Exhibit 3.1
                                                                     -----------

                            CERTIFICATE OF AMENDMENT
                                       OF
                      RESTATED CERTIFICATE OF INCORPORATION
                                       OF
                                  PATHNET, INC.


           =========================================================
           Adopted in accordance with the provisions of Section 242 of
              the General Corporation Law of the State of Delaware
           =========================================================


                  We,  William  R.  Smedberg,  V, Vice  President,  Finance  and
Corporate Development, and Michael A. Lubin, Vice President, General Counsel and
Secretary,  of Pathnet,  Inc., a corporation organized and existing under and by
virtue  of  the  General   Corporation   Law  of  the  State  of  Delaware  (the
"Corporation"), DO HEREBY CERTIFY as follows:

                  FIRST:  The  Restated  Certificate  of  Incorporation  of  the
Corporation is hereby  amended by deleting the current  Section 10 thereof it in
its entirety and renumbering Section 11 as new Section 10.

                  SECOND:  This  Amendment  has been duly adopted in  accordance
with the provisions of Section 242 of the General  Corporation  Law of the State
of Delaware.


<PAGE>


                  IN  WITNESS   WHEREOF,   the   Corporation   has  caused  this
Certificate to be signed by William R. Smedberg, V, Vice President,  Finance and
Corporate  Development,  and  attested to by Michael A. Lubin,  Vice  President,
General Counsel and Secretary, on this 8th day of December, 1998.

                                  PATHNET, INC.



                                               By: /s/ William R. Smedberg, V
                                                 ----------------------------
                                               William R. Smedberg, V
                                               Vice President,
                                               Finance and Corporate Development



ATTEST:


By: /s/ Michael A. Lubin
    ---------------------
     Michael A. Lubin
     Vice President,
     General Counsel and Secretary





<PAGE>



                AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
                                       OF
                                  PATHNET, INC.



                  Pathnet,  Inc., a corporation duly incorporated under the laws
of the State of Delaware, hereby certifies as follows:

                                                                            
                                                                            
                   FIRST:  The name of the  corporation  is Pathnet,  Inc.  (the
"Corporation"). The original Certificate of Incorporation of the Corporation was
filed  with  the  Secretary  of State of the  State of  Delaware  on 25th day of
August, 1995, under the name PathNet, Inc.

                  SECOND: This Amended and Restated Certificate of Incorporation
has been duly adopted in  accordance  with  Sections 242 and 245 of the Delaware
General Corporation Law (the "General Corporation Law").

                   THIRD: This Amended and Restated Certificate of Incorporation
hereby  restates,  integrates and amends the  Certificate of  Incorporation,  as
amended, of the Corporation as follows:

                  1. NAME. The name of the  corporation  is PATHNET,  INC. (the
"Corporation").     

                  2. ADDRESS;  REGISTERED  OFFICE AND AGENT.  The address of the
Corporation's  registered  office is 1013 Centre  Road,  Wilmington,  New Castle
County,  Delaware 19805. The name of its registered agent at such address is The
Prentice-Hall Corporation System, Inc.

                  3. PURPOSE.  The purpose of the  Corporation  is to engage in,
carry on and conduct any lawful act or activity  for which  corporations  may be
organized under the General Corporation Law.

                  4. NUMBER OF SHARES.  The total number of shares of stock that
the Corporation shall have authority to issue is 75,470,595, divided as follows:
10,000,000  shares  of  Preferred  Stock,  par  value of $0.01  per  share  (the
"Preferred  Stock"),  1,000,000 shares of Series A Convertible  Preferred Stock,
par value of $0.01 per share (the "Series A Preferred Stock"),  1,651,046 shares
of Series B  Convertible  Preferred  Stock,  par  value of $0.01 per share  (the
"Series B Preferred Stock"),  2,819,549 shares of Series C Convertible Preferred
Stock,  par value of $0.01 per  share  (the  "Series  C  Preferred  Stock,"  and
together with the Series A Preferred Stock and the 

<PAGE>

                                                                            
Series B Preferred Stock, the "Series Preferred  Stock");  and 60,000,000 shares
of Common Stock, par value of $0.01 per share (the "Common Stock").

                  5.  DESIGNATION  OF  CLASSES;   RELATIVE   RIGHTS,   ETC.  The
designation,  relative rights, preferences and limitations of the shares of each
class are as follows:

                  5.1  PREFERRED  STOCK.  The shares of Preferred  Stock may be
issued from time to time in one or more series of any number of shares, provided
that the aggregate  number of shares issued and not canceled of any and all such
series  shall  not  exceed  the  total  number  of  shares  of  Preferred  Stock
hereinabove  authorized,  and with  such  powers,  preferences  and  rights  and
qualifications, limitations or restrictions thereof, and such distinctive serial
designations,  all as shall  hereafter be stated and expressed in the resolution
or  resolutions  providing for the issue of such shares of Preferred  Stock from
time to time adopted by the Board of Directors of the Corporation (the "Board of
Directors")  pursuant to authority so to do which is hereby  vested in the Board
of Directors.  Each series of shares of Preferred Stock (a) may have such voting
rights or powers,  full or limited,  or may be without  voting rights or powers;
(b) may be subject to redemption  at such time or times and at such prices;  (c)
may be entitled to receive dividends (which may be cumulative or non-cumulative)
at such rate or rates,  on such  conditions  and at such  times,  and payable in
preference to, or in such relation to, the dividends  payable on any other class
or classes or series of stock;  (d) may have such rights upon the  voluntary  or
involuntary liquidation,  winding up or dissolution of, or upon any distribution
of the  assets  of,  the  Corporation;  (e)  may be  made  convertible  into  or
exchangeable for, shares of any other class or classes or of any other series of
the same or any other class or classes of stock of the Corporation at such price
or prices or at such rates of  exchange  and with such  adjustments;  (f) may be
entitled  to the  benefit of a sinking  fund to be applied  to the  purchase  or
redemption  of shares  of such  series in such  amount  or  amounts;  (g) may be
entitled to the benefit of  conditions  and  restrictions  upon the  creation of
indebtedness  of the  Corporation  or any  subsidiary,  upon  the  issue  of any
additional  shares  (including  additional shares of such series or of any other
series) and upon the payment of dividends  or the making of other  distributions
on, and the purchase,  redemption or other acquisition by the Corporation or any
subsidiary of, any  outstanding  shares of the Corporation and (h) may have such
other relative, participating, optional or other special rights, qualifications,
limitations or restrictions  thereof;  all as shall be stated in said resolution
or resolutions providing for the issue of such shares of Preferred Stock. Any of
the  voting  powers,  designations,   preferences,  rights  and  qualifications,
limitations or  restrictions  of any such series of Preferred  Stock may be made
dependent  upon facts  ascertainable  outside of the  resolution or  resolutions
providing  for the  issue  of such  Preferred  Stock  adopted  by the  Board  of
Directors  pursuant to the authority vested in it by this Section 5.1,  provided
that the manner in which  such  facts  shall  operate  upon the  voting  powers,
designations,   preferences,   rights   and   qualifications,   limitations   or
restrictions  of such series of  Preferred  Stock is clearly and  expressly  set
forth in the resolution or resolutions providing for the issue of such Preferred
Stock.  The term "facts" as used in the next  preceding  sentence shall have the
meaning given to it in Section 151(a) of the General  Corporation Law. Shares of
Preferred  Stock of any series  that have been  redeemed  (whether  through  the
operation  of  a  sinking  fund  or  otherwise)  or  that  if   

<PAGE>
                                                                               5

convertible or exchangeable, have been converted into or exchanged for shares of
any other  class or classes  shall have the status of  authorized  and  unissued
shares of  Preferred  Stock  undesignated  as to series and may be reissued as a
part of the  series  of which  they were  originally  a part or as part of a new
series of shares of Preferred  Stock to be created by resolution or  resolutions
of the Board of  Directors or as part of any other series of shares of Preferred
Stock,  all subject to the conditions or  restrictions  on issuance set forth in
the  resolution or resolutions  adopted by the Board of Directors  providing for
the issue of any series of shares of Preferred Stock.

                   5.2 COMMON STOCK. Subject to the provisions of any applicable
law or of the  Bylaws  of the  Corporation,  as from time to time  amended  (the
"Bylaws"),  with respect to the closing of the transfer books or the fixing of a
record date for the determination of stockholders entitled to vote and except as
otherwise  provided herein with respect to any shares of Series Preferred Stock,
by law or by the resolution or resolutions providing for the issue of any series
of shares of Preferred Stock, the holders of outstanding  shares of Common Stock
shall exclusively possess voting power for the election of directors and for all
other  purposes,  each holder of record of shares of Common Stock being entitled
to one vote for each share of Common  Stock  standing  in his or her name on the
books of the  Corporation.  Except as otherwise  provided herein with respect to
any  shares  of  Series  Preferred  Stock or by the  resolution  or  resolutions
providing for the issue of any series of shares of Preferred  Stock, the holders
of shares of Common Stock shall be entitled,  to the exclusion of the holders of
shares of Preferred  Stock of any and all series,  to receive such  dividends as
from time to time may be declared by the Board of Directors. In the event of any
liquidation,  dissolution or winding up of the Corporation, whether voluntary or
involuntary,  after payment shall have been made to the holders of shares of any
Series  Preferred Stock and any Preferred Stock of the full amount to which they
shall  be  entitled  pursuant  to  this  Amended  and  Restated  Certificate  of
Incorporation  or the resolution or  resolutions  providing for the issue of any
series of shares of Preferred Stock, the holders of shares of Common Stock shall
be entitled, to the exclusion of the holders of shares of Series Preferred Stock
and Preferred Stock of any and all series,  to share,  ratably  according to the
number of shares of Common Stock held by them,  in all  remaining  assets of the
Corporation available for distribution to its stockholders.

