CERTIFICATE OF DESIGNATIONS, VOTING POWERS,

                             PREFERENCES AND RIGHTS

                                       OF

                          THE SERIES OF PREFERRED STOCK

                                       OF

                             IDM ENVIRONMENTAL CORP.

                                TO BE DESIGNATED

                      SERIES B CONVERTIBLE PREFERRED STOCK


     Pursuant to Section 14A:7-2 of the New Jersey Business  Corporation Law, I,
Joel A. Freedman, President of IDM Environmental Corp., a New Jersey corporation
(the  "Corporation"),  hereby  certify that the  following is a true and correct
copy of a resolution duly adopted by the Corporation's  Board of Directors as of
February 6, 1997, and that said resolution has not been amended or rescinded and
is in full force and effect at the date hereof:

     RESOLVED,  that pursuant to the authority  expressly  granted and vested in
the Board of Directors of the  Corporation by the  Corporation's  Certificate of
Incorporation,  as  amended to date,  the Board of  Directors  hereby  creates a
series of Preferred Stock of the  Corporation,  par value $1.00 per share, to be
designated  "Series B  Convertible  Preferred  Stock"  and to  consist of three-
hundred  (300)  shares,  and  hereby  fixes  the  voting  powers,  designations,
preferences  and  relative,  participating,  optional  or other  rights  and the
qualifications, limitations or restrictions thereon, of the Series B Convertible
Preferred Stock (the "Series B Preferred Stock"), as follows:

1.   Voting  Rights.  The holders of Series B Preferred  Stock will not have any
     voting rights  except as set forth below or as otherwise  from time to time
     required by law. The affirmative vote or consent of the holders of at least
     a majority of the outstanding  shares of Series B Preferred  Stock,  voting
     separately as a class, will be required for an amendment, alteration or


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     repeal of the  Corporation's  Certificate of  Incorporation  (including any
     certificate of designation of preferences)  if, and only if, the amendment,
     alteration or repeal adversely  affects the powers,  preferences or special
     rights of the Series B Preferred Stock.

     To the extent that under New Jersey law the vote of the holders of Series B
     Preferred Stock,  voting  separately as a class, is required to authorize a
     given action of the  Corporation,  the  affirmative  vote or consent of the
     holders  of at least a  majority  of the  outstanding  shares  of  Series B
     Preferred Stock shall  constitute the approval of such action by the class.
     To the extent  that under New Jersey law the  holders of Series B Preferred
     Stock are entitled to vote on a matter with holders of Common Stock, voting
     together  as one class,  each share of Series B  Preferred  Stock  shall be
     entitled to a number of votes equal to the number of shares of Common Stock
     into which it is then  convertible  using the record date for the taking of
     such vote of stockholders  as the date as of which the Conversion  Price is
     calculated. Holders of Series B Preferred Stock shall be entitled to notice
     of all shareholders meetings or written consents with respect to which they
     would be entitled to vote,  which notice would be provided  pursuant to the
     Corporation's by-laws and applicable statutes.

2.   Liquidation, Dissolution or Reorganization.  Subject to the prior rights of
     the Corporation's  creditors and holders of securities senior to the Series
     B  Preferred   Stock  in  respect  of   distributions   upon   liquidation,
     dissolution,  winding-up or reorganization of the Corporation, in the event
     of the voluntary or  involuntary  liquidation,  dissolution,  winding-up or
     reorganization of the Corporation,  the holders of Series B Preferred Stock
     shall  be  entitled  to  receive   $10,000  per  share  (the   "Liquidation
     Preference"), together with accrued and unpaid dividends payable thereon to
     the date fixed for payment of such distribution, if any, all of which shall
     be paid in cash,  before any  distribution is made to holders of any Junior
     Stock.  If,  upon  any  such   liquidation,   dissolution,   winding-up  or
     reorganization  of the  Corporation,  the  assets  distributable  among the
     holders of Series B  Preferred  Stock (and any  series of  preferred  stock
     ranking  in  parity  with  the  Series B  Preferred  Stock  in  respect  of
     distributions upon liquidation,  dissolution,  winding-up or reorganization


                                      -2-
<PAGE>
     of the Corporation)  shall be insufficient to permit the payment in full to
     such holders of the preferential  amount payable to such holders determined
     as  aforesaid,  then the  holders  of Series B  Preferred  Stock will share
     ratably in any  distribution of the  Corporation's  assets in proportion to
     the  respective  preferential  amounts that would have been payable if such
     assets were sufficient to permit payment in full of all such amounts. After
     payment of the full amount of the Liquidation  Preference to which they are
     entitled,  the holders of Series B Preferred  Stock will not be entitled to
     any further participation in any distribution of assets by the Corporation.
     Under  this  Section  2, a  distribution  of  assets  in  any  liquidation,
     dissolution,   winding-up   or   reorganization   shall   include  (a)  any
     consolidation  or  merger  of  the  Corporation  with  or  into  any  other
     corporation in which the Corporation is not the surviving corporation,  (b)
     a  sale  or  other   disposition  of  all  or  substantially   all  of  the
     Corporation's  assets in  consideration  for cash  and/or the  issuance  of
     equity securities of another corporation, or (c) a Change of Control of the
     Corporation.

3.   Conversion Rights.

     (a)  Conversion.  The Series B Preferred  Stock shall be convertible at the
          option of the holder thereof into fully paid and non-assessable shares
          (rounded  up to  the  nearest  full  share)  of  Common  Stock  of the
          Corporation  (the  "Conversion  Shares") at the  following  conversion
          prices (each,  as in effect from time to time as described  herein,  a
          "Conversion  Price").  The  Series  B  Preferred  Stock  shall  not be
          convertible prior to 91 calendar days after the date of issuance. From
          the 91st  calendar  day after the date of  issuance  of the  Preferred
          Shares (the "Issue Date") up to and  including the 120th  calendar day
          after the Issue Date, the  Conversion  Price per share is equal to the
          lower of (x) one hundred twenty percent (120%) of the average  closing
          bid price of the Common Stock as calculated over the five  trading-day
          period ending on the last trading day prior to the  Subscription  Date
          (as defined  herein)  (the "Issue Date  Average")  and (y)  eighty-two
          percent (82%) of the average  closing bid price of the Common Stock as
          calculated over the five trading-day  period ending on the trading day


