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                                                                    EXHIBIT 4.5

                         EXCELSIOR-HENDERSON MOTORCYCLE
                             MANUFACTURING COMPANY

                            STATEMENT OF DESIGNATION
                                       OF
                      RIGHTS, PREFERENCES AND LIMITATIONS
                                       OF
                      SERIES C CONVERTIBLE PREFERRED STOCK

     The rights, preferences and limitations of the Series C Convertible 
Preferred Stock are as follows.  All references to Articles and Sections 
herein are solely to Articles and Sections within this Amended Statement of 
Rights, Preferences and Limitations (this "Certificate of Designation").

                           I.  DESIGNATION AND AMOUNT

     Of the 7,000,000 shares of preferred stock that EXCELSIOR-HENDERSON 
MOTORCYCLE MANUFACTURING COMPANY (the "Company") is authorized to issue under 
its Articles of Incorporation, 3,000 shares shall be designated as shares of 
Series C Convertible Preferred Stock of the Company (the "Series C Preferred 
Stock" or "Series C Preferred Shares"), par value $0.01 per share, with a 
face amount per share of $1,000 (the "Face Amount").  The relative rights and 
preferences of the Series C Preferred Shares are as set forth in this 
Certificate of Designation.

                            II.  CERTAIN DEFINITIONS

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

     "Anniversary Date" means September 3, 1999. 

     "Business Day" means any day that the principal exchange on which the 
Common Stock is traded is open for business. 

     "Closing Bid Price" means, for any security as of any date, the closing 
bid price of such security on the principal securities exchange or trading 
market where such security is listed or traded as reported by Bloomberg 
Financial Markets or a comparable reporting service of national reputation 
selected by the Company and reasonably acceptable to the Holders then holding 
a majority of the outstanding shares of Preferred Stock ("Majority Holders"), 
if Bloomberg Financial Markets is not then reporting closing bid prices of 
such security (collectively, "Bloomberg"), or if the foregoing does not 
apply, the last reported sale price of such security in the over-the-counter 
market on the electronic bulletin board of such security as reported by 
Bloomberg, or, if no sale price is reported 

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for such security by Bloomberg, the average of the bid prices of any market 
makers for such security that are listed in the "pink sheets" by the National 
Quotation Bureau, Inc.  If the Closing Bid Price cannot be calculated for 
such security on such date on any of the foregoing bases, the Closing Bid 
Price of such security on such date shall be the fair market value as 
mutually determined by the Company and the Majority Holders, or, if they are 
unable to agree on such value, it shall be determined by an investment 
banking firm selected by the Company and reasonably acceptable to the 
Majority Holders.

     "Closing Date" means the date on which the Series C Preferred Shares are 
initially issued.

     "Closing Price" means $9.0208 (the average Closing Bid Price for the 
three (3) consecutive Business Days ending one Business Day prior to the 
filing of the Certificate of Designation).

     "Common Stock" means the common stock, $0.01 par value, of the Company. 

     "Conversion Price", subject to the adjustments provided for in Article X 
hereof, means (1) on and prior to the Anniversary Date, $9.9229 
[110% of the Closing Price], and (2) beginning on the day following the 
Anniversary Date, the lesser of (i) $9.9229 [110% of the Closing Price] and 
(ii) the Market Price at the time of conversion. Notwithstanding the 
foregoing, after the Anniversary Date, if the Market Price is less than $5.00 
per Share of Common Stock, the Conversion Price shall equal 105% of the 
Market Price.

     "Effective Date" means October 9, 1998.

     "Holders" means the initial Holders of the Series C Preferred Stock and 
their permitted transferees.

     "majority of the outstanding shares of Series C Preferred Stock" means 
greater than 66.6% of the outstanding shares of Preferred Stock.

     "Market Price" means the lowest volume weighted average price of the 
Common Stock during any period of five (5) consecutive Business Days during 
the twenty (20) consecutive Business Day period ending on the day prior to 
the Conversion Date.

     "Maximum Share Amount" shall be calculated on the Anniversary Date, and 
shall mean the lesser of (a) 2,600,000 shares of Common Stock, or (b) the 
quotient resulting from  (i) $13,000,000 less  the aggregate Face Amount of 
all shares of the Series B Preferred Stock and Series C Preferred Stock, 
which have converted into shares of Common Stock on or prior to the 
Anniversary Date, divided by (ii) $5.00, subject to adjustments for stock 
dividends, stock splits, combinations or similar events.

     "Preferred Stock" means shares of the Series B Preferred Stock and the 
Series C Preferred 

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Stock.

     "Registration Statement" means a registration statement filed with the 
Securities and Exchange Commission under the Securities Act of 1933, as 
amended.

     "Series B Preferred Stock" means the shares of Series B Convertible 
Preferred Stock issued pursuant to the terms of the Securities Purchase 
Agreement.

     "Second Closing Warrants" means certain stock purchase warrants to 
acquire shares of Common Stock issued by the Company to the initial Holders 
at the Second Closing (as defined in the Securities Purchase Agreement).

     "Securities Purchase Agreement" means the Securities Purchase Agreement 
referencing this Certificate of Designation, among the Company and the 
purchasers named therein, as amended from time to time in accordance with the 
terms thereof.

     "Warrants" means the First Closing Warrants (as defined in Article 
V.B.(ii) hereof), and the Second Closing Warrants.

                                III.  DIVIDENDS

     The Series C Preferred Stock will be entitled to dividends paid on the 
Common Stock, with such dividends calculated as if the Series C Preferred 
Stock had been converted to Common Stock at the then-applicable Conversion 
Price on the date of declaration of such dividend.

                                IV.  CONVERSION

     A.   CONVERSION AT THE OPTION OF HOLDER.  Subject to Article V(B), on 
and following the Closing Date, each Holder may, at any time and from time to 
time, convert all or any portion of the Face Amount (plus any other amounts 
payable thereon, including, without limitation, payments due under Section 2 
of the Registration Rights Agreement and Conversion  Default Payments, in 
each case, to the extent not paid by the Company in cash (the "Additional 
Amounts")) of its shares of Series C Preferred Stock into a number of fully 
paid and nonassessable shares of Common Stock determined by dividing the 
aggregate Face Amount of the Series C Preferred Shares being converted 
(including any Additional Amounts) by the then applicable Conversion Price, 
subject to adjustment as provided in Article X; provided, however, that, in 
no event shall a Holder of shares of Series C Preferred Stock be entitled to 
convert any such shares to the extent, but only to the extent, that (x) the 
number of shares of Common Stock beneficially owned by the Holder and its 
affiliates (other than shares of Common Stock which may be deemed 
beneficially owned through the ownership of the unconverted portion of the 
shares of Series C Preferred Stock or unexercised portion of the Second 
Closing Warrants or any other securities containing analogous limitations) 
plus (y) the 

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number of shares of Common Stock issuable upon the conversion of the shares 
of Series C Preferred Stock with respect to which the determination of this 
proviso is being made, would result in beneficial ownership by a Holder and 
such Holder's affiliates of more than 4.99% of the outstanding shares of 
Common Stock.  For purposes of the proviso to the immediately preceding 
sentence, beneficial ownership shall be determined in accordance with Section 
13(d) of the Securities Exchange Act of 1934, as amended, and Rules 13(d) 
through (g) thereunder, except as otherwise provided in clause (x) of such 
proviso. 

