EXHIBIT 99.6



                          CERTIFICATE OF DESIGNATIONS,
                             PREFERENCES AND RIGHTS

                                       OF

                      SERIES A CONVERTIBLE PREFERRED STOCK

                                       OF

                                   AZUREL LTD.

                         Pursuant to Section 151 of the
                        Delaware General Corporation Law




           Azurel Ltd., a corporation organized and existing under the laws of
the State of Delaware (the "CORPORATION"), hereby certifies that the following
resolutions were adopted by the Board of Directors of the Corporation pursuant
to the authority of the Board of Directors as required by Section 151 of the
Delaware General Corporation Law.

           RESOLVED, that pursuant to the authority granted to and vested in the
Board of Directors of this Corporation (the "BOARD OF DIRECTORS" or the "BOARD")
in accordance with the provisions of its Certificate of Incorporation and
Bylaws, each as amended through the date hereof, the Board of Directors hereby
authorizes a series of the Corporation's previously authorized Preferred Stock,
par value $.001 per share (the "PREFERRED STOCK"), and hereby states the
designation and number of shares, and fixes the relative rights, preferences,
privileges, powers and restrictions thereof as follows:

                            I. DESIGNATION AND AMOUNT

           The designation of this series, which consists of 4,500 shares of
Preferred Stock, is the Series A Convertible Preferred Stock (the "SERIES A
PREFERRED STOCK") and the stated value shall be One Thousand U.S. Dollars
($1,000.00) per share (the "STATED VALUE").


                                II. NO DIVIDENDS

           The Series A Preferred Stock will bear no dividends, and the holders
of the Series A Preferred Stock shall not be entitled to receive dividends on
the Series A Preferred Stock.





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                            III. CERTAIN DEFINITIONS

           For purposes of this Certificate of Designation, the following terms
shall have the following meanings:

           A. "CLOSING BID PRICE" means, for any security as of any date, the
closing bid price of such security on the principal securities exchange or
trading market where such security is listed or traded as reported by Bloomberg
Financial Markets or a comparable reporting service of national reputation
selected by the Corporation and reasonably acceptable to holders of a majority
of the then outstanding shares of Series A Preferred Stock. If Bloomberg
Financial Markets is not then reporting closing bid prices of such security
(collectively, "BLOOMBERG"), or if the foregoing does not apply, the last
reported bid price of such security in the over-the-counter market on the
electronic bulletin board for such security as reported by Bloomberg, or, if no
bid 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 reasonably determined by an investment banking firm selected by the
Corporation and reasonably acceptable to holders of a majority of the then
outstanding shares of Series A Preferred Stock, with the costs of such appraisal
to be borne by the Corporation.

           B. "CONVERSION DATE" means, for any Conversion, the date on which the
notice of conversion in the form attached hereto (the "NOTICE OF CONVERSION") is
delivered by fax, as evidenced by a mechanically or electronically generated
confirmation thereof, (or delivered by other means resulting in notice) to the
Corporation on the Conversion Date indicated in the Notice of Conversion.
Notwithstanding the foregoing, if the Series A Preferred Stock is being
converted pursuant to the Required Conversion at Maturity (as defined below),
the Conversion Date shall be the Maturity Date (as defined below).

           C. "CONVERSION PRICE" means the lower of the Fixed Conversion Price
and the Variable Conversion Price, each in effect as of such date and subject to
adjustment as provided herein.

           D. "FIXED CONVERSION PRICE" means (i) with respect to the shares of
Series A Preferred Stock issued at the First Closing (as defined in the
Securities Purchase Agreement) or in exchange therefor, $2.00 and (ii) with
respect to the shares of Series A Preferred Stock issued at the Second Closing
(as defined in the Securities Purchase Agreement) or in exchange therefor, the
Variable Conversion Price in effect on the date of the Second Closing. .

           E. "ISSUANCE DATE" means the date of the closing under the Securities
Purchase Agreement by and among the Corporation and the purchasers named therein
(the "SECURITIES PURCHASE AGREEMENT") with respect to the initial issuance of
the Series A Preferred Stock.


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           F. "N" means the number of days from, but excluding, the Issuance
Date.

           G. "PREMIUM" means an amount equal to (P)x(N/365)x(1,000), where P
means:


          IF THE CONVERSION DATE IS:                              THEN P IS:

          Prior to the one year anniversary of                          12%
          the Issuance Date

          On or after the one year anniversary of                       14%
          the Issuance Date and prior to
          the two year anniversary of the Issuance Date

          On or after the two year anniversary of                       16%
          the Issuance Date and prior to
          the three year anniversary of the Issuance Date

          On or after the three year anniversary of                     18%
          the Issuance Date and prior to the
          four year anniversary of the Issuance Date

          On or after the four year anniversary of the                  20%
          Issuance Date

           H. "VARIABLE CONVERSION PRICE" means, as of any date of
determination, the amount obtained by multiplying 0.75 by the average of the
three lowest Closing Bid Prices for the Corporation's common stock, $.001 par
value per share (the "COMMON STOCK") during the 20 consecutive trading day
period ending on the trading day immediately preceding such date of
determination (subject to equitable adjustment for any stock splits, stock
dividends, reclassifications or similar events during such 20 trading day
period), and shall be subject to adjustment as provided herein.

                                 IV. CONVERSION

           A. CONVERSION AT THE OPTION OF THE HOLDER. Subject to the limitations
on conversions contained in Paragraph C of this Article IV and to the
Corporation's right of redemption contained in Article VIII.D, each holder of
shares of Series A Preferred Stock may, at any time and from time to time on or
after the Issuance Date, convert (an "OPTIONAL CONVERSION") each of its shares
of Series A Preferred Stock into a number of fully paid and nonassessable shares
of Common Stock

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determined in accordance with the following formula:

                               1,000 + THE PREMIUM
                                ----------------
                                CONVERSION PRICE

           B. MECHANICS OF CONVERSION. In order to effect an Optional
Conversion, a holder shall: (x) fax (or otherwise deliver) a copy of the fully
executed Notice of Conversion to the Corporation or the transfer agent for the
Common Stock and (y) surrender or cause to be surrendered the original
certificates representing the Series A Preferred Stock being converted (the
"PREFERRED STOCK CERTIFICATES"), duly endorsed, along with a copy of the Notice
of Conversion as soon as practicable thereafter to the Corporation or the
transfer agent. Upon receipt by the Corporation of the Notice of Conversion by
fax from a holder, the Corporation shall, within one business day, send, via
fax, a confirmation (the "NOTICE OF CONVERSION CONFIRMATION") to such holder
stating that the Notice of Conversion has been received, the date upon which the
Corporation expects to deliver the Common Stock issuable upon such conversion
and the name and telephone number of a contact person at the Corporation
regarding the conversion. The Corporation shall not be obligated to issue shares
of Common Stock upon a conversion unless either the Preferred Stock Certificates
are delivered to the Corporation or the transfer agent as provided above, or the
holder notifies the Corporation or the transfer agent that such certificates
have been lost, stolen or destroyed and delivers the documentation to the
Corporation required by Article XIV.B hereof.

           (i) DELIVERY OF COMMON STOCK UPON CONVERSION. Upon the surrender of
Preferred Stock Certificates from a holder of Series A Preferred Stock
accompanied by a Notice of Conversion, the Corporation shall, subject to the
Corporation's redemption rights set forth in Article VIII.D, no later than the
later of (a) the third business day following the Conversion Date and (b) the
business day following the date of such surrender (or, in the case of lost,
stolen or destroyed certificates, after provision of documentation pursuant to
Article XIV.B) (the "DELIVERY PERIOD"), issue and deliver to the holder or its
nominee, (x) that number of shares of Common Stock issuable upon conversion of
such shares of Series A Preferred Stock being converted and (y) a certificate
representing the number of shares of Series A Preferred Stock not being
converted, if any. If the Corporation's transfer agent is participating in the
Depository Trust Company ("DTC") Fast Automated Securities Transfer program, and
so long as the certificates therefor do not bear a legend and the holder thereof
is not then required to return such certificate for the placement of a legend
thereon, the Corporation may cause its transfer agent to electronically transmit
the Common Stock issuable upon conversion to the holder by crediting the account
of the holder or its nominee with DTC through its Deposit Withdrawal Agent
Commission system ("DTC TRANSFER"). If the aforementioned conditions to a DTC
Transfer are not satisfied or a DTC Transfer is otherwise not effected, the
Corporation shall deliver to the holder physical certificates representing the
Common Stock issuable upon conversion. Further, a holder may instruct the
Corporation to deliver to the holder physical certificates representing the
Common Stock issuable upon conversion in lieu of delivering such shares by way
of DTC Transfer.


