<PAGE>

                       RESTATED CERTIFICATE OF INCORPORATION

                                         OF

                          THE IMMUNE RESPONSE CORPORATION


          The Immune Response Corporation, a corporation organized and existing
under the laws of the State of Delaware, hereby certifies as follows:

          FIRST:  The name of the corporation is The Immune Response
Corporation.

          SECOND: The original Certificate of Incorporation of the corporation
was filed with the Secretary of State of Delaware on October 1, 1986.  The
corporation was originally incorporated under the name Response Pharmaceuticals,
Inc.

          THIRD:  The Restated Certificate of Incorporation of said corporation,
as amended, shall be amended and restated to read in full as follows:


                                     ARTICLE I.

          The name of the corporation is The Immune Response Corporation.


                                    ARTICLE II.

          The address of the corporation's registered office in the State of
Delaware is Corporation Trust Center, 1209 Orange Street in the City of
Wilmington, County of New Castle, Delaware 19801.  The name of its registered
agent at such address is The Corporation Trust Company.


                                    ARTICLE III.

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


                                    ARTICLE IV.

          A. The total number of shares of all classes of capital stock which
the corporation shall have authority to issue is forty-five million (45,000,000)
of which forty million (40,000,000) shares of the par value of One-Fourth of One
Cent ($.0025) each shall be Common Stock (the "Common Stock") and


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five million (5,000,000) shares of the par value of One-Tenth of One Cent
($.001) each shall be Preferred Stock (the "Preferred Stock").

          The Preferred Stock may be issued in any number of series, as
determined by the Board of Directors of this corporation (the "Board of
Directors").  Except as otherwise provided in this Restated Certificate of
Incorporation, the Board of Directors is expressly authorized to provide for the
issue, in one or more series, of all or any of the shares of Preferred Stock
and, in the resolution or resolutions providing for such issue, to establish for
each such series the number of its shares, the voting powers, full or limited,
of the shares of such series, or that such shares shall have no voting powers,
and the designations, preferences and relative, participating, optional or other
special rights of the shares of such series, and the qualifications, limitations
or restrictions thereof.  The Board of Directors is also expressly authorized
(unless forbidden in the resolution or resolutions providing for such issue) to
increase or decrease (but not below the number of shares of the series then
outstanding) the number of shares of any series subsequent to the issuance of
shares of that series.  In case the number of shares of any such series shall be
so decreased, the shares constituting such decrease shall resume the status that
they had prior to the adoption of the resolution originally fixing the number of
shares of such series.

          B.   The designation and amount of the initial series of Preferred
Stock and the powers, preferences and relative, participating, optional and
other special rights of the shares of such series, and the qualifications,
limitations or restrictions thereof are as follows:

     1.   DESIGNATION AND AMOUNT.  The shares of such series shall be designated
as "Series E Participating Preferred Stock," $0.001 par value per share, and the
number of shares constituting such series shall be 20,000.  Such number of
shares may be increased or decreased by resolution of the Board of Directors;
provided, that no decrease shall reduce the number of shares of Series E
Participating Preferred Stock to a number less than that of the shares then
outstanding plus the number of shares issuable upon exercise of outstanding
rights, options or warrants or upon conversion of outstanding securities issued
by the corporation.

     2.   DIVIDENDS AND DISTRIBUTIONS.

     (A)  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 E Participating Preferred Stock with respect to dividends, the holders of
shares of Series E Participating Preferred Stock in preference to the holders of
shares of Common Stock, par value $.0025 per share, of the corporation and any
other junior stock, shall be entitled


                                        -2-

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to receive, when, as and if declared by the Board of Directors out of funds
legally available for the purpose, quarterly dividends payable in cash on the
first day of March, June, September and December in each year (each such date
being referred to herein as a "Quarterly Dividend Payment Date"), commencing on
the first Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Series E Participating Preferred Stock in an amount per
share (rounded to the nearest cent) equal to the greater of (a) $100, or
(b) subject to the provision for adjustment hereinafter set forth, 1,000 times
the aggregate per share amount of all cash dividends, and 1,000 times the
aggregate per share amount (payable in kind) of all non-cash dividends or other
distributions other than a dividend payable in shares of Common Stock or a
subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise), declared on the Common Stock, since the immediately preceding
Quarterly Dividend Payment Date, or, with respect to the first Quarterly
Dividend Payment Date, since the first issuance of any share or fraction of a
share of Series E Participating Preferred Stock.  In the event the corporation
shall at any time after the close of business on February 26, 1992 (the "Rights
Declaration Date") (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, by reclassification or
otherwise, then in each such case the amount to which holders of shares of
Series E Participating Preferred Stock were entitled immediately prior to such
event under clause (b) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.

     (B)  The corporation shall declare a dividend or distribution on the
Series E Participating Preferred Stock as provided in paragraph (A) above
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); provided that, in the
event no dividend or distribution shall have been declared on the Common Stock
during the period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $100 per share on the
Series E Participating Preferred Stock shall nevertheless be payable on such
subsequent Quarterly Dividend Payment Date.

     (C)  Dividends shall begin to accrue and be cumulative on outstanding
shares of Series E Participating Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares of Series E
Participating Preferred Stock unless the date of issue of such shares is prior
to the record date for the first Quarterly Dividend Payment Date, in which case
dividends on such shares shall begin to accrue from


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the date of issue of such shares, or unless the date of issue is a Quarterly
Dividend Payment Date or is a date after the record date for the determination
of holders of shares of Series E Participating Preferred Stock entitled to
receive a quarterly dividend and before such Quarterly Dividend Payment Date in
either of which events such dividends shall begin to accrue and be cumulative
from such Quarterly Dividend Payment Date.  Accrued but unpaid dividends shall
not bear interest.  Dividends paid on the shares of Series E Participating
Preferred Stock in an amount less than the total amount of such dividends at the
time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding.  The Board
of Directors may fix a record date for the determination of holders of shares of
Series E Participating Preferred Stock entitled to receive payment of a dividend
or distribution declared thereon, which record date shall be no more than
30 days prior to the date fixed for the payment thereof.

     3.   VOTING RIGHTS.  The holders of shares of Series E Participating
Preferred Stock shall have the following voting rights:

          (A)  Subject to the provision for adjustment hereinafter set forth,
     each share of Series E Participating Preferred Stock shall entitle the
     holder thereof to 1,000 votes on all matters submitted to a vote of the
     stockholders of the corporation.  In the event the corporation shall at any
     time after the Rights Declaration Date (i) declare any dividend on Common
     Stock payable in shares of Common Stock, (ii) subdivide the outstanding
     Common Stock into a greater number of shares, or (iii) combine the
     outstanding Common Stock into a smaller number of shares, by
     reclassification or otherwise, then in each such case the number of votes
     per share to which holders of shares of Series E Participating Preferred
     Stock were entitled immediately prior to such event shall be adjusted by
     multiplying such number by a fraction the numerator of which is the number
     of shares of Common Stock outstanding immediately after such event and the
     denominator of which is the number of shares of Common Stock outstanding
     immediately prior to such event.

          (B)  Except as otherwise provided herein or by law, the holders of
     shares of Series E Participating Preferred Stock and the holders of shares
     of Common Stock shall vote together as one class on all matters submitted
     to a vote of stockholders of the corporation.

          (C)  (i)  If at any time dividends on any Series E Participating
     Preferred Stock shall be in


                                        -4-

<PAGE>

     arrears in an amount equal to six quarterly dividends thereon, the
     occurrence of such contingency shall mark the beginning of a period (herein
     called a "default period") which shall extend until such time when all
     accrued and unpaid dividends for all previous quarterly dividend periods
     and for the current quarterly dividend period on all shares of Series E
     Participating Preferred Stock then outstanding shall have been declared and
     paid or set apart for payment.  During each default period, all holders of
     Preferred Stock (including holders of the Series E Participating Preferred
     Stock) with dividends in arrears in an amount equal to six quarterly
     dividends thereon, voting as a class, irrespective of series, shall have
     the right to elect two Directors.

          (ii)  During any default period, such voting right of the holders of
     Series E Participating Preferred Stock may be exercised initially at a
     special meeting called pursuant to subparagraph (iii) of this Section 3(C)
     or at any annual meeting of stockholders, and thereafter at annual meetings
     of stockholders, provided that neither such voting right nor the right of
     the holders of any other series of Preferred Stock, if any, to increase, in
     certain cases, the authorized number of Directors shall be exercised unless
     the holders of ten percent (10%) in number of shares of Preferred Stock
     outstanding shall be present in person or by proxy.  The absence of a
     quorum of the holders of Common Stock shall not affect the exercise by the
     holders of Preferred Stock of such voting right.  At any meeting at which
     the holders of Preferred Stock shall exercise such voting right initially
     during an existing default period, they shall have the right, voting as a
     class, to elect Directors to fill such vacancies, if any, in the Board of
     Directors as may then exist up to two Directors or, if such right is
     exercised at an annual meeting, to elect two Directors.  If the number
     which may be so elected at any special meeting does not amount to the
     required number, the holders of the Preferred Stock shall have the right to
     make such increase in the number of Directors as shall be necessary to
     permit the election by them of the required number.  After the holders of
     the Preferred Stock shall have exercised their right to elect Directors in
     any default period and during the continuance of such period, the number of
     Directors shall not be increased or decreased except by vote of the holders
     of Preferred Stock as herein provided or pursuant to the rights of any
     equity securities ranking senior to or pari passu with the Series E
     Participating Preferred Stock.


                                        -5-

<PAGE>

          (iii)  Unless the holders of Preferred Stock shall, during an existing
     default period, have previously exercised their right to elect Directors,
     the Board of Directors may order, or any stockholder or stockholders owning
     in the aggregate not less than ten percent (10%) of the total number of
     shares of Preferred Stock outstanding, irrespective of series, may request,
     the calling of a special meeting of the holders of Preferred Stock in
     accordance with Article X.  Notice of such meeting and of any annual
     meeting at which holders of Preferred Stock are entitled to vote pursuant
     to this paragraph (C)(iii) shall be given to each holder of record of
     Preferred Stock by mailing a copy of such notice to him at his last address
     as the same appears on the books of the corporation.  Such meeting shall be
     called for a time not earlier than ten days and not later than 60 days
     after such order or request or in default of the calling of such meeting
     within 60 days after such order or request, such meeting may be called on
     similar notice by any stockholder or stockholders owning in the aggregate
     not less than ten percent (10%) of the total number of shares of Preferred
     Stock outstanding.  Notwithstanding the provisions of this paragraph
     (C)(iii), no such special meeting shall be called during the period within
     60 days immediately preceding the date fixed for the next annual meeting of
     the stockholders.

          (iv)  In any default period, the holders of Common Stock, and other
     classes of stock of the corporation, if applicable, shall continue to be
     entitled to elect the whole number of Directors until the holders of
     Preferred Stock shall have exercised their right to elect two Directors
     voting as a class, after the exercise of which right (x) the Directors so
     elected by the holders of Preferred Stock shall continue in office until
     their successors shall have been elected by such holders or until the
     expiration of the default period, and (y) any vacancy in the Board of
     Directors may (except as provided in paragraph (C)(ii) of this Section 3)
     be filled by vote of a majority of the remaining Directors theretofore
     elected by the holders of the class of stock which elected the Director
     whose office shall have become vacant.  References in this paragraph (C) to
     Directors elected by the holders of a particular class of stock shall
     include Directors elected by such Directors to fill vacancies as provided
     in clause (y) of the foregoing sentence.

          (v)  Immediately upon the expiration of a default period, (x) the
     right of the holders of Preferred Stock as a class to elect Directors shall
     cease,


                                        -6-

<PAGE>

     (y) the term of any Directors elected by the holders of Preferred Stock as
     a class shall terminate, and (z) the number of Directors shall be such
     number as may be provided for in, or pursuant to, the Certificate of
     Incorporation or By-Laws irrespective of any increase made pursuant to the
     provisions of paragraph (C)(ii) of this Section 3 (such number being
     subject, however, to change thereafter in any manner provided by law or in
     the Certificate of Incorporation or By-Laws).  Any vacancies in the Board
     of Directors effected by the provisions of clauses (y) and (z) in the
     preceding sentence may be filled by a majority of the remaining Directors,
     even though less than a quorum.

          (D)  Except as set forth herein, holders of Series E Participating
     Preferred Stock shall have no special voting rights and their consent shall
     not be required (except to the extent they are entitled to vote with
     holders of Common Stock as set forth herein) for taking any corporate
     action.

     4.   CERTAIN RESTRICTIONS.

     (A)  Whenever quarterly dividends or other dividends or distributions
payable on the Series E Participating Preferred Stock as provided in Section 2
are in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series E Participating
Preferred Stock outstanding shall have been paid in full, the corporation shall
not

          (i)  declare or pay dividends on, make any other distributions on, or
     redeem or purchase or otherwise acquire for consideration any shares of
     stock ranking junior (either as to dividends or upon liquidation,
     dissolution or winding up) to the Series E Participating Preferred Stock;

          (ii)  declare or pay dividends on or make any other distributions on
     any shares of stock ranking on a parity (either as to dividends or upon
     liquidation, dissolution or winding up) with the Series E Participating
     Preferred Stock except dividends paid ratably on the Series E Participating
     Preferred Stock and all such parity stock on which dividends are payable or
     in arrears in proportion to the total amounts to which the holders of all
     such shares are then entitled;

          (iii)  redeem or purchase or otherwise acquire for consideration
     shares of any stock ranking on a parity (either as to dividends or upon
     liquidation, dissolution or winding up) with the Series E Participating


                                        -7-

<PAGE>

     Preferred Stock provided that the corporation may at any time redeem,
     purchase or otherwise acquire shares of any such parity stock in exchange
     for shares of any stock of the corporation ranking junior (either as to
     dividends or upon dissolution, liquidation or winding up) to the Series E
     Participating Preferred Stock; or

          (iv)  purchase or otherwise acquire for consideration any shares of
     Series E Participating Preferred Stock or any shares of stock ranking on a
     parity with the Series E Participating Preferred Stock except in accordance
     with a purchase offer made in writing or by publication (as determined by
     the Board of Directors) to all holders of such shares upon such terms as
     the Board of Directors, after consideration of the respective annual
     dividend rates and other relative rights and preferences of the respective
     series and classes, shall determine in good faith will result in fair and
     equitable treatment among the respective series or classes.

