AMENDED AND RESTATED ARTICLES OF INCORPORATION OF

                         HYPERMEDIA COMMUNICATIONS, INC.



         The  undersigned,  Richard Landry and Donna  Petkanics,  hereby certify
that:

         1. They are the President and Chief  Executive  Officer,  and Assistant
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 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
total  number of  outstanding  shares of Common  Stock is  3,200,141.  The total
number of outstanding  shares of Preferred Stock is 8,454,660 of which 8,064,516
shares have been designated as Series E Preferred Stock, all of which are issued
and outstanding,  175,000 shares have been designated  Series F Preferred Stock,
82,250 of which are issued and outstanding,  175,000 shares have been designated
Series G Preferred Stock,  50,344 of which are issued and  outstanding,  400,000
shares  have been  designated  Series H  Preferred  Stock,  117,000 of which are
issued and outstanding,  200,000 shares have been designated  Series I Preferred
Stock,  28,800 of which are issued and  outstanding and 250,000 shares have been
designated  Series J  Preferred  Stock,  111,750  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:  May 21, 1998                             /s/ RICHARD LANDRY
                                                --------------------------------
                                                Richard Landry, President and
                                                 Chief Executive Officer


                                                /s/ DONNA M. PETKANICS
                                                --------------------------------
                                                Donna M. Petkanics, Assistant
                                                 Secretary


       [Signature page to Amended and Restated Articles of Incorporation]

<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 10,064,516,
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").



<PAGE>


         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.

         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:

                                        2

<PAGE>


                  (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 Stock,
Series G Preferred Stock, Series H Preferred Stock, Series I Preferred Stock 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  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  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 and Series F Preferred  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   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.

                                        3

<PAGE>


                  (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"):

                  (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

                                        4

<PAGE>


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 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

                                        5

<PAGE>


                                                     (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 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;

                                        6

<PAGE>


                                                     (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.

                             (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

                                        7

<PAGE>


                                                     (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.

                             (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

                                        8

<PAGE>


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 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

                                        9

<PAGE>


                                            (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:

                  (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;

         6. Status of Converted  Stock. In case any shares of Series E Preferred
shall be converted pursuant to Section A.4 hereof, the shares so converted shall
not be reissued.

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

                                       10

<PAGE>


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 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, Series I Preferred 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

                                       11

<PAGE>


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  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, $1.56 for the Series I Preferred and $.619 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,  $10.00  per  share of  Common  Stock  for
conversions  of Series I  Preferred  and  $20.00  per share of Common  Stock for
conversions  of Series J  Preferred.  Such  initial  Conversion  Prices shall be
subject to adjustment as hereinafter provided.

                                       12

<PAGE>


                  (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  there for, 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, 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.

                                       13

<PAGE>



                  (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  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 con tained 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

                                       14

<PAGE>


(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
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

                                       15

<PAGE>


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 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.

                                       16

<PAGE>


                                            (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.

                             (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

                                       17

<PAGE>


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).

                  (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

                                       18

<PAGE>


                  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.

                                       19