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                           CERTIFICATE OF DESIGNATION
                                       FOR
                    SERIES C 6% CONVERTIBLE PREFERRED STOCK,
                   SERIES D 6% CONVERTIBLE PREFERRED STOCK AND
                     SERIES E 6% CONVERTIBLE PREFERRED STOCK
                                       OF
                           5B TECHNOLOGIES CORPORATION

                              --------------------

 Pursuant to Section 151 of the General Corporation Law of the State of Delaware

                              ---------------------

     The undersigned, Glenn Nortman, hereby certifies that:

     1.  I am the duly elected and acting Chief Executive Officer of 5B
         Technologies Corporation, a Delaware corporation (the "Corporation").

     2.  The Certificate of Incorporation of the Corporation authorizes five
         million (5,000,000) shares of preferred stock, $0.01 par value per
         share.

     3.  The following is a true and correct copy of the resolution duly adopted
         by the unanimous written consent of the Board of Directors of the
         Corporation (the "Board of Directors") on July 30, 2001 pursuant to the
         Certificate of Incorporation of the Corporation and in accordance with
         the provisions of the General Corporation Law of the State of Delaware,
         relating to the designation and issuance of the Series C, D and E
         preferred stock, each at a par value $.01 per share, of the
         Corporation, to be designated "Series C 6% Convertible Preferred
         Stock", "Series D 6% Convertible Preferred Stock" and "Series E 6%
         Convertible Preferred Stock," which resolution remains in full force
         and effect as of the date hereof:

         RESOLVED, that pursuant to the authority vested in the Board of
     Directors of the Corporation by the Certificate of Incorporation, the Board
     of Directors does hereby provide for the issuance of the following series
     of preferred stock, par value $0.01 per share, of the Corporation, to be
     designated "Series C 6% Convertible Preferred Stock" ("Series C
     Preferred"), "Series D 6% Convertible Preferred Stock" ("Series D
     Preferred") and "Series E 6% Convertible Preferred Stock" ("Series E
     Preferred" and with the Series C Preferred and the Series D Preferred,
     hereinafter collectively referred to as the "Preferred Stock") which shall
     have the designation, rights, preferences, privileges and restrictions and
     limitations as follows:

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"I       SERIES C 6% CONVERTIBLE PREFERRED STOCK

(A)      Designation and Amount. The shares of such series shall be designated
     as "Series C 6% Convertible Preferred Stock," par value $0.01 per share
     (the "Series C Preferred"), and the number of shares constituting such
     series shall be 4,000.


(B)      Rights, Preferences, Privileges and Restrictions of the Series C
     Preferred. The rights, preferences, privileges and restrictions granted to
     and imposed on the Series C Preferred are as follows:

(1)      Dividend Provisions.

         (a) The holders of shares of the Series C Preferred shall be entitled
         to receive, out of any funds legally available therefor, prior and in
         preference to the declaration or payment of any dividend or
         distribution to the holders of Common Stock or any other shares or
         securities of the Corporation ranking junior to the Series C Preferred
         with respect to the payment of dividends and/or the distribution of
         assets on liquidation (including, without limitation, the Series A
         Preferred Stock and the Series B Preferred Stock, the "Junior
         Securities"), dividends which shall accrue cumulatively on each share
         of the Series C Preferred at the rate and in the manner prescribed in
         this section 1 from and including the date of issuance of such shares
         of the Series C Preferred, but excluding the date on which any
         conversion or redemption of such shares of the Series C Preferred shall
         have been effected, and payable quarterly in arrears. The date on which
         the Corporation initially issues a share of the Series C Preferred will
         be deemed to be its "date of issuance" regardless of the number of
         times transfer of such shares of the Series C Preferred is made, or of
         the number of certificates which may be issued to evidence a share of
         the Series C Preferred.

         (b) Dividends shall accrue on each share of the Series C Preferred (and
         on any accrued and unpaid dividends thereon) at a rate per annum,
         compounded quarterly, of 6% of the Original Series C Preferred Stock
         Issue Price (as defined below) (as adjusted for stock splits, stock
         dividends, combinations,

                                       2
<PAGE>

         recapitalizations and similar events). In the event of any liquidation,
         dissolution or winding up of the Corporation or the redemption of a
         share of the Series C Preferred or the bankruptcy of the Corporation,
         all accrued and unpaid dividends on a share of Series C Preferred shall
         be added to the liquidation preference of such share on the payment
         date under subsection 2(a) below, or on the date of redemption of such
         share or upon the bankruptcy of the Corporation, as the case may be,
         accrued cumulatively to but excluding such payment date or redemption
         date or bankruptcy on a daily basis. If there shall be any accrued but
         unpaid dividends immediately prior to, and in the event of, a
         conversion of shares of the Series C Preferred into shares of Common
         Stock, all such accrued and unpaid dividends shall, at the
         Corporation's option, be converted into that number of shares of Common
         Stock determined by dividing the amount of such dividends by the then
         effective Conversion Price (as defined in subsection 3(a) below), but
         only if the Corporation delivers to the holder of such Series C
         Preferred a written notice of the election by the Corporation to
         exercise such option within five days after the receipt by the
         Corporation of the certificate or certificates representing such shares
         of Series C Preferred (as contemplated by Section I(B)(3)(d) below).

         (c) No dividend or other distribution (other than a dividend or
         distribution payable solely in Common Stock) shall be paid on or set
         apart for payment on the Common Stock or other Junior Securities nor
         shall any payment be made on account of the purchase, redemption or
         retirement of any Common Stock or other Junior Securities, unless all
         accrued and unpaid dividends on the Series C Preferred have been or
         contemporaneously are paid or set apart for payment in accordance
         herewith; provided, however, that the Corporation may repurchase Common
         Stock owned by terminated employees of, or consultants to, the
         Corporation or its subsidiaries as and to the extent contemplated by
         Section I(B)(8) below. A conversion of a convertible security which by
         its terms is convertible into Common Stock by the holder thereof shall
         not be deemed a purchase, redemption or retirement of the security so
         converted for purposes of this subsection 1(c). No dividend or other
         distribution shall be declared on any series of preferred stock ranking
         as to dividends or other distributions on a parity with any other
         series of preferred stock unless there shall have been

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<PAGE>

         declared on all shares then outstanding of such series of preferred
         stock like proportionate dividends or other distributions ratably in
         proportion to the respective dividends or other distributions payable
         in respect of each such series of preferred stock (the Series D
         Preferred and the Series E Preferred shall rank on a parity with the
         Series C Preferred as to dividends and other distributions).

         (d) Any cash dividend (other than pursuant to Section (B)(1)(b) above)
         which has been declared with respect to the Series C Preferred and is
         otherwise due and payable thereon shall be paid in cash.

(2)      Liquidation Preference.

         (a) In the event of any liquidation, dissolution or winding up of the
         Corporation, either voluntary or involuntary, the holders of the Series
         C Preferred shall be entitled to receive, in cash, prior and in
         preference to any distribution of any of the assets or surplus funds of
         the Corporation to the holders of the Common Stock or any other Junior
         Securities by reason of their ownership thereof, the amount of $100.00
         per share (the "Original Series C Preferred Stock Issue Price") in cash
         or cash equivalents for each share of Series C Preferred then held by
         them, and, in addition, an amount equal to all accrued but unpaid
         dividends on such shares of Series C Preferred in cash or cash
         equivalents. If, upon occurrence of such event the assets and funds
         thus distributed ratably among the holders of the Series C Preferred
         shall be insufficient to permit the payment to such holders (and the
         holders of any series of preferred stock that ranks on a parity with
         the Series C Preferred on any liquidation, dissolution or winding up of
         the Corporation, including, without limitation, the Series D Preferred
         Stock and the Series E Preferred Stock) of the full preferential
         amount, then the entire assets and funds of the Corporation legally
         available for distribution shall be distributed among the holders of
         the Series C Preferred (and such parity stock) in proportion to the
         amount that the holders of the Series C Preferred and the holders of
         such parity stock would be entitled to receive if they were to be paid
         the full amounts due to them at the time of such liquidation,
         dissolution or winding up. After payment has been made to the holders
         of the Series C Preferred of the full amounts to which they shall be
         entitled as aforesaid, all remaining assets of the Corporation shall be

                                       4
<PAGE>

         distributed among all holders of the preferred stock of the Corporation
         that rank junior to the Series C Preferred on any liquidation,
         dissolution or winding up of the Corporation (including, without
         limitation, holders of Series A 6% Convertible Preferred Stock and
         Series B 6% Convertible Preferred Stock and any subsequently issued
         series of preferred stock) and all holders of Common Stock and other
         Junior Securities in proportion to the number of shares of Common Stock
         which would be held by each such holder if all shares of such series'
         of preferred stock were converted into Common Stock.

         (b) For purposes of this section 2, a liquidation, dissolution or
         winding up of the Corporation shall be deemed to be occasioned by, and
         to include, without limitation, the redemption or other purchase by the
         Corporation of all of its outstanding Common Stock, the Corporation's
         sale of all or substantially all of its assets or the acquisition of
         this Corporation by another entity by means of merger or consolidation
         of the Corporation with or into any other entity (whether or not the
         Corporation is the surviving or emerging entity) in which cash, stock
         or other securities or property of the Corporation, transferee or
         surviving or emerging entity or an affiliate thereof are to be received
         or where the holders of shares of the Corporation prior to such merger
         or consolidation represent less than 50% of the outstanding shares of
         the surviving entity after such merger or consolidation. Written notice
         of any event of liquidation pursuant to this section 2 shall be given
         by first class mail, postage prepaid, not less than 30 days prior to
         any payment date, which shall be stated therein, to the holders of
         record of the Series C Preferred, such notice to be addressed to each
         such holder at his last address as shown by the records of the
         Corporation. Notwithstanding the receipt of such notice, prior to the
         payment date with respect to any such liquidation as set forth therein,
         the holder of record of the Series C Preferred may still avail itself
         of the Conversion Rights set forth in section 3 below.

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

                                       5
<PAGE>

         (a) Right to Convert.Subject to the limitations set forth in subsection
         3(b) below, at any time, each share of Series C Preferred shall be
         convertible into a number of fully paid and nonassessable shares of
         Common Stock equal to (x) the sum of the Original Series C Preferred
         Stock Issue Price (as defined below) and, in the event the Corporation
         shall not elect to exercise its option referred to in the last sentence
         of Section I(B)(1)(b), the amount of all accrued and unpaid dividends
         thereon, divided by (y) the Series C Conversion Price at such time.
         Each share of Series C Preferred shall be convertible at the option of
         the holder thereof at any time. The price at which shares of Common
         Stock shall be deliverable upon conversion (the "Series C Conversion
         Price") shall initially be $2.00 per share of Common Stock. Such
         initial Series C Conversion Price shall be subject to adjustment as
         hereinafter provided.

         (b) Nasdaq Conversion Limitation. Unless the Company obtains the
         requisite approval of its stockholders to comply with the applicable
         rules of the Nasdaq SmallCap Market or the Nasdaq National Market, no
         holder of any shares of Series C Preferred may exercise its conversion
         rights to the extent that such conversion would, together with (i) an
         aggregate of 140,193 shares of Common Stock issued by the Corporation
         to such holder on the date hereof, (ii) 50,000 shares of Common Stock
         subject to outstanding warrants to purchase Common Stock and (iii)
         shares of Common Stock issued upon conversion of the Series D Preferred
         and the Series E Preferred, cause such holder to obtain more than 19.9%
         of all issued and outstanding shares of Common Stock including shares
         issuable in respect of outstanding scrip or any certificates
         representing fractional interests in such shares of Common Stock. The
         prior sentence shall not prohibit any holder of shares of Series C
         Preferred from exercising its conversion rights at any time following
         such time as the Common Stock is not listed on the Nasdaq SmallCap
         Market or the Nasdaq National Market. Nothing in this subsection 3(b)
         shall prohibit a holder of Series C Preferred from converting such
         stock if and to the extent that the shares issued upon such conversion,
         together with the shares of Common Stock referred to in subclauses (i),
         (ii) and (iii) above and any and all shares of Common Stock issued upon
         prior conversions by such holder of the Series C Preferred, would equal
         19.9% or less of all issued and outstanding shares of Common Stock,
         including shares issuable in respect of

                                       6
<PAGE>

         outstanding scrip or any certificates representing fractional interests
         in such shares of Common Stock. With respect to any holder of Series C
         Preferred, all references in this subsection 3(b) to 19.9% of all
         issued and outstanding shares of Common Stock of the Corporation shall
         mean 19.9% of such issued and outstanding Common Stock as of the date
         of issuance by the Corporation of the Series C Preferred to such
         holder.

