<PAGE>
                                                                     EXHIBIT 4.2

       CERTIFICATE OF DESIGNATION OF THE RELATIVE RIGHTS AND PREFERENCES
                                     OF THE
                      SERIES C CONVERTIBLE PREFERRED STOCK
                                       OF
                               THE VIALINK COMPANY

         The undersigned, the Chief Executive Officer of The viaLink Company, a
Delaware corporation (the "Company"), in accordance with the provisions of the
Delaware General Corporation Law, does hereby certify that, pursuant to the
authority conferred upon the Board of Directors by the Certificate of
Incorporation of the Company, the following resolution creating a series of
Series C Convertible Preferred Stock, was duly adopted on December 12, 2001:

         RESOLVED, that pursuant to the authority expressly granted to and
vested in the Board of Directors of the Company by provisions of the Certificate
of Incorporation of the Company (the "Certificate of Incorporation"), there
hereby is created out of the shares of Preferred Stock, par value $.001 per
share, of the Company authorized in Article IV of the Certificate of
Incorporation (the "Preferred Stock,"), a series of Preferred Stock of the
Company, to be named "Series C Convertible Preferred Stock," consisting of Seven
Hundred (700) shares, which series shall have the following designations,
powers, preferences and relative and other special rights and the following
qualifications, limitations and restrictions:

12.      DESIGNATION AND RANK. THE DESIGNATION OF SUCH SERIES OF THE PREFERRED
         STOCK SHALL BE THE SERIES C CONVERTIBLE PREFERRED STOCK, PAR VALUE
         $.001 PER SHARE (THE "SERIES C PREFERRED STOCK"). THE MAXIMUM NUMBER OF
         SHARES OF SERIES C PREFERRED STOCK SHALL BE SEVEN HUNDRED (700) SHARES.
         THE SERIES C PREFERRED STOCK SHALL RANK (i) PRIOR TO THE COMMON STOCK,
         PAR VALUE $.001 PER SHARE (THE "COMMON STOCK"), AND TO ALL OTHER
         CLASSES AND SERIES OF EQUITY SECURITIES OF THE COMPANY WHICH BY ITS
         TERMS DOES NOT RANK SENIOR TO THE SERIES C PREFERRED STOCK ("JUNIOR
         STOCK"); (ii) ON PARITY WITH THE SERIES B CONVERTIBLE PREFERRED STOCK,
         AND (iii) JUNIOR TO ANY CLASS OR SERIES OF EQUITY SECURITIES WHICH BY
         ITS TERMS SHALL RANK SENIOR TO THE SERIES C PREFERRED STOCK. THE SERIES
         C PREFERRED STOCK SHALL BE SUBORDINATE TO AND RANK JUNIOR TO ALL
         INDEBTEDNESS OF THE COMPANY NOW OR HEREAFTER OUTSTANDING.

13.      DIVIDENDS. THE HOLDERS OF RECORD OF SHARES OF SERIES C PREFERRED STOCK
         SHALL NOT BE ENTITLED TO RECEIVE ANY DIVIDENDS.

14.      VOTING RIGHTS.

         14.1.    CLASS VOTING RIGHTS. THE SERIES C PREFERRED STOCK SHALL HAVE
                  THE FOLLOWING CLASS VOTING RIGHTS (IN ADDITION TO THE VOTING
                  RIGHTS SET FORTH IN SECTION 3(b) HEREOF). SO LONG AS ANY
                  SHARES OF THE SERIES C PREFERRED STOCK REMAIN OUTSTANDING, THE
                  COMPANY SHALL NOT, WITHOUT THE AFFIRMATIVE VOTE OR CONSENT OF




                                      -1-
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                  THE HOLDERS OF AT LEAST THREE-FOURTHS (3/4) OF THE SHARES OF
                  THE SERIES C PREFERRED STOCK OUTSTANDING AT THE TIME, GIVEN IN
                  PERSON OR BY PROXY, EITHER IN WRITING OR AT A MEETING, IN
                  WHICH THE HOLDERS OF THE SERIES C PREFERRED STOCK VOTE
                  SEPARATELY AS A CLASS: (i) AUTHORIZE, CREATE, ISSUE OR
                  INCREASE THE AUTHORIZED OR ISSUED AMOUNT OF ANY CLASS OR
                  SERIES OF STOCK, INCLUDING BUT NOT LIMITED TO THE ISSUANCE OF
                  ANY MORE SHARES OF PREVIOUSLY AUTHORIZED COMMON STOCK OR
                  PREFERRED STOCK, RANKING PRIOR TO THE SERIES C PREFERRED
                  STOCK, WITH RESPECT TO THE DISTRIBUTION OF ASSETS ON
                  LIQUIDATION, DISSOLUTION OR WINDING UP; (ii) AMEND, ALTER OR
                  REPEAL THE PROVISIONS OF THE SERIES C PREFERRED STOCK, WHETHER
                  BY MERGER, CONSOLIDATION OR OTHERWISE, SO AS TO ADVERSELY
                  AFFECT ANY RIGHT, PREFERENCE, PRIVILEGE OR VOTING POWER OF THE
                  SERIES C PREFERRED STOCK; PROVIDED, HOWEVER, THAT ANY CREATION
                  AND ISSUANCE OF ANOTHER SERIES OF JUNIOR STOCK SHALL NOT BE
                  DEEMED TO ADVERSELY AFFECT SUCH RIGHTS, PREFERENCES,
                  PRIVILEGES OR VOTING POWERS; (iii) REPURCHASE, REDEEM OR PAY
                  DIVIDENDS ON, SHARES OF THE COMPANY'S JUNIOR STOCK; (iv) AMEND
                  THE CERTIFICATE OF INCORPORATION OR BY-LAWS OF THE COMPANY SO
                  AS TO AFFECT MATERIALLY AND ADVERSELY ANY RIGHT, PREFERENCE,
                  PRIVILEGE OR VOTING POWER OF THE SERIES C PREFERRED STOCK;
                  PROVIDED, HOWEVER, THAT ANY CREATION AND ISSUANCE OF ANOTHER
                  SERIES OF JUNIOR STOCK OR ANY OTHER CLASS OR SERIES OF EQUITY
                  SECURITIES WHICH BY ITS TERMS SHALL RANK ON PARITY WITH THE
                  SERIES C PREFERRED STOCK SHALL NOT BE DEEMED TO MATERIALLY AND
                  ADVERSELY AFFECT SUCH RIGHTS, PREFERENCES, PRIVILEGES OR
                  VOTING POWERS; (v) EFFECT ANY DISTRIBUTION WITH RESPECT TO
                  JUNIOR STOCK; OR (vi) RECLASSIFY THE COMPANY'S OUTSTANDING
                  SECURITIES.

         14.2.    GENERAL VOTING RIGHTS. EXCEPT WITH RESPECT TO TRANSACTIONS
                  UPON WHICH THE SERIES C PREFERRED STOCK SHALL BE ENTITLED TO
                  VOTE SEPARATELY AS A CLASS PURSUANT TO SECTION 3(a) ABOVE AND
                  EXCEPT AS OTHERWISE REQUIRED BY DELAWARE LAW, THE SERIES C
                  PREFERRED STOCK SHALL HAVE NO VOTING RIGHTS. THE COMMON STOCK
                  INTO WHICH THE SERIES C PREFERRED STOCK IS CONVERTIBLE SHALL,
                  UPON ISSUANCE, HAVE ALL OF THE SAME VOTING RIGHTS AS OTHER
                  ISSUED AND OUTSTANDING COMMON STOCK OF THE COMPANY.

         14.3.    LIQUIDATION PREFERENCE.

         14.4.    IN THE EVENT OF THE LIQUIDATION, DISSOLUTION OR WINDING UP OF
                  THE AFFAIRS OF THE COMPANY, WHETHER VOLUNTARY OR INVOLUNTARY,
                  AFTER PAYMENT OR PROVISION FOR PAYMENT OF THE DEBTS AND OTHER
                  LIABILITIES OF THE COMPANY, THE HOLDERS OF SHARES OF THE
                  SERIES C PREFERRED STOCK THEN OUTSTANDING SHALL BE ENTITLED TO
                  RECEIVE, OUT OF THE ASSETS OF THE COMPANY WHETHER SUCH ASSETS
                  ARE CAPITAL OR SURPLUS OF ANY NATURE, AN AMOUNT EQUAL TO
                  $10,000 PER SHARE (THE "LIQUIDATION PREFERENCE AMOUNT") OF THE
                  SERIES C PREFERRED STOCK BEFORE ANY PAYMENT SHALL BE MADE OR
                  ANY ASSETS DISTRIBUTED TO THE HOLDERS OF THE COMMON STOCK OR
                  ANY OTHER JUNIOR STOCK. IF THE ASSETS OF THE COMPANY ARE NOT
                  SUFFICIENT TO PAY IN FULL THE LIQUIDATION PREFERENCE AMOUNT
                  PAYABLE TO THE HOLDERS OF OUTSTANDING SHARES OF


                                      -2-
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                  THE SERIES C PREFERRED STOCK AND ANY SERIES OF PREFERRED STOCK
                  OR ANY OTHER CLASS OF STOCK ON A PARITY, AS TO RIGHTS ON
                  LIQUIDATION, DISSOLUTION OR WINDING UP, WITH THE SERIES C
                  PREFERRED STOCK, THEN ALL OF SAID ASSETS WILL BE DISTRIBUTED
                  AMONG THE HOLDERS OF THE SERIES C PREFERRED STOCK AND THE
                  OTHER CLASSES OF STOCK ON A PARITY WITH THE SERIES C PREFERRED
                  STOCK, IF ANY, RATABLY IN ACCORDANCE WITH THE RESPECTIVE
                  AMOUNTS THAT WOULD BE PAYABLE ON SUCH SHARES IF ALL AMOUNTS
                  PAYABLE THEREON WERE PAID IN FULL. THE LIQUIDATION PAYMENT
                  WITH RESPECT TO EACH OUTSTANDING FRACTIONAL SHARE OF SERIES C
                  PREFERRED STOCK SHALL BE EQUAL TO A RATABLY PROPORTIONATE
                  AMOUNT OF THE LIQUIDATION PAYMENT WITH RESPECT TO EACH
                  OUTSTANDING SHARE OF SERIES C PREFERRED STOCK. ALL PAYMENTS
                  FOR WHICH THIS SECTION 4(a) PROVIDES SHALL BE IN CASH,
                  PROPERTY (VALUED AT ITS FAIR MARKET VALUE AS DETERMINED BY THE
                  COMPANY'S INDEPENDENT, OUTSIDE ACCOUNTANT) OR A COMBINATION
                  THEREOF; PROVIDED, HOWEVER, THAT NO CASH SHALL BE PAID TO
                  HOLDERS OF JUNIOR STOCK UNLESS EACH HOLDER OF THE OUTSTANDING
                  SHARES OF SERIES C PREFERRED STOCK HAS BEEN PAID IN CASH THE
                  FULL LIQUIDATION PREFERENCE AMOUNT TO WHICH SUCH HOLDER IS
                  ENTITLED AS PROVIDED HEREIN. AFTER PAYMENT OF THE FULL
                  LIQUIDATION PREFERENCE AMOUNT TO WHICH EACH HOLDER IS
                  ENTITLED, SUCH HOLDERS OF SHARES OF SERIES C PREFERRED STOCK
                  WILL NOT BE ENTITLED TO ANY FURTHER PARTICIPATION AS SUCH IN
                  ANY DISTRIBUTION OF THE ASSETS OF THE COMPANY.

         14.5.    A CONSOLIDATION OR MERGER OF THE COMPANY WITH OR INTO ANY
                  OTHER CORPORATION OR CORPORATIONS, OR A SALE OF ALL OR
                  SUBSTANTIALLY ALL OF THE ASSETS OF THE COMPANY, OR THE
                  EFFECTUATION BY THE COMPANY OF A TRANSACTION OR SERIES OF
                  TRANSACTIONS IN WHICH MORE THAN 50% OF THE VOTING SHARES OF
                  THE COMPANY IS DISPOSED OF OR CONVEYED, SHALL NOT BE DEEMED TO
                  BE A LIQUIDATION, DISSOLUTION, OR WINDING UP WITHIN THE
                  MEANING OF THIS SECTION 4. IN THE EVENT OF THE MERGER OR
                  CONSOLIDATION OF THE COMPANY WITH OR INTO ANOTHER CORPORATION,
                  THE SERIES C PREFERRED STOCK SHALL MAINTAIN ITS RELATIVE
                  POWERS, DESIGNATIONS AND PREFERENCES PROVIDED FOR HEREIN AND
                  NO MERGER SHALL RESULT INCONSISTENT THEREWITH.

         14.6.    WRITTEN NOTICE OF ANY VOLUNTARY OR INVOLUNTARY LIQUIDATION,
                  DISSOLUTION OR WINDING UP OF THE AFFAIRS OF THE COMPANY,
                  STATING A PAYMENT DATE AND THE PLACE WHERE THE DISTRIBUTABLE
                  AMOUNTS SHALL BE PAYABLE, SHALL BE GIVEN BY MAIL, POSTAGE
                  PREPAID, NO LESS THAN FORTY-FIVE (45) DAYS PRIOR TO THE
                  PAYMENT DATE STATED THEREIN, TO THE HOLDERS OF RECORD OF THE
                  SERIES C PREFERRED STOCK AT THEIR RESPECTIVE ADDRESSES AS THE
                  SAME SHALL APPEAR ON THE BOOKS OF THE COMPANY.