                                       -3-
<PAGE>
          immediately  preceding  the date on which  the  Company  receives  (by
          telecopier)   each   Conversion   Notice  (as  defined   herein)  (the
          "Conversion  Date  Average").  From the 121st  calendar  day after the
          Issue Date up to and including the 150th  calendar day after the Issue
          Date,  the  Conversion  Price  per  share is equal to the lower of (x)
          one-hundred-ten  percent  (110%) of the  Issue  Date  Average  and (y)
          seventy- nine percent (79%) of the Conversion  Date Average.  From the
          151st  calendar day after the Issue Date up to and including the 180th
          calendar day after the Issue Date, the  Conversion  Price per share is
          equal to the lower of (x) one-hundred percent (100%) of the Issue Date
          Average  and (y)  seventy-six  percent  (76%) of the  Conversion  Date
          Average.  From and after the  181st  day  after  the Issue  Date,  the
          Conversion  Price per  share is equal to the lower of (x)  one-hundred
          percent (100%) of the Issue Date Average and (y) seventy-three percent
          (73%) of the Conversion  Date Average.  Each  Preferred  Share will be
          convertible  into  the  number  of  Conversion  Shares  determined  by
          dividing the Purchase Price by the applicable Conversion Price.

          The number of Conversion Shares issuable upon conversion of each share
          of Series B Preferred Stock shall be determined by dividing $10,000 by
          the  Conversion  Price in effect on the  Conversion  Date,  as defined
          below.  An  individual  share of Series B Preferred  Stock may only be
          permitted  to  convert  in  its  entirety.  Partial  conversion  of an
          individual share of Series B Preferred Stock is not permitted.

     (b)  Mechanics  of  Conversion.  The  holder  of any  shares  of  Series  B
          Preferred  Stock  may  exercise  the  conversion  right as to any part
          thereof by delivering via facsimile to the Corporation,  at the office
          of the Corporation at 396 Whitehead  Avenue,  South River,  New Jersey
          08882,  a  conversion  notice  (the  "Conversion  Notice") in the form
          attached to the subscription agreements pursuant to which the Series B
          Preferred  Stock  is  issued  (the  "Subscription  Agreements").   The
          Conversion  Notice  shall state (i) that the holder  elects to convert
          its  shares,  (ii) the  number of shares of Series B  Preferred  Stock
          which  such  holder  is   converting,   (iii)  subject  to  applicable


                                      -4-
<PAGE>
          securities laws, the name(s) in which the certificate(s)  representing
          the  Conversion  Shares and  Dividend  Shares,  if any,  to which such
          holder is entitled are to be issued, and (iv) the telecopier number to
          which the Corporation shall telecopy its confirmation described below.
          Notice given by telecopier to telecopier number  908-390-9545 shall be
          deemed notice for purposes of this paragraph and shall be deemed given
          at the time of the holder's  transmittal.  Immediately upon receipt of
          any Conversion Notice,  the Corporation shall, by telecopier,  confirm
          receipt  thereof at the  telecopier  number  included  thereon,  which
          confirmation  shall set forth,  subject to Section  5(c)  hereof,  the
          number of Conversion  Shares and Dividend Shares, if any, to be issued
          by the  Corporation  as a result of such  conversion.  The  Conversion
          Notice shall be deemed accepted by the Corporation provided the holder
          surrenders,  or  causes  any agent for the  holder to  surrender,  the
          certificate(s) for the Series B Preferred Stock to be converted,  duly
          endorsed or assigned in blank, to the Corporation, at the location set
          forth  above,  within three (3)  business  days after  delivery of the
          Conversion  Notice.  Provided that the certificate(s) are delivered in
          accordance with the preceding sentence, the conversion shall be deemed
          to have been effected on the date of delivery of the Conversion Notice
          by telecopier,  and such date is referred to herein as the "Conversion
          Date." Within two (2) business days of receipt by the  Corporation  of
          the  certificate(s)  representing  the Series B Preferred  Stock,  the
          Corporation  shall issue to such holder a certificate or  certificates
          representing the number of Conversion  Shares and Dividend Shares,  if
          any, which such holder is entitled to receive together with a check or
          cash in respect of any fractional  interest in a share of Common Stock
          as provided in Section 3(c) hereof.  Unless (i) such Conversion Shares
          and/or  Dividend  Shares  have been held long  enough to  satisfy  the
          holding  period set forth in Rule 144(k) (or any successor  provision)
          promulgated  under the Securities  Act, (ii) such shares become freely
          tradeable  pursuant to another  exemption under the Securities Act, or
          (iii) the  converting  holder  purchased  such  shares  pursuant  to a
          current prospectus under an effective registration statement covering


                                      -5-
<PAGE>
          the purchase and sale of such shares, the certificate(s)  representing
          the Conversion  Shares and the Dividend Shares will bear the following
          legend:

               THE  SHARES   REPRESENTED  BY  THIS  CERTIFICATE  HAVE  NOT  BEEN
               REGISTERED  UNDER THE  SECURITIES  ACT OF 1933,  AS AMENDED.  THE
               SHARES HAVE BEEN  ACQUIRED  FOR  INVESTMENT  AND MAY NOT BE SOLD,
               TRANSFERRED  OR ASSIGNED  IN THE  ABSENCE OF EITHER AN  EFFECTIVE
               REGISTRATION  STATEMENT FOR THESE SHARES UNDER THE SECURITIES ACT
               OF 1933, AS AMENDED,  OR AN OPINION OF COUNSEL THAT  REGISTRATION
               IS NOT  REQUIRED  UNDER SAID ACT.  THESE  SHARES  ARE  SUBJECT TO
               CERTAIN REGISTRATION RIGHTS AS SET FORTH IN A REGISTRATION RIGHTS
               AGREEMENT, A COPY OF WHICH MAY BE OBTAINED FROM THE CORPORATION.

          If the Registration  Statement as hereinafter  defined shall have been
          declared  effective by the  Securities  and Exchange  Commission,  the
          certificate(s)  evidencing  the  Conversion  Shares  and the  Dividend
          Shares will bear the following legend:

               THE SHARES  REPRESENTED BY THIS  CERTIFICATE HAVE BEEN REGISTERED
               UNDER THE SECURITIES  ACT OF 1933, AS AMENDED.  THE SHARES MAY BE
               SOLD  PURSUANT TO THE  REGISTRATION  STATEMENT  PROVIDED THAT THE
               HOLDER COMPLIES WITH THE PROSPECTUS  DELIVERY  REQUIREMENTS UNDER
               THE  SECURITIES  ACT OF  1933,  AS  AMENDED,  AND THE  SALE IS IN
               COMPLIANCE  WITH THE  PLAN OF  DISTRIBUTION  AS SET  FORTH IN THE
               PROSPECTUS.  THESE  SHARES ARE  SUBJECT  TO CERTAIN  REGISTRATION
               RIGHTS AS SET FORTH IN A REGISTRATION RIGHTS AGREEMENT, A COPY OF
               WHICH MAY BE OBTAINED FROM THE CORPORATION.

