WARP TECHNOLOGY HOLDINGS INC
CERTIFICATE OF DESIGNATIONS
<DOCUMENT>
<TYPE>EX-10.02
<SEQUENCE>4
<FILENAME>y00708aexv10w02.txt
<DESCRIPTION>CERTIFICATE OF DESIGNATIONS
<TEXT>
<PAGE>

               CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS

                          OF SERIES B-2 PREFERRED STOCK

                                       OF

                         WARP TECHNOLOGY HOLDINGS, INC.

      WARP TECHNOLOGY HOLDINGS, INC. (the "Company"), a corporation organized
and existing under and by virtue of the Revised Statutes of the State of Nevada
(the "NRS"), in accordance with Section 78.1955 of the NRS, DOES HEREBY CERTIFY
that:

      The Articles of Incorporation of the Company provides that the Company is
authorized to issue 50,000,000 shares of preferred stock with a par value of
$.00001. The Articles of Incorporation provides, further, that the Board of
Directors is authorized, to the extent permitted by law, to provide for the
issuance of the shares of preferred stock in series, and by filing a certificate
pursuant to the NRS, to establish from time to time the number of shares to be
included in each series and to fix the designation, powers, preferences and
rights and the qualifications, limitations or restrictions thereof. Pursuant to
the authority conferred upon the Board of Directors by the Articles of
Incorporation, the Board of Directors, by Unanimous Written Consent dated July
15, 2004, adopted a resolution providing for the designation, rights, powers and
preferences and the qualifications, limitations and restrictions of 4,000 shares
of Series B-2 Preferred Stock, and that a copy of such resolution is as follows:

RESOLVED, that pursuant to the authority vested in the Board of Directors of the
Company, the provisions of its Articles of Incorporation, as amended, and in
accordance with the NRS the Board of Directors hereby authorizes the filing of a
Certificate of Designations, Preferences and Rights of Series B-2 Preferred
Stock of WARP Technology Holdings, Inc. Accordingly, the Company's Series B-2
Preferred Stock with par value of $.00001 per share, shall have the powers,
preferences and rights and the qualifications, limitations and restrictions
thereof, as follows:

   1. DESIGNATION AND NUMBER OF SHARES. Shares of the series shall be designated
and known as the "Series B-2 Preferred Stock" of the Company. The Series B-2
Preferred Stock shall consist of 4,000 shares. Shares of the Series B-2
Preferred Stock which are redeemed, retired, converted into shares of Common
Stock, purchased or otherwise acquired by the Company shall be cancelled and
shall revert to the status of authorized but unissued preferred stock,
undesignated as to series and subject to reissuance by the Company as shares of
preferred stock of any one or more series. As used herein, the term "Preferred
Stock" used without specific reference to the Series A 8% Cumulative Convertible
Preferred Stock ("Series A Stock"), the Series B 10% Cumulative Convertible
Preferred Stock ("Series B Stock") or the Series B-2 Stock, means the shares of
Preferred Stock, without distinction as to series, except as otherwise expressly
provided for herein, or as the context otherwise requires. As used herein, the
term "Preferred Shares" means the shares of Series B-2 Preferred Stock excepts
as the context otherwise requires. Series A Stock shall rank junior to the
Series B-2 Preferred Stock with respect to dividends, liquidation preferences,
and all other rights, preferences and privileges, as set forth herein. The
Series B Stock shall rank on par with or junior to the Series B-2 Stock as set
forth herein.

   2. DIVIDENDS.

      2.1   COMPUTATION OF CUMULATIVE DIVIDENDS. The holders of the

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outstanding shares of Series B-2 Preferred Stock shall be entitled to receive,
out of any funds legally available therefor, cumulative dividends at the annual
rate of ten percent (10%), compounded annually, of the Series B-2 Face Amount
(as defined below), calculated on a 360-day per year basis, based on the actual
number of days elapsed. Accordingly, for purposes of calculating dividends for
the Series B-2 Preferred Stock, on each anniversary of the issuance date for
such share of Series B-2 Preferred Stock, the accrued and unpaid dividends for
the prior one year shall be deemed added to the Series B-2 Face Amount, for
purposes of calculating the amount of dividends on the Series B-2 Preferred
Stock thereafter. Dividends on the Preferred Shares shall accrue from day to day
on each Preferred Share from the date of original issuance of such Preferred
Share, whether or not earned or declared, and shall accrue until paid. All
numbers relating to calculation of cumulative dividends shall be subject to
equitable adjustment in the event of any stock dividend, stock split,
combination, reorganization, recapitalization, reclassification or other similar
event involving a change in the Company's capital structure.

