<PAGE>   1



                                                                  EXHIBIT 3.1(d)
9T-637                                                                     14819

                          CERTIFICATE OF DESIGNATION OF
                     SERIES D 8% CONVERTIBLE PREFERRED STOCK
                                       OF
                               CAFE ODYSSEY, INC.
               --------------------------------------------------
                       Pursuant to Section 302A.401 of the
               Business Corporation Act of the State of Minnesota
               --------------------------------------------------

         Cafe Odyssey, Inc., a corporation organized and existing under the
Business Corporation Act of the State of Minnesota (the "Corporation"), hereby
certifies that the following resolutions were adopted by the Board of Directors
of the Corporation on August 19, 1999 pursuant to authority of the Board of
Directors as required by Section 302A.401, Subdivision 3 of the Business
Corporation Act of the State of Minnesota:

         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 Article of Incorporation, the Board of
Directors hereby authorizes a series of the Corporation's preferred stock (the
"Preferred Stock"), and hereby states the designation and number of shares, and
fixes the relative rights, preferences, privileges, powers and restrictions
thereof as follows:

         Series D 8% Convertible Preferred Stock:


                                    ARTICLE 1
                                   DEFINITIONS

         The terms defined in this Article whenever used in this Certificate of
Designation have the following respective meanings:

         (a) "Additional Capital Shares" has the meaning set forth in Section
6.1(c).

         (b) "Affiliate" has the meaning ascribed to such term in Rule 12b-2
under the Securities Exchange Act of 1934, as amended.

         (c) "Business Day" means a day other than Saturday, Sunday or any day
on which banks located in the State of New York are authorized or obligated to
close.

         (d) "Capital Shares" means the Common Shares and any other shares of
any other class or series of common stock, whether now or hereafter authorized
and however designated, which have the right to participate in the distribution
of earnings and assets (upon dissolution, liquidation or winding-up) of the
Corporation.

         (e) "Closing Date" means August 31, 1999.

         (f) "Common Shares" or "Common Stock" means shares of common stock, par
value $0.01 per share, of the Corporation.





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         (g) "Common Stock Issued at Conversion" when used with reference to the
securities issuable upon conversion of the Series D Preferred Stock, means all
Common Shares now or hereafter Outstanding and securities of any other class or
series into which the Series D Preferred Stock hereafter shall have been changed
or substituted, whether now or hereafter created and however designated.

         (h) "Conversion Date" means any day on which all or any portion of
shares of the Series D Preferred Stock is converted in accordance with the
provisions hereof.

         (i) "Conversion Notice" has the meaning set forth in Section 6.2.

         (j) "Conversion Price" means on any date of determination the
applicable price for the conversion of shares of Series D Preferred Stock into
Common Shares on such day as set forth in Section 6.1.

         (k) "Conversion Ratio" means on any date of determination the
applicable percentage of the Market Price for conversion of shares of Series D
Preferred Stock into Common Shares on such day as set forth in Section 6.1.

         (l) "Corporation" means Cafe Odyssey, Inc., a Minnesota corporation,
and any successor or resulting corporation by way of merger, consolidation, sale
or exchange of all or substantially all of the Corporation's assets, or
otherwise.

         (m) "Current Market Price" means on any date of determination the
closing bid price of a Common Share on such day as reported on the Nasdaq
SmallCap Market ("Nasdaq"); provided, if such security bid is not listed or
admitted to trading on the Nasdaq, as reported on the principal national
security exchange or quotation system on which such security is quoted or listed
or admitted to trading, or, if not quoted or listed or admitted to trading on
any national securities exchange or quotation system, the closing bid price of
such security on the over-the-counter market on the day in question as reported
by Bloomberg LP, or a similar generally accepted reporting service, as the case
may be.

         (n) "Holder" means The Shaar Fund Ltd., any successor thereto, or any
Person or Persons to whom the Series D Preferred Stock is subsequently
transferred in accordance with the provisions hereof.

         (o) "Market Disruption Event" means any event that results in a
material suspension or limitation of trading of the Common Shares on Nasdaq.

         (p) "Market Price" per Common Share means the arithmetic mean of the
closing bid prices of the Common Shares as reported on Nasdaq for five Trading
Days during any Valuation Period; provided, if such security bid is not listed
or admitted to trading on the Nasdaq, as reported on the principal national
security exchange or quotation system on which such security is quoted or listed
or admitted to trading, or, if not quoted or listed or admitted to trading on
any national securities exchange or quotation system, the closing bid price of
such security on the over-the-counter market on the day in question as reported
by Bloomberg LP, or a





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similar generally accepted reporting service, as the case may be, for five
Trading Days during any Valuation Period.

         (q) "Outstanding" when used with reference to Common Shares or Capital
Shares (collectively, "Shares"), means, on any date of determination, all issued
and outstanding Shares, and includes all such Shares issuable in respect of
outstanding scrip or any certificates representing fractional interests in such
Shares; provided, however, that any such Shares directly or indirectly owned or
held by or for the account of the Corporation or any Subsidiary of the
Corporation shall not be deemed "Outstanding" for purposes hereof.

         (r) "Person" means an individual, a corporation, a partnership, an
association, a limited liability company, an unincorporated business
organization, a trust or other entity or organization, and any government or
political subdivision or any agency or instrumentality thereof.

