<PAGE>
 
                     RESTATED CERTIFICATE OF INCORPORATION

                                      OF

                         PHYSICIANS QUALITY CARE, INC.


     Physicians Quality Care, Inc., a corporation organized and existing under
the General Corporation Law of the State of Delaware, hereby certifies as
follows:

     1.   The name of this corporation is Physicians Quality Care, Inc.  This
corporation's original name was Physicians Quality Care Network, Inc.  The date
of filing of the corporation's original Certificate of Incorporation in the
Office of the Secretary of State of the State of Delaware was March 20, 1995.  A
Certificate of Amendment to the Certificate of Incorporation was filed with the
Office of the Secretary of State of the State of Delaware On each of April 27,
1995 and on June 21, 1995 and Amended and Restated Certificates of Incorporation
were filed therewith on June 30, 1995, August 30, 1996 and June 23 , 1997.

     2.   This Restated Certificate of Incorporation restates and integrates and
further amends the provisions of the Corporation's Amended and Restated
Certificate of Incorporation, which amendments have been approved by the
stockholders of the Corporation by written consent dated as of July 2, 1998.
This Restated Certificate of Incorporation has been adopted by the Board of
Directors and the stockholders of the Corporation in accordance with Sections
228, 245(b) and 242 of the General Corporation Law of the State of Delaware, and
written notice of consent has been given to all stockholders who have not
consented in writing to this Restated Certificate of Incorporation.

     3.   The text of this Restated Certificate of Incorporation is as follows:

     FIRST:     The name of the Corporation is Physicians Quality Care, Inc.
(the "Corporation").

     SECOND:    The address of the Corporation's registered office in the State
of Delaware is Corporation Trust Center, 1209 Orange Street in the City of
Wilmington, County of New Castle.  The name of the registered agent of the
Corporation at such address is The Corporation Trust Company.

     THIRD:     The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.

     FOURTH:    Capital Stock.
<PAGE>
 
     3.1  Authorized Shares.  The total number of shares of capital stock that
the Corporation has authority to issue is one hundred eighty-six million, one
hundred sixty-eight thousand, eight hundred forty-seven (186,168,847) shares,
consisting of:

                (1) one hundred thirty-five million (135,000,000) shares of
          Class A Common Stock, par value $0.01 per share ("Class A Common
          Stock");

                (2) six million, seven hundred twenty-seven thousand, forty-
          three (6,727,043) shares of Class B-1 Common Stock, par value $0.01
          per share ("Class B-1 Common Stock");

                (3) four million, two hundred eighty-seven thousand, nine
          hundred fifty-seven (4,287,957) shares of Class B-2 Common Stock, par
          value $0.01 per share ("Class B-2 Common Stock");

                (4) twenty-seven million, six hundred ninety-two thousand, three
          hundred nine (27,692,309) shares of Class C Common Stock, par value
          $0.01 per share ("Class C Common Stock");

                (5) two million, four hundred sixty-one thousand, five hundred
          thirty-eight (2,461,538) shares of Class L Common Stock, par value
          $0.01 per share ("Class L Common Stock"); and

                (6) ten million (10,000,000) shares of Preferred Stock, par
          value $0.01 per share ("Preferred Stock").

     The Class B-1 Common Stock and the Class B-2 Common Stock are referred to
collectively as the "Class B Common Stock"; the Class L Common Stock, Class C
Common Stock, the Class B Common Stock and the Class A Common Stock are referred
to collectively as the "Common Stock"; and each class shall be referred to as a
class of Common Stock.  As of August 30, 1996, each share of every class and
series of capital stock of the Corporation authorized immediately prior to
August 30, 1996 was automatically converted into one share of Class A Common
Stock of the Corporation.

     The Board of Directors of this Corporation may, at any time, and subject to
the provisions in Section 4.5 below, without any vote of the holders of this
Corporation's capital stock, issue all or any part of the unissued capital stock
of this Corporation from time to time authorized under this Restated Certificate
of Incorporation and may determine, subject to any requirements of law, the
consideration for which stock is to be issued and the manner of allocating such
consideration between capital and surplus.

                                      -2-
<PAGE>
 
     The powers, designations, voting rights, preferences and relative,
participating, optional or other rights, and the qualifications, limitations and
restrictions of each class and series of the Corporation's stock are as follows:

     3.2  Definitions.  As used in this Article Fourth, the following terms have
the following definitions:

          3.2.1  "Affiliate" shall mean, with respect to any Person, any other
     Person directly or indirectly controlling, controlled by or under common
     control with such Person, including effective control by virtue of a
     contractual relationship such as a management agreement or stockholder
     transfer or designation or similar agreement other than a management or
     similar agreement which does not, alone or together with related
     agreements, result in the control of such Person.  Notwithstanding the
     foregoing and for purposes of the definitions of Restricted Action and
     Class B and C Director Action, no Investor shall be deemed to be an
     Affiliate of the Corporation and no Person who is an Affiliate of an
     Investor for reasons unrelated to the Corporation or its Subsidiaries shall
     be deemed to be an Affiliate of the Corporation.

          3.2.2  "Applicable Price per Share" shall mean, (a) upon a Public
     Offering, the Public Offering Price, (b) at the time of any Realization
     Event, a fraction, the numerator of which is the excess, if any, of (i) the
     aggregate value of all Common Stock of the Corporation over (ii) the
     aggregate Remaining Class L Minimum Payment Amount with respect to all
     shares of Class L Common Stock outstanding and the denominator of which is
     the aggregate number of shares of Common Stock, (c) at any other time after
     the Public Offering Time, the Public Trading Price, and (d) in connection
     with any optional conversion of Class L Common Stock pursuant to 4.7.2(b),
     the Public Trading Price, if at such time the Class A Common Stock is
     listed on a national securities exchange or traded in the Nasdaq Stock
     Market, and, if the Class A Common Stock is not so listed or traded, the
     greater of $3.25 per share and the fair market value of each share of Class
     A Common Stock as determined in good faith by the Board of Directors of the
     Corporation.

          3.2.3  "Bain Capital Investor" shall mean Bain Capital Fund V, L.P.,
     Bain Capital Fund V-B, L.P., BCIP Associates, BCIP Trust Associates, L.P.
     and their Affiliates

          3.2.4  "Board of Directors " shall mean the Board of Directors of the
     Corporation.

          3.2.5  "Capital Investors" shall mean ABS Capital Partners II, L.P.
     and its Affiliates and certain individuals associated with ABS Capital
     Partners II, L.P.

                                      -3-
<PAGE>
 
          3.2.6  "Cause" shall mean with respect to any Person (i) any act of
     fraud, embezzlement or other material dishonesty, (ii) conviction of, or
     plea of nolo contendere to, any felony or any other crime involving fraud,
     dishonesty or moral turpitude, or (iii) conduct that causes criminal or
     material civil liabilities to the Corporation, its Subsidiaries or any of
     their Affiliates.

          3.2.7  "Class B Conversion Factor" shall mean, at any time as of which
     it is to be determined, one (1), adjusted as provided in Article 4.6 below.

          3.2.8  "Class B and C Director Action" shall mean any authorization,
     approval, ratification, consent, commitment, agreement, or other action
     (whether contingent or otherwise) in respect of or relating to the
     Corporation or any Subsidiary or Affiliate thereof with respect to or
     relating to:

                (1) the issuance, reclassification, exchange, redemption,
          retirement, purchase or acquisition of, rights to subscribe for,
          securities exchangeable for or convertible into or any agreement
          providing for the issuance (contingent or otherwise) of, or any call,
          commitment or claim relating to, capital stock of the Corporation or
          any Subsidiary or Affiliate thereof or stock appreciation, phantom
          stock, profit participation or similar rights with respect to the
          Corporation or any Subsidiary or Affiliate thereof;

                (2) dividends or distributions on or in respect of capital stock
          of the Corporation or any Subsidiary or Affiliate thereof (including
          stock dividends or other assets, property or securities), return of
          any capital to such entity's stockholders as such, recapitalization,
          or stock split;

                (3) incurrence of Indebtedness of the Corporation or any
          Subsidiary or incurrence of material Indebtedness by an Affiliate
          thereof;

                (4) merger, consolidation, amalgamation, liquidation, winding
          up, dissolution, or sale, transfer, or other action otherwise
          disposing of or voluntarily parting with the control of (whether in
          one transaction or a series of transactions) all or substantially all
          of the property, business or assets of the Corporation or any
          Subsidiary or Affiliate thereof (other than such merger, consolidation
          or other action pursuant to which the stockholders of this Corporation
          or any Subsidiary thereof constitute the stockholders of any surviving
          corporation directly or indirectly or otherwise retain the same
          control after such transaction whether by voting or otherwise, over
          such entity that such stockholders had prior to such transaction);

                (5) any Public Offering or Public Event;

                                      -4-
<PAGE>
 
                  (6) the material amendment or modification of any material
          management agreement between the Corporation, its Subsidiaries and any
          Affiliate thereof or material physician affiliation agreement or the
          substitution or replacement of any nominee stockholder under any
          stockholder designation or similar agreement; and

                  (7) the employment, termination and compensation (including
          benefits) of the Chief Executive Officer of the Corporation.

