I:\ADVANCE\ALARM\MAIN\PREFERED.007


                             - 13 -
         ALARMGUARD HOLDINGS, INC. (THE "CORPORATION")
                            PREFERRED STOCK TERMS


          Section 1.  Dividends.

          1A.   General Obligation.  When and as declared by  the
Corporation's  Board  of Directors and to  the  extent  permitted
under  the  General Corporation Law of Delaware, the  Corporation
shall  pay preferential dividends in cash to the holders  of  the
Series  A  Preferred Stock (the "Series A Preferred") as provided
in  this  Section 1.  No preferential dividends shall be paid  to
the  holders  of  the  Series B Preferred Stock  (the  "Series  B
Preferred").   Except as otherwise provided herein, dividends  on
each  share  of the Series A Preferred (a "Series A Share",  and,
collectively  with  each  share of  the  Series  B  Preferred,  a
"Share")  shall accrue, whether or not declared  or  paid,  on  a
daily  basis  at  the rate of 5% per annum  of  the  sum  of  the
Liquidation  Value  thereof  plus  all  accumulated  and   unpaid
dividends thereon from and including the date of issuance of such
Share  to  and including the first to occur of (i)  the  date  on
which  the Liquidation Value of such Share (plus all accrued  and
unpaid  dividends  thereon) is paid  to  the  holder  thereof  in
connection  with  the  liquidation  of  the  Corporation  or  the
redemption  of such Share by the Corporation, (ii)  the  date  on
which  such  Share  is converted into shares of Conversion  Stock
hereunder  or  (iii)  the date on which such Share  is  otherwise
acquired by the Corporation.  Such dividends shall accrue whether
or  not  they  have been declared and whether or  not  there  are
profits,  surplus  or  other  funds of  the  Corporation  legally
available for the payment of dividends, and such dividends  shall
be cumulative such that all accrued and unpaid dividends shall be
fully  paid  before any dividends, distributions, redemptions  or
other payments may be made with respect to any Junior Securities.
The  date  on  which the Corporation initially issues  any  Share
shall  be deemed to be its "date of issuance" regardless  of  the
number  of  times  transfer of such Share is made  on  the  stock
records  maintained by or for the Corporation and  regardless  of
the  number of certificates which may be issued to evidence  such
Share.

          1B.   Dividend Payment Dates.  All dividends which have
accrued on the Series A Preferred shall be payable on January  1,
April  1,  July 1 and October 1 of each year, beginning April  1,
1998  (the  "Dividend  Payment Dates"); provided,  however,  that
incremental  dividends over and above the rate of  5%  per  annum
payable pursuant to clause (i) of Paragraph 9B hereof need not be
paid  on  the  Dividend  Payment Dates  and  shall  accrue  until
otherwise payable pursuant to the terms hereof.

          1C.  Distribution of Partial Dividend Payments.  Except
as otherwise provided herein, if at any time the Corporation pays
less than the total amount of dividends then accrued with respect
to  the Series A Preferred, such payment shall be distributed pro
rata  among the holders thereof based upon the aggregate  accrued
but unpaid dividends on the Shares held by each such holder.

          1D.   Participating Dividends.  In the event  that  the
Corporation declares or pays any dividends upon the Common  Stock
(whether  payable  in cash, securities or other  property)  other
than  dividends  payable solely in shares of  Common  Stock,  the
Corporation  shall  also declare and pay to the  holders  of  the
Series  A  Preferred and the Series B Preferred at the same  time
that  it declares and pays such dividends to the holders  of  the
Common  Stock, the dividends which would have been  declared  and
paid with respect to the Common Stock issuable upon conversion of
the  Series  A Preferred and Series B Preferred had  all  of  the
outstanding  Series  A  Preferred  and Series  B  Preferred  been
converted immediately prior to the record date for such dividend,
or  if  no record date is fixed, the date as of which the  record
holders  of  Common Stock entitled to such dividends  are  to  be
determined.

          Section 2.  Liquidation.

          Upon any liquidation, dissolution or winding up of  the
Corporation  (whether voluntary or involuntary), each  holder  of
Series  A  Preferred or Series B Preferred (collectively referred
to herein as the "Preferred Stock") shall be entitled to be paid,
before  any  distribution  or payment is  made  upon  any  Junior
Securities,  an amount in cash equal to the aggregate Liquidation
Value  of  all Shares held by such holder (plus all  accrued  and
unpaid  dividends  thereon), and the holders of  Preferred  Stock
shall  not be entitled to any further payment.  If upon any  such
liquidation,  dissolution or winding up of  the  Corporation  the
Corporation's assets to be distributed among the holders  of  the
Preferred  Stock  are  insufficient to  permit  payment  to  such
holders  of  the aggregate amount which they are entitled  to  be
paid under this Section 2, then the entire assets available to be
distributed   to   the   Corporation's  stockholders   shall   be
distributed pro rata among such holders based upon the  aggregate
Liquidation Value (plus all accrued and unpaid dividends) of  the
Preferred  Stock  held  by  each  such  holder.   Prior  to   the
liquidation,  dissolution or winding up of the  Corporation,  the
Corporation  shall  declare for payment all  accrued  and  unpaid
dividends  with respect to the Preferred Stock, but only  to  the
extent  of  funds  of the Corporation legally available  for  the
payment of dividends.  Not less than 60 days prior to the payment
date stated therein, the Corporation shall mail written notice of
any  such  liquidation, dissolution or winding up to each  record
holder of Preferred Stock, setting forth in reasonable detail the
amount of proceeds to be paid with respect to each Share and each
share  of  Common  Stock  in connection  with  such  liquidation,
dissolution or winding up.

          Section  3.   Priority of Preferred Stock on  Dividends
and Redemptions.

          3A.  No Payments With Respect to Junior Securities.

          So  long  as  any Preferred Stock remains  outstanding,
without the prior written consent of the holders of two-thirds of
the  outstanding shares of Preferred Stock, taken together  as  a
single series, the Corporation shall not, nor shall it permit any
Subsidiary to, redeem, purchase or otherwise acquire directly  or
indirectly  any  Junior  Securities, nor  shall  the  Corporation
directly  or indirectly pay or declare any dividend or  make  any
distribution upon any Junior Securities.

          3B.  No Issuance of Senior or pari passu Securities.

          For so long as any Preferred Stock remains outstanding,
without the prior written consent of the holders of two-thirds of
the outstanding shares of the Preferred Stock, taken together  as
a  single  series,  the  Company shall  not  amend  its  Restated
Certificate of Incorporation or take any other action to  approve
or  issue  any capital stock (including increasing the number  of
authorized shares of Series A Preferred or Series B Preferred) of
the  Company that is senior or pari passu in right to the payment
of  dividends, payment upon liquidation, redemption or  otherwise
to  the  Preferred Stock.  Additionally, so long as any Preferred
Stock  remains outstanding, without the prior written consent  of
the  holders of two-thirds of the outstanding shares of Preferred
Stock,  taken together as a single series, the Company shall  not
amend its Restated Certificate of Incorporation or take any other
action that would alter the rights, preferences or privileges  of
the  Preferred  Stock as in effect on the date  of  the  original
issuance of the Preferred Stock.

          Section 4.  Redemptions.

