RESTATED CERTIFICATE OF INCORPORATION
                                       OF
                           VESTCOM INTERNATIONAL, INC.



                  THE  UNDERSIGNED,  certifies that it has adopted the following
restated certificate of incorporation:

                                    ARTICLE I
                                 Corporate Name

     The name of the corporation is Vestcom  International,  Inc.  (hereinafter,
the "corporation").

                                   ARTICLE II
                                     Purpose

     The purpose for which this  corporation  is  organized  is to engage in any
activity within the purposes for which  corporations  may be organized under the
New Jersey Business Corporation Act.

                                   ARTICLE III
                                  Capital Stock

     The corporation is authorized to issue thirty million  (30,000,000) shares,
divided into:

          (a) Twenty Million  (20,000,000)  shares of common stock,  with no par
value  (sometimes  collectively  referred to hereinafter as the "Common Stock");
and

          (b) Ten Million (10,000,000) shares of undesignated stock; all of such
shares shall have the relative rights, preferences,  and limitations required by
applicable law and as set forth in this certificate of incorporation.

          Section 1.  Authority to Divide  Shares into  Classes and Series.  The
Board of Directors of the  corporation is hereby  expressly  authorized to amend
the  certificate  of  incorporation  to divide  the  undesignated  shares of the
corporation  into one or more  classes  of common  or  preferred  stock,  and to
further  divide  any of  those  or any  existing  classes  into  series,  and to
determine the  designation,  the number,  and the powers,  preferences,  rights,
qualifications,  limitations  and  restrictions  relating to the shares of those
classes or series,  as the case may be. The  authority of the Board of Directors
with  respect  to each class or series  shall  include,  but not be limited  to,
determining the following:

          (a) the  designation of such class or series,  the number of shares to
constitute  such class or series and the stated value if different  from the par
value thereof;

          (b)  whether  the  shares of such class or series  shall  have  voting
rights,  in addition to any voting rights provided by law, and, if so, the terms
of such voting rights, which may be general or limited;

          (c) the dividends,  if any,  payable on such class or series,  whether
any such  dividends  shall be  cumulative,  and,  if so,  from what  dates,  the
conditions  and dates  upon  which  such  dividends  shall be  payable,  and the
preference or relation which such dividends shall bear to the dividends  payable
on any  shares  of stock of any  other  class or any  other  series of common or
preferred stock, as the case may be;

          (d)  whether  the shares of such  class or series  shall be subject to
redemption  either by the  corporation or the holders  thereof,  and, if so, the
times, prices and other conditions of such redemption;

          (e) the  amount or amounts  payable  to the  holders of shares of such
class or series upon,  and the rights of the holders of such class or series in,
the voluntary or involuntary liquidation, dissolution or winding up, or upon any
distribution of the assets, of the corporation;

          (f) whether the shares of such class or series shall be subject to the
operation  of a  retirement  or sinking  fund and,  if so, the extent to and the
manner in which any such  retirement  or  sinking  fund  shall be applied to the
purchase or redemption  of the shares of such class or series for  retirement or
other corporate purposes and the terms and provisions  relating to the operation
thereof;

          (g)  whether the shares of such class or series  shall be  convertible
into,  or  exchangeable  for,  shares of stock of any  other  class or any other
series of common or  preferred  stock or any other  securities  and,  if so, the
price or prices or the rate or rates of  conversion  or exchange and the method,
if any, of adjusting the same,  and any other terms and conditions of conversion
or exchange;

          (h) the  limitations and  restrictions,  if any, to be effective while
any shares of such class or series are outstanding upon the payment of dividends
or the making of other  distributions  on, and upon the purchase,  redemption or
other  acquisition by the  corporation of, shares of stock of any other class or
any other series of common or preferred stock;

          (i) the  conditions  or  restrictions,  if any,  upon the  creation of
indebtedness  of the  corporation or upon the issuance of any additional  stock,
including  additional  shares of such  class or series or of any other  class or
series of common or preferred stock; and

          (j)  any  other  powers,  preferences  and  relative,   participating,
optional and other specific  rights,  and any  qualifications,  limitations  and
restrictions thereof.

          The powers,  preferences  and  relative,  participating,  optional and
other special rights of each class or series of common or preferred  stock,  and
the qualifications, limitations or restrictions thereof, if any, may differ from
those of any and all other  classes or series of common or preferred  stock,  as
the case may be, at any time outstanding. All shares of any one series of common
or preferred  stock and all shares of any one class of common or preferred stock
unless that class is divided  into  series,  shall be  identical in all respects
with all other shares of such series or class, as applicable, except that shares
of any one series or class,  as the case may be,  issued at different  times may
differ as to the dates from which dividends thereof shall be cumulative.

          Section 2. Authority to Change Designation,  Number, etc. The Board of
Directors  of the  corporation  is  hereby  expressly  authorized  to amend  the
certificate of  incorporation  to change the  designation,  the number,  and the
powers,  preferences,  rights,  qualifications,   limitations  and  restrictions
relating to any authorized but unissued shares of stock.

                                   ARTICLE IV
                          Registered Office and Agent

          The  address of the  corporation's  current  registered  office is c/o
Lowenstein,  Sandler,  Kohl,  Fisher  &  Boylan,  P.A.,  65  Livingston  Avenue,
Roseland,  New Jersey 07068; the name of the  corporation's  current  registered
agent at that address is Alan Wovsaniker, Esq.

                                    ARTICLE V
                           Current Board of Directors

          The current board of directors consists of two persons whose names and
addresses are as follows:  

                                    Peter  McLaughlin  
                                    Paragon Towers 
                                    2332 Needham Street
                                    Newton, MA 02164

                                    Joel Cartun
                                    c/o Comvestrix Corp.
                                    1100 Valley Brook Avenue
                                    Lyndhurst, NJ  07071

                                   ARTICLE VI
                                 Indemnification
 
          Every  person who is or was a director  or officer of the  corporation
shall be  indemnified  by the  corporation to the fullest extent allowed by law,
including  the  indemnification  permitted  by N.J.S.  14A:3-5(8),  against  all
liabilities  and expenses  imposed upon or incurred by that person in connection
with any  proceeding in which that person may be made, or threatened to be made,
a party,  or in which that  person may become  involved by reason of that person
being or having been a director or officer or of serving or having served in any
capacity with any other enterprise at the request of the corporation, whether or
not that  person  is a  director  or  officer  or  continues  to serve the other
enterprise  at the time the  liabilities  or expenses  are imposed or  incurred.
During the  pendency  of any such  proceeding,  the  corporation  shall,  to the
fullest extent  permitted by law,  promptly  advance expenses that are incurred,
from time to time, by a director or officer in connection  with the  proceeding,
subject to the receipt by the corporation of an undertaking as required by law.