15.      CONVERSION. THE HOLDER OF SERIES C PREFERRED STOCK SHALL HAVE THE
         FOLLOWING CONVERSION RIGHTS (THE "CONVERSION RIGHTS"):

         15.1.    RIGHT TO CONVERT. COMMENCING ON JANUARY 31, 2002, THE HOLDER
                  OF ANY SUCH SHARES OF SERIES C PREFERRED STOCK MAY, AT SUCH
                  HOLDER'S OPTION, SUBJECT TO


                                      -3-
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                  THE LIMITATIONS SET FORTH IN SECTION 7 HEREIN, ELECT TO
                  CONVERT (A "VOLUNTARY CONVERSION") ALL OR ANY PORTION OF THE
                  SHARES OF SERIES C PREFERRED STOCK HELD BY SUCH PERSON INTO A
                  NUMBER OF FULLY PAID AND NONASSESSABLE SHARES OF COMMON STOCK
                  (THE "CONVERSION RATE") EQUAL TO THE QUOTIENT OF (i) THE
                  LIQUIDATION PREFERENCE AMOUNT OF THE SHARES OF SERIES C
                  PREFERRED STOCK BEING CONVERTED DIVIDED BY (ii) THE CONVERSION
                  PRICE (AS DEFINED IN SECTION 5(d)(iii) BELOW) THEN IN EFFECT
                  AS OF THE DATE OF THE DELIVERY BY SUCH HOLDER OF ITS NOTICE OF
                  ELECTION TO CONVERT. NOTWITHSTANDING THE FOREGOING, FOR THE
                  PERIOD FROM JANUARY 31, 2002 THROUGH MAY 6, 2002, THE HOLDERS
                  OF THE SERIES C PREFERRED STOCK SHALL NOT CONVERT IN EXCESS OF
                  ONE-THIRD (1/3) OF SUCH HOLDER'S SHARES OF SERIES C PREFERRED
                  STOCK DURING ANY TWENTY (20) TRADING DAY PERIOD; PROVIDED,
                  HOWEVER, THAT THIS RESTRICTION SHALL NOT APPLY IF (A) A
                  CONVERSION NOTICE (AS DEFINED BELOW) IS RECEIVED BY THE
                  COMPANY AT SUCH TIME WHEN THE CLOSING BID PRICE (AS DEFINED IN
                  SECTION 5(d) HEREOF) OF THE COMMON STOCK EXCEEDS $.50 DURING
                  ANY OF THE FIVE (5) TRADING DAYS PRIOR TO THE RECEIPT OF SUCH
                  CONVERSION NOTICE OR (B) THE COMPANY SHALL HAVE DELIVERED A
                  COMPANY REDEMPTION NOTICE PURSUANT TO SECTION 8(h) HEREOF.

         15.2.    MECHANICS OF VOLUNTARY CONVERSION. THE VOLUNTARY CONVERSION OF
                  SERIES C PREFERRED STOCK SHALL BE CONDUCTED IN THE FOLLOWING
                  MANNER:

                  15.2.1.  HOLDER'S DELIVERY REQUIREMENTS. TO CONVERT SERIES C
                           PREFERRED STOCK INTO FULL SHARES OF COMMON STOCK ON
                           ANY DATE (THE "VOLUNTARY CONVERSION DATE"), THE
                           HOLDER THEREOF SHALL (A) TRANSMIT BY FACSIMILE (OR
                           OTHERWISE DELIVER), FOR RECEIPT ON OR PRIOR TO 5:00
                           P.M., NEW YORK TIME ON SUCH DATE, A COPY OF A FULLY
                           EXECUTED NOTICE OF CONVERSION IN THE FORM ATTACHED
                           HERETO AS EXHIBIT I (THE "CONVERSION NOTICE"), TO THE
                           COMPANY, AND (B) SURRENDER TO A COMMON CARRIER FOR
                           DELIVERY TO THE COMPANY AS SOON AS PRACTICABLE
                           FOLLOWING SUCH VOLUNTARY CONVERSION DATE BUT IN NO
                           EVENT LATER THAN SIX (6) BUSINESS DAYS AFTER SUCH
                           DATE THE ORIGINAL CERTIFICATES REPRESENTING THE
                           SHARES OF SERIES C PREFERRED STOCK BEING CONVERTED
                           (OR AN INDEMNIFICATION UNDERTAKING WITH RESPECT TO
                           SUCH SHARES IN THE CASE OF THEIR LOSS, THEFT OR
                           DESTRUCTION) (THE "PREFERRED STOCK CERTIFICATES") AND
                           THE ORIGINALLY EXECUTED CONVERSION NOTICE.

                  15.2.2.  COMPANY'S RESPONSE. UPON RECEIPT BY THE COMPANY OF A
                           FACSIMILE COPY OF A CONVERSION NOTICE, THE COMPANY
                           SHALL IMMEDIATELY SEND, VIA FACSIMILE, A CONFIRMATION
                           OF RECEIPT OF SUCH CONVERSION NOTICE TO SUCH HOLDER.
                           UPON RECEIPT BY THE COMPANY OF THE PREFERRED STOCK
                           CERTIFICATES TO BE CONVERTED PURSUANT TO A CONVERSION
                           NOTICE, TOGETHER WITH THE ORIGINALLY EXECUTED
                           CONVERSION NOTICE, THE COMPANY OR ITS DESIGNATED
                           TRANSFER AGENT (THE "TRANSFER AGENT"), AS APPLICABLE,
                           SHALL, WITHIN THREE (3) BUSINESS DAYS FOLLOWING THE
                           DATE OF RECEIPT BY THE COMPANY OF BOTH, ISSUE AND
                           DELIVER TO THE DEPOSITORY TRUST COMPANY ("DTC")
                           ACCOUNT ON THE HOLDER'S BEHALF VIA THE


                                      -4-
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                           DEPOSIT WITHDRAWAL AGENT COMMISSION SYSTEM ("DWAC")
                           AS SPECIFIED IN THE CONVERSION NOTICE, REGISTERED IN
                           THE NAME OF THE HOLDER OR ITS DESIGNEE, FOR THE
                           NUMBER OF SHARES OF COMMON STOCK TO WHICH THE HOLDER
                           SHALL BE ENTITLED. IF THE NUMBER OF SHARES OF
                           PREFERRED STOCK REPRESENTED BY THE PREFERRED STOCK
                           CERTIFICATE(S) SUBMITTED FOR CONVERSION IS GREATER
                           THAN THE NUMBER OF SHARES OF SERIES C PREFERRED STOCK
                           BEING CONVERTED, THEN THE COMPANY SHALL, AS SOON AS
                           PRACTICABLE AND IN NO EVENT LATER THAN FIVE (5)
                           BUSINESS DAYS AFTER RECEIPT OF THE PREFERRED STOCK
                           CERTIFICATE(S) AND AT THE COMPANY'S EXPENSE, ISSUE
                           AND DELIVER TO THE HOLDER A NEW PREFERRED STOCK
                           CERTIFICATE REPRESENTING THE NUMBER OF SHARES OF
                           SERIES C PREFERRED STOCK NOT CONVERTED.

                  15.2.3.  DISPUTE RESOLUTION. IN THE CASE OF A DISPUTE AS TO
                           THE ARITHMETIC CALCULATION OF THE NUMBER OF SHARES OF
                           COMMON STOCK TO BE ISSUED UPON CONVERSION, THE
                           COMPANY SHALL PROMPTLY ISSUE TO THE HOLDER THE NUMBER
                           OF SHARES OF COMMON STOCK THAT IS NOT DISPUTED AND
                           SHALL SUBMIT THE ARITHMETIC CALCULATIONS TO THE
                           HOLDER VIA FACSIMILE AS SOON AS POSSIBLE, BUT IN NO
                           EVENT LATER THAN TWO (2) BUSINESS DAYS AFTER RECEIPT
                           OF SUCH HOLDER'S CONVERSION NOTICE. IF SUCH HOLDER
                           AND THE COMPANY ARE UNABLE TO AGREE UPON THE
                           ARITHMETIC CALCULATION OF THE NUMBER OF SHARES OF
                           COMMON STOCK TO BE ISSUED UPON SUCH CONVERSION WITHIN
                           ONE (1) BUSINESS DAY OF SUCH DISPUTED ARITHMETIC
                           CALCULATION BEING SUBMITTED TO THE HOLDER, THEN THE
                           COMPANY SHALL WITHIN ONE (1) BUSINESS DAY SUBMIT VIA
                           FACSIMILE THE DISPUTED ARITHMETIC CALCULATION OF THE
                           NUMBER OF SHARES OF COMMON STOCK TO BE ISSUED UPON
                           SUCH CONVERSION TO THE COMPANY'S INDEPENDENT, OUTSIDE
                           ACCOUNTANT. THE COMPANY SHALL CAUSE THE ACCOUNTANT TO
                           PERFORM THE CALCULATIONS AND NOTIFY THE COMPANY AND
                           THE HOLDER OF THE RESULTS NO LATER THAN SEVENTY-TWO
                           (72) HOURS FROM THE TIME IT RECEIVES THE DISPUTED
                           CALCULATIONS. SUCH ACCOUNTANT'S CALCULATION SHALL BE
                           BINDING UPON ALL PARTIES ABSENT MANIFEST ERROR. THE
                           REASONABLE EXPENSES OF SUCH ACCOUNTANT IN MAKING SUCH
                           DETERMINATION SHALL BE PAID BY THE COMPANY, IN THE
                           EVENT THE HOLDER'S CALCULATION WAS CORRECT, OR BY THE
                           HOLDER, IN THE EVENT THE COMPANY'S CALCULATION WAS
                           CORRECT, OR EQUALLY BY THE COMPANY AND THE HOLDER IN
                           THE EVENT THAT NEITHER THE COMPANY'S OR THE HOLDER'S
                           CALCULATION WAS CORRECT. THE PERIOD OF TIME IN WHICH
                           THE COMPANY IS REQUIRED TO EFFECT CONVERSIONS OR
                           REDEMPTIONS UNDER THIS CERTIFICATE OF DESIGNATION
                           SHALL BE TOLLED WITH RESPECT TO THE SUBJECT
                           CONVERSION OR REDEMPTION PENDING RESOLUTION OF ANY
                           DISPUTE BY THE COMPANY MADE IN GOOD FAITH AND IN
                           ACCORDANCE WITH THIS SECTION 5(b)(iii).

                  15.2.4.  RECORD HOLDER. THE PERSON OR PERSONS ENTITLED TO
                           RECEIVE THE SHARES OF COMMON STOCK ISSUABLE UPON A
                           CONVERSION OF THE SERIES C PREFERRED STOCK SHALL BE
                           TREATED FOR ALL PURPOSES AS THE RECORD HOLDER OR
                           HOLDERS OF SUCH SHARES OF COMMON STOCK ON THE
                           CONVERSION DATE.


                                      -5-
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                  15.2.5.  COMPANY'S FAILURE TO TIMELY CONVERT. IF WITHIN THREE
                           (3) BUSINESS DAYS OF THE COMPANY'S RECEIPT OF THE
                           CONVERSION NOTICE AND THE PREFERRED STOCK
                           CERTIFICATES TO BE CONVERTED (THE "SHARE DELIVERY
                           PERIOD") THE COMPANY SHALL FAIL TO ISSUE AND DELIVER
                           TO A HOLDER THE NUMBER OF SHARES OF COMMON STOCK TO
                           WHICH SUCH HOLDER IS ENTITLED UPON SUCH HOLDER'S
                           CONVERSION OF THE SERIES C PREFERRED STOCK OR TO
                           ISSUE A NEW PREFERRED STOCK CERTIFICATE REPRESENTING
                           THE NUMBER OF SHARES OF SERIES C PREFERRED STOCK TO
                           WHICH SUCH HOLDER IS ENTITLED PURSUANT TO SECTION
                           5(b)(ii) (A "CONVERSION FAILURE"), IN ADDITION TO ALL
                           OTHER AVAILABLE REMEDIES WHICH SUCH HOLDER MAY PURSUE
                           HEREUNDER AND UNDER THE PURCHASE AGREEMENT DATED AS
                           OF DECEMBER 28, 2001 BETWEEN THE COMPANY AND THE
                           INITIAL HOLDERS OF THE SERIES C PREFERRED STOCK (THE
                           "PURCHASE AGREEMENT") (INCLUDING INDEMNIFICATION
                           PURSUANT TO ARTICLE VIII THEREOF), THE COMPANY SHALL
                           PAY ADDITIONAL DAMAGES TO SUCH HOLDER ON EACH
                           BUSINESS DAY AFTER SUCH THIRD (3RD) BUSINESS DAY THAT
                           SUCH CONVERSION IS NOT TIMELY EFFECTED IN AN AMOUNT
                           EQUAL 0.5% OF THE PRODUCT OF (A) THE SUM OF THE
                           NUMBER OF SHARES OF COMMON STOCK NOT ISSUED TO THE
                           HOLDER ON A TIMELY BASIS PURSUANT TO SECTION 5(b)(ii)
                           AND TO WHICH SUCH HOLDER IS ENTITLED AND, IN THE
                           EVENT THE COMPANY HAS FAILED TO DELIVER A PREFERRED
                           STOCK CERTIFICATE TO THE HOLDER ON A TIMELY BASIS
                           PURSUANT TO SECTION 5(b)(ii), THE NUMBER OF SHARES OF
                           COMMON STOCK ISSUABLE UPON CONVERSION OF THE SHARES
                           OF SERIES C PREFERRED STOCK REPRESENTED BY SUCH
                           PREFERRED STOCK CERTIFICATE, AS OF THE LAST POSSIBLE
                           DATE WHICH THE COMPANY COULD HAVE ISSUED SUCH
                           PREFERRED STOCK CERTIFICATE TO SUCH HOLDER WITHOUT
                           VIOLATING SECTION 5(b)(ii) AND (B) THE CLOSING BID
                           PRICE (AS DEFINED IN SECTION 5(d) BELOW) OF THE
                           COMMON STOCK ON THE LAST POSSIBLE DATE WHICH THE
                           COMPANY COULD HAVE ISSUED SUCH COMMON STOCK AND SUCH
                           PREFERRED STOCK CERTIFICATE, AS THE CASE MAY BE, TO
                           SUCH HOLDER WITHOUT VIOLATING SECTION 5(b)(ii). IF
                           THE COMPANY FAILS TO PAY THE ADDITIONAL DAMAGES SET
                           FORTH IN THIS SECTION 5(b)(v) WITHIN FIVE (5)
                           BUSINESS DAYS OF THE DATE INCURRED, THEN SUCH PAYMENT
                           SHALL BEAR INTEREST AT THE RATE OF 2% PER MONTH (PRO
                           RATED FOR PARTIAL MONTHS) UNTIL SUCH PAYMENTS ARE
                           MADE.

         15.3.    MANDATORY CONVERSION.

                  15.3.1.  SUBJECT TO THE EXCHANGE CAP (AS DEFINED IN SECTION 7
                           HEREOF), EACH SHARE OF SERIES C PREFERRED STOCK
                           OUTSTANDING ON THE MANDATORY CONVERSION DATE SHALL,
                           AUTOMATICALLY AND WITHOUT ANY ACTION ON THE PART OF
                           THE HOLDER THEREOF, CONVERT INTO A NUMBER OF FULLY
                           PAID AND NONASSESSABLE SHARES OF COMMON STOCK EQUAL
                           TO THE QUOTIENT OF (i) THE LIQUIDATION PREFERENCE
                           AMOUNT OF THE SHARES OF SERIES C PREFERRED STOCK
                           OUTSTANDING ON THE MANDATORY CONVERSION DATE DIVIDED
                           BY (ii) THE CONVERSION PRICE IN EFFECT ON THE
                           MANDATORY CONVERSION DATE.