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                     (ii) TAXES. The Corporation shall pay any and all taxes
which may be imposed upon it with respect to the issuance and delivery of the
shares of Common Stock upon the conversion of the Series A Preferred Stock.

                     (iii) NO FRACTIONAL SHARES. If any conversion of Series A
Preferred Stock would result in the issuance of a fractional share of Common
Stock, such fractional share shall be disregarded and the number of shares of
Common Stock issuable upon conversion of the Series A Preferred Stock shall be
the next higher whole number of shares.

                     (iv) CONVERSION DISPUTES. In the case of any dispute with
respect to a conversion, the Corporation shall promptly issue such number of
shares of Common Stock as are not disputed in accordance with subparagraph (i)
above. If such dispute involves the calculation of the Conversion Price, the
Corporation shall submit the disputed calculations to an independent outside
accountant reasonably acceptable to the holder of Series A Preferred Stock being
converted via facsimile at any time prior to the expiration of the Delivery
Period. The accountant, at the Corporation's sole expense, shall audit the
calculations and notify the Corporation and the holder of the results as soon as
practicable following the date it receives the disputed calculations. The
accountant's calculation shall be deemed conclusive, absent manifest error. The
Corporation shall then issue the appropriate number of shares of Common Stock in
accordance with subparagraph (i) above.

           C. LIMITATIONS ON CONVERSIONS. The conversion of shares of Series A
Preferred Stock shall be subject to the following limitations (each of which
limitations shall be applied independently):

                     (i) CAP AMOUNT. If, notwithstanding the representations and
warranties of the Corporation contained in the Securities Purchase Agreement,
dated as of August 12, 1998, between the Corporation and the purchasers of the
Series A Preferred Stock named therein, the Corporation is prohibited by the
rules or regulations of any securities exchange or quotation system on which the
Common Stock is then listed or traded, from listing or issuing a number of
shares of Common Stock in excess of a prescribed amount (the "CAP AMOUNT")
without the approval of the Corporation's shareholders, then the Corporation
shall not be required to list or issue, as applicable, shares in excess of the
Cap Amount unless the Corporation has obtained the required approvals. The Cap
Amount which, as of the Issuance Date, shall be 1,060,000 shares, shall be
allocated pro rata to the holders of Series A Preferred Stock as provided in
Article XIV.C. In the event a holder of Series A Preferred Stock submits a
Notice of Conversion and the Corporation is prohibited from listing or issuing
shares of Common Stock to satisfy such Notice of Conversion as a result of the
operation of this subparagraph (i), such holder shall be entitled to the rights
set forth in Article VII hereof.

                     (ii) NO FIVE PERCENT HOLDERS. Unless a holder of shares of
Series A Preferred Stock delivers a waiver in accordance with the last sentence
of this subparagraph (ii), except in connection with a Required Conversion at
Maturity (as defined below), in no event shall a holder of shares of Series A
Preferred Stock be entitled to receive shares of Common Stock upon a

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conversion to the extent that the sum of (x) the number of shares of Common
Stock beneficially owned by the holder and its affiliates (exclusive of shares
issuable upon conversion of the unconverted portion of the shares of Series A
Preferred Stock or the unexercised or unconverted portion of any other
securities of the Corporation (including, without limitation, the warrants (the
"WARRANTS") issued by the Corporation pursuant to the Securities Purchase
Agreement) subject to a limitation on conversion or exercise analogous to the
limitations contained herein) and (y) the number of shares of Common Stock
issuable upon the conversion of the shares of Series A Preferred Stock with
respect to which the determination of this subparagraph is being made, would
result in beneficial ownership by the holder and its affiliates of more than
4.99% of the outstanding shares of Common Stock. For purposes of this
subparagraph, beneficial ownership shall be determined in accordance with
Section 13(d) of the Securities Exchange Act of 1934, as amended, and Regulation
13 D-G thereunder, except as otherwise provided in clause (x) above. Except as
provided in the immediately succeeding sentence, the restriction contained in
this subparagraph (ii) shall not be altered, amended, deleted or changed in any
manner whatsoever unless the holders of a majority of the outstanding shares of
Common Stock and each holder of outstanding shares of Series A Preferred Stock
shall approve such alteration, amendment, deletion or change.

           D. REQUIRED CONVERSION AT MATURITY. Subject to the limitations set
forth in Paragraph C(i) of this Article IV and the Corporation's right of
Redemption set forth in Article VIII.D, and provided all shares of Common Stock
issuable upon conversion of all outstanding shares of Series A Preferred Stock
are then (i) authorized and reserved for issuance, (ii) registered under the
Securities Act of 1933, as amended (the "SECURITIES ACT"), for resale by the
holders of such shares of Series A Preferred Stock and (iii) eligible to be
traded on either the AMEX, the New York Stock Exchange or the Nasdaq National
Market, the Nasdaq Small Cap Market or the successors of any of them, and
provided no Redemption Event has occurred, each share of Series A Preferred
Stock issued and outstanding on the fifth anniversary of the Issuance Date (the
"MATURITY DATE") automatically shall be converted into shares of Common Stock on
such date in accordance with the conversion formulas set forth in Paragraph A of
this Article IV (the "REQUIRED CONVERSION AT MATURITY"). If the Required
Conversion at Maturity occurs, the Corporation and the holders of Series A
Preferred Stock shall follow the applicable conversion procedures set forth in
Article IV.B; PROVIDED, HOWEVER, that the holders of Series A Preferred Stock
are not required to deliver a Notice of Conversion to the Corporation or its
transfer agent. Subject to the Corporation's right of redemption contained in
Article VIII hereof, if the Required Conversion at Maturity does not occur, each
holder of Series A Preferred Stock shall thereafter have the option, exercisable
in whole or in part at any time and from time to time by delivery of a
Redemption Notice (as defined in Article VIII.C) to the Corporation, to require
the Corporation to purchase for cash, at an amount per share equal to the
Redemption Amount (as defined in Article VIII.B), the holder's Series A
Preferred Stock. If the Corporation fails to redeem any of such shares within
five (5) business days after the day on which the Corporation receives such
Redemption Notice, then such holder shall be entitled to the remedies provided
in Article VIII.C and Article VIII.E.




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                    V. RESERVATION OF SHARES OF COMMON STOCK

           A. RESERVED AMOUNT. Upon the initial issuance of the shares of Series
A Preferred Stock, the Corporation shall reserve 200% of the number of shares
which would be issuable if the outstanding shares of Series A Preferred Stock
were converted in their entirety on the Issuance Date based on the Conversion
Price in effect on the Issuance Date of the authorized but unissued shares of
Common Stock for issuance upon conversion of the Series A Preferred Stock and
thereafter the number of authorized but unissued shares of Common Stock so
reserved (the "RESERVED AMOUNT") shall not be decreased and shall at all times
be sufficient to provide for the conversion of the Series A Preferred Stock
outstanding at the then current Conversion Price thereof. The Reserved Amount
shall be allocated to the holders of Series A Preferred Stock as provided in
Article XIV.C.

