<PAGE>
 
                            CERTIFICATE OF AMENDMENT

                                       OF

                          CERTIFICATE OF INCORPORATION

                                       OF

                            BOSTON LIFE SCIENCES, INC

                         Pursuant to Section 242 of the
                        Delaware General Corporation Law



           BOSTON LIFE SCIENCES, INC. (the "Corporation"), a corporation
organized and existing under and by virtue of the General Corporation Law of the
State of Delaware, DOES HEREBY CERTIFY:

           FIRST: That at a meeting of the Board of Directors of the
Corporation, resolutions were duly adopted proposing and declaring advisable the
following amendment to the Certificate of Incorporation of the Company:

           RESOLVED, that the Board of Directors hereby approves and recommends
     to the Company's stockholders that Article FOURTH of the Articles of
     Incorporation of the Company be, and it hereby is, subject to stockholder
     approval at the Meeting, amended and restated in its entirety to read as
     follows:

                 "FOURTH: The aggregate number of shares which the Corporation
           shall have authority to issue is 26,000,000 to be divided into (a)
           25,000,000 shares of Common Stock, par value $.01 per share, (b)
           1,000,000 shares of Preferred Stock, par value $.01 per share, of
           which 264,000 shares are designated as Series A Convertible Preferred
           Stock, par value $.01 per share, with the powers, preferences and
           other rights as described on Exhibit A attached hereto and made a
           part hereof.

                 The Board of Directors is hereby empowered to cause the
           Preferred Stock to be issued from time to time for such consideration
           as it may from time to time fix, and to cause such Preferred Stock to
           be issued in series with such voting powers, designations,
           preferences and relative, participating, optional or other special
           rights, if any, or the qualifications, limitations or restrictions
           thereof, as designated by
<PAGE>
 
           the Board of Directors in the resolution providing for the issue of
           such series. Shares of Preferred Stock of any one series shall be
           identical in all respects.
                                    
               Effective as of 5:00 p.m., Eastern time, on June 9, 1997, all
           outstanding shares of Common Stock held by each holder of record on
           such date shall be automatically combined at the rate of one-for-ten
           without any further action on the part of the holders thereof or this
           Corporation. No fractional shares shall be issued. All fractional
           shares for one-half share or more shall be increased to the next
           higher whole number of shares and all fractional shares less than 
           one-half share shall be decreased to the next lower whole number of
           shares, respectively."

           SECOND: That thereafter a majority of the holders of the stock of the
Corporation entitled to vote thereon voted in favor of the amendment at a
meeting of the stockholders duly held on June 6, 1997.

           THIRD: That the foregoing amendment to the Certificate of
Incorporation was duly adopted in accordance with the provisions of Section 242
of the General Corporation Law.

           IN WITNESS WHEREOF, said Boston Life Sciences, Inc. has caused this
Certificate to be executed by its duly authorized officers this 6th day of June,
1997.

                                           BOSTON LIFE SCIENCES, INC.


                                           By:  /s/ Joseph Hernon
                                               --------------------------
                                           Name:  Joseph Hernon
                                           Title: Chief Financial Officer

                                       2
<PAGE>
 
                                   EXHIBIT A
                                   ---------

                     Series A Convertible Preferred Stock
                     ------------------------------------


        1.  Designation and Amount.  There shall be a series of Preferred Stock 
            ----------------------
designated as "Series A Convertible Preferred Stock" and the number of shares 
constituting such series shall be 264,000.  Such series is referred to herein as
the "Series A Convertible Preferred Stock".  Such number of shares may be 
increased or decreased by resolution of the Board of Directors of the 
Corporation; provided, however, that no decrease shall reduce the number of 
shares of Series A Convertible Preferred Stock to less than the number of shares
then issued and outstanding.

        2.  Dividends.  Subject to the prior and superior rights of the holders 
            ---------
of any shares of any series of Preferred Stock ranking and superior to the 
shares of Series A Convertible Preferred Stock with respect to dividends and 
distributions, the holders of shares of Series A Convertible Preferred Stock, 
shall be entitled to receive dividends and distributions, when, as and if 
declared by the Board of Directors out of funds legally available for such 
purpose.  If the Corporation declares a dividend





                           [CONTINUED ON NEXT PAGE]