     B.   MANDATORY CONVERSION.  So long as, for a period of thirty (30) 
Business Days prior to delivery of a Mandatory Conversion Notice (as defined 
below), and continuing through the Mandatory Conversion Date (as defined 
below) (i) all of the shares of Common Stock issuable upon conversion of all 
outstanding shares of Series C Preferred Stock and all outstanding shares of 
Series B Preferred Stock are then (x) authorized and reserved for issuance, 
(y) registered for resale under the 1933 Act by the holders of the Series C 
Preferred Stock and the Series B Preferred Stock (or may otherwise be resold 
publicly without restriction) and (z) eligible to be traded on the Nasdaq 
National Market ("Nasdaq"), the New York Stock Exchange ("NYSE"), the 
American Stock Exchange ("AMEX") or Nasdaq SmallCap Market, or any successor 
national securities exchange or market (collectively, a "National Exchange") 
and (ii) there is not then a continuing Redemption Event and the Maximum 
Share Limit has not been reached (unless the Share Limit Waiver (as defined 
below) has been obtained), the Company shall be entitled, on any date that 
the average of the Closing Bid Prices of the Common Stock during the ten (10) 
consecutive Business Day period ending on the Business Day immediately 
preceding such date of determination is equal to or greater than 200% of the 
Closing Price (subject to adjustment in accordance with Article X hereof), to 
deliver a written notice to the Holders requiring the Holders to convert all, 
but not less than all, of the Series C Preferred Shares.  Such conversion 
shall be on a Business Day designated in such notice, which date (the 
"Mandatory Conversion Date") shall be no earlier than twenty (20) Business 
Days and no later than twenty-five (25) Business Days following the date of 
such notice (such notice, a "Mandatory Conversion Notice").  Notwithstanding 
anything herein to the contrary, no mandatory conversion will be required, 
and the applicable Mandatory Conversion Notice shall be of no further force 
and effect, if on the Business Day immediately preceding the Mandatory 
Conversion Date, the Closing Bid Price of the Common Stock is not equal to at 
least 175% of the Closing Price.  The mechanics of such conversion shall be 
in accordance with Section IV(C), except that each Holder shall be deemed to 
have delivered a Notice of Conversion, with the Conversion Date being the 
Mandatory Conversion Date specified in the Mandatory Conversion Notice.

     C.   MECHANICS OF CONVERSION.  To convert the Series C Preferred Shares, a
Holder shall: (i) fax (or deliver by other means resulting in notice) to the
Company a copy of the fully executed Notice of Conversion in the form of Exhibit
H to the Securities Purchase Agreement, and (ii) surrender or cause to be
surrendered to the Company or its transfer agent (the "Transfer Agent") (or
satisfy the provisions of Article XIII(A), if applicable) the certificates
representing the Series C Preferred Stock being converted (the "Series C
Preferred Stock Certificates") and the original 

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executed version of the Notice of Conversion as soon as practicable 
thereafter.  The date the Holder delivers to the Company the Notice of 
Conversion described in clause (i) or such later date specified in the Notice 
of Conversion shall be the "Conversion Date".  In the case of fax or 
messenger delivery, delivery shall be deemed made on the date of such fax or 
messenger delivery.

     D.   TIMING OF CONVERSION.  No later than the third Business Day 
following the Conversion Date (the "Delivery Date"), provided that the 
Company's Transfer Agent has received prior to such date the Series C 
Preferred Stock Certificates (or the Holder has satisfied the provisions of 
Article XIII(A), if applicable), the Company shall cause the Transfer Agent 
to issue and deliver to the Holder (or otherwise at such Holder's direction) 
that number of shares of Common Stock issuable upon conversion of the number 
of Series C Preferred Shares being converted, if applicable, and a new 
certificate representing the Series C Preferred Stock not converted by such 
Holder.  The person or persons entitled to receive shares of Common Stock 
issuable upon such conversion shall be treated for all purposes as the record 
holder or holders of such shares at the close of business on the Conversion 
Date, unless the Notice of Conversion is revoked as provided in Article V(E).  
If Series C Preferred Stock Certificates are not received (or the provisions 
of Article XIII(A) are not satisfied) prior to 2:00 p.m. Eastern Time on the 
Business Day prior to the Delivery Date, the Delivery Date shall be extended 
until the Business Day (or, if received after 2:00 p.m. Eastern Time, the 
second Business Day) following the date of surrender to the Company of  
Series C Preferred Stock Certificates to be converted or satisfaction of the 
provisions of Article XIII(A), if applicable.

     E.   CONTINUING RIGHTS.  In addition to any other remedies which may be 
available to the Holder, in the event the Company fails for any reason to 
effect or to cause the Transfer Agent to effect delivery to the Holder of 
certificates representing the shares of Common Stock receivable upon 
conversion of the Series C Preferred Shares by the Business Day following the 
Delivery Date (which certificates shall be unlegended as and when required 
pursuant to the Securities Purchase Agreement, the Registration Rights 
Agreement entered into in connection with the Securities Purchase Agreement 
by and among the Company and the other signatories thereto (the "Registration 
Rights Agreement") and this Certificate of Designation), the Holder shall, 
unless the Holder otherwise elects to retain its status as a holder of Common 
Stock by so notifying the Company and the Transfer Agent, regain the rights 
of a Holder with respect to such unconverted shares of Series C Preferred 
Stock and the Company shall immediately cause the Transfer Agent to return 
the subject Series C Preferred Stock Certificates and other conversion 
documents, if any, delivered by Holder, to the Holder, or, if shares of 
Series C Preferred Stock have not been surrendered, adjust its records to 
reflect that such shares of Series C Preferred Stock have not been converted; 
provided, however, that the Company shall remain liable for payment of the 
amounts determined pursuant to Article VI(A) hereof for each day falling 
between the Business Day following the Delivery Date and the date the 
revocation notice is received by the Company, and shall also remain liable 
for any damages suffered by Holder.

     F.   STAMP, DOCUMENTARY AND OTHER SIMILAR TAXES.  The Company shall pay 
all stamp, 

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documentary, issuance and other similar taxes which may be imposed with 
respect to the issuance and delivery of the shares of Common Stock pursuant 
to conversion of the Series C Preferred Stock; provided that the Company will 
not be obligated to pay stamp, transfer or other taxes resulting from the 
issuance of Common Stock to any person other than the registered holder of 
the Series C Preferred Stock.

     G.   NO FRACTIONAL SHARES.  No fractional shares of Common Stock are to 
be issued upon the conversion of Series C Preferred Stock, but the Company 
shall make a cash payment equal to such fraction multiplied by the Closing 
Bid Price on the Conversion Date in respect of any fractional share which 
would otherwise be issuable; provided that in the event that sufficient funds 
are not legally available for the payment of such cash adjustment any 
fractional shares of Common Stock shall be rounded up to the next whole 
number.

     H.   ELECTRONIC TRANSMISSION.  In lieu of delivering physical 
certificates representing the Common Stock issuable upon conversion, provided 
the Transfer Agent is participating in the Depository Trust Company ("DTC") 
Fast Automated Securities Transfer program, upon request of a Holder, the 
Company shall use its commercially reasonable efforts to cause the Transfer 
Agent to electronically transmit the Common Stock issuable upon conversion to 
the Holder by crediting the account of a prime broker designated by the 
Holder with DTC through its Deposit Withdrawal Agent Commission ("DWAC") 
system.  In the case of electronic transmission of such Common Stock, the 
Company or the Transfer Agent shall, if applicable, within three (3) Business 
Days issue a new certificate representing the Series C Preferred Stock not 
converted pursuant to any Notice of Conversion.