     (B)  The corporation shall not permit any subsidiary of the corporation to
purchase or otherwise acquire for consideration any shares of stock of the
corporation unless the corporation could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.

     5.   REACQUIRED SHARES.  Any shares of Series E Participating Preferred
Stock purchased or otherwise acquired by the corporation in any manner
whatsoever shall be retired and cancelled promptly after the acquisition
thereof.  All such shares shall upon their cancellation become authorized but
unissued shares of Preferred Stock and may be reissued as part of a new series
of Preferred Stock to be created by resolution or resolutions of the Board of
Directors, subject to the conditions and restrictions on issuance set forth
herein.

     6.   LIQUIDATION, DISSOLUTION OR WINDING UP.

     (A)  Upon any liquidation (voluntary or otherwise), dissolution or winding
up of the corporation, no distribution shall be made to the holders of shares of
stock ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series E Participating Preferred Stock unless, prior thereto,
the holders of shares of Series E Participating Preferred Stock shall have
received per share, the greater of 1,000 times $1.00 or 1,000 times the payment
made per share of Common Stock, plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of
such payment (the "Series E Liquidation Preference").  Following the payment of
the full amount of the Series E Liquidation Preference, no additional
distributions shall be made to the holders of shares of Series E Participating


                                        -8-

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Preferred Stock unless, prior thereto, the holders of shares of Common Stock
shall have received an amount per share (the "Common Adjustment") equal to the
quotient obtained by dividing (i) the Series E Liquidation Preference by
(ii) 1,000 (as appropriately adjusted as set forth in subparagraph (C) below to
reflect such events as stock splits, stock dividends and recapitalization with
respect to the Common Stock) (such number in clause (ii), the "Adjustment
Number").  Following the payment of the full amount of the Series E Liquidation
Preference and the Common Adjustment in respect of all outstanding shares of
Series E Participating Preferred Stock and Common Stock, respectively, holders
of Series E Participating Preferred Stock and holders of shares of Common Stock
shall receive their ratable and proportionate share of the remaining assets to
be distributed in the ratio of the Adjustment Number to 1 with respect to such
Preferred Stock and Common Stock, on a per share basis, respectively.

     (B)  In the event there are not sufficient assets available to permit
payment in full of the Series E Liquidation Preference and the liquidation
preferences of all other series of Preferred Stock, if any, which rank on a
parity with the Series E Participating Preferred Stock then such remaining
assets shall be distributed ratably to the holders of such parity shares in
proportion to their respective liquidation preferences.  In the event there are
not sufficient assets available to permit payment in full of the Common
Adjustment, then such remaining assets shall be distributed ratably to the
holders of Common Stock.

     (C)  In the event the corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, by reclassification or
otherwise, then in each such case the Adjustment Number in effect immediately
prior to such event shall be adjusted by multiplying such Adjustment Number by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.

     7.   CONSOLIDATION, MERGER, ETC.  In case the corporation shall enter into
any consolidation, merger, combination or other transaction in which the shares
of Common Stock are exchanged for or changed into other stock or securities,
cash and/or any other property, then in any such case the shares of Series E
Participating Preferred Stock shall at the same time be similarly exchanged or
changed in an amount per share (subject to the provision for adjustment
hereinafter set forth) equal to 1,000 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or


                                        -9-

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exchanged.  In the event the corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case
the amount set forth in the preceding sentence with respect to the exchange or
change of shares of Series E Participating Preferred Stock shall be adjusted by
multiplying such amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that are
outstanding immediately prior to such event.

     8.   REDEMPTION.  The shares of Series E Participating Preferred Stock
shall not be redeemable.

     9.   RANKING.  The Series E Participating Preferred Stock shall rank junior
to all other series of the corporation's Preferred Stock as to the payment of
dividends and the distribution of assets, unless the terms of any such series
shall provide otherwise.

     10.  AMENDMENT.  The Certificate of Incorporation and the By-Laws of the
corporation shall not be further amended in any manner which would materially
alter or change the powers, preferences or special rights of the Series E
Participating Preferred Stock so as to affect them adversely without the
affirmative vote of the holders of at least 66-2/3% of the outstanding shares of
Series E Participating Preferred Stock voting separately as a class.

     11.  FRACTIONAL SHARES.  Series E Participating Preferred Stock may be
issued in fractions of a share which shall entitle the holder, in proportion to
such holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series E Participating Preferred Stock.


                                     ARTICLE V.

          Election of Directors need not be by written ballot.


                                    ARTICLE VI.

          The Board of Directors is expressly empowered to adopt, amend or
repeal By-Laws of the corporation; provided, however, that any adoption,
amendment or repeal of By-Laws of the corporation by the Board of Directors
shall require the approval of at least sixty-six and two-thirds percent
(66 2/3%) of the total number of authorized Directors (whether or not there
exist any vacancies in previously authorized directorships at the time any
resolution providing for adoption, amendment or


                                        -10-

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repeal is presented to the Board of Directors).  The stockholders shall also
have power to adopt, amend or repeal 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 sixty-six and
two-thirds percent (66 2/3%) of the voting power of all of the then outstanding
shares of the stock of the corporation entitled to vote generally in the
election of Directors, voting together as a single class, shall be required for
such adoption, amendment or repeal by the stockholders of any provisions of the
By-Laws of the corporation.


                                    ARTICLE VII.

          Any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (whether or not by or in the
right of the corporation) by reason of the fact that he is or was a Director,
officer, incorporator, employee or agent of the corporation, or is or was
serving at the request of the corporation as a Director, officer, incorporator,
employee, partner, trustee or agent of another corporation, partnership, joint
venture, trust or other enterprise (including an employee benefit plan), shall
be entitled to be indemnified by the corporation to the full extent then
permitted by law against expenses (including attorneys' fees), judgments, fines
(including excise taxes assessed on a person with respect to an employee benefit
plan) and amounts paid in settlement incurred by him in connection with such
action, suit or proceeding.  Such right of indemnification shall inure whether
or not the claim asserted is based on matters which antedate the adoption of
this Article VII.  Such right of indemnification shall continue as to a person
who has ceased to be a Director, officer, incorporator, employee, partner,
trustee or agent and shall inure to the benefit of the heirs and personal
representatives of such a person.  The indemnification provided by this Article
VII shall not be deemed exclusive of any other rights which may be provided now
or in the future under any provision currently in effect or hereafter adopted by
the By-Laws, by any agreement, by vote of stockholders, by resolution of
disinterested Directors, by provision of law or otherwise.


                                   ARTICLE VIII.

          No Director of the corporation shall be liable to the corporation or
any of its stockholders for monetary damages for breach of fiduciary duty as a
Director, except for liability (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


                                        -11-

<PAGE>

knowing violation of law; (iii) under section 174 of the Delaware General
Corporation Law; or (iv) for any transaction from which the Director derived an
improper personal benefit.


                                    ARTICLE IX.

          Whenever a compromise or arrangement is proposed between the
corporation and its creditors or any class of them and/or between the
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 the corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for the 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 the
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 the 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 the corporation, as the
case may be, agree to any compromise or arrangement and to any reorganization of
the 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 the corporation, as the case may be, and also on the
corporation.


                                     ARTICLE X.

          No action required or permitted to be taken at any annual or special
meeting of the stockholders may be taken without a meeting and the power of
stockholders to consent in writing, without a meeting, to the taking of any
action is specifically denied.  Special meetings of the stockholders of the
corporation may be called only by the Chairman of the Board or the Chief
Executive Officer of the corporation or by a resolution adopted by the
affirmative vote of a majority of the Board of Directors.


                                     ARTICLE XI.

          The Board of Directors shall be divided into three classes, designated
Class I, Class II and Class III, as nearly equal in number as possible, and the
term of office of Directors of one class shall expire at each annual meeting of
stockholders, and in all cases as to each Director until such


                                        -12-

<PAGE>

Director's successor shall be elected and shall qualify or until such Director's
earlier resignation, removal from office, death or incapacity.  Additional
directorships resulting from an increase in number of Directors shall be
apportioned among the classes as equally as possible.  The initial term of
office of Directors of Class I shall expire at the annual meeting of
stockholders in 1993; that of Class II shall expire at the annual meeting in
1994; and that of Class III shall expire at the annual meeting in 1995; and in
all cases as to each Director until such Director's successor shall be elected
and shall qualify or until such Director's earlier resignation, removal from
office, death or incapacity.  At each annual meeting of stockholders the number
of Directors equal to the number of Directors of the class whose term expires at
the time of such meeting (or, if less, the number of Directors properly
nominated and qualified for election) shall be elected to hold office until the
third succeeding annual meeting of stockholders after their election.


                                    ARTICLE XII.

          Notwithstanding any other provision of this Restated Certificate of
Incorporation, the affirmative vote of the holders of at least sixty-six and
two-thirds percent (66-2/3%)  of the voting power of all of the then outstanding
shares of the stock of the corporation entitled to vote generally in the
election of Directors, voting together as a single class, shall be required to
amend in any respect or repeal this Article XII, or Articles VI, VII, VIII, X
and XI.


          FOURTH:  This Restated Certificate of Incorporation was duly adopted
by the Board of Directors of the corporation.

          FIFTH:  This Restated Certificate of Incorporation was duly adopted by
the stockholders in accordance with sections


                                        -13-

<PAGE>

242 and 245 of the General Corporation Law of the State of Delaware.


          IN WITNESS WHEREOF,  The Immune Response Corporation has caused its
corporate seal to be hereunto affixed and this certificate to be signed by its
President, James B. Glavin, and its Secretary, Charles J. Cashion, this 23rd day
of May, 1992.

                                        THE IMMUNE RESPONSE CORPORATION


                                        By /s/ James B. Glavin
                                           -------------------------------------
                                           James B. Glavin, President

Attest:

By /s/ Charles J. Cashion
   --------------------------------
       Charles J. Cashion
          Secretary


                                        -14-

<PAGE>

                       CERTIFICATE OF DESIGNATIONS, PREFERENCES
                  AND RIGHTS OF SERIES F CONVERTIBLE PREFERRED STOCK
                                          OF
                           THE IMMUNE RESPONSE CORPORATION

     The Immune Response Corporation (the "COMPANY"), a corporation organized
and existing under the General Corporation Law of the State of Delaware, does
hereby certify that, pursuant to authority conferred upon the Board of Directors
of the Company by the Certificate of Incorporation, as amended, of the Company,
and pursuant to Section 151 of the General Corporation Law of the State of
Delaware, the Board of Directors of the Company at a meeting duly held adopted
resolutions (i) authorizing a series of the Company's previously authorized
preferred stock, par value $.001 per share, and (ii) providing for the
designations, preferences and relative, participating, optional or other rights,
and the qualifications, limitations or restrictions thereof, of Four Hundred
(400) shares of Series F Convertible Preferred Stock of the Company, as follows:

          RESOLVED, that the Company is authorized to issue 400 shares of Series
     F Convertible Preferred Stock (the "PREFERRED SHARES"), par value $.001 per
     share, which shall have the following powers, designations, preferences and
     other special rights:

          (1)  DIVIDENDS.  The Preferred Shares shall bear dividends
("DIVIDENDS") at a rate of 7.5% per annum, which shall be cumulative, accrue
daily from the Issuance Date (as defined below) and be payable on the first day
of each Calendar Quarter (as defined below) beginning on the earlier of (a) the
first day of the Calendar Quarter immediately following the date on which the
Registration Statement (as defined below) is declared effective by the SEC (as
defined below) and (b) the first day of the Calendar Quarter immediately
following the date which is 120 days after the Issuance Date (each a "DIVIDEND
DATE").  If a Dividend Date is not a Business Day (as defined below) then the
Dividend shall be due and payable on the Business Day immediately following the
Dividend Date.  Dividends shall be payable in shares of Common Stock at the
Dividend Conversion Rate (as defined below) or, at the option of the Company, in
cash, provided that the Dividends which accrued during any period shall be
payable in cash only if the Company provides written notice ("DIVIDEND ELECTION
NOTICE") to each holder of Preferred Shares at least 20 days prior to the
Dividend Date.  Dividends to be paid in shares of Common Stock shall be paid in
a number of fully paid and nonassessable shares (rounded to the nearest whole
share in accordance with Section 2(h)) of Common Stock based on the Dividend

<PAGE>

Conversion Price on the Dividend Date.  Notwithstanding the foregoing, the
Company shall not be entitled to pay Dividends in shares of Common Stock and
shall be required to pay such Dividends in cash if (a) any event constituting a
Triggering Event (as defined in Section 3(d)), or an event that with the passage
of time would constitute a Triggering Event if not cured, has occurred and is
continuing on the date of the Company's Dividend Election Notice or on the
Dividend Date, unless otherwise consented to in writing by the holder of
Preferred Shares entitled to receive such Dividend or (b) the Registration
Statement (as defined below) has not been declared effective by the Securities
and Exchange Commission (the "SEC") on or before the Dividend Date.  Any accrued
and unpaid dividends which are not paid (in stock or cash as applicable) within
five (5) Business Days of such accrued and unpaid dividends' Dividend Date shall
bear interest at the rate of 18.0% per annum from such Dividend Date until the
same is paid (the "DEFAULT INTEREST").

