Exhibit 3b



                                  DYNAGEN, INC.

                    CERTIFICATE OF DESIGNATIONS, PREFERENCES

                     AND RIGHTS OF SERIES C PREFERRED STOCK



         The undersigned officer of DynaGen,  Inc., a corporation  organized and
existing under the General Corporation Law of the State of Delaware, does hereby
certify  that,   pursuant  to  authority   conferred  by  the   Certificate   of
Incorporation, as amended to date, and pursuant to the provisions of Section 151
of the General Corporation Law of the State of Delaware,  the Board of Directors
of DynaGen, Inc., on August 13, 1997, adopted a resolution providing for certain
powers, designations, preferences and relative, participating, optional or other
rights, and the qualifications,  limitations or restrictions thereof, of certain
shares of Series C Preferred Stock,  $.01 par value, of the  Corporation,  which
resolution is as follows:

         RESOLVED:  That,  pursuant  to the  authority  vested  in the  Board of
Directors of the Corporation and in accordance with the General  Corporation Law
of the State of Delaware and the provisions of the Corporation's  Certificate of
Incorporation,  a series of 7,500  shares of the class of  authorized  Preferred
Stock,  par value $.01 per share,  of the  Corporation  is hereby created as the
Series C Preferred  Stock, and that the designation and number of shares thereof
and the voting powers,  preferences  and relative,  participating,  optional and
other  special  rights of the  shares of such  series,  and the  qualifications,
limitations  and  restrictions  thereof,  are as set forth on Exhibit A attached
hereto.

         EXECUTED as of this 14th day of August, 1997.

                             DYNAGEN, INC.


                             By:      /s/ Indu A. Muni
                                -------------------------------
                                Indu A. Muni
                                President













                                    EXHIBIT A
                                    ---------



A.       DESCRIPTION AND DESIGNATION OF SERIES C PREFERRED STOCK

         1.       DESIGNATION AND DEFINITIONS.

                  (A) DESIGNATION.  A total of 7,500 shares of the Corporation's
previously  undesignated Preferred Stock, $.01 par value, shall be designated as
the "Series C Preferred Stock." The original issue price per share of the Series
C Preferred Stock shall be $100.00 (the "ORIGINAL ISSUE PRICE").

                  (B) CERTAIN DEFINITIONS.  As used herein, the following terms,
unless the context otherwise requires, have the following respective meanings:

                           (i) "AVERAGE  QUOTED  PRICE" means the average of the
closing  bid price of the Common  Stock of the  Corporation  as  reported by the
Nasdaq SmallCap Market or Nasdaq National Market or, if the Corporation's Common
Stock is no longer traded on a Nasdaq  market,  such other exchange on which the
Corporation's  Common  Stock  is then  traded,  for the five  (5)  Trading  Days
immediately  preceding any holder's  Conversion  Date, the Mandatory  Conversion
Date (as  defined  in Section  5(c)  below) or the date of the  consummation  or
closing of a Fundamental Change, as the case may be.

                           (ii) "COMMON STOCK" means the common stock, par value
$.01 per share, of the
Corporation.

                           (iii)  "CONVERSION DATE" means each date on which the
Corporation receives by
telecopy  written notice in accordance with Section 5(i) hereof from a holder of
Series C Preferred Stock that such holder elects to convert shares of its Series
C Preferred Stock.

                           (iv) "FUNDAMENTAL CHANGE" means: (i) any sale, lease,
exchange  or other  transfer  of all or  substantially  all of the assets of the
Corporation;  or (ii) any merger or  consolidation to which the Corporation is a
party.  Notwithstanding the foregoing,  the following shall not be a Fundamental
Change: A merger or  consolidation  (a) to which the Corporation is a party; (b)
in  which  it  is  the   surviving   corporation   and  there  is  no  resulting
reclassification of the outstanding Common Stock; and (c) after giving effect to
which, persons who were,  immediately before the consummation or closing of such
merger or consolidation,  holders of outstanding Common Stock will be the direct
or indirect  owners of  securities  of the  Corporation  possessing,  on a fully
diluted basis,  at least  seventy-five  percent (75%) of the voting power of all
voting  securities  of  the  Corporation   (excluding,   for  purposes  of  such
computation,   any  such   person  who  also  is  a  party  to  such  merger  or
consolidation).

