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                                                                     EXHIBIT 4.2

                           CERTIFICATE OF DESIGNATION
                                       FOR
            SERIES C-1 PREFERRED STOCK AND SERIES C-2 PREFERRED STOCK

USDATA Corporation (the "Corporation"), a corporation organized and existing
under and by virtue of the Delaware General Corporation Law (the "DGCL"), does
hereby certify that pursuant to the authority conferred upon the Board of
Directors by Article IV of its Certificate of Incorporation and the provisions
of Section 151 of the DGCL, the Board of Directors adopted a resolution setting
forth the designations, preferences, qualifications, privileges, limitations,
conversion rights and other rights of two series of its Preferred Stock
consisting of 250,000 shares which resolution is as follows:

RESOLVED, that, pursuant to the authority vested in the Board of Directors by
Article IV of the Certificate of Incorporation of the Corporation and the
provisions of Section 151 of the DGCL, the Board of Directors, hereby approves,
authorizes and establishes the following two series of Preferred Stock, par
value $0.01 per share: (1) "Series C-1 Preferred Stock" to consist of 125,000
shares and (2) "Series C-2 Preferred Stock" to consist of 125,000 shares. As
used herein, the term "Series C Preferred Stock" refers to both the Series C-1
Preferred Stock and the Series C-2 Preferred Stock. Each share of Series C
Preferred Stock shall have the following preferences, qualifications,
privileges, limitations, conversion rights and other rights:

         1. Rank. The Series C Preferred Stock shall, with respect to dividend
rights, rights on liquidation, dissolution and winding up, rank senior to all
other classes and series of stock of the Corporation, now or hereafter
authorized, issued or outstanding (collectively, "Junior Securities"),
including, without limitation, the Corporation's Common Stock, par value $0.01
per share ("Common Stock"), the Corporation's Series A Preferred Stock, par
value $0.01 per share (the "Series A Preferred Stock"), the Corporation's Series
B Preferred Stock, par value $0.01 per share (the "Series B Preferred Stock")
and all other series of the Corporation's Preferred Stock. The Corporation's
Certificate of Designation for Series A Preferred Stock and Series B Preferred
Stock (the "Series A and B Designation") is hereby amended to provide that the
Series B Preferred Stock shall, with respect to dividend rights, rights on
liquidation, dissolution and winding up, rank senior to the Series A Preferred
Stock. No dividends or other distributions (including payments pursuant to
liquidation, redemption or repurchase) shall be made with respect to the Series
A Preferred Stock until such time as the holders of the Series B Preferred Stock
shall have received from the Corporation, by way of dividends or other
distributions (including payments pursuant to liquidation, redemption or
repurchase), an amount equal to the Liquidation Amount (as such term is defined
in Section 3 of the Series A and B Designation). Except as otherwise provided
herein, each share of Series A Preferred Stock and Series B Preferred Stock
shall have the rights, qualifications, privileges, limitations, conversion
rights and other rights as set forth in the Series A and B Designation.

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         2. Dividends.

               a. The holders of the Series C Preferred Stock shall be entitled
to receive cumulative dividends at the rate of $4.00 per share per annum (as
adjusted for any stock dividends, combinations, splits or similar events)
whether or not earned or declared. Such dividends shall be payable in additional
shares of Series C Preferred Stock (valued at $40.00 per share, as adjusted for
any stock dividends, combinations, splits or similar events), (i) when, as and
if declared by the Board of Directors of the Corporation or (ii) upon conversion
of all of the Series C Preferred Stock to Common Stock pursuant to Section 6
below.

               b. No dividends or distributions of any sort (other than a
dividend payable solely in the Common Stock of the Corporation) shall be
declared or paid by the Corporation on any Junior Securities of the Corporation
so long as any accrued dividends on the Series C Preferred Stock remain unpaid.

               c. So long as shares of Series C Preferred Stock are outstanding,
the Corporation shall not declare or pay any distribution on any shares of its
Junior Securities except as otherwise provided in this Section 2.c. In the event
that the Corporation shall declare a dividend or distribution payable in
securities of other persons, evidences of indebtedness issued by the Corporation
or other persons, or options or rights to purchase any such securities or
evidences of indebtedness or other assets (including cash), to the holders of
the Common Stock of the Corporation, then the holders of the Series C Preferred
Stock shall be entitled to a proportionate share of any such dividend or
distribution as though the holders of the Series C Preferred Stock were the
holders of the number of shares of Common Stock of the Corporation into which
their respective shares of Series C Preferred Stock are convertible as of the
record date fixed for the determination of the holders of the Common Stock of
the Corporation entitled to receive such dividend or distribution.

