AMENDED AND RESTATED ARTICLES OF INCORPORATION OF

                         HYPERMEDIA COMMUNICATIONS, INC.

         The undersigned, Richard Landry and Kenneth Klein, hereby certify that:

         1. They are the President and Chief Executive  Officer,  and Secretary,
respectively, of HyperMedia Communications,  Inc., a California corporation (the
"Company").

         2. The  Articles  of  Incorporation  of the  Company  are  amended  and
restated in full to read as set forth in Exhibit A attached hereto.

         3. The Amended and Restated  Articles of  Incorporation  of the Company
attached  hereto  have  been duly  approved  by the  Board of  Directors  of the
Company.

         4. The amendments to the Amended and Restated Articles of Incorporation
of the Company  attached  hereto have been duly approved by the  shareholders of
the  Company  in  accordance  with  Sections  902  and  903  of  the  California
Corporations Code. The Company has two classes of shares outstanding.  The total
number of outstanding  shares of Common Stock is 3,200,975.  The total number of
outstanding  shares of Preferred  Stock is 8,512,191 of which  8,064,516  shares
have been  designated as Series E Preferred  Stock,  all of which are issued and
outstanding,  82,250 shares have been designated Series F Preferred Stock all of
which are issued and  outstanding,  50,344 shares have been designated  Series G
Preferred Stock,  all of which are issued and  outstanding,  117,000 shares have
been  designated  Series  H  Preferred  Stock,  all  of  which  are  issued  and
outstanding, 28,800 shares have been designated Series I Preferred Stock, all of
which are issued and outstanding and 250,000 shares have been designated  Series
J Preferred Stock, 169,281 shares of which are issued and outstanding. The total
number of  shares  voting  in favor of the  Amended  and  Restated  Articles  of
Incorporation  equaled  or  exceeded  the vote  required.  The  percentage  vote
required was a simple majority of the  outstanding  shares of Series E Preferred
Stock voting  separately as a single class, a simple majority of the outstanding
shares of Series F Preferred Stock voting separately as a single class, a simple
majority of the outstanding shares of Series G Preferred Stock voting separately
as a single  class,  a simple  majority  of the  outstanding  shares of Series H
Preferred  Stock voting  separately as a single class, a simple  majority of the
outstanding  shares of Series I Preferred  Stock voting  separately  as a single
class, a simple majority of the  outstanding  shares of Series J Preferred Stock
voting separately as a single class, a simple majority of the outstanding shares
of Preferred Stock voting  separately as a single class and a simple majority of
the outstanding shares of Common Stock voting separately as a single class and a
simple  majority of the  outstanding  shares of Preferred Stock and Common Stock
voting together as a single class.


<PAGE>


         The undersigned further declare under penalty of perjury under the laws
of the State of California  that the matters set forth in this  certificate  are
true and correct to their own knowledge.

DATE:  June 7, 2000:                   /s/ Richard Landry
                                       ---------------------------------------
                                       Richard Landry, Chief Executive Officer

                                       /s/ Kenneth Klein
                                       ---------------------------------------
                                       Kenneth Klein, Secretary


                                       2
<PAGE>


                                    EXHIBIT A

                 AMENDED AND RESTATED ARTICLES OF INCORPORATION

                                       OF

                         HYPERMEDIA COMMUNICATIONS, INC.

                                   Article I

         The name of this Corporation is HyperMedia Communications, Inc.

                                   Article II

         The  purpose  of this  Corporation  is to engage in any  lawful  act or
activity for which a corporation may be organized under the General  Corporation
Law of California other than the banking business, the trust company business or
the practice of a  profession  permitted to be  incorporated  by the  California
Corporations Code.

                                  Article III

         This  Corporation  is  authorized  to issue two classes of shares to be
designated  respectively  Common Stock and Preferred  Stock. The total number of
shares of  Common  Stock  this  Corporation  shall  have  authority  to issue is
50,000,000,  with a par value of $0.001 per share. The total number of shares of
Preferred  Stock this  Corporation  shall have authority to issue is 20,064,516,
with a par value of $0.001 per share.

         The  Preferred  Stock  may be  issued  from time to time in one or more
series.  The Board of Directors is authorized to fix the number of shares of any
series of Preferred  Stock and to  determine  or alter the rights,  preferences,
privileges,  and  restrictions  granted to or imposed  upon any wholly  unissued
series of Preferred Stock and, within the limits and restrictions  stated in any
resolution or resolutions of the Board of Directors originally fixing the number
of shares constituting any series of Preferred Stock, to decrease (but not below
the number of shares of any such series then  outstanding)  the number of shares
of any such series subsequent to the issue of shares of that series.

         Of the Preferred Stock,  8,064,516 shares shall be designated  Series E
Preferred Stock ("Series E Preferred"), 82,250 shares shall be designated Series
F Preferred  Stock  ("Series F  Preferred"),  50,344  shares shall be designated
Series G  Preferred  Stock  ("Series  G  Preferred"),  117,000  shares  shall be
designated Series H Preferred Stock ("Series H Preferred"),  28,800 shares shall
be designated Series I Preferred Stock ("Series I Preferred") and 250,000 shares
shall be designated Series J Preferred Stock ("Series J Preferred").

         The Corporation  shall from time to time in accordance with the laws of
the State of California increase the authorized amount of its Common Stock if at
any time the number of shares of Common Stock  remaining  unissued and available
for issuance  shall not be  sufficient  to permit  conversion  of the  Preferred
Stock.

                                       1
<PAGE>

         The relative rights,  preferences,  privileges and restrictions granted
to or imposed on the  respective  classes of the shares of capital  stock or the
holders thereof are as follows:

         A. Series E Preferred.

         1. Dividend Rights of Series E Preferred.

                  (a) The holders of the Series E Preferred shall be entitled to
receive,  when and as declared by the Board of  Directors,  out of funds legally
available  therefor,  dividends  at the rate of $0.0074 per share per annum,  on
each outstanding share of Series E Preferred, payable in preference and priority
to any payment of any dividend on Common Stock of the Corporation for such year.
The  dividends  on the Series E  Preferred  shall be  cumulative  so that if all
dividends  accumulated at the annual rate specified  above,  shall not have been
paid or declared and a sum  sufficient  for the payment  thereof set apart,  the
deficiency shall first be fully paid before any dividend or other  distribution,
other than dividends  payable solely in Common Stock,  shall be paid or declared
and set apart for the Common Stock.  If less than full  dividends are paid on or
declared  and set  apart  for  payment  on the  Series E  Preferred,  then  such
dividends shall be subtracted from any accumulated  dividends.  Any accumulation
of dividends on the Series E Preferred shall not bear interest.  The Corporation
shall not be obligated to pay any accumulated but unpaid dividends on the Series
E Preferred  before  January 1, 2000 except for the conversion of such dividends
into shares of Common  Stock  pursuant  to  subsection  (b) of this  Section A.1
below.

                  (b)  In  the  event  that  the  Corporation   shall  have  any
accumulated but unpaid dividends  outstanding  immediately  prior to, and in the
event of, a  conversion  of the Series E Preferred  (as  provided in Section A.4
hereof),  such  dividends  shall  be  converted  into  Common  Stock at the then
effective  Series  E  Conversion  Price,  as may be  applicable,  determined  in
accordance with and pursuant to the terms specified in Section A.4 hereof.