<PAGE>
 
or distribution on the common stock, par value $.01 per share (the "Common 
Stock"), of the Corporation, the holders of shares of Series A Convertible 
Preferred Stock shall be entitled to receive for each share of Series A 
Convertible Preferred Stock a dividend or distribution in the amount of the 
dividend or distribution that would be received by a holder of the Common Stock 
into which such share of Series A Convertible Preferred Stock is convertible on 
the record date for such dividend or distribution. If the Corporation declares a
dividend or distribution on any other class or series of preferred stock, the 
holders of shares of Series A Convertible Preferred Stock shall be entitled to 
receive a dividend or distribution in an amount per share in proportion to the 
dividend or distribution declared on a share of such other class or series based
upon the liquidation preference of a share of the Series A Convertible Preferred
Stock relative to that of a share of such other class or series, unless the 
holders of at least 66-2/3% of the outstanding shares of Series A Convertible 
Preferred Stock consent otherwise. In any such case, the Corporation shall 
declare a dividend or distribution on the Series A Convertible Preferred Stock 
at the same time that it declares a dividend or distribution on the Common Stock
or such other class or series of preferred stock and shall establish the same 
record date for the dividend or distribution on the Series A Convertible 
Preferred Stock as is established for such dividend or distribution on the 
Common Stock or such other class or series of preferred stock. Each such 
dividend or distribution will be payable to holders of record of the Series A 
Convertible Preferred Stock as they appeared on the records of the Corporation 
at the close of business on the record date declared for such dividend or 
distribution, as shall be fixed by the Board of Directors. If the corporation 
declares or pays a dividend or distribution on the Series A Convertible 
Preferred Stock as a result of the declaration or payment of a dividend or 
distribution on the Common Stock or any other class or series of preferred stock
as described above, the holders of the Series A Convertible Preferred Stock 
shall not be entitled to any additional dividend or distribution solely because 
such first dividend or distribution also required the declaration or payment of 
a dividend or distribution on any other class or series of preferred stock. Any 
reference to "distribution" contained in this Section 2 shall not be deemed to 
include any distribution made in connection with any liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary.

     3.  Liquidation Preference.  (a)  In the event of a (i) liquidation, 
         ----------------------
dissolution or winding up of the Corporation, whether voluntary or involuntary 
or (ii) a sale or other disposition of all or substantially all of the assets of
the Corporation (a "Liquidation Event"), after payment or provision for payment 
of debts and other liabilities of the Corporation, the holders of the Series A 
Convertible Preferred Stock then outstanding shall be entitled to be paid out of
the assets of the Corporation available for distribution to its shareholders, 
whether such assets are capital, surplus, or earnings, before any payment or 
declaration and setting apart for payment of any amount shall be made in respect
of the stock junior to the Series A Convertible Preferred Stock, an amount equal
to $130.00 per share plus an amount equal to all declared and unpaid dividends 
thereon. If upon any Liquidation Event, whether voluntary or involuntary, the 
assets to be distributed to holders of the Series A Convertible Preferred Stock 
shall be insufficient to permit the payment to such shareholders of the full 
preferential amounts aforesaid, then all of the assets of the Corporation to be 
distributed shall be so distributed ratably to the holders of the Series A 
Convertible Preferred Stock on the basis of the number of shares of Series A 
Convertible Preferred Stock held. A consolidation or merger of the Corporation 
with or into another corporation shall not be considered a liquidation, 
dissolution or winding up of the Corporation or a sale or other disposition of 
all or substantially all of the assets of the Corporation. All shares of Series 
A Convertible Preferred Stock shall rank as to payment upon the occurrence of 
any of the events described in clauses (i) and (ii) above senior to the Common 
Stock as provided herein and, unless the terms of such series shall provide 
otherwise, senior to all other series of the Corporation's preferred stock.

                                       2
<PAGE>
 
          (b)  After the payment or distribution to the holders of the Series A 
Preferred Stock of the full preferential amounts aforesaid, the holders of 
shares of the Common Stock and any other shares of participating preferred stock
then outstanding will be entitled to receive, pro rata an amount per share equal
                                              --- ----
to $13 plus accrued but unpaid dividends, if any, paid to the holders of the 
Series A Convertible Preferred Stock. After the payment or distribution pursuant
to the immediately preceding sentence, the holders of shares of the Series A 
Convertible Preferred Stock, the Common Stock and any other shares of 
participating preferred stock then outstanding will share any remaining assets 
of the Corporation on a pari passu, as converted basis. 
                        ---- -----

          4.   Conversion.
               ----------
 
          (a) Right of Conversion. The shares of Series A Convertible Preferred
              ------------------- 
Stock shall be convertible, in whole or in part, at the option of the holder
thereof and upon notice to the Corporation as set forth in paragraph (b) below,
into fully paid and nonassessable shares of Common Stock and such other
securities and property as hereinafter provided. The shares of Series A
Convertible Preferred Stock shall be convertible initially at the rate of
175.3771 shares of Common Stock for each full share of Series A Convertible
Preferred Stock and shall be subject to adjustment as provided herein. The
initial conversion price per share of Common Stock is $.5702 and shall be
subject to adjustment as provided herein. For purposes of this resolution, the
"conversion rate" applicable to a share of Series A Convertible Preferred Stock
shall be the number of shares of Common Stock and number or amount of any other
securities and property as hereinafter provided into which a share of Series A
Convertible Preferred Stock is then convertible and shall be determined by
dividing the then existing conversion price into $100.00.