                                   ARTICLE VII
                   Personal Liability of Directors or Officers

          A director or an officer of the  corporation  shall not be  personally
liable to the corporation or its shareholders for the breach of any duty owed to
the corporation or its shareholders  except to the extent that an exemption from
personal liability is not permitted by the New Jersey Business Corporation Act.


          IN WITNESS  WHEREOF,  the  undersigned  corporation  has  caused  this
certificate  to be executed on its behalf by its duly  authorized  officer as of
this 14th day of March, 1997.


                                   VESTCOM INTERNATIONAL, INC.


                                   By: /s/ Joel Cartun
                                       __________________________________
                                       Joel Cartun, President


<PAGE>


                           CERTIFICATE OF AMENDMENT TO
                        THE CERTIFICATE OF INCORPORATION
                                       OF
                           VESTCOM INTERNATIONAL, INC.
                               Dated: July 9, 1997


          THE   UNDERSIGNED,   certifies  that  it  has  adopted  the  following
Certificate of Amendment to the Certificate of  Incorporation in accordance with
N.J.S. 14A:7-2:

          1. The name of the corporation is Vestcom International, Inc.;

          2. The  resolutions  of the board  required by N.J.S.  14A:7-2(3)  are
annexed hereto as Exhibit 1;

          3. The annexed  resolutions  were duly adopted by the board on July 8,
1997;

          4. The Certificate of Incorporation is amended so that the designation
and  number  of  shares  of each  class and  series  acted  upon in the  annexed
resolutions,  and the relative rights,  preferences and limitations of each such
class and series, are as stated in the annexed resolutions.

          5. This  Certificate of Amendment to the Certificate of  Incorporation
shall be effective upon filing. IN WITNESS WHEREOF, the undersigned  corporation
has caused this  certificate to be executed on its behalf by its duly authorized
officer as of the date first above written. 


                                   VESTCOM INTERNATIONAL, INC.


                                   By:/s/Joel Cartun, President
                                      _________________________
                                      Joel Cartun, President


<PAGE>


                                    EXHIBIT 1
                                     TO THE
                           CERTIFICATE OF AMENDMENT TO
                        THE CERTIFICATE OF INCORPORATION
                                       OF
                           VESTCOM INTERNATIONAL, INC.


                                UNANIMOUS CONSENT
                                       OF
                             THE BOARD OF DIRECTORS
                                       OF
                           VESTCOM INTERNATIONAL, INC.

                            Dated as of: July 8, 1997


          WHEREAS,  in  accordance  with the terms of the proposed  acquisitions
(the  "Acquisitions") by Vestcom  International,  Inc., a New Jersey corporation
(the "Corporation") of Electronic Imaging Services, Inc., a Delaware corporation
("EIS"),  LIRPACO,  Inc., a New Brunswick,  Canada  corporation  ("LIRPACO") and
Image Printing Systems,  Inc., a Wisconsin  corporation ("IPS", EIS, LIRPACO and
IPS  are  sometimes  collectively  referred  to  hereinafter  as  the  "Acquired
Companies"),  certain  stockholders  of each of the  Acquired  Companies  are to
receive different classes of shares of preferred stock of the Corporation, which
shares have not heretofore been designated; and

          WHEREAS,  the Board of Directors is  authorized  by the  Corporation's
Certificate   of   Incorporation   to  designate   classes  and  series  of  the
Corporation's  stock out of the  non-issued  pool of  undesignated  stock of the
Corporation; and

          WHEREAS,  the Board of Directors  deems it in the  Corporation's  best
interest to designate the requisite  classes and series of preferred  stock,  in
such amounts and with such rights,  preferences  and limitations as set forth on
Exhibit A annexed hereto and made a part hereof,  as may be necessary to deliver
to certain of the stockholders of the Acquired  Companies in connection with the
Acquisitions, and to authorize the taking of various actions related thereto;

          NOW, THEREFORE, the undersigned, being all of the members of the Board
of Directors of the  Corporation,  hereby  approve the adoption of the following
resolutions:

          RESOLVED,  that two hundred (200) shares of the undesignated shares of
stock of the Corporation  heretofore existing, be, and hereby are, designated as
a class of preferred stock known as "Class A Convertible Preferred Stock," which
class shall be divided  into two series each of which shall  contain one hundred
(100)  shares,  which  series  shall be known as  "Class A Series I  Convertible
Preferred  Stock"  and  "Class  A  Series  II  Convertible   Preferred   Stock,"
respectively,  each with the relative  rights,  preferences  and limitations set
forth in Sections 1 and 2, respectively, of Exhibit A; and further

          RESOLVED,  that one (1) share of the  undesignated  shares of stock of
the Corporation  heretofore existing be, and hereby is, designated as a class of
preferred  stock known as "Class B Preferred  Stock," with the relative  rights,
preferences and limitations set forth in Section 3 of Exhibit A; and further

          RESOLVED,  that one hundred (100) shares of the undesignated shares of
stock of the Corporation heretofore existing be, and hereby are, designated as a
class of preferred  stock known as "Class C Convertible  Preferred  Stock," with
the  relative  rights,  preferences  and  limitations  set forth in Section 4 of
Exhibit A; and further

          RESOLVED,   that  Joel  Cartun,  Peter  McLaughlin  and  Leslie  Abcug
(collectively,  the  "Authorized  Officers")  be,  and each of them  hereby  is,
authorized and directed, as necessary, to execute and cause to be filed with the
Secretary of State of New Jersey,  a Certificate of Amendment to the Certificate
of  Incorporation  of the  Corporation,  in accordance  with N.J.S.  14A-7-2(4),
relating to the  designation of the shares of preferred stock of the Corporation
as described in the foregoing resolutions,  with such changes,  modifications or
amendments  as such  Authorized  Officers  or any of  them  deems  necessary  or
advisable and shall approve,  such approval to be conclusively  evidenced by his
or their execution thereof; and further

          RESOLVED,  that upon  consummation  of the  respective  Agreements and
Plans of Reorganization  with EIS and IPS, and the Share Purchase Agreement with
LIRPACO,  the shares of Class A Convertible  Preferred Stock,  Class B Preferred
Stock and Class C  Convertible  Preferred  Stock shall be issued as set forth in
such agreements; and further

          RESOLVED,  that any and all actions  relating to the subject matter of
these resolutions taken by any of the directors or officers (Authorized Officers
or otherwise) of the Corporation  prior to the date of these resolutions be, and
hereby are, ratified, confirmed and approved in all respects; and further

<PAGE> 

         RESOLVED,  that each of the  Authorized  Officers  be,  and hereby is,
authorized and directed, in the name and on behalf of the Corporation,  to do or
cause to be done all such  further  acts and things and to execute,  deliver and
seal such other documents, agreements, instruments, undertakings or certificates
and incur such fees and expenses, as any of them may deem necessary or advisable
to carry into  effect or  implement  the  purpose  and  intent of the  foregoing
resolutions.

