<PAGE>   1
                                                                    Exhibit 3(i)


                  SECOND RESTATED CERTIFICATE OF INCORPORATION


                                       OF


                       SHARED TECHNOLOGIES CELLULAR, INC.


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


               Pursuant to Section 245 of the General Corporation


                          Law of the State of Delaware


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


         SHARED TECHNOLOGIES CELLULAR, INC., a corporation organized and
existing under the laws of the State of Delaware (the "Corporation"), does
hereby certify as follows:

         1. The name of Corporation is Shared Technologies Cellular, Inc.

         2. The original Certificate of Incorporation of the Corporation was
filed with the Secretary of State of the State of Delaware on March 14, 1989. A
Restated Certificate of Incorporation was filed with the Secretary of State on
October 6, 1994.

         3. This Second Restated Certificate of Incorporation was duly adopted
in accordance with the provisions of Section 245 of the General Corporation Law,
as amended, of the State of Delaware (the "GCL") by the written consent of the
Board of Directors of the Corporation in accordance with Section 141(f) of the
GCL.

         4. This Second Restated Certificate of Incorporation hereby restates
and integrates, but does not further amend, the provisions of the Corporation's
Restated Certificate of Incorporation, as heretofore amended or supplemented,
and there is no discrepancy between those provisions and the provisions hereof,
so that the same shall read in its entirety as follows:

         First: The name of the Corporation is Shared Technologies Cellular,
Inc. (hereinafter, the "Corporation").

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

         Third: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law, as amended, of the State of Delaware (the "GCL"), as set forth in Title 8
of the Delaware Code.
<PAGE>   2
         Fourth: The total number of shares of stock which the Corporation shall
have authority to issue is 25,000,000 shares, of which 5,000,000 shall be
Preferred Stock with a par value of $.01 per share and 20,000,000 shares shall
be Common Stock with a par value of $.01 per share.

         The Preferred Stock is to be issued in one or more series, with each
series to have such designations, preferences, and relative, participating,
optional or other special rights, and qualifications, limitations or
restrictions thereof, as shall be stated and expressed in the resolution or
resolutions provided for the issue of each series adopted by the Board of
Directors of the Corporation, subject to the limitations prescribed by law and
in accordance with the provisions hereof, the Board of Directors being hereby
expressly vested with authority to adopt any such resolution or resolutions.

         The authority of the Board of Directors with respect to each series
shall include, but not be limited to, the determination or fixing of the
following:

         (1) The number of shares to constitute the series and the distinctive
designation thereof;

         (2) The amount or rate of dividends on the shares of the series,
whether dividends shall be cumulative and, if so, from what date or dates;

         (3) Whether the shares of the series shall be redeemable and, if
redeemable, the terms and provisions upon which the shares of the series may be
redeemed and the premium, if any, and any dividends accrued thereon which the
shares of the series shall be entitled to receive upon the redemption thereof;

         (4) Whether the shares of the series shall be subject to the operations
of a retirement or sinking fund to be applied to the purchase or redemption of
the shares for retirement and, if such retirement or sinking fund be
established, the annual amount thereof and the terms and provisions relative to
the operation thereof;

         (5) Whether the shares of the series shall be convertible into shares
of any class or classes, with or without par value, or of any other series of
the same class, and if convertible, the conversion price or prices or the rate
at which the conversion may be made and the method, if any, of adjusting the
same;

         (6) The rights of the shares of the series in the event of the
voluntary or involuntary liquidation, dissolution, or winding up of the
Corporation;

         (7) The restrictions, if any, on the payment of the dividends upon, and
the making of distributions to, any class of stock ranking junior to the shares
of the series, and the restrictions, if any, on the purchase or redemption of
the shares of any such junior class;

         (8) Whether the series shall have voting rights in addition to the
voting rights provided by law, and, if so, the terms of such voting rights; and

         (9) Any other relative rights, preferences, and limitations of that
series.


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          The holders of the Common Stock shall be entitled to one vote for each
share of Common Stock held.

         A. Series C Preferred Stock.

         The Board of Directors has heretofore authorized a series of the
Corporation's Preferred Stock, par value $.01 per share, with the designation
and number of shares, and relative rights, preferences, privileges and
restrictions thereof as follows:

                  1. Designation and Amount. The designation of this series,
         which consists of fifteen thousand shares of Preferred Stock, is the
         "Series C Convertible Preferred Stock" (the "Series C Preferred Stock")
         and the face amount of each share of Series C Preferred Stock (each, a
         "Preferred Share" and collectively, the "Preferred Shares") shall be
         One Thousand Dollars ($1,000) per Preferred Share (the "Stated Value").
         The date on which the Preferred Shares are issued and sold pursuant to
         the Securities Purchase Agreement, dated as of January 28, 1999,
         between the Company and the Purchasers named therein (the "Securities
         Purchase Agreement") is referred to herein as the "Issue Date." The
         holders of Preferred Shares are each referred to as a "Holder" and,
         collectively, as the "Holders."

                  2. Dividends. The Series C Preferred Stock will not bear
         dividends.

                  3. Priority.

                           a. Payment upon Dissolution.

                                    (1) Upon the occurrence of (x) any
                           insolvency or bankruptcy proceedings, or any
                           receivership, liquidation, reorganization or other
                           similar proceedings in connection therewith,
                           commenced by the Corporation or by its creditors, as
                           such, or relating to its assets or (y) the
                           dissolution or other winding up of the Corporation
                           whether total or partial, whether voluntary or
                           involuntary and whether or not involving insolvency
                           or bankruptcy proceedings, or (z) any assignment for
                           the benefit of creditors or any marshalling of the
                           material assets or material liabilities of the
                           Corporation (each, a "Liquidation Event"), no
                           distribution shall be made to the holders of any
                           shares of Junior Securities (as defined below)
                           unless, following the payment of preferential amounts
                           on all Senior Securities (as defined below), each
                           Holder shall have received the Liquidation Preference
                           (as defined below) with respect to each Preferred
                           Share then held by such Holder. In the event that
                           upon the occurrence of a Liquidation Event, and
                           following the payment of preferential amounts on all
                           Senior Securities (as defined below), the assets
                           available for distribution to the Holders and the
                           holders of Pari Passu Securities are insufficient to
                           pay the Liquidation Preference with respect to all of
                           the outstanding Preferred Shares and the preferential
                           amounts payable to such holders, the entire assets of
                           the Corporation shall be distributed ratably among
                           the Preferred Shares and the shares of Pari Passu
                           Securities in


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                           proportion to the ratio that the preferential amount
                           payable on each such share (which shall be the
                           Liquidation Preference in the case of a Preferred
                           Share) bears to the aggregate preferential amount
                           payable on all such shares.

                                    (2) The "Liquidation Preference" with
                           respect to a Preferred Share shall mean an amount
                           equal to the Stated Value of such Preferred Share
                           plus the Premium (as defined below) accrued on such
                           Preferred Share in accordance with the terms hereof.
                           "Junior Securities" shall mean the Common Stock and
                           all other capital stock of the Corporation that are
                           not Pari Passu Securities or do not have a preference
                           over the Series C Preferred Stock in respect of
                           redemption or distribution upon liquidation. "Pari
                           Passu Securities" shall mean any securities ranking
                           pari passu with the Series C Preferred Stock in
                           respect of redemption or distribution upon
                           liquidation. "Senior Securities" shall mean (i) any
                           debt issued or assumed by the Corporation and (ii)
                           any securities of the Corporation which by their
                           terms have a preference over the Series C Preferred
                           Stock in respect of redemption or distribution upon
                           liquidation.

                  4. Conversion.

                           a. Right to Convert. Each Holder shall have the right
                  to convert, at any time and from time to time after the Issue
                  Date, all or any part of the Preferred Shares held by such
                  Holder into such number of fully paid and non-assessable
                  shares ("Conversion Shares") of the Common Stock as is
                  determined in accordance with the terms hereof (a
                  "Conversion").

                           b. Conversion Notice. In order to convert Preferred
                  Shares, a Holder shall send by facsimile transmission, at any
                  time prior to 11:59 p.m., eastern time, on the date on which
                  such Holder wishes to effect such Conversion (the "Conversion
                  Date"), (i) a notice of conversion (a "Conversion Notice"), in
                  substantially the form of Exhibit A hereto, to the Corporation
                  and to the Corporation's transfer agent for the Common Stock
                  (the "Transfer Agent") stating the number of Preferred Shares
                  to be converted, the amount of Premium (as defined below)
                  accrued thereon, the applicable Conversion Price (as defined
                  below) and a calculation of the number of shares of Common
                  Stock issuable upon such Conversion and (ii) a copy of the
                  certificate or certificates representing the Preferred Shares
                  being converted. The Holder shall thereafter send the original
                  of the Conversion Notice and of such certificate or
                  certificates to the Transfer Agent. The Corporation shall
                  issue a new certificate for Preferred Shares in the event that
                  less than all of the Preferred Shares represented by a
                  certificate delivered to the Corporation in connection with a
                  Conversion are converted. Except as otherwise provided herein,
                  upon delivery of a Conversion Notice by a Holder in accordance
                  with the terms hereof, such Holder shall, as of the applicable
                  Conversion Date, be deemed for all purposes to be record owner
                  of the Common Stock to which such Conversion Notice relates.
                  In the case of a dispute between the Corporation and a Holder
                  as to the calculation of the Conversion Price or the number of
                  Conversion


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                  Shares issuable upon a Conversion, the Corporation shall issue
                  to such Holder the number of Conversion Shares that are not
                  disputed within the time frames specified in paragraph 4(e)
                  below and shall submit the disputed calculations to its
                  independent accountant within one (1) Business Day of receipt
                  of such Holder's Conversion Notice. The Corporation shall
                  cause such accountant to calculate the Conversion Price as
                  provided herein and to notify the Corporation and such Holder
                  of the results in writing no later than five (5) Business Days
                  following the Corporation's receipt of such Holder's
                  Conversion Notice (such 5th Business Day being referred to
                  herein as the "Disputed Share Calculation Date"). Such
                  accountant's calculation shall be deemed conclusive absent
                  manifest error. The fees of any such accountant shall be borne
                  by the party whose calculations were most at variance with
                  those of such accountant.

                           c. Number of Conversion Shares; Conversion Price. The
                  number of Conversion Shares to be delivered by the Corporation
                  pursuant to a Conversion shall be determined in accordance
                  with the following formula:

                                     SV + P
                                     ------
                                       CP


                  where SV represents the aggregate Stated Value of the
                  Preferred Shares to be converted,

                  P represents the aggregate Premium (i) accrued on such
                  Preferred Shares and (ii) eligible for payment by the
                  Corporation in Conversion Shares, it being understood that,
                  unless each of the Premium Share Conditions (as defined in
                  paragraph 4(g) below) is satisfied or waived by the Holder of
                  such Preferred Shares, the Corporation may not pay accrued
                  Premium in shares of Common Stock and must pay such Premium on
                  the applicable Delivery Date (as defined below) in immediately
                  available funds in accordance with the terms of this
                  Certificate, and

                  CP represents the Conversion Price (as defined below) in
                  effect on the applicable Conversion Date.

                  "Premium" with respect to a Preferred Share shall be
                  determined in accordance with the following formula:

                                  (SV)(.06)(N)
                                  ------------
                                       365



                  where SV represents the Stated Value of such Preferred Share,
                  and

                  N represents the number of days elapsed from the Issue Date
                  through and including the Conversion Date relating to such
                  Preferred Share.


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                  Subject to adjustment as provided elsewhere herein,
                  "Conversion Price" shall mean the lesser of the Fixed
                  Conversion Price and the Variable Conversion Price (each as
                  defined below); provided, however, that, if (i) during any
                  period of ten (10) consecutive Trading Days, the Closing Bid
                  Price for the Common Stock on each such Trading Day is greater
                  than $11.00 (subject to adjustment for the events specified in
                  Section 6 of Article FOURTH: A. hereof) and (ii) at all times
                  during such period of ten consecutive Trading Days, (x) a
                  registration statement filed under the Securities Act shall be
                  effective and available to the Holders for the sale of all of
                  the Conversion Shares into which the Preferred Shares and
                  Warrants (as defined in the Securities Purchase Agreement, the
                  "Warrants") then outstanding are convertible or exercisable,
                  as the case may be (without regard to any restriction or
                  limitation on the conversion thereof), or such Conversion
                  Shares may be sold under Rule 144(k), (y) the Common Stock
                  shall be listed on the Nasdaq SmallCap Market, the Nasdaq
                  National Market System or the New York Stock Exchange, and (z)
                  trading in the Common Stock, or trading generally, shall not
                  have been suspended by the principal market on which the
                  Common Stock is traded, "Conversion Price" with respect to all
                  Conversion Notices delivered after the end of such ten
                  consecutive Trading Day period shall be the Fixed Conversion
                  Price. "Fixed Conversion Price" shall mean the lesser of (A)
                  $7.00 and (B) the product of the average Closing Bid Price for
                  the Common Stock during the period of fifteen (15) Trading
                  Days occurring immediately prior to the Issue Date times one
                  hundred and fifteen percent (115%)(as adjusted, in the case of
                  (A) and (B), for the events specified in Section 6 of Article
                  FOURTH: A. below). "Variable Conversion Price" shall mean the
                  average of the lowest Closing Bid Prices for the Common Stock
                  occurring on any five (5) consecutive Trading Days during the
                  period of fifteen (15) Trading Days ending on the Trading Day
                  immediately prior to (but not including) the applicable
                  Conversion Date.

                           d. Certain Definitions. "Trading Day" means any day
                  on which the Common Stock is purchased and sold on the
                  principal securities exchange or market on which the Common
                  Stock is then listed or traded. "Closing Bid Price" means,
                  with respect to the Common Stock, the closing bid price for
                  the Common Stock occurring on a given Trading Day on the
                  principal securities exchange or trading market where such
                  security is listed or traded as reported by Bloomberg
                  Financial Markets or, if Bloomberg Financial Markets is not
                  then reporting such prices, by a comparable reporting service
                  of national reputation selected by the Corporation and
                  reasonably acceptable to each Holder of the then outstanding
                  Preferred Shares (collectively, "Bloomberg") or if the
                  foregoing does not apply, the last reported bid price of such
                  security in the over-the-counter market on the electronic
                  bulletin board for such security as reported by Bloomberg, or,
                  if no bid price is reported for such security by Bloomberg,
                  the average of the bid prices of all market makers for such
                  security as reported in the "pink sheets" by the National
                  Quotation Bureau, Inc. (collectively, the "Applicable
                  Reporting Entity"). If the Closing Bid Price cannot be
                  calculated for such security on any of the foregoing bases,
                  the Closing Bid Price of such security shall be the fair
                  market value as reasonably determined by an investment banking
                  firm selected by all of the Holders of Preferred Shares, and
                  reasonably acceptable to the Corporation,


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<PAGE>   7
                  with the costs of such appraisal to be borne by the
                  Corporation. "Closing Trade Price" means, with respect to the
                  Common Stock, the last sale price reported for the Common
                  Stock on a given Trading Day on the principal securities
                  exchange or trading market where such security is listed or
                  traded as reported by the Applicable Reporting Entity or if no
                  sale price was reported by the Applicable Reporting Entity on
                  such Trading Day, the last sale price reported by the
                  Applicable Reporting Entity on the Trading Day on which such
                  prices were last reported immediately preceding such Trading
                  Day. "Business Day" means any day on which the New York Stock
                  Exchange and commercial banks located in the City of New York
                  are open for business.