          Upon the sale by any  holder  of  Conversion  Shares  and/or  Dividend
          Shares of such shares  pursuant to and in accordance with an effective
          registration statement with respect thereto pursuant to the Securities


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<PAGE>
          Act and delivery to the  Corporation  of a certificate  in the form of
          Appendix  IV to the  Subscription  Agreements  pursuant  to which  the
          Series B Preferred Stock was issued,  the Corporation  shall issue new
          certificates representing such shares which certificate shall not bear
          any legend regarding limitations on transferability of such shares.

          The person in whose name the  certificate(s) for the Conversion Shares
          and any  Dividend  Shares  are to be  issued  shall be  deemed to have
          become a  stockholder  of record  on the  applicable  Conversion  Date
          unless the transfer books of the  Corporation are closed on that date,
          in which event he or she shall be deemed to have become a  stockholder
          of record on the next  succeeding date on which the transfer books are
          open,  but  the  Conversion  Price  shall  be that  in  effect  on the
          Conversion  Date.  Upon  conversion of only a portion of the number of
          whole shares covered by a certificate  representing shares of Series B
          Preferred  Stock  surrendered for  conversion,  the Corporation  shall
          issue and  deliver to or upon the  written  order of the holder of the
          certificate  so  surrendered  for  conversion,  at the  expense of the
          Corporation, a new certificate covering the number of shares of Series
          B  Preferred  Stock  representing  the  unconverted   portion  of  the
          certificate so surrendered, which new certificate shall entitle in all
          respects the holder thereof to the rights of Series B Preferred  Stock
          represented   thereby  to  the  same  extent  as  if  the  certificate
          theretofore  covering such unconverted shares had not been surrendered
          for conversion.

     (c)  Fractional Shares. No fractional shares of Common Stock or scrip shall
          be issued upon  conversion of shares of Series B Preferred  Stock.  If
          more than one share of Series B Preferred  Stock shall be  surrendered
          for conversion at any one time by the same holder,  the number of full
          shares of Common  Stock  issuable  upon  conversion  thereof  shall be
          computed  on the basis of the  aggregate  number of shares of Series B
          Preferred  Stock so surrendered.  Instead of any fractional  shares of
          Common Stock which would  otherwise be issuable upon conversion of any
          shares of Series B Preferred Stock,  the Corporation  shall pay a cash


                                      -7-
<PAGE>
          adjustment  in  respect  of  such  fractional  interest  in an  amount
          determined on the basis of the then Current  Market Price per share of
          Common Stock. Fractional interests shall not be entitled to dividends,
          and the  holders  thereof  shall  not be  entitled  to any  rights  as
          stockholders   of  the  Corporation  in  respect  of  such  fractional
          interests.

     (d)  Adjustments  to Conversion  Price for Certain  Events.  The Conversion
          Price shall be subject to adjustment from time to time as set forth in
          this subsection (d).

          (i)  In case at any time, or from time to time, the Corporation shall:
               (A) take a record  of the  holders  of its  Common  Stock for the
               purpose  of  entitling  them  to  receive  a  dividend  or  other
               distribution  payable in shares of capital  stock;  (B) subdivide
               its  outstanding  shares of Common Stock into a larger  number of
               shares; (C) combine its outstanding shares of Common Stock into a
               smaller  number of shares;  or (D) issue by  reclassification  or
               recapitalization of its Common Stock any other class or series of
               shares of the Corporation (including any such reclassification or
               recapitalization  in connection with a consolidation or merger in
               which  the  Corporation  is  the  continuing  corporation),   the
               Conversion  Price in  effect at the time of the  record  date for
               such  dividend  or of the  effective  date of  such  subdivision,
               combination,   reclassification  or  recapitalization   shall  be
               proportionately  adjusted  so that  the  holder  of any  Series B
               Preferred Stock  surrendered for conversion after such time shall
               be entitled to receive  the  aggregate  number and kind of shares
               which,  if such  Series B  Preferred  Stock  had  been  converted
               immediately  prior to such time,  such holder would have owned or
               have been  entitled to  receive.  Such  adjustment  shall be made
               successively  whenever any event listed above shall occur. In the
               event that such  dividend  or  distribution  is not so made,  the
               Conversion  Price shall  again be  adjusted to be the  Conversion


                                      -8-
<PAGE>
               Price  which  would then be in effect if such record date has not
               been fixed.

               (ii) In case at any time, or from time to time,  the  Corporation
                    shall  (except as  hereinafter  provided)  issue or sell any
                    Additional  Shares  of  Common  Stock at a  discount  to the
                    Current  Market  Price (as defined  below)  which is greater
                    than the then applicable discount set forth in Section 3(a),
                    the then  applicable  discount  shall be adjusted to reflect
                    the greater  discount.  For the purposes of this  subsection
                    (d)(ii),  the date as of which the Current  Market Price for
                    such  Additional  Shares of Common  Stock  shall be computed
                    shall  be  the   earlier  of  (x)  the  date  on  which  the
                    Corporation  shall enter into a legally binding contract for
                    the  issuance  or sale of such  Additional  Shares of Common
                    Stock  or (y)  the  date  of the  actual  issuance  of  such
                    Additional  Shares of Common Stock.  The  provisions of this
                    subsection  (d)(ii)  shall  not  apply  to any  issuance  of
                    Additional Shares of Common Stock for which an adjustment is
                    provided under subsection (i) hereof. No adjustment shall be
                    made under this subsection  (d)(ii) upon the issuance of any
                    Additional  Shares of Common Stock which are issued pursuant
                    to the  exercise of any  warrants or other  subscription  or
                    purchase   rights  or  pursuant  to  the   exercise  of  any
                    conversion or exchange rights in any Convertible Securities,
                    if any such adjustment  shall previously have been made upon
                    the  issuance of such  warrants or other  rights or upon the
                    issuance  of  such  Convertible   Securities  (or  upon  the
                    issuance of any warrant or other rights  therefor)  pursuant
                    to subsection  (d)(iii)  hereof.  Adjustments  shall be made
                    successively  whenever such an issuance of Additional Shares
                    of  Common  Stock  shall  occur.  In  the  event  that  such
                    Additional Shares of Common Stock are not so issued or sold,
                    the  Conversion  Price  shall  again be  adjusted  to be the
                    Conversion  Price  which  would  then be in  effect  if such
                    issuance had not occurred.