                           (v) "ISSUE DATE" means, with respect to each share of
Series C Preferred  Stock held by any holder,  the date on which the Corporation
originally  issued such share to such holder  (regardless of the number of times
transfer of such share is made on the stock transfer books  maintained by or for
the  Corporation,  and  regardless  of the number of 










                                      -2-



certificates which may be issued to evidence such share, and irrespective of any
subsequent transfer or other disposition of such share to any other holder).

                           (vi) "TRADING DAY" means a day on which the principal
national  securities exchange on which the Common Stock is listed or admitted to
trading is open for the transaction of business;  or, if the Common Stock is not
listed or admitted to trading on any national  securities exchange but is listed
on the Nasdaq system (or such other  trading  system then in use by the National
Association of Securities Dealers, Inc.), a day on which such system is open for
the transaction of business;  or, if the foregoing does not apply,  any Business
Day.

         2.       DIVIDENDS.

                  (A)  PREFERRED  DIVIDEND - CASH  AND/OR  IN-KIND.  When and as
declared by the Board of  Directors  and to the extent  permitted by the General
Corporation Law of the State of Delaware, the Corporation shall pay preferential
dividends  to the  holders of the Series C  Preferred  Stock as provided in this
Section 2(a).

                           (I) PREFERRED DIVIDEND.  Except as otherwise provided
herein,  dividends  on each  share of Series C  Preferred  Stock  shall  accrue,
cumulatively,  at the rate of seven  percent  (7.0%)  per annum of the  Original
Issue Price,  from and  including  the Issue Date of such share to and including
the date on which the  Liquidation  Value of such share is paid or such share is
converted in accordance with the provisions  hereof (the "PREFERRED  DIVIDEND").
Such  Preferred  Dividend  will accrue  whether or not it has been  declared and
whether  or not there are  profits,  surplus or other  funds of the  Corporation
legally available for its payment.

                           (II)  SEMI-ANNUAL  PAYMENTS.  Commencing  on July 31,
1998,  the  Preferred  Dividend  shall be  payable in cash  (subject  to Section
2(a)(v)  below)  semi-annually,  for the actual number of days elapsed,  on each
July 31 and January 31, to the holders of record of shares of Series C Preferred
Stock as of the tenth  (10th)  trading day  preceding  the  applicable  dividend
payment date.

                           (III)  NO  INTEREST.  Accrued  but  unpaid  Preferred
Dividends shall not bear interest. Preferred Dividends paid in cash in an amount
less than the total  amount of such  dividends  at the time  accrued and payable
shall be  allocated  on a  share-by-share  basis  among  all  shares of Series C
Preferred Stock at the time outstanding.

                           (IV)  PAYMENT UPON  CONVERSION.  On the date on which
any holder's  shares of Series C Preferred Stock are converted into Common Stock
pursuant to Section 5 hereof, the accrued Preferred Dividend with respect to the
shares  so  converted  shall  be paid  to such  holder.  All  accrued  Preferred
Dividends also shall be payable upon the liquidation,  dissolution or winding up
of the Corporation.

                           (V) PAYMENT IN COMMON STOCK. The Corporation,  at its
sole discretion,  may pay the Preferred Dividends in cash or in shares of Common
Stock at the then fair market  value per share of Common Stock as of the date on
which the Preferred  Dividend is payable.  For purposes of this Section 2(a)(v),
fair  market  value  shall be the average of the closing bid price of the Common
Stock of the  Corporation  as reported by the Nasdaq  SmallCap 








                                      -3-



Market or Nasdaq  National  Market or, if the  Corporation's  Common Stock is no
longer traded on a Nasdaq market, such other exchange on which the Corporation's
Common Stock is then traded, for the ten (10) Trading Days immediately preceding
the date on which the Preferred Dividend is payable.

                           (VI)  FRACTIONAL  SHARES.   Notwithstanding  anything
herein to the contrary,  no fractional  shares shall be issued  pursuant to this
Section 2, and the number of shares of Common  Stock  issued upon the payment of
the Preferred Dividend shall be rounded up or down to the nearest whole share.

