Document:

<PAGE>
                                                                     EXHIBIT 4.3

THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE OF A DEPOSITARY. THIS SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED
IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE AND MAY NOT BE TRANSFERRED
EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF SUCH DEPOSITARY OR BY A
NOMINEE OF SUCH DEPOSITARY TO SUCH DEPOSITARY OR ANOTHER NOMINEE OF SUCH
DEPOSITARY OR BY SUCH DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR OF SUCH
DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR.

Unless this certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Company or its
agent for registration of transfer, exchange or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.

                                                                Principal Amount
R24
                                      HCA INC.                      $250,000,000

                              6.375% NOTE DUE 2015

                                   GLOBAL NOTE

                                                               CUSIP 404119 AP 4

         HCA Inc. (f/k/a HCA - The Healthcare Company), a corporation duly
organized and existing under the laws of the State of Delaware (herein called
the "Company," which term includes any successor corporation under the Indenture
hereinafter referred to), for value received, hereby promises to pay to Cede &
Co., as the nominee of DTC, or registered assigns, the principal amount of Two
Hundred Fifty Million and No/100s Dollars ($250,000,000), on January 15, 2015
(the "Maturity Date") and to pay interest (computed on the basis of a 360-day
year of twelve 30-day months) on July 15 and January 15 in each year (each, an
"Interest Payment Date"), beginning on January 15, 2005, and at the Maturity
Date specified above on said principal amount, at the rate of 6.375% per annum,
from November 19, 2004 until payment of said principal amount has been made or
duly provided for. The interest so payable on any Interest Payment Date (other
than at maturity) will be paid to the Person in whose name this Global Note is
registered at the close of business on the first day of the month in which such
interest payment is due (a "Regular Record Date"), unless the Company shall
default in the payment of interest due on any such Interest Payment Date, in
which case such defaulted interest

                                       1
<PAGE>

shall be paid to the Person in whose name this Global Note is registered at the
close of business on a Special Record Date for the payment of such defaulted
interest established by notice to the registered holders of the Notes (as
hereinafter defined) not less than ten days preceding such Special Record Date.
In any case where the date for any payment on the Notes is not a Business Day,
such payment shall be made on the next succeeding Business Day. A Business Day
is any day that is not a Saturday or Sunday and that, in The City of New York,
New York, is not a day on which banking institutions are generally authorized or
required by law or executive order to close.

         Both principal of and interest on this Global Note are payable in
immediately available funds in any coin or currency of the United States of
America, which at the time of payment is legal tender for the payment of public
and private debts. Payments of principal and interest will be made in The City
of New York, New York, at the Corporate Trust Office of The Bank of New York, or
at such other office or agency of the Company as the Company shall designate
pursuant to the Indenture referred to elsewhere herein.

         This Global Note is a duly authorized issue of debentures, notes, bonds
or other evidences of indebtedness of the Company (the "Securities"), of the
series hereinafter specified, issued or to be issued under an Indenture dated as
of December 16, 1993, as supplemented, as may be amended by indentures
supplemental thereto (the "Indenture"), duly executed and delivered by the
Company to The Bank of New York, the successor to Bank One Trust Company, N.A.,
who was in turn the successor to The First National Bank of Chicago, as trustee
(the "Trustee"), to which Indenture reference is hereby made for a description
of the respective rights and duties thereunder of the Trustee, the Company and
the Holders of the Securities. The Securities may be issued in one or more
series, which different series may be issued in various aggregate principal
amounts, may mature at different times, may bear interest at different rates,
may have different conversion prices (if any), may be subject to different
redemption provisions, may be subject to different sinking, purchase or
analogous funds, may be subject to different covenants and Events of Default and
may otherwise vary as in the Indenture provided. This Global Note, Certificate
R24, along with Global Note, Certificate R23, together, represent a Global
Security representing the entire principal amount of a series of Securities
designated "6.375% Notes due 2015" (the "Notes") issued under the Indenture.
Unless otherwise provided herein, all terms used in this Global Note, which are
defined in the Indenture, shall have the meanings assigned to them in the
Indenture.

         The Notes do not have a sinking fund.

         The Notes may be redeemed in whole or in part, at the option of the
Company, at any time and from time to time prior to maturity. The redemption
price shall equal the greater of (i) 100% of the principal amount of the Notes
or (ii) the sum of the present values of the remaining scheduled payments of
principal and interest on the Notes to be redeemed (exclusive of interest
accrued to the date of redemption) discounted to the date of redemption on a
semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at
the then current Treasury Rate (as defined below), plus 35 basis points. In such
case, the Company will pay accrued and unpaid interest on the principal amount
being redeemed to the date of redemption.

                                       2
<PAGE>

         "Treasury Rate" means, with respect to any redemption date, the rate
per year equal to: (1) the yield, under the heading which represents the average
for the immediately preceding week, appearing in the most recently published
statistical release designated "H.15(519)" or any successor publication which is
published weekly by the Board of Governors of the Federal Reserve System and
which establishes yields on actively traded United States Treasury securities
adjusted to constant maturity under the caption "Treasury Constant Maturities,"
for the maturity corresponding to the Comparable Treasury Issue; provided that,
if no maturity is within three months before or after the Remaining Life of the
Notes to be redeemed, yields for the two published maturities most closely
corresponding to the Comparable Treasury Issue shall be determined and the
Treasury Rate shall be interpolated or extrapolated from those yields on a
straight line basis, rounding to the nearest month; or (2) if such release (or
any successor release) is not published during the week preceding the
calculation date or does not contain such yields, the rate per year equal to the
semiannual equivalent yield to maturity of the Comparable Treasury Issue,
calculated using a price for the Comparable Treasury Issue (expressed as a
percentage of its principal amount) equal to the Comparable Treasury Price for
such redemption date. The Treasury Rate shall be calculated on the third
business day preceding the redemption date.

         "Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker and having a maturity comparable to
the remaining term of the Notes to be redeemed that would be utilized, at the
time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of the Notes.

          "Comparable Treasury Price" means, with respect to any redemption
date, (a) the average of the Reference Treasury Dealer Quotations for the
redemption date, after excluding the highest and lowest Reference Treasury
Dealer Quotations, or (b) if the Trustee obtains fewer than four Reference
Treasury Dealer Quotations, the average of all the quotations.

         "Independent Investment Banker" means one of the Reference Treasury
Dealers appointed by the Trustee after consultation with the Company.

         "Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
the Trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Trustee by the Reference Treasury Dealer at 5:00 p.m. on the
third business day preceding the redemption date.

         "Reference Treasury Dealer" means each of J.P. Morgan Securities Inc.
and Merrill Lynch, Pierce, Fenner & Smith Incorporated and their respective
successors; provided however, that if any of the foregoing shall cease to be a
primary U.S. Government securities dealer in New York City (a "Primary Treasury
Dealer"), the Company shall substitute another Primary Treasury Dealer.

         "Remaining Life" means the maturity of a United States Treasury
security selected by an Independent Investment Banker that is comparable to the
remaining term of the Notes.

                                       3

<PAGE>

         The Company will mail notice of any redemption between 30 and 60 days
preceding the redemption date to each Holder of the Notes to be redeemed.

         Unless the Company defaults in payment of the redemption price, on and
after the redemption date, interest will cease to accrue on the Notes or
portions called for redemption.

         In case an Event of Default with respect to the Notes shall have
occurred and be continuing, the principal hereof may be declared, and upon such
declaration shall become, immediately due and payable, in the manner, with the
effect and subject to the conditions provided in the Indenture. The Indenture
provides that such declaration may in certain events be waived by the Holders of
a majority in principal amount of the Notes then Outstanding.

         The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
effected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of not less than a majority in principal amount of the
Outstanding Securities of each series to be affected. It is also provided in the
Indenture that, prior to any declaration accelerating the maturity of the Notes
as a series, the Holders of a majority in aggregate principal amount of the
Securities of such series at the time Outstanding may on behalf of the Holders
of all of the Securities of such series waive any past default with respect to
the Securities of such series under the Indenture and its consequences, except a
default in the payment of the principal of, or interest on, any of the
Securities of such series.

         No reference herein to the Indenture and no provision of this Global
Note or of the Indenture (including the Company's right to defease and discharge
the Notes pursuant to Article Four and Article Fourteen of the Indenture) shall
alter or impair the obligation of the Company, which is absolute and
unconditional, to pay the principal of, and interest on, this Global Note at the
place, at the respective times, at the rate and in the coin or currency herein
prescribed.

         This Global Note shall be exchangeable for Securities registered in the
names of Persons other than the Depositary or its nominee only if (i) the
Depositary notifies the Company that it is unwilling or unable to continue as
the Depositary or if at any time the Depositary ceases to be registered or in
good standing under the United States Securities Exchange Act of 1934, as
amended, and the Company fails to appoint a successor Depositary within 90 days
after the Company receives such notice or becomes aware of such event or (ii)
the Company executes and delivers to the Trustee a Company Order that this
Global Note shall be so exchangeable. To the extent that this Global Note is
exchangeable pursuant to the preceding sentence, it shall be exchangeable for
Notes registered in such names as the Depositary shall direct.

         Except as provided in the immediately preceding paragraph, this Global
Note may not be transferred except as a whole by the Depositary to a nominee of
such Depositary or by a nominee of such Depositary to such Depositary or another
nominee of such Depositary or by such Depositary or any such nominee to a
successor of such Depositary or a nominee of such successor.

                                       4
<PAGE>

         Prior to due presentment for registration of transfer of this Global
Note, the Company, the Trustee and any agent of the Company or the Trustee may
deem and treat the Holder hereof as the absolute owner of this Global Note
(whether or not this Global Note shall be overdue and notwithstanding any
notation of ownership or other writing hereon), for the purpose of receiving
payment hereof or on account hereof (except as otherwise provided in the
Indenture), as herein provided, and for all other purposes, and neither the
Company nor the Trustee nor any Paying Agent nor any Security Registrar shall be
affected by any notice to the contrary. All payments made to or upon the order
of such Holder shall, to the extent of the sum or sums paid, effectually satisfy
and discharge liability for moneys payable on this Global Note.

         None of the Company, the Trustee, any Paying Agent or the Security
Registrar will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests of this Global Note or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.

         No recourse for the payment of the principal of, or interest on, this
Global Note, or for any claims based hereon or otherwise in respect hereof, and
no recourse under or upon any obligation, covenant or agreement of the Company
in the Indenture or any indenture supplemental thereto or in any Note or because
of the creation of any indebtedness represented thereby, shall be had against
any incorporator, stockholder, officer or director, as such, past, present or
future, of the Company, whether by virtue of any assessment or penalty or
otherwise, all such liability being, by the acceptance hereof and as part of the
consideration for the issue hereof, expressly waived and released.

         Except as otherwise expressly provided in this Global Note, this Global
Note shall in all respects be entitled to all benefits, and subject to the same
terms and conditions, as definitive registered securities authenticated and
delivered under the Indenture.

         The Indenture and this Global Note shall be governed by and construed
in accordance with the laws of the State of New York.

         This Global Note shall not be valid or become obligatory for any
purpose until the certificate of authentication hereon shall have been signed by
the Trustee under the Indenture referred to on the reverse hereof.

                                       5

<PAGE>

         IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.

Dated as of November 19, 2004          HCA INC.

                                       By:    /s/ David G. Anderson
                                              ----------------------------------
                                       Name:  David G. Anderson
                                              ----------------------------------
                                       Title: Senior Vice President - Finance
                                              and Treasurer
                                              ----------------------------------

                                       Attest: /s/ John M. Franck II
                                              ----------------------------------
                                       Name:  John M. Franck II
                                              ----------------------------------
                                       Title: Vice President-Legal and Corporate
                                              Secretary
                                              ----------------------------------

TRUSTEE'S CERTIFICATE
OF AUTHENTICATION

This is one of the series
of Securities issued under
the within-mentioned Indenture.

THE BANK OF NEW YORK
as Trustee

By: /s/ Robert A. Massimillo
   --------------------------------

Title: Vice President
      -----------------------------

                                       6<PAGE>
                                                                     EXHIBIT 4.1

                                                               FILED

                                                        96 JAN 16 AM 11:47

                                                        SECRETARY OF STATE
                                                        TALLAHASSEE, FLORIDA

                            ARTICLES OF INCORPORATION

                                       OF

                       METROPOLITAN HEALTH NETWORKS, INC.

      The undersigned incorporator hereby forms a corporation under Chapter 607
of the laws of the State of Florida.

                                 ARTICLE I. NAME

      The name of the corporation shall be:

                       METROPOLITAN HEALTH NETWORKS, INC.

The address of the principal office of this corporation shall be 5816 North
University Drive, Tamarac, Florida 33321, and the mailing address of the
corporation shall be the same.

                         ARTICLE II. NATURE OF BUSINESS

      This corporation may engage or transact in any or all lawful activities or
business permitted under the laws of the United States, the State of Florida or
any other state, country, territory or nation.

                           ARTICLE III. CAPITAL STOCK

      The maximum number of shares of stock that this corporation is authorized
to have outstanding at any one time is 50,000,000 shares of common stock having
no par value per share.

<PAGE>

                          ARTICLE IV. REGISTERED AGENT

      The street address of the initial registered office of the corporation
shall be 1201 Hays Street, Tallahassee, Florida 32301, and the name of the
initial registered agent of the corporation at that address is Corporation
Service Company.

                          ARTICLE V. TERM OF EXISTENCE

      This corporation is to exist perpetually.

                              ARTICLE VI. DIRECTORS

      All corporate powers shall be exercised by or under the authority of, and
the business and affairs of the corporation managed under the direction of its
Board of Directors, subject to any limitation set forth in these Articles of
Incorporation. This corporation shall have one Director, initially. The name and
address of the initial member of the Board of Directors are:

Noel J. Guillma                                     5816 North University Drive,
Dir.                                                Tamarac, Florida 33321

<PAGE>

                            ARTICLE VII. INCORPORATOR

      The name and street address of the incorporator to these Articles of
Incorporation:

                             Corporate Agents, Inc.
                                1201 Hays Street
                           Tallahassee, Florida 32301

      The undersigned incorporator has executed these Articles of Incorporation
on January 15, 1996.

                             /s/ Gail Shelby
                             ----------------------
                             Its Agent, Gail Shelby
                                  Incorporator

     ACCEPTANCE OF REGISTERED AGENT DESIGNATED IN ARTICLES OF INCORPORATION

      Corporation Service Company, a Delaware corporation authorized to transact
business in this State, having a business office identical with the registered
office of the corporation named above, and having been designated as the
Registered Agent in the above and foregoing Articles, is familiar with and
accepts the obligations of the position of Registered Agent under Section
607.0505, Florida Statutes.

                          By: /s/ Gail Shelby
                              ----------------------
                              Its Agent, Gail Shelby
                              Authorized Service Representative
                                Corporation Service Company

ACG

<PAGE>

                                                               FILED

                                                        96 MAY -6 PM  3:54

                                                        SECRETARY OF STATE
                                                        TALLAHASSEE, FLORIDA

                              ARTICLES OF AMENDMENT
                                     TO THE
                            ARTICLES OF INCORPORATION
                                       OF
                       METROPOLITAN HEALTH NETWORKS, INC.

      Pursuant to Section 607.1006 of the Business Corporation Act of the State
of Florida, the undersigned officer of METROPOLITAN HEALTH NETWORKS, INC., a
corporation organized and existing under and by virtue of the Business
Corporation Act of the State of Florida, does hereby certify.

      The foregoing Article III was amended in its entirety and adopted by all
of the Directors of the Corporation pursuant to a unanimous written consent of
the Board of Directors on April 27, 1996, and by a majority of the Shareholders
of the Common Stock of the Corporation acting by written consent pursuant to
Section 607.0821 of the Florida Business Corporation Act, which shares voting at
such meeting represented a majority of the total issued and outstanding
capital stock of the Corporation entitled to vote. Therefore, the number of cast
for the amendment to the Corporation's Articles of Incorporation was sufficient
for approval.

      The following Article should be amended to read:

                           ARTICLE III - CAPITAL STOCK

            The maximum number of shares of stock that the Corporation is
            authorized to issue and have outstanding at any one time shall be
            forty million (40,000,000) shares of Common Stock, $.001 par value
            per share and Ten Million (10,000,000) shares of Preferred Stock
            having a par value of $.001 per share. The Preferred Stock may be
            issued from time to time, with such designations, preferences,
            conversion rights, cumulative, relative, participating, optional or
            other rights, including voting rights, qualifications, limitations
            or restrictions thereof as shall be stated and expressed in the
            resolution or resolutions providing for the creation and issuance of
            such series of Preferred Stock as adopted by the Board of Directors
            pursuant to the authority in this paragraph given.

      IN WITNESS WHEREOF, the undersigned has executed these Articles of
Amendment as of this 27 day of April, 1996.

                                        METROPOLITAN HEALTH NETWORKS, INC.

                                        By: /s/ Noel J. Guillama
                                            --------------------
                                         Its: President & CEO.
                                              NOEL J. GUILLAMA

                                        JOEL D. MAYERSOHN, Esq. 10093492
                                        (954) 766-7843
                                        Atlas, Pearlman, Trop and Borkson
                                        200 E. Las Olas, Suite 1900
                                        Ft Lauderdale FL

<PAGE>

                           P96000004953
                    FLORIDA DIVISION OF CORPORATIONS
                          PUBLIC ACCESS SYSTEM
(((H96000006191)))   ELECTRONIC FILING COVER SHEET

TO: DIVISION OF CORPORATIONS          FROM: ATLAS, PEARLMAN, TROP & BORKSON, P.A
    DEPARTMENT OF STATE                     PO BOX :4610
    STATE OF FLORIDA
    409 EAST GAINES STREET                  FT LAUDERDALE FL 33302-4610
    TALLAHASSEE, FL 32399          CONTACT: KATHY E RASLER
 FAX: (904) 922-4000                 PHONE: (305) 763-1200
                                       FAX: (305) 523-1952
(((H96000006191)))           DOCUMENT TYPE: BASIC AMENDMENT
               NAME: METROPOLITAN HEALTH NETWORKS, INC.
 FAX AUDIT NUMBER: H96000006191                 CURRENT STATUS: REQUESTED
   DATE REQUESTED: 05/01/1996                   TIME REQUESTED: 16:05:11
 CERTIFIED COPIES: 1                     CERTIFICATE OF STATUS: 0
  NUMBER OF PAGES: 1                        METHOD OF DELIVERY: FAX
 ESTIMATED CHARGE: $87.50                       ACCOUNT NUMBER: 076247002423

Note: Please print this page and use it as a cover sheet when submitting
documents to the Division of Corporations. Your document cannot be processed
without the information contained on this page. Remember to type the Fax Audit
number on the top and bottom of all pages of the document.