          Subject to adjustment pursuant to the provisions of paragraph (c) 
below, in the event that the conversion price in effect at the time of each 
Interim Closing Date (as defined below) and the Final Closing Date (as defined 
below) is greater than 85% of the average closing bid price of the Common Stock 
for the thirty consecutive trading days immediately preceding (x) any interim 
closing date of the issuance and sale of the Series A Convertible Preferred
Stock (each an "Interim Closing Date") or (y) the final closing date of the
issuance and sale of the Series A Convertible Preferred Stock (the "Final
Closing Date"), then the conversion price shall be adjusted to equal the lesser
of any such average closing bid price. If there is any change in the conversion
price as a result of the preceding sentence, then the conversion rate shall be
changed accordingly, and shall be determined by dividing the new conversion
price into $100.00. The Corporation shall prepare a certificate signed by the
principal financial officer of the Corporation setting forth the conversion rate
as of the Final Closing Date, showing in reasonable detail the facts upon which
such conversion rate is based, and such certificate shall forthwith be filed
with the transfer agent of the Series A Convertible Preferred Stock.
Notwithstanding the provisions of subparagraph (vi) of paragraph (c) below, a
notice stating that the conversion rate has been adjusted pursuant to this
paragraph, or that no adjustment is necessary, and setting forth the conversion
rate in effect as of the Final Closing Date shall be mailed as promptly as
practicable after the Final Closing Date by the Corporation to all record
holders of Series A Convertible Preferred Stock at their last addresses as they
shall appear in the stock transfer books of the Corporation.

          Subject to adjustment pursuant to the provisions of paragraph (c) 
below, the conversion price in effect immediately prior to the date that is 12 
months after the Final Closing Date of the issuance and sale of the Series A 
Convertible Preferred Stock (the "Reset Date") shall be adjusted and reset 
effective as of the Reset Date if the average closing bid price of the Common 
Stock for the 30

                                       3
<PAGE>
 
consecutive trading days immediately preceding the Reset Date (the "12-Month 
Trading Price") is less than 130% of the then applicable conversion price (a 
"Reset Event"). Upon the occurrence of a Reset Event, the conversion price shall
be reduced to be equal to the greater of (A) the 12-Month Trading Price divided 
by 1.3, (B) 50% of the then applicable conversion price and (C) $.375 (subject 
to a proportional adjustment in the event of an adjustment to the conversion 
price pursuant to paragraph 4(c) below). If there is any change in the 
conversion price as a result of the preceding sentence, then the conversion rate
shall be changed accordingly, and shall be determined by dividing the new 
conversion price into $100.00. The Corporation shall prepare a certificate 
signed by the principal financial officer of the Corporation setting forth the 
conversion rate as of the Reset Date, showing in reasonable detail the facts 
upon which such conversion rate is based, and such certificate shall forthwith 
be filed with the transfer agent of the Series A Convertible Preferred Stock. 
Notwithstanding the provisions of subparagraph (vi) of paragraph (c) below, a 
notice stating that the conversion rate has been adjusted pursuant to this 
paragraph, or that no adjustment is necessary, and setting forth the conversion 
rate in effect as of the Reset Date shall be mailed as promptly as practicable 
after the Reset Date by the Corporation to all record holders of the Series A 
Convertible Preferred Stock at their last addresses as they shall appear in the 
stock transfer books of the Corporation.

          The "closing bid price" for each trading day shall be the reported 
closing bid price on the NASDAQ Small-Cap Market or the NASDAQ National Market 
System (collectively referred to as, "NASDAQ") or, if the Common Stock is not 
quoted on NASDAQ, on the principal national securities exchange on which the 
Common Stock is listed or admitted to trading (based on the aggregate dollar 
value of all securities listed or admitted to trading) or, if not listed or 
admitted to trading on any national securities exchange or quoted on NASDAQ, the
closing bid price in the over-the-counter market as furnished by any NASD member
firm selected from time to time by the Corporation for that purpose, or, if such
prices are not available, the fair market value set by, or in a manner 
established by, the Board of Directors of the Corporation in good faith. 
"Trading day" shall mean a day on which the national securities exchange or 
NASDAQ used to determine the closing bid price is open for the transaction of 
business or the reporting of trades or, if the closing bid price is not so 
determined, a day on which NASDAQ is open for the transaction of business.

          (b)   Conversion Procedures.  Any holder of shares of Series A 
                ---------------------
Convertible Preferred Stock desiring to convert such shares into Common Stock 
shall surrender the certificate or certificates evidencing such shares of Series
A Convertible Preferred Stock at the office of the transfer agent for the Series
A Convertible Preferred Stock, which certificate or certificates, if the 
Corporation shall so require, shall be duly endorsed to the Corporation or 
in blank, or accompanied by proper instruments of transfer to the Corporation or
in blank, accompanied by irrevocable written notice to the Corporation that the 
holder elects so to convert such shares of Series A Convertible Preferred Stock 
and specifying the name or names (with address) in which a certificate or 
certificates evidencing shares of Common Stock are to be issued. The Corporation
need not deem a notice of conversion to be received unless the holder complies 
with all the provisions hereof. The Corporation will instruct the transfer agent
(which may be the Corporation) to make a notation of the date that a notice of 
conversion is received, which date shall be deemed to be the date of receipt for
purposes hereof.