           B. INCREASES TO RESERVED AMOUNT. If the Reserved Amount for any three
consecutive trading days (the last of such three trading days being the
"AUTHORIZATION TRIGGER DATE") shall be less than 135% of the number of shares of
Common Stock issuable upon conversion of the then outstanding shares of Series A
Preferred Stock, the Corporation shall immediately notify the holders of Series
A Preferred Stock of such occurrence and shall take immediate action (including,
if necessary, seeking shareholder approval to authorize the issuance of
additional shares of Common Stock) to increase the Reserved Amount to 200% of
the number of shares of Common Stock then issuable upon conversion of the
outstanding Series A Preferred Stock. In the event the Corporation fails to so
increase the Reserved Amount within 90 days after an Authorization Trigger Date
(such event being the "RESERVED AMOUNT TRIGGER EVENT"), each holder of Series A
Preferred Stock shall thereafter have the option, exercisable in whole or in
part at any time and from time to time by delivery of a Redemption Notice (as
defined in Article VIII.C) to the Corporation, to require the Corporation to
purchase for cash, at an amount per share equal to the Redemption Amount (as
defined in Article VIII.B), a portion of the holder's Series A Preferred Stock
such that, after giving effect to such purchase, the holder's allocated portion
of the Reserved Amount exceeds 135% of the total number of shares of Common
Stock issuable to such holder upon conversion of its Series A Preferred Stock.
If the Corporation fails to redeem any of such shares within five (5) business
days after its receipt of such Redemption Notice, then such holder shall be
entitled to the remedies provided in Article VIII.C.

           C. ADJUSTMENT TO CONVERSION PRICE. If the Corporation is prohibited,
at any time, from issuing shares of Common Stock upon conversion of Series A
Preferred Stock to any holder because the Corporation does not then have
available a sufficient number of authorized and reserved shares of Common Stock,
then the Fixed Conversion Price in respect of any shares of Series A Preferred
Stock held by any holder (including shares of Series A Preferred Stock submitted
to the Corporation for conversion, but for which shares of Common Stock have not
been issued to any such holder) shall be adjusted as provided in Article VI.A.



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                       VI. FAILURE TO SATISFY CONVERSIONS

           A. CONVERSION DEFAULTS. The following shall constitute a "CONVERSION
DEFAULT": (i) following the submission by a holder of shares of Series A
Preferred Stock of a Notice of Conversion, the Corporation fails for any reason
(other than because of an event described in clause (iii) below) to deliver, on
or prior to the fourth business day following the expiration of the Delivery
Period for such conversion, such number of freely tradeable shares of Common
Stock to which such holder is entitled upon such conversion; PROVIDED, HOWEVER,
that prior to the Registration Statement (as described in Article VIII.A(ii)
below) being declared effective, such shares of Common Stock shall bear the
restrictive legend set forth in Section 2(g) of the Securities Purchase
Agreement, (ii) the Corporation provides notice to any holder of Series A
Preferred Stock at any time of its intention not to issue freely tradeable
shares of Common Stock upon exercise by any holder of its conversion rights in
accordance with the terms of this Certificate of Designation (other than because
of an event described in clause (iii) below), or (iii) the Corporation is
prohibited, at any time, from listing shares of Common Stock or from issuing
shares of Common Stock upon conversion of Series A Preferred Stock to any holder
because the Corporation (A) does not at the date of such conversion have
available a sufficient number of authorized and reserved shares of Common Stock
or (B) such listing or issuance would exceed the then unissued portion of such
holder's Cap Amount. In the case of a Conversion Default described in clause (i)
or (iii) above, the Fixed Conversion Price in respect of any shares of Series A
Preferred Stock held by such holder (including shares of Series A Preferred
Stock submitted to the Corporation for conversion, but for which shares of
Common Stock have not been issued to such holder) shall thereafter be the lesser
of (x) the Fixed Conversion Price on the date of the Conversion Default and (y)
the lowest Conversion Price in effect during the period beginning on, and
including, such date through and including (A) in the case of a Conversion
Default referred to in clause (i) above, the earlier of (1) the day such shares
of Common Stock are delivered to the holder and (2) the day on which the holder
regains its rights as a holder of Series A Preferred Stock with respect to such
unconverted shares of Series A Preferred Stock pursuant to the provisions of
Article XIV.F hereof, and (B) in the case of a Conversion Default referred to in
clause (iii) above, the date on which the prohibition on listing or issuance of
Common Stock terminates. In the case of a Conversion Default described in clause
(ii) above, the Fixed Conversion Price with respect to any conversion thereafter
shall be the lowest Conversion Price in effect at any time during the period
beginning on, and including, the date of the occurrence of such Conversion
Default through and including the Default Cure Date (as defined below).
Following any adjustment to the Fixed Conversion Price pursuant to this Article
VI.A, the Fixed Conversion Price shall thereafter be subject to further
adjustment for any events described in Article XI. Upon the occurrence of each
reset of the Fixed Conversion Price pursuant to this Paragraph A, the
Corporation, at its expense, shall promptly compute the new Fixed Conversion
Price and prepare and furnish to each holder of Series A Preferred Stock a
certificate setting forth such new Fixed Conversion Price and showing in detail
each Conversion Price in effect during such reset period.

           "DEFAULT CURE DATE" means (i) with respect to a Conversion Default
described in clause (i) of its definition, the date the Corporation effects the
conversion of the full number of shares of Series A Preferred Stock, (ii) with
respect to a Conversion Default described in clause (ii) of its definition,

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the date the Corporation issues freely tradeable shares of Common Stock in
satisfaction of all conversions of Series A Preferred Stock in accordance with
Article IV.A, and (iii) with respect to a Conversion Default described in clause
(i) or clause (ii) of its definition, the date on which the Corporation redeems
shares of Series A Preferred Stock held by such holder pursuant to paragraph C
of this Article VI.

           B. BUY-IN CURE. Unless the Corporation has notified the applicable
holder in writing prior to the delivery by such holder of a Notice of Conversion
that the Corporation is unable to honor conversions, if (i) (a) the Corporation
fails for any reason to deliver during the Delivery Period shares of Common
Stock to a holder upon a conversion of shares of Series A Preferred Stock or (b)
there shall occur a Legend Removal Failure (as defined in Article VIII.A(iii)
below) and (ii) thereafter, such holder purchases (in an open market transaction
or otherwise) shares of Common Stock to make delivery in satisfaction of a sale
by such holder of the unlegended shares of Common Stock (the "SOLD SHARES")
which such holder anticipated receiving upon such conversion (a "BUY- IN"), the
Corporation shall pay such holder (in addition to any other remedies available
to the holder) the amount by which (x) such holder's total purchase price
(including brokerage commissions, if any) for the unlegended shares of Common
Stock so purchased exceeds (y) the net proceeds received by such holder from the
sale of the Sold Shares. For example, if a holder purchases unlegended shares of
Common Stock having a total purchase price of $11,000 to cover a Buy-In with
respect to shares of Common Stock it sold for $10,000, the Corporation will be
required to pay the holder $1,000. A holder shall provide the Corporation
written notification indicating any amounts payable to such holder pursuant to
this Paragraph C. The Corporation shall make any payments required pursuant to
this Paragraph C in accordance with and subject to the provisions of Article
XIV.E.

           C. REDEMPTION RIGHT. If the Corporation fails, and such failure
continues uncured for five (5) business days after the Corporation has been
notified thereof in writing by the holder, for any reason (other than because
such issuance would exceed such holder's allocated portion of the Reserved
Amount or Cap Amount, for which failures the holders shall have the remedies set
forth in Articles V and VII, respectively) to issue shares of Common Stock
within 10 business days after the expiration of the Delivery Period with respect
to any conversion of Series A Preferred Stock, then the holder may elect at any
time and from time to time prior to the Default Cure Date for such Conversion
Default, by delivery of a Redemption Notice to the Corporation, to have all of
such holder's shares of Series A Preferred Stock which were submitted for
conversion purchased by the Corporation for cash, at an amount per share equal
to the Redemption Amount (as defined in Article VIII.B). If the Corporation
fails to redeem any of such shares within five business days after its receipt
of such Redemption Notice, then such holder shall be entitled to the remedies
provided in Article VIII.C.

           D. VOID NOTICE OF CONVERSION. If for any reason a holder has not
received all of the shares of Common Stock prior to the tenth (10th) business
day after the expiration of the Delivery Period with respect to a conversion of
Series A Preferred Stock and (i) such shares have not been called for redemption
pursuant to Article VIII.D, provided the Redemption Amount therefor has been or
may be paid within the time limits set forth in Article VIII.D, and (ii) such
shares are not subject

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to a redemption notice from the holder thereof, then the holder, upon written
notice to the Corporation's transfer agent, with a copy to the Corporation, may
void its Notice of Conversion with respect to, and retain or have returned, as
the case may be, any shares of Series A Preferred Stock that have not been
converted pursuant to such holder's Notice of Conversion; provided that the
voiding of a holder's Notice of Conversion shall not affect such holders rights
and remedies which have accrued prior to the date of such notice pursuant to
Article VI hereof or otherwise.