          4A.   Scheduled Redemption. On February  2,  2003  (the
"Scheduled  Redemption Date"), the Corporation shall  redeem  all
outstanding  Preferred Stock at a price per Share  equal  to  the
Liquidation  Value  thereof (plus accrued  and  unpaid  dividends
thereon).

          4B.   Redemption Payments.  For each Share which is  to
be  redeemed hereunder, the Corporation shall be obligated on the
Redemption  Date to pay to the holder thereof (upon surrender  by
such  holder at the Corporation's principal office of the certifi
cate  representing such Share) an amount in cash  in  immediately
available  funds  equal to the Liquidation Value  of  such  Share
(plus  all  accrued and unpaid dividends thereon and any  premium
payable  with respect thereto).  If the funds of the  Corporation
legally available for redemption of Shares on any Redemption Date
are  insufficient  to redeem the total number  of  Shares  to  be
redeemed  on  such date, those funds which are legally  available
shall be used to redeem the maximum possible number of Shares pro
rata  among  the holders of the Shares to be redeemed based  upon
the  aggregate Liquidation Value of such Shares held by each such
holder  (plus  all accrued and unpaid dividends thereon  and  any
premium  payable  with respect thereto).  At any time  thereafter
when  additional  funds of the Corporation are legally  available
for  the  redemption of Shares, such funds shall  immediately  be
used  to  redeem the balance of the Shares which the  Corporation
has  become obligated to redeem on any Redemption Date but  which
it has not redeemed.  Prior to any redemption of Preferred Stock,
the  Corporation shall declare for payment all accrued and unpaid
dividends  with respect to the Shares which are to  be  redeemed,
but  only  to  the  extent  of funds of the  Corporation  legally
available for the payment of dividends.

          4C.   Notice of Redemption.  The Corporation shall mail
written  notice of each redemption of any Preferred Stock  (other
than  a  redemption  at  the request of a holder  or  holders  of
Preferred Stock) to each record holder thereof not more  than  60
nor  less than 30 days prior to the date on which such redemption
is  to  be  made.  In case fewer than the total number of  Shares
represented  by  any certificate are redeemed, a new  certificate
representing the number of unredeemed Shares shall be  issued  to
the  holder  thereof  without cost to  such  holder  within  five
business days after surrender of the certificate representing the
redeemed Shares.

          4D.   Dividends After Redemption Date.  No Share  shall
be entitled to any dividends accruing after the date on which the
Liquidation  Value  of such Share (plus all  accrued  and  unpaid
dividends thereon) is paid to the holder of such Share.  On  such
date,  all  rights of the holder of such Share shall  cease,  and
such   Share  shall  no  longer  be  deemed  to  be  issued   and
outstanding.
          4E.  Redeemed or Otherwise Acquired Shares.  Any Shares
which are redeemed or otherwise acquired by the Corporation shall
be  canceled  and retired to authorized but unissued  shares  and
shall not be reissued, sold or transferred.

          4F.     Other   Redemptions   or   Acquisitions.    The
Corporation  shall  not, nor shall it permit any  Subsidiary  to,
redeem or otherwise acquire any Shares of Preferred Stock, except
as  expressly  authorized herein or pursuant to a purchase  offer
made  pro rata to all holders of Preferred Stock on the basis  of
the number of Shares owned by each such holder.

          4G.  Payment of Accrued Dividends.  The Corporation may
not  redeem any Series A Preferred, unless all dividends  accrued
on  the  outstanding Series A Preferred through  the  immediately
preceding  Dividend Payment Date have been declared and  paid  in
full.

          4H.  Change of Control.

           (i)   If  a  Change  of Control has  occurred  or  the
Corporation  obtains  knowledge  that  a  Change  of  Control  is
proposed  to  occur,  the Corporation shall give  prompt  written
notice  of such Change of Control describing in reasonable detail
the  material  terms  and date of consummation  thereof  to  each
holder of Preferred Stock, but in any event such notice shall not
be given later than five days after the occurrence of such Change
of  Control,  and  the  Corporation shall  give  each  holder  of
Preferred  Stock prompt written notice of any material change  in
the terms or timing of such transaction.  Any holder of Preferred
Stock may require the Corporation to redeem all or any portion of
the  Preferred  Stock owned by such holder at a price  per  Share
equal  to  the  greater of (a) $1,300 if the  Change  of  Control
occurs  prior  to  February 2, 1999 or $1,500 if  the  Change  of
Control  occurs thereafter or (b) the Liquidation  Value  thereof
(plus all accrued and unpaid dividends thereon) by giving written
notice to the Corporation of such election prior to the later  of
(a)  21  days after receipt of the Corporation's notice  and  (b)
five days prior to the consummation of the Change of Control (the
"Expiration  Date").  The Corporation shall give  prompt  written
notice  of  any such election to all other holders  of  Preferred
Stock  within five days after the receipt thereof, and each  such
holder  shall have until the later of (a) the Expiration Date  or
(b)  ten  days  after receipt of such second  notice  to  request
redemption   hereunder   (by  giving  written   notice   to   the
Corporation) of all or any portion of the Preferred  Stock  owned
by such holder.

          Upon receipt of such election(s), the Corporation shall
be  obligated to redeem the aggregate number of Shares  specified
therein  on  the  occurrence of the Change of  Control.   If  any
proposed  Change  of  Control does not occur,  all  requests  for
redemption   in   connection  therewith  shall  be  automatically
rescinded, or if there has been a material change in the terms or
the  timing of the transaction, any holder of Preferred Stock may
rescind  such  holder's request for redemption by giving  written
notice of such rescission to the Corporation.

          The  term  "Change  of  Control" means  (a)  any  sale,
transfer  or  issuance  or  series  of  sales,  transfers  and/or
issuances  of  Common  Stock by the Corporation  or  any  holders
thereof  which results in any Person or group of Persons (as  the
term  "group" is used under the Securities Exchange Act of 1934),
other  than  the  holders of Preferred Stock as of  the  date  of
issuance  of  such Shares, beneficially owning (as such  term  is
used in the Securities Exchange Act of 1934) more than 50% of the
Common  Stock outstanding at the time of such sale,  transfer  or
issuance or series of sales, transfers and/or issuances, (b)  any
sale  or  transfer  of  more  than  50%  of  the  assets  of  the
Corporation   and  its  Subsidiaries  on  a  consolidated   basis
(measured  either  by  book  value in accordance  with  generally
accepted  accounting principles consistently applied or  by  fair
market value determined in the reasonable good faith judgment  of
the  Corporation's  Board of Directors)  in  any  transaction  or
series  of transactions (other than sales in the ordinary  course
of  business)  and (c) any merger or consolidation to  which  the
Corporation is a party, except for a merger in which the  Corpora
tion  is  the  surviving corporation, the terms of the  Preferred
Stock  are  not changed and the Preferred Stock is not  exchanged
for  cash, securities or other property, and after giving  effect
to  such  merger,  the  holders of the Corporation's  outstanding
capital  stock possessing a majority of the voting  power  (under
ordinary  circumstances) to elect a majority of the Corporation's
Board of Directors immediately prior to the merger shall continue
to own the Corporation's outstanding capital stock possessing the
voting  power (under ordinary circumstances) to elect a  majority
of the Corporation's Board of Directors.

          (ii)  Redemptions  made pursuant to this  paragraph  4H
shall not relieve the Corporation of its obligation to redeem the
Preferred Stock on the Scheduled Redemption Date pursuant to para
graph 4A above.