                  (B)  DECLARED  DIVIDENDS  ON  COMMON  STOCK.  If the  Board of
Directors shall declare a cash dividend payable upon the then outstanding shares
of Common  Stock (other than a stock  dividend on the Common  Stock  distributed
solely in the form of  additional  shares of Common  Stock),  the holders of the
Series C Preferred  Stock shall be  entitled to the amount of  dividends  on the
Series C Preferred  Stock as would be declared  payable on the largest number of
whole shares of Common  Stock into which the shares of Series C Preferred  Stock
held by each holder  thereof  could be converted  pursuant to the  provisions of
Section  5  hereof,  such  number  determined  as of the  record  date  for  the
determination of holders of Common Stock entitled to receive such dividend. Such
determination  of "whole  shares"  shall be based upon the  aggregate  number of
shares of Series C Preferred Stock held by each holder,  and not upon each share
of Series C Preferred Stock so held by the holder.

                  (C)  DIVIDENDS ON OTHER  SECURITIES.  Subject to the foregoing
provisions  of this  Section  2, the  Board of  Directors  may  declare  and the
Corporation may pay or set apart for payment, or cause the accrual of, stated or
cumulative  dividends and other distributions on the Series A Preferred Stock or
the  Series B  Preferred  Stock  of the  Corporation,  or any  other  series  of
preferred stock hereafter  designated,  and may purchase or otherwise redeem any
of the same (or any warrants,  rights,  options or other securities  exercisable
therefor or convertible or exchangeable thereinto),  and the holders of Series C
Preferred Stock shall not be entitled to share therein.

         3.       LIQUIDATION, DISSOLUTION OR WINDING UP.

                  (A) TREATMENT AT  LIQUIDATION,  DISSOLUTION  OR WINDING UP. In
the event of any  liquidation,  dissolution  or winding  up of the  Corporation,
whether voluntary or involuntary, or in the event of its insolvency,  before any
distribution  or  payment is made to any  holders  of Common  Stock or any other
class or series of capital stock of the  Corporation  designated to be junior to
the  Series C  Preferred  Stock,  and  subject  to the  liquidation  rights  and
preferences of any class or series of Preferred Stock designated by the Board of
Directors  in the  future  to be  senior  to or on a parity  with  the  Series C
Preferred  Stock with  respect to  liquidation  preferences,  the holder of each
share of Series C Preferred  Stock shall be entitled to be paid first out of the
assets  of  the  Corporation  available  for  distribution  to  holders  of  the
Corporation's  capital  stock of all  classes,  whether such assets are capital,
surplus or earnings,  an amount  equal to the Original  Issue Price per share of
Series  C  Preferred  Stock  held by any  holder,  plus the  Preferred  Dividend
accruing  to the  Series C  Preferred  Stock  pursuant  to  Section 2 above (the
"LIQUIDATION  VALUE"). 









                                      -4-



For  purposes  hereof,  the Series C Preferred  Stock shall rank on  liquidation
junior to the Series A Preferred Stock and on parity with the Series B Preferred
Stock.

                  If,  upon  liquidation,  dissolution  or  winding  up  of  the
Corporation,  the assets of the  Corporation  available for  distribution to its
stockholders  shall be insufficient to pay the holders of the Series C Preferred
Stock the full amount to which they otherwise would be entitled,  the holders of
Series C Preferred  Stock shall share ratably in any  distribution  of available
assets pro rata in proportion to the respective  liquidation  preference amounts
which  would  otherwise  be  payable  upon   liquidation  with  respect  to  the
outstanding shares of the Series C Preferred Stock if all liquidation preference
amounts with respect to such shares were paid in full,  based upon the aggregate
Liquidation  Value  payable  upon all  shares of Series C  Preferred  Stock then
outstanding.

                  After such payment shall have been made in full to the holders
of the Series C Preferred  Stock, or funds necessary for such payment shall have
been set aside by the  Corporation  in trust for the  account  of holders of the
Series C Preferred  Stock so as to be available for such payment,  the remaining
assets available for distribution shall be distributed ratably among the holders
of the Common Stock and any class or series of capital  stock  designated  to be
junior to the Series C  Preferred  Stock (if any) in right of  payment  upon any
liquidation, dissolution or winding up of the Corporation.

                  The  amounts  set forth  above  shall be subject to  equitable
adjustment  by the  Board  of  Directors  whenever  there  shall  occur  a stock
dividend,   stock   split,   combination,   reorganization,    recapitalization,
reclassification  or other  similar  event  involving  a change  in the  capital
structure of the Series C Preferred Stock.