(((H96000006191)))
** ENTER 'M' FOR MENU. **

ENTER SELECTION AND [CR]:
[#1] [ ] COMPUSER[ ] MENU      [ ]0:05:33[ ]        04:12p[ ]        Capture Off

                                                              FILED

                                                        96 MAY -6 PM  3:54

                                                        SECRETARY OF STATE
                                                        TALLAHASSEE, FLORIDA

                                    RECEIVED

                               96 MAY -2 AM 11:16

                              MANSION CORPORATIONS

<PAGE>

                           FLORIDA DIVISION OF CORPORATIONS
                                PUBLIC ACCESS SYSTEM
( ( (H96000006191) ) )      ELECTRONIC FILING COVER SHEET
TO: DIVISION OF CORPORATIONS         FROM: ATLAS, PEARLMAN, TROP & BORKSON, P.A
    DEPARTMENT OF STATE                    PO BOX 14610
    STATE OF FLORIDA
    409 EAST GAINES STREET                 FT LAUDERDALE FL 33302-4610
    TALLAHASSEE, FL 32399         CONTACT: KATHY E RASLER
 FAX: (904) 922-4000                PHONE: (305) 763-1200
                                      FAX: (305) 523-1952
( ( (H96000006191) ) )     DOCUMENT TYPE:  BASIC AMENDMENT
                  NAME: METROPOLITAN HEALTH NETWORKS, INC.
FAX AUDIT NUMBER: H96000006191                 CURRENT STATUS: REQUESTED
  DATE REQUESTED: 05/01/1996                   TIME REQUESTED: 16:05:11
CERTIFIED COPIES: 1                     CERTIFICATE OF STATUS: 0
 NUMBER OF PAGES: 1                        METHOD OF DELIVERY: FAX
ESTIMATED CHARGE: $87.50                       ACCOUNT NUMBER: 076247002423

Note: Please print this page and use it as a cover sheet when submitting
documents to the Division of Corporations. Your document cannot be processed
without the information contained on this page. Remember to type the Fax Audit
number on the top and bottom of all pages of the document.
(((H96000006191)))

**ENTER 'M' FOR MENU. **
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                                    RECEIVED

                               96 MAY -6 PM 1:29

                              MANSION CORPORATIONS

<PAGE>

                       [FLORIDA DEPARTMENT OF STATE LOGO]

                          FLORIDA DEPARTMENT OF STATE
                               Sandra B. Mortham
                               Secretary of State

May 2, 1996

METROPOLITAN HEALTH NETWORKS, INC.
5816 NORTH UNIVERSITY DRIVE
TAMARAC, FL 33321

SUBJECT: METROPOLITAN HEALTH NETWORKS, INC.
REF: P96000004953

We received your electronically transmitted document. However, the document has
not been filed and needs the following corrections.

The name and capacity of the person signing the document must be noted beneath
or opposite the signature.

Please return your document, along with a copy of this letter, within 60 days or
your filing will be considered abandoned.

If you have any questions concerning the filing of your document, please call
(904) 487-6902.

Linda Stitt                                     FAX And. #: H96000006191
Corporate Specialist                            Letter Number: 896200021312

<PAGE>

                                                              FILED

                                                        97 DEC 30 AM 11:25

                                                        SECRETARY OF STATE
                                                        TALLAHASSEE, FLORIDA

                             ARTICLES OF AMENDMENT
                                     TO THE
                           ARTICLES OF INCORPORATION
                                       OF
                       METROPOLITAN HEALTH NETWORKS, INC.

      Pursuant to Section 607.10025, of the Business Corporation Act of the
State of Florida, the undersigned President of METROPOLITAN HEALTH NETWORKS,
INC., a corporation organized and existing under and by virtue of the Business
Corporation Act of the State of Florida ("Corporation"), bearing document number
P96000004953, does hereby certify that the following is a true and correct copy
of resolutions duly adopted by the Board of Directors of the Company (the "Board
of Directors") by unanimous written consent dated July 28, 1997, which
constituted all requisite action on the part of the Company for adoption of such
resolutions.

      WHEREAS, the Articles of Incorporation of the Corporation authorizes
10,000,000 shares of preferred stock, par value $.001 per share, of which no
shares are issued and outstanding.

      WHEREAS, the Board of Directors is authorized at any time and from time to
time, to provide for the issuance of shares of preferred stock in one or more
series, with such voting powers, full or limited, or without voting powers, and
with such designations, preferences and relations, participating, optional or
other special rights, qualifications, limitations or restrictions thereof.

      WHEREAS, the Board of Directors desires, pursuant to its authority as
aforesaid, to designate a new series of preferred stock, set the number of
shares constituting such series and fix the rights, preferences, privileges and
restrictions of such series.
<PAGE>

            NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors hereby
designates a new series of preferred stock and, in accordance therewith, Article
III entitled, "Capital Stock" of the Articles of Incorporation of this
Corporation is revised to include the number of shares constituting such series
and the rights, preferences, privileges and restrictions relating to such series
as follows:

      C. Series A Preferred Stock.

            1. Designation and Number of Shares. The Preferred Stock shall be
      designated "Series A Convertible Stock" of a par value of $.001 per share,
      and the number of shares constituting the Series A Preferred Stock shall
      be 30,000 shares.

            2. Dividend Rights. Holders of the Series A Preferred Stock shall be
      entitled to receive, when and as declared by the Board of Directors out of
      funds legally available therefor, and the Company shall pay, cumulative
      dividends at the rate per share, as a percentage of the stated value of
      $100.00 per share ("STATED VALUE") equal to 10% percent per annum
      ("INITIAL DIVIDENDS"), payable, in cash or shares of Common Stock (subject
      to the terms and conditions hereof) at the option of the Company quarterly
      in arrears, but in no event later than conversion applicable to such share
      of Series A Preferred Stock. Dividends on the Series A Preferred Stock
      shall be calculated on the basis of a 360-day year, shall accrue daily
      commencing the date of issuance and shall be deemed to accrue on 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 party that holds the Series A Preferred Stock of record on
      an applicable record date for any dividend payment will be entitled to
      receive such dividend

<PAGE>

      payment and any other accrued and unpaid dividends which accrued prior to
      such dividend payment date, without regard to any sale or disposition of
      such Series A Preferred Stock subsequent to the applicable record date but
      prior to the applicable dividend payment date. Except as otherwise
      provided herein, if at any time the Company pays less than the total
      amount of dividends then accrued on account of the Preferred Stock, such
      payment shall be distributed ratably among the holders of the Preferred
      Stock based upon the number of shares held by each holder.

            3. Conversion.

            (a) Each share of Series A Preferred Stock shall be convertible into
      shares of Common Stock at the Conversion Ratio (as defined herein) at the
      option of the holder in whole or in part as at any time commencing seven
      months after the date of issuance. "CONVERSION RATIO" means, at any time,
      a fraction, of which the numerator is Stated Value plus accrued but unpaid
      dividends (including any accrued but unpaid interest thereon) but only to
      the extent not paid in shares of Common Stock in accordance with the terms
      hereof, and of which the denominator is the Conversion Price at such time.
      The holder shall effect conversions by surrendering the certificate or
      certificates representing the shares of Series A Preferred Stock to be
      converted to the legal counsel for the Company, with a copy thereof to the
      Company, together with the form of conversion notice attached hereto as
      Exhibit A (the "CONVERSION NOTICE"), provided, however, that the holder
      shall not convert more than 7,500 shares of Series A Preferred Stock in
      any one quarter. Each Conversion Notice shall specify the number of shares
      of Series A Preferred Stock to be converted and the date on which such

<PAGE>

      conversion is to be effected, which date may not be prior to the date the
      holder delivers such Conversion Notice by facsimile (the "CONVERSION
      DATE")- If no Conversion Date is specified in a Conversion Notice, the
      Conversion Date shall be the date that the Conversion Notice is delivered.
      Each Conversion Notice, once given, shall be irrevocable. If the holder is
      converting less than all shares of Series A Preferred Stock represented by
      the certificate or certificates tendered by the holder with the Conversion
      Notice, or if a conversion hereunder cannot be effected in full for any
      reason, the Company shall convert up to the number of shares of Series A
      Preferred Stock which can be so converted and shall promptly deliver to
      such holder a certificate for such number of shares as have not been
      converted. Notwithstanding anything to the contrary contained herein, the
      Company shall have the right to deny conversion of the Series A Preferred
      Stock, at which time the holder shall be entitled to receive and the
      Company shall pay additional cumulative dividends at the rate per share
      (as a percentage of the Stated Value) equal to 5% per annum, and together
      with the Initial Dividend rate, to equal fifteen (15%) percent per annum
      payable under the same terms as the Initial Dividends. No fractional share
      or scrip representing a fractional share will be issued upon conversion of
      the Series A Preferred Stock. In the event of any reclassification,
      merger, consolidation or change of shares of the Series A Preferred Stock
      and/or the Common Stock of the Corporation, the Corporation shall make
      adjustments to the conversion ratio that shall be as nearly equivalent to
      that stated above as may be practical.

            (b) The conversion price for each share of Series A Preferred Stock
      (the "CONVERSION PRICE") in effect on any Conversion Date shall be the

<PAGE>

      lesser of (a) 85% of the average closing bid price of the Common Stock
      reported by the principal exchange on which the Common Stock is traded,
      the NASDAQ Small Cap Market or any other exchange the Common Stock is then
      traded, for the ten (10) trading days immediately preceding the Conversion
      Date, or (b) $6.00.

            (c) The Company covenants that it will at all times reserve and keep
      available out of its authorized and unissued Common Stock solely for the
      purpose of issuance upon conversion of Preferred Stock and payment of
      dividends on Preferred Stock, each as herein provided, free from
      preemptive rights or any other actual contingent purchase rights of
      persons other than the holders of Preferred Stock, not less than such
      number of shares of Common Stock as shall (subject to any additional
      requirements of the Company as to reservation of such shares set forth in
      the Purchase Agreement) be issuable upon the conversion of all outstanding
      shares of Preferred Stock and payment of dividends hereunder. The Company
      covenants that all shares of Common Stock that shall be so issuable shall,
      upon issue, be duly and validly authorized, issued and fully paid,
      nonassessable and freely tradeable.

            (d) The Conversion Price will be subject to adjustment in certain
      events, including (i) the issuance of capital stock as a dividend or
      distribution on Common Stock, (ii) subdivision, combinations, reverse
      stock splits and reclassification of the Common Stock, (iii) the fixing of
      a record date for the issuance to all holders of Common Stock of rights or
      warrants entitling them (for a period expiring within 45 days of such
      record date) to subscribe for Common Stock and (iv) the fixing of a record
      date for the distribution to all

<PAGE>

      holders of Common Stock of evidence of indebtedness or assets (other than
      cash dividends) of the Corporation or subscription rights or warrants
      (other than those referred to above).

            (e) Shares of Series A Preferred Stock converted into Common Stock
      shall be canceled and shall have the status of authorized but unissued
      shares of undesignated preferred stock.

            4. Redemption. The Company shall have the right, exercisable at any
      time upon 10 trading days notice to the holders of the Series A Preferred
      Stock given at any time after the expiration of two years after the date
      of issuance to redeem, from funds legally available therefor at the time
      of such redemption, all or any portion of the shares of Series A Preferred
      Stock which have not previously been converted or redeemed, at a price
      equal to 105% of the product of (i) the number of shares of Preferred
      Stock then held by the holder, and (ii) the Stated Value.

            5. Voting Rights. Except as provided by law, the Series A Preferred
      Stock shall not be entitled to vote on matters submitted to a vote of the
      shareholders of the Corporation. Unless the vote or consent of the holders
      of a greater number of shares is required by law, the consent of the
      holders of at least a majority of all of the Series A Preferred Stock at
      the time outstanding shall be necessary to change, alter or revoke the
      rights and preferences conferred on the Series A Preferred Stock by the
      Articles of Incorporation or to adopt any amendment to the Articles of
      Incorporation materially adversely affecting the rights of the holders of
      the Series A Preferred Stock.

            6. Liquidation Rights. In the event of any liquidation, dissolution

<PAGE>

      or winding up of the Corporation, holders of the Series A Preferred Stock
      shall be entitled to receive, after due payment or provision for payment
      for the debts and other liabilities of the Corporation, a liquidating
      distribution before any distribution may be made to holders of Common
      Stock of the Corporation. The holders of the Series A Preferred Stock
      outstanding shall be entitled to receive an amount equal to the Stated
      Value, plus declared dividends to the date of the final distribution,
      whether or not such liquidation, dissolution or winding up is voluntary or
      involuntary on the part of the Corporation.

            7. Miscellaneous. The Series A Preferred Stock has no preemptive
      rights. The Corporation reserves the right to issue up to an additional
      9,970,000 shares of preferred stock, representing the balance of the
      authorized preferred stock, with designations and preferences as the Board
      of Directors shall determine. The Series A Preferred Stock and the Common
      Stock into which such Series A Preferred Stock is convertible, when issued
      will be legally issued, fully paid and non-assessable.

      IN WITNESS WHEREOF, the undersigned, being the President of this
Corporation, has executed these Articles of Amendment as of July 29, 1997.

                                    METROPOLITAN  HEALTH NETWORKS, INC.

                                    By: /s/ Noel J. Guillama
                                        ----------------------------------------
                                        Noel J. Guillama, Chairman and President

                                    By: /s/ Donald B. Cohen
                                        ----------------------------------------
                                        Donald B. Cohen, Secretary

<PAGE>

                                    EXHIBIT A

                              NOTICE OF CONVERSION

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

The undersigned hereby elects to convert the number of shares of Series A
Convertible Preferred Stock indicated below, into shares of Common Stock, par
value $.01 per share (the "Common Stock"), of Metropolitan Health Networks, Inc.
(the "Company") according to the conditions hereof, as of the date written
below. If shares are to be issued in the name of a person other than
undersigned, the undersigned will pay all transfer taxes payable with respect
thereto and is delivering herewith such certificates and opinions as reasonably
requested by the Company in accordance therewith. No fee will be charged to the
holder for any conversion, except for such transfer taxes, if any.

Conversion calculations:

                             Date to Effect Conversion

                             ___________________________________________________
                             Number of shares of Preferred Stock to be Converted

                             ___________________________________________________
                             Number of shares of Common Stock to be Issued

                             ___________________________________________________
                             Applicable Conversion Price

                             ___________________________________________________
                             Signature

                             ___________________________________________________
                             Name

                             ___________________________________________________
                             Address

The Company undertakes to promptly upon its receipt of this conversion notice
(and, in any case prior to the time it effects the conversion requested hereby),
notify the converting holder by facsimile of the number of shares of Common
Stock outstanding on such date and the number of shares of Common Stock which
would be issuable to the holder if the conversion requested in this conversion
notice were effected in full, whereupon, if the Company determines that such
conversion would result in it owning in excess of 4.9% of the outstanding shares
of Common Stock on such date, the Company shall convert up to an amount equal to
4.9% of the outstanding shares of Common Stock and issue to the holder one or
more certificates representing shares of Preferred Stock which have not been
converted as a result of this provision.

<PAGE>

                                                                   FILED
                                                             98 APR 27 AM 11:59
                                                             SECRETARY OF STATE
                                                            TALLAHASSEE, FLORIDA

                              ARTICLES OF AMENDMENT
                                     TO THE
                           ARTICLES OF INCORPORATION
                                       OF
                       METROPOLITAN HEALTH NETWORKS, INC.

                      (Pursuant to Section 607.0602 of the
                        Florida Business Corporation Act)

      Metropolitan Health Networks, Inc., a corporation organized and existing
under the Florida Business Corporation Act (the "Corporation") bearing document
no. P96000004953, hereby certifies that the following resolutions were adopted
by the Board of Directors of the Corporation on April 16, 1998 pursuant to
authority of the Board of Directors:

      RESOLVED, that pursuant to the authority granted to and vested in the
Board of Directors of this Corporation (the "Board of Directors" or the "Board")
in accordance with the provisions of its Articles of Incorporation, the Board of
Directors hereby authorizes a series of the Corporation's previously authorized
Preferred Stock, par value $.001 per share (the "Preferred Stock"), and hereby
amends Article 3 of the Articles of Incorporation to include the following which
states the designation and number of shares, and fixes the relative rights,
preferences, privileges, powers and restrictions thereof as follows:

      Series B Convertible Preferred Stock:

I.    Designation and Amount

      The designation of this series, which consists of 2,000 shares of
Preferred Stock, is Series B Convertible Preferred Stock (the "Series B
Preferred Stock") and the stated value shall be One Thousand Dollars ($1,000)
per share (the "Stated Value").