          Section 5.  Voting Rights.

          5A.   Election  of  Directors.   In  the  election   of
directors of the Corporation, the holders of the Preferred Stock,
voting separately as a single class to the exclusion of all other
classes of the Corporation's capital stock and with each Share of
Preferred Stock entitled to one vote, shall be entitled to  elect
two  directors to serve on the Corporation's Board  of  Directors
until  their  successors are duly elected by the holders  of  the
Preferred Stock or they are removed from office by the holders of
the  Preferred Stock.  If the holders of the Preferred Stock  for
any  reason  fail to elect anyone to fill any such  directorship,
such  position shall remain vacant until such time as the holders
of the Preferred Stock elect a director to fill such position and
shall  not  be  filled by resolution or vote of the Corporation's
Board of Directors or the Corporation's other stockholders.

          5B.  Other Voting Rights.  The holders of the Preferred
Stock shall be entitled to notice of all stockholders meetings in
accordance with the Corporation's bylaws, and except as otherwise
required  by  applicable law, the holders of the Preferred  Stock
shall  be  entitled  to  vote on all  matters  submitted  to  the
stockholders for a vote together with the holders of  the  Common
Stock voting together as a single class with each share of Common
Stock  entitled to one vote per share and each Share of Preferred
Stock  entitled  to  one  vote for each  share  of  Common  Stock
issuable upon conversion of such Share of Preferred Stock  as  of
the record date for such vote or, if no record date is specified,
as of the date of such vote.

          Section 6.  Conversion.

          6A.  Conversion Procedure.

          (i)   At any time and from time to time, any holder  of
Series A Preferred may convert all or any portion of the Series A
Preferred  (including any fraction of a Series A Share)  held  by
such  holder into a number of shares of Conversion Stock computed
by  multiplying the number of Series A Shares to be converted  by
$1,000  and dividing the result by the Series A Conversion  Price
then  in  effect and any holder of Series B Preferred may convert
all  or  any  portion  of the Series B Preferred  (including  any
fraction  of a Series B Share) held by such holder into a  number
of  shares of Conversion Stock computed by multiplying the number
of  Series  B  Shares to be converted by $1,000 and dividing  the
result by the Series B Conversion Price then in effect.

          (ii)   Except   as  otherwise  provided  herein,   each
conversion  of  Preferred Stock shall  be  deemed  to  have  been
effected  as  of the close of business on the date on  which  the
certificate or certificates representing the Preferred  Stock  to
be   converted  have  been  surrendered  for  conversion  at  the
principal  office  of  the Corporation.  At  the  time  any  such
conversion  has been effected, the rights of the  holder  of  the
Shares  converted as a holder of Preferred Stock shall cease  and
the  Person or Persons in whose name or names any certificate  or
certificates for shares of Conversion Stock are to be issued upon
such  conversion  shall be deemed to have become  the  holder  or
holders  of  record of the shares of Conversion Stock represented
thereby.

          (iii)     The conversion rights of any Share subject to
redemption hereunder shall terminate on the Redemption  Date  for
such Share unless the Corporation has failed to pay to the holder
thereof the Liquidation Value of such Share (plus all accrued and
unpaid  dividends  thereon and any premium payable  with  respect
thereto).

          (iv)  Notwithstanding any other provision hereof, if  a
conversion of Preferred Stock is to be made in connection with  a
Change of Control or other transaction affecting the Corporation,
the  conversion  of  any Shares of Preferred Stock  may,  at  the
election   of  the  holder  thereof,  be  conditioned  upon   the
consummation  of such transaction, in which case such  conversion
shall  not  be deemed to be effective until such transaction  has
been consummated.

          (v)   As  soon as possible after a conversion has  been
effected  (but in any event within three (3) business days  after
notice of such conversion  has been delivered to the Corporation,
provided that such conversion has been effected by such date,  in
the  case  of  subparagraph  (a) below),  the  Corporation  shall
deliver to the converting holder:

               (a)   a  certificate or certificates  representing
     the  number of shares of Conversion Stock issuable by reason
     of  such  conversion in such name or names and such denomina
     tion   or   denominations  as  the  converting  holder   has
     specified;

               (b)   payment  in an amount equal to  all  accrued
     dividends  with respect to each Share converted  which  have
     not  been paid prior thereto, plus the amount payable  under
     subparagraph (x) below with respect to such conversion; and

               (c)   a  certificate representing any Shares which
     were  represented  by the certificate or certificates  deliv
     ered  to  the Corporation in connection with such conversion
     but which were not converted.

          (vi)  The Corporation shall declare the payment of  all
dividends  payable  under  subparagraph  (v)(b)  above.   If  the
Corporation  is  not permitted under applicable law  to  pay  any
portion  of  the  accrued and unpaid dividends on  the  Preferred
Stock  being converted, the Corporation shall pay such  dividends
to  the  converting holder as soon thereafter  as  funds  of  the
Corporation  are  legally available for  such  payment.   At  the
request  of  any  such converting holder, the  Corporation  shall
provide  such  holder with written evidence of its obligation  to
such  holder. If for any reason the Corporation is unable to  pay
any  portion  of  the accrued and unpaid dividends  on  Preferred
Stock  being  converted, such dividends may,  at  the  converting
holder's option, be converted into an additional number of shares
of  Conversion  Stock determined by dividing the  amount  of  the
unpaid dividends to be applied for such purpose, by the lesser of
(a)  the Conversion Price then in effect and (b) the Market Price
of a share of Common Stock.

         (vii)  The issuance of certificates for shares of Conver
sion  Stock upon conversion of the Preferred Stock shall be  made
without  charge to the holders of such Preferred  Stock  for  any
issuance  tax  in respect thereof or other cost incurred  by  the
Corporation  in connection with such conversion and  the  related
issuance of shares of Conversion Stock.  Upon conversion of  each
Share,  the  Corporation  shall take  all  such  actions  as  are
necessary  in order to insure that the Conversion Stock  issuable
with  respect  to such conversion shall be validly issued,  fully
paid  and  nonassessable, free and clear  of  all  taxes,  liens,
charges and encumbrances with respect to the issuance thereof.

        (viii)  The Corporation shall not close its books against
the transfer of Preferred Stock or of Conversion Stock issued  or
issuable  upon conversion of Preferred Stock in any manner  which
interferes  with the timely conversion of Preferred  Stock.   The
Corporation shall assist and cooperate with any holder of  Shares
required to make any governmental filings or obtain any governmen
tal  approval  prior to or in connection with any  conversion  of
Shares  hereunder  (including,  without  limitation,  making  any
filings required to be made by the Corporation).

          (ix)   The Corporation shall at all times reserve   and
keep   available  out  of its authorized but unissued  shares  of
Conversion  Stock,  solely for the purpose of issuance  upon  the
conversion  of  Preferred  Stock,  such  number  of   shares   of
Conversion  Stock issuable upon the conversion of all outstanding
Preferred  Stock.  All shares of Conversion Stock  which  are  so
issuable  shall, when issued, be duly and validly  issued,  fully
paid  and  nonassessable  and free  from  all  taxes,  liens  and
charges.  The Corporation shall take all such actions as  may  be
necessary to assure that all such shares of Conversion Stock  may
be   so  issued  without  violation  of  any  applicable  law  or
governmental  regulation  or  any requirements  of  any  domestic
securities exchange upon which shares of Conversion Stock may  be
listed  (except  for official notice of issuance which  shall  be
immediately   delivered  by  the  Corporation  upon   each   such
issuance).  The Corporation shall not take any action which would
cause  the number of authorized but unissued shares of Conversion
Stock  to be less than the number of such shares required  to  be
reserved  hereunder  for  issuance upon conversion  of  Preferred
Stock.

