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                                                              Exhibit 3 (a) (2)

                              ARTICLES OF AMENDMENT

                                       OF

                      INTER*ACT ELECTRONIC MARKETING, INC.

         The undersigned corporation hereby submits these Articles of Amendment
for the purpose of amending its Articles of Incorporation:

         1. The name of the corporation is Inter*Act Electronic Marketing, Inc.

         2. The Articles of Incorporation of the corporation are hereby amended
by attaching thereto: (a) the Statement of Rights and Preferences of the 14%
Series B Senior Mandatorily Convertible Preferred Stock; and (b) the Statement
of Rights and Preferences of the 10% Series C Mandatorily Convertible Preferred
Stock, each attached hereto.

         3. The foregoing amendments to the Articles of Incorporation were duly
adopted by the Board of Directors of the corporation on December 8, 1999.

         4. The foregoing amendments were adopted without shareholder action
pursuant to the authority vested in the Board of Directors to establish one or
more series within the class of preferred stock and to establish the
designations, preferences, limitations and relative rights (including conversion
rights) of such shares, said authority having been duly granted in Article 2 of
the Restated Articles of Incorporation of the corporation filed with the
Secretary of State of North Carolina on July 19, 1999. As required by Section 4
of the Amended and Restated Statement of Rights and Preferences of the 10%
Series A Mandatorily Convertible Preferred Stock of the corporation, the
Statement of Rights and Preferences of the 14% Series B Senior Mandatorily
Convertible Preferred Stock of the corporation and the issuance of up to 140,000
shares of 14% Series B Senior Mandatorily Convertible Preferred Stock of the
corporation was duly approved by holders of more than 75% of the outstanding
shares of the 10% Series A Mandatorily Convertible Preferred Stock of the
corporation at a meeting held for that purpose on December 20, 1999.

         This the 22nd day of December, 1999.

                                  INTER*ACT ELECTRONIC MARKETING, INC.

                                  By:/s/ Stephen R. Leeolou

                                    Stephen R. Leeolou, Chief Executive Officer






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                  STATEMENT OF RIGHTS AND PREFERENCES OF THE
         14% SERIES B SENIOR MANDATORILY CONVERTIBLE PREFERRED STOCK
                   OF INTER*ACT ELECTRONIC MARKETING, INC.

         Section 1. Number and Designation. A series consisting of 140,000
shares of the authorized preferred stock of the corporation, no par value, is
designated "14% Series B Senior Mandatorily Convertible Preferred Stock" (the
"Series B Preferred Stock"). The number of authorized shares of Series B
Preferred Stock shall not be increased but may be decreased from time to time by
resolution of the Board of Directors.

         Section 2. Ranking. All capital stock of any class or classes of the
corporation outstanding on December 9, 1999 shall rank junior to Series B
Preferred Stock, and all capital stock of any class or classes of the
corporation issued after December 9, 1999 shall be deemed to rank:

                  (a) senior to the Series B Preferred Stock (the "Senior
         Stock"), either as to dividends or upon liquidation, if the holders of
         such class or classes shall be entitled to the receipt of dividends or
         of amounts distributable upon dissolution, liquidation or winding up of
         the corporation, as the case may be, in preference or priority to the
         holders of Series B Preferred Stock;

                  (b) on a parity with Series B Preferred Stock (the "Parity
         Stock"), either as to dividends or upon liquidation, whether or not the
         dividend rates, dividend payment dates or redemption or liquidation
         prices per share or sinking fund provisions, if any, shall be different
         from those of Series B Preferred Stock, if the holders of such stock
         shall be entitled to the receipt of dividends or of amounts
         distributable upon dissolution, liquidation or winding up of the
         corporation, as the case may be, without preference or priority, one
         over the other, as between the holders of such stock and the holders of
         Series B Preferred Stock; or

                  (c) junior to Series B Preferred Stock (the "Junior Stock"),
         either as to dividends or upon liquidation, if such class shall be the
         common stock, no par value, of the corporation (the "Common Stock") or
         if the holders of Series B Preferred Stock shall be entitled to receipt
         of dividends or of amounts distributable upon dissolution, liquidation
         or winding up of the corporation, as the case may be, in preference or
         priority to the holders of shares of such class or classes.

         Section 3.  Dividends and Distributions.

                  (a) For each semi-annual dividend period (a "Dividend
         Period"), the holders of outstanding shares of Series B Preferred Stock
         shall be entitled to receive, out of funds legally available therefor,
         cumulative dividends payable in cash on each share of Series B
         Preferred Stock at a rate of 14% per annum of the Liquidation
         Preference (as defined in Section 6(a) herein) for such shares of
         Series B Preferred Stock at the beginning of such Dividend Period for
         such shares of Series B Preferred Stock. Each Dividend Period shall
         commence on the February 1 and August 1 following the last






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         day of the preceding Dividend Period and shall end on and include the
         day next preceding the first day of the next Dividend Period. Dividends
         shall accrue semi-annually in arrears commencing from August 1, 1999
         and shall be cumulative, to the extent unpaid, whether or not they have
         been declared and whether or not there are profits, surplus or other
         funds of the corporation legally available for the payment of
         dividends. Dividends shall become due and payable on February 1 and
         August 1 of each year, commencing on February 1, 2000. Each such
         dividend shall be paid to the holders of record of shares of Series B
         Preferred Stock as they appear on the stock register of the corporation
         on such record date, not exceeding 45 days preceding the payment date
         thereof, as shall be fixed by the Board of Directors of the corporation
         or by a duly authorized committee thereof. Dividends on account of
         arrears for any past Dividend Period may be declared and paid at any
         time without reference to any regular dividend payment date, to holders
         of record on such date, not exceeding 45 days preceding the payment
         date thereof, as may be fixed by the Board of Directors of the
         corporation or by a duly authorized committee thereof. Dividends
         payable on shares of Series B Preferred Stock for any period greater or
         less than a full Dividend Period shall be computed on the basis of a
         360-day year consisting of twelve 30-day months and the actual number
         of days elapsed in the period.

                  (b) So long as any shares of Series B Preferred Stock are
         issued and outstanding, no dividends (other than a dividend of Junior
         Stock of the corporation) shall be paid or set apart for payment for
         any period on any Parity Stock or Junior Stock of the corporation
         unless full cumulative dividends have been or contemporaneously are
         declared and paid or declared and a sum sufficient for the payment
         thereof set apart for such payment on the Series B Preferred Stock for
         all dividends accrued and unpaid (including all dividends accrued and
         unpaid for any portion of a Dividend Period) as of the date upon which
         any dividend is paid on such Parity Stock or Junior Stock. When
         dividends are not paid in full, as aforesaid, upon the shares of Series
         B Preferred Stock and any other series of Parity Stock, all dividends
         to be paid upon shares of the Series B Preferred Stock and such other
         series of Parity Stock shall be paid pro rata so that the amount of
         dividends paid per share on the Series B Preferred Stock and such other
         Parity Stock shall in all cases bear to each other the same ratio that
         accrued and unpaid dividends per share on the shares of Series B
         Preferred Stock and such other Parity Stock bear to each other. Holders
         of shares of Series B Preferred Stock shall not be entitled to any
         dividend, whether payable in cash, property or stock, in excess of full
         cumulative dividends, as herein provided, on the Series B Preferred
         Stock. No interest, or sum of money in lieu of interest, shall be
         payable in respect of any dividend payment or payments on the Series B
         Preferred Stock which may be in arrears.