                  (c) As  authorized  by  Section  402.5(c)  of  the  California
Corporations  Code,  the  provisions  of Sections 502 and 503 of the  California
Corporations Code shall not apply with respect to repurchases by the Corporation
of shares of Common Stock issued to or held by employees, officers, directors or
consultants of the  Corporation or its  subsidiaries  upon  termination of their
employment or services  pursuant to  agreements  providing for the right of said
repurchase.

         2.   Liquidation   Preference.   In  the  event  of  any   liquidation,
dissolution, or winding up of the Corporation,  either voluntary or involuntary,
distributions  to the  shareholders  of the  Corporation  shall  be  made in the
following manner:

                  (a) The holders of the Series E Preferred shall be entitled to
receive,  prior and in  preference to any  distribution  of any of the assets or
surplus  funds of the  Corporation  to the  holders of the  Series F  Preferred,
Series  G  Preferred,  Series  H  Preferred,  Series I  Preferred  and  Series J
Preferred Stock and Common Stock by reason of their ownership of such stock, the
amount of $0.124  per share for each  share of Series E  Preferred  then held by
them, and in addition,  an amount equal to all accumulated but unpaid  dividends
(whether or not such  dividends were declared) on the Series E Preferred held by
them. If the assets and funds thus distributed among the holders of the Series E
Preferred  shall be  insufficient  to permit the payment to such  holders of the
full  aforesaid

                                      -2-
<PAGE>

preferential  amounts,  then the  entire  assets  and  funds of the  Corporation
legally available for distribution shall be distributed such that each holder of
Series E  Preferred  shall be  entitled  to  receive a portion of the assets and
funds  so  distributed  equal  to  the  ratio  that  the  aggregate  liquidation
preference of the shares of Series E Preferred held by such holder, exclusive of
cumulative dividends,  bears to the aggregate  preferential amount of all shares
of Series E Preferred outstanding as of the date of the distribution.

                  After  payments  have been made to the holders of the Series E
Preferred of the full  amounts to which they shall be entitled as aforesaid  and
to the holders of Series F Preferred,  Series G  Preferred,  Series H Preferred,
Series I  Preferred  and Series J Preferred  Stock of the full  amounts to which
they shall be  entitled  as  described  in Section B below,  the  holders of the
Common Stock, Series E Preferred, Series F Preferred, Series G Preferred, Series
H Preferred,  Series I Preferred and Series J Preferred  Stock shall be entitled
to share  ratably  in the  remaining  assets,  based on the  number of shares of
Common Stock held,  assuming  conversion  of the Series E Preferred  pursuant to
Section A.4 below and conversion of the Series F Preferred,  Series G Preferred,
Series H Preferred,  Series I Preferred and Series J Preferred Stock pursuant to
Section B.4 below, respectively.

                  (b)  For   purposes   of  this   Section   A.2,  a  merger  or
consolidation  of  the  Corporation  with  or  into  any  other  Corporation  or
Corporations,  or the merger of any other  Corporation or Corporations  into the
Corporation,  or the  sale  of all or  substantially  all of the  assets  of the
Corporation,  or any other  corporate  reorganization,  in which  consolidation,
merger,  sale of assets or  reorganization  the  shareholders of the Corporation
receive   distributions  in  cash  or  securities  of  another   Corporation  or
Corporations  as a result  of such  consolidation,  merger,  sale of  assets  or
reorganization,  shall be treated as a liquidation, dissolution or winding up of
the Corporation.

         3. Voting Rights of Series E Preferred.

                  (a) Number of Votes.  Except as otherwise  required by law and
as provided  in  subsection  (b) below,  each share of Common  Stock  issued and
outstanding  shall have one vote and each share of Series E Preferred issued and
outstanding  shall  have the  number of votes  equal to the  number of shares of
Common Stock into which the Series E Preferred is  convertible  as adjusted from
time to time pursuant to Section A.4 hereof.

                  (b) Voting by Series E Preferred.  The holder of each share of
Series E Preferred shall be entitled to notice of any  shareholders'  meeting in
accordance with the bylaws of the Corporation and shall vote with holders of the
Common Stock upon any matter submitted to a vote of  shareholders,  except those
matters required by law to be submitted to a class vote, and except as set forth
in Section 5.

                  (c) Cumulative  Voting. The holders of Common Stock and Series
E Preferred shall be entitled to cumulative voting rights as to the directors to
be elected in accordance  with the  provisions of Section 708 of the  California
Corporations Code.

         4.  Conversion.  The holders of the Series E Preferred have  conversion
rights as follows (the "Conversion Rights"):


                                      -3-
<PAGE>

                  (a) Right to Convert.  Each share of Series E Preferred  shall
initially be convertible, at the option of the holder thereof, at any time after
the date of issuance of such share at the principal office of the Corporation or
any transfer agent for the  Corporation's  Preferred Stock,  into such number of
fully paid and nonassessable shares of Common Stock as is determined by dividing
$0.124 by the Series E Conversion Price,  determined as hereinafter provided, in
effect at the time of the conversion.  The price at which shares of Common Stock
shall be  deliverable  upon  conversion  shall be, with respect to each share of
Series E  Preferred,  the price at which one share of Common  Stock is initially
sold to the public  pursuant to an effective  registration  statement  under the
Securities Act of 1933, as amended, (the "Series E Conversion Price").

                  (b) Automatic Conversion.

                           (i) Each share of Series E Preferred then outstanding
shall  automatically  convert into shares of Common Stock, at the then effective
Series  E  Conversion  Price at any  time  upon the vote of at least  75% of the
outstanding shares of Series E Preferred to convert shares of Series E Preferred
into Common Stock.

                  Notwithstanding   any  provision   contained   herein  to  the
contrary,  each of the  shares of Series E  Preferred  Stock may not,  under any
circumstances,  be converted  into Common  Stock before April 15, 1993.  Between
April 15, 1993 and December 31,  1999,  such shares of Series E Preferred  Stock
may be  converted  into Common  Stock at the option of the holder  thereof,  if,
prior to December  31, 1996,  the  Company's  aggregate  net income for any four
consecutive quarters exceeds $2,500,000.  In any event, after December 31, 1999,
each of the shares of Series E  Preferred  Stock may be  converted  into  Common
Stock at the option of the holder thereof.

                  (c) Mechanics of  Conversion.  No fractional  shares of Common
Stock  shall be  issued  upon  conversion  of  Preferred  Stock.  In lieu of any
fractional  shares  to  which  the  holder  would  otherwise  be  entitled,  the
Corporation shall round up to the nearest integer.