                                      -9-
<PAGE>
               (iii)In case at any time, or from time to time,  the  Corporation
                    shall take a record of the  holders of the Common  Stock for
                    the purpose of entitling them to receive a distribution  of,
                    or shall  otherwise  issue,  any warrants or other rights to
                    subscribe  for or purchase any  Additional  Shares of Common
                    Stock or any  Convertible  Securities and the  consideration
                    per share for which Additional Shares of Common Stock may at
                    any time thereafter be issuable pursuant to such warrants or
                    other  rights or pursuant  to the terms of such  Convertible
                    Securities shall be less than the Current Market Price, then
                    the  Conversion  Price   immediately   thereafter  shall  be
                    adjusted  as provided in  subsection  (d)(ii)  hereof on the
                    basis that (a) the maximum  number of  Additional  Shares of
                    Common Stock issuable pursuant to all such warrants or other
                    rights or necessary to effect the  conversion or exchange of
                    all such Convertible Securities shall be deemed to have been
                    issued as of the date for the  determination  of the Current
                    Market  Price  per  share of  Common  Stock  as  hereinafter
                    provided,  and  (b) the  aggregate  consideration  for  such
                    maximum number of Additional Shares of Common Stock shall be
                    deemed  to  be  the  minimum   consideration   received  and
                    receivable  by the  Corporation  for  the  issuance  of such
                    Additional  Shares of Common Stock pursuant to such warrants
                    or other rights or pursuant to the terms of such Convertible
                    Securities.  For the purposes of this  subsection  (d)(iii),
                    the date as of which the Current  Market  Price per share of
                    Common Stock shall be computed  shall be the earliest of (i)
                    the date on which the Corporation shall take a record of the
                    holders of its  Common  Stock for the  purpose of  entitling
                    them to receive any such warrants or other rights,  (ii) the
                    date on which the  Corporation  shall  enter  into a legally
                    binding  contract for the issuance of such warrants or other
                    rights or (iii) the date of actual issuance of such warrants
                    or other rights.  Such reduction shall be made  successively
                    whenever such a record date is fixed. In the event that such
                    rights or warrants are not so issued or (if issued) to the


                                      -10-
<PAGE>
                    extent not exercised,  the  Conversion  Price shall again be
                    adjusted to be the  Conversion  Price which would then be in
                    effect  if such  record  date  had not  been  fixed  or such
                    unexercised rights or warrants had not been issued.

               (iv) In case at any time, or from time to time,  the  Corporation
                    shall take a record of the  holders of its Common  Stock for
                    the purpose of entitling them to receive a distribution,  by
                    dividend or otherwise,  of evidences of its  indebtedness or
                    assets (including securities, but excluding (x) any dividend
                    or distribution  referred to in subsection (d)(i) hereof and
                    (y) any dividend or  distribution  paid in cash out of funds
                    legally available therefor of the Corporation), then in each
                    such case the  Conversion  Price in effect after such record
                    date shall be determined by multiplying the Conversion Price
                    in  effect  immediately  prior  to  such  record  date  by a
                    fraction,  of which the numerator  shall be the total number
                    of  outstanding  shares of Common  Stock  multiplied  by the
                    Current  Market  Price on such  record  date,  less the fair
                    market value (as determined by the Board of Directors of the
                    Corporation, whose determination shall be conclusive) of the
                    portion of the assets or evidences of  indebtedness so to be
                    distributed, and of which the denominator shall be the total
                    number of outstanding  shares of Common Stock  multiplied by
                    such Current  Market Price.  Such  adjustment  shall be made
                    successively  whenever  such a record date is fixed.  In the
                    event that such  distribution is not so made, the Conversion
                    Price shall again be  adjusted  to be the  Conversion  Price
                    which  would then be in effect if such  record  date had not
                    been fixed.

               (v)  No  adjustment  in the  Conversion  Price  shall be required
                    unless such adjustment would require an increase or decrease
                    of at least  five  percent  (5%) in such  conversion  price;
                    provided,  however,  that any adjustment  which by reason of
                    this paragraph (v) is not required to be made shall be


                                      -11-
<PAGE>
                    carried  forward  and taken into  account in any  subsequent
                    adjustment. All calculations under this subsection (d) shall
                    be made to the  nearest  cent or to the  nearest  1/100 of a
                    share, as the case may be.

          (e)  Automatic  Conversion.  The Series B Preferred Stock shall mature
               three years after the Issue Date (the "Maturity  Date") and shall
               automatically  convert into Conversion Shares at the then current
               Conversion  Price on the  Maturity  Date.  All accrued but unpaid
               dividends on the Series B Preferred Stock shall be payable to the
               holders on the Maturity Date in either  Dividend  Shares or cash,
               at the option of the Corporation.

          (f)  No  Impairment.  The  Corporation  will not, by  amendment of its
               Certificate  of  Incorporation  or  through  any   reorganization
               (pursuant  to  any  petition   under  the   Bankruptcy   Code  or
               otherwise),   transfer  of  assets,   consolidation,   merger  or
               dissolution,  issue or sale of securities or any other  voluntary
               action,  avoid or seek to avoid the  observance or performance of
               any of the terms to be observed  or  performed  hereunder  by the
               Corporation,  but will at all times in good  faith  assist in the
               carrying out of all the  provisions  of this Section 3 and in the
               taking of all such action as may be necessary or  appropriate  in
               order to  protect  the  conversion  rights of the  holders of the
               Series B Preferred Stock against impairment.

          (g)  Notice Provisions.

               (i)  Whenever any conversion price shall be adjusted  pursuant to
                    subsection  (d)  hereof,  the  Corporation  shall  forthwith
                    obtain  a  certificate  signed  by the  Corporation's  chief
                    financial officer,  setting forth, in reasonable detail, the
                    event  requiring the adjustment and the method by which such
                    adjustment  was  calculated  (including a description of the
                    basis  on  which  the   Corporation's   independent   public
                    accountants  determined  the fair value of any  evidences of
                    indebtedness,  shares of stock, other securities or property
                    or assets or  warrants  or other  subscription  or  purchase


                                      -12-
<PAGE>
                    rights  referred to in  subsections  (d)(ii)  through (d)(v)
                    hereof) and  specifying  the new  conversion  prices and (if
                    applicable)  describing the amount and kind of common stock,
                    securities, property or assets or cash which may be received
                    upon  conversion  of the  Series B  Preferred  Stock,  after
                    giving  effect to such  adjustment.  The  Corporation  shall
                    promptly  cause a  signed  copy of  such  certificate  to be
                    delivered to each holder of Series B Preferred Stock.

