ARTICLES OF AMENDMENT TO THE

                          ARTICLES OF INCORPORATION OF

                                  AMTRAN, INC.

                     Date of Incorporation: October 23, 1984


                  AMTRAN, INC.  (hereinafter  referred to as the "CORPORATION"),
an Indiana  corporation  existing  pursuant  to the  provisions  of the  Indiana
Business  Corporation  Law, as amended  (hereinafter  referred to as the "ACT"),
desiring  to give  notice of  corporate  action  effectuating  amendment  of its
Articles  of   Incorporation,   as  previously   restated   (the   "ARTICLES  OF
INCORPORATION"), certifies the following facts:


                                    ARTICLE I

                                  THE AMENDMENT

     1. NAME. The name of the Corporation  following this amendment continues to
be Amtran, Inc.

     2. CREATION OF NEW ARTICLE XII.  Upon  effectiveness  of these  Articles of
Amendment,  the  Corporation's  Articles  of  Incorporation  shall be amended by
adding a new Article XII, the exact text of which is as follows:


                                   ARTICLE XII

                     DESIGNATIONS, RIGHTS AND PREFERENCES OF
                            SERIES B PREFERRED STOCK

     The designations, rights, preferences,  limitations and restrictions of the
shares of Preferred  Stock,  without par value,  to be  designated  as "Series B
Preferred Stock" (in addition to those set forth elsewhere in the  Corporation's
Articles of Incorporation) are hereby fixed as follows:

     1. NUMBER OF SHARES. The number of shares of Series B Preferred Stock shall
initially  be 300 shares,  which  number from time to time may be  increased  or
decreased  (but not  decreased  below the  number of shares of the  series  then
outstanding) in accordance with the provisions of the Act, subject to the rights
of holders of the Series B  Preferred  Stock under  Section 8 hereof.  Shares of
Series B Preferred Stock redeemed or purchased by the Corporation,  or converted
into Common Stock of the Corporation in accordance  with the provisions  hereof,
shall be  canceled  and  shall  revert  to  authorized  but  unissued  shares of
Preferred Stock undesignated as to series.

     2. DEFINITIONS AND CONSTRUCTION. As used in this Article XII,


     (a) "business  day" means each day that is not a Saturday,  Sunday or other
day on which  banking  institutions  in the City of New York are  authorized  or
required by law or executive order to be closed;

     (b) "Common Stock" means the common stock of the  Corporation,  without par
value;

     (c) "herein",  "hereof",  "hereunder" and other like words mean or refer to
this Article XII;

     (d) "Junior  Stock" means the Common Stock and any other class or series of
stock  of the  Corporation  hereafter  authorized,  the  terms  of  which do not
expressly  provide that such class or series ranks senior to or on a parity with
the Series B Preferred Stock as to dividend distributions and distributions upon
the liquidation, winding up or dissolution of the Corporation;

     (e)  "outstanding",  when used  with  reference  to shares of stock,  means
issued shares, excluding shares held by the Corporation or a subsidiary;

     (f) "Parity  Stock"  means any class or series of stock of the  Corporation
authorized,  the terms of which expressly provide that such class or series will
rank on a parity with the Series B Preferred Stock as to dividend  distributions
and  distributions  upon  the  liquidation,  winding  up or  dissolution  of the
Corporation;

     (g)  "person"  means any  corporation,  partnership,  trust,  organization,
association or other entity or individual;

     (h) "Series A Preferred Stock means, collectively,  all series of preferred
stock  designated  as Series  A1,  Series  A2,  Series  A3 or any  other  series
designated by the words "Series A" in which the A is immediately followed by any
number;

     (i) headings are for  convenience  of reference  only and shall not define,
limit or affect any of the provisions hereof; and (j) references to Sections are
to Sections of this Article XII.

     3. DIVIDENDS.  The holders of Series B Preferred Stock shall be entitled to
receive,  when and if declared by the Board of Directors,  but only out of funds
legally available therefor, cumulative cash dividends at the annual rate of 5.0%
of the  Liquidation  Amount (as defined below) (the "DIVIDEND  RATE") per share,
and no more,  payable  quarterly  in equal  amounts of 1.25% of the  Liquidation
Amount on the 15th day of December, March, June and September,  respectively, in
each year (or if any such date is not a  business  day,  on the next  succeeding
business  day)  commencing  on December 15, 2000,  with respect to the quarterly
dividend period (or portion thereof) ending on the day preceding such respective
dividend  payment date, to holders of record on the  respective  date,  not more
than 60 nor less than ten days preceding such dividend  payment date,  fixed for
such purpose by the Board of Directors in advance of payment of each  particular
dividend.  If the  Corporation  fails  to pay any  quarterly  dividend  and such
failure  is not  cured  within  ten days of the date on which the  dividend  was
payable,  whether or not the funds are legally available therefor,  the Dividend
Rate shall increase as follows: (i) if the Corporation has issued on or prior to
December 31, 2000,  any series of Series A Preferred  Stock,  the Dividend  Rate
shall  increase to the highest  rate of interest  per annum  payable on any such
series of Series A Preferred Stock issued and outstanding on such date, and (ii)
if the  Corporation has not issued on or before December 31, 2000, any series of
Series A Preferred  Stock,  the Dividend Rate shall  increase to 9.8% per annum.
Following the payment of all accrued and unpaid  dividends  that have become due
and  payable,  the  Dividend  Rate will revert to the  original  Dividend  Rate.
Dividends  payable on the Series B Preferred Stock for any period shorter than a
full  quarterly  period  shall  be  computed  on the  basis  of a  360-day  year
consisting  of twelve 30-day  months.  Dividends on shares of Series B Preferred
Stock  shall be  cumulative  from  the  last  dividend  payment  date,  or if no
dividends have been paid on the outstanding  shares of Series B Preferred Stock,
from the date of issuance,  whether or not the Corporation has the funds legally
available therefor. Accumulations of dividends on outstanding shares of Series B
Preferred Stock shall bear interest at the rate of 9.5% per annum.

     So long as any shares of Series B Preferred Stock remain  outstanding,  the
Corporation  may not pay or declare any dividend,  nor make any  distribution on
any Junior Stock,  other than a dividend  payable  solely in Junior  Stock,  and
shall not purchase,  redeem or otherwise acquire for consideration,  directly or
indirectly  (other than as a result of a  reclassification  of Junior Stock into
Junior Stock,  or the exchange or conversion of one share of Junior Stock for or
into  another  share of Junior  Stock,  and other  than  through  the use of the
proceeds  of a  substantially  contemporaneous  sale of other  shares  of Junior
Stock),  unless (i) all accrued and unpaid  dividends  (including  any  interest
thereon) on all outstanding shares of Series B Preferred Stock have been paid in
full and the full  dividend  thereon  for the then  current  quarterly  dividend
period  shall have been paid or declared  and set apart for payment and (ii) all
prior  redemption  requirements  with respect to Series B Preferred  Stock shall
have been complied  with.  When dividends are not paid in full upon the Series B
Preferred  Stock and any Parity  Stock,  all  dividends  declared upon shares of
Series B Preferred Stock and all Parity Stock shall be declared PRO RATA so that
the amount of dividends  declared per share on the Series B Preferred  Stock and
all such Parity  Stock shall in all cases bear to each other the same ratio that
accrued  dividends  per share on the shares of Series B Preferred  Stock and all
such  Parity  Stock  bear to  each  other.  Subject  to the  foregoing,  and not
otherwise,  such  dividends  (payable  in cash,  stock or  otherwise)  as may be
determined  by the Board of  Directors  may be  declared  and paid on any Junior
Stock from time to time out of any funds  legally  available  therefor,  and the
Series B Preferred Stock shall not be entitled to participate therein.