          (2)  HOLDER'S CONVERSION OF PREFERRED SHARES.  A holder of Preferred
Shares shall have the right, at such holder's option, to convert the Preferred
Shares into shares of the Company's common stock, par value $.0025 per share
(the "COMMON STOCK"), on the following terms and conditions:

               (a)  CONVERSION RIGHT.  At any time or times on or after the
     Issuance Date (as defined below), any holder of Preferred Shares shall be
     entitled to convert any whole number of Preferred Shares into fully paid
     and nonassessable shares (rounded to the nearest whole share in accordance
     with Section 2(h)) of Common Stock, at the Conversion Rate (as defined
     below); provided, however, that in no event shall any holder be entitled to
     convert Preferred Shares in excess of that number of Preferred Shares
     which, upon giving effect to such conversion, would cause the aggregate
     number of shares of Common Stock beneficially owned by the holder and its
     affiliates to exceed 4.99% of the outstanding shares of the Common Stock
     following such conversion.  For purposes of the foregoing proviso, the
     aggregate number of shares of Common Stock beneficially owned by the holder
     and its affiliates shall include the number of shares of Common Stock
     issuable upon conversion of the Preferred Shares with respect to which the
     determination of such proviso is being made, but shall exclude the number
     of shares of Common Stock which would be issuable upon (i) conversion of
     the remaining, nonconverted Preferred Shares beneficially owned by the
     holder and its affiliates, and (ii) exercise or conversion of the
     unexercised or unconverted portion of any other securities of the Company
     (including, without limitation, any warrants) subject to a limitation on
     conversion or exercise analogous to the limitation contained herein
     beneficially owned by the holder and its affiliates.  Except as set forth
     in the preceding sentence, for purposes of this Section 2(a), beneficial
     ownership shall be calculated in accordance with Section 13(d) of the
     Securities Exchange Act of 1934, as amended.  The holder may waive the
     foregoing limitations by written notice to the Company upon not less than
     61 days prior notice (with such waiver taking effect only upon the
     expiration of such 61 day notice period).


                                         -2-
<PAGE>


               (b)  CONVERSION RATE.  The number of shares of Common Stock
     issuable upon conversion of each of the Preferred Shares pursuant to
     Sections (2)(a) and 2(g) and Section 5 shall be determined according to the
     following formula (the "CONVERSION RATE"):

                    Conversion Amount
                    -----------------
                    Conversion Price

     For purposes of this Certificate of Designations, the following terms shall
have the following meanings:

                    (i)    "CONVERSION PRICE" means (A) as of any Conversion
Date (as defined in Section 2(f)) or other date of determination (other than
the Maturity Date (as defined in Section 2(g)) of the applicable Preferred
Shares, the Fixed Conversion Price, subject to adjustment as provided herein
(including, without limitation, pursuant to Section 2(c)), and (B) as of the
Maturity Date of the applicable Preferred Shares, the Market Price as of such
date;

                    (ii)   "FIXED CONVERSION PRICE" means 120% of the average
of the Closing Bid Prices (as defined below) of the Common Stock for the five
consecutive trading days immediately preceding the Issuance Date of the
applicable Preferred Shares, subject to adjustment as provided herein;

                    (iii)  "CONVERSION AMOUNT" means the sum of (A) the
Additional Amount and (B) $50,000;

                    (iv)   "ADDITIONAL AMOUNT" means, on a per share basis,
the sum of (A) unpaid Default Interest through the date of determination plus
(B) the result of the following formula:  (.075)(N/365)($50,000);

                    (v)    "GREATEST AVERAGE STOCK PRICE" means, for any
period of determination, the highest Market Price during such period;

                    (vi)   "MARKET PRICE" means, with respect to any security
for any date, the average of the Closing Bid Prices for such security during
the 20 consecutive trading days immediately preceding such date of
determination;

                    (vii)  "DIVIDEND CONVERSION PRICE" means, as of any date
of determination, the average of the Closing Bid Prices of the Common Stock
during the ten consecutive trading days immediately preceding the applicable
Dividend Date;

                    (viii) "ADJUSTMENT PRICE" means, as of any date of
determination, the average of the Closing Bid Prices of the Common Stock
during the 30 consecutive trading days immediately preceding such date of
determination; provided, however, that during the


                                         -3-
<PAGE>

period beginning on the Initial Issuance Date and ending on the date which is
two years after the Initial Issuance Date, (A) the Adjustment Price with respect
to Preferred Shares issued on the Initial Issuance Date shall not be less than
$5.00 (subject to appropriate adjustments for stock splits, stock dividends and
other similar transactions relating to the Common Stock) and (B) the Adjustment
Price with respect to Preferred Shares issued after the Initial Issuance Date
shall be not less than the lesser of (I) $5.00 (subject to appropriate
adjustments for stock splits, stock dividends and other similar transactions
relating to the Common Stock) and (II) 50% of the average of the Closing Bid
Prices for the Common Stock on the five consecutive trading days immediately
preceding the Issuance Date of such Preferred Shares, subject in each case to
adjustment as provided herein; provided, further, that the minimum price for the
Adjustment Price described in the immediately preceding proviso (the "MINIMUM
ADJUSTMENT PRICE") shall not apply with respect to a Preferred Share at any time
after the Company has issued or sold, or is deemed to have issued or sold
(consistent with Section 2(d) below), any shares of Common Stock (other than
shares of Common Stock deemed to have been issued by the Company in connection
with an Approved Stock Plan (as defined below)) at a price per share (determined
consistent with the provisions of Section 2(d)) less than the Minimum Adjustment
Price with respect to such Preferred Share;

                    (ix)   "CLOSING BID PRICE" means, for any security as of
any date, the last closing bid price for such security on The Nasdaq National
Market as reported by Bloomberg Financial Markets ("BLOOMBERG"), or, if The
Nasdaq National Market is not the principal trading market for such security,
the last closing bid price of such security on the principal securities
exchange or trading market where such security is listed or traded as
reported by Bloomberg, or if the foregoing do not apply, the last closing bid
price of such security in the over-the-counter market on the electronic
bulletin board for such security as reported by Bloomberg, or, if no closing
bid price is reported for such security by Bloomberg, the last closing trade
price of such security as reported by Bloomberg, or, if no last closing trade
price is reported for such security by Bloomberg, the average of the bid
prices of any market makers for such security as reported in the "pink
sheets" by the National Quotation Bureau, Inc. If the Closing Bid Price
cannot be calculated for such security on such date on any of the foregoing
bases, the Closing Bid Price of such security on such date shall be the fair
market value as mutually determined by the Company and the holders of a
majority of the outstanding Preferred Shares (including for purposes of this
determination any Preferred Shares with respect to which the Closing Bid
Price is being determined).  If the Company and the holders of Preferred
Shares are unable to agree upon the fair market value of the Common Stock,
then such dispute shall be resolved pursuant to Section 2(f)(iii) with the
term "Closing Bid Price" being substituted for the term "Market Price." (All
such determinations to be appropriately adjusted for any stock dividend,
stock split or other similar transaction during such period).

                    (x)    "N" means the number of days from, but excluding,
the last Dividend Date with respect to which dividends, along with any
Default Interest, has been paid by the Company on the applicable Preferred
Share through and including the Conversion Date


                                         -4-
<PAGE>


or the Maturity Date for the Preferred Shares for which conversion and/or
redemption is being elected, as the case may be;

                    (xi)   "ISSUANCE DATE" means, with respect to each
Preferred Share, the date of issuance of the applicable Preferred Share;

                    (xii)  "INITIAL ISSUANCE DATE" means the first date on
which any Preferred Shares are issued by the Company;

                    (xiii) "BUSINESS DAY" means any day other than Saturday,
Sunday or other day on which commercial banks in the City of New York are
authorized or required by law to remain closed;

                    (xiv)  "CALENDAR QUARTER" means, subject to Section
2(c)(ii), each of the period beginning on and including January 1 and ending
on and including March 31, the period beginning on and including April 1 and
ending on and including June 30, the period beginning on and including July 1
and ending on and including September 30, and the period beginning on and
including October 1 and ending on and including December 31;

                    (xv)   "SECURITIES PURCHASE AGREEMENT" means that certain
securities purchase agreement between the Company and the initial holders of
the Preferred Shares;

                    (xvi)  "CONVERSION SHARES" means shares of Common Stock
issuable upon conversion of Preferred Shares and any shares of Common Stock
issuable as payment of Dividends or Registration Delay Payments (as defined
in the Registration Rights Agreement).

               (c)  ADJUSTMENT TO FIXED CONVERSION PRICE -- MARKET PRICE OF
COMMON STOCK.  In addition to any other adjustment to the Fixed Conversion Price
provided for in this Certificate of Designations, the Fixed Conversion Price
shall be subject to the following adjustments.

          (i)  ONE YEAR ADJUSTMENT.  Subject to Section 2(c)(iii) below, in the
     event that (A) the Greatest Average Stock Price during the period beginning
     on and including the date which is 21 trading days after the Issuance Date
     of the applicable Preferred Shares and ending on and including the date
     which is one year after such Issuance Date (the "ONE YEAR ADJUSTMENT DATE")
     is not greater than the Fixed Conversion Price on the Issuance Date
     (subject to appropriate adjustment pursuant to Section 2(d)(ii)) of the
     applicable Preferred Shares and (B) the Closing Bid Price on the One Year
     Adjustment Date (or if the One Year Adjustment Date is not a trading day,
     then the trading immediately preceding the One Year Adjustment Date) is not
     greater than the Fixed Conversion Price as of such Issuance Date (subject
     to appropriate adjustment pursuant


                                         -5-
<PAGE>


     to Section 2(d)(ii)), then from and after the date immediately following
     the One Year Adjustment Date, the Fixed Conversion Price shall be equal to
     the lesser of (x) the Adjustment Price on the One Year Adjustment Date and
     (y) the Fixed Conversion Price in effect immediately prior to the One Year
     Adjustment Date; subject to further adjustment as provided in this Section
     2(c) and elsewhere in this Certificate of Designations.

          (ii) CALENDAR QUARTER ADJUSTMENTS.  Subject to Section 2(c)(iii)
     below, in the event that (A) the Greatest Average Stock Price, during the
     period beginning on and including the date which is 21 trading days after
     the first day of any Calendar Quarter (ending after the One Year Adjustment
     Date of the applicable Preferred Shares) and ending on the last day of such
     Calendar Quarter, is not greater than the Fixed Conversion Price then in
     effect of the applicable Preferred Shares and (B) the Closing Bid Price on
     the last trading day of such Calendar Quarter (each a "CALENDAR QUARTER
     ADJUSTMENT DATE") is not greater than the Fixed Conversion Price then in
     effect, then from and after the date immediately following the Calendar
     Quarter Adjustment Date, the Fixed Conversion Price shall be equal to the
     lesser of (x) the Adjustment Price on the Calendar Quarter Adjustment Date
     and (y) the Fixed Conversion Price in effect immediately prior to the
     Calendar Quarter Adjustment Date; subject to further adjustment as provided
     in this Section 2(c) and elsewhere in this Certificate of Designations.
     Notwithstanding the foregoing, if at any time after the Issuance Date but
     prior to the One Year Adjustment Date of the applicable Preferred Shares
     the Company issues or sells, or is deemed to have issued or sold, any
     shares of Common Stock consistent with Section 2(d) (other than shares of
     Common Stock deemed to have been issued by the Company in connection with
     an Approved Stock Plan (as defined below)) for consideration per share less
     than the Fixed Conversion Price in effect immediately prior to such
     issuance or sale, then (A) the first Calendar Quarter Adjustment Date with
     respect to such Preferred Shares shall occur on the last trading day of the
     calendar month immediately following such issuance or sale (an "ALTERNATIVE
     CALENDAR QUARTER ADJUSTMENT DATE") and (B) for purposes of this Section
     2(c)(ii) and Section 6, a Calendar Quarter shall mean any three consecutive
     calendar months ending on the month containing the first Alternative
     Calendar Quarter Adjustment Date (the "FIRST ALTERNATIVE ADJUSTMENT MONTH")
     or any calendar month which is a multiple of three months after the First
     Alternative Adjustment Month.  (For example, if such issuance or sale
     occurs on January 15, 199X the first Alternative Calendar Quarter
     Adjustment Date would be the last trading day of February 199X and a
     Calendar Quarter would mean the three consecutive calendar months ended
     February 199X and each May, August, November and February thereafter.)

          (iii)  TERMINATION OF ONE YEAR AND CALENDAR QUARTER ADJUSTMENTS.
     Notwithstanding the provisions of Section 2(c)(i) and (ii) above, if at any
     time following the Issuance Date of the applicable Preferred Shares the
     Closing Bid Price of the Common Stock is at least 200% of the Fixed
     Conversion Price on such Issuance Date (subject to appropriate adjustment
     pursuant to Section 2(d)(ii)) on each trading day during


                                         -6-
<PAGE>


     a period of 20 consecutive trading days beginning after such Issuance Date,
     then no further adjustment shall be made pursuant to this Section 2(c) at
     any time after the last day of such 20-day period.

               (d)  ADJUSTMENT TO CONVERSION PRICE -- DILUTION AND OTHER EVENTS.
In order to prevent dilution of the rights granted under this Certificate of
Designations, the Minimum Adjustment Price and the Conversion Price will be
subject to adjustment from time to time as provided in this Section 2(d).