         (c) Shareholder Vote regarding Conversion Limitation. If a holder of
         the Series C Preferred is unable to exercise its conversion rights due
         to the limitations set forth in subsection 3(b) above, the Board of
         Directors shall use commercially reasonable efforts to present and
         recommend to the stockholders of the Company at the next annual meeting
         of stockholders (to be held in accordance with the corporate laws of
         Delaware, the Certificate of Incorporation and the Bylaws of the
         Company) a proposal to approve such holder acquiring in excess of 19.9%
         of the issued and outstanding shares of Common Stock upon conversion of
         the Series C Preferred. The Corporation hereby undertakes to present
         such proposal at the annual meeting of stockholders to take place in
         2002 or, if earlier, at the next meeting of stockholders (or in the
         next action taken by consent of stockholders without a meeting) other
         than the annual meeting of stockholders to take place in 2001. The
         Corporation shall use its best efforts to hold such annual meeting of
         stockholders prior to September 30, 2002. Notwithstanding the
         foregoing, at the request of the holders of the Series C Preferred, the
         Company shall hold a special meeting of stockholders as soon as
         practicable in accordance with all applicable state and federal laws
         and regulations; provided that the holders of the Series C Preferred
         pay or promptly reimburse the Corporation for all costs and expenses
         relating to such special meeting of stockholders. If such approval is
         not obtained at the next such meeting of the stockholders of the
         Corporation (or in the next action taken by consent of stockholders
         without a meeting), the Corporation shall thereafter continue to use
         commercially reasonable efforts to effect such approval. In no event
         may the Corporation issue more than 19.9% of the issued and outstanding
         shares of Common Stock as determined in subsection 3(b) above without
         obtaining such requisite vote of stockholders as set forth herein.

                                       7
<PAGE>

         (d) Mechanics of Conversion. No fractional shares of Common Stock shall
         be issued upon conversion of the Series C Preferred. In lieu of any
         fractional share to which a holder would otherwise be entitled, the
         Corporation shall pay cash equal to such fraction multiplied by the
         fair market value of the Common Stock as determined by the Board of
         Directors. Before any holder of the Series C Preferred shall be
         entitled to convert the same into full shares of Common Stock, he shall
         surrender the certificate or certificates therefor, duly endorsed, at
         the office of the Corporation or of any transfer agent for the Series C
         Preferred, as designated by the Corporation, and shall give written
         notice to the Corporation at such office that he elects to convert the
         same. The Corporation shall, as soon as practicable thereafter, issue
         and deliver at such office to such holder of Series C Preferred, a
         certificate or certificates for the number of shares of Common Stock to
         which such holder shall be entitled as aforesaid and a check payable to
         the holder in the amount of any cash amounts payable as the result of a
         conversion into a fractional share of Common Stock and, if the
         Corporation shall exercise the option referred to in the last sentence
         of Section I(B)(1)(b), any amount owed to such holder as the result of
         such exercise. Such conversion shall be deemed to have been made
         immediately prior to the close of business on the date of such
         surrender of the shares of Series C Preferred to be converted, and the
         person or persons entitled to receive the shares of Common Stock
         issuable upon such conversion shall be treated for all purposes as the
         record holder or holders of such shares of Common Stock on such date.

         (e) Adjustments to Series C Conversion Price for Diluting Issues.

                    (i) Stock Dividends. If the number of shares of Common Stock
             outstanding at any time after the effectiveness of these
             resolutions is increased by a stock dividend payable in shares of
             Common Stock or by a subdivision or split-up of shares of Common
             Stock or a similar transaction in respect thereof, then immediately
             effective at the close of business upon the record date fixed for
             the determination of holders of Common Stock entitled to receive
             such stock dividend, subdivision or split-up or similar
             transaction, the Series C Conversion Price shall be appropriately
             decreased so that the number of shares of Common Stock

                                       8
<PAGE>


             issuable on conversion of each share of Series C Preferred shall be
             increased in proportion to such increase of outstanding shares of
             Common Stock. Successive adjustments shall be made upon each such
             stock dividend, subdivision or split or similar transaction.

                    (ii) Adjustments for Subdivisions, Combinations, or
             Consolidations of Common Stock. In the event the outstanding shares
             of Common Stock shall be decreased by a subdivision or combination,
             by reclassification or otherwise, into a greater or lesser number
             of shares of Common Stock, the Series C Conversion Price in effect
             immediately prior to such subdivision or combination shall,
             concurrently with the effectiveness of such subdivision,
             combination or consolidation, be proportionately adjusted so that
             the number of shares of Common Stock issuable upon conversion of
             each share of Series C Preferred shall be decreased in proportion
             to such decrease of outstanding shares of Common Stock. Successive
             adjustments shall be made upon each such subdivision, combination
             or reclassification.

                    (iii) Adjustments for Other Distributions. In the event the
             Corporation at any time or from time to time makes, or fixes a
             record date for the determination of holders of Common Stock
             entitled to receive, any distribution payable in securities of the
             Corporation other than shares of Common Stock, then and in each
             such event provision shall be made so that the holders of the
             Series C Preferred shall receive upon conversion thereof, in
             addition to the number of shares of Common Stock receivable
             thereupon, the amount of securities of the Corporation which they
             would have received had their Series C Preferred been converted
             into Common Stock on the date of such event to and including the
             date of conversion, and retained such securities receivable by them
             as aforesaid during such period, subject to all other adjustments
             called for during such period under these resolutions with respect
             to the rights of the holders of the Series C Preferred.

                                       9
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                    (iv) Adjustments for Reorganizations, Reclassifications,
             etc. If the Common Stock issuable upon conversion of the Series C
             Preferred shall be changed into the same or a different number of
             shares of any other class or classes of stock or other securities
             or property, whether by reclassification, a merger or consolidation
             of this Corporation with or into any other entity or entities
             (other than pursuant to a subdivision, combination, stock dividend,
             or other distribution provided for in subsections 3(e)(i), (ii) or
             (iii) above), the Series C Conversion Price then in effect shall,
             concurrently with the effectiveness of such reorganization or
             reclassification, be proportionately adjusted such that the Series
             C Preferred shall be convertible into, in lieu of the number of
             shares of Common Stock which the holders would otherwise have been
             entitled to receive, a number of shares of such other class or
             classes of stock or securities or other property equivalent to the
             number of shares of Common Stock that would have been subject to
             receipt by the holders upon conversion of the Series C Preferred
             immediately before such event; and, in any such case, appropriate
             adjustment shall be made in the application of the provisions
             herein set forth with respect to the rights and interest thereafter
             of the holders of the Series C Preferred, to the end that the
             provisions set forth herein (including provisions with respect to
             changes in and other adjustments of the Series C Conversion Price)
             shall thereafter be applicable, as nearly as may be reasonable, in
             relation to any shares of stock or other property thereafter
             deliverable upon the conversion of the Series C Preferred.
             Successive adjustments shall be made upon each such
             reclassification, merger or consolidation.

                    (v) Adjustments for Issuances Below the Current Market
             Price.

                    (A) Except as provided in subsection (B), if the Corporation
             shall, while there are any shares of the Series C Preferred
             outstanding, issue or sell shares of the Common Stock of the
             Corporation at a price per share less than the then Current Market
             Price (as defined below) in effect immediately prior to such
             issuance or sale, then in each such case, the Series C Conversion
             Price shall be adjusted, effective as of the date

                                       10
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             of the issuance of such shares of the Common Stock of the
             Corporation, to an amount determined by multiplying the Series C
             Conversion Price in effect immediately prior to such issuance or
             sale by a fraction:

                    (i) the numerator of which shall be (1) the aggregate number
                    of shares of the Common Stock outstanding immediately prior
                    to the issuance of such additional shares of Common Stock,
                    plus (2) the aggregate number of shares of Common Stock then
                    issuable upon conversion of the shares of Series C Preferred
                    outstanding immediately prior to the issuance of such
                    additional shares of Common Stock, plus (3) the number of
                    shares of Common Stock that the net aggregate consideration
                    received by the Corporation for the total number of such
                    additional shares of the Common Stock so issued would
                    purchase at such Series C Conversion Price in effect
                    immediately prior to such issuance, and

                    (ii) the denominator of which shall be (1) the aggregate
                    number of shares of the Common Stock outstanding immediately
                    prior to the issuance of such additional shares of the
                    Common Stock, plus (2) the aggregate number of shares of
                    Common Stock then issuable upon conversion of the shares of
                    Series C Preferred outstanding immediately prior to the
                    issuance of such additional shares of Common Stock, plus (3)
                    the number of such additional shares of the Common Stock so
                    issued.

                    (B) The adjustments contemplated by subsection (A) above
             shall not apply to (i) any issuance of shares of the Common Stock
             to officers, directors, employees, consultants or agents of the
             Corporation or any subsidiary of the Corporation pursuant to any
             stock option plan or arrangement or other equity incentive, bonus,
             or similar plan or arrangement approved by the Board of Directors,
             (ii) the issuance of shares of Common Stock in connection with the
             merger or acquisition of the Corporation or any of its subsidiaries
             with or into an unaffiliated third party or for purposes of a
             strategic business alliance with an

                                       11
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             unaffiliated third party, (iii) the issuance of any Common Stock
             issued in connection with an underwritten public offering of such
             securities in which the per share price to the public and any
             underwriting discounts and commissions are determined in a manner
             that is customary for an underwritten offering of similar size and
             composition, or (iv) the issuance of any Common Stock in connection
             with the conversion of the Series B Preferred Stock, Series C
             Preferred Stock, Series D Preferred Stock or Series E Preferred
             Stock.

             (C) For purposes of this section 3(e)(v), the issuance of any
             warrants, options, subscriptions or purchase rights with respect to
             shares of Common Stock and the issuance of any securities
             convertible into or exchangeable for shares of Common Stock, or the
             issuance of any warrants, options or any rights with respect to
             such convertible or exchangeable securities, shall be deemed to be
             an issuance of shares of Common Stock at the time of the issuance
             thereof if the Net Consideration Per Share (as hereinafter defined)
             which may be received by the Corporation for the shares of Common
             Stock or issuable upon the exercise thereof is less than the then
             Current Market Price at the time of the issuance of such warrants,
             options subscriptions, purchase rights or securities. Any
             obligation, agreement or undertaking to issue warrants, options,
             subscriptions, purchase rights or such securities at any time in
             the future shall be deemed to be an issuance at the time such
             obligation, agreement or undertaking is made or arises.
             Notwithstanding the foregoing, any adjustment made to the Series C
             Conversion Price pursuant to the provisions of this section 3(e)(v)
             which relates to warrants, options, subscriptions or purchase
             rights with respect to shares of Common Stock shall be disregarded
             when, as and if all of such warrants, options, subscriptions or
             purchase rights expire or are canceled without being exercised, so
             that the Series C Conversion Price effective immediately upon such
             cancellation or expiration shall be equal to the Series C
             Conversion Price in effect at the time of the issuance of the
             expired or canceled warrants, options, subscriptions or purchase
             rights, after taking into account any other adjustments that would
             have been

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             made to the Series C Conversion Price had the expired or canceled
             warrants, options, subscriptions or purchase rights not been
             issued. No adjustment to the Series C Conversion Price shall be
             made pursuant to the provisions of this section 3(e)(v) either (x)
             upon the issuance of any shares of the Common Stock that are issued
             pursuant to the exercise of any warrants, options, subscriptions or
             purchase rights or pursuant to the exercise of any conversion or
             exchange rights of any convertible securities if any adjustment
             shall previously have been made upon the issuance of any such
             warrants, options or subscriptions or purchase rights or upon the
             issuance of any such convertible securities (or upon the issuance
             of any warrants, options or any rights therefor) or (y) upon the
             issuance of any warrants, options, subscription or purchase rights
             or any other securities convertible into or exchangeable or
             exercisable for shares of Common Stock (or upon the issuance of any
             warrants, options or rights to purchase such securities) in
             accordance with subsection (B). Any anti-dilution adjustment to any
             other class or series of warrants, options, rights, or convertible
             securities shall be deemed to be an issuance of Common Stock at the
             time of such adjustment; provided, however, that in no event shall
             the Series C Preferred Stock be subject to more than one adjustment
             as a result of any single anti-dilution adjustments to any other
             security of the Corporation.