                  5.3      SERIES PREFERRED STOCK.

                           5.3.1    SHARES.

                                    (a)     AUTHORIZED SHARES.  The Corporation
shall have  authority to issue Five Million Four Hundred  Seventy  Thousand Five
Hundred  Ninety-Five  (5,470,595) shares of Series Preferred Stock, of which One
Million (1,000,000) shares shall be designated the Series A Preferred Stock, One
Million Six Hundred  Fifty One Thousand  Forty Six  (1,651,046)  shares shall be
designated the Series B Preferred  

<PAGE>
                                                                               6

Stock and Two Million Eight Hundred  Nineteen  Thousand Five Hundred  Forty-Nine
(2,819,549) shares shall be designated as the Series C Preferred Stock.

                                    (b)     DIVIDENDS. The holders of the Series
Preferred  Stock shall be entitled to receive,  out of funds  legally  available
therefor,  dividends  (other than dividends paid in additional  shares of Common
Stock) in  preference to and at the same rate as dividends are paid with respect
to the Common  Stock  (treating  each share of Series  Preferred  Stock as being
equal to the  number of shares of Common  Stock  into  which  each such share of
Series Preferred Stock could be converted  pursuant to the provisions of Section
5.3.4  hereof,  with  such  number  determined  as of the  record  date  for the
determination of holders of Common Stock entitled to receive such dividend).

                           5.3.2    LIQUIDATION, DISSOLUTION OR WINDING UP.

                                    (a)     DISTRIBUTIONS TO HOLDERS  OF  SERIES
PREFERRED STOCK. In the event of any  liquidation,  dissolution or winding up of
the Corporation, whether voluntary or involuntary, the Series A Preferred Stock,
the Series B Preferred  Stock and the Series C  Preferred  Stock shall rank on a
parity with each other and shall rank prior to the Common  Stock or any class of
stock  ranking  junior to the Series  Preferred  Stock.  Upon such  liquidation,
holders of each share of Series Preferred Stock outstanding shall be entitled to
be paid,  out of the assets of the  Corporation  available for  distribution  to
stockholders and before any payment shall be made to the holders of any class of
Common  Stock or of any  stock  ranking  on  liquidation  junior  to the  Series
Preferred Stock, an amount in cash equal to the original  purchase price paid by
such holder for each such share of Series  Preferred  Stock held  (appropriately
adjusted for stock splits,  stock  dividends and the like) plus any declared but
unpaid dividends thereon. If upon any liquidation,  dissolution or winding up of
the  Corporation,  the  assets to be  distributed  to the  holders of the Series
Preferred  Stock under the foregoing  sentence shall be  insufficient  to permit
payment to such stockholders of the full preferential  amounts  aforesaid,  then
all of the assets of the Corporation  available for distribution to such holders
under such sentence shall be distributed  among the holders of Series  Preferred
Stock,  pro rata in accordance  with the total amount of preference  which would
have been  payable to such  holders if funds had been  available to pay the full
preference under the previous sentence.  After such payment shall have been made
in full to such holders of Series  Preferred  Stock, or funds necessary for such
payment shall have been set aside by the Corporation in trust for the account of
such  holders  so as to be  available  for  such  payment,  the  holders  of the
outstanding  shares of Common Stock and any class of stock ranking junior to the
Series  Preferred Stock shall share ratably in the distribution of the remaining
assets and funds of the Corporation available for distribution to shareholders.

                                    (b)     DEEMED LIQUIDATIONS.  In the case of
(i) a consolidation or merger of the Corporation  (other than a consolidation or
merger  upon 

<PAGE>

                                                                               7

consummation  of which the  holders  of  voting  securities  of the  Corporation
immediately  prior to such  transaction,  continue to own directly or indirectly
not less than a majority of the voting power of the surviving  corporation) or a
sale of all or  substantially  all of the  assets  of the  Corporation  or other
similar   transaction  and  (ii)  either  receipt  by  the  Corporation  of  (x)
consideration  less  than the  equivalent  of  $1.00  per  share  (appropriately
adjusted for stock splits,  stock  dividends and the like) of Series A Preferred
Stock plus any declared but unpaid dividends,  (y)  consideration  less than the
equivalent of $3.28 per share  (appropriately  adjusted for stock splits,  stock
dividends and the like) of Series B Preferred Stock plus any declared but unpaid
dividends,  or (z)  consideration  less than the  equivalent of $10.64 per share
(appropriately  adjusted  for stock  splits,  stock  dividends  and the like) of
Series C Preferred  Stock plus any  declared  but unpaid  dividends,  such event
shall be  regarded,  at the  option of the  holders  of a  majority  of the then
outstanding  shares of Series Preferred Stock, as a liquidation,  dissolution or
winding up of the affairs of the Corporation  within the meaning of this Section
5.3.2.

                                    Notwithstanding the  foregoing, each  holder
of Series  Preferred  Stock  shall have the right to elect the  benefits  of the
provisions  of  Section  5.3.4(h)  hereof  in  lieu  of  receiving   payment  in
liquidation,  dissolution  or winding  up of the  Corporation  pursuant  to this
Section 5.3.2(b). For purposes of this Section 5.3.2 and Section 5.3.6 hereof, a
sale of  substantially  all of the assets of the Corporation  shall mean (x) the
sale or other  disposition other than in the ordinary course of business of more
than 50% of such assets, as determined by reference to either (A) the book value
or (B) the fair market  value,  of such  assets,  or (y) any  issuance of Common
Stock by the  Corporation  or transfer of Common Stock by the holder  thereof to
any person or persons acting in concert or a group of affiliated persons,  which
issuance or transfer  results in such person or persons or group  holding in the
aggregate more than 50% of the issued and outstanding  Common Stock after giving
effect to such issuance or transfer.



<PAGE>


                                    (c)     NON-CASH DISTRIBUTIONS. In the event
of a liquidation,  dissolution or winding up of the Corporation resulting in the
availability  of assets other than cash for  distribution  to the holders of the
Series  Preferred  Stock,  the  holders of the Series  Preferred  Stock shall be
entitled  to a  distribution  of  cash  and/or  assets  equal  in  value  to the
liquidation  preference and other distribution rights stated in Section 5.3.2(a)
and Section 5.3.2(b) hereof.  In the event that such distribution to the holders
of the Series  Preferred  Stock shall  include any assets  other than cash,  the
following  provisions shall govern. The Board of Directors shall first determine
the value of such  assets for such  purpose,  and shall  notify  all  holders of
shares of Series Preferred Stock of such determination. The value of such assets
for purposes of the distribution  under this Section 5.3.2(c) shall be the value
as determined by the Board of Directors in good faith and with due care,  unless
the holders of a majority of the  outstanding  shares of Series  Preferred Stock
shall object thereto in writing within 15 days after the date of such notice. In
the event of such  objection,  the valuation of such

<PAGE>

                                                                               8

assets for purposes of such  distribution  shall be  determined by an arbitrator
selected by the objecting  stockholders  and the Board of  Directors,  or in the
event a single arbitrator cannot be agreed upon within 10 days after the written
objection  sent by the objecting  stockholders  in accordance  with the previous
sentence,  the valuation of such assets shall be determined  by  arbitration  in
which (i) the objecting stockholders shall name in their notice of objection one
arbitrator, (ii) the Board of Directors shall name a second arbitrator within 15
days from the receipt of such notice,  (iii) the two  arbitrators  thus selected
shall select a third arbitrator  within 15 days  thereafter,  and (iv) the three
arbitrators thus selected shall determine the valuation of such assets within 15
days thereafter for purposes of such distribution by majority vote. The costs of
such  arbitration  shall be borne by the  Corporation  or by the  holders of the
Series  Preferred  Stock  (on a pro  rata  basis  out  of the  assets  otherwise
distributable  to them) as follows:  (i) if the  valuation as  determined by the
arbitrators  is greater than 95% of the  valuation as determined by the Board of
Directors,  the holders of the Series Preferred Stock shall pay the costs of the
arbitration,  and (ii) otherwise,  the  Corporation  shall bear the costs of the
arbitration.

                           5.3.3    VOTING RIGHTS.

                                    (a)     GENERAL.     Except  as  otherwise 
expressly provided herein or as required by law, the holder of each share of the
Series Preferred Stock shall be entitled to vote on any matters presented to the
holders of the Common Stock.  Each share of Series Preferred Stock shall entitle
the holder  thereof to such  number of votes per share as shall equal the number
of shares of Common  Stock into which  such share of Series  Preferred  Stock is
convertible  in accordance  with the terms of Section 5.3.4 hereof at the record
date for the  determination of stockholders  entitled to vote on such matter or,
if no record date is established,  at the date such vote is taken or any written
consent of stockholders  is solicited.  Except as otherwise  expressly  provided
herein (including,  without limitation,  the provisions of Section 5.3.6 hereof)
or as required by law, the holders of shares of Series  Preferred  Stock and the
Common Stock shall vote  together as a single class on any matters  presented to
the holders of the Common Stock.

                                    (b)     BOARD OF DIRECTORS.