                  15.3.2.  AS USED HEREIN, A "MANDATORY CONVERSION DATE" SHALL
                           BE THE DATE WHICH IS AT LEAST EIGHTEEN (18) MONTHS
                           AFTER THE DATE OF ISSUANCE OF THE SERIES C


                                      -6-
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                           PREFERRED STOCK (THE "ISSUANCE DATE"), PROVIDED, THAT
                           THE CLOSING BID PRICE OF THE COMMON STOCK EXCEEDS
                           $.80 FOR A PERIOD OF TWENTY (20) CONSECUTIVE TRADING
                           DAYS AND THE COMMON STOCK UNDERLYING THE SERIES C
                           PREFERRED STOCK IS REGISTERED PURSUANT TO AN
                           EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
                           ACT OF 1933, AS AMENDED; AND FURTHER PROVIDED THAT
                           THE MANDATORY CONVERSION DATE SHALL BE EXTENDED FOR
                           AS LONG AS (A) THE CONVERSION OF SUCH SHARE OF
                           PREFERRED STOCK WOULD VIOLATE SECTION 7, (B) A
                           TRIGGERING EVENT (AS DEFINED IN SECTION 8(d) HEREOF)
                           SHALL HAVE OCCURRED AND BE CONTINUING OR (C) ANY
                           EVENT SHALL HAVE OCCURRED AND BE CONTINUING WHICH
                           WITH THE PASSAGE OF TIME AND THE FAILURE TO CURE
                           WOULD RESULT IN A TRIGGERING EVENT. THE MANDATORY
                           CONVERSION DATE AND THE VOLUNTARY CONVERSION DATE
                           COLLECTIVELY ARE REFERRED TO IN THIS CERTIFICATE OF
                           DESIGNATION AS THE "CONVERSION DATE."

                  15.3.3.  ON THE MANDATORY CONVERSION DATE, THE OUTSTANDING
                           SHARES OF SERIES C 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 COMPANY OR ITS TRANSFER AGENT; PROVIDED,
                           HOWEVER, THAT THE COMPANY SHALL NOT BE OBLIGATED TO
                           ISSUE THE SHARES OF COMMON STOCK ISSUABLE UPON
                           CONVERSION OF ANY SHARES OF SERIES C PREFERRED STOCK
                           UNLESS CERTIFICATES EVIDENCING SUCH SHARES OF SERIES
                           C PREFERRED STOCK ARE EITHER DELIVERED TO THE COMPANY
                           OR THE HOLDER NOTIFIES THE COMPANY THAT SUCH
                           CERTIFICATES HAVE BEEN LOST, STOLEN, OR DESTROYED,
                           AND EXECUTES AN AGREEMENT SATISFACTORY TO THE COMPANY
                           TO INDEMNIFY THE COMPANY FROM ANY LOSS INCURRED BY IT
                           IN CONNECTION THEREWITH. UPON THE OCCURRENCE OF THE
                           AUTOMATIC CONVERSION OF THE SERIES C PREFERRED STOCK
                           PURSUANT TO THIS SECTION 5, THE HOLDERS OF THE SERIES
                           C PREFERRED STOCK SHALL SURRENDER THE PREFERRED STOCK
                           CERTIFICATES REPRESENTING THE SERIES C PREFERRED
                           STOCK FOR WHICH THE MANDATORY CONVERSION DATE HAS
                           OCCURRED TO THE COMPANY AND THE COMPANY SHALL DELIVER
                           THE SHARES OF COMMON STOCK ISSUABLE UPON SUCH
                           CONVERSION (IN THE SAME MANNER SET FORTH IN SECTION
                           5(b)(ii)) TO THE HOLDER WITHIN THREE (3) BUSINESS
                           DAYS OF THE HOLDER'S DELIVERY OF THE APPLICABLE
                           PREFERRED STOCK CERTIFICATES.

         15.4.    CONVERSION PRICE.

                  15.4.1.  THE TERM "CONVERSION PRICE" SHALL MEAN NINETY PERCENT
                           (90%) OF THE MARKET PRICE; PROVIDED, HOWEVER, THAT
                           THE CONVERSION PRICE SHALL NEVER BE LESS THAN 90% OF
                           THE FLOOR PRICE (AS DEFINED BELOW).

                  15.4.2.  THE TERM "MARKET PRICE" MEANS THE AVERAGE OF THE FIVE
                           (5) LOWEST VOLUME WEIGHTED AVERAGE PRICES (AS DEFINED
                           BELOW) FOR THE COMPANY'S COMMON STOCK DURING THE
                           FIFTEEN (15) TRADING DAYS IMMEDIATELY PRIOR TO THE
                           VOLUNTARY


                                      -7-
<PAGE>

                           CONVERSION DATE, SUBJECT TO ADJUSTMENT UNDER SECTION
                           5(e) HEREOF; PROVIDED, THAT THE MARKET PRICE SHALL
                           NEVER BE GREATER THAN $.50.

                  15.4.3.  THE TERM "VOLUME WEIGHTED AVERAGE PRICE" SHALL MEAN
                           THE DAILY VOLUME WEIGHTED AVERAGE PRICE (BASED ON A
                           TRADING DAY FROM 9:30 A.M. TO 4:00 P.M., EASTERN
                           TIME) OF THE COMMON STOCK OF THE COMPANY ON THE
                           NASDAQ NATIONAL MARKET (OR ANY SUCCESSOR THERETO) AS
                           REPORTED BY BLOOMBERG FINANCIAL LP USING THE AQR
                           FUNCTION.

                  15.4.4.  THE TERM "FLOOR PRICE" SHALL MEAN 50% OF THE MARKET
                           PRICE; PROVIDED, HOWEVER, THAT THE FLOOR PRICE SHALL
                           NEVER BE CALCULATED TO BE LESS THAN $.12 (UNLESS
                           ADJUSTED PURSUANT TO SECTION 5(e) HEREOF) NOR GREATER
                           THAN $.20.

                  15.4.5.  THE TERM "CLOSING BID PRICE" SHALL MEAN, FOR ANY
                           SECURITY AS OF ANY DATE, THE LAST CLOSING BID PRICE
                           OF SUCH SECURITY IN THE NASDAQ NATIONAL MARKET FOR
                           SUCH SECURITY AS REPORTED BY BLOOMBERG, OR, IF NO
                           CLOSING BID PRICE IS REPORTED FOR SUCH SECURITY BY
                           BLOOMBERG, THE LAST CLOSING TRADE PRICE OF SUCH
                           SECURITY AS REPORTED BY BLOOMBERG, OR, IF NO LAST
                           CLOSING TRADE PRICE IS REPORTED FOR SUCH SECURITY BY
                           BLOOMBERG, THE AVERAGE OF THE BID PRICES OF ANY
                           MARKET MAKERS FOR SUCH SECURITY AS REPORTED IN THE
                           "PINK SHEETS" BY THE NATIONAL QUOTATION BUREAU, INC.
                           IF THE CLOSING BID PRICE CANNOT BE CALCULATED FOR
                           SUCH SECURITY ON SUCH DATE ON ANY OF THE FOREGOING
                           BASES, THE CLOSING BID PRICE OF SUCH SECURITY ON SUCH
                           DATE SHALL BE THE FAIR MARKET VALUE AS MUTUALLY
                           DETERMINED BY THE COMPANY AND THE HOLDERS OF A
                           MAJORITY OF THE OUTSTANDING SHARES OF SERIES C
                           PREFERRED STOCK.

         15.5.    ADJUSTMENTS OF CONVERSION PRICE.

                  15.5.1.  ADJUSTMENTS FOR STOCK SPLITS AND COMBINATIONS. IF THE
                           COMPANY SHALL AT ANY TIME OR FROM TIME TO TIME AFTER
                           THE ISSUANCE DATE, EFFECT A STOCK SPLIT OF THE
                           OUTSTANDING COMMON STOCK, THE CONVERSION PRICE SHALL
                           BE PROPORTIONATELY DECREASED. IF THE COMPANY SHALL AT
                           ANY TIME OR FROM TIME TO TIME AFTER THE ISSUANCE
                           DATE, COMBINE THE OUTSTANDING SHARES OF COMMON STOCK,
                           THE CONVERSION PRICE SHALL BE PROPORTIONATELY
                           INCREASED. ANY ADJUSTMENTS UNDER THIS SECTION 5(e)(i)
                           SHALL BE EFFECTIVE AT THE CLOSE OF BUSINESS ON THE
                           DATE THE STOCK SPLIT OR COMBINATION OCCURS.


                                      -8-
<PAGE>

                  15.5.2.  ADJUSTMENTS FOR CERTAIN DIVIDENDS AND DISTRIBUTIONS.
                           IF THE COMPANY SHALL AT ANY TIME OR FROM TIME TO TIME
                           AFTER THE ISSUANCE DATE, MAKE OR ISSUE OR SET A
                           RECORD DATE FOR THE DETERMINATION OF HOLDERS OF
                           COMMON STOCK ENTITLED TO RECEIVE A DIVIDEND OR OTHER
                           DISTRIBUTION PAYABLE IN SHARES OF COMMON STOCK, THEN,
                           AND IN EACH EVENT, THE CONVERSION PRICE SHALL BE
                           DECREASED AS OF THE TIME OF SUCH ISSUANCE OR, IN THE
                           EVENT SUCH RECORD DATE SHALL HAVE BEEN FIXED, AS OF
                           THE CLOSE OF BUSINESS ON SUCH RECORD DATE, BY
                           MULTIPLYING, AS APPLICABLE, THE CONVERSION PRICE THEN
                           IN EFFECT BY A FRACTION:

                                    (1) the numerator of which shall be the
total number of shares of Common Stock issued and outstanding immediately prior
to the time of such issuance or the close of business on such record date; and

                                    (2) the denominator of which shall be the
total number of shares of Common Stock issued and outstanding immediately prior
to the time of such issuance or the close of business on such record date plus
the number of shares of Common Stock issuable in payment of such dividend or
distribution.

                  15.5.3.  ADJUSTMENT FOR OTHER DIVIDENDS AND DISTRIBUTIONS. IF
                           THE COMPANY SHALL AT ANY TIME OR FROM TIME TO TIME
                           AFTER THE ISSUANCE DATE, MAKE OR ISSUE OR SET A
                           RECORD DATE FOR THE DETERMINATION OF HOLDERS OF
                           COMMON STOCK ENTITLED TO RECEIVE A DIVIDEND OR OTHER
                           DISTRIBUTION PAYABLE IN OTHER THAN SHARES OF COMMON
                           STOCK, THEN, AND IN EACH EVENT, AN APPROPRIATE
                           REVISION TO THE APPLICABLE CONVERSION PRICE SHALL BE
                           MADE AND PROVISION SHALL BE MADE (BY ADJUSTMENTS OF
                           THE CONVERSION PRICE OR OTHERWISE) SO THAT THE
                           HOLDERS OF SERIES C PREFERRED STOCK SHALL RECEIVE
                           UPON CONVERSIONS THEREOF, IN ADDITION TO THE NUMBER
                           OF SHARES OF COMMON STOCK RECEIVABLE THEREON, THE
                           NUMBER OF SECURITIES OF THE COMPANY WHICH THEY WOULD
                           HAVE RECEIVED HAD THEIR SERIES C PREFERRED STOCK BEEN
                           CONVERTED INTO COMMON STOCK ON THE DATE OF SUCH EVENT
                           AND HAD THEREAFTER, DURING THE PERIOD FROM THE DATE
                           OF SUCH EVENT TO AND INCLUDING THE CONVERSION DATE,
                           RETAINED SUCH SECURITIES (TOGETHER WITH ANY
                           DISTRIBUTIONS PAYABLE THEREON DURING SUCH PERIOD),
                           GIVING APPLICATION TO ALL ADJUSTMENTS CALLED FOR
                           DURING SUCH PERIOD UNDER THIS SECTION 5(e)(iii) WITH
                           RESPECT TO THE RIGHTS OF THE HOLDERS OF THE SERIES C
                           PREFERRED STOCK.

                  15.5.4.  ADJUSTMENTS FOR RECLASSIFICATION, EXCHANGE OR
                           SUBSTITUTION. IF THE COMMON STOCK ISSUABLE UPON
                           CONVERSION OF THE SERIES C PREFERRED STOCK AT ANY
                           TIME OR FROM TIME TO TIME AFTER THE ISSUANCE DATE
                           SHALL BE CHANGED TO THE SAME OR DIFFERENT NUMBER OF
                           SHARES OF ANY CLASS OR CLASSES OF STOCK, WHETHER BY
                           RECLASSIFICATION, EXCHANGE, SUBSTITUTION OR OTHERWISE
                           (OTHER THAN BY WAY OF A STOCK SPLIT OR COMBINATION OF
                           SHARES OR STOCK DIVIDENDS PROVIDED FOR IN SECTIONS
                           5(e)(i), (ii) AND (iii), OR A REORGANIZATION, MERGER,
                           CONSOLIDATION, OR SALE OF ASSETS PROVIDED FOR IN
                           SECTION 5(e)(v)), THEN, AND IN EACH EVENT, AN
                           APPROPRIATE REVISION TO THE CONVERSION PRICE SHALL BE
                           MADE AND PROVISIONS SHALL BE MADE (BY ADJUSTMENTS OF
                           THE CONVERSION PRICE OR OTHERWISE) SO THAT

                                      -9-
<PAGE>

                           THE HOLDER OF EACH SHARE OF SERIES C PREFERRED STOCK
                           SHALL HAVE THE RIGHT THEREAFTER TO CONVERT SUCH SHARE
                           OF SERIES C PREFERRED STOCK INTO THE KIND AND AMOUNT
                           OF SHARES OF STOCK AND OTHER SECURITIES RECEIVABLE
                           UPON RECLASSIFICATION, EXCHANGE, SUBSTITUTION OR
                           OTHER CHANGE, BY HOLDERS OF THE NUMBER OF SHARES OF
                           COMMON STOCK INTO WHICH SUCH SHARE OF SERIES C
                           PREFERRED STOCK MIGHT HAVE BEEN CONVERTED IMMEDIATELY
                           PRIOR TO SUCH RECLASSIFICATION, EXCHANGE,
                           SUBSTITUTION OR OTHER CHANGE, ALL SUBJECT TO FURTHER
                           ADJUSTMENT AS PROVIDED HEREIN.