            (x)   If  any  fractional  interest  in  a  share  of
Conversion  Stock  would,  except  for  the  provisions  of  this
subparagraph,  be  delivered  upon any  conversion  of  Preferred
Stock,  the  Corporation,  in lieu of delivering  the  fractional
share  therefor, shall pay an amount to the holder thereof  equal
to the Market Price of such fractional interest as of the date of
conversion.

          (xi)   If  the shares of Conversion Stock  issuable  by
reason of conversion of  Preferred Stock are convertible into  or
exchangeable   for   any  other  stock  or  securities   of   the
Corporation,  the  Corporation shall, at the converting  holder's
option,  upon  surrender of the Shares to be  converted  by  such
holder as provided herein together with any notice, statement  or
payment  required  to  effect  such  conversion  or  exchange  of
Conversion  Stock,  deliver  to  such  holder  or  as   otherwise
specified   by   such  holder  a  certificate   or   certificates
representing  the stock or securities into which  the  shares  of
Conversion  Stock  issuable by reason of such conversion  are  so
convertible or exchangeable, registered in such name or names and
in   such  denomination  or  denominations  as  such  holder  has
specified.

          6B.  Conversion Price.

           (i)   The  initial Series A Conversion Price shall  be
$8.25  and the initial Series B Conversion Price shall be  $7.75.
As  used herein, the term "Conversion Price" shall refer  to  the
Series  A Conversion Price and/or the Series B Conversion  Price,
as  applicable.  In order to prevent dilution of  the  conversion
rights  granted under this Section 6, the Conversion Price  shall
be  subject  to  adjustment from time to time  pursuant  to  this
paragraph 6B.

          (ii)  If and whenever on or after the original date  of
issuance of the Preferred Stock the Corporation issues or  sells,
or  in  accordance with paragraph 6C is deemed to have issued  or
sold,  any  shares  of its Common Stock for a  consideration  per
share   less  than  the  Series  A  Conversion  Price  in  effect
immediately  prior  to  the  time of such  issue  or  sale,  then
immediately upon such issue or sale or deemed issue or  sale  the
Series  A  Conversion  Price shall be reduced  to  the  Series  A
Conversion  Price determined by dividing (a) the sum of  (1)  the
product  derived by multiplying the Series A Conversion Price  in
effect  immediately prior to such issue or sale by the number  of
shares  of Common Stock Deemed Outstanding immediately  prior  to
such  issue or sale, plus (2) the consideration, if any, received
by  the Corporation upon such issue or sale, by (b) the number of
shares of Common Stock Deemed Outstanding immediately after  such
issue or sale.

         (iii)  Notwithstanding the foregoing, there shall be  no
adjustment  in the Series A Conversion Price as a result  of  any
issue or sale (or deemed issue or sale) of up to an aggregate  of
770,000  shares  of Common Stock to employees of the  Corporation
and  its  Subsidiaries pursuant to stock option plans  and  stock
ownership  plans approved by the Corporation's Board of Directors
(as  such  number  of  shares  is  proportionately  adjusted  for
subsequent stock splits, combinations and dividends affecting the
Common  Stock and as such number includes all such stock  options
and  purchase rights outstanding at the time of the  issuance  of
the Preferred Stock).

          (iv) Whenever the Series A Conversion Price is adjusted
pursuant  to  this  paragraph 6B, the Series B  Conversion  Price
shall  be reduced to the Series B Conversion Price determined  by
multiplying  (a)  the  Series  B  Conversion  Price   in   effect
immediately  prior  to  such adjustment by  (b)  a  fraction  the
numerator  of  which is the Series A Conversion Price  in  effect
immediately  following  such adjustment and  the  denominator  of
which  is  the  Series A Conversion Price in  effect  immediately
prior to such adjustment.

          6C.  Effect on Conversion Price of Certain Events.  For
purposes  of  determining the adjusted Series A Conversion  Price
under paragraph 6B, the following shall be applicable:

          (i)  Issuance of Rights or Options.  If the Corporation
in any manner grants or sells any Options and the price per share
for  which  Common  Stock is issuable upon the exercise  of  such
Options,  or  upon  conversion  or exchange  of  any  Convertible
Securities issuable upon exercise of such Options, is  less  than
the  Series A Conversion Price in effect immediately prior to the
time  of  the  granting or sale of such Options, then  the  total
maximum  number  of  shares of Common  Stock  issuable  upon  the
exercise  of such Options or upon conversion or exchange  of  the
total maximum amount of such Convertible Securities issuable upon
the  exercise  of such Options shall be deemed to be  outstanding
and  to have been issued and sold by the Corporation at the  time
of the granting or sale of such Options for such price per share.
For  purposes of this paragraph, the "price per share  for  which
Common Stock is issuable" shall be determined by dividing (A) the
total  amount, if any, received or receivable by the  Corporation
as  consideration for the granting or sale of such Options,  plus
the  minimum aggregate amount of additional consideration payable
to the Corporation upon exercise of all such Options, plus in the
case of such Options which relate to Convertible Securities,  the
minimum  aggregate  amount of additional consideration,  if  any,
payable  to  the Corporation upon the issuance or  sale  of  such
Convertible Securities and the conversion or exchange thereof, by
(B)  the  total maximum number of shares of Common Stock issuable
upon  the  exercise  of such Options or upon  the  conversion  or
exchange  of  all such Convertible Securities issuable  upon  the
exercise of such Options.  No further adjustment of the Series  A
Conversion  Price shall be made when Convertible  Securities  are
actually issued upon the exercise of such Options or when  Common
Stock is actually issued upon the exercise of such Options or the
conversion or exchange of such Convertible Securities.

          (ii)  Issuance  of  Convertible  Securities.   If   the
Corporation in any manner issues or sells any Convertible  Securi
ties  and  the price per share for which Common Stock is issuable
upon  conversion or exchange thereof is less than  the  Series  A
Conversion Price in effect immediately prior to the time of  such
issue  or sale, then the maximum number of shares of Common Stock
issuable   upon  conversion  or  exchange  of  such   Convertible
Securities  shall be deemed to be outstanding and  to  have  been
issued and sold by the Corporation at the time of the issuance or
sale  of  such Convertible Securities for such price  per  share.
For  the  purposes of this paragraph, the "price  per  share  for
which  Common Stock is issuable" shall be determined by  dividing
(A) the total amount received or receivable by the Corporation as
consideration   for  the  issue  or  sale  of  such   Convertible
Securities,  plus  the  minimum aggregate  amount  of  additional
consideration,  if  any,  payable to  the  Corporation  upon  the
conversion  or exchange thereof, by (B) the total maximum  number
of  shares  of  Common  Stock issuable  upon  the  conversion  or
exchange   of  all  such  Convertible  Securities.   No   further
adjustment  of the Series A Conversion Price shall be  made  when
Common  Stock is actually issued upon the conversion or  exchange
of  such Convertible Securities, and if any such issue or sale of
such  Convertible Securities is made upon exercise of any Options
for which adjustments of the Conversion Price had been or are  to
be  made  pursuant  to other provisions of  this  Section  6,  no
further adjustment of the Series A Conversion Price shall be made
by reason of such issue or sale.

