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                                                                 Exhibit 3.1(i)

                                  VIATEL, INC.

                  CERTIFICATE OF DESIGNATIONS, PREFERENCES AND
                           RIGHTS OF 7.50% CUMULATIVE
                 CONVERTIBLE PREFERRED STOCK SERIES B-1 DUE 2015

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                           CERTIFICATE OF DESIGNATIONS

            Viatel, Inc., a company organized and existing under the General
Corporation Law of the State of Delaware (the "Company"), certifies that
pursuant to the authority contained in its Certificate of Incorporation (the
"Certificate of Incorporation") and its By-laws (the "By-laws"), and in
accordance with Section 151 of the General Corporation Law of the State of
Delaware, the board of directors of the Company (the "Board of Directors") at a
meeting duly called and held on January 31st, 2000, duly approved and adopted
the following resolution, which resolution remains in full force and effect on
the date hereof:

            RESOLVED, that pursuant to the authority vested in the Board of
Directors by the Certificate of Incorporation and By-laws, the Board of
Directors does hereby create, authorize and provide for the issue of a series of
Preferred Stock having the following designation, voting powers, preferences and
relative, participating, optional and other special rights:

            Certain capitalized terms used herein are defined in Section 16.

            1. Number and Designation. The Company shall have a series of
Preferred Stock, which shall be designated as its 7.50% Series B-1 Cumulative
Convertible Preferred Stock due 2015 (the "Series B-1 Preferred Stock"), par
value $0.01 per share, with 325,000 shares initially authorized. Unless
otherwise specified, references herein to any "Section" refer to the Section
number specified in this Certificate of Designation.

            2. Issuance. The Company may issue up to 325,000 shares of Series
B-1 Preferred Stock in accordance with the Purchase Agreement; provided that,
the aggregate of the then Outstanding shares of Series B-1 Preferred Stock and
Series B-2 Preferred Stock shall not exceed such 325,000 shares.

            3. Registered Form; Liquidation Preference; Registrar. Certificates
for shares of Series B Preferred Stock shall be issuable only in registered form
and only with an initial Liquidation Preference of $1,072 per share. The Company
shall serve as initial Registrar and Transfer Agent (the "Registrar") for the
Series B Preferred Stock.

            4. Registration; Transfer. Shares of the Series B Preferred Stock
have not been registered under the Securities Act of 1933, as amended (the
"Securities Act") and may not be resold, pledged or otherwise transferred prior
to the date when they may be resold pursuant to Rule 144 under the Securities
Act other than (i) to the Company, (ii) pursuant to an exemption from
registration under the Securities Act or (iii) pursuant to an effective
registration statement under the Securities Act, in each case in accordance with
any applicable securities laws of any state of the United States. Until such
time as it is no longer required pursuant to the Securities Act, certificates
evidencing the Series B Preferred Stock shall contain a legend (the "Restrictive
Legend") evidencing the foregoing restrictions in substantially the form
attached hereto as Exhibit A.

            5. Paying Agent and Conversion Agent. (a) The Company shall maintain
(i) an office or agency where shares of Series B Preferred Stock may be
presented for payment (the "Paying Agent"), (ii) an office or agency where
shares of Series B Preferred Stock may be

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presented for conversion (the "Conversion Agent"), and (iii) a Registrar, which
shall be an office or an agency where shares of Series B Preferred Stock may be
presented for transfer. The Company may appoint the Registrar, the Paying Agent
and the Conversion Agent and may appoint one or more additional paying agents
and one or more additional conversion agents in such other locations as it shall
determine. The term "Paying Agent" includes any additional paying agent, and the
term "Conversion Agent" includes any additional conversion agent. The Company
may change any Paying Agent or Conversion Agent without prior notice to any
holder. The Company shall notify the Registrar of the name and address of any
Paying Agent or Conversion Agent appointed by the Company. If the Company fails
to appoint or maintain another entity as Paying Agent or Conversion Agent, the
Registrar shall act as such. Notwithstanding the foregoing, the Company or any
of its Affiliates may act as Paying Agent, Registrar, coregistrar or Conversion
Agent.

            (b) Neither the Company nor the Registrar shall be required (i) to
issue, countersign or register the transfer of or exchange any share of Series B
Preferred Stock during a period beginning at the opening of business 15 days
before any Redemption Date (as defined under Section 10(d)) and ending at the
close of business on such Redemption Date or (ii) to register the transfer of or
exchange any share of Series B Preferred Stock so selected for redemption. This
Section 5(b) shall not apply to any conversion of Series B Preferred Stock in
accordance with Section 12.

            (c) If shares of Series B Preferred Stock are issued upon the
transfer, exchange or replacement of shares of Series B Preferred Stock bearing
the Restrictive Legend, or if a request is made to remove such Restrictive
Legend on shares of Series B Preferred Stock, the shares of Series B Preferred
Stock so issued shall bear the Restrictive Legend, or the Restrictive Legend
shall not be removed, as the case may be, unless the holders of such shares
shall request such legend be removed, and outside counsel for such holders
reasonably determines that the transfer of such shares is no longer restricted
by the Securities Act and outside counsel for the Company reasonably concurs in
such determination.

            (d) Each holder of a share of Series B Preferred Stock agrees to
indemnify the Company and the Registrar against any liability that may result
from the transfer, exchange or assignment by such holder of such holder's share
of Series B Preferred Stock in violation of any provision of this Certificate of
Designation and/or applicable Federal or state securities law; provided,
however, that such indemnity shall not apply to acts of willful misconduct or
gross negligence on the part of the Company or the Registrar, as the case may
be.

            (e) Payments due on the shares of Series B Preferred Stock shall be
payable at the office or agency of the Company maintained for such purpose in
The City of New York and at any other office or agency maintained by the Company
for such purpose. If any such payment is in cash, it shall be payable by wire
transfer (provided that appropriate wire instructions have been received by the
Registrar at least 15 days prior to the applicable date of payment) to a United
States dollar account maintained by the holder with, a bank located in New York
City; provided that at the option of the Company payment of dividends in cash
may be made by check mailed to the address of the person entitled thereto as
such address shall appear in the Series B Preferred Share Register.


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            6. Dividend Rights.

            (a) The Company shall pay, and the holders of the shares of Series B
Preferred Stock shall be entitled to receive, cumulative dividends from the date
of initial issuance of such shares of Series B Preferred Stock at a rate of
7.50% per annum on the amount of the then-effective Liquidation Preference of
the shares of Series B Preferred Stock. Dividends will be computed on the basis
of a 360-day year of twelve 30-day months and will be payable in accordance with
Section 11 hereof. Dividends will be payable quarterly in arrears on May 31,
August 31, November 30 and February 28 of each year (each a "Dividend Payment
Date"), commencing (subject to the next sentence) on May 31, 2000, for so long
as any shares of Series B Preferred Stock are outstanding; provided, however,
that if such date is not a Business Day, then the Dividend Payment Date shall be
the next Business Day. The Company may elect not to declare dividend payments on
any Dividend Payment Date and shall not declare dividend payments prior to May
31, 2005; provided, however, that dividends on shares of the Series B Preferred
Stock will accrue (including, without limitation, for the period from the
issuance of the Series B Preferred Stock through May 31, 2005, notwithstanding
the prohibitions set forth above) whether or not the Company has earnings or
profits, whether or not there are funds legally available for the payment of
such dividends and whether or not dividends are declared. Dividends, whether
declared or undeclared, will accumulate to the extent they are not paid on the
Dividend Payment Date for the period to which they relate. The Company will take
all actions required or permitted under the General Corporation Law of the State
of Delaware to permit the payment or accrual of dividends on the shares of
Series B Preferred Stock. On each Dividend Payment Date, commencing May 31,
2000, to and including the May 31, 2005 Dividend Payment Date, accrued dividends
on a share of the Series B Preferred Stock for the preceding dividend period
shall be added cumulatively to and thereafter remain a part of the Liquidation
Preference of such share. Thereafter, accrued dividends shall be payable
quarterly on each Dividend Payment Date, commencing on August 31, 2005, to the
holders of record of the Series B Preferred Stock as of the close of business on
the applicable Dividend Record Date. Accrued dividends that are not paid in full
in cash on any such Dividend Payment Date (whether or not declared and whether
or not there are sufficient funds legally available for the payment thereof)
shall be added cumulatively to the Liquidation Preference on the applicable
Dividend Payment Date and thereafter remain a part thereof. Accrued dividends
added to the Liquidation Preference of a share of Series B Preferred Stock in
accordance with the foregoing provisions of this Section 6(a) are sometimes
referred to in this Certificate as "Accumulated Dividends". For purposes of
determining the amount of dividends "accrued" (i) as of the first Dividend
Payment Date and as of any date that is not a Dividend Payment Date, such amount
shall be calculated on the basis of the rate per annum specified above in this
paragraph for the actual number of days elapsed from and including the Closing
Date (in case of the first Dividend Payment Date and any date prior to the first
Dividend Payment Date ) or the last preceding Dividend Payment Date (in case of
any other date) to the date as of which such determination is to be made, based
on a 360-day year, and (ii) as of any Dividend Payment Date after the first
Dividend Payment Date, such amount shall be calculated on the basis of such rate
per annum based on a 360-day year of twelve 30-day months. Whenever the Company
shall declare or pay any dividend on any Series B Preferred Stock, the holders
of the Series B Preferred Stock shall be entitled to receive such dividends on a
per share basis.


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            (b) In addition to all dividends payable pursuant to Section 6(a),
whenever the Company shall declare or pay any dividend on its Common Stock, the
holders of the Series B Preferred Stock shall be entitled to receive such
dividends on a ratable as-converted basis (calculated as if all shares of Series
B Preferred Stock had been converted directly or indirectly into Common Stock
and/or Series C Preferred Stock). Dividends payable pursuant to this Section
6(b) shall not reduce any dividends payable pursuant to Section 6(a).

            7. Payment of Dividends; Mechanics of Payment; Dividend Rights
Preserved. (a) Subject to Sections 6 and 11, dividends on any share of Series B
Preferred Stock that are payable, and are punctually paid or duly provided for,
on any Dividend Payment Date shall be paid in arrears to the person in whose
name such share of Series B Preferred Stock (or one or more predecessor shares
of Series B Preferred Stock) is registered at the close of business on the next
preceding May 15, August 15, November 15 and February 15 (each a "Dividend
Record Date").

            (b) Unless full cumulative dividends on all outstanding shares of
Series B Preferred Stock for all past dividend periods shall have been declared
and paid, or declared and a sufficient sum for the payment thereof set apart,
then:

            (i) no dividend (other than (A) with respect to Junior Shares, a
      dividend payable solely in any Junior Shares, or (B) with respect to
      Parity Shares, a dividend payable solely in Junior Shares or Parity
      Shares, or (C) with respect to Parity Shares, a partial dividend paid pro
      rata on such Parity Shares and the shares of Series B Preferred Stock)
      shall be declared or paid upon, or any sum set apart for the payment of
      dividends upon, any Junior Shares or Parity Shares, respectively;

            (ii) no other distribution shall be declared or made upon, or any
      sum set apart for the payment of any distribution upon, any Junior Shares
      or Parity Shares;

            (iii) no Junior Shares or Parity Shares or any warrants, rights,
      calls or options (other than any cashless exercises of options or buybacks
      of options or restricted stock from present or former employees, directors
      or consultants) exercisable for or convertible into any Parity Share or
      Junior Share shall be purchased, redeemed or otherwise acquired (other
      than in exchange for other Junior Shares or Parity Shares, respectively
      and other than conversion of (A) Series B-1 Preferred Stock into Series
      B-2 Preferred Stock, and vice versa, (B) Series B-2 Preferred Stock into
      Series C Preferred Stock, and (C) Series C Preferred Stock into Common
      Stock and vice versa) by the Company or any of its subsidiaries; and

            (iv) no monies shall be paid into or set apart or made available for
      a sinking or other like fund for the purchase, redemption or other
      acquisition of any Junior Shares or Parity Shares or any warrants, rights,
      calls or options exercisable for or convertible into any Parity Shares or
      Junior Shares by the Company or any of its subsidiaries (other than any
      cashless exercises of options or option buybacks).


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            Except as provided in Sections 6, 12 or 13 hereof, holders of Series
B Preferred Stock will not be entitled to any dividends, whether payable in
cash, property or stock, in excess of the full cumulative dividends as herein
described.

            (c) The Company will notify the Registrar and make a public
announcement no later than the close of business on the tenth Business Day prior
to the Record Date for each dividend as to whether it will pay such dividend.

            (d) Any dividends (other than Accumulated Dividends) on any share of
Series B Preferred Stock may be paid, subject to Section 11, by the Company in
any lawful manner (which shall include the establishment of a record date not
more than 45 days prior to the payment thereof) not inconsistent with the
requirements of any national stock exchange or Commission recognized trading
market on which the shares of Series B Preferred Stock may be listed or admitted
to trading, and upon such notice (which shall precede the record date by at
least ten Business Days) as may be required by such exchange or trading market,
if, after notice given by the Company to the Registrar of the proposed payment
pursuant to this clause (d), such manner of payment shall be deemed practicable
by the Registrar.

            (e) Subject to the foregoing provisions of this Section 7, each
share of Series B Preferred Stock delivered under this Certificate of
Designation upon registration of transfer of or in exchange for or in lieu of
any other share of Series B Preferred Stock shall carry the rights to dividends
accumulated and unpaid, and to accrue, that were carried by such other shares of
Series B Preferred Stock.

            (f) The holder of record of a share of Series B Preferred Stock at
the close of business on a Dividend Record Date with respect to the payment of
dividends on the shares of Series B Preferred Stock will be entitled to receive
such dividends with respect to such share of Series B Preferred Stock on the
corresponding Dividend Payment Date, notwithstanding the conversion of such
share after such Dividend Record Date and prior to such Dividend Payment Date.

            8. Voting Rights. (a) The holders of record of shares of Series B
Preferred Stock shall not be entitled to any voting rights except as hereinafter
provided in this Section 8 or as otherwise provided by law.

            (b) The holders of record of shares of Series B-1 Preferred Stock
shall be entitled to vote on all matters that the holders of the Company's
Common Stock are entitled to vote upon.

            (c) In addition to the voting rights set forth above, the approval
of the holders of at least a majority of the then Outstanding shares of Series B
Preferred Stock voting or consenting, as the case may be, as one class, will be
required for the Company to:

            (i) amend the Certificate of Incorporation, this Certificate of
      Designation or the By-Laws so as to (A) affect adversely the rights,
      preferences (including, without limitation, liquidation preferences,
      conversion price, dividend rate and Optional Redemption provisions),
      privileges or voting rights of holders of the shares of Series B Preferred
      Stock, or (B) increase or decrease the number of authorized shares of
      Series B Preferred Stock;


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            (ii) in a single transaction or series of related transactions,
      consolidate or merge with or into, or sell, assign, transfer, lease,
      convey or otherwise dispose of all or substantially all of its assets to,
      any Person or adopt a plan of liquidation, except as expressly provided in
      Section 14 hereof;

            (iii) enter into, or permit any of its subsidiaries to enter into,
      any agreement that would impose material restrictions on the Company's
      ability to honor the exercise of any rights of the holders of the Series B
      Preferred Stock;

            (iv) authorize or create, modify the terms of or increase or
      decrease the authorized amount of any Senior Shares or Parity Shares;

            (v) issue any shares of Series B Preferred Stock other than (a)
      pursuant to the terms of the Purchase Agreement as in effect on the
      Closing Date, or (b) shares of the Series B-1 Preferred Stock upon the
      conversion of shares of the Series B-2 Preferred Stock and vice versa; or

            (vi) after March 9, 2005 (the "Fifth Anniversary Date"), commence or
      effect any tender or exchange offer made by the Company or any Subsidiary
      for all or any portion of the Common Stock.

In addition to the voting rights set forth above, the approval of the holders of
at least a majority of the then Outstanding shares of Series B-1 Preferred
Stock, other than the Relinquishing Holders, voting or consenting, as the case
may be, as one class, will be required for the Company to, on or prior to the
Fifth Anniversary Date, commence or effect any tender or exchange offer made by
the Company or any Subsidiary for all or any portion of the Common Stock. No
amendment shall be made to this Certificate of Designations without making the
same amendment to the corresponding provision (if any) to the Series B-2
Certificate of Designations (and vice versa).

            (d) For so long as members of the HMTF Group own any combination of
the shares of Series B Preferred Stock issued to members of the HMTF Group on
the Closing Date under the Purchase Agreement (the "HMTF Issued Series B
Preferred Shares") and shares of Common Stock issued upon conversion of HMTF
Issued Series B Preferred Shares that, taken together, would represent (if all
HMTF Issued Series B Preferred Shares were converted) an amount of Common Stock
issuable upon conversion of 50% or more of the HMTF Issued Series B Preferred
Shares, the HMTF Holders, voting as a single class, shall be entitled to elect
one director to serve on the Board of Directors at any annual meeting of
stockholders or special meeting held in place thereof, or at a special meeting
of the HMTF Holders called as hereinafter provided. If directors of the Company
are generally entitled to three year terms and a director has been elected by
the HMTF Holders pursuant to this paragraph, no subsequent election need be held
pursuant to this paragraph prior to the expiration of such three year term
unless a vacancy shall exist in the office of a director elected by the HMTF
Holders. At any time after voting power to elect such director shall have become
vested and be continuing in the HMTF Holders pursuant to this paragraph, or if a
vacancy shall exist in the office of a director elected by the HMTF Holders at a
time when the HMTF Holders are entitled to elect a director pursuant to this
paragraph, a proper officer of the Company may, and upon the written request of
the holders of


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record of at least twenty-five percent (25%) of the HMTF Issued Series B
Preferred Shares then Outstanding held by the HMTF Holders addressed to the
Secretary of the Company shall, call a special meeting of the HMTF Holders for
the purpose of electing the director that such holders are entitled to elect. If
such meeting shall not be called by a proper officer of the Company within
twenty (20) days after personal service of said written request upon the
Secretary of the Company, or within twenty (20) days after mailing the same
within the United States by certified mail, addressed to the Secretary of the
Company at its principal executive offices, then the holders of at least
twenty-five percent (25%) of the HMTF Issued Series B Preferred Shares then
Outstanding held by the HMTF Holders may designate in writing one of their
number to call such meeting at the expense of the Company, and such meeting may
be called by the person so designated upon the notice required for the annual
meeting of stockholders of the Company and shall be held at the place for
holding the annual meetings of stockholders. As used herein, (i) "HMTF Group"
means Hicks, Muse, Tate & Furst Incorporated, a Texas corporation, and its
Affiliates and their respective officers, directors, partners, members,
stockholders and employees (and members of their respective families and trusts
for the primary benefit of such family members) and HMTF Bridge Viatel, LLC,
HMEU Viatel I-EQ Coinvestors, LLC, HMEU Viatel I-SBS Coinvestors, LLC, HM Viatel
PG Europe, LLC, HMEU Viatel Qualified Fund, LLC, HMEU Viatel Private Fund, LLC,
and their respective Affiliates and (ii) "HMTF Holders" means members of the
HMTF Group that are the holders of all or a portion of the HMTF Issued Series B
Preferred Shares or the Common Stock into which such HMTF Issued Series B
Preferred Shares are converted. Any action permitted or required to be taken by
the HMTF Holders pursuant to this Section 8(d) may be taken (1) at any annual or
special meeting of stockholders or at a special meeting of the HMTF Holders, or
(2) without a meeting, without prior notice, and without a vote if a consent or
consents in writing, setting forth the action so taken, shall be signed by the
HMTF Holders having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares held
by the HMTF Holders entitled to vote thereon were present and voted and shall be
delivered to the Company by delivery to its address listed in Section 8.2 of the
Purchase Agreement.

            (e) In exercising the voting rights set forth in Section 8(b), each
share of Series B Preferred Stock shall be entitled to vote on an as-converted
basis with the holders of the Company's Common Stock. In exercising the voting
rights set forth in Section 8 (d), each HMTF Issued Series B Preferred Share
shall be entitled to vote on an as-converted basis with the other HMTF Issued
Series B Preferred Shares and shares of Common Stock held by the HMTF Holders
and into which HMTF Issued Series B Preferred Shares have been converted, voting
as a single class. In exercising the other voting rights set forth in this
Section 8 each share of Series B Preferred Stock entitled to vote shall have one
vote per share, except that when any other series of preferred stock shall have
the right to vote with the Series B Preferred Stock as a single class on any
matter not specified in this Section 8, then the Series B Preferred Stock and
such other series of preferred stock shall have with respect to such matters one
vote per $1,000 of the aggregate liquidation preference of all shares of Series
B Preferred Stock and all shares of such other series of preferred stock. Except
as otherwise required by applicable law or as set forth herein, the shares of
Series B Preferred Stock shall not have any relative, participating, optional or
other special voting rights and powers and the consent of the holders thereof
shall not be required for the taking of any corporate action.


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            (f) Chase Capital Partners and its Affiliates that are holders of
all or a portion of the Series B-2 Preferred Stock issued to any such entities
on the Closing Date shall have the right to designate an observer who shall have
the right to attend meetings of the Company's Board of Directors and such
observer shall be entitled to receive notice of each such meeting at the same
time as such directors. In addition, to the extent that the Company's Board of
Directors is to take action by unanimous written consent, the observer shall be
entitled to receive a copy of any such written consent when it is forwarded to
the directors for their execution. For purposes of this Section 8(f), Series B-2
Preferred Stock issued on the Closing Date shall be deemed to include Series B-1
Preferred Stock or Series C Preferred Stock issued on any date after the Closing
Date upon conversion of such Series B-2 Preferred Stock, as well as Common Stock
issued on any date after the Closing Date upon conversion of such Series B-1
Preferred Stock or Series C Preferred Stock.

            9. Ranking. (a) The shares of Series B Preferred Stock will, with
respect to dividend rights and rights on liquidation, winding-up and
dissolution, rank (i) senior to all shares of Common Stock (whether issued in
one or more classes), the Series A Junior Participating Preferred Stock of the
Company and to each other class of capital stock or series of Preferred Stock of
the Company, the terms of which do not expressly provide that it ranks senior to
or on a parity with the shares of Series B Preferred Stock as to dividend rights
and rights on liquidation, winding-up and dissolution of the Company
(collectively referred to, together with all shares of Common Stock (whether
issued in one or more classes) of the Company, as "Junior Shares"); (ii) on a
parity with additional shares of Series B Preferred Stock issued by the Company
and each other class of capital stock or series of Preferred Stock of the
Company issued by the Company in compliance with Section 8 hereof, the terms of
which expressly provide that such class or series will rank on a parity with the
shares of Series B Preferred Stock as to dividend rights and rights on
liquidation, winding-up and dissolution of the Company (collectively referred to
as "Parity Shares"); and (iii) junior to each class of capital stock or series
of Preferred Stock of the Company issued by the Company in compliance with
Section 8 hereof, the terms of which expressly provide that such class or series
will rank senior to the shares of Series B Preferred Stock as to dividend rights
and rights upon liquidation, winding-up and dissolution of the Company
(collectively referred to as "Senior Shares").

            (b) No dividend whatsoever shall be declared or paid upon, or any
sum set apart for the payment of dividends upon, any outstanding shares of
Series B Preferred Stock with respect to any dividend period unless all
dividends for all preceding dividend periods have been declared and paid, or
declared and a sufficient sum set apart for the payment of such dividends, upon
all outstanding Senior Shares.

            (c) In the event of any liquidation, dissolution or winding-up of
the Company, whether voluntary or involuntary, the holders of the shares of
Series B Preferred Stock then Outstanding shall be entitled to receive, prior
and in preference to any distribution of any of the assets of the Company to the
holders of shares of Common Stock or Junior Shares by reason of their ownership
thereof, an amount equal to the greater of (i) the then effective Liquidation
Preference of their shares of Series B Preferred Stock, plus an amount equal to
all dividends accrued and unpaid thereon from the last Dividend Payment Date to
the date fixed for liquidation, dissolution or winding-up or (ii) the amount
such holders would receive if such holders converted, directly or indirectly in
accordance with their terms, their shares of Series B


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Preferred Stock into Common Stock and/or Series C Preferred Stock immediately
prior to such liquidation, dissolution or winding up.

            (d) If upon the occurrence of such event the assets of the Company
shall be insufficient to permit the payment to such holders of the full
preferential amount and all liquidating payments on all Parity Shares, the
entire assets of the Company legally available for distribution shall be
distributed among the holders of the shares of Series B Preferred Stock and the
holders of all Parity Shares ratably in accordance with the respective amounts
that would be payable on such shares of Series B Preferred Stock and any such
Parity Shares if all amounts payable thereon were paid in full. After payment of
the full preferential amount (and, if applicable, an amount equal to a pro rata
dividend to the holders of Outstanding shares of Series B Preferred Stock), such
holders shall not be entitled to any further participation in any distribution
of assets of the Company.

            10. Redemption. (a) The shares of Series B Preferred Stock may be
redeemed by the Company at any time commencing on or after the Fifth Anniversary
Date (or earlier, in accordance with the provisions of Section 13(d) if a Change
of Control Date shall have occurred, but only as to shares of Series B Preferred
Stock with respect to which the Remarketing Option has been elected), in whole
or from time to time in part, at the election of the Company (an "Optional
Redemption"), at a redemption price (the "Redemption Price") payable in cash
equal to 100% of the then effective Liquidation Preference (after giving effect
to the Special Payment, if applicable), plus accrued and unpaid dividends
thereon from the last Dividend Payment Date to the date of redemption (the
"Optional Redemption Date").

            (b) Shares of Series B Preferred Stock (if not earlier redeemed or
converted) shall be mandatorily redeemed by the Company on February 28, 2015
(the "Mandatory Redemption Date"; provided, however, that if such date is not a
Business Day, then the Mandatory Redemption Date shall be the next Business
Day), at a Redemption Price per share in cash equal to the then effective
Liquidation Preference (after giving effect to the Special Payment, if
applicable), plus accrued and unpaid dividends thereon from the last Dividend
Payment Date to the Mandatory Redemption Date.