                  (B) DISTRIBUTIONS  OTHER THAN CASH. Whenever the distributions
provided for in this Section shall be payable in property  other than cash,  the
value of such  distribution  shall be the fair market value of such  property as
determined in good faith by the Board of Directors. All distributions (including
distributions  other  than cash)  made  hereunder  shall be made pro rata to the
holders of Series C Preferred Stock.

                  (C)  EVENTS NOT DEEMED A  LIQUIDATION.  Neither  the merger or
consolidation of the Corporation into or with any other corporation(s),  nor the
sale or transfer by the  Corporation  of all or any part of its assets,  nor the
reduction  of the  capital  stock of the  Corporation,  will be  deemed  to be a
liquidation, dissolution or winding up of the Corporation under this Section 3.

         4.       VOTING POWER.

                  (A) GENERAL.  Except as otherwise  expressly  provided in this
Section 4 or as otherwise  required by the General  Corporation Law of the State
of Delaware,  each holder of Series C Preferred  Stock shall be entitled to vote
on all  matters  and shall be  entitled  to that  number  of votes  equal to the
largest  number of whole shares of Common Stock into which such holder's  shares
of Series C Preferred  Stock could be converted,  pursuant to the  provisions of
Section 5 hereof,  at the  record  date for the  determination  of  stockholders
entitled to vote on any 









                                      -5-


matter or, if no such record date is established, at the date such vote is taken
or any  written  consent  of  stockholders  is  solicited.  Except as  otherwise
expressly  required by law,  the holders of shares of Series A Preferred  Stock,
Series B Preferred  Stock,  Series C Preferred Stock and Common Stock shall vote
together (or render written consents in lieu of a vote) as a single class on all
matters submitted to the stockholders of the Corporation.

                  Such  determination  of "whole shares" shall be based upon the
aggregate number of shares of Series C Preferred Stock held by each holder,  and
not upon each share of Series C Preferred Stock so held by the holder.

                  (B) AMENDMENTS TO CHARTER. For so long as there are any shares
of Series C Preferred Stock  outstanding,  the  Corporation  shall not amend its
Certificate of  Incorporation  or this  Certificate  of Designation  without the
approval,  by vote or written consent,  of the holders of at least a majority of
the then outstanding  shares of Series C Preferred  Stock,  voting together as a
class, each share of Series C Preferred Stock to be entitled to one vote in each
instance,  if such amendment would adversely affect the rights of the holders of
Series C Preferred Stock. Without limiting the generality of the foregoing,  the
creation, or increase in the authorized number of shares, of any class or series
of stock  ranking  prior to or on a parity  with the  Series C  Preferred  Stock
either as to dividends or upon  liquidation  shall be deemed to adversely affect
the  rights of the  holders of Series C  Preferred  Stock for  purposes  of this
Section 4(b).

         5.       CONVERSION RIGHTS.

                  (A) CONVERSION AT THE OPTION OF HOLDERS. Each holder of Series
C Preferred Stock shall have the right, at such holder's  option,  to convert at
any time any of the shares of Series C Preferred  Stock held by such holder into
such number of fully paid and  nonassessable  shares of Common Stock as shall be
determined by multiplying the number of shares of Series C Preferred Stock to be
converted by a fraction, the numerator of which is the Original Issue Price, and
the denominator of which is the applicable Conversion Price (as defined below).

                  (B)  CONVERSION  PRICE.  The  conversion  price per share (the
"CONVERSION  PRICE")  shall be equal to the lesser of  subsections  (i) and (ii)
below.

                           (i) One  hundred  twenty-five  percent  (125%) of the
average of the  closing  bid price of the  Common  Stock of the  Corporation  as
reported  by the Nasdaq  SmallCap  Market or Nasdaq  National  Market or, if the
Corporation's  Common Stock is no longer traded on a Nasdaq  market,  such other
exchange on which the  Corporation's  Common Stock is then traded,  for the five
(5) Trading Days immediately preceding the Issue Date.

                           (ii) (A)  Beginning  on the 60th day  after the Issue
Date and ending on the 150th day after the Issue Date,  eighty  percent (80%) of
the Average Quoted Price;

                                (B)  Beginning  on the 151st day after the Issue
Date and  ending on the 210th day after the Issue  Date,  seventy-eight  percent
(78%) of the Average Quoted Price;






                                      -6-

                                (C)  Beginning  on the 211th day after the Issue
Date and ending on the 365th day after the Issue Date, seventy-six percent (76%)
of the Average Quoted Price; and

                                (D)  Beginning  on the 366th day after the Issue
Date, seventy-four (74%) of the Average Quoted Price.