          (iii)      Change  in Option Price or Conversion  Rate.
If the purchase price provided for in any Options, the additional
consideration, if any, payable upon the conversion or exchange of
any  Convertible Securities or the rate at which any  Convertible
Securities are convertible into or exchangeable for Common  Stock
changes  at any time, the Series A Conversion Price in effect  at
the  time  of  such change shall be immediately adjusted  to  the
Series A Conversion Price which would have been in effect at such
time had such Options or Convertible Securities still outstanding
provided    for   such   changed   purchase   price,   additional
consideration or conversion rate, as the case may be, at the time
initially  granted,  issued  or  sold;  provided  that  if   such
adjustment would result in an increase of the Series A Conversion
Price  then  in  effect, such adjustment shall not  be  effective
until 30 days after written notice thereof has been given by  the
Corporation to all holders of the Preferred Stock.  For  purposes
of  paragraph  6C,  if  the terms of any  Option  or  Convertible
Security which was outstanding as of the date of issuance of  the
Preferred  Stock  are  changed in the  manner  described  in  the
immediately  preceding sentence, then such Option or  Convertible
Security  and  the  Common Stock deemed issuable  upon  exercise,
conversion  or  exchange thereof shall be  deemed  to  have  been
issued  as  of  the date of such change; provided  that  no  such
change  shall  at  any time cause the Series A  Conversion  Price
hereunder to be increased.

          (iv)  Treatment  of  Expired  Options  and  Unexercised
Convertible Securities.  Upon the expiration of any Option or the
termination  of any right to convert or exchange any  Convertible
Security  without the exercise of any such Option or  right,  the
Series  A  Conversion  Price then in effect  hereunder  shall  be
adjusted immediately to the Series A Conversion Price which would
have been in effect at the time of such expiration or termination
had   such   Option  or  Convertible  Security,  to  the   extent
outstanding  immediately prior to such expiration or termination,
never   been   issued;  provided  that  if  such  expiration   or
termination  would  result  in  an  increase  in  the  Series   A
Conversion  Price  then  in effect, such increase  shall  not  be
effective  until  30 days after written notice thereof  has  been
given  to  all holders of the Preferred Stock.  For  purposes  of
paragraph  6C,  the expiration or termination of  any  Option  or
Convertible  Security which was outstanding as  of  the  date  of
issuance  of  the Preferred Stock shall not cause  the  Series  A
Conversion Price hereunder to be adjusted unless, and only to the
extent  that, a change in the terms of such Option or Convertible
Security  caused  it to be deemed to have been issued  after  the
date of issuance of the Preferred Stock.

          (v)   Calculation  of Consideration Received.   If  any
Common Stock, Option or Convertible Security is issued or sold or
deemed  to  have been issued or sold for cash, the  consideration
received  therefor shall be deemed to be the amount  received  by
the  Corporation  therefor  (net of  discounts,  commissions  and
related  expenses).  If any Common Stock, Option  or  Convertible
Security  is issued or sold for a consideration other than  cash,
the  amount of the consideration other than cash received by  the
Corporation shall be the fair value of such consideration, except
where  such  consideration consists of securities, in which  case
the amount of consideration received by the Corporation shall  be
the  Market  Price  thereof as of the date of  receipt.   If  any
Common  Stock,  Option or Convertible Security is issued  to  the
owners  of the non-surviving entity in connection with any merger
in which the Corporation is the surviving corporation, the amount
of consideration therefor shall be deemed to be the fair value of
such  portion of the net assets and business of the non-surviving
entity  as  is  attributable  to such  Common  Stock,  Option  or
Convertible Security, as the case may be.  The fair value of  any
consideration other than cash and securities shall be  determined
jointly by the Corporation and the holders of a majority  of  the
outstanding Preferred Stock.  If such parties are unable to reach
agreement within a reasonable period of time, the fair  value  of
such   consideration  shall  be  determined  by  an   independent
appraiser  experienced  in  valuing such  type  of  consideration
jointly selected by the Corporation and the holders of a majority
of  the  outstanding Preferred Stock.  The determination of  such
appraiser  shall be final and binding upon the parties,  and  the
fees  and  expenses  of  such appraiser shall  be  borne  by  the
Corporation.

          (vi)  Integrated Transactions.  In case any  Option  is
issued  in  connection with the issue or sale of other securities
of   the   Corporation,   together  comprising   one   integrated
transaction  in which no specific consideration is  allocated  to
such Option by the parties thereto, the Option shall be deemed to
have been issued for a consideration of $.01.

          (vii)      Treasury Shares.  The number  of  shares  of
Common  Stock  outstanding at any given time  shall  not  include
shares owned or held by or for the account of the Corporation  or
any  Subsidiary, and the disposition of any shares  so  owned  or
held shall be considered an issue or sale of Common Stock.

          (viii)     Record  Date.   If the Corporation  takes  a
record  of  the  holders  of  Common Stock  for  the  purpose  of
entitling  them  (a) to receive a dividend or other  distribution
payable in Common Stock, Options or in Convertible Securities  or
(b)  to  subscribe  for  or  purchase Common  Stock,  Options  or
Convertible Securities, then such record date shall be deemed  to
be  the  date of the issue or sale of the shares of Common  Stock
deemed  to have been issued or sold upon the declaration of  such
dividend  or  upon the making of such other distribution  or  the
date  of  the granting of such right of subscription or purchase,
as the case may be.

          6D.   Subdivision or Combination of Common  Stock.   If
the Corporation at any time subdivides (by any stock split, stock
dividend,  recapitalization or otherwise) one or more classes  of
its  outstanding shares of Common Stock into a greater number  of
shares, the Conversion Price in effect immediately prior to  such
subdivision shall be proportionately reduced, and if the  Corpora
tion  at  any time combines (by reverse stock split or otherwise)
one  or  more  classes of its outstanding shares of Common  Stock
into  a  smaller number of shares, the Conversion Price in effect
immediately  prior  to such combination shall be  proportionately
increased.