               d. All numbers relating to calculation of cumulative dividends or
the payment of dividends on the Series C Preferred Stock in kind shall be
subject to equitable adjustment in the event of any stock dividend, stock split,
combination, reorganization, recapitalization, reclassification or other similar
event involving a change in the capital structure of the Series C Preferred
Stock.

         3. Liquidation Preference.

               a. In the event of any liquidation, dissolution or winding up of
the Corporation, whether voluntary or involuntary, (i) the holders of the Series
C-1 Preferred Stock shall be entitled prior and in preference to any
distribution of any of the assets or surplus funds of the Corporation to the
holders of the Junior Securities of the Corporation, by reason of their
ownership thereof, an amount equal to $80.00 (as adjusted for any stock
dividends, combinations, splits or similar events) plus all accrued but unpaid
dividends and interest thereon (the "Series C-1 Liquidation Amount") for each
share of Series C-1 Preferred Stock then held by them; and (ii) the holders of
the Series C-2 Preferred Stock shall be entitled prior and in preference to any
distribution of any of the assets or surplus funds of the Corporation to the
holders of the Junior Securities of the Corporation, by reason of their
ownership thereof, an amount equal to $120.00 (as adjusted for any stock
dividends, combinations, splits or similar events) plus all accrued but unpaid
dividends and interest thereon (the "Series C-2 Liquidation Amount") for each
share of Series C-2 Preferred Stock then held by them. The "Series C-1
Liquidation Amount" and the "Series C-2 Liquidation Amount" are hereinafter
individually and collectively referred to as the "Liquidation Amount". If upon
the occurrence of such event, the assets and funds thus distributed among the
holders of the Series C Preferred Stock shall be insufficient to permit the
payment to such holders of the full amounts required, then the entire assets and
funds of the Corporation legally available for distribution shall be distributed
ratably among the holders of the Series C Preferred Stock in proportion to the
aggregate amount each such holder is otherwise entitled to receive. The holders
of Series C Preferred Stock shall have the right to convert such shares into
Common Stock, in accordance with Section 6 hereof, at any time prior to or in
connection with any liquidation, dissolution or winding up of the Corporation.

               b. After payment to the holders of the Series C Preferred Stock
of the amounts set forth in Section 3.a. above, the entire remaining assets and
funds of the Corporation legally available for distribution, if any, to the
Corporation's stockholders shall be distributed among the holders of the Series
B

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Preferred Stock to the extent of the respective liquidation values of the Series
B Preferred Stock. After payment to the holders of the Series B Preferred Stock
of the amounts set forth herein, the entire remaining assets and funds of the
Corporation legally available for distribution, if any, to the Corporation's
stockholders shall be distributed among the holders of the Series A Preferred
Stock to the extent of the respective liquidation values of the Series A
Preferred Stock. After payment to the holders of the Series A Preferred Stock of
the amounts set forth herein, the entire remaining assets and funds of the
Corporation legally available for distribution, if any, to the Corporation's
stockholders shall be distributed among the holders of the Junior Securities
other than Series B Preferred Stock, Series A Preferred Stock and Common Stock
to the extent of the respective liquidation values of such Junior Securities.
After payment to the holders of any Junior Securities other than Series B
Preferred Stock, Series A Preferred Stock and Common Stock of the respective
liquidation values of such Junior Securities, the entire remaining assets and
funds of the Corporation legally available for distribution, if any, to the
Corporation's stockholders shall be distributed among the holders of the Common
Stock, the Series A Preferred Stock, the Series B Preferred Stock, the Series C
Preferred Stock and all other series of the Corporation's Preferred Stock whose
terms specifically provide that such series will rank on a parity with the
Series A Preferred Stock and the Series B Preferred Stock (the "Parity
Securities"), in proportion to the shares of Common Stock then held by them and
the shares of Common Stock which they then have the right to acquire upon
conversion of the shares of Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock and other Parity Securities then held by them;
provided, however, that, in connection with any such distribution, the holders
of the Series A Preferred Stock and the Series B Preferred Stock shall be
entitled to receive a maximum $500.00 (as adjusted for any stock split, stock
dividend, combination, reorganization, recapitalization, reclassification or
other similar event), including amounts received by the holders of the Series A
Preferred Stock and the Series B Preferred Stock in connection with a
liquidation of the Corporation and any other amounts distributed to the holders
of the Series A Preferred Stock and the Series B Preferred Stock pursuant to
this Section 3.b., for each outstanding share of Series A Preferred Stock and
Series B Preferred Stock held by them.