               (ii) In  case  the  Corporation  shall  propose  (a) to  pay  any
                    dividend payable in stock of any class to the holders of its
                    Common  Stock  or to  make  any  other  distribution  to the
                    holders of its Common Stock,  (b) to offer to the holders of
                    its Common Stock rights to subscribe  for or to purchase any
                    Convertible  Securities or Additional Shares of Common Stock
                    or shares  of stock of any  class or any  other  securities,
                    rights or options, (c) to effect any reclassification of its
                    Common Stock (other than a  reclassification  involving only
                    the  subdivision or  combination  of  outstanding  shares of
                    Common Stock), (d) to effect any capital reorganization, (e)
                    to effect any  consolidation,  merger or sale,  transfer  or
                    other distribution of all or substantially all its property,
                    assets or business, (f) to file a voluntary petition seeking
                    liquidation,  reorganization,  arrangement,  readjustment of
                    debts or for any other relief under the  Bankruptcy  Code or
                    under any  other  act or law  pertaining  to  insolvency  or
                    debtor  relief,  whether state,  federal or foreign,  now or
                    hereafter  existing,  or  (g)  to  effect  the  liquidation,
                    dissolution,    winding-up   or    reorganization   of   the
                    Corporation,  then in each such case, the Corporation  shall
                    give to each holder of Series B Preferred  Stock a notice of
                    such proposed action,  which shall specify the date on which
                    a  record  is to be taken  for the  purposes  of such  stock
                    dividend,  distribution or rights, or the date on which such
                    reclassification,   reorganization,  consolidation,  merger,
                    sale, transfer, disposition, filing of bankruptcy,


                                      -13-
<PAGE>
                    liquidation,  dissolution or winding-up is to take place and
                    the date of  participation  therein by the holders of Common
                    Stock,  if any such date is to be fixed,  and shall also set
                    forth such facts with respect thereto as shall be reasonably
                    necessary  to  indicate  the  effect  of such  action on the
                    Common Stock and the  conversion  prices after giving effect
                    to any adjustment which will be required as a result of such
                    action.  Such  notice  shall  be so given in the case of any
                    action covered by (a) or (b) above at least 20 days prior to
                    the record date for determining  holders of the Common Stock
                    for  purposes  of such  action and, in the case of any other
                    such  action,  at  least  20 days  prior  to the date of the
                    taking of such proposed action or the date of  participation
                    therein by the holders of Common Stock,  whichever  shall be
                    the earlier.

          (h)  Treasury  Stock.  The sale or  other  disposition  of any  issued
               shares of Common Stock owned or held by or for the account of the
               Corporation  shall be deemed an issuance  thereof for purposes of
               subsection (d) hereof,  but until so issued such shares shall not
               be deemed to be outstanding.

          (i)  Computation of  Consideration.  To the extent that any Additional
               Shares  of  Common  Stock or any  Convertible  Securities  or any
               warrants  or  other  rights  to  subscribe  for or  purchase  any
               Additional  Shares of Common Stock or any Convertible  Securities
               shall  be  issued  for a cash  consideration,  the  consideration
               received by the  Corporation  therefor  shall be deemed to be the
               amount of the cash received by the Corporation  therefor,  or, if
               such Additional Shares of Common Stock or Convertible  Securities
               are offered by the Corporation for subscription, the subscription
               price,  or,  if  such  Additional   Shares  of  Common  Stock  or
               Convertible  Securities are sold to  underwriters  or dealers for
               public  offering  without a  subscription  offering,  the initial
               public  offering  price,  in any such case  excluding any amounts
               paid or receivable for accrued interest or accrued  dividends and
               without deduction of any compensation, discounts or expenses paid


                                      -14-
<PAGE>
               or incurred by the Corporation for and in the underwriting of, or
               otherwise in connection  with, the issue  thereof.  To the extent
               that such issuance shall be for a consideration  other than cash,
               then, except as herein otherwise expressly  provided,  the amount
               of such  consideration  shall be deemed  to be the fair  value of
               such  consideration at the time of such issuance as determined by
               the Board of Directors of the Corporation.  The consideration for
               any Additional  Shares of Common Stock  issuable  pursuant to any
               warrants or other  rights to  subscribe  for or purchase the same
               shall  be  the  consideration  received  by the  Corporation  for
               issuing  such  warrants  or other  rights,  plus  the  additional
               consideration  payable to the  Corporation  upon the  exercise of
               such  warrants  or  other  rights.   The  consideration  for  any
               Additional  Shares of Common Stock issuable pursuant to the terms
               of any Convertible Securities shall be the consideration received
               by the  Corporation  for issuing any  warrants or other rights to
               subscribe for or purchase such Convertible  Securities,  plus the
               consideration  paid or payable to the  Corporation  in respect of
               the subscription for or purchase of such Convertible  Securities,
               plus  the  additional  consideration,  if  any,  payable  to  the
               Corporation  upon the  exercise  of the  right of  conversion  or
               exchange in such Convertible Securities.  In case of the issuance
               at  any  time  of  any  Additional  Shares  of  Common  Stock  or
               Convertible Securities in payment or satisfaction of any dividend
               upon any class of stock other than Common  Stock or in payment of
               any debt,  the  Corporation  shall be deemed to have received for
               such Additional Shares of Common Stock or Convertible  Securities
               a  consideration  equal to the amount of such dividend or debt so
               paid or satisfied.

          (j)  Fractional Interests. In computing adjustments under this Section
               3,  fractional  interests  in Common  Stock  shall be taken  into
               account to the nearest one-hundredth of a share.

          (k)  Antidilution Provisions.  No adjustment shall be made as a result
               of any  increase  in the  number of  Additional  Shares of Common


                                      -15-
<PAGE>
               Stock issuable or any decrease in the consideration  payable upon
               any issuance of Additional  Shares of Common  Stock,  pursuant to
               any provisions intended solely to avoid dilution contained in any
               warrants, rights or Convertible Securities.

          (l)  When Adjustment Not Required.

               (i)  If the Corporation shall take a record of the holders of its
                    Common Stock for the purpose of entitling  them to receive a
                    dividend or  distribution or subscription or purchase rights
                    and  shall,   thereafter  and  before  the  distribution  to
                    stockholders  thereof,  legally  abandon  its plan to pay or
                    deliver  such  dividend,   distribution,   subscription   or
                    purchase  rights,  then  thereafter no  adjustment  shall be
                    required by reason of the taking of such record and any such
                    adjustment  previously  made in  respect  thereof  shall  be
                    rescinded and annulled.