         (s) "Proposed Transactions" means the Corporation's proposed
acquisition of Popmail.com, Inc. and transactions directly related thereto,
including the proposed Internet Community Concepts and ROI Interactive, LLC
acquisitions.

         (t) "Registration Rights Agreement" means that certain Registration
Rights Agreement dated a date even herewith between the Corporation and The
Shaar Fund Ltd.

         (u) "Restaurant Divestiture" means any divestiture, sale, transfer,
conveyance or spinoff of all or substantially all of the Corporation's assets
constituting its restaurants.

         (v) "SEC" means the United States Securities and Exchange Commission.

         (w) "Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations of the SEC thereunder, all as in effect at the time.

         (x) "Securities Purchase Agreement" means that certain Securities
Purchase Agreement dated a date even herewith between the Corporation and The
Shaar Fund Ltd.

         (y) "Series D Preferred Shares" or "Series D Preferred Stock" means the
shares of Series D 8% Convertible Preferred Stock of the Corporation or such
other convertible Preferred Stock exchanged therefor.

         (z) "Stated Value" has the meaning set forth in Article 2.

         (aa)     "Subsidiary" means any entity of which securities or other
ownership interests having ordinary voting power to elect a majority of the
board of directors or other persons performing similar functions are owned
directly or indirectly by the Corporation.

         (bb)     "Trading Day" means any day on which purchases and sales of
securities authorized for quotation on Nasdaq are reported thereon and on which
no Market Disruption Event has occurred.

         (cc)     "Valuation Event" has the meaning set forth in Section 6.1.



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         (dd)  "Valuation Period" means the five Trading Day period immediately
preceding the Conversion Date.

         All references to "cash" or "$" herein means currency of the United
States of America.


                                    ARTICLE 2
                             DESIGNATION AND AMOUNT

         The designation of this series, which consists of 2,500 shares of
Preferred Stock, is Series D 8% Convertible Preferred Stock (the "Series D
Preferred Stock"), with a par value of $0.01 per share, and the stated value
shall be $1,000 per share (the "Stated Value").


                                 ARTICLE 3 RANK

         The Series D Preferred Stock shall rank (i) prior to the Common Stock;
(ii) prior to any class or series of capital stock of the Corporation hereafter
created other than "Pari Passu Securities" (collectively, with the Common Stock,
"Junior Securities"); and (iii) pari passu with the Corporation's Series A 8%
Convertible Preferred Stock, Series B Convertible Preferred Stock, Series C 8%
Convertible Preferred Stock, and any class or series of capital stock of the
Corporation hereafter created specifically ranking on parity with the Series D
Preferred Stock ("Pari Passu Securities").


                               ARTICLE 4 DIVIDENDS

         (a)(i) The Holder shall be entitled to receive, when, as and if
     declared by the Board of Directors, out of funds legally available for the
     payment of dividends, dividends (subject to Article 4(a)(ii) hereof) at the
     rate of 8% per annum (computed on the basis of a 360-day year) (the
     "Dividend Rate") on the Liquidation Value (as defined below) of each share
     of Series D Preferred Stock on and as of the most recent Dividend Payment
     Due Date (as defined below) with respect to each Dividend Period (as
     defined below). Dividends on the Series D Preferred Stock shall be
     cumulative from the date of issue, whether or not declared for any reason,
     including if such declaration is prohibited under any outstanding
     indebtedness or borrowings of the Corporation or any of its Subsidiaries,
     or any other contractual provision binding on the Corporation or any of its
     Subsidiaries, and whether or not there shall be funds legally available for
     the payment thereof.

            (ii)   Each dividend shall be payable in equal quarterly amounts on
     each March 31, June 30, September 30 and December 31 of each year (each, a
     "Dividend Payment Due Date"), commencing September 30, 1999, to the holders
     of record of shares of the Series D Preferred Stock, as they appear on the
     stock records of the Corporation at the close of business on any record
     date, not more than 60 days or less than 10 days preceding the payment
     dates thereof, as shall be fixed by the Board of Directors. For the




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         purposes hereof, "Dividend Period" means the quarterly period
         commencing on and including the Issue Date (as defined below) or, if a
         dividend has previously been paid, the day after the immediately
         preceding Dividend Payment Due Date and ending on and including the
         immediately subsequent Dividend Payment Due Date. Accrued and unpaid
         dividends for any past Dividend Period may be declared and paid at any
         time, without reference to any Dividend Payment Due Date, to holders of
         record on such date, not more than 15 days preceding the payment date
         thereof, as may be fixed by the Board of Directors.

                   (iii)   At the option of the Corporation, the dividend shall
         be paid in cash or through the issuance of duly and validly authorized
         and issued, fully paid and nonassessable, freely tradeable shares of
         the Common Stock valued at the Market Price. The Common Stock to be
         issued in lieu of cash payments shall be registered for resale in the
         Registration Statement (as defined in the Registration Rights
         Agreement) to be filed by the Corporation to register the Common Stock
         issuable upon conversion of the shares of Series D Preferred Stock and
         exercise of the Warrants as set forth in the Registration Rights
         Agreement. Notwithstanding the foregoing, until such Registration
         Statement (as defined in the Registration Rights Agreement) has been
         declared effective under the Securities Act by the SEC, payment of
         dividends on the Series D Preferred Stock shall be in cash.