          The Corporation shall, as soon as practicable after such deposit of 
certificates evidencing shares of Series A Convertible Preferred Stock 
accompanied by the written notice and compliance with any other conditions
herein contained, deliver at such office of such transfer agent to the person
for whose account such share of Series A Convertible Preferred Stock were so
surrendered, or to the nominee or nominees of such person, certificates
evidencing the number of full shares of Common Stock to which such person shall
be entitled as aforesaid, together with a cash adjustment of any fraction of a

                                       4


         



<PAGE>
 
share as hereinafter provided. Subject to the following provisions of this 
paragraph, such conversion shall be deemed to have been made as of the date of 
such surrender of the shares of Series A Convertible Preferred Stock to be 
converted, and the person or persons entitled to receive the Common Stock 
deliverable upon conversion of such Series A Convertible Preferred Stock shall 
be treated for all purposes as the record holder or holders of such Common 
Stock on such date; provided, however, that the Corporation shall not be 
required to convert any shares of Series A Convertible Preferred Stock while the
stock transfer books of the Corporation are closed for any purpose, but the 
surrender of Series A Convertible Preferred Stock for conversion during any 
period while such books are so closed shall become effective for conversion 
immediately upon the reopening of such books as if the surrender had been made 
on the date of such reopening, and the conversion shall be at the conversion 
rate in effect on such date. No adjustments in respect of any dividends on 
shares surrendered for conversion or any dividend on the Common Stock issued 
upon conversion shall be made upon the conversion of any shares of Series A 
Convertible Preferred Stock.

          All notices of conversion shall be irrevocable; provided, however, 
that if the Corporation has sent notice of an event pursuant to Section 4(g) 
hereof, a holder of Series A Convertible Preferred Stock may, at its election, 
provide in its notice of conversion that the conversion of its shares of Series 
A Convertible Preferred Stock shall be contingent upon the occurrence of the 
record date or effectiveness of such event (as specified by such holder), 
provided that such notice of conversion is received by the Corporation prior to 
such record date or effective date, as the case may be.

          (c)  Certain Adjustments of Conversion Rate. In addition to adjustment
               --------------------------------------
pursuant to paragraph (a) above, the conversion rate (and the corresponding 
conversion price) shall be subject to adjustment from time to time as follows:

          (i)  In case the Corporation shall (A) pay a dividend in Common Stock 
     or make a distribution in Common Stock, (B) subdivide its outstanding 
     Common Stock, (C) combine its outstanding Common Stock into a smaller 
     number of shares of Common Stock or (D) issue by reclassification of its 
     Common Stock other securities of the Corporation, then in each such case
     the conversion rate in effect immediately prior thereto shall be adjusted
     so that the holder of any shares of Series A Convertible Preferred Stock
     thereafter surrendered for conversion shall be entitled to receive the kind
     and number of shares of Common Stock or other securities of the Corporation
     which such holder would have owned or would have been entitled to receive
     immediately after the happening of any of the events described above had
     such shares of Series A Convertible Preferred Stock been converted
     immediately prior to the happening of such event or any record date with
     respect thereto. Any adjustment made pursuant to this subparagraph (i)
     shall become effective immediately after the effective date of such event
     retroactive to the record date, if any, for such event.

          (ii)  In case the Corporation shall issue or sell Common Stock or 
     rights, options, warrants or other securities convertible into Common 
     Stock, excluding those rights, options, warrants or other securities 
     convertible into Common Stock already outstanding and disclosed in the 
     Offering Memorandum, at a price per share which is lower than both (A) the 
     then effective conversion price and (B) the closing bid price (as defined 
     in Section 4) for the trading day immediately prior to such record date 
     (the "Current Market Price"), then the conversion rate shall be determined 
     by multiplying the conversion rate theretofore in effect by a fraction, of 
     which the numerator shall be the number of shares of Common Stock 
     outstanding immediately prior to the issuance of such shares, rights, 
     options, warrants or convertible securities plus the number of additional
     shares of Common Stock offered for subscription or purchase, and of which
     the

                                       5

<PAGE>
 
denominator shall be the number of shares of Common Stock outstanding 
immediately prior to the issuance of such rights, options, warrants or 
convertible securities plus the number of shares which the aggregate offering 
price of the total number of shares offered would purchase at the then effective
conversion price. Such adjustment shall be made whenever such rights, options, 
warrants or convertible securities are issued, and shall become effective 
immediately and retroactive to the record date for the determination of 
stockholders entitled to receive such rights, options, warrants or convertible 
securities.