            (c) In the event of a redemption or repurchase of fewer than all the
shares of Series B Preferred Stock, the shares of Series B Preferred Stock will
be chosen for redemption by the Registrar from the Outstanding shares of Series
B Preferred Stock not previously called for redemption, pro rata based on the
number of shares of Series B Preferred Stock held by each holder; provided, that
the Company may redeem (an "Odd-lot Redemption") all shares held by holders of
fewer than 100 shares of Series B Preferred Stock (or by holders that would hold
fewer than 100 shares of Series B Preferred Stock following such redemption)
prior to its redemption of other shares of Series B Preferred Stock; provided,
further, that the Company may not redeem a portion of any share without
redeeming the entire share. If fewer than all the shares of Series B Preferred
Stock represented by any share certificate are so to be redeemed, (i) the
Company shall issue a new certificate for the shares not redeemed and (ii) if
any shares represented thereby are converted before termination of the
conversion right with respect to such shares, such converted shares shall be
deemed (so far as may be) to be the shares represented by such share certificate
that was selected for redemption. Shares of Series B Preferred Stock that have
been converted during a selection of shares of Series B Preferred Stock to be
redeemed


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shall be treated by the Registrar as outstanding for the purpose of such
selection but not for the purpose of the payment of the Redemption Price.

            (d) In the event the Company elects to effect an Optional
Redemption, the Company shall (i) make a public announcement of the redemption
and (ii) give a redemption notice (the "Redemption Notice") to the holders not
fewer than 30 days nor more than 60 days before the redemption date (the
"Redemption Date"). Whenever a Redemption Notice is required to be delivered to
the holders, such notice shall provide the information set forth below and be
given by first class mail, postage prepaid to each holder of shares of Series B
Preferred Stock to be redeemed, at such holder's address appearing in the Series
B Preferred Share Register. All Redemption Notices shall identify the shares of
Series B Preferred Stock to be redeemed (including CUSIP number) and shall
state:

            (i) the Redemption Date;

            (ii) the applicable Redemption Price;

            (iii) if fewer than all the outstanding shares of Series B Preferred
      Stock are to be redeemed, the identification (and, in the case of partial
      redemption, the certificate number, the total number of shares represented
      thereby and the number of such shares being redeemed on the Redemption
      Date) of the particular shares of Series B Preferred Stock to be redeemed;

            (iv) that on the Redemption Date, the Redemption Price, together
      with all accrued and unpaid dividends from the last Dividend Payment Date
      to the Redemption Date, will become due and payable upon each such share
      of Series B Preferred Stock to be redeemed and that dividends thereon will
      cease to accrue on and after said date;

            (v) the conversion price, the date on which the right to convert
      shares of Series B Preferred Stock to be redeemed will terminate and the
      place or places where such shares of Series B Preferred Stock may be
      surrendered for conversion; and

            (vi) the place or places where such shares of Series B Preferred
      Stock are to be surrendered for payment of the Redemption Price and the
      other amounts which are then payable.

            (vi) The Redemption Notice shall be given by the Company or, at the
      Company's request, by the Registrar in the name and at the expense of
      the Company; provided that if the Company so requests, it shall provide
      the Registrar adequate time, as reasonably determined by the Registrar,
      to deliver such notices in a timely fashion.

            (e) Prior to any Redemption Date, the Company shall deposit with the
Registrar or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust) an amount of consideration sufficient to pay
the Redemption Price of all the shares of Series B Preferred Stock that are to
be redeemed on that date plus all accrued and unpaid dividends thereon from the
last Dividend Payment Date to the Redemption Date. If any share of Series B
Preferred Stock called for redemption is converted, any consideration deposited
with the Registrar or with any Paying Agent or so segregated and held in trust
for the redemption of such


                                       10
<PAGE>

share of Series B Preferred Stock shall be paid or delivered to the Company upon
Company Order or, if then held by the Company, shall be discharged from such
trust.

            (f) Notice of redemption having been given as aforesaid, the shares
of Series B Preferred Stock so to be redeemed shall, on the Redemption Date,
become due and payable at the Redemption Price therein specified plus all
accrued and unpaid dividends thereon from the last Dividend Payment Date to the
Redemption Date, and from and after such date (unless the Company shall default
in the payment of the Redemption Price and accrued but unpaid dividends)
dividends on such shares of Series B Preferred Stock shall cease to accrue and
such shares shall cease to be convertible into shares of Common Stock. Upon
surrender of any such shares of Series B Preferred Stock for redemption in
accordance with said notice, such shares of Series B Preferred Stock shall be
redeemed by the Company at the applicable Redemption Price, together with all
accrued and unpaid dividends thereon from the last Dividend Payment Date to the
Redemption Date. If any share of Series B Preferred Stock called for redemption
shall not be so paid upon surrender thereof for redemption, the Redemption Price
thereof, and all accrued and unpaid dividends thereon from the last Dividend
Payment Date to the Redemption Date, shall, until paid, bear interest from the
Redemption Date at the dividend rate payable on the shares of Series B Preferred
Stock and such shares shall remain convertible.

            (g) Any certificate that represents more than one share of Series B
Preferred Stock and is to be redeemed only in part shall be surrendered at any
office or agency of the Company designated for that purpose (with, if the
Company or the Registrar so requires, due endorsement by, or a written
instrument of transfer in form satisfactory to the Company and the Registrar
duly executed by, the holder thereof or his attorney duly authorized in
writing), and the Company shall execute, and the Registrar shall countersign and
deliver to the holder of such share of Series B Preferred Stock without service
charge, a new Series B Preferred Stock certificate or certificates, representing
any number of shares of Series B Preferred Stock as requested by such holder, in
aggregate amount equal to and in exchange for the number of shares not redeemed
and represented by the Series B Preferred Stock certificate so surrendered.

            (h) If a share of Series B Preferred Stock is redeemed subsequent to
a Dividend Record Date with respect to any Dividend Payment Date and on or prior
to such Dividend Payment Date, then any accrued dividends payable on such
Dividend Payment Date will be paid to the person in whose name such share of
Series B Preferred Stock is registered at the close of business on such Dividend
Record Date.

            11. Method of Payments. The Company may make any dividend payments
in cash with respect to any period after the Fifth Anniversary Date. Any
dividends not paid in cash on a current basis on the applicable Dividend Payment
Date with respect to all periods after the Fifth Anniversary Date, and all
dividends with respect to the periods prior to the Fifth Anniversary Date, shall
not be paid in cash but rather shall constitute Accumulated Dividends.
Notwithstanding the foregoing, the Company may make any dividend payments
required to be paid pursuant to Section 6(b) in cash. No payment may be made in
respect of Accumulated Dividends as dividends. Rather, Accumulated Dividends
shall be added to the Liquidation Preference. Dividends may not be paid by
delivery of shares of Series B Preferred Stock.


                                       11
<PAGE>

            12. Conversion. (a) Subject to and upon compliance with the
provisions of this Certificate of Designation, at the option of the holder
thereof, any share of Series B-1 Preferred Stock may be converted at any time
into a number of fully paid and nonassessable shares of Common Stock (calculated
as to each conversion to the nearest 1/100 of a share) equal to (i) the then
effective Liquidation Preference thereof plus accrued and unpaid dividends to
the date of conversion divided by (ii) the Conversion Price in effect at the
time of conversion. Such conversion right shall expire at the close of business
on the Business Day next preceding the Mandatory Redemption Date unless the
Company defaults on the payment due on redemption. In case a share of Series B-1
Preferred Stock is called for redemption, such conversion right in respect of
the share so called shall expire at the close of business on the Business Day
next preceding the Redemption Date, unless the Company defaults in making the
payment due upon redemption.

            The "Conversion Price" shall be initially $46.25. The "Conversion
Price" shall be adjusted in certain instances as provided in Section 12(d) and
Section 12(e) hereof.

            (b) In order to exercise the conversion privilege, the holder of any
share of Series B-1 Preferred Stock to be converted shall surrender the
certificate for such share, duly endorsed or assigned to the Company or in
blank, at any office or agency of the Company maintained for that purpose,
accompanied by written notice to the Company at such office or agency that the
holder elects to convert such share or, if fewer than all the shares of Series
B-1 Preferred Stock represented by a single share certificate are to be
converted, the number of shares represented thereby to be converted.

            Shares of Series B-1 Preferred Stock shall be deemed to have been
converted immediately prior to the close of business on the day of surrender of
such shares for conversion in accordance with the foregoing provisions, and at
such time the rights of the holders of such shares as holders shall cease, and
the person or persons entitled to receive the shares of Common Stock issuable
upon conversion shall be treated for all purposes as the record holder or
holders of such shares of Common Stock at such time. As promptly as practicable
on or after the conversion date, the Company shall issue and shall deliver at
such office or agency a certificate or certificates for the number of full
shares of Common Stock issuable upon conversion, together with payment in lieu
of any fraction of a share, as provided in Section 12(c).

            In the case of any conversion of fewer than all the shares of Series
B-1 Preferred Stock evidenced by a certificate, upon such conversion the Company
shall execute and the Registrar shall countersign and deliver to the holder
thereof, at the expense of the Company, a new certificate or certificates
representing the number of unconverted shares of Series B-1 Preferred Stock.

            (c) No fractional shares of Common Stock shall be issued upon the
conversion of a share of Series B-1 Preferred Stock. If more than one share of
Series B-1 Preferred Stock shall be surrendered for conversion at one time by
the same holder, the number of full shares of Common Stock which shall be
issuable upon conversion thereof shall be computed on the basis of the aggregate
number of shares of Series B-1 Preferred Stock so surrendered. Instead of any
fractional shares of Common Stock which would otherwise be issuable upon
conversion of any share of Series B-1 Preferred Stock, the Company shall pay a
cash adjustment in respect of such


                                       12
<PAGE>

fraction in an amount equal to the same fraction of the closing price (as
defined in Section 12(d)(vi)) per share of Common Stock at the close of business
on the Business Day prior to the day of conversion.

            (d) For purposes of this Section 12(d), all references to Common
Stock shall be deemed to include the shares of Common Stock into which the
Series C Preferred Stock is convertible. The Conversion Price shall be adjusted
from time to time by the Company as follows:

            (i) If the Company shall hereafter pay a dividend or make a
      distribution to all holders of the outstanding shares of Common Stock in
      shares of Common Stock, the Conversion Price in effect at the opening of
      business on the date following the date fixed for the determination of
      shareholders entitled to receive such dividend or other distribution shall
      be reduced by multiplying such Conversion Price by a fraction of which the
      numerator shall be the number of shares of Common Stock outstanding at the
      close of business on the Common Stock Record Date (as defined in Section
      12(d)(vi)) fixed for such determination and the denominator shall be the
      sum of such number of shares and the total number of shares constituting
      such dividend or other distribution, such reduction to become effective
      immediately after the opening of business on the day following the Common
      Stock Record Date. If any dividend or distribution of the type described
      in this Section 12(d)(i) is declared but not so paid or made, the
      Conversion Price shall again be adjusted to the Conversion Price which
      would then be in effect if such dividend or distribution had not been
      declared.

            (ii) (a) In case the Company shall issue or sell any Common Stock
      (other than Common Stock issued (A) pursuant to the Company's existing or
      future stock option plans or pursuant to any other existing or future
      Common Stock-related director or employee compensation plan of the Company
      approved by the Board of Directors, (B) pursuant to the Company's existing
      or future stock purchase plans approved by the Board of Directors which
      permit Company employees to purchase Common Stock at a purchase price that
      is not more than a 15% discount to the Current Market Price, (C) as
      consideration for the acquisition of a business or of assets, (D) in a
      firm commitment underwritten public offering when either (i) the
      underwriting discount is 5% or less, or (ii) the offering price per share
      is greater than the Conversion Price, (E) to the Company's joint venture
      partners in exchange for interests in the relevant joint venture, (F) upon
      exercise or conversion of any security the issuance of which caused an
      adjustment hereunder or the issuance of which did not require adjustment
      hereunder or (G) upon exercise or conversion of any of the Series B-1
      Preferred Stock, the Series B-2 Preferred Stock, the Series C Preferred
      Stock or the Warrants (as defined in the Purchase Agreement) in accordance
      with their respective terms) without consideration or for a consideration
      per share less than the Current Market Price on the date of such issuance,
      or shall issue securities convertible into Common Stock having a
      conversion price per share less than the Current Market Price at the date
      of issuance of such convertible security, the Conversion Price to be in
      effect after such issuance or sale shall be determined by multiplying the
      Conversion Price in effect immediately prior to such issuance or sale by a
      fraction, (1) the numerator of which shall be the sum of (x) the number of
      shares of Common Stock outstanding immediately prior to such issuance or
      sale and (y) the


                                       13
<PAGE>

      number of shares of Common Stock which the aggregate consideration
      receivable by the Company for the total number of additional shares of
      Common Stock so issued or sold (or, in the case of convertible securities,
      issuable on conversion) would purchase at the Current Market Price in
      effect immediately prior to such issuance or sale and (2) the denominator
      of which shall be the sum of the number of shares of Common Stock
      outstanding immediately prior to such issuance or sale and the number of
      additional shares of Common Stock to be issued or sold (or, in the case of
      convertible securities, issued on conversion). In case any portion of the
      consideration to be received by the Company shall be in a form other than
      cash, the fair market value of such noncash consideration shall be
      utilized in the foregoing computation. Such fair market value shall be
      determined in good faith by the Board of Directors.

            (b) If the Company shall offer or issue options, rights or warrants
      to all holders of its outstanding shares of Common Stock entitling them to
      subscribe for or purchase shares of Common Stock at a price per share less
      than the Current Market Price (as defined in Section 12(d)(vi)) on the
      Common Stock Record Date fixed for the determination of shareholders
      entitled to receive such rights or warrants, the Conversion Price shall be
      adjusted so that the same shall equal the price determined by multiplying
      the Conversion Price in effect at the opening of business on the date
      after such Common Stock Record Date by a fraction of which the numerator
      shall be the number of shares of Common Stock outstanding at the close of
      business on the Common Stock Record Date plus the number of shares of
      Common Stock which the aggregate offering price of the total number of
      shares of Common Stock subject to such options, rights or warrants would
      purchase at such Current Market Price and of which the denominator shall
      be the number of shares of Common Stock outstanding at the close of
      business on the Common Stock Record Date plus the total number of
      additional shares of Common Stock subject to such options, rights or
      warrants for subscription or purchase. Such adjustment shall become
      effective immediately after the opening of business on the day following
      the Common Stock Record Date fixed for determination of shareholders
      entitled to purchase or receive such options, rights or warrants. To the
      extent that shares of Common Stock are not delivered pursuant to such
      options, rights or warrants, upon the expiration or termination of such
      options, rights or warrants the Conversion Price shall again be adjusted
      to be the Conversion Price which would then be in effect had the
      adjustments made upon the issuance of such options, rights or warrants
      been made on the basis of delivery of only the number of shares of Common
      Stock actually delivered. If such options, rights or warrants are not so
      issued, the Conversion Price shall again be adjusted to be the Conversion
      Price which would then be in effect if such date fixed for the
      determination of shareholders entitled to receive such options, rights or
      warrants had not been fixed. In determining whether any options, rights or
      warrants entitle the holders to subscribe for or purchase shares of Common
      Stock at less than such Current Market Price, and in determining the
      aggregate offering price of such shares of Common Stock, there shall be
      taken into account (x) any consideration received for such options, rights
      or warrants, with the value of such consideration and the amount of such
      exercise or subscription price, if other than cash, to be determined by
      the Board of Directors and (y) the amount of any exercise price or
      subscription price required to be paid upon exercise of such options,
      warrants or rights.


                                       14
<PAGE>

            (iii) If the outstanding shares of Common Stock shall be subdivided
      into a greater number of shares of Common Stock, the Conversion Price in
      effect at the opening of business on the day following the day upon which
      such subdivision becomes effective shall be proportionately reduced, and,
      conversely, if the outstanding shares of Common Stock shall be combined
      into a smaller number of shares of Common Stock, the Conversion Price in
      effect at the opening of business on the day following the day upon which
      such combination becomes effective shall be proportionately increased,
      such reduction or increase, as the case may be, to become effective
      immediately after the opening of business on the day following the day
      upon which such subdivision or combination becomes effective.

            (iv) If the Company shall, by dividend or otherwise, distribute to
      all holders of its shares of Common Stock any class of capital stock of
      the Company (other than any dividends or distributions to which Section
      12(d)(i) applies) or evidences of its indebtedness, cash or other assets
      (including securities, but excluding any rights or warrants of a type
      referred to in Section 12(d)(ii)(b) and dividends and distributions paid
      exclusively in cash and excluding any capital stock, evidences of
      indebtedness, cash or assets distributed upon a merger or consolidation to
      which Section 12(e) applies) (the foregoing hereinafter in this Section
      12(d)(iv) called the "Distributed Securities"), then, in each such case,
      the Conversion Price shall be reduced so that the same shall be equal to
      the price determined by multiplying the Conversion Price in effect
      immediately prior to the close of business on the Common Stock Record Date
      (as defined in Section 12(d)(vi)) with respect to such distribution by a
      fraction of which the numerator shall be the Current Market Price
      (determined as provided in Section 12(d)(vi)) on such date less the fair
      market value (as determined by the Board of Directors, whose good faith
      determination shall be conclusive and described in a resolution of the
      Board of Directors) on such date of the portion of the Distributed
      Securities so distributed applicable to one share of Common Stock and the
      denominator shall be such Current Market Price, such reduction to become
      effective immediately prior to the opening of business on the day
      following the Common Stock Record Date; provided, however, that, in the
      event the then fair market value (as so determined) of the portion of the
      Distributed Securities so distributed applicable to one share of Common
      Stock is equal to or greater than the Current Market Price on the Common
      Stock Record Date, in lieu of the foregoing adjustment, adequate provision
      shall be made so that each holder of shares of Series B Preferred Stock
      shall have the right to receive upon conversion of a share of Series B
      Preferred Stock (or any portion thereof) the amount of Distributed
      Securities such holder would have received had such holder converted such
      share of Series B Preferred Stock (or portion thereof) directly or
      indirectly into Common Stock immediately prior to such Common Stock Record
      Date. If such dividend or distribution is not so paid or made, the
      Conversion Price shall again be adjusted to be the Conversion Price which
      would then be in effect if such dividend or distribution had not been
      declared. If the Board of Directors determines the fair market value of
      any distribution for purposes of this Section 12(d)(iv) by reference to
      the actual or when issued trading market for any securities constituting
      all or part of such distribution, it must in doing so consider the prices
      in such market over the same period used in computing the Current Market
      Price pursuant to Section 12(d)(vi) to the extent possible.


                                       15
<PAGE>

            Options, rights or warrants distributed by the Company to all
      holders of shares of Common Stock entitling the holders thereof to
      subscribe for or purchase shares of the Company's capital stock (either
      initially or under certain circumstances), which options, rights or
      warrants, until the occurrence of a specified event or events ("Dilution
      Trigger Event"): (A) are deemed to be transferred with such shares of
      Common Stock; (B) are not exercisable; and (C) are also issued in respect
      of future issuances of shares of Common Stock, shall be deemed not to have
      been distributed for purposes of this Section 12(d)(iv) (and no adjustment
      to the Conversion Price under this Section 12(d)(iv) shall be required)
      until the occurrence of the earliest Dilution Trigger Event, whereupon
      such options, rights and warrants shall be deemed to have been distributed
      and an appropriate adjustment to the Conversion Price under this Section
      12(d)(iv) shall be made. If any such options, rights or warrants,
      including any such existing options, rights or warrants distributed prior
      to the first issuance of shares of Series B-1 Preferred Stock, are subject
      to subsequent events, upon the occurrence of each of which such options,
      rights or warrants shall become exercisable to purchase different
      securities, evidences of indebtedness or other assets, then the occurrence
      of each such event shall be deemed to be such date of issuance and record
      date with respect to new options, rights or warrants (and a termination or
      expiration of the existing options, rights or warrants, without exercise
      by the holder thereof). In addition, in the event of any distribution (or
      deemed distribution) of options, rights or warrants, or any Dilution
      Trigger Event with respect thereto, that was counted for purposes of
      calculating a distribution amount for which an adjustment to the
      Conversion Price under this Section 12(d) was made, (1) in the case of any
      such options, rights or warrants which shall all have been redeemed or
      repurchased without exercise by any holders thereof, the Conversion Price
      shall be readjusted upon such final redemption or repurchase to give
      effect to such distribution or Dilution Trigger Event, as the case may be,
      as though it were a cash distribution, equal to the per share redemption
      or repurchase price received by a holder or holders of shares of Common
      Stock with respect to such options, rights or warrants (assuming such
      holder had retained such options, rights or warrants), made to all holders
      of shares of Common Stock as of the date of such redemption or repurchase,
      and (2) in the case of such options, rights or warrants which shall have
      expired or been terminated without exercise by any holders thereof, the
      Conversion Price (as adjusted pursuant to this paragraph) shall be
      readjusted to be the Conversion Price which would have been in effect if
      such options, rights or warrants had not been issued.

            Notwithstanding any other provision of this Section 12(d)(iv) to the
      contrary, options, rights, warrants, evidences of indebtedness, other
      securities, cash or other assets (including, without limitation, any
      rights distributed pursuant to any shareholder rights plan) shall be
      deemed not to have been distributed for purposes of this Section 12(d)(iv)
      if the Company makes proper provision so that each holder of shares of
      Series B-1 Preferred Stock who converts a share of Series B-1 Preferred
      Stock (or any portion thereof) after the date fixed for determination of
      shareholders entitled to receive any such distribution shall be entitled
      to receive upon such conversion, in addition to the shares of Common Stock
      issuable upon such conversion, the amount and kind of such distributions
      that such holder would have been entitled to receive if such holder had,
      immediately prior to such determination date, converted such share of
      Series B-1 Preferred Stock into Common Stock.


                                       16
<PAGE>

            For purposes of this Section 12(d)(iv) and Sections 12(d)(i) and
      (ii), any dividend or distribution to which this Section 12(d)(iv) is
      applicable that also includes shares of Common Stock, or options, rights
      or warrants to subscribe for or purchase shares of Common Stock to which
      Section 12(d)(ii) applies (or both), shall be deemed instead to be (A) a
      dividend or distribution of the evidences of indebtedness, assets, shares
      of capital stock, rights or warrants other than such shares of Common
      Stock or options, rights or warrants to which Section 12(d)(ii) applies
      (and any Conversion Price reduction required by this Section 12(d)(iv)
      with respect to such dividend or distribution shall then be made)
      immediately followed by (B) a dividend or distribution of such shares of
      Common Stock or such options, rights or warrants (and any further
      Conversion Price reduction required by Sections 12(d)(i) or 12(d)(ii) with
      respect to such dividend or distribution shall then be made), except that
      (1) the Common Stock Record Date of such dividend or distribution shall be
      substituted as "the date fixed for the determination of stockholders
      entitled to receive such dividend or other distribution", "the Common
      Stock Record Date fixed for such determination" and "the Common Stock
      Record Date" within the meaning of Section 12(d)(i) and as "the date fixed
      for the determination of shareholders entitled to receive such rights or
      warrants", "the Common Stock Record Date fixed for the determination of
      the share holders entitled to receive such rights or warrants" and "such
      Common Stock Record Date" for purposes of Section 12(d)(ii), and (2) any
      shares of Common Stock included in such dividend or distribution shall not
      be deemed "outstanding at the close of business on the date fixed for such
      determination" for the purposes of Section 12(d)(i).

            (v) If a tender offer made by the Company or any of its subsidiaries
      for all or any portion of the Common Stock expires and such tender offer
      (as amended upon the expiration thereof) requires the payment to
      shareholders (based on the acceptance (up to any maximum specified in the
      terms of the tender offer) of Purchased Shares) of an aggregate
      consideration having a fair market value (as determined by the Board of
      Directors, whose good faith determination shall be conclusive and
      described in a resolution of the Board of Directors) that, combined
      together with the aggregate of the cash plus the fair market value (as
      determined by the Board of Directors, whose good faith determination shall
      be conclusive and described in a resolution of the Board of Directors), as
      of the expiration of such tender offer, of consideration payable in
      respect of any other tender offers, by the Company or any of its
      subsidiaries for all or any portion of the shares of Common Stock expiring
      within the 12 months preceding the expiration of such tender offer and in
      respect of which no adjustment pursuant to this Section 12(d)(v) has been
      made, exceeds 5% of the net income of the Company reported for the 12
      month period ending with the fiscal quarter next preceding such payment
      (determined as of the last time (the "Expiration Time") tenders could have
      been made pursuant to such tender offer (as it may be amended)), then, and
      in each such case, immediately prior to the opening of business on the day
      after the date of the Expiration Time, the Conversion Price shall be
      adjusted so that the same shall equal the price determined by multiplying
      the Conversion Price in effect immediately prior to the close of business
      on the date of the Expiration Time by a fraction of which the numerator
      shall be the number of shares of Common Stock outstanding (including any
      tendered shares) at the Expiration Time multiplied by the Current Market
      Price of the shares of Common Stock on the trading day next succeeding the
      Expiration Time and the denominator shall be the sum of (x) the fair


                                       17
<PAGE>

      market value (determined as aforesaid) of the aggregate consideration
      payable to shareholders based on the acceptance (up to any maximum
      specified in the terms of the tender offer) of all shares validly tendered
      and not withdrawn as of the Expiration Time (the shares deemed so
      accepted, up to any such maximum, being referred to as the "Purchased
      Shares") and (y) the product of the number of shares of Common Stock
      outstanding (less any Purchased Shares) at the Expiration Time and the
      Current Market Price of the shares of Common Stock on the trading day next
      succeeding the Expiration Time, such reduction (if any) to become
      effective immediately prior to the opening of business on the day
      following the Expiration Time. If the Company is obligated to purchase
      shares pursuant to any such tender offer, but the Company is permanently
      prevented by applicable law from effecting any such purchases or all such
      purchases are rescinded, the Conversion Price shall again be adjusted to
      be the Conversion Price which would then be in effect if such tender offer
      had not been made. If the application of this Section 12(d)(v) to any
      tender offer would result in an increase in the Conversion Price, no
      adjustment shall be made for such tender offer under this Section
      12(d)(v).

