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                                  EXHIBIT 4.5

                   CERTIFICATE OF DESIGNATIONS, PREFERENCES

                       AND RIGHTS OF SERIES D PREFERRED

                           STOCK OF 7TH LEVEL, INC.

          7TH LEVEL, INC., a corporation organized and existing under the
General Corporation Law of the State of Delaware (the "Corporation"), DOES
HEREBY CERTIFY THAT:

          Pursuant to authority conferred upon the Board of Directors (the
"Board") by the Certificate of Incorporation of the Corporation (the
"Certificate of Incorporation") and pursuant to the provisions of (S)151 of the
Delaware General Corporation Law, the Board, at a meeting held on February 16,
1999, adopted the following resolution providing for the voting powers,
designations, preferences and rights, and the qualifications, limitations and
restrictions of the Series D Preferred Stock.

          WHEREAS, the Certificate of Incorporation provides for two classes of
shares known as common stock, $.01 par value per share (the "Common Stock"), and
preferred stock, $.01 par value per share (the "Preferred Stock"); and

          WHEREAS, the Board is authorized by the Certificate of Incorporation
to provide for the issuance of the shares of Preferred Stock in one or more
series, and by filing a certificate pursuant to the applicable law of the State
of Delaware, to establish from time to time the number of shares to be included
in any such series and to fix the voting powers, designations, preferences and
rights of the shares of any such series and the qualifications, limitations and
restrictions thereof.

          NOW, THEREFORE, BE IT RESOLVED, that the Board deems it advisable to,
and hereby does, designate a Series D Preferred Stock and fixes and determines
the voting powers, designations, preferences and rights, and the qualifications,
limitations and restrictions relating to the Series D Preferred Stock as
follows:

     1.   Designation.  The shares of such series of Preferred Stock shall be
designated "Series D Preferred Stock" (referred to herein as the "Series D
Stock").

     2.   Authorized Number.  The number of shares constituting the Series D
Stock shall be 35,000.
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     3.   Ranking.  The Series D Stock shall rank, as to dividends, rights upon
liquidation, dissolution or winding up, junior to the Corporation's currently
outstanding Series B Convertible Preferred Stock (the "Series B Stock"), and
senior and prior to the Common Stock and to all other classes or series of stock
issued by the Corporation, currently and in the future, except as otherwise
approved by the affirmative vote or consent of the holders of shares of Series D
Stock pursuant to Section 9(c) hereof.  The Corporation agrees that it shall not
issue any additional shares of Series B Stock after the Original Issue Date.
(All equity securities of the Corporation to which the Series D Stock ranks
prior, whether with respect to dividends or upon liquidation, dissolution,
winding up or otherwise, including the Common Stock, are collectively referred
to herein as "Junior Securities," all equity securities of the Corporation with
which the Series D Stock ranks on a parity, whether with respect to dividends or
upon liquidation, dissolution, winding up or otherwise, are collectively
referred to herein as "Parity Securities," and all equity securities of the
Corporation to which the Series D Stock ranks junior, whether with respect to
dividends or upon liquidation, dissolution, winding up or otherwise, including
the Series B Stock, are collectively referred to herein as "Senior Securities").

     4.   Dividends.

          (a)  Dividend Accrual and Payment.  Dividends, whether or not
declared, shall accrue on the shares of Series D Stock from the date of the
issuance of the shares of Series D Stock (the "Original Issue Date") (or if
shares of Series D Stock are issued after the Original Issue Date, the
"Subsequent Issue Date") at the rate of 8% per share per annum (expressed as a
percentage of the $1,000 per share liquidation preference (the "Dividend
Rate")); provided, that if the Approval date (as defined in Section 6(a)) occurs
on or before July 31, 1999, then no dividends shall be paid; provided, however,
that if the Approval Date does not occur within twelve months of the Original
Issue Date, the dividend rate on the Series D Stock shall increase by 2% for
every six months that the Approval Date does not occur following the first
anniversary of the Original Issue Date.  The holders of shares of Series D Stock
shall be entitled to receive such dividends when and as declared by the Board,
in cash or shares of Series D Stock valued at the Series D Issue Price (as
defined below), out of assets legally available for such purpose, quarterly in
arrears on the 30th day of January, April, July or October of each year (each of
such dates being a "Dividend Payment Date"), commencing July 30, 1999; provided
that any dividends payable in Series D Stock shall accrue rather than be paid.
Such dividends shall be paid to the holders of record at the close of business
on the date specified by the Board at the time such dividend is declared,
provided, however, that such date shall not be more than 60 nor less than 10
days prior to the applicable Dividend Payment Date.  Dividends on the Series D
Stock shall be cumulative and shall accrue on each share whether or not earned,
from and after the Dividend Payment Date coincident with or next preceding the
issuance of such share; provided, however, that dividends payable on the first
Dividend Payment Date shall so accrue from and after the date immediately
succeeding the Original Issue Date.  If the Original Issue Date or the
Subsequent Issue Date, as the case may be, is on a date which does not coincide
with a Dividend Payment Date, then the dividend accrual period applicable to
such shares shall be the 

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period from the Original Issue Date or the Subsequent Issue Date, as the case
may be, through whichever of January, April, July or October next occurs after
the Original Issue Date or the Subsequent Issue Date, as the case may be. If the
date fixed for payment of a final liquidating distribution on any shares of
Series D Stock, or the date on which any shares of Series D Stock are redeemed
or converted into Common Stock does not coincide with a Dividend Payment Date,
then subject to the provisions hereof relating to such payment, redemption or
conversion, the final dividend accrual period applicable to such shares shall be
the period from whichever of January, April, July or October most recently
precedes the date of such payment, conversion or redemption through the
effective date of such payment, conversion or redemption. The dividend amount
payable per share shall be adjusted for any combinations or divisions or similar
recapitalizations affecting the shares of Series D Stock. So long as any shares
of Series D Stock are outstanding, (i) the amount of all dividends paid with
respect to the shares of Series D Stock pursuant to this Section 4(a) shall be
paid pro rata to the holders entitled thereto and (ii) holders of the shares of
Series D Stock shall be entitled to receive the dividends provided for in this
Section 4(a) in preference to and in priority over any dividends upon any Junior
Securities.