     4. LIQUIDATION RIGHTS.

     (a) In the  event of any  liquidation,  dissolution  or  winding  up of the
Corporation,   whether   voluntary  or  involuntary  (any  such  event  being  a
"LIQUIDATION  TRANSACTION") the Series B Preferred Stock shall rank prior to any
shares of Junior  Stock,  so that in the event of any  Liquidation  Transaction,
whether voluntary or involuntary,  the holders of Series B Preferred Stock shall
be  entitled  to receive  out of the  assets of the  Corporation  available  for
distribution  to its  stockholders,  whether from capital,  surplus or earnings,
before any  distribution is made to holders of Junior Stock, an amount per share
equal to $100,000  per share (the  "LIQUIDATION  AMOUNT")  for each  outstanding
share of Series B  Preferred  Stock,  plus an amount  equal to all  accrued  and
unpaid dividends (including any interest thereon) (such sum being referred to as
the "LIQUIDATION PREFERENCE" for the Series B Preferred Stock).

     (b) If, upon any Liquidation Transaction, the assets of the Corporation, or
proceeds thereof,  shall be insufficient to pay the full Liquidation  Preference
to all  holders  of the  Series B  Preferred  Stock,  then such  assets,  or the
proceeds thereof, shall be divided and distributed PRO RATA among the holders of
the Series B Preferred  Stock and the holders of any Parity Stock in  accordance
with the aggregate respective liquidation  preferences of the Series B Preferred
Stock and all such Parity Stock.

                  (c) After  payment shall have been made in full to all holders
of Series B Preferred  Stock,  as provided in this Section 4, the holders of the
Junior Stock shall,  subject to the  respective  terms and  provisions  applying
     thereto, be entitled to receive any and all assets remaining to be paid or
distributed, and the holders of the shares of Series B Preferred Stock shall not
be entitled to share therein.

     5. REDEMPTION AND REPURCHASE.

     (a) CHANGE OF CONTROL.

     (i)  OPTIONAL  REDEMPTION  BY THE  CORPORATION.  If, on or before the third
anniversary of the initial  issuance of the Series B Preferred Stock, any person
(other  than J.  George  Mikelsons  or any person or entity  controlled  by him)
acquires or enters into an agreement  with the  Corporation  to acquire  capital
stock of the Corporation representing a majority of the voting power represented
by all outstanding  capital stock of the Corporation  (such event being referred
to as a "Change of Control"),  the  Corporation may redeem for cash, in whole at
any time, all shares of Series B Preferred Stock at the time  outstanding,  upon
notice  given as  hereinafter  specified  within 30 days  following  a Change of
Control, at a redemption price per share equal to the sum of (i) the Liquidation
Amount,  (ii) all accrued and unpaid dividends  (including any interest thereon)
to the date of  redemption,  and (iii) a premium  equal to 9.5% per annum of the
Liquidation  Amount calculated from the date of issuance of the shares of Series
B Preferred Stock to the date of redemption.

     (ii)  MANDATORY  REPURCHASE  AT THE  OPTION OF THE  HOLDER.  If a Change of
Control occurs on or before the third anniversary of the initial issuance of the
Series B Preferred  Stock,  all but not less than all of the holders of Series B
Preferred  Stock may require the Corporation to repurchase for cash, in whole at
any time, all shares of Series B Preferred Stock at the time  outstanding,  upon
notice  given as  hereinafter  specified  within 45 days  following  a Change of
Control, at a purchase price ("Repurchase  Price") per share equal to the sum of
(i) the Liquidation Amount, (ii) all accrued and unpaid dividends (including any
interest  thereon) to the date of  repurchase,  and (iii) a premium equal to the
difference between (x) the amount obtained when the highest rate of interest per
annum payable on any series of Series A Preferred  Stock issued and  outstanding
on the date of repurchase is multiplied  by the  Liquidation  Amount  calculated
from the date of issuance of the shares of Series B Preferred  Stock to the date
of repurchase and (y) 5% per annum of the Liquidation Amount calculated from the
date of  issuance  of the  shares  of  Series B  Preferred  Stock to the date of
repurchase.  A notice of mandatory  repurchase  under this  section  5(a)(ii) (a
"Repurchase  Notice") may be given to the  Corporation at any time within the 45
days following a Change of Control,  by all but not less than all of the holders
of Series B Preferred Stock. To be valid, a Repurchase Notice must (i) specify a
date of repurchase  (the  "Repurchase  Date") that is a business day not earlier
than 45 days following the date of receipt by the  Corporation of the Repurchase
Notice, (ii) be signed by all registered holders of Series B Preferred Stock and
(iii) be delivered  to the  Corporation  at its  corporate  headquarters  to the
attention of its Corporate  Secretary by first class mail,  overnight courier or
by hand. Once given, a Repurchase  Notice will be irrevocable.  On and after the
Repurchase Date, the sole right of the holders of Series B Preferred Stock shall
be to  receive  the  Repurchase  Price  without  interest  against  delivery  of
certificates representing Series B Preferred Stock.

     (b) OPTIONAL  REDEMPTION.  On or after the third anniversary of the initial
issuance of the Series B Preferred  Stock,  the Corporation may redeem for cash,
in whole at any  time,  or in part  from  time to time,  the  shares of Series B
Preferred  Stock at the  time  outstanding,  upon  notice  given as  hereinafter
specified,  at the redemption price in effect at the redemption date as provided
in this Section 5. If redeemed  during the  12-month  period  commencing  on the
anniversary  date of the initial  issuance  of Series B  Preferred  Stock in the
years set forth below the redemption price shall be the Liquidation  Amount plus
all accrued and unpaid dividends (including any interest thereon) to the date of
redemption plus a premium (expressed as a percentage of the Liquidation  Amount)
as follows:

                  2003                      3.60%
                  2004                      3.30%
                  2005                      3.00%
                  2006                      2.70%
                  2007                      2.40%
                  2008                      2.10%
                  2009                      1.80%
                  2010                      1.50%
                  2011                      1.20%
                  2012                       .90%
                  2013                       .60%
                  2014                       .30%
                  2015 and thereafter no redemption premium.