          6E.   Reorganization, Reclassification,  Consolidation,
Merger or Sale.  Any recapitalization, reorganization, reclassifi
cation,  consolidation, merger, sale of all or substantially  all
of  the  Corporation's assets or other transaction, in each  case
which  is  effected in such a manner that the holders  of  Common
Stock are entitled to receive (either directly or upon subsequent
liquidation) stock, securities or assets with respect  to  or  in
exchange  for Common Stock, is referred to herein as an  "Organic
Change".   Prior to the consummation of any Organic  Change,  the
Corporation  shall make appropriate provisions (in form  and  sub
stance satisfactory to the holders of a majority of the Preferred
Stock  then  outstanding) to insure that each of the  holders  of
Preferred  Stock shall thereafter have the right to  acquire  and
receive,  in lieu of or in addition to (as the case may  be)  the
shares of Conversion Stock immediately theretofore acquirable and
receivable upon the conversion of such holder's Preferred  Stock,
such  shares of stock, securities or assets as such holder  would
have  received  in connection with such Organic  Change  if  such
holder  had  converted its Preferred Stock immediately  prior  to
such  Organic  Change.  In each such case, the Corporation  shall
also   make   appropriate  provisions  (in  form  and   substance
satisfactory to the holders of a majority of the Preferred  Stock
then outstanding) to insure that the provisions of this Section 6
and Sections 7 and 8 hereof shall thereafter be applicable to the
Preferred   Stock   (including,  in  the   case   of   any   such
consolidation,  merger or sale in which the successor  entity  or
purchasing  entity  is other than the Corporation,  an  immediate
adjustment  of the Conversion Price to the value for  the  Common
Stock  reflected  by the terms of such consolidation,  merger  or
sale,  and a corresponding immediate adjustment in the number  of
shares  of  Conversion  Stock  acquirable  and  receivable   upon
conversion of Preferred Stock, if the value so reflected is  less
than  the  Conversion Price in effect immediately prior  to  such
consolidation, merger or sale).  The Corporation shall not effect
any  such  consolidation, merger or sale,  unless  prior  to  the
consummation  thereof, the successor entity (if  other  than  the
Corporation) resulting from consolidation or merger or the entity
purchasing such assets assumes by written instrument (in form and
substance  satisfactory  to the holders  of  a  majority  of  the
Preferred  Stock then outstanding), the obligation to deliver  to
each  such holder such shares of stock, securities or assets  as,
in  accordance with the foregoing provisions, such holder may  be
entitled to acquire.

          6F.   Certain Events.  If any event occurs of the  type
contemplated  by  the  provisions  of  this  Section  6  but  not
expressly  provided  for by such provisions  (including,  without
limitation,  the  granting of stock appreciation rights,  phantom
stock  rights  or  other rights with equity features),  then  the
Corporation's  Board  of  Directors  shall  make  an  appropriate
adjustment in the Conversion Price so as to protect the rights of
the  holders of Preferred Stock; provided that no such adjustment
shall  increase  the  Conversion Price  as  otherwise  determined
pursuant  to this Section 6 or decrease the number of  shares  of
Conversion Stock issuable upon conversion of each Share.

          6G.  Notices.

           (i)  Immediately upon any adjustment of the Conversion
Price,  the Corporation shall give written notice thereof to  all
holders  of  Preferred Stock, setting forth in reasonable  detail
and certifying the calculation of such adjustment.

          (ii)  The Corporation shall give written notice to  all
holders of Preferred Stock at least 20 days prior to the date  on
which the Corporation closes its books or takes a record (a) with
respect  to  any  dividend  or distribution  upon  Common  Stock,
(b) with respect to any pro rata subscription offer to holders of
Common  Stock or (c) for determining rights to vote with  respect
to any Organic Change, dissolution or liquidation.

         (iii)  The Corporation shall also give written notice to
the holders of Preferred Stock at least 20 days prior to the date
on which any Organic Change shall take place.

          Section 7.     Liquidating Dividends.

          If the Corporation declares or pays a dividend upon the
Common  Stock payable otherwise than in cash out of  earnings  or
earned  surplus (determined in accordance with generally accepted
accounting principles, consistently applied) except for  a  stock
dividend  payable  in  shares  of Common  Stock  (a  "Liquidating
Dividend"),  then  the Corporation shall pay to  the  holders  of
Preferred  Stock  at the time of payment thereof the  Liquidating
Dividends  which would have been paid on the shares of Conversion
Stock  had such Preferred Stock been converted immediately  prior
to  the  date  on  which a record is taken for  such  Liquidating
Dividend,  or, if no record is taken, the date as  of  which  the
record holders of Common Stock entitled to such dividends are  to
be determined.

          Section 8.     Purchase Rights.

          If  at any time the Corporation grants, issues or sells
any  Options, Convertible Securities or rights to purchase stock,
warrants,  securities or other property pro rata  to  the  record
holders  of  any  class of Common Stock (the "Purchase  Rights"),
then each holder of Preferred Stock shall be entitled to acquire,
upon  the terms applicable to such Purchase Rights, the aggregate
Purchase  Rights  which such holder could have acquired  if  such
holder  had  held  the  number  of  shares  of  Conversion  Stock
acquirable  upon  conversion  of such  holder's  Preferred  Stock
immediately  before the date on which a record is taken  for  the
grant,  issuance or sale of such Purchase Rights, or if  no  such
record  is  taken,  the date as of which the  record  holders  of
Common Stock are to be determined for the grant, issue or sale of
such Purchase Rights.

          Section 9.     Events of Noncompliance.

          9A.   Definition.  An Event of Noncompliance shall have
occurred if:

            (i)   the  Corporation  fails  to  pay  on  any   two
consecutive  Dividend Payment Dates the full amount of  dividends
then  accrued  on  the Series A Preferred, whether  or  not  such
payments  are  legally  permissible  or  are  prohibited  by  any
agreement to which the Corporation is subject;

          (ii)   the  Corporation fails to  make  any  redemption
payment  with respect to the Preferred Stock which it is required
to  make  hereunder,  whether  or not  such  payment  is  legally
permissible  or  is  prohibited by any  agreement  to  which  the
Corporation is subject;

         (iii)   the Corporation breaches or otherwise  fails  to
perform or observe the covenants set forth in Section 8.2(j)  and
(k) of the Purchase Agreement;

          (iv)   the Corporation or any material Subsidiary makes
an  assignment for the benefit of creditors or admits in  writing
its  inability to pay its debts generally as they become due;  or
an   order,  judgment  or  decree  is  entered  adjudicating  the
Corporation or any material Subsidiary bankrupt or insolvent;  or
any  order  for  relief with respect to the  Corporation  or  any
material Subsidiary is entered under the Federal Bankruptcy Code;
or  the  Corporation  or  any material  Subsidiary  petitions  or
applies  to  any  tribunal for the appointment  of  a  custodian,
trustee,  receiver  or  liquidator  of  the  Corporation  or  any
material  Subsidiary or of any substantial part of the assets  of
the  Corporation  or any material Subsidiary,  or  commences  any
proceeding (other than a proceeding for the voluntary liquidation
and  dissolution of a Subsidiary) relating to the Corporation  or
any  material  Subsidiary  under any bankruptcy,  reorganization,
arrangement,  insolvency, readjustment of  debt,  dissolution  or
liquidation  law  of any jurisdiction; or any  such  petition  or
application  is  filed,  or  any such  proceeding  is  commenced,
against  the  Corporation or any material Subsidiary  and  either
(a)  the  Corporation or any such Subsidiary by any act indicates
its approval thereof, consent thereto or acquiescence therein  or
(b)  such  petition, application or proceeding is  not  dismissed
within 60 days;
           (v)   a  judgment in excess of $5,000,000 is  rendered
against  the  Corporation or any material  Subsidiary  and,  such
judgment  is  not  (a) discharged, bonded or otherwise  satisfied
within  60 days from the entry thereof,  (b) covered by  adequate
insurance,  or (c) the execution of such judgment is  not  stayed
pending  appeal or, within 60 days after the expiration  of  such
stay, discharged or otherwise satisfied; or

           (vi)   the  Corporation  or  any  material  Subsidiary
defaults in the performance of any obligation or agreement if the
effect   of   such  default  is  to  cause  an  amount  exceeding
$10,000,000  to  become due prior to its stated maturity  or  the
holder  or  holders of any obligation causes an amount  exceeding
$10,000,000 to become due prior to its stated maturity.