                  (c) So long as any shares of Series B Preferred Stock are
         issued and outstanding, no Junior Stock shall be redeemed, purchased or
         otherwise acquired for cash or other property (or any monies be paid to
         or made available for a sinking fund for the redemption of any shares
         of any such stock) by the corporation (except by conversion into or
         exchange for Junior Stock) unless the full cumulative dividends on all
         outstanding shares of Series B Preferred Stock shall have been paid or
         declared and

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         set aside for payment for all past Dividend Periods (including all
         dividends accrued and unpaid for any portion of a Dividend Period).

         Section 4.  Voting Rights.

         Except as otherwise expressly provided herein or as required by law,
the holders of each share of Series B Preferred Stock shall be entitled to vote
on all matters submitted to shareholders for voting, voting together with the
holders of Common Stock as a single group, and shall be entitled to notice of
any shareholders' meeting in accordance with applicable law and the Bylaws of
the corporation. Each share of Series B Preferred Stock shall entitle the holder
thereof to such number of votes per share on each such matter as shall equal the
number of shares of Common Stock (including fractions of a share) into which
each share of Series B Preferred Stock is convertible pursuant to Section 5(a)
on the record date with respect to such matter.

         Section 5.  Conversion of Series B Preferred Stock.  The holders of
Series B Preferred Stock shall have conversion rights as follows (the
"Conversion Rights"):

                  (a) Voluntary Conversion. Each share of Series B Preferred
         Stock shall be convertible, at the option of the holder thereof, at any
         time after the date of issuance of such share at the office of the
         corporation or any transfer agent for such stock, without the payment
         of any additional consideration, into such number of fully paid and
         nonassessable shares of Common Stock as results by dividing the
         Liquidation Preference on the date of conversion by $14.00, as adjusted
         pursuant to Section 5(g) below (the "Conversion Price").

                  (b) Mandatory Conversion. Each share of Series B Preferred
         Stock shall automatically be converted, without the payment of
         additional consideration, into such number of fully paid and
         nonassessable shares of Common Stock as results by dividing the
         Liquidation Preference on the date of conversion by the Conversion
         Price upon the closing of the sale of the Common Stock in a Qualified
         Public Offering (defined below). Notice of any Qualified Public
         Offering shall be given to each holder of Series B Preferred Stock at
         least thirty (30) days prior to the anticipated date of closing and
         conversion. "Qualified Public Offering" means a firm commitment public
         offering of the Common Stock pursuant to a registration statement
         declared effective under the Securities Act of 1933, as amended,
         underwritten by a securities firm of nationally recognized standing
         with an aggregate offering price to the public of not less than $30
         million.

                  (c)      Mechanics of Conversion.

                                    (i) To convert shares of Series B Preferred
                           Stock into shares of Common Stock, the holder of such
                           shares of Series B Preferred Stock shall (A)
                           surrender the certificate or certificates therefor,
                           duly endorsed, at the office of the corporation or of
                           any transfer agent for

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                           such stock, (B) give written notice to the
                           corporation at such office that it elects to convert
                           the same and (C) state therein the name or names in
                           which it wishes the certificate or certificates for
                           shares of Common Stock to be issued. The corporation
                           shall, as soon as practicable thereafter and at its
                           expense, issue and deliver to such holder a
                           certificate or certificates for the number of shares
                           of Common Stock to which such holder is entitled.
                           Such conversion shall be deemed to have been made
                           immediately prior to the close of business on the
                           date of surrender of the shares of Series B Preferred
                           Stock to be converted, and the person or persons
                           entitled to receive the shares of Common Stock
                           issuable upon such conversion shall be treated for
                           all purposes as the record holder or holders of such
                           shares of Common Stock on such date.

                                    (ii) If the conversion is mandatory pursuant
                           to Section 5(b) of this Statement of Rights and
                           Preferences, the conversion shall be conditioned upon
                           the closing with the underwriters of the sale of
                           securities pursuant to the Qualified Public Offering,
                           and the conversion of the Series B Preferred Stock
                           shall be deemed to have occurred, without any further
                           action by the holders of such shares, on a date
                           immediately prior to the occurrence of such event.

                  (d) Reservation of Stock Issuable Upon Conversion. The
         corporation shall at all times reserve and keep available out of its
         authorized but unissued shares of Common Stock, free of preemptive
         rights, solely for the purpose of effecting the conversion of the
         shares of Series B Preferred Stock, such number of its shares of Common
         Stock as shall from time to time be sufficient to effect the conversion
         of all outstanding shares of Series B Preferred Stock; and if at any
         time the number of authorized but unissued shares of Common Stock shall
         not be sufficient to effect the conversion of all then outstanding
         shares of Series B Preferred Stock, the corporation will take such
         corporate action as may, in the opinion of its counsel, be necessary to
         increase its authorized but unissued shares of Common Stock to such
         number of shares as shall be sufficient for such purpose.

                  (e) Fractional Shares. No fractional share shall be issued
         upon the conversion of any share or shares of Series B Preferred Stock.
         All shares of Common Stock (including fractions thereof) issuable upon
         conversion of more than one share of Series B Preferred Stock by a
         holder thereof shall be aggregated for purposes of determining whether
         the conversion would result in the issuance of any fractional share.
         If, after the aforementioned aggregation, the conversion would result
         in the issuance of a fraction of a share of Common Stock, the
         corporation shall, in lieu of issuing any fractional share, pay the
         holder otherwise entitled to such fraction a sum in cash equal to the
         same fraction of the fair market value per share as of the date of
         conversion.

                  (f) No Impairment.  The corporation will not, by amendment
         of its Articles of Incorporation or through any reorganization,
         transfer of assets, consolidation,

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         merger, share exchange, 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 corporation, including without limitation the adjustments
         required under this Section 5, and 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 Series B
         Preferred Stock against impairment.

                  (g) Adjustment to Conversion Price. The Conversion Price shall
         be subject to adjustment from time to time as follows:

                                    (i) If, at any time when any shares of
                           Series B Preferred Stock are issued and outstanding,
                           the corporation shall pay on shares of Common Stock a
                           dividend payable in shares of Common Stock or shall
                           split the then outstanding shares of Common Stock
                           into a greater number of shares, then the number of
                           shares of Common Stock that the holders of the Series
                           B Preferred Stock would receive upon conversion
                           thereof, as in effect at the time of taking of a
                           record for such dividend or at the time of such stock
                           split, shall be proportionately increased and the
                           Conversion Price shall be proportionately decreased,
                           and conversely, if at any time the corporation shall
                           contract or reduce the number of outstanding shares
                           of Common Stock by combining such shares into a
                           smaller number of shares, then the number of shares
                           which may be purchased upon the conversion of the
                           Series B Preferred Stock at the time of such action
                           shall be proportionately decreased as of such time,
                           and the Conversion Price shall be proportionately
                           increased.

                                    (ii) If the Company shall at any time, or
                           from time to time (i) issue, sell or exchange any
                           shares of Common Stock (including shares of Common
                           Stock sold in a Qualified Public Offering), excluding
                           the Excluded Securities (as hereafter defined), for a
                           consideration per share less than the Conversion
                           Price as of the date of issuance or (ii) issue, sell
                           or exchange options or other securities, excluding
                           the Excluded Securities, that are convertible into or
                           exercisable for shares of Common Stock at an exercise
                           or conversion price that is less than the Conversion
                           Price (taking into account, to the extent applicable,
                           any price paid for the option or other security) as
                           of the date of issuance, then and thereafter
                           successively upon each such issuance, sale or
                           exchange, the Conversion Price in effect immediately
                           prior to the issuance, sale or exchange of such
                           shares, options or securities shall forthwith be
                           reduced to, in the case of clause (i) above, the
                           amount of the consideration per share received by the
                           Company in connection with such issuance, sale or
                           exchange, or in the case of clause (ii) above, the
                           amount of the exercise or conversion price per share,
                           plus the amount paid (if any) for the underlying
                           option or other security, in connection with such
                           issuance, sale or exchange.