     (c) MANDATORY  REDEMPTION.  The  Corporation  shall redeem any  outstanding
shares of Series B Preferred Stock on the anniversary of the initial issuance of
the  Series  B  Preferred  Stock  in 2015  for an  amount  in cash  equal to the
Liquidation Amount plus all accrued and unpaid dividends (including any interest
thereon).

     (d) NOTICE OF  REDEMPTION.  So long as the Series B Preferred  Stock is not
registered under the Securities Act of 1933, as amended (the "SECURITIES  ACT"),
notice of every  redemption of Series B Preferred Stock shall be mailed by first
class mail, postage prepaid, addressed to the holders of record of the shares to
be redeemed at their  respective  last  addresses as they appear on the books of
the Corporation. If the Corporation registers the outstanding shares of Series B
Preferred Stock under the Securities Act, then such notice shall be made by mail
as described in the preceding  sentence and, the Corporation  shall also publish
any notice of  redemption  by means of the Dow Jones News  Service or such other
similar news wire service or  newspaper.  Such mailing and any such  publication
shall be at least ten days and not more than 45 days prior to the date fixed for
redemption.  Any notice that is mailed or published,  as the case may be, in the
manner herein provided shall be  conclusively  presumed to have been duly given,
whether or not the shareholder receives such notice.  Furthermore,  the validity
of the  proceedings for the redemption of any shares of Series B Preferred Stock
of any  shareholder  shall not be affected by any defect in any notice  given to
any other shareholder. Such notice shall set forth

     (A) the time and date for the redemption;

     (B) the  number  of shares to be  redeemed  and if less than all  shares of
Series B Preferred Stock held by a holder are to be redeemed, the number of such
holder's shares to be redeemed;

     (C) the redemption  price;

     (D) the place or places where  certificates for
the shares are to be surrendered for redemption;

     (E) that dividends on the shares to be redeemed will cease to accrue on the
redemption date (unless the Corporation shall default in redeeming the shares on
the redemption date); and

     (F) that the right to convert such shares  shall  terminate at the close of
business on the redemption date.

     (e)  REDEMPTIONS  IN PART. In case of any  redemption of only a part of the
shares of Series B Preferred Stock at the time  outstanding,  the redemption may
be PRO RATA,  by lot or by any other method as may be determined by the Board of
Directors in its sole  discretion  to be equitable as set forth in a certificate
of the  Secretary  or  Assistant  Secretary  of the  Corporation  filed with the
transfer  agent  or  agents  for the  Series B  Preferred  Stock.  The  Board of
Directors shall have full power and authority,  subject to the provisions herein
contained,  to prescribe the terms and conditions  upon which Series B Preferred
Stock shall be redeemed from time to time.

     (f)  EFFECT OF  REDEMPTION.  If notice of  redemption  shall have been duly
given,  and if on or before the  redemption  date  specified  therein  all funds
necessary  for such  redemptions  shall have been set aside by the  Corporation,
separate  and apart from its other  funds,  in trust for the PRO RATA benefit of
the holders of the shares called for redemption,  so as to be and continue to be
available  therefor,  then,  notwithstanding  that any certificate for shares so
called for redemption shall not have been surrendered for  cancellation,  on and
after such redemption  date, all shares so called for redemption shall no longer
be deemed outstanding and all rights with respect to such shares shall forthwith
on such  redemption  date  cease  and  terminate,  except  only the right of the
holders  thereof to receive the amount  payable on redemption  thereof,  without
interest. Any funds so deposited and unclaimed at the end of two years from such
redemption date shall, to the extent  permitted by law, be released or repaid to
the  Corporation,  after  which  time the  holders  of the  shares so called for
redemption shall look only to the Corporation for payment  thereof.  A holder of
shares of Series B Preferred  Stock called for  redemption  shall be entitled to
convert such shares in accordance  with the provisions of Section 6 up until the
close of business on the redemption date.

     Any funds so deposited or set aside by the  Corporation  which shall not be
required for such redemption  because of the exercise of any right of conversion
set forth in Section 6 below  subsequent  to the date of such  deposit  shall be
released or repaid to the Corporation forthwith.

     6.  CONVERSION.  The  holders of the Series B  Preferred  Stock  shall have
conversion rights as follows:

     (a) RIGHT TO CONVERT.  On the terms and subject to the  conditions  of this
Section  6, the  holder of a share of Series B  Preferred  Stock  shall have the
right,  at its  option,  at any time to convert  such share into that  number of
shares of fully paid and  non-assessable  Common  Stock  (calculated  as to each
conversion  to  the  nearest  1/100th  of a  share)  obtained  by  dividing  the
Liquidation  Amount, by the Conversion Price (as defined in Section 6(d)) and by
surrender  of such share  pursuant to Section  6(b).  The shares of Common Stock
issuable upon such  conversion are  hereinafter  referred to as the  "CONVERSION
SHARES".  No payment or adjustment  shall be made upon any conversion on account
of any dividends  accrued on the shares of Series B Preferred Stock  surrendered
for  conversion  or on account of any  dividends on the Common Stock issued upon
conversion for which the record date is on or prior to the conversion date.

     Holders of shares of Series B Preferred Stock at the close of business on a
record date for any payment of declared  dividends  shall be entitled to receive
the dividend payable on such shares on the  corresponding  dividend payment date
notwithstanding  the optional  conversion of such shares  following  such record
date and prior to the corresponding  dividend payment date.  However,  shares of
Series B Preferred Stock  surrendered for conversion after the close of business
on a record date for any payment of dividends and before the opening of business
on the next succeeding  dividend  payment date must be accompanied by payment in
cash of an  amount  equal to the  dividend  thereon  which is to be paid on such
dividend  payment date (unless such shares have been called for  redemption on a
redemption date between such record date and such dividend payment date).

     (b) CONVERSION  PROCEDURES.  In order to exercise the conversion privilege,
the holder of any shares of the Series B  Preferred  Stock shall  surrender  the
certificate representing such shares at the principal office of the Corporation,
with a written  notice  stating  that such  holder  elects to  convert  all or a
specified  whole number of such shares pursuant to this Section 6 and specifying
the name or names in which such holder wishes the  certificate  or  certificates
for  Conversion  Shares to be  issued.  Unless the  Conversion  Shares are to be
issued in the same name as the name in which such  shares of Series B  Preferred
Stock are registered,  the certificate  representing the shares  surrendered for
conversion shall be accompanied by instruments of transfer, in form satisfactory
to the Corporation, duly executed by the holder or its duly authorized attorney.
As promptly as practicable  after such surrender of a certificate  for shares of
the Series B  Preferred  Stock to be  converted,  and in any event  within  five
business days thereafter, the Corporation shall issue and deliver at such office
to  such  holder,  or on such  holder's  written  order,  (i) a  certificate  or
certificates for the applicable number of full Conversion  Shares,  (ii) if less
than the full  number of shares of Series B  Preferred  Stock  evidenced  by the
surrendered  certificate is being converted,  a new certificate,  of like tenor,
for the  number  of  shares  of  Series  B  Preferred  Stock  evidenced  by such
surrendered  certificate less the number of shares being converted and (iii) the
cash payment in settlement  of any  fractional  Conversion  Share as provided in
Section 6(c).  Upon  conversion of any shares of Series B Preferred  Stock,  the
holder  thereof shall be entitled to receive an amount equal to all declared and
unpaid dividends on such shares.