                  (C) CONVERSION AT OPTION OF CORPORATION. At any time after the
close of  business  on the one (1)  year  anniversary  of the date on which  the
Securities and Exchange Commission declares effective the registration statement
registering  the shares of Common Stock issuable upon conversion of the Series C
Preferred  Stock,  all of the  shares  of  Series  C  Preferred  Stock  shall be
convertible,  at the option of the  Corporation,  into such number of fully paid
and  nonassessable  shares of Common Stock as shall be determined by multiplying
the number of shares of Series C Preferred  Stock  outstanding  on the Mandatory
Conversion Date (as defined below) by a fraction,  the numerator of which is the
Original Issue Price, and the denominator of which is the applicable  Conversion
Price.

                  The  Corporation  shall give  notice of its  exercise  of such
conversion  option to all holders of Series C Preferred Stock no later than five
(5) Trading Days before the date as of which the Corporation has elected to make
such conversion effective (such effective date of the conversion, the "MANDATORY
CONVERSION  Date").  Each holder of Series C Preferred Stock as of the Mandatory
Conversion Date shall, promptly after such date, surrender for conversion to the
Corporation  at its principal  office or to any transfer  agent for the Series C
Preferred Stock or the Common Stock all certificates  representing all shares of
Series C Preferred  Stock held by such holder,  accompanied  by a written notice
specifying the name or names in which such holder wishes the  certificate(s) for
shares of Common Stock to be issued.

                  Effective  as of  the  close  of  business  on  the  Mandatory
Conversion Date, each share of Series C Preferred Stock then  outstanding  shall
be (and be deemed to have been)  converted  automatically,  without  any further
action by the holders  thereof,  into shares of Common  Stock.  Such  conversion
shall be deemed to have occurred  whether or not the  certificates  representing
such shares are surrendered to the Corporation or its transfer agent.

                  (D)   LIMITATION   ON   NUMBER   OF   SHARES.    Additionally,
notwithstanding  anything  set forth in this  Section 5 to the  contrary,  in no
event shall any holder of Series C Preferred Stock, prior to earlier to occur of
the Mandatory  Conversion  Date or the date of the  consummation or closing of a
Fundamental  Change, be entitled to convert Series C Preferred Stock into shares
of Common Stock to the extent that (x) the number of shares of the Corporation's
Common Stock  beneficially  owned by such holder and its affiliates  (other than
shares  of Common  Stock  which may be deemed  beneficially  owned  through  the
ownership of the  unconverted  portion of the shares of Series C Preferred Stock
held by such holder) plus (y) the number of shares of Common Stock issuable upon
such  conversion  would  result in  beneficial  ownership  by the holder and its
affiliates of more than 4.9% of the shares of Common Stock then outstanding. For
purposes of this Section  5(d),  beneficial  ownership  shall be  determined  in
accordance  with  Section  13(d) of the  Securities  Exchange  Act of  1934,  as
amended, and Regulation 13D and 13G promulgated thereunder,  except as otherwise
provided in clause (x) of








                                      -7-

this Section 5(d).  Each holder  shall,  upon  delivering  to the  Corporation a
notice of election to convert  shares of Series C Preferred  Stock in accordance
with  Section  5(i)  hereof,  be  required  to provide  the  Corporation  with a
certification in form and substance reasonably  satisfactory to the Corporation,
that the  conversion of the Series C Preferred  Stock being  converted  will not
result in such holder and its  affiliates  beneficially  holding more than 4.9%,
determined as heretofore provided,  of the outstanding shares of Common Stock on
such Conversion Date. If the holder cannot make such  certification,  the shares
of  Series  C  Preferred  Stock  to  be  converted  shall  not  be  convertible.
Notwithstanding  the foregoing,  upon the Mandatory  Conversion Date or upon the
consummation  or closing of a  Fundamental  Change,  all such shares of Series C
Preferred  Stock  then  outstanding  shall be  converted  into  Common  Stock in
accordance with Section 5(c) or 5(g), as applicable.