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                                    (iii) Notwithstanding anything to the
                           contrary contained herein, the provisions of
                           paragraph (ii) of this Section 5(g) shall not apply
                           with respect to the issuance of any Excluded
                           Securities. For purposes hereof, "Excluded
                           Securities" means (A) options, rights or shares of
                           Common Stock issued to, or issued in connection with
                           the exercise or grant of options or rights granted
                           to, employees, directors or consultants of the
                           corporation pursuant to the terms of any stock
                           compensation plan of the corporation in effect on
                           December 9, 1999 or adopted by the shareholders of
                           the corporation after December 9, 1999, (B) shares of
                           Common Stock issued in connection with the exercise
                           of options or warrants issued by the corporation and
                           outstanding on December 9, 1999, (C) up to 20,000
                           shares of Common Stock (or options or warrants to
                           acquire up to such number of shares of Common Stock)
                           issued in connection with the exercise of options or
                           warrants issued under contractual obligations of the
                           corporation in effect as of December 9, 1999, (D)
                           shares of Common Stock issued in connection with the
                           acquisition by the corporation (or its subsidiary) of
                           Clearing Systems, Inc. so long as the corporation (or
                           its subsidiary) receives in such acquisition the same
                           number of shares of Common Stock issued, (E) shares
                           of Common Stock issued upon conversion of the 10%
                           Series A Mandatorily Convertible Preferred Stock
                           ("Series A Preferred Stock") issued and outstanding
                           on December 9, 1999 or issued in respect of a
                           dividend payment on the Series A Preferred Stock, (F)
                           shares of Series A Preferred Stock issued in respect
                           of a dividend payment on the Series A Preferred Stock
                           and (G) shares of Common Stock in connection with any
                           stock split or stock dividend covered by paragraph
                           (i) of this Section 5(g).

                                    (iv) Whenever the Conversion Price shall be
                           adjusted as provided in this Section 5(g), the
                           corporation shall as soon as practicable thereafter
                           file at its principal office, a statement signed by
                           its Chief Executive Officer or its Chief Financial
                           Officer, showing in reasonable detail the basis for
                           such adjustment and the actual Conversion Price that
                           shall be in effect after such adjustment and shall
                           cause a copy of such statement to be sent to the
                           holders of the Series B Preferred Stock at their
                           addresses on the books and records of the
                           corporation.

                  (h) Changes in Common Stock. In case at any time the
         corporation shall initiate any transaction or be a party to any
         transaction (including, without limitation, a merger, consolidation,
         share exchange, sale, lease or other disposition of all or
         substantially all of the corporation's assets, charter amendment,
         recapitalization or reclassification of the Common Stock or a "Stock
         Sale," as defined below) in connection with which the previously
         outstanding Common Stock shall be changed into or exchanged for
         different securities of the corporation or capital stock or other
         securities of another corporation or interests in a noncorporate entity
         or other property

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         (including cash) or any combination of the foregoing (each such
         transaction being herein called a "Transaction"), then, as a condition
         to the consummation of the Transaction, lawful, enforceable and
         adequate provision shall be made so that the holders of Series B
         Preferred Stock shall be entitled to receive upon conversion of their
         shares of Series B Preferred Stock at any time on or after the
         consummation of the Transaction, in lieu of the shares of Common Stock
         issuable upon such conversion prior to such consummation, the
         securities or other property (including cash) to which such holders of
         Series B Preferred Stock would have been entitled upon consummation of
         the Transaction if such holders had converted their shares of Series B
         Preferred Stock immediately prior thereto (subject to adjustments from
         and after the consummation date as nearly equivalent as possible to the
         adjustments provided for in this Section 5). If a purchase, tender or
         exchange offer is made to and accepted by the holders of more than 50%
         of the outstanding Common Stock (a "Stock Sale"), and if the holders of
         a majority interest of the shares of Series B Preferred Stock so
         designate in a written notice given to the corporation, such holders of
         Series B Preferred Stock shall be entitled to receive upon the
         conversion of their shares of Series B Preferred Stock at any time on
         or after the consummation of the Stock Sale in lieu of the shares of
         Common Stock issuable upon conversion prior to the consummation of the
         Stock Sale, the securities or other property to which such holders of
         Series B Preferred Stock would have been entitled if such holders had
         converted their shares of Series B Preferred Stock prior to the
         expiration of such purchase, tender or exchange offer and had accepted
         such offer (subject to adjustments from and after the consummation of
         such purchase, tender or exchange offer as nearly equivalent as
         possible to the adjustments provided for in this Section 5). The
         corporation will not effect any Transaction unless prior to the
         consummation thereof each corporation or entity (other than the
         corporation) that may be required to deliver any securities or other
         property upon the conversion of Series B Preferred Stock as provided
         herein shall assume, by written instrument delivered to the holders of
         Series B Preferred Stock, the obligation to deliver to such holders
         such securities or other property as in accordance with the foregoing
         provisions such holders may be entitled to receive. The foregoing
         provisions of this Section 5(h) shall similarly apply to successive
         Transactions.

                  (i) Issue Taxes. The corporation shall pay any and all issue
         and other taxes that may be payable in respect of any issue or delivery
         of shares of Common Stock on conversion of shares of Series B Preferred
         Stock pursuant hereto; provided, that the corporation shall not be
         obligated to pay any transfer taxes resulting from any transfer
         requested by any holder in connection with any such conversion.

                  (j) Status of Converted Shares. Any shares of Series B
         Preferred Stock that shall at any time have been converted pursuant to
         this Section 5 shall, after such conversion, have the status of
         authorized but unissued shares of preferred stock, without designation
         as to series until such shares are once more designated as part of a
         particular series by the Board.

         Section 6.        Liquidation Preference.

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                  (a) Series B Preferred Stock. In the event of any liquidation,
         dissolution or winding up of the corporation (a "Liquidation Event"),
         either voluntary or involuntary, each holder of the Series B Preferred
         Stock shall be entitled to receive, prior and in preference to any
         distribution of any of the assets or surplus funds of the corporation
         to the holders of any Junior Stock, an amount in cash equal to $500.00
         per share of Series B Preferred Stock plus the amount of any accrued
         and unpaid dividends thereon as of the date of the Liquidation Event,
         including all dividends accrued for any portion of a Dividend Period
         (collectively, the "Liquidation Preference") (such Liquidation
         Preference to be adjusted for any combinations, consolidations, stock
         distributions, stock splits, stock dividends or similar event with
         respect to shares of the Series B Preferred Stock). If upon the
         occurrence of any such Liquidation Event the assets and funds to be
         distributed among the holders of the Series B Preferred Stock shall be
         insufficient to permit the payment to such holders of the full
         Liquidation Preference, then the entire assets and funds of the
         corporation legally available for distribution, after payment of any
         amounts due and owing to holders of any Senior Stock, shall be
         distributed ratably among the holders of Series B Preferred Stock based
         upon the number of shares of Series B Preferred Stock then held by
         them. Upon any Liquidation Event, holders of fractional of Series B
         Preferred Stock shall receive proportionate payments in respect
         thereof. Notwithstanding anything contained herein to the contrary, if
         upon any Liquidation Event the holders of the outstanding shares of
         Series B Preferred Stock would receive more than the Liquidation
         Preference amount in the event their shares were converted to Common
         Stock immediately prior to such Liquidation Event, and the holders of
         shares of Common Stock received a liquidating distribution from the
         corporation, then each holder of shares of Series B Preferred Stock
         shall receive as a distribution from the corporation in connection with
         such Liquidation Event, in lieu of the Liquidation Preference, an
         amount equal to the amount that would be paid if such holder's shares
         of Series B Preferred Stock were converted into Common Stock
         immediately prior to such Liquidation Event.