     I.   CASH CONVERSION.  Following the Anniversary Date, so long as (i) 
for at least thirty (30) Business Days prior to the date of any Cash 
Conversion (as defined below) all of the shares of Common Stock issuable upon 
conversion of all outstanding shares of Series C Preferred Stock and all 
outstanding shares of Series B Preferred Stock are then (x) authorized and 
reserved for issuance, (y) registered for resale under the 1933 Act by the 
holders of the Series C Preferred Stock and the Series B Preferred Stock (or 
may otherwise be resold publicly without restriction) and (z) eligible to be 
traded on a National Exchange and (ii) there is not then a continuing 
Redemption Event, in lieu of honoring Notices of Conversion by delivery of 
shares of Common Stock on the Delivery Date in accordance with Section IV(D), 
the Company shall, subject to the notice requirement set forth in the last 
sentence of this Section IV(I), be entitled to make a cash payment ("Cash 
Conversion") in an amount equal to (a) the number of shares of Common Stock 
deliverable to a Holder pursuant to the Notice of Conversion multiplied by 
(b) the average Closing Bid Price of the Common Stock for the five 
consecutive Business Days preceding the Conversion Date.  The number of 
shares of Common Stock that would have been issued absent any such Cash 
Conversion will be deemed to have been issued for purposes of calculating the 
Maximum Share Amount.  If the Company desires to effect Cash Conversions, it 
shall notify the Holder subject thereto at least five Business Days prior to 
the first date during which Cash Conversions will be effected, and, unless 
waived by the Company, 

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during the period specified in such notice, not to exceed (with respect to 
any one notice) thirty (30) days, only Cash Conversions will be permitted.

            V.  RESERVATION OF AUTHORIZED SHARES OF COMMON STOCK;
                  LIMITATION ON NUMBER OF CONVERSION SHARES

     A.   RESERVATION OF COMMON STOCK.  Subject to the provisions of this 
Article V, and subject to the Maximum Share Amount (unless the Stockholder 
Approval (as defined herein) has been obtained) the Company shall at all 
times reserve and keep available out of its authorized but unissued shares of 
Common Stock a sufficient number of shares of Common Stock to provide for the 
conversion of all outstanding Series C Preferred Shares and the exercise of 
all Second Closing Warrants (at the then-current Conversion Price and 
Exercise Price, respectively) in accordance with Section 4.11 of the 
Securities Purchase Agreement (the "Reserved Amount").  The Reserved Amount 
shall be increased from time to time in accordance with the Company's 
obligations pursuant to 4.11 of the Securities Purchase Agreement.  In 
addition, if the Company shall issue any securities or make any change in its 
capital structure which would change the number of shares of Common Stock 
into which each share of the Series C Preferred Stock shall be convertible at 
the then current Conversion Price, the Company shall at the same time also 
make proper provision so that thereafter there shall be a sufficient number 
of shares of Common Stock authorized and reserved, free from preemptive 
rights, for conversion of the outstanding Series C Preferred Stock.

     B.   LIMITATION ON NUMBER OF COMMON SHARES TO BE ISSUED.

          (i)    Notwithstanding anything in this Certificate of Designation 
to the contrary, the Series C Preferred Stock shall not be convertible into 
an aggregate number of shares in excess of the Maximum Share Amount, subject 
to adjustments for stock dividends, stock splits, combinations or similar 
events, and upon issuance of Common Shares in conversion of the Series C 
Preferred Stock equal to the Maximum Share Amount, the Series C Preferred 
Stock shall, from that time forward, cease to be convertible into Common 
Stock in accordance with the terms of Article IV, unless (a) the Company, at 
its sole option, shall have notified the Holders that the Company will 
continue to honor conversions of Series C Preferred Stock into Common Stock, 
and (b) either (1) any necessary stockholder approval required by the Nasdaq 
(or such other principal exchange upon which the Common Stock is then 
trading) for the issuance of shares in excess of the Maximum Share Amount has 
been obtained or duly waived by such exchange, and evidence of such approval 
satisfactory to the Holders has been delivered to the Holders or (2) the 
Company can issue additional shares without violating National Association of 
Securities Dealers, Inc. ("NASD") rules and regulations (but only to the 
extent such rules or regulations would not be violated) (satisfaction of 
clauses (a) or (b) of this Section V(B)(i) being referred to herein as a 
"Share Limit Waiver").

          (ii)   Following any Stockholder Approval Trigger Date, the Company 
shall solicit 

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by proxy the authorization (the "Stockholder Approval") by the stockholders 
of the Company of the issuance of shares of Common Stock upon (x) the 
conversion of shares of Series C Preferred Stock pursuant to the terms 
hereof, (y) the exercise of the Second Closing Warrants pursuant to the terms 
thereof, and (z) the conversion and/or exercise of any other securities 
(including, but not limited to, the shares of Series B Preferred Stock and 
the Warrants (the "First Closing Warrants") issued by the Company at the 
First Closing (as defined in the Securities Purchase Agreement)) which would 
be integrated with the Series C Preferred Stock and Second Closing Warrants 
for purposes of the rules or regulations of any stock exchange, interdealer 
quotation system or other self-regulatory organization with jurisdiction over 
the Company or any of its securities (the "Other Securities") representing in 
the aggregate in excess of twenty (20%) percent of the outstanding shares of 
Common Stock on September 3, 1998 (the "20% Limit") for the purpose of 
eliminating any prohibitions under the rules or regulations of any stock 
exchange, interdealer quotation system or other self-regulatory organization 
with jurisdiction over the Company or any of its securities on the Company's 
ability to issue shares of Common Stock in excess of such 20% Limit.  The 
Company shall thereafter use its commercially reasonable efforts to obtain 
the Stockholder Approval no later than ninety (90) days following the 
Stockholder Approval Trigger Date.  The failure to obtain Stockholder 
Approval shall not constitute a breach of the Company's obligations 
hereunder.  "Stockholder Approval Trigger Date" shall mean any date following 
the Anniversary Date and following the date (i) on which the Holders have, in 
the aggregate, converted more than 50% of the sum of the original Face Amount 
of all of the Series C Preferred Stock issued on the Closing Date plus the 
original face value of all of the Series B Preferred Stock issued at the 
First Closing under the Securities Purchase Agreement, and (ii) on which the 
sum of (a) the number of shares of Common Stock issued upon conversion of the 
Series C Preferred Stock and exercise of the Second Closing Warrants on the 
date of calculation, plus (b) the number of shares of Common Stock issuable 
upon conversion of the then outstanding Series C Preferred Stock at the 
Market Price and upon exercise of the Second Closing Warrants at the Exercise 
Price on the date of calculation,  plus (c) the number of shares of Common 
Stock, if any, issued upon conversion and/or exercise of the Other Securities 
on the date of calculation, plus (d) the number of shares of Common Stock, if 
any, issuable upon conversion  and/or exercise of the Other Securities at the 
conversion or exercise price that would be in effect on the date of 
calculation, is, in the aggregate, in excess of the 20% Limit.