          IN WITNESS WHEREOF, the undersigned, being all of the directors of the
Corporation, have executed this consent as of the date first above written.


                                             /s/ Joel Cartun
                                            ____________________________________
                                            Joel Cartun


                                            /s/Peter J. McLaughlin
                                            ____________________________________
                                            Peter J. McLaughlin



<PAGE>


                                    EXHIBIT A
                                     TO THE
                                UNANIMOUS CONSENT
                                       OF
                             THE BOARD OF DIRECTORS
                                       OF
                           VESTCOM INTERNATIONAL, INC.


          Section 1. Class A Series I Convertible  Preferred  Stock. The Class A
Series I Convertible  Preferred  Stock (referred to hereinafter as the "Series I
Convertible  Preferred  Stock") shall have the relative rights,  preferences and
limitations set forth in this Section 1:
                 

          Paragraph  1.  Voting  Rights.  The  holders  of Series I  Convertible
Preferred Stock shall not be entitled to vote on any matters to be voted upon by
the  shareholders  of the  Corporation,  except as  required  by the New  Jersey
Business  Corporation  Act and except  that this  Section 1 shall not be amended
without  the  consent of the  holders of a majority  in interest of the Series I
Convertible Preferred Stock.

          Paragraph  2.  Dividends.  The  holders  of the  Series I  Convertible
Preferred  Stock shall not be entitled  to receive any  dividends  in respect of
their shares of Series I Convertible Preferred Stock.

          Paragraph  3.  Liquidation,   Dissolution,  or  Winding-Up.  Upon  the
voluntary or involuntary  liquidation,  dissolution or winding-up of the affairs
of the  Corporation,  the holders of Series I Convertible  Preferred Stock shall
have the right to receive Ten Cents  ($0.10)  for each  share,  and no more (the
"Series  I  Convertible  Preferred  Distribution")  prior to the  rights  of the
holders  of common  stock of the  Corporation  (hereinafter  referred  to as the
"Common Stock").  If the assets of the Corporation are not sufficient to pay the
full amount of the Preferred  Distributions  (as defined in Section 3 hereof) to
all preferred  shareholders of the Corporation,  the assets shall be distributed
ratably  among all of the  preferred  shareholders,  according  to the number of
preferred shares held by each. After the Preferred  Distributions have been made
to the preferred shareholders,  the remaining assets of the Corporation shall be
distributed  among the holders of Common Stock ratably,  according to the number
of shares of Common Stock held by each shareholder.

          Paragraph 4. Redemption of Preferred Shares.

          (a) On or after one hundred fifty (150) days after the last day of the
Series I Earnout Period (as defined below),  the Corporation may elect to redeem
all of the  outstanding  shares of the Series I Convertible  Preferred  Stock by
paying for each share Ten Cents ($0.10), and no more.

          (b) Notice of the  Corporation's  election to redeem  shall be mailed,
not less than thirty (30) days prior to the specified  redemption  date, to each
holder of Series I  Convertible  Preferred  Stock that is to be  redeemed at the
shareholder's address as it appears on the books and records of the Corporation.
The notice shall specify the date of  redemption,  the amount payable per share,
and a  statement  of  the  shareholder's  rights  on  and  after  the  specified
redemption date.

          (c) The holders of the Series I Convertible Preferred Stock which have
been  called for  redemption  shall not have any rights as  shareholders  on and
after the specified redemption date, regardless of whether they have surrendered
their share certificates and received payment therefor,  except for the right to
receive the redemption price,  without  interest,  upon surrender of their share
certificates,  provided  that on or before  the  specified  redemption  date the
Corporation has deposited the funds necessary for redemption with a bank,  trust
company or the  Corporation's  transfer agent with irrevocable  instructions and
authority to pay the redemption price to the shareholders  upon surrender of the
appropriate share certificates duly endorsed to the Corporation.

          Paragraph 5. Conversion Rights.

          (a)  Subject to all of the  provisions  of this  Paragraph  5, the one
hundred  (100)  shares  of  Series  I  Convertible   Preferred  Stock  shall  be
convertible,  at the option of the holder or  holders  thereof,  into that whole
number of shares of Common  Stock  equal to the Series I  Conversion  Factor (as
defined below), up to a maximum equal to three hundred thirty-two thousand three
hundred seven (332,307) shares. Each share of the Series I Convertible Preferred
Stock shall be  convertible  into one  one-hundredth  (1/100th) of the foregoing
number of shares.

               (i) On or before  ninety  (90) days after the end of the Series I
Earnout Period, the Corporation's independent public accountants shall determine
the net income  before taxes of  Electronic  Imaging  Systems,  Inc., a Delaware
corporation  and a  wholly-owned  subsidiary of the  Corporation  at the date of
issuance of the Series I Convertible  Preferred Stock ("EIS"),  for the Series I
Earnout  Period,  computed in  accordance  with  generally  accepted  accounting
principles,  except that:  (u) no interest  will be charged to EIS for such year
except for  interest on  equipment  acquired by EIS on or after the first day of
the Earnout Period (as defined  below);  (v) all  management and  administrative
charges of the Corporation to EIS and corporate  overhead expenses  allocated to
EIS by the Corporation  will be excluded from the calculation  unless  otherwise
mutually  agreed upon in advance,  except to the extent that the Corporation has
assumed an expense  historically  incurred by EIS (i.e., if the Corporation pays
for employee health benefits,  EIS' allocable portion of such expenses shall not
be  excluded);  (w)  certain  operating  expenses  incurred  by EIS prior to the
Consummation  Date (as defined below),  which will not be incurred by either EIS
or the  Corporation  after the  Consummation  Date,  as mutually  agreed upon in
advance,  but  specifically  including the salaries paid to E.V. Ellison and Jim
Strawn, will be excluded from the calculations,  (x) the same depreciation rates
in effect on the day preceding the first day of the Earnout Period for equipment
owned by EIS on the day  preceding  the first day of the Earnout  Period will be
used for the  Earnout  Period;  (y)  amortization  of  goodwill  created  by the
acquisition  of  EIS  by the  Corporation  shall  be  excluded;  and  (z) if the
compensation  of the  senior  executives  of EIS  and  all  subsidiaries  of the
Corporation  acquired on the same date as EIS are increased  above the levels in
effect at such  acquisition  date, the amount of the increase shall be excluded.
("Adjusted EBT of EIS").  Intercompany  transactions (i.e., transactions between
EIS  and any  other  subsidiary  of the  Corporation)  shall  be  accounted  for
consistently with the Corporation's general accounting policies.