               VII. INABILITY TO LIST OR CONVERT DUE TO CAP AMOUNT

           A. OBLIGATION TO CURE. Because, on the Issuance Date, the then
unissued portion of each holder's Cap Amount is less than 135% of the number of
shares of Common Stock then issuable upon conversion of each holder's shares of
Series A Preferred Stock (a "TRADING MARKET TRIGGER EVENT"), the Corporation
shall take immediate action (including, if necessary, seeking the approval of
its shareholders to authorize the listing or issuance of the full number of
shares of Common Stock which would be issuable upon the conversion of the then
outstanding shares of Series A Preferred Stock but for the Cap Amount) to
eliminate all prohibitions under applicable law or the rules or regulations of
any stock exchange, interdealer quotation system or other self-regulatory
organization with jurisdiction over the Corporation or any of its securities on
the Corporation's ability to list or issue shares of Common Stock in excess of
the Cap Amount ("TRADING MARKET PROHIBITIONS"). In the event the Corporation
fails to eliminate all such Trading Market Prohibitions within 120 days after
the Issuance Date, then each holder of Series A Preferred Stock shall thereafter
have the option, exercisable in whole or in part at any time and from time to
time until such date that all such Trading Market Prohibitions are eliminated,
by delivery of a Redemption Notice (as defined in Article VIII.C) to the
Corporation, to require the Corporation to purchase for cash, at an amount per
share equal to the Redemption Amount, a number of the holder's shares of Series
A Preferred Stock such that, after giving effect to such redemption, the then
unissued portion of such holder's Cap Amount exceeds 135% of the total number of
shares of Common Stock issuable upon conversion of such holder's shares of
Series A Preferred Stock. If the Corporation fails to redeem any of such shares
within five (5) business days after its receipt of such Redemption Notice, then
such holder shall be entitled to the remedies provided in Articles VII.B and
VIII.C.

           B. REMEDIES. If the Corporation fails to redeem any shares of Series
A Preferred Stock pursuant to Article VII.A within five business days after its
receipt of such Redemption Notice, and thereafter the Corporation is prohibited,
at any time, from listing shares of Common Stock or from issuing shares of
Common Stock upon conversion of Series A Preferred Stock to any holder because
such listing or issuance would exceed the then unissued portion of such holder's
Cap Amount because of applicable law or the rules or regulations of any stock
exchange, interdealer quotation system or other self-regulatory organization
with jurisdiction over the Corporation or its securities, any holder who is so
prohibited from converting its Series A Preferred Stock because the shares of
Common Stock underlying such Series A Preferred Stock may not be listed or
issued, may elect either or both of the following additional remedies:


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                     (i) to require, with the consent of holders of at least
fifty percent (50%) of the outstanding shares of Series A Preferred Stock
(including any shares of Series A Preferred Stock held by the requesting
holder), the Corporation to terminate the listing of its Common Stock on the
Nasdaq Small Cap (or any other stock exchange, interdealer quotation system or
trading market) and to cause its Common Stock to be eligible for trading on the
over-the-counter electronic bulletin board; or

                     (ii) to require the Corporation to issue shares of Common
Stock in accordance with such holder's Notice of Conversion at a conversion
price equal to the average of the Closing Bid Prices for the Common Stock during
the five consecutive trading days ending on the trading day immediately
preceding the date of the holder's written notice to the Corporation of its
election to receive shares of Common Stock pursuant to this subparagraph (ii)
(subject to equitable adjustment for any stock splits, stock dividends,
reclassifications or similar events during such five trading day period).

           C. ADJUSTMENT TO CONVERSION PRICE. If the Corporation is prohibited,
at any time after the ninetieth day after the Issuance Date, from listing shares
of Common Stock or from issuing shares of Common Stock upon conversion of Series
A Preferred Stock to any holder because such listing or issuance would exceed
the then unissued portion of such holder's Cap Amount because of applicable law
or the rules or regulations of any stock exchange, interdealer quotation system
or other self-regulatory organization with jurisdiction over the Corporation or
its securities, then the Fixed Conversion Price in respect of any shares of
Series A Preferred Stock held by any holder (including shares of Series A
Preferred Stock submitted to the Corporation for conversion, but for which
shares of Common Stock have not been issued) shall be adjusted as provided in
Article VI.A.


                                VIII. REDEMPTION

           A. REDEMPTION BY HOLDER. In the event (each of the events described
in clauses (i)-(vi) below after expiration of the applicable cure period (if
any) being a "REDEMPTION EVENT"):

                     (i) the Common Stock (including, from and after the
Issuance Date, any of the shares of Common Stock issuable upon conversion of the
Series A Preferred Stock) is suspended from trading on any of, or is not listed
(and authorized) for trading on at least one of, the NASDAQ Small Cap Market,
the NASDAQ National Market, the New York Stock Exchange or the American Stock
Exchange for an aggregate of 10 trading days in any nine month period;

                     (ii) the Registration Statement required to be filed by the
Corporation pursuant to that certain Registration Rights Agreement by and among
the Corporation and the other signatories thereto entered into in connection
with the Securities Purchase Agreement (the "REGISTRATION RIGHTS AGREEMENT") has
not been declared effective by the 60th day following the Registration Deadline
(as defined in the Registration Rights Agreement) or such Registration
Statement, after being declared effective, cannot be utilized by the holders of
Series A Preferred

                                      -11-

<PAGE>



Stock for the resale of all of their Registrable Securities (as defined in the
Registration Rights Agreement) for an aggregate of more than 30 days;

                     (iii) the Corporation fails to remove any restrictive
legend on any certificate or any shares of Common Stock issued to the holders of
Series A Preferred Stock upon conversion of the Series A Preferred Stock as and
when required by this Certificate of Designation, the Securities Purchase
Agreement or the Registration Rights Agreement (a "LEGEND REMOVAL FAILURE"), and
any such failure continues uncured for five business days after the Corporation
has been notified thereof in writing by the holder;

                     (iv) the Corporation provides notice to any holder of
Series A Preferred Stock, including by way of public announcement, at any time,
of its intention not to issue, or otherwise refuses to issue, shares of Common
Stock to any holder of Series A Preferred Stock upon conversion in accordance
with the terms of this Certificate of Designation (other than due to the
circumstances contemplated by Articles V or VII for which the holders shall have
the remedies set forth in such Articles);

                     (v) the Corporation shall:

                               (a) sell, convey or dispose of all or
substantially all of its assets (the presentation of any such transaction for
stockholder approval being conclusive evidence that such transaction involves
the sale of all or substantially all of the assets of the Corporation);

                               (b) merge, consolidate or engage in any other
business combination with any other entity (other than pursuant to a migratory
merger effected solely for the purpose of changing the jurisdiction of
incorporation of the Corporation and other than pursuant to a merger in which
the Corporation is the surviving or continuing entity and the voting capital
stock of the Corporation immediately prior to such merger represents at least
50% of the voting power of the capital stock of the Corporation after the merger
and its capital stock is unchanged);

                               (c) have fifty percent (50%) or more of the
voting power of its capital stock owned beneficially by one person, entity or
"group" (as such term is used under Section 13(d) of the Securities Exchange Act
of 1934, as amended); or

                     (vi) the Corporation otherwise shall breach any material
term hereunder or under the Securities Purchase Agreement or the Registration
Rights Agreement;

then, upon the occurrence of any such Redemption Event, each holder of shares of
Series A Preferred Stock shall thereafter have the option, exercisable in whole
or in part at any time and from time to time by delivery of a Redemption Notice
(as defined in Paragraph C below) to the Corporation while such Redemption Event
continues, to require the Corporation to purchase for cash any or all of the
then outstanding shares of Series A Preferred Stock held by such holder for an
amount per share equal to the Redemption Amount (as defined in Paragraph B
below) in effect at the time of the