     In the case of the exercise of the conversion privilege under Section 6(a),
each  conversion  shall be deemed to have been  effected  immediately  after the
close of  business on the date on which the  certificate  for shares of Series B
Preferred  Stock to be converted is  surrendered  and such notice is received by
the  Corporation as aforesaid,  and the person or persons in whose name or names
any  certificate or  certificates  for  Conversion  Shares are issuable shall be
deemed to have become the holder or holders of record of such Conversion  Shares
at such  time on such  date  and  such  conversion  shall  be at the  applicable
Conversion Price in effect at such time on such date,  unless the stock transfer
books of the  Corporation are closed on that date, in which event such person or
persons  shall be deemed to have  become such holder or holders of record at the
close of  business on the next day on which such stock  transfer  books are open
(provided  that if such books shall remain closed for five days,  such fifth day
shall  be the date  any  such  person  shall  become  such a  holder),  but such
conversion  shall be at the Conversion Price in effect on the date on which such
certificate  was surrendered  and such notice was received.  Upon delivery,  all
Conversion  Shares  shall  be  duly  authorized,  validly  issued,  fully  paid,
non-assessable,  free of all liens and charges and not subject to any preemptive
or  subscription  rights.  (c) SETTLEMENT OF FRACTIONAL  CONVERSION  SHARES.  No
fractional  Conversion  Shares or scrip  representing  fractions  of  Conversion
Shares  shall be issued  upon  conversion  of shares of the  Series B  Preferred
Stock.  Instead of any fractional  Conversion Share otherwise  deliverable,  the
Corporation  shall pay to the holder of the  converted  shares an amount in cash
equal  to the  Current  Market  Price  (as  defined  below)  of such  fractional
Conversion  Share  on the  date  of  conversion.  If  more  than  one  share  is
surrendered  for  conversion at one time by the same holder,  the number of full
Conversion  Shares  shall be  computed on the basis of the  aggregate  number of
shares so  surrendered.  The "CURRENT MARKET PRICE" per share of Common Stock on
any day is the  average  of the high and low sales  prices of the  Corporation's
Common  Stock  on the  NASDAQ  National  Market  System  ("NASDAQ")  for  the 10
consecutive  trading  days  preceding  such day rounded up to the nearest  whole
cent.  A  "TRADING  DAY" is 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 then  listed or
admitted  to trading on any  national  securities  exchange,  any day other than
Saturday, Sunday or a federal holiday.

     (d) The "CONVERSION PRICE" shall be $15.67 and may be adjusted from time to
time pursuant to this Section 6(d). The Conversion  Price shall be adjusted from
time to time as follows:

     (i) If, after the date of initial issuance of the Series B Preferred Stock,
the  Corporation (A) pays a dividend or makes a distribution on the Common Stock
in shares of Common Stock,(B)  subdivides or combines its outstanding  shares of
Common  Stock  into a greater  or  smaller  number  of  shares or (C)  issues by
reclassification  of the  Common  Stock  any  shares  of  capital  stock  of the
Corporation,  each Conversion Price in effect  immediately  prior to such action
shall be adjusted  so that the holder of any share of Series B  Preferred  Stock
thereafter  surrendered for conversion shall be entitled to receive, at the time
of such conversion,  the number of shares of Common Stock or other capital stock
of the  Corporation  that it  would  have  owned  or been  entitled  to  receive
immediately  following  such  action had such share been  converted  immediately
prior to such action or the record date  therefor,  whichever  is earlier.  Such
adjustment shall become effective immediately after the record date, in the case
of a dividend or distribution,  or immediately  after the effective date, in the
case of a subdivision, combination or reclassification.

     (ii) If,  after the date of  initial  issuance  of the  Series B  Preferred
Stock,  the  Corporation  issues any Additional  Shares (as defined below) for a
consideration  per share below the closing  price as of 4:30 pm on the principal
market on which the Common Stock is traded (the "CLOSING  PRICE") on the trading
day immediately  prior to the date on which the Corporation shall have agreed to
such  issuance,  then in each case the  Conversion  Price  shall be  adjusted by
multiplying the Conversion Price in effect immediately prior to such issuance by
a fraction,

     (A) the  numerator  of which shall be the number of shares of Common  Stock
and Share  Equivalents (as defined below)  outstanding  immediately prior to the
issuance of such  Additional  Shares  plus the number of shares of Common  Stock
that the aggregate  consideration for such Additional Shares would purchase at a
consideration per share equal to such Closing Price, and

     (B) the  denominator of which shall be the number of shares of Common Stock
and Share  Equivalents  outstanding  immediately  prior to the  issuance of such
Additional Shares plus the number of Additional Shares so issued.

Such  adjustment  for the  Series  B  Preferred  Stock  shall  become  effective
immediately after the issuance of such Additional Shares.

     "ADDITIONAL   SHARES"  shall  mean  any  shares  of  Common  Stock  of  the
Corporation issued by the Corporation after the date of issuance of the Series B
Preferred Stock excluding  Permitted  Issuances.  "SHARE EQUIVALENTS" shall mean
the Common Stock  deliverable  upon  conversion  or exercise of all  outstanding
Series B Preferred Stock, convertible securities,  options,  warrants and rights
of the  Corporation  as of the date such  computation is made and as of the time
such computation is effective as specified herein.

     "PERMITTED ISSUANCES" shall mean:

     (A) any stock options which have been granted and remain  unexercised as of
the date of issuance of the Series B Preferred Stock;

     (B) stock options  granted and shares  issued to  employees,  directors and
consultants  after the issuance of the Series B Preferred Stock in the aggregate
amount of 500,000  shares of Common  Stock per annum  (commencing  with the year
2000) pursuant to the Corporation's stock plans,  PROVIDED that if the aggregate
number of stock options  granted per annum pursuant to the  Corporation's  stock
plans is less than 500,000,  "Permitted  Issuances" shall include that number of
stock options equal to the difference  between  500,000 and the actual number of
stock options granted per annum pursuant to the Corporation's stock plans, which
stock options of Common Stock may be granted in subsequent years;

     (C)  additional  options  granted and shares  issued in an amount  equal to
options granted and shares issued pursuant to the foregoing  clauses (A) and (B)
to the extent such shares are returned to the Corporation's stock plans upon the
lapse of  unexercised  stock  options or the  repurchase  (at original  purchase
price) of unvested shares;

     (D) any shares  issued  upon  exercise of options  granted  pursuant to the
foregoing  clauses  (A)-(C)  including  as a  result  of the  operation  of anti
dilution adjustments provided for therein;

     (E) any shares  issued  pursuant to  employee  stock  purchase,  savings or
ownership  plans,  including  all  shares  issued to a trust  formed in  respect
thereof;

     (F) any shares  issued  upon  conversion  of the Series B  Preferred  Stock
(including  adjustments to the conversion  ratio), any stock options granted and
shares issued upon the exercise thereof approved by the holders of a majority of
the Series B Preferred Stock, and any shares issued to the holders of the Series
B Preferred  Stock in connection  with any  contractual  rights  related to such
approved shares or options; and

     (G) any shares issued  pursuant to the exercise,  conversion or exchange of
other securities.