     In no event shall any such action in respect of a transaction involving the
provision of capital by or sale to any of the Investors or any Affiliate thereof
under paragraphs (a)-(e) constitute a Class B and C Director Action.  All Class
B and C Director Actions shall be taken in compliance with Section 2.8 of the
Corporation's bylaws.

          3.2.9   "Class B and C Director Control Event" shall mean:

                  (1) the earlier of (x) the failure of the Corporation to meet
          75% of the Corporation's Business Plan for any two consecutive fiscal
          quarters or (y) the failure of the Corporation to meet 50% of the
          Corporation's Business Plan for any one fiscal quarter, such Business
          Plan to be approved by a majority of the Board, which majority shall
          include a majority of all of the Class B and Class C Directors, voting
          together as a single class;

                  (2) Jerilyn Asher is no longer employed on a full-time basis
          as Chief Executive Officer by the Corporation for any reason other
          than her employment having been terminated without Cause; or

                  (3) the Corporation has not received the prior written consent
          of the Investors in respect of any Restricted Action as set forth in
          the Class L Common Stock Purchase Agreement among the Corporation and
          the parties named therein.

          3.2.10  "Class C Conversion Factor" shall mean at any time as of which
     it is to be determined as provided in Article 4.7.2(b) below.

          3.2.11  "Class L Base Amount" shall mean $3.25.

          3.2.12  "Class L Conversion Constant" shall mean, at any time as of
     which it is to be determined, one (1), adjusted as provided in Article 4.6
     below.

          3.2.13  "Class L Conversion Factor" shall mean, at any time as of
     which it is to be determined, the sum of

                                      -5-
<PAGE>
 
          (1)     the Class L Conversion Constant

          plus

          (2)     the quotient obtained by dividing

                  (1) the Remaining Class L Minimum Payment Amount
          by

                  (3)  Applicable Price per share,

          plus

          (iii)   the Class L Adjustment

all determined at such time.

          3.2.14  "Class L Adjustment" shall mean an adjustment to the Class L
     Conversion Factor immediately prior to  the earlier to occur (but only upon
     the occurrence) of (x) a Realization Event and (y) a Public Offering.  In
     either such event, the Class L Conversion Factor shall be increased by a
     number equal to, (i) if the Public Offering Price or the amount distributed
     to the holders of Class L Common Stock in such liquidation (together with
     all prior distributions with respect to such Class L Common Stock) (the
     "Class L Value") is equal to or more than $6.75 per share, 0, (ii) if the
     Class L Value is equal to or less than $3.50 per share, 3.12, and (iii) if
     the Class L Value is less than $6.75 per share and equal to or greater than
     $3.50 per share, 0.0096 for each $0.01 that the Class L Value is less than
     $6.75.  The Class L Value  shall be adjusted to reflect any stock splits,
     stock dividends, combinations or similar recapitalizations.

          3.2.15  "Closing Date" shall mean the first date on which the
     Corporation issues any shares of Class B Common Stock.

          3.2.16  "Distributions" shall mean all distributions made by the
     Corporation to holders of Common Stock, whether by dividend or otherwise
     (including but not limited to any distributions made by the Corporation to
     holders of Common Stock in complete or partial liquidation of the
     Corporation or upon a sale of all or substantially all of the business or
     assets of the Corporation and its subsidiaries on consolidated basis);
     provided, however, that the following shall not be a Distribution: (a) any
     redemption or repurchase by the Corporation of any shares of Common Stock
     approved by the Class B and C Directors, voting together as a single class,
     (b)  any recapitalization or exchange of any shares of Common Stock, (c)
     any subdivision or increase in the number of (by stock split, stock
     dividend or otherwise), or any combination (other than a merger) in any
     manner of, 

                                      -6-
<PAGE>
 
     the outstanding shares of Common Stock, or (d) a merger, share exchange or
     consolidation after the consummation of which the stockholders of the
     Corporation immediately prior to such merger, share exchange or
     consolidation effectively have the power to elect a majority of the board
     of directors of the surviving corporation or its parent corporation.

          3.2.17  "Exchange Act" shall mean the Securities Exchange Act of 1934,
     as amended.

          3.2.18  "Goldman Investors" shall mean GS Capital Partners II, L.P.,
     Goldman, Sachs & Co., Verwaltungs GmbH, GS Capital Partners II Offshore,
     L.P., Bridge Street Fund 1997, L.P. and Stone Street Fund 1997, L.P. and
     their Affiliates.

          3.2.19  "Investors" shall mean the Bain Capital Investors, the Capital
     Investors and the Goldman Investors.

          3.2.20  "Indebtedness" shall mean all (i) indebtedness for borrowed
     money, (ii) obligations evidenced by notes, bonds, debentures or similar
     instruments, (iii) obligations for the deferred purchase price of assets or
     services (other than trade payables or accruals therefor incurred in the
     ordinary course of business), (iv) capitalized lease obligations, (v)
     letters of credit, and (vi) in the nature of guarantees of the obligations
     described in (i) through (v) above.

          3.2.21  "Person" shall mean any individual, partnership, corporation,
     association, trust, joint venture, unincorporated organization or other
     entity.

          3.2.22  "Public Event" shall mean any transaction or other event
     (including, without limitation, a merger with a public company) after or in
     connection with which shares of capital stock of the Corporation or any of
     its Subsidiaries or any successor are registered under the Securities Act
     and listed on a "national securities exchange" as defined in the Exchange
     Act or the subject of a price quotation through the National Association of
     Securities Dealers' Automated Quotation System.

          3.2.23  "Public Offering Price" shall mean the price per share
     received by the Corporation in connection with an underwritten sale of
     shares of Class A Common Stock to the public at the Public Offering Time
     net of any expenses incurred and any underwriting commissions and
     concessions paid or allowed by the Corporation in connection therewith.

          3.2.24  "Public Offering Time" shall mean the time of the initial sale
     of shares of Class A Common Stock of the Corporation pursuant to an initial
     underwritten Public 

                                      -7-
<PAGE>
 
     Offering of such shares registered with the Securities and Exchange
     Commission and immediately prior to any transfer of beneficial ownership of
     such shares in such offering.

          3.2.25  "Public Offering" shall mean the closing of an underwritten
     public offering of the Corporation's capital stock registered under the
     Securities Act.

          3.2.26  "Public Trading Price" shall mean, as of any date of
     determination, (a) the average closing price, for the ten most recent
     trading days, of the Class A Common Stock, regular way, on a national
     securities exchange as officially reported on the national securities
     exchange on which Class A Common Stock is then listed or admitted to
     trading, or (b) if Class A Common Stock is not so listed or admitted to
     trading on a national securities exchange, but is traded in the Nasdaq
     Stock Market, the average closing price, for the ten most recent trading
     days, of the Class A Common Stock or (c) if the Class A Common Stock is not
     so traded on the Nasdaq Stock Market, the average closing bid price, for
     the ten most recent trading days, of the Class A Common Stock as shown on a
     recognized quotation system selected by the Board of Directors in good
     faith.

          3.2.27  "Qualified Public Offering" shall mean the closing of a Public
     Offering with (i) the net proceeds of the sale of such Shares by the
     Corporation and any stockholder of the Corporation to equal or exceed
     $50,000,000 provided that (A) the Investors shall have sold or shall be
     permitted to sell fifty percent of the capital stock into which the Class B
     Common Stock, the Class C Common Stock and Class L Common Stock is
     convertible and (B) the net proceeds of the sale of such shares or the net
     proceeds of the sale of such shares which would be permitted to be sold in
     such offering by (1) the Capital Investors equal or exceed seventy-five
     percent of the total amount invested in capital stock of the Corporation by
     the Capital Investors up to $19,500,000, (2) the net proceeds of the sale
     thereof by the Bain Capital Investors shall equal or exceed seventy-five
     percent of the total amount invested in capital stock of the Corporation by
     the Bain Capital Investors up to $17,000,000 and (3) the Goldman Investors
     equal or exceed seventy-five percent of the total amount invested in
     capital stock of the Corporation by the Goldman Investors up to $16,500,000
     and (ii) subject to a firm commitment underwriting conducted by a
     nationally recognized underwriter acceptable to a majority of the Class B
     Directors and Class C Directors, voting together as a single class.

          3.2.28  "Realization Event" shall mean a merger in which the holders
     of Common Stock of the Corporation prior to the merger own less than a
     majority of the shares of common stock of the surviving corporation,
     consolidation, amalgamation, liquidation, winding-up, dissolution or sale,
     transfer or other action otherwise disposing of or voluntarily parting with
     control of (whether in one transaction or a series of transactions) all or
     substantially all of the business, property or assets of the Corporation.