               c. For purposes of this Section 3, (i) any acquisition of the
Corporation by means of merger or other form of corporate reorganization in
which outstanding shares of the Corporation are exchanged for securities or
other consideration issued or paid, or caused to be issued or paid, by the
acquiring entity or its subsidiary (other than a mere reincorporation
transaction) or (ii) a sale, lease or conveyance of all or substantially all of
the assets of the Corporation (upon such written direction, each event described
in (i) and (ii), a "Corporate Transaction"), shall be treated as a liquidation,
dissolution or winding up of the Corporation and shall entitle the holders of
the Series C Preferred Stock to receive at the closing of such Corporate
Transaction in cash, securities or other property (valued as provided in Section
3.d. below) the amounts specified in Sections 3.a. and 3.b. above. The
provisions of this Section 3 shall not apply to any reorganization, merger or
consolidation involving (1) only a change in the state of incorporation of the
Corporation, (2) a merger of the Corporation with or into a wholly-owned
subsidiary of the Corporation that is incorporated in the United States of
America, or (3) an acquisition by merger, reorganization or consolidation of
another corporation (a) in which the Corporation is substantively the surviving
corporation, the Corporation continues to operate thereafter as a going concern
and the Corporation is not the target in such acquisition, and (b) that (i) is
approved by the Board of Directors of the Corporation, (ii) does not result in
the holders of the Corporation's Common Stock and Preferred Stock immediately
prior thereto holding less than 50% of the outstanding voting securities of the
surviving corporation immediately thereafter and (iii) does not involve a
recapitalization of the Series C Preferred Stock.

               d. Whenever the distribution provided for in this Section 3 shall
be payable in securities or property other than cash, the value of such
distribution shall be the fair market value of such securities or other property
as determined in good faith by the Board of Directors. The Liquidation Amount
shall in all events be paid in cash; provided, however, that if the Liquidation
Amount is otherwise payable in connection with a consolidation or merger of the
Corporation, or sale of substantially all of the capital stock of the
Corporation, then each holder of the Series C Preferred Stock shall receive
payments with respect to such shares in the same form of consideration as is
payable with respect to the Common Stock. In the event of any business
combination or acquisition involving the Corporation which is intended to be
treated as a "pooling of interests" for accounting purposes under Accounting
Principles Board Opinion No. 16, the acquisition consideration (including any
shares of capital stock or other securities to be delivered or exchanged by the
acquiring corporation) shall be reallocated

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among the holders of Series C Preferred Stock in an appropriate manner to give
economic effect to the essential intent and purposes of Sections 3.a, 3.b. and
3.c.

         4. Redemption.

None of the Series C Preferred Stock shall be redeemable.

         5. Voting Rights. Each holder of shares of Series C Preferred Stock
shall (a) be entitled to the number of votes equal to the number of whole shares
of Common Stock into which such shares of Series C Preferred Stock could be
converted, (b) have voting rights and powers equal to the voting rights and
powers of such Common Stock (except as otherwise expressly provided herein or as
required by law, voting together with the Common Stock as a single class), and
(c) be entitled to notice of any stockholders' meeting in accordance with the
Bylaws of the Corporation and the DGCL. Fractional votes shall not, however, be
permitted and any fractional voting rights resulting from the above formula
(after aggregating all shares into which shares of Series C Preferred Stock held
by each holder could be converted) shall be rounded to the nearest whole number
(with one-half being rounded upward). Except as otherwise expressly provided
herein or in the Certificate of Incorporation, the holders of shares of Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and Common
Stock shall vote together (or render written consents in lieu of a vote) as a
single class on all matters submitted to the stockholders of the Corporation.