     C.   REDEMPTION OBLIGATION FOLLOWING ISSUANCE OF MAXIMUM SHARE AMOUNT. 
Within 90 days of the date that the Maximum Share Amount of Common Stock has 
been issued (or has been deemed to have been issued as a result of Cash 
Conversions), the Company must (a) to the extent the conditions set forth in 
clause (b) of Article V(B)(i), have been satisfied, provide the Share Limit 
Waiver to each Holder, and thereafter permit conversions of the Series C 
Preferred Stock into shares of Common Stock in excess of the Maximum Share 
Amount, or (b) redeem all of the outstanding shares of  Series C Preferred 
Stock, with the redemption amount for each share of Series C Preferred Stock 
being equal to the Face Amount thereof.  The Share Limit Waiver must be 
provided within two (2) Business Days following the issuance of the Maximum 
Share Amount of Common Stock unless the Company delivers to each Holder a 
certificate signed by its Chief Financial Officer or a Chief Executive 
Officer certifying that the Company will exercise commercially reasonable 
best 

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efforts to obtain sufficient financing to permit the redemption of all of the 
outstanding shares of Series C Preferred Stock during the 90 day period 
referenced in the preceding sentence. Unless the Share Limit Waiver is 
delivered on the Business Day following the date that the Maximum Share 
Amount of Common Stock has been issued, any conversions of Series C Preferred 
Shares into shares of Common Stock in excess of the Maximum Share Amount 
(after the Share Limit Waiver has been delivered to each Holders) shall be at 
the lowest applicable Conversion Price, as chosen in the sole discretion of 
each Holder, in effect from the date that the Maximum Share Amount was 
reached until the date of delivery of the Share Limit Waiver to such Holder.

     D.   ALLOCATION OF RESERVED AMOUNT, MAXIMUM SHARE AMOUNT. The Maximum 
Share Amount (including any increases thereto) shall be allocated by the 
Company pro rata among the holders of Series C Preferred Stock and Series B 
Preferred Stock based on the number of shares of Series C Preferred Stock and 
Series B Preferred Stock issued to each holder.  Each increase to the Maximum 
Share Amount shall be allocated pro rata among the holders of Series C 
Preferred Stock and Series B Preferred Stock based on the number of shares of 
Series C Preferred Stock and Series B Preferred Stock held by each holder at 
the time of the increase in the Maximum Share Amount.  In the event a holder 
shall sell or otherwise transfer any of such holder's shares of Series B 
Preferred Stock or Series C Preferred Stock, each transferee shall be 
allocated a pro rata portion of such transferor's Maximum Share Amount.  Any 
portion of the Maximum Share Amount which remains allocated to any person or 
entity which does not hold any Series B Preferred Stock or Series C Preferred 
Stock shall be allocated to the remaining holders of shares of Series C 
Preferred Stock and Series B Preferred Stock, pro rata based on the number of 
shares of Series C Preferred Stock and Series B Preferred Stock then held by 
such holders.

          The Reserved Amount (including any increases thereto) shall be 
allocated by the Company pro rata among the holders of Series C Preferred 
Shares based on the number of shares of Series C Preferred Shares issued to 
each holder.  Each increase to the Reserved Amount shall be allocated pro 
rata among the holders of Series C Preferred Shares based on the number of 
shares of Series C Preferred Shares held by each holder at the time of the 
increase in the Reserved Amount.  In the event a holder shall sell or 
otherwise transfer any of such holder's shares of Series C Preferred Shares, 
each transferee shall be allocated a pro rata portion of such transferor's 
Reserved Amount.  Any portion of the Reserved Amount which remains allocated 
to any person or entity which does not hold any Series C Preferred Shares 
shall be allocated to the remaining holders of shares of Series C Preferred 
Shares, pro rata based on the number of shares of Series C Preferred Shares 
then held by such holders.

                            VI.  FAILURE TO CONVERT

     A.   If, at any time, (x) a Notice of Conversion has been sent to the 
Company and the 

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Company fails for any reason to deliver, on or prior to the third Business 
Day following the expiration of the Delivery Date for such conversion (said 
period of time being the "Extended Delivery Period"), such number of shares 
of Common Stock to which such Holder is entitled (taking into account the 
limitations on conversions imposed by such Holder's allocated portion of the 
Maximum Share Amount) upon such conversion, or (y) the Company provides 
notice (including by way of public announcement) (the "Refusal Notice") to 
any Holder at any time of its intention not to issue shares of Common Stock 
upon exercise by any Holder of its conversion rights in accordance with the 
terms of this Certificate of Designation (each of (x) and (y) being a 
"Conversion Default"), then the Company shall pay to the affected Holder, in 
the case of a Conversion Default described in clause (x) above, and to all 
Holders of Series C Preferred Stock, in the case of a Conversion Default 
described in clause (y) above, an amount equal to 1% of the Face Amount of 
the Series C Preferred Stock held by such Holder with respect to which the 
Conversion Default exists (which amount shall be deemed to be the aggregate 
Face Amount of all outstanding Series C Preferred Stock in the case of a 
Conversion Default described in clause (y) above) for each day thereafter 
until the Cure Date. "Cure Date" means (i) with respect to a Conversion 
Default described in clause (x) of its definition or if a Conversion Notice 
has been submitted and the Company has issued a Refusal Notice, the date the 
Company effects the conversion of the portion of the Series C Preferred Stock 
submitted for conversion and (ii) if no Conversion Notices have been 
submitted, with respect to a Conversion Default described in clause (y) of 
its definition, the date the Company undertakes in writing to issue Common 
Stock in satisfaction of all conversions of Series C Preferred Stock in 
accordance with the terms of this Certificate of Designation. The Company 
shall promptly provide each Holder with notice of the occurrence of a 
Conversion Default with respect to any of the other Holders.

     B.   The payments to which a Holder shall be entitled pursuant to this 
Section VI(A) are referred to herein as "Conversion Default Payments." 
Conversion Default Payments shall be paid in cash.  Such payment shall be 
made in accordance with and be subject to the provisions of Article XIII(B).

                     VII.  REDEMPTION DUE TO CERTAIN EVENTS

     A.   Redemption Events.  A "Redemption Event" means any one of the 
following (after expiration of any applicable cure period):

          (i)    The Company fails, and any such failure continues uncured 
for seven (7) Business Days after the Company has been notified thereof in 
writing by the Holder, to (x) remove any restrictive legend on any 
certificate for any shares of Common Stock issued after the Effective Date to 
the Holders upon conversion of the Series C Preferred Stock or the Series B 
Preferred Stock or upon exercise of the Warrants, or (y) to transfer or cause 
the Transfer Agent to transfer any certificate for shares of Common Stock 
issued to a Holder upon conversion of the Series C Preferred Stock or the 
Series B Preferred Stock, in each case as and when required by this 
Certificate of Designation, the Warrants, the Securities Purchase Agreement 
or the Registration Rights Agreement;

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or

          (ii)   The Company fails to fulfill its obligations pursuant to 
Section 4.11 or 4.13 of the Securities Purchase Agreement (or makes any 
announcement, statement or threat that it does not intend to honor the 
obligations described in this paragraph) and any such failure shall continue 
uncured (or any announcement, statement or threat not to honor its 
obligations shall not be rescinded in writing) for ten (10) days after the 
Corporation shall have been notified thereof in writing by any holder of 
Series C Preferred Stock; or

          (iii)  The Company fails to make any redemption payment due 
pursuant to Article V(C) hereof or Article V(C) of the Amended Certificate of 
Designation with respect to the Series B Preferred Stock when due; or

          (iv)   The Registration Statement filed by the Company pursuant to 
the Registration Rights Agreement and declared effective by the SEC on the 
Effective Date lapses in effect (or sales of all of the Registrable 
Securities cannot be made by the Holders thereunder, whether by reason of the 
Company's failure to amend or supplement the prospectus included therein in 
accordance with the Registration Rights Agreement or otherwise) for more than 
forty-five (45) consecutive days or an aggregate of seventy-five (75) days in 
any twelve (12) month period after the Effective Date, or the Common Stock is 
not listed or included for quotation on a National Exchange or that trading 
is halted after the Effective Date for more than an aggregate of twenty (20) 
Business Days in any twelve (12) month period.