II.   Rank

      The Series B Preferred Stock shall rank (i) prior to the Corporation's
common stock, par value $.001 per share (the "Common Stock"); (ii) prior to any
class or series of capital stock of the Corporation hereafter created (unless,
with the consent of the holders of Series B Preferred Stock obtained in
accordance with Article IX hereof, such class or series of capital stock
specifically, by its terms, ranks senior to or pari passu with the Series B
Preferred Stock) (collectively, with the Common Stock, "Junior Securities");
(iii) pari passu with any class or series of capital stock of the Corporation
hereafter created (with the consent of the holders of Series B Preferred Stock
obtained in accordance with Article IX hereof) specifically ranking, by its
terms, on parity with the Series B Preferred Stock ("Pari Passu Securities");
and (iv) junior

This document prepared by:
ROXANNE K. BEILLY, ESQ., Florida Bar No. 851450
Atlas, Pearlman, Trop & Borkson, P.A.
200 E. Las Olas Blvd., Suite 1900
Ft. Lauderdale, FL 33301 Phone: (954) 763-1200

                                      -1-
<PAGE>

to any class or series of capital stock of the Corporation hereafter created
(with the consent of the holders of Series B Preferred Stock obtained in
accordance with Article IX hereof) specifically ranking, by its terms, senior to
the Series B Preferred Stock ("Senior Securities"), in each case as to
distribution of assets upon liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary.

III.  Dividends

      The Series B Preferred Stock shall not bear any dividends. In no event, so
long as any Series B Preferred Stock shall remain outstanding, shall any
dividend whatsoever be declared or paid upon, nor shall any distribution be made
upon, any Junior Securities, nor shall any shares of Junior Securities be
purchased or redeemed by the Corporation nor shall any moneys be paid to or made
available for a sinking fund for the purchase or redemption of any Junior
Securities (other than a distribution of Junior Securities), without, in each
such case, the written consent of the holders of a majority of the outstanding
shares of Series B Preferred Stock, voting together as a class.

IV.   Liquidation Preference

      A. If the Corporation shall commence a voluntary case under the Federal
bankruptcy laws or any other applicable Federal or State bankruptcy, insolvency
or similar law, or consent to the entry of an order for relief in an involuntary
case under any law or to the appointment of a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or other similar official) of the Corporation
or of any substantial part of its property, or make an assignment for the
benefit of its creditors, or admit in writing its inability to pay its debts
generally as they become due, or if a decree or order for relief in respect of
the Corporation shall be entered by a court having jurisdiction in the premises
in an involuntary case under the Federal bankruptcy laws or any other applicable
Federal or state bankruptcy, insolvency or similar law resulting in the
appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or other similar official) of the Corporation or of any
substantial part of its property, or ordering the winding up or liquidation of
its affairs, and any such decree or order shall be unstayed and in effect for a
period of thirty (30) consecutive days and, on account of any such event, the
Corporation shall liquidate, dissolve or wind up, or if the Corporation shall
otherwise liquidate, dissolve or wind up (each such event being considered a
"Liquidation Event"), no distribution shall be made to the holders of any shares
of capital stock of the Corporation (other than Senior Securities) upon
liquidation, dissolution or winding up unless prior thereto, the holders of
shares of Series B Preferred Stock, subject to Article VI, shall have received
the Liquidation Preference (as defined in Article IV.C) with respect to each
share. If upon the occurrence of a Liquidation Event, the assets and funds
available for distribution among the holders of the Series B Preferred Stock and
holders of Pari Passu Securities (including any dividends or distribution paid
on any Pari Passu Securities after the date of filing of this Certificate of
Designation) shall be insufficient to permit the payment to such holders of the
preferential amounts payable thereon, then the entire assets and funds of the
Corporation legally available for distribution to the Series B Preferred Stock
and the Pari Passu Securities shall be distributed ratably among such shares in
proportion to the ratio that the Liquidation Preference payable on each such
share bears to the aggregate

                                       -2-
<PAGE>

liquidation preference payable on all such shares. Any prior dividends or
distribution made after the date of filing of this Certificate of Designation
shall offset, dollar for dollar, the amount payable to the class or series to
which such distribution was made.

      B. At the option of any holder of Series B Preferred Stock, the sale,
conveyance or disposition of all or substantially all of the assets of the
Corporation, the effectuation by the Corporation of a transaction or series of
related transactions in which more than 50% of the voting power of the
Corporation is disposed of, or the consolidation, merger or other business
combination of the Corporation with or into any other Person (as defined below)
or Persons when the Corporation is not the survivor shall either: (i) be deemed
to be a liquidation, dissolution or winding up of the Corporation pursuant to
which the Corporation shall be required to distribute upon consummation of such
transaction an amount equal to 120% of the Liquidation Preference with respect
to each outstanding share of Series B Preferred Stock in accordance with and
subject to the terms of this Article IV or (ii) be treated pursuant to Article
VI.C(b) hereof. "Person" shall mean any individual, corporation, limited
liability company, partnership, association, trust or other entity or
organization.

      C. For purposes hereof, the "Liquidation Preference" with respect to a
share of the Series B Preferred Stock shall mean an amount equal to the sum of
(i) the Stated Value thereof plus (ii) and amount equal to five percent (5%) per
annum of such Stated Value for the period beginning on the date of issuance of
the Series B Preferred Stock (the "Issue Date") and ending on the date of final
distribution to the holder thereof (prorated for any portion of such period).
The liquidation preference with respect to any Pari Passu Securities shall be
as set forth in the Certificate of Designation filed in respect thereof.

V.    Redemption

      A. If any of the following events (each, a "Mandatory Redemption Event")
shall occur:

            (i) The Corporation fails to issue shares of Common Stock to the
holders of Series B Preferred Stock upon exercise by the holders of their
conversion rights in accordance with the terms of this Certificate of
Designation (for a period of at least sixty (60) days if such. failure is solely
as a result of the circumstances governed by the second paragraph of Article
VI.F below and the Corporation is using all commercially reasonable efforts to
authorize a sufficient number of shares of Common Stock as soon as practicable),
fails to transfer or to cause its transfer agent to transfer (electronically or
in certificated form) any certificate for shares of Common Stock issued to the
holders upon conversion of the Series B Preferred Stock as and when required by
this Certificate of Designation or the Registration Rights Agreement, dated as
of April 24, 1998, by and among the Corporation and the other signatories
thereto (the "Registration Rights Agreement"), fails to remove any restrictive
legend (or to withdraw any stop transfer instructions in respect thereof) on any
certificate or any shares of Common Stock issued to the holders of Series B
Preferred Stock upon conversion of the Series B Preferred Stock as and when
required by this Certificate of Designation, the Securities Purchase Agreement
dated as of April 24, 1998, by and between the Corporation and the other
signatories thereto (the "Purchase Agreement") or the Registration Rights
Agreement, or fails to fulfill its obligations pursuant to Sections 4(c), 4(e),
4(h), 4(i), 4(j) or 5 of the Purchase Agreement (or

                                      -3-
<PAGE>

makes any announcement, statement or threat that it does not intend to honor the
obligations described in this paragraph) and any such failure shall continue
uncurred (or any announcement, statement or threat not to honor its obligations
shall not be rescinded in writing) for ten (10) business days;

            (ii) The Corporation fails to obtain effectiveness with the
Securities and Exchange Commission (the "SEC") of the Registration Statement (as
defined in the Registration Rights Agreement) prior to October 31, 1998 or such
Registration Statement lapses in effect (or sales otherwise cannot be made
thereunder, whether by reason of the Company's failure to amend or supplement
the prospectus included therein in accordance with the Registration Rights
Agreement or otherwise) for more than thirty (30) consecutive days or sixty (60)
days in any twelve (12) month period after such Registration Statement becomes
effective;

            (iii) The Corporation shall make an assignment for the benefit of
creditors, or apply for or consent to the appointment of a receiver or trustee
for it or for all or substantially all of its property or business; or such a
receiver or trustee shall otherwise be appointed;

            (iv) Bankruptcy, insolvency, reorganization or liquidation
proceedings or other proceedings for relief under any bankruptcy law or any law
for the relief of debtors shall be instituted by or against the Corporation or
any subsidiary of the Corporation;

            (v) The Corporation shall fail to maintain the listing of the Common
Stock on the Nasdaq National Market, the Nasdaq SmallCap Market ("Nasdaq
SmallCap"), the New York Stock Exchange or the American Stock Exchange and such
failure shall remain uncured for at least ten (10) business days, then, upon the
occurrence and during the continuation of any Mandatory Redemption Event
specified in subparagraphs (i), (ii) or (v) at the option of the holders of at
least 50% of the then outstanding shares of Series B Preferred Stock by written
notice (the "Mandatory Redemption Notice") to the Corporation of such Mandatory
Redemption Event, or upon the occurrence of any Mandatory Redemption Event
specified in subparagraphs (iii) or (iv), the Corporation shall purchase each
holder's shares of Series B Preferred Stock for an amount per share equal to the
greater of (1) 120% multiplied by the sum of (a) the Stated Value of the shares
to be redeemed plus (b) an amount equal to five (5%) percent per annum of such
Stated Value for the period beginning on the Issue Date and ending on the date
of payment of the Mandatory Redemption Amount (the "Mandatory Redemption Date"),
and (2) the "parity value" of the shares to be redeemed, where parity value
means the product of (a) the number of shares of Common Stock issuable upon
conversion of such shares in accordance with Article VI below (without giving
any effect to any limitations or conversions of shares set forth in Article
VI.A(b)) below , and treating the Trading Day (as defined  in Article VI.B.)
immediately preceding the Mandatory Redemption Date as the "Conversion Date" (as
defined in Article VI.B(a)) unless the Mandatory Redemption Event arises as a
result of a breach in respect of a specific Conversion Date in which case such
Conversion Date shall be the Conversion Date), multiplied by (b) the Closing
Price (as defined in Article VI.A(b)) for the Common Stock on such "Conversion
Date" (the greater of such amounts being referred to as the "Mandatory
Redemption Amount").

      In the case of a Mandatory Redemption Event, if the Corporation fails to
pay the Mandatory Redemption Amount for each share within five (5) business days
of written notice

                                       -4-
<PAGE>

that such amount is due and payable, then (assuming there are sufficient
authorized shares) in addition to all other available remedies, each holder of
Series B Preferred Stock Shall have the right at any time, so long as the
Mandatory Redemption Event continues, to require the Corporation, upon written
notice, to immediately issue (in accordance with and subject to the terms of
Article VI below), in lieu of the Mandatory Redemption Amount, with respect to
each outstanding share of Series B Preferred Stock held by such holder, the
number of shares of Common Stock of the Corporation equal to the Mandatory
Redemption Amount divided by the Conversion Price then in effect.

      B. If the Series B Preferred Stock ceases to be convertible as a result of
the limitations described in the second paragraph of Article VI.A below (a
"19.99% Redemption Event"), and the Corporation has not prior to, or within
thirty (30) days of, the date that such 19.99% Redemption Event arises, (i)
obtained approval of the issuance of the additional shares of Common Stock by
the requisite vote of the holders of the then-outstanding Common Stock (not
including any shares of Common Stock held by present or former holders of Series
B Preferred Stock that were issued upon conversion of Series B Preferred Stock)
or (ii) received other permission pursuant to Nasdaq Marketplace Rule 4460(i)
allowing the Corporation to resume issuances of shares of Common Stock upon
conversion of Series B Preferred Stock, then the Corporation shall be obligated
to redeem immediately all of the then outstanding Series B Preferred Stock, in
accordance with this Article V.B. An irrevocable Redemption, Notice shall be
delivered promptly to the holders of Series B Preferred Stock at their
registered address appearing on the records of the Corporation and shall state
(1) that 19.99% of the Outstanding Common Amount (as defined in Article VI.A)
has been issued upon exercise of the Series B Preferred Stock, (2) that the
Corporation is obligated to redeem all of the outstanding Series B Preferred
Stock and (3) the Mandatory Redemption Date, which shall be a date within five
(5) business days of the Date of the Redemption Notice. On the Mandatory
Redemption Date, the Corporation shall make payment of the Mandatory Redemption
Amount (as defined in Article V.A. above) in cash. If the Corporation fails to
redeem in accordance with this Article V.B., then, in addition to all other
remedies available to the holders of the Series B Preferred Stock, upon request
of a majority-in-interest of the Series B Preferred Stock, the Corporation shall
terminate the listing of its Common Stock on Nasdaq Small Cap (and any other
exchange or quotation system with a rule substantially similar to Rule 4460(i))
and cause its Common Stock to be eligible for trading on the over-the-counter
electronic bulletin board.

      C. Notwithstanding anything to the contrary contained in this Article V,
so long as no Mandatory Redemption. Event shall have occurred and be continuing,
the Corporation shall have the right, on the date which is the third (3rd)
anniversary of the date on which the Registration Statement is declared
effective by the SEC, exercisable on not less than twenty (20) Trading Days
prior written notice to the holders of Series B Preferred Stock, to redeem all
of the outstanding shares of Series B Preferred Stock in accordance with this
Article V. Any notice of redemption hereunder (an "Optional Redemption") shall
be delivered to the holders of Series B Preferred Stock at their registered
addresses appearing on the books and records of the Corporation and shall state
(1) that the Corporation is exercising its right to redeem all of the
outstanding shares of Series B Preferred Stock issued on the Issue Date and (2)
the date of redemption (the "Optional Redemption Notice"). On the date fixed for
redemption (the "Optional Redemption Date"), the Corporation shall make payment
of the Optional Redemption Amount (as defined below) to or upon the order of the
holders as specified by the holders in

                                       -5-
<PAGE>

writing to the Corporation at least one (1) business day prior to the Optional
Redemption Date. If the Corporation exercises its right to redeem the Series B
Preferred Stock, the Corporation shall make payment to the holders of an amount
in cash (the "Optional Redemption Amount") equal to 120% multiplied by the sum
of (i) the Stated Value of the shares of Series B Preferred Stock to be redeemed
and (ii) an amount equal to five percent (5%) per annum of such Stated Value for
the period beginning on the Issue Date and ending on the Optional Redemption
Date, for each share of Series B Preferred Stock then held. Notwithstanding
notice of an Optional Redemption, the holders shall at all times prior to the
Optional Redemption Date maintain the right to convert all or any shares of
Series B Preferred Stock in accordance with Article VI and any shares of Series
B Preferred Stock so converted after receipt of an Optional Redemption Notice
and prior to the Optional Redemption Date set forth in such notice and payment
of the aggregate Optional Redemption Amount shall be deducted from the shares of
Series B Preferred Stock which are otherwise subject to redemption pursuant to
such notice.

      From time to time following the Issue Date, the holders may request
advance notice as to whether the Corporation intends to redeem the shares of
Series B Preferred Stock. Such request shall be made in writing and the
Corporation shall respond in writing as promptly as practicable but prior to
5:00 p.m. Eastern Standard Time one (1) business day after receipt of the
request. The Corporation will be bound by such response for a period of twenty
(20) Trading Days (the "Term") from the date of its response. A failure to
respond within one (1) business day shall be deemed to be an election not to
redeem the Series B Preferred Stock during the Term. The holders may not request
such notice in the event that the Corporation files a registration statement
where the use of proceeds set forth in such registration statement are
identified for purposes of redemption of the outstanding Series B Preferred
Stock.

VI.   Conversion at the Option of the Holder

      A (a) Each holder of shares of Series B Preferred Stock may, at its
option at any time and from time to time, upon surrender of the certificates
therefor, convert any or all of its shares of Series B Preferred Stock into
Common Stock as follows (an "Optional Conversion"). Each share of Series B
Preferred Stock shall be convertible into such number of fully paid and
nonassessable Shares of Common Stock as is determined by dividing (1) the sum of
(a) the Stated Value thereof plus (b) the Premium Amount (as defined below), by
(2) the then effective Conversion Price (as defined below); provided,, however,
that, unless the holder delivers a waiver in accordance with the immediately
following sentence, in no event (other than pursuant to the Automatic Conversion
(as defined herein)) shall a holder of shares of Series B Preferred Stock be
entitled to convert any such shares in excess of that number of shares upon
conversion of which the sum of (x) the number of shares of Common Stock
beneficially owned by the holder and its affiliates (other than shares of Common
Stock which may be deemed beneficially owned through the ownership of the
unconverted portion of the shares of Series B Preferred Stock) and (y) the
number of shares of Common Stock issuable upon the conversion of the shares of
Series B Preferred Stock with respect to which the determination of this proviso
is being made, would result in beneficial ownership by a bolder and such
holder's affiliates of more than 4.9% of the outstanding shares of Common Stock.
For purposes of the proviso to the immediately preceding sentence, (i)
beneficial ownership shall be determined in accordance with Section 13(d) of the
Securities Exchange Act of 1934, as amended, and Regulation 13D-G thereunder,
except as otherwise provided in clause (x) of such proviso and (ii) a holder may

                                      -6-
<PAGE>

waive the limitations set forth therein by written notice to the Corporation
upon not less than sixty-one (61) days prior written notice (with such waiver
taking effect only upon the expiration of such sixty-one (61) day notice
period).

            (b)   The "Premium Amount" means the product of the Stated Value,
multiplied by .05, multiplied by (N/365), where "N" equals the number of days
elapsed from the Issue Date to and including the Conversion Date (as defined in
Article VLB, below).