                           e. Delivery of Common Stock Upon Conversion. Upon
                  receipt of a Conversion Notice from a Holder pursuant to
                  paragraph 4(b) above, the Corporation shall, on or before the
                  close of business on the latest to occur of (i) the third
                  (3rd) Business Day following the Conversion Date set forth in
                  such Conversion Notice, (ii) the Business Day immediately
                  following the day on which the certificates representing the
                  Preferred Shares are delivered by such Holder to the
                  Corporation or the Transfer Agent, and (iii) with respect to
                  Conversion Shares that are the subject of a dispute as
                  described in paragraph 4(b) above, the Business Day
                  immediately following the Disputed Share Calculation Date (the
                  latest of such Business Days being referred to herein as the
                  "Delivery Date"), issue and deliver or cause to be delivered
                  to such Holder the number of Conversion Shares to which such
                  Holder is entitled to receive as provided herein. The
                  Corporation shall effect delivery of Conversion Shares to a
                  Holder by, as long as the Transfer Agent participates in the
                  Depository Trust Company ("DTC") Fast Automated Securities
                  Transfer program ("FAST"), crediting the account of such
                  Holder or its nominee at DTC (as specified in the applicable
                  Conversion Notice) with the number of Conversion Shares
                  required to be delivered, no later than the close of business
                  on such Delivery Date. In the event that Transfer Agent is not
                  a participant in FAST or if a Holder so specifies in a
                  Conversion Notice or otherwise in writing on or before the
                  Conversion Date, the Corporation shall effect delivery of
                  Conversion Shares by delivering to the Holder or its nominee
                  physical certificates representing such Conversion Shares, no
                  later than the close of business on such Delivery Date. If any
                  Conversion would create a fractional Conversion Share, such
                  fractional Conversion Share shall be disregarded and the
                  number of Conversion Shares issuable upon such Conversion, in
                  the aggregate, shall be the rounded to the nearest whole
                  number of Conversion Shares. Conversion Shares delivered to
                  the Holder shall not contain any restrictive legend as long as
                  (A) the sale, transfer, pledge or other disposition of such
                  Conversion Shares is covered by an effective registration
                  statement, (B) such Securities have been publicly sold
                  pursuant to Rule 144 ("Rule 144"), or (C) such Conversion
                  Shares can be sold pursuant to Rule 144(k) under Securities
                  Act of 1933, as amended (the "Securities Act"), or any
                  successor rule or provision.

                           f. Failure to Deliver Conversion Shares.


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<PAGE>   8
                           (1) In the event that the Corporation fails for any
                  reason to deliver to a Holder certificates (without any
                  restrictive legend in the circumstances described in clause
                  (A) or (B) of paragraph 4(e) above) representing the number of
                  Conversion Shares specified in the applicable Conversion
                  Notice on or before the Delivery Date therefor (a "Conversion
                  Default") as a result of any willful action or any willful
                  failure to act on the part of the Corporation, and such
                  failure to deliver certificates continues for ten (10)
                  Business Days following the delivery of written notice thereof
                  from such Holder (such tenth Business Day being referred to
                  herein as the "Conversion Default Date"), the Corporation
                  shall pay to such Holder payments ("Conversion Default
                  Payments") in the amount of (i) "N" multiplied by (ii) the
                  aggregate Stated Value of the Preferred Shares which are the
                  subject of such Conversion Default multiplied by (iii) one
                  percent (1%), where "N" equals the number of days elapsed
                  between the Conversion Default Date and the earlier to occur
                  of (A) the date on which all of the certificates (without any
                  restrictive legend in the circumstances described in clause
                  (A), (B) or (C) of paragraph 4(e) above) representing such
                  Conversion Shares are issued and delivered to such Holder, (B)
                  the date on which such Preferred Shares are redeemed pursuant
                  to the terms hereof and (C) the date on which a Withdrawal
                  Notice (as defined below) is delivered to the Corporation.
                  Amounts payable under this subparagraph (f) shall be paid to
                  the Holder in immediately available funds on or before the
                  fifth (5th) Business Day of the calendar month immediately
                  following the calendar month in which such amounts have
                  accrued.

                           (2) In the event that a Holder has not received
                  certificates representing the Conversion Shares by the tenth
                  (10th) Business Day following a Conversion Default as a result
                  of any willful action or any willful failure to act on the
                  part of the Corporation, such Holder may, upon written notice
                  (a "Withdrawal Notice") delivered to the Corporation on such
                  Business Day or on any Business Day thereafter (unless, prior
                  to the delivery of such notice, such Conversion Shares are
                  delivered to such Holder), withdraw its Conversion Notice with
                  respect to such Conversion Shares and regain its rights as a
                  Holder of the Preferred Shares that are the subject of such
                  Conversion Default. In such event, the Conversion Price that
                  would otherwise be in effect when such Preferred Shares are
                  thereafter converted in accordance with the terms hereof shall
                  be reduced by one percent (1%) for each day occurring during
                  the period immediately following such 10th Business Day until
                  the day on which the such Holder delivers a Withdrawal Notice
                  to the Corporation; provided, however, that the maximum
                  percentage by which such Conversion Price may be reduced
                  hereunder shall be fifty percent (50%). (For example, if such
                  Conversion Default were to continue for five days following
                  such 10th Business Day, such Conversion Price would be reduced
                  by 5%; if for ten days, by 10%; and for fifty days or more,
                  50%, so that the number of Conversion Shares deliverable upon
                  conversion of such Preferred Shares would be increased


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<PAGE>   9
                  proportionately). Upon delivery by a Holder of a Withdrawal
                  Notice, such Holder shall retain all of such Holder's rights
                  and remedies with respect to the Corporation's failure to
                  deliver such Conversion Shares (including without limitation
                  the right to receive the cash payments specified in
                  subparagraph 4(f)(1) above).

                           (3) In addition to any other remedies provided
                  herein, each Holder shall have the right to pursue actual
                  damages for the Corporation's failure to issue and deliver
                  Conversion Shares on the applicable Delivery Date (including,
                  without limitation, damages relating to any purchase of shares
                  of Common Stock by such Holder to make delivery on a sale
                  effected in anticipation of receiving Conversion Shares upon
                  Conversion, such damages to be in an amount equal to (A) the
                  aggregate amount paid by such Holder for the shares of Common
                  Stock so purchased minus (B) the aggregate Conversion Price
                  for such Conversion Shares, and such Holder shall have the
                  right to pursue all other remedies available to it at law or
                  in equity (including, without limitation, a decree of specific
                  performance and/or injunctive relief).

                  g. Premium Share Conditions. The Corporation's right to pay
         accrued Premium in Conversion Shares upon conversion of a Preferred
         Share is conditioned upon the satisfaction of each of the following
         conditions (the "Premium Share Conditions"):

                           (1) the number of shares of Common Stock authorized,
                  unissued and unreserved for all other purposes, or held in the
                  Corporation's treasury, is sufficient to pay such Premium in
                  Conversion Shares;

                           (2) the Common Stock is authorized for quotation on
                  the Nasdaq SmallCap Market or the Nasdaq National Market or
                  for listing or quotation on the New York Stock Exchange or any
                  other national securities exchange and trading in the Common
                  Stock on such market or exchange has not been suspended;

                           (3) the registration statement required to be
                  maintained by the Corporation (the "Registration Statement")
                  pursuant to a registration rights agreement by and among the
                  Corporation and the Purchasers named therein (the
                  "Registration Rights Agreement") is effective and available
                  for the sale of the Conversion Shares issuable pursuant to the
                  conversion of all of the Preferred Shares and exercise of all
                  of the Warrants then outstanding, or sales of such Conversion
                  Shares may be made pursuant to Rule 144(k);

                           (4) no Mandatory Redemption Event (as defined herein)
                  has occurred and is continuing; and


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<PAGE>   10
                           (5) such payment of Premium in Conversion Shares will
                  not violate the limitations set forth in Section 5 of Article
                  FOURTH: A. below.

         In the event that any Premium Share Condition is not satisfied as of
         the Conversion Date for a Preferred Share, the Premium accrued on such
         Preferred Share shall be payable by the Corporation to the Holder
         thereof in immediately available funds on the Delivery Date immediately
         following such Conversion Date. If the Corporation fails to deliver the
         amount of such Premium in immediately available funds to a Holder on or
         before the close of business on the Delivery Date therefor (a "Premium
         Cash Default"), such amount will bear interest at an annual rate equal
         to the lower of (x) ten percent (10%) and (y) the highest interest rate
         permitted by applicable law (the "Default Interest Rate"), accrued on a
         daily basis from and after such Delivery Date until such amount is paid
         in full.

                  h. Conversion at Maturity. On the date which is five (5) years
         following the Issue Date (the "Maturity Date"), each Preferred Share
         then outstanding shall be automatically converted into the number of
         shares of Common Stock equal to the Liquidation Preference of such
         shares divided by the Conversion Price then in effect (a "Conversion at
         Maturity"); provided, however, that if, on the Maturity Date, (i) the
         number of shares of Common Stock authorized, unissued and unreserved
         for all other purposes, or held in the Corporation's treasury, is not
         sufficient to effect the issuance and delivery of the number of
         Conversion Shares into which all outstanding Preferred Shares are then
         convertible, (ii) the Common Stock is not designated for quotation or
         listed on the Nasdaq SmallCap Market, the Nasdaq National Market or the
         New York Stock Exchange or trading in the Common Stock on such market
         or exchange has been suspended, or (iii) a Mandatory Redemption Event
         (as defined herein) has occurred and is continuing, each Holder shall
         have the option, upon written notice to the Corporation, to retain its
         rights as a holder of Preferred Shares, including without limitation,
         the right to convert such Preferred Shares in accordance with the terms
         of paragraphs 4(a) through 4(f) hereof and, upon delivery of such
         notice, such Preferred Shares shall not be subject to a Conversion at
         Maturity hereunder until the thirtieth (30th) day following the later
         of (a) the date on which the event specified (i), (ii) or (iii) is no
         longer continuing and (b) the date on which the Corporation delivers to
         each Holder written notice to such effect, and in such event, such
         thirtieth day shall be deemed to be the Maturity Date for purposes of
         this Certificate of Designation. If a Conversion at Maturity occurs,
         the Corporation and each Holder shall follow the procedures for
         Conversion set forth in this Section 4 of Article FOURTH: A., with the
         Maturity Date deemed to be the Conversion Date, except that the Holder
         shall not be required to send a Conversion Notice as contemplated by
         paragraph 4(b).

         5. Conversion Limitations. In no event shall a Holder be permitted to
convert any Preferred Shares in excess of the number of such shares, upon the
Conversion of which:


                                      -10-
<PAGE>   11
                  a. the number of Conversion Shares to be issued pursuant to
         such Conversion, when added to the number of shares of Common Stock
         issued pursuant to all prior Conversions of Preferred Shares and all
         prior exercises of the Warrants by the Holders thereof, would exceed
         19.99% of the number of outstanding shares of Common Stock on the Issue
         Date (subject to equitable adjustments from time to time for the events
         described in Section 6 of Article FOURTH: A. below) (the "Cap Amount"),
         except that such limitation shall not apply in the event that (i) the
         Corporation obtains the approval of the holders of a majority of the
         Corporation's Common Stock for the issuance of Common Stock in excess
         of the Cap Amount ("Stockholder Approval") or (ii) the Holders of a
         majority of the number of Preferred Shares then outstanding obtain an
         opinion of counsel reasonably satisfactory to the Corporation that such
         approval is not required. Until Stockholder Approval or such opinion is
         obtained, no purchaser of Preferred Shares pursuant to the Securities
         Purchase Agreement (each, a "Purchaser" and together the "Purchasers")
         shall be issued, upon Conversion of the Preferred Shares, Conversion
         Shares in an amount greater than the product of (A) the Cap Amount
         times (B) a fraction, the numerator of which is the number of Preferred
         Shares issued to such Purchaser pursuant to the Securities Purchase
         Agreement and the denominator of which is the aggregate amount of all
         of the Preferred Shares issued to the Purchasers pursuant to the
         Securities Purchase Agreement (the "Cap Allocation Amount"). In the
         event that any Purchaser shall sell or otherwise transfer any of such
         Purchaser's Preferred Shares, the transferee shall be allocated a pro
         rata portion of such Purchaser's Cap Allocation Amount. In the event
         that any Holder converts all of such Holder's Preferred Shares into a
         number of Conversion Shares which, in the aggregate, is less than such
         Holder's Cap Allocation Amount, then the difference between such
         Holder's Cap Allocation Amount and the number of Conversion Shares
         actually issued to such Holder shall be allocated to the respective Cap
         Allocation Amounts of the remaining Holders of Preferred Shares on a
         pro rata basis in proportion to the number of Preferred Shares then
         held by each such Holder; notwithstanding anything to the contrary set
         forth herein, from and after May 31, 1999, any Holder whose Cap
         Allocation Amount represents one hundred and seventy-five percent
         (175%) or less of (i) the number of Conversion Shares into which the
         Preferred Shares and Warrants then held by such Holder are convertible
         or exercisable at the Conversion Price or the Exercise Price, as the
         case may be, then in effect (without regard to any restrictions or
         limitations on such conversion or exercise) plus (ii) the number of
         Conversion Shares and Warrant Shares into which such Holder has
         previously converted Preferred Shares and exercised the Warrants,
         respectively, shall have the right from time to time to require the
         Corporation, upon written notice, at such Holder's option (A) to seek
         Stockholder Approval by means of a special meeting of stockholders to
         be held as soon as practicable following the Corporation's receipt of
         such notice, but in any case within one hundred and twenty five (125)
         days following such receipt, and to recommend such approval to its
         stockholders at such special meeting, or (B) to institute proceedings
         and take all other action necessary to delist the Common Stock from


                                      -11-
<PAGE>   12
         the Nasdaq SmallCap Market, in which case, the limitation set forth in
         this paragraph (a) shall not apply at any time following such
         delisting;

                  b. the number of Conversion Shares to be issued pursuant to
         such Conversion, when added to the number of shares of Common Stock
         issued pursuant to all prior Conversions of Preferred Shares by the
         Holders thereof, would exceed the following amounts (each of which
         shall be subject to equitable adjustments from time to time for the
         events described in Section 6 of Article FOURTH: A. below) during the
         periods specified (each, a "Conversion Limit Amount"):