                                      -12-

<PAGE>



redemption hereunder. For the avoidance of doubt, the occurrence of any event
described in clauses (i), (ii), (iv) or (v) above shall immediately constitute a
Redemption Event and there shall be no cure period. Upon the Corporation's
receipt of any Redemption Notice hereunder (other than during the three trading
day period following the Corporation's delivery of a Redemption Announcement (as
defined below) to all of the holders in response to the Corporation's initial
receipt of a Redemption Notice from a holder of Series A Preferred Stock), the
Corporation shall immediately (and in any event within one business day
following such receipt) deliver a written notice (a "REDEMPTION ANNOUNCEMENT")
to all holders of Series A Preferred Stock stating the date upon which the
Corporation received such Redemption Notice and the amount of Series A Preferred
Stock covered thereby. Subject to Article VIII.D, the Corporation shall not
redeem any shares of Series A Preferred Stock during the three trading day
period following the delivery of a required Redemption Announcement hereunder.
At any time and from time to time during such three trading day period, each
holder of Series A Preferred Stock may request (either orally or in writing)
information from the Corporation with respect to the instant redemption
(including, but not limited to, the aggregate number of shares of Series A
Preferred Stock covered by Redemption Notices received by the Corporation) and
the Corporation shall furnish (either orally or in writing) as soon as
practicable such requested information to such requesting holder.

           B. DEFINITION OF REDEMPTION AMOUNT. The "REDEMPTION AMOUNT" with
respect to a share of Series A Preferred Stock means an amount equal to the
greater of:

                     (i)            V        X     M
                                   ---
                                   C P


           and       (ii)      V   X   1.13

where:

           "V" means the Face Amount thereof, plus the accrued Premium thereon
through the date of payment of the Redemption Amount;

           "CP" means the Conversion Price in effect on the date on which the
Corporation receives the Redemption Notice; and

           "M" means (i) with respect to all redemptions other than redemptions
pursuant to Article VIII.A(v) hereof, the highest Closing Bid Price of the
Corporation's Common Stock during the period beginning on the date on which the
Corporation receives the Redemption Notice and ending on the date immediately
preceding the date of payment of the Redemption Amount and (ii) with respect to
redemptions pursuant to Article VIII.A(v) hereof, the greater of (a) the amount
determined pursuant to clause (i) of this definition or (b) the fair market
value, as of the date on which the Corporation receives the Redemption Notice,
of the consideration payable to the holder of a share of Common Stock pursuant
to the transaction which triggers the redemption. For purposes of this
definition, "fair market value" shall be determined by the mutual agreement of
the Corporation and

                                      -13-

<PAGE>



holders of a majority-in-interest of the shares of Series A Preferred Stock then
outstanding, or if such agreement cannot be reached within five business days
prior to the date of redemption, by an investment banking firm selected by the
Corporation and reasonably acceptable to holders of a majority-in-interest of
the then outstanding shares of Series A Preferred Stock, with the costs of such
appraisal to be borne by the Corporation.

           C. REDEMPTION DEFAULTS. If the Corporation fails to pay any holder
the Redemption Amount with respect to any share of Series A Preferred Stock
within five business days after its receipt of a notice requiring such
redemption (a "REDEMPTION NOTICE"), then the holder of Series A Preferred Stock
delivering such Redemption Notice (i) shall be entitled to interest on the
Redemption Amount at a per annum rate equal to the lower of twenty-four percent
(24%) and the highest interest rate permitted by applicable law from the date on
which the Corporation receives the Redemption Notice until the date of payment
of the Redemption Amount hereunder, and (ii) shall have the right, at any time
and from time to time, to require the Corporation, upon written notice, to
immediately convert (in accordance with the terms of Paragraph A of Article IV
but subject to Paragraph C of Article IV) all or any portion of the Redemption
Amount, plus interest as aforesaid, into shares of Common Stock at the lowest
Conversion Price in effect during the period beginning on the date on which the
Corporation receives the Redemption Notice and ending on the Conversion Date
with respect to the conversion of such Redemption Amount. In the event the
Corporation is not able to redeem all of the shares of Series A Preferred Stock
subject to Redemption Notices delivered prior to the date upon which such
redemption is to be effected, the Corporation shall redeem shares of Series A
Preferred Stock from each holder pro rata, based on the total number of shares
of Series A Preferred Stock outstanding at the time of redemption included by
such holder in all Redemption Notices delivered prior to the date upon which
such redemption is to be effected relative to the total number of shares of
Series A Preferred Stock outstanding at the time of redemption included in all
of the Redemption Notices delivered prior to the date upon which such redemption
is to be effected.

           D.        REDEMPTION BY CORPORATION.

                     (i) The Corporation shall have the right at any time and
from time to time to redeem any shares which are the subject of a Notice of
Conversion for an amount of cash equal to the Redemption Amount (a "REDEMPTION
IN LIEU OF CONVERSION"), in its sole discretion by delivery of an Optional
Redemption Notice in accordance with the redemption procedures set forth below.

                     (ii) Within ten (10) calendar days prior to the beginning
of any calendar month during which the Corporation elects to effect a Redemption
in Lieu of Conversion, the Corporation shall provide written notice to the
holders of Series A Preferred Stock by facsimile and overnight courier stating
that the Corporation will redeem any conversions of Series A Preferred Stock in
such calendar month (an "OPTIONAL REDEMPTION NOTICE"). In the event the
Corporation fails to provide an Optional Redemption Notice to the holders of
Series A Preferred Stock within such ten (10) day period, the Corporation shall
not be permitted to so redeem any conversions of Series A Preferred Stock during
such calendar month. In the event a timely Optional Redemption Notice is
provided

                                      -14-

<PAGE>



as aforesaid, upon the Corporation's receipt of a Notice of Conversion the
Corporation shall be obligated to redeem on or before the fifth business day
after the receipt of the Notice of Conversion, the entire number of shares of
the Series A Preferred Stock which are the subject of the Notice of Conversion
for the Redemption Amount (as defined in Article VIII.B).

                     (iii) At any time and from time to time on or before the
90th day after the Issuance Date, the Corporation shall have the right, on 10
business days prior written notice, to redeem any or all of the then outstanding
shares of Series A Preferred Stock by paying to each holder an amount per share
of Series A Preferred Stock equal to 120% of the Stated Value thereof. At all
times prior to redemption pursuant to this Article VIII.D(iii) (including after
receipt of the notice required by this Article), each holder of Series A
Preferred Stock shall remain entitled to convert shares of Series A Preferred
Stock into shares of Common Stock in accordance with the terms of Article IV
hereof. Notwithstanding anything herein to the contrary the first redemption, if
any, by the Corporation pursuant to this Article VIII.D(iii) shall not be for an
amount of cash less than $500,000, with any subsequent redemptions, if any,
hereunder for an amount of cash not less than $100,000.

           E. VOID REDEMPTION. In the event that the Corporation does not pay
the Redemption Amount within the time period set forth in Article IV.D, Article
VIII.A or Article VIII.D, at any time thereafter and until the Corporation pays
such unpaid applicable Redemption Amount in full, a holder of Series A Preferred
Stock shall have the option (the "VOID OPTIONAL REDEMPTION OPTION") to, in lieu
of redemption, require the Corporation to promptly return to such holder any or
all of the shares of Series A Preferred Stock that were submitted for redemption
by such holder under this Article VIII and for which the applicable Redemption
Amount (together with any interest thereon) has not been paid, by sending
written notice thereof to the Corporation via facsimile and confirmed by
overnight courier, in person (by courier or otherwise) or by telephone (to an
authorized officer of the Corporation or his or her administrative assistant)
(the "VOID OPTIONAL REDEMPTION NOTICE"). Upon the Corporation's receipt of such
Void Optional Redemption Notice and overnight courier, in- person or telephone
confirmation, (i) the Notice of Redemption shall be null and void with respect
to those shares of Series A Preferred Stock subject to the Void Optional
Redemption Notice, and (ii) the Corporation shall immediately return any shares
of Series A Preferred Stock subject to the Void Optional Redemption Notice

                                    IX. RANK

           The Series A Preferred Stock shall rank (i) prior to the
Corporation's Common Stock; (ii) prior to any class or series of capital stock
of the Corporation hereafter created that, by its terms, ranks junior to the
Series A Preferred Stock ("JUNIOR SECURITIES"); (iii) junior to any class or
series of capital stock of the Corporation hereafter created (with the consent
of the holders of Series A Preferred Stock obtained in accordance with Article
XIII hereof) specifically ranking, by its terms, senior to the Series A
Preferred Stock ("SENIOR SECURITIES"); and (iv) PARI PASSU with any class or
series of capital stock of the Corporation hereafter created (with the consent
of the holders of the Series A Preferred Stock obtained in accordance with
Article XIII hereof) specifically ranking by its terms on parity with the Series
A Preferred Stock ("PARI PASSU SECURITIES"), in each case as to

                                      -15-

<PAGE>



distribution of assets upon liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary.