          9B.  Consequences of Events of Noncompliance.

           (i)  If an Event of Noncompliance has occurred and  is
continuing,  the  dividend rate on the Series A  Preferred  shall
increase  immediately by an increment of two percentage point(s).
Thereafter, until such time as no Event of Noncompliance  exists,
the dividend rate shall increase automatically at the end of each
succeeding  90-day  period  by  an additional  increment  of  two
percentage  point(s)  (but in no event shall  the  dividend  rate
exceed  13%).   Any increase of the dividend rate resulting  from
the  operation  of this subparagraph shall terminate  as  of  the
close  of business on the date on which no Event of Noncompliance
exists,   subject  to  subsequent  increases  pursuant  to   this
paragraph.

          (ii)   If an Event of Noncompliance other than an Event
of  Noncompliance of the type described in subparagraphs 9A(i) or
9A(iv)  has occurred and is continuing, the holders of a majority
of  the  Preferred Stock then outstanding may demand (by  written
notice delivered to the Corporation) immediate redemption of  all
or  any  portion of the Preferred Stock owned by such  holder  or
holders  at  a  price  per Share equal to the  Liquidation  Value
thereof  (plus  all accrued and unpaid dividends  thereon).   The
Corporation shall give prompt written notice of such election  to
the  other  holders of Preferred Stock (but in any  event  within
five  days  after receipt of the initial demand for  redemption),
and each such other holder may demand immediate redemption of all
or any portion of such holder's Preferred Stock by giving written
notice thereof to the Corporation within seven days after receipt
of  the  Corporation's notice.  The Corporation shall redeem  all
Preferred Stock as to which rights under this paragraph have been
exercised within 15 days after receipt of the initial demand  for
redemption.

        (iii)  If an Event of Noncompliance of the type described
in  subparagraph 9A(iv) has occurred, all of the Preferred  Stock
then outstanding shall be subject to immediate redemption by  the
Corporation (without any action on the part of the holders of the
Preferred  Stock) at a price per Share equal to  the  Liquidation
Value  thereof  (plus all accrued and unpaid dividends  thereon).
The Corporation shall immediately redeem all Preferred Stock upon
the occurrence of such Event of Noncompliance.

          (iv)   If  any  Event  of  Noncompliance  of  the  type
described  in  subparagraph 9A(i) has  occurred,  for  each  such
occurrence of the failure to pay on any two consecutive  Dividend
Payment  Dates the full amount of dividends then accrued  on  the
Series  A  Preferred,  whether or not such payments  are  legally
permissible  or  are  prohibited by any agreement  to  which  the
Corporation is subject,  the Series A Conversion Price  shall  be
reduced  immediately by $0.50 from the Series A Conversion  Price
in  effect  immediately prior to such adjustment.   In  no  event
shall any Series A Conversion Price adjustment be rescinded.

           (v)   If  any  Event  of  Noncompliance  of  the  type
described  in  subparagraph 9A(ii) has  occurred,  the  Series  A
Conversion  Price and Series B Conversion Price shall be  reduced
immediately  to  75%  of   the  lesser  of  (a)  the   applicable
Conversion  Price in effect immediately prior to such  adjustment
and (b) the Market Price of a share of Common Stock.  Thereafter,
until such time as no Event of Noncompliance exists, the Series A
Conversion  Price  and  Series  B  Conversion  Price   shall   be
automatically reduced at the end of each succeeding 90-day period
to  75% of  the lesser of (a) the applicable Conversion Price  in
effect  immediately prior to such adjustment and (b)  the  Market
Price  of  a  share  of  Common Stock.  In  no  event  shall  any
Conversion Price adjustment be rescinded.

     For  example,  assume that the initial Series  A  Conversion
     Price  is  $8.25. If an Event of Noncompliance of  the  type
     described  in  subparagraph 9A(ii)  has  occurred,  and  the
     Market  Price of a share of Common Stock exceeds $8.25,  the
     Series  A  Conversion Price would be reduced immediately  to
     75%  of  $8.25,  or  $6.1875.  If an Event of  Noncompliance
     exists for an additional 90 days, and the Market Price of  a
     share of Common Stock exceeds $6.1875, the existing Series A
     Conversion  Price  would be reduced to 75%  of  $6.1875,  or
     $4.640625.   Then  assume that there is a two-for-one  stock
     split, in which case the Conversion Price would be decreased
     hereunder from $4.640625 to $2.3203125, and assume  that  an
     Event of Noncompliance exists for an additional 90 days  and
     that  the  Market Price of a share of Common  Stock  exceeds
     $2.3203125.   In  this case, the Series A  Conversion  Price
     would be reduced to 75% of $2.3203125, or $1.740234375.

          (vi)   If  any  Event  of  Noncompliance  of  the  type
described  in  subparagraph 9A(v) has  occurred,  for  each  such
occurrence  the Series A Conversion Price and Series B Conversion
Price  shall  be reduced immediately by an amount  equal  to  the
quotient  of  (a)  the  amount of the  judgment  referred  to  in
subparagraph 9A(v) divided by (b) the number of shares of  Common
Stock Deemed Outstanding.

         (vii)  If any Event of Noncompliance exists, each holder
of  Preferred Stock shall also have any other rights  which  such
holder  is entitled to under the Purchase Agreement or any  other
contract or agreement with such holder at any time and any  other
rights which such holder may have pursuant to applicable law.

          Section 10.    Registration of Transfer.

          The  Corporation shall keep at its principal  office  a
register  for  the  registration of Preferred  Stock.   Upon  the
surrender of any certificate representing Preferred Stock at such
place, the Corporation shall, at the request of the record holder
of  such  certificate, execute and deliver (at the  Corporation's
expense)  a new certificate or certificates in exchange  therefor
representing in the aggregate the number of Shares represented by
the surrendered certificate.  Each such new certificate shall  be
registered in such name and shall represent such number of Shares
as  is requested by the holder of the surrendered certificate and
shall  be  substantially  identical in form  to  the  surrendered
certificate,  and dividends shall accrue on the  Preferred  Stock
represented  by  such  new certificate from  the  date  to  which
dividends  have  been  fully paid on such Preferred  Stock  repre
sented by the surrendered certificate.

          Section 11.  Replacement.

          Upon receipt of evidence reasonably satisfactory to the
Corporation  (an  affidavit  of the registered  holder  shall  be
satisfactory)  of the ownership and the loss, theft,  destruction
or  mutilation of any certificate evidencing Preferred Stock, and
in  the case of any such loss, theft or destruction, upon receipt
of indemnity reasonably satisfactory to the Corporation (provided
that   if  the  holder  is  a  financial  institution  or   other
institutional  investor its own agreement shall be satisfactory),
or,  in  the case of any such mutilation upon surrender  of  such
certificate, the Corporation shall (at its expense)  execute  and
deliver  in  lieu of such certificate a new certificate  of  like
kind  representing the number of Shares of such class represented
by  such  lost,  stolen, destroyed or mutilated  certificate  and
dated  the  date  of  such lost, stolen, destroyed  or  mutilated
certificate,  and dividends shall accrue on the  Preferred  Stock
represented  by  such  new certificate from  the  date  to  which
dividends have been fully paid on such lost, stolen, destroyed or
mutilated certificate.