            (vi) For purposes of this Section 12(d), the following terms shall
      have the meaning indicated:

            "closing price" with respect to any securities on any day means the
closing sale price as of 4:00 p.m. Eastern Time on such day or any earlier final
closing on such day or, if no such sale takes place on such day, the average of
the reported high and low bid prices on such day, in each case on the Nasdaq
National Market, or the New York Stock Exchange, as applicable, or, if such
security is not listed or admitted to trading on such national market or
exchange, on the national stock exchange or Commission recognized trading market
in the United States on which such security is quoted or listed or admitted to
trading, or, if not quoted or listed or admitted to trading on any national
stock exchange or Commission recognized trading market in the United States, the
average of the high and low bid prices of such security on the over-the-counter
market on the day in question as reported by the National Quotation Bureau
Incorporated or a similar generally accepted reporting service in the United
States, or, if not so available, in such manner as furnished by any New York
Stock Exchange member firm selected from time to time by the Board of Directors
for that purpose, or a price determined in good faith by the Board of Directors,
whose determination shall be conclusive and described in a resolution of the
Board of Directors.

            "Common Stock Record Date" means, with respect to any dividend,
distribution or other transaction or event in which the holders of Common Stock
have the right to receive any cash, securities or other property or in which the
Common Stock (or other applicable security) is exchanged for or converted into
any combination of cash, securities or other property, the date fixed for
determination of shareholders entitled to receive such cash, securities or other
property (whether such date is fixed by the Board of Directors or by statute,
contract or otherwise).

            "Current Market Price" means the average of the daily closing prices
per share of Common Stock for the 10 consecutive trading days immediately prior
to the date in question; provided, however, that (A) if the "ex" date (as
hereinafter defined) for any event (other than the issuance or distribution
requiring such computation) that requires an adjustment to the Conversion Price
pursuant to Section 12(d)(i), (ii), (iii), (iv), and (v) occurs during such 10


                                       18
<PAGE>

consecutive trading days, the closing price for each trading day prior to the
"ex" date for such other event shall be adjusted by multiplying such closing
price by the same fraction by which the Conversion Price is so required to be
adjusted as a result of such other event, (B) if the "ex" date for any event
(other than the issuance or distribution requiring such computation) that
requires an adjustment to the Conversion Price pursuant to Section 12(d)(i),
(ii), (iii), (iv), or (v) occurs on or after the "ex" date for the issuance or
distribution requiring such computation and prior to the day in question, the
closing price for each trading day on and after the "ex" date for such other
event shall be adjusted by multiplying such closing price by the reciprocal of
the fraction by which the Conversion Price is so required to be adjusted as a
result of such other event and (C) if the "ex" date for the issuance or
distribution requiring such computation is prior to the day in question, after
taking into account any adjustment required pursuant to clause (A) or (B) of
this proviso, the closing price for each trading day on or after such "ex" date
shall be adjusted by adding thereto the amount of any cash and the fair market
value (as determined by the Board of Directors in a manner consistent with any
good faith determination of such value for purposes of Section 12(d)(iv) or (v),
whose good faith determination shall be conclusive and described in a resolution
of the Board of Directors) of the evidences of indebtedness, shares of capital
stock or assets being distributed applicable to one share of Common Stock as of
the close of business on the day before such "ex" date. For purposes of any
computation under Section 12(d)(v), the Current Market Price on any date shall
be deemed to be the average of the daily closing prices per share of Common
Stock for such day and the next two succeeding trading days; provided, however,
that, if the "ex" date for any event (other than the tender offer requiring such
computation) that requires an adjustment to the Conversion Price pursuant to
Section 12(d)(i), (ii), (iii), (iv), or (v) occurs on or after the Expiration
Time for the tender or exchange offer requiring such computation and prior to
the day in question, the closing price for each trading day on and after the
"ex" date for such other event shall be adjusted by multiplying such closing
price by the reciprocal of the fraction by which the Conversion Price is so
required to be adjusted as a result of such other event. For purposes of this
paragraph, the term "ex" date (1) when used with respect to any issuance or
distribution, means the first date on which the shares of Common Stock trade
regular way on the relevant exchange or in the relevant market from which the
closing price was obtained without the right to receive such issuance or
distribution, (2) when used with respect to any subdivision or combination of
shares of Common Stock, means the first date on which the shares of Common Stock
trade regular way on such exchange or in such market after the time at which
such subdivision or combination becomes effective and (3) when used with respect
to any tender or exchange offer means the first date on which the shares of
Common Stock trade regular way on such exchange or in such market after the
Expiration Time of such offer. Notwithstanding the foregoing, whenever
successive adjustments to the Conversion Price are called for pursuant to this
Section 12(d), such adjustments shall be made to the Current Market Price as may
be necessary or appropriate to effectuate the intent of this Section 12(d) and
to avoid unjust or inequitable results, as determined in good faith by the Board
of Directors.

            "fair market value" means the amount which a willing buyer would pay
a willing seller in an arm's-length transaction.

            (vii) No adjustment in the Conversion Price shall be required unless
      such adjustment would require an increase or decrease of at least 1% in
      such price; provided, however, that any adjustments which by reason of
      this Section 12(d)(vii) are not required


                                       19
<PAGE>

      to be made shall be carried forward and taken into account in any
      subsequent adjustment. All calculations under this Section 12 shall be
      made by the Company and shall be made to the nearest cent. No adjustment
      need be made for a change in the par value or no par value of the Common
      Stock.

            (viii) Whenever the Conversion Price is adjusted as herein provided,
      the Company shall promptly file with the Registrar an Officers'
      Certificate setting forth the Conversion Price after such adjustment and
      setting forth a brief statement of the facts requiring such adjustment.
      Promptly after delivery of such certificate, the Company shall prepare a
      notice of such adjustment of the Conversion Price setting forth the
      adjusted Conversion Price and the date on which each adjustment becomes
      effective and shall mail such notice of such adjustment of the Conversion
      Price to each holder of shares of Series B-1 Preferred Stock at such
      holder's last address appearing on the register of holders maintained for
      that purpose within 20 days of the effective date of such adjustment.
      Failure to deliver such notice shall not affect the legality or validity
      of any such adjustment.

            (ix) In any case in which this Section 12(d) provides that an
      adjustment shall become effective immediately after a Common Stock Record
      Date for an event, the Company may defer until the occurrence of such
      event issuing to the holder of any share of Series B-1 Preferred Stock
      converted after such Common Stock Record Date and before the occurrence of
      such event the additional shares of Common Stock issuable upon such
      conversion by reason of the adjustment required by such event over and
      above the shares of Common Stock issuable upon such conversion before
      giving effect to such adjustment.

            (x) For purposes of this Section 12(d), the number of shares of
      Common Stock at any time outstanding shall not include shares held in the
      treasury of the Company. The Company shall not pay any dividend or make
      any distribution on shares of Common Stock held in the treasury of the
      Company.

            (e) Subject to Section 13 hereof, in case of any consolidation of
the Company with, or merger of the Company into, any other Person, or in case of
any merger of another Person into the Company (other than a merger that does not
result in any reclassification, conversion, exchange or cancellation of
outstanding shares of Common Stock of the Company), or in case of any sale,
conveyance or transfer of all or substantially all the assets of the Company,
the holder of each share of Series B-1 Preferred Stock shall have the right
thereafter, during the period such share of Series B-1 Preferred Stock shall be
convertible as specified in Section 12(a), to convert such share of Series B-1
Preferred Stock into the kind and amount of securities, cash and other property
receivable upon such consolidation, merger, conveyance or transfer by a holder
of the number of shares of shares of Common Stock of the Company into which such
share of Series B-1 Preferred Stock might have been converted immediately prior
to such consolidation, merger, conveyance or transfer, assuming such holder of
shares of Common Stock of the Company failed to exercise his rights of election,
if any, as to the kind or amount of securities, cash and other property
receivable upon such consolidation, merger, conveyance or transfer (provided
that, if the kind or amount of securities, cash and other property receivable
upon such consolidation, merger, conveyance or transfer is not the same for each
share of


                                       20
<PAGE>

Common Stock of the Company in respect of which such rights of election shall
not have been exercised ("nonelecting share"), then for the purpose of this
Section 12 the kind and amount of securities, cash and other property receivable
upon such consolidation, merger, conveyance or transfer by each nonelecting
share shall be deemed to be the kind and amount so receivable per share by a
plurality of the nonelecting shares). Such securities shall provide for
adjustments which, for events subsequent to the effective date of the triggering
event, shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Section 12. The above provisions of this Section 12 shall
similarly apply to successive consolidations, mergers, conveyances or transfers.

            (f) In case:

            (i) the Company shall declare a dividend (or any other distribution)
      on its Common Stock and/or Series C Preferred Stock payable otherwise than
      in cash out of its earned surplus; or

            (ii) the Company shall authorize the granting to all holders of its
      shares of Common Stock and/or Series C Preferred Stock of rights or
      warrants to subscribe for or purchase any shares of capital stock of any
      class or of any other rights; or

            (iii) of any reclassification of the Common Stock and/or Series C
      Preferred Stock (other than a subdivision or combination of the Company's
      outstanding shares of Common Stock and/or Series C Preferred Stock), or of
      any consolidation or merger to which the Company is a party and for which
      approval of any shareholders of the Company is required, or the sale,
      conveyance or transfer of all or substantially all the assets of the
      Company; or

            (iv) of the voluntary or involuntary dissolution, liquidation or
      winding-up of the Company;

then the Company shall cause to be filed with the Registrar and at each office
or agency maintained for the purpose of conversion of shares of Series B-1
Preferred Stock, and shall cause to be mailed to all holders at their last
addresses as they shall appear in the shares of Series B-1 Preferred Stock
Register, at least 20 Business Days (or 10 Business Days in any case specified
in clause (i) or (ii) above) prior to the applicable date hereinafter specified,
a notice stating (x) the date on which a record is to be taken for the purpose
of such dividend, distribution, rights or warrants, or, if a record is not to be
taken, the date as of which the holders of shares of Common Stock and/or Series
C Preferred Stock of record to be entitled to such dividend, distribution,
rights or warrants are to be determined or (y) the date on which such
reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding-up is expected to become effective, and the date as of
which it is expected that holders of shares of Common Stock and/or Series C
Preferred Stock of record shall be entitled to exchange their shares of Common
Stock and/or Series C Preferred Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding-up. Failure to give the notice required by
this Section 12(f) or any defect therein shall not affect the legality or
validity of any dividend, distribution, right, warrant, reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or winding-up,
or the vote upon any such action.


                                       21
<PAGE>

            (g) The Company shall at all times reserve and keep available, free
from preemptive rights, out of its authorized but unissued shares of Common
Stock, for the purpose of effecting the conversion of shares of Series B-1
Preferred Stock, the full number of shares of Common Stock then issuable upon
the conversion of all outstanding shares of Series B-1 Preferred Stock.

            (h) The Company will pay any and all taxes that may be payable in
respect of the issue or delivery of shares of Common Stock on conversion of
shares of Series B-1 Preferred Stock pursuant hereto. The Company shall not,
however, be required to pay any tax which may be payable in respect of any
transfer involved in the issue and delivery of shares of Common Stock in a name
other than that of the holder of the share of Series B-1 Preferred Stock or
shares of Series B-1 Preferred Stock to be converted, and no such issue or
delivery shall be made unless and until the Person requesting such issue has
paid to the Company the amount of any such tax, or has established to the
satisfaction of the Company that such tax has been paid or is not payable.

            (i) Conversion to Other Series B Preferred Stock.

            (i) Conversion of Series B-1 Preferred Stock. Subject to and upon
      compliance with the provisions of this Section 12(i)(i), any Regulated
      Stockholder (defined below) shall be entitled to convert, at any time and
      from time to time, any or all of the shares of Series B-1 Preferred Stock
      held by such Regulated Stockholder into the same number of shares of
      Series B-2 Preferred Stock.

            (ii) Conversion of Series B-2 Preferred Stock. Subject to and upon
      compliance with the provisions of this Section 12(i)(ii), each record
      holder of Series B-2 Preferred Stock shall be entitled at any time and
      from time to time in such holder's sole discretion and at such holder's
      option, to convert any or all of the shares of such holder's Series B-2
      Preferred Stock into the same number of shares of Series B-1 Preferred
      Stock (and, if such holder so elects, simultaneously upon issuance of such
      shares of Series B-1 Preferred Stock to convert any or all of such shares
      of Series B-1 Preferred Stock to shares of Common Stock, and in accordance
      with this Certificate of Designations, as if such holder of Series B-2
      Preferred Stock were a holder of Series B-1 Preferred Stock when making
      such election); provided, however, that Series B-2 Preferred Stock held by
      a particular Regulated Stockholder may not be converted into Series B-1
      Preferred Stock to the extent that immediately prior thereto, or as a
      result of such conversion, the number of shares of Series B-1 Preferred
      Stock held by such Regulated Stockholder would exceed the number of shares
      of Series B-1 Preferred Stock which such Regulated Stockholder reasonably
      determines it and its Affiliates may own, control or have the power to
      vote under any law, regulation, rule or other requirement of any
      governmental authority at the time applicable to such Regulated
      Stockholder or its Affiliates. Each Regulated Stockholder may provide for
      further restrictions upon the conversion of any shares of Series B-2
      Preferred Stock by providing the Company with signed, written instructions
      specifying such additional restrictions and legending such shares as to
      the existence of such restrictions.


                                       22
<PAGE>

            (iii) Conversion Procedure. Each conversion of shares of Series B
      Preferred Stock into shares of another class of Series B Preferred Stock
      shall be effected by the surrender of the certificate or certificates
      representing the shares to be converted (the "Converting Shares") at the
      principal office of the Company (or such other office or agency of the
      Company as the Company may designate by written notice to the holders of
      Series B Preferred Stock) at any time during its usual business hours,
      together with written notice by the holder of such Converting Shares,
      stating that such holder desires to convert the Converting Shares, or a
      stated number of the shares represented by such certificate or
      certificates, into an equal number of shares of the class into which such
      shares may be converted (the "Converted Shares"). Such notice shall also
      state the name or names (with addresses) and denominations in which the
      certificate or certificates for Converted Shares are to be issued and
      shall include instructions for the delivery thereof. The Company shall
      promptly notify each Regulated Stockholder of its receipt of such notice.
      Promptly after such surrender and the receipt of such written notice, the
      Company will issue and deliver in accordance with the surrendering
      holder's instructions the certificate or certificates evidencing the
      Converted Shares issuable upon such conversion, and the Company will
      deliver to the converting holder a certificate (which shall contain such
      legends as were set forth on the surrendered certificate or certificates)
      representing any shares which were represented by the certificate or
      certificates that were delivered to the Company in connection with such
      conversion, but which were not converted. Such conversion, to the extent
      permitted by law, shall be deemed to have been effected as of the close of
      business on the date on which such certificate or certificates shall have
      been surrendered and such notice shall have been received by the Company,
      and at such time the rights of the holder of the Converting Shares as such
      holder shall cease and the person or persons in whose name or names the
      certificate or certificates for the Converted Shares are to be issued upon
      such conversion shall be deemed to have become the holder or holders of
      record of the Converted Shares. Upon issuance of shares in accordance with
      this Section 12(i)(iii), such Converted Shares shall be deemed to be duly
      authorized, validly issued, fully paid and non-assessable. The Company
      shall take all such actions as may be necessary to assure that all such
      shares of Series B Preferred Stock may be so issued without violation of
      any applicable law or governmental regulation or any requirements of any
      domestic securities exchange upon which shares of Series B Preferred Stock
      may be listed (except for official notice of issuance which will be
      immediately transmitted by the Company upon issuance). The Company shall
      not close its books against the transfer of shares of Series B Preferred
      Stock in any manner which would interfere with the timely conversion of
      any shares of Series B Preferred Stock.

      A written request for conversion from any Regulated Stockholder to the
      Company stating such Regulated Stockholder's reasonable belief that a
      conversion is permissible under all applicable laws, rules and regulations
      shall be conclusive and shall obligate the Company to effect such
      conversion in a timely manner.

            (iv) Notice of Conversion to Other Regulated Stockholders. The
      Company shall not convert or directly or indirectly redeem, purchase or
      otherwise acquire any shares of Series B Preferred Stock or any other
      class of capital stock of the Company or take any other action affecting
      the voting rights of such shares, if such action will


                                       23
<PAGE>

      increase the percentage of any class of outstanding voting securities
      owned or controlled by any Regulated Stockholder (other than any such
      stockholder which requested that the Company take such action, or which
      otherwise waives in writing its rights under this Section 12(i)(iv)),
      unless the Company simultaneously with taking such action gives written
      notice that it is taking such action to each Regulated Stockholder.

            (j) Miscellaneous.

            (i) Stock Splits; Adjustments. If the Company shall in any manner
      subdivide (by stock split, stock dividend or otherwise) or combine (by
      reverse stock split or otherwise) the outstanding shares of the Series B-1
      Preferred Stock or the Series B-2 Preferred Stock then the outstanding
      shares of each other series of Series B Preferred Stock shall be
      subdivided or combined, as the case may be, to the same extent, share and
      share alike, and effective provision shall be made for the protection of
      the conversion rights hereunder.

            (ii) Preemptive Right with respect to Certain Issuances. In case the
      Company shall issue or sell any Common Stock or convertible Junior Shares
      (other than Common Stock issued (A) pursuant to the Company's existing or
      future stock option plans or pursuant to any other existing or future
      Common Stock-related director or employee compensation plan of the Company
      approved by the Board of Directors, (B) other than pursuant to the
      Company's existing or future stock purchase plans approved by the Board of
      Directors which permit the Company's employees to purchase Common Stock at
      not more than a 15% discount to the Current Market Price, (C) as
      consideration for the acquisition of a business or of assets, (D) in a
      firm commitment underwritten public offering when either (i) the
      underwriting discount is 5% or less, or (ii) the offering price per share
      is greater than the Conversion Price, (E) to the Company's unaffiliated
      joint venture partners in exchange for interests in the relevant joint
      venture, (F) upon exercise or conversion of any security, the issuance of
      which caused an adjustment hereunder or the issuance of which did not
      require adjustment hereunder or (G) upon exercise or conversion of any of
      the Series B-1 Preferred Stock, the Series B-2 Preferred Stock, the Series
      C Preferred Stock or the Warrants (as defined in the Purchase Agreement)
      in accordance with their respective terms) for a consideration per share
      less than the Conversion Price then in effect but equal to or greater than
      the Current Market Price at the date of issuance of such Common Stock or
      convertible Junior Shares, the holders of the Series B Preferred Stock
      shall be entitled if they so elect to purchase such number of the shares
      of the Common Stock or convertible Junior Shares (or, in the case of a
      Regulated Holder, upon such Regulated Holder's request, nonvoting
      securities (x) identical in all respects, other than voting, to any such
      voting securities and (y) convertible into voting securities in a manner
      consistent with the convertibility of Series B-2 Preferred Stock into
      voting securities of the Company), being issued as will permit such
      holders to maintain their proportional ownership interest in the Company
      after giving effect to such issuance.

            The Company shall give twenty days prior written notice to the
      holders of the Series B Preferred Stock of its intention to issue or sell
      any Common Stock or Junior Shares that would give rise to preemptive
      rights pursuant to this Section 12(j)(ii). Within


                                       24
<PAGE>

      ten days after receipt of such notice, the holders of the Series B
      Preferred Stock shall notify the Company whether or not they intend
      (without commitment) to purchase such shares.

            (iii) No Charge. The issuance of certificates for shares of any
      class of Series B Preferred Stock (upon conversion of shares of any other
      series of Series B Preferred Stock or otherwise) shall be made without
      charge to the holders of such shares for any issuance tax in respect
      thereof or other cost incurred by the Company in connection with such
      conversion and/or the issuance of shares of Series B Preferred Stock;
      provided, however, that the Company shall not be required to pay any tax
      which may be payable in respect of any transfer involved in the issuance
      and delivery of any certificate in a name other than that of the holder of
      the Series B Preferred Stock converted.

            13. Change of Control. (a) If a Change of Control shall have
occurred (the time and date of such occurrence being a "Change of Control
Date"), the Company shall cause to be filed with the Registrar and at each
office or agency maintained for the purpose of conversion of shares of Series B
Preferred Stock, and shall cause to be mailed to all holders at their last
addresses as they shall appear in the Series B Preferred Stock Register, in any
case within 10 days after the Change of Control Date, a notice stating (1) the
Change of Control Date, (2) the fact that (if the Change of Control Date is
prior to the Fifth Anniversary Date) the holders shall receive the Special
Payment (as defined below) as a result of such Change of Control, (3) the fact
that holders shall have the right to either (a) continue to hold their shares of
Series B Preferred Stock (or the shares of preferred stock issued in respect
thereof pursuant to Section 14) (the "Hold Option") or (b) in the case of shares
of Series B-1 Preferred Stock, convert such shares (after taking into account
the Special Payment) in accordance with Section 12 or (c) elect the Remarketing
Option (as defined below), (4) the relevant circumstances and facts regarding
such Change of Control and (5) the instructions that such holder must follow in
order to exercise the rights identified above. As of the Change of Control Date
(if the Change of Control Date occurs prior to the Fifth Anniversary Date), the
holders of the Series B Preferred Stock shall receive the Special Payment,
pursuant to which the Liquidation Preference of each share of Series B Preferred
Stock shall be deemed to have been increased by an amount (the "Special
Payment") equal to the product of (x) the Share Factor with respect to such
share of Series B Preferred Stock and (y) the Aggregate Special Payment Amount.
Such Special Payment shall accrue as of the Change of Control Date (if the
Change of Control Date is prior to the Fifth Anniversary Date) whether or not
the Company has earnings or profits, whether or not there are funds legally
available for the payment of such dividend and whether or not such dividend is
declared and shall be in all respects identical to any other dividend declared
or accrued on the Series B Preferred Stock (except as set forth above) and all
provisions of this Certificate of Designation applicable to dividends shall
apply to such Special Payment (except as set forth above). The Special Payment
shall be added to the Liquidation Preference as of the Change of Control Date
whether the holders of the Series B Preferred Stock elect the Hold Option or the
Remarketing Option or whether they elect to convert their shares in accordance
with Section 12.

            (b) Within 30 days after delivery by the Company of the notice
described in Section 13(a), each holder of shares of Series B Preferred Stock
(or the shares of preferred stock issued in respect thereof pursuant to Section
14) who wishes to exercise the Hold Option or the Remarketing Option must submit
written notice (a "COC Response Notice") to the Company


                                       25
<PAGE>

setting forth the option such holder wishes to elect (and if no option is
selected within such 30 day period such holder shall be deemed to have selected
the Hold Option).

            (c) If the Hold Option is selected with respect to a share of Series
B Preferred Stock, or if no notice from a holder is received by the date
referred to in the preceding paragraph, such share of Series B Preferred Stock
(or the shares of preferred stock issued in respect thereof pursuant to Section
14) shall remain outstanding in accordance with its current terms (including,
without limitation, the right to convert pursuant to Section 12) after giving
effect to the Special Payment (if applicable).

            (d) If the Remarketing Option is selected with respect to a share of
Series B Preferred Stock, the holder of such share shall be deemed to have
elected to waive such holder's right during the Remarketing Period to convert
such share pursuant to Section 12 during the Remarketing Period and the Company
shall thereafter have the option (the "Remarketing Option") to either (a) have
such share redeemed in accordance with the optional redemption procedures set
forth in Section 10 (except that such procedures shall apply only to the holders
so electing the Remarketing Option) or (b) remarket such share for the account
of such holder and, if the net proceeds to such holder of such remarketing are
less than an amount in cash equal to 100% of the Liquidation Preference (after
giving effect to the Special Payment (if applicable)) of such share plus accrued
and unpaid dividends thereon from the last Dividend Payment Date to the date
payment in full is received by such holder in respect of such share (the
"Remarketing Price"), the Company shall issue to and sell for the account of
such holder a sufficient number of shares of Common Stock to make up such
shortfall; i.e., such that the holder receives a net amount in cash in respect
of such share of Series B Preferred Stock as to which the Remarketing Option has
been selected which, when taken together with the net proceeds received by such
holder in such remarketing is equal to the Remarketing Price. Written notice of
the election by the Company to either redeem or remarket such share shall be
provided to such holder within 75 days after receipt of a COC Response Notice
specifying the Remarketing Option.

            (e) In order to accomplish the remarketing, the Company shall take
all actions that may be necessary, including without limitation, preparing and
filing a registration statement under the Securities Act, and shall pay all
expenses (including without limitation, underwriting discounts) associated with
the remarketing and issuance and shall provide customary indemnification for the
benefit of the holder against securities law liabilities in connection
therewith. If the Remarketing Option has been selected and the Company has not
elected to redeem such share, payment of the full Remarketing Price in respect
of the remarketed share shall be made at a single settlement against surrender
of the share. Such settlement shall take place as soon as reasonably
practicable. If such settlement does not take place within 180 days after the
date of the Company's written notice pursuant to paragraph (d) above (the
"Remarketing Period"), the Company shall give written notice to the holders that
have elected the Remarketing Option that such 180-day period has elapsed and
that each such holder shall have the option, for a period of 10 Business Days
following the giving of such notice, of electing to terminate the remarketing
process with respect to such holder's shares and to elect (i) to convert such
holder's shares in accordance with Section 12 or (ii) the Hold Option. The
foregoing shall not affect the holder's right to receive and retain the Special
Payment (if the Change of Control Date is prior to the Fifth Anniversary Date)
as of the Change of Control Date).


                                       26
<PAGE>

            (f) The Company shall have the right to institute reasonable
procedures in order to implement this Section 13 and, to the extent reasonably
practicable, will make proper provision prior to the Change of Control Date to
ensure that the holders of shares of Series B Preferred Stock will be entitled
to receive the benefits intended to be afforded by this Section 13. Nothing in
this Section 13 shall affect the rights of the holders of Series B Preferred
Stock set forth in Section 14 hereof.

            14. Consolidation, Merger, Conveyance or Transfer. Without the vote
or consent of the holders of a majority of the then Outstanding shares of Series
B Preferred Stock, the Company may not consolidate or merge with or into, or
sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its assets to, any Person unless (i) if the Company is the
surviving or continuing Person, the Series B Preferred Stock shall remain
outstanding without any amendment that would adversely affect the preferences,
rights or powers of the Series B Preferred Stock, (ii) if the Company is not the
surviving or continuing Person, (a) the entity formed by such consolidation or
merger or to which such sale, assignment, transfer, lease, conveyance or other
disposition shall have been made (in any such case, the "resulting entity") is a
corporation organized and existing under the laws of Bermuda, the United States
or any State thereof or the District of Columbia; and (b) the shares of Series B
Preferred Stock are converted into or exchanged for and become shares of such
resulting entity, having in respect of such resulting entity the same (or more
favorable) powers, preferences and relative, participating, optional or other
special rights that the shares of Series B Preferred Stock had immediately prior
to such transaction; and (iii) the Company shall have delivered to the Registrar
an Officers' Certificate and an opinion of counsel, reasonably satisfactory in
form and content, each stating that such consolidation, merger, conveyance or
transfer complies with this Section 14 and that all conditions precedent herein
provided for relating to such transaction have been complied with.