               (ii) If  the  Corporation  declares  or  makes  any  dividend  or
                    distribution  with  respect  to  Common  Stock,  other  than
                    regular cash dividends or dividends payable solely in shares
                    of Common Stock, and each holder of Series B Preferred Stock
                    concurrently  receives  dividends or distributions  equal in
                    amount  and in the  same  kind of  property  (whether  cash,
                    securities  or  other  property)  as such  holder  would  be
                    entitled  to  receive  if all of the  outstanding  Series  B
                    Preferred  Stock were  converted into Common Stock as of the
                    record date of such dividend or distribution with respect to
                    Common  Stock,   then  thereafter  no  adjustment  shall  be
                    required with respect to such dividend or distribution.

          (m)  Other Action  Affecting  Common Stock.  If a state of facts shall
               occur which,  without being specifically  controlled by the other
               provisions  of this  Section  3,  would not  fairly  protect  the
               conversion  rights of the Series B Preferred  Stock in accordance
               with the essential intent and principles of such provisions, then
               the Board of  Directors  of the  Corporation  shall in good faith
               make an adjustment in the application of such provisions, in


                                      -16-
<PAGE>
               accordance with such essential  intent and  principles,  so as to
               protect such conversion rights.

          (n)  Necessary Corporate Action.  Before taking any action which would
               result in an adjustment in the Conversion  Price, the Corporation
               shall obtain all such  authorizations or exemptions  thereof,  or
               consents thereto,  as may be necessary from any public regulatory
               body or bodies having jurisdiction thereof.

          (o)  Taxes Upon Conversion. The Corporation shall pay all documentary,
               stamp or other transaction taxes  attributable to the issuance or
               delivery of shares of Common Stock upon  conversion of any shares
               of Series B Preferred Stock.

          (p)  Reservation of Common Stock.  The Corporation  shall at all times
               reserve and keep  available  out of its  authorized  but unissued
               shares of Common Stock  solely for the purpose of  effecting  the
               conversion of shares of Series B Preferred Stock, the full number
               of  whole  shares  of  Common  Stock  then  deliverable  upon the
               conversion of all shares of Series B Preferred  Stock at the time
               outstanding  (assuming  full payment of dividends  with  Dividend
               Shares),  up to a maximum of  1,915,000  shares of Common  Stock,
               subject to  adjustment  as provided  in Sections 3 and 5(b).  All
               shares of Common  Stock which shall be so  issuable  shall,  when
               issued  upon  conversion  of all or any  portion  of the Series B
               Preferred  Stock,  be duly and validly  issued and fully paid and
               non-assessable  and free from all taxes,  liens and charges  with
               respect to the  issuance  thereof.  Upon  conversion  of Series B
               Preferred  Stock,  the  shares  of  Series B  Preferred  Stock so
               converted  shall  have the  status  of  authorized  and  unissued
               Preferred  Stock,  and the number of shares of Series B Preferred
               Stock which the  Corporation  shall have authority to issue shall
               be decreased by any such  conversion.

          (q)  Dividends  Constitute  Corporate Debt. All dividends  accrued and
               unpaid on Series B Preferred  Stock to and  including the date of


                                      -17-
<PAGE>
               conversion,  whether or not  declared by the Board of  Directors,
               shall  constitute  a debt  of  the  Corporation  payable  without
               interest  to the  converting  holders  and  shall  be paid by the
               Corporation on the Conversion Date, in its option, either in cash
               or by the  issuance of  Dividend  Shares as provided in Section 4
               hereof.

4.   Dividends.

     (a)  Dividends.  Each holder of shares of Series B Preferred Stock shall be
          entitled to receive,  in  preference to the holders of Common Stock or
          any other Junior Stock, a cumulative  annual dividend  payment of $700
          for each share of Series B Preferred Stock held. Dividends are payable
          only upon conversion or redemption of the shares of Series B Preferred
          Stock  pursuant to Section 3 or Section 5 hereof and are payable  upon
          conversion  or  redemption  either  (i)  in  shares  of  Common  Stock
          ("Dividend  Shares"),  with the  number  thereof to be  determined  by
          dividing the accrued  dividend  payable by the average Market Price of
          the Common  Stock over the five (5) trading day period  preceding  the
          Conversion  Date and rounded up to the nearest full share,  or (ii) in
          cash,  at the option of the  Corporation.  Dividends  on the shares of
          Series B Preferred Stock shall  accumulate from the Issue Date through
          the date of conversion or redemption, as the case may be, on the basis
          of a calendar year consisting of twelve (12) months each consisting of
          thirty (30) days.  Dividends  shall be payable in cash only out of the
          assets of the Corporation legally available for the payment thereof.

     (b)  Restrictions  on  Dividends,  Etc.  Except as set forth in paragraph 7
          hereof,  as long as any shares of Series B  Preferred  Stock  shall be
          outstanding,  the Corporation shall not declare,  pay or set aside for
          payment  any  dividend  or declare or make any  distributions  upon or
          purchase, redeem or otherwise acquire Common Stock or any other series
          or class of capital stock; provided, however, that the Corporation may
          declare,  pay or set  aside for  payment,  dividends  required  by the
          preferences,  rights and designations any series or class of Preferred
          Stock ranking senior to, or pari passu with, Series B Preferred Stock.


                                      -18-
<PAGE>
5.   Redemption.

     (a)  Optional Redemption.  In the event that the then applicable Conversion
          Price is $1.80 per share or less and the holder of Series B  Preferred
          Stock intends to convert some or all of the Series B Preferred  Stock,
          the  holder  shall  give a  preliminary  notice of such  intent to the
          Corporation ("Notice of Intent to Convert") indicating such intent and
          setting forth (i) the number of shares of Series B Preferred  Stock up
          to which it  proposes  to convert  during the ten (10)  business  days
          following  receipt by the  Company of such Notice of Intent to Convert
          (the  "Notice of Intent  Period")  and (ii) the  telecopier  number to
          which the  Corporation  shall telecopy its response  described  below.
          Within three (3) business  days after receipt of a Notice of Intent to
          Convert, the Corporation shall notify the holder as to whether it will
          redeem some or all of the shares proposed to be converted,  indicating
          the amount  which it  proposes to redeem,  if any. If the  Corporation
          notifies  the  holder  that  it  will  not  redeem  shares  or if  the
          Corporation  fails to provide notice within the three (3) business-day
          period,  the  holder  may  carry  out one  (but  not  more  than  one)
          conversion  during  the  Notice of Intent  Period in  accordance  with
          Paragraph 3(b) hereof. If the Corporation  notifies the holder that it
          intends to redeem some or all of the shares to be converted during the
          applicable  Notice of Intent Period,  the Corporation shall pay to the
          holder  within seven (7) calendar  days after  receipt of a Conversion
          Notice $12,200, together with cash in the amount of accrued and unpaid
          dividends   thereon   through  the  Redemption  Date  (as  defined  in
          subsection (c) herein,  in redemption of all Series B Preferred  Stock
          submitted   for   conversion   up  to  the  limit  set  forth  in  the
          Corporation's  notice of intent to redeem. Upon the giving of a Notice
          of Intent to Convert,  the holder shall not be permitted to submit any
          additional Notices of Intent to Convert or otherwise modify its Notice
          of Intent to Convert prior to completion of the then applicable Notice