          (b)  Participation Rights.  In addition to and subject to the payment
of any Liquidation Payments (as defined below), the holders of the shares of
Series D Stock shall be paid an aggregate amount equal to 22% of all dividends,
payments and distributions payable with respect to the Common Stock including,
without limitation, payment resulting from any liquidation, dissolution or
winding up of the Corporation, merger or sale of substantially all of the
Corporation's assets with such amount to be allocated pro rata among the shares
of Series D Stock.

          (c)  Dividends on Fractional Shares.  Each fractional share of Series
D Stock outstanding shall be entitled to a ratably proportionate amount of all
dividends accruing with respect  to each outstanding share of Series D Stock
pursuant to Section 4(a) hereof, and all such dividends with respect to such
outstanding fractional shares shall be fully cumulative and shall accrue
(whether or not declared), and shall be payable in the same manner and at such
times as provided for in Section 4(a) hereof with respect to dividends on each
outstanding share of Series D Stock.

     5.   Liquidation.

          (a)  Liquidation Procedure.  Upon any liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary, the holders of
the shares of Series D Stock shall be entitled, after all distributions and
payments are made upon any Senior Securities and before any distribution or
payment is made upon any Junior Securities, to be paid an amount equal to (i)
$1,000 per share of Series D Stock, representing the liquidation preference per
share of the Series D Stock (as adjusted for any combinations, divisions or
similar recapitalizations affecting the shares of Series D Stock) (the "Series D
Issue Price"), plus (ii) all accrued and unpaid dividends on the Series D Stock
to such date (together with the Series D Issue Price, the "Liquidation
Payments").  If upon any liquidation, dissolution or winding up of the
Corporation, 

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whether voluntary or involuntary, the assets to be distributed among the holders
of Series D Stock shall be insufficient to permit payment in full to the holders
of Series D Stock of the Liquidation Payments, then the entire assets of the
Corporation shall be distributed ratably among such holders in proportion to the
full respective distributive amounts to which they are entitled after all
distributions and payments are made upon any Senior Securities.

          (b)  Remaining Assets.  Upon any liquidation, dissolution or winding
up of the Corporation, whether voluntary or involuntary, after the holders of
Series D Stock shall have been paid in full the Liquidation Payments, the
remaining assets of the Corporation may be distributed ratably per share in
order of preference to the holders of Junior Securities in accordance with their
terms and to the holders of the Series D Preferred Stock in accordance with
their participation rights set forth in Section 4(b).

          (c)  Notice of Liquidation.  Written notice of a liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary,
stating a payment date, the amount of the Liquidation Payments and the place
where said Liquidation Payments shall be payable, shall be given by mail,
postage prepaid, not less than 30 days prior to the payment date stated therein,
to each holder of record of Series D Stock at his post office address as shown
by the records of the Corporation.

          (d)  Fractional Shares.  The Liquidation Payments with respect to each
outstanding fractional share of Series D Stock shall be equal to a ratably
proportionate amount of the Liquidation Payments with respect to each
outstanding share of Series D Stock.

     6.   Mandatory Conversion.

          (a)  Conversion.  Subject to the limitations set forth below, on the
date (the "Approval Date") that is one day after the stockholders of the
Corporation approve the issuance of 20% or more of the outstanding Common Stock
(the "Issuance") in connection with the Corporation's acquisition of Street
Technologies, Inc. ("Street"), the Series D Stock shall be converted
automatically, without any further action by the holder of such shares and
whether or not the certificates representing such shares are surrendered to the
Corporation, into the number of fully paid and nonassessable shares of Common
Stock equal to the quotient of (x) the aggregate liquidation preference of the
shares of Series D Stock outstanding divided by (y) the Conversion Price (as
defined below) then in effect .  The holders of shares of Series D Stock by
acceptance of the shares of Series D Stock agree to vote in favor of the
Issuance.  Upon the conversion of shares of Series D Stock as provided in this
Section 6, the Corporation shall pay all then accrued but unpaid dividends on
the Series D Stock to the holders of the Series D Stock in additional shares of
Common Stock valued at the Market Price (as defined below) thereof on the date
of such payment.

          (b)  Conversion Price; Converted Shares.  The initial conversion price
per share of the Series D Stock (the "Conversion Price") shall be equal to
$3.00, subject to 

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adjustment as provided in Section 7. If any fractional interest in a share of
Common Stock would be deliverable upon conversion of Series D Stock, the
Corporation shall pay in lieu of such fractional share an amount in cash equal
to the Conversion Price of such fractional share (computed to the nearest one
hundredth of a share) in effect at the close of business on the date of
conversion. Any shares of Series D Stock which have been converted shall be
cancelled and all dividends on converted shares shall cease to accrue and the
certificates representing shares of Series D Stock so converted shall represent
the right to receive (i) such number of shares of Common Stock into which such
shares of Series D Stock are convertible, plus (ii) cash payable for any
fractional share, plus (iii) all accrued but unpaid dividends relating to such
shares through the date of conversion. Amounts payable with respect to the
foregoing clause (iii) shall be paid in accordance with the provisions set forth
in Section 6(a). The Board shall at all times, so long as any shares of Series D
Stock remain outstanding, reserve a sufficient number of authorized but unissued
shares of Common Stock to be issued in satisfaction of the conversion rights and
privileges aforesaid.