                    (i)  ADJUSTMENT OF MINIMUM ADJUSTMENT PRICE UPON ISSUANCE OF
COMMON STOCK.  If and whenever on or after the Issuance Date, the Company issues
or sells, or is deemed to have issued or sold, any shares of Common Stock (other
than shares of Common Stock deemed to have been issued by the Company in
connection with an Approved Stock Plan (as defined below)) for a consideration
per share less than a price (the "APPLICABLE PRICE") equal to the Fixed
Conversion Price in effect immediately prior to such issuance or sale, then
immediately after such issue or sale, the Minimum Adjustment Price, if any, then
in effect shall be reduced to an amount equal to the product of (x) the Minimum
Adjustment Price in effect immediately prior to such issue or sale and (y) the
quotient determined by dividing (1) the sum of (I) the product of the Applicable
Price and the number of shares of Common Stock Deemed Outstanding (as defined
below) immediately prior to such issue or sale, and (II) the consideration, if
any, received by the Company upon such issue or sale, by (2) the product of
(I) the Applicable Price and (II) the number of shares of Common Stock Deemed
Outstanding immediately after such issue or sale.  For purposes of determining
the adjusted Minimum Adjustment Price under this Section 2(d)(i), the following
shall be applicable:

                         (A) ISSUANCE OF OPTIONS.  If the Company in any manner
     grants any rights or options to subscribe for or to purchase Common Stock
     (other than pursuant to an Approved Stock Plan or upon conversion of the
     Preferred Shares) or any stock or other securities convertible into or
     exchangeable for Common Stock (such rights or options being herein called
     "OPTIONS" and such convertible or exchangeable stock or securities being
     herein called "CONVERTIBLE SECURITIES") and the price per share for which
     Common Stock is issuable upon the exercise of such Options or upon
     conversion or exchange of such Convertible Securities is less than the
     Applicable Price, then the total maximum number of shares of Common Stock
     issuable upon the exercise of such Options or upon conversion or exchange
     of the total maximum amount of such Convertible Securities issuable upon
     the exercise of such Options shall be deemed to be outstanding and to have
     been issued and sold by the Company for such price per share.  For purposes
     of this Section 2(d)(i)(A), the "price per share for which Common Stock is
     issuable upon exercise of such Options or upon conversion or exchange of
     such Convertible Securities" is determined by dividing (I) the total
     amount, if any, received or receivable by the Company as consideration for
     the granting of such Options, plus the minimum aggregate amount of
     additional consideration payable to the Company upon the exercise of all
     such Options, plus in the case of such Options which relate to Convertible
     Securities, the


                                         -7-
<PAGE>

     minimum aggregate amount of additional consideration, if any, payable to
     the Company upon the issuance or sale of such Convertible Securities and
     the conversion or exchange thereof, by (II) the total maximum number of
     shares of Common Stock issuable upon exercise of such Options or upon the
     conversion or exchange of all such Convertible Securities issuable upon the
     exercise of such Options. No adjustment of the Minimum Adjustment Price
     shall be made upon the actual issuance of such Common Stock or of such
     Convertible Securities upon the exercise of such Options or upon the actual
     issuance of such Common Stock upon conversion or exchange of such
     Convertible Securities.

                         (B) ISSUANCE OF CONVERTIBLE SECURITIES.  If the
     Company in any manner issues or sells any Convertible Securities and the
     price per share for which Common Stock is issuable upon such conversion or
     exchange is less than the Applicable Price, then the maximum number of
     shares of Common Stock issuable upon conversion or exchange of such
     Convertible Securities shall be deemed to be outstanding and to have been
     issued and sold by the Company for such price per share.  For the purposes
     of this Section 2(d)(i)(B), the "price per share for which Common Stock is
     issuable upon such conversion or exchange" is determined by dividing (I)
     the total amount received or receivable by the Company as consideration for
     the issue or sale of such Convertible Securities, plus the minimum
     aggregate amount of additional consideration, if any, payable to the
     Company upon the conversion or exchange thereof, by (II) the total maximum
     number of shares of Common Stock issuable upon the conversion or exchange
     of all such Convertible Securities.  No adjustment of the Minimum
     Adjustment Price shall be made upon the actual issue of such Common Stock
     upon conversion or exchange of such Convertible Securities, and if any such
     issue or sale of such Convertible Securities is made upon exercise of any
     Options for which adjustment of the Minimum Adjustment Price had been or
     are to be made pursuant to other provisions of this Section 2(d)(i), no
     further adjustment of the Minimum Adjustment Price shall be made by reason
     of such issue or sale.

                         (C) CHANGE IN OPTION PRICE OR RATE OF CONVERSION.  If
     the purchase price provided for in any Options, the additional
     consideration, if any, payable upon the issue, conversion or exchange of
     any Convertible Securities, or the rate at which any Convertible Securities
     are convertible into or exchangeable for Common Stock change at any time,
     the Minimum Adjustment Price in effect at the time of such change shall be
     readjusted to the Minimum Adjustment Price which would have been in effect
     at such time had such Options or Convertible Securities still outstanding
     provided for such changed purchase price, additional consideration or
     changed conversion rate, as the case may be, at the time initially granted,
     issued or sold; provided that no adjustment shall be made if such
     adjustment would result in an increase of the Minimum Adjustment Price then
     in effect.


                                         -8-
<PAGE>

                         (D) CERTAIN DEFINITIONS.  For purposes of determining
     the adjusted Minimum Adjustment Price under this Section 2(d)(i), the
     following terms have the meanings set forth below:

                             (I)   "APPROVED STOCK PLAN" shall mean any
     contract, plan or agreement which has been approved by the Board of
     Directors of the Company, pursuant to which the Company's securities may be
     issued to any employee, officer, director, consultant or other service
     provider.

                             (II)  "COMMON STOCK DEEMED OUTSTANDING" means, at
     any given time, the number of shares of Common Stock actually outstanding
     at such time, plus the number of shares of Common Stock deemed to be
     outstanding pursuant to Sections 2(d)(i)(A) and 2(d)(i)(B) hereof
     regardless of whether the Options or Convertible Securities are actually
     exercisable at such time, but excluding any shares of Common Stock issuable
     upon conversion of the Preferred Shares.

                         (E) EFFECT ON MINIMUM ADJUSTMENT PRICE OF CERTAIN
     EVENTS.  For purposes of determining the adjusted Minimum Adjustment Price
     under this Section 2(d)(i), the following shall be applicable:

                             (I)   CALCULATION OF CONSIDERATION RECEIVED.  If
     any Common Stock, Options or Convertible Securities are issued or sold or
     deemed to have been issued or sold for cash, the consideration received
     therefor will be deemed to be the net amount received by the Company
     therefor.  In case any Common Stock, Options or Convertible Securities are
     issued or sold for a consideration other than cash, the amount of the
     consideration other than cash received by the Company will be the fair
     value of such consideration, except where such consideration consists of
     securities, in which case the amount of consideration received by the
     Company will be the average of the Closing Bid Prices of such securities
     for the five consecutive trading days immediately preceding the date of
     receipt.  In case any Common Stock, Options or Convertible Securities are
     issued to the owners of the non-surviving entity in connection with any
     merger in which the Company is the surviving entity, the amount of
     consideration therefor will be deemed to be the fair value of such portion
     of the net assets and business of the non-surviving entity as is
     attributable to such Common Stock, Options or Convertible Securities, as
     the case may be.  The fair value of any consideration other than cash or
     securities will be determined jointly by the Company and the holders of a
     majority of the Preferred Shares then outstanding.  If such parties are
     unable to reach agreement within ten (10) days after the occurrence of an
     event requiring valuation (the "VALUATION EVENT"), the fair value of such
     consideration will be determined within forty-eight (48) hours of the tenth
     (10th) day following the Valuation Event by an independent, reputable
     appraiser selected by the Company.  The determination of such appraiser
     shall be binding upon all parties absent manifest error.


                                         -9-
<PAGE>


                             (II)  INTEGRATED TRANSACTIONS.  In case any Option
     is issued in connection with the issue or sale of other securities of the
     Company, together comprising one integrated transaction in which no
     specific consideration is allocated to such Options by the parties thereto,
     the Options will be deemed to have been issued for a consideration of $.01.

                             (III) TREASURY SHARES.  The number of shares
     of Common Stock outstanding at any given time does not include shares owned
     or held by or for the account of the Company, and the disposition of any
     shares so owned or held will be considered an issue or sale of Common
     Stock.

                             (IV)  RECORD DATE.  If the Company takes a record
     of the holders of Common Stock for the purpose of entitling them (1) to
     receive a dividend or other distribution payable in Common Stock, Options
     or in Convertible Securities, or (2) to subscribe for or purchase Common
     Stock, Options or Convertible Securities, then such record date will be
     deemed to be the date of the issue or sale of the shares of Common Stock
     deemed to have been issued or sold upon the declaration of such dividend or
     the making of such other distribution or the date of the granting of such
     right of subscription or purchase, as the case may be.

                    (ii) ADJUSTMENT OF FIXED CONVERSION PRICE AND MINIMUM
     ADJUSTMENT PRICE UPON SUBDIVISION OR COMBINATION OF COMMON STOCK.  If the
     Company at any time subdivides (by any stock split, stock dividend,
     recapitalization or otherwise) one or more classes of its outstanding
     shares of Common Stock into a greater number of shares, the Fixed
     Conversion Price and the Minimum Adjustment Price in effect immediately
     prior to such subdivision each will be proportionately reduced.  If the
     Company at any time combines (by combination, reverse stock split or
     otherwise) one or more classes of its outstanding shares of Common Stock
     into a smaller number of shares, the Fixed Conversion Price and the Minimum
     Adjustment Price in effect immediately prior to such combination each will
     be proportionately increased.

                    (iii) REORGANIZATION, RECLASSIFICATION, CONSOLIDATION,
     MERGER OR SALE.  Any recapitalization, reorganization, reclassification,
     consolidation, merger, sale of all or substantially all of the Company's
     assets to another Person (as defined below) or other transaction which is
     effected in such a way that holders of Common Stock are entitled to receive
     (either directly or upon subsequent liquidation) stock, securities or
     assets with respect to or in exchange for Common Stock is referred to
     herein as "ORGANIC CHANGE."  Prior to the consummation of any Organic
     Change, the Company will make appropriate provision (in form and substance
     reasonably satisfactory to the holders of a majority of the Preferred
     Shares then outstanding) to insure that each of the holders of the
     Preferred Shares will thereafter have the right to acquire and receive in
     lieu of or in addition to (as the case may be) the shares of Common Stock
     otherwise acquirable and receivable upon the conversion of such holder's
     Preferred Shares, such


                                         -10-
<PAGE>

     shares of stock, securities or assets that would have been issued or
     payable in such Organic Change with respect to or in exchange for the
     number of shares of Common Stock which would have been acquirable and
     receivable upon the conversion of such holder's Preferred Shares had such
     Organic Change not taken place (without taking into account any limitations
     or restrictions on the timing or amount of conversions).  In any such case,
     the Company will make appropriate provision (in form and substance
     reasonably satisfactory to the holders of a majority of the Preferred
     Shares then outstanding) with respect to such holders' rights and interests
     to insure that the provisions of this Section 2(d) and Section 2(e) will
     thereafter be applicable to the Preferred Shares (including, in the case of
     any such consolidation, merger or sale in which the successor entity or
     purchasing entity is other than the Company, an immediate adjustment of the
     Fixed Conversion Price to the value for the Common Stock reflected by the
     terms of such consolidation, merger or sale, if the value so reflected is
     less than the Fixed Conversion Price in effect immediately prior to such
     consolidation, merger or sale and an immediate revision to the Adjustment
     Price and the Minimum Adjustment Price to reflect the price of the common
     stock of the surviving entity and the market in which such common stock is
     traded).  The Company will not effect any such consolidation, merger or
     sale, unless prior to the consummation thereof, the successor entity (if
     other than the Company) resulting from consolidation or merger or the
     entity purchasing such assets assumes, by written instrument (in form and
     substance reasonably satisfactory to the holders of a majority of the
     Preferred Shares then outstanding), the obligation to deliver to each
     holder of Preferred Shares such shares of stock, securities or assets as,
     in accordance with the foregoing provisions, such holder may be entitled to
     acquire.  "PERSON" shall mean an individual, a limited liability company, a
     partnership, a joint venture, a corporation, a trust, an unincorporated
     organization and a government or any department or agency thereof.

                    (iv) CERTAIN EVENTS.  If any event occurs of the type
     contemplated by the provisions of this Section 2(d) but not expressly
     provided for by such provisions (including, without limitation, the
     granting of stock appreciation rights, phantom stock rights or other rights
     with equity features), then the Company's Board of Directors will make an
     appropriate adjustment in the Conversion Price and the Minimum Adjustment
     Price so as to protect the rights of the holders of the Preferred Shares;
     provided, however, that no such adjustment will increase the Conversion
     Price as otherwise determined pursuant to this Section 2(d).

                    (v)  NOTICES.

                         (A) Immediately upon any adjustment of the Conversion
     Price or the Minimum Adjustment Price, the Company will give written notice
     thereof to each holder of the Preferred Shares, setting forth in reasonable
     detail and certifying the calculation of such adjustment.


                                         -11-
<PAGE>

                         (B) The Company will give written notice to each
     holder of the Preferred Shares at least twenty (20) days prior to the date
     on which the Company closes its books or takes a record (I) with respect to
     any dividend or distribution upon the Common Stock, (II) with respect to
     any pro rata subscription offer to holders of Common Stock, or (III) for
     determining rights to vote with respect to any Organic Change, dissolution
     or liquidation and in no event shall such notice be provided to such holder
     prior to such information being made known to the public.

                         (C) The Company will also give written notice to each
     holder of the Preferred Shares at least twenty (20) days prior to the date
     on which any Organic Change, dissolution or liquidation will take place and
     in no event shall such notice be provided to such holder prior to such
     information being made known to the public.

               (e)  PURCHASE RIGHTS.  In addition to any adjustments of the
     Conversion Price and the Minimum Adjustment Price pursuant to Section 2(d),
     if at any time after the Issuance Date the Company grants, issues or sells
     any Options, Convertible Securities or rights to purchase stock, warrants,
     securities or other property pro rata to the record holders of any class of
     Common Stock (the "PURCHASE RIGHTS"), then the holders of the Preferred
     Shares will be entitled to acquire, upon the terms applicable to such
     Purchase Rights, the aggregate Purchase Rights which such holder could have
     acquired if such holder had held the number of shares of Common Stock
     acquirable upon complete conversion of the Preferred Shares (without taking
     into account any limitations or restrictions on the timing or amount of
     conversions) immediately before the date on which a record is taken for the
     grant, issuance or sale of such Purchase Rights, or, if no such record is
     taken, the date as of which the record holders of the Common Stock are to
     be determined for the grant, issue or sale of such Purchase Rights.