                    (D) For purposes of subsection (C), the "Net Consideration
             Per Share" shall mean the amount which is equal to the total amount
             of consideration, if any, received by the Corporation for the
             issuance of warrants, options, subscriptions or other purchase
             rights or convertible or exchangeable securities, plus the minimum
             amount of consideration, if any, payable to the Corporation upon
             exercise or conversion thereof, divided by the aggregate number of
             shares of the Common Stock that would be issued if all such
             warrants, options, subscriptions or other purchase rights or
             convertible or exchangeable securities were exercised, converted or
             exchanged. For purposes of this subsection (D), if part or all of
             the consideration received or to be received by the Corporation in
             connection with the issuance of shares of Common Stock or the
             issuance

                                       13
<PAGE>

             of any of the securities described in this subsection (D) consists
             of property other than cash, the value of such property shall be
             determined by or at the direction of the Board of Directors, in
             good faith, whereupon such value shall be given to such
             consideration and shall be recorded on the books of the Corporation
             with respect to receipt of such property.

                    (E) For the purpose of any computation under subsection (A)
             the Current Market Price per share of Common Stock on any date
             shall be (i) the last reported sale price, or if none is reported,
             the average of the reported closing bid and asked prices, on all
             domestic securities exchanges on which the Common Stock is listed,
             or (ii) if on any day the Common Stock is not so listed, the sales
             price for the Common Stock as of 4:00 P.M., New York time, as
             reported on the Nasdaq Stock Market, or (iii) if the Common Stock
             is not reported on the Nasdaq Stock Market, the average of the
             representative bid and asked quotations for the Common Stock as of
             4:00 P.M., New York time, as reported on the Nasdaq interdealer
             quotation system, bulletin board, over the counter market or any
             similar or successor organization, in each such case averaged over
             a period of 15 trading days prior to the day as of which the
             Current Market Price is being determined. If there is no such
             closing price or closing bid and asked prices or the Common Stock
             is not reported on any such exchange or market, the Current Market
             Price shall be determined in any good faith reasonable manner
             approved by the Board of Directors of the Corporation.

         (f) No Impairment.

                    (i) The Corporation will not, by amendment of its
             Certificate of Incorporation or through any reorganization,
             transfer of assets, merger, dissolution, issue or sale of
             securities or any other voluntary action, avoid or seek to avoid
             the observance or performance of any of the terms to be observed or
             performed hereunder by the Corporation but will at all times in
             good faith assist in the carrying out of all the

                                       14
<PAGE>

             provisions of this section 3 and in the taking of all such action
             as may be necessary or appropriate in order to protect the
             conversion rights of the holders of the Series C Preferred against
             impairment.

                    (ii) The Corporation shall at all times reserve and keep
             available for issuance upon the conversion of the Series C
             Preferred a number of its authorized but unissued shares of Common
             Stock that will from time to time be sufficient to permit the
             conversion of all outstanding shares of Series C Preferred, and
             shall take all action required to increase the authorized number of
             shares of Common Stock if at any time there shall be insufficient
             authorized but unissued shares of Common Stock to permit such
             reservation or to permit the conversion of all outstanding shares
             of Series C Preferred.

                    (iii) Any registered holder of Series C Preferred shall be
             entitled to seek an injunction or injunctions to prevent breaches
             of the provisions of this certificate of designation and to enforce
             specifically the terms and provisions of this certificate of
             designation in any court of the United States or any state thereof
             having jurisdiction, this being in addition to any other remedy to
             which such holder may be entitled at law or in equity.

         (g) Certificate as to Adjustments. Upon the occurrence of each
         adjustment or readjustment of the Series C Conversion Price pursuant to
         this section 3, the Corporation, at its expense, shall promptly compute
         such adjustment or readjustment in accordance with the terms hereof and
         furnish to each holder of Series C Preferred a certificate setting
         forth such adjustment or readjustment and showing in detail the facts
         upon which such adjustment or readjustment is based. The Corporation
         shall, upon the written request at any time of any holder of Series C
         Preferred, furnish or cause to be furnished to such holder a like
         certificate setting forth (i) such adjustments and readjustments,(ii)
         the Series C Conversion Price at the time in effect, and (iii) the
         number of shares of Common Stock and the amount, if any, of other
         property which at the time would be received upon the conversion of
         Series C Preferred.

                                       15
<PAGE>

         (h) Notices of Record Date. In the event that this Corporation shall
         propose at any time:

                    (i) to declare any dividend or distribution upon its Common
             Stock, whether in cash, property, stock or other securities,
             whether or not a regular cash dividend and whether or not out of
             earnings or earned surplus;

                    (ii) to effect any reclassification or recapitalization or
             other reorganization of its capital stock; or

                    (iii) to merge with or into any other corporation or other
             entity, or sell, lease or convey all or substantially all its
             property or business, or to liquidate, dissolve or wind up;

         then, in connection with each such event, this Corporation shall send
         to the holders of the Series C Preferred shares:

                    (A) at least 10 days' prior written notice of the date on
             which a record shall be taken for such dividend, distribution or
             subscription rights and setting forth a description thereof (and
             specifying the date on which the holders of Common Stock shall be
             entitled thereto) or for determining rights to vote in respect of
             the matters referred to in (iii) above; and

                    (B) in the case of the matters referred to in subsection
             3(h)(ii) or (iii) above, at least 10 days' prior written notice of
             the date when the same shall take place (and specifying the date on
             which the holders of Common Stock shall be entitled to exchange
             their Common Stock for securities or other property deliverable
             upon the occurrence of such event).

         Each such written notice shall be given by first class mail, postage
         prepaid, addressed to the holders of Series C Preferred at the address
         for each such holder as shown on the books of this Corporation.

(4) Voting. Except as otherwise required by law, the holders of Series C
Preferred shall not be entitled to vote upon any matter submitted to the
stockholders for a vote except as to matters affecting holders of Series C
Preferred as a class, as set forth in section (5) below.

(5) Protective Provisions. In addition to any other rights provided by law, so
long as any Series C Preferred shall be outstanding, this Corporation shall not,
without first obtaining the affirmative vote or written consent of the holders
of more than 50 percent of such outstanding shares of Series C Preferred:

         (a) amend or repeal any provision of, or add any provision to, this
         Corporation's Certificate of Incorporation or Bylaws if such action
         would alter or change the preferences, rights, privileges or powers of,
         or the restrictions provided for the benefit of, the Series C
         Preferred;

         (b) authorize or issue shares of any class of stock having any
         preference or priority as to dividends or assets superior to or on a
         parity with any such

                                       16
<PAGE>

         preference or priority of the Series C Preferred, or authorize or issue
         shares of stock of any class or any bonds, debentures, notes or other
         obligations convertible into or exchangeable for, or having option
         rights to purchase, any shares of stock of this Corporation having any
         preference or priority as to dividends or assets superior to or on a
         parity with any such preference or priority of the Series C Preferred;
         or

         (c) reclassify any Common Stock into shares having any preference or
         priority as to dividends or assets superior to or on a parity with any
         such preference or priority of the Series C Preferred.

(6) Status of Converted Stock. In the event any shares of Series C Preferred
shall be converted pursuant to section 3 hereof, the shares so converted shall
be canceled and shall not be issuable by the Corporation.

(7) Residual Rights. All rights accruing to the outstanding shares of this
Corporation not expressly provided for to the contrary herein shall be vested in
the Common Stock.

(8) Consent for Certain Repurchases of Common Stock Deemed to be Distributions.
Each holder of Series C Preferred shall be deemed to have consented to
distributions made by the Corporation in connection with the repurchase of
shares of Common Stock issued to or held by employees or consultants upon
termination of their employment or services pursuant to agreements providing for
such right of repurchase between the Corporation and such persons.


                                       17
<PAGE>

II                  SERIES D 6% CONVERTIBLE PREFERRED STOCK


(A)      Designation and Amount. The shares of such series shall be designated
     as "Series D 6% Convertible Preferred Stock," par value $0.01 per share
     (the "Series D Preferred"), and the number of shares constituting such
     series shall be 5,000.

(B)      Rights, Preferences, Privileges and Restrictions of the Series D
     Preferred. The rights, preferences, privileges and restrictions granted to
     and imposed on the Series D Preferred are as follows:

     (1) Dividend Provisions.

         (a) The holders of shares of the Series D Preferred shall be entitled
         to receive, out of any funds legally available therefor, prior and in
         preference to the declaration or payment of any dividend or
         distribution to the holders of Common Stock or any other shares or
         securities of the Corporation ranking junior to the Series D Preferred
         with respect to the payment of dividends and/or the distribution of
         assets on liquidation (including, without limitation, the Series A
         Preferred Stock and the Series B Preferred Stock, the "Junior
         Securities"), dividends which shall accrue cumulatively on each share
         of the Series D Preferred at the rate and in the manner prescribed in
         this section 1 from and including the date of issuance of such shares
         of the Series D Preferred, but excluding the date on which any
         conversion or redemption of such shares of the Series D Preferred shall
         have been effected, and payable quarterly in arrears. The date on which
         the Corporation initially issues a share of the Series D Preferred will
         be deemed to be its "date of issuance" regardless of the number of
         times transfer of such shares of the Series D Preferred is made, or of
         the number of certificates which may be issued to evidence a share of
         the Series D Preferred.

         (b) Dividends shall accrue on each share of the Series D Preferred (and
         on any accrued and unpaid dividends thereon) at a rate per annum,
         compounded quarterly, of 6% of the Original Series D Preferred Stock
         Issue Price (as

                                       18
<PAGE>

         defined below) (as adjusted for stock splits, stock dividends,
         combinations, recapitalizations and similar events). In the event of
         any liquidation, dissolution or winding up of the Corporation or the
         redemption of a share of the Series D Preferred or the bankruptcy of
         the Corporation, all accrued and unpaid dividends on a share of Series
         D Preferred shall be added to the liquidation preference of such share
         on the payment date under subsection 2(a) below, or on the date of
         redemption of such share or upon the bankruptcy of the Corporation, as
         the case may be, accrued cumulatively to but excluding such payment
         date or redemption date or bankruptcy on a daily basis. If there shall
         be any accrued but unpaid dividends immediately prior to, and in the
         event of, a conversion of shares of the Series D Preferred into shares
         of Common Stock, all such accrued and unpaid dividends shall, at the
         Corporation's option, be converted into that number of shares of Common
         Stock determined by dividing the amount of such dividends by the then
         effective Conversion Price (as defined in subsection 3(a) below), but
         only if the Corporation delivers to the holder of such Series D
         Preferred a written notice of the election by the Corporation to
         exercise such option within five days after the receipt by the
         Corporation of the certificate or certificates representing such shares
         of Series D Preferred (as contemplated by Section II(B)(3)(d) below).