                  15.5.5.  ADJUSTMENTS FOR REORGANIZATION, MERGER, CONSOLIDATION
                           OR SALES OF ASSETS. IF AT ANY TIME OR FROM TIME TO
                           TIME AFTER THE ISSUANCE DATE THERE SHALL BE A CAPITAL
                           REORGANIZATION OF THE COMPANY (OTHER THAN BY WAY OF A
                           STOCK SPLIT OR COMBINATION OF SHARES OR STOCK
                           DIVIDENDS OR DISTRIBUTIONS PROVIDED FOR IN SECTION
                           5(e)(i), (ii) AND (iii), OR A RECLASSIFICATION,
                           EXCHANGE OR SUBSTITUTION OF SHARES PROVIDED FOR IN
                           SECTION 5(e)(iv)), OR A MERGER OR CONSOLIDATION OF
                           THE COMPANY WITH OR INTO ANOTHER CORPORATION, OR THE
                           SALE OF ALL OR SUBSTANTIALLY ALL OF THE COMPANY'S
                           PROPERTIES OR ASSETS TO ANY OTHER PERSON (AN "ORGANIC
                           CHANGE"), THEN AS A PART OF SUCH ORGANIC CHANGE AN
                           APPROPRIATE REVISION TO THE CONVERSION PRICE SHALL BE
                           MADE AND PROVISION SHALL BE MADE (BY ADJUSTMENTS OF
                           THE CONVERSION PRICE OR OTHERWISE) SO THAT THE HOLDER
                           OF EACH SHARE OF SERIES C PREFERRED STOCK SHALL HAVE
                           THE RIGHT THEREAFTER TO CONVERT SUCH SHARE OF SERIES
                           C PREFERRED STOCK INTO THE KIND AND AMOUNT OF SHARES
                           OF STOCK AND OTHER SECURITIES OR PROPERTY OF THE
                           COMPANY OR ANY SUCCESSOR CORPORATION RESULTING FROM
                           ORGANIC CHANGE. IN ANY SUCH CASE, APPROPRIATE
                           ADJUSTMENT SHALL BE MADE IN THE APPLICATION OF THE
                           PROVISIONS OF THIS SECTION 5(e)(v) WITH RESPECT TO
                           THE RIGHTS OF THE HOLDERS OF THE SERIES C PREFERRED
                           STOCK AFTER THE ORGANIC CHANGE TO THE END THAT THE
                           PROVISIONS OF THIS SECTION 5(e)(v) (INCLUDING ANY
                           ADJUSTMENT IN THE CONVERSION PRICE THEN IN EFFECT AND
                           THE NUMBER OF SHARES OF STOCK OR OTHER SECURITIES
                           DELIVERABLE UPON CONVERSION OF THE SERIES C PREFERRED
                           STOCK) SHALL BE APPLIED AFTER THAT EVENT IN AS NEARLY
                           AN EQUIVALENT MANNER AS MAY BE PRACTICABLE.

                  15.5.6.  ADJUSTMENTS FOR ISSUANCE OF ADDITIONAL SHARES OF
                           COMMON STOCK. COMMENCING SIX MONTHS AFTER THE INITIAL
                           ISSUANCE OF THE SERIES C PREFERRED STOCK, IN THE
                           EVENT THE COMPANY SHALL ISSUE OR SELL ANY ADDITIONAL
                           SHARES OF COMMON STOCK (OTHERWISE THAN AS PROVIDED IN
                           THE FOREGOING SUBSECTIONS (i) THROUGH (v) OF THIS
                           SECTION 5(e)) (THE "ADDITIONAL SHARES OF COMMON
                           STOCK"), AT A PRICE PER SHARE LESS THAN THE FLOOR
                           PRICE THEN IN EFFECT OR WITHOUT CONSIDERATION, THE
                           FLOOR PRICE THEN IN EFFECT SHALL BE REDUCED TO A
                           PRICE EQUAL TO THE CONSIDERATION PER SHARE PAID FOR
                           SUCH ADDITIONAL SHARES OF COMMON STOCK.



                                      -10-
<PAGE>

                  15.5.7.  ISSUANCE OF COMMON STOCK EQUIVALENTS. IF THE COMPANY,
                           AT ANY TIME AFTER THE ISSUANCE DATE, SHALL ISSUE ANY
                           SECURITIES CONVERTIBLE INTO OR EXCHANGEABLE FOR,
                           DIRECTLY OR INDIRECTLY, COMMON STOCK ("CONVERTIBLE
                           SECURITIES"), OTHER THAN THE SERIES C PREFERRED
                           STOCK, OR ANY RIGHTS OR WARRANTS OR OPTIONS TO
                           PURCHASE ANY SUCH COMMON STOCK OR CONVERTIBLE
                           SECURITIES, SHALL BE ISSUED OR SOLD (COLLECTIVELY,
                           THE "COMMON STOCK EQUIVALENTS") AND THE PRICE PER
                           SHARE FOR WHICH ADDITIONAL SHARES OF COMMON STOCK MAY
                           BE ISSUABLE THEREAFTER PURSUANT TO SUCH COMMON STOCK
                           EQUIVALENT SHALL BE LESS THAN THE FLOOR PRICE THEN IN
                           EFFECT, THEN THE FLOOR PRICE UPON EACH SUCH ISSUANCE
                           OR AMENDMENT SHALL BE ADJUSTED AS PROVIDED IN THE
                           FIRST SENTENCE OF SUBSECTION (vi) OF THIS SECTION
                           5(e) ON THE BASIS THAT (1) THE MAXIMUM NUMBER OF
                           ADDITIONAL SHARES OF COMMON STOCK ISSUABLE PURSUANT
                           TO ALL SUCH COMMON STOCK EQUIVALENTS SHALL BE DEEMED
                           TO HAVE BEEN ISSUED (WHETHER OR NOT SUCH COMMON STOCK
                           EQUIVALENTS ARE ACTUALLY THEN EXERCISABLE,
                           CONVERTIBLE OR EXCHANGEABLE IN WHOLE OR IN PART) AS
                           OF THE EARLIER OF (A) THE DATE ON WHICH THE COMPANY
                           SHALL ENTER INTO A FIRM CONTRACT FOR THE ISSUANCE OF
                           SUCH COMMON STOCK EQUIVALENT, OR (B) THE DATE OF
                           ACTUAL ISSUANCE OF SUCH COMMON STOCK EQUIVALENT, AND
                           (2) THE AGGREGATE CONSIDERATION FOR SUCH MAXIMUM
                           NUMBER OF ADDITIONAL SHARES OF COMMON STOCK SHALL BE
                           DEEMED TO BE THE MINIMUM CONSIDERATION RECEIVED OR
                           RECEIVABLE BY THE COMPANY FOR THE ISSUANCE OF SUCH
                           ADDITIONAL SHARES OF COMMON STOCK PURSUANT TO SUCH
                           COMMON STOCK EQUIVALENT. NO ADJUSTMENT OF THE FLOOR
                           PRICE SHALL BE MADE UNDER THIS SUBSECTION (vii) UPON
                           THE ISSUANCE OF ANY CONVERTIBLE SECURITY WHICH IS
                           ISSUED PURSUANT TO THE EXERCISE OF ANY WARRANTS OR
                           OTHER SUBSCRIPTION OR PURCHASE RIGHTS THEREFOR, IF
                           ANY ADJUSTMENT SHALL PREVIOUSLY HAVE BEEN MADE TO THE
                           EXERCISE PRICE OF SUCH WARRANTS THEN IN EFFECT UPON
                           THE ISSUANCE OF SUCH WARRANTS OR OTHER RIGHTS
                           PURSUANT TO THIS SUBSECTION (vii).

                  15.5.8.  CONSIDERATION FOR STOCK. IN CASE ANY SHARES OF COMMON
                           STOCK OR CONVERTIBLE SECURITIES OTHER THAN THE SERIES
                           C PREFERRED STOCK, OR ANY RIGHTS OR WARRANTS OR
                           OPTIONS TO PURCHASE ANY SUCH COMMON STOCK OR
                           CONVERTIBLE SECURITIES, SHALL BE ISSUED OR SOLD:


                                    (3) in connection with any merger or
consolidation in which the Company is the surviving corporation (other than any
consolidation or merger in which the previously outstanding shares of Common
Stock of the Company shall be changed to or exchanged for the stock or other
securities of another corporation), the amount of consideration therefore shall
be, deemed to be the fair value, as determined reasonably and in good faith by
the Board of Directors of the Company, of such portion of the assets and
business of the nonsurviving corporation as such Board may determine to be
attributable to such shares of Common Stock, Convertible Securities, rights or
warrants or options, as the case may be; or

                                    (4) in the event of any consolidation or
merger of the Company in which the Company is not the surviving corporation or
in which the previously outstanding shares of Common Stock of the Company shall
be changed into or exchanged for the stock or other securities of



                                      -11-
<PAGE>

another corporation, or in the event of any sale of all or substantially all of
the assets of the Company for stock or other securities of any corporation, the
Company shall be deemed to have issued a number of shares of its Common Stock
for stock or securities or other property of the other corporation computed on
the basis of the actual exchange ratio on which the transaction was predicated,
and for a consideration equal to the fair market value on the date of such
transaction of all such stock or securities or other property of the other
corporation. If any such calculation results in adjustment of the applicable
Conversion Price, or the number of shares of Common Stock issuable upon
conversion of the Series C Preferred Stock, the determination of the applicable
Conversion Price or the number of shares of Common Stock issuable upon
conversion of the Series C Preferred Stock immediately prior to such merger,
consolidation or sale, shall be made after giving effect to such adjustment of
the number of shares of Common Stock issuable upon conversion of the Series C
Preferred Stock.

                  15.5.9.  RECORD DATE. IN CASE THE COMPANY SHALL TAKE RECORD OF
                           THE HOLDERS OF ITS COMMON STOCK OR ANY OTHER
                           PREFERRED STOCK FOR THE PURPOSE OF ENTITLING THEM TO
                           SUBSCRIBE FOR OR PURCHASE COMMON STOCK OR CONVERTIBLE
                           SECURITIES, THEN THE DATE OF THE ISSUE OR SALE OF THE
                           SHARES OF COMMON STOCK SHALL BE DEEMED TO BE SUCH
                           RECORD DATE.

                  15.5.10. CERTAIN ISSUES EXCEPTED. ANYTHING HEREIN TO THE
                           CONTRARY NOTWITHSTANDING, THE COMPANY SHALL NOT BE
                           REQUIRED TO MAKE ANY ADJUSTMENT OF THE CONVERSION
                           PRICE OR THE NUMBER OF SHARES OF COMMON STOCK
                           ISSUABLE UPON CONVERSION OF THE SERIES C PREFERRED
                           STOCK UPON THE GRANT AFTER THE ISSUANCE DATE OF, OR
                           THE EXERCISE AFTER THE ISSUANCE DATE OF, OPTIONS OR
                           WARRANTS OR RIGHTS TO PURCHASE STOCK UNDER OR
                           PURSUANT TO (A) THE COMPANY'S STOCK OPTION PLAN, (B)
                           EMPLOYEE, CONSULTANT AND SERVICE PROVIDER
                           COMPENSATION PAID BY THE COMPANY WITH SHARES OF
                           COMMON STOCK IN LIEU OF CASH AND (C) INVESTMENTS MADE
                           BY STRATEGIC PARTNERS IN THE COMPANY.

         15.6.    NO IMPAIRMENT. THE COMPANY SHALL NOT, BY AMENDMENT OF ITS
                  CERTIFICATE OF INCORPORATION OR THROUGH ANY REORGANIZATION,
                  TRANSFER OF ASSETS, CONSOLIDATION, MERGER, DISSOLUTION, ISSUE
                  OR SALE OF SECURITIES OR ANY OTHER VOLUNTARY ACTION, AVOID OR
                  SEEK TO AVOID THE OBSERVANCE OR PERFORMANCE OF ANY OF THE
                  TERMS TO BE OBSERVED OR PERFORMED HEREUNDER BY THE COMPANY,
                  BUT WILL AT ALL TIMES IN GOOD FAITH, ASSIST IN THE CARRYING
                  OUT OF ALL THE PROVISIONS OF THIS SECTION 5 AND IN THE TAKING
                  OF ALL SUCH ACTION AS MAY BE NECESSARY OR APPROPRIATE IN ORDER
                  TO PROTECT THE CONVERSION RIGHTS OF THE HOLDERS OF THE SERIES
                  C PREFERRED STOCK AGAINST IMPAIRMENT. IN THE EVENT A HOLDER
                  SHALL ELECT TO CONVERT ANY SHARES OF SERIES C PREFERRED STOCK
                  AS PROVIDED HEREIN, THE COMPANY CANNOT REFUSE CONVERSION BASED
                  ON ANY CLAIM THAT SUCH HOLDER OR ANY ONE ASSOCIATED OR
                  AFFILIATED WITH SUCH HOLDER HAS BEEN ENGAGED IN ANY VIOLATION
                  OF LAW, UNLESS, AN INJUNCTION FROM A COURT, ON NOTICE,
                  RESTRAINING AND/OR ADJOINING CONVERSION OF ALL OR OF SAID
                  SHARES OF SERIES C PREFERRED STOCK SHALL HAVE BEEN ISSUED AND
                  THE COMPANY POSTS A SURETY BOND FOR THE BENEFIT OF SUCH HOLDER
                  IN THE AMOUNT OF THE DIFFERENCE BETWEEN THE CONVERSION PRICE
                  AND THE CLOSING BID PRICE ON THE TRADING DAY


                                      -12-
<PAGE>

                  PRECEDING THE DATE OF THE ATTEMPTED CONVERSION MULTIPLIED BY
                  THE NUMBER OF SHARES OF SERIES C PREFERRED STOCK SOUGHT TO BE
                  CONVERTED, WHICH BOND SHALL REMAIN IN EFFECT UNTIL THE
                  COMPLETION OF ARBITRATION/LITIGATION OF THE DISPUTE AND THE
                  PROCEEDS OF WHICH SHALL BE PAYABLE TO SUCH HOLDER IN THE EVENT
                  IT OBTAINS JUDGMENT.