                  (b) Consolidation, Merger, etc. Not a Liquidation. The
         consolidation or merger of the corporation with or into any other
         entity, the acquisition of the capital stock of the corporation in a
         share exchange or the sale, lease or other disposition of all or
         substantially all of the assets, property or business of the
         corporation shall not be deemed to be a Liquidation Event within the
         meaning of this Section 6.

                  (c) Valuation of Securities. Any securities to be distributed
         pursuant to this Section 6 in a Liquidation Event shall be valued at
         the fair market value thereof, as mutually determined in good faith by
         the Board of Directors of the corporation and the holders of a majority
         of the outstanding shares of Series B Preferred Stock or, if so
         required by a majority interest of the holders of outstanding shares of
         Series B Preferred Stock, as determined by a national or regional
         investment bank or a national accounting firm mutually selected by such
         holders and the corporation, the fees and expenses of which shall be
         paid by the corporation.

                  (d) Notice. Written notice (the "Notice") of any Liquidation
         Event within the meaning of this Section 6, which Notice shall state
         the payment date, the amount

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         per share which each holder of Series B Preferred Stock will be
         entitled to receive, the place where payments shall be made and the
         date on which Conversion Rights terminate as to such shares (which
         shall be not less than 30 days after the date such Notice is received),
         shall be given by first class mail, postage prepaid, or by telecopy,
         facsimile or recognized overnight courier, not less than 30 nor more
         than 60 days prior to the payment date stated therein, to the holders
         of record of any then outstanding shares of Series B Preferred Stock
         and Common Stock, such Notice to be addressed to each such holder at
         its address as shown on the records of the corporation.

         Section 7.        Redemption Rights.

                  (a) Each holder of shares of Series B Preferred Stock shall
         have the right to require the corporation to redeem all (but not less
         than all) of the shares of Series B Preferred Stock held by such person
         upon the occurrence of a Change of Control (as defined below). The
         redemption price per share (the "Redemption Price") shall be payable in
         cash in immediately available funds and shall be equal to the
         Liquidation Preference per share of Series B Preferred Stock as of the
         date of redemption. Upon any redemption as provided herein, the holders
         of fractional shares shall receive proportionate amounts in respect
         thereof. Notwithstanding the foregoing, if upon a Change of Control the
         holders of the outstanding shares of Series B Preferred Stock would
         receive more than the Redemption Price in the event their shares were
         converted into Common Stock immediately prior to such Change of
         Control, and such shares of Common Stock were purchased or otherwise
         participated in the Change of Control, then each holder of shares of
         Series B Preferred Stock shall receive from the corporation or the
         relevant purchaser, as applicable, upon the election of such holders to
         redeem or otherwise participate in the Change of Control an amount
         equal to the amount per share that would be paid if the shares of
         Common Stock receivable upon conversion of the Series B Preferred Stock
         were being acquired in the Change of Control at the same price per
         share as is paid for other shares of Common Stock, which amount shall
         be paid in the same form of consideration as is paid to holders of
         Common Stock, as if each share of Series B Preferred Stock had been
         converted into the number of shares of Common Stock issuable upon
         conversion of such shares of Series B Preferred Stock immediately prior
         to such Change of Control.

                  (b) The corporation shall give each holder of record of shares
         of Series B Preferred Stock written notice of any impending Change of
         Control transaction, that it is aware of, at least 30 days prior to the
         anticipated closing date of such Change of Control transaction. The
         notice shall describe the material terms and conditions of the
         impending transaction, including without limitation the consideration
         to be delivered in connection with such transaction.

                  (c) Any shares of Series B Preferred Stock that have been
         redeemed shall, after such redemption, have the status of authorized
         but unissued shares of preferred stock, without designation as to
         series until such shares are once more designated as part of a
         particular series by the Board.

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<PAGE>


                  (d) Within thirty (30) days following the date of receipt of
         the Change of Control notice described above, any holder of shares of
         Series B Preferred Stock desiring to tender shares for redemption shall
         provide written notice of such election and, together therewith, shall
         surrender the certificate or certificates representing such shares to
         the corporation, duly assigned or endorsed for transfer (or accompanied
         by duly executed stock powers relating thereto), or, in the event the
         certificate or certificates are lost, stolen or missing, shall deliver
         an affidavit or agreement satisfactory to the corporation to indemnify
         the corporation from any loss incurred by it in connection therewith
         (an "Affidavit of Loss") with respect to such certificates at the
         principal corporate office of the corporation or the office of the
         transfer agent for the Series B Preferred Stock or such office or
         offices in the continental United States of an agent for redemption as
         may from time to time be designated by the corporation in a notice to
         the holders of Series B Preferred Stock, and thereupon the Redemption
         Price (or such other consideration as is provided in Section 7(a)) of
         such shares shall be paid by the corporation to the person whose name
         appears in the corporation's records as the holder of record of such
         shares of Series B Preferred Stock; provided, however, that if the
         corporation is prohibited from redeeming any shares of Series B
         Preferred Stock, then upon the surrender of such certificate(s), the
         corporation will deliver to the holder a new certificate for the
         aggregate number of shares of Series B Preferred Stock not so redeemed.

                  (e) If the corporation is prohibited under applicable law from
         redeeming all shares of Series B Preferred Stock for which redemption
         is required hereunder, then it shall redeem such shares, if any, on a
         pro-rata basis among the holders of the Series B Preferred Stock in
         proportion to the full respective redemption amounts to be redeemed
         hereunder to the extent possible and shall redeem the remaining shares
         to be redeemed as soon as the corporation is not prohibited from
         redeeming some or all of such shares under applicable law. Any shares
         of Series B Preferred Stock not redeemed shall remain outstanding and
         entitled to all of the rights and preferences provided in this
         Statement of Rights and Preferences. The corporation shall take such
         commercially reasonable action as shall be necessary or appropriate to
         review and promptly remove any impediment to its ability to redeem the
         shares of Series B Preferred Stock under the circumstances contemplated
         by this Section.

                  (f) From and after the date of redemption of shares of Series
         B Preferred Stock, no shares of Series B Preferred Stock subject to
         redemption shall be entitled to dividends; provided, however, that in
         the event that any shares of Series B Preferred Stock are unable to be
         redeemed and continue to be outstanding, such shares shall continue to
         be entitled to dividends thereon as otherwise provided herein until the
         date on which such shares are actually redeemed by the corporation.

                  (g) A "Change of Control" means the occurrence of any of the
         following events: (i) any "person" or "group" (within the meaning of
         Sections 13(d)(3) and 14(d)(2) of the Securities Exchange Act of 1934,
         as amended (the "Exchange Act"), or any successor provision to either
         of the foregoing, including any group acting for the purpose of
         acquiring, holding or disposing of securities within the meaning of
         Rule