               (f)  MECHANICS OF CONVERSION.  Subject to the Company's inability
     to fully satisfy its obligations under a Conversion Notice (as defined
     below) as provided for in Section 4:

                    (i)  HOLDER'S DELIVERY REQUIREMENTS.  To convert Preferred
     Shares into full shares of Common Stock on any date (the "CONVERSION
     DATE"), the holder thereof shall (A) transmit by facsimile (or otherwise
     deliver), for receipt on or prior to 11:59 p.m. Eastern Time, on such date,
     a copy of a fully executed notice of conversion in the form attached hereto
     as EXHIBIT I (the "CONVERSION NOTICE") to the Company or its designated
     transfer agent (the "TRANSFER AGENT"), and (B) surrender to a common
     carrier, for delivery to the Company or the Transfer Agent as soon as
     practicable following such date, the original certificate(s) representing
     the Preferred Shares being converted (or an indemnification undertaking
     with respect to such shares in the case of their loss, theft or
     destruction) (the "PREFERRED STOCK CERTIFICATE(S)") and the originally
     executed Conversion Notice.


                                         -12-
<PAGE>

                    (ii) COMPANY'S RESPONSE.  Upon receipt by the Company of a
     facsimile copy of a Conversion Notice, the Company shall, or shall cause
     the Transfer Agent to, promptly, but in no event later than one Business
     Day after receipt, send, via facsimile, a confirmation of receipt of such
     Conversion Notice to such holder.  Upon receipt by the Company or the
     Transfer Agent of the Preferred Stock Certificate(s) to be converted
     pursuant to a Conversion Notice, together with the originally executed
     Conversion Notice, the Company or the Transfer Agent (as applicable) shall,
     on the next Business Day following the date of receipt, (I) issue and
     surrender to a common carrier for overnight delivery to the address
     specified in the Conversion Notice, a certificate, registered in the name
     of the holder or its designee, for the number of shares of Common Stock to
     which the holder shall be entitled, or (II) credit such aggregate number of
     shares of Common Stock to which the holder shall be entitled to the
     holder's or its designee's balance account with The Depository Trust
     Company.  If the number of Preferred Shares represented by the Preferred
     Stock Certificate(s) submitted for conversion is greater than the number of
     Preferred Shares being converted, then the Company or Transfer Agent, as
     the case may be, shall, as soon as practicable and in no event later than
     two Business Days after receipt of the Preferred Stock Certificate(s) and
     at its own expense, issue and deliver to the holder a new Preferred Stock
     Certificate representing the number of Preferred Shares not converted.

                    (iii)    DISPUTE RESOLUTION.  In the case of a dispute as
     to the determination of the Market Price or the arithmetic calculation of
     the Conversion Rate, the Company shall promptly issue to the holder the
     number of shares of Common Stock that is not disputed and shall submit the
     disputed determinations or arithmetic calculations to the holder via
     facsimile within one (1) Business Day of receipt of such holder's
     Conversion Notice.  If such holder and the Company are unable to agree upon
     the determination of the Market Price or arithmetic calculation of the
     Conversion Rate within one (1) Business Day of such disputed determination
     or arithmetic calculation being submitted to the holder, then the Company
     shall within one (1) Business Day submit via facsimile (A) the disputed
     determination of the Market Price to an independent, reputable investment
     bank, or (B) the disputed arithmetic calculation of the Conversion Rate to
     its independent, outside accountant.  The Company shall cause the
     investment bank or the accountant, as the case may be, to perform the
     determinations or calculations and notify the Company and the holder of the
     results no later than forty-eight (48) hours from the time it receives the
     disputed determinations or calculations.  Such investment bank's or
     accountant's determination or calculation, as the case may be, shall be
     binding upon all parties absent manifest error.

                    (iv) RECORD HOLDER.  The person or persons entitled to
     receive the shares of Common Stock issuable upon a conversion of Preferred
     Shares shall be treated for all purposes as the record holder or holders of
     such shares of Common Stock on the Conversion Date.


                                         -13-
<PAGE>

                    (v)  COMPANY'S FAILURE TO TIMELY CONVERT.  If within five
     Business Days after the Company's or the Transfer Agent's receipt of the
     Preferred Stock Certificates to be converted and the Conversion Notice the
     Company shall fail (I) to issue a certificate for the number of shares of
     Common Stock to which a holder is entitled or to credit the holder's
     balance account with The Depository Trust Company for such number of shares
     of Common Stock to which the holder is entitled upon such holder's
     conversion of the Preferred Shares, or (II) to issue a new Preferred Stock
     Certificate representing the number of Preferred Shares to which such
     holder is entitled, pursuant to Section 2(f)(ii), in addition to all other
     available remedies which such holder may pursue hereunder and under the
     Securities Purchase Agreement (including indemnification pursuant to
     Section 8 thereof), the Company shall pay additional damages to such holder
     on each date after such fifth (5th) Business Day that such conversion or
     delivery of such Preferred Stock Certificates, as the case may be, is not
     timely effected in an amount equal to 0.5% of the product of (A) the sum of
     the number of shares of Common Stock not issued to the holder on a timely
     basis pursuant to Section 2(f)(ii) and to which such holder is entitled
     and, in the event the Company has failed to deliver a Preferred Stock
     Certificate to the holder on a timely basis pursuant to Section 2(f)(ii),
     the number of shares of Common Stock issuable upon conversion of the
     Preferred Shares represented by such Preferred Stock Certificate as of the
     last possible date which the Company could have issued such Preferred Stock
     Certificate to such holder without violating Section 2(f)(ii); and (B) the
     Closing Bid Price of the Common Stock on the last possible date which the
     Company could have issued such Common Stock and the Preferred Stock
     Certificate, as the case may be, to such holder without violating Section
     2(f)(ii).

               (g)  MANDATORY CONVERSION OR REDEMPTION AT MATURITY.  If any
     Preferred Shares remain outstanding on the Maturity Date (as defined
     below), then all such Preferred Shares, at the Company's option, either
     (i) shall be converted as of such date in accordance with this Section 2
     as if the holders of such Preferred Shares had given the Conversion
     Notice on the Maturity Date (a "MATURITY DATE MANDATORY CONVERSION") or
     (ii) shall be redeemed as of such date for an amount in cash per
     Preferred Share (the "MATURITY DATE REDEMPTION PRICE") equal to the sum
     of (A) $50,000 plus (B) the Additional Amount as of such date (a
     "MATURITY DATE MANDATORY REDEMPTION"); provided, however, that if the
     Company has elected a Maturity Date Mandatory Conversion and a
     Triggering Event has occurred and is continuing on the Maturity Date,
     then the Company shall, within five Business Days following the Maturity
     Date (unless otherwise notified in writing by the holder of its request
     to have the Preferred Shares converted into Common Stock), pay to each
     holder of Preferred Shares then outstanding, in immediately available
     funds, an amount equal to the Maturity Date Redemption Price.  The
     Company shall be deemed to have elected a Maturity Date Mandatory
     Conversion unless it delivers written notice to each holder of Preferred
     Shares at least 30 Business Days prior to the Maturity Date of its
     election to effect a Maturity Date Mandatory Redemption.  If the Company
     elects a Maturity Date Mandatory Redemption, then on the Maturity Date
     the Company shall pay to each holder of Preferred Shares outstanding on



                                         -14-
<PAGE>

     the Maturity Date, by wire transfer of immediately available funds, an
     amount per Preferred Share equal to the Maturity Date Redemption Price.
     All holders of Preferred Shares shall thereupon surrender all Preferred
     Stock Certificates, duly endorsed for cancellation, to the Company or
     the Transfer Agent, provided that the Company has complied with its
     obligations under this Section 2(g). Notwithstanding the foregoing, if
     the Common Stock is not designated for quotation on The Nasdaq National
     Market or listed on The New York Stock Exchange, Inc. but such events do
     not constitute a Triggering Event, then the Maturity Date shall be
     extended until the Common Stock is so designated or listed.  "MATURITY
     DATE" means the date which is three years after the applicable Issuance
     Date, subject to extension (i) as described in the immediately preceding
     sentence, (ii) pursuant to Section 4(l) of the Securities Purchase
     Agreement, which extension shall be equal to one and one-half (1 1/2)
     days for each number of days in any Underwriting Lock-Up Period (as
     defined in Section 4(m) of the Securities Purchase Agreement) and (iii)
     pursuant to Section 3(u) of the Registration Rights Agreement, which
     extension shall be equal to one and one-half (1 1/2) days for each
     number of days in any Allowable Grace Period (as defined in Section 3(u)
     of the Registration Rights Agreement).

               (h)  FRACTIONAL SHARES.  The Company shall not issue any fraction
     of a share of Common Stock upon any conversion.  All shares of Common Stock
     (including fractions thereof) issuable upon conversion of more than one
     Preferred Share by a holder thereof shall be aggregated for purposes of
     determining whether the conversion would result in the issuance of a
     fraction of a share of Common Stock.  If, after the aforementioned
     aggregation, the issuance would result in the issuance of a fraction of a
     share of Common Stock, the Company shall round such fraction of a share of
     Common Stock up or down to the nearest whole share.

               (i)  TAXES.  The Company shall pay any and all taxes which may be
     imposed upon it with respect to the issuance and delivery of shares of
     Common Stock upon the conversion of the Preferred Shares.

          (3)  REDEMPTION AT OPTION OF HOLDERS.

               (a)  REDEMPTION OPTION UPON MAJOR TRANSACTION.  In addition to
     all other rights of the holders of Preferred Shares contained herein,
     simultaneous with or after the occurrence of a Major Transaction (as
     defined below), each holder of Preferred Shares shall have the right, at
     such holder's option, to require the Company to redeem all or a portion of
     such holder's Preferred Shares at a price per Preferred Share equal to the
     greater of (i) 120% of the Liquidation Value (as defined in Section 11);
     and (ii) the product of (A) the Conversion Rate at such time, and (B) the
     Closing Bid Price on the date of the public announcement of such Major
     Transaction or the next date on which the exchange or market on which the
     Common Stock is traded is open if such public announcement is made
     (X) after 12:00 p.m. Eastern Time, on such date or (Y) on a date


                                         -15-
<PAGE>


     on which the exchange or market on which the Common Stock is traded is
     closed (the "MAJOR TRANSACTION REDEMPTION PRICE").

               (b)  REDEMPTION OPTION UPON TRIGGERING EVENT.  In addition to all
     other rights of the holders of Preferred Shares contained herein,
     simultaneous with or after the occurrence of a Triggering Event (as defined
     below), each holder of Preferred Shares shall have the right, at such
     holder's option, to require the Company to redeem all or a portion of such
     holder's Preferred Shares at a price per Preferred Share equal to the
     greater of (i) 120% of the Liquidation Value; and (ii) the product of (A)
     the Conversion Rate at such time, and (B) the greater of (I) the Closing
     Bid Price on the trading day immediately preceding such Triggering Event or
     (II) the Closing Bid Price on the date of the holder's delivery to the
     Company of a Notice of Redemption at Option of Buyer Upon Triggering Event
     (as defined below) or, if such date of delivery is not a trading day, the
     next date on which the exchange or market on which the Common Stock is
     traded is open (the "TRIGGERING EVENT REDEMPTION PRICE" and, collectively
     with the Major Transaction Redemption Price, the "REDEMPTION PRICE").

               (c)  "MAJOR TRANSACTION".  A "MAJOR TRANSACTION" shall be deemed
     to have occurred at such time as any of the following events:

                    (i)  the consolidation, merger or other business combination
     of the Company with or into another Person (other than pursuant to a
     migratory merger effected solely for the purpose of changing the
     jurisdiction of incorporation of the Company);

                    (ii) the sale or transfer of all or substantially all of the
     Company's assets; or

                    (iii) a purchase, tender or exchange offer made to and
     accepted by the holders of more than 40% of the outstanding shares of
     Common Stock.

               (d)  "TRIGGERING EVENT".  A "TRIGGERING EVENT" shall be deemed to
     have occurred at such time as any of the following events:

                    (i)  the failure of the registration statement (the
     REGISTRATION STATEMENT") covering the resale of the shares of Common Stock
     issuable upon conversion of the Preferred Shares (as defined in the
     Securities Purchase Agreement referred to in Section 2(f)(v) of this
     Certificate of Designations) and required to be filed by the Company
     pursuant to the Registration Rights Agreement between the Company and the
     Buyers referred to therein (the "REGISTRATION RIGHTS AGREEMENT") to be
     declared effective by the SEC on or prior to the date that is 180 days
     after the Initial Issuance Date;


                                         -16-
<PAGE>


                    (ii) while the Registration Statement is required to be
     maintained effective pursuant to the terms of the Registration Rights
     Agreement, the effectiveness of the Registration Statement lapses for any
     reason (including, without limitation, the issuance of a stop order) or is
     unavailable to the holder of the Preferred Shares for sale of the
     Registrable Securities (as defined in the Registration Rights Agreement) in
     accordance with the terms of the Registration Rights Agreement, and such
     lapse or unavailability continues for a period of ten consecutive trading
     days (excluding any days during an Allowable Grace Period (as defined in
     Section 3(u) of the Registration Rights Agreement));

                    (iii) suspension from listing or delisting of the Common
     Stock from The Nasdaq National Market or The New York Stock Exchange, Inc.
     for a period of five consecutive days;

                    (iv) the Company's notice to any holder of Preferred Shares,
     including by way of public announcement, at any time, of its intention not
     to comply with proper requests for conversion of any Preferred Shares into
     shares of Common Stock, including due to any of the reasons set forth in
     Section 4(a) below; or

                    (v)  the Company breaches any representation, warranty,
     covenant or other material term or condition of the Securities Purchase
     Agreement, the Registration Rights Agreement, this Certificate of
     Designations or any other agreement, document, certificate or other
     instrument delivered in connection with the transactions contemplated
     thereby or hereby, except to the extent that such breach would not have a
     Material Adverse Effect (as defined in Section 3(a) of the Securities
     Purchase Agreement) and except, in the case of a breach of a covenant which
     is curable, only if such breach continues for a period of at least ten
     days.