               (ii) The "Earnout  Period"  shall be the  twenty-four  (24) month
period  beginning  on the  first  day of the  fiscal  quarter  within  which the
Consummation Date (as defined in sub-paragraph (a)(v) below) occurs. The "Series
I Earnout  Period" shall be the twelve (12) month period  beginning on the first
day of the fiscal  quarter  within  which the  Consummation  Date occurs and the
"Series II Earnout  Period"  shall be the twelve (12) month period  beginning on
the day after the last day of the Series I Earnout Period.

               (iii) The  "Series  I  Conversion  Factor"  shall be equal to the
quotient  of:  (x) the  1998 EBT  Multiple  (as  defined  below)  multiplied  by
seventy-two  percent (72%);  divided by (y) thirteen  dollars ($13.00) (the "IPO
Price");  then (z) rounded to the lowest whole  number.  The "1998 EBT Multiple"
shall be computed as follows:  (a)  Adjusted EBT of EIS for the Series I Earnout
Period minus Three Hundred Thousand Dollars ($300,000);  multiplied by (b) three
(3).

               (iv) All  determinations by the Corporation's  independent public
accountants hereunder,  including,  but not limited to, determinations as to the
number  of  shares  to be issued  upon  conversion,  if any,  shall be final and
binding absent manifest error.

               (v) As used in  Sections  1 and 2, the term  "Consummation  Date"
shall have the meaning  ascribed  to it in that  certain  Agreement  and Plan of
Reorganization,  dated as of February  28, 1997,  by and among the  Corporation,
Electronic Imaging Acquisition Corp., EIS and the Stockholders named therein.

          (b) During the thirty (30) day period after the determination  made in
accordance with sub-paragraph (a)(i) above, the conversion right granted in this
Section 1 may be exercised by the holder or holders of the Series I  Convertible
Preferred Stock  delivering the  certificate(s)  evidencing all of such holder's
shares of Series I Convertible  Preferred Stock to the Corporation together with
a  written  notice  stating  that all of such  shares  are being  delivered  for
conversion  into  shares of Common  Stock.  The  share  certificate(s)  shall be
endorsed to the Corporation by the holder or holders thereof, and the notice and
the share  certificate(s) must be delivered to the attention of the secretary of
the Corporation at its principal business office or to the transfer agent of the
Corporation  at its  place of  business.  The  shares  of  Series I  Convertible
Preferred  Stock  shall be deemed to have been  converted  upon  receipt  of the
endorsed share certificates and the notice of conversion by the secretary or the
transfer  agent,  and such holder shall  thereupon be deemed to be the holder of
the number of shares of Common  Stock  which the shares of Series I  Convertible
Preferred Stock are convertible into on the Corporation's  books and records. As
soon as practicable  thereafter,  the  Corporation  shall deliver or cause to be
delivered to the holder of the converted  shares, at that holder's address as it
appears  on  the  Corporation's  books  and  records,  a  share  certificate  or
certificates, registered in the name of such holder, for the number of shares of
the Common Stock into which the shares of Series I Convertible  Preferred  Stock
have been converted.

          (c) The  number  and type of shares  into which each share of Series I
Convertible  Preferred  Stock is  convertible  shall be  equitably  adjusted  to
reflect: 

               (i) any stock  dividends  issued  to the  holders  of the  Common
Stock;

               (ii) any stock  divisions  or stock  combinations  of the  Common
Stock; and

               (iii) shares  issued in exchange  for Common Stock in  connection
with any merger,  consolidation,  recapitalization,  reorganization or any other
capital  changes  affecting the number of outstanding  shares of Common Stock or
causing the  conversion  or  exchange  of shares of Common  Stock into shares of
another  class or  series  so as to cause  the  holders  of  shares  of Series I
Convertible Preferred Stock to receive the same number of shares of Common Stock
they would have received if they had been holding  shares of Common Stock at the
time of the stock dividend, stock split or combination,  merger,  consolidation,
recapitalization  or  reorganization,  or other  capital  change.  Following the
occurrence of any event which gives rise to such an adjustment,  the Corporation
shall notify the holders of shares of Series I  Convertible  Preferred  Stock of
its calculation of the adjustment.

          (d) The  Corporation  shall  reserve a sufficient  number of shares of
Common  Stock to  satisfy  the  conversion  rights of the  Series I  Convertible
Preferred Stock.

          Paragraph 6.  Reclassification  Upon  Conversion or  Redemption.  Upon
conversion or redemption of the Series I Convertible  Preferred  Stock as herein
provided,  the shares of Series I  Convertible  Preferred  Stock so converted or
redeemed,  as the case may be, shall  thereupon be  reclassified as undesignated
stock of the  Corporation,  and may be issued again,  in whole or in part,  from
time to time,  as and when  determined  by the  Board of  Directors,  with  such
rights, preferences and limitations as the Board of Directors shall at that time
determine in accordance with the Certificate of  Incorporation,  as the same may
be amended from time to time, and applicable law.

          Section 2. Class A Series II Convertible  Preferred Stock. The Class A
Series II Convertible Preferred Stock (referred to hereinafter as the "Series II
Convertible  Preferred  Stock") shall have the relative rights,  preferences and
limitations set forth in this Section 2:

          Paragraph  1.  Voting  Rights.  The  holders of Series II  Convertible
Preferred Stock shall not be entitled to vote on any matters to be voted upon by
the  shareholders  of the  Corporation,  except as  required  by the New  Jersey
Business  Corporation  Act and except  that this  Section 2 shall not be amended
without  the  consent of a majority  of the holders in interest of the Series II
Convertible Preferred Stock.

          Paragraph  2.  Dividends.  The  holders of the  Series II  Convertible
Preferred  Stock shall not be entitled  to receive any  dividends  in respect of
their shares of Series II Convertible Preferred Stock.