     (iii) If after the date of initial issuance of the Series B Preferred Stock
the  Corporation  issues any  warrants,  options or other rights  entitling  the
holders  thereof to subscribe for or purchase  either any  Additional  Shares or
evidences  of  debt,  shares  of  capital  stock or  other  securities  that are
convertible  into or  exchangeable  for,  with or without  payment of additional
consideration,  Additional Shares (such warrants,  options or other rights being
called "RIGHTS" and such convertible or exchangeable  evidences of debt,  shares
of capital stock or other securities being called "CONVERTIBLE SECURITIES"), and
the  consideration  per  share  for  which  Additional  Shares  may at any  time
thereafter be issuable  pursuant to such Rights or Convertible  Securities (when
added to the  consideration per share of Common Stock, if any, received for such
Rights or  Convertible  Securities)  is less than the  Conversion  Price then in
effect,  the Conversion  Price shall be adjusted as provided in Section 6(d)(ii)
on the basis that,

     (A) the maximum number of Additional  Shares issuable  pursuant to all such
Rights or necessary to effect the conversion or exchange of all such Convertible
Securities shall be deemed to have been issued, and

     (B) the aggregate  consideration (plus the consideration,  if any, received
for  such  Rights  and  Convertible  Securities)  for  such  maximum  number  of
Additional  Shares  shall  be  deemed  to  be  the  consideration  received  and
receivable  by the  Corporation  for  the  issuance  of such  Additional  Shares
pursuant to such Rights or Convertible Securities.

     No  adjustment  of the  Conversion  Price shall be made under this  Section
6(d)(iii) upon (x) the issuance of any Convertible Securities issued pursuant to
the exercise of any Rights,  to the extent that such  adjustment  was previously
made upon the issuance of such Rights  pursuant to Section  6(d)(iii) or (y) the
granting of any stock options that qualify as Permitted  Issuances  under clause
(B) or (C) of the definition thereof.

     (iv) For purposes of Section 6(d)(iii), the relevant Conversion Price shall
be the Conversion  Price in effect  immediately  prior to the earlier of (A) the
record  date for the holders of Common  Stock  entitled to receive the Rights or
Convertible Securities and (B) the initial issuance of the Rights or Convertible
Securities,  and the adjustment provided for in either such Section shall become
effective  immediately  after the earlier of the times  specified in clauses (A)
and (B).

     (v) No  adjustment  of the  Conversion  Price  shall be made under  Section
6(d)(ii) upon the issuance of any Additional  Shares pursuant to the exercise of
any Rights or any  conversion  or exchange  rights  pursuant to any  Convertible
Securities,  if such  adjustment  was  previously  made in  connection  with the
issuance of such Rights or  Convertible  Securities  (or in connection  with the
issuance of any Rights therefor) pursuant to Section 6(d)(iii).

     (vi) If any Rights or Convertible Securities (or any portions thereof) that
gave rise to an  adjustment  pursuant to Section  6(d)(iii)  expire or terminate
without  the  exercise  thereof  and/or if by reason of the  provisions  of such
Rights or Convertible  Securities there has been any increase,  with the passage
of time or otherwise,  in the  consideration  payable upon the exercise thereof,
the  Conversion  Price  shall  be  readjusted  (but to no  greater  extent  than
originally adjusted) on the basis of,

     (A) eliminating  from the computation  Additional  Shares  corresponding to
such expired or terminated Rights or conversion or exchange rights,

     (B) treating the Additional  Shares,  if any,  actually  issued or issuable
pursuant  to the  previous  exercise of such  Rights or  conversion  or exchange
rights as  having  been  issued  for the  consideration  actually  received  and
receivable therefor, and

     (C) treating any such Rights or conversion  or exchange  rights that remain
outstanding  as being  subject  to  exercise  on the basis of the  consideration
payable upon the exercise or conversion thereof as is in effect at such time,

     PROVIDED,   HOWEVER,  that  any  consideration  actually  received  by  the
Corporation  in  connection  with the issuance of such Rights shall form part of
the  readjustment  computation  even though such Rights  expired  without  being
exercised.  The  Conversion  Price  shall be  adjusted  as  provided  in Section
6(d)(ii) and any applicable  provisions of Section  6(d)(iii) as a result of any
increase in the number of  Additional  Shares  issuable,  or any decrease in the
consideration  payable upon any issuance of Additional  Shares,  pursuant to any
anti dilution provisions of any Rights or Convertible Securities.

     (vii) (A) If any Additional  Shares,  Convertible  Securities or Rights are
issued for cash, the  consideration  received therefor shall be deemed to be the
amount of cash received.

     (B) If any Additional Shares,  Convertible Securities or Rights are offered
by the Corporation for subscription,  the consideration  received therefor shall
be deemed to be the subscription price.

     (C) If any Additional Shares,  Convertible Securities or Rights are sold to
underwriters or dealers for public offering without a subscription offering, the
consideration received therefor shall be deemed to be the public offering price.

     (D) In  any  case  covered  by  Section  6(d)(vii)  (A),  (B)  or  (C),  in
determining the amount of any consideration received by the Corporation in whole
or in part other than in cash, the amount of such consideration  shall be deemed
to be the fair market value of such consideration as determined in good faith by
the Board of Directors,  and evidence of such determination  shall be filed with
the minutes of the  Corporation.  If  Additional  Shares are issued as part of a
unit with Rights,  the consideration  received for the Rights shall be deemed to
be the portion of the  consideration  received for such unit  determined in good
faith at the time of issuance by the Board of  Directors,  and  evidence of such
determination  shall be filed with the minutes of the Corporation.  If the Board
of Directors does not make any such  determination,  the consideration  received
for the Rights shall be deemed to be zero.  In either event,  the  consideration
received  for the  Additional  Shares  shall be deemed  to be the  consideration
received for such unit less the  consideration  deemed to have been received for
the Rights.

     (E) In any case  covered by Section  6(d)(vii)  (A),  (B),  (C) or (D),  in
determining the amount of  consideration  received by the  Corporation,  (I) any
amounts received or receivable for accrued  interest or accrued  dividends shall
be excluded and (II) any compensation,  underwriting  commissions or concessions
or expenses paid or incurred in connection therewith shall not be deducted.