<TABLE>
<CAPTION>
         Period                                         Conversion Limit Amount
<S>                                                     <C>
During the 1st Year Following the Issue Date                   3,975,000

During the 2nd  Year Following the Issue Date                  4,200,000

During the 3rd Year Following the Issue Date                   4,425,000

During the 4th Year Following the Issue Date                   4,650,000

Following the 4th Anniversary of the Issue Date                4,875,000
</TABLE>

         No Purchaser shall be issued, upon Conversion of the Preferred Shares,
         Conversion Shares in an amount greater than the product of (A) the
         applicable Conversion Limit Amount times (B) a fraction, the numerator
         of which is the number of Preferred Shares issued to such Purchaser
         pursuant to the Securities Purchase Agreement and the denominator of
         which is the aggregate amount of all of the Preferred Shares issued to
         the Purchasers pursuant to the Securities Purchase Agreement (the
         "Conversion Limit Allocation Amount"). In the event that any Purchaser
         shall sell or otherwise transfer any of such Purchaser's Preferred
         Shares, the transferee shall be allocated a pro rata portion of such
         Purchaser's Conversion Limit Allocation Amount. In the event that any
         Holder converts all of such Holder's Preferred Shares into a number of
         Conversion Shares which, in the aggregate, is less than such Holder's
         Conversion Limit Allocation Amount, then the difference between such
         Holder's Conversion Limit Allocation Amount and the number of
         Conversion Shares actually issued to such Holder shall be allocated to
         the respective Conversion Limit Allocation Amounts of the remaining
         Holders of Preferred Shares on a pro rata basis in proportion to the
         number of Preferred Shares then held by each such Holder.

                  c. (x) the number of shares of Common Stock beneficially owned
         by such Holder (other than shares of Common Stock issuable upon
         conversion of such Preferred Shares or which would otherwise be deemed
         beneficially owned except for being subject to a limitation on
         conversion or exercise analogous to the limitation contained in this
         subparagraph (b)) plus (y) the number of shares of Common Stock
         issuable upon the Conversion of such Preferred Shares, would be


                                      -12-
<PAGE>   13
         equal to or exceed (z) 4.99% of the number of shares of Common Stock
         then issued and outstanding. As used herein, beneficial ownership shall
         be determined in accordance with Section 13(d) of the Securities
         Exchange Act of 1934, as amended, and the rules thereunder. To the
         extent that the limitation contained in this paragraph 5(c) applies,
         the determination of whether Preferred Shares are convertible (in
         relation to other securities owned by a Holder) and of which Preferred
         Shares are convertible shall be in the sole discretion of such Holder,
         and the submission of Preferred Shares for Conversion shall be deemed
         to be such Holder's determination that such Preferred Shares are
         convertible pursuant to the terms hereof, and the Corporation shall
         have no right or obligation whatsoever to verify or confirm the
         accuracy of such determination. This paragraph may be amended (i) in
         order to clarify an ambiguity or otherwise to give effect to such
         limitation, by all of the Holders of Preferred Shares then outstanding
         and (ii) for any other reason, with the further consent of the holders
         of a majority of the shares of Common Stock then outstanding. Nothing
         contained herein shall be deemed to restrict the right of a Holder to
         convert Preferred Shares at such time as the Conversion thereof will
         not violate the provisions of this subparagraph 5(c). The restriction
         contained in this subparagraph 5(c) shall not apply (i) in the event of
         a Conversion at Maturity or a Mandatory Conversion (as defined below)
         or (ii) with respect to any Preferred Shares that were purchased from
         the Corporation pursuant to the Securities Purchase Agreement by a
         purchaser that elected therein not to be subject to the limitation
         contained in this paragraph 5(c).

         6. Adjustments To Conversion Price.

                  a. Adjustment to Fixed Conversion Price Due to Stock Split,
         Stock Dividend, Etc. If, prior to the Conversion of all of the
         Preferred Shares, (A) the number of outstanding shares of Common Stock
         is increased by a stock split, a stock dividend on the Common Stock, a
         reclassification of the Common Stock, the distribution to all or
         substantially all of the holders of Common Stock of rights or warrants
         entitling them to subscribe for or purchase Common Stock at less than
         the then current market price thereof (based upon the subscription or
         exercise price of such rights or warrants at the time of the issuance
         thereof) or other similar event, the Fixed Conversion Price shall be
         proportionately reduced, or (B) 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 Fixed Conversion
         Price shall be proportionately increased. In such event, the
         Corporation shall notify the Transfer Agent of such change on or before
         the effective date thereof. For purposes hereof, the "market price" per
         share of Common Stock on any date shall be the average Closing Trade
         Price for the Common Stock on the five (5) consecutive Trading Days
         occurring immediately prior to but not including the earlier of such
         date and the Trading Day before the "ex" date, if any, with respect to
         the issuance or distribution requiring such computation. The term "'ex'
         date", when used with respect to any issuance or distribution, means
         the first Trading Day on which the Common Stock trades regular way in
         the market from which such average Closing Trade Price is then to be
         determined without the right to receive such issuance or distribution.


                                      -13-
<PAGE>   14
                  b. Adjustment to Conversion Price During Reference Period. If,
         prior to the Conversion of all of the Preferred Shares, the number of
         outstanding shares of Common Stock is increased or decreased by a stock
         split, a stock dividend on the Common Stock, a combination, a
         reclassification of the Common Stock or other similar event, and such
         event takes place during the reference period for the determination of
         the Conversion Price for any Conversion thereof, the Conversion Price
         shall be calculated giving appropriate effect to the stock split, stock
         dividend, combination, reclassification or other similar event for all
         Trading Days occurring during such reference period.

                  c. Adjustment Due to Merger, Consolidation, Etc. If, prior to
         the Conversion of all of the Preferred Shares, there shall be any
         merger, consolidation, business combination, tender offer, exchange of
         shares, recapitalization, reorganization, redemption or other similar
         event, as a result of which shares of Common Stock shall be changed
         into the same or a different number of shares of the same or another
         class or classes of stock or securities of the Corporation or another
         entity (an "Exchange Transaction"), then such Holder shall (A) upon the
         consummation of such Exchange Transaction, have the right to receive,
         with respect to any shares of Common Stock then held by such Holder, or
         which such Holder is then entitled to receive pursuant to a Conversion
         Notice previously delivered by such Holder (and without regard to
         whether such shares contain a restrictive legend or are
         freely-tradable), the same amount and type of consideration (including
         without limitation, stock, securities and/or other assets) and on the
         same terms as a holder of shares of Common Stock would be entitled to
         receive in connection with the consummation of such Exchange
         Transaction (the "Exchange Consideration"), and (B) upon the Conversion
         of Preferred Shares occurring subsequent to the consummation of such
         Exchange Transaction (a "Subsequent Conversion"), have the right to
         receive the Exchange Consideration which such Holder would have been
         entitled to receive in connection with such Exchange Transaction had
         such shares been converted immediately prior to such Exchange
         Transaction at the Conversion Price applicable on the Conversion Date
         relating to such Subsequent Conversion, and in any such case
         appropriate provisions shall be made with respect to the rights and
         interests of such Holder to the end that the provisions hereof
         (including, without limitation, provisions for the adjustment of the
         Conversion Price and of the number of shares of Common Stock issuable
         upon a Conversion) shall thereafter be applicable as nearly as may be
         practicable in relation to any securities thereafter deliverable upon
         the Conversion of such Preferred Shares. The Corporation shall not
         effect any Exchange Transaction unless (i) it first gives to each
         Holder twenty (20) days prior written notice of such Exchange
         Transaction (an "Exchange Notice"), and makes a public announcement of
         such event at the same time that it gives such notice (it being
         understood that the filing by the Corporation of a Form 8-K for the
         purpose of disclosing the anticipated consummation of the Exchange
         Transaction shall constitute an Exchange Notice for purposes of this
         provision) and (ii) the resulting successor or acquiring entity (if not
         the Corporation) assumes by written instrument the obligations of the
         Corporation hereunder,


                                      -14-
<PAGE>   15
         including the terms of this subparagraph 6(c), and under the Securities
         Purchase Agreement and the Registration Rights Agreement.

                  d. Distribution of Assets. If the Corporation or any of its
         subsidiaries shall declare or make any distribution of cash, evidences
         of indebtedness or other securities or assets (other than cash
         dividends or distributions payable out of earned surplus or net profits
         for the current or the immediately preceding year), or any rights to
         acquire any of the foregoing, to holders of Common Stock (or to a
         holder of the common stock of any such subsidiary) as a partial
         liquidating dividend, by way of return of capital or otherwise,
         including any dividend or distribution in shares of capital stock of a
         subsidiary of the Corporation (collectively, a "Distribution"), then,
         upon a Conversion by a Holder occurring after the record date for
         determining stockholders entitled to such Distribution, the applicable
         Conversion Price for Preferred Shares not converted prior to the record
         date of a Distribution shall be reduced by an amount equal to the fair
         market value of the assets so distributed with respect to each share of
         Common Stock, such fair market value to be determined by an investment
         banking firm selected by all of the holders of Preferred Shares then
         outstanding and reasonably acceptable to the Corporation.

                  e. Adjustment Pursuant to Other Agreements. In addition to and
         without limiting in any way the adjustments provided in this Section 6
         of Article FOURTH: A., the Conversion Price shall be adjusted as may be
         required by the provisions of the Registration Rights Agreement and/or
         by the provisions of the Securities Purchase Agreement.

                  f. No Fractional Shares. If any adjustment under this Section
         would create a fractional share of Common Stock or a right to acquire a
         fractional share of Common Stock, such fractional share shall be
         disregarded and the number of shares of Common Stock issuable upon
         Conversion shall be rounded to the nearest whole number of shares.

         7. Mandatory Conversion.

                  a. Mandatory Conversion. The Corporation shall have the right,
         upon the satisfaction of each of the Mandatory Conversion Conditions
         (as defined below), to require conversion of all of the Preferred
         Shares outstanding on the Mandatory Conversion Date (as defined below)
         (a "Mandatory Conversion"). In the event of a Mandatory Conversion,
         the Corporation and each Holder shall follow the procedures for
         Conversion set forth in Section 4 of Article FOURTH: A. above, with the
         Mandatory Conversion Date (as defined below) deemed to be the
         Conversion Date, except that a Holder shall not be required to send a
         Conversion Notice as contemplated by paragraph (b) of Section 4 of
         Article FOURTH: A.

                  b. Mandatory Conversion Notice. In order to effect a Mandatory
         Conversion hereunder, the Corporation must deliver to each Holder
         written notice thereof (a "Mandatory Conversion Notice") on or before
         5:00 p.m. (eastern time)


                                      -15-
<PAGE>   16
         on a Business Day (the "Mandatory Conversion Notice Date") that (i)
         occurs on or before the third Business Day immediately following the
         last Trading Day of the Mandatory Conversion Period (as defined below)
         and (ii) is not less than fifteen (15) Trading Days prior to the date
         on which such Mandatory Conversion is to be effected (the "Mandatory
         Conversion Date") and, at the same time that it delivers such notice,
         the Corporation shall confirm delivery thereof with each Holder by
         telephone, either personally or by voicemail message. Notwithstanding
         the delivery by the Corporation of a Mandatory Conversion Notice,
         nothing contained herein shall be deemed to limit in any way (i) the
         right of a Holder to convert Preferred Shares prior to the Mandatory
         Conversion Date or (ii) the availability of any and all remedies that
         are provided to a Holder hereunder, including without limitation in the
         event that the Corporation fails to deliver Conversion Shares upon a
         Mandatory Conversion as required by the terms of Section 4 of Article
         FOURTH: A. hereof.

                  c. Mandatory Conversion Conditions. The Mandatory Conversion
         Conditions are as follows:

                           (1) at any time after the 365-day period following
                  the Closing Date, the Closing Bid Price shall have been
                  greater than $15.00 for fifteen (15) consecutive Trading Days
                  (such 15-Trading Day period being referred to herein as a
                  "Mandatory Conversion Period");

                           (2) during the Mandatory Conversion Period, on the
                  Mandatory Conversion Notice Date and at all times during the
                  period from the Mandatory Conversion Notice Date through the
                  Mandatory Conversion Date, (x) a registration statement filed
                  under the Securities Act shall be effective and available to
                  the Holders for the sale of all of the Conversion Shares into
                  which the Preferred Shares and Warrants then outstanding are
                  convertible or exercisable, as the case may be (without regard
                  to any restriction or limitation on the conversion thereof),
                  or such Conversion Shares may be sold under Rule 144(k), (y)
                  the Common Stock shall be listed on the Nasdaq SmallCap
                  Market, the Nasdaq National Market System or the New York
                  Stock Exchange, and (z) trading in the Common Stock, or
                  trading generally, shall not have been suspended by the
                  principal market on which the Common Stock is traded;

                           (3) the Corporation shall not have breached, at any
                  time prior to the Mandatory Conversion Date, any material
                  agreement or obligation hereunder or under the Securities
                  Purchase Agreement or the Registration Rights Agreement; and

                           (4) a Mandatory Redemption Event (as defined below)
                  shall not have occurred and be continuing as of the Mandatory
                  Conversion Notice Date or the Mandatory Conversion Date.

         8. Redemption.


                                      -16-
<PAGE>   17
                  a. Mandatory Redemption by the Holder.

                           (1) Mandatory Redemption. In the event that a
                  Mandatory Redemption Event (as defined below) occurs, each
                  Holder shall have the right to require the Corporation to
                  redeem all or any portion of the Preferred Shares held by such
                  Holder (a "Mandatory Redemption") at the Mandatory Redemption
                  Price (as defined herein). In order to exercise its right to
                  effect a Mandatory Redemption, a Holder must deliver a written
                  notice (a "Mandatory Redemption Notice") to the Corporation at
                  any time on or before 5:00 p.m. (eastern time) on the third
                  (3rd) Business Day following the Business Day on which the
                  Mandatory Redemption Event to which such Mandatory Redemption
                  Notice relates is no longer continuing. The Mandatory
                  Redemption Notice shall specify the effective date of such
                  Mandatory Redemption (the "Mandatory Redemption Date") and the
                  number of such shares to be redeemed.

