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Exhibit 3.4

                                    RESTATED
                          CERTIFICATE OF INCORPORATION
                                       OF
                          SPARTA PHARMACEUTICALS, INC.
                     (formerly MediRx Pharmaceuticals, Inc.)

                         Adopted in accordance with the
                       provisions of Sections 242 and 245
                     of the Delaware General Corporation Law

         The Certificate of Incorporation of Sparta Pharmaceuticals, Inc. (the
"Corporation"), as originally filed with the Secretary of State of the State of
Delaware on June 12, 1990 and as amended by the filing with the Secretary of
State of the State of Delaware of Certificates of Stock Designation on December
30, 1991, September 20, 1993 and December 10, 1993, of Certificates of Amendment
on May 31, 1991, August 23, 1991, March 3, 1993, December 10, 1993 and December
10, 1993, a Certificate of Retirement of Stock on September 21, 1993, a
Certificate of Retirement of Stock on March 5, 1996, a Certificate of Stock
Designation on February 26, 1996, a Certificate of Stock Designation on July 3,
1996 and an Amended Certificate of Stock Designation on August 1, 1996, is
hereby amended and restated as set forth below pursuant to a resolution adopted
by the Board of Directors of the Corporation acting at a meeting held in
accordance with the provisions of the General Corporation Law of the State of
Delaware and the By-laws of the Corporation and pursuant to a resolution adopted
by holders of a majority of the outstanding shares of Common Stock and Preferred
Stock, voting together as a class, at a meeting duly called in accordance with
the provisions of Section 222 the General Corporation Law of the State of
Delaware and the By-Laws of the Corporation.

         THE UNDERSIGNED does hereby certify as follows:

         FIRST:  The name of the Corporation (hereinafter referred to
as the "Corporation") is

                          SPARTA PHARMACEUTICALS, INC.

         SECOND:  The registered office of the Corporation in the
State of Delaware is 1013 Centre Road, City of Wilmington, County

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of New Castle, Delaware. The name of its registered agent at that address is The
Prentice-Hall Corporation System, Inc.

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

         FOURTH: A. Designation and Number of Shares.

         The total number of shares of stock which the Company is authorized to
issue is 53,000,000, of which shares 42,000,000 of the par value of $.001 each
shall be designated Common Stock, and 11,000,000 of the par value of $.001 each
shall be designated Preferred Stock, of which 330,000 of the par value of $.001
each shall be designated Series A Convertible Preferred Stock and 3,000,000 of
the par value of $.001 each shall be designated Series B Convertible Preferred
Stock. The number of authorized shares of Preferred Stock may be increased or
decreased (but not below the number thereof then outstanding) by the affirmative
vote of the holders of a majority of the capital stock of the Corporation
entitled to vote, voting together as a single class, without a vote of the
holders of the Preferred Stock, or of any series thereof, as a separate class or
series, unless a vote of any such holders is required pursuant to the terms of
any series of Preferred Stock, as such terms may be established in accordance
with the following provisions of this Article FOURTH, subject in any event to
the provisions of Article TENTH of this Restated Certificate of Incorporation.

         The relative powers, designations, preferences, special rights,
restrictions and other matters relating to such Common Stock, the Preferred
Stock, the Series A Convertible Preferred Stock and the Series B Convertible
Preferred Stock are as set forth below in this Article FOURTH. The Preferred
Stock, the Series A Convertible Preferred Stock and the Series B Convertible
Preferred Stock are sometimes referred to herein collectively as the "Preferred
Stock" and the shares of Preferred Stock which are not designated as shares of
Series A Convertible Preferred Stock or Series B Convertible Preferred Stock are
sometimes referred to herein as the "Undesignated Preferred Stock."

         B.       Common Stock.

                  1. General. The voting, dividend and liquidation rights of the
holders of the Common Stock are subject to and

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qualified by the rights of the holders of Preferred Stock, if any.

                  2. Voting. The holders of the Common Stock are entitled to one
vote for each share held. There shall be no cumulative voting.

                  3. Dividends. Dividends may be declared and paid on the Common
Stock from funds lawfully available therefor as and when determined by the Board
of Directors, subject to any provision of this Restated Certificate of
Incorporation, as amended from time to time, and subject to the relative rights
and preferences of any shares of Preferred Stock authorized and issued
hereunder.

                  4. Liquidation. Upon the dissolution or liquidation of the
Corporation, whether voluntary or involuntary, holders of Common Stock will be
entitled to receive all assets of the Corporation available for distribution to
its stockholders, subject, however, to the liquidation rights of the holders of
Preferred Stock authorized and issued hereunder.

         C.       Undesignated Preferred Stock.

         The Undesignated Preferred Stock may be issued from time to time in one
or more series. The Board of Directors is authorized, subject to any limitations
prescribed by law, to provide for the issuance of shares of Undesignated
Preferred Stock in series, and by filing a certificate pursuant to the
applicable law of the State of Delaware (such certificate being hereinafter
referred to as a "Preferred Stock Designation"), to establish from time to time
the number of shares to be included in each such series, and to fix the
designation, powers, preferences and rights of the shares of each such series
and any qualifications, limitations or restrictions thereof. The Board of
Directors is also expressly authorized to increase or decrease the number of
shares of any such series prior to the issue of shares of that series. In case
the number of shares of any series shall be so decreased, the shares
constituting such decrease shall resume the status which they had prior to the
adoption of the resolution originally fixing the number of shares of such
series. The number of authorized shares of Undesignated Preferred Stock may be
increased or decreased (but not below the

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number thereof then outstanding) by the affirmative vote of the holders of a
majority of the Common Stock, without a vote of the holders of the Preferred
Stock, or of any series thereof, unless a vote of any such holders is required
pursuant to the terms of any Preferred Stock then outstanding, subject in any
event to the provisions of Article TENTH of this Restated Certificate of
Incorporation.

         D.       Series A Convertible Preferred Stock and Series B
                  Convertible Preferred Stock.

         (i).              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 330,000.
         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 then 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 prior
         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 or distribution on the common stock, par value
         $.001 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

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         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. 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

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         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 $10.00 per share plus an amount equal to all
         declared and unpaid dividends thereon, if any. If upon any Liquidation
         Event, whether voluntary or involuntary, the assets to be distributed
         to the 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.

                  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 4.444444 shares of
         Common Stock for each full share of Series A Convertible Preferred
         Stock and shall be subject to

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         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 $10.00 (subject to appropriate adjustment upon
         any stock split of, stock dividend on, combination of or other
         recapitalization of the Series A Convertible Preferred Stock (a
         "Preferred Stock Recapitalization Event")). The initial conversion
         price shall be $2.25 (the "conversion price").

                           (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 shares of Series A
         Convertible Preferred Stock were so surrendered, or to the

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         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
         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:

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       (i)        In case the Corporation shall at any time or from time
                  to time (A) pay a dividend in Common Stock on the
                  Common Stock or make a distribution in Common Stock on
                  the 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 the events described
                  above had such shares of Series A Convertible Preferred
                  Stock been converted immediately prior to the happening
                  of the first 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, but shall be
                  subject to further adjustment upon any subsequent
                  event.

      (ii)        In case the Corporation shall issue rights, options,
                  warrants or convertible securities to all or
                  substantially all holders of its Common Stock, without
                  any charge to such holders, entitling them to subscribe
                  for or purchase Common Stock at a price per share which
                  is lower at the record date mentioned below than the
                  closing price (as defined in Section 5) 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
                  rights, options, warrants or convertible securities
                  plus the number of additional shares of Common Stock
                  offered for subscription or purchase, and of which the
                  denominator shall be the number of shares of Common

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                  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 such Current
                  Market 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. "Trading day" shall mean a day on
                  which the national securities exchange or the NASDAQ National
                  Market System used to determine the closing price is open for
                  the transaction of business or the reporting of trades or, if
                  the closing price is not so determined, a day on which the
                  American Stock Exchange is open for the transaction of
                  business.

     (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.


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      (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 facts

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                  upon which such 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, 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 shares
                  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

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         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 (x) the conversion rate in
         effect at such time multiplied by (y) the number of shares of such
         other stock or securities, cash and/or other property exchanged for
         each share of Common Stock or into which each share of Common Stock is
         changed.

                  (f) Reservation of Shares; Transfer Taxes; Etc. The
         Corporation shall at all times reserve and keep available, out of its
         authorized and 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 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

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         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,
         such that the effective conversion price (for all purposes an amount
         equal to $10.00 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 all of 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 holders of Common Stock 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

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                                    Common Stock is converted into other
                                    securities, cash or other property; or

                           (iv)     of the voluntary or involuntary dissolution,
                                    liquidation or winding up of the
                                    Corporation; or

                           (v)      the Corporation shall consummate a Qualified
                                    Offering (as defined below);

         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.


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                  (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
         15 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 evidenced 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 of rights or warrants to purchase or subscribe for
         stock or from any event treated as such for income tax purposes. The
         Corporation shall not be obligated to make any increase.

                  (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. (a)(i) The Series A Convertible
         Preferred Stock shall be automatically converted upon the completion of
         the Qualified Offering (as defined below) into Qualified Offering
         Securities (as defined below) at the greater of (x) the then applicable
         conversion rate and (y) a conversion rate equal to (A) $10.00 (which
         shall be appropriately adjusted upon any Preferred Stock
         Recapitalization Event) divided by (B) the Per Unit Offering Price (as
         defined below) of the securities offered in the Qualified Offering
         multiplied by .75. As used herein, the Per Unit Offering Price shall
         mean (l) if the only security issued or sold in the Qualified Offering
         is Common Stock, the offering price of one share of Common Stock, (2)
         if the only security issued or sold in the Qualified Offering is a
         Convertible Security, the offering price of one share of such
         Convertible Security (as defined below) (or if the Convertible Security
         is issued in dollar denominations, of

                                       16

<PAGE>



         such minimum dollar denomination in which such Convertible Security is
         issued) divided by the number of shares of Common Stock issuable upon
         conversion or exchange of the Convertible Securities and (3) the
         offering price of one unit issued or sold in the Qualified Offering
         divided by the sum of the number of shares of Common Stock included in
         such unit and the number of shares of Common Stock issuable upon
         conversion or exchange of the Convertible Securities included in such
         unit. As used herein, the "Qualified Offering Securities" into which
         the Series A Convertible Preferred Stock is convertible shall refer to
         the securities (whether they are Common Stock, Convertible Securities,
         units of Common Stock and/or Convertible Securities or units of Common
         Stock or Convertible Securities and warrants or other similar rights)
         issued or sold in the Qualified Offering. In the event of (2) or (3)
         above, the conversion rate as determined above shall be adjusted by
         dividing such conversion rate by either (x) in the case of a
         Convertible Security, by the number of shares of Common Stock issuable
         upon conversion or exchange of one share of such Convertible Security
         (or if the Convertible Security is issued in dollar denominations, such
         minimum dollar denomination of such Convertible Securities as used in
         (2) above) or (y) in the case of a unit, the sum of the number of
         shares of Common Stock included in such unit and the number of shares
         of Common Stock issuable upon conversion or exchange of the Convertible
         Securities included in such unit. As used herein, "Convertible
         Security" and "Convertible Securities" shall mean any security
         convertible into or exchangeable for a share or shares of Common Stock
         without the payment of any additional consideration in such conversion
         or exchange other than the delivery of such security, but shall not
         include a warrant or option to purchase Common Stock or to purchase a
         Convertible Security, whether or not such warrant or option contains a
         right to exercise such warrant or option by the delivery of shares
         deemed purchased thereunder, including, without limitation, by a
         cashless exercise. A "Qualified Offering" shall mean the sale or series
         of sales of equity securities of the Corporation next occurring after
         the issuance of the Series A Convertible Preferred Stock, including
         without limitation, Common Stock, warrants, units of Common Stock and
         warrants, other securities exchangeable, convertible or exercisable for

                                       17

<PAGE>



         Common Stock, alone or in units, whether in a public offering or
         private placement, raising gross proceeds in excess of $2,500,000 (the
         "Threshold Amount").

                  (ii) Conversion shall be deemed to have been effected on the
         date on which the Threshold Amount has been sold. Such automatic
         conversion shall require no further action on the part of either the
         Corporation or the holder of Series A Convertible Preferred Stock and,
         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).
         The Corporation shall, as soon as practicable after surrender of the
         certificates representing the Series A Convertible Preferred Stock,
         issue and deliver the certificate or certificates for the number of
         Qualified Offering Securities into which the Series A Convertible
         Preferred Stock is convertible, together with any cash in lieu of any
         fractional shares as provided in paragraph 4(d). The entity in whose
         name the certificates of the Qualified Offering Securities are issued
         to shall be deemed to be holders of record of such Qualified Offering
         Securities on the next succeeding day on which the transfer books of
         the Corporation are open after the closing of the Qualified Offering.
         Upon receipt of notice from the Corporation of such automatic
         conversion, each holder of shares so 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 converted pursuant hereto
         shall not have been surrendered, the shares shall no longer be deemed
         outstanding and all rights whatsoever with respect to the shares so
         converted (except the right of the holders to convert such shares upon
         surrender of their certificates therefor) shall terminate.

         (b)(i) In addition, at any time on or after one year following the
         initial issuance date of the Series A Convertible Preferred Stock, the
         Corporation, at 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

                                       18

<PAGE>



         other securities and property as herein provided if the closing price
         of the Common Stock shall have exceeded 250% 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). Conversion shall be deemed to have been effected on the date
         of such mandatory conversion. Such mandatory conversion shall require
         no further action on the part of either the Corporation or the holder
         of Series A Convertible Preferred Stock and, any share 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). The Corporation shall, as soon
         as practicable after surrender of the certificates representing the
         Series A Convertible Preferred Stock, issue and deliver the certificate
         or certificates for the number of shares of Common Stock into which the
         Series A Convertible preferred Stock is convertible, together with any
         cash in lieu of any fractional shares as provided in paragraph 4(d).
         The entity in whose name the certificates of the Common Stock are
         issued to shall be deemed to be holders of record of such Common Stock
         on the next succeeding day on which the transfer books of the
         Corporation are open after such mandatory conversion. Upon receipt of
         notice from the Corporation of such automatic conversion, each holder
         of shares so 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 converted pursuant hereto shall not have been surrendered, the
         shares shall no longer be deemed outstanding and all rights whatsoever
         with respect to the shares so converted (except the right of the
         holders to convert such shares upon surrender of their certificates
         therefor) shall terminate. Such mandatory conversion shall be effective
         whether or not the holder of such shares of Series A Convertible
         Preferred Stock shall have received notice of such conversion.


                                       19

<PAGE>



         (ii)     Not more than 60 nor less than 20 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 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.

         (iii)    The "closing price" for each trading day shall be the reported
                  last sales price or, in case no such reported sale takes place
                  on such day, the average of the reported closing bid and asked
                  prices, 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.

         (iv)     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

                                       20

<PAGE>



                  holders of the shares to be converted shall not affect the
                  validity of the proceedings for the conversion of any shares
                  of Series A Convertible Preferred Stock. On 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 in this Restated Certificate
of Incorporation or the By-laws of the Corporation, or as required 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. Any
shares of Series A Convertible Preferred Stock held by the Corporation shall not
have voting rights hereunder and shall not be counted in determining the
presence of a quorum.


                                       21

<PAGE>



         (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 initially issued 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 or consenting
separately as a class, (i) amend, alter or repeal any provision of this Restated
Certificate of Incorporation, as amended, or 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 (except from employees, consultants, officers and directors) 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 other than upon
liquidation, dissolution or winding up of the Corporation or a sale of all or
substantially all of the assets of the Corporation. 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 in which the
Corporation is not the surviving entity, a sale or transfer of all or part of
the Corporation's assets for cash, securities or other property, or a compulsory
share exchange.


                                       22

<PAGE>



                  7. Outstanding Shares. For purposes of Section D(i) hereof
only, all shares of Series A Convertible Preferred Stock shall be deemed
outstanding except (i) from the date, or the deemed date as provided in this
Restated Certificate of Incorporation, of surrender of certificates evidencing
shares of Series A Convertible Preferred Stock, all shares of Series A
Convertible Preferred Stock converted into Common Stock or otherwise, (ii) from
the date of registration of transfer, all shares of Series A Convertible
Preferred Stock held of record by 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 of Section D(i) 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.


                                       23

<PAGE>



         (ii). Series B Convertible Preferred Stock.

                  1. Designation and Amount. There shall be a series of
Preferred Stock designated as "Series B Convertible Preferred Stock" and the
number of shares constituting such series shall be 3,000,000. Such series is
referred to herein as the "Series B 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 B 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 prior and
superior to the shares of Series B Convertible Preferred Stock with respect to
dividends and distributions, the holders of shares of Series B 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 or distribution on the
common stock, par value $.001 per share (the "Common Stock"), of the
Corporation, the holders of shares of Series B Convertible Preferred Stock shall
be entitled to receive for each share of Series B 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 B 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
B 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 B 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 B Convertible Preferred
Stock consent otherwise. In any such case, the Corporation shall declare a
dividend or distribution on the Series B 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 B Convertible Preferred
Stock as is established for such dividend or distribution on the

                                       24

<PAGE>



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 B
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 B 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 B 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 or in lieu of any Liquidation
Event (as defined below).

                  3. Liquidation Preference. In the event of a (i) liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary,
(ii) a sale or other disposition of all or substantially all of the assets of
the Corporation or (iii) any consolidation, merger, combination, reorganization
or other transaction in which the Corporation is not the surviving entity or the
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") (subparagraphs (i), (ii) and
(iii) being collectively referred to as a "Liquidation Event"), after payment or
provision for payment of debts and other liabilities of the Corporation, the
holders of the Series B 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 B Convertible
Preferred Stock, an amount equal to $13.00 per share plus an amount equal to all
declared and unpaid dividends thereon; provided, however, in the case of Section
3(iii) above, such $13.00 per share may be paid in cash

                                       25

<PAGE>



and/or securities (valued at the closing price (as defined in Section 5) of such
security) of the entity surviving such Merger Transaction. If upon any
Liquidation Event, whether voluntary or involuntary, the assets to be
distributed to the holders of the Series B 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 B Convertible
Preferred Stock on the basis of the number of shares of Series B Convertible
Preferred Stock held. A consolidation or merger of the Corporation with or into
another corporation, other than in a transaction described in Section 3(iii)
above, 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 and accordingly the Corporation shall make appropriate
provision to ensure that the terms of this Restated Certificate of Incorporation
respecting shares of Series B Convertible Preferred Stock survive any such
transaction. All shares of Series B Convertible Preferred Stock shall rank as to
payment upon the occurrence of any Liquidation Event 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.

                  4. Conversion.

                  (a) Right of Conversion. The shares of Series B 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 B
Convertible Preferred Stock shall be convertible initially at the rate of
6.666667 shares of Common Stock for each full share of Series B Convertible
Preferred Stock and shall be subject to adjustment as provided herein. The
initial conversion price per share of Common Stock is $1.50 and shall be subject
to adjustment as provided herein. For purposes of this resolution, the
"conversion rate" applicable to a share of Series B 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 B

                                       26

<PAGE>



Convertible Preferred Stock is then convertible and shall be determined by
dividing the then existing conversion price into $10.00.

                  The conversion price (subject to adjustments pursuant to the
provisions of paragraph (c) below) in effect immediately prior to the date that
is 12 months after the final closing date (the "Final Closing Date") of the
issuance and sale of the Series B 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 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, and (B) 50% of
the then applicable conversion 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 $10.00. 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 B 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 B 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

                                       27

<PAGE>



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 B
Convertible Preferred Stock desiring to convert such shares into Common Stock
shall surrender the certificate or certificates evidencing such shares of Series
B Convertible Preferred Stock at the office of the transfer agent for the Series
B 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 B 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 B 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 shares of Series B 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
share as hereinafter

                                       28

<PAGE>



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 B Convertible Preferred Stock to be converted, and the person or
persons entitled to receive the Common Stock deliverable upon conversion of such
Series B 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 B
Convertible Preferred Stock while the stock transfer books of the Corporation
are closed for any purpose, but the surrender of Series B 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 B 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 B Convertible Preferred Stock may, at its
election, provide in its notice of conversion that the conversion of its shares
of Series B 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

                                       29

<PAGE>



         case the conversion rate in effect immediately prior thereto shall be
         adjusted so that the holder of any shares of Series B 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 B
         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 rights, options,
         warrants or convertible securities to all or substantially all holders
         of its Common Stock, without any charge to such holders, entitling them
         to subscribe for or purchase Common Stock at a price per share which is
         lower at the record date mentioned below 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
         rights, options, warrants or convertible securities plus the number of
         additional shares of Common Stock offered for subscription or purchase,
         and of which the 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 such Current Market 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. Notwithstanding any of the foregoing, no adjustment shall
         be made pursuant to the provisions of this

                                       30

<PAGE>



         subsection (ii), if such adjustment would result in a
         decrease of the conversion rate.

                  (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

                                       31

<PAGE>



         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 facts upon which such
                  adjustment is based, and such certificate shall forthwith be
                  filed with the transfer agent of the Series B 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 B 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 B 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 B Convertible Preferred

                                       32

<PAGE>



         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 B Convertible Preferred Stock. If more than one certificate evidencing
shares of Series B 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 B 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 B 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) Reservation of Shares; Transfer Taxes; Etc. The
Corporation shall at all times reserve and keep available, out of its authorized
and unissued stock, solely for the purpose of effecting the conversion of the
Series B 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 B 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 B 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 B 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

                                       33

<PAGE>



securities or assets) in a name other than that in which the shares of Series B
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 $10.00
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.

                  (f) 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

                  (iv)  of the voluntary or involuntary dissolution,
         liquidation or winding up of the Corporation;


                                       34

<PAGE>



then the Corporation shall cause to be filed with the transfer agent for the
Series B Convertible Preferred Stock, and shall cause to be mailed to the
holders of record of the Series B 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.

                  (g) 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 B Convertible Preferred Stock a notice
of the increase at least 15 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 evidenced 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

                                       35

<PAGE>



resulting from any dividend or distribution of stock or issuance of rights or
warrants to purchase or subscribe for stock or from any event treated as such
for income tax purposes.

                  (h)      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
B Convertible Preferred Stock, and its actions in so doing shall be final and
conclusive.

                  5. Mandatory Conversion. At any time on or after the Reset
Date, the Corporation, at its option, may cause the Series B 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 200% of the then applicable conversion price for at least 20
trading days in any 30 consecutive trading day period. Any shares of Series B
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).

         Not more than 60 nor less than 20 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 B Convertible Preferred Stock to be
converted, addressed to such holders at their last addresses 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 B
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

                                       36

<PAGE>



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 give 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 B 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 B 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 in this Restated
Certificate of Incorporation or in the By-laws of the Corporation, the holders
of shares of Series B 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 B 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

                                       37

<PAGE>



Series B 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 B 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 B
Convertible Preferred Stock (including those shares of Series B Convertible
Preferred Stock issued or issuable upon the exercise of the warrants issued to
Paramount Capital, Inc., the placement agent in connection with the offer and
sale of the Series B 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 B Convertible Preferred Stock voting
separately as a class, (i) amend, alter or repeal any provision of this Amended
and Restated Certificate of Incorporation, as amended, or the By-laws of the
Corporation so as adversely to affect the relative rights, preferences,
qualifications, limitations or restrictions of the Series B 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 B 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 B 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 B 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 B Convertible Preferred Stock or any bonds,

                                       38

<PAGE>



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 B Preferred Stock); or (c) any consolidation or
merger of the Corporation with or into another corporation in which the
Corporation is not the surviving entity, 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 Section D(ii) hereof,
all shares of Series B Convertible Preferred Stock shall be deemed outstanding
except (i) from the date, or the deemed date, of surrender of certificates
evidencing shares of Series B Convertible Preferred Stock, all shares of Series
B Convertible Preferred Stock converted into Common Stock, (ii) from the date of
registration of transfer, all shares of Series B Convertible Preferred Stock
held of record by the Corporation or any subsidiary of the Corporation and (iii)
any and all shares of Series B 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 B 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 B Convertible
Preferred Stock.

                  9. Preemptive Rights. The Series B 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 of Section D(ii) 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

                                       39

<PAGE>



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.

         FIFTH: The following provisions are inserted for the management of the
business and the conduct of the affairs of the Corporation, and for further
definition, limitation and regulation of the powers of the Corporation and of
its directors and stockholders:

         A. The business and affairs of the Corporation shall be managed by or
under the direction of the Board of Directors. In addition to the powers and
authority expressly conferred upon them by statute or by this Restated
Certificate of Incorporation or the by-laws of the Corporation, the directors
are hereby empowered to exercise all such powers and do all such acts and things
as may be exercised or done by the Corporation.

         B. The directors of the Corporation need not be elected by written
ballot unless the by-laws so provide.

         C. Any action required or permitted to be taken by the stockholders of
the Corporation may be effected only at a duly called annual or special meeting
of stockholders of the Corporation.

         SIXTH:  A.  Subject to the rights of the holders of any
series of Preferred Stock then outstanding to elect additional
directors under specified circumstances, the number of directors
shall be fixed from time to time exclusively by the Board of
Directors pursuant to a resolution adopted by a majority of the
Whole Board.

         B. On or prior to the date on which the Corporation first provides
notice of an annual meeting of the stockholders (or a special meeting in lieu
thereof) in 1994 or solicits actions by written consent in lieu thereof, the
Board of Directors of the Corporation shall divide the directors nominated for
election at such meeting into three classes, as nearly equal in number as

                                       40

<PAGE>



reasonably possible, with the term of office of the first class to expire at the
1995 annual meeting of stockholders or any special meeting in lieu thereof, the
term of office of the second class to expire at the 1996 annual meeting of
stockholders or any special meeting in lieu thereof, and the term of office of
the third class to expire at the 1997 annual meeting of stockholders or any
special meeting in lieu thereof. At each annual meeting of stockholders or
special meeting in lieu thereof following such initial classification, directors
elected to succeed those directors whose terms expire shall be elected for a
term of office to expire at the third succeeding annual meeting of stockholders
or special meeting in lieu thereof after their election and until their
successors are duly elected and qualified.

         C. Subject to the rights of the holders of any series of Preferred
Stock then outstanding, newly created directorships resulting from any increase
in the authorized number of directors or any vacancies in the Board of Directors
resulting from death, resignation, retirement, disqualification, removal from
office or other cause may be filled only by a majority vote of the directors
then in office even though less than a quorum, or by a sole remaining director.
In the event of any increase or decrease in the authorized number of directors,
(i) each director then serving as such shall nevertheless continue as a director
of the class of which he is a member until the expiration of his current term or
his prior death, retirement, removal or resignation and (ii) the newly created
or eliminated directorships resulting from such increase or decrease shall if
reasonably possible be apportioned by the Board of Directors among the three
classes of directors so as to ensure that no one class has more than one
director more than any other class. To the extent reasonably possible,
consistent with the foregoing rule, any newly created directorships shall be
added to those classes whose terms of office are to expire at the latest dates
following such allocation and newly eliminated directorships shall be subtracted
from those classes whose terms of office are to expire at the earliest dates
following such allocation, unless otherwise provided for from time to time by
resolution adopted by a majority of the directors then in office, although less
than a quorum. In the event of a vacancy in the Board of Directors, the
remaining directors, except as otherwise provided by law, may

                                       41

<PAGE>



exercise the powers of the full Board of Directors until the
vacancy is filled.

         D. Advance notice of stockholder nominations for the election of
directors and of business to be brought by stockholders before any meeting of
the stockholders of the Corporation shall be given in the manner provided in the
by-laws of the Corporation.


                                       42

<PAGE>



         E. Subject to the rights of the holders of any series of Preferred
Stock then outstanding, any director, or the entire Board of Directors, may be
removed from office at any time only with cause. A director may be removed for
cause only after a reasonable notice and opportunity to be heard before the body
proposing to remove him.

         SEVENTH: The Board of Directors is expressly empowered to adopt, amend
or repeal by-laws of the Corporation. Any adoption, amendment or repeal of the
by-laws of the Corporation by the Board of Directors shall require the approval
of a majority of the Whole Board. The stockholders shall also have power to
adopt, amend or repeal the by-laws of the Corporation; provided, however, that,
in addition to any vote of the holders of any class or series of stock of the
Corporation required by law or by this Restated Certificate of Incorporation,
the affirmative vote of the holders of at least seventy percent (70%) of the
voting power of all of the then outstanding shares of the capital stock of the
Corporation entitled to vote generally in the election of directors, voting
together as a single class, shall be required for the stockholders to adopt,
amend or repeal any provision of the by-laws of the Corporation.

         EIGHTH: 1. To the fullest extent permitted by the Delaware General
Corporation Law as the same now exists or may hereafter be amended, the
Corporation shall indemnify, and advance expenses to, its directors, officers
and members of its Scientific Advisory Board and any person who is or was
serving at the request of the Corporation as a director or officer, employee or
agent of another corporation, or of a partnership, joint venture, trust or other
enterprise if such person was or is made a party to or is threatened to be made
a party to or is otherwise involved (including, without limitation, as a
witness) in any action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he is or was a
director or officer of the Corporation or a member of the Corporation's
Scientific Advisory Board or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation, or of a
partnership, joint venture, trust or other enterprise, including service with
respect to an employee benefit plan, provided, however, that except with respect
to proceedings to enforce rights to indemnification or as is otherwise required
by law, the by-laws

                                       43

<PAGE>



of the Corporation may provide that the Corporation shall not be required to
indemnify, and advance expenses to, any director, officer or other person in
connection with a proceeding (or part thereof) initiated by such director,
officer or other person, unless such proceeding (or part thereof) was authorized
by the board of directors of the Corporation. The Corporation, by action of its
board of directors, may provide indemnification or advance expenses to employees
and other agents of the Corporation or other persons only on such terms and
conditions and to the extent determined by the board of directors in its sole
and absolute discretion.

                  2. The indemnification and advancement of expenses provided
by, or granted pursuant to, this Article EIGHTH shall not be deemed exclusive of
any other rights to which a person seeking indemnification or advancement of
expenses may be entitled under any by-law, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his official capacity
and as to action in another capacity while holding such office.

                  3. The Corporation shall have the power to purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation, or
of a partnership, joint venture, trust or other enterprise, against any
liability asserted against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not the Corporation would have the
power to indemnify him against such liability under this Article EIGHTH.

                  4. The indemnification and advancement of expenses provided
by, or granted pursuant to, this Article EIGHTH shall, unless otherwise provided
when authorized or ratified, continue as to a person who has ceased to be a
director, officer or member of the Corporation's Scientific Advisory Board and
shall inure to the benefit of the heirs, executors and administrators of such
director, officer or member of the Corporation's Scientific Advisory Board. The
indemnification and rights to advancement of expenses that may have been
provided to an employee or agent of the Corporation by action of the board of
directors, pursuant to the last sentence of Paragraph 1 of this Article EIGHTH,
shall,

                                       44

<PAGE>



unless otherwise provided when authorized or ratified, continue as to a person
who has ceased to be an employee or agent of the Corporation and shall inure to
the benefit of the heirs, executors and administrators of such person, after the
time such person has ceased to be an employee or agent of the Corporation, only
on such terms and conditions and to the extent determined by the board of
directors in its sole discretion. No repeal or amendment of this Article EIGHTH
shall adversely affect any rights of any person pursuant to this Article EIGHTH
which existed at the time of such repeal or amendment with respect to acts or
omissions occurring prior to such repeal or amendment.

         NINTH: No director shall be personally liable to the Corporation or its
stockholders for any monetary damages for breaches of fiduciary duty as a
director, notwithstanding any provision of law imposing such liability; provided
that this provision shall not eliminate or limit the liability of a director, to
the extent that such liability is imposed by applicable law, (i) for any breach
of the director's duty of loyalty to the Corporation or its stockholders; (ii)
for acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law; (iii) under Section 174 or successor provisions
of the General Corporation Law of the State of Delaware; or (iv) for any
transaction from which the director derived an improper personal benefit. This
provision shall not eliminate or limit the liability of a director for any act
or omission if such elimination or limitation is prohibited by the General
Corporation Law of the State of Delaware. No amendment to or repeal of this
provision shall apply to or have any effect on the liability or alleged
liability of any director for or with respect to any acts or omissions of such
director occurring prior to such amendment or repeal. If the Delaware General
Corporation Law is amended to authorize corporate action further eliminating or
limiting the personal liability of directors, then the liability of a director
of the Corporation shall be eliminated or limited to the fullest extent
permitted by the Delaware General Corporation Law, as so amended.

         TENTH: The Corporation reserves the right to amend or repeal any
provision contained in this Restated Certificate of Incorporation in the manner
prescribed by the laws of the State of Delaware and all rights conferred upon
stockholders are granted subject to this reservation, provided, however, that in

                                       45

<PAGE>



addition to the vote of the holders of any class or series of stock of the
Corporation required by law or by this Restated Certificate of Incorporation,
the affirmative vote of the holders of shares of voting stock of the Corporation
representing at least seventy percent (70%) of the voting power of all of the
then outstanding shares of the capital stock of the Corporation entitled to vote
generally in the election of directors, voting together as a single class, shall
be required to (i) reduce or eliminate the number of authorized shares of Common
Stock or the number of authorized shares of Preferred Stock set forth in Article
FOURTH or (ii) amend or repeal, or adopt any provision inconsistent with,
Section C of Article FOURTH and Articles FIFTH, SIXTH, SEVENTH, EIGHTH, NINTH
and this Article TENTH of this Restated Certificate of Incorporation.

         ELEVENTH: Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this Corporation under the provisions of Section 279 of Title 8 of the
Delaware Code, order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this Corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this Corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this Corporation, as the case may be,
and also on this Corporation.


                                       46

<PAGE>


         IN WITNESS WHEREOF, the Corporation has caused this certificate to be
signed and acknowledged by Jerry B. Hook, Ph.D., its President and Chief
Executive Officer, this 31st day of July, 1996.

                              SPARTA PHARMACEUTICALS, INC.



                              By: /s/ Jerry B. Hook
                                 -------------------------------
                                 Jerry B. Hook, Ph.D.
                                 President and Chief Executive Officer

                                       47


<PAGE>



                            CERTIFICATE OF AMENDMENT

                                       OF

                      RESTATED CERTIFICATE OF INCORPORATION

                                       OF

                          SPARTA PHARMACEUTICALS, INC.




          Sparta Pharmaceuticals, Inc., a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware (the
"Company"), does hereby certify:

FIRST:    That at a meeting of the board of directors duly called and legally
          held on March 16, 1998, a resolution was duly adopted setting forth a
          proposed amendment to the Company's Restated Certificate of
          Incorporation, as amended (the "Certificate of Incorporation"),
          declaring said amendment to be advisable and calling for consideration
          of said proposed amendment by the stockholders of the Company. The
          resolution setting forth the amendment is as follows:

          RESOLVED, that it is hereby proposed that Article Fourth of the
          Certificate of Incorporation of the Company be amended so that the
          same as amended would read as follows:

               "FOURTH: A. Designation and Number of Shares.

The total number of shares of stock which the Company is authorized to issue is
83,000,000, of which shares 72,000,000 of the par value of $.001 each shall be
designated Common Stock, and 11,000,000 of the par value of $.001 each shall be
designated Preferred Stock, of which 330,000 of the par value of $.001 each
shall be designated Series A Convertible Preferred Stock and 3,000,000 of the
par value of $.001 each shall be designated Series B Convertible Preferred
Stock. The number of authorized shares of Preferred Stock may be increased or
decreased (but not below the number thereof then outstanding) by the affirmative
vote of the holders of a majority of the capital stock of the Corporation
entitled to vote, voting together as a single class, without a vote of the
holders of the Preferred Stock, or of any series thereof, as a separate class or
series, unless a vote of any such holders is required pursuant to the terms of
any series of Preferred Stock, as such terms may be established in accordance
with the following provisions of this Article FOURTH, subject in any event to
the provisions of Article TENTH of this Restated Certificate of Incorporation.

At the time this amendment becomes effective, and without any further action on
the part of the Corporation or its stockholders, each ten shares of Common
Stock, par value $.00l per share, then issued and outstanding shall be changed
and reclassified into one fully paid and non-assessable share of Common Stock,
par value $.001. The capital account of the Company shall not be increased or
decreased by such change and reclassification. To reflect the said change and
reclassification, each certificate representing shares of Common Stock, with a
par value of $.00l per share, theretofore issued and outstanding shall represent
one-tenth the number of shares of







<PAGE>



Common Stock, with a par value of $.00l per share, issued and outstanding after
such change and reclassification; and the holder of record of each such
certificate shall be entitled to receive a new certificate representing a number
of shares of Common Stock, with a par value of $.001 per share, of the kind
authorized by this amendment, equal to one-tenth the number of shares
represented by said certificate for theretofore issued and outstanding shares,
so that upon this amendment becoming effective each holder of record of ten
shares of the Common Stock will have or be entitled to certificates representing
in the aggregate one share of Common Stock, with a par value of $.00l per share,
of the kind authorized by this amendment for each share of Common Stock, with a
par value of $.001 per share, of which he was the holder prior to the
effectiveness of this amendment.

    The relative powers, designations, preferences, special rights, restrictions
and other matters relating to such Common Stock, the Preferred Stock, the Series
A Convertible Preferred Stock and the Series B Convertible Preferred Stock are
as set forth below in this Article FOURTH. The Preferred Stock, the Series A
Convertible Preferred Stock and the Series B Convertible Preferred Stock are
sometimes referred to herein collectively as the "Preferred Stock" and the
shares of Preferred Stock which are not designated as shares of Series A
Convertible Preferred Stock or Series B Convertible Preferred Stock are
sometimes referred to herein as the "Undesignated Preferred Stock."


SECOND:     That thereafter, pursuant to the resolution of the board of
            directors, the proposed amendment was approved by the stockholders
            of the Company at the Annual Meeting of Stockholders duly called and
            legally held on May 11, 1998.

THIRD:      That this Certificate shall become effective at 9:30 a.m. on May 13,
            1998.

FOURTH:     That said amendment was duly adopted in accordance with the
            provisions of Section 242 of the General Corporation Law of the
            State of Delaware.

          IN WITNESS WHEREOF, the Company has caused this Certificate to be
executed by Jerry B. Hook, its President, this 11th day of May, 1998.

                                SPARTA PHARMACEUTICALS, INC.

                                By: /s/ Jerry B. Hook
                                    ----------------------------------------
                                       Jerry B. Hook, Ph.D., President & CEO







<PAGE>



                          CERTIFICATE OF CORRECTION OF
                            CERTIFICATE OF AMENDMENT
                                       OF
                      RESTATED CERTIFICATE OF INCORPORATION
                                       OF
                          SPARTA PHARMACEUTICALS, INC.

It is hereby certified that:

                  1. The name of the corporation (hereinafter called the
"Company") is Sparta Pharmaceuticals, Inc.

                  2. The Certificate of Amendment of Restated Certificate of
Incorporation, which was filed by the Secretary of State of Delaware on May 13,
1998, is hereby corrected.

                  3. The inaccuracy to be corrected in said instrument is as
follows:

                  "FOURTH: A.  Designation and Number of Shares.

   The total number of shares of stock which the Company is authorized to issue
is 83,000,000, of which shares 72,000,000 of the par value of $.001 each shall
be designated Common Stock, and 11,000,000 of the par value of $.001 each shall
be designated Preferred Stock, of which 330,000 of the par value of $.001 each
shall be designated Series A Convertible Preferred Stock and 3,000,000 of the
par value of $.001 each shall be designated Series B Convertible Preferred
Stock. The number of authorized shares of Preferred Stock may be increased or
decreased (but not below the number thereof then outstanding) by the affirmative
vote of the holders of a majority of the capital stock of the Corporation
entitled to vote, voting together as a single class, without a vote of the
holders of the Preferred Stock, or of any series thereof, as a separate class or
series, unless a vote of any such holders is required pursuant to the terms of
any series of Preferred Stock, as such terms may be established in accordance
with the following provisions of this Article FOURTH, subject in any event to
the provisions of Article TENTH of this Restated Certificate of Incorporation.

At the time this amendment becomes effective, and without any further action on
the part of the Corporation or its stockholders, each ten shares of Common
Stock, par value $.001 per share, then issued and outstanding shall be changed
and reclassified into one fully paid and non-assessable share of Common Stock,
par value $.001. The capital account of the Company shall not be increased or
decreased by such change and reclassification. To reflect the said change and
reclassification, each certificate representing shares of Common Stock, with a
par value of $.00l per share, theretofore issued and outstanding shall represent
one-tenth the number of shares of Common Stock, with a par value of $.001 per
share, issued and outstanding after such change and reclassification; and the
holder of record of each such certificate shall be entitled to receive a new
certificate representing a number of shares of Common Stock, with a par value of
$.001 per share, of the kind authorized by this amendment, equal to one-tenth
the number of shares represented by said certificate for theretofore issued and
outstanding shares, so that upon this amendment becoming effective each holder
of record of ten shares of








<PAGE>



the Common Stock will have or be entitled to certificates representing in the
aggregate one share of Common Stock, with a par value of $.001 per share, of the
kind authorized by this amendment for each share of Common Stock, with a par
value of $.001 per share, of which he was the holder prior to the effectiveness
of this amendment.

    The relative powers, designations, preferences, special rights, restrictions
and other matters relating to such Common Stock, the Preferred Stock, the Series
A Convertible Preferred Stock and the Series B Convertible Preferred Stock are
as set forth below in this Article FOURTH. The Preferred Stock, the Series A
Convertible Preferred Stock and the Series B Convertible Preferred Stock are
sometimes referred to herein collectively as the "Preferred Stock" and the
shares of Preferred Stock which are not designated as shares of Series A
Convertible Preferred Stock or Series B Convertible Preferred Stock are
sometimes referred to herein as the "Undesignated Preferred Stock"."


                  4. The portion of the instrument in corrected form is as
follows:

                  "FOURTH: A.  Designation and Number of Shares.

   The total number of shares of stock which the Company is authorized to issue
is 83,000,000, of which shares 72,000,000 of the par value of $.001 each shall
be designated Common Stock, and 11,000,000 of the par value of $.001 each shall
be designated Preferred Stock, of which 330,000 of the par value of $.001 each
shall be designated Series A Convertible Preferred Stock and 3,000,000 of the
par value of $.001 each shall be designated Series B Convertible Preferred
Stock. The number of authorized shares of Preferred Stock may be increased or
decreased (but not below the number thereof then outstanding) by the affirmative
vote of the holders of a majority of the capital stock of the Corporation
entitled to vote, voting together as a single class, without a vote of the
holders of the Preferred Stock, or of any series thereof, as a separate class or
series, unless a vote of any such holders is required pursuant to the terms of
any series of Preferred Stock, as such terms may be established in accordance
with the following provisions of this Article FOURTH, subject in any event to
the provisions of Article TENTH of this Restated Certificate of Incorporation.

At the time this amendment becomes effective, and without any further action on
the part of the Corporation or its stockholders, each five shares of Common
Stock, par value $.001 per share, then issued and outstanding shall be changed
and reclassified into one fully paid and non-assessable share of Common Stock,
par value $.001. The capital account of the Company shall not be increased or
decreased by such change and reclassification. To reflect the said change and
reclassification, each certificate representing shares of Common Stock, with a
par value of $.00l per share, theretofore issued and outstanding shall represent
one-fifth the number of shares of Common Stock, with a par value of $.001 per
share, issued and outstanding after such change and reclassification; and the
holder of record of each such certificate shall be entitled to receive a new
certificate representing a number of shares of Common Stock, with a par value of
$.001 per share, of the kind authorized by this amendment, equal to one-fifth
the number of shares represented by said certificate for theretofore issued and
outstanding shares, so that upon this amendment becoming effective each holder
of record of five shares of the Common Stock will have or be entitled to
certificates representing in the aggregate one share of Common Stock, with a par
value of $.001 per share, of the kind authorized by this amendment for each
share of Common Stock, with a par value of $.001 per share, of which he was the
holder prior to the effectiveness of this amendment.








<PAGE>



    The relative powers, designations, preferences, special rights, restrictions
and other matters relating to such Common Stock, the Preferred Stock, the Series
A Convertible Preferred Stock and the Series B Convertible Preferred Stock are
as set forth below in this Article FOURTH. The Preferred Stock, the Series A
Convertible Preferred Stock and the Series B Convertible Preferred Stock are
sometimes referred to herein collectively as the "Preferred Stock" and the
shares of Preferred Stock which are not designated as shares of Series A
Convertible Preferred Stock or Series B Convertible Preferred Stock are
sometimes referred to herein as the "Undesignated Preferred Stock"."

                  IN WITNESS WHEREOF, the Company has caused this Certificate to
be executed by Jerry B. Hook, Ph.D., its Chairman, President and Chief Executive
Officer, this 12th day of August, 1998.



                                SPARTA PHARMACEUTICALS, INC.

                                By: /s/ Jerry B. Hook
                                    ----------------------------------------
                                    Jerry B. Hook, Ph.D., Chairman, President
                                    and Chief Executive Officer