               (e)  MECHANICS OF REDEMPTION AT OPTION OF BUYER UPON MAJOR
     TRANSACTION.  No sooner than 15 days nor later than 10 days prior to the
     consummation of a Major Transaction, but not prior to the public
     announcement of such Major Transaction, the Company shall deliver written
     notice thereof via facsimile and overnight courier (a "NOTICE OF MAJOR
     TRANSACTION") to each holder of Preferred Shares.  At any time after
     receipt of a Notice of Major Transaction (or, in the event a Notice of
     Major Transaction is not delivered at least 10 days prior to a Major
     Transaction, at any time on or after the date which is 10 days prior to a
     Major Transaction), any holder of the Preferred Shares then outstanding may
     require the Company to redeem all or a portion of the holder's Preferred
     Shares then outstanding by delivering written notice thereof via facsimile
     and overnight courier (a "NOTICE OF REDEMPTION AT OPTION OF BUYER UPON
     MAJOR TRANSACTION") to the Company, which Notice of Redemption at Option of
     Buyer Upon Major Transaction shall indicate (i) the number of Preferred
     Shares that such holder is submitting for redemption, and (ii) the
     applicable Major Transaction Redemption Price, as calculated pursuant to
     Section 3(a).


                                         -17-
<PAGE>


               (f)  MECHANICS OF REDEMPTION AT OPTION OF BUYER UPON TRIGGERING
     EVENT.  Within one (1) day after the occurrence of a Triggering Event, the
     Company shall deliver written notice thereof via facsimile and overnight
     courier (a "NOTICE OF TRIGGERING EVENT") to each holder of Preferred
     Shares.  At any time after the earlier of a holder's receipt of a Notice of
     Triggering Event and such holder becoming aware of a Triggering Event, any
     holder of Preferred Shares then outstanding may require the Company to
     redeem all or a portion of the holder's Preferred Shares then outstanding
     by delivering written notice thereof via facsimile and overnight courier (a
     "NOTICE OF REDEMPTION AT OPTION OF BUYER UPON TRIGGERING EVENT") to the
     Company, which Notice of Redemption at Option of Buyer Upon Triggering
     Event shall indicate (i) the number of Preferred Shares that such holder is
     submitting for redemption, and (ii) the applicable Triggering Event
     Redemption Price, as calculated pursuant to Section 3(b).

               (g)  PAYMENT OF REDEMPTION PRICE.  Upon the Company's receipt of
     a Notice(s) of Redemption at Option of Buyer Upon Triggering Event or a
     Notice(s) of Redemption at Option of Buyer Upon Major Transaction from any
     holder of Preferred Shares, the Company shall immediately notify each
     holder of Preferred Shares by facsimile of the Company's receipt of such
     Notice(s) of Redemption at Option of Buyer Upon Triggering Event or
     Notice(s) of Redemption at Option of Buyer Upon Major Transaction and each
     holder which has sent such a notice shall promptly submit to the Company or
     its Transfer Agent such holder's Preferred Stock Certificates which such
     holder has elected to have redeemed.  The Company shall deliver the
     applicable Triggering Event Redemption Price, in the case of a redemption
     pursuant to Section 3(f), to such holder within five (5) Business Days
     after the Company's receipt of a Notice of Redemption at Option of Buyer
     Upon Triggering Event and, in the case of a redemption pursuant to Section
     3(e), the Company shall deliver the applicable Major Transaction Redemption
     Price immediately prior to the consummation of the Major Transaction;
     provided that a holder's Preferred Stock Certificates shall have been so
     delivered to the Company; provided further that if the Company is unable to
     redeem all of the Preferred Shares to be redeemed, the Company shall redeem
     an amount from each holder of Preferred Shares being redeemed equal to such
     holder's pro-rata amount (based on the number of Preferred Shares held by
     such holder relative to the number of Preferred Shares outstanding) of all
     Preferred Shares being redeemed.  If the Company shall fail to redeem all
     of the Preferred Shares submitted for redemption (other than pursuant to a
     dispute as to the arithmetic calculation of the Redemption Price), in
     addition to any remedy such holder of Preferred Shares may have under this
     Certificate of Designation, the Securities Purchase Agreement and the
     Registration Rights Agreement, the applicable Redemption Price payable in
     respect of such unredeemed Preferred Shares shall bear interest at the rate
     of 2.0% per month (prorated for partial months) until paid in full.  Until
     the Company pays such unpaid applicable Redemption Price in full to a
     holder of Preferred Shares submitted for redemption, such holder shall have
     the option (the "VOID OPTIONAL REDEMPTION OPTION") to, in lieu of
     redemption, require the Company to promptly return to such holder(s) all of
     the Preferred Shares that were submitted for


                                         -18-
<PAGE>


     redemption by such holder(s) under this Section 3 and for which the
     applicable Redemption Price has not been paid, by sending written notice
     thereof to the Company via facsimile (the "VOID OPTIONAL REDEMPTION
     NOTICE").  Upon the Company's receipt of such Void Optional Redemption
     Notice(s) prior to payment of the full applicable Redemption Price to such
     holder, (i) the Notice(s) of Redemption at Option of Buyer Upon Triggering
     Event or the Notice(s) of Redemption at Option of Buyer Upon Major
     Transaction, as the case may be, shall be null and void with respect to
     those Preferred Shares submitted for redemption and for which the
     applicable Redemption Price has not been paid, (ii) the Company shall
     immediately return any Preferred Shares submitted to the Company by each
     holder for redemption under this Section 3(g) and for which the applicable
     Redemption Price has not been paid and (iii) the Fixed Conversion Price of
     such returned Preferred Shares shall be adjusted to the lesser of (A) the
     Fixed Conversion Price as in effect on the date on which the Void Optional
     Redemption Notice(s) is delivered to the Company and (B) the lowest Closing
     Bid Price during the period beginning on the date on which the Notice(s) of
     Redemption of Option of Buyer Upon Major Transaction or the Notice(s) of
     Redemption at Option of Buyer Upon Triggering event, as the case may be, is
     delivered to the Company and ending on the date on which the Void Optional
     Redemption Notice(s) is delivered to the Company; provided that no
     adjustment shall be made if such adjustment would result in an increase of
     the Fixed Conversion Price then in effect.  Notwithstanding the foregoing,
     in the event of a dispute as to the determination of the Closing Bid Price
     or the arithmetic calculation of the Redemption Price, such dispute shall
     be resolved pursuant to Section 2(g)(iii) above with the term "Closing Bid
     Price" being substituted for the term "Market Price" and the term
     "Redemption Price" being substituted for the term "Conversion Rate".  A
     holder's delivery of a Void Optional Redemption Notice and exercise of its
     rights following such notice shall not effect the Company's obligations to
     make any payments which have accrued prior to the date of such notice.
     Payments provided for in this Section 3 shall have priority to payments to
     other stockholders in connection with a Major Transaction.

          (4)  INABILITY TO FULLY CONVERT.

               (a)  HOLDER'S OPTION IF COMPANY CANNOT FULLY CONVERT.  If, upon
     the Company's receipt of a Conversion Notice or on the Maturity Date, the
     Company can not issue shares of Common Stock registered for resale under
     the Registration Statement for any reason, including, without limitation,
     because the Company (x) does not have a sufficient number of shares of
     Common Stock authorized and available, (y) is otherwise prohibited by
     applicable law or by the rules or regulations of any stock exchange,
     interdealer quotation system or other self-regulatory organization with
     jurisdiction over the Company or its Securities, including without
     limitation the Exchange Cap, from issuing all of the Common Stock which is
     to be issued to a holder of Preferred Shares pursuant to a Conversion
     Notice or (z) fails to have a sufficient number of shares of Common Stock
     registered for resale under the Registration Statement, then the Company


                                         -19-
<PAGE>

     shall issue as many shares of Common Stock as it is able to issue in
     accordance with such holder's Conversion Notice and pursuant to Section
     2(f) and, with respect to the unconverted Preferred Shares, the holder,
     solely at such holder's option, can elect to:

                    (i)  require the Company to redeem from such holder those
     Preferred Shares for which the Company is unable to issue Common Stock in
     accordance with such holder's Conversion Notice ("MANDATORY REDEMPTION") at
     a price per Preferred Share (the "MANDATORY REDEMPTION PRICE") equal to the
     Triggering Event Redemption Price as of such Conversion Date;

                    (ii)  if the Company's inability to fully convert Preferred
     Shares is pursuant to Section 4(a)(z), require the Company to issue
     restricted shares of Common Stock in accordance with such holder's
     Conversion Notice and pursuant to Section 2(f);

                    (iii)  void its Conversion Notice and retain or have
     returned, as the case may be, the nonconverted Preferred Shares that were
     to be converted pursuant to such holder's Conversion Notice (provided that
     a holder's voiding its Conversion Notice shall not effect the Company's
     obligations to make any payments which have accrued prior to the date of
     such notice); or

                    (iv)  if the Company's inability to fully convert Preferred
     Shares is pursuant to the Exchange Cap described in Section 4(a)(y),
     require the Company to issue shares of Common Stock in accordance with such
     holder's Conversion Notice and pursuant to Section 2(f) at a Conversion
     Price equal to the average of Closing Bid Prices of the Common Stock for
     the five consecutive trading days preceding such holder's Notice in
     Response to Inability to Convert (as defined below).

               (b)  MECHANICS OF FULFILLING HOLDER'S ELECTION.  The Company
     shall immediately send via facsimile to a holder of Preferred Shares, upon
     receipt of a facsimile copy of a Conversion Notice from such holder which
     cannot be fully satisfied as described in Section 4(a), a notice of the
     Company's inability to fully satisfy such holder's Conversion Notice (the
     "INABILITY TO FULLY CONVERT NOTICE").  Such Inability to Fully Convert
     Notice shall indicate (i) the reason why the Company is unable to fully
     satisfy such holder's Conversion Notice, (ii) the number of Preferred
     Shares which cannot be converted and (iii) the applicable Mandatory
     Redemption Price.  Such holder shall notify the Company of its election
     pursuant to Section 4(a) above by delivering written notice via facsimile
     to the Company ("NOTICE IN RESPONSE TO INABILITY TO CONVERT").

               (c)  PAYMENT OF REDEMPTION PRICE.  If such holder shall elect to
     have its shares redeemed pursuant to Section 4(a)(i), the Company shall pay
     the Mandatory Redemption Price in cash to such holder within ten days of
     the Company's receipt of the holder's Notice in Response to Inability to
     Convert.  If the Company shall fail to pay the


                                         -20-
<PAGE>

     applicable Mandatory Redemption Price to such holder on a timely basis as
     described in this Section 4(c) (other than pursuant to a dispute as to the
     determination of the arithmetic calculation of the Redemption Price), in
     addition to any remedy such holder of Preferred Shares may have under this
     Certificate of Designations, the Securities Purchase Agreement and the
     Registration Rights Agreement, such unpaid amount shall bear interest at
     the rate of 2.0% per month (prorated for partial months) until paid in
     full.  Until the full Mandatory Redemption Price is paid in full to such
     holder, such holder may void the Mandatory Redemption with respect to those
     Preferred Shares for which the full Mandatory Redemption Price has not been
     paid and (i) receive back such Preferred Shares and (ii) the Fixed
     Conversion Price of such returned Preferred Shares shall be adjusted to the
     lesser of (A) the Fixed Conversion Price in effect on the date on which the
     holder voided the Mandatory Redemption and (B) the lowest Closing Bid Price
     during the Period beginning on the Conversion Date and ending on the date
     the holder voided the Mandatory Redemption.  Notwithstanding the foregoing,
     if the Company fails to pay the applicable Mandatory Redemption Price
     within such ten-day period due to a dispute as to the determination of the
     arithmetic calculation of the Redemption Price, such dispute shall be
     resolved pursuant to Section 2(f)(iii) with the term "Redemption Price"
     being substituted for the term "Conversion Rate".

               (d)  PRO-RATA CONVERSION AND REDEMPTION.  In the event the
     Company receives a Conversion Notice, Notice of Redemption at Option of
     Buyer Upon Major Transaction or Notice of Redemption at Option of Buyer
     Upon Triggering Event from more than one holder of Preferred Shares on the
     same day and the Company can convert and/or redeem some, but not all, of
     the Preferred Shares pursuant to this Section 4, the Company shall convert
     and redeem from each holder of Preferred Shares electing to have Preferred
     Shares converted and redeemed at such time an amount equal to such holder's
     pro-rata amount (based on the number of Preferred Shares held by such
     holder relative to the number of Preferred Shares outstanding) of all
     Preferred Shares being converted and redeemed at such time.