         (c) No dividend or other distribution (other than a dividend or
         distribution payable solely in Common Stock) shall be paid on or set
         apart for payment on the Common Stock or other Junior Securities nor
         shall any payment be made on account of the purchase, redemption or
         retirement of any Common Stock or other Junior Securities, unless all
         accrued and unpaid dividends on the Series D Preferred have been or
         contemporaneously are paid or set apart for payment in accordance
         herewith; provided, however, that the Corporation may repurchase Common
         Stock owned by terminated employees of, or consultants to, the
         Corporation or its subsidiaries as and to the extent contemplated by
         Section II(B)(8) below. A conversion of a convertible security which by
         its terms is convertible into Common Stock by the holder thereof shall
         not be deemed a purchase, redemption or retirement of the security so
         converted for purposes of this subsection 1(c). No dividend or other
         distribution shall be declared on any series of preferred stock ranking
         as to dividends or other distributions on a

                                       19
<PAGE>

         parity with any other series of preferred stock unless there shall have
         been declared on all shares then outstanding of such series of
         preferred stock like proportionate dividends or other distributions
         ratably in proportion to the respective dividends or other
         distributions payable in respect of each such series of preferred stock
         (the Series C Preferred and the Series E Preferred shall rank on a
         parity with the Series D Preferred as to dividends and other
         distributions).

         (d) Any cash dividend (other than pursuant to Section (B)(1)(b) above)
         which has been declared with respect to the Series D Preferred and is
         otherwise due and payable thereon shall be paid in cash.

(2)      Liquidation Preference.

         (a) In the event of any liquidation, dissolution or winding up of the
         Corporation, either voluntary or involuntary, the holders of the Series
         D Preferred shall be entitled to receive, in cash, prior and in
         preference to any distribution of any of the assets or surplus funds of
         the Corporation to the holders of the Common Stock or any other Junior
         Securities by reason of their ownership thereof, the amount of $100.00
         per share (the "Original Series D Preferred Stock Issue Price") in cash
         or cash equivalents for each share of Series D Preferred then held by
         them, and, in addition, an amount equal to all accrued but unpaid
         dividends on such shares of Series D Preferred in cash or cash
         equivalents. If, upon occurrence of such event the assets and funds
         thus distributed ratably among the holders of the Series D Preferred
         shall be insufficient to permit the payment to such holders (and the
         holders of any series of preferred stock that ranks on a parity with
         the Series D Preferred on any liquidation, dissolution or winding up of
         the Corporation, including, without limitation, the Series C Preferred
         Stock and the Series E Preferred Stock) of the full preferential
         amount, then the entire assets and funds of the Corporation legally
         available for distribution shall be distributed among the holders of
         the Series D Preferred (and such parity stock) in proportion to the
         amount that the holders of the Series D Preferred and the holders of
         such parity stock would be entitled to receive if they were to be paid
         the full amounts due to them at the time of such liquidation,
         dissolution or winding up. After payment has been made to

                                       20
<PAGE>

         the holders of the Series D Preferred of the full amounts to which they
         shall be entitled as aforesaid, all remaining assets of the Corporation
         shall be distributed among all holders of the preferred stock of the
         Corporation that rank junior to the Series D Preferred on any
         liquidation, dissolution or winding up of the Corporation (including,
         without limitation, holders of Series A 6% Convertible Preferred Stock
         and Series B 6% Convertible Preferred Stock and any subsequently issued
         series of preferred stock) and all holders of Common Stock and other
         Junior Securities in proportion to the number of shares of Common Stock
         which would be held by each such holder if all shares of such series'
         of preferred stock were converted into Common Stock.

         (b) For purposes of this section 2, a liquidation, dissolution or
         winding up of the Corporation shall be deemed to be occasioned by, and
         to include, without limitation, the redemption or other purchase by the
         Corporation of all of its outstanding Common Stock, the Corporation's
         sale of all or substantially all of its assets or the acquisition of
         this Corporation by another entity by means of merger or consolidation
         of the Corporation with or into any other entity (whether or not the
         Corporation is the surviving or emerging entity) in which cash, stock
         or other securities or property of the Corporation, transferee or
         surviving or emerging entity or an affiliate thereof are to be received
         or where the holders of shares of the Corporation prior to such merger
         or consolidation represent less than 50% of the outstanding shares of
         the surviving entity after such merger or consolidation. Written notice
         of any event of liquidation pursuant to this section 2 shall be given
         by first class mail, postage prepaid, not less than 30 days prior to
         any payment date, which shall be stated therein, to the holders of
         record of the Series D Preferred, such notice to be addressed to each
         such holder at his last address as shown by the records of the
         Corporation. Notwithstanding the receipt of such notice, prior to the
         payment date with respect to any such liquidation as set forth therein,
         the holder of record of the Series D Preferred may still avail itself
         of the Conversion Rights set forth in section 3 below.

(3) Conversion. The holders of the Series D Preferred shall each have conversion
rights as follows (the "Conversion Rights"):

                                       21
<PAGE>

         (a) Right to Convert. Subject to the limitations set forth in
         subsection 3(b) below, at any time, each share of Series D Preferred
         shall be convertible into a number of fully paid and nonassessable
         shares of Common Stock equal to (x) the sum of the Original Series D
         Preferred Stock Issue Price (as defined below) and, in the event the
         Corporation shall not elect to exercise its option referred to in the
         last sentence of Section II(B)(1)(b), the amount of all accrued and
         unpaid dividends thereon, divided by (y) the Series D Conversion Price
         at such time. Each share of Series D Preferred shall be convertible at
         the option of the holder thereof at any time. The price at which shares
         of Common Stock shall be deliverable upon conversion (the "Series D
         Conversion Price") shall initially be $2.75 per share of Common Stock.
         Such initial Series D Conversion Price shall be subject to adjustment
         as hereinafter provided.

         (b) Nasdaq Conversion Limitation. Unless the Company obtains the
         requisite approval of its stockholders to comply with the applicable
         rules of the Nasdaq SmallCap Market or the Nasdaq National Market, no
         holder of any shares of Series D Preferred may exercise its conversion
         rights to the extent that such conversion would, together with (i) an
         aggregate of 140,193 shares of Common Stock issued by the Corporation
         to such holder on the date hereof, (ii) 50,000 shares of Common Stock
         subject to outstanding warrants to purchase Common Stock, and (iii)
         shares of Common Stock issued upon conversion of the Series C Preferred
         and the Series E Preferred, cause such holder to obtain more than 19.9%
         of all issued and outstanding shares of Common Stock, including shares
         issuable in respect of outstanding scrip or any certificates
         representing fractional interests in such shares of Common Stock. The
         prior sentence shall not prohibit any holder of shares of Series D
         Preferred from exercising its conversion rights at any time following
         such time as the Common Stock is not listed on the Nasdaq SmallCap
         Market or the Nasdaq National Market. Nothing in this subsection 3(b)
         shall prohibit a holder of Series D Preferred from converting such
         stock if and to the extent that the shares issued upon such conversion,
         together with the shares of Common Stock referred to in subclauses (i),
         (ii) and (iii) above and any and all shares of Common Stock issued upon
         prior conversions by such holder of the Series D Preferred, would equal
         19.9% or less of all issued and outstanding shares of Common Stock,
         including

                                       22
<PAGE>

         shares issuable in respect of outstanding scrip or any certificates
         representing fractional interests in such shares of Common Stock. With
         respect to any holder of Series D Preferred, all references in this
         subsection 3(b) to 19.9% of all issued and outstanding shares of Common
         Stock of the Corporation shall mean 19.9% of such issued and
         outstanding Common Stock as of the date of issuance by the Corporation
         of the Series D Preferred to such holder.

         (c) Shareholder Vote regarding Conversion Limitation. If a holder of
         the Series D Preferred is unable to exercise its conversion rights due
         to the limitations set forth in subsection 3(b) above, the Board of
         Directors shall use commercially reasonable efforts to present and
         recommend to the stockholders of the Company at the next annual meeting
         of stockholders (to be held in accordance with the corporate laws of
         Delaware, the Certificate of Incorporation and the Bylaws of the
         Company) a proposal to approve such holder acquiring in excess of 19.9%
         of the issued and outstanding shares of Common Stock upon conversion of
         the Series D Preferred. The Corporation hereby undertakes to present
         such proposal at the annual meeting of stockholders to take place in
         2002 or, if earlier, at the next meeting of stockholders (or in the
         next action taken by consent of stockholders without a meeting) other
         than the annual meeting of stockholders to take place in 2001. The
         Corporation shall use its best efforts to hold such annual meeting of
         stockholders prior to September 30, 2002. Notwithstanding the
         foregoing, at the request of the holders of the Series D Preferred, the
         Company shall hold a special meeting of stockholders as soon as
         practicable in accordance with all applicable state and federal laws
         and regulations; provided that the holders of the Series D Preferred
         pay or promptly reimburse the Corporation for all costs and expenses
         relating to such special meeting of stockholders. If such approval is
         not obtained at the next such meeting of the stockholders of the
         Corporation (or in the next action taken by consent of stockholders
         without a meeting), the Corporation shall thereafter continue to use
         commercially reasonable efforts to effect such approval. In no event
         may the Corporation issue more than 19.9% of the issued and outstanding
         shares of Common Stock as determined in subsection 3(b) above without
         obtaining such requisite vote of stockholders as set forth herein.

                                       23
<PAGE>

         (d) Mechanics of Conversion. No fractional shares of Common Stock shall
         be issued upon conversion of the Series D Preferred. In lieu of any
         fractional share to which a holder would otherwise be entitled, the
         Corporation shall pay cash equal to such fraction multiplied by the
         fair market value of the Common Stock as determined by the Board of
         Directors. Before any holder of the Series D Preferred shall be
         entitled to convert the same into full shares of Common Stock, he shall
         surrender the certificate or certificates therefor, duly endorsed, at
         the office of the Corporation or of any transfer agent for the Series D
         Preferred, as designated by the Corporation, and shall give written
         notice to the Corporation at such office that he elects to convert the
         same. The Corporation shall, as soon as practicable thereafter, issue
         and deliver at such office to such holder of Series D Preferred, a
         certificate or certificates for the number of shares of Common Stock to
         which such holder shall be entitled as aforesaid and a check payable to
         the holder in the amount of any cash amounts payable as the result of a
         conversion into a fractional share of Common Stock and, if the
         Corporation shall exercise the option referred to in the last sentence
         of Section II(B)(1)(b), any amount owed to such holder as the result of
         such exercise. Such conversion shall be deemed to have been made
         immediately prior to the close of business on the date of such
         surrender of the shares of Series D Preferred to be converted, and the
         person or persons entitled to receive the shares of Common Stock
         issuable upon such conversion shall be treated for all purposes as the
         record holder or holders of such shares of Common Stock on such date.

         (e) Adjustments to Series D Conversion Price for Diluting Issues.

                    (i) Stock Dividends. If the number of shares of Common Stock
             outstanding at any time after the effectiveness of these
             resolutions is increased by a stock dividend payable in shares of
             Common Stock or by a subdivision or split-up of shares of Common
             Stock or a similar transaction in respect thereof, then immediately
             effective at the close of business upon the record date fixed for
             the determination of holders of Common Stock entitled to receive
             such stock dividend, subdivision or split-up or similar
             transaction, the Series D Conversion Price shall be

                                       24
<PAGE>

             appropriately decreased so that the number of shares of Common
             Stock issuable on conversion of each share of Series D Preferred
             shall be increased in proportion to such increase of outstanding
             shares of Common Stock. Successive adjustments shall be made upon
             each such stock dividend, subdivision or split or similar
             transaction.