                                      -8-
<PAGE>
 
          3.2.29  "Restricted Action" shall mean any of the following:

                (1) A merger, consolidation, amalgamation, liquidation, winding
          up, dissolution or sale, transfer or other action otherwise disposing
          of or voluntarily parting with the control of (whether in one
          transaction or a series of transactions) of all or substantially all
          of the property, business or assets of the Corporation, its
          Subsidiaries or any Affiliate thereof other than a merger or
          consolidation of a Subsidiary with the Corporation or any other
          Subsidiary of the Corporation provided that, in the case of any such
          merger or consolidation, the person formed by such merger or
          consolidation shall be a wholly-owned Subsidiary of the Corporation.

                (2) A sale, lease, transfer or other disposition of or grant or
          any option or other right to purchase, lease or otherwise acquire all
          or a material part of the assets of the Corporation, the Subsidiaries
          and any Affiliates on a consolidated basis (other than pursuant to an
          agreement in effect on the Closing Time); or

                (3) Any agreement, contract, commitment or understanding with
          any Person for the acquisition or affiliation entered into by the
          Corporation or, its Subsidiaries or any Affiliate thereof of any
          business or assets including, without limitation any management
          agreement, and the terms of any securities or other consideration to
          be issued in connection therein or acquired any business or assets
          other than acquisitions not in excess of $1,000,000 in any 12 month
          period.

                (4) Any dividends, distributions, repurchase, redemption,
          retirement, defeasance or similar transaction for capital stock or any
          warrants, rights or options to acquire such capital stock, now or
          hereafter outstanding, return any capital to its stockholders as such,
          make any distribution of assets, capital stock, warrants, rights,
          options, obligations or securities to its stockholders as such, or
          issue or sell any capital stock or any warrants, rights or options to
          acquire such capital stock, or permit the Corporation, its
          Subsidiaries or any Affiliate thereof to do any of the foregoing.

                (5) Any material change in the nature of its business of this
          Corporation, its Subsidiaries and Affiliates, taken as a whole on a
          consolidated basis as described in the principal business plan of the
          Corporation as carried on at the date hereof and reasonable extensions
          thereof.

                (6) Any amendment or restatement of organizational documents
          (including the Certificate of Incorporation) or Bylaws of this
          Corporation or its Subsidiaries.

                                      -9-
<PAGE>
 
                (7) Retain or dismiss the services of the Chief Operating
          Officer or the Chief Financial Officer of the Corporation;

                (8) Any transaction between (i) the Corporation or its
          Subsidiaries and any Affiliate thereof and (ii) an officer, director
          or bolder of more than 5% of the outstanding capital stock of the
          Corporation which is not on terms comparable to an arms-length
          transaction.

                (9) The commencement, management, defense, prosecution or
          settlement of any material action, suit, investigation or proceeding
          before any court or governmental department, commission, board, agency
          or instrumentality, domestic or foreign, affecting the Corporation,
          the Subsidiaries or any Affiliate thereof other than any such action,
          suit, or proceeding initiated and instituted by the holders of Class B
          Common Stock, Class C Common Stock or Class L Common Stock against the
          Corporation.

          3.2.30  "Remaining Class L Minimum Payment Amount" shall mean, with
     respect to any share of Class L Common Stock at any time the amount that
     would then be required to be distributed with respect to such share
     pursuant to Article 4.8 in order for no further Distributions to be payable
     with respect to such share pursuant to Article 4.8.

          3.2.31  "Subsidiary" shall mean any corporation with respect to which
     a specified Person (or a Subsidiary thereof) owns a majority of the common
     stock or has the power to vote or direct the voting of sufficient
     securities to elect a majority of the directors.


     3.3  Shares Identical.  Except as otherwise provided in this Article
Fourth, for purposes of this Article Fourth, all shares of Common Stock shall,
to the fullest extent permitted by applicable law, be identical in all respects
and shall entitle the holders thereof to the same rights, privileges and
preferences and shall be subject to the same qualifications, limitations and
restrictions.  Without limiting the foregoing, except as provided in this
Article Fourth, no distribution (whether in cash, securities or otherwise) shall
be made in respect of any class of Common Stock unless an equivalent
distribution is made with respect to each outstanding share of each class of
Common Stock.

     3.4  Stockholder Voting Rights.  Subject to the powers, preferences and
rights of any class of stock (or any series thereof) having any preference or
priority over, or rights superior to, the Common Stock that the Corporation may
hereafter become authorized to issue, to the fullest extent permitted by
applicable law, except as otherwise provided in this Article Fourth, the holders
of the Common Stock shall have and possess all powers and voting and other
rights pertaining to the stock of the Corporation.  Except as otherwise provided
in this Article Fourth or as otherwise required by applicable law, all holders
of Common Stock shall vote together as a 

                                      -10-
<PAGE>
 
single class. Notwithstanding anything in this Article Fourth to the contrary,
until each holder of Class L Common Stock obtains any requisite approval
(whether by direct approval or expiration or termination of any applicable
waiting periods) under the Hart-Scott-Rodino Antitrust Improvements Act, as
amended (the "HSR Act"), to acquire additional voting securities of the
Corporation, Class L Common Stock shall not be entitled to any voting rights.
Once the holders of Class L Common Stock who are required to obtain approval
under the HSR Act obtain such approval (or the applicable waiting period
terminates or expires), the Class L Common Stock shall automatically be entitled
to equal voting rights with all other shares of Common Stock.

     3.5  Directors.  The number of directors constituting the entire Board of
Directors (the "Number of Directors ") shall be thirteen.  The directors shall
be divided into classes, elected as follows:

                (1) Class A Directors.  The holders of record of outstanding
          shares of Class A Common Stock, voting separately as a single class,
          shall be entitled to elect two directors of the Corporation (such
          directors to be designated and referred to herein as the "Class A
          Directors");

                (2) Class B-1 Directors.  The holders of record of outstanding
          shares of Class B-1 Common Stock, voting separately as a single class,
          shall be entitled to elect one director of the Corporation (such
          director to be designated and referred to herein as the "Class B-1
          Director");

                (3) Class B-2 Directors.  The holders of record of outstanding
          shares of Class B-2 Common Stock, voting separately as a single class,
          shall be entitled to elect one director of the Corporation (such
          director to be designated and referred to herein as the "Class B-2
          Director," together with the Class B-1 Director, the "Class B
          Directors");

                (4) Class C Directors.  The holders of record of outstanding
          shares of Class C Common Stock, voting separately as a single class,
          shall be entitled to elect two directors of the Corporation (such
          directors to be designated and referred to herein as the "Class C
          Directors"); and

                (5) Common Stock Directors.  The holders of record of
          outstanding shares of Common Stock, voting together as a single class,
          shall be entitled to elect seven directors of the Corporation (such
          directors to be designated and referred to herein as the "Common Stock
          Directors").

          3.5.2 In the event that all of the Class B Common and/or all of the
     Class C Common have converted into Class A Common, the number of directors
     automatically 

                                      -11-
<PAGE>
 
     will be decreased by the total number of Class B Directors and/or Class C
     Directors, as the case may be.

          3.5.3 Except as otherwise provided in this Article Fourth, each Class
     A Director, Class B Director, Class C Director and Common Stock Director
     shall be entitled to one vote on all matters to be voted on by the
     directors. The directors shall vote together as a single class on all
     matters to which the Board of Directors shall be entitled to vote.

          3.5.4 Any vacancy in the Board of Directors shall be filled only by
     the vote of the holders of a majority of the outstanding shares of the
     class or classes of Common Stock which was entitled to elect the director
     whose office is vacant. The Board of Directors shall be deemed to be duly
     constituted notwithstanding one or more vacancies in its membership,
     whether because of the failure of any class of stockholders to elect the
     full number of directors to which such class is entitled or otherwise. Any
     such vacancy shall automatically reduce the Number of Directors pro tanto,
     until such time as the holders of the class of Common Stock which was
     entitled to elect the director whose office is vacant shall have exercised
     their right to elect a director to fill such vacancy, whereupon the Number
     of Directors shall be automatically increased pro tanto.

          3.5.5 No Class A Director, Class B Director, Class C Director or
     Common Stock Director may be removed without the consent of the holders of
     the class or classes of Common Stock entitled to elect such director.

          3.5.6 With respect to each Class B and C Director Action, each Class B
     Director and Class C Director shall be entitled to five votes.

          3.5.7 Upon the occurrence of any Class B and C Director Control Event
     and for so long as such Class B and C Director Control Event or any other
     Class B and C Director Control Event shall continue in effect, each Class B
     Director and Class C Director shall be entitled to five votes.