     (iii)  In case the Corporation shall distribute to all or substantially all
holders of its Common Stock evidences of its indebtedness or assets (excluding 
cash dividends or distributions out of earnings) or rights, options, warrants or
convertible securities containing the right to subscribe for or purchase Common 
Stock (excluding those referred to in subparagraph (ii) above), then in each 
case the conversion rate shall be determined by multiplying the conversion rate 
theretofore in effect by a fraction, of which the numerator shall be the then 
fair value as determined in good faith by the Corporation's Board of Directors 
on the date of such distribution, and of which the denominator shall be such 
fair value on such date minus the then fair value (as so determined) of the 
portion of the assets or evidences of indebtedness so distributed or of such 
subscription rights, options, warrants or convertible securities applicable to 
one share. Such adjustment shall be made whenever any such distribution is made 
and shall become effective on the date of distribution retroactive to the record
date for the determination of stockholders entitled to receive such 
distribution.

     (iv)   Upon the expiration of any rights, options, warrants or conversion 
privileges, if such shall not have been exercised, the conversion rate shall, 
upon such expiration, be readjusted and shall thereafter be such as it would 
have been had it been originally adjusted (or had the original adjustment not 
been required, as the case may be) on the basis of (A) the fact that Common 
Stock, if any, actually issued or sold upon the exercise of such rights, 
options, warrants or conversion privileges, and (B) the fact that such shares of
Common Stock, if any, were issued or sold for the consideration actually 
received by the Corporation upon such exercise plus the consideration, if any, 
actually received by the Corporation for the issuance, sale or grant of all such
rights, options, warrants or conversion privileges whether or not exercised.

     (v)    No adjustment in the conversion rate shall be required unless such 
adjustment would require an increase or decrease of at least 1% in such rate; 
provided, however, that the Corporation may make any such adjustment at its 
election; and provided, further, that any adjustments which by reason of this 
subparagraph (v) are not required to be made shall be carried forward and taken 
into account in any subsequent adjustment. All calculations under this Section 4
shall be made to the nearest cent or to the nearest one-hundredth of a share, as
the case may be.

     (vi)   Whenever the conversion rate is adjusted as provided in any 
provision of this Section 4;

            (A)  the Corporation shall compute (or may retain a firm of
     independent public accountants of recognized national standing (which may
     be any such firm regularly employed by the Corporation) to compute) the
     adjusted conversion rate in accordance with this Section 4 and shall
     prepare a certificate signed by the principal financial officer of the
     Corporation (or cause any such independent public accountants to execute a
     certificate) setting forth the adjusted conversion rate and showing in
     reasonable detail the

                                       6
<PAGE>
 
           facts upon which each adjustment is based, and such certificate shall
           forthwith be filed with the transfer agent of the Series A
           Convertible Preferred Stock; and

                 (B)   a notice stating that the conversion rate has been 
           adjusted and setting forth the adjusted conversion rate shall
           forthwith be required, and as soon as practicable after it is
           required, such notice shall be mailed by the Corporation to all
           record holders of Series A Convertible Preferred Stock at their last
           addresses as they shall appear in the stock transfer books of the
           Corporation.

           (vii) In the event that at any time, as a result of any adjustment 
     made pursuant to this Section 4, the holder of any shares of Series A
     Convertible Preferred Stock thereafter surrendered for conversion shall
     become entitled to receive any shares of the Corporation other than shares
     of Common stock or to receive any other securities, the number of such
     other shares or securities so receivable upon conversion of any share of
     Series A Convertible Preferred Stock shall be subject to adjustment from
     time to time in a manner and on terms as nearly equivalent as practicable
     to the provisions contained in this Section 4 with respect to the Common
     Stock.

           (d)   No fractional Shares.  No fractional shares or scrip 
                 --------------------
representing fractional shares of Common stock shall be issued upon conversion 
of Series A Convertible Preferred Stock.  If more than one certificate 
evidencing shares of Series A Convertible Preferred Stock shall be surrendered 
for conversion at one time by the same holder, the number of full shares 
issuable upon conversion thereof shall be computed on the basis of the aggregate
number of shares of Series A Convertible Preferred Stock so surrendered.  
Instead of any fractional share of Common stock which would otherwise be 
issuable upon conversion of any shares of Series A Convertible Preferred Stock, 
the Corporation shall pay a cash adjustment in respect of such fractional 
interest in an amount equal to the same fraction of the market price per share 
of Common Stock (which shall be the closing price as defined in Section 5) at 
the close of business on the day of conversion.