          As used herein, "Market Price" means, with respect to the shares of
     Common Stock, (a) if the shares are listed or admitted for trading on any
     national securities exchange or included in The Nasdaq National Market or
     Nasdaq SmallCap Market, the last reported sales price as reported on such
     exchange or market; (b) if the shares are not listed or admitted for
     trading on any national securities exchange or included in The Nasdaq
     National Market or Nasdaq SmallCap Market, the average of the last reported
     closing bid and asked quotation for the shares as reported on the National
     Association of Securities Dealers Automated Quotation System ("NASDAQ") or
     a similar service if NASDAQ is not reporting such information; (c) if the
     shares are not listed or admitted for trading on any national securities
     exchange or included in The Nasdaq National Market or Nasdaq SmallCap
     Market or quoted by NASDAQ or a similar service, the average of the last
     reported bid and asked quotation for the shares as quoted by a market maker
     in the shares (or if there is more than one market maker, the bid and asked
     quotation shall be obtained from two market makers and the average of the
     lowest bid and highest asked quotation). In the absence of any available
     public quotations for the Common Stock, the Board shall determine in good
     faith the fair value of the Common Stock, which determination shall be set
     forth in a certificate by the Secretary of the Corporation.

          (c)  Issue Taxes.  The Corporation shall pay all issue taxes, if any,
incurred in respect of the issue of shares of Common Stock on conversion.  If a
holder of shares of Series D Stock specifies that the shares of Common Stock to
be issued on automatic conversion are to be issued in a name or names other than
the name or names in which such Series D Stock stand, then the Corporation shall
not be required to pay any transfer or other taxes incurred by reason of the
issuance of such shares of Common Stock to the name of another, and if the
appropriate transfer taxes shall not have been paid to the Corporation or the
transfer agent for the Series D Stock at the time of automatic conversion of the
Series D Stock, the shares of Common Stock issued upon conversion thereof may be
registered in the name or names in which the Series D Stock were registered,
despite the instructions to the contrary.

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          (d)  Valid Issuance.  All shares of Common Stock which may be issued
in connection with the conversion provisions set forth herein shall, upon
issuance by the Corporation, be validly issued, fully paid and nonassessable,
free from preemptive rights and free from all taxes, liens or charges with
respect thereto created or imposed by the Corporation.

     7.   Adjustment of Conversion Price.  The number and kind of securities
issuable upon the conversion of the Series D Stock and the Conversion Price
shall be subject to adjustment from time to time in accordance with the
following provisions:

          (a)  Certain Definitions.  For purposes of this Certificate of
Designations:

               (i)    The term "Additional Shares of Common Stock" shall mean
          all shares of Common Stock issued, or deemed to be issued by the
          Corporation pursuant to paragraph (e) of this Section 7, after the
          Original Issue Date except:

                      (A)  issuances of Common Stock, Convertible Securities
               and/or Options granted or approved to be granted by the Board or
               a committee thereof on or prior to the Original Issue Date;

                      (B)  issuances of Common Stock, Convertible Securities
               and/or Options to officers, employees, consultants or directors;
               provided that such issuances pursuant to this clause (B) in the
               aggregate do not exceed more than 5% of the shares of Common
               Stock outstanding, as determined on a fully-diluted basis (the
               "Management Securities"); and

                      (C)  issuances of Common Stock or Series D Stock resulting
               from the provisions of the Agreement and Plan of Merger, dated as
               of February 16, 1999 (the "Merger Agreement"), by and among the
               Corporation, 7/th/ Level Merger Corporation, Street and the
               stockholders of Street named therein, and in each case the
               documents executed, filed or delivered in connection therewith.

               (ii)   The term "Common Stock" shall mean (A) the Common Stock
          and (B) the stock of the Corporation of any class, or series within a
          class, whether now or hereafter authorized, which has the right to
          participate in the distribution of either earnings or assets of the
          Corporation without limit as to the amount or percentage.

               (iii)  The term "Convertible Securities" shall mean any evidence
          of indebtedness, shares or other securities (other than the Series D
          Stock) convertible into or exercisable or exchangeable for Common
          Stock.

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               (iv)   The term "Options" shall mean any and all rights, options
          or warrants (other than the Management Securities) to subscribe for,
          purchase or otherwise in any manner acquire Common Stock or
          Convertible Securities.
 
          (b)  Subdivision or Combination of Shares. In case outstanding shares
of Common Stock shall be subdivided, the Conversion Price shall be
proportionately reduced as of the effective date of such subdivision, or as of
the date a record is taken of the holders of Common Stock for the purpose of so
subdividing, whichever is earlier. In case outstanding shares of Common Stock
shall be combined, the Conversion Price shall be proportionately increased as of
the effective date of such combination, or as of the date a record is taken of
the holders of Common Stock for the purpose of so combining, whichever is
earlier.

          (c)  Stock Dividends. In case shares of Common Stock are issued as a
dividend or other distribution on the Common Stock (or such dividend is
declared), the Conversion Price shall be adjusted, as of the date a record is
taken of the holders of Common Stock for the purpose of receiving such dividend
or other distribution (or if no such record is taken, as at the earliest of the
date of such declaration, payment or other distribution), to the Conversion
Price determined by multiplying the Conversion Price in effect immediately prior
to such declaration, payment or other distribution by a fraction (i) the
numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to the declaration or payment of such dividend or other
distribution, and (ii) the denominator of which shall be the total number of
shares of Common Stock outstanding immediately after the declaration or payment
of such dividend or other distribution. In the event that the Corporation shall
declare or pay any dividend on the Common Stock payable in any right to acquire
Common Stock for no consideration, then the Corporation shall be deemed to have
made a dividend payable in Common Stock in an amount of shares equal to the
maximum number of shares issuable upon exercise of such rights to acquire Common
Stock.