                    (ii) Adjustments for Subdivisions, Combinations, or
             Consolidations of Common Stock. In the event the outstanding shares
             of Common Stock shall be decreased by a subdivision or combination,
             by reclassification or otherwise, into a greater or lesser number
             of shares of Common Stock, the Series D Conversion Price in effect
             immediately prior to such subdivision or combination shall,
             concurrently with the effectiveness of such subdivision,
             combination or consolidation, be proportionately adjusted so that
             the number of shares of Common Stock issuable upon conversion of
             each share of Series D Preferred shall be decreased in proportion
             to such decrease of outstanding shares of Common Stock. Successive
             adjustments shall be made upon each such subdivision, combination
             or reclassification.

                    (iii) Adjustments for Other Distributions. In the event the
             Corporation at any time or from time to time makes, or fixes a
             record date for the determination of holders of Common Stock
             entitled to receive, any distribution payable in securities of the
             Corporation other than shares of Common Stock, then and in each
             such event provision shall be made so that the holders of the
             Series D Preferred shall receive upon conversion thereof, in
             addition to the number of shares of Common Stock receivable
             thereupon, the amount of securities of the Corporation which they
             would have received had their Series D Preferred been converted
             into Common Stock on the date of such event to and including the
             date of conversion, and retained such securities receivable by them
             as aforesaid during such period, subject to all other adjustments
             called for during such period under these resolutions with respect
             to the rights of the holders of the Series D Preferred.

                                       25
<PAGE>

                    (iv) Adjustments for Reorganizations, Reclassifications,
             etc. If the Common Stock issuable upon conversion of the Series D
             Preferred shall be changed into the same or a different number of
             shares of any other class or classes of stock or other securities
             or property, whether by reclassification, a merger or consolidation
             of this Corporation with or into any other entity or entities
             (other than pursuant to a subdivision, combination, stock dividend,
             or other distribution provided for in subsections 3(e)(i), (ii) or
             (iii) above), the Series D Conversion Price then in effect shall,
             concurrently with the effectiveness of such reorganization or
             reclassification, be proportionately adjusted such that the Series
             D Preferred shall be convertible into, in lieu of the number of
             shares of Common Stock which the holders would otherwise have been
             entitled to receive, a number of shares of such other class or
             classes of stock or securities or other property equivalent to the
             number of shares of Common Stock that would have been subject to
             receipt by the holders upon conversion of the Series D Preferred
             immediately before such event; and, in any such case, appropriate
             adjustment shall be made in the application of the provisions
             herein set forth with respect to the rights and interest thereafter
             of the holders of the Series D Preferred, to the end that the
             provisions set forth herein (including provisions with respect to
             changes in and other adjustments of the Series D Conversion Price)
             shall thereafter be applicable, as nearly as may be reasonable, in
             relation to any shares of stock or other property thereafter
             deliverable upon the conversion of the Series D Preferred.
             Successive adjustments shall be made upon each such
             reclassification, merger or consolidation.

                    (v) Adjustments for Issuances Below the Current Market
             Price.

                    (A) Except as provided in subsection (B), if the Corporation
             shall, while there are any shares of the Series D Preferred
             outstanding, issue or sell shares of the Common Stock of the
             Corporation at a price per share less than the then Current Market
             Price (as defined below) in

                                       26
<PAGE>

             effect immediately prior to such issuance or sale, then in each
             such case, the Series D Conversion Price shall be adjusted,
             effective as of the date of the issuance of such shares of the
             Common Stock of the Corporation, to an amount determined by
             multiplying the Series D Conversion Price in effect immediately
             prior to such issuance or sale by a fraction:

                    (i) the numerator of which shall be (1) the aggregate number
                    of shares of the Common Stock outstanding immediately prior
                    to the issuance of such additional shares of Common Stock,
                    plus (2) the aggregate number of shares of Common Stock then
                    issuable upon conversion of the shares of Series D Preferred
                    outstanding immediately prior to the issuance of such
                    additional shares of Common Stock, plus (3) the number of
                    shares of Common Stock that the net aggregate consideration
                    received by the Corporation for the total number of such
                    additional shares of the Common Stock so issued would
                    purchase at such Series D Conversion Price in effect
                    immediately prior to such issuance, and

                    (ii) the denominator of which shall be (1) the aggregate
                    number of shares of the Common Stock outstanding immediately
                    prior to the issuance of such additional shares of the
                    Common Stock, plus (2) the aggregate number of shares of
                    Common Stock then issuable upon conversion of the shares of
                    Series D Preferred outstanding immediately prior to the
                    issuance of such additional shares of Common Stock, plus (3)
                    the number of such additional shares of the Common Stock so
                    issued.

                    (B) The adjustments contemplated by subsection (A) above
             shall not apply to (i) any issuance of shares of the Common Stock
             to officers, directors, employees, consultants or agents of the
             Corporation or any subsidiary of the Corporation pursuant to any
             stock option plan or arrangement or other equity incentive, bonus,
             or similar plan or arrangement approved by the Board of Directors,
             (ii) the issuance of shares of Common Stock in connection with the
             merger or acquisition of

                                       27
<PAGE>

             the Corporation or any of its subsidiaries with or into an
             unaffiliated third party or for purposes of a strategic business
             alliance with an unaffiliated third party, (iii) the issuance of
             any Common Stock issued in connection with an underwritten public
             offering of such securities in which the per share price to the
             public and any underwriting discounts and commissions are
             determined in a manner that is customary for an underwritten
             offering of similar size and composition, or (iv) the issuance of
             any Common Stock in connection with the conversion of the Series B
             Preferred Stock, Series C Preferred Stock, Series D Preferred
             Stock, or Series E Preferred Stock.

                    (C) For purposes of this section 3(e)(v), the issuance of
             any warrants, options, subscriptions or purchase rights with
             respect to shares of Common Stock and the issuance of any
             securities convertible into or exchangeable for shares of Common
             Stock, or the issuance of any warrants, options or any rights with
             respect to such convertible or exchangeable securities, shall be
             deemed to be an issuance of shares of Common Stock at the time of
             the issuance thereof if the Net Consideration Per Share (as
             hereinafter defined) which may be received by the Corporation for
             the shares of Common Stock or issuable upon the exercise thereof is
             less than the then Current Market Price at the time of the issuance
             of such warrants, options subscriptions, purchase rights or
             securities. Any obligation, agreement or undertaking to issue
             warrants, options, subscriptions, purchase rights or such
             securities at any time in the future shall be deemed to be an
             issuance at the time such obligation, agreement or undertaking is
             made or arises. Notwithstanding the foregoing, any adjustment made
             to the Series D Conversion Price pursuant to the provisions of this
             section 3(e)(v) which relates to warrants, options, subscriptions
             or purchase rights with respect to shares of Common Stock shall be
             disregarded when, as and if all of such warrants, options,
             subscriptions or purchase rights expire or are canceled without
             being exercised, so that the Series D Conversion Price effective
             immediately upon such cancellation or expiration shall be equal to
             the Series D Conversion Price in effect at the time of the issuance
             of the

                                       28
<PAGE>

             expired or canceled warrants, options, subscriptions or purchase
             rights, after taking into account any other adjustments that would
             have been made to the Series D Conversion Price had the expired or
             canceled warrants, options, subscriptions or purchase rights not
             been issued. No adjustment to the Series D Conversion Price shall
             be made pursuant to the provisions of this section 3(e)(v) either
             (x) upon the issuance of any shares of the Common Stock that are
             issued pursuant to the exercise of any warrants, options,
             subscriptions or purchase rights or pursuant to the exercise of any
             conversion or exchange rights of any convertible securities if any
             adjustment shall previously have been made upon the issuance of any
             such warrants, options or subscriptions or purchase rights or upon
             the issuance of any such convertible securities (or upon the
             issuance of any warrants, options or any rights therefor) or (y)
             upon the issuance of any warrants, options, subscription or
             purchase rights or any other securities convertible into or
             exchangeable or exercisable for shares of Common Stock (or upon the
             issuance of any warrants, options or rights to purchase such
             securities) in accordance with subsection (B). Any anti-dilution
             adjustment to any other class or series of warrants, options,
             rights, or convertible securities shall be deemed to be an issuance
             of Common Stock at the time of such adjustment; provided, however,
             that in no event shall the Series D Preferred Stock be subject to
             more than one adjustment as a result of any single anti-dilution
             adjustments to any other security of the Corporation.

                    (D) For purposes of subsection (C), the "Net Consideration
             Per Share" shall mean the amount which is equal to the total amount
             of consideration, if any, received by the Corporation for the
             issuance of warrants, options, subscriptions or other purchase
             rights or convertible or exchangeable securities, plus the minimum
             amount of consideration, if any, payable to the Corporation upon
             exercise or conversion thereof, divided by the aggregate number of
             shares of the Common Stock that would be issued if all such
             warrants, options, subscriptions or other purchase rights or
             convertible or exchangeable securities were exercised, converted or
             exchanged. For purposes of this subsection (D), if part or all of
             the consideration received or to be received by the Corporation in
             connection with the issuance of shares of Common Stock or the
             issuance of any of the securities described in this subsection (D)
             consists of property other than cash, the value of such property
             shall be determined by or at the direction of the Board of
             Directors, in good faith, whereupon such value shall be given to
             such consideration and shall be recorded on the books of the
             Corporation with respect to receipt of such property.

                    (E) For the purpose of any computation under subsection (A)
             the Current Market Price per share of Common Stock on any date
             shall be (i) the last reported sale price, or if none is reported,
             the average of the reported closing bid and asked prices, on all
             domestic securities exchanges on which the Common Stock is listed,
             or (ii) if on any day the

                                       29
<PAGE>

             Common Stock is not so listed, the sales price for the Common Stock
             as of 4:00 P.M., New York time, as reported on the Nasdaq Stock
             Market, or (iii) if the Common Stock is not reported on the Nasdaq
             Stock Market, the average of the representative bid and asked
             quotations for the Common Stock as of 4:00 P.M., New York time, as
             reported on the Nasdaq interdealer quotation system, bulletin
             board, over-the-counter market or any similar or successor
             organization, in each such case averaged over a period of 15
             trading days prior to the day as of which the Current Market Price
             is being determined. If there is no such closing price or closing
             bid and asked prices or the Common Stock is not reported on any
             such exchange or market, the Current Market Price shall be
             determined in any good faith reasonable manner approved by the
             Board of Directors of the Corporation.

         (f) No Impairment.

                    (i) The Corporation will not, by amendment of its
             Certificate of Incorporation or through any reorganization,
             transfer of assets, merger, dissolution, issue or sale of
             securities or any other voluntary action, avoid or seek to avoid
             the observance or performance of any of

                                       30
<PAGE>

             the terms to be observed or performed hereunder by the Corporation
             but will at all times in good faith assist in the carrying out of
             all the provisions of this section 3 and in the taking of all such
             action as may be necessary or appropriate in order to protect the
             conversion rights of the holders of the Series D Preferred against
             impairment.

                    (ii) The Corporation shall at all times reserve and keep
             available for issuance upon the conversion of the Series D
             Preferred a number of its authorized but unissued shares of Common
             Stock that will from time to time be sufficient to permit the
             conversion of all outstanding shares of Series D Preferred, and
             shall take all action required to increase the authorized number of
             shares of Common Stock if at any time there shall be insufficient
             authorized but unissued shares of Common Stock to permit such
             reservation or to permit the conversion of all outstanding shares
             of Series D Preferred.

                    (iii) Any registered holder of Series D Preferred shall be
             entitled to seek an injunction or injunctions to prevent breaches
             of the provisions of this certificate of designation and to enforce
             specifically the terms and provisions of this certificate of
             designation in any court of the United States or any state thereof
             having jurisdiction, this being in addition to any other remedy to
             which such holder may be entitled at law or in equity.