               (b) Except as provided in Section 4(e) hereof, the Holder shall
not be entitled to any dividends in excess of the cumulative dividends, as
herein provided, on the Series D Preferred Stock. Except as provided in this
Article 4, no interest, or sum of money in lieu of interest, shall be payable in
respect of any dividend payment or payments on the Series D Preferred Stock that
may be in arrears.

               (c) So long as any shares of the Series D Preferred Stock are
outstanding, no dividends, except as described in the next succeeding sentence,
shall be declared or paid or set apart for payment on Pari Passu Securities for
any period unless full cumulative dividends required to be paid in cash have
been or contemporaneously are declared and paid or declared and a sum sufficient
for the payment thereof set apart for such payment on the Series D Preferred
Stock for all Dividend Periods terminating on or prior to the date of payment of
the dividend on such class or series of Pari Passu Securities. When dividends
are not paid in full or a sum sufficient for such payment is not set apart, as
aforesaid, all dividends declared upon shares of the Series D Preferred Stock
and all dividends declared upon any other class or series of Pari Passu
Securities shall be declared ratably in proportion to the respective amounts of
dividends accumulated and unpaid on the Series D Preferred Stock and accumulated
and unpaid on such Pari Passu Securities.

               (d) So long as any shares of the Series D Preferred Stock are
outstanding, no dividends shall be declared or paid or set apart for payment or
other distribution declared or made upon Junior Securities, nor shall any Junior
Securities be redeemed, purchased or otherwise acquired (other than a
redemption, purchase or other acquisition of shares of Common Stock made for
purposes of an employee incentive or benefit plan (including a stock option
plan) of the Corporation or any subsidiary), (all such dividends, distributions,
redemptions or purchases being hereinafter referred to as a "Junior Securities
Distribution") for any



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consideration (or any moneys be paid to or made available for a sinking fund for
the redemption of any shares of any such stock) by the Corporation, directly or
indirectly, unless in each case (i) the full cumulative dividends required to be
paid in cash on all outstanding shares of the Series D Preferred Stock and any
other Pari Passu Securities shall have been paid or set apart for payment for
all past Dividend Periods with respect to the Series D Preferred Stock and all
past dividend periods with respect to such Pari Passu Securities, and (ii)
sufficient funds shall have been paid or set apart for the payment of the
dividend for the current Dividend Period with respect to the Series D Preferred
Stock and the current dividend period with respect to such Pari Passu
Securities.

         (e) If at any time the Corporation shall declare or pay a dividend on,
or other distribution on, the Common Shares payable in Common Shares (a "Stock
Dividend"), the Board of Directors shall declare a dividend (the "Series D Stock
Dividend") on the aggregate Series D Preferred Shares then outstanding of that
number of Common Shares equal to the number of Common Shares the Holder would
have received had it converted all its then outstanding Series D Preferred
Shares, and exercised the Warrant in full for all the Common Shares then
underlying the Warrant, immediately prior to the Stock Dividend. The Series D
Stock Dividend shall be payable to the Holder concurrently with the payment of
the Stock Dividend to the holders of Common Shares, and the Common Shares issued
pursuant to the Series D Stock Dividend shall be duly and validly authorized and
issued, fully paid and nonassessable.


                                    ARTICLE 5
                             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 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 upon liquidation, dissolution or winding-up unless
prior thereto, the holders of shares of Series D Preferred Stock, subject to
this Article 5, shall have received the Liquidation Preference (as defined in
Article 5(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 D Preferred Stock and holders of Pari Passu Securities
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




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distribution to the Series D 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.

         (b) At the option of each Holder, the sale, conveyance of 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 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 and as a condition to, such transaction an amount equal to
120% (100% if the provisions of this Article 5(b) are triggered by a Restaurant
Divestiture) of the Liquidation Preference with respect to each outstanding
share of Series D Preferred Stock in accordance with and subject to the terms of
this Article 5 or (ii) be treated pursuant to Article 5(c)(iii) hereof;
provided, that all holders of Series D Preferred Stock shall be deemed to elect
the option set forth in clause (i) hereof if at least a majority in interest of
such holders elect such option; provided, further, that the provisions of this
Article 5(b) shall not apply to the Proposed Transaction.

         (c) For purposes hereof, the "Liquidation Preference" with respect to a
share of the Series D Preferred Stock shall mean an amount equal to the sum of
(i) the Stated Value thereof, plus (ii) an amount equal to 30% of such Stated
Value, plus (iii) the aggregate of all accrued and unpaid dividends on such
share of Series D Preferred Stock until the most recent Dividend Payment Due
Date; provided that, in the event of an actual liquidation, dissolution or
winding up of the Corporation, the amount referred to in clause (iii) above
shall be calculated by including accrued and unpaid dividends to the actual date
of such liquidation, dissolution or winding up, rather than the Dividend Payment
Due Date referred to above.


                                    ARTICLE 6
                          CONVERSION OF PREFERRED STOCK

         Section 6.1      Conversion; Conversion Price

         At the option of the Holder, the shares of Series D Preferred Stock may
be converted, either in whole or in part, into Common Shares (calculated as to
each such conversion to the nearest 1/100th of a share), at any time, and from
time to time following the date of issuance of the Series D Preferred Stock (the
"Issue Date") at a Conversion Price per share of Common Stock equal to 65% of
the Market Price. At the Corporation's option, the amount of accrued and unpaid
dividends as of the Conversion Date shall not be subject to conversion but
instead may be paid in cash as of the Conversion Date; if the Corporation elects
to convert the amount of accrued and unpaid dividends at the Conversion Date
into Common Stock, the Common Stock issued to the Holder shall be valued at the
applicable Conversion Price.