     3.6  Stock Splits and Stock Dividends.  The Corporation shall not in any
manner subdivide or increase (whether by stock split, stock dividend or other
similar manner) reclassify or combine in any manner (i) the outstanding shares
of Class A Common Stock unless a proportional adjustment is made to the Class B
Conversion Factor, the Class C Conversion Factor, the Class L Conversion
Constant and the Class L Adjustment or (ii) the outstanding shares of Class B
Common, Class C Common or Class L Common unless a proportional adjustment is
made to the other classes of Common Stock.

                                      -12-
<PAGE>
 
     3.7  Conversion Rights

          3.7.1 Mandatory Conversion

                (1) Class B Common Stock.  Upon the earlier to occur of (i) a
          Qualified Public Offering, and (ii) the date on which the number of
          outstanding shares of Class B Common Stock equals the lesser of (a)
          30% of the total number of shares of Class B Common Stock issued by
          the Corporation on or prior to such date and (b)(1) 1,200,000, in the
          event the number of shares of Class B Common Stock issued equals or
          exceeds 4,000,000 and is less than 8,000,000, and (2) 1,600,000, in
          the event the number of shares of Class B Common Stock issued equals
          or exceeds 8,000,000 and is less than 12,000,000, each outstanding
          share of Class B Common Stock shall automatically convert into the
          number of shares of Class A Common Stock determined by application of
          the Class B Conversion Factor.  From and after such conversion, such
          shares of Class B Common Stock shall be retired and shall not be
          reissued.

                (2) Class C Common Stock.  Upon the earlier to occur of (i) a
          Qualified Public Offering; and (ii) the date on which the total number
          of outstanding shares of Class C Common Stock is less than 30% of the
          total number of shares of Class C Common Stock issued by the
          Corporation on or prior to such date, each outstanding share of Class
          C Common Stock shall automatically convert into the number of shares
          of Class A Common Stock determined by application of the Class C
          Conversion Factor.   From and after such conversion, such shares of
          Class C Common Stock shall be retired and shall not be reissued.

                (3) Class L Common Stock. Upon the earlier to occur of (i) a
          Public Offering; (ii) upon a Realization Event; and (iii) the date on
          which the total number of outstanding shares of Class L Common Stock
          is less than 30% of the total number of shares of Class L Common Stock
          issued by the Corporation on or prior to such date and, in each such
          case, subject to the affirmative approval of the mandatory conversion
          thereof by the vote of two-thirds of the Class B and Class C
          Directors, voting as a single class, each outstanding share of Class L
          Common Stock shall automatically convert into the number of shares of
          Class A Common Stock equal to the Class L Conversion Factor; provided,
          however, that the conversion of shares of Class L Common Stock shall
          not occur, in the event that the holder thereof is required to obtain
          approval for such conversion under the HSR Act, until the later to
          occur of (x) the Public Offering, (y) the Realization Event and (z)
          the obtaining of such approval (or the applicable waiting periods
          expiring or terminating) under the HSR Act (in which case, the number
          of shares of Class A Common Stock issued shall be determined as if the
          conversion had not 

                                      -13-
<PAGE>
 
          been delayed by such HSR Act filing). From and after such conversion,
          such shares of Class L Common Stock shall be retired and shall not be
          reissued.

                (4) Other.  Upon conversion of all of the Class B Common Stock,
          the Class C Common Stock and the Class L Common Stock pursuant to this
          Section 4.7, (i) the holders of the Class A Common Stock shall be
          entitled to elect the entire Number of Directors consisting of the
          full Board of Directors and each such director shall have one vote on
          all matters to be voted on by the directors, (ii) the Restated
          Certificate of Incorporation shall automatically be amended to
          eliminate the corresponding provisions in Sections 4.2.8, 4.2.9,
          4.2.29, 4.5.4, 4.5.5, and 4.5.6 with respect to such class of Common
          Stock and (iii) upon the filing of a certificate in accordance with
          Section 243 of the General Corporation Law of the State of Delaware,
          the authorized shares of Class B Common Stock, Class C Common Stock
          and Class L Common Stock shall be eliminated.

          3.7.2 Optional Conversion

                (1) Class B Common Stock.  At the option of any holder of the
          shares of Class B Common Stock, exercisable at any time, in whole or
          in part, each outstanding share of Class B Common Stock held by such
          holder may be converted into the number of shares of Class A Common
          Stock as determined by application of the Class B Conversion Factor.
          From and after such optional conversion, such shares of Class B Common
          Stock shall be retired and shall not be reissued, and upon the
          conversion of all outstanding shares of Class B Common Stock and upon
          the filing of a certificate in accordance with Section 243 of the
          General Corporation Law of the State of Delaware, the authorized
          shares of Class B Common Stock shall be eliminated.

                (2) Class L Common Stock.  At the option of any holder of the
          shares of Class L Common Stock, exercisable at any time, in whole or
          in part, each outstanding share of Class L Common Stock held by such
          holder may be converted into the number of shares of Class A Common
          Stock equal to the Class L Conversion Factor.  From and after such
          optional conversion, such shares of Class L Common Stock shall be
          retired and shall not be reissued, and upon the conversion of all
          outstanding shares of Class L Common Stock and upon the filing of a
          certificate in accordance with Section 243 of the General Corporation
          Law of the State of Delaware, the authorized shares of Class L Common
          Stock shall be eliminated.

                (3) Class C Common Stock.  At the option of any holder of the
          shares of Class C Common Stock, exercisable at any time, in whole or
          in part, each outstanding share of Class C Common Stock held by such
          holder may be 

                                      -14-
<PAGE>
 
          converted into the number of shares of Class A Common Stock as
          determined by application of the Class C Conversion Factor. From and
          after such optional conversion, such shares of Class C Common Stock
          shall be retired and shall not be reissued, and upon the conversion of
          all outstanding shares of Class C Common Stock and upon the filing of
          a certificate in accordance with Section 243 of the General
          Corporation Law of the State of Delaware, the authorized shares of
          Class C Common Stock shall be eliminated.

          (1)  The conversion factor in effect at any time for the Class C
               Common Stock (the "Class C Conversion Factor") shall be the
               quotient obtained by dividing $3.25 by the Class C Conversion
               Value.

          (2)  The Class C Conversion Value shall be $3.25, as adjusted as
               provided below.

               (1)  Upon Sale of Common Stock.  If the Corporation shall, while
                    -------------------------                                  
                    there are any shares of Class C Common Stock outstanding,
                    issue or sell, or be deemed to issue and sell in accordance
                    with this Section 4.7.2(b)(ii), shares after the date hereof
                    of its Common Stock (other than Excluded Securities (as
                    defined below)) without consideration or at a price per
                    share less than the Class C Conversion Value in effect
                    immediately prior to such issuance or sale, then upon each
                    such issuance or sale such Class C Conversion Value, except
                    as provided in Section 4.7.2(b)(ii), shall be lowered so as
                    to be equal to an amount determined by multiplying the Class
                    C Conversion Value by a fraction: (1) the numerator of which
                    shall be (a) the number of shares of Common Stock
                    outstanding immediately prior to the issuance of such
                    additional shares of Common Stock, plus (b) the number of
                    shares of Common Stock which the net aggregate
                    consideration, if any, received by the Corporation for the
                    total number of such additional shares of Common Stock so
                    issued would purchase at the Class C Conversion Value in
                    effect immediately prior to such issuance, and (2) the
                    denominator of which shall be (a) the number of shares of
                    Common Stock outstanding immediately prior to the issuance
                    of such additional shares of Common Stock, plus (b) the
                    number of such additional shares of Common Stock so issued;
                    provided, however, that no adjustment shall be made pursuant
                    to this Clause A unless the consideration received by the
                    Corporation is less than $2.25 per share.

                                      -15-
<PAGE>
 
               (2)  Upon Issuance of Warrants.  Options and Rights to Purchase
                    ----------------------------------------------------------
                    Common Stock.
                    ------------ 

                    (1)  For the purpose of this Section 4.7.2(b)(ii), the
                         issuance of any warrants, options, subscriptions or
                         purchase rights with respect to shares of Common Stock
                         and the issuance of any securities convertible into or
                         exchangeable for shares of Common Stock (or the
                         issuance of any warrants, options or any rights with
                         respect to such convertible or exchangeable securities)
                         shall be deemed an issuance at such time of such Common
                         Stock if the Net Consideration Per Share (as
                         hereinafter determined) which may be received by the
                         Corporation for such Common Stock shall be less than
                         the Class C Conversion Value in effect at the time of
                         such issuance.  Any obligation, agreement or
                         undertaking to issue warrants, options, subscriptions
                         or purchase rights at any time in the future shall be
                         deemed to be an issuance at the time such obligation,
                         agreement or undertaking is made or arises.  No
                         adjustment of the Class C Conversion Value for the
                         Class C Common Stock shall be made under this Section
                         4.7.2(b)(ii) upon the issuance of any shares of Common
                         Stock which are issued pursuant to the exercise of any
                         warrants, options, subscriptions or purchase rights or
                         pursuant to the exercise of any conversion or exchange
                         rights in any convertible securities if any adjustment
                         shall previously have been made upon the issuance of
                         any such warrants, options or subscriptions or purchase
                         rights or upon the issuance of any such convertible
                         securities (or upon the issuance of any such warrants,
                         options or any rights therefor) as above.