                           (2) Mandatory Redemption Event. Each of the following
                  events shall be deemed a "Mandatory Redemption Event":

                                    (a) the Corporation fails for any reason
                           (including without limitation as a result of not
                           having a sufficient number of shares of Common Stock
                           authorized and reserved for issuance, or as a result
                           of the limitation contained in Section 5(a) of
                           Article FOURTH: A. hereof) to issue shares of Common
                           Stock to a Holder and deliver certificates
                           representing such shares to such Holder as and when
                           required by the provisions hereof upon Conversion of
                           any Preferred Shares, as a result of any willful
                           action or willful failure to act on the part of the
                           Corporation, and such failure continues for ten (10)
                           Business Days;

                                    (b) the Corporation breaches, in a material
                           respect, any covenant or other material term or
                           condition of this Certificate, the Securities
                           Purchase Agreement, the Registration Rights
                           Agreement, or any other agreement, document,
                           certificate or other instrument delivered in
                           connection with the transactions contemplated
                           thereby, and such breach continues for a period of
                           five (5) Business Days after written notice thereof
                           to the Corporation from a Holder;

                                    (c) any material representation or warranty
                           made by the Corporation in the Securities Purchase
                           Agreement, the Registration Rights Agreement or any
                           other agreement, document, certificate or other
                           instrument delivered in connection with the
                           transactions contemplated hereby or thereby is
                           inaccurate or misleading in any material respect as
                           of the date such representation or warranty was made;


                                      -17-
<PAGE>   18
                                    (d) the Registration Statement is not
                           declared effective by the one hundred and twenty
                           fifth (125th) day following the Issue Date or if the
                           Registration Statement has been declared effective by
                           such date and, while the effectiveness of the
                           Registration Statement is required to be maintained
                           pursuant to the terms of the Registration Rights
                           Agreement, the effectiveness of the Registration
                           Statement lapses for any reason (including without
                           limitation, the issuance of a stop order) or is
                           unavailable to the Holder for the sale of Conversion
                           Shares in accordance with the terms of the
                           Registration Rights Agreement, and such lapse or
                           unavailability continues for a period of five (5)
                           consecutive Business Days (other than during a
                           "Blackout Period" as that term is defined in the
                           Registration Rights Agreement), in any twelve (12)
                           month period, provided that such failure to be
                           declared effective, lapse or unavailability occurs as
                           a result of any willful action or willful failure to
                           act on the part of the Corporation;

                                    (e) the Common Stock is not quoted on the
                           Nasdaq SmallCap Market or the Nasdaq National Market
                           or listed on the New York State Exchange, or trading
                           in the Common Stock on such market or exchange is
                           suspended and such suspension is in effect for more
                           than five consecutive (5) Trading Days, and such
                           suspension or failure to be so quoted or listed
                           occurs as a result of any willful action or willful
                           failure to act on the part of the Corporation; and

                                    (f) the Corporation does not obtain
                           Stockholder Approval on or before May 31, 1999.

                           (3) Mandatory Redemption Price. The "Mandatory
                  Redemption Price" shall be equal to the greater of (i) the
                  Liquidation Preference of the Preferred Shares being redeemed
                  multiplied by one hundred and fifteen percent (115%) and (ii)
                  an amount determined by dividing the Liquidation Preference of
                  the Preferred Shares being redeemed by the Conversion Price in
                  effect on the Mandatory Redemption Date and multiplying the
                  resulting quotient by the average Closing Trade Price for the
                  Common Stock on the five (5) Trading Days immediately
                  preceding (but not including) the Mandatory Redemption Date.

                           (4) Payment of Mandatory Redemption Price.

                                    (a) The Corporation shall pay the Mandatory
                           Redemption Price to the Holder exercising its right
                           to redemption on the later to occur of (i) the fifth
                           (5th) Business Day following the Mandatory Redemption
                           Date and (ii) the date on which the Preferred Shares
                           being redeemed are delivered by the Purchaser to the
                           Corporation for cancellation (the "Mandatory
                           Redemption Payment Date").


                                      -18-
<PAGE>   19
                                    (b) If Corporation fails to pay the
                           Mandatory Redemption Price to the Holder on or before
                           the Mandatory Redemption Date, the Holder shall be
                           entitled to interest thereon, from and after the
                           Mandatory Redemption Payment Date until the Mandatory
                           Redemption Price has been paid in full, at an annual
                           rate equal to the Default Interest Rate.

                                    (c) If the Corporation fails to pay the
                           Mandatory Redemption Price within ten (10) Business
                           Days of the Mandatory Redemption Date, then the
                           Holder shall have the right to regain its rights as a
                           Holder of the Series C Preferred Stock and, upon
                           written notice to such effect from the Holder, the
                           Corporation shall return to such Holder the
                           certificates representing the Preferred Shares that
                           were delivered to the Corporation in connection with
                           such Mandatory Redemption; in such event, the
                           Conversion Price otherwise applicable to future
                           Conversions of the Preferred Shares shall be reduced
                           by one percent (1%) for each day beyond such 10th
                           Business Day in which the failure to pay the
                           Mandatory Redemption Price continued until the date
                           of such notice; provided, however, that the maximum
                           percentage by which such Conversion Price may be
                           reduced hereunder shall be fifty percent (50%).

                  b. Optional Redemption By Corporation.

                           (1) Optional Redemption. The Corporation shall have
                  the right, at any time and from time to time, upon the
                  satisfaction of each of the Optional Redemption Conditions (as
                  defined below), to redeem any Preferred Shares that are
                  submitted for Conversion at a Conversion Price that is less
                  than $7.00 (subject to equitable adjustments from time to time
                  for the events described in Section 6 of Article FOURTH: A.
                  hereof) (the "Optional Redemption Trigger Price") in
                  accordance with the terms hereof (an "Optional Redemption").
                  The date on which an Optional Redemption is effected and the
                  Optional Redemption Price (as defined below) is paid by the
                  Corporation to a Holder is referred to herein as an "Optional
                  Redemption Date".

                           (2) Optional Redemption Notice. In order to effect an
                  Optional Redemption hereunder with respect to a Conversion of
                  Preferred Shares at a Conversion Price below the Optional
                  Redemption Trigger Price, the Corporation must deliver to the
                  Holder seeking such Conversion written notice of such Optional
                  Redemption (an "Optional Redemption Notice") on or before 5:00
                  p.m. (eastern time) on the Business Day immediately following
                  the Conversion Date for such Conversion and, at the same time
                  that it delivers such notice, the Corporation shall confirm
                  delivery thereof with such Holder by telephone, either
                  personally or by voicemail message. Notwithstanding the
                  foregoing, each Holder shall have the right, at any


                                      -19-
<PAGE>   20
                  time and from time to time, to deliver a written request (an
                  "Optional Redemption Request") to the Corporation and, upon
                  delivery of an Optional Redemption Request by a Holder to the
                  Corporation, the Corporation shall respond to such Holder in
                  writing (an "Optional Redemption Response") on or before 5:00
                  p.m. (eastern time) on the Business Day immediately following
                  the Business Day on which such Optional Redemption Request is
                  delivered to the Corporation. The Optional Redemption Response
                  shall state whether the Corporation intends to redeem such
                  Holder's Preferred Shares in the event that such Holder
                  submits a Conversion Notice during the period of five (5)
                  Business Days following the Business Day on which the Company
                  delivers an Optional Redemption Response to such Holder (the
                  "Optional Redemption Period") with a Conversion Price that is
                  less than the Optional Redemption Trigger Price. In the event
                  that the Corporation states in an Optional Redemption Response
                  delivered to a Holder that the Corporation intends to redeem
                  Preferred Shares that would otherwise be converted at a
                  Conversion Price that is less than the Optional Redemption
                  Trigger Price, the Corporation must (subject to the
                  satisfaction of each of the Optional Redemption Conditions)
                  redeem all or, if the Corporation intends to redeem less than
                  all, the percentage specified in the Optional Redemption
                  Response, of the Preferred Shares for which a Conversion
                  Notice or Notices may be delivered to the Corporation during
                  the Optional Redemption Period by such Holder with a
                  Conversion Price that is less than the Optional Redemption
                  Trigger Price (in which case the Corporation shall not be
                  required to deliver an Optional Redemption Notice to such
                  Holder). In the event that (i) the Corporation fails to
                  deliver an Optional Redemption Response to a Holder on or
                  before 5:00 p.m. on the Business Day immediately following the
                  Business Day on which such Holder delivers an Optional
                  Redemption Request to the Corporation or (ii) the Corporation
                  states in an Optional Redemption Response that it does not
                  intend to redeem Preferred Shares during the related Optional
                  Redemption Period, the Corporation may not redeem any
                  Preferred Shares for which a Conversion Notice is submitted by
                  such Holder during such Optional Redemption Period.

                           (3) Optional Redemption Conditions. The Optional
                  Redemption Conditions are as follows:

                                    (a) the Corporation shall not have breached,
                           at any time prior to the Optional Redemption Date,
                           any material agreement or obligation hereunder or
                           under the Securities Purchase Agreement or the
                           Registration Rights Agreement which remains uncured
                           as of the Optional Redemption Date, including without
                           limitation, the Corporation's obligation to effect
                           Conversions in accordance with the terms hereof; and


                                      -20-
<PAGE>   21
                                    (b) a Mandatory Redemption Event shall not
                           have occurred and be continuing as of the Optional
                           Redemption Date.

                           (4) Optional Redemption Price. The "Optional
                  Redemption Price" to be paid by the Corporation to a Holder in
                  the event of an Optional Redemption shall be equal to (A) the
                  aggregate Stated Value of the Preferred Shares being redeemed
                  times a percentage such that the resulting product will
                  represent an annualized return on such Stated Value of one
                  hundred and ten percent (110%) from the Issue Date for such
                  Preferred Shares through and including the related Optional
                  Redemption Date plus (B) all Premium accrued on such Preferred
                  Shares through and including such Optional Redemption Date.

                           (5) Payment of Optional Redemption Price.

                                    (a) The Corporation shall pay the Optional
                           Redemption Price by wire transfer in immediately
                           available funds to each Holder on or before 5:00 p.m.
                           (eastern time) on the thirtieth (30th) day following
                           the Conversion Date for the Preferred Shares being
                           redeemed (the "Optional Redemption Payment Date").

                                    (b) If the Corporation fails to pay the
                           Optional Redemption Price by wire transfer in
                           immediately available funds to a Holder on or before
                           the Optional Redemption Payment Date, (i) such Holder
                           shall be entitled to interest thereon, from and after
                           the Optional Redemption Payment Date until the
                           Optional Redemption Price has been paid in full, at
                           an annual rate equal to the Default Interest Rate for
                           the number of days elapsed from such Optional
                           Redemption Payment Date until such amount is paid in
                           full, (ii) such Holder shall have the option to
                           regain, as of the date of delivery of written notice
                           thereof to the Corporation (a "Redemption Default
                           Notice"), its rights as a Holder of the Preferred
                           Shares that were redeemed, in which case the Variable
                           Conversion Price for such Preferred Shares upon the
                           subsequent conversion thereof will be equal to the
                           lesser of (x) the lowest Variable Conversion Price
                           occurring during the thirty day period immediately
                           preceding the Optional Redemption Date and (y) the
                           Variable Conversion Price in effect on the applicable
                           Conversion Date (it being understood that such Holder
                           may deliver a Conversion Notice with respect to such
                           Preferred Shares at any time following delivery of a
                           Redemption Default Notice to the Corporation) and
                           (iii) the Corporation shall not be entitled to effect
                           an Optional Redemption thereafter with respect to any
                           Preferred Shares.

                  9. Miscellaneous.


                                      -21-
<PAGE>   22
                  a. Transfer of Preferred Shares. A Holder may sell or transfer
         all or any portion of the Preferred Shares to any person or entity as
         long as such sale or transfer is the subject of an effective
         registration statement under the Securities Act or is exempt from
         registration thereunder and otherwise is made in accordance with the
         terms of the Securities Purchase Agreement. From and after the date of
         such sale or transfer, the transferee thereof shall be deemed to be a
         Holder. Upon any such sale or transfer, the Corporation shall, promptly
         following the return of the certificate or certificates representing
         the Preferred Shares that are the subject of such sale or transfer,
         issue and deliver to such transferee a new certificate in the name of
         such transferee.

                  b. Notices. Except as otherwise provided herein, any notice,
         demand or request required or permitted to be given pursuant to the
         terms hereof, the form or delivery of which notice, demand or request
         is not otherwise specified herein, shall be in writing and shall be
         deemed delivered (i) when delivered personally or by verifiable
         facsimile transmission on or before 5:00 p.m., eastern time, on a
         Business Day or, if such day is not a Business Day, on the next
         succeeding Business Day, (ii) on the next Business Day after timely
         delivery to an overnight courier and (iii) on the Business Day actually
         received if deposited in the U.S. mail (certified or registered mail,
         return receipt requested, postage prepaid), addressed to the parties as
         follows:

         If to the Corporation:

         Shared Technologies Cellular, Inc.
         100 Great Meadow Road
         Suite 100
         Wethersfield, CT 06109
         Attn: Legal Department
         Tel:  (860) 258-2500
         Fax:  (860) 258-2455

         with a copy to:

         Day, Berry & Howard LLP
         260 Franklin Street
         Boston MA 02110
         Attn: Jeffrey A. Clopeck, Esq.
         Tel:   (617) 345-4600
         Fax:   (617) 345-4745


         and if to any Holder, to such address for such Holder as shall be
         designated by such Holder in writing to the Corporation.

                  c. Lost or Stolen Certificate. Upon receipt by the Corporation
         of evidence of the loss, theft, destruction or mutilation of a
         certificate representing


                                      -22-
<PAGE>   23
         Preferred Shares, and (in the case of loss, theft or destruction) of
         indemnity or security reasonably satisfactory to the Corporation, and
         upon surrender and cancellation of such certificate if mutilated, the
         Corporation shall execute and deliver to the Holder a new certificate
         identical in all respects to the original certificate.

                  d. No Voting Rights. Except as provided by applicable law and
         paragraph 9(g) below, the Holders of the Preferred Shares shall have no
         voting rights with respect to the business, management or affairs of
         the Corporation; provided that the Corporation shall provide each
         Holder with prior notification of each meeting of stockholders (and
         copies of proxy statements and other information sent to such
         stockholders).

                  e. Remedies, Characterization, Other Obligations, Breaches and
         Injunctive Relief. The remedies provided to a Holder in this
         Certificate of Designation shall be cumulative and in addition to all
         other remedies available to such Holder under this Certificate of
         Designation or under any Transaction Document (as defined in the
         Securities Purchase Agreement), at law or in equity (including without
         limitation 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
         contained herein shall limit such Holder's right to pursue actual
         damages for any failure by the Corporation to comply with the terms of
         these Certificate of Designation. The Corporation agrees with each
         Holder that there shall be no characterization concerning this
         instrument other than as specifically provided herein. Amounts set
         forth or provided for herein with respect to payments, conversion and
         the like (and the computation thereof) shall be the amounts to be
         received by the Holder hereof and shall not, except as expressly
         provided herein, be subject to any other obligation of the Corporation
         (or the performance thereof). The Corporation acknowledges that a
         breach by it of its obligations hereunder will cause irreparable harm
         to the Holders and that the remedy at law for any such breach may be
         inadequate. The Corporation agrees, in the event of any such breach or
         threatened breach, each Holder shall be entitled, in addition to all
         other available remedies, to an injunction restraining any breach,
         without the necessity of showing economic loss and without any bond or
         other security being required.

                  f. Failure or Delay 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.

                  g. Protective Provisions.