                                            (i)      INVESTOR DIRECTORS.  The
holders of the Series A  Preferred  Stock  shall be  entitled to vote as a class
separately  from all other classes of stock of the  Corporation  in any vote for
the election of directors of the Corporation,  and shall be entitled to elect by
such class vote two directors (the "Series A Investor Directors"),  one of which
Series A Investor Directors to be designated by Spectrum Equity Investors,  L.P.
("Spectrum")  for so long as it owns  shares  of  Series A  Preferred  Stock and
thereafter by the holders of a majority of the issued and outstanding  shares of
Series A  Preferred  Stock,  and the other to be  designated  by New  Enterprise
Associates VI, Limited  Partnership or its affiliates  (collectively,  "NEA VI")

<PAGE>

                                                                               9

for so long as it owns shares of Series A Preferred  Stock and thereafter by the
holders of a majority of the issued and outstanding shares of Series A Preferred
Stock.  The holders of the Series B Preferred Stock shall be entitled to vote as
a class  separately  from all other classes of stock of the  Corporation  in any
vote for the election of directors of the Corporation,  and shall be entitled to
elect by such class vote one director  (the "Series B Investor  Director") to be
designated by Grotech  Capital  Group IV, LLC  ("Grotech  IV") for so long as it
owns  shares of Series B  Preferred  Stock and  thereafter  by the  holders of a
majority of the issued and outstanding  shares of Series B Preferred  Stock. The
holders of the Series C  Preferred  Stock  shall be  entitled to vote as a class
separately  from all other classes of stock of the  Corporation  in any vote for
the election of directors of the Corporation,  and shall be entitled to elect by
such class vote one director (the "Series C Investor Director") to be designated
by the  holders of a majority of the issued and  outstanding  shares of Series C
Preferred  Stock;  provided,  however,  that if the holders of a majority of the
issued and outstanding shares of Series C Preferred Stock designate for election
as the  Series  C  Investor  Director  an  individual  who is not a  partner  or
associate  of a Series C  Investor  or an entity  under  substantially  the same
management as a Series C Investor,  such designee shall be elected as a director
only with the vote of a majority  of the Common  Stock  Directors  and  Investor
Directors,  voting together.  Initially,  the Series C Investor Director will be
designated  by Toronto  Dominion  Capital  (U.S.A.),  Inc. In no event shall the
Series C Investor  Director  be (i) a partner or  associate  of  Spectrum  or an
entity  under  substantially  the same  management  as  Spectrum  for so long as
Spectrum has designation  rights under this Section 5.5.3(a),  (ii) a partner or
associate of NEA VI or an entity under  substantially the same management as NEA
VI for so long as NEA VI has designation rights under this Section 5.3.3(a), and
(iii) a partner or associate of Grotech IV or an entity under  substantially the
same management as Grotech IV for so long as Grotech IV has  designation  rights
under this Section 5.3.3(a).

                                            (ii)     COMMON STOCK DIRECTORS. For
so long as any Series Preferred Stock remains outstanding, the holders of Common
Stock shall be entitled to vote as a class  separately from all other classes in
any vote for the election of directors of the Corporation, and shall be entitled
to elect by such class vote two directors (the "Common Stock Directors").

                                            (iii)    APPOINTMENT OF CHIEF 
EXECUTIVE  OFFICER/OFFICER  DIRECTOR. Upon the termination or resignation of the
Chief Executive Officer of the Corporation, the Corporation will select and hire
a  successor  Chief  Executive  Officer  (and  any  successor  thereto)  by  the
affirmative  vote of a majority  of the  Common  Stock  Directors,  the Series A
Investor  Directors,  the Series B Investor  Director  and the Series C Investor
Director,  voting together.  The Chief Executive Officer (and any replacement or
successor Chief Executive  Officer) as so selected and hired shall be elected to
the  Corporation's  Board of  Directors  by the holders of the Series  Preferred
Stock and the Common  Stock  voting  together  as a single  class (the  "Officer
Director").  David  Schaeffer  may  serve  as  Chief  Executive  Officer  of the

<PAGE>

                                                                              10

Corporation in the  discretion of the Board of Directors,  but in no event shall
David Schaeffer be elected as the Officer Director.

                                            (iv)     REMOVAL OF DIRECTORS.  The 
removal of any director of the  Corporation  shall be as set forth in the Bylaws
of the Corporation.

                                    (c)     SPECIAL VOTING RIGHTS.  The holders
of the Series Preferred Stock shall be entitled to the special voting rights set
forth in Section 5.3.6 hereof.

                           5.3.4    CONVERSION.  The holders of the Series 
Preferred Stock shall have the following conversion rights:

                                    (a)     RIGHT TO CONVERT.  Subject to and in
compliance  with the provisions of this Section 5.3.4,  any shares of the Series
Preferred  Stock  may,  at any time or from  time to time at the  option  of the
holder, be converted into fully-paid and non-assessable  shares of Common Stock.
The number of shares of Common  Stock to which a holder of the Series  Preferred
Stock  shall be  entitled  upon  conversion  shall be the  product  obtained  by
multiplying the Applicable  Conversion  Rate  (determined as provided in Section
5.3.4(c)) by the number of shares of Series Preferred Stock being converted.

                                    (b)     AUTOMATIC CONVERSION.

                                            (i)      Each  share  of  the Series
Preferred Stock outstanding shall  automatically be converted into the number of
shares of Common Stock into which such shares are convertible  upon  application
of the then  effective  Applicable  Conversion  Rate  (determined as provided in
Section  5.3.4(c))  immediately  upon  the  closing  of an  underwritten  public
offering  pursuant to an effective  registration  statement under the Securities
Act of 1933, as amended, or under such other applicable  securities  regulations
covering the offer and sale of capital  stock of the  Corporation  (other than a
registration  relating  solely  to Rule 145  under  such  Act (or any  successor
thereto) or to an employee  benefit  plan of the  Corporation)  (i)  immediately
prior to the  consummation  of which,  the  Corporation  is valued (based on the
per-share price paid in such public offering, but without regard to any proceeds
to be received by the Company in connection  with such offering) at greater than
$50,000,000, (ii) in which the gross proceeds received by the Corporation exceed
$20,000,000,  and (iii) in which the  Corporation  uses a nationally  recognized
underwriter  approved  by  holders  of a  majority  in  interest  of the  Series
Preferred Stock (a "Qualified Public Offering").

                                           (ii)     Upon the occurrence of an 
event  specified  in  Section  5.3.4(b)(i),  the  outstanding  shares  of Series
Preferred Stock shall be converted  automatically  without any further action by
the holders of such shares and whether or not the certificates representing such
shares are  surrendered  to the  Corporation  or its transfer  agent;  provided,
however,  that the  Corporation  shall not be  

<PAGE>

                                                                              11

obligated  to issue  certificates  evidencing  such  shares of the Common  Stock
unless  certificates  evidencing such shares of the Series Preferred Stock being
converted are either  delivered to the  Corporation  or any transfer  agent,  as
hereinafter  provided,  or the holder  notifies the  Corporation or any transfer
agent, as hereinafter provided, that such certificates have been lost, stolen or
destroyed and executes an agreement satisfactory to the Corporation to indemnify
the Corporation from any loss incurred by it in connection therewith.

                                            Upon the occurrence of the automatic
conversion of all of the outstanding  Series Preferred Stock, the holders of the
Series Preferred Stock shall surrender the certificates representing such shares
at the office of the  Corporation or of any transfer agent for the Common Stock.
Thereupon,  there shall be issued and delivered to each such holder, promptly at
such  office  and in his  name as  shown  on  such  surrendered  certificate  or
certificates,  a certificate or certificates  for the number of shares of Common
Stock  into  which the shares of the Series  Preferred  Stock  surrendered  were
convertible on the date on which such automatic  conversion occurred and cash as
provided  in Section  5.3.4(k)  below in respect of any  fraction  of a share of
Common Stock issuable upon such automatic conversion.

                                    (c)     APPLICABLE CONVERSION RATE.  The 
conversion  rate in  effect  at any time for the  applicable  series  of  Series
Preferred  Stock (the  "Applicable  Conversion  Rate")  shall equal the quotient
obtained by dividing $1.00 in the case of Series A Preferred Stock, $3.28 in the
case of Series B Preferred Stock or $10.64 in the case of the Series C Preferred
Stock by the Applicable Conversion Value, calculated as hereinafter provided.

                                    (d)     APPLICABLE CONVERSION VALUE.  The
Applicable  Conversion  Value in effect  initially,  and until first adjusted in
accordance with Section 5.3.4(e) or Section  5.3.4(f) hereof,  shall be $1.00 in
the case of Series A  Preferred  Stock,  $3.28 in the case of Series B Preferred
Stock and $10.64 in the case of the Series C Preferred Stock.

                                    (e)     ADJUSTMENT FOR COMMON STOCK
DIVIDENDS,  SUBDIVIDENDS  AND  COMBINATIONS  OF  COMMON  STOCK,  ETC.  Upon  the
happening  of any of the  following:  (i) the issuance of  additional  shares of
Common  Stock of any class as a dividend or other  distribution  of  outstanding
Common Stock, (ii) the subdivision of outstanding  shares of Common Stock of any
class into a greater number of shares of Common Stock,  or (iii) the combination
of  outstanding  shares of Common  Stock of any class  into a smaller  number of
shares of  Common  Stock  (each an  "Extraordinary  Common  Stock  Event"),  the
Applicable  Conversion  Value shall,  simultaneously  with the happening of such
Extraordinary  Common  Stock Event,  be adjusted by dividing the then  effective
Applicable  Conversion Value by a fraction,  the numerator of which shall be the
number  of  shares  of  Common  Stock  outstanding  (excluding  treasury 

<PAGE>

                                                                              12

stock)  immediately  after  such  Extraordinary   Common  Stock  Event  and  the
denominator  of which shall be the number of shares of Common Stock  outstanding
(excluding treasury stock) immediately prior to such Extraordinary  Common Stock
Event,  and  the  quotient  so  obtained  shall  thereafter  be  the  Applicable
Conversion  Value.  The Applicable  Conversion  Value, as so adjusted,  shall be
readjusted in the same manner upon the happening of any successive Extraordinary
Common Stock Event or Events.