          Section 12.  Definitions.

          "Change  of  Control"  has the  meaning  set  forth  in
paragraph 4H hereof.

          "Common  Stock" means, collectively, the  Corporation's
Common Stock, $0.0001 par value per share, and any capital  stock
of any class of the Corporation hereafter authorized which is not
limited  to a fixed sum or percentage of par or stated  value  in
respect  to  the rights of the holders thereof to participate  in
dividends  or in the distribution of assets upon any liquidation,
dissolution or winding up of the Corporation.

          "Common  Stock Deemed Outstanding" means, at any  given
time,  the  number of shares of Common Stock actually outstanding
at such time, plus the number of shares of Common Stock deemed to
be  outstanding pursuant to subparagraphs 6C(i) and 6C(ii) hereof
whether or not the Options or Convertible Securities are actually
exercisable at such time.

          "Conversion  Stock" means shares of  the  Corporation's
Common Stock, par value $0.0001 per share; provided that if there
is  a change such that the securities issuable upon conversion of
Preferred  Stock are issued by an entity other than  the  Corpora
tion  or there is a change in the type or class of securities  so
issuable,  then the term "Conversion Stock" shall mean one  share
of  the  security issuable upon conversion of Preferred Stock  if
such  security is issuable in shares, or shall mean the  smallest
unit  in which such security is issuable if such security is  not
issuable in shares.

          "Convertible Securities" means any stock or  securities
directly  or  indirectly  convertible into  or  exchangeable  for
Common Stock.

          "Junior  Securities" means any capital stock  or  other
equity  securities of the Corporation, except for  the  Preferred
Stock.

          "Liquidation  Value" of any Share as of any  particular
date shall be equal to $1,000.

          "Market Price" of any security means the average of the
closing  prices  of  such  security's  sales  on  all  securities
exchanges  on which such security may at the time be listed,  or,
if  there has been no sales on any such exchange on any day,  the
average  of the highest bid and lowest asked prices on  all  such
exchanges at the end of such day, or, if on any day such security
is not so listed, the average of the representative bid and asked
prices  quoted  in the NASDAQ System as of 4:00  P.M.,  New  York
time, or, if on any day such security is not quoted in the NASDAQ
System,   the average of the highest bid and lowest asked  prices
on  such  day in the domestic over-the-counter market as reported
by  the  National Quotation Bureau, Incorporated, or any  similar
successor organization, in each such case averaged over a  period
of  21  days consisting of the day as of which "Market Price"  is
being  determined and the 20 consecutive business days  prior  to
such day.  If at any time such security is not listed on any secu
rities   exchange  or  quoted  in  the  NASDAQ  System   or   the
over-the-counter  market, the "Market Price" shall  be  the  fair
value  thereof  determined jointly by  the  Corporation  and  the
holders of a majority of the Series A Preferred.  If such parties
are unable to reach agreement within a reasonable period of time,
such  fair  value shall be determined by an independent appraiser
experienced  in  valuing  securities  jointly  selected  by   the
Corporation and the holders of a majority of the Preferred Stock.
The  determination of such appraiser shall be final  and  binding
upon  the  parties, and the Corporation shall pay  the  fees  and
expenses of such appraiser.

          "Options"  means  any rights, warrants  or  options  to
subscribe for or purchase Common Stock or Convertible Securities.

          "Person" means an individual, a partnership, a  corpora
tion,   a   limited   liability  company,  a  limited   liability
partnership, an association, a joint stock company,  a  trust,  a
joint  venture, an unincorporated organization and a governmental
entity   or  any  department,  agency  or  political  subdivision
thereof.

          "Preferred  Stock"  means  collectively  the  Series  A
Preferred and Series B Preferred.

          "Purchase  Agreement"  means  the  Purchase  Agreement,
dated  as  of February 2, 1998, by and among the Corporation  and
certain  investors, as such agreement may from time  to  time  be
amended in accordance with its terms.

          "Redemption  Date"  as  to any  Share  means  the  date
specified  in  the notice of any redemption at the  Corporation's
option or at the holder's option or the applicable date specified
herein in the case of any other redemption; provided that no such
date  shall be a Redemption Date unless the Liquidation Value  of
such Share (plus all accrued and unpaid dividends thereon and any
required premium with respect thereto) is actually paid  in  full
on  such  date,  and if not so paid in full, the Redemption  Date
shall be the date on which such amount is fully paid.

          "Subsidiary"  means, with respect to  any  Person,  any
corporation, limited liability company, partnership,  association
or  other  business  entity of which  (i)  if  a  corporation,  a
majority  of  the total voting power of shares of stock  entitled
(without regard to the occurrence of any contingency) to vote  in
the election of directors, managers or trustees thereof is at the
time  owned or controlled, directly or indirectly, by that Person
or  one  or  more of the other Subsidiaries of that Person  or  a
combination  thereof,  or  (ii) if a limited  liability  company,
partnership, association or other business entity, a majority  of
the partnership or other similar ownership interest thereof is at
the  time  owned  or controlled, directly or indirectly,  by  any
Person  or  one  or  more  Subsidiaries  of  that  person  or   a
combination  thereof.  For purposes hereof, a Person  or  Persons
shall  be  deemed  to  have a majority ownership  interest  in  a
limited  liability  company, partnership,  association  or  other
business  entity if such Person or Persons shall be  allocated  a
majority  of  limited liability company, partnership, association
or  other business entity gains or losses or shall be or  control
the  managing general partner of such limited liability  company,
partnership, association or other business entity.

          Section 13.  Amendment and Waiver.

          No  amendment, modification or waiver shall be  binding
or  effective with respect to any provision of Sections 1  to  14
hereof without the prior written consent of the holders of 66.67%
of  the  Preferred Stock outstanding at the time such  action  is
taken; provided that no such action shall change (a) the rate  at
which  or  the  manner in which dividends on the Preferred  Stock
accrue or the times at which such dividends become payable or the
amount payable on redemption of the Preferred Stock or the  times
at  which redemption of Preferred Stock is to occur, without  the
prior  written  consent of the holders of at  least  75%  of  the
Preferred Stock then outstanding, (b) the Conversion Price of the
Preferred  Stock or the number of shares or class of  stock  into
which  the  Preferred  Stock is convertible,  without  the  prior
written  consent of the holders of at least 75% of the  Preferred
Stock then outstanding, or (c) the percentage required to approve
any  change  described in clauses (a) and (b) above, without  the
prior  written  consent of the holders of at  least  75%  of  the
Preferred  Stock then outstanding; and provided further  that  no
change  in  the  terms hereof may be accomplished  by  merger  or
consolidation  of  the  Corporation with another  corporation  or
entity  unless  the  Corporation has obtained the  prior  written
consent  of  the  holders  of the applicable  percentage  of  the
Preferred Stock then outstanding.

          Section 14.  Notices.

          Except  as otherwise expressly provided hereunder,  all
notices  referred  to  herein shall be in writing  and  shall  be
delivered  by  registered  or  certified  mail,  return   receipt
requested and postage prepaid, or by reputable overnight  courier
service, charges prepaid, and shall be deemed to have been  given
when  so  mailed or sent (i) to the Corporation, at its principal
executive  offices and (ii) to any stockholder, at such  holder's
address  as  it  appears in the stock records of the  Corporation
(unless otherwise indicated by any such holder).