         The number of shares of Common Stock due upon conversion of Series D
Preferred Stock shall be (i) the number of shares of Series D Preferred Stock to
be converted, multiplied by (ii) the Stated Value and divided by (iii) the
applicable Conversion Price.




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<PAGE>   8


         Within two Business Days of the occurrence of a Valuation Event, the
Corporation shall send notice (the "Valuation Event Notice") of such occurrence
to the Holder. Notwithstanding anything to the contrary contained herein, if a
Valuation Event occurs during any Valuation Period, a new Valuation Period shall
begin on the Trading Day immediately following the occurrence of such Valuation
Event and end on the Conversion Date; provided that, if a Valuation Event occurs
on the fifth day of any Valuation Period, then the Conversion Price shall be the
Current Market Price of the Common Shares on such day; and provided, further,
that the Holder may, in its discretion, postpone such Conversion Date to a
Trading Day which is no more than five Trading Days after the occurrence of the
latest Valuation Event by delivering a notification to the Corporation within
two Business Days of the receipt of the Valuation Event Notice. In the event
that the Holder deems the Valuation Period to be other than the five Trading
Days immediately prior to the Conversion Date, the Holder shall give written
notice of such fact to the Corporation in the related Conversion Notice at the
time of conversion.

         For purposes of this Section 6.1, a "Valuation Event" shall mean an
event in which the Corporation at any time during a Valuation Period takes any
of the following actions:

         (a)   subdivides or combines its Capital Shares;

         (b)   makes any distribution on its Capital Shares;

         (c)   issues any additional Capital Shares (the "Additional Capital
Shares"), otherwise than as provided in the foregoing Sections 6.1(a) and 6.1(b)
above, at a price per share less, or for other consideration lower, than the
Current Market Price in effect immediately prior to such issuances, or without
consideration, except for issuances under employee benefit plans consistent with
those presently in effect and issuances under presently outstanding warrants,
options or convertible securities;

         (d)   issues any warrants, options or other rights to subscribe for or
purchase any Additional Capital Shares and the price per share for which
Additional Capital Shares may at any time thereafter be issuable pursuant to
such warrants, options or other rights shall be less than the Current Market
Price in effect immediately prior to such issuance;

         (e)   issues any securities convertible into or exchangeable or
exercisable for Additional Capital Shares and the consideration per share for
which Additional Capital Shares may at any time thereafter be issuable pursuant
to the terms of such convertible, exchangeable or exercisable securities shall
be less than the Current Market Price in effect immediately prior to such
issuance;

         (f)   makes a distribution of its assets or evidences of indebtedness
to the holders of its Capital Shares as a dividend in liquidation or by way of
return of capital or other than as a dividend payable out of earnings or surplus
legally available for the payment of dividends under applicable law or any
distribution to such holders made in respect of the sale of all or substantially
all of the Corporation's assets (other than under the circumstances provided for
in the foregoing Sections 6.1(a) through 6.1(e)); or



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         (g) takes any action affecting the number of Outstanding Capital
Shares, other than an action described in any of the foregoing Sections 6.1(a)
through 6.1(f) hereof, inclusive, which in the opinion of the Corporation's
Board of Directors, determined in good faith, would have a material adverse
effect upon the rights of the Holder at the time of a conversion of the Series D
Preferred Stock.

         Section 6.2     Exercise of Conversion Privilege

         (a) Conversion of the Series D Preferred Stock may be exercised, in
whole or in part, by the Holder by telecopying an executed and completed notice
of conversion in the form annexed hereto as Annex I (the "Conversion Notice") to
the Corporation. Each date on which a Conversion Notice is telecopied to the
Corporation in accordance with the provisions of this Section 6.2 shall
constitute a Conversion Date. The Corporation shall convert the Preferred Stock
and issue the Common Stock Issued at Conversion, and all voting and other rights
associated with the beneficial ownership of the Common Stock Issued at
Conversion shall vest with the Holder, effective as of the Conversion Date at
the time specified in the Conversion Notice. The Conversion Notice also shall
state the name or names (with addresses) of the persons who are to become the
holders of the Common Stock Issued at Conversion in connection with such
conversion. The Holder shall deliver the shares of Series D Preferred Stock to
the Corporation by express courier within 15 days following the date on which
the telecopied Conversion Notice has been transmitted to the Corporation. Upon
surrender for conversion, the Series D Preferred Stock shall be accompanied by a
proper assignment thereof to the Corporation or be endorsed in blank. As
promptly as practicable after the receipt of the Conversion Notice as aforesaid,
but in any event not more than five Business Days after the Corporation's
receipt of such Conversion Notice, the Corporation shall (i) issue the Common
Stock issued at Conversion in accordance with the provisions of this Article 6,
and (ii) cause to be mailed for delivery by overnight courier to the Holder (x)
a certificate or certificate(s) representing the number of Common Shares to
which the Holder is entitled by virtue of such conversion, (y) cash, as provided
in Section 6.3, in respect of any fraction of a Common Share issuable upon such
conversion and (z) cash in the amount of accrued and unpaid dividends as of the
Conversion Date. Such conversion shall be deemed to have been effected at the
time at which the Conversion Notice indicates so long as the Series D Preferred
Stock shall have been surrendered as aforesaid at such time, and at such time
the rights of the Holder of the Series D Preferred Stock, as such, shall cease
and the Person or Persons in whose name or names the Common Stock Issued at
Conversion shall be issuable shall be deemed to have become the holder or
holders of record of the Common Shares represented thereby and all voting and
other rights associated with the beneficial ownership of such Common Shares
shall at such time vest with such Person or Persons. The Conversion Notice shall
constitute a contract between the Holder and the Corporation, whereby the Holder
shall be deemed to subscribe for the number of Common Shares which it will be
entitled to receive upon such conversion and, in payment and satisfaction of
such subscription (and for any cash adjustment to which it is entitled pursuant
to Section 6.4), to surrender the Series D Preferred Stock and to release the
Corporation from all liability thereon. No cash payment aggregating less than
$1.00 shall be required to be given unless specifically requested by the Holder.