            (c)   So long as the Common Stock is listed for trading on Nasdaq
SmallCap or an exchange or quotation system with a rule substantially similar to
Rule 4460(i) then, notwithstanding anything to the contrary contained herein if,
at any time, the aggregate number of shares of Common Stock then issued upon
conversion of the Series B Preferred Stock (including any shares of capital
stock or rights to acquire shares of capital stock issued by the Corporation
which are aggregated or integrated with the Common Stock issued or issuable upon
conversion of the Series B Preferred Stock for purposes of such rule) equals
19.99% of the "Outstanding Common Amount" (as hereinafter defined), the Series B
Preferred Stock shall, from that time forward, cease to be convertible into
Common Stock in accordance with the terms of this Article VI and Article VII
below, unless the Corporation (i) has obtained approval of the issuance of the
Common Stock upon conversion of the Series B Preferred Stock by a majority of
the total votes cast on such proposal, in person or by proxy, by the holders of
the then-outstanding Common Stock (not including any shares of Common Stock held
by present or former holders of Series B Preferred Stock that were issued upon
conversion of Series B Preferred Stock), or (ii) shall have otherwise obtained
permission to allow such issuances from Nasdaq SmallCap in accordance with
Nasdaq SmallCap Rule 4460(i). If the Corporation's Common Stock is not then
listed on Nasdaq SmallCap or an exchange or quotation system that has a rule
substantially similar to Rule 4460(i) limitations set forth herein shall be
inapplicable and of no force and effect. For purposes of this paragraph,
"Outstanding Common Amount" means (i) the number of shares of the Common Stock
outstanding on the date of issuance of the Series B Preferred Stock pursuant to
the Purchase Agreement plus (ii) any additional shares of Common Stock issued
thereafter in respect of such shares pursuant to a stock dividend, stock split
or similar event. The maximum number of shares of Common Stock issuable as a
result of the 19.99% limitation set forth herein is hereinafter referred to as
the "Maximum Share Amount." With respect to each holder of Series B Preferred
Stock, the Maximum Share Amount shall refer to such holder's pro rata share
thereof determined in accordance with Article X below. In the event that
Corporation obtains Stockholder Approval or the approval of Nasdaq SmallCap, by
reason of the inapplicability of the rules of Nasdaq SmallCap or otherwise and
concludes that it is able to increase the number of shares to be issued above
the Maximum Share Amount (such increased number being the "New Maximum Share
Amount"), the references to Maximum Share Amount, above, shall be deemed to be,
instead, references to the greater New Maximum Share Amount. In the event that
Stockholder Approval is not obtained, there are insufficient reserved or
authorized shares or a registration statement covering the additional shares of
Common Stock which constitute the New Maximum Share Amount is not effective
prior to the Maximum Share Amount being issued (if such registration statement
is necessary to allow for the public resale of such securities), the Maximum
Share Amount shall remain unchanged; provided, however, that the Holder may
grant an extension to obtain a sufficient reserved or authorized amount of
shares or of the effective date of such registration statement. In the event
that (a) the aggregate number of shares of Common Stock issued pursuant to the

                                       -7-
<PAGE>

outstanding Series B Preferred Stock represents at least twenty percent (20%) of
the Maximum Share Amount and (b) the sum of (x) the aggregate number of shares
of Common Stock issued upon conversion of Series B Preferred Stock plus (y) the
aggregate number of shares of Common Stock that remain issuable upon conversion
of Series B Preferred Stock, represents at least one hundred percent (100%) of
the Maximum Share Amount (the "Triggering Event"), the Corporation will use its
best efforts to seek and obtain Stockholder Approval (or obtain such other
relief as will allow conversions hereunder in excess of the Maximum Share
Amount) as soon as practicable following the Triggering Event and before the
Mandatory Redemption Date.

            B.    (a) Subject to subparagraph (b) below, the "Conversion Price"
shall be the lesser of the Market Price (as defined herein) and the Fixed
Conversion Price (as defined herein), subject to adjustments pursuant to the
provisions of Article VI.C below. "Market Price" shall mean the average of the
three (3) lowest Closing Bid Prices during the twelve (12) consecutive Trading
Day period ending one (1) Trading Day prior to the date (the "Conversion Date")
the Conversion Notice is sent by a holder to the Corporation via facsimile (the
"Pricing Period"). The "Fixed Conversion Price" shall mean $4.00. "Closing Bid
Price" means, for any security as of any date, the closing bid price on Nasdaq
SmallCap as reported by Bloomberg Financial Markets or an equivalent reliable
reporting service mutually acceptable to and hereafter designated by the holders
of a majority in interest of the shares of Series B Preferred Stock and the
Corporation ("Bloomberg") or, if Nasdaq SmallCap is not the principal trading
market for such security, the closing bid price of such security on the
principal securities exchange or trading market where such security is listed or
traded as reported by Bloomberg, or if the foregoing do not apply, the closing
bid price of such security in the over-the-counter market on the electronic
bulletin board for such security as reported by Bloomberg, or, if no closing bid
price of such security in the over-the-counter market on the electronic
bulletin board for such security or in any of the foregoing manners, the
average of the bid prices of any market makers for such security or as reported
in the "pink sheets" by the National Quotation Bureau, Inc. If the Closing Bid
Price cannot be calculated for such security on such date in the manner provided
above, the Closing Bid Price shall be the fair market value as mutually
determined by the Corporation and the holders of a majority in interest of
shares of Series B Preferred Stock being converted for which the calculation of
the Closing Bid Price is required in order to determine the Conversion Price of
such Series B Preferred Stock. "Trading Day" shall mean any day on which the
Common Stock is traded for any period on Nasdaq SmallCap, or on the principal
securities exchange or other securities market on which the Common Stock is then
being traded.

            (b)   Notwithstanding anything contained in subparagraph (a) of this
Paragraph B to the contrary, in the event the Corporation (i) makes a public
announcement that it intends to consolidate or merge with any other corporation
(other than a merger in which the Corporation is the surviving or continuing
corporation and its capital stock is unchanged) or sell or transfer all or
substantially all of the assets of the Corporation or (ii) any person, group or
entity (including the Corporation) publicly announces a tender offer to purchase
50% or more of the Corporation's Common Stock or otherwise publicly announces an
intention to replace a majority of the corporation's Board of Directors by
waging a proxy battle or otherwise (the date of the announcement referred to in
clause (i) or (ii) is hereinafter referred to as the "Announcement Date"), then
the Conversion Price shall, effective upon the Announcement Date and continuing
through the Adjusted Conversion Price Termination Date (as defined below), be
equal to the lower of (x) the Conversion Price which would have been applicable
for an Optional

                                       -8-
<PAGE>

Conversion occurring on the Announcement Date and (y) the Conversion Price that
would otherwise be in effect. From and after the Adjusted Conversion Price
Termination Date, the Conversion Price shall be determined as set forth in
subparagraph (a) of this Article VI.B. For purposes hereof, "Adjusted Conversion
Price Termination Date" shall mean, with respect to any proposed transaction,
tender offer or removal of the majority of the Board of Directors which a public
announcement as contemplated by this subparagraph (b) has been made, the date
upon which the Corporation (in the case of clause (i) above) or the person,
group or entity (in the case of clause (ii) above) publicly announces the
termination or abandonment of the proposed transaction or tender offer which
caused this subparagraph (b) to become operative.

                                      -9-
<PAGE>

      C.    The Conversion Price shall be subject to adjustment from time to
time as follows:

            (a)   Adjustment to Conversion Price Due to Stock Split, Stock
Dividend, Etc. If at any time when Series B Preferred Stock is issued and
outstanding, the number of outstanding shares of Common Stock is increased or
decreased by a stock split, stock dividend, combination, reclassification,
rights offering below the Trading Price (as defined below) to all holders of
Common Stock or other similar event, which event shall have taken place during
the reference period for determination of the Conversion Price for any Optional
Conversion or Automatic Conversion of the Series B Preferred Stock, then the
Conversion Price shall be calculated giving appropriate effect to the stock
split, stock dividend, combination, reclassification or other similar event. In
such event, the Corporation shall notify the Transfer Agent of such change on or
before the effective date thereof.

            (b)   Adjustment Due to Merger, Consolidation, Etc. If, at any time
when Series B Preferred Stock is issued and outstanding and prior to the
conversion of all Series B Preferred Stock, there shall be any merger,
consolidation, exchange of shares, recapitalization, reorganization, or other
similar event, as a result of which shares of Common Stock of the Corporation
shall be changed into the same or a different number of shares of another class
or classes of stock or securities of the Corporation or another entity, or in
case of any sale or conveyance of all or substantially all of the assets of the
Corporation other than in connection, with a plan of complete liquidation of the
Corporation, then the holders of Series B Preferred Stock shall thereafter have
the right to receive upon conversion of the Series B Preferred Stock, upon the
bases and upon the terms and conditions specified herein and in lieu of the
shares of Common Stock immediately theretofore issuable upon conversion, such
stock, securities or assets which the holders of Series B Preferred Stock would
have been entitled to receive in such transaction had the Series B Preferred
Stock been converted in full (without regard to any limitations on conversion
contained herein) immediately prior to such transaction, and in any such case
appropriate provisions shall be made with respect to the rights and interests of
the holders of Series B Preferred Stock to the end that the provisions hereof
(including, without limitation, provisions for adjustment of the Conversion
Price and of the number of shares of Common Stock issuable upon conversion of
the Series B Preferred Stock) shall thereafter be applicable, as nearly as may
be practicable in relation to any securities or assets thereafter deliverable
upon the conversion of Series B Preferred Stock. The Corporation shall not
effect any transaction described in this subsection (b) unless (a) it first
gives, to the extent practical, thirty (30) days' prior written notice (but in
any event at least fifteen (15) business days prior written notice) of such
merger, consolidation, exchange of shares, recapitalization, reorganization or
other similar event or sale of assets (during which time the holders of Series B
Preferred Stock shall be entitled to convert the Series B Preferred Stock) and
(b) the resulting successor or acquiring entity (if not the Corporation) assumes
by written instrument the obligations of this subsection (b). The above
provisions shall similarly apply to successive consolidations, mergers, sales,
transfers or share exchanges.

            (c)   Other Securities Offerings. If, at any time after the Issue
Date, the Corporation sells Common Stock or securities convertible into, or
exchangeable for, Common Stock, other than a sale pursuant to a bona fide firm
commitment underwritten public offering of Common Stock by the Corporation (not
including a continuous offering pursuant to Rule 415 under the Securities Act of
1933, as amended), (collectively, the "Other Common Stock"), then,

                                      -10-
<PAGE>

if the effective or maximum sales price of the Common Stock with respect to such
transaction (including the effective or maximum conversion, or exchange price)
("Other Price") is less than the effective Conversion Price of the Series B
Preferred Stock at such time and such Other Common Stock is eligible for resale
prior to December 31, 1999, the Corporation shall adjust the Conversion Price
applicable to the Series B Preferred Stock not yet converted in form and
substance reasonably satisfactory to the holders of Series B Preferred Stock so
that the Conversion Price applicable to the Series B Preferred Stock shall not,
in any event, be greater, after giving effect to all other adjustments contained
herein, than the Other Price.

            (d)   Adjustment Due to Distribution. Subject to Article III, if the
Corporation shall declare or make any distribution of its asses (or rights to
acquire its assets) to holders of Common Stock as a dividend, stock repurchase,
by way of return of capital or otherwise (including any dividend or distribution
to the Corporation's shareholders in cash, or shares (or rights to acquire
shares) of capital stock of a subsidiary (i.e., a spin-off)) (a "Distribution"),
then the holders of Series B Preferred Stock shall be entitled, upon any
conversion of shares of Series B Preferred Stock after the date of record for
determining shareholders entitled to such Distribution, to receive the amount of
such assets which would have been payable to the holder with respect to the
shares of Common Stock issuable upon such conversion had such holder been the
holder of such shares of Common Stock on the record date for the determination
of shareholders entitled to such Distribution.

            (e)   Purchase Rights. Subject to Article III, if at any time when
any Series B Preferred Stock is issued and outstanding, the Corporation issues
any convertible securities or rights to purchase stock, warrants, securities or
other property (the "Purchase Rights") pro rata to the record holders of any
class of Common Stock, then the holders of Series B Preferred Stock will be
entitled to acquire, upon the terms applicable to such Purchase Rights, the
aggregate Purchase Rights which such holder could have acquired if such holder
had held the number of shares of Common Stock acquirable upon complete
conversion of the Series B Preferred Stock (without regard to any limitations on
conversion contained herein) immediately before the date on which a record is
taken for the grant, issuance or sale of such Purchase Rights, or, if no such
record is taken, the date as of which the record holders of Common Stock are to
be determined for the grant, issue or sale of such Purchase Rights.

            (f)   Adjustment for Restricted Periods. In the event that (1) the
Corporation fails to obtain effectiveness with the Securities and Exchange
Commission of the Registration Statement (as defined in the Registration Rights
Agreement) prior to one hundred twenty (120) days following the Issue Date, or
(2) such Registration Statement lapses in effect, or sales otherwise cannot be
made thereunder, whether by reason of the Corporation's failure or inability to
amend or supplement the prospectus (the "Prospectus") included therein in
accordance with the Registration Rights Agreement or otherwise, after such
Registration Statement becomes effective (including, without limitation, during
an Allowed Delay (as defined in Section 3(f) of the Registration Rights
Agreement), then the Pricing Period shall be comprised of, (i) in the case of an
event described in clause (1), the twenty (20) Trading Days preceding the 120th
day following the Issue Date plus all Trading Days through and including the
third Trading Day following the date of effectiveness of the Registration
Statement; and (ii) in the case of an event described in clause (2), the number
of Trading Days preceding the date on which the holder of the Series B Preferred
Stock is first notified that sales may not be made under the Prospectus

                                      -11-
<PAGE>

that would otherwise then be included in the Pricing Period in accordance with
the definition thereof set forth in Article VI.B(a), plus all Trading Days
through and including the third Trading Day following the date on which the
Holder is first notified that such sales may again be made under the Prospectus.
If a holder of Series B Preferred Stock determines that sales may not be made
pursuant to the Prospectus (whether by reason of the Corporation's failure or
inability to amend or supplement the Prospectus) it shall so notify the
Corporation in writing and, unless the Corporation provides such holder with a
written opinion of the Corporation's counsel to the contrary, such determination
shall be binding for purposes of this paragraph.

            (g)   Notice of Adjustments. Upon the occurrence of each adjustment
or readjustment of the Conversion Price pursuant to this Article VI.C, the
Corporation, at its expense, shall promptly compute such adjustment or
readjustment and prepare and furnish to each holder of Series B Preferred Stock
a certificate setting forth such adjustment or readjustment and showing in
detail the facts upon which such adjustment or readjustment is based. The
Corporation shall, upon the written request at any time of any holder of Series
B Preferred Stock, furnish to such holder a like certificate setting forth (i)
such adjustment or readjustment, (ii) the Conversion Price at the time in effect
and (iii) the number of shares of Common Stock and the amount, if any, of other
securities or property which at the time would be received upon conversion of a
share of Series B Preferred Stock.

      D.    For purposes of Article VI. C(a) above, "Trading Price," which shall
be measured as of the record date in respect of the rights offering means (i)
the average of the last reported sale prices for the shares of Common Stock on
Nasdaq SmallCap as reported by Bloomberg, as applicable, for the five (5)
Trading Days immediately preceding such date, or (ii) if Nasdaq SmallCap is not
the principal trading market for the shares of Common Stock, the average of the
last reported sale prices on the principal trading market for the Common Stock
during the same period as reported by Bloomberg, or (iii) if market value cannot
be calculated as of such date on any of the foregoing bases, the Trading Price
shall be the fair market value as reasonably determined in good faith by (a) the
Board of Directors of the Corporation or, (b) at the option of a
majority-in-interest of the holders of the outstanding Series B Preferred Stock
by an independent investment bank of nationally recognized standing in the
valuation of businesses similar to the business of the Corporation.

      E.    In order to convert Series B Preferred Stock into full shares of
Common Stock, a holder of Series B Preferred Stock shall: (i) submit a copy of
the fully executed notice of conversion in the form attached hereto as Exhibit A
("Notice of Conversion") to the Corporation by facsimile dispatched on the
Conversion Date (or by other means resulting in notice to the Corporation on the
Conversion Date) at the office of the Corporation or its designated Transfer
Agent for the Series B Preferred Stock that the holder elects to convert the
same, which notice shall specify the number of shares of Series B Preferred
Stock to be converted, the applicable Conversion Price and a calculation of the
number of shares of Common Stock issuable upon such conversion (together with a
copy of the first page of each certificate to be converted) prior to Midnight,
New York City time (the "Conversion Notice Deadline") on the date of conversion
specified on the Notice of Conversion; and (ii) surrender the original
certificates representing the Series B Preferred Stock being converted (the
"Preferred Stock Certificates"), duly endorsed, along with a copy of the Notice
of Conversion to the office of the Corporation or the Transfer Agent for the
Series B Preferred Stock as soon as practicable thereafter. The Corporation
shall

                                      -12-
<PAGE>

not be obligated to issue certificates evidencing the shares of Common Stock
issuable upon such conversion, unless either the Preferred Stock Certificates
are delivered to the Company or its Transfer Agent as provided above, or the
holder notifies the Corporation or its Transfer Agent that such certificates
have been lost, stolen or destroyed (subject to the requirements of subparagraph
(a) below). In the case of a dispute as to the calculation of the Conversion
Price, the Corporation shall promptly issue such number of shares of Common
Stock that are not disputed in accordance with, subparagraph (b) below. The
Corporation shall submit the disputed calculations to its outside accountant via
facsimile within two (2) business days of receipt of the Notice of Conversion.
The accountant shall audit the calculations and notify the Corporation and the
holder of the results no later than 48 hours from the time it receives the
disputed calculations. The accountant's calculation shall be deemed conclusive
absent manifest error.

            (a)   Lost or Stolen Certificates. Upon receipt by the Corporation
of evidence of the loss, theft, destruction or mutilation of any Preferred Stock
Certificates representing shares of Series B Preferred Stock, and (in the case
of loss, theft or destruction) of indemnity reasonably satisfactory to the
Corporation, and upon surrender and cancellation of the Preferred Stock
Certificate(s), if mutilated, the Corporation shall execute and deliver new
Preferred Stock Certificate(s) of like tenor and date.