         (g) Certificate as to Adjustments. Upon the occurrence of each
         adjustment or readjustment of the Series D Conversion Price pursuant to
         this section 3, the Corporation, at its expense, shall promptly compute
         such adjustment or readjustment in accordance with the terms hereof and
         furnish to each holder of Series D Preferred a certificate setting
         forth such adjustment or readjustment and showing in detail the facts
         upon which such adjustment or readjustment is based. The Corporation
         shall, upon the written request at any time of any holder of Series D
         Preferred, furnish or cause to be furnished to such holder a like
         certificate setting forth (i) such adjustments and readjustments,(ii)
         the Series D Conversion Price at the time in effect, and (iii) the
         number of shares of

                                       31
<PAGE>

             Common Stock and the amount, if any, of other property which at the
             time would be received upon the conversion of Series D Preferred.

         (h) Notices of Record Date. In the event that this Corporation shall
         propose at any time:

                    (i) to declare any dividend or distribution upon its Common
             Stock, whether in cash, property, stock or other securities,
             whether or not a regular cash dividend and whether or not out of
             earnings or earned surplus;

                    (ii) to effect any reclassification or recapitalization or
             other reorganization of its capital stock; or

                    (iii) to merge with or into any other corporation or other
             entity, or sell, lease or convey all or substantially all its
             property or business, or to liquidate, dissolve or wind up;
         then, in connection with each such event, this Corporation shall send
         to the holders of the Series D Preferred shares:

                    (A) at least 10 days' prior written notice of the date on
             which a record shall be taken for such dividend, distribution or
             subscription rights and setting forth a description thereof (and
             specifying the date on which the holders of Common Stock shall be
             entitled thereto) or for determining rights to vote in respect of
             the matters referred to in (iii) above; and

                    (B) in the case of the matters referred to in subsection
             3(h)(ii) or (iii) above, at least 10 days' prior written notice of
             the date when the same shall take place (and specifying the date on
             which the holders of Common Stock shall be entitled to exchange
             their Common Stock for securities or other property deliverable
             upon the occurrence of such event).

                                       32
<PAGE>

         Each such written notice shall be given by first class mail, postage
         prepaid, addressed to the holders of Series D Preferred at the address
         for each such holder as shown on the books of this Corporation.

(4) Voting. Except as otherwise required by law, the holders of Series D
Preferred shall not be entitled to vote upon any matter submitted to the
stockholders for a vote except as to matters affecting holders of Series D
Preferred as a class, as set forth in section (5) below.

(5) Protective Provisions. In addition to any other rights provided by law, so
long as any Series D Preferred shall be outstanding, this Corporation shall not,
without first obtaining the affirmative vote or written consent of the holders
of more than 50 percent of such outstanding shares of Series D Preferred:

         (a) amend or repeal any provision of, or add any provision to, this
         Corporation's Certificate of Incorporation or Bylaws if such action
         would alter or change the preferences, rights, privileges or powers of,
         or the restrictions provided for the benefit of, the Series D
         Preferred;

         (b) authorize or issue shares of any class of stock having any
         preference or priority as to dividends or assets superior to or on a
         parity with any such preference or priority of the Series D Preferred,
         or authorize or issue shares of stock of any class or any bonds,
         debentures, notes or other obligations convertible into or exchangeable
         for, or having option rights to purchase, any shares of stock of this
         Corporation having any preference or priority as to dividends or assets
         superior to or on a parity with any such preference or priority of the
         Series D Preferred; or

         (c) reclassify any Common Stock into shares having any preference or
         priority as to dividends or assets superior to or on a parity with any
         such preference or priority of the Series D Preferred.

                                       33
<PAGE>

(6) Status of Converted Stock. In the event any shares of Series D Preferred
shall be converted pursuant to section 3 hereof, the shares so converted shall
be canceled and shall not be issuable by the Corporation.

(7) Residual Rights. All rights accruing to the outstanding shares of this
Corporation not expressly provided for to the contrary herein shall be vested in
the Common Stock.

(8) Consent for Certain Repurchases of Common Stock Deemed to be Distributions.
Each holder of Series D Preferred shall be deemed to have consented to
distributions made by the Corporation in connection with the repurchase of
shares of Common Stock issued to or held by employees or consultants upon
termination of their employment or services pursuant to agreements providing for
such right of repurchase between the Corporation and such persons.


                                       34
<PAGE>

III                  SERIES E 6% CONVERTIBLE PREFERRED STOCK

(A)      Designation and Amount. The shares of such series shall be designated
     as "Series E 6% Convertible Preferred Stock," par value $0.01 per share
     (the "Series E Preferred"), and the number of shares constituting such
     series shall be 10,000.


(B)      Rights, Preferences, Privileges and Restrictions of the Series E
     Preferred. The rights, preferences, privileges and restrictions granted to
     and imposed on the Series E Preferred are as follows:

     (1) Dividend Provisions.

         (a) The holders of shares of the Series E Preferred shall be entitled
         to receive, out of any funds legally available therefor, prior and in
         preference to the declaration or payment of any dividend or
         distribution to the holders of Common Stock or any other shares or
         securities of the Corporation ranking junior to the Series E Preferred
         with respect to the payment of dividends and/or the distribution of
         assets on liquidation (including, without limitation, the Series A
         Preferred Stock and the Series B Preferred Stock, the "Junior
         Securities"), dividends which shall accrue cumulatively on each share
         of the Series E Preferred at the rate and in the manner prescribed in
         this section 1 from and including the date of issuance of such shares
         of the Series E Preferred, but excluding the date on which any
         conversion or redemption of such shares of the Series E Preferred shall
         have been effected, and payable quarterly in arrears. The date on which
         the Corporation initially issues a share of the Series E Preferred will
         be deemed to be its "date of issuance" regardless of the number of
         times transfer of such shares of the Series E Preferred is made, or of
         the number of certificates which may be issued to evidence a share of
         the Series E Preferred.

         (b) Dividends shall accrue on each share of the Series E Preferred (and
         on any accrued and unpaid dividends thereon) at a rate per annum,
         compounded quarterly, of 6% of the Original Series E Preferred Stock
         Issue Price (as defined below) (as adjusted for stock splits, stock
         dividends, combinations,

                                       35
<PAGE>

         recapitalizations and similar events). In the event of any liquidation,
         dissolution or winding up of the Corporation or the redemption of a
         share of the Series E Preferred or the bankruptcy of the Corporation,
         all accrued and unpaid dividends on a share of Series E Preferred shall
         be added to the liquidation preference of such share on the payment
         date under subsection 2(a) below, or on the date of redemption of such
         share or upon the bankruptcy of the Corporation, as the case may be,
         accrued cumulatively to but excluding such payment date or redemption
         date or bankruptcy on a daily basis. If there shall be any accrued but
         unpaid dividends immediately prior to, and in the event of, a
         conversion of shares of the Series E Preferred into shares of Common
         Stock, all such accrued and unpaid dividends shall, at the
         Corporation's option, be converted into that number of shares of Common
         Stock determined by dividing the amount of such dividends by the then
         effective Conversion Price (as defined in subsection 3(a) below), but
         only if the Corporation delivers to the holder of such Series E
         Preferred a written notice of the election by the Corporation to
         exercise such option within five days after the receipt by the
         Corporation of the certificate or certificates representing such shares
         of Series E Preferred (as contemplated by Section III(B)(3)(d) below).

         (c) No dividend or other distribution (other than a dividend or
         distribution payable solely in Common Stock) shall be paid on or set
         apart for payment on the Common Stock or other Junior Securities nor
         shall any payment be made on account of the purchase, redemption or
         retirement of any Common Stock or other Junior Securities, unless all
         accrued and unpaid dividends on the Series E Preferred have been or
         contemporaneously are paid or set apart for payment in accordance
         herewith; provided, however, that the Corporation may repurchase Common
         Stock owned by terminated employees of, or consultants to, the
         Corporation or its subsidiaries as and to the extent contemplated by
         Section III(B)(8) below. A conversion of a convertible security which
         by its terms is convertible into Common Stock by the holder thereof
         shall not be deemed a purchase, redemption or retirement of the
         security so converted for purposes of this subsection 1(c). No dividend
         or other distribution shall be declared on any series of preferred
         stock ranking as to dividends or other distributions on a parity with
         any other series of preferred stock unless there shall have been

                                       36
<PAGE>

         declared on all shares then outstanding of such series of preferred
         stock like proportionate dividends or other distributions ratably in
         proportion to the respective dividends or other distributions payable
         in respect of each such series of preferred stock (the Series C
         Preferred and the Series D Preferred shall rank on a parity with the
         Series E Preferred as to dividends and other distributions).

         (d) Any cash dividend (other than pursuant to Section (B)(1)(b) above)
         which has been declared with respect to the Series E Preferred and is
         otherwise due and payable thereon shall be paid in cash.

     (2) Liquidation Preference.

         (a) In the event of any liquidation, dissolution or winding up of the
         Corporation, either voluntary or involuntary, the holders of the Series
         E Preferred shall be entitled to receive, in cash, prior and in
         preference to any distribution of any of the assets or surplus funds of
         the Corporation to the holders of the Common Stock or any other Junior
         Securities by reason of their ownership thereof, the amount of $100.00
         per share (the "Original Series E Preferred Stock Issue Price") in cash
         or cash equivalents for each share of Series E Preferred then held by
         them, and, in addition, an amount equal to all accrued but unpaid
         dividends on such shares of Series E Preferred in cash or cash
         equivalents. If, upon occurrence of such event the assets and funds
         thus distributed ratably among the holders of the Series E Preferred
         shall be insufficient to permit the payment to such holders (and the
         holders of any series of preferred stock that ranks on a parity with
         the Series E Preferred on any liquidation, dissolution or winding up of
         the Corporation, including, without limitation, the Series C Preferred
         Stock and the Series D Preferred Stock) of the full preferential
         amount, then the entire assets and funds of the Corporation legally
         available for distribution shall be distributed among the holders of
         the Series E Preferred (and such parity stock) in proportion to the
         amount that the holders of the Series E Preferred and the holders of
         such parity stock would be entitled to receive if they were to be paid
         the full amounts due to them at the time of such liquidation,
         dissolution or winding up. After payment has been made to the holders
         of the Series E Preferred of the full amounts to which they shall be
         entitled as aforesaid, all remaining assets of the Corporation shall be
         distributed among all holders of the preferred stock of the Corporation
         that rank junior to the Series E Preferred on any liquidation,
         dissolution or winding up of the Corporation (including, without
         limitation, holders of Series A 6% Convertible

                                       37
<PAGE>

         Preferred Stock and Series B 6% Convertible Preferred Stock and any
         subsequently issued series of preferred stock) and all holders of
         Common Stock and other Junior Securities in proportion to the number of
         shares of Common Stock which would be held by each such holder if all
         shares of such series' of preferred stock were converted into Common
         Stock.

         (b) For purposes of this section 2, a liquidation, dissolution or
         winding up of the Corporation shall be deemed to be occasioned by, and
         to include, without limitation, the redemption or other purchase by the
         Corporation of all of its outstanding Common Stock, the Corporation's
         sale of all or substantially all of its assets or the acquisition of
         this Corporation by another entity by means of merger or consolidation
         of the Corporation with or into any other entity (whether or not the
         Corporation is the surviving or emerging entity) in which cash, stock
         or other securities or property of the Corporation, transferee or
         surviving or emerging entity or an affiliate thereof are to be received
         or where the holders of shares of the Corporation prior to such merger
         or consolidation represent less than 50% of the outstanding shares of
         the surviving entity after such merger or consolidation. Written notice
         of any event of liquidation pursuant to this section 2 shall be given
         by first class mail, postage prepaid, not less than 30 days prior to
         any payment date, which shall be stated therein, to the holders of
         record of the Series E Preferred, such notice to be addressed to each
         such holder at his last address as shown by the records of the
         Corporation. Notwithstanding the receipt of such notice, prior to the
         payment date with respect to any such liquidation as set forth therein,
         the holder of record of the Series E Preferred may still avail itself
         of the Conversion Rights set forth in section 3 below.