         15.7.    CERTIFICATES AS TO ADJUSTMENTS. UPON OCCURRENCE OF EACH
                  ADJUSTMENT OR READJUSTMENT OF THE CONVERSION PRICE OR NUMBER
                  OF SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THE
                  SERIES C PREFERRED STOCK PURSUANT TO THIS SECTION 5, THE
                  COMPANY AT ITS EXPENSE SHALL PROMPTLY COMPUTE SUCH ADJUSTMENT
                  OR READJUSTMENT IN ACCORDANCE WITH THE TERMS HEREOF AND
                  FURNISH TO EACH HOLDER OF SUCH SERIES C PREFERRED STOCK A
                  CERTIFICATE SETTING FORTH SUCH ADJUSTMENT AND READJUSTMENT,
                  SHOWING IN DETAIL THE FACTS UPON WHICH SUCH ADJUSTMENT OR
                  READJUSTMENT IS BASED. THE COMPANY SHALL, UPON WRITTEN REQUEST
                  OF THE HOLDER OF SUCH AFFECTED SERIES C PREFERRED STOCK, AT
                  ANY TIME, FURNISH OR CAUSE TO BE FURNISHED TO SUCH HOLDER A
                  LIKE CERTIFICATE SETTING FORTH SUCH ADJUSTMENTS AND
                  READJUSTMENTS, THE CONVERSION PRICE IN EFFECT AT THE TIME, AND
                  THE NUMBER OF SHARES OF COMMON STOCK AND THE AMOUNT, IF ANY,
                  OF OTHER SECURITIES OR PROPERTY WHICH AT THE TIME WOULD BE
                  RECEIVED UPON THE CONVERSION OF A SHARE OF SUCH SERIES C
                  PREFERRED STOCK. NOTWITHSTANDING THE FOREGOING, THE COMPANY
                  SHALL NOT BE OBLIGATED TO DELIVER A CERTIFICATE UNLESS SUCH
                  CERTIFICATE WOULD REFLECT AN INCREASE OR DECREASE OF AT LEAST
                  ONE PERCENT OF SUCH ADJUSTED AMOUNT.

         15.8.    ISSUE TAXES. THE COMPANY SHALL PAY ANY AND ALL ISSUE AND OTHER
                  TAXES, EXCLUDING FEDERAL, STATE OR LOCAL INCOME TAXES, THAT
                  MAY BE PAYABLE IN RESPECT OF ANY ISSUE OR DELIVERY OF SHARES
                  OF COMMON STOCK ON CONVERSION OF SHARES OF SERIES C PREFERRED
                  STOCK PURSUANT THERETO; PROVIDED, HOWEVER, THAT THE COMPANY
                  SHALL NOT BE OBLIGATED TO PAY ANY TRANSFER TAXES RESULTING
                  FROM ANY TRANSFER REQUESTED BY ANY HOLDER IN CONNECTION WITH
                  ANY SUCH CONVERSION.

         15.9.    NOTICES. ALL NOTICES AND OTHER COMMUNICATIONS HEREUNDER SHALL
                  BE IN WRITING AND SHALL BE DEEMED GIVEN IF DELIVERED
                  PERSONALLY OR BY FACSIMILE OR THREE (3) BUSINESS DAYS
                  FOLLOWING BEING MAILED BY CERTIFIED OR REGISTERED MAIL,
                  POSTAGE PREPAID, RETURN-RECEIPT REQUESTED, ADDRESSED TO THE
                  HOLDER OF RECORD AT ITS ADDRESS APPEARING ON THE BOOKS OF THE
                  COMPANY. THE COMPANY WILL GIVE WRITTEN NOTICE TO EACH HOLDER
                  OF SERIES C PREFERRED STOCK AT LEAST TWENTY (20) DAYS PRIOR TO
                  THE DATE ON WHICH THE COMPANY CLOSES ITS BOOKS OR TAKES A
                  RECORD (I) WITH RESPECT TO ANY DIVIDEND OR DISTRIBUTION UPON
                  THE COMMON STOCK, (II) WITH RESPECT TO ANY PRO RATA
                  SUBSCRIPTION OFFER TO HOLDERS OF COMMON STOCK OR (III) FOR
                  DETERMINING RIGHTS TO VOTE WITH RESPECT TO ANY ORGANIC CHANGE,
                  DISSOLUTION, LIQUIDATION OR WINDING-UP AND IN NO EVENT SHALL
                  SUCH NOTICE BE PROVIDED TO SUCH HOLDER PRIOR TO SUCH
                  INFORMATION BEING MADE KNOWN TO THE PUBLIC. THE COMPANY WILL
                  ALSO GIVE




                                      -13-
<PAGE>

                  WRITTEN NOTICE TO EACH HOLDER OF SERIES C PREFERRED STOCK AT
                  LEAST TWENTY (20) DAYS PRIOR TO THE DATE ON WHICH ANY ORGANIC
                  CHANGE, DISSOLUTION, LIQUIDATION OR WINDING-UP WILL TAKE PLACE
                  AND IN NO EVENT SHALL SUCH NOTICE BE PROVIDED TO SUCH HOLDER
                  PRIOR TO SUCH INFORMATION BEING MADE KNOWN TO THE PUBLIC.

         15.10.   FRACTIONAL SHARES. NO FRACTIONAL SHARES OF COMMON STOCK SHALL
                  BE ISSUED UPON CONVERSION OF THE SERIES C PREFERRED STOCK. IN
                  LIEU OF ANY FRACTIONAL SHARES TO WHICH THE HOLDER WOULD
                  OTHERWISE BE ENTITLED, THE COMPANY SHALL PAY CASH EQUAL TO THE
                  PRODUCT OF SUCH FRACTION MULTIPLIED BY THE AVERAGE OF THE
                  CLOSING BID PRICES OF THE COMMON STOCK FOR THE FIVE (5)
                  CONSECUTIVE TRADING DAYS IMMEDIATELY PRECEDING THE VOLUNTARY
                  CONVERSION DATE OR MANDATORY CONVERSION DATE, AS APPLICABLE.

         15.11.   RESERVATION OF COMMON STOCK. THE COMPANY SHALL, SO LONG AS ANY
                  SHARES OF SERIES C PREFERRED STOCK ARE OUTSTANDING, RESERVE
                  AND KEEP AVAILABLE OUT OF ITS AUTHORIZED AND UNISSUED COMMON
                  STOCK, SOLELY FOR THE PURPOSE OF EFFECTING THE CONVERSION OF
                  THE SERIES C PREFERRED STOCK, SUCH NUMBER OF SHARES OF COMMON
                  STOCK AS SHALL FROM TIME TO TIME BE SUFFICIENT TO EFFECT THE
                  CONVERSION OF ALL OF THE SERIES C PREFERRED STOCK THEN
                  OUTSTANDING; PROVIDED THAT THE NUMBER OF SHARES OF COMMON
                  STOCK SO RESERVED SHALL AT NO TIME BE LESS THAN 200% OF THE
                  NUMBER OF SHARES OF COMMON STOCK FOR WHICH THE SHARES OF
                  SERIES C PREFERRED STOCK ARE AT ANY TIME CONVERTIBLE. THE
                  INITIAL NUMBER OF SHARES OF COMMON STOCK RESERVED FOR
                  CONVERSIONS OF THE SERIES C PREFERRED STOCK AND EACH INCREASE
                  IN THE NUMBER OF SHARES SO RESERVED SHALL BE ALLOCATED PRO
                  RATA AMONG THE HOLDERS OF THE SERIES C PREFERRED STOCK BASED
                  ON THE NUMBER OF SHARES OF SERIES C PREFERRED STOCK HELD BY
                  EACH HOLDER AT THE TIME OF ISSUANCE OF THE SERIES C PREFERRED
                  STOCK OR INCREASE IN THE NUMBER OF RESERVED SHARES, AS THE
                  CASE MAY BE. IN THE EVENT A HOLDER SHALL SELL OR OTHERWISE
                  TRANSFER ANY OF SUCH HOLDER'S SHARES OF SERIES C PREFERRED
                  STOCK, EACH TRANSFEREE SHALL BE ALLOCATED A PRO RATA PORTION
                  OF THE NUMBER OF RESERVED SHARES OF COMMON STOCK RESERVED FOR
                  SUCH TRANSFEROR. ANY SHARES OF COMMON STOCK RESERVED AND WHICH
                  REMAIN ALLOCATED TO ANY PERSON OR ENTITY WHICH DOES NOT HOLD
                  ANY SHARES OF SERIES C PREFERRED STOCK SHALL BE ALLOCATED TO
                  THE REMAINING HOLDERS OF SERIES C PREFERRED STOCK, PRO RATA
                  BASED ON THE NUMBER OF SHARES OF SERIES C PREFERRED STOCK THEN
                  HELD BY SUCH HOLDER. THE COMPANY SHALL, FROM TIME TO TIME IN
                  ACCORDANCE WITH THE DELAWARE GENERAL CORPORATION LAW, AS
                  AMENDED, INCREASE THE AUTHORIZED NUMBER OF SHARES OF COMMON
                  STOCK IF AT ANY TIME THE UNISSUED NUMBER OF AUTHORIZED SHARES
                  SHALL NOT BE SUFFICIENT TO SATISFY THE COMPANY'S OBLIGATIONS
                  UNDER THIS SECTION 5(k).

         15.12.   RETIREMENT OF SERIES C PREFERRED STOCK. CONVERSION OF SERIES C
                  PREFERRED STOCK SHALL BE DEEMED TO HAVE BEEN EFFECTED ON THE
                  APPLICABLE VOLUNTARY CONVERSION DATE OR MANDATORY CONVERSION
                  DATE, AND SUCH DATE IS REFERRED TO


                                      -14-
<PAGE>

                  HEREIN AS THE "CONVERSION DATE". UPON CONVERSION OF ONLY A
                  PORTION OF THE NUMBER OF SHARES OF SERIES C PREFERRED STOCK
                  REPRESENTED BY A CERTIFICATE SURRENDERED FOR CONVERSION, THE
                  COMPANY SHALL ISSUE AND DELIVER TO SUCH HOLDER AT THE EXPENSE
                  OF THE COMPANY, A NEW CERTIFICATE COVERING THE NUMBER OF
                  SHARES OF SERIES C PREFERRED STOCK REPRESENTING THE
                  UNCONVERTED PORTION OF THE CERTIFICATE SO SURRENDERED AS
                  REQUIRED BY SECTION 5(b)(ii).

         15.13.   REGULATORY COMPLIANCE. IF ANY SHARES OF COMMON STOCK TO BE
                  RESERVED FOR THE PURPOSE OF CONVERSION OF SERIES C PREFERRED
                  STOCK REQUIRE REGISTRATION OR LISTING WITH OR APPROVAL OF ANY
                  GOVERNMENTAL AUTHORITY, STOCK EXCHANGE OR OTHER REGULATORY
                  BODY UNDER ANY FEDERAL OR STATE LAW OR REGULATION OR OTHERWISE
                  BEFORE SUCH SHARES MAY BE VALIDLY ISSUED OR DELIVERED UPON
                  CONVERSION, THE COMPANY SHALL, AT ITS SOLE COST AND EXPENSE,
                  IN GOOD FAITH AND AS EXPEDITIOUSLY AS POSSIBLE, ENDEAVOR TO
                  SECURE SUCH REGISTRATION, LISTING OR APPROVAL, AS THE CASE MAY
                  BE.

16.      NO PREEMPTIVE RIGHTS. EXCEPT AS PROVIDED IN SECTION 5 HEREOF AND IN THE
         PURCHASE AGREEMENT, NO HOLDER OF THE SERIES C PREFERRED STOCK SHALL BE
         ENTITLED TO RIGHTS TO SUBSCRIBE FOR, PURCHASE OR RECEIVE ANY PART OF
         ANY NEW OR ADDITIONAL SHARES OF ANY CLASS, WHETHER NOW OR HEREINAFTER
         AUTHORIZED, OR OF BONDS OR DEBENTURES, OR OTHER EVIDENCES OF
         INDEBTEDNESS CONVERTIBLE INTO OR EXCHANGEABLE FOR SHARES OF ANY CLASS,
         BUT ALL SUCH NEW OR ADDITIONAL SHARES OF ANY CLASS, OR ANY BOND,
         DEBENTURES OR OTHER EVIDENCES OF INDEBTEDNESS CONVERTIBLE INTO OR
         EXCHANGEABLE FOR SHARES, MAY BE ISSUED AND DISPOSED OF BY THE BOARD OF
         DIRECTORS ON SUCH TERMS AND FOR SUCH CONSIDERATION (TO THE EXTENT
         PERMITTED BY LAW), AND TO SUCH PERSON OR PERSONS AS THE BOARD OF
         DIRECTORS IN THEIR ABSOLUTE DISCRETION MAY DEEM ADVISABLE.

17.      CONVERSION RESTRICTION. NOTWITHSTANDING ANYTHING TO THE CONTRARY SET
         FORTH IN SECTION 5 OF THIS CERTIFICATE OF DESIGNATION, AT NO TIME MAY A
         HOLDER OF SHARES OF SERIES C PREFERRED STOCK CONVERT SHARES OF THE
         SERIES C PREFERRED STOCK IF THE NUMBER OF SHARES OF COMMON STOCK TO BE
         ISSUED PURSUANT TO SUCH CONVERSION WOULD EXCEED, WHEN AGGREGATED WITH
         ALL OTHER SHARES OF COMMON STOCK OWNED BY SUCH HOLDER AT SUCH TIME, THE
         NUMBER OF SHARES OF COMMON STOCK WHICH WOULD RESULT IN SUCH HOLDER
         OWNING MORE THAN 4.99% OF ALL OF THE COMMON STOCK OUTSTANDING AT SUCH
         TIME; PROVIDED, HOWEVER, THAT UPON A HOLDER OF SERIES C PREFERRED STOCK
         PROVIDING THE COMPANY WITH SEVENTY-FIVE (75) DAYS NOTICE (PURSUANT TO
         SECTION 5(i) HEREOF) (THE "WAIVER NOTICE") THAT SUCH HOLDER WOULD LIKE
         TO WAIVE SECTION 7(b) OF THIS CERTIFICATE OF DESIGNATION WITH REGARD TO
         ANY OR ALL SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF SERIES C
         PREFERRED STOCK, THIS SECTION 7(b) SHALL BE OF NO FORCE OR EFFECT WITH
         REGARD TO THOSE SHARES OF SERIES C PREFERRED STOCK REFERENCED IN THE
         WAIVER NOTICE.