          Paragraph  3.  Liquidation,   Dissolution,  or  Winding-Up.  Upon  the
voluntary or involuntary  liquidation,  dissolution or winding-up of the affairs
of the  Corporation,  the Series II Convertible  Preferred  Stock shall have the
right to receive Ten Cents  ($0.10) for each share,  and no more (the "Series II
Convertible  Preferred  Distribution")  prior to the  rights of the  holders  of
Common Stock.  If the assets of the  Corporation  are not  sufficient to pay the
full amount of the Preferred  Distributions  (as defined in Section 3 hereof) to
all preferred  shareholders of the Corporation,  the assets shall be distributed
ratably  among all of the  preferred  shareholders,  according  to the number of
preferred shares held by each. After the Preferred  Distributions have been made
to the preferred shareholders,  the remaining assets of the Corporation shall be
distributed  among the holders of Common Stock ratably,  according to the number
of shares of Common Stock held by each shareholder.

          Paragraph 4. Redemption of Preferred Shares.

          (a) On or after one  hundred  fifty  (150)  days  after the end of the
Series II Earnout Period,  the Corporation may elect to redeem all or any number
of the outstanding shares of the Series II Convertible Preferred Stock by paying
for each share Ten Cents ($0.10), and no more.

          (b) Notice of the  Corporation's  election to redeem  shall be mailed,
not less than thirty (30) days prior to the specified  redemption  date, to each
holder of Series II  Convertible  Preferred  Stock that is to be redeemed at the
shareholder's address as it appears on the books and records of the Corporation.
The notice shall specify the date of  redemption,  the amount payable per share,
and a  statement  of  the  shareholder's  rights  on  and  after  the  specified
redemption date.

          (c) The  holders of the Series II  Convertible  Preferred  Stock which
have been called for redemption shall not have any rights as shareholders on and
after the specified redemption date, regardless of whether they have surrendered
their share  certificates and received payment,  except for the right to receive
the  redemption  price,   without  interest,   upon  surrender  of  their  share
certificates,  provided  that on or before  the  specified  redemption  date the
Corporation has deposited the funds necessary for redemption with a bank,  trust
company or the  Corporation's  transfer agent with irrevocable  instructions and
authority to pay the redemption price to the shareholders  upon surrender of the
appropriate share certificates duly endorsed to the Corporation.

          Paragraph 5. Conversion Rights.

          (a)  Subject to all of the  provisions  of this  Paragraph  5, the one
hundred  (100)  shares  of  Series  II  Convertible  Preferred  Stock  shall  be
convertible,  at the option of the holder or  holders  thereof,  into that whole
number of shares of Common Stock equal to the Series II Conversion Factor, up to
a maximum of three hundred  thirty-two  thousand  three hundred seven  (332,307)
shares  minus  the  Series I  Conversion  Factor.  Each  share of the  Series II
Convertible   Preferred  Stock  shall  be  convertible  into  one-one  hundredth
(1/100th) of the foregoing number of shares.

               (i) On or before  ninety (90) days after the end of the Series II
Earnout Period, the Corporation's independent public accountants shall determine
the Adjusted EBT of EIS for the Series II Earnout Period in accordance  with the
procedures of Section 1, Paragraph 5(a) above.

               (ii)  Subject to clause (iii)  below,  the "Series II  Conversion
Factor"  shall be  equal  to the  quotient  of (x) the  product  of the 1999 EBT
Multiple multiplied by seventy-two percent (72%);  divided by (y) the 1999 Share
Price;  then (z) rounded to the lowest  whole  number.  The "1999 EBT  Multiple"
shall be computed as follows:  (a) Adjusted EBT of EIS for the Series II Earnout
Period minus Three Hundred Thousand Dollars ($300,000);  multiplied by (b) three
(3). The "1999 Share Price" shall be computed as follows:

                    (A) if the fair market value of the Common Stock on the last
day of the Series I Earnout  Period is equal to or less than the  product of one
hundred fifty percent (150%)  multiplied by the IPO Price,  then the "1999 Share
Price" shall equal the IPO Price; or

                    (B) if the fair market value of the Common Stock on the last
day of the Series I Earnout Period is more than the product of one hundred fifty
percent (150%) multiplied by the IPO Price, then the "1999 Share Price" shall be
computed  as  follows:  (x) the IPO  Price  multiplied  by (y) a  fraction,  the
numerator  of which is the fair market value of the Common Stock on the last day
of the Series I Earnout  Period and the  denominator  of which is the product of
one hundred fifty percent (150%) multiplied by the IPO Price.

               (iii)  Notwithstanding the foregoing,  if the Adjusted EBT of EIS
for the  Series II  Earnout  Period  does not exceed  Eight  Hundred  Eighty-Two
Thousand  Dollars  ($882,000) or does not exceed the Adjusted EBT of EIS for the
Series I Earnout Period, then, at the option of the Corporation,  the "Series II
Conversion  Factor" shall equal the quotient of the 1999 EBT Multiple divided by
the fair  market  value  of the  Common  Stock  on the last day of the  Series I
Earnout Period.

               (iv) All  determinations by the Corporation's  independent public
accountants hereunder,  including,  but not limited to, determinations as to the
number  of  shares  to be issued  upon  conversion,  if any,  shall be final and
binding absent manifest error.

               (v) As used  herein,  the term "fair  market  value of the Common
Stock" means the closing price of the Common Stock on the date  specified on its
principal trading market, or if such date is not a trading day of the securities
exchange or national  quotation system on which the Common Stock is then traded,
then the first trading day on such exchange or system thereafter.

          (b) During the thirty (30) day period after the determination  made in
accordance with  sub-paragraph  (a) above,  the conversion right granted in this
Section 2 may be  exercised  by the  holders or holder of Series II  Convertible
Preferred Stock  delivering the  certificate(s)  evidencing all of such holder's
shares of Series II Convertible Preferred Stock to the Corporation together with
a written  notice  stating that all of such shares are delivered for  conversion
into shares of Common Stock. The share  certificate(s)  shall be endorsed to the
Corporation  by the  holder or  holders  thereof,  and the  notice and the share
certificate(s)  must be  delivered  to the  attention  of the  secretary  of the
Corporation  at its principal  business  office or to the transfer  agent of the
Corporation  at its place of  business.  The  shares  of  Series II  Convertible
Preferred  Stock  shall be deemed to have been  converted  upon  receipt  of the
endorsed share  certificate(s)  and the notice of conversion by the secretary or
the transfer  agent,  and such holder shall  thereupon be deemed to be holder of
the number of shares of Common  Stock which the shares of Series II  Convertible
Preferred Stock are convertible into on the Corporation's  books and records. As
soon as practicable  thereafter,  the  Corporation  shall deliver or cause to be
delivered to the holder of the converted  shares, at that holder's address as it
appears  on  the  Corporation's  books  and  records,  a  share  certificate  or
certificates, registered in the name of such holder, for the number of shares of
the Common Stock into which the shares of Series II Convertible  Preferred Stock
have been converted.