(3) Conversion. The holders of the Series E Preferred shall each have conversion
rights as follows (the "Conversion Rights"):

         (a) Right to Convert. Subject to the limitations set forth in
         subsection 3(b) below, at any time, each share of Series E Preferred
         shall be convertible into a number of fully paid and nonassessable
         shares of Common Stock equal to (x) the sum of the Original Series E
         Preferred Stock Issue Price (as defined below) and, in the event the
         Corporation shall not elect to exercise its option referred to in the
         last sentence of Section III(B)(1)(b), the amount of all accrued

                                       38
<PAGE>

         and unpaid dividends thereon, divided by (y) the Series E Conversion
         Price at such time. Each share of Series E Preferred shall be
         convertible at the option of the holder thereof at any time. The price
         at which shares of Common Stock shall be deliverable upon conversion
         (the "Series E Conversion Price") shall initially be $3.75 per share of
         Common Stock. Such initial Series E Conversion Price shall be subject
         to adjustment as hereinafter provided.

         (b) Nasdaq Conversion Limitation. Unless the Company obtains the
         requisite approval of its stockholders to comply with the applicable
         rules of the Nasdaq SmallCap Market or the Nasdaq National Market, no
         holder of any shares of Series E Preferred may exercise its conversion
         rights to the extent that such conversion would, together with an (i)
         aggregate of 140,193 shares of Common Stock issued by the Corporation
         to such holder on the date hereof, (ii) 50,000 shares of Common Stock
         subject to outstanding warrants to purchase Common Stock, and (iii)
         shares of Common Stock issued upon conversion of the Series C Preferred
         and the Series D Preferred, cause such holder to obtain more than 19.9%
         of all issued and outstanding shares of Common Stock including shares
         issuable in respect of outstanding scrip or any certificates
         representing fractional interests in such shares of Common Stock. The
         prior sentence shall not prohibit any holder of shares of Series E
         Preferred from exercising its conversion rights at any time following
         such time as the Common Stock is not listed on the Nasdaq SmallCap
         Market or the Nasdaq National Market. Nothing in this subsection 3(b)
         shall prohibit a holder of Series E Preferred from converting such
         stock if and to the extent that the shares issued upon such conversion,
         together with the shares of Common Stock referred to in subclauses (i),
         (ii) and (iii) above and any and all shares of Common Stock issued upon
         prior conversions by such holder of the Series E Preferred, would equal
         19.9% or less of all issued and outstanding shares of Common Stock,
         including

                                       39
<PAGE>

         shares issuable in respect of outstanding scrip or any certificates
         representing fractional interests in such shares of Common Stock. With
         respect to any holder of Series E Preferred, all references in this
         subsection 3(b) to 19.9% of all issued and outstanding shares of Common
         Stock of the Corporation shall mean 19.9% of such issued and
         outstanding Common Stock as of the date of issuance by the Corporation
         of the Series E Preferred to such holder.

         (c) Shareholder Vote regarding Conversion Limitation. If a holder of
         the Series E Preferred is unable to exercise its conversion rights due
         to the limitations set forth in subsection 3(b) above, the Board of
         Directors shall use commercially reasonable efforts to present and
         recommend to the stockholders of the Company at the next annual meeting
         of stockholders (to be held in accordance with the corporate laws of
         Delaware, the Certificate of Incorporation and the Bylaws of the
         Company) a proposal to approve such holder acquiring in excess of 19.9%
         of the issued and outstanding shares of Common Stock upon conversion of
         the Series E Preferred. The Corporation hereby undertakes to present
         such proposal at the annual meeting of stockholders to take place in
         2002 or, if earlier, at the next meeting of stockholders (or in the
         next action taken by consent of stockholders without a meeting) other
         than the annual meeting of stockholders to take place in 2001. The
         Corporation shall use its best efforts to hold such annual meeting of
         stockholders prior to September 30, 2002. Notwithstanding the
         foregoing, at the request of the holders of the Series E Preferred, the
         Company shall hold a special meeting of stockholders as soon as
         practicable in accordance with all applicable state and federal laws
         and regulations; provided that the holders of the Series E Preferred
         pay or promptly reimburse the Corporation for all costs and expenses
         relating to such special meeting of stockholders. If such approval is
         not obtained at the next such meeting of the stockholders of the
         Corporation (or in the next action taken by consent of stockholders
         without a meeting), the Corporation shall thereafter continue to use
         commercially reasonable efforts to effect such approval. In no event
         may the Corporation issue more than 19.9% of the issued and outstanding
         shares of Common Stock as determined in subsection 3(b) above without
         obtaining such requisite vote of stockholders as set forth herein.

                                       40
<PAGE>

         (d) Mechanics of Conversion. No fractional shares of Common Stock shall
         be issued upon conversion of the Series E Preferred. In lieu of any
         fractional share to which a holder would otherwise be entitled, the
         Corporation shall pay cash equal to such fraction multiplied by the
         fair market value of the Common Stock as determined by the Board of
         Directors. Before any holder of the Series E Preferred shall be
         entitled to convert the same into full shares of Common Stock, he shall
         surrender the certificate or certificates therefor, duly endorsed, at
         the office of the Corporation or of any transfer agent for the Series E
         Preferred, as designated by the Corporation, and shall give written
         notice to the Corporation at such office that he elects to convert the
         same. The Corporation shall, as soon as practicable thereafter, issue
         and deliver at such office to such holder of Series E Preferred, a
         certificate or certificates for the number of shares of Common Stock to
         which such holder shall be entitled as aforesaid and a check payable to
         the holder in the amount of any cash amounts payable as the result of a
         conversion into a fractional share of Common Stock and, if the
         Corporation shall exercise the option referred to in the last sentence
         of Section III(B)(1)(b), any amount owed to such holder as the result
         of such exercise. Such conversion shall be deemed to have been made
         immediately prior to the close of business on the date of such
         surrender of the shares of Series E Preferred to be converted, and the
         person or persons entitled to receive the shares of Common Stock
         issuable upon such conversion shall be treated for all purposes as the
         record holder or holders of such shares of Common Stock on such date.

         (e) Adjustments to Series E Conversion Price for Diluting Issues.

                    (v) Stock Dividends. If the number of shares of Common Stock
             outstanding at any time after the effectiveness of these
             resolutions is increased by a stock dividend payable in shares of
             Common Stock or by a subdivision or split-up of shares of Common
             Stock or a simlar transaction in respect thereof, then immediately
             effective at the close of business upon the record date fixed for
             the determination of holders of Common Stock entitled to receive
             such stock dividend, subdivision or split-up or similar
             transaction, the Series E Conversion Price shall be

                                       41
<PAGE>

             appropriately decreased so that the number of shares of Common
             Stock issuable on conversion of each share of Series E Preferred
             shall be increased in proportion to such increase of outstanding
             shares of Common Stock. Successive adjustments shall be made upon
             each such stock dividend, subdivision or split or similar
             transaction.

                    (vi) Adjustments for Subdivisions, Combinations, or
             Consolidations of Common Stock. In the event the outstanding shares
             of Common Stock shall be decreased by a subdivision or combination,
             by reclassification or otherwise, into a greater or lesser number
             of shares of Common Stock, the Series E Conversion Price in effect
             immediately prior to such subdivision or combination shall,
             concurrently with the effectiveness of such subdivision,
             combination or consolidation, be proportionately adjusted so that
             the number of shares of Common Stock issuable upon conversion of
             each share of Series E Preferred shall be decreased in proportion
             to such decrease of outstanding shares of Common Stock. Successive
             adjustments shall be made upon each such subdivision, combination
             or reclassification.

                    (vii) Adjustments for Other Distributions. In the event the
             Corporation at any time or from time to time makes, or fixes a
             record date for the determination of holders of Common Stock
             entitled to receive, any distribution payable in securities of the
             Corporation other than shares of Common Stock, then and in each
             such event provision shall be made so that the holders of the
             Series E Preferred shall receive upon conversion thereof, in
             addition to the number of shares of Common Stock receivable
             thereupon, the amount of securities of the Corporation which they
             would have received had their Series E Preferred been converted
             into Common Stock on the date of such event to and including the
             date of conversion, and retained such securities receivable by them
             as aforesaid during such period, subject to all other adjustments
             called for during such period under these resolutions with respect
             to the rights of the holders of the Series E Preferred.

                                       42
<PAGE>

                    (viii) Adjustments for Reorganizations, Reclassifications,
             etc. If the Common Stock issuable upon conversion of the Series E
             Preferred shall be changed into the same or a different number of
             shares of any other class or classes of stock or other securities
             or property, whether by reclassification, a merger or consolidation
             of this Corporation with or into any other entity or entities
             (other than pursuant to a subdivision, combination, stock dividend,
             or other distribution provided for in subsections 3(e)(i), (ii) or
             (iii) above), the Series E Conversion Price then in effect shall,
             concurrently with the effectiveness of such reorganization or
             reclassification, be proportionately adjusted such that the Series
             E Preferred shall be convertible into, in lieu of the number of
             shares of Common Stock which the holders would otherwise have been
             entitled to receive, a number of shares of such other class or
             classes of stock or securities or other property equivalent to the
             number of shares of Common Stock that would have been subject to
             receipt by the holders upon conversion of the Series E Preferred
             immediately before such event; and, in any such case, appropriate
             adjustment shall be made in the application of the provisions
             herein set forth with respect to the rights and interest thereafter
             of the holders of the Series E Preferred, to the end that the
             provisions set forth herein (including provisions with respect to
             changes in and other adjustments of the Series E Conversion Price)
             shall thereafter be applicable, as nearly as may be reasonable, in
             relation to any shares of stock or other property thereafter
             deliverable upon the conversion of the Series E Preferred.
             Successive adjustments shall be made upon each such
             reclassification, merger or consolidation.

                    (v) Adjustments for Issuances Below the Current Market
             Price.

                    (A) Except as provided in subsection (B), if the Corporation
             shall, while there are any shares of the Series E Preferred
             outstanding, issue or sell shares of the Common Stock of the
             Corporation at a price per share less than the then Current Market
             Price (as defined below) in effect immediately prior to such
             issuance or sale, then in each such case, the Series E Conversion
             Price shall be adjusted, effective as of the date of the issuance
             of such shares of the Common Stock of the Corporation, to an amount
             determined by multiplying the Series E Conversion Price in effect
             immediately prior to such issuance or sale by a fraction:

                    (i) the numerator of which shall be (1) the aggregate number
                    of shares of the Common Stock outstanding immediately prior
                    to the issuance of such additional shares of Common Stock,
                    plus (2) the aggregate number of shares of Common Stock then
                    issuable upon conversion of the shares of Series E Preferred
                    outstanding immediately prior to the issuance of such
                    additional shares of

                                       43
<PAGE>

                    Common Stock, plus (3) the number of shares of Common Stock
                    that the net aggregate consideration received by the
                    Corporation for the total number of such additional shares
                    of the Common Stock so issued would purchase at such Series
                    E Conversion Price in effect immediately prior to such
                    issuance, and

                    (ii) the denominator of which shall be (1) the aggregate
                    number of shares of the Common Stock outstanding immediately
                    prior to the issuance of such additional shares of the
                    Common Stock, plus (2) the aggregate number of shares of
                    Common Stock then issuable upon conversion of the shares of
                    Series E Preferred outstanding immediately prior to the
                    issuance of such additional shares of Common Stock, plus (3)
                    the number of such additional shares of the Common Stock so
                    issued.