                                      -15-
<PAGE>

18.      REDEMPTION.

         18.1.    REDEMPTION OPTION UPON MAJOR TRANSACTION. IN ADDITION TO ALL
                  OTHER RIGHTS OF THE HOLDERS OF SERIES C PREFERRED STOCK
                  CONTAINED HEREIN, SIMULTANEOUS WITH THE OCCURRENCE OF A MAJOR
                  TRANSACTION (AS DEFINED BELOW), EACH HOLDER OF SERIES C
                  PREFERRED STOCK SHALL HAVE THE RIGHT, AT SUCH HOLDER'S OPTION,
                  TO REQUIRE THE COMPANY TO REDEEM ALL OR A PORTION OF SUCH
                  HOLDER'S SHARES OF SERIES C PREFERRED STOCK AT A PRICE PER
                  SHARE OF SERIES C PREFERRED STOCK EQUAL TO THE GREATER OF (i)
                  120% OF THE LIQUIDATION PREFERENCE AMOUNT PLUS ANY LIQUIDATED
                  DAMAGES AND (ii) THE PRODUCT OF (A) THE CONVERSION RATE AND
                  (B) THE CLOSING BID PRICE OF THE COMMON STOCK ON THE TRADING
                  DATE IMMEDIATELY PRECEDING SUCH MAJOR TRANSACTION (THE "MAJOR
                  TRANSACTION REDEMPTION PRICE").

         18.2.    REDEMPTION OPTION UPON TRIGGERING EVENT. IN ADDITION TO ALL
                  OTHER RIGHTS OF THE HOLDERS OF SERIES C PREFERRED STOCK
                  CONTAINED HEREIN AND TO THE EXTENT THE HOLDERS OF THE SERIES C
                  PREFERRED STOCK HAVE NOT PREVIOUSLY CONVERTED, AFTER A
                  TRIGGERING EVENT (AS DEFINED BELOW), EACH HOLDER OF SERIES C
                  PREFERRED STOCK SHALL HAVE THE RIGHT, AT SUCH HOLDER'S OPTION,
                  TO REQUIRE THE COMPANY TO REDEEM ALL OR A PORTION OF SUCH
                  HOLDER'S SHARES OF SERIES C PREFERRED STOCK AS SHALL BE
                  OUTSTANDING ON SUCH DATE OF A TRIGGERING EVENT, AT A PRICE PER
                  SHARE OF SERIES C PREFERRED STOCK EQUAL TO 150% OF THE
                  LIQUIDATION PREFERENCE AMOUNT (THE "TRIGGERING EVENT
                  REDEMPTION PRICE" AND THE "MAJOR TRANSACTION REDEMPTION PRICE"
                  ARE SOMETIMES INDIVIDUALLY REFERRED TO HEREIN AS THE
                  "REDEMPTION PRICE").

         18.3.    "MAJOR TRANSACTION". A "MAJOR TRANSACTION" SHALL BE DEEMED TO
                  HAVE OCCURRED AT SUCH TIME AS ANY OF THE FOLLOWING EVENTS:

                  18.3.1.  THE CONSOLIDATION, MERGER OR OTHER BUSINESS
                           COMBINATION OF THE COMPANY WITH OR INTO ANOTHER
                           PERSON (OTHER THAN (A) PURSUANT TO A MIGRATORY MERGER
                           EFFECTED SOLELY FOR THE PURPOSE OF CHANGING THE
                           JURISDICTION OF INCORPORATION OF THE COMPANY OR (B) A
                           CONSOLIDATION, MERGER OR OTHER BUSINESS COMBINATION
                           IN WHICH HOLDERS OF THE COMPANY'S VOTING POWER
                           IMMEDIATELY PRIOR TO THE TRANSACTION CONTINUE AFTER
                           THE TRANSACTION TO HOLD, DIRECTLY OR INDIRECTLY, THE
                           VOTING POWER OF THE SURVIVING ENTITY OR ENTITIES
                           NECESSARY TO ELECT A MAJORITY OF THE MEMBERS OF THE
                           BOARD OF DIRECTORS (OR THEIR EQUIVALENT IF OTHER THAN
                           A CORPORATION) OF SUCH ENTITY OR ENTITIES).

                  18.3.2.  THE SALE OR TRANSFER OF ALL OR SUBSTANTIALLY ALL OF
                           THE COMPANY'S ASSETS;


                                      -16-
<PAGE>


                  18.3.3.  CONSUMMATION OF A PURCHASE, TENDER OR EXCHANGE OFFER
                           MADE TO THE HOLDERS OF MORE THAN 30% OF THE
                           OUTSTANDING SHARES OF COMMON STOCK; OR

                  18.3.4.  CONSUMMATION OF A TRANSACTION WHEREBY THE COMPANY IS
                           NO LONGER A REPORTING COMPANY PURSUANT TO THE
                           SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

         18.4.    "TRIGGERING EVENT". A "TRIGGERING EVENT" SHALL BE DEEMED TO
                  HAVE OCCURRED AT SUCH TIME AS ANY OF THE FOLLOWING EVENTS:

                  18.4.1.  SO LONG AS ANY SHARES OF SERIES C PREFERRED STOCK ARE
                           OUTSTANDING, THE EFFECTIVENESS OF THE REGISTRATION
                           STATEMENT LAPSES FOR ANY REASON (INCLUDING, WITHOUT
                           LIMITATION, THE ISSUANCE OF A STOP ORDER) OR IS
                           UNAVAILABLE TO THE HOLDER OF THE SERIES C PREFERRED
                           STOCK FOR SALE OF THE SHARES OF COMMON STOCK, AND
                           SUCH LAPSE OR UNAVAILABILITY CONTINUES FOR A PERIOD
                           OF TEN CONSECUTIVE TRADING DAYS, PROVIDED THAT THE
                           CAUSE OF SUCH LAPSE OR UNAVAILABILITY IS NOT DUE TO
                           FACTORS SOLELY WITHIN THE CONTROL OF SUCH HOLDER OF
                           SERIES C PREFERRED STOCK;

                  18.4.2.  THE SUSPENSION FROM LISTING OR THE FAILURE OF THE
                           COMMON STOCK TO BE LISTED ON THE NASDAQ NATIONAL
                           MARKET, THE NASDAQ SMALLCAP MARKET, THE OTC BULLETIN
                           BOARD, THE NEW YORK STOCK EXCHANGE, INC. OR THE
                           AMERICAN STOCK EXCHANGE, INC., AS APPLICABLE, FOR A
                           PERIOD OF FIVE (5) CONSECUTIVE DAYS;

                  18.4.3.  THE COMPANY'S NOTICE TO ANY HOLDER OF SERIES C
                           PREFERRED STOCK, INCLUDING BY WAY OF PUBLIC
                           ANNOUNCEMENT, AT ANY TIME, OF ITS INABILITY TO COMPLY
                           (INCLUDING FOR ANY OF THE REASONS DESCRIBED IN
                           SECTION 9) OR ITS INTENTION NOT TO COMPLY WITH PROPER
                           REQUESTS FOR CONVERSION OF ANY SERIES C PREFERRED
                           STOCK INTO SHARES OF COMMON STOCK;

                  18.4.4.  THE COMPANY'S FAILURE TO COMPLY WITH A CONVERSION
                           NOTICE TENDERED IN ACCORDANCE WITH THE PROVISIONS OF
                           THIS CERTIFICATE OF DESIGNATION WITHIN TEN (10)
                           BUSINESS DAYS AFTER THE RECEIPT BY THE COMPANY OF THE
                           CONVERSION NOTICE AND THE PREFERRED STOCK
                           CERTIFICATES; OR

                  18.4.5.  THE COMPANY BREACHES ANY REPRESENTATION, WARRANTY,
                           COVENANT OR OTHER TERM OR CONDITION OF THE PURCHASE
                           AGREEMENT, THIS CERTIFICATE OF DESIGNATION OR ANY
                           OTHER AGREEMENT, DOCUMENT, CERTIFICATE OR OTHER
                           INSTRUMENT DELIVERED



                                      -17-
<PAGE>

                           IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED
                           THEREBY OR HEREBY, EXCEPT TO THE EXTENT THAT SUCH
                           BREACH WOULD NOT HAVE A MATERIAL ADVERSE EFFECT (AS
                           DEFINED IN THE PURCHASE AGREEMENT) AND EXCEPT, IN THE
                           CASE OF A BREACH OF A COVENANT WHICH IS CURABLE, ONLY
                           IF SUCH BREACH CONTINUES FOR A PERIOD OF A LEAST TEN
                           (10) DAYS.

         18.5.    MECHANICS OF REDEMPTION AT OPTION OF BUYER UPON MAJOR
                  TRANSACTION. NO SOONER THAN FIFTEEN (15) DAYS NOR LATER THAN
                  TEN (10) DAYS PRIOR TO THE CONSUMMATION OF A MAJOR
                  TRANSACTION, BUT NOT PRIOR TO THE PUBLIC ANNOUNCEMENT OF SUCH
                  MAJOR TRANSACTION, THE COMPANY SHALL DELIVER WRITTEN NOTICE
                  THEREOF VIA FACSIMILE AND OVERNIGHT COURIER ("NOTICE OF MAJOR
                  TRANSACTION") TO EACH HOLDER OF SERIES C PREFERRED STOCK. AT
                  ANY TIME AFTER RECEIPT OF A NOTICE OF MAJOR TRANSACTION (OR,
                  IN THE EVENT A NOTICE OF MAJOR TRANSACTION IS NOT DELIVERED AT
                  LEAST TEN (10) DAYS PRIOR TO A MAJOR TRANSACTION, AT ANY TIME
                  WITHIN TEN (10) DAYS PRIOR TO A MAJOR TRANSACTION), ANY HOLDER
                  OF SERIES C PREFERRED STOCK THEN OUTSTANDING MAY REQUIRE THE
                  COMPANY TO REDEEM, EFFECTIVE IMMEDIATELY PRIOR TO THE
                  CONSUMMATION OF SUCH MAJOR TRANSACTION, ALL OF THE HOLDER'S
                  SERIES C PREFERRED STOCK THEN OUTSTANDING BY DELIVERING
                  WRITTEN NOTICE THEREOF VIA FACSIMILE AND OVERNIGHT COURIER
                  ("NOTICE OF REDEMPTION AT OPTION OF BUYER UPON MAJOR
                  TRANSACTION") TO THE COMPANY, WHICH NOTICE OF REDEMPTION AT
                  OPTION OF BUYER UPON MAJOR TRANSACTION SHALL INDICATE (i) THE
                  NUMBER OF SHARES OF SERIES C PREFERRED STOCK THAT SUCH HOLDER
                  IS ELECTING TO REDEEM AND (ii) THE APPLICABLE MAJOR
                  TRANSACTION REDEMPTION PRICE, AS CALCULATED PURSUANT TO
                  SECTION 8(a) ABOVE.

         18.6.    MECHANICS OF REDEMPTION AT OPTION OF BUYER UPON TRIGGERING
                  EVENT. WITHIN ONE (1) DAY AFTER THE OCCURRENCE OF A TRIGGERING
                  EVENT, THE COMPANY SHALL DELIVER WRITTEN NOTICE THEREOF VIA
                  FACSIMILE AND OVERNIGHT COURIER ("NOTICE OF TRIGGERING EVENT")
                  TO EACH HOLDER OF SERIES C PREFERRED STOCK. AT ANY TIME AFTER
                  THE EARLIER OF A HOLDER'S RECEIPT OF A NOTICE OF TRIGGERING
                  EVENT AND SUCH HOLDER BECOMING AWARE OF A TRIGGERING EVENT,
                  ANY HOLDER OF SERIES C PREFERRED STOCK THEN OUTSTANDING MAY
                  REQUIRE THE COMPANY TO REDEEM ALL OF THE SERIES C PREFERRED
                  STOCK BY DELIVERING WRITTEN NOTICE THEREOF VIA FACSIMILE AND
                  OVERNIGHT COURIER ("NOTICE OF REDEMPTION AT OPTION OF BUYER
                  UPON TRIGGERING EVENT") TO THE COMPANY, WHICH NOTICE OF
                  REDEMPTION AT OPTION OF BUYER UPON TRIGGERING EVENT SHALL
                  INDICATE (i) THE NUMBER OF SHARES OF SERIES C PREFERRED STOCK
                  THAT SUCH HOLDER IS ELECTING TO REDEEM AND (ii) THE APPLICABLE
                  TRIGGERING EVENT REDEMPTION PRICE, AS CALCULATED PURSUANT TO
                  SECTION 8(b) ABOVE.

         18.7.    PAYMENT OF REDEMPTION PRICE. UPON THE COMPANY'S RECEIPT OF A
                  NOTICE(S) OF REDEMPTION AT OPTION OF BUYER UPON TRIGGERING
                  EVENT OR A NOTICE(S) OF REDEMPTION AT OPTION OF BUYER UPON
                  MAJOR TRANSACTION FROM ANY HOLDER OF SERIES C PREFERRED STOCK,
                  THE COMPANY SHALL IMMEDIATELY NOTIFY EACH HOLDER OF SERIES C