            15. SEC Reports; Reports by Company. So long as any shares of Series
B Preferred Stock are outstanding, the Company shall file with the SEC and,
within 15 days after it files them with the SEC, with the Registrar and, if
requested, furnish to each holder of shares of Series B Preferred Stock all
annual and quarterly reports and the information, documents, and other reports
that the Company is required to file with the SEC pursuant to Section 13(a) or
15(d) of the Exchange Act ("SEC Reports"). In the event the Company is not
required or shall cease to be required to file SEC Reports, pursuant to the
Exchange Act, the Company will nevertheless file such reports with the SEC
(unless the SEC will not accept such a filing). Whether or not required by the
Exchange Act to file SEC Reports with the SEC, so long as any shares of Series B
Preferred Stock are Outstanding, the Company will furnish or cause to be
furnished copies of the SEC Reports to the holders of shares of Series B
Preferred Stock at the time the Company is required to make such information
available to the Registrar and to prospective investors who request it in
writing.

            16. Definitions. For purposes of this Certificate of Designation,
the following terms shall have the meaning set forth below (capitalized terms
used but not defined herein shall have the meanings ascribed to them in the
Series B-2 Certificate of Designations):

            "Accumulated Dividends" has the meaning set forth in Section 6.


                                       27
<PAGE>

            "Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with, such Person. For the purposes of this definition and the
definition of "HMTF Group", "control" when used with respect to any Person means
the power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing. Without limiting the foregoing, each of Chase
Capital Partners, The Chase Manhattan Corporation, each of their respective
affiliates (the "Chase Entities") and any other person, fund or entity for whom
any of the Chase Entities acts as a fiduciary or provides discretionary
management with respect to any investments or any such direct or indirect
interests therein shall be deemed to be affiliates of each other.

            "Aggregate Change of Control Date Accreted Value" means the product
obtained by multiplying (x) the Change of Control Date Accreted Value by (y) the
number of shares of Series B Preferred Stock Outstanding immediately prior to
the Change of Control Date.

            "Aggregate Five Year Accreted Value" means the product obtained by
multiplying (x) the Five Year Accreted Value by (y) the number of shares of
Series B Preferred Stock Outstanding immediately prior to the Change of Control
Date.

            "Aggregate Special Payment Amount" means the difference between (x)
the Aggregate Five Year Accreted Value and (y) the Aggregate Change of Control
Date Accreted Value.

            "Board of Directors" has the meaning set forth in the Recitals.

            "Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in The City of New York
are authorized or obligated by law or executive order to be closed.

            "By-laws" has the meaning set forth in the Recitals.

            "COC Response Notice" has the meaning set forth in Section 13(b).

            "Capital Stock" means, with respect to any person, any and all
shares, interests, participations, rights in, or other equivalents (however
designated and whether voting and/or non-voting) of such person's capital stock,
whether outstanding on the Closing Date or issued after the Closing Date, and
any and all rights (other than any evidence of indebtedness), warrants or
options exchangeable for or convertible into such capital stock.

            "Certificate of Incorporation" has the meaning set forth in the
recitals.

            "Change of Control" means the occurrence of any of the following
events: (a) any "person" or "group" (as such terms are used in Sections 13(d)
and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as defined
in Rule 13d-3 and 13d-5 under the Exchange Act, except that a person shall be
deemed to have "beneficial ownership" of all securities that such person has the
right to acquire, whether such right is exercisable immediately or only after
the passage of time), directly or indirectly, of more than 50% of the total
Voting


                                       28
<PAGE>

Capital Stock of the Company; or (b) the Company consolidates with, or merges
with or into, another person or sells, assigns, conveys, transfers, leases or
otherwise disposes of all or substantially all of its assets to any person, or
any person consolidates with, or merges with or into the Company, in any such
event pursuant to a transaction in which either (A) the outstanding Voting
Capital Stock of the Company is converted into or exchanged for cash, securities
or other property, other than any such transaction where immediately after such
transaction no "person" or "group" (as such terms are used in Sections 13(d) and
14(d) of the Exchange Act) (other than any such group if each member of such
group, together with its Affiliates, owns less than 50% of the total Voting
Capital Stock of the Company) is the "beneficial owner" (as defined in Rules
13d-3 and 13d-5 under the Exchange Act, except that a person shall be deemed to
have "beneficial ownership" of all securities that such person has the right to
acquire, whether such right is exercisable immediately or only after the passage
of time), directly or indirectly, of more than 50% of the total Voting Capital
Stock of the surviving or transferee company or its parent company or (B) the
holders of the outstanding Voting Capital Stock of the Company immediately prior
to such transaction hold less than 50% of the outstanding Voting Capital Stock
of the surviving or transferee company or its parent company immediately after
the transaction or (C) during any consecutive two-year period, individuals who
at the beginning of such period constituted the Board of Directors (together
with any new directors whose election by the Board of Directors or whose
nomination for election by the stockholders of the Company was approved by a
vote of a majority of the directors then still in office who were either
directors at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the Board of Directors then in office.

            "Change of Control Date" has the meaning set forth in Section 13(a).

            "Change of Control Date Accreted Value" means with respect to each
$1,072 of original Liquidation Preference, the value that $1,072 would accrete
to between the Closing Date and the Change of Control Date, compounded quarterly
at an annual rate of 7.50%.

            "Closing Date" means any Closing Date under the Purchase Agreement.

            "closing price" has the meaning set forth in Section 12(d)(vi).

            "Common Stock Record Date" has the meaning set forth in Section
12(d)(vi).

            "Common Stock" means the common stock of the Company, par value
$0.01 per share.

            "Company" has the meaning set forth in the Recitals.

            "Company Order" means a written request or order signed in the name
of the Company by its Chairman of the Board, its Chief Executive Officer, its
President or any Executive or Senior Vice President and by its Chief Financial
Officer, Treasurer, an Assistant Treasurer, its Secretary or an Assistant
Secretary.

            "Conversion Agent" has the meaning set forth in Section 5(a).

            "Conversion Price" has the meaning set forth in Section 12.


                                       29
<PAGE>

            "Current Market Price" has the meaning set forth in Section
12(d)(vi).

            "Dilution Trigger Event" has the meaning set forth in Section
12(d)(iv).

            "Distributed Securities" has the meaning set forth in Section
12(d)(iv).

            "Dividend Payment Date" has the meaning set forth in Section 6.

            "Dividend Record Date" has the meaning set forth in Section 7(a).

            "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

            "Expiration Time" has the meaning set forth in Section 12(d)(v).

            "fair market value" has the meaning set forth in Section 12(d)(vi).

            "Fifth Anniversary Date" has the meaning set forth in Section
8(c)(vi).

            "Five Year Accreted Value" means with respect to each $1,072 of
original Liquidation Preference, $1,554.34 (subject to appropriate adjustment
with respect to stock splits, stock dividends and similar events affecting the
Series B Preferred Stock).

            "HMTF Group" has the meaning set forth in Section 8(d).

            "HMTF Holders" has the meaning set forth in Section 8(d).

            "Hold Option" has the meaning set forth in Section 13(a).

            "Junior Shares" has the meaning set forth in Section 9(a).

            "Liquidation Preference" means an amount equal to $1,000 per share
plus an amount equal to the Share Option Adjustment Amount per share of Series B
Preferred Stock, subject to change in accordance with Section 6, Section 7,
Section 11 and Section 13 hereof, including, without limitation, by the addition
of Accumulated Dividends and, if applicable and without duplication, the Special
Payment.

            "Mandatory Redemption Date" has the meaning set forth in Section
10(b); provided, however, that if such date shall not be a Business Day, then
such date shall be the next Business Day.

            "nonelecting share" has the meaning set forth in Section 12(e).

            "Odd-lot Redemption" has the meaning set forth in Section 10(c).

            "Officers' Certificate" means a certificate of the Company signed in
the name of the Company by its Chairman of the Board, its Chief Executive
Officer, its President or an Executive or Senior Vice President and by its Chief
Financial Officer, Treasurer, an Assistant Treasurer, its Secretary or an
Assistant Secretary.


                                       30
<PAGE>

            "Optional Redemption" has the meaning set forth in Section 10(a).

            "Optional Redemption Date" has the meaning set forth in Section
10(a).

            "Outstanding" means (i) when used with respect to shares of Series B
Preferred Stock, as of the date of determination, all shares of Series B
Preferred Stock theretofore authenticated and delivered under this Certificate
of Designation, except (a) shares of Series B Preferred Stock theretofore
converted into shares of Common Stock and/or Series C Preferred Stock in
accordance with Section 12 and shares of Series B Preferred Stock theretofore
canceled by the Registrar or delivered to the Registrar for cancellation; (b)
shares of Series B Preferred Stock for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Registrar or any Paying
Agent (other than the Company) in trust or set aside and segregated in trust by
the Company (if the Company shall act as its own Paying Agent) for the holders
of such shares of Series B Preferred Stock; provided that, if such shares of
Series B Preferred Stock are to be redeemed, notice of such redemption has been
duly given pursuant to this Certificate of Designation or provision therefor
satisfactory to the Registrar has been made; and (c) shares of Series B
Preferred Stock in exchange for or in lieu of which other shares of Series B
Preferred Stock have been authenticated and delivered pursuant to this
Certificate of Designation; provided, however, that, in determining whether the
holders of the shares of Series B Preferred Stock have given any request,
demand, authorization, direction, notice, consent or waiver or taken any other
action hereunder, shares of Series B Preferred Stock owned by the Company or any
Subsidiary of the Company shall be disregarded and deemed not to be Outstanding,
except that, in determining whether the Registrar shall be protected in relying
upon any such request, demand, authorization, direction, notice, consent, waiver
or other action, only shares of Series B Preferred Stock which the Registrar has
actual knowledge of being so owned shall be so disregarded. Shares of Series B
Preferred Stock so owned which have been pledged in good faith may be regarded
as Outstanding if the pledgee establishes to the satisfaction of the Registrar
the pledgee's right so to act with respect to such shares of Series B Preferred
Stock and that the pledgee is not the Company or any other obligor upon the
shares of Series B Preferred Stock or any Affiliate of the Company or of such
other obligor and (ii) when used with respect to shares of Series B-2 Preferred
Stock, the same definition of "Outstanding" shall apply thereto with references
to Series B-2 being substituted for references to Series B-1 therein.

            "Parity Shares" has the meaning set forth in Section 9(a).

            "Paying Agent" has the meaning set forth in Section 5(a).

            "Person" means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, governmental authority or other entity of whatever
nature.

            "Preferred Stock" means, with respect to any person, any and all
shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) of such person's preferred or preference stock,
whether now outstanding or issued after the date hereof, including all series
and classes of such preferred or preference stock.


                                       31
<PAGE>

            "Purchase Agreement" means the Securities Purchase Agreement, dated
as of February 1, 2000, among the Company and the Purchasers named therein, as
it may be amended from time to time.

            "Purchased Shares" has the meaning set forth in Section 12(d)(v).

            "Redemption Date" has the meaning set forth in Section 10(d).

            "Redemption Notice" has the meaning set forth in Section 10(d).

            "Redemption Price" has the meaning set forth in Section 10(a).

            "Registrar" has the meaning set forth in Section 3.

            "Registration Rights Agreement" means the Registration Rights
Agreement, dated as of March 9, 2000, among the Company and the Purchasers.

            "Regulated Stockholder" shall mean Chase Equity Associates, LLC or
any other stockholder that (i) is subject to the provisions of Regulation Y or
has an Affiliate subject to provisions of Regulation Y, (ii) holds shares of
Common Stock or Preferred Stock of the Company and (iii) has provided written
notice to the Company of its status as a "Regulated Stockholder" hereunder.

            "Regulation Y" shall mean Regulation Y of the Board of Governors of
the Federal Reserve System, 12 C.F.R. Part 225 (or any successor to such
Regulation).

            "Relinquishing Holder" means Chase Capital Partners and its
Affiliates and their respective transferees and any other holder of a share of
Series B-1 Preferred Stock that delivers a written notice to the Company to the
effect that such holder elects not to be entitled to vote with respect to any
matter referred to in Section 8(d).

            "Remarketing Option" has the meaning set forth in Section 13(d).

            "Restrictive Legend" has the meaning set forth in Section 4.

            "resulting entity" has the meaning set forth in Section 14.

            "SEC" means the Securities and Exchange Commission, as from time to
time constituted, created under the Securities Exchange Act of 1934, or, if at
any time after the adoption of this Certificate of Designation such commission
is not existing and performing the duties now assigned to it, then the body
performing such duties at such time.

            "SEC Reports" has the meaning set forth in Section 15.

            "Securities Act" has the meaning set forth in Section 4.

            "Senior Shares" has the meaning set forth in Section 9(a).


                                       32
<PAGE>

            "Series B Preferred Stock" means the Series B-1 Preferred Stock and
the Series B-2 Preferred Stock.

            "Series B-1 Preferred Stock" has the meaning set forth in Section 1.

            "Series B-2 Certificate of Designations" means the Certificate of
Designations, Preferences and Rights of the Company's 7.50% Cumulative
Convertible Preferred Stock, Series B-2, due 2015.

            "Series B-2 Preferred Stock" means the Company's 7.50% Cumulative
Convertible Preferred Stock, Series B-2, due 2015, par value $0.01 per share, to
be issued pursuant to the Series B-2 Certificate of Designations.

            "Series C Certificate of Designations" means the Certificate of
Designations, Preferences and Rights of the Series C Preferred Stock.

            "Series C Preferred Stock" means the Company's Convertible Preferred
Stock, Series C, par value $0.01 per share, to be issued pursuant to the Series
C Certificate of Designations.

            "Share Factor" means with respect to each share of Series B
Preferred Stock, a fraction, the numerator of which is the Liquidation
Preference of such share as of the Change of Control Date, without giving effect
to the Special Payment, and the denominator of which is the aggregate
Liquidation Preference of all outstanding shares of Series B Preferred Stock as
of the Change of Control Date, without giving effect to the Special Payment.

            "Share Option Adjustment Amount" means an amount equal to $72.00.

            "Special Payment" has the meaning set forth in Section 13.

            "Voting Capital Stock" means with respect to any Person, securities
of any class or classes of Capital Stock in such Person ordinarily entitling the
holders thereof (whether at all times or at the times that such class of Capital
Stock has voting power by reason of the happening of any contingency) to vote in
the election of members of the board of directors or comparable governing body
of such Person.


                                       33
<PAGE>

            IN WITNESS WHEREOF, the Company has caused this Certificate of
Designation to be duly executed by the undersigned officer of the Company, this
9th day of March, 2000.

                                          VIATEL, INC.,


                                          By: /s/ JAMES P. PRENETTA
                                              ---------------------------------
                                          Name: James P. Prenetta
                                          Title: Senior Vice President and
                                                 General Counsel

<PAGE>

                                    EXHIBIT A

      "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
       UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT")
       OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. SUCH
       SHARES MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED
       OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OTHER
       THAN PURSUANT TO AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS."
<PAGE>



                                  VIATEL, INC.

                  CERTIFICATE OF DESIGNATIONS, PREFERENCES AND
                           RIGHTS OF 7.50% CUMULATIVE
                 CONVERTIBLE PREFERRED STOCK SERIES B-2 DUE 2015

<PAGE>

                           CERTIFICATE OF DESIGNATIONS

            Viatel, Inc., a company organized and existing under the General
Corporation Law of the State of Delaware (the "Company"), certifies that
pursuant to the authority contained in its Certificate of Incorporation (the
"Certificate of Incorporation") and its By-laws (the "By-laws"), and in
accordance with Section 151 of the General Corporation Law of the State of
Delaware, the board of directors of the Company (the "Board of Directors") at a
meeting duly called and held on January 31, 2000, duly approved and adopted the
following resolution, which resolution remains in full force and effect on the
date hereof:

            RESOLVED, that pursuant to the authority vested in the Board of
Directors by the Certificate of Incorporation and By-laws, the Board of
Directors does hereby create, authorize and provide for the issue of a series of
Preferred Stock having the following designation, voting powers, preferences and
relative, participating, optional and other special rights:

            Certain capitalized terms used herein are defined in Section 16.

      1. Number and Designation. The Company shall have a series of Preferred
Stock, which shall be designated as its 7.50% Series B-2 Cumulative Convertible
Preferred Stock due 2015 (the "Series B-2 Preferred Stock"), par value $0.01 per
share, with 325,000 shares initially authorized. Unless otherwise specified,
references herein to any "Section" refer to the Section number specified in this
Certificate of Designation.

      2. Issuance. The Company may issue up to 162,500 shares of Series B-2
Preferred Stock in accordance with the Purchase Agreement; provided that, the
aggregate of the then Outstanding shares of Series B-1 Preferred Stock and
Series B-2 Preferred Stock shall not exceed 325,000 shares.

      3. Registered Form; Liquidation Preference; Registrar. Certificates for
shares of Series B Preferred Stock shall be issuable only in registered form and
only with an initial Liquidation Preference of $1,072 per share. The Company
shall serve as initial Registrar and Transfer Agent (the "Registrar") for the
Series B Preferred Stock.

      4. Registration; Transfer. Shares of the Series B Preferred Stock have not
been registered under the Securities Act of 1933, as amended (the "Securities
Act") and may not be resold, pledged or otherwise transferred prior to the date
when they may be resold pursuant to Rule 144 under the Securities Act other than
(i) to the Company, (ii) pursuant to an exemption from registration under the
Securities Act or (iii) pursuant to an effective registration statement under
the Securities Act, in each case in accordance with any applicable securities
laws of any state of the United States. Until such time as it is no longer
required pursuant to the Securities Act, certificates evidencing the Series B
Preferred Stock shall contain a legend (the "Restrictive Legend") evidencing the
foregoing restrictions in substantially the form attached hereto as Exhibit A.

      5. Paying Agent and Conversion Agent.

<PAGE>

            (a) The Company shall maintain (i) an office or agency where shares
of Series B Preferred Stock may be presented for payment (the "Paying Agent"),
(ii) an office or agency where shares of Series B Preferred Stock may be
presented for conversion (the "Conversion Agent"), and (iii) a Registrar, which
shall be an office or an agency where shares of Series B Preferred Stock may be
presented for transfer. The Company may appoint the Registrar, the Paying Agent
and the Conversion Agent and may appoint one or more additional paying agents
and one or more additional conversion agents in such other locations as it shall
determine. The term "Paying Agent" includes any additional paying agent, and the
term "Conversion Agent" includes any additional conversion agent. The Company
may change any Paying Agent or Conversion Agent without prior notice to any
holder. The Company shall notify the Registrar of the name and address of any
Paying Agent or Conversion Agent appointed by the Company. If the Company fails
to appoint or maintain another entity as Paying Agent or Conversion Agent, the
Registrar shall act as such. Notwithstanding the foregoing, the Company or any
of its Affiliates may act as Paying Agent, Registrar, coregistrar or Conversion
Agent.

            (b) Neither the Company nor the Registrar shall be required (i) to
issue, countersign or register the transfer of or exchange any share of Series B
Preferred Stock during a period beginning at the opening of business 15 days
before any Redemption Date (as defined under Section 10(d)) and ending at the
close of business on such Redemption Date or (ii) to register the transfer of or
exchange any share of Series B Preferred Stock so selected for redemption. This
Section 5(b) shall not apply to any conversion of Series B Preferred Stock in
accordance with Section 12.

            (c) If shares of Series B Preferred Stock are issued upon the
transfer, exchange or replacement of shares of Series B Preferred Stock bearing
the Restrictive Legend, or if a request is made to remove such Restrictive
Legend on shares of Series B Preferred Stock, the shares of Series B Preferred
Stock so issued shall bear the Restrictive Legend, or the Restrictive Legend
shall not be removed, as the case may be, unless the holders of such shares
shall request such legend be removed, and outside counsel for such holders
reasonably determines that the transfer of such shares is no longer restricted
by the Securities Act and outside counsel for the Company reasonably concurs in
such determination.

            (d) Each holder of a share of Series B Preferred Stock agrees to
indemnify the Company and the Registrar against any liability that may result
from the transfer, exchange or assignment by such holder of such holder's share
of Series B Preferred Stock in violation of any provision of this Certificate of
Designation and/or applicable Federal or state securities law; provided,
however, that such indemnity shall not apply to acts of willful misconduct or
gross negligence on the part of the Company or the Registrar, as the case may
be.

            (e) Payments due on the shares of Series B Preferred Stock shall be
payable at the office or agency of the Company maintained for such purpose in
The City of New York and at any other office or agency maintained by the Company
for such purpose. If any such payment is in cash, it shall be payable by wire
transfer (provided that appropriate wire instructions have been received by the
Registrar at least 15 days prior to the applicable date of payment) to a United
States dollar account maintained by the holder with, a bank located in New York
City; provided that at the option of the Company payment of dividends in cash
may be made by check


                                       2
<PAGE>

mailed to the address of the person entitled thereto as such address shall
appear in the Series B Preferred Share Register.

      6. Dividend Rights.

            (a) The Company shall pay, and the holders of the shares of Series B
Preferred Stock shall be entitled to receive, cumulative dividends from the date
of initial issuance of such shares of Series B Preferred Stock at a rate of
7.50% per annum on the amount of the then-effective Liquidation Preference of
the shares of Series B Preferred Stock. Dividends will be computed on the basis
of a 360-day year of twelve 30-day months and will be payable in accordance with
Section 11 hereof. Dividends will be payable quarterly in arrears on May 31,
August 31, November 30 and February 28 of each year (each a "Dividend Payment
Date"), commencing (subject to the next sentence) on May 31, 2000, for so long
as any shares of Series B Preferred Stock are outstanding; provided, however,
that if such date is not a Business Day, then the Dividend Payment Date shall be
the next Business Day. The Company may elect not to declare dividend payments on
any Dividend Payment Date and shall not declare dividend payments prior to May
31, 2005; provided, however, that dividends on shares of the Series B Preferred
Stock will accrue (including, without limitation, for the period from the
issuance of the Series B Preferred Stock through May 31, 2005, notwithstanding
the prohibitions set forth above) whether or not the Company has earnings or
profits, whether or not there are funds legally available for the payment of
such dividends and whether or not dividends are declared. Dividends, whether
declared or undeclared, will accumulate to the extent they are not paid on the
Dividend Payment Date for the period to which they relate. The Company will take
all actions required or permitted under the General Corporation Law of the State
of Delaware to permit the payment or accrual of dividends on the shares of
Series B Preferred Stock. On each Dividend Payment Date, commencing May 31,
2000, to and including the May 31, 2005 Dividend Payment Date, accrued dividends
on a share of the Series B Preferred Stock for the preceding dividend period
shall be added cumulatively to and thereafter remain a part of the Liquidation
Preference of such share. Thereafter, accrued dividends shall be payable
quarterly on each Dividend Payment Date, commencing on August 31, 2005, to the
holders of record of the Series B Preferred Stock as of the close of business on
the applicable Dividend Record Date. Accrued dividends that are not paid in full
in cash on any such Dividend Payment Date (whether or not declared and whether
or not there are sufficient funds legally available for the payment thereof)
shall be added cumulatively to the Liquidation Preference on the applicable
Dividend Payment Date and thereafter remain a part thereof. Accrued dividends
added to the Liquidation Preference of a share of Series B Preferred Stock in
accordance with the foregoing provisions of this Section 6(a) are sometimes
referred to in this Certificate as "Accumulated Dividends". For purposes of
determining the amount of dividends "accrued" (i) as of the first Dividend
Payment Date and as of any date that is not a Dividend Payment Date, such amount
shall be calculated on the basis of the rate per annum specified above in this
paragraph for the actual number of days elapsed from and including the Closing
Date (in case of the first Dividend Payment Date and any date prior to the first
Dividend Payment Date ) or the last preceding Dividend Payment Date (in case of
any other date) to the date as of which such determination is to be made, based
on a 360-day year, and (ii) as of any Dividend Payment Date after the first
Dividend Payment Date, such amount shall be calculated on the basis of such rate
per annum based on a 360-day year of twelve 30-day months. Whenever the Company
shall declare or pay any dividend on any Series B


                                       3
<PAGE>

Preferred Stock, the holders of the Series B Preferred Stock shall be entitled
to receive such dividends on a per share basis.

            (b) In addition to all dividends payable pursuant to Section 6(a),
whenever the Company shall declare or pay any dividend on its Common Stock, the
holders of the Series B Preferred Stock shall be entitled to receive such
dividends on a ratable as-converted basis (calculated as if all shares of Series
B Preferred Stock had been converted directly or indirectly into Common Stock
and/or Series C Preferred Stock). Dividends payable pursuant to this Section
6(b) shall not reduce any dividends payable pursuant to Section 6(a).

      7. Payment of Dividends; Mechanics of Payment; Dividend Rights Preserved.

            (a) Subject to Sections 6 and 11, dividends on any share of Series B
Preferred Stock that are payable, and are punctually paid or duly provided for,
on any Dividend Payment Date shall be paid in arrears to the person in whose
name such share of Series B Preferred Stock (or one or more predecessor shares
of Series B Preferred Stock) is registered at the close of business on the next
preceding May 15, August 15, November 15 and February 15 (each a "Dividend
Record Date").