                                    (f)    ADJUSTMENTS FOR DILUTING ISSUES.

                                          (i)      Except as provided in
Section  5.3.4(e)  above or for  Excluded  Shares  (as  defined  below),  if the
Corporation  shall issue any additional  shares of Common Stock of any class for
no  consideration  or at a price per share less than the  Applicable  Conversion
Value in effect for each applicable series of Series Preferred Stock immediately
prior  to such  issuance  or  sale,  then  in each  such  case  such  Applicable
Conversion Value shall be reduced to such lower price.

                                          For purposes of this Section 5.3.4(f),
"Excluded  Shares"  shall mean (i) shares  issued or delivered  from treasury or
stock  options (and shares of Common  Stock  issued upon the  exercise  thereof)
granted by the  Corporation,  with the  approval of the Board of  Directors,  to
directors,  officers, employees, agents or consultants of the Corporation for up
to an aggregate  of 1,325,212  shares of the Common Stock (as adjusted for stock
splits,  stock  dividends  and the like);  (ii)  warrants to purchase  shares of
Common Stock (and any shares of Common  Stock issued upon the exercise  thereof)
issued by the  Corporation  in  connection  with the  Corporation's  offering of
units,  each such unit  consisting  of $1,000  principal  amount at  maturity of
Senior Notes due 2008 (the "Notes") of the  Corporation and warrants to purchase
shares of Common Stock;  and (iii)  warrants to purchase  shares of Common Stock
(and any shares of Common Stock issued upon the exercise  thereof) issued by the
Corporation  in  connection  with the credit  facilities  among the  Corporation
and/or its subsidiaries, its equipment vendors and certain other senior lenders.

                                          For purposes of this Section 5.3.4(f),
if a part or all of the consideration  received by the Corporation in connection
with the  issuance of shares of the Common  Stock or the  issuance of any of the
securities  described below in paragraph (ii) of this Section 5.3.4(f)  consists
of property other than cash, such consideration shall be deemed to have the same
value as is determined by the  Corporation's  Board of Directors with respect to
receipt of such property so long as such  determination  was made reasonably and
in good faith,  and shall  otherwise be deemed to have a value equal to its fair
market value.

                                          (ii)     For the purpose of this 
Section 5.3.4(f), the issuance of any warrants, options or other subscription or
purchase  rights  with  respect  to shares of Common  Stock of any class and the
issuance of any securities  convertible into shares of Common Stock of any class
(or the  issuance of any  warrants,  options or any rights with  respect to such
convertible  securities) shall be deemed an issuance at such time of such Common
Stock  if  the  Net  Consideration  Per  Share  which  may  be  received  by the
Corporation for such Common Stock (as hereinafter determined) shall 

<PAGE>

                                                                              13

be less than the Applicable  Conversion  Value at the time of such issuance and,
except as hereinafter provided, an adjustment in the Applicable Conversion Value
shall be made upon each such issuance in the manner provided in paragraph (i) of
this  Section  5.3.4(f)  as if  such  Common  Stock  were  issued  at  such  Net
Consideration Per Share. No adjustment of the Applicable  Conversion Value shall
be made under this Section  5.3.4(f) upon the issuance of any additional  shares
of Common  Stock  which are issued  pursuant to the  exercise  of any  warrants,
options or other  subscription or purchase rights or pursuant to the exercise of
any  conversion  or  exchange  rights  in  any  convertible  securities  if  any
adjustment  shall  previously have been made upon the issuance of such warrants,
options or other rights. Any adjustment of the Applicable  Conversion Value with
respect to this paragraph (ii) of this Section 5.3.4(f) shall be disregarded if,
as and when the  rights to  acquire  shares of Common  Stock  upon  exercise  or
conversion of the warrants, options, rights or convertible securities which gave
rise to such adjustment expire or are canceled without having been exercised, so
that  the  Applicable   Conversion   Value  effective   immediately   upon  such
cancellation or expiration shall be equal to the Applicable  Conversion Value in
effect  immediately prior to the time of the issuance of the expired or canceled
warrants,  options,  rights or  convertible  securities,  with  such  additional
adjustments as would have been made to that Applicable  Conversion Value had the
expired or canceled warrants, options, rights or convertible securities not been
issued;  provided,   however,  that  no  such  readjustment  of  the  Applicable
Conversion  Value shall have the effect of increasing the Applicable  Conversion
Value to an amount  which  exceeds  the lower of (x) the  Applicable  Conversion
Value on the original  adjustment  date, or (y) the Applicable  Conversion Value
that would have  resulted from any issuance of any  additional  shares of Common
Stock  pursuant to such  warrants,  options,  rights or  convertible  securities
between the original  adjustment date and such  readjustment  date. In the event
that the terms of any warrants,  options,  other subscription or purchase rights
or  convertible  securities  previously  issued by the  Corporation  are changed
(whether  by their  terms  or for any  other  reason)  so as to  change  the Net
Consideration  Per  Share  payable  with  respect  thereto  (whether  or not the
issuance of such warrants,  options, rights or convertible securities originally
gave rise to an adjustment of the Applicable  Conversion  Value), the Applicable
Conversion Value shall be recomputed as of the date of such change,  so that the
Applicable  Conversion  Value  effective  immediately  upon such change shall be
equal to the Applicable  Conversion  Value in effect at the time of the issuance
of the  warrants,  options,  rights or  convertible  securities  subject to such
change,  adjusted for the issuance  thereof in accordance with the terms thereof
after giving  effect to such change,  and with such  additional  adjustments  as
would  have  been made to that  Applicable  Conversion  Value had the  warrants,
options, rights or convertible securities been issued on such changed terms. For
purposes of this paragraph  (ii), the Net  Consideration  Per Share which may be
received by the Corporation shall be determined as follows:

                                                     (A)   The Net Consideration
Per Share shall mean the amount equal to the total amount of  consideration,  if
any,  received by the  Corporation  for the issuance of such warrants,  options,
rights or convertible securities,  plus the minimum amount of consideration,  if
any, payable to the 

<PAGE>

                                                                              14

Corporation upon exercise or conversion thereof, divided by the aggregate number
of shares of Common  Stock that would be issued if all such  warrants,  options,
subscriptions, or other purchase rights or convertible securities were exercised
or converted at such net consideration per share.

                                                     (B) The  Net  Consideration
Per Share which may be received by the Corporation  shall be determined in  each
instance as of the date of issuance of warrants,  options, rights or convertible
securities  without  giving effect to any possible  future price  adjustments or
rate adjustments which may be applicable with respect to such warrants, options,
rights or convertible  securities  and which are contingent  upon future events;
provided that in the case of an adjustment to be made as a result of a change in
terms of such  warrants,  options,  rights or  convertible  securities,  the Net
Consideration Per Share shall be determined as of the date of such change.

                                    (g)     ADJUSTMENTS FOR RECLASSIFICATION. If
the Common Stock  issuable  upon the  conversion of the Series  Preferred  Stock
shall be  changed  into the same or  different  number of shares of any class or
classes of stock,  whether  by  reclassification  or  otherwise  (other  than an
Extraordinary Common Stock Event, or a reorganization,  merger, consolidation or
sale of assets provided for elsewhere in this Section  5.3.4),  then and in each
such  event the holder of each share of Series  Preferred  Stock  shall have the
right  thereafter  to  convert  such share into the kind and amount of shares of
stock and other  securities and property  receivable  upon such  reorganization,
reclassification  or other  change by  holders of the number of shares of Common
Stock into which such shares of Series Preferred Stock might have been converted
immediately  prior  to such  reorganization,  reclassification  or  change,  all
subject  to  further  adjustment  as  provided  herein.   Without  limiting  the
generality of the foregoing,  the Applicable Conversion Rate, as defined in this
Section 5.3.4,  in respect of such other shares or securities so receivable upon
conversion of shares of Series Preferred Stock shall thereafter be adjusted, and
shall be  subject to further  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  5.3.4,  and the  remaining  provisions
herein with respect to the Common Stock shall apply on like or similar  terms to
any such other shares or securities.

                                    (h)     ADJUSTMENTS FOR REORGANIZATIONS.  If
at any time or from time to time there shall be a capital  reorganization of the
Common  Stock  (other  than  a  subdivision,  combination,  reclassification  or
exchange of shares  provided for elsewhere in this Section 5.3.4) or a merger or
consolidation of the Corporation with or into another corporation or the sale of
all or substantially all of the Corporation's properties and assets to any other
person,  then,  as a part of and as a  condition  to the  effectiveness  of such
reorganization,  merger,  consolidation or sale,  lawful and adequate  provision
shall be made so that if the Corporation is not the surviving  corporation,  the
Series  Preferred Stock shall be converted into preferred stock of the surviving
corporation having equivalent preferences,  rights and privileges except that in
lieu of 

<PAGE>

                                                                              15

being able to convert  into  shares of Common  Stock of the  Corporation  or the
successor  corporation the holders of the Series  Preferred Stock (including any
such preferred stock issued upon conversion of the Series Preferred Stock) shall
thereafter be entitled to receive upon conversion of the Series  Preferred Stock
(including  any such  preferred  stock  issued  upon  conversion  of the  Series
Preferred  Stock) the number of shares of stock or other  securities or property
of the Corporation or of the successor corporation resulting from such merger or
consolidation or sale, to which a holder of the number of shares of Common Stock
deliverable upon conversion of the Series Preferred Stock  immediately  prior to
the  capital  reorganization,  merger,  consolidation  or sale  would  have been
entitled on such capital reorganization,  merger, consolidation, or sale. In any
such case,  appropriate  provisions  shall be made with respect to the rights of
the holders of the Series  Preferred  Stock  (including any such preferred stock
issued upon conversion of the Series Preferred Stock) after the  reorganization,
merger,  consolidation  or sale to the end that the  provisions  of this Section
5.3.4  (including,   without  limitation,   provisions  for  adjustment  of  the
Applicable Conversion Value and the number of shares purchasable upon conversion
of the Series  Preferred  Stock or such  preferred  stock) shall  thereafter  be
applicable, as nearly as may be, with respect to any shares of stock, securities
or  assets  to be  deliverable  thereafter  upon the  conversion  of the  Series
Preferred Stock or such preferred stock.