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<PAGE>   10




         (b) If, at any time (i) the Corporation challenges, disputes or denies
the right of the Holder hereof to effect the conversion of the Series D
Preferred Stock into Common Shares or otherwise dishonors or rejects any
Conversion Notice delivered in accordance with this Section 6.2 or (ii) any
third party who is not and has never been an Affiliate of the Holder commences
any lawsuit or proceeding or otherwise asserts any claim before any court or
public or governmental authority which seeks to challenge, deny, enjoin, limit,
modify, delay or dispute the right of the Holder hereof to effect the conversion
of the Series D Preferred Stock into Common Shares, then the Holder shall have
the right, by written notice to the Corporation, to require the Corporation to
promptly redeem the Series D Preferred Stock for cash at a redemption price
equal to 135% of the Stated Value thereof together with all accrued and unpaid
dividends thereon (the "Mandatory Purchase Amount"). Under any of the
circumstances set forth above, the Corporation shall be responsible for the
payment of all costs and expenses of the Holder, including reasonable legal fees
and expenses, as and when incurred in disputing any such action or pursuing its
rights hereunder (in addition to any other rights of the Holder).

         Section 6.3     Fractional Shares

         No fractional Common Shares or scrip representing fractional Common
Shares shall be issued upon conversion of the Series D Preferred Stock. Instead
of any fractional Common Shares which otherwise would be issuable upon
conversion of the Series D Preferred Stock, the Corporation shall pay a cash
adjustment in respect of such fraction in an amount equal to the same fraction.
No cash payment of less than $1.00 shall be required to be given unless
specifically requested by the Holder.

         Section 6.4     Reclassification, Consolidation, Merger or Mandatory
Share Exchange

         At any time while the Series D Preferred Stock remains outstanding and
any shares thereof have not been converted, in case of any reclassification or
change of Outstanding Common Shares issuable upon conversion of the Series D
Preferred Stock (other than a change in par value, or from par value to no par
value per share, or from no par value per share to par value or as a result of a
subdivision or combination of outstanding securities issuable upon conversion of
the Series D Preferred Stock) or in case of any consolidation, merger or
mandatory share exchange of the Corporation with or into another corporation
(other than a merger or mandatory share exchange with another corporation in
which the Corporation is a continuing corporation and which does not result in
any reclassification or change, other than a change in par value, or from par
value to no par value per share, or from no par value per share to par value, or
as a result of a subdivision or combination of Outstanding Common Shares upon
conversion of the Series D Preferred Stock), or in the case of any sale or
transfer to another corporation of the property of the Corporation as an
entirety or substantially as an entirety, the Corporation, or such successor,
resulting or purchasing corporation, as the case may be, shall, without benefit
of any additional consideration therefor, execute a new Preferred Stock
providing that the Holder shall have the right to convert such new Preferred
Stock (upon terms and conditions not less favorable to the Holder than those in
effect pursuant to the Series D Preferred Stock) and to receive upon such
exercise, in lieu of each Common Share theretofore issuable upon conversion of
the Series D Preferred Stock, the kind and amount of shares of stock, other
securities, money



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<PAGE>   11



or property receivable upon such reclassification, change, consolidation,
merger, mandatory share exchange, sale or transfer by the holder of one Common
Share issuable upon conversion of the Series D Preferred Stock had the Series D
Preferred Stock been converted immediately prior to such reclassification,
change, consolidation, merger, mandatory share exchange or sale or transfer. The
provisions of this Section 6.4 shall similarly apply to successive
reclassifications, changes, consolidations, mergers, mandatory share exchanges
and sales and transfers.