     (F) In any case covered by Section  6(d)(vii)  (A), (B), (C) or (D),  there
shall be added to the  consideration  received by the Corporation at the time of
issuance or sale (I) the minimum  aggregate  amount of additional  consideration
payable  to  the  Corporation  upon  the  exercise  of  Rights  that  relate  to
Convertible  Securities and (II) the minimum  aggregate  amount of consideration
payable upon the conversion or exchange thereof.

     (G) If any Additional Shares,  Convertible  Securities or Rights are issued
in connection with any merger,  consolidation or other  reorganization  in which
the  Corporation  is the  surviving  corporation,  the  amount of  consideration
received  therefor shall be deemed to be the fair market value, as determined in
good faith by the Board,  of such  portion  of the  assets and  business  of the
non-surviving  person or persons as the Board of  Directors  determines  in good
faith to be attributable to such Additional  Shares,  Convertible  securities or
Rights,  and evidence of such  determination  shall be filed with the minutes of
the Corporation.

     (viii)  If the  Corporation  effects  any  merger,  consolidation  or other
reorganization  to which  the  Corporation  is a party  (other  than a merger or
consolidation  in which the Company is the surviving or  continuing  corporation
and in which each share of Common  Stock  outstanding  immediately  prior to the
merger or consolidation remains unchanged in all material respects), any sale or
conveyance  to  another  person of all or  substantially  all the  assets of the
Corporation  or  any  statutory  exchange  of  securities  with  another  person
(including any exchange  effected in connection  with a merger of a third person
into  the  Corporation),   then  effective  provision  shall  be  made  in  such
transaction  so that the holder of each share of Series B  Preferred  Stock then
outstanding  shall have the right thereafter to convert such share into the kind
and amount of consideration  receivable pursuant to such transaction by a holder
of the  number of  shares of Common  Stock  into  which  such  share of Series B
Preferred Stock might have been converted immediately prior to such transaction,
assuming  such holder of Common Stock failed to exercise its rights of election,
if  any,  as to the  kind  or  amount  of  consideration  receivable  upon  such
transaction  (provided  that if the kind or amount of  consideration  receivable
pursuant to such  transaction  is not the same for each share of Common Stock in
respect  of  which  such  rights  of  election  shall  not have  been  exercised
("NON-ELECTING SHARE"), then, for purposes of this Section 6(d)(viii),  the kind
and amount of  consideration  receivable  pursuant to such  transaction for each
non-electing  share shall be deemed to be the kind and amount so receivable  per
share by a plurality of the  non-electing  shares).  Thereafter,  the holders of
shares of Series B Preferred Stock shall be entitled to appropriate  adjustments
with respect to their conversion rights to the end that the provisions set forth
in this Section 6 shall  correspondingly  be made  applicable,  as nearly as may
reasonably  be, to any  consideration  thereafter  deliverable  on conversion of
shares of the Series B Preferred  Stock.  Notwithstanding  the  foregoing,  this
Section  6(d)(viii)  shall not apply with regard to the Series B Preferred Stock
to an event which is treated as a liquidation,  dissolution or winding-up of the
Corporation with respect to such series pursuant to Section 4.

     (ix) If the Corporation distributes generally to holders of its outstanding
shares of  Common  Stock,  evidences  of its debt,  securities  or other  assets
(excluding  any cash  dividends if the  annualized per share amount thereof does
not  exceed  9.0% of the  Current  Market  Price of the  Common  Stock as of the
trading day  immediately  preceding the date of declaration of such dividend and
excluding  any  dividends  or  distributions  payable  in Rights or  Convertible
Securities  for which  adjustment  is  otherwise  made  pursuant to this Section
6(d)),  the Conversion  Price shall be adjusted by multiplying  such  Conversion
Price in  effect  immediately  prior to the  record  date  for the  dividend  or
distribution  by a  fraction  of which (x) the  numerator  shall be the  Current
Market  Price per share of the Common  Stock on such  record  date less the then
fair market value,  as determined in good faith by the Board,  of the portion of
the evidences of debt,  securities or other assets so  distributed or applicable
to the holder of one share of Common Stock and (y) the denominator  shall be the
Current  Market Price per share of the Common  Stock on such record  date.  Such
adjustment  shall become  effective  immediately  after the record date for such
dividend or distribution.

     (x) No  adjustment  in the  Conversion  Price  shall be required to be made
unless it would  require an increase  or decrease of at least one cent,  but any
adjustments  not made because of this Section  6(d)(x) shall be carried  forward
and taken into account in any  subsequent  adjustment  otherwise  required.  All
calculations under this Section 6(d) shall be made to the nearest cent or to the
nearest 1/100th of a share, as the case may be. All adjustments  with respect to
a transaction or event shall apply to subsequent such  transactions  and events.
Anything in this  Section  6(d) to the  contrary  notwithstanding,  the Board of
Directors  shall  be  entitled  (but  shall  not  be  obligated)  to  make  such
irrevocable  reduction in the Conversion  Price,  in addition to the adjustments
required by this Section  6(d), as in its  discretion  it shall  determine to be
advisable  in order to avoid or diminish  any income  deemed to be received  for
United  States  Federal  income tax  purposes  by any holder of shares of Common
Stock or Series B Preferred Stock resulting from any event or occurrence  giving
rise to an adjustment pursuant to this Section 6(d) or from any similar event or
occurrence,  and  evidence  of the  Board of  Director's  determination  of such
adjustment shall be filed with the minutes of the Corporation.

     (xi)  Whenever the  Conversion  Price is adjusted  pursuant to this Section
6(d),

     (A) the Corporation shall promptly file with the minutes of the Corporation
a certificate of the Corporation's  chief accounting  officer setting forth such
Conversion  Price (and any change in the kind or amount of  consideration  to be
received  by the  holders  of  shares  of the  Series  B  Preferred  Stock  upon
conversion)  after such  adjustment  and setting forth a brief  statement of the
facts requiring such adjustment and the manner of computing the same, and

     (B) a notice stating that such Conversion Price has been adjusted,  stating
the effective  date of such  adjustment  and enclosing  such  certificate  shall
forthwith be mailed by the  Corporation to the holders of shares of the Series B
Preferred  Stock  at  their  addresses  as  shown  on  the  stock  books  of the
corporation.

     (xii) If as a result of any  adjustment  pursuant to this Section 6(d), the
holder of any share of  Series B  Preferred  Stock  surrendered  for  conversion
becomes entitled to receive any consideration other than Common Stock,

     (A) the Conversion Price with respect to such other  consideration shall be
subject  to  adjustment  from  time to time in a manner  and on terms as  nearly
equivalent  as  practicable  to the  provisions  with  respect  to Common  Stock
contained in this Section 6(d), and

     (B) in the case such consideration  shall consist of shares of Common Stock
and some other kind of consideration  or of two or more kinds of  consideration,
the Board shall  determine  in good faith the fair  allocation  of the  adjusted
Conversion Price between or among such types of  consideration,  and evidence of
such determination shall be filed with the minutes of the corporation.