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

               a. Right to Convert. Each share of Series C Preferred Stock shall
be convertible, at the option of the holder thereof, at any time at the office
of the Corporation or any transfer agent for such stock, into such number of
fully paid and nonassessable shares of Common Stock as is determined by dividing
$40.00 plus all accrued but unpaid dividends and interest thereon by the
conversion price applicable to such share (the "Conversion Price"), determined
as hereinafter provided, in effect on the date the certificate is surrendered
for conversion. The Conversion Price at which shares of Common Stock shall be
deliverable upon conversion of shares of the Series C Preferred Stock initially
shall be $0.40 per share of Common Stock. Such initial Conversion Price shall be
adjusted as hereinafter provided.

               b. Mechanics of Conversion. Before any holder of Series C
Preferred Stock shall be entitled to convert the same into shares of Common
Stock, such holder shall surrender the certificate or certificates therefor,
duly endorsed, at the office of the Corporation or of any transfer agent for
such stock, and shall give written notice to the Corporation at such office that
such holder elects to convert the same and shall state therein the name or names
in which such holder wishes the certificate or certificates for shares of Common
Stock to be issued. The Corporation shall, as soon as practicable thereafter,
issue and deliver at such office to such holder of Series C Preferred Stock a
certificate or certificates for the number of shares of Common Stock to which
such holder shall be entitled as aforesaid. Such conversion shall be deemed to
have been made immediately prior to the close of business on the date of
surrender of the shares of Series C Preferred Stock to be converted and the
person or persons entitled to receive the shares of Common Stock issuable upon
such conversion shall be treated for all purposes as the record holder or
holders of such shares of Common Stock on such date.

               c. Adjustments to Conversion Price for Certain Diluting Issues.

                    (i) Special Definitions. For purposes of this Section 6.c.,
the following definitions apply:

                         (1) "Options" shall mean rights, options, or warrants
to subscribe for, purchase or otherwise acquire either Common Stock or
Convertible Securities (defined below), other than rights, options or warrants
relating to Employee Stock (defined below).

                         (2) "Measurement Date" shall mean March 30, 2001.

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                         (3) "Convertible Securities" shall mean any evidences
of indebtedness, shares (other than Common Stock or Series C Preferred Stock) or
other securities convertible into or exchangeable for Common Stock (other than
Options).

                         (4) "Additional Shares of Common Stock" shall mean all
shares of Common Stock issued (or, pursuant to Section 6.c.(iii), deemed to be
issued) by the Corporation after the applicable Measurement Date, other than
shares of Common Stock issued (or deemed issued):

                              (A) upon conversion of shares of Series A
Preferred Stock, Series B Preferred Stock and Series C Preferred Stock;

                              (B) to outside directors, officers, employees and
consultants pursuant to the Corporation's 1994 Equity Compensation Plan or
Employee Stock Purchase Plan or other employee stock plan (the "Employee
Stock"), provided that (i) the issuance of such shares is or has been approved
by a majority of the members of the Board of Directors or any duly constituted
committee thereof and (ii) the number of shares of Employee Stock does not
exceed an aggregate of 2,700,000 shares (as adjusted for any stock dividends,
combinations, splits or similar events) regardless of whether issued by the
Corporation prior to the date hereof;

                              (C) as a dividend or distribution on Series A
Preferred Stock, Series B Preferred Stock and Series C Preferred Stock; or

                              (D) for which adjustment of the Conversion Price
is made pursuant to Section 6.d.

                    (ii) No Adjustment of Conversion Price. Any provision herein
to the contrary notwithstanding, no adjustment in the Conversion Price shall be
made in respect of the issuance of Additional Shares of Common Stock unless the
consideration per share (determined pursuant to Section 6.c.(v) hereof) for an
Additional Share of Common Stock issued or deemed to be issued by the
Corporation is less than the Conversion Price in effect on the date of, and
immediately prior to such issue. In computing each adjusted Conversion Price,
the result shall be rounded to five decimal places, and such adjustment shall be
made separately in each instance, and in the event the adjustment therefrom
results in a change of the Conversion Price of less than $0.01, no adjustment to
the then Conversion Price shall be made, but the amount of said adjustment
calculated thereby shall be carried forward to successive occasions until such
adjustments in the aggregate equal or exceed $0.01.