                    (B) The adjustments contemplated by subsection (A) above
             shall not apply to (i) any issuance of shares of the Common Stock
             to officers, directors, employees, consultants or agents of the
             Corporation or any subsidiary of the Corporation pursuant to any
             stock option plan or arrangement or other equity incentive, bonus,
             or similar plan or arrangement approved by the Board of Directors,
             (ii) the issuance of shares of Common Stock in connection with the
             merger or acquisition of the Corporation or any of its subsidiaries
             with or into an unaffiliated

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<PAGE>

             third party or for purposes of a strategic business alliance with
             an unaffiliated third party, (iii) the issuance of any Common Stock
             issued in connection with an underwritten public offering of such
             securities in which the per share price to the public and any
             underwriting discounts and commissions are determined in a manner
             that is customary for an underwritten offering of similar size and
             composition, or (iv) the issuance of any Common Stock in connection
             with the conversion of the Series B Preferred Stock, Series C
             Preferred Stock, Series D Preferred Stock or Series E Preferred
             Stock.

                    (C) For purposes of this section 3(e)(v), the issuance of
             any warrants, options, subscriptions or purchase rights with
             respect to shares of Common Stock and the issuance of any
             securities convertible into or exchangeable for shares of Common
             Stock, or the issuance of any warrants, options or any rights with
             respect to such convertible or exchangeable securities, shall be
             deemed to be an issuance of shares of Common Stock at the time of
             the issuance thereof if the Net Consideration Per Share (as
             hereinafter defined) which may be received by the Corporation for
             the shares of Common Stock or issuable upon the exercise thereof is
             less than the then Current Market Price at the time of the issuance
             of such warrants, options subscriptions, purchase rights or
             securities. Any obligation, agreement or undertaking to issue
             warrants, options, subscriptions, purchase rights or such
             securities at any time in the future shall be deemed to be an
             issuance at the time such obligation, agreement or undertaking is
             made or arises. Notwithstanding the foregoing, any adjustment made
             to the Series E Conversion Price pursuant to the provisions of this
             section 3(e)(v) which relates to warrants, options, subscriptions
             or purchase rights with respect to shares of Common Stock shall be
             disregarded when, as and if all of such warrants, options,
             subscriptions or purchase rights expire or are canceled without
             being exercised, so that the Series E Conversion Price effective
             immediately upon such cancellation or expiration shall be equal to
             the Series E Conversion Price in effect at the time of the issuance
             of the expired or canceled warrants, options, subscriptions or
             purchase rights,

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<PAGE>

             after taking into account any other adjustments that would have
             been made to the Series E Conversion Price had the expired or
             canceled warrants, options, subscriptions or purchase rights not
             been issued. No adjustment to the Series E Conversion Price shall
             be made pursuant to the provisions of this section 3(e)(v) either
             (x) upon the issuance of any shares of the Common Stock that are
             issued pursuant to the exercise of any warrants, options,
             subscriptions or purchase rights or pursuant to the exercise of any
             conversion or exchange rights of any convertible securities if any
             adjustment shall previously have been made upon the issuance of any
             such warrants, options or subscriptions or purchase rights or upon
             the issuance of any such convertible securities (or upon the
             issuance of any warrants, options or any rights therefor) or (y)
             upon the issuance of any warrants, options, subscription or
             purchase rights or any other securities convertible into or
             exchangeable or exercisable for shares of Common Stock (or upon the
             issuance of any warrants, options or rights to purchase such
             securities) in accordance with subsection (B). Any anti-dilution
             adjustment to any other class or series of warrants, options,
             rights, or convertible securities shall be deemed to be an issuance
             of Common Stock at the time of such adjustment; provided, however,
             that in no event shall the Series E Preferred Stock be subject to
             more than one adjustment as a result of any single anti-dilution
             adjustments to any other security of the Corporation.

                    (D) For purposes of subsection (C), the "Net Consideration
             Per Share" shall mean the amount which is equal to the total amount
             of consideration, if any, received by the Corporation for the
             issuance of warrants, options, subscriptions or other purchase
             rights or convertible or exchangeable securities, plus the minimum
             amount of consideration, if any, payable to the Corporation upon
             exercise or conversion thereof, divided by the aggregate number of
             shares of the Common Stock that would be issued if all such
             warrants, options, subscriptions or other purchase rights or
             convertible or exchangeable securities were exercised, converted or
             exchanged. For purposes of this subsection (D), if part or all of
             the consideration received or to be received by the Corporation in
             connection with the issuance of shares of Common Stock or the
             issuance of any of the securities described in this subsection (D)
             consists of property other than cash, the value of such property
             shall be determined by or at the direction of the Board of
             Directors, in good faith, whereupon such value shall be given to
             such consideration and shall be recorded on the books of the
             Corporation with respect to receipt of such property.

                    (E) For the purpose of any computation under subsection (A)
             the Current Market Price per share of Common Stock on any date
             shall be (i) the last reported sale price, or if none is reported,
             the average of the reported closing bid and asked prices, on all
             domestic securities exchanges on which the Common Stock is listed,
             or (ii) if on any day the Common Stock is not so listed, the sales
             price for the Common Stock as of 4:00 P.M., New York time, as
             reported on the Nasdaq Stock Market,

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<PAGE>

             or (iii) if the Common Stock is not reported on the Nasdaq Stock
             Market, the average of the representative bid and asked quotations
             for the Common Stock as of 4:00 P.M., New York time, as reported on
             the Nasdaq interdealer quotation system, bulletin board,
             over-the-counter market or any similar or successor organization,
             in each such case averaged over a period of 15 trading days prior
             to the day as of which the Current Market Price is being
             determined. If there is no such closing price or closing bid and
             asked prices or the Common Stock is not reported on any such
             exchange or market, the Current Market Price shall be determined in
             any good faith reasonable manner approved by the Board of Directors
             of the Corporation.

         (f) No Impairment.

                    (i) The Corporation will not, by amendment of its
             Certificate of Incorporation or through any reorganization,
             transfer of assets, merger, dissolution, issue or sale of
             securities or any other voluntary action, avoid or seek to avoid
             the observance or performance of any of the terms to be observed or
             performed hereunder by the Corporation but will at all times in
             good faith assist in the carrying out of all the provisions of this
             section 3 and in the taking of all such action as may be necessary
             or appropriate in order to protect the conversion rights of the
             holders of the Series E Preferred against impairment.

                    (ii) The Corporation shall at all times reserve and keep
             available for issuance upon the conversion of the Series E
             Preferred a number of its authorized but unissued shares of Common
             Stock that will from time to time be sufficient to permit the
             conversion of all outstanding shares of Series E Preferred, and
             shall take all action required to increase the authorized number of
             shares of Common Stock if at any time there shall be insufficient
             authorized but unissued shares of Common Stock to permit such
             reservation or to permit the conversion of all outstanding shares
             of Series E Preferred.

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<PAGE>

                    (iii) Any registered holder of Series E Preferred shall be
             entitled to seek an injunction or injunctions to prevent breaches
             of the provisions of this certificate of designation and to enforce
             specifically the terms and provisions of this certificate of
             designation in any court of the United States or any state thereof
             having jurisdiction, this being in addition to any other remedy to
             which such holder may be entitled at law or in equity.

         (g) Certificate as to Adjustments. Upon the occurrence of each
         adjustment or readjustment of the Series E Conversion Price pursuant to
         this section 3, the Corporation, at its expense, shall promptly compute
         such adjustment or readjustment in accordance with the terms hereof and
         furnish to each holder of Series E Preferred a certificate setting
         forth such adjustment or readjustment and showing in detail the facts
         upon which such adjustment or readjustment is based. The Corporation
         shall, upon the written request at any time of any holder of Series E
         Preferred, furnish or cause to be furnished to such holder a like
         certificate setting forth (i) such adjustments and readjustments,(ii)
         the Series E Conversion Price at the time in effect, and (iii) the
         number of shares of

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<PAGE>

         Common Stock and the amount, if any, of other property which at the
         time would be received upon the conversion of Series E Preferred.

         (h) Notices of Record Date. In the event that this Corporation shall
         propose at any time:

                    (i) to declare any dividend or distribution upon its Common
             Stock, whether in cash, property, stock or other securities,
             whether or not a regular cash dividend and whether or not out of
             earnings or earned surplus;

                    (ii) to effect any reclassification or recapitalization or
             other reorganization of its capital stock; or

                    (iii) to merge with or into any other corporation or other
             entity, or sell, lease or convey all or substantially all its
             property or business, or to liquidate, dissolve or wind up;

         then, in connection with each such event, this Corporation shall send
         to the holders of the Series E Preferred shares:

                    (A) at least 10 days' prior written notice of the date on
             which a record shall be taken for such dividend, distribution or
             subscription rights and setting forth a description thereof (and
             specifying the date on which the holders of Common Stock shall be
             entitled thereto) or for determining rights to vote in respect of
             the matters referred to in (iii) above; and

                    (B) in the case of the matters referred to in subsection
             3(h)(ii) or (iii) above, at least 10 days' prior written notice of
             the date when the same shall take place (and specifying the date on
             which the holders of Common Stock shall be entitled to exchange
             their Common Stock for securities or other property deliverable
             upon the occurrence of such event).

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<PAGE>

         Each such written notice shall be given by first class mail, postage
         prepaid, addressed to the holders of Series E Preferred at the address
         for each such holder as shown on the books of this Corporation.

(4) Voting. Except as otherwise required by law, the holders of Series E
Preferred shall not be entitled to vote upon any matter submitted to the
stockholders for a vote except as to matters affecting holders of Series E
Preferred as a class, as set forth in section (5) below.

(5) Protective Provisions. In addition to any other rights provided by law, so
long as any Series E Preferred shall be outstanding, this Corporation shall not,
without first obtaining the affirmative vote or written consent of the holders
of more than 50 percent of such outstanding shares of Series E Preferred:

         (a) amend or repeal any provision of, or add any provision to, this
         Corporation's Certificate of Incorporation or Bylaws if such action
         would alter or change the preferences, rights, privileges or powers of,
         or the restrictions provided for the benefit of, the Series E
         Preferred;

         (b) authorize or issue shares of any class of stock having any
         preference or priority as to dividends or assets superior to or on a
         parity with any such preference or priority of the Series E Preferred,
         or authorize or issue shares of stock of any class or any bonds,
         debentures, notes or other obligations convertible into or exchangeable
         for, or having option rights to purchase, any shares of stock of this
         Corporation having any preference or priority as to dividends or assets
         superior to or on a parity with any such preference or priority of the
         Series E Preferred; or

         (c) reclassify any Common Stock into shares having any preference or
         priority as to dividends or assets superior to or on a parity with any
         such preference or priority of the Series E Preferred.


                                       50
<PAGE>

(6) Status of Converted Stock. In the event any shares of Series E Preferred
shall be converted pursuant to section 3 hereof, the shares so converted shall
be canceled and shall not be issuable by the Corporation.

(7) Residual Rights. All rights accruing to the outstanding shares of this
Corporation not expressly provided for to the contrary herein shall be vested in
the Common Stock.

(8) Consent for Certain Repurchases of Common Stock Deemed to be Distributions.
Each holder of Series E Preferred shall be deemed to have consented to
distributions made by the Corporation in connection with the repurchase of
shares of Common Stock issued to or held by employees or consultants upon
termination of their employment or services pursuant to agreements providing for
such right of repurchase between the Corporation and such persons.

     IN WITNESS WHEREOF, 5B Technologies Corporation has caused its corporate
seal to be hereunto affixed and this certificate to be signed by Glenn Nortman,
its Chief Executive Officer, this 16th day of August, 2001.


                                          5B TECHNOLOGIES CORPORATION


                                          By: /s/ Glenn Nortman
                                              -------------------------------
                                              Glenn Nortman
                                              Chief Executive Officer


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