                                      10





<PAGE>


         13d-5(b)(1) under the Exchange Act) other than one or more of the
         Permitted Holders (defined below) is or becomes the "beneficial owner"
         (as defined in Rule 13d-3 under the Exchange Act), directly or
         indirectly, of 40% or more of the total voting power of power of all
         shares of outstanding capital stock of the corporation or of Intero Act
         Operating Co., Inc., a North Carolina corporation and wholly-owned
         subsidiary of the corporation (the "Subsidiary") (on a fully diluted
         basis, the "Voting Stock"), (ii) during any period of two consecutive
         years, individuals who at the beginning of such period constituted the
         Board of Directors of either the corporation or the Subsidiary
         (together with any new directors whose election by the Board of
         Directors of either the corporation or the Subsidiary or whose
         nomination for election by the shareholders of the corporation or the
         Subsidiary was approved by a vote of 66 2/3% of the directors of the
         corporation or the Subsidiary, as the case may be, then still in office
         who were either directors at the beginning of such period or whose
         election or nomination for election was previously so approved) cease
         for any reason to constitute a majority of the Board of Directors of
         the corporation or the Subsidiary then in office, (iii) the corporation
         or the Subsidiary consolidates or merges with or into any other Person
         (other than with each other or with a wholly owned subsidiary of the
         corporation) where less than a majority of the outstanding voting stock
         of the surviving or consolidated corporation is held by stockholders of
         the corporation immediately prior to such event, (iv) the Richardson
         Family (as defined in the definition of Permitted Holder) or Stephen R.
         Leeolou, at any one time or from time to time, sells to any Person that
         is not a Permitted Holder more than 10% of the fully-diluted shares of
         Common Stock beneficially held by the Richardson Family or Stephen R.
         Leeolou, as the case may be, as of the date hereof or (v) the
         Subsidiary sells, conveys, transfers or leases, directly or indirectly,
         all or substantially all of its assets (other than a transfer of such
         assets as an entirety or virtually as an entirety to a wholly owned
         Subsidiary). For purposes of this paragraph, "Permitted Holders" means
         (i) the descendants of Lunsford Richardson, Sr., their spouses, trusts,
         and corporations in which they have interests and charitable
         organizations established by such descendants (the "Richardson Family")
         and (ii) Stephen R. Leeolou and Lee D. Armbuster, their estates,
         spouses, ancestors, and lineal descendants, the legal representatives
         of any of the foregoing and the trustee of any bona fide trust of which
         the foregoing are the sole beneficiaries or the grantors, or any person
         of which the foregoing "beneficially owns" (as defined in Rules 13d-3
         and 13d-5 under the Exchange Act) voting securities representing at
         least 66-2/3% of the total voting power of all classes of capital stock
         of such person or entity (exclusive of any matters as to which class
         voting rights exist).

         Section 8. Right to Approve Certain Actions. Except as otherwise
provided by law, so long as any shares of Series B Preferred Stock remain
outstanding, the corporation shall not, without the approval by vote or written
consent (which written consent need not be unanimous) by the holders of a
majority of the then outstanding shares of Series B Preferred Stock, voting as a
separate class, take any of the following actions:

                  (a) amend, restate, modify or alter the corporation's articles
         of incorporation (including any amendments thereto and including any
         Statements of Rights and Preferences incorporated therein) or its
         bylaws;

                                      11




<PAGE>


                  (b) (i) declare or pay, or set aside funds for payment of, any
         dividend on or with respect to (other than dividends payable on the
         shares of Series B Preferred Stock) any shares of capital stock of the
         corporation or (ii) redeem, purchase or otherwise acquire for value (or
         pay into or set aside for a sinking fund for such purpose) any shares
         of capital stock of the corporation (other than with respect to any
         shares of Series B Preferred Stock);

                  (c) effect any liquidation, dissolution or winding-up of the
         corporation;

                  (d) authorize or issue any shares of Senior Stock; or

                  (e) increase the number of shares, options or other rights
         authorized under any stock compensation plan of the corporation above
         such number which is authorized as of December 9, 1999, or present any
         stock compensation plan to the shareholders of the corporation for
         adoption.

         Section 9.  Preemptive Rights.

                  (a) Holders of shares of Series B Preferred Stock shall have a
         preemptive right to purchase his or her pro rata share of any Common
         Stock issued by the corporation, other than shares issued pursuant to
         the following transactions:

                                    (i) shares issued in connection with the
                           exercise or grant of options or rights granted to
                           employees, directors or consultants of the
                           corporation pursuant to the terms of any stock
                           compensation plan of the corporation in effect on
                           December 9, 1999 or adopted by the shareholders of
                           the corporation after December 9, 1999;

                                    (ii) shares issued in connection with the
                           exercise of options or warrants issued by the
                           corporation and outstanding on December 9, 1999;

                                    (iii) shares issued in connection with a
                           merger or asset acquisition approved by a majority of
                           the Board of Directors;

                                    (iv) shares issued as dividends with respect
                           to outstanding shares of the same class or series of
                           stock;

                                    (v) shares issued upon conversion of any
                           shares of 10% Series A Mandatorily Convertible
                           Preferred Stock; or

                                    (vi) shares issued upon conversion of any
                           shares of Series B Preferred Stock.

                                      12




<PAGE>


For purposes hereof, each holder of shares of Series B Preferred Stock shall
have a "pro rata share" based on the ratio which the Series B Preferred Stock
then owned by it bears, on an as-if-converted basis, to all of the then issued
and outstanding shares of Voting Stock of the corporation.

                  (b) All preemptive rights under this Section 9 shall terminate
         upon the closing of a Qualified Public Offering and shall exclude all
         capital stock issued in such Qualified Public Offering.


                                      13




<PAGE>


                  STATEMENT OF RIGHTS AND PREFERENCES OF THE
             10% SERIES C MANDATORILY CONVERTIBLE PREFERRED STOCK
                   OF INTER*ACT ELECTRONIC MARKETING, INC.

         Section 1. Number and Designation. A series consisting initially of
250,000 shares of the authorized preferred stock of the corporation, no par
value, is designated "10% Series C Mandatorily Convertible Preferred Stock" (the
"Series C Preferred Stock"). The number of shares of Series C Preferred Stock
shall not be increased but may be decreased from time to time by resolution of
the Board of Directors; provided, that the number of authorized shares of Series
A Preferred Stock shall be increased by the number of shares of Series C
Preferred Stock issued in respect of dividends pursuant to Section 3(b) hereof.

         Section 2. Ranking. For purposes of this Statement of Rights and
Preferences, all shares of the corporation's 14% Series B Senior Mandatorily
Convertible Preferred Stock shall rank senior to Series C Preferred Stock, all
shares of the corporation's 10% Series A Mandatorily Convertible Preferred Stock
shall rank on a parity with Series C Preferred Stock and all other capital stock
of any class or classes of the corporation shall be deemed to rank:

         a. prior to the Series C Preferred Stock, either as to dividends or
upon liquidation, if the holders of such class or classes shall be entitled to
the receipt of dividends or of amounts distributable upon dissolution,
liquidation or winding up of the corporation, as the case may be, in preference
or priority to the holders of Series C Preferred Stock;

         b. on a parity with Series C Preferred Stock (the "Parity Stock"),
either as to dividends or upon liquidation, whether or not the dividend rates,
dividend payment dates or redemption or liquidation prices per share or sinking
fund provisions, if any, shall be different from those of Series C Preferred
Stock, if the holders of such stock shall be entitled to the receipt of
dividends or of amounts distributable upon dissolution, liquidation or winding
up of the corporation, as the case may be, without preference or priority, one
over the other, as between the holders of such stock and the holders of Series C
Preferred Stock; or

         c. junior to Series C Preferred Stock, either as to dividends or upon
liquidation, if such class shall be the common stock, no par value, of the
corporation (the "Common Stock") or if the holders of Series C Preferred Stock
shall be entitled to receipt of dividends or of amounts distributable upon
dissolution, liquidation or winding up of the corporation, as the case may be,
in preference or priority to the holders of shares of such class or classes.