     (5)  CONVERSION AT THE COMPANY'S ELECTION.  At any time or times on or
after the date which is one year after the Issuance Date of the applicable
Preferred Shares, the Company shall have the right, in its sole discretion, to
require that any or all of such outstanding Preferred Shares be converted
("CONVERSION AT COMPANY'S ELECTION") at the Conversion Rate; provided that the
Conditions to Conversion at the Company's Election (as set forth below) are
satisfied.  The Company shall exercise its right to Conversion at Company's
Election by providing each holder of Preferred Shares written notice ("NOTICE OF
CONVERSION AT COMPANY'S ELECTION") at least five trading days prior to the date
selected by the Company for conversion ("COMPANY'S ELECTION CONVERSION DATE").
If the Company elects to require conversion of some, but not all, of such
Preferred Shares, the Company shall convert an amount from each holder of
Preferred Shares equal to such holder's pro rata amount (based on the number of
such Preferred Shares held by such holder relative to the number of such
Preferred Shares outstanding on date of the Company's delivery of the Notice of
Conversion at Company's Election) of all Preferred Shares


                                         -21-
<PAGE>

the Company is requiring to be converted.  The Notice of Conversion at Company's
Election shall indicate (x) the number of Preferred Shares the Company has
selected for conversion, (y) the Company's Election Conversion Date, which date
shall be not less than five or more than 30 trading days after each holder's
receipt of such notice, and (z) each holder's pro rata share of outstanding
Preferred Shares.  All Preferred Shares selected for conversion in accordance
with the provision of this Section 5 shall be converted as of the Company's
Election Conversion Date in accordance with Section 2 as if the holders of such
Preferred Shares selected by the Company to be converted had given the
Conversion Notice on the Company's Election Conversion Date.  All holders of
Preferred Shares shall thereupon and within two Business Days after the
Company's Election Conversion Date surrender all Preferred Stock Certificates
selected for conversion, duly endorsed for cancellation, to the Company.
"CONDITIONS TO CONVERSION AT THE COMPANY'S ELECTION" means the following
conditions:  (i) on each day during the period beginning 30 days prior to the
date of the Company's Notice of Conversion at Company's Election and ending on
and including the Company's Election Conversion Date, no Grace Period (as
defined in Section 3(u) of the Registration Rights Agreement) or Underwriting
Lock-Up Period shall be in effect and the Registration Statement shall be
effective and available for the sale of no less than 125% of the sum of (A) the
number of Conversion Shares then issuable upon the conversion of all outstanding
Preferred Shares (without regard to any limitations on conversion herein or
elsewhere), including the Conversion Shares to be issued pursuant to this
Conversion at the Company's Election, and (B) the number of Conversion Shares
and Dividend Shares that are then held by the holders of the Preferred Shares;
(ii) on each day during the period beginning 30 days prior to the date of the
Company's Notice of Conversion at Company's Election and ending on and including
the Company's Election Conversion Date, the Common Stock is designated for
quotation on The Nasdaq National Market or listed on The New York Stock
Exchange, Inc. and is not suspended from trading; (iii) on each day during the
20 consecutive trading days immediately preceding the date of the receipt by the
Buyers of the Notice of Conversion at Company's Election, the Closing Bid Price
of the Common Stock is at least 150% of the Fixed Conversion Price as of the
Issuance Date of the Preferred Shares being converted; (iv) on each day during
the period beginning on and including the date of the receipt by the Buyers of
the Notice of Conversion at Company's Election and ending on and including the
Company's Election Conversion Date, the Closing Bid Price of the Common Stock is
at least 150% of the Fixed Conversion Price as of the Issuance Date of the
Preferred Shares being converted; (v) during the period beginning on the first
Issuance Date of any Preferred Shares and ending on and including the Company's
Election Conversion Date, the Company shall have delivered Conversion Shares
upon conversion of the Preferred Shares to the Buyers on a timely basis as set
forth in Section 2(e)(ii) of this Certificate of Designations; and (vi) the
Company otherwise has satisfied its obligations and is not in default under this
Certificate of Designations, the Securities Purchase Agreement and the
Registration Rights Agreement.  Notwithstanding the above, any holder of
Preferred Shares may convert such shares (including Preferred Shares selected
for conversion) into Common Stock pursuant to Section 2(a) on or prior to the
date immediately preceding the Company's Election Conversion Date.  No holder of
Preferred Shares shall sell or agree to sell on any day after the date of the
Buyer's receipt of the Notice of Conversion at Company's Election and prior to
the date of the Company's Election Conversion


                                         -22-
<PAGE>

Date (the "COMPANY'S ELECTION NOTICE PERIOD"), a number of shares of Common
Stock which is greater than the result of (a) the sum of (i) the number of
Conversion Shares issuable upon conversion of Preferred Shares held by such
holder as of the date of such holder's receipt of the Notice of Conversion at
Company's Election (without taking into account any limitations on the timing or
amount of conversions), (ii) the number of Conversion Shares held by such holder
on the date of such holder's receipt of the Notice of Conversion at Company's
Election and (iii) the number of Conversion Shares issuable with respect to the
Additional Amount accruing during the Company's Election Notice Period, divided
by (b) the number of trading days during the Company's Election Notice Period.

     (6)  COMPANY'S RIGHT TO REDEEM IN LIEU OF CONVERSION. (a) Notwithstanding
Section 2 or anything herein to the contrary, but subject to Section 6(e), at
any time after the Issuance Date, the Company may elect to redeem Preferred
Shares submitted for conversion in lieu of converting such Preferred Shares (a
"COMPANY REDEMPTION IN LIEU OF CONVERSION"). If the Company elects to redeem
some, but not all, of the Preferred Shares submitted for conversion, the Company
shall redeem a number of Preferred Shares from each holder of Preferred Shares
submitted for conversion on the applicable date equal to such holder's pro-rata
amount (based on the number of Preferred Shares held by such holder relative to
the number of Preferred Shares outstanding) of all Preferred Shares submitted
for conversion which the Company elects to redeem.

               (b)  REDEMPTION PRICE OF COMPANY REDEMPTION IN LIEU OF
     CONVERSION.  The "REDEMPTION PRICE OF COMPANY REDEMPTION IN LIEU OF
     CONVERSION" shall be an amount per Preferred Share equal to the product of
     (i) the Conversion Rate of the Preferred Shares on the Conversion Date and
     (ii) the last reported sale price of the Common Stock (as reported by
     Bloomberg) on the Conversion Date.

               (c)  MECHANICS OF COMPANY REDEMPTION IN LIEU OF CONVERSION.  The
     Company shall exercise its right to redeem by delivering written notice by
     facsimile and overnight courier ("NOTICE OF COMPANY REDEMPTION IN LIEU OF
     CONVERSION") no later than three Business Days prior to the first day of a
     Calendar Quarter to (i) each holder of the Preferred Shares and (ii) the
     Transfer Agent.  Such Notice of Company Redemption in Lieu of Conversion
     shall (A) indicate the maximum, if any, number of Preferred Shares which
     shall be subject to Company Redemption in Lieu of Conversion which maximum
     number of Preferred Shares, if less than all of the Preferred Shares
     outstanding, shall be allocated pro rata among the holders of Preferred
     Shares (based on the number of Preferred Shares held by each holder on the
     date of the Company's delivery of Notice of Company Redemption in Lieu of
     Conversion relative to the total number of Preferred Shares outstanding on
     such date), (B) confirm the Calendar Quarter during which the Company may
     effect Company Redemption in Lieu of conversion.  The Company's Notice of
     Company Redemption in Lieu of Conversion shall be effective for the period
     of the applicable Calendar Quarter (the "REDEMPTION IN LIEU OF CONVERSION
     PERIOD").  The Company may terminate a Redemption in Lieu of Conversion
     Period at


                                         -23-
<PAGE>

     any time with respect to Preferred Shares which have not been submitted for
     conversion by delivering written notice of such termination to each holder
     of Preferred Shares by facsimile and overnight courier at least five
     Business Days prior to the date of such termination.  Any Preferred Shares
     submitted for conversion after the termination of the Redemption in Lieu of
     Conversion Period or the number of which is in excess of the maximum number
     of Preferred Shares designated in the Notice of Company Redemption in Lieu
     of Conversion shall be converted in accordance with Section 2.

               (d)  PAYMENT OF REDEMPTION PRICE.  The Company shall pay the
     applicable Redemption Price of Company Redemption in Lieu of Conversion to
     the holder of the Preferred Shares being redeemed in cash within five
     business days after the Conversion Date, but not prior to such holder's
     delivery to the Company of the Preferred Stock Certificates representing
     the Preferred Shares being redeemed.  If the Company shall fail to pay the
     applicable Redemption Price of Company Redemption in Lieu of Conversion to
     such holder on a timely basis as described in this Section 6(d), in
     addition to any remedy such holder of Preferred Shares may have under this
     Certificate of Designations, the Securities Purchase Agreement and the
     Registration Rights Agreement, such unpaid amount shall bear interest at
     the rate of 2.0% per month (prorated for partial months) until paid in
     full.  Until the Company pays such unpaid applicable Redemption Price of
     Company Redemption in Lieu of Conversion in full to each holder, each
     holder of Preferred Shares submitted for redemption pursuant to this
     Section 6 and for which the applicable Redemption Price of Company
     Redemption in Lieu of Conversion has not been paid, shall have the option
     (the "VOID COMPANY REDEMPTION OPTION") to, in lieu of redemption, require
     the Company to promptly return to each holder all of the Preferred Shares
     that were submitted for redemption by such holder under this Section 6 and
     for which the applicable Redemption Price of Company Redemption in Lieu of
     Conversion has not been paid, by sending written notice thereof to the
     Company via facsimile (the "VOID COMPANY REDEMPTION NOTICE").  Upon the
     Company's receipt of such Void Company Redemption Notice(s) prior to
     payment of the full applicable redemption price to each holder, (i) the
     Company's Redemption in Lieu of Conversion shall be null and void with
     respect to those Preferred Shares submitted for redemption and for which
     the applicable Redemption Price has not been paid and (ii) the Company
     shall immediately either, at the option of the holder, (A) return any
     Preferred Shares submitted to the Company by such holder for redemption
     under this Section 6 and for which the applicable Redemption Price of
     Company Redemption in Lieu of Conversion has not been paid or (B) deliver
     the Conversion Shares to such holder which would have been issuable on the
     Conversion Date with respect to Preferred Shares submitted to the Company
     by such holder for redemption under this Section 6 and for which the
     applicable Redemption Price of Company Redemption in Lieu of Conversion has
     not been paid.  Notwithstanding the foregoing, if the Company fails to pay
     the applicable Redemption Price of Company Redemption in Lieu of Conversion
     to a holder within the time period described in this Section 6(d) due to a
     dispute as to the arithmetic calculation of the Redemption Price of Company
     Redemption in Lieu of Conversion, such dispute


                                         -24-
<PAGE>

     shall be resolved pursuant to Section 2(f)(iii) with the term "Redemption
     Price of Company Redemption in Lieu of Conversion" being substituted for
     the term "Conversion Rate."  If the Company fails to timely effect a
     Company Redemption in Lieu of Conversion in accordance with this Section 6,
     the Company shall not be allowed to submit another Notice of Company
     Redemption in Lieu of Conversion without the prior written consent of the
     holders of at least two-thirds (2/3) of the Preferred Shares then
     outstanding.

               (e)  COMPANY MUST HAVE IMMEDIATELY AVAILABLE FUNDS OR CREDIT
     FACILITIES.  The Company shall not be entitled to send any Notice of
     Company Redemption in Lieu of Conversion pursuant to Section 6(b) above and
     begin the redemption procedure under this Section 6, unless it has:

                    (i)  the full amount of the Redemption Price of Company
     Redemption in Lieu of Conversion in cash, available in a demand or other
     immediately available account in a bank or similar financial institution;

                    (ii)  credit facilities, with a bank or similar financial
     institutions that are immediately available and unrestricted for use in
     redeeming the Preferred Shares, in the full amount of the Redemption Price
     of Company Redemption in Lieu of Conversion;

                    (iii)  a written agreement with a standby underwriter or
     qualified buyer ready, willing and able to purchase from the Company a
     sufficient number of shares of stock to provide proceeds necessary to
     redeem any Preferred Shares that are not converted prior to a Company
     Redemption in Lieu of Conversion; or

                    (iv)  a combination of the items set forth in the preceding
     clauses (i), (ii) and (iii), aggregating the full amount of the Redemption
     Price of Company Redemption in Lieu of Conversion.

     (7)  REDEMPTION AT THE COMPANY'S ELECTION UPON CHANGE OF CONTROL.  At any
time or times on or after the date the Company publicly discloses a Change of
Control Transaction (as defined below), the Company shall have the right, in its
sole discretion, to require that all of the outstanding Preferred Shares be
redeemed ("REDEMPTION AT COMPANY'S ELECTION") at the Major Transaction
Redemption Price ("COMPANY'S ELECTION REDEMPTION PRICE"); provided that the
Conditions to Redemption at the Company's Election (as set forth below) are
satisfied.  The Company shall exercise its right to Redemption at Company's
Election by providing each holder of Preferred Shares written notice ("NOTICE OF
REDEMPTION AT COMPANY'S ELECTION") after the public disclosure of a Change of
Control Transaction and at least 20 trading days prior to the date of
consummation of the Change of Control Transaction ("COMPANY'S ELECTION
REDEMPTION DATE").  The Notice of Redemption at Company's Election shall
indicate the anticipated Company's Election Redemption Date.  If the Company has
exercised its right of Redemption at Company's Election and the conditions to
such Redemption at Company's Election have been


                                         -25-
<PAGE>

satisfied, then all Preferred Shares outstanding at the time of the consummation
of the Change of Control Transaction shall be redeemed as of the Company's
Election Redemption Date by payment by the Company to each holder of Preferred
Shares of the Company's Election Redemption Price concurrent with the closing of
the Change of Control Transaction.  All holders of Preferred Shares shall
thereupon and within two business days after the Company's Election Redemption
Date, or such earlier date as the Company and each holder of Preferred Shares
mutually agree, surrender all outstanding Preferred Stock Certificates, duly
endorsed for cancellation, to the Company.  If the Company fails to pay the full
Company's Election Redemption Price with respect to any Preferred Shares
concurrently with the closing of the Change of Control Transaction, then the
Redemption at Company's Election shall be null and void with respect to such
Preferred Shares and the holder of such Preferred Shares shall be entitled to
all the rights of a holder of outstanding Preferred Shares set forth in this
Certificate of Designations.  "CONDITIONS TO REDEMPTION AT THE COMPANY'S
ELECTION" means the following conditions:  (i) during the period beginning on
the first Issuance Date of any Preferred Shares and ending on and including the
Company's Election Redemption Date, the Company shall have delivered Conversion
Shares upon conversion of the Preferred Shares to the Buyers on a timely basis
as set forth in Section 2(e)(ii) of this Certificate of Designations; and
(ii) the Company otherwise has satisfied its obligations in all material
respects and is not in default in any material respect under this Certificate of
Designations, the Securities Purchase Agreement and the Registration Rights
Agreement.  Notwithstanding the above, any holder of Preferred Shares may
convert such shares (including Preferred Shares selected for redemption) into
Common Stock pursuant to Section 2(a) on or prior to the date immediately
preceding the Company's Election Redemption Date.  For purposes of this Section
7, "CHANGE OF CONTROL TRANSACTION" means the consolidation, merger or other
business combination of the Company with or into another Person (other than (A)
a consolidation, merger or other business combination in which holders of the
Company's voting power immediately prior to the transaction continue after the
transaction to hold, directly or indirectly, the voting power of the surviving
entity or entities necessary to elect a majority of the members of the board of
directors (or their equivalent if other than a corporation) of such entity or
entities or (B) pursuant to a migratory merger effected solely for the purpose
of changing the jurisdiction of incorporation of the Company).