                         Should the Net Consideration Per Share of any such
                         warrants, options, subscriptions or purchase rights or
                         convertible securities be decreased from time to time
                         then, upon the effectiveness of each such change, the
                         Class C Conversion Value shall be adjusted to such
                         Class C Conversion Value as would have obtained (1) had
                         the adjustments made upon the issuance of such
                         warrants, options, rights or convertible securities
                         been made upon the basis of the actual Net
                         Consideration Per Share of such securities, and (2) had
                         the adjustments made to the Class C Conversion Value
                         since the date of issuance of such 

                                      -16-
<PAGE>
 
                         securities been made to the Class C Conversion Value as
                         adjusted pursuant to (1) above. Any adjustment of the
                         Class C Conversion Value with respect to this paragraph
                         which relates to warrants, options, subscriptions or
                         purchase rights with respect to shares of Common Stock
                         shall be disregarded if, as, and when all of such
                         warrants, options, subscriptions or purchase rights
                         expire or are canceled without being exercised, so that
                         the Class C Conversion Value effective immediately upon
                         such cancellation or expiration shall be equal to the
                         Class C Conversion Value in effect at the time of the
                         issuance of the expired or canceled warrants, options,
                         subscriptions or purchase rights, with such additional
                         adjustments as would have been made to that Class C
                         Conversion Value had the expired or canceled warrants,
                         options, subscriptions or purchase rights not been
                         issued.

                    (2)  For purposes of this paragraph, the "Net Consideration
                         Per Share" which may be received by the Corporation
                         shall be determined as follows: the "Net Consideration
                         Per Share" shall mean the amount equal to the total
                         amount of consideration, if any, received by the
                         Corporation for the issuance of such warrants, options,
                         subscriptions or other purchase rights or convertible
                         or exchangeable securities, plus the minimum amount of
                         consideration, if any, payable to the Corporation upon
                         exercise or conversion thereof, divided by the
                         aggregate number of shares of Common Stock that would
                         be issued if all such warrants, options, subscriptions
                         or other purchase rights or convertible or exchangeable
                         securities were exercised, exchanged or converted and
                         shall be determined in each instance as of the date of
                         issuance of warrants, options, subscriptions or other
                         purchase rights or convertible or exchangeable
                         securities without giving effect to any possible future
                         upward price adjustments or rate adjustments which may
                         be applicable with respect to such warrants, options,
                         subscriptions or other purchase rights or convertible
                         or exchangeable securities.

               (3)  Stock Dividends.  In the event the Corporation shall make or
                    ---------------                                             
                    issue, or shall fix a record date for the determination of
                    holders of any stock of the Corporation other than Common
                    Stock entitled to 

                                      -17-
<PAGE>
 
                    receive a dividend or other distribution payable in Common
                    Stock or securities of the Corporation convertible into or
                    otherwise exchangeable for the Common Stock of the
                    Corporation, then such Common Stock or other securities
                    issued in payment of such dividend shall be deemed to have
                    been issued without consideration, except for (i) dividends
                    payable in shares of Common Stock payable to holders of
                    Class C Common Stock and to holders of any other class of
                    stock, whether or not paid to holders of any other class of
                    stock, (ii) dividends payable in shares of Class C Common
                    Stock; or (iii) dividends payable in Class L Common Stock to
                    the holders of Class L Common Stock so long as, in the case
                    of (i) and (ii) the holders of any shares of Class L Common
                    Stock shall receive such shares of Common Stock and the
                    shares of Class C Common Stock issued as such dividend and
                    payable with respect to the shares into which the Class C
                    Common are convertible.

               (4)  Consideration Other than Cash.  For purposes of this Section
                    -----------------------------                               
                    4.7.2(b)(ii), if a part or all of the consideration received
                    by the Corporation in connection with the issuance of shares
                    of the Common Stock or the issuance of any of the securities
                    described in this Section 4.7.2(b)(ii) consists of property
                    other than cash, such consideration shall be deemed to have
                    a fair market value as is reasonably determined in good
                    faith by the Class B and C Directors, voting together as a
                    single class.

               (5)  Exceptions.  This Section 4.7.2(b)(ii) shall not apply: (1)
                    ----------                                                 
                    to the issuance of shares of Common Stock, or options
                    exercisable therefor, (subject to equitable adjustment in
                    the event of any stock-split, combination, reclassification
                    or other similar event involving the Common Stock) issued
                    and issuable, to officers, employees and consultants of the
                    Corporation or any Affiliate of the Corporation pursuant to
                    any incentive stock option plan or stock purchase plan
                    approved (both as to such plan and as to any issuance of
                    stock or options thereunder) or any stock option approved by
                    the Board of Directors in accordance with the provisions of
                    this certificate; (2) under any of the circumstances under
                    Section 4.6; (3) to the issuance of shares of Common Stock
                    upon the exchange or exercise of or pursuant to any
                    adjustments provided by any warrants (A) outstanding as of
                    the date hereof or (B) sold to the Investors in connection
                    with the original issuance of shares of Class B Common
                    Stock, Class C Common Stock and/or 

                                      -18-
<PAGE>
 
                    Class L Common Stock or (4) to the issuance of shares of
                    Class A Common Stock upon the conversion of any shares of
                    Class B Common Stock, Class C Common Stock or Class L Common
                    Stock. The shares issued pursuant to (1) through (4) hereof
                    are collectively referred to herein as the "Excluded
                    Securities."

          3.7.6  Reclassification.  If the Common Stock issuable upon the
     conversion of the Class B Common Stock, Class C Common Stock or Class L
     Common Stock shall be changed into the same or different number of shares
     of any class or classes of stock, whether by reclassification or otherwise
     (other than a subdivision or combination of shares or stock dividend or a
     reorganization, merger or sale of assets provided for elsewhere in this
     Section 4.7, or Section 4.8.6 (to the extent that such transaction is
     treated as a liquidation, dissolution or winding up) or the sale of all or
     substantially all of the Corporation's properties and assets to any other
     person), then and in each such event the holder of each share of Class B
     Common Stock, Class C Common Stock or Class L Common Stock shall have the
     right thereafter to convert such shares into the kind and amount of shares
     of stock and other securities and property receivable upon such
     reclassification or other change by holders of the number of shares of
     Class A Common Stock into which such shares of Class B Common Stock, Class
     C Common Stock or Class L Common Stock might have been converted
     immediately prior to such reclassification or change, all subject to
     further adjustment as provided herein.

          3.7.4  Accountant's Certificate as to Adjustments; Notice by
     Corporation. In each case of an adjustment or readjustment of the Class C
     Conversion Value or upon any calculation of the Class L Conversion Factor,
     the Corporation at its expense will furnish each holder of Class C Common
     Stock or Class L Common Stock, as the case may be, with a certificate,
     prepared by independent public accountants of recognized standing, showing
     such adjustment, readjustment or calculation and stating in detail the
     facts upon which such adjustment, readjustment or calculation is based.

          3.7.5  Cash in Lieu of Fractional Shares.  No fractional shares of
     Common Stock or scrip representing fractional shares shall be issued upon
     the conversion of shares of Class B Common Stock, Class C Common Stock or
     Class L Common Stock.  Instead of any fractional share of Common Stock
     which would otherwise be issuable upon conversion of Class B Common Stock,
     Class C Common Stock or Class L Common Stock, the Corporation shall pay to
     the holder of the shares of Class B Common Stock, Class C Common Stock or
     Class L Common Stock, which were converted, a cash adjustment in respect to
     such fractional shares in an amount equal to the same fraction of the
     market price per share of Common Stock (as determined in a reasonable
     manner prescribed by the Board of Directors), but not less than the
     applicable conversion factor, at the close of business on the conversion
     date.  The determination as to whether or not any fractional shares are
     issuable shall be based upon the total number of shares of Class 

                                      -19-
<PAGE>
 
     B Common Stock, Class C Common Stock or Class L Common Stock being
     converted at any one time by any holder thereof, not upon each share of
     Class B Common Stock, Class C Common Stock or Class L Common Stock being
     converted.