          (c) The number  and type of shares  into which each share of Series II
Convertible  Preferred  Stock is  convertible  shall be  equitably  adjusted  to
reflect:

               (i) any stock  dividends  issued  to the  holders  of the  Common
Stock;

               (ii) any stock  divisions  or stock  combinations  of the  Common
Stock; and

               (iii) shares  issued in exchange  for Common Stock in  connection
with any merger,  consolidation,  recapitalization,  reorganization or any other
capital  changes  affecting the number of outstanding  shares of Common Stock or
causing the  conversion  or  exchange  of shares of Common  Stock into shares of
another  class or  series  so as to cause  the  holders  of  shares of Series II
Convertible Preferred Stock to receive the same number of shares of Common Stock
they would have received if they had been holding  shares of Common Stock at the
time of the stock dividend, stock split or combination,  merger,  consolidation,
recapitalization  or  reorganization,  or other  capital  change.  Following the
occurrence of any event which gives rise to such an adjustment,  the Corporation
shall notify the holders of shares of Series II Convertible  Preferred  Stock of
its calculation of the adjustment.

          (d) The  Corporation  shall  reserve a sufficient  number of shares of
Common  Stock to satisfy  the  conversion  rights of the  Series II  Convertible
Preferred Stock.

          Paragraph 6.  Reclassification  Upon  Conversion or  Redemption.  Upon
conversion or redemption of the Series II Convertible  Preferred Stock as herein
provided,  the shares of Series II Convertible  Preferred  Stock so converted or
redeemed,  as the case may be, shall  thereupon be  reclassified as undesignated
stock of the  Corporation,  and may be issued again,  in whole or in part,  from
time to time,  as and when  determined  by the  Board of  Directors,  with  such
rights, preferences and limitations as the Board of Directors shall at that time
determine in accordance with the Certificate of  Incorporation,  as the same may
be amended from time to time, and applicable law.

          Section 3. Class B Preferred  Stock. The Class B Preferred Stock shall
have the relative rights, preferences, and limitations set forth in this Section
3:

          Paragraph  1. Voting  Rights.  The holder of Class B  Preferred  Stock
shall be entitled to vote on all matters to be voted upon by the shareholders of
the Corporation,  and the holder of Class B Preferred Stock shall be entitled to
that number of votes equal to the number of Dividend Access Shares then owned or
held legally or beneficially  by, or held in trust for, Howard April and Leonard
April or their respective  assignees.  The holder of the Class B Preferred Stock
may cast all of such  votes in the same  manner or in  different  manners on any
particular matter, or not at all. As used herein, "Dividend Access Shares" means
the Dividend  Access Shares of 504087 N.B. Inc., an entity formed under the laws
of New Brunswick, Canada ("NEWCO"), having the rights, privileges,  restrictions
and conditions set forth in the Articles of NEWCO.

          Paragraph  2.  Dividends.  The holder of the Class B  Preferred  Stock
shall not be  entitled  to  receive  any  dividends  in  respect  of the Class B
Preferred Stock.

          Paragraph  3.  Liquidation,   Dissolution,  or  Winding-Up.  Upon  the
voluntary or involuntary  liquidation,  dissolution or winding-up of the affairs
of the  Corporation,  the holder of Class B Preferred Stock shall have the right
to receive  Ten Cents  ($0.10)  in the  aggregate  for such stock (the  "Class B
Preferred  Distribution",  the Series I Convertible Preferred Distribution,  the
Series  II  Convertible  Preferred   Distribution  and  the  Class  B  Preferred
Distribution,  may  sometimes  be  collectively  referred  to as the  "Preferred
Distributions") prior to the right of the holders of Common Stock. If the assets
of the  Corporation  are not  sufficient to pay the full amount of the Preferred
Distributions to all preferred shareholders of the Corporation, the assets shall
be distributed ratably among all of the preferred shareholders, according to the
number of preferred shares held by each. After the Preferred  Distributions have
been made to the preferred shareholders, the remaining assets of the Corporation
shall be distributed  among the common  shareholders  ratably,  according to the
number of shares of Common Stock held by each shareholder.

          Paragraph 4. Redemption of Preferred Shares.

          (a) On the date for the Automatic  Redemption by NEWCO of the Dividend
Access  Shares owned or held legally or  beneficially  by, or held in trust for,
Howard April and Leonard April or their respective assignees,  as defined in and
pursuant to Article 7 of the share  provisions of NEWCO,  the Corporation  shall
redeem the Class B Preferred  Stock by paying for such share Ten Cents  ($0.10),
in the aggregate, and no more.

          (b) Notice of the  Corporation's  election to redeem  shall be mailed,
not less than thirty (30) days prior to the  specified  redemption  date, to the
holder of Class B Preferred  Stock that is to be  redeemed at the  shareholder's
address as it appears on the books and  records of the  Corporation.  The notice
shall  specify  the date of  redemption,  the amount  payable  per share,  and a
statement  of the  shareholder's  rights on and after the  specified  redemption
date.

          (c) The holder of the Class B  Preferred  Stock  which has been called
for  redemption  shall  not have any  rights as a  shareholder  on and after the
specified  redemption date,  regardless of whether he or she has surrendered his
or her  share  certificate(s)  and  received  payment,  except  for the right to
receive the redemption price, without interest, upon surrender of the applicable
share  certificate(s),  provided that on or before the specified redemption date
the  Corporation  has deposited the funds  necessary for redemption with a bank,
trust company or the Corporation's transfer agent in Canada or the United States
with  irrevocable  instructions and authority to pay the redemption price to the
shareholder upon surrender of the appropriate share certificate(s) duly endorsed
to the Corporation.

          Paragraph 5. Reclassification  Upon or Redemption.  Upon redemption of
the Class B Preferred Stock as herein  provided,  the share of Class B Preferred
Stock so redeemed shall thereupon be  reclassified as undesignated  stock of the
Corporation, and may be issued again, in whole or in part, from time to time, as
and when determined by the Board of Directors, with such rights, preferences and
limitations as the Board of Directors shall at that time determine in accordance
with the Certificate of  Incorporation,  as the same may be amended from time to
time, and applicable law.