           (e)   Consolidation; Merger; Etc.  If the Corporation shall enter 
                 --------------------------
into any consolidation, merger, combination or other transaction in which shares
of Common Stock constituting in excess of 50% of the voting power of the
Corporation are exchanged for or changed into other stock or securities, cash
and/or any other property (a "Merger Transaction"), then in any such case the
shares of Series A Convertible Preferred Stock shall at the same time be
similarly exchanged or changed in an amount per share equal to (i) the
conversion rate in effect at such time multiplied by (ii) the aggregate fair
market value, as determined in good faith by the Board of Directors of the
Corporation, of stock, securities, cash and/or any other property (payable in
kind), as the case may be, into which or for which each share of Common stock is
changed or exchanged (the "Per Share Merger Consideration"); provided, however,
                                                             --------  -------
that if any stock of securities received in the Merger Transaction are traded on
a securities exchange or quotation system, the fair market value of such stock
or securities shall be the closing sales price of such stock or securities as
reported by the principal exchange or quotation system for such stock or
securities the business day immediately preceding the execution of the merger
agreement or other transaction agreement for such Merger Transaction, and if no
such trading market exists for such stock or securities, the aggregate fair
market value shall be as determined in good faith by the Board of Directors of
the Corporation; provided, further, however, that if any such Merger Transaction
                 --------  -------  -------
is effected on or before the Reset Date, and if the Per Share Merger
Consideration (assuming conversion of all outstanding convertible stock,
including the Series A Convertible Preferred Stock, at the conversion rate for
such stock in effect at the time of the execution and delivery of the merger
agreement relating to such Merger Transaction) is less than 130% of the then
applicable conversion price relating to the Series A Convertible Preferred
Stock, then the conversion price will be reduced to equal the greater of (x) the
Per Share

                                       7
<PAGE>
 
Merger Consideration divided by 1.3, (y) 50% of the then applicable conversion 
price and (z) $.375 (subject to a proportional adjustment in the event of an 
adjustment to the conversion price pursuant to paragraph 4(c) above).

                (f)     Reservation of Shares; Transfer Taxes; Etc.  The 
                        ------------------------------------------
Corporation shall at all times reserve and keep available, out of its authorized
unissued stock, solely for the purpose of effecting the conversion of the Series
A Convertible Preferred Stock, such number of shares of its Common Stock free of
preemptive rights as shall from time to time be sufficient to effect the 
conversion of all shares of Series A Convertible Preferred Stock from time to 
time outstanding.  The Corporation shall use its best efforts from time to time,
in accordance with the laws of the State of Delaware, to increase the authorized
number of shares of Common Stock if at any time the number of shares of Common 
Stock not outstanding shall not be sufficient to permit the conversion of all 
the then-outstanding shares of Series A Convertible Preferred Stock.

                The Corporation shall pay any and all issue or other taxes that
may be payable in respect of any issue or delivery of shares of Common Stock on
conversion of the Series A Convertible Preferred Stock. The Corporation shall
not, however, be required to pay any tax which may be payable in respect of any
transfer involved in the issue or delivery of Common Stock (or other securities
or assets) in a name other than that in which the shares of Series A Convertible
Preferred Stock so converted were registered, and no such issue or delivery
shall be made unless and until the person requesting such issue has paid to the
Corporation the amount of such tax or has established, to the satisfaction of
the Corporation, that such tax has been paid.

                Notwithstanding anything to the contrary herein, before taking 
any action that would cause an adjustment reducing the conversion rate or before
any such adjustment is made as a result of a Reset Event, in either event, such 
that the effective conversion price (for all purposes an amount equal to $100.00
divided by the conversion rate as in effect at such time) would be below the 
then par value of the Common Stock, the Corporation shall take any corporate 
action which may, in the opinion of its counsel, be necessary in order that the 
Corporation may validly and legally issue fully paid and nonassessable shares of
Common Stock at the conversion rate as so adjusted.

                (g)     Prior Notice of Certain Events. In case:
                        ------------------------------

                (i)     the Corporation shall declare any dividend (or any other
distribution) on its Common Stock; or

                (ii)    the Corporation shall authorize the granting to the 
holders of Common Stock of rights or warrants to subscribe for or purchase any 
shares of stock of any class or of any other rights or warrants; or

                (iii)   of any reclassification of Common Stock (other than a 
subdivision or combination of the outstanding Common Stock, or a change in par 
value, or from par value to no par value, or from no par value to par value), or
of any consolidation or merger to which the Corporation is a party and for which
approval of any stockholders of the Corporation shall be required, or of the 
sale or transfer of all or substantially all of the assets of the Corporation or
of any compulsory share exchange whereby the Common Stock is converted into 
other securities, cash or other property; or



                                       8
<PAGE>
 
         (iv)   of the voluntary or involuntary dissolution, liquidation or
winding up of the Corporation;

then the Corporation shall cause to be filed with the transfer agent for the 
Series A Convertible Preferred Stock, and shall cause to be mailed to the 
holders of record of the Series A Convertible Preferred Stock, at their last 
addresses as they shall appear upon the stock transfer books of the Corporation,
at least 10 days prior to the applicable record date hereinafter specified, a 
notice stating (x) the date on which a record (if any) is to be taken for the 
purpose of such dividend, distribution or granting of rights or warrants or, if 
a record is not to be taken, the date as of which the holders of Common Stock of
record to be entitled to such dividend, distribution, rights or warrants are to 
be determined and a  description of the cash, securities or other property to be
received by such holders upon such dividend, distribution or granting of rights 
or warrants or (y) the date on which such reclassification, consolidation, 
merger, sale, transfer, share exchange, dissolution, liquidation or winding up 
is expected to become effective, the date as of which it is expected that 
holders of Common Stock of record shall be entitled to exchange their shares of 
Common Stock for securities or other property deliverable upon such exchange, 
dissolution, liquidation or winding up and the consideration, including 
securities or other property, to be received by such holders upon such exchange;
provided, however, that no failure to mail such notice or any defect therein or 
in the mailing thereof shall affect the validity of the corporate action 
required to be specified in such notice.