         Section 3.  Dividends and Distributions.

         a. For each semi-annual dividend period (a "Dividend Period") dividends
payable on each share of Series C Preferred Stock shall be payable at a rate of
10% per annum of the initial liquidation preference of $100 per share divided by
two. Each Dividend Period shall commence on the April 1 and October 1 following
the last day of the preceding Dividend Period and shall end on and include the
day next preceding the first day of the next Dividend Period. Dividends






<PAGE>


shall be cumulative from the date of original issue and shall be payable, when,
as and if declared by the Board of Directors or by a duly authorized committee
thereof, on March 31 and September 30 of each year, commencing on March 31,
2000. Each such dividend shall be paid to the holders of record of shares of
Series C Preferred Stock as they appear on the stock register of the corporation
on such record date, not exceeding 45 days preceding the payment date thereof,
as shall be fixed by the Board of Directors of the corporation or by a duly
authorized committee thereof. Dividends on account of arrears for any past
Dividend Periods may be declared and paid at any time, without reference to any
regular dividend payment date, to holders of record on such date, not exceeding
45 days preceding the payment date thereof, as may be fixed by the Board of
Directors of the corporation or by a duly authorized committee thereof.

         b. Dividends payable on shares of Series C Preferred Stock for any
period greater or less than a full Dividend Period, shall be computed on the
basis of a 360-day year consisting of twelve 30-day months and the actual number
of days elapsed in the period. Notwithstanding paragraph (a) of this Section 3,
any dividends payable on the shares of Series C Preferred Stock prior to a
Qualified Public Offering (defined below), including without limitation any or
all dividends in arrears, shall be paid in additional shares of Series C
Preferred Stock. The corporation shall pay such dividend by issuing to such
holder of Series C Preferred Stock additional shares of Series C Preferred Stock
having an aggregate initial liquidation preference equal to the amount of cash
dividends otherwise payable to such holder.

         c. No full dividends shall be declared or paid or set apart for payment
on the Preferred Stock of any series ranking, as to dividends, on a parity with
or junior to the Series C Preferred Stock for any period unless full cumulative
dividends have been or contemporaneously are declared and paid or declared and a
sum sufficient for the payment thereof set apart for such payment on the Series
C Preferred Stock for all Dividend Periods terminating on or prior to the date
of payment of such full cumulative dividends. When dividends are not paid in
full, as aforesaid, upon the shares of Series C Preferred Stock and any other
series of Parity Stock, all dividends declared upon shares of this Series and
such other series of Parity Stock shall be declared pro rata so that the amount
of dividends declared per share on the Series C Preferred Stock and such other
Parity Stock shall in all cases bear to each other the same ratio that accrued
and unpaid dividends per share on the shares of Series C Preferred Stock and
such other Parity Stock bear to each other. Holders of shares of Series C
Preferred Stock shall not be entitled to any dividend, whether payable in cash,
property or stock, in excess of full cumulative dividends, as herein provided,
on the Series C Preferred Stock. No interest, or sum of money in lieu of
interest, shall be payable in respect of any dividend payment or payments on the
Series C Preferred Stock which may be in arrears.

         d. So long as any shares of Series C Preferred Stock are outstanding,
no dividend (other than a dividend in Common Stock or in any other stock ranking
junior to this series as to dividends and upon liquidation and other than as
provided in paragraph (c) of this Section 3) shall be declared or paid or set
aside for payment or other distribution declared or made upon the Common Stock
or upon any other stock ranking junior to or on a parity with this Series as to
dividends or upon liquidation, nor shall any Common Stock or any other stock of
the corporation ranking junior to or on a parity with this Series as to
dividends or upon liquidation be redeemed, purchased or otherwise acquired for
cash or other property (or any moneys be paid to or made

                                      2




<PAGE>


available for a sinking fund for the redemption of any shares of any such stock)
by the corporation (except by conversion into or exchange for stock of the
corporation ranking junior to the Series C Preferred Stock as to dividends and
upon liquidation) unless, in each case, the full cumulative dividends on all
outstanding shares of Series C Preferred Stock shall have been paid or declared
and set aside for payment for all past Dividend Periods.

         Section 4. Voting Rights. Except as otherwise expressly provided herein
or as required by law, the holders of each share of Series C Preferred Stock
shall be entitled to vote on all matters submitted to shareholders for voting,
voting together with the holders of Common Stock as a single group, and shall be
entitled to notice of any shareholders' meeting in accordance with applicable
law and the Bylaws of the corporation. Each share of Series C Preferred Stock
shall entitle the holder thereof to such number of votes per share on each such
matter as shall equal the number of shares of Common Stock (including fractions
of a share) into which each share of Series C Preferred Stock is convertible
pursuant to Section 5(a) on the record date with respect to such matter. Except
as provided in the next succeeding sentence, the approval of holders of a
majority of the outstanding shares of Series C Preferred Stock shall be required
prior to the corporation's issuing any shares of a class of preferred stock that
ranks on a parity with or senior to the Series C Preferred Stock.
Notwithstanding the foregoing sentence, the corporation may issue up to $90
million of Series C Preferred Stock and Parity Stock without the approval of any
holders of Series C Preferred Stock. The corporation may not amend or alter any
of this Statement of Rights and Preferences without the approval of the holders
of 75% of the outstanding Series C Preferred Stock

         Section 5.  Conversion of Series C Preferred Stock.  The holders of
Series C Preferred Stock shall have conversion rights as follows (the
"Conversion Rights"):

         a. Right to Convert. Each share of Series C Preferred Stock shall be
convertible, at the option of the holder thereof, at any time after the date of
issuance of such share at the office of the corporation or any transfer agent
for such stock, into such number of fully paid and nonassessable shares of
Common Stock as is equal to the Liquidation Preference on the date of conversion
divided by $14.00, as adjusted pursuant to Section 5(g) below (the "Conversion
Price").

         b. Mandatory Conversion. Each share of Series C Preferred Stock shall
automatically be converted into such number of fully paid and nonassessable
shares of Common Stock as is equal to the Liquidation Preference on the date of
conversion divided by the Conversion Price, upon (i) the closing of the sale of
the Common Stock in a Qualified Public Offering (defined below), (ii) the
closing of any Transaction (as defined in Section 5(h) below) in which each
holder of shares of Series C Preferred Stock is entitled to receive an amount of
cash or marketable securities having a current market value at least equal to
the Liquidation Preference of such shares of Series C Preferred Stock (a
"Qualified Transaction") or (iii) the vote or written consent of holders of not
less than 75% of the outstanding shares of Series C Preferred Stock. Notice of
any Qualified Public Offering or Qualified Transaction shall be given to each
holder of Series C Preferred Stock at least thirty days prior to anticipated
date of closing and conversion. "Qualified Public Offering" means a firm
commitment, public offering of the Common Stock pursuant to a registration
statement declared effective under the Securities Act of 1933, as

                                      3




<PAGE>


amended, underwritten by a securities firm of nationally recognized standing
with an aggregate offering price to the public of not less than $30 million and
a price per share not less than the Conversion Price.

         c.       Mechanics of Conversion.

                  i. To convert shares of Series C Preferred Stock into shares
         of Common Stock, the holder of such shares of Series C Preferred Stock
         shall (A) surrender the certificate or certificates therefor, duly
         endorsed, at the office of the corporation or of any transfer agent for
         such stock, (B) give written notice to the corporation at such office
         that it elects to convert the same, (C) state therein the name or names
         in which it wishes the certificate or certificates for shares of Common
         Stock to be issued and (D) deliver to the corporation an executed
         joinder agreement pursuant to which such holder agrees to become a
         party to and be bound by the Shareholders' Agreement dated as of April
         16, 1993 among the corporation and the holders of Common Stock, as
         amended (the "Shareholders' Agreement"). The corporation shall, as soon
         as practicable thereafter and at its expense, issue and deliver to such
         holder a certificate or certificates for the number of shares of Common
         Stock to which such holder is entitled. Such conversion shall be deemed
         to have been made immediately prior to the close of business on the
         date of surrender of the shares of Series C Preferred Stock to be
         converted, and the person or persons entitled to receive the shares of
         Common Stock issuable upon such conversion shall be treated for all
         purposes as the record holder or holders of such shares of Common Stock
         on such date.