          (d)  Issuance of Additional Shares of Common Stock. If the Corporation
shall issue any Additional Shares of Common Stock (including Additional Shares
of Common Stock deemed to be issued pursuant to paragraph (e) below) after the
Original Issue Date (other than as provided in the foregoing subsections (b) and
(c)), for no consideration or for a consideration per share less than the Market
Price in effect on the date of and immediately prior to such issue, then in such
event, the Conversion Price shall be reduced, concurrently with such issue, to a
price equal to the quotient obtained by dividing:

               (A)    an amount equal to (x) the total number of shares of
          Common Stock outstanding immediately prior to such issuance or sale
          multiplied by the Market Price in effect immediately prior to such
          issuance or sale, plus (y) the aggregate consideration received or
          deemed to be received by the Corporation upon such issuance or sale,
          by

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               (B)    the total number of shares of Common Stock outstanding
          immediately after such issuance or sale.

          (e)  Deemed Issue of Additional Shares of Common Stock.  Except as set
forth in subsection (a) above, if the Corporation at any time or from time to
time after the Original Issue Date shall issue any Convertible Securities or
Options or shall fix a record date for the determination of holders of any class
of securities then entitled to receive any such Options or Convertible
Securities, then the maximum number of shares (as set forth in the instrument
relating thereto without regard to any provisions contained therein designed to
protect against dilution) of Common Stock 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 of Options
or Convertible Securities or, in case such a record date shall have been fixed,
as of the close of business on such record date, provided that in any such case
in which Additional Shares of Common Stock are deemed to be issued:

               (i)    no further adjustments 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 the issue of Common
          Stock upon the conversion or exchange of such Convertible Securities;

               (ii)   if such Options or Convertible Securities by their terms
          provide, with the passage of time or otherwise, for any increase or
          decrease in the consideration payable to the Corporation, or increase
          or decrease in the number of shares of Common Stock issuable, upon the
          exercise, conversion or exchange thereof, the Conversion Price
          computed upon the original issuance of such Options or Convertible
          Securities (or upon the occurrence of a record date with respect
          thereto), and any subsequent adjustments based thereon, upon any such
          increase or decrease becoming effective, shall be recomputed to
          reflect such increase or decrease insofar as it affects such Options
          or the rights of conversion or exchange under such Convertible
          Securities (provided, however, that no such adjustment of the
          Conversion Price shall affect Common Stock previously issued upon
          conversion of the Series D Stock);

               (iii)  upon the expiration of any such Options or any rights of
          conversion or exchange under such Convertible Securities which shall
          not have been exercised, the Conversion Price computed upon the
          original issue of such Options or Convertible Securities (or upon the
          occurrence of a record date with respect thereto), and any subsequent
          adjustments based thereon, shall, upon such expiration, be recomputed
          as if:

                      (A)  in the case of Options or Convertible Securities, the
               only Additional Shares of Common Stock issued were the shares of
               Common

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               Stock, if any, actually issued upon the exercise of such Options
               or the conversion or exchange of such Convertible Securities and
               the consideration received therefor was the consideration
               actually received by the Corporation (x) for the issue of all
               such Options, whether or not exercised, plus the consideration
               actually received by the Corporation upon exercise of the Options
               or (y) for the issue of all such Convertible Securities which
               were actually converted or exchanged plus the additional
               consideration, if any, actually received by the Corporation upon
               the conversion or exchange of the Convertible Securities; and

                      (B)  in the case of Options for Convertible Securities,
               only the Convertible Securities, if any, actually issued upon the
               exercise thereof were issued at the time of issue of such
               Options, and the consideration received by the Corporation for
               the Additional Shares of Common Stock deemed to have been then
               issued was the consideration actually received by the Corporation
               for the issue of all such Options, whether or not exercised, plus
               the consideration deemed to have been received by the Corporation
               upon the issue of the Convertible Securities with respect to
               which such Options were actually exercised.

               (iv)   No readjustment pursuant to clause (ii) or (iii) above
          shall have the effect of increasing the Conversion Price to an amount
          which exceeds the lower of (x) the Conversion Price on the original
          adjustment date or (y) the Conversion Price that would have resulted
          from any issuance of Additional Shares of Common Stock between the
          original adjustment date and such readjustment date.

               (v)    In the case of any Options which expire by their terms not
          more than 30 days after the date of issue thereof, no adjustment of
          the Conversion Price shall be made until the expiration or exercise of
          all such Options, whereupon such adjustment shall be made in the same
          manner provided in clause (iii) above.

          (f)  Determination of Consideration.  For purposes of this Section 7,
the consideration received by the Corporation for the issue of any Additional
Shares of Common Stock shall be computed as follows:

               (i)    Cash and Property.  Such consideration shall:

                      (A)  insofar as it consists of cash, be the aggregate
               amount of cash received by the Corporation; and

                      (B)  insofar as it consists of property other than cash,
               be computed at the fair value thereof at the time of the issue,
               as determined in good faith by the vote of a majority of the
               Board or if the Board cannot 

                                      -9-
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               reach such agreement, by a qualified independent certified public
               accounting firm, other than the accounting firm then engaged as
               the Corporation's independent auditors.
 
               (ii)   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 paragraph (e) above,
          relating to Options and Convertible Securities shall be determined by
          dividing:

                      (A)  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 designed to protect against dilution) payable to the
               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

                      (B)  the maximum number of shares of Common Stock (as set
               forth in the instruments relating thereto, without regard to any
               provision contained therein designed to protect against dilution)
               issuable upon the exercise of such Options or conversion or
               exchange of such Convertible Securities.