         Section 6.5      Adjustments to Conversion Ratio

         For so long as any shares of the Series D Preferred Stock are
outstanding, if the Corporation: (i) issues and sells pursuant to an exemption
from registration under the Securities Act (A) Common Shares at a purchase price
on the date of issuance thereof that is lower than the Conversion Price, (B)
warrants or options with an exercise price representing a percentage of the
Current Market Price with an exercise price on the date of issuance of the
warrants or options that is lower than the agreed upon exercise price for the
Holder, except for employee stock option agreements or stock incentive
agreements of the Corporation, or (C) convertible, exchangeable or exercisable
securities with a right to exchange at lower than the Current Market Price on
the date of issuance or conversion, as applicable, of such convertible,
exchangeable or exercisable securities, except for stock option agreements or
stock incentive agreements; and (ii) grants the right to the purchaser(s)
thereof to demand that the Corporation register under the Securities Act such
Common Shares issued or the Common Shares for which such warrants or options may
be exercised or such convertible, exchangeable or exercisable securities may be
converted, exchanged or exercised, then the Conversion Ratio shall be reduced to
equal the lowest of any such lower rates.

         Section 6.6      Optional Redemption Under Certain Circumstances

         At anytime after the date of issuance of the Series D Preferred Stock
until the Mandatory Conversion Date (as defined below), the Corporation, upon
notice delivered to the Holder as provided in Section 6.7, may redeem, in cash,
the Series D Preferred Stock (but only with respect to such shares as to which
the Holder has not theretofore furnished a Conversion Notice in compliance with
Section 6.2), at 135% of the Stated Value thereof (the "Optional Redemption
Price"), together with all accrued and unpaid dividends thereon to the date of
redemption (the "Redemption Date"). Except as set forth in this Section 6.6, the
Corporation shall not have the right to prepay or redeem the Series D Preferred
Stock.

         Section 6.7      Notice of Redemption

         Notice of redemption pursuant to Section 6.6 shall be provided by the
Corporation to the Holder in writing (by registered mail or overnight courier at
the Holder's last address appearing in the Corporation's security registry) not
less than 10 nor more than 15 days prior to the Redemption Date, which notice
shall specify the Redemption Date and refer to Section 6.6 (including a
statement of the Market Price per Common Share) and this Section 6.7.




                                       11



<PAGE>   12




         Section 6.8     Surrender of Preferred Stock

         Upon any redemption of the Series D Preferred Stock pursuant to
Sections 6.6 or 6.7, the Holder shall either deliver the Series D Preferred
Stock by hand to the Corporation at its principal executive offices or surrender
the same to the Corporation at such address by express courier. Payment of the
optional Redemption Price specified in Section 6.6 shall be made by the
Corporation to the Holder against receipt of the Series D Preferred Stock (as
provided in this Section 6.8) by wire transfer of immediately available funds to
such account(s) as the Holder shall specify to the Corporation. If payment of
such redemption price is not made in full by the Mandatory Redemption Date or
the Redemption Date, as the case may be, the Holder shall again have the right
to convert the Series D Preferred Stock as provided in Article 6 hereof.

         Section 6.9     Mandatory Conversion

         On the fifth anniversary of the date of this Agreement (the "Mandatory
Conversion Date"), the Corporation shall convert all Series D Preferred Stock
outstanding at the Conversion Price.

         Section 6.10    Certain Conversion Limitations

         (a)   Notwithstanding anything herein to the contrary, the Holder shall
not have the right, and the Corporation shall not have the obligation, to
convert all or any portion of the Series D Preferred Stock (and the Corporation
shall not have the right to pay dividends on the Series D Preferred Stock in
shares of Common Stock) if and to the extent that the issuance to the Holder of
shares of Common Stock upon such conversion (or payment of dividends) would
result in the Holder being deemed the "beneficial owner" of more than 5% of the
then outstanding shares of Common Stock within the meaning of Section 13(d) of
the Securities Exchange Act of 1934, as amended, and the rules promulgated
thereunder. If any court of competent jurisdiction shall determine that the
foregoing limitation is ineffective to prevent a Holder from being deemed the
beneficial owner of more than 5% of the then outstanding shares of Common Stock,
then the Corporation shall redeem so many of such Holder's shares (the
"Redemption Shares") of Series D Preferred Stock as are necessary to cause such
Holder to be deemed the beneficial owner of not more than 5% of the then
outstanding shares of Common Stock. Upon such determination by a court of
competent jurisdiction, the Redemption Shares shall immediately and without
further action be deemed returned to the status of authorized but unissued
shares of Series D Preferred Stock, and the Holder shall have no interest in or
rights under such Redemption Shares. Any and all dividends paid on or prior to
the date of such determination shall be deemed dividends paid on the remaining
shares of Series D Preferred Stock held by the Holder. Such redemption shall be
for cash at a redemption price equal to the sum of (i) the Stated Value of the
Redemption Shares and (ii) any accrued and unpaid dividends to the date of such
redemption; provided, however, if the redemption is a result of the mandatory
conversion pursuant to Section 6.9, the Corporation may either (i) make such
redemption in cash at a redemption price equal to the sum of (x) 135% of the
Stated Value of such shares and (y) any accrued and unpaid dividends to the date
of such redemption or (ii) extend the Mandatory Conversion Date for a period of
one year.