                  Before any holder of Series E  Preferred  shall be entitled to
convert  the same into full shares of Common  Stock and to receive  certificates
therefor,  the holder shall surrender the certificate or certificates  therefor,
duly endorsed, at the office of the Corporation or of any transfer agent for the
Preferred Stock, as applicable, and shall give written notice to the Corporation
at such office that the holder  elects to convert the same;  provided,  however,
that in the event of an automatic  conversion  pursuant to Section  A.4(b),  the
outstanding  shares  of  Series E  Preferred  shall be  converted  automatically
without any further  action by the holders of such shares and whether or not the
certificates  representing such shares are surrendered to the Corporation or its
transfer agent;  provided  further,  however,  that the Corporation shall not be
obligated to issue  certificates  evidencing the shares of Common Stock issuable
upon such automatic conversion unless the certificates evidencing such shares of
Series E Preferred are either delivered to the Corporation or its transfer agent
as provided  above, or the holder notifies the Corporation or its transfer agent
that such  certificates  have been lost,  stolen or  destroyed  and  executes an
agreement  satisfactory to the Corporation to indemnify the Corporation from any
loss incurred by it in connection with such certificates. The Corporation shall,
as  soon  as   practicable   after  such   delivery,   or  such   agreement  and
indemnification  in the case of a lost  certificate,  issue and  deliver at such
office to such holder of  Preferred  Stock,  as  applicable,  a

                                      -4-
<PAGE>

certificate  or  certificates  for the number of whole shares of Common Stock to
which such holder shall be  entitled.  Such  conversion  shall be deemed to have
been  made  immediately  prior  to the  close  of  business  on the date of such
surrender of the shares of Preferred  Stock to be  converted,  or in the case of
automatic  conversion on the date of such  affirmative  vote, and the persons or
entities  entitled  to receive  the shares of Common  Stock  issuable  upon such
conversion  shall be treated for all purposes as the record holder or holders of
such shares of Common Stock on such date.

         (d) Adjustments of Conversion Prices For Diluting Issues.

                  (i) Special Definitions.  For purposes of this Section A.4(d),
the following definitions shall apply:

                           (1) "Options" shall mean rights,  options or warrants
to  subscribe  for,  purchase  or  otherwise  acquire  either  Common  Stock  or
Convertible Securities.

                           (2)  "Original  Issue  Date"  shall  mean the date on
which the first share of Series E Preferred was first issued.

                           (3) "Convertible Securities" shall mean any evidences
of indebtedness,  shares (other than the shares of Series E Preferred authorized
herein) or other securities convertible into or exchangeable for Common Stock.

                           (4)  "Additional  Shares of Common  Stock" shall mean
all shares of equity  securities  issued (or,  pursuant to Section  A.4(d)(iii),
deemed to be issued) by the Corporation,  other than shares of equity securities
issued or issuable at any time:

                                    (A) upon the exercise of certain warrants to
purchase up to 229,472 shares of Common Stock;

                                    (B)  upon   conversion   of  the  shares  of
Preferred Stock authorized  herein into shares of Common Stock;

                                    (C) to officers, directors and employees of,
and  consultants  to,  the  Corporation   pursuant  to  employee  benefit  plans
unanimously approved by the Board of Directors; and

                                    (D) as a  dividend  or  distribution  on the
Series E  Preferred  or  pursuant  to any  event for  which  adjustment  is made
pursuant to subparagraph (d)(vi) hereof.

                           (5) "Issue  Price"  with  respect to any  issuance of
Additional  Shares of Common shall mean the price per share obtained by dividing
the  total  consideration  received  by  the  Corporation  in  respect  of  such
Additional  Shares of Common,  computed in  accordance  with  Section  A.4(d)(v)
hereof,  by the aggregate  number of shares of such Additional  Shares of Common
issued, computed in accordance with Section A.4(d)(iii) hereof.

                  (ii) No Adjustment of Conversion  Price.  No adjustment in the
Series E Conversion  Price shall be made hereunder in respect of the issuance of
Additional  Shares of

                                      -5-
<PAGE>

Common  Stock  unless the  consideration  per share for an  Additional  Share of
Common Stock issued or deemed to be issued by the  Corporation  is less than the
Series E Conversion  Price, in effect on the date of, and  immediately  prior to
such issue.

                  (iii) Deemed Issue of Additional Shares of Common Stock.

                           (1) Options and Convertible Securities.  In the event
the  Corporation  at any time or from time to time after the Original Issue Date
shall issue any Options or Convertible Securities or shall fix a record date for
the determination of holders of any class of securities  entitled to receive any
such Options or  Convertible  Securities,  then the maximum number of shares (as
set forth in the instrument  relating  thereto  without regard to any provisions
contained  therein for a subsequent  adjustment  of such number) of Common Stock
issuable  upon the  exercise  of such  Options  or,  in the case of  Convertible
Securities and Options therefor,  the conversion or exchange of such Convertible
Securities, shall be deemed to be Additional Shares of Common Stock issued as of
the time of such issue or, in case such a record date shall have been fixed,  as
of the close of business on such record date, provided that Additional Shares of
Common  Stock shall not be deemed to have been issued  unless the  consideration
per share  (determined  pursuant to Section A.4(d)(v) hereof) of such Additional
Shares  of Common  Stock  would be less than the  Series E  Conversion  Price in
effect on the date of and immediately  prior to such issue, or such record date,
as the  case  may be,  and  provided  further  that in any  such  case in  which
Additional Shares of Common Stock are deemed to be issued:

                                    (A) no  further  adjustment  in the Series E
Conversion  Price  shall  be made  upon  the  subsequent  issue  of  Convertible
Securities  or shares of Common  Stock  upon the  exercise  of such  Options  or
conversion or exchange of such Convertible Securities;

                                    (B)   if   such   Options   or   Convertible
Securities by their terms  provide,  with the passage of time or otherwise,  for
any increase in the consideration payable to the Corporation, or decrease in the
number of shares of Common Stock  issuable,  upon the  exercise,  conversion  or
exchange thereof, the Series E Conversion Price computed upon the original issue
thereof (or upon the occurrence of a record date with respect thereto),  and any
subsequent adjustments based thereon,  shall, upon any such increase or decrease
becoming  effective,  be recomputed to reflect such increase or decrease insofar
as it affects such Options or the rights of  conversion  or exchange  under such
Convertible Securities;


                                    (C) no  readjustment  pursuant to clause (B)
above shall have the effect of  increasing  the  applicable  Series E Conversion
Price to an amount which exceeds the lower of (i) the Series E Conversion  Price
computed on the original  adjustment date, or (ii) the Series E Conversion Price
that would have resulted from any issuance of Additional  Shares of Common Stock
between the original adjustment date and such readjustment date; and

                                    (D) in the case of any Options  which expire
by their  terms  not more  than 30 days  after  the  date of issue  thereof,  no
adjustment of the Series E Conversion  Price shall be made until the  expiration
or exercise of all such Options.

                                      -6-
<PAGE>

                           (iv) Adjustment of Conversion  Price Upon Issuance of
Additional  Shares of Common Stock.  In the event that after the Original  Issue
Date, the Corporation  shall issue Additional  Shares of Common Stock (including
Additional  Shares of Common  Stock  deemed to be  issued  pursuant  to  Section
A.4(d)(iii))  for a  consideration  per share less than the Series E  Conversion
Price in effect on the date of and immediately  prior to such issue, then and in
such event, the Series E Conversion Price, as the case may be, shall be reduced,
concurrently  with such issue, to a price equal to such  consideration per share
of the Additional Shares of Common Stock.

                           (v) Determination of  Consideration.  For purposes of
this Section A.4(d), the consideration received by the Corporation for the issue
of any Additional Shares of Common Stock shall be computed as follows:

                                    (1) Cash and  Property:  Such  consideration
shall:

                                    (A)  insofar  as it  consists  of  cash,  be
computed at the aggregate  amount of cash received by the Corporation  excluding
amounts paid or payable for accrued interest or accrued dividends;

                                    (B) insofar as it consists of property other
than cash, be computed at the fair value  thereof at the time of such issue,  as
determined in good faith by the Board; and

                                    (C) in the event Additional Shares of Common
Stock are issued together with other shares or securities or other assets of the
Corporation  for  consideration  which covers both,  be the  proportion  of such
consideration so received, computed as provided in clauses (A) and (B) above, as
determined in good faith by the Board.