            (b)   Delivery of Common Stock Upon Conversion. Upon the surrender
of certificates as described above together with a Notice of Conversion, the
Corporation shall issue and, within two (2) business days after such surrender
(or, in the case of lost, stolen or destroyed certificates, after provision of
agreement and indemnification pursuant to subparagraph (a) above) (the
"Delivery Period"), deliver (or cause its Transfer Agent to so issue and
deliver) to or upon the order of the holder (i) that number of shares of Common
Stock for the portion of the shares of Series B Preferred Stock converted as
shall be determined in accordance herewith and (ii) a certificate representing
the balance of the shares of Series B Preferred Stock not converted, if any. In
addition to any other remedies available to the holder, including actual damages
and/or equitable relief, the Corporation shall pay to a holder $2,000 per day in
cash for each day beyond a two (2) day grace period following the Delivery
Period that the Corporation fails to deliver Common Stock (a "Conversion
Default") issuable upon surrender of shares of Series B Preferred Stock with a
Notice of Conversion until such time as the Corporation has delivered all such
Common Stock (the "Conversion Default Payments") Such cash amount shall be
paid to such holder by the fifth day of the month following the month in which,
it has accrued or, at the option of the holder (by written notice to the
Corporation by the first day of the month following the month in which it has
accrued), shall be convertible into Common Stock in accordance with the terms of
this Article VI.

      In lien of delivering physical certificates representing the Common Stock
issuable upon conversion, provided the Corporation's Transfer Agent is
participating in the Depository Trust Company ("DTC") Fast Automated Securities
Transfer ("FAST") program, upon request of the holder and its compliance with
the provisions contained in Article VI.A. and in this Article VI.E., the
Corporation shall use its best efforts to cause its Transfer Agent to
electronically transmit the Common Stock issuable upon conversion to the holder
by crediting the account of holder's Prime Broker with DTC through its Deposit
Withdrawal Agent Commission ("DWAC") system. The time periods for delivery and
penalties described in the immediately preceding paragraph shall apply to the
electronic transmittals described herein.

                                      -13-
<PAGE>

            (c)   No Fractional Shares. If any conversion of Series B Preferred
Stock would result in a fractional share of Common Stock or the right to acquire
a fractional share of Common Stock such issuable share shall be disregarded
and the number of shares of Common Stock issuable upon Conversion of the
Series B Preferred Stock shall be the next higher number of shares.

            (d)   Conversion Date. The "Conversion Date" shall be the date
specified in the Notice of Conversion, provided that the Notice of Conversion is
submitted by facsimile (or by other means resulting in notice) to the
Corporation or its Transfer Agent before Midnight, New York City time, on the
Conversion Date. The person or persons entitled to receive the shares of Common
Stock issuable upon conversion shall be treated for all purposes as the record
holder or holders of such securities as of the Conversion Date and all rights
with respect to the shares of Series B Preferred Stock surrendered shall
forthwith terminate except the right to receive the shares of Common Stock or
other securities or property issuable on such conversion and except that the
holders preferential rights as a holder of Series B Preferred Stock shall
survive to the extent the corporation fails to deliver such securities.

            F.    A number of shares of the authorized but unissued Common Stock
sufficient to provide for the conversion of the Series B Preferred Stock
outstanding at the then current Conversion Price shall at all times be reserved
by the Corporation free from preemptive rights, for such conversion or
exercise. As of the date of issuance of the Series B Preferred Stock, 750,000
authorized and unissued shares of Common Stock have been duly reserved for
issuance upon conversion of the Series B Preferred Stock (the "Reserved
Amount"). The Reserved Amount shall be increased from time to time in accordance
with the Company's obligations pursuant to Section 4(h) of the Purchase
Agreement. In addition, if the Corporation shall issue any securities or make
any change in its capital structure which would change the number of shares of
Common Stock into which each share of the Series B Preferred Stock shall be
convertible at the then current Conversion Price, the Corporation shall at the
same time also make proper provision so that thereafter there shall be a
sufficient number of shares of Common Stock authorized and reserved, free from
preemptive rights, for conversion of the outstanding Series B Preferred Stock.

      If at any time a holder of shares of Series B Preferred Stock submits a
Notice of Conversion, and the Corporation does not have sufficient authorized
but unissued shares of Common Stock available to effect such conversion in
accordance with the provisions of this Article VI (a "Conversion Default"), the
Corporation shall issue to the holder (or holders, if more than one holder
submits a Notice of Conversion in respect of the same Conversion Date, pro rata
based on the ratio that the number of shares of Series B Preferred Stock then
held by each such holder bears to the aggregate number of such shares held by
such holders) all of the shares of Common Stock which are available to effect
such conversion. The number of shares of Series B Preferred Stock included in
the Notice of Conversion which exceeds the amount which is then convertible into
available shares of Common Stock (the "Excess Amount") shall, notwithstanding
anything to the contrary contained herein, not be convertible into Common Stock
in accordance with the terms hereof until (and at the holder's option at any
time after) the date additional shares of Common Stock are authorized by the
Corporation to permit such conversion, at which time the Conversion Price in
respect thereof shall be the lesser of (i) the Conversion Price on the
Conversion Default Date (as defined below) and (ii) the Conversion Price on the

                                      -14-
<PAGE>

Conversion Date elected by the holder in respect thereof. The Corporation shall
use its best efforts to effect an increase in the authorized number of shares of
Common Stock as soon as possible following a Conversion Default. In addition,
the Corporation shall pay to the holder payments ("Conversion Default Payments")
for a Conversion Default in the amount of (a) (N/365), multiplied by (b) the sum
of the Stated Value plus the Premium Amount per share of Series B Preferred
Stock through the Authorization Date (as defined below), multiplied by (c) the
Excess Amount on the day the holder submits a Notice of Conversion giving rise
to a Conversion Default (the "Conversion Default Date"), multiplied by (d). 24,
where (i) N = the number of days from the Conversion Default Date to the date
(the "Authorization Date") that the Corporation authorizes a sufficient number
of shares of Common Stock to effect conversion of the full number of shares of
Series B Preferred Stock. The Corporation shall send notice to the holder of the
authorization of additional shares of Common Stock, the Authorization Date and
the amount of holder's accrued Conversion Default Payments. The accrued
Conversion Default Payment for each calendar month shall be paid in cash or
shall be convertible into Common Stock at the Conversion Price, at the holder's
option, as follows:

            (a)   In the event the holder elects to take such payment in cash,
cash payment shall be made to holder by the fifth day of the month following the
month in which it has accrued; and

            (b)   In the event the holder elects to take-such payment in Common
Stock, the holder may convert such payment amount into Common Stock at the
Conversion Price (as in effect at the time of Conversion) at any time after the
fifth day of the month following the month in which it has accrued in accordance
with The terms of this Article VI (so long as there is then A sufficient number
of authorized shares).

      Nothing herein shall limit the holder's right to pursue actual damages for
the Corporation's failure to maintain a sufficient number of authorized shares
of Common Stock, and each holder shall have the right to pursue all remedies
available at law or in equity (including a decree of specific performance and/or
injunctive relief).

            G.    Upon the occurrence of each adjustment or readjustment of the
Conversion Price pursuant to mis Article VI, the Corporation, at its expense,
shall promptly compute such adjustment or readjustment in accordance with the
terms hereof and prepare and furnish to each holder of Series B Preferred Stock
a certificate setting forth such adjustment or readjustment and showing in
detail the facts upon which such adjustment or readjustment is based. The
Corporation shall, upon the written request at any time of any holder of Series
B Preferred Stock, furnish or cause to be furnished to such holder a like
certificate setting forth (i) such adjustment or readjustment, (ii) the
Conversion Price at the time in effect and (iii) the number of shares of Common
Stock and the amount, if any, of other securities or property which at the time
would be received upon conversion of a share of Series B Preferred Stock

            H.    Upon submission of a Notice of Conversion by a holder of
Series B Preferred

                                      -15-
<PAGE>

Stock, (i) the shares covered thereby (other than the shares, if any, which
cannot be issued because their issuance would exceed such holder's allocated
portion of the Reserved Amount) shall be deemed converted into shares of Common
Stock and (ii) the holder's rights as a holder of such converted shares of
Series B Preferred Stock shall cease and terminate, excepting only the right to
receive certificates for such shares of Common Stock and to any remedies
provided herein or otherwise available at law or in equity to such holder
because of a failure by the Corporation to comply with the terms of this
Certificate of Designation. Notwithstanding the foregoing, if a holder has not
received certificates for all shares of Common Stock prior to the tenth (10th)
business day after the expiration of the Delivery Period with respect to a
conversion of shares of Series B Preferred Stock for any reason, then (unless
the holder otherwise elects to retain its status as a holder of Common Stock by
so notifying the Corporation) the holder shall regain the rights of a holder of
such shares of Series B Preferred Stock with respect to such unconverted shares
of Series B Preferred Stock and the Corporation shall, as soon as practicable,
return such unconverted shares of Series B Preferred Stock to the holder or, if
such shares of Series B Preferred Stock have not been surrendered, adjust its
records to reflect that such shares of Series B Preferred Stock have not been
converted. In all cases, the holder shall retain all of its rights and remedies
(including, without limitation, the right to receive Conversion Default Payments
pursuant to Article IV.E. to the extent required thereby for such Conversion
Default and any subsequent Conversion Default).

VII. Automatic Conversion

      So long as the Registration Statement is effective and there is not then a
continuing Mandatory Redemption Event, each share of Series B Preferred Stock
issued and outstanding on April 24, 2003, subject to any adjustment pursuant to
Article V.A.(ii) (the "Automatic Conversion Date"), automatically shall be
converted into shares of Common Stock on such date at the then effective
Conversion Price in accordance with, and subject to, the provisions of Article
VI hereof (the "Automatic Conversion"). The Automatic Conversion Date shall be
delayed by one (1) Trading Day each for each Trading Day occurring prior thereto
and prior to the full conversion of the Series B Preferred Stock that (i) sales
cannot be made pursuant to the Registration Statement (whether by reason of the
Company's failure to properly supplement or amend the prospectus included
therein in accordance with the terms of the Registration Rights Agreement or
otherwise including any Allowed Delays (as defined in Section 3(f) of the
Registration Rights Agreement) or (ii) any Default Event (as defined in Article
V.A.) exists, without regard to whether any cure periods shall have run. The
Automatic Conversion Date shall be the Conversion Date for purposes of
determining the Conversion Price and the time within which certificates
representing the Common Stock must be delivered to the holder.

VIII. Voting Rights

      The holders of the Series B Preferred Stock have no voting power
whatsoever, except as otherwise provided by the Florida Corporation Law ("FCL"),
in this Article VIII, and in Article IX below.

      Notwithstanding the above, the Corporation shall provide each holder of
Series B Preferred Stock with prior notification of any meeting of the
shareholders (and copies of proxy materials and other information sent to
shareholders). In the event of any taking by the

                                      -16-
<PAGE>

Corporation of a record of its shareholders for the purpose of determining
shareholders who are entitled to receive payment of any dividend or other
distribution, any right to subscribe for, purchase or otherwise acquire
(including by way of merger, consolidation or recapitalization) any share of any
class or any other securities or property, or to receive any other right, or for
the purpose of determining shareholders who are entitled to vote in connection
with any proposed sale, lease or conveyance of all or substantially all of the
assets of the Corporation, or any proposed liquidation, dissolution or winding
up of the Corporation, the Corporation shall mail a notice to each holder, at
least ten (10) days prior to the record date specified therein (or thirty (30)
days prior to the consummation of the transaction or event, whichever is
earlier), of the date on which any such record is to be taken for the purpose of
such dividend, distribution, right or other event, and a brief statement
regarding the amount and character of such dividend, distribution, right or
other event to the extent known at such time.

      To the extent that under the FCL the vote of the holders of the Series B
Preferred Stock, voting separately as a class or series as applicable, is
required to authorize a given action of the Corporation, the affirmative vote or
consent of the holders of at least a majority of the shares of the Series B
Preferred Stock represented at a duly held meeting at which a quorum is present
or by written consent of a majority of the shares of Series B Preferred Stock
(except as otherwise may be required under the FCL) shall constitute the
approval of such action by the class. To the extent that under the FCL holders
of the Series B Preferred Stock are entitled to vote on a matter with holders of
Common Stock, voting together as one class, each share of Series B Preferred
Stock shall be entitled to a number of votes equal to the number of shares of
Common Stock into which it is then convertible using the record date for the
taking of such vote of shareholders as the date as of which the Conversion Price
is calculated. Holders of the Series B Preferred Stock shall be entitled to
notice of all shareholder meetings or written consents (and copies of proxy
materials and other information sent to shareholders) with respect to which they
would be entitled to vote, which notice would be provided pursuant to the
Corporation's bylaws and the FCL.

IX.   Protective Provisions

      So long as shares of Series B Preferred Stock are outstanding, the
Corporation shall not, without first obtaining the approval (by vote or written
consent, as provided by the FCL) of the holders of at least a majority of the
then outstanding shares of Series B Preferred Stock:

            (a) alter or change the rights, preferences or privileges of the
Series B Preferred Stock or any Senior Securities so as to affect adversely the
Series B Preferred Stock;

            (b) create any new class or series of capital stock having a
preference over the Series B Preferred Stock as to distribution of assets upon
liquidation, dissolution or winding up of the Corporation (as previously
defined in Article II hereof, "Senior Securities");

            (c) create any new class or series of capital stock ranking pari
passu with the Series B Preferred Stock as to distribution of assets upon
liquidation, dissolution or winding up of the Corporation (as previously defined
in Article II hereof, "Pari Passu Securities");

            (d) increase the authorized number of shares of Series B Preferred
Stock; or

                                      -17-
<PAGE>

            (e) do any act or thing not authorized or contemplated by this
Certificate of Designation which would result in taxation of the holders of
shares of the Series B Preferred Stock under Section 305 of the Internal Revenue
Code of 1986, as amended (or any comparable provision of the Internal Revenue
Code as hereafter from time to time amended).

      In the event holders of at least a majority of the then outstanding shares
of Series B Preferred Stock agree to allow the Corporation to alter or change
the rights, preferences or privileges of the shares of Series B Preferred Stock,
pursuant to subsection (a) above, so as to affect the Series B Preferred Stock,
then the Corporation will deliver notice of such approved change to the holders
of the Series B Preferred Stock that did not agree to such alteration or change
(the "Dissenting Holders") and Dissenting Holders shall have the right for a
period of thirty (30) days to convert pursuant to the terms of this Certificate
of Designation as they exist prior to such alteration or change or continue to
hold their shares of Series B Preferred Stock.

X.    Pro Rata Allocations

      The Maximum Share Amount and the Reserved Amount (including any increases
thereto) shall be allocated by the Corporation pro rata among the holders of
Series B Preferred Stock based on the number of shares of Series B Preferred
Stock then held by each holder relative to the total aggregate number of shares
of Series B Preferred Stock then outstanding.

                      (THIS PAGE INTENTIONALLY LEFT BLANK)

                                      -18-
<PAGE>

            IN WITNESS WHEREOF, this Certificate of Designation is executed on
behalf of the Corporation this 24th day of April, 1998.

                                              METROPOLITAN HEALTH NETWORKS, INC.

                                              By: /s/ Anthony J. Gigiliotti
                                                  -----------------------------
                                                  Name: Anthony J. Gigiliotti
                                                  Title: Chairman

<PAGE>

                                                        JUL-8 AM 10:2[ILLEGIBLE]

                                                             SECRETARY OF STATE
                                                            TALLAHASSEE, FLORIDA

                              ARTICLES OF AMENDMENT
                                     TO THE
                            ARTICLES OF INCORPORATION
                                       OF
                       METROPOLITAN HEALTH NETWORKS, INC.

                      (Pursuant to Section 607.0602 of the
                        Florida Business Corporation Act)

      Metropolitan Health Networks, Inc., a corporation organized and existing
under the Florida Business Corporation Act (the "Corporation") bearing document
no. P96000004953, hereby certifies that the following resolutions were adopted
by the Board of Directors of the Corporation on June 30, 1998 pursuant to
authority of the Board of Directors:

      RESOLVED, that pursuant to the authority granted to and vested in the
Board of Directors of this Corporation (the "Board of Directors" or the "Board")
in accordance with the provisions of its Articles of Incorporation on April
16, 1998, the Board of Directors authorized a series of the Corporation's
previously authorized Preferred Stock, par value $.001 per share, as Series B
Preferred Stock, in the aggregate amount of 2,000 shares; and

      RESOLVED, that pursuant to the unanimous Written Consent of the Board of
Directors and sole Series B Preferred Stockholder, the Corporation increased the
authorized amount of Series B Preferred Stock from 2,000 shares to 7,000 shares
and hereby amends Article 3 of the Articles of Amendment to replace the
description of the Series B Preferred Stock with the following which, states the
designation and number of shares, and fixes the relative rights, preferences,
privileges, powers and restrictions of the Series B Preferred Stock thereof as
follows:

      Series B Convertible Preferred Stock:

I.    Designation and Amount

      The designation of this series, which consists of 7,000 shares of
Preferred Stock, is Series B Convertible Preferred Stock (the "Series B
Preferred Stock") and the stated value shall be One Thousand Dollars ($1,000)
per share (the "Stated Value").

This document prepared by:
ROXANNE K. BEILLY, ESQ., Florida Bar No. 851450
Atlas, Pearlman, Trop & Borkson, P.A.
200 E. Las Olas Blvd., Suite 1900
Ft. Lauderdale, FL 33301 Phone: (954) 763-1200

                                      -1-
<PAGE>

II.   Rank

      The Series B Preferred Stock shall rank (i) prior to the Corporation's
common stock, par value $.001 per share (the "Common Stock"); (ii) prior to any
class or series of capital stock of the Corporation hereafter created (unless,
with the consent of the holders of Series B Preferred Stock obtained in
accordance with Article IX hereof, such class or series of capital stock
specifically, by its terms, ranks senior to or pari passu with the Series B
Preferred Stock) (collectively, with the Common Stock, "Junior Securities");
(iii) pari passu with any class or series of capital stock of the Corporation
hereafter created (with the consent of the holders of Series B Preferred Stock
obtained in accordance with Article IX hereof) specifically ranking, by its
terms, on parity with the Series B Preferred Stock ("Pari Passu Securities");
and (iv) junior to any class or series of capital stock of the Corporation
hereafter created (with the consent of the holders of Series B Preferred Stock
obtained in accordance with Article IX hereof) specifically ranking, by its
terms, senior to the Series B Preferred Stock ("Senior Securities"), in each
case as to distribution of assets upon liquidation, dissolution or winding up of
the Corporation, whether voluntary or involuntary.

III.  Dividends

      Holders of the Series B Preferred Stock shall be entitled to receive,
whether or not declared by the Board of Directors out of funds legally available
therefor, and the Company shall pay, cumulative dividends at the rate per share,
as a percentage of the Stated Value equal to 5% percent per annum, payable, in
cash or shares of Common Stock (subject to the terms and conditions hereof) at
the option of the Company quarterly in arrears, but in no event later than
conversion applicable to such share of Series B Preferred Stock. Dividends on
the Series B Preferred Stock shall be calculated on the basis of a 360-day year,
shall accrue daily commencing the date of issuance and shall be deemed to accrue
on 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 party that holds the Series B Preferred Stock of record on an
applicable record date for any dividend payment will be entitled to receive such
dividend payment and any other accrued and unpaid dividends which accrued prior
to such dividend payment date, without regard to any sale or disposition of such
Series B Preferred Stock subsequent to the applicable record date but prior to
the applicable dividend payment date. Except as otherwise provided herein, if at
any time the Company pays less than the total amount of dividends then accrued
on account of the Series B Preferred Stock, such payment shall be distributed
ratably among the holders of the Series B Preferred Stock based upon the number
of shares held by each holder.

      In no event, so long as any Series B Preferred Stock shall remain
outstanding, shall any dividend whatsoever be declared or paid upon, nor shall
any distribution be made upon, any Junior Securities, nor shall any shares of
Junior Securities be purchased or redeemed by the Corporation nor shall any
moneys be paid to or made available for a sinking fund for the purchase or
redemption of any Junior Securities (other than a distribution of Junior
Securities), without, in each such case, the written consent of the holders of a
majority of the outstanding shares of Series B Preferred Stock, voting together
as a class.

                                      -2-
<PAGE>

IV.   Liquidation Preference

      A. If the Corporation shall commence a voluntary case under the Federal
bankruptcy laws or any other applicable Federal or State bankruptcy, insolvency
or similar law, or consent to the entry of an order for relief in an involuntary
case under any law or to the appointment of a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or other similar official) of the Corporation
or of any substantial part of its property, or make an assignment for the
benefit of its creditors, or admit in writing its inability to pay its debts
generally as they become due, or if a decree or order for relief in respect of
the Corporation shall be entered by a court having jurisdiction in the premises
in an involuntary case under the Federal bankruptcy laws or any other applicable
Federal or state bankruptcy, insolvency or similar law resulting in the
appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or other similar official) of the Corporation or of any
substantial part of its property, or ordering the winding up or liquidation of
its affairs, and any such decree or order shall be unstayed and in effect for a
period of thirty (30) consecutive days and, on account of any such event, the
Corporation shall liquidate, dissolve or wind up, or if the Corporation shall
otherwise liquidate, dissolve or wind up (each such event being considered a
"Liquidation Event"), no distribution shall be made to the holders of any shares
of capital stock of the Corporation (other than Senior Securities) upon
liquidation, dissolution or winding up unless prior thereto, the holders of
shares of Series B Preferred Stock, subject to Article VI, shall have received
the Liquidation Preference (as defined in Article IV.C) with respect to each
share. If upon the occurrence of a Liquidation Event, the assets and funds
available for distribution among the holders of the Series B Preferred Stock and
holders of Pari Passu Securities (including any dividends or distribution paid
on any Pari Passu Securities after the date of filing of this Articles of
Amendment) shall be insufficient to permit the payment to such holders of the
preferential amounts payable thereon, then the entire assets and funds of the
Corporation legally available for distribution to the Series B Preferred Stock
and the Pari Passu Securities shall be distributed ratably among such shares in
proportion to the ratio that the Liquidation Preference payable on each such
share bears to the aggregate liquidation preference payable on all such shares.
Any prior dividends or distribution made after the date of filing of this
Articles of Amendment shall offset, dollar for dollar, the amount payable to the
class or series to which such distribution was made.

      B. At the option of any holder of Series B Preferred Stock, the sale,
conveyance or disposition of all or substantially all of the assets of the
Corporation, the effectuation by the Corporation of a transaction or series of
related transactions in which more than 50% of the voting power of the
Corporation is disposed of, or the consolidation, merger or other business
combination of the Corporation with or into any other Person (as defined below)
or Persons when the Corporation is not the survivor shall either: (i) be deemed
to be a liquidation, dissolution or winding up of the Corporation pursuant to
which the Corporation shall be required to distribute upon consummation of such
transaction an amount equal to 120% of the Liquidation Preference with respect
to each outstanding share of Series B Preferred Stock in accordance with and
subject to the terms of this Article IV or (ii) be treated pursuant to Article
VI.C(b) hereof. "Person" shall mean any individual, corporation, limited
liability company, partnership, association, trust or other entity or
organization.

      C. For purposes hereof, the "Liquidation Preference" with respect to a
share of the Series B Preferred Stock shall mean an amount equal to the sum of
(i) the Stated Value thereof

                                      -3-
<PAGE>

plus (ii) and amount equal to five percent (5%) per annum of such Stated Value
for the period beginning on the date of issuance of the Series B Preferred Stock
(the "Issue Date") and ending on the date of final distribution to the holder
thereof (prorated for any portion of such period). The liquidation preference
with respect to any Pari Passu Securities shall be as set forth in the Articles
of Incorporation filed in respect thereof.

V.    Redemption

      A. If any of the following events (each, a "Mandatory Redemption Event")
shall occur:

            (i) The Corporation fails to issue shares of Common Stock to the
holders of Series B Preferred Stock upon exercise by the holders of their
conversion rights in accordance with the terms of this Articles of Amendment
(for a period of at least sixty (60) days if such failure is solely as a result
of the circumstances governed by the second paragraph of Article VI.F below and
the Corporation is using all commercially reasonable efforts to authorize a
sufficient number of shares of Common Stock as soon as practicable), fails to
transfer or to cause its transfer agent to transfer (electronically or in
certificated form) any certificate for shares of Common Stock issued to the
holders upon conversion of the Series B Preferred Stock as and when required by
this Articles of Amendment or the Registration Rights Agreement, dated as of
April 24, 1998, by and among the Corporation and the other signatories thereto
(the "Registration Rights Agreement"), fails to remove any restrictive legend
(or to withdraw any stop transfer instructions in respect thereof) on any
certificate or any shares of Common Stock issued to the holders of Series B
Preferred Stock upon conversion of the Series B Preferred Stock as and when
required by this Articles of Amendment, the Securities Purchase Agreement dated
as of April 24, 1998, by and between the Corporation and the other signatories
thereto (the "Purchase Agreement") or the Registration Rights Agreement, or
fails to fulfill its obligations pursuant to Sections 4(c), 4(e), 4(h), 4(i),
4(j) or 5 of the Purchase Agreement (or makes any announcement, statement or
threat that it does not intend to honor the obligations described in this
paragraph) and any such failure shall continue uncured (or any announcement,
statement or threat not to honor its obligations shall not be rescinded in
writing) for ten (10) business days;

            (ii) In connection with the Securities Purchase Agreement dated
April 24, 1998, the Corporation fails to obtain effectiveness with the
Securities and Exchange Commission (the "SEC") of the Registration Statement (as
defined in the Registration Rights Agreement) prior to November 7, 1998 or such
Registration Statement lapses in effect (or sales otherwise cannot be made
thereunder, whether by reason of the Company's failure to amend or supplement
the prospectus included therein in accordance with the Registration Rights
Agreement or otherwise) for more than thirty (30) consecutive days or sixty (60)
days in any twelve (12) month period after such Registration Statement becomes
effective. In connection with shares of Series B Preferred Stock issued pursuant
to any other securities purchase agreement, the Corporation fails to obtain
effectiveness with the Securities and Exchange Commission (the "SEC") of the
Registration Statement (as defined in the Registration Rights Agreement) prior
to the expiration of six (6) months from the date of issuance of the Series B
Preferred Stock or such Registration Statement lapses in effect (or sales
otherwise cannot be made thereunder, whether by reason of the Company's failure
to amend or supplement the prospectus included therein in accordance with the
Registration Rights Agreement or otherwise) for more than

                                      -4-
<PAGE>

thirty (30) consecutive days or sixty (60) days in any twelve (12) month period
after such Registration Statement becomes effective;

            (iii) The Corporation shall make an assignment for the benefit of
creditors, or apply for or consent to the appointment of a receiver or trustee
for it or for all or substantially all of its property or business; or such a
receiver or trustee shall otherwise be appointed;

            (iv) Bankruptcy, insolvency, reorganization or liquidation
proceedings or other proceedings for relief under any bankruptcy law or any law
for the relief of debtors shall be instituted by or against the Corporation or
any subsidiary of the Corporation;

            (v) The Corporation shall fail to maintain the listing of the Common
Stock on the Nasdaq National Market, the Nasdaq SmallCap Market ("Nasdaq
SmallCap"), the New York Stock Exchange or the American Stock Exchange and such
failure shall remain uncured for at least ten (10) business days, then, upon the
occurrence and during the continuation of any Mandatory Redemption Event
specified in subparagraphs (i), (ii) or (v) at the option of the holders of at
least 50% of the then outstanding shares of Series B Preferred Stock by written
notice (the "Mandatory Redemption Notice") to the Corporation of such Mandatory
Redemption Event, or upon the occurrence of any Mandatory Redemption Event
specified in subparagraphs (iii) or (iv), the Corporation shall purchase each
holder's shares of Series B Preferred Stock for an amount per share equal to the
greater of (1) 120% multiplied by the sum of (a) the Stated Value of the shares
to be redeemed (the "Mandatory Redemption Date"), and (2) the "parity value" of
the shares to be redeemed, where parity value means the product of (a) the
number of shares of Common Stock issuable upon conversion of such shares in
accordance with Article VI below (without giving any effect to any limitations
or conversions of shares set forth in Article VI.A(b) below, and treating the
Trading Day (as defined in Article VI.B.) immediately preceding the date of
payment of the Mandatory Redemption Amount ("Mandatory Redemption Date") as the
"Conversion Date" (as defined in Article VI.B(a)) unless the Mandatory
Redemption Event arises as a result of a breach in respect of a specific
Conversion Date in which case such Conversion Date shall be the Conversion
Date), multiplied by (b) the Closing Price (as defined in Article VI.A(b)) for
the Common Stock on such "Conversion Date" (the greater of such amounts being
referred to as the "Mandatory Redemption Amount").

      In the case of a Mandatory Redemption Event, if the Corporation fails to
pay the Mandatory Redemption Amount for each share within five (5) business days
of written notice that such amount is due and payable, then (assuming there are
sufficient authorized shares) in addition to all other available remedies, each
holder of Series B Preferred Stock shall have the right at any time, so long as
the Mandatory Redemption Event continues, to require the Corporation, upon
written notice, to immediately issue (in accordance with and subject to the
terms of Article VI below), in lieu of the Mandatory Redemption Amount, with
respect to each outstanding share of Series B Preferred Stock held by such
holder, the number of shares of Common Stock of the Corporation equal to the
Mandatory Redemption Amount divided by the Conversion Price then in effect.

      B. If the Series B Preferred Stock ceases to be convertible as a result of
the limitations described in the second paragraph of Article VI.A below (a
"19.99% Redemption Event"), and the Corporation has not prior to, or within
thirty (30) days of, the date that such

                                      -5-
<PAGE>

19.99% Redemption Event arises, (i) obtained approval of the issuance of the
additional shares of Common Stock by the requisite vote of the holders of the
then-outstanding Common Stock (not including any shares of Common Stock held by
present or former holders of Series B Preferred Stock that were issued upon
conversion of Series B Preferred Stock) or (ii) received other permission
pursuant to Nasdaq Marketplace Rule 4460(i) allowing the Corporation to resume
issuances of shares of Common Stock upon conversion of Series B Preferred Stock,
then the Corporation shall be obligated to redeem immediately all of the then
outstanding Series B Preferred Stock, in accordance with this Article V.B. An
irrevocable Redemption Notice shall be delivered promptly to the holders of
Series B Preferred Stock at their registered address appearing on the records of
the Corporation and shall state (1) that 19.99% of the Outstanding Common Amount
(as defined in Article VI.A) has been issued upon exercise of the Series B
Preferred Stock, (2) that the Corporation is obligated to redeem all of the
outstanding Series B Preferred Stock and (3) the Mandatory Redemption Date,
which shall be a date within five (5) business days of the date of the
Redemption Notice. On the Mandatory Redemption Date, the Corporation shall make
payment of the Mandatory Redemption Amount (as defined in Article V.A. above) in
cash. If the Corporation fails to redeem in accordance with this Article V.B.,
then, in addition to all other remedies available to the holders of the Series B
Preferred Stock, upon request of a majority-in-interest of the Series B
Preferred Stock, the Corporation shall terminate the listing of its Common Stock
on Nasdaq SmallCap (and any other exchange or quotation system with a rule
substantially similar to Rule 4460(i)) and cause its Common Stock to be eligible
for trading on the over-the-counter electronic bulletin board.

      C. Notwithstanding anything to the contrary contained in this Article V,
so long as no Mandatory Redemption Event shall have occurred and be continuing,
the Corporation shall have the right, on the date which is the third (3rd)
anniversary of the date on which the Registration Statement is declared
effective by the SEC, exercisable on not less than twenty (20) Trading Days
prior written notice to the holders of Series B Preferred Stock, to redeem all
of the outstanding shares of Series B Preferred Stock in accordance with this
Article V. Any notice of redemption hereunder (an "Optional Redemption") shall
be delivered to the holders of Series B Preferred Stock at their registered
addresses appearing on the books and records of the Corporation and shall state
(1) that the Corporation is exercising its right to redeem all of the
outstanding shares of Series B Preferred Stock issued on the Issue Date and (2)
the date of redemption (the "Optional Redemption Notice"). On the date fixed for
redemption (the "Optional Redemption Date"), the Corporation shall make payment
of the Optional Redemption Amount (as defined below) to or upon the order of the
holders as specified by the holders in writing to the Corporation at least one
(1) business day prior to the Optional Redemption Date. If the Corporation
exercises its right to redeem the Series B Preferred Stock, the Corporation
shall make payment to the holders of an amount in cash (the "Optional Redemption
Amount") equal to 120% of the Stated Value of the shares of Series B Preferred
Stock to be redeemed plus any unpaid dividend for each share of Series B
Preferred Stock then held. Notwithstanding notice of an Optional Redemption, the
holders shall at all times prior to the Optional Redemption Date maintain the
right to convert all or any shares of Series B Preferred Stock in accordance
with Article VI and any shares of Series B Preferred Stock so converted after
receipt of an Optional Redemption Notice and prior to the Optional Redemption
Date set forth in such notice and payment of the aggregate Optional Redemption
Amount shall be deducted from the shares of Series B Preferred Stock which are
otherwise subject to redemption pursuant to such notice.

                                      -6-
<PAGE>

      From time to time following the Issue Date, the holders may request
advance notice as to whether the Corporation intends to redeem the shares of
Series B Preferred Stock. Such request shall be made in writing and the
Corporation shall respond in writing as promptly as practicable but prior to
5:00 p.m. Eastern Standard Time one (1) business day after receipt of the
request. The Corporation will be bound by such response for a period of twenty
(20) Trading Days (the "Term") from the date of its response. A failure to
respond within one (1) business day shall be deemed to be an election not to
redeem the Series B Preferred Stock during the Term. The holders may not request
such notice in the event that the Corporation files a registration statement
where the use of proceeds set forth in such registration statement are
identified for purposes of redemption of the outstanding Series B Preferred
Stock.

VI.   Conversion at the Option of the Holder

      A. (a) Each holder of shares of Series B Preferred Stock may, at its
option at any time and from time to time, upon surrender of the certificates
therefor, convert any or all of its shares of Series B Preferred Stock into
Common Stock as follows (an "Optional Conversion"). Each share of Series B
Preferred Stock shall be convertible into such number of fully paid and
nonassessable shares of Common Stock as is determined by dividing (1) the Stated
Value thereof by (2) the then effective Conversion Price (as defined below);
provided, however, that, unless the holder delivers a waiver in accordance with
the immediately following sentence, in no event (other than pursuant to the
Automatic Conversion (as defined herein)) shall a holder of shares of Series B
Preferred Stock be entitled to convert any such shares in excess of that number
of shares upon conversion of which the sum of (x) the number of shares of Common
Stock beneficially owned by the holder and its affiliates (other than shares of
Common Stock which may be deemed beneficially owned through the ownership of the
unconverted portion of the shares of Series B Preferred Stock) and (y) the
number of shares of Common Stock issuable upon the conversion of the shares of
Series B Preferred Stock with respect to which the determination of this
proviso is being made, would result in beneficial ownership by a holder and such
holder's affiliates of more than 4.9% of the outstanding shares of Common
Stock. For purposes of the proviso to the immediately preceding sentence, (i)
beneficial ownership shall be determined in accordance with Section 13(d) of the
Securities Exchange Act of 1934, as amended, and Regulation 13D-G thereunder,
except as otherwise provided in clause (x) of such proviso and (ii) a holder may
waive the limitations set forth therein by written notice to the Corporation
upon not less than sixty-one (61) days prior written notice (with such waiver
taking effect only upon the expiration of such sixty-one (61) day notice
period).