     B.   REDEMPTION OF HOLDER'S SHARES.  Upon the occurrence and during the 
continuation of any Redemption Event, the Company shall, as to each Holder of 
the then outstanding shares of Series C Preferred Stock who have given 
written notice (the "Optional Redemption Notice") to the Company of such 
Redemption Event, purchase each such Holder's shares of Series C Preferred 
Stock for an amount per share equal to the greater of (1) 130% multiplied by 
the sum of (a) the Face Amount of the shares to be redeemed, plus (b) any 
other amounts payable thereon (including without limitation payments due 
under Section 2 of the Registration Rights Agreement and Conversion Default 
Payments) through the date of payment of the Optional Redemption Amount (as 
defined herein) (the "Optional Redemption Date") and (2) the "Parity Value" 
of the shares to be redeemed (the greater of such amounts being the "Optional 
Redemption Amount"); provided that if such Redemption Event is pursuant to 
Article VII(A)(iv), the Company may, at its sole option, in lieu of the 
foregoing purchase, pay the Holder an amount equal to the Default Amount (as 
defined below) multiplied by the number of shares of Series C Preferred Stock 
held by such holder on the date of the Optional Redemption Notice. "Parity 
Value" means the product of (a) the number of shares of Common Stock issuable 
upon conversion of such shares at such time (treating the Trading Day 
immediately preceding the Optional Redemption Date as the "Conversion Date" 
(as hereinafter defined), unless the Redemption Event arises as a result of a 
breach in respect of a specific Conversion Date in which case such Conversion 
Date shall be the Conversion Date), multiplied by 

                                       11
<PAGE>

(b) the highest Closing Bid Price for the Common Stock on the principal 
trading market for such shares from the period beginning on the date of the 
first occurrence of the Redemption Event and ending on such Conversion Date.  
"Default Amount" shall mean Two Hundred  U.S. Dollars ($200), or such lesser 
amount as would be determined in accordance with Section 2(c) of the 
Registration Rights Agreement. 

          In the case of a Redemption Event, if the Company fails to pay the 
Default Amount or the Optional Redemption Amount, as applicable, for each 
share within five (5) business days of written notice that such amount is due 
and payable, then (assuming there are sufficient authorized shares) in 
addition to all other available remedies, each holder of Series C Preferred 
Stock shall have the right at any time, so long as the Redemption Event 
continues, to require the Company, upon written notice, to immediately issue 
(in accordance with and subject to the terms of Article V above), in lieu of 
the Default Amount or the Optional Redemption Amount, as applicable, with 
respect to each outstanding share of Series C Preferred Stock held by such 
holder, the number of shares of Common Stock of the Company equal to the 
Default Amount or the Optional Redemption Amount, as applicable, divided by 
any Conversion Price, as chosen in the sole discretion of the Holder, in 
effect from the date of the Redemption Event until the date of exercise of 
such rights by Holder.  Payment of the Default Amount shall not affect the 
Holder's ongoing rights with respect to the then outstanding shares of Series 
C Preferred Stock or the rights of such holders to pursue alternate damages 
in respect of the events giving rise to such payments.

     C.   OPTIONAL REDEMPTION BY THE COMPANY.  So long as (i) for at least 
thirty (30) Business Days prior to the date of any date of redemption under 
this Article VII(C) all of the shares of Common Stock issuable upon 
conversion of all outstanding shares of Series C Preferred Stock and all 
outstanding shares of Series B Preferred Stock are then (x) authorized and 
reserved for issuance, (y) registered for resale under the 1933 Act by the 
holders of the Series C Preferred Stock and Series B Preferred Stock (or may 
otherwise be resold publicly without restriction) and (z) eligible to be 
traded on a National Exchange and (ii) there is not then a continuing 
Redemption Event or Shareholder Approval Trigger Date (unless  the Share 
Limit Waiver has occurred), the Company may, at its option, upon twenty (20) 
Business Days' notice, redeem the Series C Preferred Stock, as follows:  (x) 
beginning upon the date that the Company completes a public offering of its 
Common Stock of at least $20,000,000 underwritten by an investment banking 
firm that holds a seat on the NYSE, and (y) on any date following the 
Anniversary Date that the average Closing Bid Price of the Common Stock over 
the immediately preceding ten trading day period is less than $5.00 per share 
(as adjusted for any stock dividends, stock splits, combinations, or similar 
events), the Company may, at its option, redeem for cash out of funds legally 
available therefor, all (but not less than all) of the outstanding Series C 
Preferred Shares at 120% of the Face Amount of such shares of Series C 
Preferred Stock plus any other amounts payable thereon.

          Nothing in this Article VII(C) shall prohibit conversions of Series 
C Preferred Stock otherwise permitted pursuant to the terms of this 
Certificate of Designation during the pendency of any notice of optional 
redemption by the Company hereunder.

                                       12
<PAGE>

     D.   MATURITY; REQUIRED REDEMPTION.  Subject to the limitations 
contained in Article VII(F) hereof and so long as there is not then a 
continuing Redemption Event, each share of Series C Preferred Stock 
outstanding on September 3, 2001 (the "Maturity Date") will be redeemed at 
the Company's sole option, (a) in cash equal to the aggregate face value 
thereof and any other amounts payable thereon or, (b) by delivery of a number 
of shares of Common Stock issuable upon conversion of all of the Series C 
Preferred Stock at the then-applicable Conversion Price, including any 
adjustment under Article X; provided that (i) any necessary approval for the 
issuance of additional shares has been obtained if the Maximum Share Amount 
has been reached (or will be exceeded as a result of any conversion at 
maturity) or the Company is able to issue shares of Common Stock without 
violating applicable rules of the principal National Exchange on which the 
Common Stock is then traded (but only to the extent such rules would not be 
violated), and (ii) all shares of Common Stock issuable upon conversion of 
all outstanding shares of Series C Preferred Stock are then (x) authorized 
and reserved for issuance, (y) registered under the Securities Act for resale 
by all Holders of such Series C Preferred Shares and (z) eligible to be 
traded on a National Exchange.  The Maturity Date shall be delayed by one (1) 
Business Day each for each Business Day occurring prior thereto and prior to 
the full conversion of the Series C Preferred Stock that any Redemption Event 
(as defined in Article V(A)) exists, without regard to whether any cure 
periods shall have run, and for each Business Day that the Registration 
Statement is not effective or that the Common Stock is not then listed for 
trading beyond days during which such events are permitted without penalty 
pursuant to the Registration Rights Agreement.   The Company will notify each 
Holder at least ten Business Days prior to the Maturity Date if the Company 
intends to redeem all or any portion of the Series C Preferred Stock held 
such Holder in cash.