                           (2)   Options   and   Convertible   Securities.   The
consideration  per share received by the  Corporation  for Additional  Shares of
Common  Stock  deemed to have  been  issued  pursuant  to  Section  A.4(d)(iii),
relating to Options and Convertible Securities, shall be determined by dividing

                                    (A) the total  amount,  if any,  received or
receivable by the Corporation as consideration  for the issue of such Options or
Convertible  Securities,   plus  the  minimum  aggregate  amount  of  additional
consideration (as set forth in the instruments relating thereto,  without regard
to  any  provision  contained  therein  for  a  subsequent  adjustment  of  such
consideration)  payable to the Corporation  upon the exercise of such Options or
the  conversion or exchange of such  Convertible  Securities,  or in the case of
Options for Convertible Securities, the exercise of such Options for Convertible
Securities and the conversion or exchange of such Convertible Securities, by

                                    (B) the  maximum  number of shares of Common
Stock (as set forth in the instruments  relating thereto,  without regard to any
provision contained therein for a subsequent adjustment of such number) issuable
upon  the  exercise  of such  Options  or the  conversion  or  exchange  of such
Convertible Securities.

                                       7
<PAGE>

                           (vi)   Adjustments   for   Subdivisions,   Dividends,
Combinations  or  Consolidation  of Common Stock.  In the event the  outstanding
shares of Common Stock shall be subdivided  (by stock split,  stock  dividend or
otherwise),  into a greater  number of shares  of  Common  Stock,  the  Series E
Conversion  Price then in effect shall  concurrently  with the  effectiveness of
such subdivision,  be  proportionately  decreased.  In the event the outstanding
shares of Common Stock shall be combined or consolidated, by reclassification or
otherwise,  into a lesser  number  of  shares  of  Common  Stock,  the  Series E
Conversion Price then in effect shall,  concurrently  with the  effectiveness of
such combination or consolidation, be proportionately increased.

                           (vii)  Adjustments  for Other  Distributions.  In the
event the  Corporation at any time or from time to time makes, or fixes a record
date for the  determination of holders of Common Stock entitled to receive,  any
distribution  payable in  securities  of the  Corporation  other than  shares of
Common Stock and other than as otherwise adjusted in Section A.1 or this Section
A.4, then and in each such event  provision shall be made so that the holders of
the Series E Preferred shall receive upon conversion thereof, in addition to the
respective number of shares of Common Stock receivable thereupon, the respective
amount of securities of the Corporation which they would have received had their
shares of Series E  Preferred,  as the case may be, 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 date of  conversion,  retained such
securities  receivable by them as aforesaid  during such period,  subject to all
other  adjustments  called for during  such period  under this  Section A.4 with
respect to the rights of the holders of the Series E Preferred.

                           (viii) Adjustments for Reclassification, Exchange and
Substitution. If the Common Stock issuable upon conversion of Series E Preferred
shall be  changed  into the same or a  different  number  of shares of any other
class or classes of stock, whether by capital  reorganization,  reclassification
or otherwise  (other than a subdivision,  combination or consolidation of shares
provided  for  above),  the  Series E  Conversion  Price  then in effect  shall,
concurrently with the effectiveness of such reorganization or  reclassification,
be  proportionately   adjusted  such  that  the  Series  E  Preferred  shall  be
convertible  into,  in lieu of the  respective  number of shares of Common Stock
which the holders would  otherwise  have been  entitled to receive,  a number of
shares of such  other  class or classes of stock  equivalent  to the  respective
number of shares of Common  Stock that would have been subject to receipt by the
holders upon conversion of the immediately before that change.

                  (e) No Impairment.  The Corporation  will not, by amendment of
its Articles of Incorporation or through any reorganization, transfer of 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 to be observed or performed hereunder by the Corporation,  but will at
all times in good faith assist in the carrying out of all the provisions of this
Section  A.4  and in the  taking  of all  such  action  as may be  necessary  or
appropriate  in order to protect  the  conversion  rights of the  holders of the
Series E Preferred set forth in this Section A.4 against impairment.

                  (f) Certificate as to Adjustments. Upon the occurrence of each
adjustment or  readjustment  of the Series E Conversion  Price  pursuant to this
Section  A.4,  the  Corporation  at its  expense  shall  promptly  compute  such
adjustment or  readjustment  in accordance  with the terms

                                       8
<PAGE>

hereof and furnish to each holder of Series E  Preferred a  certificate  setting
forth such adjustment or readjustment and showing in detail the facts upon which
such  adjustment or  readjustment  is based.  The  Corporation  shall,  upon the
written request at any time of any holder of Series E Preferred furnish or cause
to be  furnished  to such  holder  a like  certificate  setting  forth  (i) such
adjustments and readjustments, (ii) the Series E Conversion Price at the time in
effect,  and (iii) the number of shares of Common Stock and the amount,  if any,
of other  property  which at the time would be received  upon the  conversion of
Series E Preferred.

                  (g) Notices of Record Date. In the event that this Corporation
shall propose at any time:

                           (i) to declare any dividend or distribution  upon its
Common Stock, whether in cash, property,  stock or other securities,  whether or
not a  regular  cash  dividend  and  whether  or not out of  earnings  or earned
surplus;

                           (ii)  to  offer  for  subscription  pro  rata  to the
holders  of any class or series of its stock any  additional  shares of stock of
any class or series or other rights;

                           (iii)   to    effect    any    reclassification    or
recapitalization  of its  Common  Stock  outstanding  involving  a change in the
Common Stock; or

                           (iv) to merge or  consolidate  with or into any other
Corporation,  or sell, lease or convey all or substantially  all its property or
business,  or to liquidate,  dissolve or wind up; then, in connection  with each
such  event,  this  Corporation  shall  send  to the  holders  of the  Series  E
Preferred:

                                    (1) at least 20 days' prior  written  notice
of the date on which a record shall be taken for such dividend,  distribution or
subscription  rights  (and  specifying  the date on which the  holders of Common
Stock shall be entitled thereto) or for determining rights to vote in respect of
the matters referred to in (i) and (ii) above; and

                                    (2) in the case of the  matters  referred to
in (iii) and (iv) above, at least 20 days' prior written notice of the date when
the same  shall  take place  (and  specifying  the date on which the  holders of
Common Stock shall be entitled to exchange  their Common Stock for securities or
other property deliverable upon the occurrence of such event).

                  Each such  written  notice shall be  delivered  personally  or
given by first  class mail,  postage  prepaid,  addressed  to the holders of the
Series E Preferred  at the address for each such holder as shown on the books of
this Corporation.