                                    Each holder of Series Preferred Stock upon 
the  occurrence  of a capital  reorganization,  merger or  consolidation  of the
Corporation or the sale of all or substantially all of its assets and properties
as such events are more fully set forth in the first  paragraph  of this Section
5.3.4(h),  shall have the option of electing  treatment  of his shares of Series
Preferred Stock under either this Section  5.3.4(h) or Section  5.3.2(b) hereof,
and except as  otherwise  provided  in said  Section  5.3.2(b),  notice of which
election  shall be  submitted  in writing to the  Corporation  at its  principal
offices no later than 10 days before the effective date of such event,  provided
that any such notice  shall be  effective  if given not later than 15 days after
the date of the Corporation's notice, pursuant to Section 5.3.8, with respect to
such event.

                                    (i)     CERTIFICATE AS TO ADJUSTMENTS.  In 
each case of an adjustment or  readjustment of the Applicable  Conversion  Rate,
the Corporation will promptly furnish each holder of Series Preferred Stock with
a  certificate,  prepared  by the chief  financial  officer of the  Corporation,
showing such  adjustment or  readjustment,  and stating in detail the facts upon
which such adjustment or readjustment is based.

                                    (j)     MECHANICS OF CONVERSION. To exercise
its conversion privilege, a holder of Series Preferred Stock shall surrender the
certificate  or  certificates  representing  the shares  being  converted to the
Corporation  at its  principal  office,  and shall  give  written  notice to the
Corporation at that office that such holder elects to convert such shares.  Such
notice shall also state the name or names (with  address or  addresses) in which
the  certificate or  certificates  for shares of Common Stock issuable upon such
conversion shall be issued. The certificate or 

<PAGE>

                                                                              16

certificates  for shares of Series  Preferred  Stock  surrendered for conversion
shall be  accompanied  by proper  assignment  thereof to the  Corporation  or in
blank. The date when such written notice is received by the Corporation together
with the certificate or certificates representing the shares of Series Preferred
Stock  being  converted,   shall  be  the  "Conversion  Date."  As  promptly  as
practicable  after the Conversion  Date, the  Corporation  shall issue and shall
deliver to the holder of the shares of Series Preferred Stock being converted, a
certificate or certificates in such  denominations  as it may request in writing
for the number of full shares of Common Stock  issuable  upon the  conversion of
such shares of Series  Preferred Stock in accordance with the provisions of this
Section 5.3.4 and cash as provided in Section  5.3.4(k)  below 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 close
of business on the Conversion Date, and at such time the rights of the holder as
holder of the  converted  shares of Series  Preferred  Stock shall cease and the
person or persons in whose name or names any  certificate  or  certificates  for
shares of Common Stock shall be issuable upon such conversion shall be deemed to
have  become  the  holder or  holders  of  record  of  shares  of  Common  Stock
represented thereby.

                                    (k)     FRACTIONAL SHARES.  No fractional 
shares of Common Stock or scrip  representing  fractional shares shall be issued
upon conversion of Series Preferred Stock.  Instead of any fractional  shares of
Common  Stock  that  would  otherwise  be  issuable  upon  conversion  of Series
Preferred Stock, the Corporation shall pay to the holder of the shares of Series
Preferred  Stock  that were  converted  a cash  adjustment  in  respect  of such
fraction in an amount  equal to the same  fraction of the market price per share
of the Common Stock (as  determined in a manner  prescribed in good faith by the
Board of Directors) at the close of business on the Conversion Date.

                                    (l)     PARTIAL CONVERSION.  In the event
some but not all of the  shares  of  Series  Preferred  Stock  represented  by a
certificate  or  certificates   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 Preferred Stock which were not converted.

                                    (m)     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  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  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 Preferred Stock, the Corporation shall take such corporate action as may,
in the opinion of its  counsel,  be necessary  to increase  its  authorized  but
unissued  shares of Common Stock to such number of shares as shall be sufficient
for such purpose.

<PAGE>

                                                                              17


                           5.3.5    REDEMPTION.

                                    (a)     OPTIONAL REDEMPTION.

                                            (i)      OPTIONAL REDEMPTION OF
SERIES A PREFERRED  STOCK AND SERIES B PREFERRED  STOCK. In the event that there
shall not have occurred a closing of a Qualified  Public Offering (as defined in
Section  5.3.4(b)  hereof)  prior to December 23,  2000,  at the election of any
holder of shares of Series A Preferred Stock or any holder of Series B Preferred
Stock outstanding as of December 24, 2000, the Corporation shall redeem all (but
not part) of the shares of Series A Preferred Stock and Series B Preferred Stock
then held by such holder.  Payment of the Series A Redemption  Price (as defined
below) to the  holders of Series A Preferred  Stock and the Series B  Redemption
Price (as defined  below) to the holders of shares of Series B Preferred  Stock,
shall be made by the  Corporation on January 23, 2001, for a cash price equal to
the  original  purchase  price paid by such  holders  for each share of Series A
Preferred Stock and Series B Preferred Stock outstanding, adjusted for any stock
split,  combined  consolidation  or stock  distribution  or stock dividends with
respect to such  shares  (the  "Series A  Redemption  Price"  and the  "Series B
Redemption  Price,"  respectively).  On or  prior  to  December  24,  2000,  the
Corporation  shall give  written  notice (the  "Series A and Series B Redemption
Notice") by mail, postage prepaid, to the holders of the then outstanding shares
of Series A Preferred  Stock and Series B Preferred Stock at the address of each
such holder appearing on the books of the Corporation or given by such holder to
the  Corporation  for the  purpose of notice.  Such  notice  shall set forth the
Series A Redemption Price and the Series B Redemption Price, as the case may be,
and shall further state that any holder of shares of Series A Preferred Stock or
Series B  Preferred  Stock who  intends  to request  redemption  of its Series A
Preferred  Stock or Series B  Preferred  Stock,  respectively,  pursuant to this
Section  5.3.5(a) must give written notice to the Corporation of its request for
redemption on or before  January 11, 2001.  On or after  January 11, 2001,  each
holder of shares of Series A Preferred  Stock and Series B  Preferred  Stock who
requested  that such  holder's  shares of Series A Preferred  Stock and Series B
Preferred Stock be so redeemed,  shall surrender the certificate or certificates
evidencing  such shares to the  Corporation.  In the case of any  certificate or
certificates  which  have been  lost,  stolen or  destroyed,  the holder of such
certificate or certificates  shall make and deliver an affidavit of that fact to
the Corporation without the necessity of giving the Corporation a bond.

                                            (ii)     MANDATORY REDEMPTION OF 
SERIES A PREFERRED  STOCK AND SERIES B  PREFERRED  STOCK.  If after  sending the
Series A and Series B Redemption Notice,  the Corporation  receives requests for
redemption  on or  prior to  January  11,  2001  from  the  holders  of at least
sixty-seven percent (67%) of the Series A Preferred Stock and Series B Preferred
Stock taken together,  it shall give written notice by mail, postage prepaid, to
the  holders of Series A Preferred  Stock and Series B Preferred  Stock that all
shares  of the  Series A  Preferred  Stock and  Series B  Preferred  Stock  then
outstanding  will be redeemed  on January  23, 2001 (the  "Series A 
<PAGE>

                                                                              18

and Series B Redemption  Date") for a per share cash price equal to the Series A
Redemption  Price and the  Series B  Redemption  Price,  as the case may be. The
notice shall further call upon such holders to surrender to the  Corporation  on
or before the Series A and Series B Redemption  Date at the place  designated in
the notice such holder's certificate or certificates  representing the shares to
be redeemed.  On or after the Series A and Series B Redemption Date, each holder
of shares of Series A Preferred  Stock and Series B Preferred  Stock  called for
redemption  shall  surrender the  certificate or  certificates  evidencing  such
shares to the Corporation.  In the case of any certificate or certificates which
have  been  lost,  stolen  or  destroyed,  the  holder  of such  certificate  or
certificates shall make and deliver an affidavit of that fact to the Corporation
without the necessity of giving the Corporation a bond.

                                            (iii)    OPTIONAL REDEMPTION OF
SERIES C PREFERRED  STOCK.  In the event there shall not have occurred a closing
of a Qualified  Public Offering (as defined in Section 5.3.4(b) hereof) prior to
November 3, 2001, at the election of each holder of shares of Series C Preferred
Stock  outstanding as of November 4, 2001, the Corporation shall redeem all (but
not part) of the shares of Series C  Preferred  Stock then held by such  holder.
Payment of the  applicable  Series C Redemption  Price (as defined below) to the
holders of Series C Preferred Stock shall be made by the Corporation on December
3, 2001,  for a cash price  equal to the  original  purchase  price paid by such
holders for each share of Series C Preferred Stock outstanding, adjusted for any
stock split,  combined  consolidation  or stock  distribution or stock dividends
with respect to such shares (the "Series C  Redemption  Price").  On or prior to
November 4, 2001,  the  Corporation  shall give  written  notice (the  "Series C
Redemption  Notice")  by  mail,  postage  prepaid,  to the  holders  of the then
outstanding  shares  of Series C  Preferred  Stock at the  address  of each such
holder  appearing on the books of the Corporation or given by such holder to the
Corporation for the purpose of notice.  The Series C Redemption Notice shall set
forth the Series C Redemption  Price and shall  further state that any holder of
shares of Series C  Preferred  Stock who  intends to request  redemption  of its
Series C Preferred  Stock  pursuant to this Section  5.3.5(a)  must give written
notice to the  Corporation of its request for  redemption on or before  November
21,  2001.  On or after  December  3,  2001,  each  holder of shares of Series C
Preferred  Stock who requested  that such holder's  shares of Series C Preferred
Stock be so redeemed, shall surrender the certificate or certificates evidencing
such shares to the  Corporation.  In the case of any certificate or certificates
which have been lost,  stolen or destroyed,  the holder of such  certificate  or
certificates shall make and deliver an affidavit of that fact to the Corporation
without the necessity of giving the Corporation a bond.