         So long as shares of Series C Preferred Stock are outstanding, the
         Corporation shall not, without first obtaining the approval of the
         Holders of at least two-thirds (2/3) of outstanding shares of Series C
         Preferred Stock:


                                      -23-
<PAGE>   24
                                    (1) alter, change, modify or amend (x) the
                           terms of the Series C Preferred Stock in any way or
                           (y) the terms of any other capital stock of the
                           Corporation so as to affect adversely the Series C
                           Preferred Stock;

                                    (2) create any new class or series of
                           capital stock having a preference over or ranking
                           pari passu with the Series C Preferred Stock as to
                           redemption or distribution of assets upon a
                           Liquidation Event or any other liquidation,
                           dissolution or winding up of the Corporation;

                                    (3) increase the authorized number of shares
                           of Series C Preferred Stock;

                                    (4) re-issue any shares of Series C
                           Preferred Stock which have been converted or redeemed
                           in accordance with the terms hereof;

                                    (5) issue any Pari Passu Securities or
                           Senior Securities (other than non-convertible debt
                           securities or debt securities which are convertible
                           into or exchangeable for Common Stock or any other
                           equity or convertible security of the Corporation
                           junior to the Series C Preferred Stock);

                                    (6) redeem, or declare, pay or make any
                           provision for any dividend or distribution with
                           respect to, the Common Stock or any other capital
                           stock of the Corporation ranking junior to the Series
                           C Preferred Stock as to the distribution of assets
                           upon liquidation, dissolution or winding up of the
                           Corporation; or

                                    (7) issue any Series C Preferred Stock
                           except pursuant to the terms of the Securities
                           Purchase Agreement.

                  In the event that the Holders of at least two-thirds of the
                  outstanding shares of Series C Preferred Stock agree to allow
                  the Corporation to alter or change the rights, preferences or
                  privileges of the shares of Series C Preferred Stock pursuant
                  to the terms hereof, then the Corporation will deliver notice
                  of such approved change to the holders of the Series C
                  Preferred Stock that did not agree to such alteration or
                  change (the "Dissenting Holders") and the Dissenting Holders
                  shall have the right for a period of thirty (30) days
                  following such delivery to convert their Preferred Shares
                  pursuant to the terms hereof as they existed prior to such
                  alteration or change, or to continue to hold such Preferred
                  Shares. No such change shall be effective to the extent that,
                  by its terms, it applies to less than all of the Holders of
                  Preferred Shares then outstanding.

         B.       Series D Preferred Stock.

         The Board of Directors has heretofore authorized a series of the
Corporation's previously authorized Preferred Stock, par value $.01 per share,
with the designation and number of shares, and relative rights, preferences,
privileges and restrictions thereof as follows:


                                      -24-
<PAGE>   25
                  1. Designation and Amount. The designation of this series,
         which consists of ten thousand (10,000) shares of Preferred Stock, is
         the "Series D Convertible Preferred Stock" (the "Series D Preferred
         Stock") and the face amount of each share of Series D Preferred Stock
         (each, a "Series D Preferred Share" and collectively, the "Series D
         Preferred Shares") shall be One Thousand Dollars ($1,000) per Series D
         Preferred Share (the "Stated Value"). The date on which the Series D
         Preferred Shares are issued and sold pursuant to the Securities
         Purchase Agreement, dated as of October 1, 1999, between the Company
         and the Purchasers named therein (the "Securities Purchase Agreement")
         is referred to herein as the "Issue Date". The holders of Series D
         Preferred Shares are each referred to as a "Holder" and, collectively,
         as the "Holders".

                  2. Dividends. The Series D Preferred Stock will not bear
         dividends.

                  3. Priority.

                           a. Payment upon Dissolution.

                                    (1) Upon the occurrence of (x) any
                           insolvency or bankruptcy proceedings, or any
                           receivership, liquidation, reorganization or other
                           similar proceedings in connection therewith,
                           commenced by the Corporation or by its creditors, as
                           such, or relating to its assets or (y) the
                           dissolution or other winding up of the Corporation
                           whether total or partial, whether voluntary or
                           involuntary and whether or not involving insolvency
                           or bankruptcy proceedings, or (z) any assignment for
                           the benefit of creditors or any marshalling of the
                           material assets or material liabilities of the
                           Corporation (each, a "Liquidation Event"), no
                           distribution shall be made to the holders of any
                           shares of Junior Securities (as defined below)
                           unless, following the payment of preferential amounts
                           on all Senior Securities (as defined below), each
                           Holder shall have received the Liquidation Preference
                           (as defined below) with respect to each Series D
                           Preferred Share then held by such Holder. In the
                           event that upon the occurrence of a Liquidation
                           Event, and following the payment of preferential
                           amounts on all Senior Securities, the assets
                           available for distribution to the Holders and the
                           holders of Pari Passu Securities (as defined below)
                           are insufficient to pay the Liquidation Preference
                           with respect to all of the outstanding Series D
                           Preferred Shares and the preferential amounts payable
                           to such holders, the entire assets of the Corporation
                           shall be distributed ratably among the Series D
                           Preferred Shares and the shares of Pari Passu
                           Securities in proportion to the ratio that the
                           preferential amount payable on each such share (which
                           shall be the Liquidation Preference in the case of a
                           Series D Preferred Share) bears to the aggregate
                           preferential amount payable on all such shares.

                                    (2) The "Liquidation Preference" with
                           respect to a Series D Preferred Share shall mean an
                           amount equal to the Stated Value of such Series D
                           Preferred Share plus the Premium (as defined below)
                           accrued on such Series D Preferred Share in
                           accordance with the terms hereof.


                                      -25-
<PAGE>   26
                  "Junior Securities" shall mean the Common Stock and all other
                  capital stock of the Corporation that are not Pari Passu
                  Securities or do not have a preference over the Series D
                  Preferred Stock in respect of redemption or distribution upon
                  liquidation. "Pari Passu Securities" shall mean the Series C
                  Convertible Preferred Stock of the Corporation and any other
                  securities ranking pari passu with the Series D Preferred
                  Stock in respect of redemption or distribution upon
                  liquidation. "Senior Securities" shall mean (i) any debt
                  issued or assumed by the Corporation and (ii) any securities
                  of the Corporation which by their terms have a preference over
                  the Series D Preferred Stock in respect of redemption or
                  distribution upon liquidation.

         4. Conversion.

                  a. Right to Convert. Each Holder shall have the right to
         convert, at any time and from time to time after the Issue Date, all or
         any part of the Series D Preferred Shares held by such Holder into such
         number of fully paid and non-assessable shares ("Conversion Shares") of
         the Common Stock as is determined in accordance with the terms hereof
         (a "Conversion").

                  b. Conversion Notice. In order to convert Series D Preferred
         Shares, a Holder shall send by facsimile transmission, at any time
         prior to 11:59 p.m., eastern time, on the date on which such Holder
         wishes to effect such Conversion (the "Conversion Date"), (i) a notice
         of conversion (a "Conversion Notice"), in substantially the form of
         Exhibit A hereto, to the Corporation and to the Corporation's transfer
         agent for the Common Stock (the "Transfer Agent") stating the number of
         Series D Preferred Shares to be converted, the amount of Premium (as
         defined below) accrued thereon, the applicable Conversion Price (as
         defined below) and a calculation of the number of shares of Common
         Stock issuable upon such Conversion and (ii) a copy of the certificate
         or certificates representing the Series D Preferred Shares being
         converted. The Holder shall thereafter send the original of the
         Conversion Notice and of such certificate or certificates to the
         Transfer Agent. The Corporation shall issue a new certificate for
         Series D Preferred Shares in the event that less than all of the Series
         D Preferred Shares represented by a certificate delivered to the
         Corporation in connection with a Conversion are converted. Except as
         otherwise provided herein, upon delivery of a Conversion Notice by a
         Holder in accordance with the terms hereof, such Holder shall, as of
         the applicable Conversion Date, be deemed for all purposes to be record
         owner of the Common Stock to which such Conversion Notice relates. In
         the case of a dispute between the Corporation and a Holder as to the
         calculation of the Conversion Price or the number of Conversion Shares
         issuable upon a Conversion, the Corporation shall issue to such Holder
         the number of Conversion Shares that are not disputed within the time
         frames specified in paragraph 4(e) below and shall submit the disputed
         calculations to its independent accountant within one (1) Business Day
         of receipt of such Holder's Conversion Notice. The Corporation shall
         cause such accountant to calculate the Conversion Price as provided
         herein and to notify the Corporation and such Holder of the results in


                                      -26-
<PAGE>   27
         writing no later than five (5) Business Days following the
         Corporation's receipt of such Holder's Conversion Notice (such 5th
         Business Day being referred to herein as the "Disputed Share
         Calculation Date") . Such accountant's calculation shall be deemed
         conclusive absent manifest error. The fees of any such accountant shall
         be borne by the party whose calculations were most at variance with
         those of such accountant.

                  c. Number of Conversion Shares; Conversion Price. The number
         of Conversion Shares to be delivered by the Corporation pursuant to a
         Conversion shall be determined in accordance with the following
         formula:

                                     SV + P
                                     ------
                                       CP


         where SV represents the aggregate Stated Value of the Series D
         Preferred Shares to be converted,


         P represents the aggregate Premium (i) accrued on such Series D
         Preferred Shares and (ii) eligible for payment by the Corporation in
         Conversion Shares, it being understood that, unless each of the Premium
         Share Conditions (as defined in paragraph 4(g) below) is satisfied or
         waived by the Holder of such Series D Preferred Shares, the Corporation
         may not pay accrued Premium in shares of Common Stock and must pay such
         Premium on the applicable Delivery Date (as defined below) in
         immediately available funds in accordance with the terms of this
         Certificate, and

         CP represents the Conversion Price (as defined below) in effect on the
         applicable Conversion Date.

         "Premium" with respect to a Series D Preferred Share shall be
         determined in accordance with the following formula:


                                  (SV)(.06)(N)
                                  ------------
                                       365


         where SV represents the Stated Value of such Series D Preferred Share,
         and


         N represents the number of days elapsed from the Issue Date through and
         including the Conversion Date relating to such Series D Preferred
         Share.

         Subject to adjustment as provided elsewhere herein, "Conversion Price"
         shall mean $8.875.


                  d. Certain Definitions. "Trading Day" means any day on which
         the Common Stock is purchased and sold on the principal securities
         exchange or


                                      -27-
<PAGE>   28
         market on which the Common Stock is then listed or traded. "Business
         Day" means any day on which the New York Stock Exchange and commercial
         banks located in the City of New York are open for business.

                  e. Delivery of Common Stock Upon Conversion. Upon receipt of a
         Conversion Notice from a Holder pursuant to paragraph 4(b) above, the
         Corporation shall, on or before the close of business on the latest to
         occur of (i) the third (3rd) Business Day following the Conversion Date
         set forth in such Conversion Notice, (ii) the Business Day immediately
         following the day on which the certificates representing the Series D
         Preferred Shares are delivered by such Holder to the Corporation or the
         Transfer Agent, and (iii) with respect to Conversion Shares that are
         the subject of a dispute as described in paragraph 4(b) above, the
         Business Day immediately following the Disputed Share Calculation Date
         (the latest of such Business Days being referred to herein as the
         "Delivery Date"), issue and deliver or cause to be delivered to such
         Holder the number of Conversion Shares to which such Holder is entitled
         to receive as provided herein. The Corporation shall effect delivery of
         Conversion Shares to a Holder by, as long as the Transfer Agent
         participates in the Depository Trust Company ("DTC") Fast Automated
         Securities Transfer program ("FAST"), crediting the account of such
         Holder or its nominee at DTC (as specified in the applicable Conversion
         Notice) with the number of Conversion Shares required to be delivered,
         no later than the close of business on such Delivery Date. In the event
         that Transfer Agent is not a participant in FAST or if a Holder so
         specifies in a Conversion Notice or otherwise in writing on or before
         the Conversion Date, the Corporation shall effect delivery of
         Conversion Shares by delivering to the Holder or its nominee physical
         certificates representing such Conversion Shares, no later than the
         close of business on such Delivery Date. If any Conversion would create
         a fractional Conversion Share, such fractional Conversion Share shall
         be disregarded and the number of Conversion Shares issuable upon such
         Conversion, in the aggregate, shall be the rounded to the nearest whole
         number of Conversion Shares. Conversion Shares delivered to the Holder
         shall not contain any restrictive legend as long as (A) the sale,
         transfer, pledge or other disposition of such Conversion Shares is
         covered by an effective registration statement, (B) such Conversion
         Shares have been publicly sold pursuant to Rule 144 ("Rule 144"), or
         (C) such Conversion Shares can be sold pursuant to Rule 144(k) under
         Securities Act of 1933, as amended (the "Securities Act"), or any
         successor rule or provision .

                  f. Failure to Deliver Conversion Shares.

                           (1) In the event that the Corporation fails for any
                  reason to deliver to a Holder certificates (without any
                  restrictive legend in the circumstances described in clause
                  (A) or (B) of paragraph 4(e) above) representing the number of
                  Conversion Shares specified in the applicable Conversion
                  Notice on or before the Delivery Date therefor (a "Conversion
                  Default") as a result of any willful action or any willful
                  failure to act on the part of the Corporation, and such
                  failure to deliver certificates continues for twenty (20)
                  Business Days following the delivery of written


                                      -28-
<PAGE>   29
                  notice thereof from such Holder (such tenth Business Day being
                  referred to herein as the "Conversion Default Date"), the
                  Corporation shall pay to such Holder payments ("Conversion
                  Default Payments") in the amount of (i) "N" multiplied by (ii)
                  the aggregate Stated Value of the Series D Preferred Shares
                  which are the subject of such Conversion Default multiplied by
                  (iii) one percent (1%), where "N" equals the number of days
                  elapsed between the Conversion Default Date and the earlier to
                  occur of (A) the date on which all of the certificates
                  (without any restrictive legend in the circumstances described
                  in clause (A), (B) or (C) of paragraph 4(e) above)
                  representing such Conversion Shares are issued and delivered
                  to such Holder, (B) the date on which such Series D Preferred
                  Shares are redeemed pursuant to the terms hereof and (C) the
                  date on which a Withdrawal Notice (as defined below) is
                  delivered to the Corporation. Amounts payable under this
                  subparagraph (f) shall be paid to the Holder in immediately
                  available funds on or before the fifth (5th) Business Day of
                  the calendar month immediately following the calendar month in
                  which such amounts have accrued.