         5.  Covenants.  In addition to any other rights  provided by law,  this
Corporation  shall not,  without first obtaining the affirmative vote or written
consent of the holders of not less than a majority of such outstanding shares of
Series E Preferred:

                                       9
<PAGE>

                  (a)  authorize  or issue any class or series of shares  having
rights,  preferences  or  privileges  senior to or on a parity with the Series E
Preferred as to dividends, liquidation or redemption rights;

                  (b) amend the rights, preferences,  privileges or restrictions
of the Series E Preferred;

                  (c) amend the Corporation's  Articles of Corporation or Bylaws
to change the number of directors from five (5);

                  (d) effect (i) any sale of all or substantially all the assets
of  the  Corporation,  or  (ii)  any  merger  or  other  reorganization  of  the
Corporation with or into another Corporation;

                  (e) repurchase or redeem any  outstanding  securities  (except
for  repurchases of unvested  employee stock upon the termination of employees);
or

                  (f) declare  any  dividend  on the  Corporation's  outstanding
Common Stock;

         B. Series F Preferred, Series G Preferred, Series H Preferred, Series I
Preferred and Series J Preferred.

         1.  Designation.  The  number of shares  constituting  the (i) Series F
Preferred shall be 82,250, (ii) Series G Preferred shall be 50,344, (iii) Series
H Preferred  shall be 117,000,  (iv) Series I Preferred  shall be 28,800 and (v)
Series J Preferred shall be 250,000. For purposes of this Section B, the "Series
F Initial Sales Price", "Series G Initial Sales Price" , "Series H Initial Sales
Price", "Series I Initial Sales Price", and "Series J Initial Sales Price" shall
mean the  price  per  share at which  shares  of  Series F  Preferred,  Series G
Preferred,  Series H Preferred,  Series I Preferred  and Series J Preferred  are
first sold to  investors,  and the  "Series F Original  Issue  Date",  "Series G
Original Issue Date",  "Series H Original Issue Date",  "Series I Original Issue
Date",  and "Series J Original Issue Date" shall mean the date of such sale. The
Series F Preferred,  Series G Preferred,  Series H Preferred, Series I Preferred
and  Series J  Preferred  shall have the  rights,  preferences,  privileges  and
restrictions granted to or imposed upon them as specified below.

         2. Dividends.

                  (a) No  dividend  (payable  other than in Common  Stock of the
Corporation) may be paid on or declared or set apart for the Common Stock in any
one  fiscal  year  unless a  dividend  at the rate of five  percent  (5%) of the
Initial  Sales  Price is paid on, or declared  and set apart for,  each share of
Series F Preferred,  Series G Preferred,  Series H Preferred, Series I Preferred
and Series J Preferred  Stock.  The amount of dividend  shall be prorated  for a
share of Series F Preferred,  Series G Preferred,  Series H Preferred,  Series I
Preferred and Series J Preferred  Stock which is not issued and  outstanding for
an entire  fiscal  year.  The  dividends  on the  Series F  Preferred,  Series G
Preferred,  Series H Preferred,  Series I Preferred and Series J Preferred Stock
shall be paid out of any assets  legally  available  therefor,  when,  as and if
declared by the Board of Directors.  Dividends on the Series F Preferred, Series
G Preferred, Series H Preferred, Series I Preferred and Series J Preferred shall
not be  cumulative  and no rights  shall  accrue to the  holders of the Series F
Preferred,  Series G

                                       10
<PAGE>

Preferred, Series H Preferred, Series I Preferred, nor the holders of the Series
J Preferred in the event the Corporation  shall fail to declare or pay dividends
on the Series F  Preferred,  Series G Preferred,  Series H  Preferred,  Series I
Preferred  or  Series J  Preferred  in the  amount of five  percent  (5%) of the
Initial Sales Price per share per fiscal year or in any amount in any prior year
of the  Corporation,  whether or not the  earnings  of the  Corporation  in that
previous  fiscal year were sufficient to pay such dividends in whole or in part.
In the event the Board of Directors of the Corporation  declares  dividends in a
fiscal year in an amount less than the aggregate of all the dividend preferences
of the Series E Preferred,  the Series F Preferred,  the Series G Preferred, the
Series H  Preferred,  the Series I Preferred  and the Series J Preferred  Stock,
then the entire amount of dividends  declared by the Board of Directors shall be
distributed  ratably  among the  holders of the Series E  Preferred  Stock,  the
Series F Preferred  Stock,  the Series G Preferred Stock, the Series H Preferred
Stock,  the Series I Preferred  Stock and the Series J Preferred Stock such that
the same  percentage  of the annual  dividend to which each series of  Preferred
Stock is entitled is paid on each share of Series E  Preferred  Stock,  Series F
Preferred Stock,  Series G Preferred Stock,  Series H Preferred Stock,  Series I
Preferred Stock and the Series J Preferred Stock.

                  (b) As  authorized  by  Section  402.5(c)  of  the  California
Corporations  Code,  the  provisions  of Sections 502 and 503 of the  California
Corporations Code shall not apply with respect to repurchases by the Corporation
of shares of Common Stock issued to or held by employees, officers, directors or
consultants of the  Corporation or its  subsidiaries  upon  termination of their
employment or services  pursuant to  agreements  providing for the right of said
repurchase.

         3. Liquidation Preference. In the event of any voluntary or involuntary
liquidation, dissolution, or winding up of the Corporation, after the payment to
which the holders of the Series E Preferred  Stock, are entitled as set forth in
Article  III.A.2 (the "Series E  Distribution")  has been made, no  distribution
shall be made on the shares of Common Stock without first making a  distribution
on the shares of Series F Preferred Stock,  Series G Preferred  Stock,  Series H
Preferred  Stock  Series I  Preferred  Stock and Series J  Preferred  Stock (the
"Series F, Series G, Series H, Series I and Series J Distribution") equal to the
amount of the Initial  Sales Price per share for each share of Preferred  Stock,
plus all declared  but unpaid  dividends  thereon.  If upon  occurrence  of such
event,  and after the  Series E  Distribution,  the  assets  and  property  thus
distributed  among  the  holders  of the  Series  F  Preferred  Stock,  Series G
Preferred Stock, Series H Preferred Stock, Series I Preferred Stock and Series J
Preferred  Stock shall be  insufficient to permit the payment to such holders of
their full respective preferential amounts, then the entire remaining assets and
property  of  the  Corporation  legally  available  for  distribution  shall  be
distributed  ratably among the holders of the Series F Preferred Stock, Series G
Preferred Stock, Series H Preferred Stock, Series I Preferred Stock and Series J
Preferred  Stock such that the same  percentage  of the  preferential  amount to
which each series of Series F Preferred Stock,  Series G Preferred Stock, Series
H  Preferred  Stock,  Series I Preferred  Stock and Series J Preferred  Stock is
entitled is paid on each share of Series F Preferred  Stock,  Series G Preferred
Stock, Series H Preferred Stock, Series I Preferred Stock and Series J Preferred
Stock.  A  consolidation  or  merger of the  Corporation  with or into any other
corporation or corporations,  other than a merger or  consolidation  which would
result in the voting  securities of the Company  outstanding  immediately  prior
thereto  continuing to represent  (either by remaining  outstanding  or by being
converted into voting securities of the surviving entity) at least fifty percent
(50%) of the total  voting power  represented  by the voting  securities  of the
Corporation or such

                                       11
<PAGE>

surviving entity outstanding immediately after such merger or consolidation,  or
a sale of all or substantially  all of the assets of the  Corporation,  shall be
deemed to be a liquidation, dissolution, or winding up of the Corporation.