                                       12


<PAGE>   13


         (b)   Unless the Corporation shall have obtained the approval of its
voting stockholders to such issuance in accordance with the rules of the Nasdaq
or such other stock market with which the Corporation shall be required to
comply, but only to the extent required thereby, the Corporation shall not issue
shares of Common Stock (i) upon conversion of any shares of Series D Preferred
Stock or (ii) as a dividend on the Series D Preferred Stock, if such issuance of
Common Stock, when added to the number of shares of Common Stock previously
issued by the Corporation (i) upon conversion of shares of the Series D
Preferred Stock, (ii) upon exercise of the Warrants issued pursuant to the terms
of the Securities Purchase Agreement and (iii) in payment of dividends on the
Series D Preferred Stock, would equal or exceed 20% of the number of shares of
the Corporation's Common Stock which were issued and outstanding on the Closing
Date (the "Maximum Issuance Amount"). In the event that a properly executed
Conversion Notice is received by the Corporation which would require the
Corporation to issue shares of Common Stock equal to or in excess of the Maximum
Issuance Amount, the Corporation shall honor such conversion request by (i)
converting the number of shares of Series D Preferred Stock stated in the
Conversion Notice not in excess of the Maximum Issuance Amount and (ii)
redeeming the number of shares of Series D Preferred Stock stated in the
Conversion Notice equal to or in excess of the Maximum Issuance Amount in cash
at a price equal to 125% of the Stated Value of the shares of Series D Preferred
Stock to be so redeemed, together with all accrued and unpaid dividends thereon.
In the event that the Corporation shall elect to pay a dividend in shares of
Common Stock which would require the Corporation to issue shares of Common Stock
equal to or in excess of the Maximum Issuance Amount, the Corporation shall pay
(i) a dividend in shares of Common Stock equal to one less than an amount which
would result in the Corporation issuing shares equal to the Maximum Issuance
Amount and (ii) the balance of the dividend in cash.


                                    ARTICLE 7
                                  VOTING RIGHTS

         The holders of the Series D Preferred Stock have no voting power,
except as otherwise provided by the Business Corporation Act of the State of
Minnesota ("MBCA"), in this Article 7, and in Article 8 below.

         Notwithstanding the above, the Corporation shall provide each Holder of
Series D 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 liquidation, dissolution or
winding up of the Corporation, the Corporation shall mail a notice to each
Holder, at least 30 days prior to the consummation of the transaction or event,
whichever is earlier), of the date on which any such action 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.



                                       13



<PAGE>   14




         To the extent that under the MBCA the vote of the Holders of the Series
D 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 outstanding shares of
Series D Preferred Stock represented at a duly held meeting at which a quorum is
present or by written consent of a majority of the outstanding shares of Series
D Preferred Stock (except as otherwise may be required under the MBCA) shall
constitute the approval of such action by the class. To the extent that under
the MBCA holders of the Series D Preferred Stock are entitled to vote on a
matter with holders of Common Stock, voting together as one class, each share of
Series D 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 D 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 MBCA.


                                    ARTICLE 8
                              PROTECTIVE PROVISIONS

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

         (a) alter or change the rights, preferences or privileges of the Series
D Preferred Stock;

         (b) create any new class or series of capital stock having a preference
over the Series D Preferred Stock as to distribution of assets upon liquidation,
dissolution or winding up of the Corporation ("Senior Securities") or alter or
change the rights, preferences or privileges of any Senior Securities so as to
affect adversely the Series D Preferred Stock, except in connection with the
Proposed Transaction;

         (c) increase the authorized number of shares of Series D Preferred
Stock; or

         (d) 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 D 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 least a majority of the then outstanding shares
of Series D Preferred Stock agree to allow the Corporation to alter or change
the rights, preferences or privileges of the shares of Series D Preferred Stock,
pursuant to subsection (a) above, so as to affect the Series D Preferred Stock,
then the Corporation will deliver notice of such approved change to the Holders
of the Series D 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 30



                                       14



<PAGE>   15



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 D Preferred Stock.

         If at any time the Corporation shall "spin-off" certain of its assets
or businesses by transferring, directly or indirectly, such assets or businesses
to a subsidiary of the Corporation ("Spinco") and making a dividend (the
"Spin-off Dividend") to the Corporation's stockholders of the shares of capital
stock of Spinco, the Corporation shall make a dividend to each Holder of, or
cause Spinco to issue to each Holder, that number of shares of capital stock of
Spinco as such Holder would have received had it converted, immediately prior to
the Spin-off Dividend, each Preferred Share then held by such Holder into Common
Stock.


                                    ARTICLE 9
                                  MISCELLANEOUS

         Section 9.1    Loss, Theft, Destruction of Preferred Stock

         Upon receipt of evidence satisfactory to the Corporation of the loss,
theft, destruction or mutilation of shares of Series D Preferred Stock and, in
the case of any such loss, theft or destruction, upon receipt of indemnity or
security reasonably satisfactory to the Corporation, or, in the case of any such
mutilation, upon surrender and cancellation of the Series D Preferred Stock, the
Corporation shall make, issue and deliver, in lieu of such lost, stolen,
destroyed or mutilated shares of Series D Preferred Stock, new shares of Series
D Preferred Stock of like tenor. The Series D Preferred Stock shall be held and
owned upon the express condition that the provisions of this Section 9.1 are
exclusive with respect to the replacement of mutilated, destroyed, lost or
stolen shares of Series D Preferred Stock and shall preclude any and all other
rights and remedies notwithstanding any law or statute existing or hereafter
enacted to the contrary with respect to the replacement of negotiable
instruments or other securities without the surrender thereof.