                                      -18-
<PAGE>

                  PREFERRED STOCK BY FACSIMILE OF THE COMPANY'S RECEIPT OF SUCH
                  NOTICE(S) OF REDEMPTION AT OPTION OF BUYER UPON TRIGGERING
                  EVENT OR NOTICE(S) OF REDEMPTION AT OPTION OF BUYER UPON MAJOR
                  TRANSACTION AND EACH HOLDER WHICH HAS SENT SUCH A NOTICE SHALL
                  PROMPTLY SUBMIT TO THE COMPANY SUCH HOLDER'S PREFERRED STOCK
                  CERTIFICATES WHICH SUCH HOLDER HAS ELECTED TO HAVE REDEEMED.
                  THE COMPANY SHALL DELIVER THE APPLICABLE MAJOR TRANSACTION
                  REDEMPTION PRICE IMMEDIATELY PRIOR TO THE CONSUMMATION OF THE
                  MAJOR TRANSACTION; PROVIDED THAT A HOLDER'S PREFERRED STOCK
                  CERTIFICATES SHALL HAVE BEEN SO DELIVERED TO THE COMPANY;
                  PROVIDED FURTHER THAT IF THE COMPANY IS UNABLE TO REDEEM ALL
                  OF THE SERIES C PREFERRED STOCK TO BE REDEEMED, THE COMPANY
                  SHALL REDEEM AN AMOUNT FROM EACH HOLDER OF SERIES C PREFERRED
                  STOCK BEING REDEEMED EQUAL TO SUCH HOLDER'S PRO-RATA AMOUNT
                  (BASED ON THE NUMBER OF SHARES OF SERIES C PREFERRED STOCK
                  HELD BY SUCH HOLDER RELATIVE TO THE NUMBER OF SHARES OF SERIES
                  C PREFERRED STOCK OUTSTANDING) OF ALL SERIES C PREFERRED STOCK
                  BEING REDEEMED. IF THE COMPANY SHALL FAIL TO REDEEM ALL OF THE
                  SERIES C PREFERRED STOCK SUBMITTED FOR REDEMPTION (OTHER THAN
                  PURSUANT TO A DISPUTE AS TO THE ARITHMETIC CALCULATION OF THE
                  REDEMPTION PRICE), IN ADDITION TO ANY REMEDY SUCH HOLDER OF
                  SERIES C PREFERRED STOCK MAY HAVE UNDER THIS CERTIFICATE OF
                  DESIGNATION AND THE PURCHASE AGREEMENT, THE APPLICABLE
                  REDEMPTION PRICE PAYABLE IN RESPECT OF SUCH UNREDEEMED SERIES
                  C PREFERRED STOCK SHALL BEAR INTEREST AT THE RATE OF 2.0% PER
                  MONTH (PRORATED FOR PARTIAL MONTHS), COMMENCING, IN THE CASE
                  OF A REDEMPTION AT OPTION OF BUYER UPON MAJOR TRANSACTION,
                  UPON THE CLOSING OF THE MAJOR TRANSACTION TRIGGERING THE
                  BUYER'S OPTION, UNTIL PAID IN FULL. UNTIL THE COMPANY PAYS
                  SUCH UNPAID APPLICABLE REDEMPTION PRICE IN FULL TO A HOLDER OF
                  SHARES OF SERIES C PREFERRED STOCK SUBMITTED FOR REDEMPTION,
                  SUCH HOLDER SHALL HAVE THE OPTION (THE "VOID OPTIONAL
                  REDEMPTION OPTION") TO, IN LIEU OF REDEMPTION, REQUIRE THE
                  COMPANY TO PROMPTLY RETURN TO SUCH HOLDER(S) ALL OF THE SHARES
                  OF SERIES C PREFERRED STOCK THAT WERE SUBMITTED FOR REDEMPTION
                  BY SUCH HOLDER(S) UNDER THIS SECTION 8 AND FOR WHICH THE
                  APPLICABLE REDEMPTION PRICE HAS NOT BEEN PAID, BY SENDING
                  WRITTEN NOTICE THEREOF TO THE COMPANY VIA FACSIMILE (THE "VOID
                  OPTIONAL REDEMPTION NOTICE"). UPON THE COMPANY'S RECEIPT OF
                  SUCH VOID OPTIONAL REDEMPTION NOTICE(S) AND PRIOR TO PAYMENT
                  OF THE FULL APPLICABLE REDEMPTION PRICE TO SUCH HOLDER, (i)
                  THE NOTICE(S) OF REDEMPTION AT OPTION OF BUYER UPON MAJOR
                  TRANSACTION SHALL BE NULL AND VOID WITH RESPECT TO THOSE
                  SHARES OF SERIES C PREFERRED STOCK SUBMITTED FOR REDEMPTION
                  AND FOR WHICH THE APPLICABLE REDEMPTION PRICE HAS NOT BEEN
                  PAID, (ii) THE COMPANY SHALL IMMEDIATELY RETURN ANY SERIES C
                  PREFERRED STOCK SUBMITTED TO THE COMPANY BY EACH HOLDER FOR
                  REDEMPTION UNDER THIS SECTION 8(d) AND FOR WHICH THE
                  APPLICABLE REDEMPTION PRICE HAS NOT BEEN PAID AND (iii) THE
                  CONVERSION PRICE OF SUCH RETURNED SHARES OF SERIES C PREFERRED
                  STOCK SHALL BE ADJUSTED TO THE LESSER OF (A) THE CONVERSION
                  PRICE AND (B) THE VOLUME WEIGHTED AVERAGE PRICE DURING THE
                  PERIOD BEGINNING ON THE DATE ON WHICH THE NOTICE(S) OF
                  REDEMPTION OF OPTION OF BUYER UPON MAJOR TRANSACTION IS
                  DELIVERED TO THE COMPANY AND ENDING ON THE DATE ON WHICH THE
                  VOID OPTIONAL REDEMPTION NOTICE(S) IS DELIVERED TO THE
                  COMPANY; PROVIDED THAT NO ADJUSTMENT SHALL BE MADE IF SUCH
                  ADJUSTMENT WOULD RESULT IN AN INCREASE OF THE CONVERSION PRICE
                  THEN IN EFFECT. A HOLDER'S DELIVERY OF A VOID OPTIONAL
                  REDEMPTION NOTICE AND EXERCISE OF ITS RIGHTS FOLLOWING SUCH
                  NOTICE SHALL NOT EFFECT THE COMPANY'S OBLIGATIONS TO MAKE ANY
                  PAYMENTS WHICH HAVE ACCRUED PRIOR TO THE DATE OF SUCH NOTICE.


                                      -19-
<PAGE>

                  PAYMENTS PROVIDED FOR IN THIS SECTION 8 SHALL HAVE PRIORITY TO
                  PAYMENTS TO OTHER STOCKHOLDERS IN CONNECTION WITH A MAJOR
                  TRANSACTION.


                                      -20-
<PAGE>

         18.8.    COMPANY'S REDEMPTION OPTION. THE COMPANY MAY REDEEM ALL OR A
                  PORTION OF THE SERIES C PREFERRED STOCK OUTSTANDING UPON TEN
                  (10) TRADING DAYS PRIOR WRITTEN NOTICE (THE "COMPANY'S
                  REDEMPTION NOTICE") AT A PRICE PER SHARE OF SERIES C PREFERRED
                  STOCK EQUAL TO 150% OF THE LIQUIDATION PREFERENCE AMOUNT PLUS
                  ANY LIQUIDATED DAMAGES; PROVIDED, THAT IF A HOLDER HAS
                  DELIVERED A CONVERSION NOTICE TO THE COMPANY OR DELIVERS A
                  CONVERSION NOTICE WITHIN FORTY-EIGHT (48) HOURS OF RECEIPT OF
                  THE COMPANY'S REDEMPTION NOTICE, THE SHARES OF SERIES C
                  PREFERRED STOCK DESIGNATED TO BE REDEEMED MAY BE CONVERTED BY
                  SUCH HOLDER; PROVIDED FURTHER THAT IF DURING THE PERIOD
                  BETWEEN DELIVERY OF THE COMPANY'S REDEMPTION NOTICE AND THE
                  REDEMPTION DATE A HOLDER SHALL BECOME ENTITLED TO DELIVER A
                  NOTICE OF REDEMPTION AT OPTION OF BUYER UPON MAJOR
                  TRANSACTION, THEN THE RIGHT OF SUCH HOLDER SHALL TAKE
                  PRECEDENCE OVER THE PREVIOUSLY DELIVERED COMPANY REDEMPTION
                  NOTICE. THE COMPANY'S REDEMPTION NOTICE SHALL STATE THE DATE
                  OF REDEMPTION WHICH DATE SHALL BE THE SIXTH (6TH) DAY AFTER
                  THE COMPANY HAS DELIVERED THE COMPANY'S REDEMPTION NOTICE (THE
                  "COMPANY'S REDEMPTION DATE"), THE COMPANY'S REDEMPTION PRICE
                  AND THE NUMBER OF SHARES TO BE REDEEMED BY THE COMPANY. THE
                  COMPANY SHALL NOT SEND A COMPANY'S REDEMPTION NOTICE UNLESS IT
                  HAS GOOD AND CLEAR FUNDS FOR A MINIMUM OF THE AMOUNT IT
                  INTENDS TO REDEEM IN A BANK ACCOUNT CONTROLLED BY THE COMPANY;
                  PROVIDED THAT IF THE REDEMPTION IS EXPECTED TO BE MADE
                  CONTEMPORANEOUS WITH THE CLOSING OF A PUBLIC UNDERWRITTEN
                  OFFERING OF THE COMPANY, THEN THE COMPANY MAY NOT HAVE GOOD
                  AND CLEAR FUNDS IN THE BANK ACCOUNT AT THE TIME OF THE
                  COMPANY'S REDEMPTION NOTICE AND MAY NOT SEND ANY SUCH
                  COMPANY'S REDEMPTION NOTICE EARLIER THAN THE DAY IMMEDIATELY
                  PRIOR TO THE DATE THE PUBLIC OFFERING IS PRICED. THE COMPANY
                  SHALL DELIVER THE COMPANY'S REDEMPTION PRICE TO THE HOLDER(S)
                  WITHIN FIVE (5) BUSINESS DAYS AFTER THE COMPANY HAS DELIVERED
                  THE COMPANY'S REDEMPTION NOTICE, PROVIDED, THAT IF THE
                  HOLDER(S) DELIVERS A CONVERSION NOTICE BEFORE THE COMPANY'S
                  REDEMPTION DATE, THEN THE PORTION OF THE COMPANY'S REDEMPTION
                  PRICE WHICH WOULD BE PAID TO REDEEM THE SHARES OF SERIES C
                  PREFERRED STOCK COVERED BY SUCH CONVERSION NOTICE SHALL BE
                  RETURNED TO THE COMPANY UPON DELIVERY OF THE COMMON STOCK
                  ISSUABLE IN CONNECTION WITH SUCH CONVERSION NOTICE TO THE
                  HOLDER(S). ON THE REDEMPTION DATE, THE COMPANY SHALL PAY THE
                  COMPANY'S REDEMPTION PRICE, SUBJECT TO ANY ADJUSTMENT PURSUANT
                  TO THE IMMEDIATELY PRECEDING SENTENCE, TO THE HOLDER(S) ON A
                  PRO RATA BASIS, PROVIDED, HOWEVER, THAT UPON RECEIPT BY THE
                  COMPANY OF THE PREFERRED STOCK CERTIFICATES TO BE REDEEMED
                  PURSUANT TO THIS SECTION 8(e), THE COMPANY SHALL, ON THE NEXT
                  BUSINESS DAY FOLLOWING THE DATE OF RECEIPT BY THE COMPANY OF
                  SUCH PREFERRED STOCK CERTIFICATES, PAY THE COMPANY'S
                  REDEMPTION PRICE TO THE HOLDER(S) ON A PRO RATA BASIS. IF THE
                  COMPANY FAILS TO PAY THE COMPANY'S REDEMPTION PRICE BY THE
                  SIXTH (6TH) BUSINESS DAY AFTER THE COMPANY HAS DELIVERED THE
                  COMPANY'S REDEMPTION NOTICE (OR IN THE CASE OF A PUBLIC
                  OFFERING, THE CLOSING OF THE PUBLIC OFFERING), THE REDEMPTION
                  WILL BE DECLARED NULL AND VOID AND THE COMPANY SHALL LOSE ITS
                  RIGHT TO SERVE A COMPANY'S REDEMPTION NOTICE IN THE FUTURE.



                                      -21-
<PAGE>

19.      INABILITY TO FULLY CONVERT.

         19.1.    HOLDER'S OPTION IF COMPANY CANNOT FULLY CONVERT. IF, UPON THE
                  COMPANY'S RECEIPT OF A CONVERSION NOTICE OR ON THE MANDATORY
                  CONVERSION DATE, THE COMPANY CANNOT ISSUE SHARES OF COMMON
                  STOCK REGISTERED FOR RESALE UNDER THE REGISTRATION STATEMENT
                  FOR ANY REASON, INCLUDING, WITHOUT LIMITATION, BECAUSE THE
                  COMPANY (w) DOES NOT HAVE A SUFFICIENT NUMBER OF SHARES OF
                  COMMON STOCK AUTHORIZED AND AVAILABLE, (x) FAILED TO CALL THE
                  STOCKHOLDER MEETING WITHIN THE TIME PERIOD SET FORTH IN
                  SECTION 7 HEREOF, (y) IS OTHERWISE PROHIBITED BY APPLICABLE
                  LAW OR BY THE RULES OR REGULATIONS OF ANY STOCK EXCHANGE,
                  INTERDEALER QUOTATION SYSTEM OR OTHER SELF-REGULATORY
                  ORGANIZATION WITH JURISDICTION OVER THE COMPANY OR ITS
                  SECURITIES FROM ISSUING ALL OF THE COMMON STOCK WHICH IS TO BE
                  ISSUED TO A HOLDER OF SERIES C PREFERRED STOCK PURSUANT TO A
                  CONVERSION NOTICE OR (z) FAILS TO HAVE A SUFFICIENT NUMBER OF
                  SHARES OF COMMON STOCK REGISTERED FOR RESALE UNDER THE
                  REGISTRATION STATEMENT, THEN THE COMPANY SHALL ISSUE AS MANY
                  SHARES OF COMMON STOCK AS IT IS ABLE TO ISSUE IN ACCORDANCE
                  WITH SUCH HOLDER'S CONVERSION NOTICE AND PURSUANT TO SECTION
                  5(b)(ii) ABOVE AND, WITH RESPECT TO THE UNCONVERTED SERIES C
                  PREFERRED STOCK, THE HOLDER, SOLELY AT SUCH HOLDER'S OPTION,
                  CAN ELECT, WITHIN FIVE (5) BUSINESS DAYS AFTER RECEIPT OF
                  NOTICE FROM THE COMPANY THEREOF TO:

                  19.1.1.  REQUIRE THE COMPANY TO REDEEM FROM SUCH HOLDER THOSE
                           SERIES C PREFERRED STOCK FOR WHICH THE COMPANY IS
                           UNABLE TO ISSUE COMMON STOCK IN ACCORDANCE WITH SUCH
                           HOLDER'S CONVERSION NOTICE ("MANDATORY REDEMPTION")
                           AT A PRICE PER SHARE EQUAL TO THE MAJOR TRANSACTION
                           REDEMPTION PRICE AS OF SUCH CONVERSION DATE (THE
                           "MANDATORY REDEMPTION PRICE");

                  19.1.2.  IF THE COMPANY'S INABILITY TO FULLY CONVERT SERIES C
                           PREFERRED STOCK IS PURSUANT TO SECTION 9(a)(z) ABOVE,
                           REQUIRE THE COMPANY TO ISSUE RESTRICTED SHARES OF
                           COMMON STOCK IN ACCORDANCE WITH SUCH HOLDER'S
                           CONVERSION NOTICE AND PURSUANT TO SECTION 5(b)(ii)
                           ABOVE;

                  19.1.3.  VOID ITS CONVERSION NOTICE AND RETAIN OR HAVE
                           RETURNED, AS THE CASE MAY BE, THE SHARES OF SERIES C
                           PREFERRED STOCK THAT WERE TO BE CONVERTED PURSUANT TO
                           SUCH HOLDER'S CONVERSION NOTICE (PROVIDED THAT A
                           HOLDER'S VOIDING ITS CONVERSION NOTICE SHALL NOT
                           EFFECT THE COMPANY'S OBLIGATIONS TO MAKE ANY PAYMENTS
                           WHICH HAVE ACCRUED PRIOR TO THE DATE OF SUCH NOTICE).