         4.  Conversion.  The holders of Preferred  Stock shall have  conversion
rights as follows (the "Conversion Rights"):

                  (a) Right to Convert. Each share of Series F Preferred, Series
G Preferred, Series H Preferred, Series I Preferred and Series J Preferred Stock
shall be convertible,  at any time after the date of issuance,  at the option of
the  holder  thereof,  of such  share at the  office of the  Corporation  or any
transfer  agent  for the  Series  F  Preferred,  Series  G  Preferred,  Series H
Preferred,  Series I Preferred and Series J Preferred Stock, into that number of
fully-paid and nonassessable shares of Common Stock that is equal to the Initial
Sales  Price  for each  respective  Series of  Preferred  Stock  divided  by the
appropriate  Conversion  Price  (as  hereinafter  defined)  for each  Series  of
Preferred  Stock.  The  Initial  Sales  Price  shall be $3.039 per share for the
Series F  Preferred,  $1.992  per share for the Series G  Preferred,  $2.136 per
share for the Series H Preferred,  $15.62 for the Series I Preferred and $12.531
per share for the Series J Preferred.  The price at which shares of Common Stock
shall be  deliverable  upon  conversion  (individually  the "Series F Conversion
Price",  "Series G Conversion  Price",  "Series H Conversion  Price",  "Series I
Conversion  Price"  and  "Series J  Conversion  Price",  and  collectively,  the
"Conversion  Prices")  shall  initially  be $3.039 per share of Common Stock for
conversions  of  Series F  Preferred,  $1.992  per  share of  Common  Stock  for
conversions  of  Series G  Preferred,  $2.136  per  share of  Common  Stock  for
conversions  of  Series H  Preferred,  $1.562  per  share of  Common  Stock  for
conversions  of Series I Preferred  and  $0.62655  per share of Common Stock for
conversions  of Series J  Preferred.  Such  initial  Conversion  Prices shall be
subject to adjustment as hereinafter provided.

                  (b)  Automatic  Conversion.  All shares of Series F Preferred,
Series  G  Preferred,  Series  H  Preferred,  Series I  Preferred  and  Series J
Preferred then  outstanding  shall  automatically  convert into shares of Common
Stock upon the election of at least 67% of the outstanding shares of each of the
respective Series F Preferred,  Series G Preferred, Series H Preferred, Series I
Preferred  and  Series J  Preferred  (voting  separately  as a class) to convert
shares of the respective Series of Preferred Stock into Common Stock.

                  (c) Mechanics of  Conversion.  No fractional  shares of Common
Stock shall be issued upon conversion of Series F Preferred, Series G Preferred,
Series H Preferred,  Series I Preferred or Series J Preferred  Stock. In lieu of
any  fractional  shares to which the holder would  otherwise  be  entitled,  the
Corporation  shall pay cash equal to such  fraction  multiplied by the then fair
market value of such  fractional  shares as determined by the Board of Directors
of the Corporation. Before any holder of Series F Preferred, Series G Preferred,
Series H  Preferred,  Series I Preferred  or Series J  Preferred  Stock shall be
entitled to convert the same into full  shares of Common  Stock,  and to receive
certificates  therefor,  he shall  surrender  the  certificate  or  certificates
therefor,  duly  endorsed,  at the office of the  Corporation or of any transfer
agent for Series F Preferred,  Series G Preferred,  Series H Preferred, Series I
Preferred  or Series J Preferred  Stock,  and shall give  written  notice to the
Corporation  at such  office  that he elects  to  convert  the  same;  provided,
however,  that in the event of an  automatic  conversion  pursuant to  paragraph
B.4(b) above,

                                       12
<PAGE>

the  outstanding  shares of Series F  Preferred,  Series G  Preferred,  Series H
Preferred,  Series I Preferred  or Series J Preferred  Stock shall be  converted
automatically  without  any  further  action by the  holders of such  shares and
whether or not the certificates  representing such shares are surrendered to the
Corporation  or  its  transfer  agent;  provided  further,   however,  that  the
Corporation shall not be obligated to issue  certificates  evidencing the shares
of Common  Stock  issuable  upon such  automatic  conversion  unless  either the
certificates  evidencing such shares of Series F Preferred,  Series G Preferred,
Series H Preferred, Series I Preferred or Series J Preferred Stock are delivered
to the  Corporation  or its  transfer  agent as  provided  above,  or the holder
notifies the Corporation or its transfer agent that such  certificates have been
lost,  stolen  or  destroyed  and  executes  an  agreement  satisfactory  to the
Corporation  to  indemnify  the  Corporation  from  any loss  incurred  by it in
connection with such certificates.

                  The  Corporation  shall,  as soon as  practicable  after  such
delivery, or after such agreement and indemnification, issue and deliver at such
office to such  holder  of  Series F  Preferred,  Series G  Preferred,  Series H
Preferred,  Series I Preferred  or Series J  Preferred  Stock a  certificate  or
certificates  for the  number of  shares  of  Common  Stock to which he shall be
entitled  as  aforesaid  and a check  payable to the holder in the amount of any
cash amounts  payable as the result of a conversion  into  fractional  shares of
Common Stock,  plus any declared and unpaid  dividends on the converted Series F
Preferred,  Series G Preferred, Series H Preferred, Series I Preferred or Series
J Preferred Stock. Such conversion shall be deemed to have been made immediately
prior to the close of  business on the date of such  surrender  of the shares of
Series F Preferred,  Series G Preferred,  Series H Preferred, Series I Preferred
or Series J Preferred Stock to be converted,  and the person or persons entitled
to receive the shares of Common Stock  issuable  upon such  conversion  shall be
treated  for all  purposes  as the record  holder or  holders of such  shares of
Common Stock on such date.

         (d) Adjustments to Conversion Price for Diluting Issues.

                  (i) Special Definition. For purposes of this paragraph B.4(d),
"Additional  Shares of Common" shall mean all shares of Common Stock issued (or,
pursuant to paragraph B.4(d)(iii), deemed to be issued) by the Corporation after
the Original Issue Date, other than shares of Common Stock issued or issuable:

                           (1) upon conversion of shares of Preferred Stock;

                           (2)  to  the   Corporation's   employees,   officers,
directors and  consultants  as may be determined by the  Corporation's  Board of
Directors from time to time;

                           (3) as a dividend or  distribution on Preferred Stock
or  pursuant to any event for which  adjustment  is made  pursuant to  paragraph
B.4(e)(i) or (ii) hereof;

                           (4) pursuant to commercial borrowing, secured lending
or lease financing transactions approved by the Board of Directors;

                           (5) in any  transaction,  other than the  issuance by
the  Company of Series J  Preferred,  in which the  issuance  (or,  pursuant  to
paragraph  4(d)(iii),  deemed  issuance)  by the

                                       13
<PAGE>

Corporation  of such  shares of Common  Stock  results  in net  proceeds  to the
Corporation of less than $500,000;

                           (6)  upon   exercise   of  any  options  or  warrants
outstanding as of the Original Issue Date to purchase the Company's Common Stock
or Preferred Stock.

                  (ii) No Adjustment of Conversion  Price.  No adjustment in the
Conversion  Price  of a  particular  share  of  Series  F  Preferred,  Series  G
Preferred,  Series H Preferred,  Series I Preferred or Series J Preferred  Stock
shall be made in respect of the issuance of  Additional  Shares of Common unless
the  consideration  per share for an Additional Share of Common issued or deemed
to be issued by the  Corporation is less than the Conversion  Price in effect on
the date of, and  immediately  prior to such issue,  for such share of Preferred
Stock.