      2.2   PAYMENT. Dividends on each share of Series B-2 Preferred Stock shall
be paid at the time of conversion of such Preferred Share into shares of Common
Stock. Each dividend on the outstanding shares of the Series B-2 Preferred Stock
shall be paid either in cash, or in additional shares of Common Stock, at the
election of the Company. If the Company elects to pay dividends in additional
shares of Common Stock, dividends shall be paid in full shares only, with an
additional share to be paid for any fractional shares. Upon conversion of any
shares of the Series B-2 Preferred Stock, the dividends provided for under this
Section 2, shall cease to accrue, provided, however, that any dividends declared
on the Common Stock shall accrue on any such Conversion Shares, including shares
of Common Stock received in payments of the dividends provided for under this
Section 2.

      2.3   PREFERENCE. The dividends provided for under this Section 2 are pari
passu with any declarations or payment of any dividends or distribution to the
Series B Stock, pari passu with any declaration or payment of any dividend or
distribution to any other series of preferred stock of the Company, and prior
and in preference to any declaration or payment of any dividend or distribution
to the Common Stock of the Company.

   3. LIQUIDATION, DISSOLUTION OR WINDING UP.

      3.1   TREATMENT AT LIQUIDATION, DISSOLUTION OR WINDING UP.

          (a)   In the event of any liquidation, dissolution or winding up of
the Company, whether voluntary or involuntary, or in the event of its insolvency
(any such liquidation or other event referred to herein as a "Liquidation"),
before any distribution or payment is made to any holders of Common Stock, or
any other class or series of capital stock of the Company designated to be
junior to the Preferred Shares in liquidation preference, and subject to the
liquidation rights and preferences of any class or series of Preferred Stock
designated in the future to be senior to, or on a parity with, the Preferred
Shares with respect to liquidation preference, the holders of each Preferred
Share shall be entitled to be paid first out of the assets of the Company
available for distribution to holders of the Company's capital stock of all
classes, whether such assets are capital, surplus or earnings ("Available
Assets"), an amount equal to $1,000 per share of Series B-2 Preferred Stock
(subject to equitable adjustment for any stock dividend, stock split,
combination, reorganization, recapitalization, reclassification or other similar
event involving a change in the capital structure of the

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Series B-2 Preferred Stock) (the "Series B-2 Face Amount") plus all accrued but
unpaid dividends on each such share of Series B-2 Preferred Stock. If, upon
Liquidation, the Available Assets shall be insufficient to pay the holders of
the Series B-2 Preferred Stock and of any other series of Preferred Stock on
parity with the Series B-2 Preferred Stock with respect to liquidation
preference the full amounts to which they otherwise would be entitled, the
holders of the Series B-2 Preferred Stock and such other series of Preferred
Stock shall share ratably in any distribution of Available Assets pro rata in
proportion to the respective liquidation preference dollar amounts which would
otherwise be payable upon liquidation with respect to the outstanding Series B-2
Preferred Stock and such other series of Preferred Stock if all liquidation
preference dollar amounts with respect to such shares were paid in full.

          (b)   After the payment of the Series B-2 Preferred Stock
liquidation preference, and any liquidation preference of any other series of
Preferred Stock senior to or on parity with the Series B-2 Preferred Stock, the
remaining Available Assets, if any, shall be distributed to the holders of the
Series B Preferred Stock in accordance with their relative liquidation
preferences as set forth in the respective Certificates of Designations.

          (c)   After payment of all liquidation preferences to all holders of
Preferred Stock, the entire remaining Available Assets, if any, shall be
distributed among the holders of Common Stock, the Preferred Shares, and any
other class or series of Preferred Stock entitled to participate with the Common
Stock in a liquidating distribution, in proportion to the shares of Common Stock
then held by them and the shares of Common Stock which they then have the right
to acquire upon conversion of such shares of Preferred Stock held by them.

      3.2   TREATMENT OF REORGANIZATION, CONSOLIDATION, MERGER, OR SALE OF
ASSETS.

          (a)   Any merger, consolidation or other corporate reorganization or
combination to which the Company is a non-surviving party, any transaction or
series of related transactions in which any person (or group of affiliated or
related persons) shall have acquired beneficial ownership of more than 50% of
the voting stock of the Company and any sale of all or substantially all of the
assets of the Company (any of the foregoing referred to herein as a "Merger"),
shall be regarded as a Liquidation for purposes of this Section 3 with the
result that the liquidation preference set forth above shall be paid to the
holders of the outstanding Series B-2 Stock and, without limiting said payment,
the outstanding shares of Series B-2 Stock then shall be converted into Common
Stock pursuant to Section 5 and, pursuant to Section 3.1(c) receive such shares
of stock or other securities or property to which a holder of the number of
shares of Common Stock of the Company deliverable upon conversion of such Series
B-2 Preferred Stock would have been entitled upon such Merger; provided,
however, that in the case of any such transaction to which the provisions of
Section 5.7 also apply, the holders of a majority of the outstanding shares of
Series B-2 Preferred Stock (voting as a separate class) shall have the right to
elect the benefits of the provisions of Section 5.7 hereof for all, but not less
than all, of the shares of Series B-2 Preferred Stock in lieu of receiving
payment in Liquidation pursuant to this Section 3.