                                            (iv)     MANDATORY REDEMPTION OF
SERIES C PREFERRED STOCK. If after sending the Series C Redemption  Notice,  the
Corporation  receives  requests for  redemption on or prior to November 21, 2001
from the holders of at least sixty-seven percent (67%) of the Series C Preferred
Stock, it shall give written notice by mail, postage prepaid,  to the holders of
Series C  Preferred  Stock  that all  shares of Series C  Preferred  Stock  then
outstanding  will be  redeemed on  December  3,

<PAGE>

                                                                              19

2001 (the  "Series C  Redemption  Date") for a per share cash price equal to the
Series C Redemption  Price.  The notice shall  further call upon such holders to
surrender to the  Corporation  on or before the Series C Redemption  Date at the
place  designated  in the  notice  such  holder's  certificate  or  certificates
representing the shares to be redeemed on or after the Series C Redemption Date,
each holder of shares of Series C Preferred  Stock called for  redemption  shall
surrender  the  certificate  or  certificates  evidencing  such  shares  to  the
Corporation.  In the case of any  certificate  or  certificates  which have been
lost, stolen or destroyed,  the holder of such certificate or certificates shall
make and  deliver  an  affidavit  of that fact to the  Corporation  without  the
necessity of giving the Corporation a bond.

                                            (v)   EXTENSION OF REDEMPTION DATES.
Notwithstanding  the  foregoing  clauses  (i)  through  (iv),  in the  event any
indebtedness  under the Notes  remains  outstanding,  the  holders  of shares of
Series A Preferred Stock,  Series B Preferred Stock and Series C Preferred Stock
shall not have the right to require the Corporation to redeem any of such shares
until ninety (90) days after the later of (x) the date on which such Notes shall
be indefeasibly paid in full and (y) the applicable Redemption Date.

                                    (b)     TERMINATION OF RIGHTS.  From and
after the Series A and Series B Redemption  Date or the Series C Redemption Date
(each a "Redemption  Date"),  as the case may be, unless there shall have been a
default in payment or tender by the Corporation of the Series A Redemption Price
and the Series B  Redemption  Price or the  Series C  Redemption  Price  (each a
"Redemption  Price"), as the case may be, all rights of the holders with respect
to such  redeemed  shares of the Series  Preferred  Stock  (except  the right to
receive the applicable  Redemption  Price upon  surrender or their  certificate)
shall cease and such shares shall not  thereafter be transferred on the books of
this Corporation or be deemed to be outstanding for any purpose whatsoever.

                                    (c)     INSUFFICIENT FUNDS.  If the funds of
the  Corporation  legally  available  for  redemption  of shares  of the  Series
Preferred Stock on the applicable Redemption Date are insufficient to redeem the
total number of shares of Series A Preferred  Stock and Series B Preferred Stock
or Series C Preferred  Stock, as the case may be, on such  Redemption  Date, the
Corporation  will use its best  efforts to engage in a  recapitalization  or the
sale of its business or businesses to generate sufficient funds to redeem all of
the shares of the Series A Preferred  Stock and Series B Preferred  Stock or the
Series C Preferred  Stock, as the case may be. The  Corporation  shall use those
funds which are legally  available to redeem the maximum possible number of such
shares  ratably  among the  holders of such shares to be  redeemed.  At any time
thereafter  when additional  funds of the Corporation are legally  available for
the  redemption  of  shares of the  Series  Preferred  Stock,  such  funds  will
immediately  be used to redeem the balance of the shares  which the  Corporation
has become  obligated to redeem on the applicable  Redemption  Date but which it
has not redeemed at the applicable Redemption Price. If any shares of the Series
Preferred  Stock  are not  

<PAGE>

                                                                              20

redeemed for the foregoing reason or because the Corporation otherwise failed to
pay  or  tender  to  pay  the  aggregate  applicable  Redemption  Price  on  all
outstanding  shares of Series  Preferred  Stock,  all shares which have not been
redeemed shall remain outstanding and entitled to all the rights and preferences
provided  herein,  and the  Corporation  shall pay  interest  on the  applicable
Redemption Price for the unredeemed portion at an aggregate per annum rate equal
to the greater of (i) twelve  percent (12%) or (ii) the Base Rate or any similar
lending rate announced from time to time by The First National Bank of Boston or
any  successor  entity plus five percent (5%),  increased,  in each case, by one
percent (1%) at the end of each  calendar  quarter  thereafter.  All  provisions
hereof  are  hereby  expressly  limited  so  that  in no  contingency  or  event
whatsoever  shall the  amount  paid or agreed to be paid to the  holders  of the
Series  Preferred  Stock exceed the maximum amount which the holder is permitted
to receive under  applicable  law. If fulfillment of any provision  hereof shall
involve  exceeding  such  amount,  then the  obligation  to be  fulfilled  shall
automatically  be reduced to the limit of such maximum  amount.  As used herein,
the term  "applicable  law" shall mean the law in effect as of the date  hereof,
provided,  however,  that in the event  that  there is a change in the law which
results in a higher permissible rate of interest, then these provisions shall be
governed by such new law as of its effective date.

                           5.3.6    RESTRICTIONS AND LIMITATIONS.  The
Corporation  shall not without the  affirmative  vote or written  consent of the
holders of a majority  of the then  outstanding  shares of the Series  Preferred
Stock:

                                    (i)    Redeem, purchase or otherwise acquire
for value (or pay into or set aside for a sinking  fund for such  purpose),  any
share or shares of Series  Preferred  Stock other than pursuant to Section 5.3.5
hereof;

                                    (ii) Redeem,  purchase or otherwise  acquire
for value (or pay into or set aside for a sinking fund for such  purpose) any of
the  Common  Stock of any class or any other  capital  stock of the  Corporation
other  than the  Series  Preferred  Stock or any of the  Corporation's  options,
warrants or convertible or exchangeable securities, except that these provisions
will not prohibit the Corporation  from  repurchasing or redeeming any shares of
capital stock from  individuals  and entities who have entered into  stockholder
agreements,  stock option  agreements,  employment  agreements  or other similar
agreements  with the  Corporation  in each case  approved  by a majority  of the
Series A Investor  Directors,  Series B Investor  Director and Series C Investor
Director under which the  Corporation  has the option to repurchase  such shares
upon the occurrence of certain  events,  including the termination of employment
and involuntary transfers by operation of law (and their permitted transferees);
provided,  however,  that any such  agreement  between such  individual  and the
Corporation under which the Corporation has such options to repurchase,  must be
approved by the affirmative vote or written consent of the holders of a majority
of the then outstanding Series Preferred Stock before such agreement is executed
by the Corporation;

<PAGE>

                                                                              21

                                    (iii) Authorize or issue, or obligate itself
to issue,  any other debt or equity  security,  other than as  provided  in that
certain Investment and Stockholder's Agreement, by and among the Corporation and
the  Investors  named  therein,  dated as of October 31,  1997 (the  "Investment
Agreement");

                                    (iv)  Increase  or  decrease  (other than by
conversion as permitted  hereby) the total number of authorized shares of Series
Preferred Stock;

                                    (v)     Pay or declare any dividend or 
distribution on any of its capital stock;

                                    (vi) Authorize any merger,  consolidation of
the  Corporation  with or into any other  company or entity,  or  authorize  the
reorganization  or sale of the Corporation or the sale of  substantially  all of
the assets of the Corporation;

                                    (vii)  Amend the  charter  documents  of the
Corporation or amend the Bylaws of the  Corporation in any manner that adversely
affects the preferences,  powers,  rights or privileges of the holders of Series
Preferred Stock;

                                    (viii)  Authorize any reclassification or 
recapitalization of the outstanding capital stock of the Corporation;

                                    (ix) Approve the annual  operating budget of
the Corporation;

                                    (x)   Change the composition or compensation
of management of the Corporation except as provided in the Investment Agreement;
or

                                    (xi)  Incur,  create,  assume,  become or be
liable in any manner with respect to, or permit to exist, any new or additional
indebtedness  or  liability  in excess of  $50,000,  except as  provided  in the
Investment Agreement.

                           5.3.7    NO REISSUANCE OF SERIES PREFERRED STOCK.  No
share or shares of the Series  Preferred  Stock  acquired by the  Corporation by
reason of redemption,  purchase,  conversion or otherwise shall be reissued, and
all such shares shall be canceled, retired, and eliminated from the shares which
the Corporation  shall be authorized to issue.  The Corporation may from time to
time take such  appropriate  corporate  action as may be necessary to reduce the
authorized number of shares of the Series Preferred Stock accordingly.