          (g)  Other Provisions Applicable to Adjustment Under this Section.
The following provisions shall be applicable to the adjustments in Conversion
Price as provided in this Section 7:

               (i)    Treasury Shares. The number of shares of Common Stock at
          any time outstanding shall not include any shares thereof then
          directly or indirectly owned or held by or for the account of the
          Corporation.

               (ii)   Other Action Affecting Common Stock. If the Corporation
          shall take any action affecting the outstanding number of shares of
          Common Stock other than an action described in any of the foregoing
          subsections 7(b) through 7(e) hereof, inclusive, which would have an
          inequitable effect on the holders of Series D Stock, then the
          Conversion Price shall be adjusted in such manner and at such time as
          the Board on the advice of the Corporation's independent public
          accountants may in good faith determine to be equitable in the
          circumstances.

               (iii)  Minimum Adjustment. No adjustment of the Conversion Price
          shall be made if the amount of any such adjustment would be an amount
          less than

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<PAGE>
 
          one percent (1%) of the Conversion Price then in effect, but any such
          amount shall be carried forward and an adjustment in respect thereof
          shall be made at the time of and together with any subsequent
          adjustment which, together with such amount and any other amount or
          amounts so carried forward, shall aggregate an increase or decrease of
          one percent (1%) or more.

               (iv)   Certain Adjustments. The Conversion Price shall not be
          adjusted upward except in the event of a combination of the
          outstanding shares of Common Stock into a smaller number of shares of
          Common Stock or in the event of a readjustment of the Conversion Price
          pursuant to Section 7(e)(ii) or (iii).

          (h)  Notices of Adjustments. Whenever the Conversion Price is adjusted
as herein provided, an officer of the Corporation shall compute the adjusted
Conversion Price in accordance with the foregoing provisions and shall prepare a
written certificate setting forth such adjusted Conversion Price and showing in
detail the facts upon which such adjustment is based, and such written
instrument shall promptly be delivered to the recordholders of the Series D
Stock.

     8.   Special Optional Redemption. If the Issuance is not approved after a
minimum of two duly called and properly held meetings of the stockholders of the
Corporation for the purpose of approving the Issuance, then the Corporation
shall submit a written offer (the "Offer") to each holder of Series D Stock to
purchase any and all of the Series D Stock owned by such holder at a redemption
price ("Redemption Price") per share, payable in cash, equal to the sum of (x)
the Series D Issue Price plus (y) all accrued and unpaid dividends on the shares
of Series D Stock to be so redeemed to the date of redemption (the "Redemption
Date") and (z) an amount such that the holder of Series D Stock will receive an
aggregate compounded rate of return of 10% from the Original Issue Date to the
Redemption Date. If the holder of Series D Stock desires to sell a number of his
shares of Series D Stock, then such holder shall communicate in writing his
election to sell such shares (an "Acceptance") to the Corporation within 30 days
of the date the Offer was made. The Corporation shall purchase all shares of
Series D Stock as to which an Acceptance was received by the Corporation within
30 days after the date of the Offer. Any Offer made by the Corporation shall
comply with the Securities Act of 1933, as amended (the "Securities Act"), and
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the
rules and regulations promulgated thereunder. The Redemption Price for the
shares of Series D Stock to be redeemed shall be paid on or after the Redemption
Date, upon surrender of the certificate or certificates evidencing such shares.
From and after the Redemption Date, unless there shall have been a default in
payment of the Redemption Price, all rights of the holders of shares of Series D
Stock as holders of Series D Stock (except the right to receive the Redemption
Price upon surrender of their certificate or certificates) shall cease as to
those shares of Series D Stock redeemed, and such shares shall not thereafter be
transferred on the books of the Corporation or be deemed to be outstanding for
any purpose whatsoever.

     9.   Voting Rights.

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<PAGE>
 
          (a)  General. Holders of Series D Stock shall be entitled to notice of
all meetings of the Corporation's stockholders. Except as provided herein, in
addition to the rights otherwise provided for herein or by law, holders of the
Series D Stock shall be entitled to vote, together with the holders of the
Common Stock and any other class or series of stock then entitled to vote, as
one class on all matters submitted to a vote of stockholders of the Corporation,
in the same manner and with the same effect as the holders of the Common Stock
on an "as converted" basis. In addition, except for the vote of stockholders of
the Corporation with respect to the Issuance, holders of Series D Stock shall be
entitled to vote as a separate class on all matters submitted to a vote of
stockholders of the Corporation. In any such vote, and in any vote or action of
the holders of the Series D Stock voting together with the holders of the Common
Stock and any other class or series of stock then entitled to vote, each share
of issued and outstanding Series D Stock shall entitle the holder thereof to one
vote per share for each share of Common Stock (including fractional shares)
which would be obtained upon conversion of all of the outstanding shares of the
Series D Stock held by such holder, rounded up to the nearest one-tenth of a
share.