          (b)   The provisions of this Section 3.2 shall not apply to (i) any
reorganization, merger or consolidation involving only a change in the state of
incorporation of the Company, (ii) a merger of the Company with or

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into a wholly-owned subsidiary of the Company that is incorporated in the United
States of America, (iii) a merger, reorganization, consolidation or other
combination, of which the Company is substantively the surviving corporation and
operates as a going concern, with another corporation incorporated in the United
States of America and which does not involve a recapitalization, reorganization,
reclassification or other similar change in the capital structure of the
Company, or (iv) a merger, reorganization, consolidation or other transaction
that constitutes an equity financing.

      3.3   DISTRIBUTIONS OTHER THAN CASH. Whenever the distribution provided
for in this Section 3 shall be payable in whole or in part in property other
than cash, the value of any property distributed shall be the fair market value
of such property as reasonably determined in good faith by the Board of
Directors of the Company. All distributions of property other than cash made
hereunder shall be made, to the maximum extent possible, pro rata with respect
to each series and class of Preferred Stock and Common Stock in accordance with
the liquidation amounts payable with respect to each such series and class as
set forth in Sections 3.1 and 3.2.

   4. VOTING POWER.

      4.1   GENERAL. Except as otherwise expressly provided in that certain
Series B-2 Stockholders Agreement, dated as of August 4, 2004, between and among
the Company, the holders of the Series B-2 Preferred Stock and the such other
stockholders named therein (as the same may be amended from time to time, the
"Stockholders Agreement") Sections 3.2, 4.2, 5, 6, 9, 10 hereof, or as otherwise
provided in this Certificate of Designations, or in any Certificate of
Designation heretofore or hereafter filed with respect to any other series of
Preferred Stock, or as otherwise required by law, (i) each holder of Preferred
Shares shall be entitled to vote on all matters submitted to a vote of the
stockholders of the Company and shall be entitled to that number of votes equal
to the largest number of whole shares of Common Stock into which such holder's
Preferred Shares could be converted, pursuant to the provisions of Section 5
hereof, at the record date for the determination of stockholders entitled to
vote on such matters or, if no such record date is established, at the date such
vote is taken or any written consent of stockholders is solicited and (ii) the
holders of Series B-2 and Common Stock shall vote together (or render written
consents in lieu of a vote) as a single class on all matters submitted to the
stockholders of the Company.

      4.2   DIRECTOR ELECTION RIGHTS. Subject to Section 4.2(f) and 4.2(g)
below, the holders of the outstanding shares of Series B-2 Preferred Stock,
voting as a separate class, shall have the right to elect directors of the
Company as follows:

          (a)   For so long as the New Investors (as such term is defined in
the Stockholders Agreement), beneficially own, in the aggregate, at least 375 of
the total of the shares (the "New Investor Shares") of Series B-2 Preferred
Stock purchased by the New Investors under the Stock Purchase Agreement or the
number of shares of Common Stock received upon conversion of such 375 shares of
Series B-2 Preferred Stock (excluding any shares of Series B-2 Stock received on
exercise of the Warrants and subject to adjustment in the event of any stock
split, stock dividend or the like), then the New Investors, voting as a separate
class and series, shall have the right to elect two (2) directors of the
Company, to remove any individuals elected as such directors, and to fill any
vacancies in such directorships, all as further set forth in the Stockholders
Agreement;

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          (b)   For so long as the Participating Investors (as such term is
defined in the Stockholders Agreement), beneficially own, in the aggregate, at
least 375 of the total of the shares (the "Participating Investor Shares") of
Series B-2 Preferred Stock purchased by the Participating Investors under the
Stock Purchase Agreement or the number of shares of Common Stock received upon
conversion of such 375 shares of Series B-2 Preferred Stock (excluding any
shares of Series B-2 Stock received on exercise of the Warrants and subject to
adjustment in the event of any stock split, stock dividend or the like), then
the Participating Investors, voting as a separate class and series, shall have
the right to elect two (2) directors of the Company, to remove any individuals
elected as such directors, and to fill any vacancies in such directorships, all
as further set forth in the Stockholders Agreement;

          (c)   In the event that either (i) the New Investors no longer
beneficially own, in the aggregate, at least the minimum number of the New
Investor Shares as set forth in Section 4.2(a) above, or (ii) the Participating
Investors no longer beneficially own, in the aggregate, at least the minimum
number of the Participating Investor Shares as set forth in Section 4.2(b)
above, then the holders of the Series B-2 Preferred Stock, voting as a separate
class, shall have the right to elect the two (2) directors of the Company which
would have otherwise been elected pursuant to a vote of the New Investors under
Section 4.2(a) or pursuant to a vote of the Participating Investors under
Section 4.2(b), as applicable, then a second Independent Director (as defined
below) shall be elected pursuant to Section 4.2(e), and the holders of the
Series B-2 Preferred Stock, voting as a separate class, shall have the right to
elect one (1) director of the Company (the "Series B-2 Designee") as set forth
in the Stockholders Agreement; provided, however, that in place of the Series
B-2 Designee, a third Independent Director shall be elected under the
circumstances set forth in the Stockholders Agreement