                           5.3.8    NOTICES OF RECORD DATE.  In the event (i) 
the Corporation  establishes a record date to determine the holders of any class
of securities who are entitled to receive any dividend or other distribution, or
(ii)  there  occurs  any  capital   
<PAGE>

                                                                              22

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  company,  or any  other  entity  or  person,  or any
voluntary  or  involuntary  dissolution,   liquidation  or  winding  up  of  the
Corporation, the Corporation shall mail to each holder of Series Preferred Stock
at least 20 days prior to the record date specified therein, a notice specifying
(a)  the  date  of  such  record  date  for the  purpose  of  such  dividend  or
distribution and a description of such dividend or distribution, (b) the date on
which  any  such  reorganization,   reclassification,  transfer,  consolidation,
merger, dissolution,  liquidation or winding up is expected to become effective,
and (c) 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, transfer, consolidation,
merger, dissolution, liquidation or winding up.

                           5.3.9    OTHER RIGHTS.  Except as otherwise provided 
in this Amended and Restated  Certificate of Incorporation shares of each series
of the Series  Preferred  Stock and shares of Common Stock shall be identical in
all respects (each share of Series Preferred Stock having  equivalent  rights to
the number of shares of Common Stock into which it is then  convertible),  shall
have the same powers,  preferences  and rights,  without  preference of any such
class or share  over any other  such  class or share,  and shall be treated as a
single class of stock for all purposes.

                           5.3.10  RANKING.  Each series of Series Preferred 
Stock shall rank on a parity with the other series of Series  Preferred Stock as
to the distribution of assets on liquidation,  dissolution and winding up of the
Corporation. The Series Preferred Stock shall rank senior to the Common Stock as
to the distribution of assets on liquidation,  dissolution and winding up of the
Corporation.

                           5.3.11  MISCELLANEOUS.


                                    (a)     All notices referred to herein shall
be in  writing,  and all notices  hereunder  shall be deemed to have been given,
upon the  earlier  of  delivery  thereof by hand  delivery,  by  courier,  or by
standard form of telecommunication, addressed: (i) if to the Corporation, to its
principal executive office (Attention:  President) and to the transfer agent, if
any, for the Series Preferred Stock or other agent of the Corporation designated
as permitted  hereby or (ii) if to any holder of the Series  Preferred  Stock or
Common  Stock,  as the case may be, to such holder at the address of such holder
as listed in the stock  record books of the  Corporation  (which may include the
records of any transfer agent for the Series Preferred Stock or Common Stock, as
the case may be) or (iii) to such other address as the  Corporation  or any such
holder, as the case may be, shall have designated by notice similarly given.

                                    (b)     The Corporation shall pay any and
all stock transfer and documentary stamp taxes that may be payable in respect of
any issuance or 
<PAGE>

                                                                              23

                                                                            
delivery of shares of Series  Preferred Stock or shares of Common Stock or other
securities  issued on  account  of Series  Preferred  Stock  pursuant  hereto or
certificates representing such shares or securities.  The Corporation shall not,
however,  be required to pay any such tax which may be payable in respect of any
transfer  involved in the  issuance  or  delivery of shares of Series  Preferred
Stock or Common Stock or other securities in a name other than that in which the
shares of Series  Preferred  Stock with  respect  to which such  shares or other
securities are issued or delivered were registered, or in respect of any payment
to any person with respect to any such shares or securities other than a payment
to the  registered  holder  thereof,  and shall not be required to make any such
issuance,  delivery or payment unless and until the person otherwise entitled to
such issuance, delivery or payment 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 is not payable.  (c) The Corporation may appoint,  and from
time to time  discharge  and change,  a transfer  agent of the Series  Preferred
Stock.  Upon  any  such  appointment  or  discharge  of a  transfer  agent,  the
Corporation shall send notice thereof by hand delivery,  by courier, by standard
form of  telecommunication  or by first class mail  (postage  prepaid),  to each
holder of record of the Series Preferred Stock. 5.4 Subject to the provisions of
this Amended and Restated  Certificate of Incorporation  and except as otherwise
provided  by law,  the stock of the  Corporation,  regardless  of class,  may be
issued for such  consideration  and for such corporate  purposes as the Board of
Directors may from time to time determine.

                  60  COMPROMISE,  ARRANGEMENT  OR  REORGANIZATION.  Whenever  a
compromise or arrangement is proposed between this Corporation and its creditors
or any class of them and/or between this Corporation and its stockholders or any
class of them, any court of equitable  jurisdiction within the State of Delaware
may, on the application in a summary way of this  Corporation or of any creditor
or  stockholder  thereof or on the  application  of any  receiver  or  receivers
appointed  for this  Corporation  under the  provisions  of  Section  291 of the
General  Corporation  Law or on the application of trustees in dissolution or of
any receiver or receivers appointed for this Corporation under the provisions of
Section 279 of General Corporation Law order a meeting of the creditors or class
of  creditors,  and/or  of the  stockholders  or class of  stockholders  of this
Corporation, as the case may be, to be summoned in such manner as the said court
directs.  If a majority  in number  representing  three-fourths  in value of the
creditors  or  class  of  creditors,  and/or  of the  stockholders  or  class of
stockholders of this Corporation, as the case may be, agree to any compromise or
arrangement and to any  reorganization  of this  Corporation as a consequence of
such compromise or arrangement,  the said compromise or arrangement and the said
reorganization  shall, if sanctioned by the court to which the said  application
has been made, be binding on all the creditors or class of creditors,  and/or on
all stockholders or class of stockholders of this  Corporation,  as the case may
be, and also on this Corporation.

<PAGE>

                                                                              24

                  70  LIMITATION OF  LIABILITY.  No director of the  Corporation
shall be personally  liable to the Corporation or its  stockholders for monetary
damages for breach of fiduciary duty as a director, except for liability (a) for
any  breach  of  the  director's  duty  of  loyalty  to the  Corporation  or its
stockholders,  (b) for acts or  omissions  not in good  faith  or which  involve
intentional  misconduct or a knowing  violation of law, (c) under Section 174 of
the General  Corporation Law or (d) for any transaction  from which the director
derived  any  improper  personal  benefits.  If the General  Corporation  Law is
hereafter amended to authorize  corporate action further eliminating or limiting
the personal  liability of  directors,  then the  liability of a director of the
Corporation  shall be eliminated or limited to the fullest  extent  permitted by
the General Corporation Law, as so amended.

                  Any repeal or modification  of the foregoing  paragraph by the
stockholders  of the  Corporation  shall  not  adversely  affect  any  right  or
protection of a director of the Corporation  existing at the time of such repeal
or modification.

                  80       INDEMNIFICATION.

                           8.1      INDEMNITY UNDERTAKING.  To the extent not 
prohibited  by law, the  Corporation  shall  indemnify  any person (an "Eligible
Person")  who  is or  was  made,  or  threatened  to be  made,  a  party  to any
threatened,  pending or completed  action,  suit or proceeding (a "Proceeding"),
whether civil,  criminal,  administrative or investigative,  including,  without
limitation,  an  action  by or in the  right of the  Corporation  to  procure  a
judgment in its favor,  by reason of the fact that such  person,  or a person of
whom such person is the legal representative, is or was a Director or officer of
the Corporation,  or, while a Director or officer of the Corporation,  is or was
serving,  at the  request of the  Corporation,  as a director  or officer of any
other corporation or in a capacity with comparable authority or responsibilities
for any  partnership,  joint  venture,  trust,  employee  benefit  plan or other
enterprise (an "Other Entity"),  against  judgments,  fines,  penalties,  excise
taxes,  amounts paid in settlement  and costs,  charges and expenses  (including
attorneys' fees, disbursements and other charges).

                           8.2      PAYMENT OF EXPENSES.  The Corporation shall,
from time to time pay to an Eligible  Person the funds  necessary for payment of
expenses, including attorneys' fees and disbursements,  incurred by or on behalf
of such Eligible Person in connection with any Proceeding,  as such expenses are
incurred  in  advance of the final  disposition  of such  Proceeding;  provided,
however,  that,  if required  by the  General  Corporation  Law,  such  expenses
incurred by or on behalf of such  Eligible  Person may be paid in advance of the
final  disposition  of a Proceeding  only upon receipt by the  Corporation of an
undertaking,  by or on behalf of such Eligible Person,  to repay any such amount
so advanced if it shall ultimately be determined by final judicial decision from
which  there is no  further  right of appeal  that such  Eligible  Person is not
entitled to be indemnified for such expenses.


<PAGE>

                                                                              25

                           8.3      CERTAIN EXCLUSIONS.  Section 8.1 and 8.2
shall not include any  Proceeding  commenced by any Eligible  Person without the
advance approval of the Board of Directors.

                           8.4      BINDING EFFECT.  The provisions of this
Section 8 shall be a contract between the Corporation, on the one hand, and each
Eligible Person,  on the other hand,  pursuant to which the Corporation and each
such Eligible  Person intend to be, and shall be,  legally  bound.  No repeal or
modification  of this  Section 8 shall  affect  any rights or  obligations  with
respect to any state of facts then or  theretofore  existing  or any  proceeding
theretofore or thereafter  brought or threatened  based in whole or in part upon
any such state of facts.

                           8.5      PROCEDURAL RIGHTS.  The rights to
indemnification  and payment of expenses  provided  by, or granted  pursuant to,
this  Section 8 shall be  enforceable  by an  Eligible  Person  entitled to such
indemnification  or payment of expenses in any court of competent  jurisdiction.
The burden of proving  that such  indemnification  or payment of expenses is not
appropriate shall be on the Corporation.  Neither the failure of the Corporation
(including the disinterested Directors on its Board of Directors, a committee of
such disinterested  Directors,  the Corporation's  independent legal counsel and
its stockholders) to have made a determination prior to the commencement of such
action  that  such  indemnification  or  payment  of  expenses  is proper in the
circumstances,  nor an actual  determination  by the Corporation  (including the
disinterested  Directors  on  its  Board  of  Directors,  a  committee  of  such
disinterested  Directors,  the  Corporation's  independent legal counsel and its
stockholders)  that  such  person is not  entitled  to such  indemnification  or
payment  of  expenses  shall  constitute  a  defense  to the  action or create a
presumption that such person is not so entitled. Notwithstanding anything to the
contrary in Section 8.3, such Eligible  Person shall also be indemnified for any
expenses incurred in connection with successfully  establishing his or her right
to such indemnification or payment of expenses, in whole or in part, in any such
proceeding.