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

                  (F) CAPITAL REORGANIZATION OR RECLASSIFICATION.  If the Common
Stock  issuable  upon the  conversion  of the Series C Preferred  Stock shall be
changed into the same or  different  number of shares of any class or classes of
capital   stock,   whether   by   capital   reorganization,    recapitalization,
reclassification or otherwise (other than a subdivision or combination of shares
or stock  dividend  provided for elsewhere in this Section 5, or the sale of all
or substantially all of the  Corporation's  capital stock or assets to any other
person),  then and in each such event the  holders of Series C  Preferred  Stock
shall have the right  thereafter to convert such shares into the kind and amount
of shares of capital stock and other  securities  and property  receivable  upon
such reorganization,  recapitalization,  reclassification or other change by the
holders of the number of shares of Common Stock into which such shares of Series
C  Preferred  Stock  might  have  been  converted   immediately  prior  to  such
reorganization,  recapitalization,  reclassification  or change,  all subject to
further adjustment as provided herein.

                  (G)  MANDATORY   CONVERSION  -  FUNDAMENTAL   CHANGE.  If  any
Fundamental  Change  shall  occur,  then each share of Series C Preferred  Stock
outstanding as of the date of the  consummation or closing thereof shall be (and
be deemed to have been) converted  automatically,  without any further action by
the holders thereof,  into such number of fully paid and nonassessable shares of
Common  Stock as shall be  determined  by  multiplying  the  number of 








                                      -8-

shares  of  Series  C  Preferred  Stock  outstanding  on the on the date of such
consummation  or  closing  date by a  fraction,  the  numerator  of which is the
Original Issue Price, and the denominator of which is the applicable  Conversion
Price.  Such  conversion  shall be deemed to have  occurred  whether  or not the
certificates  representing such shares are surrendered to the Corporation or its
transfer agent.

                  The Corporation shall give notice of a proposed or anticipated
Fundamental Change to all holders of the Series C Preferred Stock not later than
thirty (30) days before the expected closing or consummation of such Fundamental
Change,  provided that at all times during such thirty-day period a registration
statement  shall be in effect to permit the  registration  of the  Common  Stock
issuable upon  conversion of the Series C Preferred  Stock under the  Securities
Act of 1933, as amended.  The  Corporation  also shall give prompt notice of the
closing or consummation of such  Fundamental  Change to all holders of record of
the Series C  Preferred  Stock as of the date of such  closing or  consummation.
Each holder of Series C Preferred Stock shall thereupon  promptly  surrender for
conversion,  to the Corporation at its principal office or to any transfer agent
for  the  Series  C  Preferred  Stock  or the  Common  Stock,  all  certificates
representing  all  shares  of  Series C  Preferred  Stock  held by such  holder,
accompanied  by a  written  notice  specifying  the name or names in which  such
holder wishes the certificate(s) for shares of Common Stock to be issued.

                  (H) CERTIFICATE AS TO ADJUSTMENTS;  NOTICE BY CORPORATION.  In
each case of an  adjustment or  readjustment  of the Original  Issue Price,  the
Corporation at its expense will furnish each holder of Series C Preferred  Stock
so  affected  with a  certificate  prepared  by an officer  of the  Corporation,
showing such  adjustment or  readjustment,  and stating in detail the facts upon
which such adjustment or readjustment is based.

                  (I)  EXERCISE  OF  CONVERSION   PRIVILEGE.   To  exercise  its
conversion  privilege,  a holder of Series C Preferred  Stock shall give written
notice by telecopy to the  Corporation at its principal  office that such holder
elects to convert  shares of its Series C Preferred  Stock and shall  thereafter
surrender the original certificate(s) representing the shares being converted to
the  Corporation at its principal  office  together with an originally  executed
copy of such  notice.  Such notice  shall also state the name or names (with its
address or  addresses,  as well as the  address(es)  for  delivery) in which the
certificate(s) for shares of Common Stock issuable upon such conversion shall be
issued.   The  certificate(s)  for  the  shares  of  Series  C  Preferred  Stock
surrendered for conversion shall be accompanied by proper assignment  thereof to
the  Corporation or in blank.  As promptly as practicable  after the Corporation
receives the original  certificate(s) for the shares of Series C Preferred Stock
surrendered for conversion,  the proper assignment thereof to the Corporation or
in blank and the original  notice of  conversion  (collectively,  the  "ORIGINAL
DOCUMENTATION"),  but in no event  more than  three (3)  Trading  Days after the
Corporation's receipt of the Original Documentation, the Corporation shall issue
and shall deliver to the holder of the shares of Series C Preferred  Stock being
converted,   at  the   addresses  set  forth   therefor  by  the  holder,   such
certificate(s)  as it may request for the number of whole shares of Common Stock
issuable  upon the  conversion  of such  shares of Series C  Preferred  Stock in
accordance  with the  provisions  of this  Section 5, and cash,  as  provided in
Section  5(j),  in respect of any fraction of a share of Common  Stock  issuable
upon such  conversion.  Such  conversion  shall be deemed to have been  effected
immediately  prior to the