     (e) ALTERNATE  SOURCES FOR COMMON STOCK SHARE PRICES. If for any reason the
Common Stock is no longer reported on NASDAQ or a national  securities  exchange
then the high and low price of a share of Common  Stock on the  relevant day for
purposes of  calculating  the Current  Market Price shall be  determined  on the
basis of the last  reported  sale price,  regular  way,  of the Common  Stock as
reported on the composite tape, or similar reporting  system,  for issues listed
or admitted to trading on the principal  national  securities  exchange on which
the Common  Stock is then  listed or admitted to trading or, if there is no such
reported  sale on the day in  question,  on the basis of the average of the high
and low bid and asked  quotations  as so reported or, if the Common Stock is not
then  listed or admitted to trading on any  national  securities  exchange or on
NASDAQ,  on the basis of the average of the high bid and low asked quotations on
the day in question in the  over-the-counter  market as reported by the National
Association of Securities  Dealers  Automated  Quotation  System,  or, if not so
quoted,  as reported by National  Quotation Bureau,  Incorporated,  or a similar
organization. If the Current Market Price is not determinable as aforesaid, they
shall be determined  in good faith by the Board of Directors of the  Corporation
and  evidence  of such  determination  shall be filed  with the  minutes  of the
Corporation.

     (f)  SPECIFIED  EVENTS.  For  purposes of this  Section  6(f), a "SPECIFIED
EVENT" shall occur if (i) the Corporation authorizes the granting to the holders
of the  Common  Stock of any  Rights or of any other  rights,  (ii) there is any
capital stock reorganization or reclassification of the Common Stock (other than
a subdivision or combination  of the  outstanding  Common Stock and other than a
change in the par value of the Common Stock),  or any merger,  consolidation  or
other  reorganization  to which the  Corporation  is a party,  or any  statutory
exchange  of  securities  with  another  person  and for which  approval  of any
stockholders of the  Corporation is required,  or any sale or transfer of all or
substantially  all the assets of the  Corporation  or (iii) there is a voluntary
liquidation,  dissolution or winding up of the Corporation. If a Specified Event
occurs,  the  Corporation  shall  cause to be  filed  with  the  minutes  of the
Corporation, and shall cause to be mailed to the holders of shares of the Series
B  Preferred  Stock  at their  addresses  as  shown  on the  stock  books of the
Corporation,  at least 10 days prior to the applicable  date specified  below, a
notice stating,

     (A) the date on  which a  record  is to be  taken  for the  purpose  of any
distribution  or Rights  relating to such Specified Event or, if a record is not
to be taken,  the date as of which the  holders of Common  Stock of record to be
entitled to such distribution or Rights are to be determined, or

     (B) the date on which the reorganization, reclassification,  consolidation,
merger,  statutory  exchange,  sale,  transfer,   dissolution,   liquidation  or
winding-up relating to such Specified Event is expected to become effective, and
the date as of which it is expected that holders of Common Stock of record shall
be entitled to exchange  their  shares of Common Stock for  securities  or other
property deliverable upon such Specified Event.

     (g) RESERVATION OF COMMON STOCK. The Corporation shall at all times reserve
and keep available,  free from preemptive and  subscription  rights,  out of its
authorized  but unissued  shares of Common  Stock,  for the purpose of effecting
conversions of the Series B Preferred Stock, the full number of shares of Common
Stock  deliverable  upon the  conversion of all  outstanding  shares of Series B
Preferred  Stock not  theretofore  converted.  For this  purpose,  the number of
shares of Common Stock deliverable upon the conversion of all outstanding shares
of Series B Preferred  Stock shall be computed as if at the time of  computation
all such outstanding shares were held by a single holder.

     (h) LISTING.  With respect to any securities  required to be delivered upon
conversion  of the  Series B  Preferred  Stock,  the  Corporation  shall use all
commercially  reasonable  efforts to list or have  approved for  quotation  such
securities  prior to such  delivery upon each  securities  exchange or automated
quotation  system,  if any,  on which any  securities  of such class are already
listed or approved for quotation.

     (i) TAXES. The Corporation shall pay all documentary stamp or similar issue
or transfer  taxes  payable in respect of the issue or delivery of securities on
conversion  of the Series B Preferred  Stock;  PROVIDED,  HOWEVER,  that (i) the
Corporation  shall not be  required  to pay any tax  payable  in  respect of any
transfer  involved in the issue or delivery of  securities  in a name other than
that of the holder of the shares of Series B Preferred  Stock,  to be  converted
and (ii) no such issue or  delivery  shall be made  unless and until such holder
has paid to the  Corporation the amount of any such tax or has  established,  to
the  satisfaction  of the  Corporation,  that such tax has been paid or provided
for.

     (j)  TERMINATION  OF  CONVERSION  RIGHTS.  (i) If within  any  period of 30
consecutive trading days for a period of at least 20 trading days (which 20 days
must include the last day of the 30 consecutive trading day period), the average
of the high and low sales prices of the Corporation's Common Stock on the NASDAQ
for such 20 trading  days  rounded up to the  nearest  whole cent (the  "Average
Daily Trading  Price") exceeds 120% of the Conversion  Price then in effect,  at
its option and in its sole discretion upon notice given as set forth below,  the
Corporation  may  terminate the  conversion  rights set forth in this Section 6.
Beginning on the 10th day following  receipt from the  Corporation of the notice
setting forth its intention to terminate the conversion rights and ending on the
45th day after receipt thereof,  the Corporation shall be required to redeem any
shares  of  Series B  Preferred  Stock (i) at a  redemption  price  equal to the
Liquidation Amount plus all accrued and unpaid dividends (including any interest
thereon)  if  redeemed  prior to the third  anniversary  of the  issuance of the
Series B Preferred  Stock,  and (ii) at the redemption  prices then in effect as
set forth in Section 5(b) if redeemed on or after the third  anniversary  of the
issuance of the Series B Preferred Stock, of any holder that so requests,  which
request  must be received by the  Corporation  on or prior to the 45th day after
such  holder  receives  the notice of the  conversion  termination.  In order to
exercise this right,  such holder must submit its request to the  Corporation in
the manner set forth in the notice of conversion  termination,  the certificates
for the shares to be so redeemed and the number of shares to be redeemed if less
than the number  represented by the  certificate  and the name in which to issue
any such shares not so redeemed,  if different  from the holder.  Following  the
45th day after the  holders  receive  the  conversion  termination  notice,  the
conversion  rights for all outstanding  shares of Series B Preferred Stock shall
terminate  with no  further  action by the  Corporation.  For  purposes  of this
paragraph,  a holder shall be deemed to have received notice,  if such notice is
sent by facsimile to a facsimile number provided by such party for such purpose,
on the  day it is so  sent.  If sent  by  first  class  mail,  postage  prepaid,
addressed to such holder at the last address for such holder that appears on the
books of the  Corporation,  notice shall be deemed to have been  received on the
third business day after such notice has been mailed. If notice is also required
to be published as set forth in paragraph (ii) below,  notice shall be deemed to
have been received on the day that it is so published.