         (b) So long as the Common Stock is listed for trading on Nasdaq
SmallCap or an exchange or quotation system with a rule substantially similar to
Rule 4460(i) then, notwithstanding anything to the contrary contained herein if,
at any time, the aggregate number of shares of Common Stock then issued upon
conversion of the Series B Preferred Stock (including any shares of capital
stock or rights to acquire shares of capital stock issued by the Corporation
which are aggregated or integrated with the Common Stock issued or issuable upon
conversion of the Series B Preferred Stock for purposes of such rule) equals
19.99% of the "Outstanding Common Amount" (as hereinafter defined), the Series B
Preferred Stock shall, from that time forward, cease to be convertible into
Common Stock in accordance with the terms of this Article VI and Article VII
below, unless the Corporation (i) has obtained approval of the issuance of the
Common Stock upon conversion of the Series B Preferred Stock by a majority

                                      -7-
<PAGE>

of the total votes cast on such proposal, in person or by proxy, by the holders
of the then-outstanding Common Stock (not including any shares of Common Stock
held by present or former holders of Series B Preferred Stock that were issued
upon conversion of Series B Preferred Stock), or (ii) shall have otherwise
obtained permission to allow such issuances from Nasdaq SmallCap in accordance
with Nasdaq SmallCap Rule 4460(i). If the Corporation's Common Stock is not then
listed on Nasdaq SmallCap or an exchange or quotation system that has a rule
substantially similar to Rule 4460(i) limitations set forth herein shall be
inapplicable and of no force and effect. For purposes of this paragraph,
"Outstanding Common Amount" means (i) the number of shares of the Common Stock
outstanding on the date of issuance of the Series B Preferred Stock pursuant to
the Purchase Agreement plus (ii) any additional shares of Common Stock issued
thereafter in respect of such shares pursuant to a stock dividend, stock split
or similar event. The maximum number of shares of Common Stock issuable as a
result of the 19.99% limitation set forth herein is hereinafter referred to as
the "Maximum Share Amount." With respect to each holder of Series B Preferred
Stock, the Maximum Share Amount shall refer to such holder's pro rata share
thereof determined in accordance with Article X below. In the event that
Corporation obtains Stockholder Approval or the approval of Nasdaq SmallCap, by
reason of the inapplicability of the rules of Nasdaq SmallCap or otherwise and
concludes that it is able to increase the number of shares to be issued above
the Maximum Share Amount (such increased number being the "New Maximum Share
Amount"), the references to Maximum Share Amount, above, shall be deemed to be,
instead, references to the greater New Maximum Share Amount. In the event that
Stockholder Approval is not obtained, there are insufficient reserved or
authorized shares or a registration statement covering the additional shares of
Common Stock which constitute the New Maximum Share Amount is not effective
prior to the Maximum Share Amount being issued (if such registration statement
is necessary to allow for the public resale of such securities), the Maximum
Share Amount shall remain unchanged; provided, however, that the Holder may
grant an extension to obtain a sufficient reserved or authorized amount of
shares or of the effective date of such registration statement. In the event
that (a) the aggregate number of shares of Common Stock issued pursuant to the
outstanding Series B Preferred Stock represents at least twenty percent (20%) of
the Maximum Share Amount and (b) the sum of (x) the aggregate number of shares
of Common Stock issued upon conversion of Series B Preferred Stock plus (y) the
aggregate number of shares of Common Stock that remain issuable upon conversion
of Series B Preferred Stock, represents at least one hundred percent (100%) of
the Maximum Share Amount (the "Triggering Event"), the Corporation will use its
best efforts to seek and obtain Stockholder Approval (or obtain such other
relief as will allow conversions hereunder in excess of the Maximum Share
Amount) as soon as practicable following the Triggering Event and before the
Mandatory Redemption Date.

        B. (a) Subject to subparagraph (b) below, the "Conversion Price" shall
be the lesser of the Market Price (as defined herein) and the Fixed Conversion
Price (as defined herein), subject to adjustments pursuant to the provisions of
Article VI.C below. "Market Price" shall mean 90% of the average of the two (2)
lowest Closing Bid Prices during the twelve (12) consecutive Trading Day period
ending one (1) Trading Day prior to the date (the "Conversion Date") the
Conversion Notice is sent by a holder to the Corporation via facsimile (the
"Pricing Period"). The "Fixed Conversion Price" shall mean $4.00. "Closing Bid
Price" means, for any security as of any date, the closing bid price on Nasdaq
SmallCap as reported by Bloomberg Financial Markets or an equivalent reliable
reporting service mutually acceptable to and hereafter designated by the holders
of a majority in interest of the shares of Series B Preferred stock and

                                       -8-
<PAGE>

calculated giving appropriate effect to the stock split, stock dividend,
combination, reclassification or other similar event. In such event, the
Corporation shall notify the Transfer Agent of such change on or before the
effective date thereof.

            (b) Adjustment Due to Merger, Consolidation, Etc. If, at any time
when Series B Preferred Stock is issued and outstanding and prior to the
conversion of all Series B Preferred Stock, there shall be any merger,
consolidation, exchange of shares, recapitalization, reorganization, or other
similar event, as a result of which shares of Common Stock of the Corporation
shall be changed into the same or a different number of shares of another class
or classes of stock or securities of the Corporation or another entity, or in
case of any sale or conveyance of all or substantially all of the assets of the
Corporation other than to connection with a plan of complete liquidation of the
Corporation, then the holders of Series B Preferred Stock shall thereafter have
the right to receive upon conversion of the Series B Preferred Stock, upon the
bases and upon the terms and conditions specified herein and in lieu of the
shares of Common Stock immediately theretofore issuable upon conversion, such
stock, securities or assets which the holders of Series B Preferred Stock would
have been entitled to receive in such transaction had the Series B Preferred
Stock been converted in full (without regard to any limitations on conversion
contained herein) immediately prior to such transaction, and in any such case
appropriate provisions shall be made with respect to the rights and interests of
the holders of Series B Preferred Stock to the end that the provisions hereof
(including, without limitation, provisions for adjustment of the Conversion
Price and of the number of shares of Common Stock issuable upon conversion of
the Series B Preferred Stock) shall thereafter be applicable, as nearly as may
be practicable in relation to any securities or assets thereafter deliverable
upon the conversion of Series B Preferred Stock. The Corporation shall not
effect any transaction described in this subsection (b) unless (a) it first
gives, to the extent practical, thirty (30) days' prior written notice (but in
any event at least fifteen (15) business days prior written notice) of such
merger, consolidation, exchange of shares, recapitalization, reorganization or
other similar event or sale of assets (during which time the holders of Series B
Preferred Stock shall be entitled to convert the Series B Preferred Stock) and
(b) the resulting successor or acquiring entity (if not the Corporation) assumes
by written instrument the obligations of this subsection (b). The above
provisions shall similarly apply to successive consolidations, mergers, sales,
transfers or share exchanges.

            (c) Other Securities Offerings. If, at any time after the Issue
Date, the Corporation sells Common Stock or securities convertible into, or
exchangeable for, Common Stock, other than a sale pursuant to a bona fide firm
commitment underwritten public offering of Common Stock by the Corporation (not
including a continuous offering pursuant to Rule 415 under the Securities Act of
1933, as amended), (collectively, the "Other Common Stock"), then, if the
effective or maximum sales price of the Common Stock with respect to such
transaction (including the effective or maximum conversion, or exchange price)
("Other Price") is less than the effective Conversion Price of the Series B
Preferred Stock at such time and such Other Common Stock is eligible for resale
prior to December 31, 1999, the Corporation shall adjust the Conversion Price
applicable to the Series B Preferred Stock not yet converted in form and
substance reasonably satisfactory to the holders of Series B Preferred Stock so
that the Conversion Price applicable to the Series B Preferred Stock shall not,
in any event, be greater, after giving effect to all other adjustments contained
herein, than the Other Price.

                                       -10-
<PAGE>

the Corporation ("Bloomberg") or, if Nasdaq SmallCap is not the principal
trading market for such security, the closing bid price of such security on the
principal securities exchange or trading market where such security is listed or
traded as reported by Bloomberg, or if the foregoing do not apply, the closing
bid price of such security in the over-the-counter market on the electronic
bulletin board for such security as reported by Bloomberg, or, if no closing bid
price of such security in the over-the-counter market on the electronic bulletin
board for such security or in any of the foregoing manners, the average of the
bid prices of any market makers for such security or as reported in the "pink
sheets" by the National Quotation Bureau, Inc. If the Closing Bid Price cannot
be calculated for such security on such date in the manner provided above, the
Closing Bid Price shall be the fair market value as mutually determined by the
Corporation and the holders of a majority in interest of shares of Series B
Preferred Stock being converted for which the calculation of the Closing Bid
Price is required in order to determine the Conversion Price of such Series B
Preferred Stock. "Trading Day" shall mean any day on Which the Common Stock is
traded for any period on Nasdaq SmallCap, or on the principal securities
exchange or other securities market on which the Common Stock is then being
traded.

            (b) Notwithstanding anything contained in subparagraph (a) of this
Paragraph B to the contrary, in the event the Corporation (i) makes a public
announcement that it intends to consolidate or merge with any other corporation
(other than a merger in which the Corporation is the surviving or continuing
corporation and its capital stock is unchanged) or sell or transfer all or
substantially all of the assets of the Corporation or (ii) any person, group or
entity (including the Corporation) publicly announces a tender offer to purchase
50% or more of the Corporation's Common Stock or otherwise publicly announces an
intention to replace a majority of the corporation's Board of Directors by
waging a proxy battle or otherwise (the date of the announcement referred to in
clause (i) or (ii) is hereinafter referred to as the "Announcement Date"), then
the Conversion Price shall, effective upon the Announcement Date and continuing
through the Adjusted Conversion Price Termination Date (as defined below), be
equal to the lower of (x) the Conversion Price which would have been applicable
for an Optional Conversion occurring on the Announcement Date and (y) the
Conversion Price that would otherwise be in effect. From and after the Adjusted
Conversion Price Termination Date, the Conversion Price shall be determined as
set forth in subparagraph (a) of this Article VI.B. For purposes hereof,
"Adjusted Conversion Price Termination Date" shall mean, with respect to any
proposed transaction, tender offer or removal of the majority of the Board of
Directors which a public announcement as contemplated by this subparagraph (b)
has been made, the date upon which the Corporation (in the case of clause (i)
above) or the person, group or entity (in the case of clause (ii) above)
publicly announces the termination or abandonment of the proposed transaction or
tender offer which caused this subparagraph (b) to become operative.

      C. The Conversion Price Shall be subject to adjustment from time to time
as follows:

            (a) Adjustment to Conversion Price Due to Stock Split, Stock
Dividend, Etc. If at any time when Series B Preferred Stock is issued and
outstanding, the number of outstanding shares of Common Stock is increased or
decreased by a stock split, stock dividend, combination, reclassification,
rights offering below the Trading Price (as defined below) to all holders of
Common Stock or other similar event, which event shall have taken place during
the reference period for determination of the Conversion Price for any Optional
Conversion or Automatic Conversion of the Series B Preferred Stock, then the
Conversion Price shall be

                                      -9-
<PAGE>

            (d) Adjustment Due to Distribution. Subject to Article III, if the
Corporation shall declare or make any distribution of its assets (or rights to
acquire its assets) to holders of Common Stock as a dividend, stock repurchase,
by way of return of capital or otherwise (including any dividend or distribution
to the Corporation's shareholders in cash or shares (or rights to acquire
shares) of capital stock of a subsidiary (i.e., a spin-off)) (a "Distribution"),
then the holders of Series B Preferred Stock shall be entitled, upon any
conversion of shares of Series B Preferred Stock after the date of record for
determining shareholders entitled to such Distribution, to receive the amount of
such assets which would have been payable to the holder with respect to the
shares of Common Stock issuable upon such conversion had such holder been the
holder of such shares of Common Stock on the record date for the determination
of shareholders entitled to such Distribution.

            (e) Purchase Rights. Subject to Article III, if at any time when any
Series B Preferred Stock is issued and outstanding, the Corporation issues any
convertible securities or rights to purchase stock, warrants, securities or
other property (the "Purchase Rights") pro rata to the record holders of any
class of Common Stock, then the holders of Series B Preferred Stock will be
entitled to acquire, upon the terms applicable to such Purchase Rights, the
aggregate Purchase Rights which such holder could have acquired if such holder
had held the number of shares of Common Stock acquirable upon complete
conversion of the Series B Preferred Stock (without regard to any limitations on
conversion contained herein) immediately before the date on which a record is
taken for the grant, issuance or sale of such Purchase Rights, or, if no such
record is taken, the date as of which the record holders of Common Stock are to
be determined for the grant, issue or sale of such Purchase Rights.

            (f) Adjustment for Restricted Periods. In the event that (1) the
Corporation fails to obtain effectiveness with the Securities and Exchange
Commission of the Registration Statement (as defined in the Registration Rights
Agreement) prior to one hundred twenty (127) days following the Issue Date, or
(2) such Registration Statement lapses in effect, or sales otherwise cannot be
made thereunder, whether by reason of the Corporation's failure or inability to
amend or supplement the prospectus (the "Prospectus") included therein in
accordance with the Registration Rights Agreement or otherwise, after such
Registration Statement becomes effective (including, without limitation, during
an Allowed Delay (as defined in Section 3(f) of the Registration Rights
Agreement), then the Pricing Period shall be comprised of, (i) in the case of an
event described in clause (1), the twenty (20) Trading Days preceding the 127th
day following the Issue Date plus all Trading Days through and including the
third Trading Day following the date of effectiveness of the Registration
Statement; and (ii) in the case of an event described in clause (2), the number
of Trading Days preceding the date on which the holder of the Series B Preferred
Stock is first notified that sales may not be made under the Prospectus that
would otherwise then be included in the Pricing Period in accordance with the
definition thereof set forth in Article VI-B(a), plus all Trading Days through
and including the third Trading Day following the date on which the Holder is
first notified that such sales may again be made under the Prospectus. If a
holder of Series B Preferred Stock determines that sales may not be made
pursuant to the Prospectus (whether by reason of the Corporation's failure or
inability to amend or supplement the Prospectus) it shall so notify the
Corporation in writing and, unless the Corporation provides such holder with a
written opinion of the Corporation's counsel to the contrary, such determination
shall be binding for purposes of this paragraph.

                                      -11-
<PAGE>

            (g) Notice of Adjustments. Upon the occurrence of each adjustment or
readjustment of the Conversion Price pursuant to this Article VI.C, the
Corporation, at its expense, shall promptly compute such adjustment or
readjustment and prepare and furnish to each holder of Series B Preferred Stock
a certificate setting forth such adjustment or readjustment and showing in
detail the facts upon which such adjustment or readjustment is based. The
Corporation shall, upon the written request at any time of any holder of Series
B Preferred Stock, furnish to such holder a like certificate setting forth (i)
such adjustment or readjustment, (ii) the Conversion Price at the time in effect
and (iii) the number of shares of Common Stock and the amount, if any, of other
securities or property which at the time would be received upon conversion of a
share of Series B Preferred Stock.

      D. For purposes of Article VI.C(a) above, "Trading Price," which shall be
measured as of the record date in respect of the rights offering means (i) the
average of the last reported sale prices for the shares of Common Stock on
Nasdaq SmallCap as reported by Bloomberg, as applicable, for the five (5)
Trading Days immediately preceding such date, or (ii) if Nasdaq SmallCap is not
the principal trading market for the shares of Common Stock, the average of the
last reported sale prices on the principal trading market for the Common Stock
during the same period as reported by Bloomberg, or (iii) if market value cannot
be calculated as of such date on any of the foregoing bases, the Trading Price
shall be the fair market value as reasonably determined in good faith by (a) the
Board of Directors of the Corporation or, (b) at the option of a
majority-in-interest of the holders of the outstanding Series B Preferred Stock
by an independent investment bank of nationally recognized standing in the
valuation of businesses similar to the business of the Corporation.

      E. In order to convert Series B Preferred Stock into full shares of Common
Stock, a holder of Series B Preferred Stock shall: (i) submit a copy of the
fully executed notice of conversion in the form attached hereto as Exhibit A
("Notice of Conversion") to the Corporation by facsimile dispatched on the
Conversion Date (or by other means resulting in notice to the Corporation on the
Conversion Date) at the office of the Corporation or its designated Transfer
Agent for the Series B Preferred Stock that the holder elects to convert the
same, which notice shall specify the number of shares of Series B Preferred
Stock to be converted, the applicable Conversion Price and a calculation of the
number of shares of Common Stock issuable upon such conversion (together with a
copy of the first page of each certificate to be converted) prior to Midnight,
New York City time (the "Conversion Notice Deadline") on the date of conversion
specified on the Notice of Conversion; and (ii) surrender the original
certificates representing the Series B Preferred Stock being converted (the
"Preferred Stock Certificates"), duly endorsed, along with a copy of the Notice
of Conversion to the office of the Corporation or the Transfer Agent for the
Series B Preferred Stock as soon as practicable thereafter. The Corporation
shall not be obligated to issue certificates evidencing the shares of Common
Stock issuable upon such conversion, unless either the Preferred Stock
Certificates are delivered to the Company or its Transfer Agent as provided
above, or the holder notifies the Corporation or its Transfer Agent that such
certificates have been lost, stolen or destroyed (subject to the requirements of
subparagraph (a) below). In the case of a dispute as to the calculation of the
Conversion Price, the Corporation shall promptly issue such number of shares of
Common Stock that are not disputed in accordance with subparagraph (b) below.
The Corporation shall submit the disputed calculations to its outside accountant
via facsimile within two (2) business days of receipt of the Notice of
Conversion, The accountant shall audit the calculations and notify the
Corporation

                                      -12-
<PAGE>

and the holder of the results no later than 48 hours from the time it receives
the disputed calculations. The accountant's calculation shall be deemed
conclusive absent manifest error.