                            X. LIQUIDATION PREFERENCE

           A. If the Corporation shall commence a voluntary case under the U.S.
Federal bankruptcy laws or any other applicable bankruptcy, insolvency or
similar law, or consent to the entry of an order for relief in an involuntary
case under any law or to the appointment of a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or other similar official) of the Corporation
or of any substantial part of its property, or make an assignment for the
benefit of its creditors, or admit in writing its inability to pay its debts
generally as they become due, or if a decree or order for relief in respect of
the Corporation shall be entered by a court having jurisdiction in the premises
in an involuntary case under the U.S. Federal bankruptcy laws or any other
applicable bankruptcy, insolvency or similar law resulting in the appointment of
a receiver, liquidator, assignee, custodian, trustee, sequestrator (or other
similar official) of the Corporation or of any substantial part of its property,
or ordering the winding up or liquidation of its affairs, and any such decree or
order shall be unstayed and in effect for a period of 60 consecutive days and,
on account of any such event, the Corporation shall liquidate, dissolve or wind
up, or if the Corporation shall otherwise liquidate, dissolve or wind up,
including, but not limited to, the sale or transfer of all or substantially all
of the Corporation's assets in one transaction or in a series of related
transactions (a "LIQUIDATION EVENT"), no distribution shall be made to the
holders of any shares of capital stock of the Corporation (other than Senior
Securities and Pari Passu Securities) upon liquidation, dissolution or winding
up unless prior thereto the holders of shares of Series A Preferred Stock shall
have received the Liquidation Preference with respect to each share. If, upon
the occurrence of a Liquidation Event, the assets and funds available for
distribution among the holders of the Series A Preferred Stock and holders of
PARI PASSU Securities shall be insufficient to permit the payment to such
holders of the preferential amounts payable thereon, then the entire assets and
funds of the Corporation legally available for distribution to the Series A
Preferred Stock and the PARI PASSU Securities shall be distributed ratably among
such shares in proportion to the ratio that the Liquidation Preference payable
on each such share bears to the aggregate Liquidation Preference payable on all
such shares.

           B. The purchase or redemption by the Corporation of stock of any
class, in any manner permitted by law, shall not, for the purposes hereof, be
regarded as a liquidation, dissolution or winding up of the Corporation. Neither
the consolidation or merger of the Corporation with or into any other entity nor
the sale or transfer by the Corporation of less than substantially all of its
assets shall, for the purposes hereof, be deemed to be a liquidation,
dissolution or winding up of the Corporation.

           C. The "LIQUIDATION PREFERENCE" with respect to a share of Series A
Preferred Stock means an amount equal to the Stated Value thereof, plus the
accrued Premium thereon through the date of final distribution. The Liquidation
Preference with respect to any PARI PASSU Securities shall be as set forth in
the Certificate of Designation filed in respect thereof.

                                      -16-

<PAGE>




                     XI. ADJUSTMENTS TO THE CONVERSION PRICE

           The Conversion Price shall be subject to adjustment from time to time
as follows:

           A. STOCK SPLITS, STOCK DIVIDENDS, ETC. If, at any time on or after
the Issuance Date, the number of outstanding shares of Common Stock is increased
by a stock split, stock dividend, combination, reclassification or other similar
event, the Fixed Conversion Price shall be proportionately reduced, or if the
number of outstanding shares of Common Stock is decreased by a reverse stock
split, combination or reclassification of shares, or other similar event, the
Fixed Conversion Price shall be proportionately increased. In such event, the
Corporation shall notify the Corporation's transfer agent of such change on or
before the effective date thereof.

           B. ADJUSTMENT DUE TO MERGER, CONSOLIDATION, ETC. If, at any time
after the Issuance Date, there shall be (i) any reclassification or change of
the outstanding shares of Common Stock (other than a change in par value, or
from par value to no par value, or from no par value to par value, or as a
result of a subdivision or combination), (ii) any consolidation or merger of the
Corporation with any other entity (other than a merger in which the Corporation
is the surviving or continuing entity and its capital stock is unchanged), (iii)
any sale or transfer of all or substantially all of the assets of the
Corporation or (iv) any share exchange pursuant to which all of the outstanding
shares of Common Stock are converted into other securities or property (each of
(i) - (iv) above being a "CORPORATE CHANGE"), then the holders of Series A
Preferred Stock shall thereafter have the right to receive upon conversion, in
lieu of the shares of Common Stock otherwise issuable, such shares of stock,
securities and/or other property as would have been issued or payable in such
Corporate Change with respect to or in exchange for the number of shares of
Common Stock which would have been issuable upon conversion (without giving
effect to the limitations contained in Article IV.C) had such Corporate Change
not taken place, and in any such case, appropriate provisions (in form and
substance reasonably satisfactory to the holders of a majority of the Series A
Preferred Shares then outstanding) shall be made with respect to the rights and
interests of the holders of the Series A Preferred Stock to the end that the
economic value of the shares of Series A Preferred Stock are in no way
diminished by such Corporate Change and that the provisions hereof (including,
without limitation, in the case of any such consolidation, merger or sale in
which the successor entity or purchasing entity is not the Corporation, an
immediate adjustment of the Fixed Conversion Price so that the Fixed Conversion
Price immediately after the Corporate Change reflects the same relative value as
compared to the value of the surviving entity's common stock that existed
between the Fixed Conversion Price and the value of the Corporation's Common
Stock immediately prior to such Corporate Change and an immediate revision to
the Variable Conversion Price so that it is determined as provided in Article
III.H but based on the price of the common stock of the surviving entity and the
market in which such common stock is traded) shall thereafter be applicable, as
nearly as may be practicable in relation to any shares of stock or securities
thereafter deliverable upon the conversion thereof. The Corporation shall not
effect any Corporate Change unless (i) each holder of Series A Preferred Stock
has received written notice of such transaction along with the notice sent to
the holders of the Common Stock of the Corporation, but in no event later than
20 days

                                      -17-

<PAGE>



prior to the record date for the determination of shareholders entitled to vote
with respect thereto, and (ii) the resulting, successor or acquiring entity (if
not the Corporation) assumes by written instrument (in form and substance
reasonably satisfactory to the holders of a majority of the Series A Preferred
Shares then outstanding) the obligations of this Certificate of Designation. The
above provisions shall apply regardless of whether or not there would have been
a sufficient number of shares of Common Stock authorized and available for
issuance upon conversion of the shares of Series A Preferred Stock outstanding
as of the date of such transaction, and shall similarly apply to successive
reclassifications, consolidations, mergers, sales, transfers or share exchanges.