                                      -9-


close of business  on the  Conversion  Date,  and at such time the rights of the
holder as holder of the converted shares of Series C Preferred Stock shall cease
and the person(s) in whose name(s) any certificate(s) for shares of Common Stock
shall be  issuable  upon such  conversion  shall be deemed  to have  become  the
holder(s) of record of the shares of Common Stock  represented  thereby.  If the
Corporation  fails to issue and deliver to such holder such  certificate(s)  for
shares of Common Stock  within  three (3) Trading  Days after the  Corporation's
receipt of the Original Documentation,  the Corporation shall pay the liquidated
damages set forth in the Stock Purchase  Agreement  between the  Corporation and
the initial purchasers of the Series C Preferred Stock.

                  (J) CASH IN LIEU OF FRACTIONAL SHARES. No fractional shares of
Common Stock or scrip  representing  fractional  shares shall be issued upon the
conversion  of shares of Series C  Preferred  Stock.  Instead of any  fractional
shares of Common  Stock that would  otherwise  be issuable  upon  conversion  of
Series C Preferred Stock, the Corporation  shall pay to the holder of the shares
of Series C Preferred Stock being converted a cash adjustment in respect of such
fractional  shares in an amount  equal to the same  fraction of the market price
per share of the Common Stock (as determined in a reasonable  manner  prescribed
by the Board of Directors) at the close of business on the Conversion  Date. The
determination  as to whether or not any fractional  shares are issuable shall be
based upon the  aggregate  number of shares of Series C  Preferred  Stock  being
converted at any one time by any holder thereof, not upon each share of Series C
Preferred Stock being converted.

                  (K) PARTIAL  CONVERSION.  In the event some but not all of the
shares of Series C Preferred Stock  represented by a certificate(s)  surrendered
by a holder are converted,  the  Corporation  shall execute and deliver to or on
the order of the holder,  at the expense of the  Corporation,  a new certificate
representing  the number of shares of Series C  Preferred  Stock  which were not
converted.  Such new  certificate  shall be so delivered on or prior to the date
set forth in Section 5(i) for the delivery of certificates  for shares of Common
Stock.

                  (L) RESERVATION OF COMMON STOCK. The Corporation  shall at all
times reserve and keep available out of its  authorized  but unissued  shares of
Common Stock,  solely for the purpose of effecting the  conversion of the shares
of the Series C Preferred  Stock,  such number of its shares of Common  Stock as
shall  from  time  to  time  be  sufficient  to  effect  the  conversion  of all
outstanding  shares of the Series C  Preferred  Stock  (including  any shares of
Series C Preferred Stock represented by any warrants,  options,  subscription or
purchase rights for the Series C Preferred Stock), and if at any time the number
of  authorized  but unissued  shares of Common Stock shall not be  sufficient to
effect the conversion of all then  outstanding  shares of the Series C Preferred
Stock  (including  any shares of Series C  Preferred  Stock  represented  by any
warrants,  options,  subscriptions or purchase rights for the Series C Preferred
Stock),  then the Corporation shall be deemed to be in breach and default of its
obligations hereunder,  and in addition to all charges, claims and rights at law
or in equity that each holder  shall be entitled to, the  Corporation  shall use
all means  reasonably  available to it, and promptly take any and all actions as
may be necessary, to increase its authorized but unissued shares of Common Stock
to such number of shares as shall be sufficient for such purpose.










                                      -10-

         6.  REDEMPTION AND REPURCHASE  RIGHTS.  The  Corporation  shall have no
right to redeem, and holders of shares of Series C Preferred Stock shall have no
right to cause the Corporation to redeem,  any or all of the outstanding  shares
of Series C Preferred Stock.