                  ii. If the conversion is mandatory pursuant to Section 5(b) of
         this Statement of Rights and Preferences, the conversion shall be
         conditioned upon the closing with the underwriters of the sale of
         securities pursuant to such Qualified Public Offering, the closing of
         such Qualified Transaction or the vote or written consent of holders of
         not less than 75% of the outstanding shares of Series C Preferred
         Stock, as the case may be, and the Series C Preferred Stock shall be
         deemed to have been converted immediately prior to the occurrence of
         such event.

         d. Reservation of Stock Issuable Upon Conversion. The corporation shall
at all times reserve and keep available out of its authorized but unissued
shares of Common Stock, free of preemptive rights, solely for the purpose of
effecting the conversion of the shares of Series C Preferred Stock, such number
of its shares of Common Stock as shall from time to time be sufficient to effect
the conversion of all outstanding shares of Series C Preferred Stock; and if at
any time the number of authorized but unissued shares of Common Stock shall not
be sufficient to effect the conversion of all then outstanding shares of Series
C Preferred Stock, the corporation will take such corporate action as may, in
the opinion of its counsel, be necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as shall be sufficient for such
purpose, including, without limitation, engaging in best efforts to obtain the
requisite shareholder approval of any necessary amendment to these Articles of
Incorporation.

         e. Fractional Shares. No fractional share shall be issued upon the
conversion of any share or shares of Series C Preferred Stock. All shares of
Common Stock (including fractions

                                      4




<PAGE>


thereof) issuable upon conversion of more than one share of Series C Preferred
Stock by a holder thereof shall be aggregated for purposes of determining
whether the conversion would result in the issuance of any fractional share. If,
after the aforementioned aggregation, the conversion would result in the
issuance of a fraction of a share of Common Stock, the corporation shall, in
lieu of issuing any fractional share, pay the holder otherwise entitled to such
fraction a sum in cash equal to the same fraction of the fair market value per
share as of the date of conversion.

         f. No Impairment. The corporation will not, by amendment of its
Articles of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, share exchange, 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
corporation, including without limitation the adjustments required under this
Section 5, and 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 Series C Preferred Stock against impairment.

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

                  i. If, at any time when any shares of Series C Preferred Stock
         are issued and outstanding, the corporation shall pay on shares of
         Common Stock a dividend payable in shares of Common Stock or shall
         split the then outstanding shares of Common Stock into a greater number
         of shares, then the number of shares of Common Stock that the holders
         of the Series C Preferred Stock would receive upon conversion thereof,
         as in effect at the time of taking of a record for such dividend or at
         the time of such stock split, shall be proportionately increased and
         the Conversion Price shall be proportionately decreased, and
         conversely, if at any time the corporation shall contract or reduce the
         number of outstanding shares of Common Stock by combining such shares
         into a smaller number of shares, then the number of shares which may be
         purchased upon the conversion of the Series C Preferred Stock at the
         time of such action shall be proportionately decreased as of such time,
         and the Conversion Price shall be proportionately increased.

                  ii. If the Company shall at any time, or from time to time (i)
         issue, sell or exchange any shares of Common Stock (including shares of
         Common Stock sold in a Qualified Public Offering), excluding the
         Excluded Securities (as hereafter defined), for a consideration per
         share less than the Conversion Price as of the date of issuance or (ii)
         issue, sell or exchange options or other securities, excluding the
         Excluded Securities, that are convertible into or exercisable for
         shares of Common Stock at an exercise or conversion price that is less
         than the Conversion Price (taking into account, to the extent
         applicable, any price paid for the option or other security) as of the
         date of issuance, then and thereafter successively upon each such
         issuance, sale or exchange, the Conversion Price in effect immediately
         prior to the issuance, sale or exchange of such shares, options or
         securities shall forthwith be reduced to, in the case of clause (i)
         above, the amount of the consideration per share received by the
         Company in connection with such issuance, sale or exchange, or in the
         case of clause (ii) above, the amount of the exercise or

                                      5




<PAGE>


         conversion price per share, plus the amount paid (if any) for the
         underlying option or other security, in connection with such
         issuance, sale or exchange.

                  iii. Notwithstanding anything to the contrary contained
         herein, the provisions of paragraph (ii) of this Section 5(g) shall not
         apply with respect to the issuance of any Excluded Securities For
         purposes hereof, "Excluded Securities" means (A) options, rights or
         shares of Common Stock issued to, or issued in connection with the
         exercise or grant of options or rights granted to, employees, directors
         or consultants of the corporation pursuant to the terms of any stock
         compensation plan of the corporation in effect on December 9, 1999 or
         adopted by the shareholders of the corporation after December 9, 1999,
         (B) shares of Common Stock issued in connection with the exercise of
         options or warrants issued by the corporation and outstanding on
         December 9, 1999, (C) up to 20,000 shares of Common Stock (or options
         or warrants to acquire up to such number of shares of Common Stock)
         issued in connection with the exercise of options or warrants issued
         under contractual obligations of the corporation in effect prior to
         December 9, 1999, (D) shares of Common Stock issued in connection with
         the acquisition by the corporation (or its subsidiary) of Clearing
         Systems, Inc. so long as the corporation (or its subsidiary) receives
         in such acquisition the same number of shares of Common Stock issued,
         (E) shares of Common Stock issued upon conversion of the 10% Series A
         Mandatorily Convertible Preferred Stock ("Series A Preferred Stock")
         issued and outstanding on December 9, 1999 or issued in respect of a
         dividend payment on the Series A Preferred Stock, (F) shares of Series
         A Preferred Stock issued in respect of a dividend payment on the Series
         A Preferred Stock and (G) shares of Common Stock in connection with any
         stock split or stock dividend covered by paragraph (i) of this Section
         5(g).

                  iv. Whenever the Conversion Price shall be adjusted as
         provided in this Section 5(g), the corporation shall as soon as
         practicable thereafter file at its principal office, a statement signed
         by its Chief Executive Officer or its Chief Financial Officer, showing
         in reasonable detail the basis for such adjustment and the actual
         Conversion Price that shall be in effect after such adjustment and
         shall cause a copy of such statement to be sent to the holders of the
         Series C Preferred Stock at their addresses on the books and records of
         the corporation.

         h. Changes in Common Stock. In case at any time the corporation shall
initiate any transaction or be a party to any transaction (including, without
limitation, a merger, consolidation, share exchange, sale, lease or other
disposition of all or substantially all of the corporation's assets, charter
amendment, recapitalization or reclassification of the Common Stock or a "Stock
Sale," as defined below) in connection with which the previously outstanding
Common Stock shall be changed into or exchanged for different securities of the
corporation or capital stock or other securities of another corporation or
interests in a non-corporate entity or other property (including cash) or any
combination of the foregoing (each such transaction being herein called a
"Transaction"), then, as a condition of the consummation of the Transaction,
lawful, enforceable and adequate provision shall be made so that the holders of
Series C Preferred Stock shall be entitled to receive upon conversion of their
shares of Series C Preferred Stock at any time on or after the consummation of
the Transaction, in lieu of the shares of Common Stock issuable upon such
conversion prior to such consummation, the securities or other property