                  (iii)  Deemed  Issue of  Additional  Shares of Common.  In the
event the  Corporation at any time or from time to time after the Original Issue
Date shall issue any options,  warrants or convertible securities or shall fix a
record date for the determination of holders of any class of securities entitled
to receive  any such  options,  warrants  or  convertible  securities,  then the
maximum  number  of  shares  (as set forth in the  instrument  relating  thereto
without regard to any provisions  contained therein for a subsequent  adjustment
of such  number) of Common Stock  issuable  upon the exercise of such options or
warrants  or, in the case of  convertible  securities  and  options or  warrants
therefor,  the conversion or exchange of such convertible securities or exercise
of such options or warrants,  shall be deemed to be Additional  Shares of Common
issued as of the time of such  issue or, in case such a record  date  shall have
been  fixed,  as of the close of business on such  record  date,  provided  that
Additional  Shares of Common shall not be deemed to have been issued  unless the
consideration  per share  (determined  pursuant to paragraph  4(d)(v) hereof) of
such  Additional  Shares of Common  would be less than the  Conversion  Price in
effect on the date of and immediately  prior to such issue, or such record date,
as the  case  may be,  and  provided  further  that in any  such  case in  which
Additional Shares of Common are deemed to be issued:

                           (1) no further  adjustment  in the  Conversion  Price
shall be made upon the subsequent  issue of convertible  securities or shares of
Common  Stock upon the  exercise of such  options or warrants or  conversion  or
exchange of such convertible securities;

                           (2)  if  such   options,   warrants  or   convertible
securities by their terms  provide,  with the passage of time or otherwise,  for
any increase or decrease in the  consideration  payable to the  Corporation,  or
increase or decrease in the number of shares of Common Stock issuable,  upon the
exercise, conversion or exchange thereof, the Conversion Price computed upon the
original  issue  thereof (or upon the  occurrence  of a record date with respect
thereto),  and any subsequent  adjustments  based thereon,  shall, upon any such
increase or decrease becoming effective,  be recomputed to reflect such increase
or  decrease  insofar as it affects  such  options or  warrants or the rights of
conversion or exchange under such convertible securities;

                           (3) no  readjustment  pursuant  to  clause  (2) above
shall have the effect of  increasing  the  Conversion  Price to an amount  which
exceeds the lower of (i) the Conversion  Price on the original  adjustment date,
or (ii) the  Conversion  Price that would have  resulted  from any

                                       14
<PAGE>

issuance of Additional Shares of Common between the original adjustment date and
such readjustment date;

                           (4)  upon  the  expiration  of any  such  options  or
warrants  or any  rights  of  conversion  or  exchange  under  such  convertible
securities  which shall not have been exercised,  the Conversion  Price computed
upon the original  issue  thereof (or upon the  occurrence of a record date with
respect thereto) and any subsequent  adjustments  based thereon shall, upon such
expiration, be recomputed as if:

                                    (A) in the case of convertible securities or
options or  warrants  for Common  Stock,  the only  Additional  Shares of Common
issued  were the  shares of  Common  Stock,  if any,  actually  issued  upon the
exercise  of such  options or  warrants  or the  conversion  or exchange of such
convertible   securities  and  the  consideration   received  therefor  was  the
consideration  actually  received  by the  Corporation  for  the  issue  of such
exercised  options or warrants plus the  consideration  actually received by the
Corporation  upon  such  exercise  or for  the  issue  of all  such  convertible
securities  which were  actually  converted or  exchanged,  plus the  additional
consideration, if any, actually received by the Corporation upon such conversion
or exchange, and

                                    (B) in the case of options or  warrants  for
convertible securities, only the convertible securities, if any, actually issued
upon the  exercise  thereof  were issued at the time of issue of such options or
warrants,  and the consideration  received by the Corporation for the Additional
Shares of Common deemed to have been then issued was the consideration  actually
received by the Corporation for the issue of such exercised options or warrants,
plus  the  consideration  deemed  to  have  been  received  by  the  Corporation
(determined  pursuant to paragraph  B.4(d)(v)) upon the issue of the convertible
securities  with  respect  to which  such  options  or  warrants  were  actually
exercised; and

                           (5) if such  record  date  shall  have been fixed and
such  options,  warrants or  convertible  securities  are not issued on the date
fixed therefor,  the adjustment  previously  made in the Conversion  Price which
became  effective  on such  record  date  shall be  canceled  as of the close of
business on such record  date,  and  thereafter  the  Conversion  Price shall be
adjusted  pursuant to this  paragraph  4(d)(iii)  as of the actual date of their
issuance.

                  (iv)   Adjustment  of   Conversion   Price  Upon  Issuance  of
Additional  Shares of  Common.  In the event the  Corporation,  on or before the
earlier of (i) the first  anniversary  of the final sale by the  Corporation  of
Series F Preferred  prior to June 30, 1996,  the first  anniversary of the final
sale by the  Corporation  of Series G Preferred  prior to December 31, 1996, the
first anniversary of the final sale by the Corporation of Series H Preferred and
Series I Preferred  prior to June 30,  1998,  and the first  anniversary  of the
final  sale by the  Company  of Series J  Preferred  prior to August  22,  1998,
respectively  and (ii) June 30, 1997 (with  respect to the Series F  Preferred),
December 31, 1997 (with respect to the Series G Preferred),  June 30, 1999 (with
respect to the Series H Preferred and Series I  Preferred),  and August 22, 1999
(with respect to the Series J Preferred) (the earlier of which dates is referred
to as the "Determination  Date"),  issues Additional Shares of Common (including
Additional   Shares  of  Common  deemed  to  be  issued  pursuant  to  paragraph
B.4(d)(iii))  without  consideration or for a consideration  per share less than
the Conversion  Price for the

                                       15
<PAGE>

respective  Series of Preferred  Stock in effect on the date of and  immediately
prior to such  issue  (a  "Dilutive  Issuance"),  then  and in such  event  such
Conversion  Price shall be  reduced,  concurrently  with such issue,  to a price
equal to such  consideration per share of the Additional  Shares of Common.  The
Conversion  Price  of the  Series F  Preferred,  Series  G  Preferred,  Series H
Preferred,  Series I Preferred and Series J Preferred Stock shall not be reduced
as a result of any Dilutive Issuance that occurs after the Determination Date.

                  (v)  Determination  of  Consideration.  For  purposes  of this
subsection 4(d), the consideration  received by the Corporation for the issue of
any Additional Shares of Common shall be computed as follows:

                           (1) Cash and Property. Such consideration shall:

                                    (a)  insofar  as it  consists  of  cash,  be
computed at the aggregate  amount of cash received by the Corporation  excluding
amounts paid or payable for accrued interest or accrued dividends;

                                    (b) insofar as it consists of property other
than cash, be computed at the fair value  thereof at the time of such issue,  as
determined in good faith by the Board of Directors; and

                                    (c) in the event Additional Shares of Common
are issued  together  with other  shares or  securities  or other  assets of the
Corporation  for  consideration  which covers both,  be the  proportion  of such
consideration  so received,  computed as provided in clauses a) and b) above, as
determined in good faith by the Board of Directors.