          (d)   In the event that neither (i) the New Investors beneficially
own, in the aggregate, at least the minimum number of the New Investor Shares as
set forth in Section 4.2(a) above, nor (ii) the Participating Investors
beneficially own, in the aggregate, at least the minimum number of the
Participating Investor Shares as set forth in Section 4.2(b) above, then the
holders of the Series B-2 Preferred Stock, voting as a separate class, shall no
longer have any special director election rights under this Section 4.2;

          (e)   During the period set forth in Section 4.2(d), the Board of
Directors (or a nominating committee thereof delegated such responsibility)
shall nominate a candidate for election to fill the one (1) directorship not
elected pursuant to Sections 4.2(a) and 4.2(b), and, in the event that Section
4.2(c) is applicable, the Board of Directors shall nominate candidates to fill
the second, and, if applicable, third, directorship(s) made available by such
Section. In all such cases, such candidates are to be designated by unanimous
agreement of the other directors and elected by all of the Company's
stockholders entitled to vote for the election of directors (as so elected, each
an "Independent Director" and, together, the "Independent Directors").

          (f)   During the period that the special director election rights of
this Section 4.2 are in effect, the number of directors constituting the entire
Board of Directors of the Company shall be fixed at five (5); provided, however,
that the Board of Directors may be increased by resolution

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of the Board of Directors to a number greater than five (5) to the extent as may
be required to provide for such number of independent directors as required by
applicable Securities and Exchange Commission rules and regulations or the rules
and regulations of any stock market or exchange on which the Company's Common
Stock is traded.

          (g)   The provisions of this Section 4.2 are as more fully set forth
in, and are subject to the voting provisions and other terms of, the
Stockholders Agreement.

   5. CONVERSION RIGHTS. The holders of the Preferred Shares shall have the
following rights and be subject to the following obligations with respect to the
conversion of such shares into shares of Common Stock. The number of shares of
Common Stock which a holder of Series A Preferred Stock shall be entitled to
receive upon conversion shall be the product obtained by multiplying (i) the
number of shares of Series B-2 Preferred Stock being converted at any time, by
(ii) the Applicable Conversion Ratio. The "Applicable Conversion Ratio" is the
quotient obtained by dividing the sum of the Series B-2 Face Amount plus any
accrued but unpaid dividends by the Applicable Conversion Price, determined as
hereinafter provided, in effect at the time of conversion. The "Applicable
Conversion Price" in effect from time to time, except as adjusted in accordance
with this Section 5, shall initially be $0.05in the case of the Series B-2
Preferred Stock. The Applicable Conversion Price shall be adjusted in accordance
with this Section 5. The shares of Common Stock received upon conversion shall
be fully paid and non-assessable.

      5.1   VOLUNTARY CONVERSION. Subject to and in compliance with the
provisions of this Section 5, any Preferred Shares may, at the option of the
holder thereof, be converted at any time and from time to time into shares of
Common Stock.

      5.2   AUTOMATIC CONVERSION.

          (a)   EVENTS CAUSING CONVERSION. If, upon the expiration of five (5)
years from the date of issuance, there remain any shares of Series B-2 Stock
which have not been converted, such shares shall automatically convert into
shares of Common Stock.

          (b)   SURRENDER OF CERTIFICATES UPON MANDATORY CONVERSION. Upon the
occurrence of the conversion event specified in the preceding paragraph, the
holders of the Preferred Shares shall, upon notice from the Company, surrender
the certificates representing such shares at the office of the Company or its
transfer agent for the Common Stock. Thereupon, there shall be issued and
delivered to such holder a certificate or certificates for the number of shares
of Common Stock into which the Preferred Shares so surrendered were convertible
on the date on which the conversion occurred. The Company shall not be obligated
to issue such certificates unless certificates evidencing such Preferred Shares
being converted are either delivered to the Company or any such transfer agent,
or the holder notifies the Company that such certificates have been lost, stolen
or destroyed and executes an agreement satisfactory to the Company to indemnify
the Company from any loss incurred by it in connection therewith.

      5.3   ANTI-DILUTION ADJUSTMENTS.

          (a)   UPON DILUTIVE ISSUANCES. If the Company shall, while there are
any shares of Series B-2 Preferred Stock outstanding, issue or sell shares of
its Common Stock or "Common Stock Equivalents" (as defined below)

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without consideration or at a price per share or "Net Consideration Per Share"
(as defined below) less than the Applicable Conversion Price for the Series B-2
Preferred Stock in effect immediately prior to such issuance or sale, with
respect to the Series B-2 Preferred Stock, then in each such case the Applicable
Conversion Price for the Series B-2 Preferred Stock then in effect at such time,
except as hereinafter provided, shall be lowered so as to be equal to the Net
Consideration Per Share

The provisions of this Section 5.3(a) may be waived as to all shares of Series
B-2 Preferred Stock in any instance (without the necessity of convening any
meeting of stockholders of the Company) upon the written agreement of the
holders of a majority of the outstanding shares of Series B-2 Preferred Stock
(voting as a separate class), excluding the vote of, and shares of Series B-2
Stock held by, any holder of Series B Stock if the Series B holders have not
waived the applicability of any anti-dilution provisions of the Series B Stock
with respect to the same issuance.