          3.7.6  Reservation of Common Stock; Definitions.  The Corporation
     shall at all times reserve and keep available out of its authorized but
     unissued shares of Class A Common Stock, solely for the purpose of
     effecting the conversion of the shares of Class B Common Stock, Class C
     Common Stock or Class L Common Stock, such number of its shares of Class A
     Common Stock as shall from time to time be sufficient to effect the
     conversion of all outstanding shares of Class B Common Stock, Class C
     Common Stock and Class L Common Stock, and if at any time the number of
     authorized but unissued shares of Class A Common Stock shall not be
     sufficient to effect the conversion of all then outstanding shares of Class
     B Common Stock, Class C Common Stock and Class L Common Stock, the
     Corporation shall take such corporate action as may be necessary to
     increase its authorized but unissued shares of Class A Common Stock to such
     number of shares as shall be sufficient for the purpose.

          3.7.7  Validity of Shares.  The Corporation agrees that it will from
     time to time take all such actions as may be requisite to assure that all
     shares of Common Stock which may be issued upon conversion of any share of
     the Class B Common Stock, Class C Common Stock and Class L Common Stock
     will, upon issuance, be legally and validly issued, fully paid and non-
     assessable and free from all taxes, liens and charges with respect to the
     issue thereof; and, without limiting the generality of the foregoing, the
     Corporation agrees that it will from time to time take all such action as
     may be requisite to assure that the par value per share, if any, of the
     Class A Common Stock is at all times equal to or less than the amount paid
     per share for the Class B Common Stock, Class C Common Stock and Class L
     Common Stock divided by the number of shares of Class A Common Stock into
     which each share of Class B Common Stock, Class C Common Stock and Class L
     Common Stock can, from time to time, be converted.

          3.7.8  Effect of Conversion.  Upon conversion of any share of Class B
     Common Stock, Class C Common Stock or Class L Common Stock, the holder
     shall surrender the certificate evidencing such share to the Corporation at
     its principal place of business.  Promptly after receipt of such
     certificate, the Corporation shall issue and send to such holder a new
     certificate, registered in the name of such holder, evidencing the number
     of shares of Class A Common Stock into which such share has been converted.
     From and after the time of conversion of any share of Class B Common Stock,
     Class C Common Stock or Class L Common Stock, the rights of the holder
     thereof as such shall cease; the certificate formerly evidencing such share
     shall, until surrendered and reissued as provided above, evidence the
     applicable number of shares of Class B Common Stock, Class C Common Stock
     or Class L Common Stock; and such holder shall be deemed to 

                                      -20-
<PAGE>
 
     have become the holder of record of the same number of shares of the Class
     A Common Stock.

     3.8  Distributions.  All Distributions (including on a liquidation,
dissolution or winding-up of the Corporation) shall be made to the holders of
Common Stock in the following order or priority:

          3.8.1  First, the holders of the shares of Class L Common Stock (other
     than shares concurrently being converted into Class A Common Stock), as a
     single and separate class, shall be entitled to receive all Distributions
     until there has been paid with respect to each such share from amounts then
     and previously distributed pursuant to this Article 4.8.1 an amount equal
     to the Class L Base Amount plus an amount sufficient to generate an
     internal rate of return thereon equal to twelve percent (12%) per annum,
     compounded annually.  Such internal rate of return shall be calculated in
     accordance with accepted financial practices, treating the Class L Base
     Amount of each share as having been paid for such share on the date on
     which such share shall have been originally issued by the Corporation and
     each Distribution with respect to the Class L Common Stock as having been
     made on the date it is actually paid by the Corporation.

          3.8.2  Second, if the Distribution is a distribution in liquidation,
     dissolution or winding up of the Corporation and the holders of Class L
     Common Stock have received the distribution provided for in Section 4.8.1,
     the holders of the Class C Common Stock and Class B Common Stock shall be
     entitled to receive prior and in preference to any distribution of any of
     the assets of the Corporation to the holders of Class A Common Stock by
     reason of their ownership of such stock, an amount equal to the sum of (i)
     the greater of (x) $3.25 per share of Class C Common Stock or $2.50 per
     share of Class B Common Stock (which amount, in each case, shall be subject
     to equitable adjustment whenever there shall occur a stock split,
     combination, reclassification or other similar event involving the Class C
     Common Stock) and (y) such amount per share of Class C Common Stock and
     Class B Common Stock which would be payable in such liquidation,
     dissolution or winding up if all outstanding shares of Class C Common Stock
     and Class B Common Stock were converted into Class A Common plus (ii) an
     amount equal to all declared but unpaid dividends thereon, whether or not
     earned, to and including the date full payment shall be tendered to the
     holders of Class C Common Stock and Class B Common Stock with respect to
     such liquidation, dissolution or winding up.  If the assets of the
     Corporation available for distribution shall be insufficient to permit the
     payment in full to such holders of the Class C Common Stock and Class B
     Common Stock of the full aforesaid preferential amount, then the entire
     assets of the Corporation legally available for distribution shall be
     distributed among the holders of the Class C Common Stock and Class B
     Common Stock in the same ratio as the aggregate liquidation preference of
     the outstanding shares of Class C Common Stock and bears to the aggregate
     liquidation preference of the outstanding shares of Class B Common Stock
     held by each of them.

                                      -21-
<PAGE>
 
          3.8.3  Third, if the Distribution is a distribution in liquidation,
     dissolution or winding up of the Corporation, after payment has been made
     to the holders of the Class L Common Stock, Class C Common Stock and Class
     B Common Stock of the full amounts to which they shall be entitled as
     aforesaid pursuant to Sections 4.8.1 and 4.8.2, the holders of the Common
     Stock (including the Class L Common Stock but excluding the Class B Common
     Stock and Class C Common Stock) shall be entitled to share ratably in the
     remaining assets, based on the number of shares of Common Stock held by
     them; provided that for purposes of this Section 4.8.3, each share of Class
     L Common Stock shall be deemed to have been converted into the number of
     shares of Class A Common Stock equal to the Class L Conversion Factor.

          3.8.4  Fourth, if the Distribution is not a distribution in
     liquidation, dissolution or winding up of the Corporation after the full
     required amount of Distributions have been made pursuant to Article 4.8.1
     above, all holders of the shares of Common Stock, as a single class, shall
     thereafter be entitled to receive all remaining Distributions pro rata
     based on the number of outstanding shares of Common Stock; provided that
     for purposes of this Section 4.8.4, each share of Class L Common Stock
     shall be deemed to have been converted into a number of shares of Class A
     Common Stock equal to the Class L Conversion Factor.

          3.8.5  All Distributions pursuant to Articles 4.8.1, 4.8.2, 4.8.3 and
     4.8.4 shall be made ratably among the holders of the class or classes of
     Common Stock in question, based on the number of shares of such class held
     by such holders.

          3.8.6  A reorganization of the Common Stock, or a consolidation or
     merger of the Corporation with or into any other corporation or
     corporations in which the stockholders of the Corporation immediately after
     the consolidation or merger do not own more than fifty percent (50%) of the
     outstanding voting power (assuming conversion of all convertible securities
     and the exercise of all outstanding options and warrants) of the surviving
     corporation, or a sale of all or substantially all of the assets of the
     Corporation shall be regarded as a liquidation, dissolution or winding up
     of the affairs of the Corporation within the meaning of Section 4.8, unless
     the holders of a majority of the then outstanding shares of Class B Common
     Stock, Class C Common Stock and Class L Common Stock, voting together as a
     separate class, elect not to treat any of the foregoing events as a
     liquidation, dissolution or winding up by giving written notice thereof to
     the Corporation, at least five (5) business days prior to such event.

     3.9  Prohibition on Distributions Constituting Taxable Events.
Notwithstanding anything to the contrary in this Article 4, the Corporation
shall not, without the written approval of the holders of more than sixty
percent of the shares of Class L Common Stock or, if there is no Class L Common
Stock then outstanding, the holders of a majority of the Class L Common 

                                      -22-
<PAGE>
 
Stock at the time such Common Stock was converted into Class A Common Stock, pay
any dividend or make any other distribution on any share of capital stock, or
take any other action, so long as any share of Class L Common Stock is
outstanding and for three years thereafter, if the effect of such dividend,
distribution or action might be to make (a) an increase of the Remaining Class L
Minimum Payment Amount, (b) a conversion of the Class L Common Stock into Class
A Common Stock or (c) an adjustment of the Class L Conversion Factor a taxable
event to the holders of the Class L Common Stock. No amendment to the provisions
of this Article 4.9 shall be effective without the prior written consent of the
holders of more than sixty percent of the then outstanding shares of Class L
Common Stock or, if there in no Class L Common Stock then outstanding, the
holders of more than sixty percent of the Class L Common Stock at the time such
Common Stock was converted into Class A Common Stock.

     3.10 Preferred Stock.  Preferred Stock may be issued from time to time in
one or more series, each of such series to have such terms as stated or
expressed herein and in the resolution or resolutions providing for the issue of
such series adopted by the Board of Directors of the Corporation as hereinafter
provided subject to the approval of the Class B and C Directors, voting together
as a single class, and compliance with Section 4.9 of this Article Fourth.  Any
shares of Preferred Stock which may be redeemed, purchased or acquired by the
Corporation may be reissued except as otherwise provided by law.  Different
series of Preferred Stock shall not be construed to constitute different classes
of shares for the purposes of voting by classes unless expressly provided.