            (b) Unless full cumulative dividends on all outstanding shares of
Series B Preferred Stock for all past dividend periods shall have been declared
and paid, or declared and a sufficient sum for the payment thereof set apart,
then:

                  (i) no dividend (other than (A) with respect to Junior Shares,
      a dividend payable solely in any Junior Shares, or (B) with respect to
      Parity Shares, a dividend payable solely in Junior Shares or Parity
      Shares, or (C) with respect to Parity Shares, a partial dividend paid pro
      rata on such Parity Shares and the shares of Series B Preferred Stock)
      shall be declared or paid upon, or any sum set apart for the payment of
      dividends upon, any Junior Shares or Parity Shares, respectively;

                  (ii) no other distribution shall be declared or made upon, or
      any sum set apart for the payment of any distribution upon, any Junior
      Shares or Parity Shares;

                  (iii) no Junior Shares or Parity Shares or any warrants,
      rights, calls or options (other than any cashless exercises of options or
      buybacks of options or restricted stock from present or former employees,
      directors or consultants) exercisable for or convertible into any Parity
      Share or Junior Share shall be purchased, redeemed or otherwise acquired
      (other than in exchange for other Junior Shares or Parity Shares,
      respectively and other than conversion of (A) Series B-1 Preferred Stock
      into Series B-2 Preferred Stock, and vice versa, (B) Series B-2 Preferred
      Stock into Series C Preferred Stock, and (C) Series C Preferred Stock into
      Common Stock and vice versa) by the Company or any of its subsidiaries;
      and

                  (iv) no monies shall be paid into or set apart or made
      available for a sinking or other like fund for the purchase, redemption or
      other acquisition of any Junior Shares or Parity Shares or any warrants,
      rights, calls or options exercisable for or convertible into any Parity
      Shares or Junior Shares by the Company or any of its subsidiaries (other
      than any cashless exercises of options or option buybacks).


                                       4
<PAGE>

Except as provided in Sections 6, 12 or 13 hereof, holders of Series B Preferred
Stock will not be entitled to any dividends, whether payable in cash, property
or stock, in excess of the full cumulative dividends as herein described.

            (c) The Company will notify the Registrar and make a public
announcement no later than the close of business on the tenth Business Day prior
to the Record Date for each dividend as to whether it will pay such dividend.

            (d) Any dividends (other than Accumulated Dividends) on any share of
Series B Preferred Stock may be paid, subject to Section 11, by the Company in
any lawful manner (which shall include the establishment of a record date not
more than 45 days prior to the payment thereof) not inconsistent with the
requirements of any national stock exchange or Commission recognized trading
market on which the shares of Series B Preferred Stock may be listed or admitted
to trading, and upon such notice (which shall precede the record date by at
least ten Business Days) as may be required by such exchange or trading market,
if, after notice given by the Company to the Registrar of the proposed payment
pursuant to this clause (d), such manner of payment shall be deemed practicable
by the Registrar.

            (e) Subject to the foregoing provisions of this Section 7, each
share of Series B Preferred Stock delivered under this Certificate of
Designation upon registration of transfer of or in exchange for or in lieu of
any other share of Series B Preferred Stock shall carry the rights to dividends
accumulated and unpaid, and to accrue, that were carried by such other shares of
Series B Preferred Stock.

            (f) The holder of record of a share of Series B Preferred Stock at
the close of business on a Dividend Record Date with respect to the payment of
dividends on the shares of Series B Preferred Stock will be entitled to receive
such dividends with respect to such share of Series B Preferred Stock on the
corresponding Dividend Payment Date, notwithstanding the conversion of such
share after such Dividend Record Date and prior to such Dividend Payment Date.

      8. Voting Rights.

            (a) The holders of record of shares of Series B Preferred Stock
shall not be entitled to any voting rights except as hereinafter provided in
this Section 8 or as otherwise provided by law.

            (b) The approval of the holders of at least a majority of the then
Outstanding shares of Series B Preferred Stock voting or consenting, as the case
may be, as one class, will be required for the Company to:

                  (i) amend the Certificate of Incorporation, this Certificate
      of Designation or the By-Laws so as to (A) affect adversely the rights,
      preferences (including, without limitation, liquidation preferences,
      conversion price, dividend rate and Optional Redemption provisions),
      privileges or voting rights of holders of the shares of Series B Preferred
      Stock, or (B) increase or decrease the number of authorized shares of
      Series B Preferred Stock;


                                       5
<PAGE>

                  (ii) in a single transaction or series of related
      transactions, consolidate or merge with or into, or sell, assign,
      transfer, lease, convey or otherwise dispose of all or substantially all
      of its assets to, any Person or adopt a plan of liquidation, except as
      expressly provided in Section 14 hereof;

                  (iii) enter into, or permit any of its subsidiaries to enter
      into, any agreement that would impose material restrictions on the
      Company's ability to honor the exercise of any rights of the holders of
      the Series B Preferred Stock;

                  (iv) authorize or create, modify the terms of or increase or
      decrease the authorized amount of any Senior Shares or Parity Shares;

                  (v) issue any shares of Series B Preferred Stock other than
      (a) pursuant to the terms of the Purchase Agreement as in effect on the
      Closing Date, or (b) shares of the Series B-1 Preferred Stock upon the
      conversion of shares of the Series B-2 Preferred Stock and vice versa; or

                  (vi) after March 9, 2005 (the "Fifth Anniversary Date"),
      commence or effect any tender or exchange offer made by the Company or any
      Subsidiary for all or any portion of the Common Stock.

No amendment shall be made to this Certificate of Designation without making the
same amendment to the corresponding provision (if any) to the Series B-1
Certificate of Designations (and vice versa).

            (c) Chase Capital Partners and its Affiliates that are holders of
all or a portion of the Series B-2 Preferred Stock issued to any such entities
on the Closing Date shall have the right to designate an observer who shall have
the right to attend meetings of the Company's Board of Directors and such
observer shall be entitled to receive notice of each such meeting at the same
time as such directors. In addition, to the extent that the Company's Board of
Directors is to take action by unanimous written consent, the observer shall be
entitled to receive a copy of any such written consent when it is forwarded to
the directors for their execution. For purposes of this Section 8(c), Series B-2
Preferred Stock issued on the Closing Date shall be deemed to include Series B-1
Preferred Stock or Series C Preferred Stock issued on any date after the Closing
Date upon conversion of such Series B-2 Preferred Stock, as well as Common Stock
issued on any date after the Closing Date upon conversion of such Series B-1
Preferred Stock or Series C Preferred Stock.

      9. Ranking.

            (a) The shares of Series B Preferred Stock will, with respect to
dividend rights and rights on liquidation, winding-up and dissolution, rank (i)
senior to all shares of Common Stock (whether issued in one or more classes),
the Series A Junior Participating Preferred Stock of the Company and to each
other class of capital stock or series of Preferred Stock of the Company, the
terms of which do not expressly provide that it ranks senior to or on a parity
with the shares of Series B Preferred Stock as to dividend rights and rights on
liquidation, winding-up and dissolution of the Company (collectively referred
to, together with all shares of Common Stock


                                       6
<PAGE>

(whether issued in one or more classes) of the Company, as "Junior Shares");
(ii) on a parity with additional shares of Series B Preferred Stock issued by
the Company and each other class of capital stock or series of Preferred Stock
of the Company issued by the Company in compliance with Section 8 hereof, the
terms of which expressly provide that such class or series will rank on a parity
with the shares of Series B Preferred Stock as to dividend rights and rights on
liquidation, winding-up and dissolution of the Company (collectively referred to
as "Parity Shares"); and (iii) junior to each class of capital stock or series
of Preferred Stock of the Company issued by the Company in compliance with
Section 8 hereof, the terms of which expressly provide that such class or series
will rank senior to the shares of Series B Preferred Stock as to dividend rights
and rights upon liquidation, winding-up and dissolution of the Company
(collectively referred to as "Senior Shares").

            (b) No dividend whatsoever shall be declared or paid upon, or any
sum set apart for the payment of dividends upon, any outstanding shares of
Series B Preferred Stock with respect to any dividend period unless all
dividends for all preceding dividend periods have been declared and paid, or
declared and a sufficient sum set apart for the payment of such dividends, upon
all outstanding Senior Shares.

            (c) In the event of any liquidation, dissolution or winding-up of
the Company, whether voluntary or involuntary, the holders of the shares of
Series B Preferred Stock then Outstanding shall be entitled to receive, prior
and in preference to any distribution of any of the assets of the Company to the
holders of shares of Common Stock or Junior Shares by reason of their ownership
thereof, an amount equal to the greater of (i) the then effective Liquidation
Preference of their shares of Series B Preferred Stock, plus an amount equal to
all dividends accrued and unpaid thereon from the last Dividend Payment Date to
the date fixed for liquidation, dissolution or winding-up or (ii) the amount
such holders would receive if such holders converted, directly or indirectly in
accordance with their terms, their shares of Series B Preferred Stock into
Common Stock and/or Series C Preferred Stock immediately prior to such
liquidation, dissolution or winding up.

            (d) If upon the occurrence of such event the assets of the Company
shall be insufficient to permit the payment to such holders of the full
preferential amount and all liquidating payments on all Parity Shares, the
entire assets of the Company legally available for distribution shall be
distributed among the holders of the shares of Series B Preferred Stock and the
holders of all Parity Shares ratably in accordance with the respective amounts
that would be payable on such shares of Series B Preferred Stock and any such
Parity Shares if all amounts payable thereon were paid in full. After payment of
the full preferential amount (and, if applicable, an amount equal to a pro rata
dividend to the holders of Outstanding shares of Series B Preferred Stock), such
holders shall not be entitled to any further participation in any distribution
of assets of the Company.

      10. Redemption.

            (a) The shares of Series B Preferred Stock may be redeemed by the
Company at any time commencing on or after the Fifth Anniversary Date (or
earlier, in accordance with the provisions of Section 13(d) if a Change of
Control Date shall have occurred, but only as to shares of Series B Preferred
Stock with respect to which the Remarketing Option has been elected), in


                                       7
<PAGE>

whole or from time to time in part, at the election of the Company (an "Optional
Redemption"), at a redemption price (the "Redemption Price") payable in cash
equal to 100% of the then effective Liquidation Preference (after giving effect
to the Special Payment, if applicable), plus accrued and unpaid dividends
thereon from the last Dividend Payment Date to the date of redemption (the
"Optional Redemption Date").

            (b) Shares of Series B Preferred Stock (if not earlier redeemed or
converted) shall be mandatorily redeemed by the Company on February 28, 2015
(the "Mandatory Redemption Date"; provided, however, that if such date is not a
Business Day, then the Mandatory Redemption Date shall be the next Business
Day), at a Redemption Price per share in cash equal to the then effective
Liquidation Preference (after giving effect to the Special Payment, if
applicable), plus accrued and unpaid dividends thereon from the last Dividend
Payment Date to the Mandatory Redemption Date.

            (c) In the event of a redemption or repurchase of fewer than all the
shares of Series B Preferred Stock, the shares of Series B Preferred Stock will
be chosen for redemption by the Registrar from the Outstanding shares of Series
B Preferred Stock not previously called for redemption, pro rata based on the
number of shares of Series B Preferred Stock held by each holder; provided, that
the Company may redeem (an "Odd-lot Redemption") all shares held by holders of
fewer than 100 shares of Series B Preferred Stock (or by holders that would hold
fewer than 100 shares of Series B Preferred Stock following such redemption)
prior to its redemption of other shares of Series B Preferred Stock; provided,
further, that the Company may not redeem a portion of any share without
redeeming the entire share. If fewer than all the shares of Series B Preferred
Stock represented by any share certificate are so to be redeemed, (i) the
Company shall issue a new certificate for the shares not redeemed and (ii) if
any shares represented thereby are converted before termination of the
conversion right with respect to such shares, such converted shares shall be
deemed (so far as may be) to be the shares represented by such share certificate
that was selected for redemption. Shares of Series B Preferred Stock that have
been converted during a selection of shares of Series B Preferred Stock to be
redeemed shall be treated by the Registrar as outstanding for the purpose of
such selection but not for the purpose of the payment of the Redemption Price.

            (d) In the event the Company elects to effect an Optional
Redemption, the Company shall (i) make a public announcement of the redemption
and (ii) give a redemption notice (the "Redemption Notice") to the holders not
fewer than 30 days nor more than 60 days before the redemption date (the
"Redemption Date"). Whenever a Redemption Notice is required to be delivered to
the holders, such notice shall provide the information set forth below and be
given by first class mail, postage prepaid to each holder of shares of Series B
Preferred Stock to be redeemed, at such holder's address appearing in the Series
B Preferred Share Register. All Redemption Notices shall identify the shares of
Series B Preferred Stock to be redeemed (including CUSIP number) and shall
state:

                  (i) the Redemption Date;

                  (ii) the applicable Redemption Price;


                                       8
<PAGE>

                  (iii) if fewer than all the outstanding shares of Series B
      Preferred Stock are to be redeemed, the identification (and, in the case
      of partial redemption, the certificate number, the total number of shares
      represented thereby and the number of such shares being redeemed on the
      Redemption Date) of the particular shares of Series B Preferred Stock to
      be redeemed;

                  (iv) that on the Redemption Date, the Redemption Price,
      together with all accrued and unpaid dividends from the last Dividend
      Payment Date to the Redemption Date, will become due and payable upon each
      such share of Series B Preferred Stock to be redeemed and that dividends
      thereon will cease to accrue on and after said date;

                  (v) the conversion price, the date on which the right to
      convert shares of Series B Preferred Stock to be redeemed will terminate
      and the place or places where such shares of Series B Preferred Stock may
      be surrendered for conversion; and

                  (vi) the place or places where such shares of Series B
      Preferred Stock are to be surrendered for payment of the Redemption Price
      and the other amounts which are then payable.

                  (vii) The Redemption Notice shall be given by the Company or,
      at the Company's request, by the Registrar in the name and at the expense
      of the Company; provided that if the Company so requests, it shall provide
      the Registrar adequate time, as reasonably determined by the Registrar, to
      deliver such notices in a timely fashion.

            (e) Prior to any Redemption Date, the Company shall deposit with the
      Registrar or with a Paying Agent (or, if the Company is acting as its own
      Paying Agent, segregate and hold in trust) an amount of consideration
      sufficient to pay the Redemption Price of all the shares of Series B
      Preferred Stock that are to be redeemed on that date plus all accrued and
      unpaid dividends thereon from the last Dividend Payment Date to the
      Redemption Date. If any share of Series B Preferred Stock called for
      redemption is converted, any consideration deposited with the Registrar or
      with any Paying Agent or so segregated and held in trust for the
      redemption of such share of Series B Preferred Stock shall be paid or
      delivered to the Company upon Company Order or, if then held by the
      Company, shall be discharged from such trust.

            (f) Notice of redemption having been given as aforesaid, the shares
of Series B Preferred Stock so to be redeemed shall, on the Redemption Date,
become due and payable at the Redemption Price therein specified plus all
accrued and unpaid dividends thereon from the last Dividend Payment Date to the
Redemption Date, and from and after such date (unless the Company shall default
in the payment of the Redemption Price and accrued but unpaid dividends)
dividends on such shares of Series B Preferred Stock shall cease to accrue and
such shares shall cease to be convertible into shares of Common Stock. Upon
surrender of any such shares of Series B Preferred Stock for redemption in
accordance with said notice, such shares of Series B Preferred Stock shall be
redeemed by the Company at the applicable Redemption Price, together with all
accrued and unpaid dividends thereon from the last Dividend Payment Date to the
Redemption Date. If any share of Series B Preferred Stock called for redemption
shall not be so paid upon surrender thereof for redemption, the Redemption Price
thereof, and all accrued and unpaid dividends thereon from the last Dividend
Payment Date to the Redemption Date, shall,


                                       9
<PAGE>

until paid, bear interest from the Redemption Date at the dividend rate payable
on the shares of Series B Preferred Stock and such shares shall remain
convertible.

            (g) Any certificate that represents more than one share of Series B
Preferred Stock and is to be redeemed only in part shall be surrendered at any
office or agency of the Company designated for that purpose (with, if the
Company or the Registrar so requires, due endorsement by, or a written
instrument of transfer in form satisfactory to the Company and the Registrar
duly executed by, the holder thereof or his attorney duly authorized in
writing), and the Company shall execute, and the Registrar shall countersign and
deliver to the holder of such share of Series B Preferred Stock without service
charge, a new Series B Preferred Stock certificate or certificates, representing
any number of shares of Series B Preferred Stock as requested by such holder, in
aggregate amount equal to and in exchange for the number of shares not redeemed
and represented by the Series B Preferred Stock certificate so surrendered.

            (h) If a share of Series B Preferred Stock is redeemed subsequent to
a Dividend Record Date with respect to any Dividend Payment Date and on or prior
to such Dividend Payment Date, then any accrued dividends payable on such
Dividend Payment Date will be paid to the person in whose name such share of
Series B Preferred Stock is registered at the close of business on such Dividend
Record Date.

      11. Method of Payments. The Company may make any dividend payments in cash
with respect to any period after the Fifth Anniversary Date. Any dividends not
paid in cash on a current basis on the applicable Dividend Payment Date with
respect to all periods after the Fifth Anniversary Date, and all dividends with
respect to the periods prior to the Fifth Anniversary Date, shall not be paid in
cash but rather shall constitute Accumulated Dividends. Notwithstanding the
foregoing, the Company may make any dividend payments required to be paid by
Section 6(b) in cash. No payment may be made in respect of Accumulated Dividends
as dividends. Rather, Accumulated Dividends shall be added to the Liquidation
Preference. Dividends may not be paid by delivery of shares of Series B
Preferred Stock.

      12. Conversion.

            (a) Subject to and upon compliance with the provisions of this
Certificate of Designation, at the option of the holder thereof, any share of
Series B-2 Preferred Stock may be converted at any time into a number of fully
paid and nonassessable shares of Series C Preferred Stock (calculated as to each
conversion to the nearest 1/10,000 of a share) equal to (i)(x) the then
effective Liquidation Preference thereof plus accrued and unpaid dividends to
the date of conversion divided by (y) the Conversion Price in effect at the time
of conversion divided by (ii) one hundred (100). Such conversion right shall
expire at the close of business on the Business Day next preceding the Mandatory
Redemption Date unless the Company defaults on the payment due on redemption. In
case a share of Series B-2 Preferred Stock is called for redemption, such
conversion right in respect of the share so called shall expire at the close of
business on the Business Day next preceding the Redemption Date, unless the
Company defaults in making the payment due upon redemption.

The "Conversion Price" shall be initially $46.25. The "Conversion Price" shall
be adjusted in certain instances as provided in Section 12(d) and Section 12(e)
hereof.


                                       10
<PAGE>

            (b) In order to exercise the conversion privilege, the holder of any
share of Series B-2 Preferred Stock to be converted shall surrender the
certificate for such share, duly endorsed or assigned to the Company or in
blank, at any office or agency of the Company maintained for that purpose,
accompanied by written notice to the Company at such office or agency that the
holder elects to convert such share or, if fewer than all the shares of Series
B-2 Preferred Stock represented by a single share certificate are to be
converted, the number of shares represented thereby to be converted.

                  Shares of Series B-2 Preferred Stock shall be deemed to have
            been converted immediately prior to the close of business on the day
            of surrender of such shares for conversion in accordance with the
            foregoing provisions, and at such time the rights of the holders of
            such shares as holders shall cease, and the person or persons
            entitled to receive the shares of Series C Preferred Stock issuable
            upon conversion shall be treated for all purposes as the record
            holder or holders of such shares of Series C Preferred Stock at such
            time. As promptly as practicable on or after the conversion date,
            the Company shall issue and shall deliver at such office or agency a
            certificate or certificates for the number of full shares of Series
            C Preferred Stock issuable upon conversion, together with payment in
            lieu of any fraction of a share, as provided in Section 12(c).

                  In the case of any conversion of fewer than all the shares of
            Series B-2 Preferred Stock evidenced by a certificate, upon such
            conversion the Company shall execute and the Registrar shall
            countersign and deliver to the holder thereof, at the expense of the
            Company, a new certificate or certificates representing the number
            of unconverted shares of Series B-2 Preferred Stock.

            (c) If consented to by the holder of shares of Series B-2 Preferred
Stock being converted, no fractional shares of Series C Preferred Stock shall be
issued upon the conversion of a share of Series B-2 Preferred Stock. If more
than one share of Series B-2 Preferred Stock shall be surrendered for conversion
at one time by the same holder, the number of full shares of Series C Preferred
Stock, which shall be issuable upon conversion thereof shall be computed on the
basis of the aggregate number of shares of Series B-2 Preferred Stock so
surrendered. If consented to by the holder of shares of Series B-2 Preferred
Stock being converted, instead of any fractional shares of Series C Preferred
Stock which would otherwise be issuable upon conversion of any share of Series
B-2 Preferred Stock, the Company shall pay a cash adjustment in respect of such
fraction in an amount equal to (x) the same fraction of the closing price (as
defined in Section 12(d)(vi)) per share of Common Stock at the close of business
on the Business Day prior to the day of conversion multiplied by (y) 100.

            (d) For purposes of this Section 12(d), all references to Common
Stock shall be deemed to include the shares of Common Stock into which the
Series C Preferred Stock is convertible. The Conversion Price shall be adjusted
from time to time by the Company as follows:

                  (i) If the Company shall hereafter pay a dividend or make a
      distribution to all holders of the outstanding shares of Common Stock in
      shares of Common Stock, the


                                       11
<PAGE>

      Conversion Price in effect at the opening of business on the date
      following the date fixed for the determination of shareholders entitled to
      receive such dividend or other distribution shall be reduced by
      multiplying such Conversion Price by a fraction of which the numerator
      shall be the number of shares of Common Stock outstanding at the close of
      business on the Common Stock Record Date (as defined in Section 12(d)(vi))
      fixed for such determination and the denominator shall be the sum of such
      number of shares and the total number of shares constituting such dividend
      or other distribution, such reduction to become effective immediately
      after the opening of business on the day following the Common Stock Record
      Date. If any dividend or distribution of the type described in this
      Section 12(d)(i) is declared but not so paid or made, the Conversion Price
      shall again be adjusted to the Conversion Price which would then be in
      effect if such dividend or distribution had not been declared.

            (ii)

                        (1) In case the Company shall issue or sell any Common
            Stock (other than Common Stock issued (A) pursuant to the Company's
            existing or future stock option plans or pursuant to any other
            existing or future Common Stock-related director or employee
            compensation plan of the Company approved by the Board of Directors,
            (B) pursuant to the Company's existing or future stock purchase
            plans approved by the Board of Directors which permit Company
            employees to purchase Common Stock at a purchase price that is not
            more than a 15% discount to the Current Market Price, (C) as
            consideration for the acquisition of a business or of assets, (D) in
            a firm commitment underwritten public offering when either (i) the
            underwriting discount is 5% or less, or (ii) the offering price per
            share is greater than the Conversion Price, (E) to the Company's
            joint venture partners in exchange for interests in the relevant
            joint venture, (F) upon exercise or conversion of any security the
            issuance of which caused an adjustment hereunder or the issuance of
            which did not require adjustment hereunder or (G) upon exercise or
            conversion of any of the Series B-1 Preferred Stock, the Series B-2
            Preferred Stock, the Series C Preferred Stock or the Warrants (as
            defined in the Purchase Agreement) in accordance with their
            respective terms) without consideration or for a consideration per
            share less than the Current Market Price on the date of such
            issuance, or shall issue securities convertible into Common Stock
            having a conversion price per share less than the Current Market
            Price at the date of issuance of such convertible security, the
            Conversion Price to be in effect after such issuance or sale shall
            be determined by multiplying the Conversion Price in effect
            immediately prior to such issuance or sale by a fraction, (1) the
            numerator of which shall be the sum of (x) the number of shares of
            Common Stock outstanding immediately prior to such issuance or sale
            and (y) the number of shares of Common Stock which the aggregate
            consideration receivable by the Company for the total number of
            additional shares of Common Stock so issued or sold (or, in the case
            of convertible securities, issuable on conversion) would purchase at
            the Current Market Price in effect immediately prior to such
            issuance or sale


                                       12
<PAGE>

            and (2) the denominator of which shall be the sum of the number of
            shares of Common Stock outstanding immediately prior to such
            issuance or sale and the number of additional shares of Common Stock
            to be issued or sold (or, in the case of convertible securities,
            issued on conversion). In case any portion of the consideration to
            be received by the Company shall be in a form other than cash, the
            fair market value of such noncash consideration shall be utilized in
            the foregoing computation. Such fair market value shall be
            determined in good faith by the Board of Directors.

                        (2) If the Company shall offer or issue options, rights
            or warrants to all holders of its outstanding shares of Common Stock
            entitling them to subscribe for or purchase shares of Common Stock
            at a price per share less than the Current Market Price (as defined
            in Section 12(d)(vi)) on the Common Stock Record Date fixed for the
            determination of shareholders entitled to receive such rights or
            warrants, the Conversion Price shall be adjusted so that the same
            shall equal the price determined by multiplying the Conversion Price
            in effect at the opening of business on the date after such Common
            Stock Record Date by a fraction of which the numerator shall be the
            number of shares of Common Stock outstanding at the close of
            business on the Common Stock Record Date plus the number of shares
            of Common Stock which the aggregate offering price of the total
            number of shares of Common Stock subject to such options, rights or
            warrants would purchase at such Current Market Price and of which
            the denominator shall be the number of shares of Common Stock
            outstanding at the close of business on the Common Stock Record Date
            plus the total number of additional shares of Common Stock subject
            to such options, rights or warrants for subscription or purchase.
            Such adjustment shall become effective immediately after the opening
            of business on the day following the Common Stock Record Date fixed
            for determination of shareholders entitled to purchase or receive
            such options, rights or warrants. To the extent that shares of
            Common Stock are not delivered pursuant to such options, rights or
            warrants, upon the expiration or termination of such options, rights
            or warrants the Conversion Price shall again be adjusted to be the
            Conversion Price which would then be in effect had the adjustments
            made upon the issuance of such options, rights or warrants been made
            on the basis of delivery of only the number of shares of Common
            Stock actually delivered. If such options, rights or warrants are
            not so issued, the Conversion Price shall again be adjusted to be
            the Conversion Price which would then be in effect if such date
            fixed for the determination of shareholders entitled to receive such
            options, rights or warrants had not been fixed. In determining
            whether any options, rights or warrants entitle the holders to
            subscribe for or purchase shares of Common Stock at less than such
            Current Market Price, and in determining the aggregate offering
            price of such shares of Common Stock, there shall be taken into
            account (x) any consideration received for such options, rights or
            warrants, with the value of such consideration and the amount of
            such exercise or subscription price, if other than cash, to be
            determined by


                                       13
<PAGE>

            the Board of Directors and (y) the amount of any exercise price or
            subscription price required to be paid upon exercise of such
            options, warrants or rights.