          (8)  REISSUANCE OF CERTIFICATES.  In the event of a conversion or
redemption pursuant to this Certificate of Designations of less than all of the
Preferred Shares represented by a particular Preferred Stock Certificate, the
Company shall promptly cause to be issued and delivered to the holder of such
Preferred Shares a preferred stock certificate representing the remaining
Preferred Shares which have not been so converted or redeemed.

          (9)  RESERVATION OF SHARES.  The Company shall, so long as any of the
Preferred Shares are outstanding, reserve and keep available out of its
authorized and unissued Common Stock, solely for the purpose of effecting the
conversion of the Preferred Shares, such number of shares of Common Stock as
shall from time to time be sufficient to effect the conversion of all of the
Preferred Shares then outstanding (without regard to any limitations on
conversions); provided that the number of shares of Common Stock so reserved
shall at no time

                                         -26-

<PAGE>

be less than 150% of the number of shares of Common Stock for which the
Preferred Shares are at any time convertible.  The initial number of shares of
Common Stock reserved for conversions of the Preferred Shares and each increase
in the number of shares so reserved shall be allocated pro rata among the
holders of the Preferred Shares based on the number of Preferred Shares held by
each holder at the time of issuance of the Preferred Shares or increase in the
number of reserved shares, as the case may be.  In the event a holder shall sell
or otherwise transfer any of such holder's Preferred Shares, each transferee
shall be allocated a pro rata portion of the number of reserved shares of Common
Stock reserved for such transferor.  Any shares of Common Stock reserved and
which remain allocated to any person or entity which does not hold any Preferred
Shares shall be allocated to the remaining holders of Preferred Shares, pro rata
based on the number of Preferred Shares then held by such holder.

          (10) VOTING RIGHTS.  Holders of Preferred Shares shall have no voting
rights, except as required by law, including but not limited to the General
Corporation Law of the State of Delaware, and as expressly provided in this
Certificate of Designations.

          (11) LIQUIDATION, DISSOLUTION, WINDING-UP.  In the event of any
voluntary or involuntary liquidation, dissolution or winding up of the Company,
the holders of the Preferred Shares shall be entitled to receive in cash out of
the assets of the Company, whether from capital or from earnings available for
distribution to its stockholders (the "PREFERRED FUNDS"), before any amount
shall be paid to the holders of any of the capital stock of the Company of any
class junior in rank to the Preferred Shares in respect of the preferences as to
the distributions and payments on the liquidation, dissolution and winding up of
the Company, an amount per Preferred Share equal to the sum of (i) $50,000 and
(ii) the Additional Amount (such sum being referred to as the "LIQUIDATION
VALUE"); provided that, if the Preferred Funds are insufficient to pay the full
amount due to the holders of Preferred Shares and holders of shares of other
classes or series of preferred stock of the Company that are of equal rank with
the Preferred Shares as to payments of Preferred Funds (the "PARI PASSU
SHARES"), then each holder of Preferred Shares and Pari Passu Shares shall
receive a percentage of the Preferred Funds equal to the full amount of
Preferred Funds payable to such holder as a liquidation preference, in
accordance with their respective Certificate of Designations, Preferences and
Rights, as a percentage of the full amount of Preferred Funds payable to all
holders of Preferred Shares and Pari Passu Shares.  The purchase or redemption
by the Company of stock of any class, in any manner permitted by law, shall not,
for the purposes hereof, be regarded as a liquidation, dissolution or winding up
of the Company.  Neither the consolidation or merger of the Company with or into
any other Person, nor the sale or transfer by the Company of less than
substantially all of its assets, shall, for the purposes hereof, be deemed to be
a liquidation, dissolution or winding up of the Company.  No holder of Preferred
Shares shall be entitled to receive any amounts with respect thereto upon any
liquidation, dissolution or winding up of the Company other than the amounts
provided for herein; provided that a holder of Preferred Shares shall be
entitled to all amounts previously accrued with respect to amounts owed
hereunder.


                                         -27-
<PAGE>
          (12) PREFERRED RANK; PARTICIPATION.  (i)  All shares of Common Stock
     shall be of junior rank to all Preferred Shares in respect to the
     preferences as to distributions and payments upon the liquidation,
     dissolution and winding up of the Company.  The rights of the shares of
     Common Stock shall be subject to the preferences and relative rights of the
     Preferred Shares.  Without the prior express written consent of the holders
     of not less than two-thirds (2/3) of the then outstanding Preferred Shares,
     the Company shall not hereafter authorize or issue additional or other
     capital stock that is of senior or equal rank to the Preferred Shares in
     respect of the preferences as to distributions and payments upon the
     liquidation, dissolution and winding up of the Company.  Without the prior
     express written consent of the holders of not less than two-thirds (2/3) of
     the then outstanding Preferred Shares, the Company shall not hereafter
     authorize or make any amendment to the Company's Certificate of
     Incorporation or bylaws, or file any resolution of the board of directors
     of the Company with the Secretary of State of the State of Delaware
     containing any provisions, which would adversely affect or otherwise impair
     the rights or relative priority of the holders of the Preferred Shares
     relative to the holders of the Common Stock or the holders of any other
     class of capital stock.  In the event of the merger or consolidation of the
     Company with or into another corporation, the Preferred Shares shall
     maintain their relative powers, designations and preferences provided for
     herein and no merger shall result inconsistent therewith.

          (ii)  Subject to the rights of the holders, if any, of the Pari Passu
     Shares, the holders of the Preferred Shares shall, as holders of Preferred
     Stock, be entitled to such dividends paid and distributions made to the
     holders of Common Stock to the same extent as if such holders of Preferred
     Shares had converted the Preferred Shares into Common Stock (without regard
     to any limitations on conversion herein or elsewhere) and had held such
     shares of Common Stock on the record date for such dividends and
     distributions.  Payments under the preceding sentence shall be made
     concurrently with the dividend or distribution to the holders of Common
     Stock.

          (13) RESTRICTION ON REDEMPTION AND CASH DIVIDENDS WITH RESPECT TO
OTHER CAPITAL STOCK.  Until all of the Preferred Shares have been converted or
redeemed as provided herein, the Company shall not, directly or indirectly,
redeem, or declare or pay any cash dividend or distribution on, its Common Stock
without the prior express written consent of the holders of not less than
two-thirds (2/3) of the then outstanding Preferred Shares.

          (14) LIMITATION ON NUMBER OF CONVERSION SHARES.  Notwithstanding any
other provision herein, the Company shall not be obligated to issue any shares
of Common Stock upon conversion of the Preferred Shares if the issuance of such
shares of Common Stock would exceed that number of shares of Common Stock which
the Company may issue upon Conversion of the Preferred Shares (the "EXCHANGE
CAP") without breaching the Company's obligations under the rules or regulations
of The Nasdaq Stock Market, Inc., except that such limitation shall not apply in
the event that the Company (a) obtains the approval of its stockholders as
required by applicable rules and regulations of The Nasdaq Stock Market for
issuances of


                                         -28-

<PAGE>

Common Stock in excess of such amount or (ii) obtains a written opinion from
outside counsel to the Company that such approval is not required, which opinion
shall be reasonably satisfactory to the holders of a majority of the Preferred
Shares then outstanding.  Until such approval or written opinion is obtained, no
purchaser of Preferred Shares pursuant to the Securities Purchase Agreement (the
"PURCHASERS") shall be issued, upon conversion of Preferred Shares, shares of
Common Stock in an amount greater than the product of (i) the Exchange Cap
amount multiplied by (ii) a fraction, the numerator of which is the number of
Preferred Shares issued to such Purchaser pursuant to the Securities Purchase
Agreement and the denominator of which is the aggregate amount of all the
Preferred Shares issued to the Purchasers pursuant to the Securities Purchase
Agreement (the "CAP ALLOCATION AMOUNT").  In the event that any Purchaser shall
sell or otherwise transfer any of such Purchaser's Preferred Shares, the
transferee shall be allocated a pro rata portion of such Purchaser's Cap
Allocation Amount.  In the event that any holder of Preferred Shares shall
convert all of such holder's Preferred Shares into a number of shares of Common
Stock which, in the aggregate, is less than such holder's Cap Allocation Amount,
then the difference between such holder's Cap Allocation Amount and the number
of shares of Common Stock actually issued to such holder shall be allocated to
the respective Cap Allocation Amounts of the remaining holders of Preferred
Shares on a pro rata basis in proportion to the number of Preferred Shares then
held by each such holder.

          (15) VOTE TO CHANGE THE TERMS OF OR ISSUE PREFERRED SHARES.  The
affirmative vote at a meeting duly called for such purpose or the written
consent without a meeting, of the holders of not less than two-thirds (2/3) of
the then outstanding Preferred Shares, shall be required for (a) any change to
this Certificate of Designations or the Company's Certificate of Incorporation
which would amend, alter, change or repeal any of the powers, designations,
preferences and rights of the Preferred Shares, or (b) any issuance of Preferred
Shares other than pursuant to the Securities Purchase Agreement.

          (16) LOST OR STOLEN CERTIFICATES.  Upon receipt by the Company of
evidence satisfactory to the Company of the loss, theft, destruction or
mutilation of any Preferred Stock Certificates representing the Preferred
Shares, and, in the case of loss, theft or destruction, of any indemnification
undertaking by the holder to the Company and, in the case of mutilation, upon
surrender and cancellation of the Preferred Stock Certificate(s), the Company
shall execute and deliver new preferred stock certificate(s) of like tenor and
date; provided, however, the Company shall not be obligated to re-issue
preferred stock certificates if the holder contemporaneously requests the
Company to convert such Preferred Shares into Common Stock.

          (17) REMEDIES, CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES AND
INJUNCTIVE RELIEF.  The remedies provided in this Certificate of Designations
shall be cumulative and in addition to all other remedies available under this
Certificate of Designations, at law or in equity (including a decree of specific
performance and/or other injunctive relief), no remedy contained herein shall be
deemed a waiver of compliance with the provisions giving rise to such remedy and
nothing herein shall limit a holder's right to pursue actual damages for any
failure by the Company to comply with the terms of this Certificate of
Designations.  The Company covenants


                                         -29-

<PAGE>

to each holder of Preferred Shares that there shall be no characterization
concerning this instrument other than as expressly provided herein.  Amounts set
forth or provided for herein with respect to payments, conversion and the like
(and the computation thereof) shall be the amounts to be received by the holder
thereof and shall not, except as expressly provided herein, be subject to any
other obligation of the Company (or the performance thereof).  The Company
acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to the holders of the Preferred Shares and that the remedy at
law for any such breach may be inadequate.  The Company therefore agrees that,
in the event of any such breach or threatened breach, the holders of the
Preferred Shares shall be entitled, in addition to all other available remedies,
to an injunction restraining any breach, without the necessity of showing
economic loss and without any bond or other security being required.

          (18) SPECIFIC SHALL NOT LIMIT GENERAL; CONSTRUCTION.  No specific
provision contained in this Certificate of Designations shall limit or modify
any more general provision contained herein.  This Certificate of Designations
shall be deemed to be jointly drafted by the Company and all Buyers and shall
not be construed against any person as the drafter hereof.

          (19) FAILURE OR INDULGENCE NOT WAIVER.  No failure or delay on the
part of a holder of Preferred Shares in the exercise of any power, right or
privilege hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other right, power or privilege.

                                     * * * * * *


                                         -30-

<PAGE>

     IN WITNESS WHEREOF, the Company has caused this Certificate of Designations
to be signed by Dennis J. Carlo, its President, as of April 27th, 1998.

                              THE IMMUNE RESPONSE CORPORATION

                              By: /s/ Dennis J. Carlo
                                -----------------------------
                              Name: Dennis J. Carlo
                                  ---------------------------
                              Its:  President


<PAGE>

                          CERTIFICATE OF AMENDMENT OF

            AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF

                        THE IMMUNE RESPONSE CORPORATION

     The Immune Response Corporation, a corporation organized and existing
under the laws of the State of Delaware, hereby certifies as follows:

     FIRST: The name of the Corporation is The Immune Response Corporation.

     SECOND: The date of filing of its original Certificate of Incorporation
with the Secretary of State of Delaware was October 1, 1986.

     THIRD: At a meeting of the Board of Directors of The Immune Response
Corporation, resolutions were duly adopted providing that:

     The first paragraph of Section A of Article IV of the Restated
Certificate of Incorporation of The Immune Response Corporation, as amended,
shall be hereby amended and restated to read as follows:

                                  "ARTICLE IV

          "A.  The total number of shares of all classes of capital stock
     which the corporation shall have authority to issue is seventy million
     (70,000,000) of which sixty-five million (65,000,000) shares of the par
     value of One-Fourth of One Cent ($.0025) each shall be Common Stock (the
     "Common Stock") and five million (5,000,000) shares of the par value of
     One-Tenth of One Cent ($.001) each shall be Preferred Stock (the
     "Preferred Stock")."

     FOURTH: That thereafter, pursuant to resolution of its Board of
Directors, a special meeting of the stockholders of said corporation was duly
called and held, upon notice in accordance with Section 222 of the General
Corporation Law of the State of Delaware, at which meeting the necessary
number of shares as required by statute were voted in favor of the amendment.

<PAGE>

     FIFTH: This Certificate of Amendment of Amended and Restated Certificate
of Incorporation was duly adopted at said annual meeting of the stockholders
in accordance with the provisions of section 242 of the General Corporation
Law of the State of Delaware.

    IN WITNESS WHEREOF, said The Immune Response Corporation has caused this
certificate to be signed by its President and Chief Executive Officer, Dennis
J. Carlo, this 26th day of May, 1999.


                                       By        /s/ Dennis J. Carlo
                                          -------------------------------------
                                                     Dennis J. Carlo
                                          President and Chief Executive Officer



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