           C. ADJUSTMENT DUE TO MAJOR ANNOUNCEMENT. In the event the Corporation
at any time after the Issuance Date (i) makes a public announcement that it
intends to consolidate or merge with any other entity (other than a merger in
which the Corporation is the surviving or continuing entity and its capital
stock is unchanged) or to sell or transfer all or substantially all of the
assets of the Corporation or (ii) any person, group or entity (including the
Corporation) publicly announces a tender offer, exchange offer or another
transaction to purchase 50% or more of the Corporation's Common Stock or
otherwise publicly announces an intention to replace a majority of the
Corporation's Board of Directors by waging or proxy battle or otherwise (the
date of the announcement or commencement referred to in clause (i) or (ii) of
this Paragraph C is hereinafter referred to as the "ANNOUNCEMENT DATE"), then
the Conversion Price shall, effective upon the Announcement Date and continuing
through the tenth trading day following the earlier of the consummation of the
proposed transaction or tender offer, exchange offer or another transaction or
the Abandonment Date (as defined below) (the earlier of such dates being the
"ADJUSTED CONVERSION PRICE TERMINATION DATE"), be equal to the lower of (x) the
Conversion Price which would have been applicable for an Optional Conversion
occurring on the Announcement Date and (y) the Conversion Price determined in
accordance with Article III.C on the Conversion Date set forth in the Notice of
Conversion for the Optional Conversion. After the Adjusted Conversion Price
Termination Date, the Conversion Price shall be determined as set forth in
Article III.C. "ABANDONMENT DATE" means with respect to any proposed transaction
or tender offer, exchange offer or another transaction for which a public
announcement or an action contemplated by this Paragraph C has been made or
commenced, the date upon which the Corporation (in the case of clause (i) above)
or the person, group or entity (in the case of clause (ii) above) publicly
announces the termination or abandonment of the proposed transaction or tender
offer, exchange offer or another transaction which caused this Paragraph C to
become operative.

           D. ADJUSTMENT DUE TO DISTRIBUTION. If, at any time after the Issuance
Date, the Corporation shall declare or make any distribution of its assets (or
rights to acquire its assets) to holders of Common Stock as a partial
liquidating dividend, by way of return of capital or otherwise (including any
dividend or distribution to the Corporation's common shareholders in shares (or
rights to acquire shares) of capital stock of a subsidiary (I.E. a spin-off)) (a
"DISTRIBUTION"), then the holders of Series A Preferred Stock shall be entitled,
upon any conversion of shares of Series A Preferred Stock after the date of
record for determining shareholders entitled to such Distribution, to receive
the amount of such assets which would have been payable to the holder with
respect to the shares of Common Stock issuable upon such conversion (without
giving effect to the limitations

                                      -18-

<PAGE>



contained in Article IV.C) had such holder been the holder of such shares of
Common Stock on the record date for the determination of shareholders entitled
to such Distribution.

           E. ISSUANCE OF OTHER SECURITIES WITH VARIABLE CONVERSION PRICE. If,
at any time after the Issuance Date, the Corporation shall issue any securities
which are convertible into or exchangeable for Common Stock ("CONVERTIBLE
SECURITIES") at a conversion price or exchange rate which is more favorable to
the holders of such Convertible Securities than the Conversion Price mechanism
provided for herein, then such conversion price or exchange rate shall be
applicable hereto.

           F. PURCHASE RIGHTS. If, at any time after the Issuance Date, the
Corporation issues any securities which are convertible into or exchangeable for
Common Stock, or rights to purchase stock, warrants, securities or other
property (the "PURCHASE RIGHTS") pro rata to the record holders of any class of
Common Stock, then the holders of Series A Preferred Stock will be entitled to
acquire, upon the terms applicable to such Purchase Rights, the aggregate
Purchase Rights which such holder could have acquired if such holder had held
the number of shares of Common Stock acquirable upon complete conversion of the
Series A Preferred Stock (without giving effect to the limitations contained in
Article IV.C) immediately before the date on which a record is taken for the
grant, issuance or sale of such Purchase Rights, or, if no such record is taken,
the date as of which the record holders of Common Stock are to be determined for
the grant, issue or sale of such Purchase Rights.

           G. NOTICE OF ADJUSTMENTS. Upon the occurrence of each adjustment or
readjustment of the Conversion Price pursuant to this Article XI, the
Corporation, at its expense, shall promptly compute such adjustment or
readjustment and prepare and furnish to each holder of Series A Preferred Stock
a certificate setting forth such adjustment or readjustment and showing in
detail the facts upon which such adjustment or readjustment is based. The
Corporation shall, upon the written request at any time of any holder of Series
A Preferred Stock, furnish to such holder a like certificate setting forth (i)
such adjustment or readjustment, (ii) the Conversion Price at the time in effect
and (iii) 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 conversion of a
share of Series A Preferred Stock.


                               XII. VOTING RIGHTS

           The holders of the Series A Preferred Stock have no voting power
whatsoever, except as otherwise provided by the Delaware General Corporation Law
(the "BUSINESS CORPORATION ACT") and in Article XIII below.

           Notwithstanding the above, the Corporation shall provide each holder
of Series A Preferred Stock with prior notification of any meeting of the
shareholders (and copies of proxy materials and other information sent to
shareholders) at the same time such notice and materials are provided to the
holders of Common Stock. If the Corporation takes a record of its shareholders
for the purpose of determining shareholders entitled to (a) receive payment of
any dividend or other distribution, any

                                      -19-

<PAGE>



right to subscribe for, purchase or otherwise acquire (including by way of
merger consolidation or recapitalization) any share of any class or any other
securities or property, or to receive any other right, or (b) to vote in
connection with any proposed sale, lease or conveyance of all or substantially
all of the assets of the Corporation, or any proposed merger, consolidation,
liquidation, dissolution or winding up of the Corporation, the Corporation shall
mail a notice to each holder, at least 20 days prior to the record date
specified therein (but in no event earlier than public announcement of such
proposed transaction), of the date on which any such record is to be taken for
the purpose of such dividend, distribution, right or other event, and a brief
statement regarding the amount and character of such dividend, distribution,
right or other event to the extent known at such time.

           To the extent that under the Business Corporation Act the vote of the
holders of the Series A Preferred Stock, voting separately as a class or series,
as applicable, is required to authorize a given action of the Corporation, the
affirmative vote or consent of the holders of at least a majority of the then
outstanding shares of the Series A Preferred Stock represented at a duly held
meeting at which a quorum is present or by written consent of the holders of at
least a majority of the then outstanding shares of Series A Preferred Stock
(except as otherwise may be required under the Business Corporation Act) shall
constitute the approval of such action by the class. To the extent that under
the Business Corporation Act holders of the Series A Preferred Stock are
entitled to vote on a matter with holders of Common Stock, voting together as
one class, each share of Series A Preferred Stock shall be entitled to a number
of votes equal to the number of shares of Common Stock into which it is then
convertible (subject to the limitations contained in Article IV.C(ii)) using the
record date for the taking of such vote of shareholders as the date as of which
the Conversion Price is calculated.

                           XIII. PROTECTION PROVISIONS

           So long as any shares of Series A Preferred Stock are outstanding,
the Corporation shall not without first obtaining the approval (by vote or
written consent, as provided by the Business Corporation Act) of a majority in
interest of the holders of the then outstanding shares of Series A Preferred
Stock:

                               (a) alter or change the rights, preferences or
privileges of the Series A Preferred Stock;

                               (b) alter or change the rights, preferences or
privileges of any previously issued shares of capital stock of the Corporation
so as to affect adversely the Series A Preferred Stock;

                               (c) create any new class or series of capital
stock having a preference over the Series A Preferred Stock as to distribution
of assets upon liquidation, dissolution or winding up of the Corporation (as
previously defined in Article IX hereof, "SENIOR SECURITIES");


                                      -20-

<PAGE>



                               (d) create any new class or series of capital
stock ranking PARI PASSU with the Series A Preferred Stock as to distribution of
assets upon liquidation, dissolution or winding up of the Corporation (as
previously defined in Article IX hereof, "PARI PASSU SECURITIES");

                               (e) increase the authorized number of shares of
Series A Preferred Stock;

                               (f) issue any shares of Senior Securities;

                               (g) issue any shares of Series A Preferred Stock
other than pursuant to the Securities Purchase Agreement;

                               (h) redeem, or declare or pay any cash dividend
or distribution on, any Junior Securities; or

                               (i) increase the par value of the Common Stock.

Notwithstanding the foregoing, no change pursuant to this Article XIII shall be
effective to the extent that, by its terms, it applies to less than all of the
holders of shares of Series A Preferred Stock then outstanding.