     (ii) So long as the Series B Preferred  Stock is not  registered  under the
Securities Act,  notice of the termination of conversion  rights shall be mailed
by first class mail, postage prepaid,  addressed to the holders of record of the
Series B Preferred  Stock at their  respective  last addresses as they appear of
the books of the  Corporation  and may be  provided by  facsimile  to any number
provided  by the holder  for that  purpose.  If the  Corporation  registers  the
outstanding  shares of Series B Preferred  Stock under the Securities  Act, then
such notice shall be given by mail as described  in the  preceding  sentence and
the Corporation  shall also publish any such notice as set forth in Section 5(c)
hereof. The notice shall set forth:

     (A) the Average  Daily  Trading  Price for the 20 trading days in question,
the dates for which such amounts are  presented,  the  Conversion  Price then in
effect for each such day and the  percentage  by which the Current  Market Price
exceeds such Conversion Price;

     (B) the redemption price then in effect;

     (C) the  place  or  places  where  certificates  for the  shares  are to be
surrendered for redemption; and

     (D) that dividends on the shares to be redeemed will cease to accrue on the
date the holder delivers any shares to the  Corporation  for redemption  (unless
the Corporation shall default in redeeming the shares on the redemption date).

     7. STATUS OF SHARES. Upon any redemption,  repurchase, conversion, exchange
or other  acquisition by the Corporation of shares of Series B Preferred  Stock,
the shares of Series B Preferred  Stock,  so redeemed,  repurchased,  converted,
exchanged  or acquired  shall be retired and canceled and shall not be available
for reissuance.

     8. VOTING RIGHTS. (a) The holders of shares of the Series B Preferred Stock
shall not have the right to vote on or consent to any matter as  shareholders of
the Corporation,  except as required by applicable law or as otherwise  provided
below. All matters on which the holders of the Series B Preferred Stock have the
right to vote may be approved at an annual or special  meeting by holders of the
minimum  number of shares of Series B Preferred  Stock that would be required to
approve a matter if all shares were  present  and voting at a meeting  called to
consider such matter or may be approved by one or more written  consents  signed
by all of the holders of shares of Series B Preferred Stock.

     (b) The consent of holders of at least a majority of the outstanding shares
of Series B Preferred Stock (voting separately as a class but excluding from any
calculation  any shares of Series B Preferred  Stock held by the  Corporation or
any subsidiary  thereof) shall be necessary to amend, alter or repeal any of the
provisions  of  this  Article  XII  of  the  Articles  of  Incorporation  of the
Corporation  which would adversely  affect the powers,  preferences or rights of
the holders of shares of Series B Preferred Stock then outstanding.

     (c) If at any time the equivalent of six quarterly dividends payable on the
outstanding  shares of Series B Preferred Stock are accrued and unpaid,  whether
or not consecutive  and whether or not declared,  the holders of all outstanding
shares of Series B Preferred Stock, voting as a single class,  together with the
holders  entitled  to vote of each  series of Series A  Preferred  Stock and the
holders  entitled  to  vote  of all  other  series  of  Preferred  Stock  of the
Corporation  that rank PARI PASSU with or senior to the Series B Preferred Stock
and have similar  voting  rights,  shall be entitled to elect at the next annual
meeting  of  shareholders  of  the  Corporation  25%  of  the  directors  to the
Corporation's  Board  of  Directors,  but no less  than two  directors  (or such
greater number as shall be provided in any other series of Preferred  Stock that
shall at the time be entitled to vote with the Series B Preferred Stock to elect
directors).  The proportion of the total vote of all holders of Preferred  Stock
entitled to vote for such directors  attributable to the holders of the Series B
Preferred  Stock  shall be based on the  percentage  the  aggregate  Liquidation
Amount  for all  outstanding  shares of Series B  Preferred  Stock  bears to the
aggregate liquidation amounts of all other shares of Preferred Stock entitled to
vote. Such directors shall serve until all accumulated and unpaid dividends have
been paid or declared and funds sufficient for their payment have been set aside
therefor.

     (d) For the  avoidance  of  doubt,  except as  otherwise  set forth in this
Section 8 or as  required by law,  the  holders of the Series B Preferred  Stock
shall not have the right to vote or consent  with respect to (i) the increase or
decrease in the amount of authorized capital stock of any class or series, other
than increases or decreases in Series B Preferred Stock (to the extent specified
elsewhere herein), (ii) the authorization,  creation (by way of reclassification
or  otherwise)  or issuance by the Board of Directors of any series of Preferred
Stock,  other than any series  that will rank  senior to the Series B  Preferred
Stock as to  dividend  distributions  and  distributions  upon the  liquidation,
winding up or  dissolution  of the  Corporation  or any  obligation  or security
convertible  into or exercisable for or exchangeable  into or evidencing a right
to  purchase,  shares of any series of  Preferred  Stock or the  issuance by the
Board of Directors of any  previously  authorized  class of capital stock of the
Corporation,  or (iii) any merger,  acquisition,  disposition  or share exchange
involving the  Corporation  where no shareholder  vote is otherwise  required or
pursuant to which the holders of the Series B Preferred  Stock  receive  cash at
least equal to the Liquidation Amount.

     (e) The consent of the  holders of at least a majority  of the  outstanding
shares of Series B Preferred Stock (voting  separately as a class, but excluding
from any  calculation  any  shares  of  Series  B  Preferred  Stock  held by the
Corporation  or any  subsidiary  thereof)  shall be  necessary  to increase  the
authorized number of shares of Series B Preferred Stock and to authorize, create
or issue any series of  Preferred  Stock  that will rank  senior to the Series B
Preferred  Stock  as to  dividend  distributions,  and  distributions  upon  the
liquidation, winding up or dissolution of the Corporation.


                                   ARTICLE II

     The foregoing amendment was adopted on September 19, 2000.


                                   ARTICLE III

                           MANNER OF ADOPTION AND VOTE

     Section 1. ACTION BY  DIRECTORS.  The amendment set forth above was adopted
by the Board of  Directors of the  Corporation  and  shareholder  action was not
required.


                                   ARTICLE IV

                       COMPLIANCE WITH LEGAL REQUIREMENTS

     The manner of the  adoption of the  Articles of  Amendment  and the vote by
which they were adopted  constitute full legal compliance with the provisions of
the Act, the Articles of Incorporation, and the Bylaws of the Corporation.




     IN WITNESS WHEREOF,  the undersigned  Corporation has caused these Articles
of Amendment to be signed and verified by a duly authorized officer,  acting for
and on behalf of such Corporation;  and the undersigned  verifies subject to the
penalties of perjury that the facts  contained  herein are true this 19th day of
September, 2000.


AMTRAN, INC.

  by
                                    Name:
    -----------------------------
         Title: