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                                                                     EXHIBIT 4.1

                      RESOLUTION OF THE BOARD OF DIRECTORS
                                    APPROVING
                            THE DESIGNATION STATEMENT
                                   RELATING TO
                SERIES A-1 NONVOTING CONVERTIBLE PREFERRED STOCK

     WHEREAS, the Amended and Restated Certificate of Incorporation of 24/7 Real
Media, Inc., a Delaware corporation (the "CORPORATION"), as amended to the date
hereof (the "CERTIFICATE OF INCORPORATION") authorizes the Corporation to issue
a total of 10,000,000 shares of preferred stock, par value $0.01 per share
("PREFERRED STOCK"), which may be divided into one or more classes and/or series
as the Corporation's Board of Directors (the "BOARD") may determine;

     WHEREAS, the Certificate of Incorporation expressly vests in the Board of
Directors the authority to fix the powers, designations, preferences, rights and
qualifications, limitations or restrictions, of the Preferred Stock; and

     WHEREAS, the Board of Directors deems it advisable to designate a series of
the Preferred Stock consisting of Three Hundred Forty Thousand (340,000) shares
designated as Series A Nonvoting Convertible Preferred Stock;

     NOW, THEREFORE, IT IS HEREBY RESOLVED, that pursuant to Article Fourth of
the Certificate of Incorporation, there be and hereby is authorized and created,
pursuant to the terms of this designation statement (this "DESIGNATION
STATEMENT") a series of Preferred Stock, which series shall have the powers,
designations, preferences, relative and other special rights, and the
qualifications, limitations and restrictions set forth below:

     SERIES A-1 CONVERTIBLE PREFERRED STOCK. Three Hundred Forty Thousand
(340,000) of the authorized shares of Preferred Stock of the Corporation are
hereby designated "Series A-1 Nonvoting Convertible Preferred Stock", $0.01 par
value per share (the "SERIES A-1 PREFERRED STOCK"). The powers, designations,
preferences, relative and other special rights, and the qualifications,
limitations and restrictions and other matters relating to the Series A-1
Preferred Stock are as follows:

     1.   DEFINITIONS. For purposes of this Designation Statement, the following
definitions apply:

          1.1  "ACQUIRING STOCKHOLDER" shall mean, with respect to a Combination
Transaction, a stockholder or stockholders of the Corporation that (i) merges or
combines with the Corporation in such Combination Transaction or (ii) owns or
controls a majority of another corporation that merges or combines with the
Corporation in such Combination Transaction.

          1.2  "COMBINATION TRANSACTION" shall mean a reorganization,
consolidation, merger or similar transaction or series of related transactions.

          1.3  "COMMON STOCK" shall mean the Common Stock, par value $0.01 per
share, of the Corporation.

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          1.4  "COMMON STOCK DIVIDEND" shall mean a stock dividend declared and
paid on the Common Stock that is payable in shares of Common Stock.

          1.5  "CONVERSION SHARES" shall mean three hundred forty thousand
(340,000) shares of Series A Preferred Stock issuable upon conversion of the
Series A-1 Preferred Stock originally issued under the Series A Purchase
Agreement (as adjusted for any Series A Preferred Stock Events,
recapitalizations or the like, with respect to the Series A Preferred Stock).

          1.6  "DISTRIBUTION" shall mean the transfer of cash or property by the
Corporation to one or more of its stockholders without consideration, whether by
dividend or otherwise (except a dividend in shares of Corporation's stock). A
Permitted Repurchase (defined below) is not a Distribution.

          1.7  "DIVIDEND ACCRUAL DATE" shall mean the first day of each calendar
month.

          1.8  "DIVIDEND RATE" shall mean a dollar amount per share equal to six
percent (6%) of the Original Issue Price for the Series A-1 Preferred Stock, per
annum, for the Series A-1 Preferred Stock (as adjusted for any stock splits,
stock dividends, recapitalizations or the like, with respect to the Series A-1
Preferred Stock).

          1.9  "ORIGINAL ISSUE DATE" for the Series A-1 Preferred Stock shall
mean the date on which the first share of Series A-1 Preferred Stock is issued
by the Corporation.

          1.10 "ORIGINAL ISSUE PRICE" shall mean $10.00 per share for the Series
A-1 Preferred Stock, and $10.00 per share for the Series A Preferred Stock (as
adjusted for any stock splits, stock dividends, recapitalizations or the like,
with respect to such series of Preferred Stock).

          1.11 "PERMITTED REPURCHASES" shall mean the repurchase by the
Corporation of shares of Common Stock held by employees, officers, directors,
consultants, independent contractors, advisors, or other persons performing
services for the Corporation or a Subsidiary that are subject to restricted
stock purchase agreements, stock option exercise agreements or similar
agreements under which the Corporation has the option to repurchase such shares.

          1.12 "SERIES A DESIGNATION" shall mean the resolutions adopted by the
Board authorizing the Series A Preferred Stock, as filed with the Delaware
Secretary of State.

          1.13 "SERIES A PREFERRED STOCK" shall mean the Series A Preferred
Stock, par value $0.01 per share, of the Corporation.

          1.14 "SERIES A PREFERRED STOCK EVENT" shall mean, at any time or from
time to time after the Original Issue Date for the Series A-1 Preferred Stock,
(i) the issue by the Corporation of additional shares of Series A Preferred
Stock in connection with a dividend payable in shares of Series A Preferred
Stock, or other distribution, on outstanding Series A Preferred Stock, (ii) a
subdivision of the outstanding shares of Series A Preferred Stock into a greater
number of shares of Series A Preferred Stock, or (iii) a combination of the
outstanding shares of Series A Preferred Stock into a smaller number of shares
of Series A Preferred Stock.

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          1.15 "SERIES A PURCHASE AGREEMENT" shall mean that certain Series A
and A-1 Preferred Stock and Common Stock Warrant Purchase Agreement dated on or
about July 1, 2002 by and among the Corporation and the persons and entities
listed on Exhibit A thereto.

          1.16 "SUBSIDIARY" shall mean any corporation of which at least fifty
percent (50%) of the outstanding voting stock is at the time owned directly or
indirectly by the Corporation or by one or more of such subsidiary corporations.

     2.   DIVIDEND RIGHTS.

          2.1  CUMULATIVE DIVIDEND PREFERENCE. The holders of the then
outstanding Series A-1 Preferred Stock shall be entitled to receive, when, as
and if declared by the Board, out of any funds and assets of the Corporation
legally available therefor, cumulative dividends at the annual Dividend Rate for
the Series A-1 Preferred Stock, prior and in preference to the payment of any
dividend or other Distribution on the Common Stock (other than a Common Stock
Dividend). Such dividends shall begin accruing on each share of Series A-1
Preferred Stock on the first Dividend Accrual Date occurring after the date on
which such share of Series A Preferred Stock is issued by the Corporation, and
shall accrue on each subsequent Dividend Accrual Date thereafter until paid,
whether or not earned or declared. No accumulation of dividends on the Series
A-1 Preferred Stock shall compound or bear any interest. Unless the full amount
of any accrued and unpaid dividends accrued on the Series A-1 Preferred Stock
shall have been paid or declared in full and a sum sufficient for the payment
thereof reserved and set apart, no dividend (other than a Common Stock Dividend)
shall be paid or declared, and no Distribution shall be made, on any Common
Stock; PROVIDED, HOWEVER, that this restriction shall not apply to Permitted
Repurchases. Payments of any accrued dividends to the holders of the Series A
Preferred Stock and the Series A-1 Preferred Stock shall be made pro rata, on an
equal priority, pari passu basis.

          2.2  PARTICIPATION RIGHTS. In the event that the Corporation shall
declare a dividend or other Distribution on the Common Stock out of funds
legally available therefor (other than a Common Stock Dividend), then the
holders of the then outstanding Series A-1 Preferred Stock shall be entitled to
a proportionate share of any such dividend or other Distribution as though each
holder of such Series A-1 Preferred Stock was the holder of the greatest whole
number of shares of Common Stock issuable upon conversion of the Series A
Preferred Stock issuable upon conversion pursuant to Section 5 of all the Series
A-1 Preferred Stock held by such holder, in each case as of the record date
fixed for the determination of holders of Common Stock entitled to receive such
dividend or other Distribution, assuming for this purpose that the Automatic
Conversion Date is such record date.

          2.3  NON-CASH DIVIDENDS. Whenever a dividend provided for in this
Section 2 shall be payable in property other than cash, the value of such
dividend shall be deemed to be the fair market value of such property as
determined in good faith by the Board, provided that dividends payable in
securities (other than Common Stock Dividends, dividends declared and paid on
the Series A Preferred Stock that are payable in shares of Series A Preferred
Stock, and dividends declared and paid on the Series A-1 Preferred Stock that
are payable in shares of Series A-1 Preferred Stock) shall be valued in the
manner set forth in Sections 3.4(a) and (b) hereof.

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     3.   LIQUIDATION RIGHTS. In the event of any liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary, the funds and
assets that may be legally distributed to the Corporation's stockholders (the
"AVAILABLE FUNDS AND ASSETS") shall be distributed to stockholders in the
following manner:

          3.1  LIQUIDATION PREFERENCE. The holders of each share of Series A-1
Preferred Stock then outstanding shall be entitled to be paid, out of the
Available Funds and Assets, and prior and in preference to any payment or
distribution (or any setting apart of any payment or distribution) of any
Available Funds and Assets on any shares of Common Stock, an amount per share
equal to the Original Issue Price for the Series A-1 Preferred Stock plus all
accrued but unpaid dividends on the Series A-1 Preferred Stock. The Series A-1
Preferred Stock shall rank on parity with the Series A Preferred Stock with
respect to the liquidation, dissolution or winding up of the Corporation. If
upon any liquidation, dissolution or winding up of the Corporation, the
Available Funds and Assets shall be insufficient to permit the payment to
holders of the Series A-1 Preferred Stock and the Series A Preferred Stock of
their full preferential amounts, then all of the Available Funds and Assets
shall be distributed among the holders of the then outstanding Series A-1
Preferred Stock and the Series A Preferred Stock pro rata, on an equal priority,
pari passu basis, according to their respective liquidation preferences.

          3.2  PARTICIPATION RIGHTS. If there are any Available Funds and Assets
remaining after the payment or distribution (or the setting aside for payment or
distribution) to the holders of the Series A-1 Preferred Stock and Series A
Preferred Stock of their full liquidation preference amounts payable pursuant to
Section 3.1 above for the Series A-1 Preferred Stock, and pursuant to Section
3.1 of the Series A Designation for the Series A Preferred Stock, in connection
with a liquidation, dissolution or winding up of the Corporation, then all such
remaining Available Funds and Assets shall be distributed among the holders of
the then outstanding Common Stock, Series A Preferred Stock and Series A-1
Preferred Stock pro rata according to the number of shares of Common Stock held
by such holders, where, for this purpose: (a) each holder of outstanding Series
A-1 Preferred Stock will be deemed to hold (in lieu of their Series A-1
Preferred Stock), the greatest whole number of shares of Common Stock issuable
upon conversion of the Series A Preferred Stock issuable upon conversion
pursuant to Section 5 of all the Series A-1 Preferred Stock held by such holder,
in each case as of the record date fixed for the determination of holders of
Common Stock entitled to receive such distribution, and assuming for this
purpose that the Automatic Conversion Date is such record date, and (b) each
holder of outstanding Series A Preferred Stock will be deemed to hold (in lieu
of their Series A Preferred Stock), the greatest whole number of shares of
Common Stock issuable upon conversion of such holder's Series A Preferred Stock,
as of the record date fixed for the determination of holders of Common Stock
entitled to receive such distribution; UNTIL SUCH TIME AS: (x) in the case of
the Series A-1 Preferred Stock, each holder of then outstanding Series A-1
Preferred Stock shall have received, in distributions made in connection with
such liquidation, dissolution or winding up, an aggregate amount per share of
Series A-1 Preferred Stock held equal to three (3) times the Original Issue
Price for the Series A-1 Preferred Stock (such aggregate dollar amount to
include all amounts previously paid to such holder pursuant to the liquidation
preference of the Series A-1 Preferred Stock including without limitation any
dividends paid thereon), and (y) in the case of the Series A Preferred Stock,
each holder of then outstanding Series A Preferred Stock shall have received, in
distributions made in connection with such liquidation, dissolution or winding
up, an aggregate amount per share of Series A

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Preferred Stock held equal to three (3) times the Original Issue Price for the
Series A Preferred Stock (such aggregate dollar amount to include all amounts
previously paid to such holder pursuant to the liquidation preference of the
Series A Preferred Stock including without limitation any dividends paid
thereon); AFTER WHICH TIME the holders of then outstanding Common Stock shall be
entitled to receive all the remaining Available Funds and Assets (if any) pro
rata according to the number of outstanding shares of Common Stock then held by
each of them.

          3.3  MERGER OR SALE OF ASSETS. Each of the following transactions
shall be deemed to be a liquidation, dissolution or winding up of the
Corporation as those terms are used in this Section 3 (and in the case of a
transaction described in Section 3.3(a) below, the Available Funds and Assets
shall be the consideration paid by the acquiror in such transaction): (a) a
Combination Transaction in which the Corporation is a constituent corporation
if, as a result of such Combination Transaction, the voting securities of the
Corporation that are outstanding immediately prior to the consummation of such
Combination Transaction (OTHER THAN any such securities that are held by an
Acquiring Stockholder) do not represent, or are not converted into, securities
of the surviving corporation of such Combination Transaction (or such surviving
corporation's parent corporation if the surviving corporation is owned by the
parent corporation) that, immediately after the consummation of such Combination
Transaction, together possess at least a majority of the total voting power of
all securities of such surviving corporation (or its parent corporation, if
applicable) that are outstanding immediately after the consummation of such
Combination Transaction, including securities of such surviving corporation (or
its parent corporation, if applicable) that are held by the Acquiring
Stockholder; or (b) a sale of all or substantially all of the assets of the
Corporation (each of the foregoing transactions, a "SALE TRANSACTION").

          The Corporation shall not enter into any Sale Transaction that does
not provide for the treatment of the holders of Series A-1 Preferred Stock in a
manner consistent with the provisions of this Section 3. In the event that the
requirements of the immediately preceding sentence are not complied with in
connection with a Sale Transaction, the Corporation shall forthwith either: (x)
cause the closing of Sale Transaction to be postponed until such time as such
requirements have been complied with, or (y) cancel such Sale Transaction, in
which event the rights, preferences and privileges of the holders of the Series
A-1 Preferred Stock shall revert to and be the same as such rights, preferrences
and privileges existing immediately prior to the latest date on which the notice
referred to in Section 3.5 below with respect to such Sale Transaction could be
given in compliance with the provisions of such Section 3.5.

          3.4  NON-CASH CONSIDERATION. If any assets of the Corporation
distributed to stockholders in connection with any liquidation, dissolution, or
winding up of the Corporation are other than cash, then the value of such assets
shall be their fair market value as determined in good faith by the Board,
EXCEPT THAT any securities to be distributed to stockholders in a liquidation,
dissolution, or winding up of the Corporation shall be valued as follows:

               (a)  The method of valuation of securities not subject to
investment letter or other similar restrictions on free marketability shall be
as follows:

                    (i)   unless otherwise specified in a definitive agreement
for the acquisition of the Corporation, if the securities are then traded on a
national securities exchange,

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the Nasdaq National Market or the Nasdaq SmallCap Market (or a similar national
quotation system), then the value shall be deemed to be the average of the
closing prices of the securities on such exchange or system over the twenty (20)
trading day period ending three (3) trading days prior to the distribution; and

                    (ii)  if (i) above does not apply but the securities are
actively traded over-the-counter, then, unless otherwise specified in a
definitive agreement for the acquisition of the Corporation, the value shall be
deemed to be the average of the closing bid prices over the twenty (20) trading
day period ending three (3) trading days prior to the distribution; and

                    (iii) if there is no active public market as described in
clauses (i) or (ii) above, then the value shall be the fair market value
thereof, as determined in good faith by the Board.

               (b)  The method of valuation of securities subject to investment
letter or other restrictions on free marketability (other than restrictions
arising solely by virtue of a stockholder's status as an affiliate or former
affiliate) shall be to make an appropriate discount from the market value
determined as above in subparagraphs (a)(i),(ii) or (iii) of this subsection to
reflect the approximate fair market value thereof, as determined in good faith
by the Board.

               (c)  Any determination in good faith by the Board pursuant to
this Section 3.4 shall be conclusive and final and shall be binding on the
Corporation and all stockholders thereof.

          3.5  NOTICE. Written notice of any liquidation, dissolution or winding
up of the Corporation within the meaning of this Section 3, stating the nature
of such liquidation, dissolution or winding up, and specifying the anticipated
effective date of such liquidation, dissolution or winding up, shall be given in
the manner specified in Section 5.10 hereof at least twenty (20) days prior to,
and no more than sixty (60) days prior to, the effective date of such
liquidation, dissolution or winding up.

     4.   VOTING RIGHTS.

          4.1  NO VOTING RIGHTS. Except as otherwise provided by law and as
provided in Section 4.2 below, holders of Series A-1 Preferred Stock shall have
no voting rights.

          4.2  PROTECTIVE PROVISIONS. The Corporation shall not, without the
approval, by vote or written consent, of the holders of a majority of the Series
A-1 Preferred Stock then outstanding, voting as a separate class: (a) amend its
Certificate of Incorporation or Bylaws in any manner that would alter or change
the rights, preferences, privileges or restrictions of the Series A-1 Preferred
Stock so as to adversely affect any of the rights, preferences, privileges or
restrictions of such series of Preferred Stock, or (b) increase or decrease
(other than pursuant to Section 7.1 below) the total number of authorized shares
of Series A-1 Preferred Stock.

     5.   CONVERSION. The outstanding shares of Series A-1 Preferred Stock shall
be convertible into Series A Preferred Stock as follows:

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          5.1  AUTOMATIC CONVERSION.

               (a)  At the close of business on the date: (i) of any meeting of
the holders of the Common Stock at which a quorum shall be present and at which
a majority of the shares of Common Stock voting shall have voted (in person or
by proxy) in favor of a proposal to approve the issuance of the Conversion
Shares upon conversion of the Series A-1 Preferred Stock, or (ii) that such
other action shall have been taken by the stockholders of the Corporation as
shall have satisfied the stockholder approval requirements of Nasdaq with
respect to the issuance of the Conversion Shares upon conversion of the Series
A-1 Preferred Stock, in either case prior to the Corporation's receipt of a
Redemption Request (as defined in Section 6.1 below) delivered in accordance
with Section 6.1, each then outstanding share of Series A-1 Preferred Stock
shall be automatically converted into fully paid and nonassessable shares of
Series A Preferred Stock effective as of the date such stockholder approval is
obtained (the "AUTOMATIC CONVERSION DATE"), as provided herein (such conversion,
the "AUTOMATIC CONVERSION").

               (b)  Upon an Automatic Conversion in accordance with Section
5.1(a), and effective as of the close of business on the Automatic Conversion
Date, the outstanding shares of Series A-1 Preferred Stock shall be converted
into Series A Preferred Stock automatically without the need for any further
action by the holders of such shares and whether or not the certificates
representing such shares are surrendered to the Corporation or its transfer
agent; PROVIDED, HOWEVER, that the Corporation shall not be obligated to issue
certificates evidencing the shares of Series A Preferred Stock issuable upon
such conversion unless the certificates evidencing such shares of Series A-1
Preferred Stock are either delivered to the Corporation or its transfer agent as
provided below, or the holder notifies the Corporation or its transfer agent
that such certificates have been lost, stolen or destroyed and executes an
agreement satisfactory to the Corporation and/or its transfer agent to indemnify
the Corporation and/or its transfer agent from any loss incurred by it in
connection with such certificates. Upon the occurrence of such Automatic
Conversion of the Series A-1 Preferred Stock: (i) the Corporation shall deliver
written notice of such Automatic Conversion in the manner specified in Section
5.10 hereof promptly after the Automatic Conversion Date to each holder of
Series A-1 Preferred Stock that was converted into Series A Preferred Stock in
the Automatic Conversion, and (ii) the holders of Series A-1 Preferred Stock
shall surrender the certificates representing such shares at the office of any
transfer agent for the Series A-1 Preferred Stock or Series A Preferred Stock.
Thereupon, there shall be issued and delivered to such holder promptly at such
office and in its name as shown on such surrendered certificate or certificates,
a certificate or certificates for the number of shares of Series A Preferred
Stock into which the shares of Series A-1 Preferred Stock surrendered were
convertible on the Automatic Conversion Date.

          5.2  CONVERSION PRICE. Each share of Series A-1 Preferred Stock shall
be convertible in accordance with Section 5.1 above into the number of shares of
Series A Preferred Stock which results from dividing the Original Issue Price
for the Series A-1 Preferred Stock by the conversion price for the Series A-1
Preferred Stock that is in effect at the time of conversion (the "CONVERSION
PRICE"). The initial Conversion Price for the Series A-1 Preferred Stock shall
be the Original Issue Price for the Series A-1 Preferred Stock. The Conversion
Price of the Series A-1 Preferred Stock shall be subject to adjustment from time
to time as provided below.

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Following each adjustment of the Conversion Price, such adjusted Conversion
Price shall remain in effect until a further adjustment of such Conversion Price
hereunder.

          5.3  ADJUSTMENT UPON SERIES A PREFERRED STOCK EVENT. Upon the
happening of a Series A Preferred Stock Event, the Conversion Price of the
Series A-1 Preferred Stock shall, simultaneously with the happening of such
Series A Preferred Stock Event, be adjusted by multiplying the Conversion Price
of the Series A-1 Preferred Stock in effect immediately prior to such Series A
Preferred Stock Event by a fraction, (i) the numerator of which shall be the
number of shares of Series A Preferred Stock issued and outstanding immediately
prior to such Series A Preferred Stock Event, and (ii) the denominator of which
shall be the number of shares of Series A Preferred Stock issued and outstanding
immediately after such Series A Preferred Stock Event, and the product so
obtained shall thereafter be the Conversion Price for the Series A-1 Preferred
Stock. The Conversion Price for the Series A-1 Preferred Stock shall be
readjusted in the same manner upon the happening of each subsequent Series A
Preferred Stock Event.

          5.4  ADJUSTMENTS FOR OTHER DIVIDENDS AND DISTRIBUTIONS. If at any time
or from time to time after the Original Issue Date for the Series A-1 Preferred
Stock the Corporation pays a dividend or makes another distribution to the
holders of the Series A Preferred Stock payable in securities of the
Corporation, other than an event constituting a Series A Preferred Stock Event,
then in each such event provision shall be made so that the holders of the
Series A-1 Preferred Stock shall receive upon conversion thereof, in addition to
the number of shares of Series A Preferred Stock receivable upon conversion
thereof, the amount of securities of the Corporation which they would have
received had their Series A-1 Preferred Stock been converted into Series A
Preferred Stock on the date of such event (or such record date, as applicable)
and had they thereafter, during the period from the date of such event (or such
record date, as applicable) to and including the conversion date, retained such
securities receivable by them as aforesaid during such period, subject to all
other adjustments called for during such period under this Section 5 with
respect to the rights of the holders of the Series A-1 Preferred Stock or with
respect to such other securities by their terms.

          5.5  ADJUSTMENT FOR RECLASSIFICATION, EXCHANGE AND SUBSTITUTION. If at
any time or from time to time after the Original Issue Date for the Series A-1
Preferred Stock the Series A Preferred Stock issuable upon the conversion of the
Series A-1 Preferred Stock is changed into the same or a different number of
shares of any class or classes of stock, whether by recapitalization,
reclassification or otherwise (OTHER THAN by a Series A Preferred Stock Event or
a stock dividend, reorganization, merger, or consolidation provided for
elsewhere in this Section 5), then in any such event each holder of Series A-1
Preferred Stock shall have the right thereafter to convert such stock into the
kind and amount of stock and other securities and property receivable upon such
recapitalization, reclassification or other change by holders of the number of
shares of Series A Preferred Stock into which such shares of Series A-1
Preferred Stock could have been converted immediately prior to such
recapitalization, reclassification or change, all subject to further adjustment
as provided herein or with respect to such other securities or property by the
terms thereof.

          5.6  REORGANIZATIONS, MERGERS AND CONSOLIDATIONS. If at any time or
from time to time after the Original Issue Date for the Series A-1 Preferred
Stock there is a reorganization

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of the Corporation (other than a recapitalization, subdivision, combination,
reclassification or exchange of shares provided for elsewhere in this Section 5)
or a merger or consolidation of the Corporation with or into another corporation
(except an event which is governed under Section 3.3), then, as a part of such
reorganization, merger or consolidation, provision shall be made so that the
holders of the Series A-1 Preferred Stock thereafter shall be entitled to
receive, upon conversion of the Series A-1 Preferred Stock, the number of shares
of stock or other securities or property of the Corporation, or of such
successor corporation resulting from such reorganization, merger or
consolidation, to which a holder of Series A Preferred Stock deliverable upon
conversion would have been entitled on such reorganization, merger or
consolidation. In any such case, appropriate adjustment shall be made in the
application of the provisions of this Section 5 with respect to the rights of
the holders of the Series A-1 Preferred Stock after the reorganization, merger
or consolidation to the end that the provisions of this Section 5 (including
adjustment of the Conversion Price then in effect and number of shares issuable
upon conversion of the Series A-1 Preferred Stock) shall be applicable after
that event and be as nearly equivalent to the provisions hereof as may be
practicable. This Section 5.6 shall similarly apply to successive
reorganizations, mergers and consolidations.

          5.7  CERTIFICATE OF ADJUSTMENT. In each case of an adjustment or
readjustment of the Conversion Price for the Series A-1 Preferred Stock, the
Corporation, at its expense, shall promptly cause its Chief Financial Officer to
compute such adjustment or readjustment in accordance with the provisions hereof
and prepare a certificate showing such adjustment or readjustment, and shall
cause such certificate to be delivered to each registered holder of the Series
A-1 Preferred Stock in accordance with Section 5.10.

          5.8  FRACTIONAL SHARES. No fractional shares of Series A Preferred
Stock shall be issued upon any conversion of Series A-1 Preferred Stock. In lieu
of any fractional share to which the holder would otherwise be entitled, the
Corporation shall pay the holder cash equal to the product of such fraction
multiplied by the fair value of one share of Series A Preferred Stock, which
shall be equal to the fair market value of the shares of Common Stock and other
securities or property issuable upon conversion of such share of Series A
Preferred Stock on the Automatic Conversion Date as determined in good faith by
the Board (with reference to the closing price of the Corporation's Common Stock
(as reported by a national securities exchange, the Nasdaq National Market, the
Nasdaq SmallCap Market or a similar national quotation system on which the
Common Stock is then traded).

          5.9  RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The Corporation
shall at all times reserve and keep available out of its authorized but unissued
shares of Series A Preferred Stock and Common Stock, solely for the purpose of
effecting the conversion of the shares of the Series A-1 Preferred Stock and the
conversion of the Series A Preferred Stock issuable upon conversion of the
Series A-1 Preferred Stock: (a) such number of its shares of Series A Preferred
Stock as shall from time to time be sufficient to effect the conversion of all
outstanding shares of the Series A-1 Preferred Stock, and (b) such number of its
shares of Common Stock as shall from time to time be sufficient to effect the
conversion of all outstanding shares of the Series A Preferred Stock issuable
upon conversion of all Series A-1 Preferred Stock; and if at any time the number
of authorized but unissued shares of Series A Preferred Stock or Common Stock
shall not be sufficient to effect the conversion of all then outstanding shares
of the Series A-1 Preferred Stock and the conversion of all Series A Preferred
Stock

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issuable upon conversion of all then outstanding Series A-1 Preferred Stock, the
Corporation will take such corporate action as may, in the opinion of its
counsel, be necessary to increase its authorized but unissued shares of Series A
Preferred Stock and/or Common Stock to such number of shares as shall be
sufficient for such purposes.

          5.10 NOTICES. Any notice or certificate required by the provisions of
this Designation Statement to be given to the holders of shares of the Series
A-1 Preferred Stock shall be deemed given upon the earliest of: (i) actual
receipt, (ii) one (1) business day after deposit with a recognized express
courier, fees prepaid, addressed to each holder of record at the address of such
holder appearing on the books of the Corporation, or (iii) on the date of
transmission by facsimile (with confirmation of receipt), sent to each holder of
record at the fascimile address of such holder appearing on the books of the
Corporation.

          5.11 NO IMPAIRMENT. The Corporation shall not avoid or seek to avoid
the observance or performance of any of the terms to be observed or performed
hereunder by the Corporation, but shall at all times in good faith assist in
carrying out all such action as may be reasonably necessary or appropriate in
order to protect the conversion rights of the holders of the Series A-1
Preferred Stock against impairment.

     6.   REDEMPTION.

          6.1  MANDATORY REDEMPTION. Subject to the terms and conditions of this
subsection, if the Corporation receives a written request signed by the holders
of a majority of the then outstanding shares of Series A-1 Preferred Stock
requesting that the Corporation redeem their shares of Series A-1 Preferred
Stock (the "REDEMPTION REQUEST") at any time after the first to occur of: (x)
the date of any meeting of the holders of the Common Stock of the Corporation at
which a quorum shall be present and at which a vote shall be taken with respect
to a proposal to approve the issuance of the Conversion Shares upon conversion
of the Series A-1 Preferred Stock and at which a majority of the shares of
Common Stock voting shall not vote (in person or by proxy) in favor of such
proposal (provided that if such meeting shall be postponed or adjourned to a
later date, then the date of such meeting shall be deemed to be the date of such
meeting as so postponed or adjourned), unless such other action shall have been
taken by the stockholders of the Corporation as shall have satisfied the
stockholder approval requirements of Nasdaq with respect to such issuance of the
Conversion Shares upon conversion of the Series A-1 Preferred Stock; (y) the
date on which the Board or any committee thereof withdraws, amends or modifies,
or proposes or resolves to withdraw, amend or modify in a manner adverse to the
holders of Series A-1 Preferred Stock and Series A Preferred Stock, the
unanimous recommendation of the Board that the Corporation's stockholders vote
in favor of and adopt and approve the Board Proposals (as defined in the Series
A Purchase Agreement); and (z) October 15, 2002, then the Corporation shall
redeem, from any source of funds legally available therefor, on the date seven
(7) business days following its receipt of such written redemption request (or
the next succeeding business day if such date is a holiday or weekend) (the
"REDEMPTION DATE"), all shares of Series A-1 Preferred Stock outstanding on the
Redemption Date for an amount per share of Series A-1 Preferred Stock so
redeemed equal to the Original Issue Price for the Series A-1 Preferred Stock
(the "REDEMPTION PRICE").

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          6.2  EXCESS REDEMPTION. If upon the Redemption Date or any Excess
Redemption Date (as defined below) the funds and assets of the Corporation
legally available to redeem the Series A-1 Preferred Stock shall be insufficient
to redeem all shares of Series A-1 Preferred Stock, then the Corporation shall
redeem shares of Series A-1 Preferred Stock on the Redemption Date to the extent
of the funds and assets of the Corporation legally available therefor, pro rata
among all holders of then outstanding Series A-1 Preferred Stock according to
the number of shares held by each holder thereof on the Redemption Date, and any
shares of Series A-1 Preferred Stock not so redeemed on the Redemption Date (the
"EXCESS REDEMPTION SHARES") shall continue to be outstanding and entitled to all
dividend, liquidation, and other rights, preferences, privileges and
restrictions of the Series A-1 Preferred Stock until such shares have been
redeemed hereunder. The Corporation shall promptly return the certificate(s)
representing the Excess Redemption Shares, or issue new certificates
representing the Excess Redemption Shares to the extent such certificates were
cancelled, to the holders of record thereof to the extent such holders had
delivered their certificate(s) representing such Excess Redemption Shares to the
Corporation in connection with the applicable redemption. Excess Redemption
Shares shall be redeemed by the Corporation on the first business day of each
calendar month after the calendar month following the calendar month including
the Redemption Date, to the full extent of legally available funds of the
Corporation at such time (each such date of redemption of Excess Redemption
Shares, an "EXCESS REDEMPTION DATE").

          6.3  REDEMPTION NOTICE. At least five (5) days prior to the Redemption
Date and each Excess Redemption Date, if any, written notice shall be given by
the Corporation pursuant to Section 5.10 hereof to each holder of record (at the
close of business on the business day next preceding the day on which notice is
given) of the Series A-1 Preferred Stock, notifying such holder of the
redemption to be effected, specifying the subsection hereof under which such
redemption is being effected, the Redemption Date or Excess Redemption Date, as
applicable, the applicable Redemption Price (calculated to take into effect all
dividends accrued and unpaid on the Series A-1 Preferred Stock as of such
Redemption Date or Excess Redemption Date), and the place at which payment may
be obtained and calling upon such holder to surrender to the Corporation, in the
manner and at the place designated, the certificate or certificates representing
the shares to be redeemed (the "REDEMPTION NOTICE").

          6.4  SURRENDER OF CERTIFICATES. On or before the Redemption Date and
any Excess Redemption Date, if any, each holder of Series A-1 Preferred Stock to
be redeemed shall surrender the certificate(s) representing such shares of
Series A-1 Preferred Stock to be redeemed to the Corporation, in the manner and
at the place designated in the Redemption Notice, and thereupon the Redemption
Price for each shares shall be payable to the order of the person whose name
appears on such certificate(s) as the owner thereof, and each surrendered
certificate shall be cancelled and retired.

          6.5  EFFECT OF REDEMPTION. If the Redemption Notice shall have been
duly given, and if on the Redemption Date or the Excess Redemption Date the
applicable Redemption Price is paid, then notwithstanding that the certificates
evidencing any of the shares of Series A-1 Preferred Stock so called for
redemption shall not have been surrendered, all dividends with respect to such
shares shall cease to accrue after such Redemption Date or Excess Redemption
Date, as the case may be, such shares shall not thereafter be transferred on the
Corporation's books and the rights of all of the holders of such shares with
respect to such shares shall

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terminate after such Redemption Date or Excess Redemption Date, except only the
right of the holders to receive the applicable Redemption Price without interest
upon surrender of their certificate(s) therefor.

     7.   MISCELLANEOUS.

          7.1  NO REISSUANCE OF PREFERRED STOCK. No share or shares of Series
A-1 Preferred Stock acquired by the Corporation by reason of redemption,
purchase, conversion or otherwise shall be reissued, and all such shares shall
be cancelled, retired and eliminated from the shares which the Corporation shall
be authorized to issue.

          7.2  PREEMPTIVE RIGHTS. No stockholder of the Corporation shall have a
right to purchase shares of capital stock of the Corporation sold or issued by
the Corporation except to the extent that such a right may from time to time be
set forth in a written agreement between the Corporation and a stockholder.

          7.3  PREFERRED STOCK WRITTEN CONSENT. Notwithstanding any other
provision of this Designation Statement, with respect to matters involving only
the Series A-1 Preferred Stock and the rights, preferences, privileges and
restrictions granted to and imposed on the Series A-1 Preferred Stock, the
holders of the Series A-1 Preferred Stock may take action without a meeting,
without prior notice and without a vote, if a consent or consents in writing,
setting forth the action so taken, shall be signed by the holders of majority of
the Series A-1 Preferred Stock then outstanding.

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