                               XIV. MISCELLANEOUS

           A. CANCELLATION OF SERIES A PREFERRED STOCK. If any shares of Series
A Preferred Stock are converted pursuant to Article IV, the shares so converted
shall be canceled, shall return to the status of authorized, but unissued
preferred stock of no designated series, and shall not be issuable by the
Corporation as Series A Preferred Stock.

           B. LOST OR STOLEN CERTIFICATES. Upon receipt by the Corporation of
(i) evidence of the loss, theft, destruction or mutilation of any Preferred
Stock Certificate(s) and (ii) (y) in the case of loss, theft or destruction, of
indemnity (without any bond or other security) reasonably satisfactory to the
Corporation, or (z) in the case of mutilation, upon surrender and cancellation
of the Preferred Stock Certificate(s), the Corporation shall execute and deliver
new Preferred Stock Certificate(s) of like tenor and date. However, the
Corporation shall not be obligated to reissue such lost or stolen Preferred
Stock Certificate(s) if the holder contemporaneously requests the Corporation to
convert such Series A Preferred Stock.

           C. ALLOCATION OF CAP AMOUNT AND RESERVED AMOUNT. The initial Cap
Amount and Reserved Amount shall be allocated pro rata among the holders of
Series A Preferred Stock based on the number of shares of Series A Preferred
Stock issued to each holder. Each increase to the Cap Amount and the Reserved
Amount shall be allocated pro rata among the holders of Series A Preferred Stock
based on the number of shares of Series A Preferred Stock held by each holder at
the time of the increase in the Cap Amount or Reserved Amount. In the event a
holder shall sell or

                                      -21-

<PAGE>



otherwise transfer any of such holder's shares of Series A Preferred Stock, each
transferee shall be allocated a pro rata portion of such transferor's Cap Amount
and Reserved Amount. Any portion of the Cap Amount or Reserved Amount which
remains allocated to any person or entity which does not hold any Series A
Preferred Stock shall be allocated to the remaining holders of shares of Series
A Preferred Stock, pro rata based on the number of shares of Series A Preferred
Stock then held by such holders.

           D. QUARTERLY STATEMENTS OF AVAILABLE SHARES. For each calendar
quarter beginning in the quarter in which the initial registration statement
required to be filed pursuant to the Registration Rights Agreement is declared
effective and thereafter so long as any shares of Series A Preferred Stock are
outstanding, the Corporation shall deliver (or cause its transfer agent to
deliver) to each holder a written report notifying the holders of any occurrence
which prohibits the Corporation from issuing Common Stock upon any such
conversion. The report shall also specify (i) the total number of shares of
Series A Preferred Stock outstanding as of the end of such quarter, (ii) the
total number of shares of Common Stock issued upon all conversions of Series A
Preferred Stock prior to the end of such quarter, (iii) the total number of
shares of Common Stock which are reserved for issuance upon conversion of the
Series A Preferred Stock as of the end of such quarter and (iv) the total number
of shares of Common Stock which may thereafter be listed or issued by the
Corporation upon conversion of the Series A Preferred Stock before the
Corporation would exceed the Cap Amount and the Reserved Amount. The Corporation
(or its transfer agent) shall deliver the report for each quarter to each holder
prior to the tenth day of the calendar month following the quarter to which such
report relates. In addition, the Corporation (or its transfer agent) shall
provide, within 15 days after delivery to the Corporation of a written request
by any holder, any of the information enumerated in clauses (i) - (iv) of this
Paragraph D as of the date of such request.

           E. PAYMENT OF CASH; DEFAULTS. Whenever the Corporation is required to
make any cash payment to a holder under this Certificate of Designation (upon
redemption or otherwise), such cash payment shall be made to the holder within
five business days after delivery by such holder of a notice specifying that the
holder elects to receive such payment in cash and the method (E.G., by check,
wire transfer) in which such payment should be made. If such payment is not
delivered within such five business day period, such holder shall thereafter be
entitled to interest on the unpaid amount at a per annum rate equal to the lower
of twenty-four percent (24%) and the highest interest rate permitted by
applicable law until such amount is paid in full to the holder.

           F. STATUS AS STOCKHOLDER. Upon submission of a Notice of Conversion
by a holder of Series A Preferred Stock, (i) the shares covered thereby (other
than the shares, if any, which cannot be issued because their listing or
issuance would exceed such holder's allocated portion of the Reserved Amount or
Cap Amount) shall be deemed converted into shares of Common Stock and (ii) the
holder's rights as a holder of such converted shares of Series A Preferred Stock
shall cease and terminate, excepting only the right to receive certificates for
such shares of Common Stock and to any remedies provided herein or otherwise
available at law or in equity to such holder because of a failure by the
Corporation to comply with the terms of this Certificate of Designation.
Notwithstanding the foregoing, if a holder has not received certificates for all
shares of Common

                                      -22-

<PAGE>



Stock prior to the tenth business day after the expiration of the Delivery
Period with respect to a conversion of Series A Preferred Stock for any reason,
then (unless the holder otherwise elects to retain its status as a holder of
Common Stock by so notifying the Corporation within five business days after the
expiration of such 10 business day period) the holder shall regain the rights of
a holder of Series A Preferred Stock with respect to such unconverted shares of
Series A Preferred Stock and the Corporation shall, as soon as practicable,
return such unconverted shares to the holder. In all cases, the holder shall
retain all of its rights and remedies (including, without limitation, the right
to have the Conversion Price with respect to subsequent conversions determined
in accordance with Article VI.A) for the Corporation's failure to convert Series
A Preferred Stock.

           G. REMEDIES CUMULATIVE. 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), and nothing herein
shall limit a holder's right to pursue actual damages for any failure by the
Corporation to comply with the terms of this Certificate of Designation. The
Corporation acknowledges that a breach by it of its obligations hereunder will
cause irreparable harm to the holders of Series A Preferred Stock and that the
remedy at law for any such breach may be inadequate. The Corporation therefore
agrees, in the event of any such breach or threatened breach, that the holders
of Series A 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.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]



                                      -23-

<PAGE>



           IN WITNESS WHEREOF, this Certificate of Designation is executed on
behalf of the Corporation this 11th day of August, 1998.


                                       AZUREL LTD.


                                       By:  /s/ Gerard Semhon
                                            Name:  Gerard Semhon
                                            Title: CEO


                                      -24-

<PAGE>


                              NOTICE OF CONVERSION

                    (To be Executed by the Registered Holder
                in order to Convert the Series A Preferred Stock)

The undersigned hereby irrevocably elects to convert ____________ shares of
Series A Preferred Stock (the "CONVERSION"), represented by stock certificate
Nos(s). ___________ (the "PREFERRED STOCK CERTIFICATES"), into shares of common
stock ("COMMON STOCK") of AZUREL LTD. (the "CORPORATION") according to the
conditions of the Certificate of Designations, Preferences and Rights of the
Series A Convertible Preferred Stock of the Corporation (the "CERTIFICATE OF
DESIGNATION"), as of the date written below. If securities are to be issued in
the name of a person other than the undersigned, the undersigned will pay all
transfer taxes payable with respect thereto. No fee will be charged to the
holder for any conversion, except for transfer taxes, if any. A copy of each
Preferred Stock Certificate is attached hereto (or evidence of loss, theft or
destruction thereof).

The undersigned requests that the Corporation electronically transmit the Common
Stock issuable pursuant to this Notice of Conversion to the account of the
undersigned or its nominee (which is _________________) with DTC through its
Deposit Withdrawal Agent Commission System ("DTC TRANSFER").

The undersigned represents and warrants that all offers and sales by the
undersigned of the securities issuable to the undersigned upon conversion of the
Series A Preferred Stock shall be made pursuant to registration of the Common
Stock under the Securities Act of 1933, as amended (the "ACT"), or pursuant to
an exemption from registration under the Act.

-          In lieu of receiving the shares of Common Stock issuable pursuant to
           this Notice of Conversion by way of DTC Transfer, the undersigned
           hereby requests that the Corporation issue and deliver to the
           undersigned physical certificates representing such shares of Common
           Stock.


                              Date of Conversion:

                              Applicable Conversion Price:

                              Number of Shares of Common
                              Stock to be Issued:

                              Signature:

                              Name:

                              Address:_______________________________________





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