                           (2) In the event that a Holder has not received
                  certificates representing the Conversion Shares by the
                  twentieth (20th) Business Day following a Conversion Default
                  as a result of any willful action or any willful failure to
                  act on the part of the Corporation, such Holder may, upon
                  written notice (a "Withdrawal Notice") delivered to the
                  Corporation on such Business Day or on any Business Day
                  thereafter (unless, prior to the delivery of such notice, such
                  Conversion Shares are delivered to such Holder), withdraw its
                  Conversion Notice with respect to such Conversion Shares and
                  regain its rights as a Holder of the Series D Preferred Shares
                  that are the subject of such Conversion Default. In such
                  event, the Conversion Price that would otherwise be in effect
                  when such Series D Preferred Shares are thereafter converted
                  in accordance with the terms hereof shall be reduced by one
                  percent (1%) for each day occurring during the period
                  immediately following such 10th Business Day until the day on
                  which the such Holder delivers a Withdrawal Notice to the
                  Corporation; provided, however, that the maximum percentage by
                  which such Conversion Price may be reduced hereunder shall be
                  fifty percent (50%). (For example, if such Conversion Default
                  were to continue for five days following such 10th Business
                  Day, such Conversion Price would be reduced by 5%; if for ten
                  days, by 10%; and for fifty days or more, 50%, so that the
                  number of Conversion Shares deliverable upon conversion of
                  such Series D Preferred Shares would be increased
                  proportionately). Upon delivery by a Holder of a Withdrawal
                  Notice, such Holder shall retain all of such Holder's rights
                  and remedies with respect to the Corporation's failure to
                  deliver such Conversion Shares (including without limitation
                  the right to receive the cash payments specified in
                  subparagraph 4(f)(1) above).


                                      -29-
<PAGE>   30
                           (3) In addition to any other remedies provided
                  herein, each Holder shall have the right to pursue actual
                  damages for the Corporation's failure to issue and deliver
                  Conversion Shares on the applicable Delivery Date (including,
                  without limitation, damages relating to any purchase of shares
                  of Common Stock by such Holder to make delivery on a sale
                  effected in anticipation of receiving Conversion Shares upon
                  Conversion, such damages to be in an amount equal to (A) the
                  aggregate amount paid by such Holder for the shares of Common
                  Stock so purchased minus (B) the aggregate Conversion Price
                  for such Conversion Shares, and such Holder shall have the
                  right to pursue all other remedies available to it at law or
                  in equity (including, without limitation, a decree of specific
                  performance and/or injunctive relief).

                  g. Premium Share Conditions. The Corporation's right to pay
         accrued Premium in Conversion Shares upon conversion of a Series D
         Preferred Share is conditioned upon the satisfaction of each of the
         following conditions (the "Premium Share Conditions"):

                           (1) the number of shares of Common Stock authorized,
                  unissued and unreserved for all other purposes, or held in the
                  Corporation's treasury, is sufficient to pay such Premium in
                  Conversion Shares; and

                           (2) the Common Stock is authorized for quotation on
                  the Nasdaq SmallCap Market or the Nasdaq National Market or
                  for listing or quotation on the New York Stock Exchange or any
                  other national securities exchange and trading in the Common
                  Stock on such market or exchange has not been suspended;

         In the event that any Premium Share Condition is not satisfied as of
         the Conversion Date for a Series D Preferred Share, the premium accrued
         on such Series D Preferred Share shall be payable by the Corporation to
         the Holder thereof in immediately available funds on the Delivery Date
         immediately following such Conversion Date. If the Corporation fails to
         deliver the amount of such Premium in immediately available funds to a
         Holder on or before the close of business on the Delivery Date therefor
         (a "Premium Cash Default"), such amount will bear interest at an annual
         rate equal to at the lower of (x) ten percent (10%) and (y) the highest
         interest rate permitted by applicable law (the "Default Interest
         Rate"), accruing on a daily basis from and after such Delivery Date
         until such amount is paid in full.

                  h. Conversion at Maturity. On the date which is five (5) years
         following the Issue Date (the "Maturity Date"), each Series D Preferred
         Share then outstanding shall be automatically converted into the number
         of shares of Common Stock equal to the Liquidation Preference of such
         shares divided by the Conversion Price then in effect (a "Conversion at
         Maturity"); provided, however, that if, on the Maturity Date, (i) the
         number of shares of Common Stock authorized, unissued and unreserved
         for all other purposes, or held in the


                                      -30-
<PAGE>   31
         Corporation's treasury, is not sufficient to effect the issuance and
         delivery of the number of Conversion Shares into which all outstanding
         Series D Preferred Shares are then convertible, or (ii) the Common
         Stock is not designated for quotation or listed on the Nasdaq SmallCap
         Market, the Nasdaq National Market or the New York Stock Exchange or
         trading in the Common Stock on such market or exchange has been
         suspended, each Holder shall have the option, upon written notice to
         the Corporation, to retain its rights as a holder of Series D Preferred
         Shares, including without limitation, the right to convert such Series
         D Preferred Shares in accordance with the terms of paragraphs 4(a)
         through 4(e) hereof and, upon delivery of such notice, such Series D
         Preferred Shares shall not be subject to a Conversion at Maturity
         hereunder until the thirtieth (30th) day following the later of (a) the
         date on which the event specified (i) or (ii) is no longer continuing
         and (b) the date on which the Corporation delivers to each Holder
         written notice to such effect, and in such event, such thirtieth day
         shall be deemed to be the Maturity Date for purposes of this
         Certificate of Designation. If a Conversion at Maturity occurs, the
         Corporation and each Holder shall follow the procedures for Conversion
         set forth in this Section 4 of Article FOURTH: B., with the Maturity
         Date deemed to be the Conversion Date, except that the Holder shall not
         be required to send a Conversion Notice as contemplated by paragraph
         4(b).

         5. Adjustments To Conversion Price.

                  a. Adjustment to Conversion Price Due to Stock Split, Stock
         Dividend, Etc. If, prior to the Conversion of all of the Series D
         Preferred Shares, (A) the number of outstanding shares of Common Stock
         is increased by a stock split, a stock dividend on the Common Stock, a
         reclassification of the Common Stock, or other similar event, the
         Conversion Price shall be proportionately reduced, or (B) 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 Conversion Price shall be proportionately increased. In such
         event, the Corporation shall notify the Transfer Agent of such change
         on or before the effective date thereof.

                  b. Adjustment Due to Merger, Consolidation, Etc. If, prior to
         the Conversion of all of the Series D Preferred Shares, there shall be
         any merger, consolidation, business combination, tender offer, exchange
         of shares, recapitalization, reorganization, redemption or other
         similar event, as a result of which shares of Common Stock shall be
         changed into the same or a different number of shares of the same or
         another class or classes of stock or securities of the Corporation or
         another entity (an "Exchange Transaction"), then such Holder shall (A)
         upon the consummation of such Exchange Transaction, have the right to
         receive, with respect to any shares of Common Stock then held by such
         Holder, or which such Holder is then entitled to receive pursuant to a
         Conversion Notice previously delivered by such Holder (and without
         regard to whether such shares contain a restrictive legend or are
         freely-tradable), the same amount and type of consideration (including
         without limitation, stock, securities and/or other assets) and on the
         same terms as a holder of shares of Common Stock would be entitled


                                      -31-
<PAGE>   32
         to receive in connection with the consummation of such Exchange
         Transaction (the "Exchange Consideration"), and (B) upon the Conversion
         of Series D Preferred Shares occurring subsequent to the consummation
         of such Exchange Transaction (a "Subsequent Conversion"), have the
         right to receive the Exchange Consideration which such Holder would
         have been entitled to receive in connection with such Exchange
         Transaction had such shares been converted immediately prior to such
         Exchange Transaction at the Conversion Price applicable on the
         Conversion Date relating to such Subsequent Conversion, and in any such
         case appropriate provisions shall be made with respect to the rights
         and interests of such Holder to the end that the provisions hereof
         (including, without limitation, provisions for the adjustment of the
         Conversion Price and of the number of shares of Common Stock issuable
         upon a Conversion) shall thereafter be applicable as nearly as may be
         practicable in relation to any securities thereafter deliverable upon
         the Conversion of such Series D Preferred Shares. The Corporation shall
         not effect any Exchange Transaction unless (i) it first gives to each
         Holder twenty (20) days prior written notice of such Exchange
         Transaction (an "Exchange Notice"), and makes a public announcement of
         such event at the same time that it gives such notice (it being
         understood that the filing by the Corporation of a Form 8-K for the
         purpose of disclosing the anticipated consummation of the Exchange
         Transaction shall constitute an Exchange Notice for purposes of this
         provision) and (ii) the resulting successor or acquiring entity (if not
         the Corporation) assumes by written instrument the obligations of the
         Corporation hereunder, including the terms of this subparagraph 5(b),
         and under the Securities Purchase Agreement and the Registration Rights
         Agreement.

                  c. Distribution of Assets. If the Corporation or any of its
         subsidiaries shall declare or make any distribution of cash, evidences
         of indebtedness or other securities or assets (other than cash
         dividends or distributions payable out of earned surplus or net profits
         for the current or the immediately preceding year), or any rights to
         acquire any of the foregoing, to holders of Common Stock (or to a
         holder of the common stock of any such subsidiary) as a partial
         liquidating dividend, by way of return of capital or otherwise,
         including any dividend or distribution in shares of capital stock of a
         subsidiary of the Corporation (collectively, a "Distribution"), then,
         upon a Conversion by a Holder occurring after the record date for
         determining stockholders entitled to such Distribution, the applicable
         Conversion Price for Series D Preferred Shares not converted prior to
         the record date of a Distribution shall be reduced by an amount equal
         to the fair market value of the assets so distributed with respect to
         each share of Common Stock, such fair market value to be determined by
         an investment banking firm selected by all of the holders of Series D
         Preferred Shares then outstanding and reasonably acceptable to the
         Corporation.

                  d. Adjustments to Conversion Price for Diluting Issues:

                           (1) Special Definitions. For purposes of this
                  subparagraph 5(d), the following definitions shall apply:


                                      -32-
<PAGE>   33
                                    (a) "Option" shall mean rights, options or
                           warrants to subscribe for, purchase or otherwise
                           acquire Common Stock or Convertible Securities.

                                    (b) "Original Issue Date" shall mean the
                           date on which a Series D Preferred Share was first
                           issued.

                                    (c) "Convertible Securities" shall mean any
                           evidences of indebtedness, shares or other securities
                           directly or indirectly convertible into or
                           exchangeable for Common Stock.

                                    (d) "Additional Shares of Common Stock"
                           shall mean all shares of Common Stock issued (or,
                           pursuant to subparagraph 5(d)(3) below, deemed to be
                           issued) by the Corporation after the Original Issue
                           Date, other than shares of Common Stock issued or
                           issuable:

                                             (i) upon conversion of any
                                    Convertible Securities outstanding on the
                                    Original Issue Date, or upon exercise of any
                                    Options outstanding on the Original Issue
                                    Date;

                                             (ii) as a dividend or distribution
                                    on the Preferred Stock;

                                             (iii) by reason of a dividend,
                                    stock split, split-up or other distribution
                                    on shares of Common Stock that is covered by
                                    subparagraph 5(a) or 5(c) above;

                                             (iv) to employees or directors of,
                                    or consultants to, the Corporation pursuant
                                    to a stock option, restricted stock or other
                                    plan or arrangement approved by the Board of
                                    Directors of the Corporation, such number of
                                    shares not to exceed 15% of the total number
                                    of shares of Common Stock from time to time
                                    outstanding, calculated on a fully diluted
                                    basis; plus any shares of Common Stock
                                    subject to options that terminate
                                    unexercised (and are eligible to be
                                    regranted under the terms of the applicable
                                    plan or arrangement) and shares of
                                    restricted stock repurchased from employees
                                    upon termination of employment; or

                                             (v) in connection with joint
                                    venture and corporate partnering
                                    relationships approved by the Board of
                                    Directors of the Corporation, and in
                                    connection with acquisition transactions
                                    approved by the Board of Directors of the
                                    Corporation.


                                      -33-
<PAGE>   34
                                    (2) No Adjustment of Conversion Price. No
                           adjustment in the number of shares of Common Stock
                           into which the Series D Preferred Stock is
                           convertible shall be made by adjustment in the
                           applicable Conversion Price thereof: (a) unless the
                           consideration per share (determined pursuant to
                           subparagraph 5(d)(5)) for an Additional Share of
                           Common Stock issued or deemed to be issued by the
                           Corporation is less than the applicable Conversion
                           Price in effect on the date of, and immediately prior
                           to, the issue of such Additional Shares, or (b) if
                           prior to such issuance, the Corporation receives
                           written notice from the holders of at least a
                           majority of the then outstanding shares of Series D
                           Preferred Stock, agreeing that no such adjustment
                           shall be made as the result of the issuance of
                           Additional Shares of Common Stock.