          (b)  Appointment of Board of Directors.  Commencing on the first
anniversary of the Original Issue Date, the holders of Series D Stock shall have
the right to elect one third (_) of the members of the Board, and commencing on
the second anniversary of the Original Issue Date the holders of the Series D
Stock shall have the right to elect a majority of the members of the Board.
Subject to applicable law, the Series D Stock shall vote as a class to elect
such designees.  The Corporation acting through its Board, shall (i)(A) increase
the size of its Board in accordance with the terms of this Section 9, (B) elect
the designees of the Series D Stock to the Board to the newly created
directorships to hold office until their respective successors are elected at a
special or annual meeting of the stockholders, and (C) in connection with any
subsequent election of directors, nominate, recommend and do all other acts and
things to cause (including, without limitation, voting all shares for which the
Corporation's management or Board holds proxies (including undesignated proxies)
unless otherwise provided by the stockholders submitting such proxies) the
persons referenced in the preceding clause (B) to be elected to the Board.  In
the event the directors elected pursuant to this Section 8(b) shall cease to
serve as directors for any reason, the Corporation shall cause (subject to its
fiduciary duty and the provisions of the Certificate of Incorporation and the
Corporation's By-Laws and applicable law) the vacancies resulting thereby to be
filled as promptly as practicable by persons selected by the holders of Series D
Stock.  Notwithstanding the foregoing, the rights of the holders of Series D
Stock in this Section 9(b) are in lieu of, and not in addition to, the right
that Stephen Gott possesses regarding the designation of directors contained in
Section 6.09 of the Merger Agreement.

          (c)  Protective Provisions.  In addition to any other vote or consent
of stockholders provided by law or by the Certificate of Incorporation, the
Corporation shall not, without the approval by vote or written consent of the
holders of not less than 66_% of the then outstanding shares of Series D Stock,
voting as a separate class:

                                      -12-
<PAGE>
 
               (i)    amend, alter or repeal any of the provisions of the
          Certificate of Incorporation or the Certificate of Designations
          creating this Series D Stock which would alter or change the powers,
          preferences or special rights of the shares of Series D Stock so as to
          affect them adversely, including, but not limited to, increasing or
          decreasing the par value of the Series D Stock; or

               (ii)   authorize, increase the number of or issue any Senior
          Securities or reclassify any Junior Securities into Senior Securities
          (the expressions "Junior Securities" and "Senior Securities" in this
          clause (ii) to include securities convertible into or exchangeable for
          options, warrants or other rights to acquire, Junior Securities or
          Senior Securities, as the case may be).

     10.  Registration.

          (a)  Required Registration.  If the Approval Date does not occur prior
to the one year anniversary of the Original Issue Date, then the Corporation
shall use its reasonable best efforts to prepare and file as soon as practicable
(but in no event more than 15 days after the first anniversary of the Original
Issue Date) with the Securities and Exchange Commission a registration statement
on Form S-3 (or such successor or other appropriate form) under the Securities
Act ("Registration Statement") with respect to the Series D Stock (the
"Registrable Shares") and to effect all such registrations, qualifications and
compliances (including, without limitation, obtaining appropriate qualifications
under applicable state securities or 'blue sky" laws and compliance with any
other applicable governmental requirements or regulations) as any holder of the
Series D Stock may reasonably request and that would permit or facilitate the
sale of Registrable Shares in the open market (provided, however, that the
Corporation shall not be required in connection therewith to qualify to do
business or to file a general consent to service of process in any such state or
jurisdiction), in each case so that such Registration Statement and all other
such registrations, qualifications and compliances may become effective.
Notwithstanding the foregoing, the Corporation shall not be obligated to effect
an underwritten Registration Statement.

          (b)  Effectiveness, Suspension Right.

               (i)    The Corporation will use its best efforts to maintain the
     effectiveness of the Registration Statement and other applicable
     registrations, qualifications and compliances until the second anniversary
     of the effective date of the Registration Statement (the "Registration
     Effective Period"), and from time to time will amend or supplement the
     Registration Statement and the prospectus contained therein as and to the
     extent necessary to comply with the Securities Act, the Exchange Act and
     any applicable state securities statute or regulation, subject to the
     following limitations and qualifications.

                                      -13-
<PAGE>
 
               (ii)   Following the date on which the Registration Statement is
     first declared effective, the holders of the Registrable Shares will be
     permitted (subject in all cases to Section 11 below) to offer and sell
     Registrable Shares during the Registration Effective Period in the manner
     described in the Registration Statement provided that the Registration
     Statement remains effective and has not been suspended.

               (iii)  Notwithstanding any other provision of this Section 10 but
     subject to Section 11, the Corporation shall have the right at any time to
     require that all holders of Registrable Shares suspend further open market
     offers and sales of Registrable Shares whenever, and for so long as, in the
     reasonable judgment of the Corporation after consultation with counsel
     there is or may be in existence material undisclosed information or events
     with respect to the Corporation (the "Suspension Right"). In the event the
     Corporation exercises the Suspension Right, such suspension will continue
     for the period of time reasonably necessary for disclosure to occur at a
     time that is not detrimental to the Corporation or its stockholders or
     until such time as the information or event is no longer material, each as
     determined in good faith by the Corporation after consultation with
     counsel. The Corporation will give the holders of Registrable Shares notice
     of any such suspension and will use all reasonable efforts to minimize the
     length of the suspension.

          (c)  Expenses. The costs and expenses to be borne by the Corporation
for purposes of this Section 10 shall include, without limitation, printing
expenses (including a reasonable number of prospectuses for circulation by the
selling holders of Registrable Shares), legal fees and disbursements of counsel
for the Corporation, "blue sky'' expenses, accounting fees and filing fees, and
legal fees and disbursements of not more than one counsel for the holders of
Registrable Shares.

          (d)  Indemnification.