         19.2.    MECHANICS OF FULFILLING HOLDER'S ELECTION. THE COMPANY SHALL
                  IMMEDIATELY SEND VIA FACSIMILE TO A HOLDER OF SERIES C
                  PREFERRED STOCK, UPON RECEIPT OF A FACSIMILE COPY OF A
                  CONVERSION NOTICE FROM SUCH HOLDER WHICH CANNOT BE FULLY
                  SATISFIED AS DESCRIBED IN SECTION 9(a) ABOVE, A NOTICE OF THE
                  COMPANY'S INABILITY TO FULLY SATISFY SUCH HOLDER'S CONVERSION
                  NOTICE (THE "INABILITY TO FULLY CONVERT NOTICE"). SUCH
                  INABILITY TO FULLY CONVERT NOTICE SHALL INDICATE (i) THE
                  REASON WHY THE COMPANY IS UNABLE TO FULLY SATISFY SUCH
                  HOLDER'S CONVERSION NOTICE, (ii) THE

                                      -22-
<PAGE>

                  NUMBER OF SERIES C PREFERRED STOCK WHICH CANNOT BE CONVERTED
                  AND (iii) THE APPLICABLE MANDATORY REDEMPTION PRICE. SUCH
                  HOLDER SHALL NOTIFY THE COMPANY OF ITS ELECTION PURSUANT TO
                  SECTION 9(a) ABOVE BY DELIVERING WRITTEN NOTICE VIA FACSIMILE
                  TO THE COMPANY ("NOTICE IN RESPONSE TO INABILITY TO CONVERT").

         19.3.    PAYMENT OF REDEMPTION PRICE. IF SUCH HOLDER SHALL ELECT TO
                  HAVE ITS SHARES REDEEMED PURSUANT TO SECTION 9(A)(I) ABOVE,
                  THE COMPANY SHALL PAY THE MANDATORY REDEMPTION PRICE IN CASH
                  TO SUCH HOLDER WITHIN THIRTY (30) DAYS OF THE COMPANY'S
                  RECEIPT OF THE HOLDER'S NOTICE IN RESPONSE TO INABILITY TO
                  CONVERT, PROVIDED THAT PRIOR TO THE COMPANY'S RECEIPT OF THE
                  HOLDER'S NOTICE IN RESPONSE TO INABILITY TO CONVERT THE
                  COMPANY HAS NOT DELIVERED A NOTICE TO SUCH HOLDER STATING, TO
                  THE SATISFACTION OF THE HOLDER, THAT THE EVENT OR CONDITION
                  RESULTING IN THE MANDATORY REDEMPTION HAS BEEN CURED AND ALL
                  CONVERSION SHARES ISSUABLE TO SUCH HOLDER CAN AND WILL BE
                  DELIVERED TO THE HOLDER IN ACCORDANCE WITH THE TERMS OF
                  SECTION 2(g). IF THE COMPANY SHALL FAIL TO PAY THE APPLICABLE
                  MANDATORY REDEMPTION PRICE TO SUCH HOLDER ON A TIMELY BASIS AS
                  DESCRIBED IN THIS SECTION 9(c) (OTHER THAN PURSUANT TO A
                  DISPUTE AS TO THE DETERMINATION OF THE ARITHMETIC CALCULATION
                  OF THE REDEMPTION PRICE), IN ADDITION TO ANY REMEDY SUCH
                  HOLDER OF SERIES C PREFERRED STOCK MAY HAVE UNDER THIS
                  CERTIFICATE OF DESIGNATION AND THE PURCHASE AGREEMENT, SUCH
                  UNPAID AMOUNT SHALL BEAR INTEREST AT THE RATE OF 2.0% PER
                  MONTH (PRORATED FOR PARTIAL MONTHS) UNTIL PAID IN FULL. UNTIL
                  THE FULL MANDATORY REDEMPTION PRICE IS PAID IN FULL TO SUCH
                  HOLDER, SUCH HOLDER MAY (i) VOID THE MANDATORY REDEMPTION WITH
                  RESPECT TO THOSE SERIES C PREFERRED STOCK FOR WHICH THE FULL
                  MANDATORY REDEMPTION PRICE HAS NOT BEEN PAID, (ii) RECEIVE
                  BACK SUCH SERIES C PREFERRED STOCK, AND (iii) REQUIRE THAT THE
                  CONVERSION PRICE OF SUCH RETURNED SERIES C PREFERRED STOCK BE
                  ADJUSTED TO THE LESSER OF (A) THE CONVERSION PRICE AND (B) THE
                  LOWEST CLOSING BID PRICE DURING THE PERIOD BEGINNING ON THE
                  CONVERSION DATE AND ENDING ON THE DATE THE HOLDER VOIDED THE
                  MANDATORY REDEMPTION.

         19.4.    PRO-RATA CONVERSION AND REDEMPTION. IN THE EVENT THE COMPANY
                  RECEIVES A CONVERSION NOTICE FROM MORE THAN ONE HOLDER OF
                  SERIES C PREFERRED STOCK ON THE SAME DAY AND THE COMPANY CAN
                  CONVERT AND REDEEM SOME, BUT NOT ALL, OF THE SERIES C
                  PREFERRED STOCK PURSUANT TO THIS SECTION 9, THE COMPANY SHALL
                  CONVERT AND REDEEM FROM EACH HOLDER OF SERIES A CONVERTIBLE
                  PREFERRED STOCK ELECTING TO HAVE SERIES C PREFERRED STOCK
                  CONVERTED AND REDEEMED AT SUCH TIME AN AMOUNT EQUAL TO SUCH
                  HOLDER'S PRO-RATA AMOUNT (BASED ON THE NUMBER SHARES OF SERIES
                  C PREFERRED STOCK HELD BY SUCH HOLDER RELATIVE TO THE NUMBER
                  SHARES OF SERIES C PREFERRED STOCK OUTSTANDING) OF ALL SHARES
                  OF SERIES C PREFERRED STOCK BEING CONVERTED AND REDEEMED AT
                  SUCH TIME.

20.      VOTE TO CHANGE THE TERMS OF OR ISSUE PREFERRED STOCK. THE AFFIRMATIVE
         VOTE AT A MEETING DULY CALLED FOR SUCH PURPOSE OR THE WRITTEN CONSENT
         WITHOUT A MEETING, OF THE


                                      -23-
<PAGE>

         HOLDERS OF NOT LESS THAN THREE-FOURTHS (3/4) OF THE THEN OUTSTANDING
         SHARES OF SERIES C PREFERRED STOCK, SHALL BE REQUIRED (a) FOR ANY
         CHANGE TO THIS CERTIFICATE OF DESIGNATION OR THE COMPANY'S CERTIFICATE
         OF INCORPORATION WHICH WOULD AMEND, ALTER, CHANGE OR REPEAL ANY OF THE
         POWERS, DESIGNATIONS, PREFERENCES AND RIGHTS OF THE SERIES C PREFERRED
         STOCK OR (b) FOR THE ISSUANCE OF SHARES OF SERIES C PREFERRED STOCK
         OTHER THAN PURSUANT TO THE PURCHASE AGREEMENT.

21.      LOST OR STOLEN CERTIFICATES. UPON RECEIPT BY THE COMPANY OF EVIDENCE
         SATISFACTORY TO THE COMPANY OF THE LOSS, THEFT, DESTRUCTION OR
         MUTILATION OF ANY PREFERRED STOCK CERTIFICATES REPRESENTING THE SHARES
         OF SERIES C PREFERRED STOCK, AND, IN THE CASE OF LOSS, THEFT OR
         DESTRUCTION, OF ANY INDEMNIFICATION UNDERTAKING BY THE HOLDER TO THE
         COMPANY AND, IN THE CASE OF MUTILATION, UPON SURRENDER AND CANCELLATION
         OF THE PREFERRED STOCK CERTIFICATE(S), THE COMPANY SHALL EXECUTE AND
         DELIVER NEW PREFERRED STOCK CERTIFICATE(S) OF LIKE TENOR AND DATE;
         PROVIDED, HOWEVER, THE COMPANY SHALL NOT BE OBLIGATED TO RE-ISSUE
         PREFERRED STOCK CERTIFICATES IF THE HOLDER CONTEMPORANEOUSLY REQUESTS
         THE COMPANY TO CONVERT SUCH SHARES OF SERIES C PREFERRED STOCK INTO
         COMMON STOCK.

22.      REMEDIES, CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE
         RELIEF. THE REMEDIES PROVIDED IN THIS CERTIFICATE OF DESIGNATION SHALL
         BE CUMULATIVE AND IN ADDITION TO ALL OTHER REMEDIES AVAILABLE UNDER
         THIS CERTIFICATE OF DESIGNATION, AT LAW OR IN EQUITY (INCLUDING A
         DECREE OF SPECIFIC PERFORMANCE AND/OR OTHER INJUNCTIVE RELIEF), NO
         REMEDY CONTAINED HEREIN SHALL BE DEEMED A WAIVER OF COMPLIANCE WITH THE
         PROVISIONS GIVING RISE TO SUCH REMEDY AND NOTHING HEREIN SHALL LIMIT A
         HOLDER'S RIGHT TO PURSUE ACTUAL DAMAGES FOR ANY FAILURE BY THE COMPANY
         TO COMPLY WITH THE TERMS OF THIS CERTIFICATE OF DESIGNATION. AMOUNTS
         SET FORTH OR PROVIDED FOR HEREIN WITH RESPECT TO PAYMENTS, CONVERSION
         AND THE LIKE (AND THE COMPUTATION THEREOF) SHALL BE THE AMOUNTS TO BE
         RECEIVED BY THE HOLDER THEREOF AND SHALL NOT, EXCEPT AS EXPRESSLY
         PROVIDED HEREIN, BE SUBJECT TO ANY OTHER OBLIGATION OF THE COMPANY (OR
         THE PERFORMANCE THEREOF). THE COMPANY ACKNOWLEDGES THAT A BREACH BY IT
         OF ITS OBLIGATIONS HEREUNDER WILL CAUSE IRREPARABLE HARM TO THE HOLDERS
         OF THE SERIES C PREFERRED STOCK AND THAT THE REMEDY AT LAW FOR ANY SUCH
         BREACH MAY BE INADEQUATE. THE COMPANY THEREFORE AGREES THAT, IN THE
         EVENT OF ANY SUCH BREACH OR THREATENED BREACH, THE HOLDERS OF THE
         SERIES C PREFERRED STOCK SHALL BE ENTITLED, IN ADDITION TO ALL OTHER
         AVAILABLE REMEDIES, TO AN INJUNCTION RESTRAINING ANY BREACH, WITHOUT
         THE NECESSITY OF SHOWING ECONOMIC LOSS AND WITHOUT ANY BOND OR OTHER
         SECURITY BEING REQUIRED.



                                      -24-
<PAGE>

23.      SPECIFIC SHALL NOT LIMIT GENERAL; CONSTRUCTION. NO SPECIFIC PROVISION
         CONTAINED IN THIS CERTIFICATE OF DESIGNATION SHALL LIMIT OR MODIFY ANY
         MORE GENERAL PROVISION CONTAINED HEREIN. THIS CERTIFICATE OF
         DESIGNATION SHALL BE DEEMED TO BE JOINTLY DRAFTED BY THE COMPANY AND
         ALL INITIAL PURCHASERS OF THE SERIES C PREFERRED STOCK AND SHALL NOT BE
         CONSTRUED AGAINST ANY PERSON AS THE DRAFTER HEREOF.

24.      FAILURE OR INDULGENCE NOT WAIVER. NO FAILURE OR DELAY ON THE PART OF A
         HOLDER OF SERIES C PREFERRED STOCK IN THE EXERCISE OF ANY POWER, RIGHT
         OR PRIVILEGE HEREUNDER SHALL OPERATE AS A WAIVER THEREOF, NOR SHALL ANY
         SINGLE OR PARTIAL EXERCISE OF ANY SUCH POWER, RIGHT OR PRIVILEGE
         PRECLUDE OTHER OR FURTHER EXERCISE THEREOF OR OF ANY OTHER RIGHT, POWER
         OR PRIVILEGE.



                                      -25-
<PAGE>


         IN WITNESS WHEREOF, the undersigned has executed and subscribed this
Certificate and does affirm the foregoing as true this 28th day of December,
2001.


                                               THE VIALINK COMPANY



                                               By:
                                                  ------------------------------
                                                  Name:  Warren D. Jones
                                                  Title: Chief Executive Officer





                                      -26-
<PAGE>




                                                                       EXHIBIT I

                               THE VIALINK COMPANY
                                CONVERSION NOTICE

Reference is made to the Certificate of Designation of the Relative Rights and
Preferences of the Series C Preferred Stock of The viaLink Company (the
"Certificate of Designation"). In accordance with and pursuant to the
Certificate of Designation, the undersigned hereby elects to convert the number
of shares of Series C Preferred Stock, par value $.001 per share (the "Preferred
Shares"), of The viaLink Company, a Delaware corporation (the "Company"),
indicated below into shares of Common Stock, par value $.001 per share (the
"Common Stock"), of the Company, by tendering the stock certificate(s)
representing the share(s) of Preferred Shares specified below as of the date
specified below.

         Date of Conversion:
                            ----------------------------------------------------

         Number of Preferred Shares to be converted:
                                                    ----------------------------

         Stock certificate no(s). of Preferred Shares to be converted:
                                                                      ----------

         The Common Stock have been sold pursuant to the Registration Statement
(as defined in the Purchase Agreement): YES        NO
                                            ----     ----

Please confirm the following information:

         Conversion Price:
                                                    ----------------------------

         Number of shares of Common Stock
         to be issued:
                                                    ----------------------------

Please issue the Common Stock into which the Preferred Shares are being
converted and, if applicable, any check drawn on an account of the Company in
the following name and to the following address:

         Issue to:
                                                    ----------------------------


         Facsimile Number:
                                                    ----------------------------

         Authorization:
                                                    ----------------------------
                                                    By:
                                                       -------------------------
                                                    Title:
                                                          ----------------------

         Dated:


                                 PRICES ATTACHED


                                      -1-