                    (iii) Deemed Issue of Additional Shares of Common Stock. In
the event the Corporation at any time or from time to time after the applicable
Measurement Date shall issue any Options or Convertible Securities or shall fix
a record date for the determination of holders of any class of securities then
entitled to receive any such Options or Convertible Securities, except, in both
cases, where Common Stock to be issued upon conversion or exercise of such
securities would not constitute Additional Shares of Common Stock, then the
maximum number of shares (as set forth in the instrument relating thereto
without regard to any provisions contained therein designed to protect against
dilution) of Common Stock issuable upon the exercise of such Options or, in the
case of Convertible Securities and Options therefor, the conversion or exchange
of such Convertible Securities, shall be deemed to be Additional Shares of
Common Stock issued as of the time of such issue or, in case such a record date
shall have been fixed, as of the close of business on such record date, provided
further that in any such case in which Additional Shares of Common Stock are
deemed to be issued:

                         (1) no further adjustments in the Conversion Price
shall be made upon the subsequent issue of Convertible Securities or shares of
Common Stock upon the exercise of such Options or conversion or exchange of such
Convertible Securities;

                         (2) if such Options or Convertible Securities by their
terms provide, with the passage of time or otherwise, for any increase in the
consideration payable to the Corporation, or

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decrease in the number of shares of Common Stock issuable, upon the exercise,
conversion or exchange thereof, the Conversion Price computed upon the original
issue thereof (or upon the occurrence of a record date with respect thereto),
and any subsequent adjustments based thereon, shall, upon any such increase or
decrease becoming effective, be recomputed to reflect such increase or decrease
insofar as it affects such Options or the rights of conversion or exchange under
such Convertible Securities (provided, however, that no such adjustment of the
Conversion Price shall affect Common Stock previously issued upon conversion of
Series C Preferred Stock); and

                         (3) no readjustment pursuant to clause (1) or (2) above
shall have the effect of increasing the Conversion Price to an amount which
exceeds the lower of (a) Conversion Price on the original adjustment date, or
(b) the Conversion Price that would have resulted from any issuance of
Additional Shares of Common Stock between the original adjustment date and such
readjustment date.

                    (iv) Adjustment of Conversion Price Upon Issuance of
Additional Shares of Common Stock.

                         (1) In the event that, at any time after the applicable
Measurement Date, the Corporation shall issue Additional Shares of Common Stock
(including Additional Shares of Common Stock deemed to be issued pursuant to
Section 6.c.(iii)) without consideration or for a consideration per share less
than the Conversion Price in effect on the date of and immediately prior to such
issue, then and in such event, the Conversion Price shall be reduced,
concurrently with such issue, to a price equal to the price per share paid for
such Additional Shares of Common Stock. The provisions of this paragraph may be
waived in any instance (without the necessity of convening any meeting of
stockholders of the Corporation) upon the written approval of the holders of a
majority of the outstanding shares of Series C Preferred Stock.

                    (v) Determination of Consideration. For purposes of this
Section 6.c., the consideration received by the Corporation for the issue of any
Additional Shares of Common Stock shall be computed as follows:

                         (1) Cash and Property: Such consideration shall:

                              (A) insofar as it consists of cash, be computed at
the aggregate amount of cash received by the Corporation;

                              (B) insofar as it consists of property other than
cash, be computed at the fair value thereof at the time of such issue, as
determined in good faith by the Board of Directors; and

                              (C) in the event Additional Shares of Common Stock
are issued together with other shares or securities or other assets of the
Corporation for consideration which covers both, be the proportion of such
consideration so received in exchange for the Additional Shares of Common Stock,
computed as provided in clauses (A) and (B) above, as determined in good faith
by the Board of Directors.