                                      -19-
<PAGE>
          of Intent  Period.  Notice given by telecopier to telecopier  shall be
          deemed notice for purposes of this paragraph and shall be deemed given
          at the time of the holder's transmittal.

     (b)  Mandatory Redemption.  The Corporation shall redeem shares of Series B
          Preferred  Stock  subject  to a  Conversion  Notice  by  paying to the
          holders  of such  outstanding  Series  B  Preferred  Stock in cash the
          redemption  price of $11,000  per share of Series B  Preferred  Stock,
          together  with cash in the amount of all accrued and unpaid  dividends
          thereon  through the  Redemption  Date (as defined in  subsection  (c)
          herein),  if (i) a Conversion  Notice is submitted which, if accepted,
          would  otherwise  require  the  Corporation  to  issue  in  excess  of
          1,915,000  shares of Common Stock in  combination  with all  Preferred
          Shares   previously   converted  and  (ii)  the  shareholders  of  the
          Corporation  vote  against an  increase in the number of the shares of
          Common Stock  authorized for issuance upon  conversion of the Series B
          Preferred Stock at the 1997 Annual Meeting of Shareholders.

     (c)  Mechanics of Redemption.  Notwithstanding  Section 5(a), if any shares
          of Series B Preferred  Stock subject to a Conversion  Notice are to be
          redeemed pursuant to subsection (a) or (b) hereof, notice thereof (the
          "Redemption  Notice")  shall be sent  immediately  upon receipt by the
          Corporation  of such  Conversion  Notice to the  holder(s)  requesting
          conversion  by telecopier  and for overnight  delivery by a nationally
          recognized  overnight express courier service,  to such holder at such
          holder's address and telecopier number as the same shall appear on the
          books of the Corporation.  The Corporation  shall redeem the shares of
          Series B Preferred  Stock it is redeeming  pursuant to subsections (a)
          or (b) hereof on the seventh (7th)  calendar day following the date on
          which the Corporation  provides a Redemption  Notice (the  "Redemption
          Date").  The  Redemption  Notice  shall  state  that (a) the shares of
          Preferred  Stock  will be  redeemed  at the close of  business  on the
          Redemption  Date,  (b) the  redemption  price,  (c) the place at which
          certificates  for  shares  of  Series B  Preferred  Stock  called  for
          redemption  must be surrendered to collect the redemption  price,  (d)


                                      -20-
<PAGE>
          dividends on shares of Series B Preferred  Stock called for redemption
          cease to accrue  at the close of the last day prior to the  Redemption
          Date and (e) the Section of this Certificate of  Designations,  Voting
          Powers,  Preferences  and  Rights  pursuant  to  which  they are to be
          redeemed.  If, on the Redemption Date, the Corporation fails to pay to
          the holder(s) the redemption  price in cash for all of the outstanding
          shares of Series B Preferred Stock,  then the Corporation shall pay in
          cash to the holder(s) thereof,  as liquidated damages, an amount equal
          to 2.0% of the  redemption  price for each  thirty (30)  calendar  day
          period, or portion thereof,  during which the redemption price remains
          unpaid,  which  period  shall  commence on the  Redemption  Date.  Any
          payments  required  to be  made  by the  Corporation  pursuant  to the
          preceding  sentence  shall be made in cash and on the last day of each
          period as described  therein and shall not have the effect of reducing
          the redemption price.

     (d)  Partial  Redemption.  If less  than all of the  outstanding  shares of
          Series B Preferred Stock are to be redeemed, the shares to be redeemed
          shall be determined  pro rata relative to each holder's  percentage of
          ownership of the outstanding  shares of Series B Preferred Stock as of
          the date of the Redemption Notice. From and after the Redemption Date,
          unless the  Corporation  shall  default in the  payment of  redemption
          price pursuant to the Redemption Notice, all dividends on the Series B
          Preferred  Stock  shall  cease to accrue and all rights of the holders
          thereof  as  stockholders  of the  Corporation,  except  the  right to
          receive the redemption  price (but without  interest  thereon),  shall
          cease and  terminate.  Any and all shares of Series B Preferred  Stock
          redeemed,   purchased  or  otherwise   acquired  by  the   Corporation
          thereafter  shall be canceled and returned to the status of authorized
          and unissued Preferred Stock.

     (e)  Transfer Books. To facilitate the redemption of any shares of Series B
          Preferred  Stock,  the Board of Directors is  authorized  to cause the
          transfer  books for such Series B  Preferred  Stock to be closed as to
          the shares to be redeemed, unless the rules of any national securities


                                      -21-
<PAGE>
          exchange or automated quotation system on which the Series B Preferred
          Stock may be listed or quoted  prohibit  the closing of such  transfer
          books.

6.   No Preemptive  Rights. No holder of Series B Preferred Stock shall have any
     preemptive or preferential  right of subscription to any shares of stock of
     the  Corporation,  or to options,  warrants or other  interests  therein or
     therefor, or to any obligations  convertible into stock of the Corporation,
     issued or sold,  or any right of  subscription  to any  thereof  other than
     such, if any, as the Board of Directors,  in its  discretion,  from time to
     time may  determine  and at such price or prices as the Board of  Directors
     from  time to time  may fix  pursuant  to the  authority  conferred  by the
     Corporation's Certificate of Incorporation.