         Section 9.2    Who Deemed Absolute Owner

         The Corporation may deem the Person in whose name the Series D
Preferred Stock shall be registered upon the registry books of the Corporation
to be, and may treat it as, the absolute owner of the Series D Preferred Stock
for the purpose of receiving payment of dividends on the Series D Preferred
Stock, for the conversion of the Series D Preferred Stock and for all other
purposes, and the Corporation shall not be affected by any notice to the
contrary. All such payments and such conversion shall be valid and effectual to
satisfy and discharge the liability upon the Series D Preferred Stock to the
extent of the sum or sums so paid or the conversion so made.

         Section 9.3    Notice of Certain Events

         In the case of the occurrence of any event described in Sections 6.1,
6.6 or 6.7 of this Certificate of Designation, the Corporation shall cause to be
mailed to the Holder of the Series D Preferred Stock at its last address as it
appears in the Corporation's security registry, at least 20 days prior to the
applicable record, effective or expiration date hereinafter specified (or, if
such 20 days notice is not possible, at the earliest possible date prior to any
such record,



                                       15


<PAGE>   16



effective or expiration date), a notice stating (x) the date on which a record
is to be taken for the purpose of such dividend, distribution, issuance or
granting of rights, options or warrants, or if a record is not to be taken, the
date as of which the Holders of record of Series D Preferred Stock to be
entitled to such dividend, distribution, issuance or granting of rights, options
or warrants are to be determination or the date on which such reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or winding-up is
expected to become effective, and (y) the date as of which it is expected that
Holders of record of Series D Preferred Stock will be entitled to exchange their
shares for securities, cash or other property deliverable upon such
reclassification, consolidation, merger, sale transfer, dissolution, liquidation
or winding-up.

         Section 9.4     Register

         The Corporation shall keep at its principal office a register in which
the Corporation shall provide for the registration of the Series D Preferred
Stock. Upon any transfer of the Series D Preferred Stock in accordance with the
provisions hereof, the Corporation shall register such transfer on the Series D
Preferred Stock register.

         The Corporation may deem the person in whose name the Series D
Preferred Stock shall be registered upon the registry books of the Corporation
to be, and may treat it as, the absolute owner of the Series D Preferred Stock
for the purpose of receiving payment of dividends on the Series D Preferred
Stock, for the conversion of the Series D Preferred Stock and for all other
purposes, and the Corporation shall not be affected by any notice to the
contrary. All such payments and such conversions shall be valid and effective to
satisfy and discharge the liability upon the Series D Preferred Stock to the
extent of the sum or sums so paid or the conversion or conversions so made.

         Section 9.5     Withholding

         To the extent required by applicable law, the Corporation may withhold
amounts for or on account of any taxes imposed or levied by or on behalf of any
taxing authority in the United States having jurisdiction over the Corporation
from any payments made pursuant to the Series D Preferred Stock.

         Section 9.6     Headings

         The headings of the Articles and Sections of this Certificate of
Designation are inserted for convenience only and do not constitute a part of
this Certificate of Designation.





                                       16



<PAGE>   17



         IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Designation to be signed by its duly authorized officer on August 31, 1999.


                                           CAFE ODYSSEY, INC.


                                           By: /s/ Ronald K. Fuller
                                               ---------------------------------
                                               Name:  Ronald K. Fuller
                                               Title: President
















                                       17






<PAGE>   18

                                                                         ANNEX I

                            FORM OF CONVERSION NOTICE

         TO: Cafe Odyssey, Inc.
             4801 West 81st Street, Suite 112
             Bloomington, MN 55437

         The undersigned owner of this Series D 8% Convertible Preferred Stock
(the "Series D Preferred Stock") issued by Cafe Odyssey, Inc. (the
"Corporation") hereby irrevocably exercises its option to convert __________
shares of the Series D Preferred Stock into shares of the common stock, par
value $0.01 per share ("Common Stock"), of the Corporation in accordance with
the terms of the Certificate of Designation. The undersigned hereby instructs
the Corporation to convert the number of shares of the Series D Preferred Stock
specified above into Shares of Common Stock Issued at Conversion in accordance
with the provisions of Article 6 of the Certificate of Designation. The
undersigned directs that the Common Stock issuable and certificates therefor
deliverable upon conversion, the Series D Preferred Stock recertificated, if
any, not being surrendered for conversion hereby, together with any check in
payment for fractional Common Stock, be issued in the name of and delivered to
the undersigned unless a different name has been indicated below. All
capitalized terms used and not defined herein have the respective meanings
assigned to them in the Certificate of Designation. So long as the Series D
Preferred Stock shall have been surrendered for conversion hereby, the
conversion pursuant hereto shall be deemed to have been effected at the date and
time specified below, and at such time the rights of the undersigned as a Holder
of the Series D Preferred Stock shall cease and the Person or Persons in whose
name or names the Common Stock Issued at Conversion shall be issuable shall be
deemed to have become the holder or holders of record of the Common Shares
represented thereby and all voting and other rights associated with the
beneficial ownership of such Common Shares shall at such time vest with such
Person or Persons.

Date and time:
              ----------------------



                                               ---------------------------------
                                                           Signature

Fill in for registration of Series D Preferred Stock:



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

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

--------------------------------------------------------------------------------
            Please print name and address (including zip code number)
                                                            STATE OF MINNESOTA
                                                          FILED - DUPLICATE COPY


                                                                 AUG 31, 1999

                                                              /s/ Mary Kiffmeyer
                                                              Secretary of State






                                       18