                         (2) Options and Convertible Securities. The
consideration per share received by the Corporation for Additional Shares of
Common Stock deemed to have been issued pursuant to Section 6.c.(iii), relating
to Options and Convertible Securities shall be determined by dividing:

                              (D) the total amount, if any, received or
receivable by the Corporation as consideration for the issue of such Options or
Convertible Securities, plus the minimum aggregate amount of additional
consideration (as set forth in the instruments relating thereto, without regard
to any provision contained therein designed to protect against dilution) payable
to the Corporation upon the exercise of such Options or the conversion or
exchange of such Convertible Securities, or in the case of Options for
Convertible Securities, the exercise of such Options for Convertible Securities
and the conversion or exchange of such Convertible Securities, by

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                              (E) the maximum number of shares of Common Stock
(as set forth in the instruments relating thereto, without regard to any
provision contained therein designed to protect against the dilution) issuable
upon the exercise of such Options or conversion or exchange of such Convertible
Securities.

               d. Adjustments to Conversion Price for Stock Dividends and for
Combinations or Subdivisions of Common Stock. In the event that the Corporation
at any time or from time to time after the applicable Measurement Date shall
effect a (i) subdivision of the outstanding shares of Common Stock into a
greater number of shares of Common Stock (by stock dividend, stock split,
reclassification or otherwise), or (ii) combination or consolidation of the
outstanding shares of Common Stock into a lesser number of shares of Common
Stock (by reclassification or otherwise), then the Conversion Price in effect
immediately prior to such event shall, concurrently with the effectiveness of
such event, be proportionately decreased or increased, as appropriate. In the
event that the Corporation shall declare or pay, without consideration, any
dividend on the Common Stock payable in Common Stock or in any right to acquire
Common Stock for no consideration, then the Corporation shall be deemed to have
subdivided the outstanding shares of Common Stock by an amount of shares equal
to the maximum number of shares issuable through such dividend and/or upon
exercise of such rights to acquire Common Stock.

               e. Adjustments to Conversion Price for Reclassification and
Reorganization. If the Common Stock issuable upon conversion of the Series C
Preferred Stock shall be changed into the same or a different number of shares
of any other class or classes of stock, whether by capital reorganization,
reclassification or otherwise (other than as provided for in Section 6.d. above
or in connection with a Corporate Transaction), the Conversion Price then in
effect shall, concurrently with the effectiveness of such reorganization or
reclassification, be proportionately adjusted so that the Series C Preferred
Stock shall be convertible into, in lieu of the number of shares of Common Stock
which the holders would otherwise have been entitled to receive, a number of
shares of such other class or classes of stock equivalent to the number of
shares of Common Stock that would have been subject to receipt by the holders
upon conversion of the Series C Preferred Stock immediately before that change.

               f. No Impairment. The Corporation shall not, by amendment of its
Certificate of Incorporation or the Certificate of Incorporation of any of its
subsidiaries through any reorganization, transfer of assets, consolidation,
merger, 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 shall at all times in
good faith assist in the carrying out of all the provisions of this Section 6
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 C Preferred Stock
against impairment.

               g. Certificates as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Conversion Price pursuant to this Section 6,
the Corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and prepare and furnish to each
holder of Series C Preferred Stock a certificate executed by the Corporation's
President or Chief Financial Officer setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. The Corporation shall, upon the written request at any
time of any holder of Series C Preferred Stock, furnish or cause to be furnished
to such holder a like certificate setting forth (i) such adjustments and
readjustments, (ii) the Conversion Price at the time in effect, and (iii) the
number of shares of Common Stock and the amount, if any, of other property which
at the time would be received upon the conversion of the Series C Preferred
Stock.

               h. Notices of Record Date. In the event that the Corporation
shall propose at any time to effect any reclassification or recapitalization, to
merge or consolidate with or into any other entity, or sell, lease or convey all
or substantially all of its assets, or to liquidate, dissolve or wind up, then,
in connection with each such event, the Corporation shall send to the holders of
Series C Preferred Stock: (1) at least 20 days prior written notice of the date
on which a record shall be taken for such event and specifying the date on which
such event shall occur; and (2) at least 20 days prior written notice of the
record date for determining rights to vote, if any, in respect of such event.

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

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

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

               l. Notices. Any notice required by the provisions of this Section
6 to be given to the holders of shares of Series C Preferred Stock shall be
deemed given if deposited in the United States mail, postage prepaid, and
addressed to each holder of record at his address appearing on the books of the
Corporation.