          Section  4.  Class  C  Convertible   Preferred   Stock.  The  Class  C
Convertible  Preferred  Stock shall have the relative  rights,  preferences  and
limitations set forth in this Section 4:

          Paragraph  1.  Voting  Rights.  The  holders  of  Class C  Convertible
Preferred Stock shall be entitled to vote on all matters to be voted upon by the
shareholders of the  Corporation  together with the holders of the Common Stock,
as though all of such  holders  were in one and the same  class.  The holders of
Class C Convertible Preferred Stock shall be entitled, in the aggregate, to that
number of votes equal to the quotient  (rounded to the lowest  whole  number) of
Two Million Dollars  ($2,000,000)  divided by the IPO Price (the "Base Amount").
Each holder of the Class C Convertible  Preferred  Stock must cast all of his or
her votes in the same manner on any particular matter, or not at all. Each share
of Class C Convertible  Preferred  Stock shall be entitled to one  one-hundredth
(1/100th) of the foregoing aggregate number of votes.

          Paragraph  2.  Dividends.  The  holders  of the  Class  C  Convertible
Preferred  Stock  shall be  entitled  to receive  dividends  in respect of their
shares of Class C Convertible Preferred Stock pari passu with the holders of the
Common Stock,  as though the holders of the Class C Convertible  Preferred Stock
owned of record,  in the aggregate,  that number of shares of Common Stock equal
to the Base  Amount;  the  amount of such  dividends,  in the  aggregate,  being
referred  to as  the  "Aggregate  Dividend  Amount."  Each  holder  of  Class  C
Convertible  Preferred Stock shall be entitled to receive dividends for each one
of his or her shares of Class C Convertible  Preferred Stock, in an amount equal
to one one-hundredth (1/100th) of such Aggregate Dividend Amount.

          Paragraph  3.  Liquidation,   Dissolution,  or  Winding-Up.  Upon  the
voluntary or involuntary  liquidation,  dissolution or winding-up of the affairs
of the Corporation,  after the Preferred  Distributions (as defined in Section 3
hereof)  have been made to the  preferred  shareholders,  the holders of Class C
Convertible  Preferred  Stock  shall  have  the  right  to  participate  in  the
distribution of the remaining  assets of the  Corporation  ratably (and no more)
with the holders of the Common  Stock,  as though  they owned of record,  in the
aggregate,  that number of shares of Common Stock equal to the Base Amount;  the
amount  of  such  distribution,  in  the  aggregate,  being  referred  to as the
Aggregate  Liquidation  Distribution  Amount. Each holder of Class C Convertible
Preferred Stock shall be entitled to receive a distribution  for each one of his
or her shares of Class C Convertible  Preferred  Stock in an amount equal to one
one-hundredth (1/100th) of such Aggregate Liquidation Distribution Amount.

          Paragraph 4. Redemption of Preferred Shares.

          (a) On or after one hundred fifty (150) days from the end of the Class
C Earnout Period (as defined in paragraph 5(a)(ii),  below), the Corporation may
elect to redeem all of the then  outstanding  shares of the Class C  Convertible
Preferred Stock, by paying for each share Ten Cents ($0.10), and no more.

          (b)  Notice of the  Corporation's  election  to redeem all of the then
outstanding  shares of the Class C Convertible  Preferred Stock shall be mailed,
not less than thirty (30) days prior to the specified  redemption  date, to each
holder of Class C  Convertible  Preferred  Stock that is to be  redeemed  at the
shareholder's address as it appears on the books and records of the Corporation.
The notice shall specify the date of  redemption,  the amount payable per share,
and a  statement  of  the  shareholder's  rights  on  and  after  the  specified
redemption date.

          (c) The holders of the Class C Convertible  Preferred Stock which have
been  called for  redemption  shall not have any rights as  shareholders  on and
after the specified redemption date, regardless of whether they have surrendered
their share certificates and received payment therefor,  except for the right to
receive the redemption price,  without  interest,  upon surrender of their share
certificates,  provided  that on or before  the  specified  redemption  date the
Corporation has deposited the funds necessary for redemption with a bank,  trust
company or the  Corporation's  transfer agent with irrevocable  instructions and
authority to pay the redemption price to the shareholders  upon surrender of the
appropriate share certificates duly endorsed to the Corporation.

          Paragraph 5. Conversion Rights.

          (a)  Subject to all of the  provisions  of this  Paragraph  5, the one
hundred  (100)  shares  of  Class  C  Convertible   Preferred   Stock  shall  be
convertible,  at the option of the holder or  holders  thereof,  into that whole
number of shares of Common Stock equal to the Class C Conversion Factor, up to a
maximum of two hundred  ninety-two  thousand three hundred seven  (292,307) (the
"Class C Conversion  Ceiling").  Each share of the Class C Convertible Preferred
Stock shall be  convertible  into one  one-hundredth  (1/100th) of the foregoing
number of shares.  Notwithstanding  anything herein to the contrary, if: (i) the
Adjusted EBT of IPS (as defined in sub-paragraph  (a)(i), below) is greater than
or equal to One Million Four Hundred  Sixteen  Thousand Six Hundred  Sixty-Seven
Dollars ($1,416,667), then the Class C Conversion Factor shall equal the Class C
Conversion  Ceiling;  or (ii) the  Adjusted  EBT of IPS is less than Six Hundred
Sixty-Six Thousand Six Hundred Sixty-Seven Dollars ($666,667),  then the Class C
Conversion Factor shall equal zero.

               (i) On or before  ninety  (90) days  after the end of the Class C
Earnout Period, the Corporation's independent public accountants shall determine
the net  income  before  taxes of Image  Printing  Systems,  Inc.,  a  Wisconsin
corporation  and a  wholly-owned  subsidiary of the  Corporation  at the date of
issuance of the Class C Convertible  Preferred  Stock  ("IPS"),  for the Class C
Earnout  Period,  computed in  accordance  with  generally  accepted  accounting
principles,  except that:  (x) no interest  will be charged to IPS for such year
except for  interest on  equipment  acquired by IPS on or after the first day of
the Class C Earnout Period; and (y) all management and administrative charges of
the Corporation to IPS and corporate  overhead expenses  allocated to IPS by the
Corporation  will be excluded from the  calculation  unless  otherwise  mutually
agreed upon in advance, except to the extent that the Corporation has assumed an
expense historically incurred by IPS (i.e., if the Corporation pays for employee
health  benefits,  IPS'  allocable  portion of such expenses  shall be included)
("Adjusted EBT of IPS").  Intercompany  transactions (i.e., transactions between
IPS  and any  other  subsidiary  of the  Corporation)  shall  be  accounted  for
consistently with the Corporation's general accounting policies.