                                    (3) Issue of Securities Deemed Issue of
                           Additional Shares of Common Stock. If the Corporation
                           at any time or from time to time after the Original
                           Issue Date shall issue any Options or Convertible
                           Securities, then the maximum number of shares of
                           Common Stock (as set forth in the instrument relating
                           thereto without regard to any provision contained
                           therein for a subsequent adjustment of such number)
                           issuable upon the exercise of such Options or, in the
                           case of Convertible Securities and Options therefor,
                           the conversion or exchange of such Convertible
                           Securities, shall be deemed to be Additional Shares
                           of Common Stock issued as of the time of such issue,
                           provided that Additional Shares of Common Stock shall
                           not be deemed to have been issued unless the
                           consideration per share (determined pursuant to
                           subparagraph 5(d)(5) hereof) of such Additional
                           Shares of Common Stock would be less than the
                           applicable Conversion Price in effect on the date of
                           and immediately prior to such issue, and provided
                           further that in any such case in which Additional
                           Shares of Common Stock are deemed to be issued:

                                             (a) No further adjustment in the
                                    Conversion Price shall be made upon the
                                    subsequent issue of Convertible Securities
                                    or shares of Common Stock upon the exercise
                                    of such Options or conversion or exchange of
                                    such Convertible Securities;

                                             (b) If such Options or Convertible
                                    Securities by their terms provide, with the
                                    passage of time or otherwise, for any
                                    increase in the consideration payable to the
                                    Corporation, upon the exercise, conversion
                                    or exchange thereof, the Conversion Price
                                    computed upon the original issue thereof (or
                                    upon the occurrence of a record date with
                                    respect thereto), and any subsequent
                                    adjustments based thereon, shall, upon any
                                    such increase becoming effective, be
                                    recomputed to reflect such increase insofar
                                    as it affects such Options or the rights of
                                    conversion or exchange under such
                                    Convertible Securities;


                                      -34-
<PAGE>   35
                                             (c) Upon the expiration or
                                    termination of any unexercised Option, the
                                    Conversion Price shall be readjusted to
                                    reflect the Conversion Price in effect at
                                    the time of the issuance of the expired or
                                    terminated Options, with such additional
                                    adjustments as would have been made to the
                                    Conversion Price had the expired or
                                    terminated Options not been issued, and the
                                    Additional Shares of Common Stock deemed
                                    issued as the result of the original issue
                                    of such Option shall not be deemed issued
                                    for the purposes of any subsequent
                                    adjustment of the Conversion Price;

                                             (d) In the event of any change in
                                    the number of shares of Common Stock
                                    issuable upon the exercise, conversion or
                                    exchange of any Option or Convertible
                                    Security, including, but not limited to, a
                                    change resulting from the anti-dilution
                                    provisions thereof, the Conversion Price
                                    then in effect shall forthwith be readjusted
                                    to such Conversion Price as would have
                                    obtained had the adjustment, which was made
                                    upon the issuance of such Option or
                                    Convertible Security which has not been
                                    exercised or converted prior to such change,
                                    been made upon the basis of such change; and

                                             (e) No readjustment pursuant to
                                    clause (b) or (d) above shall have the
                                    effect of increasing the Conversion Price to
                                    an amount which exceeds the lower of (i) the
                                    Conversion Price on the original adjustment
                                    date, or (ii) the Conversion Price that
                                    would have resulted from any issuances of
                                    Additional Shares of Common Stock between
                                    the original adjustment date and such
                                    readjustment date.

                                    (4) Adjustment of Conversion Price Upon
                           Issuance of Additional Shares of Common Stock. In the
                           event the Corporation shall at any time after the
                           Original Issue Date issue Additional Shares of Common
                           Stock (including Additional Shares of Common Stock
                           deemed to be issued pursuant to subparagraph 5(d)(3),
                           but excluding shares issued as a stock split or
                           combination as provided in subparagraph 5(a) or upon
                           a dividend or distribution as provided in
                           subparagraph 5(c)), without consideration or for a
                           consideration per share less than the applicable
                           Conversion Price in effect on the date of and
                           immediately prior to such issue, then and in such
                           event, such Conversion Price shall be reduced,
                           concurrently with such issue, to a price (calculated
                           to the nearest cent) determined by multiplying such
                           Conversion Price by a fraction, (A) the numerator of
                           which shall be (1) the number of shares of Common
                           Stock outstanding immediately prior to such issue
                           plus (2) the number of shares of Common Stock which
                           the aggregate consideration received or to be
                           received by the Corporation for the total number of
                           Additional Shares of Common


                                      -35-
<PAGE>   36
                  Stock so issued would purchase at such Conversion Price; and
                  (B) the denominator of which shall be the number of shares of
                  Common Stock outstanding immediately prior to such issue plus
                  the number of such Additional Shares of Common Stock so
                  issued; provided that, (i) for the purpose of this
                  subparagraph 5(d)(4), all shares of Common Stock issuable upon
                  exercise or conversion of Options or Convertible Securities
                  outstanding immediately prior to such issue shall be deemed to
                  be outstanding, and (ii) the number of shares of Common Stock
                  deemed issuable upon exercise or conversion of such
                  outstanding Options and Convertible Securities shall not give
                  effect to any adjustments to the conversion price or
                  conversion rate of such Options or Convertible Securities
                  resulting from the issuance of Additional Shares of Common
                  Stock that is the subject of this calculation.

                           (5) Determination of Consideration. For purposes of
                  this subparagraph 5(d), the consideration received by the
                  Corporation for the issue of any Additional Shares of Common
                  Stock shall be computed as follows:

                                    (a) Cash and Property: Such consideration
                           shall:

                                             (i) insofar as it consists of cash,
                                    be computed at the aggregate of cash
                                    received by the Corporation, excluding
                                    amounts paid or payable for accrued
                                    interest;

                                             (ii) insofar as it consists of
                                    property other than cash, be computed at the
                                    fair market value thereof at the time of
                                    such issue, as determined in good faith by
                                    the Board of Directors; and

                                             (iii) in the event Additional
                                    Shares of Common Stock are issued together
                                    with other shares or securities or other
                                    assets of the Corporation for consideration
                                    which covers both, be the proportion of such
                                    consideration so received, computed as
                                    provided in clauses (i) and (ii) above, as
                                    determined in good faith by the Board of
                                    Directors.

                                    (b) Options and Convertible Securities. The
                           consideration per share received by the Corporation
                           for Additional Shares of Common Stock deemed to have
                           been issued pursuant to subparagraph 5(d)(3),
                           relating to Options and Convertible Securities, shall
                           be determined by dividing

                                             (i) the total amount, if any,
                                    received or receivable by the Corporation as
                                    consideration for the issue of such Options
                                    or Convertible Securities, plus the minimum
                                    aggregate amount of additional consideration
                                    (as set forth in the instruments relating
                                    thereto, without regard to any provision
                                    contained therein for a subsequent
                                    adjustment of such consideration) payable to
                                    the


                                      -36-
<PAGE>   37
                                    Corporation upon the exercise of such
                                    Options or the conversion or exchange of
                                    such Convertible Securities, or in the case
                                    of Options for Convertible Securities, the
                                    exercise of such Options for Convertible
                                    Securities and the conversion or exchange of
                                    such Convertible Securities, by

                                             (ii) the maximum number of shares
                                    of Common Stock (as set forth in the
                                    instruments relating thereto, without regard
                                    to any provision contained therein for a
                                    subsequent adjustment of such number)
                                    issuable upon the exercise of such Options
                                    or the conversion or exchange of such
                                    Convertible Securities.

                           (6) Multiple Closing Dates. In the event the
                  Corporation shall issue on more than one date Additional
                  Shares of Common Stock which are comprised of shares of the
                  same series or class of Preferred Stock, and such issuance
                  dates occur within a period of no more than 120 days, then the
                  Conversion Price shall be adjusted only once on account of
                  such issuances, with such adjustment to occur upon the final
                  such issuance and to give effect to all such issuances as if
                  they occurred on the date of the final such issuance.

                  e. Certificate as to Adjustments. Upon the occurrence of each
         adjustment or readjustment of the Conversion Price pursuant to this
         Section 5 of Article FOURTH: B., 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 Stock 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 Stock, furnish or cause to be
         furnished to such holder a similar certificate setting forth (i) such
         adjustments and readjustments, (ii) the Conversion Price then in
         effect, and (iii) the number of shares of Common Stock and the amount,
         if any, of other property which then would be received upon the
         conversion of Series D Preferred Stock.

                  f. No Fractional Shares. If any adjustment under this Section
         would create a fractional share of Common Stock or a right to acquire a
         fractional share of Common Stock, such fractional share shall be
         disregarded and the number of shares of Common Stock issuable upon
         Conversion shall be rounded to the nearest whole number of shares.

         6. Mandatory Conversion.

                  a. Mandatory Conversion. The Corporation shall have the right,
         upon the satisfaction of each of the Mandatory Conversion Conditions
         (as defined below), to require conversion of all of the Series D
         Preferred Shares outstanding on the Mandatory Conversion Date (as
         defined below)(a "Mandatory Conversion"). In


                                      -37-
<PAGE>   38
         the event of a Mandatory Conversion, the Corporation and each Holder
         shall follow the procedures for Conversion set forth in Section 4 of
         Article FOURTH: B. above, with the Mandatory Conversion Date (as
         defined below) deemed to be the Conversion Date, except that a Holder
         shall not be required to send a Conversion Notice as contemplated by
         paragraph (b) of Section 4 of Article FOURTH: B.

                  b. Mandatory Conversion Notice. In order to effect a Mandatory
         Conversion hereunder, the Corporation must deliver to each Holder
         written notice thereof (a "Mandatory Conversion Notice") on or before
         5:00 p.m. (eastern time) on a Business Day (the "Mandatory Conversion
         Notice Date") that (i) occurs on or before the third Business Day
         immediately following the last Trading Day of the Mandatory Conversion
         Period (as defined below) and (ii) is not less than fifteen (15)
         Trading Days prior to the date on which such Mandatory Conversion is to
         be effected (the "Mandatory Conversion Date") and, at the same time
         that it delivers such notice, the Corporation shall confirm delivery
         thereof with each Holder by telephone, either personally or by
         voicemail message. Notwithstanding the delivery by the Corporation of a
         Mandatory Conversion Notice, nothing contained herein shall be deemed
         to limit in any way the right of a Holder to convert Series D Preferred
         Shares prior to the Mandatory Conversion Date.

                  c. Mandatory Conversion Conditions. The Mandatory Conversion
         Conditions are as follows:

                           (1) at any time after the 365-day period following
                  the Closing Date, the Closing Sale Price shall have been
                  greater than $18.00 for fifteen (15) consecutive Trading Days
                  (such 15-Trading Day period being referred to herein as a
                  "Mandatory Conversion Period"); and

                           (2) during the Mandatory Conversion Period, on the
                  Mandatory Conversion Notice Date and at all times during the
                  period from the Mandatory Conversion Notice Date through the
                  Mandatory Conversion Date, (y) the Common Stock shall be
                  listed on the Nasdaq SmallCap Market, the Nasdaq National
                  Market System or the New York Stock Exchange, and (z) trading
                  in the Common Stock, or trading generally, shall not have been
                  suspended by the principal market on which the Common Stock is
                  traded;

         7. Redemption.

                  Mandatory Redemption by the Holder.

                  a. Mandatory Redemption. In the event that a Mandatory
         Redemption Event (as defined below) occurs, each Holder shall have the
         right to require the Corporation to redeem all or any portion of the
         Series D Preferred Shares held by such Holder (a "Mandatory
         Redemption") at the Mandatory Redemption Price (as defined herein). In
         order to exercise its right to effect a Mandatory Redemption, a


                                      -38-
<PAGE>   39
         Holder must deliver a written notice (a "Mandatory Redemption Notice")
         to the Corporation at any time on or before 5:00 p.m. (eastern time) on
         the third (3rd) Business Day following the Business Day on which the
         Mandatory Redemption Event to which such Mandatory Redemption Notice
         relates is no longer continuing. The Mandatory Redemption Notice shall
         specify the effective date of such Mandatory Redemption (the "Mandatory
         Redemption Date") and the number of such shares to be redeemed.

                  b. Mandatory Redemption Event. Each of the following events
         shall be deemed a "Mandatory Redemption Event":

                           (1) the Corporation fails for any reason (including
                  without limitation as a result of not having a sufficient
                  number of shares of Common Stock authorized and reserved for
                  issuance) to issue shares of Common Stock to a Holder and
                  deliver certificates representing such shares to such Holder
                  as and when required by the provisions hereof upon Conversion
                  of any Series D Preferred Shares, as a result of any willful
                  action or willful failure to act on the part of the
                  Corporation, and such failure continues for twenty (20)
                  Business Days;

                           (2) the Corporation breaches, in a material respect,
                  any covenant or other material term or condition of this
                  Certificate, the Securities Purchase Agreement, the
                  Registration Rights Agreement, or any other agreement,
                  document, certificate or other instrument delivered in
                  connection with the transactions contemplated thereby, and
                  such breach continues for a period of five (5) Business Days
                  after written notice thereof to the Corporation from a Holder;

                           (3) any material representation or warranty made by
                  the Corporation in the Securities Purchase Agreement, the
                  Registration Rights Agreement or any other agreement,
                  document, certificate or other instrument delivered in
                  connection with the transactions contemplated hereby or
                  thereby is inaccurate or misleading in any material respect as
                  of the date such representation or warranty was made;

                           (4) The effectiveness of any demand Registration
                  Statement required to be maintained pursuant to the terms of
                  the Registration Rights Agreement lapses for any reason
                  (including without limitation, the issuance of a stop order)
                  or is unavailable to the Holder for the sale of Conversion
                  Shares in accordance with the terms of the Registration Rights
                  Agreement, and such lapse or unavailability continues for a
                  period of five (5) consecutive Business Days (other than as
                  permitted under the Registration Rights Agreement), in any
                  twelve (12) month period, provided that such lapse or
                  unavailability occurs as a result of any willful action or
                  willful failure to act on the part of the Corporation; and


                                      -39-
<PAGE>   40
                           (5) the Common Stock is not quoted on the Nasdaq
                  SmallCap Market or the Nasdaq National Market or listed on the
                  New York State Exchange, or trading in the Common Stock on
                  such market or exchange is suspended and such suspension is in
                  effect for more than five consecutive (5) Trading Days, and
                  such suspension or failure to be so quoted or listed occurs as
                  a result of any willful action or willful failure to act on
                  the part of the Corporation.

                  c. Mandatory Redemption Price. The "Mandatory Redemption
         Price" shall be equal to the greater of (i) the Liquidation Preference
         of the Series D Preferred Shares being redeemed multiplied by one
         hundred and fifteen percent (115%) and (ii) an amount determined by
         dividing the Liquidation Preference of the Series D Preferred Shares
         being redeemed by the Conversion Price in effect on the Mandatory
         Redemption Date and multiplying the resulting quotient by the average
         Closing Trade Price for the Common Stock on the five (5) Trading Days
         immediately preceding (but not including) the Mandatory Redemption
         Date.

                  d. Payment of Mandatory Redemption Price.

                           (1) The Corporation shall pay the Mandatory
                  Redemption Price to the Holder exercising its right to
                  redemption on the later to occur of (i) the fifth (5th)
                  Business Day following the Mandatory Redemption Date and (ii)
                  the date on which the Series D Preferred Shares being redeemed
                  are delivered by the Purchaser to the Corporation for
                  cancellation (the "Mandatory Redemption Payment Date").

                           (2) If Corporation fails to pay the Mandatory
                  Redemption Price to the Holder on or before the Mandatory
                  Redemption Date, the Holder shall be entitled to interest
                  thereon, from and after the Mandatory Redemption Payment Date
                  until the Mandatory Redemption Price has been paid in full, at
                  an annual rate equal to the Default Interest Rate.

                           (3) If the Corporation fails to pay the Mandatory
                  Redemption Price within ten (10) Business Days of the
                  Mandatory Redemption Date, then the Holder shall have the
                  right to regain its rights as a Holder of the Series D
                  Preferred Stock and, upon written notice to such effect from
                  the Holder, the Corporation shall return to such Holder the
                  certificates representing the Series D Preferred Shares that
                  were delivered to the Corporation in connection with such
                  Mandatory Redemption; in such event, the Conversion Price
                  otherwise applicable to future Conversions of the Series D
                  Preferred Shares shall be reduced by one percent (1%) for each
                  day beyond such 10th Business Day in which the failure to pay
                  the Mandatory Redemption Price continued until the date of
                  such notice; provided, however, that the maximum percentage by
                  which such Conversion Price may be reduced hereunder shall be
                  fifty percent (50%).