               (i)    To the extent permitted by law, the Corporation will
     indemnify and hold harmless each holder of Registrable Shares, its
     officers, directors, stockholders or partners and each person, if any, who
     controls such holder of Registrable Shares within the meaning of the
     Securities Act or the Exchange Act, against any losses, claims, damages or
     liabilities (joint or several) to which they may become subject under the
     Securities Act, the Exchange Act or other federal or state law, insofar as
     such losses, claims, damages, or liabilities (or actions in respect
     thereof) arise out of or are based upon any of the following statements,
     omissions or violations (collectively a "Violation"): (A) any untrue
     statement or alleged untrue statement of a material fact contained in the
     Registration Statement, including any preliminary prospectus or final
     prospectus contained therein or any amendments or supplements thereto, (B)
     the omission or alleged omission to state therein a material fact required
     to be stated therein, or necessary to make the statements therein not
     misleading, or (C) any Violation or alleged Violation by the Corporation of
     the Securities Act, the Exchange Act, any state securities law or any rule

                                      -14-
<PAGE>
 
     or regulation promulgated under the Securities Act, the Exchange Act or any
     state securities law; and the Corporation will pay to each such holder of
     Registrable Shares (and its officers, directors, stockholders or partners)
     or controlling person, any legal or other expenses reasonably incurred by
     them in connection with investigating or defending any such loss, claim,
     damage, liability, or action; provided, however, that the indemnity
     agreement contained in this Section 10(d)(i) shall not apply to amounts
     paid in settlement of any such loss, claim, damage, liability, or action if
     such settlement is effected without the consent of the Corporation, nor
     shall the Corporation be liable in any such case for any such loss, claim,
     damage, liability, or action to the extent that it arises out of or is
     based upon (a) a Violation which occurs in reliance upon and in conformity
     with written information furnished expressly for use in the Registration
     Statement by any such holder of Registrable Shares, or (b) a Violation that
     would not have occurred if such holder of Registrable Shares had delivered
     to the purchaser the version of the prospectus most recently provided by
     the Corporation to the holder of Registrable Shares as of the date of such
     sale.

               (ii)   To the extent permitted by law, each selling holder of
     Registrable Shares will indemnify and hold harmless the Corporation, each
     of its directors, each of its officers who has signed the Registration
     Statement, each person, if any, who controls the Corporation within the
     meaning of the Securities Act, any other holders of Registrable Shares
     selling securities pursuant to the Registration Statement and any
     controlling person of any other holders of Registrable Shares, against any
     losses, claims, damages, or liabilities (joint or several) to which any of
     the foregoing persons may become subject, under the Securities Act, the
     Exchange Act or other federal or state law, insofar as such losses, claims,
     damages, or liabilities (or actions in respect thereto) arise out of or are
     based upon any Violation (which includes without limitation the failure of
     the holders of Registrable Shares to comply with the prospectus delivery
     requirements under the Securities Act, and the failure of the holders of
     Registrable Shares to deliver the most current prospectus provided by the
     Corporation prior to such sale), in each case to the extent (and only to
     the extent) that such Violation occurs in reliance upon and in conformity
     with written information furnished by such holders of Registrable Shares
     expressly for use in the Registration Statement or such Violation is caused
     by the holder's of Registrable Shares failure to deliver to the purchaser
     of the Registrable Shares a prospectus (or amendment or supplement thereto)
     that had been made available to the holders of Registrable Shares by the
     Corporation; and each such holder of Registrable Shares will pay any legal
     or other expenses reasonably incurred by any person intended to be
     indemnified pursuant to this Section 10(d)(ii) in connection with
     investigating or defending any such loss, claim, damage, liability, or
     action; provided, however, that the indemnity agreement contained in this
     Section 10(d)(ii) shall not apply to amounts paid in settlement of any such
     loss, claim, damage, liability or action if such settlement is effected
     without the consent of the holders of Registrable Shares, which consent
     shall not be unreasonably withheld. The aggregate indemnification liability
     of each holder of Registrable Shares under this Section 10(d)(ii) shall not
     exceed the net proceeds received

                                      -15-
<PAGE>
 
     by such holder of Registrable Shares in connection with sale of shares
     pursuant to the Registration Statement.

               (iii)  Each person entitled to indemnification under this Section
          10(d) (the "Indemnified Party'') shall give notice to the party
          required to provide indemnification (the "Indemnifying Party")
          promptly after such Indemnified Party has actual knowledge of any
          claim as to which indemnity may be sought and shall permit the
          Indemnifying Party to assume the defense of any such claim and any
          litigation resulting therefrom, provided that counsel for the
          Indemnifying Party who conducts the defense of such claim or any
          litigation resulting therefrom shall be approved by the Indemnified
          Party (whose approval shall not be unreasonably withheld), and the
          Indemnified Party may participate in such defense at such party's
          expense, and provided further that the failure of any Indemnified
          Party to give notice as provided herein shall not relieve the
          Indemnifying Party of its obligations under this Section 10 unless the
          Indemnifying Party is materially prejudiced thereby. No Indemnifying
          Party, in the defense of any such claim or litigation, shall (except
          with the consent of each Indemnified Party) consent to entry of any
          judgment or enter into any settlement that does not include as an
          unconditional term thereof the giving by the claimant or plaintiff to
          such Indemnified Party of a release from all liability in respect to
          such claim or litigation. Each Indemnified Party shall furnish such
          information regarding itself or the claim in question as an
          Indemnifying Party may reasonably request in writing and as shall be
          reasonably required in connection with the defense of such claim and
          litigation resulting therefrom.

               (iv)   To the extent that the indemnification provided for in
          this Section 10(d) is held by a court of competent jurisdiction to be
          unavailable to an Indemnified Party with respect to any loss,
          liability, claim, damage or expense referred to herein, then the
          Indemnifying Party, in lieu of indemnifying such Indemnified Party
          hereunder, shall contribute to the amount paid or payable by such
          Indemnified Party as a result of such loss, liability, claim, damage
          or expense in such proportion as is appropriate to reflect the
          relative fault of the Indemnifying Party on the one hand and of the
          Indemnified Party on the other in connection with the statements or
          omissions which resulted in such loss, liability, claim, damage or
          expense, as well as any other relevant equitable considerations. The
          relative fault of the Indemnifying Party and of the Indemnified Party
          shall be determined by reference to, among other things, whether the
          untrue or alleged untrue statement of a material fact or the omission
          or alleged omission to state a material fact relates to information
          supplied by the Indemnifying Party or by the Indemnified Party and the
          parties' relative intent, knowledge, access to information and
          opportunity to correct or prevent such statement or omission. The
          aggregate contribution liability of each holder of Registrable Shares
          under this Section 10(d)(iv) shall not exceed the net proceeds
          received by such holder of Registrable Shares in connection with sale
          of shares pursuant to the Registration Statement.