     E.   REDEMPTION DEFAULTS.  If the Company fails to pay any Holder the 
redemption consideration with respect to any share of Series C Preferred 
Stock, as provided in this Article VII, within five (5) Business Days of its 
receipt or delivery, as applicable, of a notice requiring such redemption 
(the "Redemption Notice"), then each Holder (i) shall be entitled to interest 
on the redemption consideration not paid at a per annum rate equal to the 
lower of (x) the sum of prime rate published from time to time by the Wall 
Street Journal plus three percent (3%) and (y) the highest interest rate 
permitted by applicable law from the date of the Redemption Notice until the 
date of redemption hereunder.  In the event the Company is not able to redeem 
all of the shares of Series C Preferred Stock subject to Redemption Notices, 
the Company shall redeem shares of Series C Preferred Stock from each Holder, 
pro rata, based on the total number of shares of Series C Preferred Stock 
included in the Redemption Notice relative to the total number of shares of 
Series C Preferred Stock in all of the Redemption Notices.  In the case of a 
Redemption Event, if the Company fails to pay the Optional Redemption Amount 
for each share for any reason (including, without limitation, the 
circumstances specified in paragraph VII(F)), within five (5) Business Days 
of the applicable Redemption Notice then (assuming there are sufficient 
authorized shares) in addition to all other available remedies, each Holder 
of Series C Preferred Stock shall have the right at any time, so long as the 
Redemption Event continues, to convert, upon written notice, in lieu of the 
Optional 

                                       13
<PAGE>

Redemption Amount, each outstanding share of Series C Preferred Stock held by 
such Holder, into the number of shares of Common Stock of the Company equal 
to the Optional Redemption Amount, divided by the Conversion Price then in 
effect, subject in all cases to each such Holder's Maximum Share Amount.

     F.   CAPITAL IMPAIRMENT.  In the event that any Section 302A.551 of the 
Minnesota  Business Corporation Act ("BCA"), would be violated by the 
redemption of any shares of Series C Preferred Stock that are otherwise 
subject to redemption pursuant to this Article VII, the Company: (i) will 
redeem the greatest number of shares of Series C Preferred Stock possible 
without violation of said Article; (ii) the Company thereafter shall use its 
best efforts to take all necessary steps permitted pursuant to this 
Certificate of Designation and the agreements entered into in connection with 
the issuance of Series C Preferred Stock pursuant hereto in order to remedy 
its capital structure in order to allow further redemptions without violation 
of said Article; and (iii) from time to time thereafter as promptly as 
possible the Company shall redeem shares of Series C Preferred Stock at the 
request of the Holders to the greatest extent possible without causing a 
violation of the BCA.

                          VIII.  RANK; PARTICIPATION

     A.   RANK.  All shares of the Series C Preferred Stock shall rank (i) 
prior to the Common Stock; (ii) prior to any class or series of capital stock 
of the Company hereafter created (unless, with the consent of the Holders of 
a majority of the outstanding shares of Series C Preferred Stock obtained in 
accordance with Article XII hereof, such class or series of capital stock 
specifically, by its terms, ranks senior to or pari passu with the Series C 
Preferred Stock) (collectively, with the Common Stock, "Junior Securities"); 
(iii) pari passu with the Series B Preferred Stock and pari passu with any 
class or series of capital stock of the Company hereafter created (with the 
consent of the Holders of a majority of the outstanding shares of Series C 
Preferred Stock obtained in accordance with Article XII hereof), specifically 
ranking, by its terms, on parity with the Series C Preferred Stock (the "Pari 
Passu Securities"); and (iv) junior to any class or series of capital stock 
of the Company hereafter created (with the consent of the Holders of a 
majority of the outstanding shares of Series C Preferred Stock obtained in 
accordance with Article XII hereof) specifically ranking, by its terms, 
senior to the Series C Preferred Stock (the "Senior Securities"), in each 
case as to distribution of assets upon liquidation, dissolution or winding up 
of the Company, whether voluntary or involuntary.

     B.   PARTICIPATION.  Subject to the rights of the holders (if any) of 
Pari Passu Securities and Senior Securities, the Holders shall, as such 
Holders, be entitled to such dividends paid and distributions made to the 
holders of Common Stock to the same extent as if such Holders had converted 
their shares of Series C Preferred Stock into Common Stock (without regard to 
any limitations on conversion herein or elsewhere contained) and had been 
issued such Common Stock on the day before the record date for said dividend 
or distribution.  Payments under the preceding sentence shall be made 
concurrently with the dividend or distribution to the holders of Common 

                                       14
<PAGE>

Stock.

                          IX.  LIQUIDATION PREFERENCE

     A.   LIQUIDATION OF THE COMPANY.  If the Company shall commence a 
voluntary case under the U.S. Federal bankruptcy laws or any other applicable 
bankruptcy, insolvency or similar law, or consent to the entry of an order 
for relief in an involuntary case under any law or to the appointment of a 
receiver, liquidator, assignee, custodian, trustee, sequestrator (or other 
similar official) of the Company or of any substantial part of its property, 
or make an assignment for the benefit of its creditors, or admit in writing 
its inability to pay its debts generally as they become due, or if a decree 
or order for relief in respect of the Company shall be entered by a court 
having jurisdiction in the premises in an involuntary case under the U.S. 
Federal bankruptcy laws or any other applicable bankruptcy, insolvency or 
similar law resulting in the appointment of a receiver, liquidator, assignee, 
custodian, trustee, sequestrator (or other similar official) of the Company 
or of any substantial part of its property, or ordering the winding up or 
liquidation of its affairs, and any such decree or order shall be unstayed 
and in effect for a period of sixty (60) consecutive days and, on account of 
any such event, the Company shall liquidate, dissolve or wind up, or if the 
Company shall otherwise liquidate, dissolve or wind up (a "Liquidation 
Event"), no distribution shall be made to the holders of any shares of 
capital stock of the Company (other than Senior Securities and, together with 
the Holders of Series C Preferred Stock and the Pari Passu Securities) upon 
liquidation, dissolution or winding up unless prior thereto the Holders shall 
have received the Liquidation Preference (as herein defined) with respect to 
each Series C Preferred Share.  If, upon the occurrence of a Liquidation 
Event, the assets and funds available for distribution among the Holders and 
holders of Pari Passu Securities shall be insufficient to permit the payment 
to such Holders of the preferential amounts payable thereon, then the entire 
assets and funds of the Company legally available for distribution to the 
Series C Preferred Stock and the Pari Passu Securities shall be distributed 
ratably among such shares in proportion to the ratio that the Liquidation 
Preference payable on each such share bears to the aggregate Liquidation 
Preference payable on all such shares.

     B.   CERTAIN ACTS NOT A LIQUIDATION.  The purchase or redemption by the 
Company of stock of any class, in any manner permitted by law, shall not, for 
the purposes hereof, be regarded as a liquidation, dissolution or winding up 
of the Company.  Subject to the provisions of Section X(B), neither the 
consolidation or merger of the Company with or into any other entity nor the 
sale or transfer by the Company of less than substantially all of its assets 
shall, for the purposes hereof, be deemed to be a liquidation, dissolution or 
winding up of the Company.