         7. Series C Restrictions and Limitations. So long as any shares of
Series C Preferred Stock remain outstanding, in addition to any other vote
required by the Delaware General Corporation Law, the vote or written consent or
written agreement of the holders of at least fifty percent of the then
outstanding shares of the Series C Preferred Stock, voting as a separate class,
shall be required in order to:

                    (i) alter, amend or modify the rights, preferences or
privileges of the Series C Preferred Stock;

                    (ii) increase the authorized number of shares of the Series
C Preferred Stock or issue any additional shares of Series C Preferred Stock
other than shares issued in payment of dividends on the outstanding shares of
Series C Preferred Stock pursuant to Section 2.a above;

                    (iii) authorize or issue, or obligate itself to issue, any
other equity security (including any security convertible into or exercisable
for any equity security) senior to or on a parity with the Series C Preferred
Stock as to dividend rights, liquidation preferences or redemption rights;

                    (iv) redeem, purchase or otherwise acquire any Parity
Securities or Junior Securities (or pay into a sinking fund for such purpose);
provided, however, that this restriction shall not apply to the repurchase of
shares of Common Stock at the original purchase price from employees, officers,
directors or other persons performing services for this Corporation;

                    (v) reorganize, merge or consolidate the Corporation with or
into any corporation if such reorganization, merger or consolidation would
result in the stockholders of the Corporation immediately prior to such
reorganization, merger or consolidation holding less than a majority of the
voting power of the stock of the surviving corporation immediately after such
reorganization, merger or consolidation;

                    (vi) sell, lease, convey or otherwise dispose of, or
encumber, all or substantially all the Corporation's assets in a single
transaction or series of related transactions; or

                    (vii) liquidate, dissolve or wind-up the Company.

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<PAGE>   9

               a. Board of Directors. The holders of the Series C Preferred
Stock, voting as a separate class (acting by majority vote), shall be entitled
to vote to elect one member to the Board of Directors of the Corporation. The
right to elect a member of the Board of Directors of the holders of the Series C
Preferred Stock contained in this Section may be exercised at a special meeting
of the holders of Series C Preferred Stock, called as provided hereinafter, at
any annual or special meeting of the stockholders of the Corporation, or by
written consent of the holders of the Series C Preferred Stock in lieu of a
meeting. The director to be elected by the holders of the Series C Preferred
Stock shall serve for a term extending from the date of election and
qualification until the time of the next succeeding annual meeting of
stockholders and until his or her successor has been duly elected and qualified.
Any director elected pursuant to this Section shall not be subject to removal
unless such removal is approved by a majority vote of the holders of the Series
C Preferred Stock. If at any time a directorship to be filled by the holders of
the Series C Preferred Stock shall be vacant, the Chief Executive Officer of the
Corporation shall, upon the written request of the holders of record of shares
representing at least fifty percent of the voting power of the shares of Series
C Preferred Stock, call a special meeting of the holders of Series C Preferred
Stock for the purpose of electing a director to fill such vacancy. Such meeting
shall be held at the earliest practicable date at such place as is specified in
or determined in accordance with the Bylaws of the Corporation. If such meeting
is not so called within ten days after delivery of said written request, then
the holders of record of shares representing at least twenty-five percent of the
voting power of the shares of Series C Preferred Stock may designate in writing
one of such holders to call such meeting at the expense of the Corporation. Such
meeting may be called by such designated person upon the notice required for
annual meetings of stockholders and shall be held at such place as specified or
determined above. At any meeting held for the purpose of electing directors at
which the holders of Series C Preferred Stock shall have the right to elect such
directors as aforesaid, the presence in person or by proxy of the holders owning
shares having at least a majority of the votes of Series C Preferred Stock shall
be required to constitute a quorum of such Series C Preferred Stock. Any holder
of record of shares of Series C Preferred Stock shall have access to the stock
books of the Corporation for the purpose of calling a meeting of stockholders
pursuant to this Section

         8. No Reissuance. No share or shares of Series C Preferred Stock
acquired by the Corporation by reason of redemption, purchase, conversion or
otherwise shall be reissued, and all such shares shall be cancelled, retired and
restored to the status of undesignated Preferred Stock.

                                      * * *

                            [Signature page follows.]

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<PAGE>   10

IN WITNESS WHEREOF, this Certificate of Designation for Series C-1 Preferred
Stock and Series C-2 Preferred Stock has been signed by the Chief Executive
Officer of the Corporation this 30th day of March, 2001.


----------------------------------------
Robert A. Merry, Chief Executive Officer

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