            (iii) If the outstanding shares of Common Stock shall be subdivided
into a greater number of shares of Common Stock, the Conversion Price in effect
at the opening of business on the day following the day upon which such
subdivision becomes effective shall be proportionately reduced, and, conversely,
if the outstanding shares of Common Stock shall be combined into a smaller
number of shares of Common Stock, the Conversion Price in effect at the opening
of business on the day following the day upon which such combination becomes
effective shall be proportionately increased, such reduction or increase, as the
case may be, to become effective immediately after the opening of business on
the day following the day upon which such subdivision or combination becomes
effective.

            (iv) If the Company shall, by dividend or otherwise, distribute to
all holders of its shares of Common Stock any class of capital stock of the
Company (other than any dividends or distributions to which Section 12(d)(i)
applies) or evidences of its indebtedness, cash or other assets (including
securities, but excluding any rights or warrants of a type referred to in
Section 12(d)(ii)(b) and dividends and distributions paid exclusively in cash
and excluding any capital stock, evidences of indebtedness, cash or assets
distributed upon a merger or consolidation to which Section 12(e) applies) (the
foregoing hereinafter in this Section 12(d)(iv) called the "Distributed
Securities"), then, in each such case, the Conversion Price shall be reduced so
that the same shall be equal to the price determined by multiplying the
Conversion Price in effect immediately prior to the close of business on the
Common Stock Record Date (as defined in Section 12(d)(vi)) with respect to such
distribution by a fraction of which the numerator shall be the Current Market
Price (determined as provided in Section 12(d)(vi)) on such date less the fair
market value (as determined by the Board of Directors, whose good faith
determination shall be conclusive and described in a resolution of the Board of
Directors) on such date of the portion of the Distributed Securities so
distributed applicable to one share of Common Stock and the denominator shall be
such Current Market Price, such reduction to become effective immediately prior
to the opening of business on the day following the Common Stock Record Date;
provided, however, that, in the event the then fair market value (as so
determined) of the portion of the Distributed Securities so distributed
applicable to one share of Common Stock is equal to or greater than the Current
Market Price on the Common Stock Record Date, in lieu of the foregoing
adjustment, adequate provision shall be made so that each holder of shares of
Series B Preferred Stock shall have the right to receive upon conversion of a
share of Series B Preferred Stock (or any portion thereof) the amount of
Distributed Securities such holder would have received had such holder converted
such share of Series B Preferred Stock (or portion thereof) directly or
indirectly into Common Stock immediately prior to such Common Stock Record Date.
If such dividend or distribution is not so paid or made, the Conversion Price
shall again be adjusted to be the Conversion Price which would then be in effect
if such dividend or distribution had not been declared. If the Board of
Directors determines the fair market value of any distribution for purposes of
this Section 12(d)(iv) by reference to the actual or when issued trading market
for any securities constituting all or part of such


                                       14
<PAGE>

distribution, it must in doing so consider the prices in such market over the
same period used in computing the Current Market Price pursuant to Section
12(d)(vi) to the extent possible.

      Options, rights or warrants distributed by the Company to all holders of
shares of Common Stock entitling the holders thereof to subscribe for or
purchase shares of the Company's capital stock (either initially or under
certain circumstances), which options, rights or warrants, until the occurrence
of a specified event or events ("Dilution Trigger Event"): (A) are deemed to be
transferred with such shares of Common Stock; (B) are not exercisable; and (C)
are also issued in respect of future issuances of shares of Common Stock, shall
be deemed not to have been distributed for purposes of this Section 12(d)(iv)
(and no adjustment to the Conversion Price under this Section 12(d)(iv) shall be
required) until the occurrence of the earliest Dilution Trigger Event, whereupon
such options, rights and warrants shall be deemed to have been distributed and
an appropriate adjustment to the Conversion Price under this Section 12(d)(iv)
shall be made. If any such options, rights or warrants, including any such
existing options, rights or warrants distributed prior to the first issuance of
shares of Series B Preferred Stock, are subject to subsequent events, upon the
occurrence of each of which such options, rights or warrants shall become
exercisable to purchase different securities, evidences of indebtedness or other
assets, then the occurrence of each such event shall be deemed to be such date
of issuance and record date with respect to new options, rights or warrants (and
a termination or expiration of the existing options, rights or warrants, without
exercise by the holder thereof). In addition, in the event of any distribution
(or deemed distribution) of options, rights or warrants, or any Dilution Trigger
Event with respect thereto, that was counted for purposes of calculating a
distribution amount for which an adjustment to the Conversion Price under this
Section 12(d) was made, (1) in the case of any such options, rights or warrants
which shall all have been redeemed or repurchased without exercise by any
holders thereof, the Conversion Price shall be readjusted upon such final
redemption or repurchase to give effect to such distribution or Dilution Trigger
Event, as the case may be, as though it were a cash distribution, equal to the
per share redemption or repurchase price received by a holder or holders of
shares of Common Stock with respect to such options, rights or warrants
(assuming such holder had retained such options, rights or warrants), made to
all holders of shares of Common Stock as of the date of such redemption or
repurchase, and (2) in the case of such options, rights or warrants which shall
have expired or been terminated without exercise by any holders thereof, the
Conversion Price (as adjusted pursuant to this paragraph) shall be readjusted to
be the Conversion Price which would have been in effect if such options, rights
or warrants had not been issued.

      Notwithstanding any other provision of this Section 12(d)(iv) to the
contrary, options, rights, warrants, evidences of indebtedness, other
securities, cash or other assets (including, without limitation, any rights
distributed pursuant to any shareholder rights plan) shall be deemed not to have
been distributed for purposes of this Section 12(d)(iv) if the Company makes
proper provision so that each holder of shares of Series B-2 Preferred Stock who
converts a share of Series B-2 Preferred Stock (or any portion thereof) after
the date fixed for determination of shareholders entitled to receive any such
distribution shall be entitled to receive upon such conversion, in addition to
the shares of


                                       15
<PAGE>

Series C Preferred Stock (or Common Stock, as the case may be) issuable upon
such conversion, the amount and kind of such distributions that such holder
would have been entitled to receive if such holder had, immediately prior to
such determination date, converted such share of Series B-2 Preferred Stock into
Series C Preferred Stock (or Common Stock, as the case may be).

      For purposes of this Section 12(d)(iv) and Sections 12(d)(i) and (ii), any
dividend or distribution to which this Section 12(d)(iv) is applicable that also
includes shares of Common Stock, or options, rights or warrants to subscribe for
or purchase shares of Common Stock to which Section 12(d)(ii) applies (or both),
shall be deemed instead to be (A) a dividend or distribution of the evidences of
indebtedness, assets, shares of capital stock, rights or warrants other than
such shares of Common Stock or options, rights or warrants to which Section
12(d)(ii) applies (and any Conversion Price reduction required by this Section
12(d)(iv) with respect to such dividend or distribution shall then be made)
immediately followed by (B) a dividend or distribution of such shares of Common
Stock or such options, rights or warrants (and any further Conversion Price
reduction required by Sections 12(d)(i) or 12(d)(ii) with respect to such
dividend or distribution shall then be made), except that (1) the Common Stock
Record Date of such dividend or distribution shall be substituted as "the date
fixed for the determination of stockholders entitled to receive such dividend or
other distribution", "the Common Stock Record Date fixed for such determination"
and "the Common Stock Record Date" within the meaning of Section 12(d)(i) and as
"the date fixed for the determination of shareholders entitled to receive such
rights or warrants", "the Common Stock Record Date fixed for the determination
of the share holders entitled to receive such rights or warrants" and "such
Common Stock Record Date" for purposes of Section 12(d)(ii), and (2) any shares
of Common Stock included in such dividend or distribution shall not be deemed
"outstanding at the close of business on the date fixed for such determination"
for the purposes of Section 12(d)(i).

            (v) If a tender offer made by the Company or any of its subsidiaries
for all or any portion of the Common Stock expires and such tender offer (as
amended upon the expiration thereof) requires the payment to shareholders (based
on the acceptance (up to any maximum specified in the terms of the tender offer)
of Purchased Shares) of an aggregate consideration having a fair market value
(as determined by the Board of Directors, whose good faith determination shall
be conclusive and described in a resolution of the Board of Directors) that,
combined together with the aggregate of the cash plus the fair market value (as
determined by the Board of Directors, whose good faith determination shall be
conclusive and described in a resolution of the Board of Directors), as of the
expiration of such tender offer, of consideration payable in respect of any
other tender offers, by the Company or any of its subsidiaries for all or any
portion of the shares of Common Stock expiring within the 12 months preceding
the expiration of such tender offer and in respect of which no adjustment
pursuant to this Section 12(d)(v) has been made, exceeds 5% of the net income of
the Company reported for the 12 month period ending with the fiscal quarter next
preceding such payment (determined as of the last time (the "Expiration Time")
tenders could have been made pursuant to such tender offer (as it may be
amended)), then, and in each such case, immediately prior to the


                                       16
<PAGE>

      opening of business on the day after the date of the Expiration Time, the
      Conversion Price shall be adjusted so that the same shall equal the price
      determined by multiplying the Conversion Price in effect immediately prior
      to the close of business on the date of the Expiration Time by a fraction
      of which the numerator shall be the number of shares of Common Stock
      outstanding (including any tendered shares) at the Expiration Time
      multiplied by the Current Market Price of the shares of Common Stock on
      the trading day next succeeding the Expiration Time and the denominator
      shall be the sum of (x) the fair market value (determined as aforesaid) of
      the aggregate consideration payable to shareholders based on the
      acceptance (up to any maximum specified in the terms of the tender offer)
      of all shares validly tendered and not withdrawn as of the Expiration Time
      (the shares deemed so accepted, up to any such maximum, being referred to
      as the "Purchased Shares") and (y) the product of the number of shares of
      Common Stock outstanding (less any Purchased Shares) at the Expiration
      Time and the Current Market Price of the shares of Common Stock on the
      trading day next succeeding the Expiration Time, such reduction (if any)
      to become effective immediately prior to the opening of business on the
      day following the Expiration Time. If the Company is obligated to purchase
      shares pursuant to any such tender offer, but the Company is permanently
      prevented by applicable law from effecting any such purchases or all such
      purchases are rescinded, the Conversion Price shall again be adjusted to
      be the Conversion Price which would then be in effect if such tender offer
      had not been made. If the application of this Section 12(d)(v) to any
      tender offer would result in an increase in the Conversion Price, no
      adjustment shall be made for such tender offer under this Section
      12(d)(v).

                  (vi) For purposes of this Section 12(d), the following terms
      shall have the meaning indicated:

            "closing price" with respect to any securities on any day means the
closing sale price as of 4:00 p.m. Eastern Time on such day or any earlier final
closing on such day or, if no such sale takes place on such day, the average of
the reported high and low bid prices on such day, in each case on the Nasdaq
National Market, or the New York Stock Exchange, as applicable, or, if such
security is not listed or admitted to trading on such national market or
exchange, on the national stock exchange or Commission recognized trading market
in the United States on which such security is quoted or listed or admitted to
trading, or, if not quoted or listed or admitted to trading on any national
stock exchange or Commission recognized trading market in the United States, the
average of the high and low bid prices of such security on the over-the-counter
market on the day in question as reported by the National Quotation Bureau
Incorporated or a similar generally accepted reporting service in the United
States, or, if not so available, in such manner as furnished by any New York
Stock Exchange member firm selected from time to time by the Board of Directors
for that purpose, or a price determined in good faith by the Board of Directors,
whose determination shall be conclusive and described in a resolution of the
Board of Directors.

            "Common Stock Record Date" means, with respect to any dividend,
distribution or other transaction or event in which the holders of Common Stock
have the right to receive any cash, securities or other property or in which the
Common Stock (or other applicable security) is exchanged for or converted into
any combination of cash, securities or other property, the date


                                       17
<PAGE>

fixed for determination of shareholders entitled to receive such cash,
securities or other property (whether such date is fixed by the Board of
Directors or by statute, contract or otherwise).

            "Current Market Price" means the average of the daily closing prices
per share of Common Stock for the 10 consecutive trading days immediately prior
to the date in question; provided, however, that (A) if the "ex" date (as
hereinafter defined) for any event (other than the issuance or distribution
requiring such computation) that requires an adjustment to the Conversion Price
pursuant to Section 12(d)(i), (ii), (iii), (iv), and (v) occurs during such 10
consecutive trading days, the closing price for each trading day prior to the
"ex" date for such other event shall be adjusted by multiplying such closing
price by the same fraction by which the Conversion Price is so required to be
adjusted as a result of such other event, (B) if the "ex" date for any event
(other than the issuance or distribution requiring such computation) that
requires an adjustment to the Conversion Price pursuant to Section 12(d)(i),
(ii), (iii), (iv), or (v) occurs on or after the "ex" date for the issuance or
distribution requiring such computation and prior to the day in question, the
closing price for each trading day on and after the "ex" date for such other
event shall be adjusted by multiplying such closing price by the reciprocal of
the fraction by which the Conversion Price is so required to be adjusted as a
result of such other event and (C) if the "ex" date for the issuance or
distribution requiring such computation is prior to the day in question, after
taking into account any adjustment required pursuant to clause (A) or (B) of
this proviso, the closing price for each trading day on or after such "ex" date
shall be adjusted by adding thereto the amount of any cash and the fair market
value (as determined by the Board of Directors in a manner consistent with any
good faith determination of such value for purposes of Section 12(d)(iv) or (v),
whose good faith determination shall be conclusive and described in a resolution
of the Board of Directors) of the evidences of indebtedness, shares of capital
stock or assets being distributed applicable to one share of Common Stock as of
the close of business on the day before such "ex" date. For purposes of any
computation under Section 12(d)(v), the Current Market Price on any date shall
be deemed to be the average of the daily closing prices per share of Common
Stock for such day and the next two succeeding trading days; provided, however,
that, if the "ex" date for any event (other than the tender offer requiring such
computation) that requires an adjustment to the Conversion Price pursuant to
Section 12(d)(i), (ii), (iii), (iv), or (v) occurs on or after the Expiration
Time for the tender or exchange offer requiring such computation and prior to
the day in question, the closing price for each trading day on and after the
"ex" date for such other event shall be adjusted by multiplying such closing
price by the reciprocal of the fraction by which the Conversion Price is so
required to be adjusted as a result of such other event. For purposes of this
paragraph, the term "ex" date (1) when used with respect to any issuance or
distribution, means the first date on which the shares of Common Stock trade
regular way on the relevant exchange or in the relevant market from which the
closing price was obtained without the right to receive such issuance or
distribution, (2) when used with respect to any subdivision or combination of
shares of Common Stock, means the first date on which the shares of Common Stock
trade regular way on such exchange or in such market after the time at which
such subdivision or combination becomes effective and (3) when used with respect
to any tender or exchange offer means the first date on which the shares of
Common Stock trade regular way on such exchange or in such market after the
Expiration Time of such offer. Notwithstanding the foregoing, whenever
successive adjustments to the Conversion Price are called for pursuant to this
Section 12(d), such adjustments shall be made to the Current Market Price as may
be necessary or appropriate to effectuate the intent of this


                                       18
<PAGE>

Section 12(d) and to avoid unjust or inequitable results, as determined in good
faith by the Board of Directors.

            "fair market value" means the amount which a willing buyer would pay
a willing seller in an arm's-length transaction.

                  (vii) No adjustment in the Conversion Price shall be required
      unless such adjustment would require an increase or decrease of at least
      1% in such price; provided, however, that any adjustments which by reason
      of this Section 12(d)(vii) are not required to be made shall be carried
      forward and taken into account in any subsequent adjustment. All
      calculations under this Section 12 shall be made by the Company and shall
      be made to the nearest cent. No adjustment need be made for a change in
      the par value or no par value of the Common Stock.

                  (viii) Whenever the Conversion Price is adjusted as herein
      provided, the Company shall promptly file with the Registrar an Officers'
      Certificate setting forth the Conversion Price after such adjustment and
      setting forth a brief statement of the facts requiring such adjustment.
      Promptly after delivery of such certificate, the Company shall prepare a
      notice of such adjustment of the Conversion Price setting forth the
      adjusted Conversion Price and the date on which each adjustment becomes
      effective and shall mail such notice of such adjustment of the Conversion
      Price to each holder of shares of Series B-2 Preferred Stock at such
      holder's last address appearing on the register of holders maintained for
      that purpose within 20 days of the effective date of such adjustment.
      Failure to deliver such notice shall not affect the legality or validity
      of any such adjustment.

                  (ix) In any case in which this Section 12(d) provides that an
      adjustment shall become effective immediately after a Common Stock Record
      Date for an event, the Company may defer until the occurrence of such
      event issuing to the holder of any share of Series B-2 Preferred Stock
      converted after such Common Stock Record Date and before the occurrence of
      such event the additional shares of Common Stock issuable upon such
      conversion by reason of the adjustment required by such event over and
      above the shares of Common Stock issuable upon such conversion before
      giving effect to such adjustment.

                  (x) For purposes of this Section 12(d), the number of shares
      of Common Stock at any time outstanding shall not include shares held in
      the treasury of the Company. The Company shall not pay any dividend or
      make any distribution on shares of Common Stock held in the treasury of
      the Company.

            (e) Subject to Section 13 hereof, in case of any consolidation of
the Company with, or merger of the Company into, any other Person, or in case of
any merger of another Person into the Company (other than a merger that does not
result in any reclassification, conversion, exchange or cancellation of
outstanding shares of Common Stock or Series C Preferred Stock of the Company),
or in case of any sale, conveyance or transfer of all or substantially all the
assets of the Company, the holder of each share of Series B-2 Preferred Stock
shall have the right thereafter, during the period such share of Series B-2
Preferred Stock


                                       19
<PAGE>

shall be convertible as specified in Section 12(a), to convert such share of
Series B-2 Preferred Stock into the kind and amount of securities, cash and
other property receivable upon such consolidation, merger, conveyance or
transfer by a holder of the number of shares of shares of Common Stock or Series
C Preferred Stock of the Company into which such share of Series B-2 Preferred
Stock might have been directly or indirectly converted immediately prior to such
consolidation, merger, conveyance or transfer, assuming such holder of shares of
Common Stock or Series C Preferred Stock of the Company failed to exercise his
rights of election, if any, as to the kind or amount of securities, cash and
other property receivable upon such consolidation, merger, conveyance or
transfer (provided that, if the kind or amount of securities, cash and other
property receivable upon such consolidation, merger, conveyance or transfer is
not the same for each share of Common Stock and Series C Preferred Stock, on an
as-converted basis, of the Company in respect of which such rights of election
shall not have been exercised ("nonelecting share"), then for the purpose of
this Section 12 the kind and amount of securities, cash and other property
receivable upon such consolidation, merger, conveyance or transfer by each
nonelecting share shall be deemed to be the kind and amount so receivable per
share by a plurality of the nonelecting shares). Such securities shall provide
for adjustments which, for events subsequent to the effective date of the
triggering event, shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 12. The above provisions of this
Section 12 shall similarly apply to successive consolidations, mergers,
conveyances or transfers.

            (f) In case:

                  (i) the Company shall declare a dividend (or any other
      distribution) on its Common Stock and/or Series C Preferred Stock payable
      otherwise than in cash out of its earned surplus; or

                  (ii) the Company shall authorize the granting to all holders
      of its shares of Common Stock and/or Series C Preferred Stock of rights or
      warrants to subscribe for or purchase any shares of capital stock of any
      class or of any other rights; or

                  (iii) of any reclassification of the Common Stock and/or
      Series C Preferred Stock (other than a subdivision or combination of the
      Company's outstanding shares of Common Stock and/or Series C Preferred
      Stock), or of any consolidation or merger to which the Company is a party
      and for which approval of any shareholders of the Company is required, or
      the sale, conveyance or transfer of all or substantially all the assets of
      the Company; or

                  (iv) of the voluntary or involuntary dissolution, liquidation
      or winding-up of the Company;

then the Company shall cause to be filed with the Registrar and at each office
or agency maintained for the purpose of conversion of shares of Series B-2
Preferred Stock, and shall cause to be mailed to all holders at their last
addresses as they shall appear in the shares of Series B-2 Preferred Stock
Register, at least 20 Business Days (or 10 Business Days in any case specified
in clause (i) or (ii) above) prior to the applicable date hereinafter specified,
a notice stating (x) the date on which a record is to be taken for the purpose
of such dividend, distribution, rights or warrants, or, if a record is not to be
taken, the date as of which the holders of shares of Common


                                       20
<PAGE>

Stock and/or Series C Preferred Stock of record to be entitled to such dividend,
distribution, rights or warrants are to be determined or (y) the date on which
such reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding-up is expected to become effective, and the date as of
which it is expected that holders of shares of Common Stock and/or Series C
Preferred Stock of record shall be entitled to exchange their shares of Common
Stock and/or Series C Preferred Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding-up. Failure to give the notice required by
this Section 12(f) or any defect therein shall not affect the legality or
validity of any dividend, distribution, right, warrant, reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or winding-up,
or the vote upon any such action.

            (g) The Company shall at all times reserve and keep available, free
from preemptive rights, out of its authorized but unissued shares of Common
Stock, for the purpose of effecting the conversion of shares of Series B-2
Preferred Stock, the full number of shares of Series B-1 Preferred Stock, Series
C Preferred Stock and Common Stock then issuable upon the direct or indirect
conversion of all outstanding shares of Series B-2 Preferred Stock (or any
security into which it is directly or indirectly convertible).

            (h) The Company will pay any and all taxes that may be payable in
respect of the issue or delivery of shares of Series C Preferred Stock on
conversion of shares of Series B-2 Preferred Stock. The Company shall not,
however, be required to pay any tax which may be payable in respect of any
transfer involved in the issue and delivery of shares of Series C Preferred
Stock in a name other than that of the holder of the share of Series B-2
Preferred Stock or shares of Series B-2 Preferred Stock to be converted, and no
such issue or delivery shall be made unless and until the Person requesting such
issue has paid to the Company the amount of any such tax, or has established to
the satisfaction of the Company that such tax has been paid or is not payable.

            (i) Conversion to other Series B Preferred Stock.

                  (i) Conversion of Series B-1 Preferred Stock. Subject to and
      upon compliance with the provisions of this Section 12(i)(i), any
      Regulated Stockholder (defined below) shall be entitled to convert, at any
      time and from time to time, any or all of the shares of Series B-1
      Preferred Stock held by such Regulated Stockholder into the same number of
      shares of Series B-2 Preferred Stock.

                  (ii) Conversion of Series B-2 Preferred Stock. Subject to and
      upon compliance with the provisions of this Section 12(i)(ii), each record
      holder of Series B-2 Preferred Stock shall be entitled at any time and
      from time to time in such holder's sole discretion and at such holder's
      option, to convert any or all of the shares of such holder's Series B-2
      Preferred Stock into the same number of shares of Series B-1 Preferred
      Stock (and, if such holder so elects, simultaneously upon issuance of such
      shares of Series B-1 Preferred Stock to convert any or all of such shares
      of Series B-1 Preferred Stock to shares of Common Stock, and, in
      accordance with the Series B-1 Certificate of Designations, as if such
      holder of Series B-2 Preferred Stock were a holder of Series B-1 Preferred
      Stock when making such election); provided, however, that Series B-2
      Preferred Stock held by a particular Regulated Stockholder may not be
      converted into


                                       21
<PAGE>

      Series B-1 Preferred Stock to the extent that immediately prior thereto,
      or as a result of such conversion, the number of shares of Series B-1
      Preferred Stock held by such Regulated Stockholder would exceed the number
      of shares of Series B-1 Preferred Stock or which such Regulated
      Stockholder reasonably determines it and its Affiliates may own, control
      or have the power to vote under any law, regulation, rule or other
      requirement of any governmental authority at the time applicable to such
      Regulated Stockholder or its Affiliates. Each Regulated Stockholder may
      provide for further restrictions upon the conversion of any shares of
      Series B-2 Preferred Stock by providing the Company with signed, written
      instructions specifying such additional restrictions and legending such
      shares as to the existence of such restrictions.

                  (iii) Conversion Procedure. Each conversion of shares of
      Series B Preferred Stock into shares of another class of Series B
      Preferred Stock shall be effected by the surrender of the certificate or
      certificates representing the shares to be converted (the "Converting
      Shares") at the principal office of the Company (or such other office or
      agency of the Company as the Company may designate by written notice to
      the holders of Series B Preferred Stock) at any time during its usual
      business hours, together with written notice by the holder of such
      Converting Shares, stating that such holder desires to convert the
      Converting Shares, or a stated number of the shares represented by such
      certificate or certificates, into an equal number of shares of the class
      into which such shares may be converted (the "Converted Shares"). Such
      notice shall also state the name or names (with addresses) and
      denominations in which the certificate or certificates for Converted
      Shares are to be issued and shall include instructions for the delivery
      thereof. The Company shall promptly notify each Regulated Stockholder of
      its receipt of such notice. Promptly after such surrender and the receipt
      of such written notice, the Company will issue and deliver in accordance
      with the surrendering holder's instructions the certificate or
      certificates evidencing the Converted Shares issuable upon such
      conversion, and the Company will deliver to the converting holder a
      certificate (which shall contain such legends as were set forth on the
      surrendered certificate or certificates) representing any shares which
      were represented by the certificate or certificates that were delivered to
      the Company in connection with such conversion, but which were not
      converted. Such conversion, to the extent permitted by law, shall be
      deemed to have been effected as of the close of business on the date on
      which such certificate or certificates shall have been surrendered and
      such notice shall have been received by the Company, and at such time the
      rights of the holder of the Converting Shares as such holder shall cease
      and the person or persons in whose name or names the certificate or
      certificates for the Converted Shares are to be issued upon such
      conversion shall be deemed to have become the holder or holders of record
      of the Converted Shares. Upon issuance of shares in accordance with this
      Section 12(i)(iii), such Converted Shares shall be deemed to be duly
      authorized, validly issued, fully paid and non-assessable. The Company
      shall take all such actions as may be necessary to assure that all such
      shares of Series B Preferred Stock may be so issued without violation of
      any applicable law or governmental regulation or any requirements of any
      domestic securities exchange upon which shares of Series B Preferred Stock
      may be listed (except for official notice of issuance which will be
      immediately transmitted by the Company upon issuance). The Company shall
      not close its books against the transfer of shares of Series B Preferred


                                       22
<PAGE>

      Stock in any manner which would interfere with the timely conversion of
      any shares of Series B Preferred Stock.