                           (2)   Options   and   Convertible   Securities.   The
consideration  per share received by the  Corporation  for Additional  Shares of
Common deemed to have been issued pursuant to paragraph  4(d)(iii),  relating to
options, warrants and convertible securities, shall be determined by dividing

                                    (a) the total  amount,  if any,  received or
receivable by the  Corporation as  consideration  for the issue of such options,
warrants  or  convertible  securities,  plus the  minimum  aggregate  amount  of
additional  consideration  (as set forth in the  instruments  relating  thereto,
without regard to any provision contained therein for a subsequent adjustment of
such consideration) payable to the Corporation upon the exercise of such options
or warrants or the conversion or exchange of such convertible securities,  or in
the case of options or warrants for convertible securities, the exercise of such
options  for  convertible  securities  and the  conversion  or  exchange of such
convertible securities by

                                    (b) the  maximum  number of shares of Common
Stock (as set forth in the instruments  relating thereto,  without regard to any
provision contained therein for a subsequent adjustment of such number) issuable
upon the exercise of such options or warrants or the  conversion  or exchange of
such convertible securities.

                           (e) Adjustments to Conversion Rate.

                                       16
<PAGE>

                  (i)  Adjustments  for  Subdivisions,   Splits,   Combinations,
Consolidations,  Reorganizations  or  Reclassifications  of Common Stock. In the
event  that  after the date of the first  issuance  of the  Series F  Preferred,
Series  G  Preferred,  Series  H  Preferred,  Series I  Preferred  and  Series J
Preferred Stock the  outstanding  shares of Common Stock shall be (a) subdivided
or split  into a greater  number of shares of  Common  Stock;  (b)  combined  or
consolidated,  by reclassification or otherwise,  into a lesser number of shares
of Common  Stock or (c) changed  into a different  number of shares of any other
class or classes of stock, whether by capital  reorganization,  reclassification
or  otherwise,  the holders of the shares of Preferred  Stock shall receive upon
conversion,  the stock  and/or  securities  to which the holder  would have been
entitled  had  the  holder  held,  at  the  time  of  said  split,  subdivision,
combination, consolidation,  reorganization or reclassification, the same number
of shares of Common Stock as the number of Series J Preferred Stock converted.

                  (ii) Adjustments for Other Dividends and Distributions. In the
event the  Corporation  at any time after the date of the first  issuance of the
Series F Preferred,  Series G Preferred,  Series H Preferred, Series I Preferred
and  Series  J  Preferred   Stock  makes,  or  fixes  a  record  date  for,  the
determination  of holders of Common  Stock  entitled to  receive,  a dividend or
other  distribution  payable  in the  securities  of the  Corporation,  then the
holders  of the  shares  of Series F  Preferred,  Series G  Preferred,  Series H
Preferred,  Series I Preferred  and Series J Preferred  Stock shall receive upon
conversion,  in  addition  to the number of sharers of Common  Stock  receivable
thereupon,  the stock or securities to which the holder would have been entitled
had the holder held,  at the time of said  dividend or other  distribution,  the
same  number  of shares of  Common  Stock as the  number of Series F  Preferred,
Series  G  Preferred,  Series  H  Preferred,  Series I  Preferred  and  Series J
Preferred converted,  and had they thereafter during the period from the date of
such  event to and  including  the date of  conversion,  retained  such stock or
securities  receivable by them as aforesaid  during such period,  subject to all
other  adjustments  called for during  such period  under this  Section B.4 with
respect to the  respective  rights of the  holders  of the  Series F  Preferred,
Series  G  Preferred,  Series  H  Preferred,  Series I  Preferred  and  Series J
Preferred.

         5. Voting Rights.  Except as otherwise  required by law, the holders of
Series F Preferred,  Series G Preferred,  Series H Preferred, Series I Preferred
and Series J Preferred  Stock  shall be entitled to notice of any  shareholders'
meeting in accordance with the Bylaws of the Corporation and to vote together as
a single  class with the holders of the Common  Stock  (except  with  respect to
those  matters  required by law to be  submitted  to a separate  class or series
vote) upon the  election of  directors  and upon any other  matter  submitted to
shareholders for a vote, on the following basis:

                  (a)  Series  F  Preferred,   Series  G  Preferred,   Series  H
Preferred,  Series I Preferred and Series J Preferred  Stock Vote. Each share of
Preferred Stock issued and  outstanding  shall have the number of votes equal to
the number of shares of Common Stock into which it is  convertible,  as adjusted
from time to time under Section 4 hereof.  Fractional votes shall not,  however,
be permitted and any fractional  voting rights  resulting from the above formula
(after  aggregating all shares into which shares of Preferred Stock held by each
holder could be  converted)  shall be rounded to the nearest  whole number (with
one-half being rounded upward).

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<PAGE>

                  (b)  Cumulative  Voting.  Notwithstanding  the above,  for the
election of  directors  each holder of Series F  Preferred,  Series G Preferred,
Series H  Preferred,  Series I  Preferred  and Series J  Preferred,  shall after
giving the notice required by Section 708 of the California  Corporations  Code,
as amended from time to time,  be entitled to the number of votes as  determined
pursuant to  paragraph  (a) above  multiplied  by the number of  directors to be
elected,  with each  shareholder  being  entitled to cumulate such votes for one
candidate or to distribute  such votes among the  candidates as the  shareholder
sees fit.

         6. Covenants.  In addition to any other rights provided by law, so long
as 33% of the originally issued Series F Preferred, Series G Preferred, Series H
Preferred,  Series I  Preferred  and  Series J  Preferred  shall be  outstanding
respectively,   this   Corporation   shall  not,  without  first  obtaining  the
affirmative  vote or written  consent of the holders of not less than a majority
of the outstanding shares of each of the Series F Preferred, Series G Preferred,
Series H  Preferred,  Series I  Preferred  and Series J Preferred  Stock  voting
separately as single classes.

                  (a) amend or repeal any provision of, or add any provision to,
this Corporation's Articles of Incorporation if such action would materially and
adversely alter or change the preferences,  rights,  privileges or powers of, or
the restrictions  provided for the benefit of, the Series F Preferred,  Series G
Preferred,  Series H Preferred,  Series I Preferred and Series J Preferred Stock
authorized hereby;

                  (b) authorize or issue shares of any class of stock having any
preference or priority as to dividends or assets superior to any such preference
or priority of the Series F Preferred,  Series G Preferred,  Series H Preferred,
Series I Preferred and Series J Preferred Stock; or

                  (c)  reclassify  any shares of Common Stock into shares having
any  preference  or  priority  as to  dividends  or assets  superior to any such
preference or priority of the Series F Preferred,  Series G Preferred,  Series H
Preferred, Series I Preferred and Series J Preferred Stock.

                                   Article IV

         Section 1.  Limitation  of Directors'  Liability.  The liability of the
directors of this  Corporation  for monetary  damages shall be eliminated to the
fullest extent permissible under California law.

         Section 2.  Indemnification of Corporation  Agents. This Corporation is
authorized to provide through bylaw provisions, agreements with its agents, vote
of shareholders or disinterested directors or otherwise;  indemnification of its
agents (as defined in Section 317 of the California General  Corporation Law) in
excess of the  indemnification  otherwise permitted by such Section 317, subject
to the limits set forth in Section 204 of the California General Corporation Law
for breach of duty to this Corporation or its shareholders.

         Section 3 Repeal or  Modification.  Any repeal or  modification  of the
foregoing  provisions of this Article IV by the  shareholders of the Corporation
shall  not  adversely  affect  any right of  indemnification  or  limitation  of
liability of an agent of the Corporation relating to acts or omissions occurring
prior to such repeal or modification.

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