          (b)   COMMON STOCK EQUIVALENTS.

          (i)   GENERAL. For the purposes of this Section 5.3, the issuance of
              any warrants, options, subscription or purchase rights with
              respect to shares of Common Stock and the issuance of any
              securities (including, without limitation, securities evidencing
              indebtedness) convertible into or exchangeable for shares of
              Common Stock and the issuance of any warrants, options,
              subscription or purchase rights with respect to such convertible
              or exchangeable securities (collectively, "Common Stock
              Equivalents"), shall be deemed an issuance of Common Stock. Any
              obligation, agreement or undertaking to issue Common Stock
              Equivalents at any time in the future shall be deemed to be an
              issuance at the time such obligation, agreement or undertaking is
              made or arises. No adjustment of the Applicable Conversion Price
              shall be made under this Section 5.3 upon the issuance of any
              shares of Common Stock which are issued pursuant to the exercise,
              conversion or exchange of any Common Stock Equivalents.

          (ii)  ADJUSTMENTS FOR ADJUSTMENT, CANCELLATION OR EXPIRATION OF
              COMMON STOCK EQUIVALENTS. Should the Net Consideration Per Share
              of any such Common Stock Equivalents be decreased from time to
              time other than as a result of the application of anti-dilution
              provisions substantially similar to the provisions of this Section
              5.3, then, upon the effectiveness of each such change, the
              Applicable Conversion Price will be that which would have been
              obtained (1) had the adjustments made pursuant to Section
              5.3(b)(i) upon the issuance of such Common Stock Equivalents been
              made upon the basis of the new Net Consideration Per Share of such
              securities, and (2) had the adjustments made to the Applicable
              Conversion Price since the date of issuance of such Common Stock
              Equivalents been made to such Applicable Conversion Price as
              adjusted pursuant to clause (1) above. Any adjustment of the
              Applicable Conversion Price which relates to any Common Stock
              Equivalent shall be disregarded if, as, and when such Common Stock
              Equivalent expires or is canceled without being exercised, or is
              repurchased by the Company at a price per share at or less than
              the original purchase price, so that the Applicable Conversion
              Price effective immediately upon such cancellation or expiration
              shall be equal to the Applicable

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              Conversion Price that would have been in effect (1) had the
              expired or canceled Common Stock Equivalent not been issued, and
              (2) had the adjustments made to the Applicable Conversion Price
              since the date of issuance of such Common Stock Equivalents been
              made to the Applicable Conversion Price which would have been in
              effect had the expired or canceled Common Stock Equivalent not
              been issued.

          (c)    NET CONSIDERATION PER SHARE. For purposes of this Section 5.3,
the "Net Consideration Per Share" which shall be receivable by the Company for
any Common Stock issued upon the exercise or conversion of any Common Stock
Equivalents shall be determined as follows:

          (i)   The "Net Consideration Per Share" shall mean the amount equal
              to the total amount of consideration, if any, received by the
              Company for the issuance of such Common Stock Equivalents,
              plus the minimum amount of consideration, if any, payable to
              the Company upon exercise, or conversion or exchange thereof,
              divided by the maximum aggregate number of shares of Common
              Stock (without regard to any provision contained therein
              providing for a subsequent adjustment to such number) that
              would be issued if all such Common Stock Equivalents were
              exercised, exchanged or converted.

          (ii)  The "Net Consideration Per Share" which shall be receivable by
              the Company shall be determined in each instance as of the date of
              issuance of Common Stock Equivalents without giving effect to any
              possible future upward price adjustments or rate adjustments which
              may be applicable with respect to such Common Stock Equivalents.

          (d)   STOCK DIVIDENDS FOR HOLDERS OF CAPITAL STOCK OTHER THAN COMMON
STOCK. In the event that the Company shall make or issue (otherwise than to
holders of Common Stock), or shall fix a record date for the determination of
holders of any capital stock of the Company other than holders of Common Stock
entitled to receive, a dividend or other distribution payable in Common Stock or
securities of the Company convertible into or otherwise exchangeable for shares
of Common Stock of the Company, then such Common Stock or other securities
issued in payment of such dividend shall be deemed to have been issued for their
fair market value as is reasonably determined in good faith by the Board of
Directors of the Company (including, as long as Section 4.2 is in effect, at
least one director elected either by the New Investors or the Participating
Investors), except for dividends payable to the holders of Preferred Shares.