7.   Certain  Restrictions.   So  long  as  any  Series  B  Preferred  Stock  is
     outstanding, the Corporation shall not, without the consent of holders of a
     majority  of the  outstanding  shares  of  Series B  Preferred  Stock,  (i)
     purchase,  redeem  or  otherwise  acquire  any  shares  of any class of the
     Corporation's  outstanding  capital stock (except as otherwise  provided in
     Section  4(b) hereof and pursuant to  repurchase  programs in effect on the
     date hereof),  (ii) issue any class or series of any class of capital stock
     which ranks prior to the Series B Preferred  Stock with respect to dividend
     rights  or  rights  on  liquidation,   winding-up  or  dissolution  of  the
     Corporation  or (iii) amend,  alter or change the  preferences or rights of
     any  series or class of capital  stock of the  Corporation  (including  the
     Series  B  Preferred   Stock)  or  the   qualifications,   limitations   or
     restrictions  thereof if such  amendment,  alteration  or change  adversely
     affects the Series B Preferred Stock.

8.   Definitions.

     (a)  "Additional  Shares of Common  Stock"  shall mean all shares of Common
          Stock issued by the Corporation after February 18, 1997, except Common
          Stock  which may be issued  pursuant  to:  (i) the  conversion  of the
          Series B  Preferred  Stock;  (ii) the  exercise  by  employees  of the
          Corporation or any of its  subsidiaries of options granted pursuant to
          any stock option plan which may hereafter be adopted by the


                                      -22-
<PAGE>
          Corporation  where the exercise price of such options is not less than
          the fair market  value of a share of Common Stock on the date of grant
          thereof;  (iii) the exercise of any warrants to purchase  Common Stock
          issued by the  Corporation  and  outstanding  as of February 18, 1997;
          (iv) the warrant and/or options to be issued to various consultants of
          the Corporation not to exceed 300,000;  and (v) any obligations of the
          Corporation  to  issue  securities   pursuant  to  the  terms  of  any
          employment arrangements in effect on the date hereof.

     (b)  "Bankruptcy Code" shall mean 11 U.S.C. ss. 101 et seq, as amended, and
          any  successor  statute  or  statute  having  substantially  the  same
          function.

     (c)  "Change  in  Control"  shall  mean a merger  or  consolidation  of the
          Corporation  with  any  other  corporation,  other  than a  merger  or
          consolidation  which  would  result in the  voting  securities  of the
          Corporation   outstanding  immediately  prior  thereto  continuing  to
          represent (either by remaining  outstanding or by being converted into
          voting  securities  of the  surviving  entity) at least fifty  percent
          (50%) of the  total of the  voting  power  represented  by the  voting
          securities of the  Corporation  or such surviving  entity  outstanding
          immediately  after such merger or consolidation or, except as provided
          under Section 2 hereof,  the closing of a sale or  disposition  by the
          Corporation of all or substantially  all of the  Corporation's  assets
          (other than to a subsidiary or subsidiaries of the Corporation).

     (d)  "Common   Stock"  shall  mean  the  shares  of  common  stock  of  the
          Corporation,  par value $.001 per share, and any stock into which such
          Common Stock may hereinafter be changed.

     (e)  "Conversion Date" shall have the meaning such term is given in Section
          3(b) hereof.

     (f)  "Conversion  Notice"  shall  have the  meaning  such  term is given in
          Section 3(b) hereof.

     (g)  "Conversion  Price"  shall  have  the  meaning  such  term is given in
          Section 3(a) hereof.


                                      -23-
<PAGE>
     (h)  "Conversion  Shares"  shall  have the  meaning  such  term is given in
          Section 3(a) hereof.

     (i)  "Convertible Securities" shall mean evidences of indebtedness,  shares
          of stock or other securities which are convertible into or exercisable
          or   exchangeable   for,   with  or  without   payment  of  additional
          consideration  in cash or property,  for  Additional  Shares of Common
          Stock,  either  immediately or upon the arrival of a specified date or
          the happening of a specified event.

     (j)  "Current  Market  Price" per share of Common  Stock at any date herein
          specified  shall  mean the  average of the daily  market  prices for 5
          consecutive  Trading Days ending on the last trading day prior to such
          date,  except that for purposes of Section  3(c) hereof,  the "Current
          Market  Price" per share of Common Stock shall mean the market  prices
          on the Trading Day therein  specified.  The market price for each such
          Trading  Day shall be (i) if the Common  Stock is quoted on the Nasdaq
          National  Market or Nasdaq Small Cap Market,  the reported  last sales
          price, or (ii) if the Common Stock is listed or admitted to trading on
          a national securities exchange, the last reported sales prices regular
          way, or (iii) if the Common  Stock is quoted on the NASD OTC  Bulletin
          Board, the average of the closing bid and asked prices regular way, or
          (iv) if the Common Stock is not so quoted, as reasonably determined by
          the Board of Directors of the Corporation.

     (k)  "Dividend Shares" shall have the meaning such term is given in Section
          4 hereof.

     (l)  "Issue Date" shall have the meaning such term is given in Section 3(a)
          hereof.

     (m)  "Junior  Stock"  shall  mean the  Common  Stock or any other  class or
          series  of  capital  stock  of the  Corporation  which  at the time of
          issuance  is not  declared  to be  senior  to or on a parity  with the
          Series B Preferred Stock as to dividends or rights upon liquidation.


                                      -24-
<PAGE>
     (n)  "Liquidation  Preference" shall have the meaning such term is given in
          Section 2 hereof.

     (o)  "Maturity  Date" shall have the meaning  such term is given in Section
          3(e) hereof.

     (p)  "Person" shall mean any individual, corporation, association, company,
          business  trust,  partnership,  joint  venture,  joint-stock  company,
          trust, unincorporated organization or association or government or any
          agency or political subdivision thereof.

     (q)  "Redemption Date" shall have the meaning such term is given in Section
          5(c) hereof.

     (r)  "Redemption  Notice"  shall  have the  meaning  such  term is given in
          Section 5(c) hereof.

     (s)  "Securities Act" shall mean the Securities Act of 1933, as amended.

     (t)  "Trading  Day" shall mean any day on which  trading takes place (a) in
          the  over-the-counter-market  and prices  reflecting  such trading are
          published by the National  Association of Securities Dealers Automated
          Quotation System or (b) if the Common Stock is then listed or admitted
          to  trading  on a  national  securities  exchange,  on  the  principal
          national  securities exchange on which the Common Stock is then listed
          or admitted to trading.


                                      -25-
<PAGE>
     IN WITNESS WHEREOF, the undersigned has executed this Certificate this 11th
day of February 1997.


                                       By:  /s/ Joel A. Freedman
                                          --------------------------------------
                                       Name: Joel A. Freedman
                                       Title: President


ATTEST:


By:  /s/ Frank A. Falco
   ----------------------------
Name:  Frank A. Falco
Title: Secretary


                                      -26-