     Authority is hereby expressly granted to the Board of Directors, subject to
the approval of the Class B and C Directors, voting together as a single class,
and compliance with Section 4.9 of this Article Fourth, from time to time to
issue the Preferred Stock in one or more series, and in connection with the
creation of any such series, by resolution or resolutions providing for the
issue of the shares thereof, to determine and fix such voting powers, full or
limited, or no voting powers, and such designations, preferences and relative
participating, optional or other special rights, and qualifications, limitations
or restrictions thereof, including without limitation thereof, dividend rights,
conversion rights, redemption privileges and liquidation preferences, as shall
be stated and expressed in such resolutions, all to the full extent now or
hereafter permitted by the General Corporation Law of Delaware.  Without
limiting the generality of the foregoing, the resolutions providing for issuance
of any series of Preferred Stock may provide that such series shall be superior
or rank equally or be junior to the Preferred Stock of any other series to the
extent permitted by law.  Except as otherwise provided in this Certificate of
Incorporation, no vote of the holders of the Preferred Stock or Common Stock
shall be a prerequisite to the designation or issuance of any shares of any
series of the Preferred Stock authorized by and complying with the conditions of
this Certificate of Incorporation, the right to have such vote being expressly
waived by all present and future holders of the capital stock of the
Corporation.

     3.11 Replacement. Upon receipt of an affidavit of the registered owner of
one or more shares of any class of Common Stock (or such other evidence as may
be reasonably satisfactory 

                                      -23-
<PAGE>
 
to the Corporation) with respect to the ownership and the loss, theft,
destruction or mutilation of any certificate evidencing such shares of Common
Stock, and in the case of any such loss, theft or destruction, upon receipt of
indemnity reasonably satisfactory to the Corporation (it being understood that
if the holder is an Investor, or any other holder of shares of Common Stock of
the Corporation which is an entity regularly engaged in the business of
investing in companies and meets such requirements of creditworthiness as may
reasonably be imposed by the Corporation in connection with the provisions of
this paragraph, its own agreement will be satisfactory), or, in the case of any
such mutilation upon surrender of such certificate, the Corporation shall
execute and deliver in lieu of such certificate a new certificate of like kind
representing the number of shares of such class represented by such lost,
stolen, destroyed or mutilated certificate and dated the date of such lost,
stolen, destroyed or mutilated certificate.

     3.12  Amendment; Waiver.  No amendment or waiver of any provision of this
Article Fourth shall be effective without the prior written consent of the
holders of more than sixty percent of the then outstanding shares of the Class B
Common Stock, Class C Common Stock and Class L Common Stock, voting as a single
class, and no amendment or waiver of any provision of this Article Fourth which
adversely affects the holders of Class A Common Stock or increases the rights of
the Class B Common Stock, Class C Common Stock and Class L Common Stock shall be
effective without the prior written consent of the holders of a majority of the
then outstanding shares of the Class A Common Stock voting as a single class;
provided, however, that as stipulated in Section 242(b)(2) of the Delaware
General Corporation Law no amendment to any class of Common Stock that alters or
changes the powers, preferences or special rights of such class of Common Stock
so as to affect them adversely shall be effective without the prior consent of
the holders of more than sixty percent of the then outstanding shares of such
class of Common Stock.

     FIFTH:     Except to the extent that the General Corporation Law of
Delaware prohibits the elimination or limitation of liability of directors for
breaches of fiduciary duty, no director of the Corporation shall be personally
liable to the Corporation or its stockholders for monetary damages for any
breach of fiduciary duty as a director, notwithstanding any provision of law
imposing such liability.  No amendment to or repeal of this provision shall
apply to or have any effect on the liability or alleged liability of any
director of the Corporation for or with respect to any acts or omissions of such
director occurring prior to such amendment.

     SIXTH:

     3.13  Actions, Suits and Proceedings Other than by or in the Right of the
           -------------------------------------------------------------------
Corporation.  The Corporation shall indemnify each person who was or is a party
-----------                                                                    
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Corporation), by
reason of the fact that such person is or was, or is or was serving, or has
agreed to serve, at the request of the Corporation, as a director, officer or
trustee of, or in a similar capacity with, 

                                      -24-
<PAGE>
 
another corporation, partnership, joint venture, trust or other enterprise
(including any employee benefit plan) (all such persons being referred to
hereafter as an "Indemnitee"), or by reason of any action alleged to have been
taken or omitted in such capacity, against all expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person or on such person's behalf in connection with such
action, suit or proceeding and any appeal therefrom, if such person acted in
good faith and in a manner such person reasonably believed to be in, or not
opposed to, the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe such person's
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction or upon a plea of nolo contendere or its
                                                          ---- ----------
equivalent, shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which such person reasonably believed to be
in, or not opposed to, the best interests of the Corporation, and, with respect
to any criminal action or proceeding, had reasonable cause to believe that such
person's conduct was unlawful. Notwithstanding anything to the contrary in this
Article, except as set forth in Section 6.7 below, the Corporation shall not
indemnify an Indemnitee seeking indemnification in connection with a proceeding
(or part thereof) initiated by the Indemnitee unless the initiation thereof was
approved by the Board of Directors of the Corporation. Notwithstanding anything
to the contrary in this Article, the Corporation shall not indemnify an
Indemnitee to the extent such Indemnitee is reimbursed from the proceeds of
insurance, and in the event the Corporation makes any indemnification payments
to an Indemnitee and such Indemnitee is subsequently reimbursed from the
proceeds of insurance, such Indemnitee shall promptly refund such
indemnification payments to the Corporation to the extent of such insurance
reimbursement.

     3.14 Actions or Suits by or in the Right of the Corporation.  The
          ------------------------------------------------------      
Corporation shall indemnify any Indemnitee who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the Corporation to procure a judgment in its favor by
reason of the fact that such person is or was, or has agreed to become, a
director or officer of the Corporation, or is or was serving, or has agreed to
serve, at the request of the Corporation, as a director, officer or trustee of,
or in a similar capacity with, another corporation, partnership, joint venture,
trust or other enterprise (including any employee benefit plan), or by reason of
any action alleged to have been taken or omitted in such capacity, against all
expenses (including attorneys' fees) and, to the extent permitted by law,
amounts paid in settlement actually and reasonably incurred by such person or on
such person's behalf in connection with such action, suit or proceeding and any
appeal therefrom, if such person acted in good faith and in a manner reasonably
believed to be in, or not opposed to, the best interests of the Corporation,
except that no indemnification shall be made in respect of any claim, issue or
matter as to which such person shall have been adjudged to be liable to the
Corporation unless and only to the extent that the Court of Chancery of Delaware
shall determine upon application that, despite the adjudication of such
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses (including
attorneys' fees) which the Court of Chancery of Delaware shall deem proper.

                                      -25-
<PAGE>
 
     3.15 Indemnification for Expenses of Successful Party.  Notwithstanding the
          ------------------------------------------------                      
other provisions of this Article, to the extent that an Indemnitee has been
successful, on the merits or otherwise, in defense of any action, suit or
proceeding referred to in Sections 6.1 and 6.2 of this Article, or in defense of
any claim, issue or matter therein, or on appeal from any such action, suit or
proceeding, the Indemnitee shall be indemnified against all expenses (including
attorneys' fees) actually and reasonably incurred by the Indemnitee or on the
Indemnitee's behalf in connection therewith. Without limiting the foregoing, if
any action, suit or proceeding is disposed of, on the merits or otherwise
(including a disposition without prejudice), without (i) the disposition being
adverse to the Indemnitee, (ii) an adjudication that the Indemnitee was liable
to the Corporation, (iii) a plea of guilty or nolo contendere by the Indemnitee,
                                              ---- ----------                   
(iv) an adjudication that the Indemnitee did not act in good faith and in a
manner the Indemnitee reasonably believed to be in or not opposed to the best
interests of the Corporation, and (v) with respect to any criminal proceeding,
an adjudication that the Indemnitee had reasonable cause to believe the
Indemnitee's conduct was unlawful, the Indemnitee shall be considered for the
purposes hereof to have been wholly successful with respect thereto.