          (e)   CONSIDERATION OTHER THAN CASH. For purposes of this Section
5.3, if a part or all of the consideration received by the Company in connection
with the issuance of shares of the Common Stock or the issuance of any of the
securities described in this Section 5.3 consists of property other than cash,
such consideration shall be deemed to have a fair market value as is reasonably
determined in good faith by the Board of Directors of the Company (including, as
long as Section 4.2 is in effect, at least one director elected either by the
New Investors or the Participating Investors).

          (f)   EXCEPTIONS TO ANTI-DILUTION ADJUSTMENTS. This Section 5.3
shall not apply (A) under any of the circumstances which would constitute an
Extraordinary Common Stock Event (as described below) (such circumstances being
accounted for pursuant to Section 5.4 hereof), (B) to the issuance of

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Common Stock upon the conversion of the Series B-2 Stock or the Series B Stock,
the issuance of Series B-2 Preferred Stock upon exercise of the warrants to
acquire Series B-2 Preferred Stock issued under the Stock Purchase Agreement
(the "Warrants"), and any shares of Common Stock upon exercise of the Warrants,
(C) to the issuance of Preferred Stock or Common Stock in connection with the
exercise of registration rights (including, without limitation, upon the
exercise of warrants) of the Series B Preferred Stock, or the registration
rights of the Series B-2 Stock hereunder or under the Stockholders Agreement, or
(D) upon exercise of the warrants or options to purchase shares of Common Stock,
or other securities convertible into shares of Common Stock, outstanding prior
to, or issued on, the original issue date of the Series B-2 Stock sold under
that certain Series B-2 Preferred Stock Purchase Agreement (the "Stock Purchase
Agreement"), entered into as of August 4, 2004 between and among the Company and
the holders of the Series B-2 Stock named therein. Further, this Section 5.3
shall not apply with respect to the issuance or sale of shares of Common Stock,
or the grant or options exercisable therefor, issued or issuable after the
original issue date of the Series B-2 Preferred Stock (sold under the Stock
Purchase Agreement) to

            (i)   directors, officers, employees and consultants of the Company
              or any subsidiary pursuant to any qualified or non-qualified stock
              option plan or agreement, stock purchase plan or agreement, stock
              restriction agreement, employee stock ownership plan, consultant
              equity compensation plan or arrangement approved by the Board of
              Directors or an authorized committee thereof, including any
              repurchase or stock restriction agreement, or such other options,
              issuances, arrangements, agreements or plans intended principally
              as a means of providing compensation for employment or services
              and approved by the Board of Directors;

            (ii)  Capital stock, or options or warrants to purchase capital
              stock, issued to financial institutions or lessors in connection
              with commercial credit arrangements, equipment financings,
              commercial property lease transactions or similar transactions;

            (iii) Capital stock, or warrants or options to purchase capital
              stock, issued in connection with bona fide acquisitions, mergers
              or similar transactions, the terms of which are approved by the
              Board of Directors of the Company; and

            (iv)  Capital stock issued or issuable to an entity as a component
              of any business relationship with such entity for the purpose of
              (A) joint venture, technology licensing or development activities,
              (B) distribution, supply or manufacture of the Company's products
              or services or (C) any other arrangements involving corporate
              partners that are primarily for purposes other than raising
              capital, the terms of which business relationship with such entity
              are approved by the Board of Directors.

          (g)   NO FRACTIONAL ADJUSTMENTS. No adjustment of the Conversion
Ratio shall be made in an amount less than one cent per share, provided that any
adjustments which are not required to be made by reason of this sentence shall
be carried forward and shall be either taken into account in any subsequent
adjustment made prior to three years from the date of the event giving rise to
the adjustment being carried forward, or shall be made at the end of three years
from the date of the event giving rise to the adjustment

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being carried forward.

          (h)   NO INCREASED CONVERSION PRICE. Notwithstanding any other
provisions of this Section 5.3, except to the limited extent provided for in
Sections 5.3 (b) (ii), no adjustment of the Conversion Price pursuant to this
Section 5.3 shall have the effect of increasing the Conversion Price above the
Conversion Price in effect immediately prior to such adjustment.

      5.4   ADJUSTMENT UPON EXTRAORDINARY COMMON STOCK EVENT. Upon the happening
of an Extraordinary Common Stock Event (as hereinafter defined), the Applicable
Conversion Price for each series of Preferred Shares shall, simultaneously with
the happening of such Extraordinary Common Stock Event, be adjusted by
multiplying such Applicable Conversion Price by a fraction, the numerator of
which shall be the number of shares of Common Stock outstanding immediately
prior to such Extraordinary Common Stock Event and the denominator of which
shall be the number of shares of Common Stock outstanding immediately after such
Extraordinary Common Stock Event, and the product so obtained shall thereafter
be the Applicable Conversion Price for such series of Preferred Shares which, as
so adjusted, shall be readjusted in the same manner upon the happening of any
successive Extraordinary Common Stock Event or Events.