                           8.6      SERVICE DEEMED AT CORPORATION'S REQUEST. Any
Director or officer of the  Corporation  serving (a) as a director or officer of
another  corporation  of which a majority of the shares  entitled to vote in the
election of its directors is held, directly or indirectly, by the Corporation or
(b) any employee benefit plan of the Corporation or any corporation  referred to
in clause (a) shall be deemed to be doing so at the request of the Corporation.

                           8.7      ELECTION OF APPLICABLE LAW.  Any person
entitled  to be  indemnified  or to  payment  of  expenses  as a matter of right
pursuant  to this  Section 8 may elect to have the right to  indemnification  or
payment of expenses  interpreted on the basis of the applicable law in effect at
the time of the  occurrence of the event or events giving rise to the applicable
Proceeding,  to the extent  permitted by law, or on the basis of the  applicable
law in effect at the time such indemnification or payment of expenses is sought.
Such election shall be made, by a notice in writing to the 


<PAGE>

                                                                              26

Corporation,  at the time  indemnification  or  payment of  expenses  is sought;
provided, however, that if no such notice is given, the right to indemnification
or  payment of  expenses  shall be  determined  by the law in effect at the time
indemnification or payment of expenses is sought.

                           8.8      RIGHTS NOT EXCLUSIVE.  The rights to 
indemnification  and  reimbursement  or advancement of expenses  provided by, or
granted  pursuant to, this Section 8 shall not be deemed  exclusive of any other
rights to which a person seeking indemnification or reimbursement or advancement
of expenses may have or hereafter be entitled  under any statute,  this Restated
Certificate  of  Incorporation,   the  By-laws,  any  agreement,   any  vote  of
stockholders or disinterested  Directors or otherwise,  both as to action in his
or her official capacity and as to action in another capacity while holding such
office.

                           8.9      CONTINUATION OF BENEFITS.  The rights to 
indemnification  and  reimbursement  or advancement of expenses  provided by, or
granted pursuant to, this Section 8 shall continue as to a person who has ceased
to be a Director or officer (or other person  indemnified  hereunder)  and shall
inure to the benefit of the executors, administrators, legatees and distributees
of such person.

                           8.10     INSURANCE.  The Corporation shall have power
to  purchase  and  maintain  insurance  on behalf of any  person who is or was a
director, officer, employee or agent of the Corporation, or is or was serving at
the request of the Corporation as a director,  officer,  employee or agent of an
Other Entity, against any liability asserted against such person and incurred by
such  person in any such  capacity,  or arising out of such  person's  status as
such,  whether or not the  Corporation  would have the power to  indemnify  such
person  against such  liability  under the provisions of this Section 8 or under
Section 145 of the General Corporation Law or any other provision of law.

                  90 DIRECTORS.  This Section is inserted for the  management of
the  business  and for the conduct of the affairs of the  Corporation  and it is
expressly  provided  that  it is  intended  to be in  furtherance  of and not in
limitation or exclusion of the powers conferred by applicable law.

                           9.1      NUMBER, ELECTION, AND TERMS OF OFFICE OF 
BOARD OF DIRECTORS.  The business of the Corporation shall be managed by a Board
of  Directors  consisting  of not less than three or more than 15  members.  The
exact number of directors within the minimum and maximum  limitations  specified
in the preceding sentence shall be fixed from time to time by resolution adopted
by a majority of the entire  Board of Directors  then in office,  whether or not
present at a meeting. Directors need not be stockholders of the Corporation. The
directors shall be divided into three classes of  approximately  equal size with
the term of office of the first class to expire at the first  annual  meeting of
stockholders  of the  Corporation  next  following the end of the  Corporation's
fiscal year ending  December 31, 1998, the term of office of the 

<PAGE>

                                                                              27

second  class to expire at the  first  annual  meeting  of  stockholders  of the
Corporation  next  following  the end of the  Corporation's  fiscal  year ending
December  31,  1999 and the term of office  of the third  class to expire at the
annual meeting of stockholders of the Corporation  next following the end of the
Corporation's  fiscal year ending  December 31, 2000. At each annual  meeting of
stockholders  following  such  initial  election as specified  above,  directors
elected to succeed  those  directors  whose terms  expire shall be elected for a
term of office to expire at the third succeeding  annual meeting of stockholders
after their election.

                           Notwithstanding the foregoing, whenever, pursuant to
the  provisions  of Section 5.1 of this  Amended  and  Restated  Certificate  of
Incorporation,  the holders of any one or more series of  Preferred  Stock shall
have the right,  voting separately as a series or together with holders of other
such series, to elect Directors at an annual or special meeting of stockholders,
the election,  term of office,  filling of vacancies and other  features of such
directorships  shall be  governed  by the  terms of this  Amended  and  Restated
Certificate of  Incorporation  and any  certificate of  designations  applicable
thereto.

                           During any period when the holders of any series of 
Preferred Stock have the right to elect additional  Directors as provided for or
fixed  pursuant to the  provisions of this Amended and Restated  Certificate  of
Incorporation  or any  certificate of  designation  related  thereto,  then upon
commencement  and for  the  duration  of the  period  during  which  such  right
continues:  (i) the then otherwise total  authorized  number of Directors of the
Corporation  shall  automatically  be  increased  by such  specified  number  of
Directors,  and the holders of such  Preferred  Stock shall be entitled to elect
the additional  Directors so provided for or fixed pursuant to said  provisions,
and (ii) each  such  additional  Director  shall  serve  until  such  Director's
successor  shall have been duly elected and qualified,  or until such Director's
right to hold such  office  terminates  pursuant to said  provisions,  whichever
occurs  earlier,  subject to such  Director's  earlier death,  disqualification,
resignation  or  removal.  Except  as  otherwise  provided  by the  Board in the
resolution or resolutions  establishing such series, whenever the holders of any
series of Preferred  Stock having such right to elect  additional  Directors are
divested of such right  pursuant to the  provisions of such stock,  the terms of
office of all such additional Directors elected by the holders of such stock, or
elected  to  fill  any  vacancies   resulting   from  the  death,   resignation,
disqualification  or  removal  of such  additional  Directors,  shall  forthwith
terminate and the total and  authorized  number of Directors of the  Corporation
shall be reduced accordingly.

                           9.2      TENURE.  Notwithstanding any provisions to
the contrary  contained herein, (i) each director shall hold office until his or
her successor is elected and qualified,  or until the earlier of such director's
death,  resignation  or removal and (ii) the term of any director who is also an
officer of the Corporation  shall terminate if he or she ceases to be an officer
of the Corporation.

<PAGE>

                                                                              28

                           9.3      NEWLY CREATED DIRECTORSHIPS AND VACANCIES. 
Subject to the  rights of the  holders  of any  series of  Preferred  Stock then
outstanding,  newly  created  directorships  resulting  from any increase in the
authorized  number of  directors  or any  vacancies  in the  Board of  Directors
resulting from death, resignation,  retirement,  disqualification,  removal from
office  or other  cause  shall be  filled by a  majority  vote of the  remaining
directors  then in office  although less than a quorum,  or by a sole  remaining
director and  directors  so chosen shall hold office for a term  expiring at the
annual meeting of stockholders at which the term of the class to which they have
been elected  expires or, in each case,  until their  respective  successors are
duly elected and qualified.  No decrease in the number of directors constituting
the Board of Directors  shall shorten the term of any incumbent  director.  When
any director  shall give notice of  resignation  effective at a future date, the
Board of Directors  may fill such  vacancy to take effect when such  resignation
shall become effective. In the event of a vacancy in the Board of Directors, the
remaining  Directors,  except as  otherwise  provided by law,  may  exercise the
powers of the full Board of Directors until the vacancy is filled.

                           9.4      REMOVAL OF DIRECTORS. Any one or more or all
of the  directors  may be  removed,  at any  time,  but  only  for  cause by the
stockholders  having at least a majority in voting  power of the then issued and
outstanding shares of capital stock of the Corporation.

                  100 ACTION BY STOCKHOLDERS.  Notwithstanding the provisions of
Section 228 of the  General  Corporation  Law (or any  successor  statute),  any
action  required or permitted by the General  Corporation Law to be taken at any
annual or special  meeting of  stockholders of the Corporation may be taken only
at such an annual or  special  meeting  of  stockholders  and cannot be taken by
written consent  without a meeting.  At any annual meeting or special meeting of
stockholders of the Corporation,  only such business shall be conducted as shall
have been brought before such meeting in the manner provided by the By-laws.



<PAGE>


                  110 ADOPTION,  AMENDMENT AND/OR REPEAL OF BYLAWS. The Board of
Directors  may from time to time adopt,  amend or repeal the  Bylaws;  provided,
however,  that any Bylaws  adopted or amended by the Board of  Directors  may be
amended  or  repealed,  and  any  Bylaws  may  be  adopted,  by a  vote  of  the
stockholders  having at least  two-thirds of the voting power of the then issued
and outstanding shares of capital stock of the Corporation.

                  IN WITNESS WHEREOF, the undersigned has executed this Restated
Certification of Incorporation this _____ day of August, 1998.

                                           PATHNET, INC.


                                           By:
                                              --------------------------------
                                           Richard A. Jalkut
                                           President and Chief Executive Officer


Attest:


By:
   --------------------------------
   Michael A. Lubin
   Vice President, General Counsel and Secretary