      A written request for conversion from any Regulated Stockholder to the
      Company stating such Regulated Stockholder's reasonable belief that a
      conversion is permissible under all applicable laws, rules and regulations
      shall be conclusive and shall obligate the Company to effect such
      conversion in a timely manner.

                  (iv) Notice of Conversion to Other Regulated Stockholders. The
      Company shall not convert or directly or indirectly redeem, purchase or
      otherwise acquire any shares of Series B Preferred Stock or any other
      class of capital stock of the Company or take any other action affecting
      the voting rights of such shares, if such action will increase the
      percentage of any class of outstanding voting securities owned or
      controlled by any Regulated Stockholder (other than any such stockholder
      which requested that the Company take such action, or which otherwise
      waives in writing its rights under this Section 12(i)(iv)), unless the
      Company simultaneously with taking such action gives written notice that
      it is taking such action to each Regulated Stockholder.

            (j) Miscellaneous.

                  (i) Stock Splits; Adjustments. If the Company shall in any
      manner subdivide (by stock split, stock dividend or otherwise) or combine
      (by reverse stock split or otherwise) the outstanding shares of the Series
      B-1 Preferred Stock or the Series B-2 Preferred Stock then the outstanding
      shares of each other series of Series B Preferred Stock shall be
      subdivided or combined, as the case may be, to the same extent, share and
      share alike, and effective provision shall be made for the protection of
      the conversion rights hereunder.

                  (ii) Preemptive Right with respect to Certain Issuances. In
      case the Company shall issue or sell any Common Stock or convertible
      Junior Shares (other than Common Stock issued (A) pursuant to the
      Company's existing or future stock option plans or pursuant to any other
      existing or future Common Stock-related director or employee compensation
      plan of the Company approved by the Board of Directors, (B) other than
      pursuant to the Company's existing or future stock purchase plans approved
      by the Board of Directors which permit the Company's employees to purchase
      Common Stock at not more than a 15% discount to the Current Market Price,
      (C) as consideration for the acquisition of a business or of assets, (D)
      in a firm commitment underwritten public offering when either (i) the
      underwriting discount is 5% or less, or (ii) the offering price per share
      is greater than the Conversion Price, (E) to the Company's unaffiliated
      joint venture partners in exchange for interests in the relevant joint
      venture, (F) upon exercise or conversion of any security, the issuance of
      which caused an adjustment hereunder or the issuance of which did not
      require adjustment hereunder or (G) upon exercise or conversion of any of
      the Series B-1 Preferred Stock the Series B-2 Preferred Stock, the Series
      C Preferred Stock or the Warrants (as defined in the Purchase Agreement)
      in accordance with their respective terms) for a consideration per share
      less than the Conversion Price then in effect but equal to or greater than
      the Current Market Price at the date of issuance of such Common Stock or
      convertible Junior Shares, the


                                       23
<PAGE>

      holders of the Series B Preferred Stock shall be entitled if they so elect
      to purchase such number of the shares of the Common Stock or convertible
      Junior Shares (or, in the case of a Regulated Holder, upon such Regulated
      Holder's request, nonvoting securities (x) identical in all respects,
      other than voting, to any such voting securities and (y) convertible into
      voting securities in a manner consistent with the convertibility of Series
      B-2 Preferred Stock into voting securities of the Company), being issued
      as will permit such holders to maintain their proportional ownership
      interest in the Company after giving effect to such issuance.

            The Company shall give twenty days prior written notice to the
      holders of the Series B Preferred Stock of its intention to issue or sell
      any Common Stock or Junior Shares that would give rise to preemptive
      rights pursuant to this Section 12(j)(ii). Within ten days after receipt
      of such notice, the holders of the Series B Preferred Stock shall notify
      the Company whether or not they intend (without commitment) to purchase
      such shares.

                  (iii) No Charge. The issuance of certificates for shares of
      any class of Series B Preferred Stock (upon conversion of shares of any
      other series of Series B Preferred Stock or otherwise) shall be made
      without charge to the holders of such shares for any issuance tax in
      respect thereof or other cost incurred by the Company in connection with
      such conversion and/or the issuance of shares of Series B Preferred Stock;
      provided, however, that the Company shall not be required to pay any tax
      which may be payable in respect of any transfer involved in the issuance
      and delivery of any certificate in a name other than that of the holder of
      the Series B Preferred Stock converted.

      13. Change of Control.

            (a) If a Change of Control shall have occurred (the time and date of
such occurrence being a "Change of Control Date"), the Company shall cause to be
filed with the Registrar and at each office or agency maintained for the purpose
of conversion of shares of Series B Preferred Stock, and shall cause to be
mailed to all holders at their last addresses as they shall appear in the Series
B Preferred Stock Register, in any case within 10 days after the Change of
Control Date, a notice stating (1) the Change of Control Date, (2) the fact that
(if the Change of Control Date is prior to the Fifth Anniversary Date) the
holders shall receive the Special Payment (as defined below) as a result of such
Change of Control, (3) the fact that holders shall have the right to either (a)
continue to hold their shares of Series B Preferred Stock (or the shares of
preferred stock issued in respect thereof pursuant to Section 14) (the "Hold
Option") or (b) in the case of shares of Series B-2 Preferred Stock, convert
such shares (after taking into account the Special Payment) in accordance with
Section 12 or (c) elect the Remarketing Option (as defined below), (4) the
relevant circumstances and facts regarding such Change of Control and (5) the
instructions that such holder must follow in order to exercise the rights
identified above. As of the Change of Control Date (if the Change of Control
Date occurs prior to the Fifth Anniversary Date), the holders of the Series B
Preferred Stock shall receive the Special Payment, pursuant to which the
Liquidation Preference of each share of Series B Preferred Stock shall be deemed
to have been increased by an amount (the "Special Payment") equal to the product
of (x) the Share Factor with respect to such share of Series B Preferred Stock
and (y) the Aggregate


                                       24
<PAGE>

Special Payment Amount. Such Special Payment shall accrue as of the Change of
Control Date (if the Change of Control Date is prior to the Fifth Anniversary
Date) whether or not the Company has earnings or profits, whether or not there
are funds legally available for the payment of such dividend and whether or not
such dividend is declared and shall be in all respects identical to any other
dividend declared or accrued on the Series B Preferred Stock (except as set
forth above) and all provisions of this Certificate of Designation applicable to
dividends shall apply to such Special Payment (except as set forth above). The
Special Payment shall be added to the Liquidation Preference as of the Change of
Control Date whether the holders of the Series B Preferred Stock elect the Hold
Option or the Remarketing Option or whether they elect to convert their shares
in accordance with Section 12.

            (b) Within 30 days after delivery by the Company of the notice
described in Section 13(a), each holder of shares of Series B Preferred Stock
(or the shares of preferred stock issued in respect thereof pursuant to Section
14) who wishes to exercise the Hold Option, or the Remarketing Option must
submit written notice (a "COC Response Notice") to the Company setting forth the
option such holder wishes to elect (and if no option is selected within such 30
day period such holder shall be deemed to have selected the Hold Option).

            (c) If the Hold Option is selected with respect to a share of Series
B Preferred Stock, or if no notice from a holder is received by the date
referred to in the preceding paragraph, such share of Series B Preferred Stock
(or the shares of preferred stock issued in respect thereof pursuant to Section
14) shall remain outstanding in accordance with its current terms (including,
without limitation, the right to convert pursuant to Section 12) after giving
effect to the Special Payment (if applicable).

            (d) If the Remarketing Option is selected with respect to a share of
Series B-2 Preferred Stock, the holder of such share shall be deemed to have
elected to waive such holder's right during the Remarketing Period to convert
such share pursuant to Section 12 during the Remarketing Period (other than
conversion of such share to a share of Series B-1 Preferred Stock) and the
Company shall thereafter have the option (the "Remarketing Option") to either
(a) have such share redeemed in accordance with the optional redemption
procedures set forth in Section 10 (except that such procedures shall apply only
to the holders so electing the Remarketing Option) or (b) remarket such share
(or the share of Series B-1 Preferred Stock into which such other share is
converted by the holder thereof) for the account of such holder and, if the net
proceeds to such holder of such remarketing are less than an amount in cash
equal to 100% of the Liquidation Preference (after giving effect to the Special
Payment (if applicable)) of such share plus accrued and unpaid dividends thereon
from the last Dividend Payment Date to the date payment in full is received by
such holder in respect of such share (the "Remarketing Price"), the Company
shall issue to and sell for the account of such holder a sufficient number of
shares of Common Stock (or, if requested by a Regulated Holder, shares of Series
C Preferred Stock) to make up such shortfall; i.e., such that the holder
receives a net amount in cash in respect of such share of Series B Preferred
Stock as to which the Remarketing Option has been selected which, when taken
together with the net proceeds received by such holder in such remarketing is
equal to the Remarketing Price. Written notice of the election by the Company to
either redeem or remarket such share shall be provided to such holder within 75
days after receipt of a COC Response Notice specifying the Remarketing Option.


                                       25
<PAGE>

            (e) In order to accomplish the remarketing, the Company shall take
all actions that may be necessary, including without limitation, preparing and
filing a registration statement under the Securities Act, and shall pay all
expenses (including without limitation, underwriting discounts) associated with
the remarketing and issuance and shall provide customary indemnification for the
benefit of the holder against securities law liabilities in connection
therewith. If the Remarketing Option has been selected and the Company has not
elected to redeem such share, payment of the full Remarketing Price in respect
of the remarketed share shall be made at a single settlement against surrender
of the share. Such settlement shall take place as soon as reasonably
practicable. If such settlement does not take place within 180 days after the
date of the Company's written notice pursuant to paragraph (d) above (the
"Remarketing Period"), the Company shall give written notice to the holders that
have elected the Remarketing Option that such 180-day period has elapsed and
that each such holder shall have the option, for a period of 10 Business Days
following the giving of such notice, of electing to terminate the remarketing
process with respect to such holder's shares and to elect (i) to convert such
holder's shares in accordance with Section 12 or (ii) the Hold Option. The
foregoing shall not affect the holder's right to receive and retain the Special
Payment (if the Change of Control Date is prior to the Fifth Anniversary Date)
as of the Change of Control Date).

            (f) The Company shall have the right to institute reasonable
procedures in order to implement this Section 13 and, to the extent reasonably
practicable, will make proper provision prior to the Change of Control Date to
ensure that the holders of shares of Series B Preferred Stock will be entitled
to receive the benefits intended to be afforded by this Section 13. Nothing in
this Section 13 shall affect the rights of the holders of Series B Preferred
Stock set forth in Section 14 hereof.

      14. Consolidation, Merger, Conveyance or Transfer. Without the vote or
consent of the holders of a majority of the then Outstanding shares of Series B
Preferred Stock, the Company may not consolidate or merge with or into, or sell,
assign, transfer, lease, convey or otherwise dispose of all or substantially all
of its assets to, any Person unless (i) if the Company is the surviving or
continuing Person, the Series B Preferred Stock shall remain outstanding without
any amendment that would adversely affect the preferences, rights or powers of
the Series B Preferred Stock, (ii) if the Company is not the surviving or
continuing Person, (a) the entity formed by such consolidation or merger or to
which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made (in any such case, the "resulting entity") is a corporation
organized and existing under the laws of Bermuda, the United States or any State
thereof or the District of Columbia; and (b) the shares of Series B Preferred
Stock are converted into or exchanged for and become shares of such resulting
entity, having in respect of such resulting entity the same (or more favorable)
powers, preferences and relative, participating, optional or other special
rights that the shares of Series B Preferred Stock had immediately prior to such
transaction; and (iii) the Company shall have delivered to the Registrar an
Officers' Certificate and an opinion of counsel, reasonably satisfactory in form
and content, each stating that such consolidation, merger, conveyance or
transfer complies with this Section 14 and that all conditions precedent herein
provided for relating to such transaction have been complied with.

      15. SEC Reports; Reports by Company. So long as any shares of Series B
Preferred Stock are outstanding, the Company shall file with the SEC and, within
15 days after it files


                                       26
<PAGE>

them with the SEC, with the Registrar and, if requested, furnish to each holder
of shares of Series B Preferred Stock all annual and quarterly reports and the
information, documents, and other reports that the Company is required to file
with the SEC pursuant to Section 13(a) or 15(d) of the Exchange Act ("SEC
Reports"). In the event the Company is not required or shall cease to be
required to file SEC Reports, pursuant to the Exchange Act, the Company will
nevertheless file such reports with the SEC (unless the SEC will not accept such
a filing). Whether or not required by the Exchange Act to file SEC Reports with
the SEC, so long as any shares of Series B Preferred Stock are Outstanding, the
Company will furnish or cause to be furnished copies of the SEC Reports to the
holders of shares of Series B Preferred Stock at the time the Company is
required to make such information available to the Registrar and to prospective
investors who request it in writing.

      16. Definitions. For purposes of this Certificate of Designation, the
following terms shall have the meaning set forth below (capitalized terms used
but not defined herein shall have the meanings ascribed to them in the Series
B-1 Certificate of Designations):

            "Accumulated Dividends" has the meaning set forth in Section 6.

            "Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with, such Person. For the purposes of this definition, "control"
when used with respect to any Person means the power to direct the management
and policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
Without limiting the foregoing, each of Chase Capital Partners, The Chase
Manhattan Corporation, each of their respective affiliates (the "Chase
Entities") and any other person, fund or entity for whom any of the Chase
Entities acts as a fiduciary or provides discretionary management with respect
to any investments or any such direct or indirect interests therein shall be
deemed to be affiliates of each other.

            "Aggregate Change of Control Date Accreted Value" means the product
obtained by multiplying (x) the Change of Control Date Accreted Value by (y) the
number of shares of Series B Preferred Stock Outstanding immediately prior to of
the Change of Control Date.

            "Aggregate Five Year Accreted Value" means the product obtained by
multiplying (x) the Five Year Accreted Value by (y) the number of shares of
Series B Preferred Stock Outstanding immediately prior to the Change of Control
Date.

            "Aggregate Special Payment Amount" means the difference between (x)
the Aggregate Five Year Accreted Value and (y) the Aggregate Change of Control
Date Accreted Value.

            "Board of Directors" has the meaning set forth in the Recitals.

            "Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in The City of New York
are authorized or obligated by law or executive order to be closed.


                                       27
<PAGE>

            "By-laws" has the meaning set forth in the Recitals.

            "COC Response Notice" has the meaning set forth in Section 13(b).

            "Capital Stock" means, with respect to any person, any and all
shares, interests, participations, rights in, or other equivalents (however
designated and whether voting and/or non-voting) of such person's capital stock,
whether outstanding on the Closing Date or issued after the Closing Date, and
any and all rights (other than any evidence of indebtedness), warrants or
options exchangeable for or convertible into such capital stock.

            "Certificate of Incorporation" has the meaning set forth in the
recitals.

            "Change of Control" means the occurrence of any of the following
events: (a) any "person" or "group" (as such terms are used in Sections 13(d)
and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as defined
in Rule 13d-3 and 13d-5 under the Exchange Act, except that a person shall be
deemed to have "beneficial ownership" of all securities that such person has the
right to acquire, whether such right is exercisable immediately or only after
the passage of time), directly or indirectly, of more than 50% of the total
Voting Capital Stock of the Company; or (b) the Company consolidates with, or
merges with or into, another person or sells, assigns, conveys, transfers,
leases or otherwise disposes of all or substantially all of its assets to any
person, or any person consolidates with, or merges with or into the Company, in
any such event pursuant to a transaction in which either (A) the outstanding
Voting Capital Stock of the Company is converted into or exchanged for cash,
securities or other property, other than any such transaction where immediately
after such transaction no "person" or "group" (as such terms are used in
Sections 13(d) and 14(d) of the Exchange Act) (other than any such group if each
member of such group, together with its Affiliates, owns less than 50% of the
total Voting Capital Stock of the Company) is the "beneficial owner" (as defined
in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person shall be
deemed to have "beneficial ownership" of all securities that such person has the
right to acquire, whether such right is exercisable immediately or only after
the passage of time), directly or indirectly, of more than 50% of the total
Voting Capital Stock of the surviving or transferee company or its parent
company or (B) the holders of the outstanding Voting Capital Stock of the
Company immediately prior to such transaction hold less than 50% of the
outstanding Voting Capital Stock of the surviving or transferee company or its
parent company immediately after the transaction or (C) during any consecutive
two-year period, individuals who at the beginning of such period constituted the
Board of Directors (together with any new directors whose election by the Board
of Directors or whose nomination for election by the stockholders of the Company
was approved by a vote of a majority of the directors then still in office who
were either directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the Board of Directors then in office.

            "Change of Control Date" has the meaning set forth in Section 13(a).

            "Change of Control Date Accreted Value" means with respect to each
$1,072 of original Liquidation Preference, the value that $1,072 would accrete
to between the Closing Date and the Change of Control Date, compounded quarterly
at an annual rate of 7.50%.


                                       28
<PAGE>

            "Closing Date" means any Closing Date under the Purchase Agreement.

            "closing price" has the meaning set forth in Section 12(d)(vi).

            "Common Stock Record Date" has the meaning set forth in Section
12(d)(vi).

            "Common Stock" means the common stock of the Company, par value
$0.01 per share.

            "Company" has the meaning set forth in the Recitals.

            "Company Order" means a written request or order signed in the name
of the Company by its Chairman of the Board, its Chief Executive Officer, its
President or any Executive or Senior Vice President and by its Chief Financial
Officer, Treasurer, an Assistant Treasurer, its Secretary or an Assistant
Secretary.

            "Conversion Agent" has the meaning set forth in Section 5(a).

            "Conversion Price" has the meaning set forth in Section 12.

            "Converted Shares" has the meaning set forth in Section 12(a).

            "Current Market Price" has the meaning set forth in Section
12(d)(vi).

            "Dilution Trigger Event" has the meaning set forth in Section
12(d)(iv).

            "Distributed Securities" has the meaning set forth in Section
12(d)(iv).

            "Dividend Payment Date" has the meaning set forth in Section 6.

            "Dividend Record Date" has the meaning set forth in Section 7(a).

            "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

            "Expiration Time" has the meaning set forth in Section 12(d)(v).

            "fair market value" has the meaning set forth in Section 12(d)(vi).

            "Fifth Anniversary Date" has the meaning set forth in Section
8(b)(vi).

            "Five Year Accreted Value" means with respect to each $1,072 of
original Liquidation Preference, $1,554.34 (subject to appropriate adjustment
with respect to stock splits, stock dividends and similar events affecting the
Series B Preferred Stock).

            "Hold Option" has the meaning set forth in Section 13(a).

            "Junior Shares" has the meaning set forth in Section 9(a).


                                       29
<PAGE>

            "Liquidation Preference" means an amount equal to $1,000 per share
plus an amount equal to the Share Option Adjustment Amount per share of Series B
Preferred Stock, subject to change in accordance with Section 6, Section 7 ,
Section 11 and Section 13 hereof, including, without limitation, Accumulated
Dividends and, if applicable and without duplication, the Special Payment.

            "Mandatory Redemption Date" has the meaning set forth in Section
10(b); provided, however, that if such date shall not be a Business Day, then
such date shall be the next Business Day.

            "nonelecting share" has the meaning set forth in Section 12(e).

            "Odd-lot Redemption" has the meaning set forth in Section 10(c).

            "Officers' Certificate" means a certificate of the Company signed in
the name of the Company by its Chairman of the Board, its Chief Executive
Officer, its President or an Executive or Senior Vice President and by its Chief
Financial Officer, Treasurer, an Assistant Treasurer, its Secretary or an
Assistant Secretary.

            "Optional Redemption" has the meaning set forth in Section 10(a).

            "Optional Redemption Date" has the meaning set forth in Section
10(a).

            "Outstanding" means (i) when used with respect to shares of Series B
Preferred Stock, as of the date of determination, all shares of Series B
Preferred Stock theretofore authenticated and delivered under this Certificate
of Designation, except (a) shares of Series B Preferred Stock theretofore
converted into shares of Series C Preferred Stock and/or Common Stock in
accordance with Section 12 and shares of Series B Preferred Stock theretofore
canceled by the Registrar or delivered to the Registrar for cancellation; (b)
shares of Series B Preferred Stock for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Registrar or any Paying
Agent (other than the Company) in trust or set aside and segregated in trust by
the Company (if the Company shall act as its own Paying Agent) for the holders
of such shares of Series B Preferred Stock; provided that, if such shares of
Series B Preferred Stock are to be redeemed, notice of such redemption has been
duly given pursuant to this Certificate of Designation or provision therefor
satisfactory to the Registrar has been made; and (c) shares of Series B
Preferred Stock in exchange for or in lieu of which other shares of Series B
Preferred Stock have been authenticated and delivered pursuant to this
Certificate of Designation; provided, however, that, in determining whether the
holders of the shares of Series B Preferred Stock have given any request,
demand, authorization, direction, notice, consent or waiver or taken any other
action hereunder, shares of Series B Preferred Stock owned by the Company or any
Subsidiary of the Company shall be disregarded and deemed not to be Outstanding,
except that, in determining whether the Registrar shall be protected in relying
upon any such request, demand, authorization, direction, notice, consent, waiver
or other action, only shares of Series B Preferred Stock which the Registrar has
actual knowledge of being so owned shall be so disregarded. Shares of Series B
Preferred Stock so owned which have been pledged in good faith may be regarded
as Outstanding if the pledgee establishes to the satisfaction of the Registrar
the pledgee's right so to act with respect to such shares of Series B Preferred
Stock and


                                       30
<PAGE>

that the pledgee is not the Company or any other obligor upon the shares of
Series B Preferred Stock or any Affiliate of the Company or of such other
obligor and (ii) when used with respect to shares of Series B-1 Preferred Stock,
the same definition of "Outstanding" shall apply thereto with references to
Series B-1 being substituted for references to Series B-2 therein.

            "Parity Shares" has the meaning set forth in Section 9(a).

            "Paying Agent" has the meaning set forth in Section 5(a).

            "Person" means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, governmental authority or other entity of whatever
nature.

            "Preferred Stock" means, with respect to any person, any and all
shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) of such person's preferred or preference stock,
whether now outstanding or issued after the date hereof, including all series
and classes of such preferred or preference stock.

            "Purchase Agreement" means the Securities Purchase Agreement, dated
as of February 1, 2000, among the Company and the Purchasers named therein, as
it may be amended from time to time.

            "Purchased Shares" has the meaning set forth in Section 12(d)(v).

            "Redemption Date" has the meaning set forth in Section 10(d).

            "Redemption Notice" has the meaning set forth in Section 10(d).

            "Redemption Price" has the meaning set forth in Section 10(a).

            "Registrar" has the meaning set forth in Section 3.

            "Registration Rights Agreement" means the Registration Rights
Agreement, dated as of March 9, 2000, among the Company and the Purchasers.

            "Regulated Stockholder" shall mean Chase Equity Associates, LLC or
any other stockholder that (i) is subject to the provisions of Regulation Y or
has an Affiliate subject to provisions of Regulation Y, (ii) holds shares of
Common Stock or Preferred Stock of the Company and (iii) has provided written
notice to the Company of its status as a "Regulated Stockholder" hereunder.

            "Regulation Y" shall mean Regulation Y of the Board of Governors of
the Federal Reserve System, 12 C.F.R. Part 225 (or any successor to such
Regulation).

            "Remarketing Option" has the meaning set forth in Section 13(d).

            "Restrictive Legend" has the meaning set forth in Section 4.

            "resulting entity" has the meaning set forth in Section 14.


                                       31
<PAGE>

            "SEC" means the Securities and Exchange Commission, as from time to
time constituted, created under the Securities Exchange Act of 1934, or, if at
any time after the adoption of this Certificate of Designation such commission
is not existing and performing the duties now assigned to it, then the body
performing such duties at such time.

            "SEC Reports" has the meaning set forth in Section 15.

            "Securities Act" has the meaning set forth in Section 4.

            "Senior Shares" has the meaning set forth in Section 9(a).

            "Series B Preferred Stock" means the Series B-1 Preferred Stock and
the Series B-2 Preferred Stock.

            "Series B-2 Preferred Stock" has the meaning set forth in Section 1.

            "Series B-1 Certificate of Designations" means the Certificate of
Designations, Preferences and Rights of the Company's 7.50% Cumulative
Convertible Preferred Stock, Series B-2, due 2015.

            "Series B-1 Preferred Stock" means the Company's 7.50% Cumulative
Convertible Preferred Stock, Series B-1, due 2015, par value $0.01 per share, to
be issued pursuant to the Series B-1 Certificate of Designations.

            "Series C Certificate of Designations" means the Certificate of
Designations, Preferences and Rights of the Series C Preferred Stock.

            "Series C Preferred Stock" means the Company's Convertible Preferred
Stock, Series C, par value $0.01 per share, to be issued pursuant to the Series
C Certificate of Designations.

            "Share Factor" means with respect to each share of Series B
Preferred Stock, a fraction, the numerator of which is the Liquidation
Preference of such share as of the Change of Control Date, without giving effect
to the Special Payment, and the denominator of which is the aggregate
Liquidation Preference of all outstanding shares of Series B Preferred Stock as
of the Change of Control Date, without giving effect to the Special Payment.

            "Share Option Adjustment Amount" means an amount equal to $72.00.

            "Special Payment" has the meaning set forth in Section 13.

            "Voting Capital Stock" means with respect to any Person, securities
of any class or classes of Capital Stock in such Person ordinarily entitling the
holders thereof (whether at all times or at the times that such class of Capital
Stock has voting power by reason of the happening of any contingency) to vote in
the election of members of the board of directors or comparable governing body
of such Person.


                                       32
<PAGE>

            IN WITNESS WHEREOF, the Company has caused this Certificate of
Designation to be duly executed by the undersigned officer of the Company, this
9th day of March, 2000.

                                         VIATEL, INC.,


                                          By: /s/ JAMES P. PRENETTA
                                              ---------------------------------
                                          Name: James P. Prenetta
                                          Title: Senior Vice President and
                                                 General Counsel

<PAGE>

                                    EXHIBIT A

"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR THE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES. SUCH SHARES MAY NOT BE OFFERED, SOLD,
TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF
SUCH REGISTRATION OTHER THAN PURSUANT TO AN EXEMPTION FROM SUCH REGISTRATION
REQUIREMENTS."
<PAGE>




                                  VIATEL, INC.