         7. NOTICES OF RECORD DATE. In the event of any:

                  (A) taking by the  Corporation  of a record of the  holders of
any class of securities for the purpose of determining  the holders  thereof who
are  entitled to receive any  dividend  or other  distribution,  or any right to
subscribe for,  purchase or otherwise acquire any shares of capital stock of any
class or any other securities or property, or to receive any other right, or

                  (B)   capital   reorganization   of   the   Corporation,   any
reclassification  or  recapitalization  of the capital stock of the Corporation,
any  merger or  consolidation  of the  Corporation,  or any  transfer  of all or
substantially all of the assets of the Corporation to any other Corporation,  or
any other entity or person, or

                  (C)  voluntary  or  involuntary  dissolution,  liquidation  or
winding up of the Corporation,

then and in each such event the  Corporation  shall telecopy and thereafter mail
or cause to be  mailed  to each  holder  of  Series C  Preferred  Stock a notice
specifying  (i) the date on which any such record is to be taken for the purpose
of such  dividend,  distribution  or right and a description  of such  dividend,
distribution  or  right,  (ii)  the  date  on  which  any  such  reorganization,
reclassification,    recapitalization,    transfer,    consolidation,    merger,
dissolution,  liquidation  or winding up is  expected to become  effective,  and
(iii) the time, if any, that is to be fixed, as to when the holders of record of
Common Stock (or other securities) shall be entitled to exchange their shares of
Common Stock (or other securities) for securities or other property  deliverable
upon  such   reorganization,   reclassification,   recapitalization,   transfer,
consolidation, merger, dissolution, liquidation or winding up. Such notice shall
be telecopied and thereafter mailed by first class mail, postage prepaid,  or by
express  overnight  courier  service,  at least ten (10) days  prior to the date
specified in such notice on which such action is to be taken.

         8.       GENERAL.

                  (a)  REPLACEMENT  OF  CERTIFICATES.   Upon  the  Corporation's
receipt,  from the  holder  of any  certificate  evidencing  shares  of Series C
Preferred  Stock,  of evidence  reasonably  satisfactory  to the Corporation (an
affidavit of such holder will be  satisfactory)  of the  ownership and the loss,
theft,  destruction  or mutilation of such  certificate,  and in the case of any
such  loss,  theft  or  destruction,   upon  receipt  of  indemnity   reasonably
satisfactory to the Corporation,  and in the case of any such  mutilation,  upon
surrender of such  certificate,  the  Corporation (at its expense) shall execute
and deliver to such holder, in lieu of such certificate,  a new certificate that
represents the number of shares  represented by, is dated the date of, is issued
in the name of the holder of, and is  substantially  identical  in form of, such
lost, stolen, destroyed or mutilated certificate.








                                      -11-


                  (B)  PAYMENT  OF TAXES.  The  Corporation  shall pay all taxes
(other than taxes based upon income) and other governmental  charges that may be
imposed in  connection  with the  issuance  or  delivery of any shares of Common
Stock (or  other of the  Corporation's  securities)  that  results  from (i) the
conversion of shares of Series C Preferred Stock pursuant to this Certificate of
Designations or (ii) the application of Section 2(a)(v) hereof.  Notwithstanding
the  foregoing,  if the  Corporation,  pursuant to a notice from a holder of any
shares of Series C  Preferred  Stock,  effects  the  issuance or delivery of any
shares of Common Stock (or other of the Corporation's securities) in any name(s)
other than such holder's name, then such holder shall deliver to the Corporation
with the aforesaid notice (A) all transfer taxes and other governmental  charges
payable upon the issuance or delivery of securities in such other name(s) or (B)
evidence  satisfactory to the Corporation  that such taxes and charges have been
or shall be paid in full.

                  (C) STATUS OF REDEEMED OR CONVERTED SHARES. Shares of Series C
Preferred  Stock that are  redeemed,  converted  or  otherwise  acquired  by the
Corporation in any manner  (including by purchase or exchange) shall be canceled
and upon  cancellation  (i) shall no longer  be deemed to be  outstanding,  (ii)
shall become  authorized but unissued shares of preferred stock  undesignated as
to series  and (iii) may be  reissued  as part of  another  series of  preferred
stock.