            (a) Lost or Stolen Certificates. Upon receipt by the Corporation of
evidence of the loss, theft, destruction or mutilation of any Preferred Stock
Certificates representing shares of Series B Preferred Stock, and (in the case
of loss, theft or destruction) of indemnity reasonably satisfactory to the
Corporation, and upon surrender and cancellation of the Preferred Stock
Certificate(s), if mutilated, the Corporation shall execute and deliver new
Preferred Stock Certificate(s) of like tenor and date.

            (b) Delivery of Common Stock Upon Conversion. Upon the surrender of
certificates as described above together with a Notice of Conversion, the
Corporation shall issue and, within two (2) business days after such surrender
(or, in the case of lost, stolen or destroyed certificates, after provision of
agreement and indemnification pursuant to subparagraph (a)above) (the "Delivery
Period"), deliver (or cause its Transfer Agent to so issue and deliver) to or
upon the order of the holder (i) that number of shares of Common Stock for the
portion of the shares of Series B Preferred Stock converted as shall be
determined in accordance herewith and (ii) a certificate representing the
balance of the shares of Series B Preferred Stock not converted, if any. In
addition to any other remedies available to the holder, including actual damages
and/or equitable relief, the Corporation shall pay to a holder $2,000 per day in
cash for each day beyond a two (2) day grace period following the Delivery
Period that the Corporation fails to deliver Common Stock (a "Conversion
Default") issuable upon surrender of shares of Series B Preferred Stock with a
Notice of Conversion until such time as the Corporation has delivered all such
Common Stock (the "Conversion Default Payments"). Such cash amount shall be paid
to such holder by the fifth day of the month following the month in which it
has accrued or, at the option of the holder (by written notice to the
Corporation by the first day of the month following the month in which it has
accrued), shall be convertible into Common Stock in accordance with the terms of
this Article VI.

      In lieu of delivering physical certificates representing the Common Stock
issuable upon conversion, provided the Corporation's Transfer Agent is
participating in the Depository Trust Company ("DTC") Fast Automated Securities
Transfer ("FAST") program, upon request of the holder and its compliance with
the provisions contained in Article VI.A. and in this Article VI.E., the
Corporation shall use its best efforts to cause its Transfer Agent to
electronically transmit the Common Stock issuable upon conversion to the holder
by crediting the account of holder's Prime Broker with DTC through its Deposit
Withdrawal Agent Commission ("DWAC") system. The time periods for delivery and
penalties described in the immediately preceding paragraph shall apply to the
electronic transmittals described herein.

            (c) No Fractional Shares. If any conversion of Series B Preferred
Stock would result in a fractional share of Common Stock or the right to acquire
a fractional share of Common Stock, such fractional share shall be disregarded
and the number of shares of Common Stock issuable upon Conversion of the Series
B Preferred Stock shall be the next higher number of shares.

            (d) Conversion Date. The "Conversion Date" shall be the date
specified in the Notice of Conversion, provided that the Notice of Conversion is
submitted by facsimile (or

                                      -13-
<PAGE>

by other means resulting in notice) to the Corporation or its Transfer Agent
before Midnight, New York City time, on the Conversion Date. The person or
persons entitled to receive the shares of Common Stock issuable upon conversion
shall be treated for all purposes as the record holder or holders of such
securities as of the Conversion Date and all rights with respect to the shares
of Series B Preferred Stock surrendered shall forthwith terminate except the
right to receive the shares of Common Stock or other securities or property
issuable on such conversion and except that the holders preferential rights as a
holder of Series B Preferred Stock shall survive to the extent the corporation
fails to deliver such securities.

      F. A number of shares of the authorized but unissued Common Stock
sufficient to provide for the conversion of the Series B Preferred Stock
outstanding at the then current Conversion Price shall at all times be reserved
by the Corporation, free from preemptive rights, for such conversion or
exercise. As of the date of issuance of the Series B Preferred Stock, 750,000
authorized and unissued shares of Common Stock have been duly reserved for
issuance upon conversion of the Series B Preferred Stock (the "Reserved
Amount"). The Reserved Amount shall be increased from time to time in accordance
with the Company's obligations pursuant to Section 4(h) of the Purchase
Agreement. In addition, if the Corporation shall issue any securities or make
any change in its capital structure which would change the number of shares of
Common Stock into which each share of the Series B Preferred Stock shall be
convertible at the then current Conversion Price, the Corporation shall at the
same time also make proper provision so that thereafter there shall be a
sufficient number of shares of Common Stock authorized and reserved, free from
preemptive rights, for conversion of the outstanding Series B Preferred Stock.

      If at any time a holder of shares of Series B Preferred Stock submits a
Notice of Conversion, and the Corporation does not have sufficient authorized
but unissued shares of Common Stock available to effect such conversion in
accordance with the provisions of this Article VI (a "Conversion Default"), the
Corporation shall issue to the holder (or holders, if more than one holder
submits a Notice of Conversion in respect of the same Conversion Date, pro rata
based on the ratio that the number of shares of Series B Preferred Stock then
held by each such holder bears to the aggregate number of such shares held by
such holders) all of the shares of Common Stock which are available to effect
such conversion. The number of shares of Series B Preferred Stock included in
the Notice of Conversion which exceeds the amount which is then convertible into
available shares of Common Stock (the "Excess Amount") shall, notwithstanding
anything to the contrary contained herein, not be convertible into Common Stock
in accordance with the terms hereof until (and at the holder's option at any
time after) the date additional shares of Common Stock are authorized by the
Corporation to permit such conversion, at which time the Conversion Price in
respect thereof shall be the lesser of (i) the Conversion Price on the
Conversion Default Date (as defined below) and (ii) the Conversion Price on the
Conversion Date elected by the holder in respect thereof. The Corporation shall
use its best efforts to effect an increase in the authorized number of shares of
Common Stock as soon as possible following a Conversion Default. In addition,
the Corporation shall pay to the holder payments ("Conversion Default Payments")
for a Conversion Default in the amount of (a)(N/365), multiplied by (b) the sum
of the Stated Value plus the Premium Amount per share of Series B Preferred
Stock through the Authorization Date (as defined below), multiplied by (c) the
Excess Amount on the day the holder submits a Notice of Conversion giving rise
to a Conversion Default (the "Conversion Default Date"), multiplied by (d) .24,
where (i) N = the

                                      -14-
<PAGE>

number of days from the Conversion Default Date to the date (the "Authorization
Date") that the Corporation authorizes a sufficient number of shares of Common
Stock to effect conversion of the full number of shares of Series B Preferred
Stock. The Corporation shall send notice to the holder of the authorization of
additional shares of Common Stock, the Authorization Date and the amount of
holder's accrued Conversion Default Payments. The accrued Conversion Default
Payment for each calendar month shall be paid in cash or shall be convertible
into Common Stock at the Conversion Price, at the holder's option, as follows:

            (a) In the event the holder elects to take such payment in cash,
cash payment shall be made to holder by the fifth day of the month following
the month in which it has accrued; and

            (b) In the event the holder elects to take such payment in Common
Stock, the holder may convert such payment amount into Common Stock at the
Conversion Price (as in effect at the time of Conversion) at any time after the
fifth day of the month following the month in which, it has accrued in
accordance with the terms of this Article VI (so long as there is then a
sufficient number of authorized shares).

      Nothing herein shall limit the holder's right to pursue actual damages for
the Corporation's failure to maintain a sufficient number of authorized shares
of Common Stock, and each holder shall have the right to pursue all remedies
available at law or in equity (including a decree of specific performance and/or
injunctive relief).

      G. Upon the occurrence of each adjustment or readjustment of the
Conversion Price pursuant to this Article VI, the Corporation, at its expense,
shall promptly compute such adjustment or readjustment in accordance with the
terms hereof and prepare and furnish to each holder of Series B Preferred Stock
a certificate setting forth such adjustment or readjustment and showing in
detail the facts upon which such adjustment or readjustment is based. The
Corporation shall, upon the written request at any time of any holder of Series
B Preferred Stock, furnish or cause to be furnished to such holder a like
certificate setting forth (i) such adjustment or readjustment, (ii) the
Conversion Price at the time in effect and (iii) the number of shares of Common
Stock and the amount, if any, of other securities or property which at the time
would be received upon conversion of a share of Series B Preferred Stock.

      H. Upon submission of a Notice of Conversion by a holder of Series B
Preferred Stock, (i) the shares covered thereby (other than the shares, if any,
which cannot be issued because their issuance would exceed such holder's
allocated portion of the Reserved Amount) shall be deemed converted into shares
of Common Stock and (ii) the holder's rights as a holder of such converted
shares of Series B Preferred Stock shall cease and terminate, excepting only the
right to receive certificates for such shares of Common Stock and to any
remedies provided herein or otherwise available at law or in equity to such
holder because of a failure by the Corporation to comply with the terms of this
Articles of Amendment. Notwithstanding the foregoing, if a holder has not
received certificates for all shares of Common Stock prior to the tenth (10th)
business day after the expiration of the Delivery Period with respect to a
conversion of shares of Series B Preferred Stock for any reason, then (unless
the bolder otherwise elects to retain its status as a holder of Common Stock by
so notifying the Corporation) the holder shall regain the rights of a holder of
such shares of Series B Preferred Stock with respect to such

                                      -15-
<PAGE>

unconverted shares of Series B Preferred Stock and the Corporation shall, as
soon as practicable, return such unconverted shares of Series B Preferred Stock
to the holder or, if such shares of Series B Preferred Stock have not been
surrendered, adjust its records to reflect that such shares of Series B
Preferred Stock have not been converted. In all cases, the holder shall retain
all of its rights and remedies (including, without limitation, the right to
receive Conversion Default Payments pursuant to Article IV.E. to the extent
required thereby for such Conversion Default and any subsequent Conversion
Default).

VII. Automatic Conversion

      So long as the Registration Statement is effective and there is not then a
continuing Mandatory Redemption Event, each share of Series B Preferred Stock
issued and outstanding on April 24. 2003, subject to any adjustment pursuant to
Article V.A.(ii) (the "Automatic Conversion Date"), automatically shall be
converted into stares of Common Stock on such date at the then effective
Conversion Price in accordance with, and subject to, the provisions of Article
VI hereof (the "Automatic Conversion"). The Automatic Conversion Date shall be
delayed by one (1) Trading Day each for each Trading Day occurring prior thereto
and prior to the full conversion of the Series B Preferred Stock that (i) sales
cannot be made pursuant to the Registration Statement (whether by reason of the
Company's failure to properly supplement or amend the prospectus included
therein in accordance with the terms of the Registration Rights Agreement or
otherwise including any Allowed Delays (as defined in Section 3(f) of the
Registration Rights Agreement) or (ii) any Default Event (as defined in Article
V.A.) exists, without regard to whether any cure periods shall have run. The
Automatic Conversion Date shall be the Conversion Date for purposes of
determining the Conversion price and the time within which certificates
representing the Common Stock must be delivered to the holder.

VIII. Voting Rights

      The holders of the Series B Preferred Stock have no voting power
whatsoever, except as otherwise provided by the Florida Corporation Law ("FCL"),
in this Article VIII, and in Article IX below.

      Notwithstanding the above, the Corporation shall provide each holder of
Series B Preferred Stock with prior notification of any meeting of the
shareholders (and copies of proxy materials and other information sent to
shareholders). In the event of any taking by the Corporation of a record of its
shareholders for the purpose of determining shareholders who are entitled to
receive payment of any dividend or other distribution, any right to subscribe
for, purchase or otherwise acquire (including by way of merger, consolidation or
recapitalization) any share of any class or any other securities or property, or
to receive any other right, or for the purpose of determining shareholders who
are entitled to vote in connection with any proposed sale, lease or conveyance
of all or substantially all of the assets of the Corporation, or any proposed
liquidation, dissolution or winding up of the Corporation, the Corporation shall
mail a notice to each holder, at least ten (10) days prior to the record date
specified therein (or thirty (30) days prior to the consummation of the
transaction or event, whichever is earlier), of the date on which any such
record is to be taken for the purpose of such dividend, distribution, right or
other event, and a brief statement regarding the amount and character of such
dividend, distribution, right or other event to the extent known at such time.

                                      -16-
<PAGE>

      To the extent that under the FCL the vote of the holders of the Series B
Preferred Stock, voting separately as a class or series as applicable, is
required to authorize a given action of the Corporation, the affirmative vote or
consent of the holders of at least a majority of the shares of the Series B
Preferred Stock represented at a duly held meeting at which a quorum is present
or by written consent of a majority of the shares of Series B Preferred Stock
(except as otherwise may be required under the FCL) shall constitute the
approval of such action by the class. To the extent that under the FCL holders
of the Series B Preferred Stock are entitled to vote on a matter with holders of
Common Stock, voting together as one class, each share of Series B Preferred
Stock shall be entitled to a number of votes equal to the number of shares of
Common Stock into which it is then convertible using the record date for the
taking of such vote of shareholders as the date as of which the Conversion Price
is calculated. Holders of the Series B Preferred Stock shall be entitled to
notice of all shareholder meetings or written consents(and copies of proxy
materials and other information sent to shareholders) with respect to which,
they would be entitled to vote, which notice would be provided pursuant to the
Corporation's bylaws and the FCL.

IX. Protective Provisions

      So long as shares of Series B Preferred Stock are outstanding, the
Corporation shall not, without first obtaining the approval (by vote or written
consent, as provided by the FCL) of the holders of at least a majority of the
then outstanding shares of Series B Preferred Stock:

            (a) alter or change the rights, preferences or privileges of the
Series B Preferred Stock or any Senior Securities so as to affect adversely the
Series B Preferred Stock;

            (b) create any new class or series of capital stock having a
preference over the Series B Preferred Stock as to distribution of assets upon
liquidation, dissolution or winding up of the Corporation (as previously defined
in Article II hereof, "Senior Securities");

            (c) create any new class or series of capital stock ranking pari
passu with the Series B Preferred Stock as to distribution of assets upon
liquidation, dissolution or winding up of the Corporation (as previously defined
in Article II hereof, "Pari Passu Securities");

            (d) increase the authorized number of shares of Series B Preferred
Stock; or

            (e) do any act or thing not authorized or contemplated by this
Articles of Amendment which would result in taxation of the holders of shares of
the Series B Preferred Stock under Section 305 of the Internal Revenue Code of
1986, as amended (or any comparable provision of the Internal Revenue Code as
hereafter from time to time amended).

      In the event holders of at least a majority of the then outstanding shares
of Series B Preferred Stock agree to allow the Corporation to alter or change
the rights, preferences or privileges of the shares of Series B Preferred Stock,
pursuant to subsection (a) above, so as to affect the Series B Preferred Stock,
then the Corporation will deliver notice of such approved change to the holders
of the Series B Preferred Stock that did not agree to such alteration or change
(the "Dissenting Holders") and Dissenting Holders shall have the right for a
period of

                                      -17-
<PAGE>

thirty (30) days to convert pursuant to the terms of this Articles of Amendment
as they exist prior to such alteration or change or continue to hold their
shares of Series B Preferred Stock.

X. Pro Rata Allocations

      The Maximum Share Amount and the Reserved Amount (including any increases
thereto) shall be allocated by the Corporation pro rata among the holders of
Series B Preferred Stock based on the number of shares of Series B Preferred
Stock then held by each holder relative to the total aggregate number of shares
of Series B Preferred Stock then outstanding.

                      (THIS PAGE INTENTIONALLY LEFT BLANK)

                                      -18-
<PAGE>

            IN WITNESS WHEREOF, this Articles of Amendment is executed on behalf
of the Corporation this 1st day of July, 1998.

                                              METROPOLITAN HEALTH NETWORKS, INC.

                                              By: /s/ Noel J. Guillama
                                                  ------------------------------
                                              Name: Noel J. Guillama
                                              Title: President

                                      -19-
<PAGE>

                                                                   FILED
                                                              01 JUN-4 PM 3:50

                                                             SECRETARY OF STATE
                                                            TALLAHASSEE, FLORIDA

                              ARTICLES OF AMENDMENT
                                     TO THE
                            ARTICLES OF INCORPORATION
                                       OF
                       METROPOLITAN HEALTH NETWORKS, INC.

      Pursuant to Section 607.1006 of the Business Corporation Act of the State
of Florida, the undersigned Directors of METROPOLITAN HEALTH NETWORKS, INC., a
corporation organized and existing under and by virtue of the Business
Corporation Act of the State of Florida, bearing document number P96000004953,
do hereby certify:

      That pursuant to Unanimous Written Consent of the Board of Directors of
said Corporation dated March 12, 2001 and the consent of a majority of
Shareholders of the outstanding common stock of the Corporation at a meeting on
May 24, 2001, which shares voting at such meeting represented a majority of the
total issued and outstanding capital stock of the Corporation entitled to vote.
Therefore, the number of votes cast for the amendment to the Corporation's
Articles of Incorporation was sufficient for approval.

      The first two paragraphs of the following Article should be amended to
read:

                           ARTICLE III - CAPITAL STOCK

            The maximum number of shares that this Corporation shall be
      authorized to issue and have outstanding at any one time shall be ninety
      million (90,000,000) shares which are to be divided as follows:

            Eighty million (80,000,000) shares of Common Stock with a par value
      of $.001 per share and ten million (10,000,000) shares of Preferred Stock
      at a par value of $.001 per share. Series of the Preferred Stock may be
      created and issued from time to time, with such designations, preferences,
      conversion rights, cumulative, relative, participating, optional or other
      rights, including voting rights, qualifications, limitations or
      restrictions thereof as shall be stated and expressed in the resolution or
      resolutions providing for the creation and issuance of such series of
      preferred stock as adopted by the Board of Directors pursuant to the
      authority in this paragraph given.

      IN WITNESS WHEREOF, the undersigned has executed these Articles of
Amendment as of the 24th day of May, 2001

                                              METROPOLITAN HEALTH NETWORKS, INC.

                                              /s/ Fred Sternberg
                                              ----------------------------------
                                              By: Fred Sternberg, Chairman & CEO

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