                                      6




<PAGE>

(including cash) to which such holders of Series C Preferred Stock would have
been entitled upon consummation of the Transaction if such holders had converted
their shares of Series C Preferred Stock immediately prior thereto (subject to
adjustments from and after the consummation date as nearly equivalent as
possible to the adjustments provided for in this Section 5). If a purchase,
tender or exchange offer is made to and accepted by the holders of more than 50%
of the outstanding Common Stock (a "Stock Sale"), and if the holders of Series C
Preferred Stock so designate in a written notice given to the corporation, such
holders of Series C Preferred Stock shall be entitled to receive upon the
conversion of their shares of Series C Preferred Stock at any time on or after
the consummation of the Stock Sale in lieu of the shares of Common Stock
issuable upon conversion prior to the consummation of the Stock Sale, the
securities or other property to which such holders of Series C Preferred Stock
would have been entitled if such holders had converted their shares of Series C
Preferred Stock prior to the expiration of such purchase, tender or exchange
offer and had accepted such offer (subject to adjustments from and after the
consummation of such purchase, tender or exchange offer as nearly equivalent
as possible to the adjustments provided for in this Section 5). The corporation
will not effect any Transaction unless prior to the consummation thereof each
corporation or entity (other than the corporation) which may be required to
deliver any securities or other property upon the conversion of Series C
Preferred Stock as provided herein shall assume, by written instrument delivered
to the holders of Series C Preferred Stock, the obligation to deliver to such
holders such securities or other property as in accordance with the foregoing
provisions such holders may be entitled to receive. The foregoing provisions of
this Section 5(h) shall similarly apply to successive Transactions.

         i. Other Action Affecting Common Stock. In case at any time or from
time to time the corporation shall take any action affecting the Common Stock,
other than an action described in Section 5(h) hereof, then, unless in the
opinion of the Board of Directors of the corporation such action will not have a
material adverse effect upon the rights of the holders of Series C Preferred
Stock (taking into consideration, if necessary, any prior actions which the
Board of Directors deemed not to materially adversely affect the rights of the
holders), the conversion formula set forth in Section 5(a) shall be adjusted in
such manner and at such time as the Board of Directors of the corporation may in
good faith determine to be equitable in the circumstances.

         j. Issue Taxes. The corporation shall pay any and all issue and other
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
hereto; provided, that the corporation shall not be obligated to pay any
transfer taxes resulting from any transfer requested by any holder in connection
with any such conversion.

         k. Any shares of Series C Preferred Stock which shall at any time have
been converted pursuant to this Section 6 shall, after such conversion, have the
status of authorized but unissued shares of preferred stock, without designation
as to series until such shares are once more designated as part of a particular
series by the Board.

         Section 6.   Liquidation Preference.

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         a.  Series C Preferred Stock.  In the event of any liquidation,
dissolution or winding up of the corporation, either voluntary or involuntary,
the holders of the Series C Preferred Stock shall be entitled to receive, prior
and in preference to any distribution of any of the assets or surplus funds of
the corporation to the holders of any stock ranking junior to the Series C
Preferred Stock, an amount equal to $100.00 per share plus the amount of accrued
and unpaid dividends thereon (the "Liquidation Preference")(such Liquidation
Preference to be adjusted for any combinations, consolidations, stock
distributions or stock dividends with respect to shares of the Series C
Preferred Stock). If upon the occurrence of any such liquidation, dissolution
or winding up of the corporation the assets and funds to be distributed among
the holders of the Series C Preferred Stock shall be insufficient to permit
the payment to such holders of the full Liquidation Preference, then the entire
assets and funds of the corporation legally available for distribution after
payment of any amounts due and owing to holders of any stock ranking senior to
the Series C Preferred Stock shall be distributed ratably among the holders of
Series C Preferred Stock based upon the number of shares of Series C Preferred
Stock then held by them.

         b. Consolidation, Merger, etc. Not a Liquidation. The consolidation or
merger of the corporation with or into any other entity, the acquisition of the
capital stock of the corporation in a share exchange or the sale, lease or other
disposition of all or substantially all of the assets, property or business of
the corporation shall not be deemed to be a liquidation, dissolution or winding
up of the corporation within the meaning of this Section 6.

         c. Valuation of Securities. Any securities to be distributed pursuant
to this Section 6 in a liquidation, dissolution or winding up of the corporation
shall be the fair market value thereof, as determined in good faith by the Board
of Directors of the corporation or, if so required by a holder of Series C
Preferred Stock, as determined by a national or regional investment bank or a
national accounting firm mutually selected by such holder and the corporation,
the fees and expenses of which shall be paid by the corporation.

         d. Notice. Written notice (the "Notice") of any such liquidation,
dissolution or winding up of the corporation within the meaning of this Section
6, which states the payment date, the place where said payments shall be made
and the date on which Conversion Rights (as defined in Section 5) terminate as
to such shares (which shall be not less than 20 days after the date such notice
is given), shall be given by first class mail, postage prepaid, or by telecopy,
facsimile or recognized overnight courier, not less than 30 nor more than 60
days prior to the payment date stated therein, to the then holders of record of
Series C Preferred Stock and Common Stock, such Notice to be addressed to each
such holder at its address as shown on the records of the corporation.

         Section 7.  Redemption Rights.

         a. The corporation shall have the right at any time after November 1,
2005 to redeem, out of funds legally available therefor, any outstanding shares
of Series C Preferred Stock, in whole or in part, for a redemption price equal
to the Liquidation Price per share of the Series C Preferred Stock (calculated
as if the corporation liquidated on the date of redemption). On November 1,
2008, the corporation shall redeem, out of funds legally available therefor, any
outstanding shares of Series C Preferred Stock, in whole or in part, for a
redemption price equal to the Liquidation Price per share of the Series C
Preferred Stock (calculated as if the corporation liquidated on the date of
redemption). On November 1, 2008, the corporation shall redeem, out of funds
legally available therefor, any outstanding shares of Series C Preferred Stock,
in whole or in part, for a redemption price equal

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to the Liquidation Price per share of the Series C Preferred Stock (calculated
as if the corporation liquidated on the date of redemption).

         b. In the event that fewer than all the outstanding Series C Preferred
Stock are to be redeemed, except as otherwise provided by law, the number of
shares to be redeemed shall be determined by the Board and the shares to be
redeemed shall be determined by lot or pro rata as may be determined by the
Board or by any other method as may be determined by the Board in its sole
discretion to be equitable.

         c. In the event the corporation shall redeem shares of Series C
Preferred Stock, notice of such redemption shall be given by first class mail,
postage prepaid, mailed not less than 30 nor more than 60 days prior to the
redemption date, to each holder of record of the shares to be redeemed, at such
holder's address as the same appears on the stock register of the Corporation.
Each such notice shall state: (i) the redemption date; (ii) the number of shares
of Series C Preferred Stock to be redeemed and, if fewer than all the shares
held by such holder are to be redeemed, the number of such shares to be redeemed
from such holder; (iii) the redemption price; and (iv) the place or places where
certificates for such shares are to be surrendered for payment of the redemption
price.

         d. Notice having been mailed as aforesaid, from and after the
redemption date (unless default shall be made by the corporation in providing
money for the payment of the redemption price), the redeemed shares of Series C
Preferred Stock shall no longer be deemed to be outstanding, and all rights of
the holders thereof as stockholders of the corporation (except the right to
receive from the corporation the redemption price) shall cease. Upon surrender
in accordance with said notice of the certificates for any shares so redeemed
(properly endorsed or assigned for transfer, if the Board shall so require and
the notice shall so state), such shares shall be redeemed by the corporation at
the redemption price aforesaid. In case fewer than all the shares represented by
any such certificate are redeemed, a new certificate shall be issued
representing the unredeemed shares without cost to the holder thereof.

         e. Any shares of Series C Preferred Stock which shall at any time have
been redeemed shall, after such redemption, have the status of authorized but
unissued shares of preferred stock, without designation as to series until such
shares are once more designated as part of a particular series by the Board.

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