                  CERTIFICATE OF DESIGNATIONS, PREFERENCES AND
                                    RIGHTS OF
                      CONVERTIBLE PREFERRED STOCK SERIES C

<PAGE>

                           CERTIFICATE OF DESIGNATIONS

            Viatel, Inc., a company organized and existing under the General
Corporation Law of the State of Delaware (the "Company"), certifies that
pursuant to the authority contained in its Certificate of Incorporation (the
"Certificate of Incorporation") and its By-laws (the "By-laws"), and in
accordance with Section 151 of the General Corporation Law of the State of
Delaware, the board of directors of the Company (the "Board of Directors") at a
meeting duly called and held on January 31, 2000, duly approved and adopted the
following resolution, which resolution remains in full force and effect on the
date hereof:

            RESOLVED, that pursuant to the authority vested in the Board of
Directors by the Certificate of Incorporation and By-laws, the Board of
Directors does hereby create, authorize and provide for the issue of a series of
Preferred Stock having the following designation, voting powers, preferences and
relative, participating, optional and other special rights:

            Certain capitalized terms used herein are defined in Section 11.

      1. Number and Designation. The Company shall have a series of Preferred
Stock, which shall be designated as its Series C Convertible Preferred Stock
(the "Series C Preferred Stock"), par value $0.01 per share, with 162,500 shares
initially authorized. Unless otherwise specified, references herein to any
"Section" refer to the Section number specified in this Certificate of
Designation.

      2. Issuance. The Company may issue up to 162,500 shares of Series C
Preferred Stock.

      3. Registered Form; Liquidation Preference; Registrar. Certificates for
shares of Series C Preferred Stock shall be issuable only in registered form and
only with an initial liquidation preference of $0.01 per share. The Company
shall serve as initial Registrar and Transfer Agent (the "Registrar") for the
Series C Preferred Stock.

      4. Registration; Transfer. Shares of the Series C Preferred Stock have not
been registered under the Securities Act of 1933, as amended (the "Securities
Act") and may not be resold, pledged or otherwise transferred prior to the date
when they may be resold pursuant to Rule 144 under the Securities Act other than
(i) to the Company, (ii) pursuant to an exemption from registration under the
Securities Act or (iii) pursuant to an effective registration statement under
the Securities Act, in each case in accordance with any applicable securities
laws of any state of the United States. Until such time as it is no longer
required pursuant to the Securities Act, certificates evidencing the Series C
Preferred Stock shall contain a legend (the "Restrictive Legend") evidencing the
foregoing restrictions in substantially the form attached hereto as Exhibit A.

      5. Paying Agent and Conversion Agent.

            (a) The Company shall maintain (i) an office or agency where shares
of Series C Preferred Stock may be presented for payment (the "Paying Agent"),
(ii) an office or agency where shares of Series C Preferred Stock may be
presented for conversion (the "Conversion


                                       1
<PAGE>

Agent"), and (iii) a Registrar, which shall be an office or an agency where
shares of Series C Preferred Stock may be presented for transfer. The Company
may appoint the Registrar, the Paying Agent and the Conversion Agent and may
appoint one or more additional paying agents and one or more additional
conversion agents in such other locations as it shall determine. The term
"Paying Agent" includes any additional paying agent, and the term "Conversion
Agent" includes any additional conversion agent. The Company may change any
Paying Agent or Conversion Agent without prior notice to any holder. The Company
shall notify the Registrar of the name and address of any Paying Agent or
Conversion Agent appointed by the Company. If the Company fails to appoint or
maintain another entity as Paying Agent or Conversion Agent, the Registrar shall
act as such. Notwithstanding the foregoing, the Company or any of its Affiliates
may act as Paying Agent, Registrar, coregistrar or Conversion Agent.

            (b) If shares of Series C Preferred Stock are issued upon the
transfer, exchange or replacement of shares of Series C Preferred Stock bearing
the Restrictive Legend, or if a request is made to remove such Restrictive
Legend on shares of Series C Preferred Stock, the shares of Series C Preferred
Stock so issued shall bear the Restrictive Legend, or the Restrictive Legend
shall not be removed, as the case may be, unless the holders of such shares
shall request such legend be removed, and outside counsel for such holders
reasonably determines that the transfer of such shares is no longer restricted
by the Securities Act and outside counsel for the Company reasonably concurs in
such determination.

            (c) Each holder of a share of Series C Preferred Stock agrees to
indemnify the Company and the Registrar against any liability that may result
from the transfer, exchange or assignment by such holder of such holder's share
of Series C Preferred Stock in violation of any provision of this Certificate of
Designation and/or applicable Federal or state securities law; provided,
however, that such indemnity shall not apply to acts of willful misconduct or
gross negligence on the part of the Company or the Registrar, as the case may
be.

            (d) Payments due on the shares of Series C Preferred Stock shall be
payable at the office or agency of the Company maintained for such purpose in
The City of New York and at any other office or agency maintained by the Company
for such purpose. If any such payment is in cash, it shall be payable by wire
transfer (provided that appropriate wire instructions have been received by the
Registrar at least 15 days prior to the applicable date of payment) to a United
States dollar account maintained by the holder with, a bank located in New York
City; provided that at the option of the Company payment of dividends in cash
may be made by check mailed to the address of the person entitled thereto as
such address shall appear in the Series C Preferred Share Register.

      6. Dividend and Distribution Rights.

            (a) Whenever the Company shall either declare or pay any dividend on
or make any distribution with respect to any Common Stock, the holders of the
Series C Preferred Stock shall be entitled to receive such dividends or
distributions on a ratable as-converted basis (calculated as if all shares of
Series C Preferred Stock had been converted into Common Stock); provided, that
(i) in the case of dividends or distributions payable in shares of Common Stock
of the Company, or options, warrants or rights to acquire shares of such Common
Stock, or securities convertible into or exchangeable for shares of such Common
Stock, the shares,


                                       2
<PAGE>

options, warrants, rights or securities so payable shall be payable in (as
applicable) shares of, or options, warrants or rights to acquire, or securities
convertible into or exchangeable for, shares of Series C Preferred Stock (which
on an as-converted basis would equate with the number of shares of Common Stock
which would otherwise be payable or issuable, on a fully-diluted basis, solely
with respect to such dividend or distribution to holders of the Series C
Preferred Stock); provided, however, if any of such shares, options, warrants,
rights or other securities constitute voting securities, then upon the request
of a holder of Series C Preferred Stock, the Company shall make available to
such holder of Series C Preferred Stock, non-voting securities of the
Corporation which are otherwise identical to such voting securities and which
are convertible into or exchangeable for such voting securities on substantially
the same terms as the Series B-2 Preferred Stock is convertible to the Series
B-1 Preferred Stock or the Series C Preferred Stock is convertible into Common
Stock, as applicable.

      7. Voting Rights.

            (a) The holders of record of shares of Series C Preferred Stock
shall not be entitled to any voting rights except as hereinafter provided in
this Section 7 or as otherwise provided by law.

            (b) The approval of the holders of at least a majority of the then
Outstanding shares of Series C Preferred Stock and Series B-2 Preferred Stock
(on an as-converted basis into Series C Preferred Stock) voting or consenting,
as the case may be, as one class, will be required for the Company to:

                  (i) amend the Certificate of Incorporation, this Certificate
      of Designation or the By-Laws so as to (A) affect adversely the rights,
      preferences (including, without limitation, liquidation preferences,
      conversion rights and dividend rights), privileges or voting rights of
      holders of the shares of Series C Preferred Stock, or (B) increase or
      decrease the number of authorized shares of Series C Preferred Stock;

                  (ii) enter into, or permit any of its subsidiaries to enter
      into, any agreement that would impose material restrictions on the
      Company's ability to honor the exercise of any rights of the holders of
      the Series C Preferred Stock; or

                  (iii) issue any shares of Series C Preferred Stock other than
      upon the conversion of shares of the Series B-2 Preferred Stock or
      exercise of the A-2 Warrants and the B-2 Warrants (as defined in the
      Purchase Agreement).

      8. Ranking. In the event of any liquidation, dissolution or winding-up of
the Company, whether voluntary or involuntary, the holders of the shares of
Series C Preferred Stock then Outstanding shall be entitled to receive, prior
and in preference to any distribution of any of the assets of the Company to the
holders of shares of Common Stock by reason of their ownership thereof, (i) an
amount equal to the amount such holders would receive if such holders converted,
in accordance with their terms, their shares of Series C Preferred Stock into
Common Stock immediately prior to such liquidation, dissolution or winding up,
plus (ii) $0.01 per share of Series C Preferred Stock.

      9. Conversion to Common.


                                       3
<PAGE>

            (a) Subject to and upon compliance with the provisions of this
Section 9(a), at the option of the Regulated Stockholder thereof, any share of
Series C Preferred Stock may be converted at any time into one hundred (100)
shares of Common Stock; provided, however, that Series C Preferred Stock held by
a particular Regulated Stockholder may not be converted into Common Stock to the
extent that immediately prior thereto, or as a result of such conversion, the
number of shares of Common Stock held by such Regulated Stockholder would exceed
the number of shares of Common Stock which such Regulated Stockholder reasonably
determines it and its Affiliates may own, control or have the power to vote
under any law, regulation, rule or other requirement of any governmental
authority at the time applicable to such Regulated Stockholder or its
Affiliates. Each Regulated Stockholder may provide for further restrictions upon
the conversion of any shares of Series C Preferred Stock by providing the
Company with signed, written instructions specifying such additional
restrictions and legending such shares as to the existence of such restrictions.

            A written request for conversion from any Regulated Stockholder to
the Company stating such Regulated Stockholder's reasonable belief that a
conversion is permissible under all applicable laws, rules and regulations shall
be conclusive and shall obligate the Company to effect such conversion in a
timely manner.

            (b) In order to exercise the conversion privilege, the holder of any
share of Series C Preferred Stock to be converted shall surrender the
certificate for such share, duly endorsed or assigned to the Company or in
blank, at any office or agency of the Company maintained for that purpose,
accompanied by written notice to the Company at such office or agency that the
holder elects to convert such share or, if fewer than all the shares of Series C
Preferred Stock represented by a single share certificate are to be converted,
the number of shares represented thereby to be converted.

            Shares of Series C Preferred Stock shall be deemed to have been
converted immediately prior to the close of business on the day of surrender of
such shares for conversion in accordance with the foregoing provisions, and at
such time the rights of the holders of such shares as holders shall cease, and
the person or persons entitled to receive the shares of Common Stock issuable
upon conversion shall be treated for all purposes as the record holder or
holders of such shares of Common Stock at such time. As promptly as practicable
on or after the conversion date, the Company shall issue and shall deliver at
such office or agency a certificate or certificates for the number of full
shares of Common Shares issuable upon conversion, together with payment in lieu
of any fraction of a share, as provided in Section 9(c).

            In the case of any conversion of fewer than all the shares of Series
C Preferred Stock evidenced by a certificate, upon such conversion the Company
shall execute and the Registrar shall countersign and deliver to the holder
thereof, at the expense of the Company, a new certificate or certificates
representing the number of unconverted shares of Series C Preferred Stock.

            (c) No fractional shares of Common Stock shall be issued upon the
conversion of a share of Series C Preferred Stock. If more than one share of
Series C Preferred Stock shall be surrendered for conversion at one time by the
same holder, the number of full shares of Common Stock, which shall be issuable
upon conversion thereof shall be computed on


                                       4
<PAGE>

the basis of the aggregate number of shares of Series C Preferred Stock so
surrendered. Instead of any fractional shares of Common Stock, the Company shall
pay a cash adjustment in respect to such fraction in an amount equal to the same
fraction of the closing price (as defined in Section 12(d)(vi) of the Series B-2
Certificate of Designations) per Common Share at the close of business on the
Business Day prior to the day of conversion.

            (d) The Company shall not convert or directly or indirectly redeem,
purchase or otherwise acquire any shares of Series C Preferred Stock or any
other class of Capital Stock of the Company or take any other action affecting
the voting rights of such shares, if such action will increase the percentage of
any class of outstanding voting securities owned or controlled by any Regulated
Stockholder (other than any such stockholder which requested that the Company
take such action, or which otherwise waives in writing its rights under this
Section 9(d)), unless the Company simultaneously with taking such action gives
written notice that it is taking such action to each Regulated Stockholder.

            (e) In case of any consolidation of the Company with, or merger of
the Company into, any other corporation, or in case of any merger of another
corporation into the Company (other than a merger that does not result in any
reclassification, conversion, exchange or cancellation of outstanding shares of
Common Stock or Series C Preferred Stock of the Company), or in case of any
recapitalization or reorganization, or in case of any sale, conveyance or
transfer of all or substantially all the assets of the Company, the holder of
each share of Series C Preferred Stock shall have the right thereafter, to
convert such share of Series C Preferred Stock into the kind and amount of
securities, cash and other property receivable upon such consolidation, merger,
recapitalization, reorganization, conveyance or transfer by a holder of the
number of shares of Common Stock of the Company into which such share of Series
C Preferred Stock might have been converted immediately prior to such
consolidation, merger, recapitalization, reorganization, conveyance or transfer,
assuming such holder of shares of Common Stock of the Company failed to exercise
his rights of election, if any, as to the kind or amount of securities, cash and
other property receivable upon such consolidation, merger, recapitalization,
reorganization, conveyance or transfer (provided that, if the kind or amount of
securities, cash and other property receivable upon such consolidation, merger,
conveyance or transfer is not the same for each share of Common Stock and Series
C Preferred Stock on an as-converted basis of the Company in respect of which
such rights of election shall not have been exercised ("nonelecting share"),
then for the purpose of this Section 9 the kind and amount of securities, cash
and other property receivable upon such consolidation, merger, recapitalization,
reorganization, conveyance or transfer by each nonelecting share shall be deemed
to be the kind and amount so receivable per share by a plurality of the
nonelecting shares). Such securities shall provide for adjustments which, for
events subsequent to the effective date of the triggering event, shall be as
nearly equivalent as may be practicable to the adjustments provided for in this
Section 9. The above provisions of this Section 9 shall similarly apply to
successive consolidations, mergers, recapitalizations, reorganizations,
conveyances or transfers.

            (f) In case:

                  (i) the Company shall declare a dividend (or any other
      distribution) on its Common Stock payable otherwise than in cash out of
      its earned surplus; or


                                       5
<PAGE>

                  (ii) the Company shall authorize the granting to all holders
      of its shares of Common Stock of rights or warrants to subscribe for or
      purchase any shares of Capital Stock of any class or of any other rights;
      or

                  (iii) of any reclassification of the Common Stock (other than
      a subdivision or combination of the Company's outstanding shares of Common
      Stock), or of any consolidation or merger to which the Company is a party
      and for which approval of any shareholders of the Company is required, or
      the sale, conveyance or transfer of all or substantially all the assets of
      the Company; or

                  (iv) of the voluntary or involuntary dissolution, liquidation
      or winding-up of the Company;

then the Company shall cause to be filed with the Registrar and at each office
or agency maintained for the purpose of conversion of shares of Series C
Preferred Stock, and shall cause to be mailed to all holders at their last
addresses as they shall appear in the shares of Series C Preferred Stock
Register, at least 20 Business Days (or 10 Business Days in any case specified
in clause (i) or (ii) above) prior to the applicable date hereinafter specified,
a notice stating (x) the date on which a record is to be taken for the purpose
of such dividend, distribution, rights or warrants, or, if a record is not to be
taken, the date as of which the holders of shares of Common Stock of record to
be entitled to such dividend, distribution, rights or warrants are to be
determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer, dissolution, liquidation or winding-up is expected to
become effective, and the date as of which it is expected that holders of shares
of Common Stock of record shall be entitled to exchange their shares of Common
Stock for securities, cash or other property deliverable upon such
reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding-up. Failure to give the notice required by this Section
9(f) or any defect therein shall not affect the legality or validity of any
dividend, distribution, right, warrant, reclassification, consolidation, merger,
sale, transfer, dissolution, liquidation or winding-up, or the vote upon any
such action.

            (g) The Company shall at all times reserve and keep available, free
from preemptive rights, out of its authorized but unissued shares of Common
Stock, for the purpose of effecting the conversion of shares of Series C
Preferred Stock, the full number of shares of Common Stock then issuable upon
the conversion of all outstanding shares of Series B Preferred Stock and
(without duplication) Series C Preferred Stock.

            (h) Miscellaneous.

                  (i) Stock Splits; Adjustments. If the Company shall in any
      manner subdivide (by stock split, stock dividend or otherwise) or combine
      (by reverse stock split or otherwise) or reclassify the outstanding shares
      of the Common Stock, then the outstanding shares of Series C Preferred
      Stock shall be subdivided or combined, as the case may be, to the same
      extent, share and share alike, and effective provision shall be made for
      the protection of the conversion rights hereunder.

                  (ii) No Charge. The issuance of certificates for shares of any
      Common Stock (upon conversion of shares of Series C Preferred Stock or
      otherwise) shall be made


                                       6
<PAGE>

      without charge to the holders of such shares for any issuance tax in
      respect thereof or other cost incurred by the Company in connection with
      such conversion and/or the issuance of shares of Series C Preferred Stock;
      provided, however, that the Company shall not be required to pay any tax
      which may be payable in respect of any transfer involved in the issuance
      and delivery of any certificate in a name other than that of the holder of
      the Series C Preferred Stock converted.

                  (iii) Simultaneous Conversion of Series B-2 Preferred Stock,
      A-2 Warrants and B-2 Warrants to Common Stock. In connection with any
      conversion of Series B-2 Preferred Stock to Series C Preferred Stock in
      accordance with the Series B-2 Certificate of Designations, or the
      exercise of any A-2 Warrants or B-2 Warrants (as defined in the Purchase
      Agreement) in accordance with the terms thereof for Series C Preferred
      Stock, the holder of such Series B-2 Preferred Stock, A-2 Warrants or B-2
      Warrants, as the case may be, may elect simultaneously upon issuance of
      any such shares of Series C Preferred Stock to convert any or all of such
      shares of Series C Preferred Stock to shares of Common Stock of the
      Company or otherwise, in any case in accordance with, and to the extent
      permitted by, this Certificate of Designations, as if such holder of
      Series B-2 Preferred Stock, A-2 Warrants or B-2 Warrants, as the case may
      be, were a holder of Series C Preferred Stock when making such election.

      10. Consolidation, Merger, Conveyance or Transfer. Without the vote or
consent of the holders of a majority of the then Outstanding shares of Series C
Preferred Stock, the Company may not consolidate or merge with or into, or sell,
assign, transfer, lease, convey or otherwise dispose of a The Special Payment
shall be added to the Liquidation Preference as of the Change of Control Date
whether the holders of the Series B Preferred Stock elect the Hold Option or the
Remarketing Option or whether they elect to convert their shares in accordance
with Section 12.ll or substantially all of its assets to, any Person unless (i)
if the Company is the surviving or continuing Person, the Series C Preferred
Stock shall remain outstanding without any amendment that would adversely affect
the preferences, rights or powers of the Series C Preferred Stock, (ii) if the
Company is not the surviving or continuing Person, (a) the entity formed by such
consolidation or merger or to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made (in any such case, the
"resulting entity") is a corporation organized and existing under the laws of
Bermuda, the United States or any State thereof or the District of Columbia; and
(b) the shares of Series C Preferred Stock are converted into or exchanged for
and become shares of such resulting entity, having in respect of such resulting
entity the same (or more favorable) powers, preferences and relative,
participating, optional or other special rights that the shares of Series C
Preferred Stock had immediately prior to such transaction; and (iii) the Company
shall have delivered to the Registrar an Officers' Certificate and an opinion of
counsel, reasonably satisfactory in form and content, each stating that such
consolidation, merger, conveyance or transfer complies with this Section 10 and
that all conditions precedent herein provided for relating to such transaction
have been complied with.

      11. Definitions. For purposes of this Certificate of Designation, the
following terms shall have the meaning set forth below (capitalized terms used
not defined herein shall have the meanings ascribed to them in the Series B-1
Certificate of Designations):


                                       7
<PAGE>

            "Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with, such Person. For the purposes of this definition, "control"
when used with respect to any Person means the power to direct the management
and policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
Without limiting the foregoing, each of Chase Capital Partners, The Chase
Manhattan Corporation, each of their respective affiliates (the "Chase
Entities") and any other person, fund or entity for whom any of the Chase
Entities acts as a fiduciary or provides discretionary management with respect
to any investments or any such direct or indirect interests therein shall be
deemed to be affiliates of each other.

            "Board of Directors" has the meaning set forth in the Recitals.

            "Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in The City of New York
are authorized or obligated by law or executive order to be closed.

            "By-laws" has the meaning set forth in the Recitals.

            "Capital Stock" means, with respect to any person, any and all
shares, interests, participations, rights in, or other equivalents (however
designated and whether voting and/or non-voting) of such person's Capital Stock,
whether outstanding on the Closing Date or issued after the Closing Date, and
any and all rights (other than any evidence of indebtedness), warrants or
options exchangeable for or convertible into such Capital Stock.

            "Certificate of Incorporation" has the meaning set forth in the
Recitals.

            "Closing Date" means any Closing Date under the Purchase Agreement.

            "Common Stock" means the common stock of the Company, par value
$0.01 per share.

            "Company" has the meaning set forth in the Recitals.

            "Company Order" means a written request or order signed in the name
of the Company by its Chairman of the Board, its Chief Executive Officer, its
President or any Executive or Senior Vice President and by its Chief Financial
Officer, Treasurer, an Assistant Treasurer, its Secretary or an Assistant
Secretary.

            "Conversion Agent" has the meaning set forth in Section 5(a).

            "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

            "nonelecting share" has the meaning set forth in Section 9(b).

            "Officers' Certificate" means a certificate of the Company signed in
the name of the Company by its Chairman of the Board, its Chief Executive
Officer, its President or an


                                       8
<PAGE>

Executive or Senior Vice President and by its Chief Financial Officer,
Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary.

            "Outstanding" means when used with respect to shares of Series C
Preferred Stock, as of the date of determination, all shares of Series C
Preferred Stock theretofore authenticated and delivered under this Certificate
of Designation, except (a) shares of Series C Preferred Stock theretofore
converted into shares of Common Stock in accordance with Section 9 and shares of
Series C Preferred Stock theretofore canceled by the Registrar or delivered to
the Registrar for cancellation; and (b) shares of Series C Preferred Stock in
exchange for or in lieu of which other shares of Series C Preferred Stock have
been authenticated and delivered pursuant to this Certificate of Designation;
provided, however, that, in determining whether the holders of the shares of
Series C Preferred Stock have given any request, demand, authorization,
direction, notice, consent or waiver or taken any other action hereunder, shares
of Series C Preferred Stock owned by the Company or any Subsidiary of the
Company shall be disregarded and deemed not to be Outstanding, except that, in
determining whether the Registrar shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent, waiver or other
action, only shares of Series C Preferred Stock which the Registrar has actual
knowledge of being so owned shall be so disregarded. Shares of Series C
Preferred Stock so owned which have been pledged in good faith may be regarded
as Outstanding if the pledgee establishes to the satisfaction of the Registrar
the pledgee's right so to act with respect to such shares of Series C Preferred
Stock and that the pledgee is not the Company or any other obligor upon the
shares of Series C Preferred Stock or any Affiliate of the Company or of such
other obligor.

            "Paying Agent" has the meaning set forth in Section 5(a).

            "Person" means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, governmental authority or other entity of whatever
nature.

            "Preferred Stock" means, with respect to any person, any and all
shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) of such person's preferred or preference stock,
whether now outstanding or issued after the date hereof, including all series
and classes of such preferred or preference stock (other than the Series C
Preferred Stock).

            "Purchase Agreement" means the Securities Purchase Agreement, dated
as of February 1, 2000, among the Company and the Purchasers named therein, as
it may be amended from time to time.

            "Registrar" has the meaning set forth in Section 3.

            "Registration Rights Agreement" means the Registration Rights
Agreement, dated as of March 9, 2000, among the Company and the Purchasers.

            "Regulated Stockholder" shall mean Chase Equity Associates, LLC or
any other stockholder that (i) is subject to the provisions of Regulation Y or
has an Affiliate subject to provisions of Regulation Y, (ii) holds shares of
Common Stock or Preferred Stock of the


                                       9
<PAGE>

Company and (iii) has provided written notice to the Company of its status as a
"Regulated Stockholder" hereunder.

            "Regulation Y" shall mean Regulation Y of the Board of Governors of
the Federal Reserve System, 12 C.F.R. Part 225 (or any successor to such
Regulation).

            "Restrictive Legend" has the meaning set forth in Section 4.

            "Securities Act" has the meaning set forth in Section 4.

            "Series B-1 Certificate of Designations" means the Certificate of
Designations, Preferences and Rights of the Company's 7.50% Cumulative
Convertible Preferred Stock, Series B-1, due 2015.

            "Series B-2 Certificate of Designations" means the Certificate of
Designations, Preferences and Rights of the Company's 7.50% Cumulative
Convertible Preferred Stock, Series B-2, due 2015.

            "Series B-1 Preferred Stock" means the Company's 7.50% Cumulative
Convertible Preferred Stock, Series B-1, due 2015, par value $0.01 per shares,
to be issued pursuant to the Series B-1 Certificate of Designations.

            "Series B-2 Preferred Stock" means the Company's 7.50% Cumulative
Convertible Preferred Stock, Series B-2, due 2015, par value $0.01 per share, to
be issued pursuant to the Series B-2 Certificate of Designations.

            "Series C Preferred Stock" has the meaning set forth in Section 1.

            "Series C Certificate of Designations" means the Certificate of
Designations, Preferences and Rights of the Company's Convertible Preferred
Stock, Series C.


                                       10
<PAGE>

            IN WITNESS WHEREOF, the Company has caused this Certificate of
Designation to be duly executed by the undersigned officer of the Company, this
9th day of March, 2000.

                                             VIATEL, INC.,


                                          By: /s/ JAMES P. PRENETTA
                                              ---------------------------------
                                          Name: James P. Prenetta
                                          Title: Senior Vice President and
                                                 General Counsel

<PAGE>

                                    EXHIBIT A

"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR THE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES. SUCH SHARES MAY NOT BE OFFERED, SOLD,
TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF
SUCH REGISTRATION OTHER THAN PURSUANT TO AN EXEMPTION FROM SUCH REGISTRATION
REQUIREMENTS."