     C.   DEFINITION OF LIQUIDATION PREFERENCE.  The "Liquidation Preference" 
with respect to a share of Series C Preferred Stock means an amount equal to 
the Face Amount thereof plus any other amounts that may be due from the 
Company with respect thereto pursuant to this Certificate of Designation, the 
Securities Purchase Agreement or the Registration Rights Agreement.  The 
Liquidation Preference with respect to any Pari Passu Securities shall be as 
set forth in the Certificate 

                                       15
<PAGE>

of Designation filed in respect thereof.

         X.  ADJUSTMENTS TO THE CONVERSION PRICE; CERTAIN PROTECTIONS

     The Conversion Price shall be subject to adjustment from time to time as 
follows:

     A.   STOCK SPLITS, STOCK DIVIDENDS, ETC.  If at any time on or after the 
Closing Date, the number of outstanding shares of Common Stock is increased 
by a stock split, stock dividend, reclassification or other similar event, 
the number of shares of Common Stock issuable upon conversion of the Series C 
Preferred Shares shall be proportionately increased, or if the number of 
outstanding shares of Common Stock is decreased by a reverse stock split, 
combination or reclassification of shares, or other similar event, the number 
of shares of Common Stock issuable upon conversion of the Series C Preferred 
Shares shall be proportionately reduced.  In such event, the Company shall 
notify the Company's Transfer Agent of such change on or before the effective 
date thereof.

     B.   MAJOR TRANSACTIONS.  If the Company shall consolidate with or merge 
into any corporation, sell all or substantially all of its assets, effectuate 
a transaction or series of transactions in which 50% or more of the voting 
power of the Company is disposed of or reclassify its outstanding shares of 
Common Stock (other than by way of subdivision or reduction of such shares) 
(each a "Major Transaction"), then each Holder shall thereafter be entitled 
to receive consideration, in exchange for each share of Series C Preferred 
Stock held by it, equal to the greater of, as determined in the sole 
discretion of the Holders of at least 50.1% of the outstanding shares of 
Series C Preferred Stock: (i) the number of shares of stock or securities or 
property of the Company, or of the entity resulting from such consolidation 
or merger (the "Major Transaction Consideration"), to which a Holder of the 
number of shares of Common Stock delivered upon conversion of such shares of 
Series C Preferred Stock would have been entitled upon such Major Transaction 
(without regard to any limitations on conversion herein contained) and had 
such Common Stock been issued and outstanding and had such Holder been the 
holder of record of such Common Stock at the time of such Major Transaction, 
and the Company shall make lawful provision therefore as a part of such 
consolidation, merger or reclassification; and (ii) the Optional Redemption 
Amount, in cash.  Subject to the provisions of this Article X, but in any 
event not later than five (5) Business Days prior to the consummation of the 
Major Transaction, but not prior to the public announcement of such Major 
Transaction, the Company shall deliver written notice ("Notice of Major 
Transaction") to each Holder, which Notice of Major Transaction shall be 
deemed to have been delivered one (1) Business Day after the Company's 
sending such notice by telecopy (provided that the Company sends a confirming 
copy of such notice on the same day by overnight courier).  Such Notice of 
Major Transaction shall indicate the amount and type of the Major Transaction 
Consideration which such Holder would receive under clause (i) of this 
Article X(B).  If the Major Transaction Consideration does not consist 
entirely of United States dollars, the value of such other property shall be 
determined by a reputable accounting firm selected by the Company that is 
reasonably acceptable the Holders of a majority of the outstanding.  The 
Holder shall, within two (2) Business Days following 

                                       16
<PAGE>

receipt of the Notice of Major Transactions, notify the Company of the type 
of consideration it elects to receive under this Article X(B).

     C.   ADJUSTMENT DUE TO DISTRIBUTION.  If at any time after the Closing 
Date, the Company shall declare or make any distribution of its assets (or 
rights to acquire its assets) to holders of Common Stock as a partial 
liquidating dividend, by way of return of capital or otherwise (including any 
dividend or distribution to the Company's stockholders in cash or shares (or 
rights to acquire shares) of capital stock of a subsidiary (i.e. a spin-off)) 
(a "Distribution"), then the minimum Conversion Price per share shall be 
reduced by the value of such Distribution per share.  If the Distribution 
does not consist entirely of U.S. Dollars, the value of such other property 
shall be determined by a reputable accounting firm selected by the Company 
that is reasonably acceptable to the Holders of a majority of the outstanding 
shares of Series C Preferred Stock.

     D.   PURCHASE RIGHTS.  If at any time after the Closing Date, the 
Company issues any Convertible Securities or rights to purchase stock, 
warrants, securities or other property (the "Purchase Rights") pro rata to 
the record holders of any class of Common Stock, then the Holders of Series C 
Preferred Stock will be entitled to acquire, upon the terms applicable to 
such Purchase Rights, the aggregate Purchase Rights which such Holder could 
have acquired if such Holder had held the number of shares of Common Stock 
acquirable upon complete conversion of the Series C Preferred Stock (without 
regard to any limitations on conversion or exercise herein or elsewhere 
contained) immediately before the date on which a record is taken for the 
grant, issuance or sale of such Purchase Rights, or, if no such record is 
taken, the date as of which the record holders of Common Stock are to be 
determined for the grant, issue or sale of such Purchase Rights.

     E.   ADJUSTMENT TO CONVERSION PRICE.  If at any time when Series C 
Preferred Stock is issued and outstanding, the number of outstanding shares 
of Common Stock is increased or decreased by a stock split, stock dividend, 
combination, reclassification, below-market price rights offering to all 
holders of Common Stock or other similar event, which event shall have taken 
place during the reference period for determination of the Conversion Price 
for the Series C Preferred Stock, then the Conversion Price shall be 
calculated giving appropriate effect to the stock split, stock dividend, 
combination, reclassification or other similar event during the calculation 
period preceding the Conversion Date.  In such event, the Company shall 
notify the Transfer Agent of such change on or before the effective date 
thereof. 

     F.   ADJUSTMENT FOR RESTRICTED PERIODS.  If  the Registration Statement 
filed by the Company pursuant to the Registration Rights Agreement and 
declared effective by the SEC on the Effective Date lapses in effect or sales 
cannot otherwise be made thereunder, whether by reason of the Company's 
failure or inability to amend or supplement the prospectus included therein 
("Prospectus") in accordance with the Registration Rights Agreement or 
otherwise, then the 20 Business Days period ("Lookback Period") used for 
determining the "Market Price" shall be extended to include the number of 
Business Days preceding the date on which the Holder is first 

                                       17
<PAGE>

notified that sales may not be made under the Prospectus, which would 
otherwise then be included in the Lookback Period plus all Business Days 
through and including the date on which the Holder is notified that sales may 
again be made under the Prospectus.  If a Holder of the Series C Preferred 
Stock reasonably determines that sales may not be made pursuant to the 
Prospectus, it shall notify the Company in writing and, unless the Company 
provides Holder with an opinion of Company's counsel to the contrary, such 
determination shall be binding for purposes of this paragraph.