         8. Miscellaneous.


                                      -40-
<PAGE>   41
                  a. Transfer of Series D Preferred Shares. A Holder may sell or
         transfer all or any portion of the Series D Preferred Shares to any
         person or entity as long as such sale or transfer is the subject of an
         effective registration statement under the Securities Act or is exempt
         from registration thereunder and otherwise is made in accordance with
         the terms of the Securities Purchase Agreement. From and after the date
         of such sale or transfer, the transferee thereof shall be deemed to be
         a Holder. Upon any such sale or transfer, the Corporation shall,
         promptly following the return of the certificate or certificates
         representing the Series D Preferred Shares that are the subject of such
         sale or transfer, issue and deliver to such transferee a new
         certificate in the name of such transferee.

                  b. Notices. Except as otherwise provided herein, any notice,
         demand or request required or permitted to be given pursuant to the
         terms hereof, the form or delivery of which notice, demand or request
         is not otherwise specified herein, shall be in writing and shall be
         deemed delivered (i) when delivered personally or by verifiable
         facsimile transmission on or before 5:00 p.m., eastern time, on a
         Business Day or, if such day is not a Business Day, on the next
         succeeding Business Day, (ii) on the next Business Day after timely
         delivery to an overnight courier and (iii) on the Business Day actually
         received if deposited in the U.S. mail (certified or registered mail,
         return receipt requested, postage prepaid), addressed to the parties as
         follows:

                  If to the Corporation:

                  Shared Technologies Cellular, Inc.
                  100 Great Meadow Road
                  Suite 100
                  Wethersfield, CT 06109
                  Attn: Legal Department
                  Tel:  (860) 258-2500
                  Fax:  (860) 258-2455

                  with a copy to:

                  Day, Berry & Howard LLP
                  260 Franklin Street
                  Boston MA 02110
                  Attn: Jeffrey A. Clopeck, Esq.
                  Tel:   (617) 345-4600
                  Fax:   (617) 345-4745

         and if to any Holder, to such address for such Holder as shall be
         designated by such Holder in writing to the Corporation.


                  c. Lost or Stolen Certificate. Upon receipt by the Corporation
         of evidence of the loss, theft, destruction or mutilation of a
         certificate representing Series D Preferred Shares, and (in the case of
         loss, theft or destruction) of

                                      -41-
<PAGE>   42
         indemnity or security reasonably satisfactory to the Corporation, and
         upon surrender and cancellation of such certificate if mutilated, the
         Corporation shall execute and deliver to the Holder a new certificate
         identical in all respects to the original certificate.

                  d. No Voting Rights. Except as provided by applicable law and
         paragraph 8(g) below, the Holders of the Series D Preferred Shares
         shall have no voting rights with respect to the business, management or
         affairs of the Corporation; provided that the Corporation shall provide
         each Holder with prior notification of each meeting of stockholders
         (and copies of proxy statements and other information sent to such
         stockholders).

                  e. Remedies, Characterization, Other Obligations, Breaches and
         Injunctive Relief. The remedies provided to a Holder in this
         Certificate of Designation shall be cumulative and in addition to all
         other remedies available to such Holder under this Certificate of
         Designation or under any Transaction Document (as defined in the
         Securities Purchase Agreement), at law or in equity (including without
         limitation 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
         contained herein shall limit such Holder's right to pursue actual
         damages for any failure by the Corporation to comply with the terms of
         these Certificate of Designation. The Corporation agrees with each
         Holder that there shall be no characterization concerning this
         instrument other than as specifically provided herein. Amounts set
         forth or provided for herein with respect to payments, conversion and
         the like (and the computation thereof) shall be the amounts to be
         received by the Holder hereof and shall not, except as expressly
         provided herein, be subject to any other obligation of the Corporation
         (or the performance thereof). The Corporation acknowledges that a
         breach by it of its obligations hereunder will cause irreparable harm
         to the Holders and that the remedy at law for any such breach may be
         inadequate. The Corporation agrees, in the event of any such breach or
         threatened breach, each Holder shall be entitled, in addition to all
         other available remedies, to an injunction restraining any breach,
         without the necessity of showing economic loss and without any bond or
         other security being required.

                  f. Failure or Delay 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.

                  g. Protective Provisions. So long as shares of Series D
         Preferred Stock are outstanding, the Corporation shall not, without
         first obtaining the approval of the Holders of a majority of the
         outstanding shares of Series D Preferred Stock:


                                      -42-
<PAGE>   43
                           (1) alter, change, modify or amend (x) the terms of
                  the Series D Preferred Stock in any way or (y) the terms of
                  any other capital stock of the Corporation so as to affect
                  adversely the Series D Preferred Stock;

                           (2) create any new class or series of capital stock
                  having a preference over or ranking pari passu with the Series
                  D Preferred Stock as to redemption or distribution of assets
                  upon a Liquidation Event or any other liquidation, dissolution
                  or winding up of the Corporation;

                           (3) increase the authorized number of shares of
                  Series D Preferred Stock;

                           (4) re-issue any shares of Series D Preferred Stock
                  which have been converted or redeemed in accordance with the
                  terms hereof;

                           (5) issue any Pari Passu Securities or Senior
                  Securities (other than non-convertible debt securities or debt
                  securities which are convertible into or exchangeable for
                  Common Stock or any other equity or convertible security of
                  the Corporation junior to the Series D Preferred Stock);

                           (6) redeem, or declare, pay or make any provision for
                  any dividend or distribution with respect to, the Common Stock
                  or any other capital stock of the Corporation ranking junior
                  to the Series D Preferred Stock as to the distribution of
                  assets upon liquidation, dissolution or winding up of the
                  Corporation; or

                           (7) issue any Series D Preferred Stock except
                  pursuant to the terms of the Securities Purchase Agreement.

         In the event that the Holders of at a majority of the outstanding
         shares of Series D Preferred Stock agree to allow the Corporation to
         alter or change the rights, preferences or privileges of the shares of
         Series D Preferred Stock pursuant to the terms hereof, then the
         Corporation will deliver notice of such approved change to the holders
         of the Series D Preferred Stock that did not agree to such alteration
         or change (the "Dissenting Holders") and the Dissenting Holders shall
         have the right for a period of thirty (30) days following such delivery
         to convert their Series D Preferred Shares pursuant to the terms hereof
         as they existed prior to such alteration or change, or to continue to
         hold such Series D Preferred Shares. No such change shall be effective
         to the extent that, by its terms, it applies to less than all of the
         Holders of Series D Preferred Shares then outstanding.

                  h. BHCA Compliance. Notwithstanding the provisions of Section
         4 and Section 6 of Article FOURTH: B. hereof, with respect to any
         Holder subject to the Bank Holding company Act of 1956 (the "BHCA"),
         only such number of the Series D Preferred Shares held by such Holder
         shall be convertible into Conversion Shares as may be permitted at any
         time under the BHCA. Any Series D Preferred Shares which are not
         convertible into Conversion Shares pursuant to the preceding sentence
         may be held by such Holder until such time as such Series


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<PAGE>   44
                  D Preferred Shares may, in the opinion of counsel reasonable
                  acceptable to such Holder, be converted into Conversion Shares
                  without violating the BHCA.

         FIFTH: [Omitted.]

         SIXTH: In furtherance of and not in limitation of powers conferred by
statute, it is further provided:

                  1. Election of directors need not be by written ballot.

                  2. The Board of Directors is expressly authorized to adopt,
         amend or repeal the By-Laws of the Corporation.

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

         EIGHTH: A director of the Corporation shall not be personally liable to
the Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director for any act or omission; provided, however, that the
foregoing shall not eliminate or limit the liability of a director (i) for any
breach of the director's duty or loyalty to the Corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the GCL, or
(iv) for any transaction from which the director derived an improper personal
benefit. If the GCL is hereafter amended to permit further elimination or
limitation of the personal liability of directors, then the liability of a
director of the Corporation shall be eliminated or limited to the fullest extent
permitted by the GCL as so amended. Any repeal or modification of this Article
EIGHTH by the stockholders of the Corporation or otherwise shall not apply to or
have any effect on the liability or alleged liability of any director of the
Corporation for or with respect to any acts or omission of such director
occurring prior to such amendment or repeal.

         NINTH: A. The Corporation shall, to the fullest extent permitted by
Section 145 of the GCL, indemnify any person who was or is a party or is
threatened to be made a party

                                      -44-
<PAGE>   45
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of the Corporation) against any and all of the expenses (including
attorneys' fees), judgment, fines and amounts paid in settlement actually or
reasonably incurred by such person by reason of having been an officer,
director, employee or agent at the request of the Corporation, any subsidiary of
the Corporation or of any other corporation, partnership, joint venture, trust
or other enterprise for which any and all persons who acted as officer,
director, employee or agent at the request of the Corporation, if such person
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe that the
person's conduct was unlawful. The termination of any action, suit or proceeding
by judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which the person reasonably believed to be
in or not opposed to the best interests of the Corporation, and with respect to
any criminal action or proceeding, had reasonable cause to believe that his
conduct was unlawful.

         B. The Corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the Corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent of
the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if such person acted in good faith and in a
manner such person reasonably believed to be in or not opposed to the best
interests of the Corporation and except that no indemnification shall be made in
respect to any claim, issue or matter as to which such person shall have been
adjudged to be liable to the Corporation unless and only to the extent that the
Court of Chancery or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or such
other court shall deem proper.

         C. To the extent that a director, officer, employee or agent of the
Corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in sections (a) and (b) of this Article
NINTH, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.

         D. Any indemnification under sections (a) and (b) of this Article NINTH
(unless ordered by a court) shall be made by the Corporation only as authorized
in the specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in sections (a) and (b) of this Article
NINTH. Such determination shall be made (1) by the Board by a majority vote of a
quorum consisting of directors who were not parties to such action, suit or
proceeding, or (2) if such a quorum is not obtainable, or even if obtainable a
quorum of disinterested directors so directs, by independent legal counsel in a
written opinion, or (3) by the stockholders.


                                      -45-
<PAGE>   46
         E. Expenses (including attorneys' fees) incurred by an officer or
director in defending any civil, criminal, administrative or investigative
action, suit or proceeding may be paid by the Corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such amount if
it shall ultimately be determined that such person is not entitled to be
indemnified by the Corporation as authorized in this Article NINTH. Such
expenses (including attorneys' fees) incurred by other employees and agents may
be so paid upon such terms and conditions, if any, as the Board deems
appropriate.

         F. The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this Article NINTH shall not be
deemed exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in such
person's official capacity and as to action in another capacity while holding
such office.

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

         H. The indemnification and advancement of expenses provided by, or
granted pursuant to, this Article NINTH shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.

         I. If a claim for indemnification pursuant to this Article NINTH is not
paid in full by the Corporation within thirty (30) days after a written claim
has been received by the Corporation, the claimant may at any time thereafter
bring suit against the Corporation to recover the unpaid amount of the claim
and, if successful in whole or in part, the claimant shall be entitled to be
paid also the expenses of prosecuting such claim. It shall be a defense to any
such action (other than an action brought to enforce a claim for expenses
incurred in defending any proceeding in advance of its final disposition where
the required undertaking, if any is required, has been tendered to the
Corporation) that the claimant has not met the applicable standard of conduct
set forth in the GCL for the Corporation to indemnify the claimant for the
amount claimed, but the burden of proving such defense shall be on the
Corporation. Neither the failure of the Corporation (including its Board,
independent legal counsel or stockholders) to have made a determination prior to
the commencement of such action that indemnification of the claimant is proper
in the circumstances because he or she has met the applicable standard of
conduct set forth in the GCL, nor an actual determination by the Corporation
(including its Board, independent legal counsel or stockholders) that the
claimant has not met such applicable standard of conduct, shall be a defense to
the action or create a presumption that the claimant has not met the applicable
standard of conduct.


                                      -46-
<PAGE>   47
         TENTH: The Corporation reserves the right to rescind, amend, alter,
change, or repeal any provision contained in this Restated Certificate of
Incorporation, in the manner now or hereafter prescribed by statute, and all
rights conferred upon stockholders herein are granted subject to this
reservation.

         ELEVENTH: The number of directors constituting the entire Board of
Directors shall be as set forth in or pursuant to the Bylaws of the Corporation.
The Board of Directors shall be divided into three classes, designated Classes
I, II and III, which shall be as nearly equal in number as possible. Initially,
directors of Class I shall be elected to hold office for a term expiring at the
annual meeting of stockholders in 2000, directors of Class II shall be elected
to hold office for a term expiring at the annual meeting of stockholders in 2001
and directors of Class III shall be elected to hold office for a term expiring
at the annual meeting of stockholders in 2002. At each annual meeting of
stockholders following such initial classification and election, the respective
successors of each class shall be elected for three-year terms.


                                      -47-
<PAGE>   48
         IN WITNESS WHEREOF, SHARED TECHNOLOGIES CELLULAR, INC. has caused this
Second Restated Certificate of Incorporation to be signed by Anthony D.
Autorino, its Chairman and Chief Executive Officer, this 29th day of February,
2000.

                                    SHARED TECHNOLOGIES CELLULAR, INC.




                                    By:   /s/ Anthony D. Autorino
                                         ------------------------
                                         Anthony D. Autorino
                                         Chairman and Chief Executive Officer


                                      -48-
<PAGE>   49
                                    EXHIBIT A


                              NOTICE OF CONVERSION


The undersigned hereby elects to convert shares of Series ___ Convertible
Preferred Stock (the "Preferred Stock"), represented by stock certificate No(s).
_______ (the "Preferred Stock Certificates"), into shares of common stock
("Common Stock") of Shared Technologies Cellular, Inc. according to the terms
and conditions of the Certificate of Designation relating to the Preferred Stock
(the "Certificate of Designation"), as of the date written below. Capitalized
terms used herein and not otherwise defined shall have the respective meanings
set forth in the Certificate of Designation.

                                    Date of Conversion: ________________________
                                    Number of Shares of
                                    Preferred Stock to be Converted: ___________
                                    Amount of Accrued Premium: _________________
                                    Applicable Conversion Price: _______________
                                    Number of Shares of Common
                                    Stock to be Issued: ________________________
                                    Name of Holder: ____________________________
                                    Address: ___________________________________
                                             ___________________________________
                                             ___________________________________
                                    Signature: _________________________________
                                                Name:
                                                Title:
Holder Requests Delivery to be made: (check one)

         By Delivery of Physical Certificates to the Above Address

         Through Depository Trust Corporation
         (Account_________________________________)


                                      -49-