         (h)    Other Changes in Conversion Rate.  The Corporation from time to 
                --------------------------------
time may increase the conversion rate by any amount for any period of time if
the period is at least 20 days and if the increase is irrevocable during the
period. Whenever the conversion rate is so increased, the Corporation shall mail
to holders of record of the Series A Convertible Preferred Stock a notice of the
increase at least 10 days before the date the increased conversion rate takes
effect, and such notice shall state the increased conversion rate and the period
it will be in effect.

         The Corporation may make such increases in the conversion rate, in 
addition to those required or allowed by this Section 4, as shall be determined 
by it, as evidence by a resolution of the Board of Directors, to be advisable in
order to  avoid or diminish any income tax to holders of Common Stock resulting 
from any dividend or distribution of stock or issuance or rights or warrants to 
purchase or subscribe for stock or from any event treated as such for income tax
purposes.

         (i)    Ambiguities/Errors. The Board of Directors of the Corporation 
                ------------------
shall have the power to resolve any ambiguity or correct any error in the 
provisions relating to the convertibility of the Series A Convertible Preferred 
Stock, and its actions in so doing shall be final and conclusive.

         5.     Mandatory Conversion at Option of Corporation. At any time on or
                ---------------------------------------------
after the Reset Date, the Corporation, as its option, may cause the Series A 
Convertible Preferred Stock to be converted in whole, or in part, on a pro rata 
                                                                       --- ----
basis, into fully paid and nonassessable shares of Common Stock and such other 
securities and property as herein provided if the closing price of the Common 
Stock shall have exceeded 150% of the then applicable conversion price for at
least 20 trading days in any 30 consecutive trading day period. Any shares of
Series A Convertible Preferred Stock so converted shall be treated as having
been surrendered by the holder thereof for conversion pursuant to Section 4 on
the date of such mandatory conversion (unless previously converted at the option
of the holder).

         No more than 60 nor less than 10 days prior to the date of any such 
mandatory conversion, notice by first class mail, postage prepaid, shall be 
given to the holders of record of the Series A Convertible Preferred Stock to be
converted, addressed to such holders at their last addresses 

                                       9

<PAGE>
 
as shown on the stock transfer books of the Corporation.  Each such notice shall
specify the date fixed for conversion, the place or places for surrender of 
shares of Series A Convertible Preferred Stock, and the then effective 
conversion rate pursuant to Section 4.

               The "closing price" for each trading day shall be the reported 
last sales price regular way or, in case no such reported sale takes place on 
such day, the average of the reported closing bid and asked prices regular way, 
in either case on the NASDAQ Small-Cap Market or the NASDAQ National Market 
System (collectively referred to as, "NASDAQ") or, if the Common Stock is not 
quoted on NASDAQ, on the principal national securities exchange on which the 
Common Stock is listed or admitted to trading (based on the aggregate dollar 
value of all securities listed or admitted to trading) or, if not listed or 
admitted to trading on any national securities exchange or quoted on NASDAQ, the
average of the closing bid and asked prices in the over-the-counter market as 
furnished by any NASD member firm selected from time to time by the Corporation 
for that purpose, or, if such prices are not available, the fair market value 
set by, or in a manner established by, the Board of Directors of the Corporation
in good faith.  "Trading day" shall have the meaning given in Section 4 hereof.

               Any notice which is mailed as herein provided shall be 
conclusively presumed to have been duly given by the Corporation on the date 
deposited in the mail, whether or not the holder of the Series A Convertible 
Preferred Stock receives such notice; and failure properly to give such notice 
by mail, or any defect in such notice, to the holders of the shares to be 
converted shall not affect the validity of the proceedings for the conversion of
any other shares of Series A Convertible Preferred Stock. On or after the date 
fixed for conversion as stated in such notice, each holder of shares called to 
be converted shall surrender the certificate evidencing such shares to the 
Corporation at the place designated in such notice for conversion.  
Notwithstanding that the certificates evidencing any shares properly called for
conversion shall not have been surrendered, the shares shall no longer be deemed
outstanding and all rights whatsoever with respect to the shares so called for 
conversion (except the right of the holders to convert such shares upon 
surrender of their certificates therefor) shall terminate.