      11. Procedures for Sale of Shares under Registration Statement.

                                      -16-
<PAGE>
 
          (a)  Notice and Approval.  If any holder of Registrable Shares shall
propose to sell any Registrable Shares pursuant to the Registration Statement,
it shall notify the Corporation of its intent to do so (including the proposed
manner and timing of all sales) at least 10 full business days prior to such
sale, and the provision of such notice to the Corporation shall conclusively be
deemed to reestablish and reconfirm an agreement by such holder of Registrable
Shares to comply with the registration provisions set forth in this Certificate
of Designations.  Unless otherwise specified in such notice, such notice shall
be deemed to constitute a representation that any information previously
supplied by such holder of Registrable Shares expressly for inclusion in the
Registration Statement (as the same may have been superseded by subsequent such
information) is accurate as of the date of such notice.  At any time within such
10 business day period, the Corporation may refuse to permit the holders of
Registrable Shares to resell any Registrable Shares pursuant to the Registration
Statement; provided, however, that in order to exercise this right, the
Corporation must deliver a certificate in writing to the holders of Registrable
Shares to the effect that a delay in such sale is necessary because a sale
pursuant to the Registration Statement in its then-current form without the
addition of material, non-public information about the Corporation, could
constitute a violation of the federal securities laws.  Notwithstanding the
foregoing, the Corporation will ensure that in any event the holders of
Registrable Shares shall have at least 15 business days (prorated for partial
quarters) available to sell Registrable Shares during each calendar quarter (or
portion thereof) from the date the Registration Statement is declared effective
until the expiration of the Registration Effective Period.

          (b)  Delivery of Prospectus.  For any offer or sale of any of the
Registrable Shares by a holder of Registrable Shares in a transaction that is
not exempt under the Securities Act, the holder of Registrable Shares, in
addition to complying with any other federal securities laws, shall deliver a
copy of the final prospectus (or amendment of or supplement to such prospectus)
of the Corporation covering the Registrable Shares in the form furnished to the
holder of Registrable Shares by the Corporation to the purchaser of any of the
Registrable Shares on or before the settlement date for the purchase of such
Registrable Shares.

          (c)  Copies of Prospectuses.  Subject to the provisions of this
Section 11, when a holder of Registrable Shares is entitled to sell and gives
notice of its intent to sell Registrable Shares pursuant to the Registration
Statement, the Corporation shall, within 5 business days following the request,
furnish to such holder of Registrable Shares a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be necessary so that, as
thereafter delivered to the purchasers of such Registrable Shares, such
prospectus shall not as of the date of delivery to the holder of Registrable
Shares include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading or incomplete in the light of the circumstances then
existing.

     12   No Reissuance of Series D Stock.  No share or shares of Series D Stock
acquired by the Corporation by reason of redemption, purchase, conversion or
otherwise shall be reissued, 

                                      -17-
<PAGE>
 
and all such shares of Series D Stock shall be canceled, retired and eliminated
from the shares of Series D Stock which the Corporation shall be authorized to
issue. Any such shares of Series D Stock acquired by the Corporation shall have
the status of authorized and unissued shares of Preferred Stock issuable in
undesignated Series and may be redesignated and reissued in any series other
than as Series D Stock.

     13   Exclusion of Other Rights.  Except as may otherwise be required by
law, shares of Series D Stock shall not have any voting powers, designations,
preferences and rights, other than those specifically set forth herein (as may
be amended from time to time) and in the Certificate of Incorporation.

     14   Registered Holders.  A holder of Series D Stock registered on the
Corporation's stock transfer books as the owner of shares of Series D Stock
shall be treated as the owner of such shares for all purposes.  All notices and
all payments required to be mailed to a holder of shares of Series D Stock shall
be mailed to such holder's registered address on the Corporation's stock
transfer books, and all dividend and redemption payments to a holder of shares
of Series D Stock made hereunder shall be deemed to be paid in compliance hereof
on the date such payments are deposited into the mail addressed to such holder
at his registered address on the Corporation's stock transfer books.

     15   Headings of Subdivisions.  The headings of the various subdivisions
hereof are for convenience of reference only and shall not affect the
interpretation of any of the provisions hereof.

     16   Severability of Provisions.  If any right, preference or limitation of
the Series D Stock set forth herein (as may be amended) from time to time is
invalid, unlawful or incapable of being enforced by reason of any rule of law or
public policy, such right, preference or limitation (including, without
limitation, the dividend rate) shall be enforced to the maximum extent permitted
by law and all other rights, preferences and limitations set forth herein (as so
amended) which can be given effect without the invalid, unlawful or
unenforceable right, preference or limitation shall, nevertheless, remain in
full force and effect, and no right, preference or limitation herein set forth
shall be deemed dependent upon any other such right, preference or limitation
unless so expressed herein.

                 [Remainder of page intentionally left blank.]

                                      -18-
<PAGE>
 
          IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Designations this 16 day of February, 1999.

                              7/TH/ LEVEL, INC.

                              By:  /s/ DONALD SCHUPAK
                                  --------------------------------
                                   Donald Schupak
                                   Chairman of the Board

                                      -19-