      An "Extraordinary Common Stock Event" shall mean (i) the issue of
additional shares of Common Stock as a dividend or other distribution on
outstanding shares of Common Stock, (ii) a subdivision of outstanding shares of
Common Stock into a greater number of shares of Common Stock, or (iii) a
combination or reverse stock split of outstanding shares of Common Stock into a
smaller number of shares of the Common Stock.

      5.5   ADJUSTMENT UPON CERTAIN DIVIDENDS. In the event the Company shall
make or issue, or shall fix a record date for the determination of holders of
Common Stock entitled to receive, a dividend or other distribution (other than a
distribution in Liquidation or other distribution otherwise provided for herein)
with respect to the Common Stock payable in (i) securities of the Company other
than shares of Common Stock, or (ii) other assets (excluding cash dividends or
distributions), then and in each such event provision shall be made so that the
holders of the Preferred Shares shall receive upon conversion thereof in
addition to the number of shares of Common Stock receivable thereupon, the
number of securities or such other assets of the Company which they would have
received had their Preferred Shares been converted into Common Stock on the date
of such event and had they thereafter, during the period from the date of such
event to and including the Conversion Date, retained such securities or such
other assets receivable by them, giving application to all other adjustments
called for during such period under this Section 5.

      5.6   ADJUSTMENT UPON CAPITAL REORGANIZATION OR RECLASSIFICATION. If the
Common Stock shall be changed into the same or different number of shares of any
other class or classes of capital stock, whether by capital reorganization,
recapitalization, reclassification or otherwise (other than an Extraordinary
Common Stock Event provided for in Section 5.4, a dividend or other distribution
provided for in Section 5.5, or a merger or other transaction provided for in
Section 5.7), then and in each such event the holders of Preferred Shares shall
have the right thereafter to convert such Preferred Shares into, in lieu of the
number of shares of Common Stock which the holder would otherwise have been
entitled to receive, the kind and amount of shares of capital stock and other
securities and property receivable upon such reorganization, recapitalization,
reclassification or other change by

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<PAGE>

the holders of the number of shares of Common Stock into which such Preferred
Shares could have been converted immediately prior to such reorganization,
recapitalization, reclassification or change, all subject to further adjustment
as provided herein.

      5.7   ADJUSTMENT FOR MERGER OR REORGANIZATION, ETC.

          (a)   In case of any consolidation or merger of the Company with or
into another corporation or the sale of all or substantially all of the assets
of the Company to another corporation (other than a consolidation, merger or
sale which is treated as a Liquidation pursuant to Section 3.2): if the
surviving entity shall consent in writing to the following provisions, then each
share of Series B-2 Preferred Stock shall thereafter be convertible into the
kind and amount of shares of stock or other securities or property to which a
holder of the number of shares of Common Stock of the Company deliverable upon
conversion of such Series B-2 Preferred Stock would have been entitled upon such
consolidation, merger or sale; and, in such case, appropriate adjustment (as
determined in good faith by the Board of Directors) shall be made in the
application of the provisions in this Section 5 set forth with respect to the
rights and interest thereafter of the holders of the Series B-2 Preferred Stock,
to the end that the provisions set forth in this Section 5 (including provisions
with respect to changes in and other adjustments of the Conversion Value) shall
thereafter be applicable, as nearly as reasonably may be, in relation to any
shares of stock or other property thereafter deliverable upon the conversion of
the Series B-2 Preferred Stock;

          (b)   The provision for such conversion rights shall be a condition
precedent to the consummation by the Company of any such transaction unless the
election described below is made.

          (c)   In the case of a transaction to which both this Section 5.7
and Section 3.2 apply, the holders of a majority of the outstanding shares of
Series B-2 Preferred Stock (voting as a separate class) shall have the option of
electing treatment for the Series B-2 Preferred Stock under either this Section
5.7, or under Section 3.2, notice of which election shall be submitted in
writing to the Company at its principal office no later than five (5) business
days before the effective date of such event. If no such election shall be made,
the provisions of Section 3.2, and not this Section 5.7, shall apply.

      5.8   CERTIFICATE AS TO ADJUSTMENTS; NOTICE BY COMPANY. In each case of an
adjustment or readjustment of the Applicable Conversion Price, the Company at
its expense will furnish each holder of Preferred Shares so affected with a
certificate prepared by the Treasurer or Chief Financial Officer of the Company,
showing such adjustment or readjustment, and stating in detail the facts upon
which such adjustment or readjustment is based.