     G.   ADJUSTMENT TO CONVERSION PRICE FOR MAJOR ANNOUNCEMENTS.  In the 
event the Company (i) makes a public announcement that it intends to 
consolidate or merge with any other corporation (other than a merger in which 
the Company is the surviving or continuing corporation and its capital stock 
is unchanged) or sell or transfer all or substantially all of the assets of 
the Company or (ii) any person, group or entity (including the Company) 
publicly announces a tender offer to purchase 50% or more of the Company's 
Common Stock or otherwise publicly announces an intention to replace a 
majority of the Corporation's Board of Directors by waging a proxy battle or 
otherwise (the date of the announcement referred to in clause (i) or (ii) is 
hereinafter referred to as the "Announcement Date"), then the Conversion 
Price shall, effective upon the Announcement Date and continuing through the 
Adjusted Conversion Price Termination Date (as defined below), be equal to 
the lower of (x) the Conversion Price which would have been applicable for an 
Optional Conversion occurring on the Announcement Date and (y) the Conversion 
Price that would otherwise be in effect.  From and after the Adjusted 
Conversion Price Termination Date, the Conversion Price shall be determined 
as set forth in Article II.  For purposes hereof, "Adjusted Conversion Price 
Termination Date" shall mean, with respect to any proposed transaction, 
tender offer or removal of the majority of the Board of Directors which a 
public announcement as contemplated by this Article X.H. has been made, the 
date upon which the Company (in the case of clause (i) above) or the person, 
group or entity (in the case of clause (ii) above) consummates or publicly 
announces the termination or abandonment of the proposed transaction or 
tender offer which caused this Article X.H. to become operative.

     H.   NOTICE OF ADJUSTMENTS.  Upon the occurrence of each adjustment or 
readjustment of the Conversion Price pursuant to this Section X, the Company, 
at its expense, shall promptly compute such adjustment or readjustment and 
prepare and furnish to each Holder a certificate setting forth such 
adjustment or readjustment and showing in detail the facts upon which such 
adjustment or readjustment is based.  The Company shall, upon the written 
request at any time of any Holder, furnish to such Holder a like certificate 
setting forth (i) such adjustment or readjustment, (ii) the Conversion Price 
at the time in effect and (iii) the number of shares of Common Stock and the 
amount, if any, of other securities or property which at the time would be 
received upon conversion of a share of Preferred Stock.

                               XI.  VOTING RIGHTS

     The holders of the Series C Preferred Stock have no voting power 
whatsoever, except as 

                                       18
<PAGE>

otherwise provided by the ("BCA"), in this Article XI, and in Article XII 
below.

     Notwithstanding the above, the Company shall provide each holder of 
Series C Preferred Stock with prior notification of any meeting of the 
shareholders (and copies of proxy materials and other information sent to 
shareholders).  In the event of any taking by the Company of a record of its 
shareholders for the purpose of determining shareholders who are entitled to 
receive payment of any dividend or other distribution, any right to subscribe 
for, purchase or otherwise acquire (including by way of merger, consolidation 
or recapitalization) any share of any class or any other securities or 
property, or to receive any other right, or for the purpose of determining 
shareholders who are entitled to vote in connection with any proposed sale, 
lease or conveyance of all or substantially all of the assets of the Company, 
or any proposed liquidation, dissolution or winding up of the Company, the 
Company shall mail a notice to each holder, at least ten (10) days prior to 
the record date specified therein (or thirty (30) days prior to the 
consummation of the transaction or event, whichever is earlier), of the date 
on which any such record is to be taken for the purpose of such dividend, 
distribution, right or other event, and a brief statement regarding the 
amount and character of such dividend, distribution, right or other event, 
and a brief statement regarding the amount and character of such dividend, 
distribution, right or other event to the extent known at such time.

     No Holder of the Series C Preferred Stock shall be entitled to vote on 
any matter submitted to the shareholders of the Company for their vote, 
waiver, release or other action, except as may be otherwise expressly 
required by law.

                         XII.  PROTECTION PROVISIONS

     So long as any Series C Preferred Shares are outstanding, the Company 
shall not, without first obtaining the approval of the Holders of majority of 
the outstanding shares of Series C Preferred Stock: (a) alter or change the 
rights, preferences or privileges of the Series C Preferred Stock; (b) alter 
or change the rights, preferences or privileges of any capital stock of the 
Company so as to affect adversely the Series C Preferred Stock; (c) create or 
issue any Senior Securities; (d) create or issue any Pari Passu Securities; 
(e) increase the authorized number of shares of Series C Preferred Stock;  
(f) increase the par value of the Common Stock; or (g) do any act or thing 
not authorized or contemplated by this Certificate of Designation which would 
result in any taxation with respect to the Series C Preferred Stock under 
Section 305 of the Internal Revenue Code of 1986, as amended, or any 
comparable provision of the Internal Revenue Code as hereafter from time to 
time amended, (or otherwise suffer to exist any such taxation as a result 
thereof). 

                             XIII.  MISCELLANEOUS

     A.   LOST OR STOLEN CERTIFICATES.  Upon receipt by the Company of (i) 
evidence of the loss, theft, destruction or mutilation of any Series C 
Preferred Stock Certificate(s) and (ii) (y) in the case of loss, theft or 
destruction, of indemnity reasonably satisfactory to the Company, or (z) in 
the case 

                                       19
<PAGE>

of mutilation, upon surrender and cancellation of the Series C Preferred 
Stock Certificate(s), the Company shall execute and deliver new Series C 
Preferred Stock Certificate(s) of like tenor and date.  However, the Company 
shall not be obligated to reissue such lost, stolen, destroyed or mutilated 
Series C Preferred Stock Certificate(s) if the Holder contemporaneously 
requests the Company to convert such Series C Preferred Stock.

     B.   PAYMENT OF CASH; DEFAULTS.  Whenever the Company is required to 
make any cash payment to a Holder under this Certificate of Designation (as a 
Conversion Default Payment, Optional Redemption Amount or otherwise), such 
cash payment shall be made to the Holder by the method (by certified or 
cashier's check or wire transfer of immediately available funds) elected by 
such Holder. If such payment is not delivered when due such Holder shall 
thereafter be entitled to interest on the unpaid amount until such amount is 
paid in full to the Holder at a per annum rate equal to the lower of (x) the 
sum of prime rate published from time to time by the Wall Street Journal plus 
three percent (3%) and (y) the highest interest rate permitted by applicable 
law.

     C.   REMEDIES, CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES AND 
INJUNCTIVE RELIEF.  The remedies provided in this Certificate of Designation 
shall be cumulative and in addition to all other remedies available under 
this Certificate of Designation, at law or in equity (including a decree of 
specific performance and/or other injunctive relief), no remedy contained 
herein shall be deemed a waiver of compliance with the provisions giving rise 
to such remedy and nothing herein shall limit a Holder's right to pursue 
actual damages for any failure by the Company to comply with the terms of 
this Certificate of Designation.  Company covenants to each Holder that there 
shall be no characterization concerning this instrument other than as 
expressly provided herein; provided, however, that the Company shall be 
entitled to prepare summaries of this Certificate of Designation for purposes 
of complying with its disclosure obligations and in connection with bona fide 
disputes as to the operations of the provisions of this Certificate of 
Designation.

     D.   FAILURE OR INDULGENCY NOT WAIVER.  No failure or delay on the part 
of a Holder in the exercise of any power, right or privilege hereunder shall 
operate as a waiver thereof, nor shall any single or partial exercise of any 
such power, right or privilege preclude other or further exercise thereof or 
of any other right, power or privilege.

     E.   NOTICES.  Any notice from a Holder to the Company hereunder shall 
be given to the Company in accordance with Section 8(f) of the Securities 
Purchase Agreement.  Any notices from the Company to a Holder shall be given 
to such Holder at such Holder's address as shown in the stock register of the 
Company and otherwise in accordance with Section 8(f) of the Securities 
Purchase Agreement.


                                       20