               6.    Voting Rights.
                     -------------

               (a)   General.  Except as otherwise provided herein, in the 
                     -------
Amended and Restated Certificate of Incorporation or by law, the holders of 
shares of Series A Convertible Preferred Stock, the holders of shares of Common 
Stock and the holders of any other class or series of shares entitled to vote 
with the Common Stock shall vote together as one class on all matters submitted 
to a vote of stockholders of the Corporation.  In any such vote, each share of 
Series A Convertible Preferred Stock shall entitle the holder thereof to cast 
the number of votes equal to the number of votes which could be cast in such 
vote by a holder of the Common Stock into which such share of Series A 
Convertible Preferred Stock is convertible on the record date for such vote, or 
if no record date has been established, on the date such vote is taken.  Any 
shares of Series A Convertible Preferred Stock held by the Corporation or any 
entity controlled by the Corporation shall not have voting rights hereunder and 
shall not be counted in determining the presence of a quorum.

               (b)   Class Voting Rights.  In addition to any vote specified in
                     -------------------
paragraph (a) of this Section 6, so long as 50% of the shares of Series A 
Convertible Preferred Stock (including those shares of Series A Convertible 
Preferred Stock issued or issuable upon the exercise of the placement agent 
warrants issued in connection with the offer and sale of the Series A 
Convertible Preferred Stock) shall be outstanding, the Corporation shall not, 
without the affirmative vote or consent of the holders of at least 66-2/3% of 
all outstanding Series A Convertible Preferred Stock voting separately as a 
class, (i) amend, alter or repeal any provision of the Amended and Restated 
Certificate of Incorporation, as amended, or 

                                      10


<PAGE>
 
the Bylaws of the Corporation so as adversely to affect the relative rights, 
preferences, qualifications, limitations or restrictions of the Series A 
Convertible Preferred Stock, (ii) declare any dividend or distribution on the 
Common Stock or any other class or series of preferred stock or authorize the 
repurchase of any securities of the Corporation or (iii) authorize or issue, or 
increase the authorized amount of, any additional class or series of stock, or 
any security convertible into stock of such class or series, (A) ranking prior 
to, or on a parity with, the Series A Convertible Preferred Stock upon 
liquidation, dissolution or winding up of the Corporation or a sale of all or 
substantially all of the assets of the Corporation or (B) providing for the 
payment of any dividends or distributions. A class vote on the part of the 
Series A Convertible Preferred Stock shall, without limitation, specifically not
be deemed to be required (except as otherwise required by law or resolution of 
the Corporation's Board of Directors) in connection with: (a) the authorization,
issuance or increase in the authorized amount of Common Stock or of any shares 
of any other class or series of stock ranking junior to the Series A Convertible
Preferred Stock in respect of distributions upon liquidation, dissolution or 
winding up of the Corporation; (b) the authorization, issuance or increase in 
the amount of the Series A Convertible Preferred Stock or any bonds, mortgages, 
debentures or other obligations of the Corporation (other than bonds, mortgages,
debentures or other obligations convertible into or exchangeable for or having 
option rights to purchase any shares of stock of the Corporation the 
authorization issuance or increase in amount of which would require the consent 
of the holders of the Series A Preferred Stock); or (c) any consolidation or 
merger of the Corporation with or into another corporation, a sale or transfer 
of all or part of the Corporation's assets for cash, securities or other 
property, or a compulsory share exchange.

          7.   Outstanding Shares.  For purposes of this Certificate of 
               ------------------
Designations, all shares of Series A Convertible Preferred Stock shall be deemed
outstanding except (i) from the date, or the deemed date, of surrender of 
certificates evidencing shares of Series A Convertible Preferred Stock, all 
shares of Series A Convertible Preferred Stock converted into Common Stock, (ii)
from the date of registration of transfer, all shares of Series A Convertible 
Preferred Stock held of record by the Corporation or any subsidiary of the 
Corporation and (iii) any and all shares of Series A Convertible Preferred Stock
held in escrow prior to delivery of such stock by the Corporation to the initial
beneficial owners thereof.

          8.   Status of Acquired Shares.  Shares of Series A Convertible 
               -------------------------
Preferred Stock received upon conversion pursuant to Section 4 or Section 5 or 
otherwise acquired by the Corporation will be restored to the status of 
authorized but unissued shares of Preferred Stock, without designation as to 
class, and may thereafter be issued, but not as shares of Series A Convertible 
Preferred Stock.

          9.   Preemptive Rights.  The Series A Convertible Preferred Stock is 
               -----------------
not entitled to any preemptive or subscription rights in respect of any 
securities of the Corporation.

          10.  Severability of Provisions.  Whenever possible, each provision 
               --------------------------
hereof shall be interpreted in a manner as to be effective and valid under 
applicable law, but if any provision hereof is held to be prohibited by or 
invalid under applicable law, such provision shall be ineffective only to the 
extent of such prohibition or invalidity, without invalidating or otherwise 
adversely affecting the remaining provisions hereof. If a court of competent 
jurisdiction should determine that a provision hereof would be valid or 
enforceable if a period of time were extended or shortened or a particular 
percentage were increased or decreased, then such court may make such change as 
shall be necessary to render the provision in question effective and valid under
applicable law.

                                      11