      5.9   EXERCISE OF CONVERSION PRIVILEGE. To exercise its conversion
privilege, a holder of Preferred Shares shall surrender the certificate or
certificates representing the shares being converted to the Company at its
principal office, and shall give written notice to the Company at that office
that such holder elects to convert such shares. Such notice shall also state the
name or names (with address or addresses) in which the certificate or
certificates for shares of Common Stock issuable upon such conversion shall be
issued. The certificate or certificates for Preferred Shares surrendered for
conversion shall be accompanied by proper assignment thereof to the Company or
in blank. The date when such written notice is received by the

                                       11

<PAGE>

Company, together with the certificate or certificates representing the
Preferred Shares being converted, shall be the "Conversion Date". As promptly as
practicable after the Conversion Date, the Company shall issue and deliver to
the holder of the Preferred Shares being converted, or on its written order,
such certificate or certificates as it may request for the number of whole
shares of Common Stock issuable upon the conversion of such Preferred Shares in
accordance with the provisions of this Section 5. No fractional shares of Common
Stock shall be issued upon conversion, and no cash shall be paid in lieu
thereof; the conversion rights with respect to fractional shares being forfeited
on the Conversion Date. Such conversion shall be deemed to have been effected
immediately prior to the close of business on the Conversion Date, and at such
time the rights of the holder as holder of the converted Preferred Shares shall
cease and the person(s) in whose name(s) any certificate(s) for shares of Common
Stock shall be issuable upon such conversion shall be deemed to have become the
holder or holders of record of the shares of Common Stock represented thereby.
The Company shall pay any and all issue and other taxes that may be payable in
respect of any issue or delivery of shares of Common Stock on conversion of the
Preferred Shares.

      5.10  PARTIAL CONVERSION. In the event some but not all of the Preferred
Shares represented by a certificate(s) surrendered by a holder are converted,
the Company shall execute and deliver to or on the order of the holder, at the
expense of the Company, a new certificate representing the number of shares of
such series of Preferred Stock which were not converted.

      5.11  RESERVATION OF COMMON STOCK. The Company shall at all times reserve
and keep available out of its authorized but unissued shares of Common Stock,
solely for the purpose of effecting the conversion of the Preferred Shares, such
number of its shares of Common Stock as shall from time to time be sufficient to
effect the conversion of all outstanding Preferred Shares (including any
Preferred Shares represented by any dividends, warrants, options, subscription
or purchase rights for Preferred Shares), and if at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to effect
the conversion of all then outstanding Preferred Shares (including any Preferred
Shares represented by any dividends, warrants, options, subscriptions or
purchase rights for Preferred Shares) the Company shall take such action as may
be necessary to increase its authorized but unissued shares of Common Stock to
such number of shares as shall be sufficient for such purpose.

   6. REGISTRATION RIGHTS FOR CONVERSION SHARES.

The Company undertakes to register the shares of Common Stock to be received
upon conversion of the shares of Series B-2 Stock ("Conversion Shares") upon the
exercise of the registration rights set forth in the Stockholders Agreement.

   7. NO DILUTION OR IMPAIRMENT. The Company will not, by amendment of its
Articles of Incorporation, this Certificate of Designations, by resolution or
through any reorganization, transfer of capital stock or assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of the
Series B-2 Preferred Stock set forth herein, but will at all times in good faith
assist in the carrying out of all such terms; provided, however, that no
transactions or series of related transactions entered into by the Company with
one or more third parties, shall be considered to be a violation of the
immediately preceding sentence if such

                                       12

<PAGE>

transactions have been duly authorized by the Company's Board of Directors, and,
to the extent required under the NRS, the Certificate of Incorporation, or any
Certificates of Designations, the holders of the Company's capital stock, voting
according to class and series as so required. Without limiting the generality of
the foregoing, the Company (a) will not increase the par value of any shares of
stock receivable on the conversion of the Series B-2 Preferred Stock above the
amount payable therefor on such conversion, and (b) will take such action as may
be necessary or appropriate in order that the Company may validly and legally
issue fully paid and nonassessable shares of stock on the conversion of all
Series B-2 Preferred Stock from time to time outstanding.

   8. SINKING FUND. There shall be no sinking fund for the payment of dividends
or liquidation preferences on the Series B-2 Preferred Stock or any other series
of Preferred Stock or the redemptions of any shares of Series B-2 Preferred
Stock or any other series of Preferred Stock.

   9. AMENDMENT. This Certificate of Designations constitutes an agreement
between the Company and the holders of the Preferred Shares. For as long as any
shares of Series B-2 Preferred Stock are outstanding, the terms hereof may be
amended, modified, repealed or waived only by vote of the Board of Directors of
the Company and a vote of the holders of a majority of the outstanding shares of
Series B-2 Preferred Stock, voting together as a class and series; provided,
that, in addition to such vote, any amendment, modification or waiver of rights
set forth in Section 4.2 shall require the approval of the New Investors and/or
the Participating Investors as set forth in the Stockholders Agreement.

IN WITNESS WHEREOF, WARP Technology Holdings, Inc. has caused this Certificate
to be signed by Gus Bottazi, its CEO and President, this 3rd day of August,
2004.

/s/ Gus Bottazzi

------------------------
Gus Bottazzi
CEO and President

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</TEXT>
</DOCUMENT>