               (ii) The  "Class C  Earnout  Period"  shall  be the  twelve  (12)
consecutive month period beginning on the first day of the fiscal quarter within
which the Consummation  Date occurs (as defined in sub-paragraph  (a)(v) below),
unless the Corporation  receives the Date Change Notice (as defined below) on or
before the Closing Date (as that term is defined in the IPS Merger Agreement, as
defined  in  sub-paragraph  (a)(v)  below),  in which  case the "Class C Earnout
Period" shall be the twelve (12) consecutive  month period beginning on April 1,
1997 and ending on March 31, 1998 (the "April Earnout Period"),  as indicated in
the Date Change Notice.  If the closing of the transactions  contemplated by the
IPS  Merger  Agreement  does not  occur on or prior to June 30,  1997,  then the
holders of the Class C Convertible  Preferred  Stock may elect, at their option,
to change the Class C Earnout  Period to the April  Earnout  Period by sending a
written notice (the "Date Change  Notice")  signed by both of the holders of the
Class C Convertible  Preferred  Stock, to the  Corporation's  secretary,  at its
principal  place of business,  which is received on or before the Closing  Date,
specifying that the April Earnout Period shall apply.  Time is of the essence in
respect of the Date Change  Notice;  such that if the Date Change  Notice is not
received by the Corporation's  secretary on or before the Closing Date, then the
Class C  Earnout  Period  shall be the  twelve  (12)  consecutive  month  period
beginning on the first day of the fiscal quarter  within which the  Consummation
Date occurs.

               (iii) The "Class C  Conversion  Factor"  shall be  calculated  as
follows:

                    (A) If the  Adjusted  EBT of  IPS is  exactly  equal  to One
Million Dollars  ($1,000,000),  then the "Class C Conversion Factor" shall equal
the Base Amount.

                    (B) If the  Adjusted  EBT of IPS is greater than One Million
Dollars ($1,000,000) but less than One Million Four Hundred Sixteen Thousand Six
Hundred Sixty-Seven Dollars  ($1,416,667),  then the "Class C Conversion Factor"
shall  equal the Base  Amount plus the  quotient  (rounded  to the lowest  whole
number) of (x) the product of the EBT  Multiple  (as defined in this clause (B))
multiplied by seventy-two percent (72%);  divided by (y) the IPO Price. The "EBT
Multiple"  shall  equal the  product  of (i) the  Adjusted  EBT of IPS minus One
Million Dollars ($1,000,000); multiplied by (ii) six (6).

                    (C) If the  Adjusted  EBT of IPS is less  than  One  Million
Dollars  ($1,000,000),  then the "Class C  Conversion  Factor"  shall  equal the
greater of zero or the difference of the Base Amount minus the quotient (rounded
to the lowest whole  number) of the EBT Multiple (as defined in this clause (C))
divided by the IPO Price.  The "EBT Multiple" shall equal the product of (i) One
Million Dollars  ($1,000,000) minus the Adjusted EBT of IPS;  multiplied by (ii)
six (6).

               (iv) All  determinations by the Corporation's  independent public
accountants hereunder,  including,  but not limited to, determinations as to the
number  of  shares  to be issued  upon  conversion,  if any,  shall be final and
binding absent manifest error.

               (v) As used in this Section 4, the term "Consummation Date" shall
have  the  meaning  ascribed  to  it in  that  certain  Agreement  and  Plan  of
Reorganization,  dated as of February  28, 1997,  by and among the  Corporation,
Image Printing Acquisition Corp., IPS and the holders of the Class C Convertible
Preferred Stock, hereinafter referred to as the "IPS Merger Agreement"

          (b) During the thirty (30) day period after the determination  made in
accordance with sub-paragraph (a)(i) above, the conversion right granted in this
Paragraph 5 may be exercised by the holder or holders of the Class C Convertible
Preferred Stock  delivering the  certificate(s)  evidencing all of such holder's
shares of Class C Convertible Preferred Stock to the Corporation together with a
written  notice  stating  that  all of  such  shares  are  being  delivered  for
conversion  into  shares  of Common  Stock.  The  share  certificate(s)  must be
endorsed to the Corporation by the holder or holders thereof, and the notice and
the share  certificate(s) must be delivered to the attention of the secretary of
the Corporation at its principal business office or to the transfer agent of the
Corporation  at its  place  of  business.  The  shares  of  Class C  Convertible
Preferred  Stock  shall be deemed to have been  converted  upon  receipt  of the
endorsed share certificates and the notice of conversion by the secretary or the
transfer  agent,  and such holder shall  thereupon be deemed to be the holder of
the number of shares of Common  Stock  which the  shares of Class C  Convertible
Preferred Stock are convertible into on the Corporation's  books and records. As
soon as practicable  thereafter,  the  Corporation  shall deliver or cause to be
delivered to the holder of the converted  shares, at that holder's address as it
appears  on  the  Corporation's  books  and  records,  a  share  certificate  or
certificates, registered in the name of such holder, for the number of shares of
the Common Stock into which the shares of Class C  Convertible  Preferred  Stock
have been converted.

          (c) The  number  and type of shares  into  which each share of Class C
Convertible  Preferred  Stock is  convertible  shall be  equitably  adjusted  to
reflect:

               (i) any stock  dividends  issued  to the  holders  of the  Common
Stock;

               (ii) any stock  divisions  or stock  combinations  of the  Common
Stock; and

               (iii) shares  issued in exchange  for Common Stock in  connection
with any merger,  consolidation,  recapitalization,  reorganization or any other
capital  changes  affecting the number of outstanding  shares of Common Stock or
causing the  conversion  or  exchange  of shares of Common  Stock into shares of
another  class or  series  so as to  cause  the  holders  of  shares  of Class C
Convertible Preferred Stock to receive the same number of shares of Common Stock
they would have received if they had been holding  shares of Common Stock at the
time of the stock dividend, stock split or combination,  merger,  consolidation,
recapitalization  or  reorganization,  or other  capital  change.  Following the
occurrence of any event which gives rise to such an adjustment,  the Corporation
shall notify the holders of shares of Class C Convertible Preferred Stock of its
calculation of the adjustment.

          (d) The  Corporation  shall  reserve a sufficient  number of shares of
Common  Stock to  satisfy  the  conversion  rights  of the  Class C  Convertible
Preferred Stock.

          Paragraph 6.  Reclassification  Upon  Conversion or  Redemption.  Upon
conversion or redemption  of the Class C Convertible  Preferred  Stock as herein
provided,  the shares of Class C  Convertible  Preferred  Stock so  converted or
redeemed,  as the case may be, shall  thereupon be  reclassified as undesignated
stock of the  Corporation,  and may be issued again,  in whole or in part,  from
time to time,  as and when  determined  by the  Board of  Directors,  with  such
rights, preferences and limitations as the Board of Directors shall at that time
determine in accordance with the Certificate of  Incorporation,  as the same may
be amended from time to time, and applicable law.