     3.16 Notification and Defense of Claim.  As a condition precedent to the
          ---------------------------------                                  
right to be indemnified, the Indemnitee must notify the Corporation in writing
as soon as practicable of any action, suit, proceeding or investigation
involving the Indemnitee for which indemnity will or could be sought.  With
respect to any action, suit, proceeding or investigation of which the
Corporation is so notified, the Corporation will be entitled to participate
therein at its own expense and/or to assume the defense thereof at its own
expense, with legal counsel reasonably -acceptable to the Indemnitee.  After
notice from the Corporation to the Indemnitee of its election so to assume such
defense, the Corporation shall not be liable to the Indemnitee for any legal or
other expenses subsequently incurred by the Indemnitee in connection with such
claim, other than as provided below in this Section 6.4.  The Indemnitee shall
have the right to employ the Indemnitee's own counsel in connection with such
claim, but the fees and expenses of such counsel incurred after notice from the
Corporation of its assumption of the defense thereof shall be at the expense of
the Indemnitee unless (i) the employment of counsel by the Indemnitee has been
authorized by the Corporation, (ii) counsel to the Indemnitee shall have
reasonably concluded that there may be a conflict of interest or position on any
significant issue between the Corporation and the Indemnitee in the conduct of
the defense of such action or (iii) the Corporation shall not in fact have
employed counsel to assume the defense of such action, in each of which cases
the fees and expenses of counsel for the Indemnitee shall be at the expense of
the Corporation, except as otherwise expressly provided by this Article.  The
Corporation shall not be entitled, without the consent of the Indemnitee, to
assume the defense of any claim brought by or in the right of the Corporation or
as to which counsel for the Indemnitee shall have reasonably made the conclusion
provided for in clause (ii) above.

     3.17 Advance of Expenses.  Subject to the provisions of Section 6.6 below,
          -------------------                                                  
in the event that the Corporation does not assume the defense pursuant to
Section 6.4 of this Article of any 

                                      -26-
<PAGE>
 
action, suit, proceeding or investigation of which the Corporation receives
notice under this Article, any expenses (including attorneys' fees) incurred by
an Indemnitee in defending a civil or criminal action, suit, proceeding or
investigation or any appeal therefrom shall be paid by the Corporation in
advance of the final disposition of such matter; provided, however, that the
payment of such expenses incurred by an Indemnitee in advance of the final
--------  -------                                                             
disposition of such matter shall be made only upon receipt of an undertaking by
or on behalf of the Indemnitee to repay all amounts so advanced in the event
that it shall ultimately be determined that the Indemnitee is not entitled to be
indemnified by the Corporation as authorized in this Article. Such undertaking
shall be accepted without reference to the financial ability of the Indemnitee
to make such repayment.

     3.18 Procedure for Indemnification.  In order to obtain indemnification or
          -----------------------------                                        
advancement of expenses pursuant to Section 6.1, 6.2, 6.3 or 6.5 of this
Article, the Indemnitee shall submit to the Corporation a written request,
including in such request such documentation and information as is reasonably
available to the Indemnitee and is reasonably necessary to determine whether and
to what extent the Indemnitee is entitled to indemnification or advancement OF
expenses.  Any such indemnification or advancement of expenses shall be made
promptly, and in any event within 60 days after receipt by the Corporation of
the written request of the Indemnitee, unless with respect to requests under
Section 6.1, 6.2 or 6.5 the Corporation determines within such 60-day period
that the Indemnitee did not meet the applicable standard of conduct set forth in
Section 1 or 2, as the case may be. Such determination shall be made in each
instance by (a) a majority vote of the directors of the Corporation consisting
of persons who are not at that time parties to the action, suit or proceeding in
question ("disinterested directors"), whether or not a quorum, (b)a majority
vote of a quorum of the outstanding shares of stock of all classes entitled to
vote for directors, voting as a single class, which quorum shall consist of
stockholders who are not at that time parties to the action, suit or proceeding
in question, (c) independent legal counsel (who competent jurisdiction.

     3.19 Remedies.  The right to indemnification or advances as granted by this
          --------                                                              
Article shall be enforceable by the Indemnitee in any court of competent
jurisdiction if the Corporation denies such request, in whole or in part, or if
no disposition thereof is made within the 60-day period referred to above in
Section 6.6.  Unless otherwise required by law, the burden of proving that the
Indemnitee is not entitled to indemnification or advancement of expenses under
this Article shall be on the Corporation.  Neither the failure of the
Corporation to have made a determination prior to the commencement of such
action that indemnification is proper in the circumstances because the
Indemnitee has met the applicable standard of conduct, nor an actual
determination by the Corporation pursuant to Section 6.6 that the Indemnitee has
not met such applicable standard of conduct, shall be a defense to the action or
create a presumption that the Indemnitee has not met the applicable standard of
conduct.  The Indemnitee's expenses (including attorneys' fees) incurred in
connection with successfully establishing the Indemnitee's right to
indemnification, in whole or in part, in any such proceeding shall also be
indemnified by the Corporation.

                                      -27-
<PAGE>
 
     3.20 Subsequent Amendment.  No amendment, termination or repeal of this
          --------------------                                              
Article or of the relevant provisions of the General Corporation Law of Delaware
or any other applicable laws shall affect or diminish in any way the rights of
any Indemnitee to indemnification under the provisions hereof with respect to
any action, suit, proceeding or investigation arising out of or relating to any
actions, transactions or facts occurring prior to the final adoption of such
amendment, termination or repeal.

     3.21 Other Rights.  The indemnification and advancement of expenses
          ------------                                                  
provided by this Article shall not be deemed exclusive of any other rights to
which an Indemnitee seeking indemnification or advancement of expenses may be
entitled under any law (common or statutory), agreement or vote of stockholders
or disinterested directors or otherwise, both as to action in such person's
official capacity and as to action in any other capacity while holding office
for the Corporation, and shall continue as to an Indemnitee who has ceased to be
a director or officer, and shall inure to the benefit of the estate, heirs,
executors and administrators of the Indemnitee.  Nothing contained in this
Article shall be deemed to prohibit, and the Corporation is specifically
authorized to enter into, agreements with officers and directors providing
indemnification rights and procedures different from those set forth in this
Article.  In addition, the Corporation may, to the extent authorized from time
to time by its Board of Directors, grant indemnification rights to other
employees or agents of the -Corporation or other persons serving the Corporation
and such rights may be equivalent to, or greater or less than, those set forth
in this Article.

     3.22 Partial Indemnification.  If an Indemnitee is entitled under any
          -----------------------                                         
provision of this Article to indemnification by the Corporation for some or a
portion of the expenses (including attorneys' fees), judgments, fines or amounts
paid in settlement actually and reasonably incurred by such person or on such
person's behalf in connection with any action, suit, proceeding or investigation
and any appeal therefrom but not, however, for the total amount thereof, the
Corporation shall nevertheless indemnify the Indemnitee for the portion of such
expenses (including attorneys' fees), judgments, fines or amounts paid in
settlement to which the Indemnitee is entitled.

     3.23 Insurance.  The Corporation may purchase and maintain insurance, at
          ---------                                                          
its expense, to protect itself and any director, officer, employee or agent of
the Corporation or another corporation, partnership, joint venture, trust or
other enterprise (including any employee benefit plan) against any expense,
liability or loss incurred by such person in any such capacity, or arising out
of such person's status as such, whether or not the Corporation would have the
power to indemnify such person against such expense, liability or loss under the
General Corporation Law of Delaware.

     3.24 Merger or Consolidation.  If the Corporation is merged into or
          -----------------------                                       
consolidated with another corporation and the Corporation is not the surviving
corporation, the surviving 

                                      -28-
<PAGE>
 
corporation shall assume the obligations of the Corporation under this Article
with respect to any action, suit, proceeding or investigation arising out of or
relating to any actions, transactions or facts occurring prior to the date of
such merger or consolidation.

     3.25 Savings Clause.  If this Article or any portion hereof shall be
          --------------                                                 
invalidated on any ground by any court of competent jurisdiction, then the
Corporation shall nevertheless indemnify each Indemnitee as to any expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement in
connection with any action, suit, proceeding or investigation, whether civil,
criminal or administrative, including an action by or in the right OF the
portion OF this Article that shall Corporation, to the fullest extent permitted
by any applicable not have been invalidated and to the fullest extent permitted
by applicable law.

     3.26 Definitions.  Terms used herein and defined in Section 145(h) and
          -----------                                                      
Section 145(i) of the General Corporation Law of Delaware shall have the
respective meanings assigned to such terms in such Section 145(h) and Section
145(i).

     3.27 Subsequent Legislation.  If the General Corporation Law of Delaware is
          ----------------------                                                
amended after adoption of this Article to expand further the indemnification
permitted to Indemnitees, then the Corporation shall indemnify such persons to
the fullest extent permitted by the General Corporation Law of Delaware, as so
amended.

     SEVENTH:   The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute and this Certificate of
Incorporation, and all rights conferred upon stockholders herein are granted
subject to this reservation.

                                      -29-
<PAGE>
 
     IN WITNESS WHEREOF, the Corporation has caused its corporate seal to be
affixed hereto and this Restated Certificate of Incorporation to be signed by
its President and attested by its Secretary this 9th day of July, 1998.


                                        PHYSICIANS QUALITY CARE, INC.



                                        By:________________________________
 


                                        ATTEST:



 



                                        [Corporate Seal]

                                      -30-