<PAGE>
Exhibit 3.1

                                                     (    STATE OF DELAWARE    )
                                                     (    SECRETARY OF STATE   )
                                                     ( DIVISION OF CORPORATIONS)
                                                     (FILED 11:30 AM 03/19/1998)
                                                     (   981105844 - 2873445   )

                         CERTIFICATE OF INCORPORATION OF
                           Z-TEL COMMUNICATIONS, INC.

     1. The name of the corporation is Z-Tel Communications, lnc.

     2. The address of its registered office in the State of Delaware is
Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County
of New Castle. The name of its registered agent at such address is The
Corporation Trust Company.

     3. The nature of the business or purposes to be conducted or promoted is to
engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of Delaware.

     4. The total number of shares of stock which the corporation shall have
authority to issue is One Thousand (1,000) and the par value of each of such
shares is Zero Dollars and One Cent ($0.01) amounting in the aggregate to Ten
Dollars and No Cents ($10.00).

     5. The board of directors is authorized to make, alter or repeal the bylaws
of the corporation. Election of directors need not be by written ballot.

     6. The name and mailing address of the sole incorporator is:

               Laura Vitalo
               Corporation Trust Center
               1209 Orange Street
               Wilmington, Delaware 19801

     7. A director of the corporation shall not be personally liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director except for liability (i) for any breach of the director's
duty of loyalty to the corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the Delaware General Corporation
Law, or (iv) for any transaction from which the director derived any improper
personal benefit.

     8. The corporation shall indemnify its officers, directors, employees and
agents to the extent permitted by the General Corporation Law of Delaware.

     I, THE UNDERSIGNED, being the incorporator hereinbefore named, for the
purpose of forming a corporation pursuant to the General Corporation Law of the
State of Delaware, do make this certificate, hereby declaring and certifying
that this is my act and deed and the facts herein stated are true, and
accordingly have hereunto set my hand this 19th day of March, 1998.


                                        /s/ Laura Vitalo
                                        ----------------------------------------
                                        Laura Vitalo, Sole Incorporator
<PAGE>
(    STATE OF DELAWARE    )
(    SECRETARY OF STATE   )
( DIVISION OF CORPORATIONS)
(FILED 04:30 PM 04/02/1998)
(   981129183 - 2873445   )

                      RESTATED CERTIFICATE OF INCORPORATION
                                       OF
                            Z-TEL COMMUNICATIONS, INC

     Z-Tel Communications, Inc., a corporation organized and existing under the
laws of the State of Delaware, hereby certifies as follows:

     The name of the corporation is Z-Tel Communications, Inc. The date of
filing of its original Certificate of Incorporation with the Secretary of State
was March 19, 1998.

     The text of the Certificate of Incorporation as amended or supplemented
heretofore is further amended hereby to read as herein set forth in full:

     1.   The name of the corporation is Z-Tel Technologies, Inc.

     2.   The address of its registered office in the State of Delaware is
          Corporation Trust Center, 1209 Orange Street, in the City of
          Wilmington, County of New Castle. The name of its registered agent at
          such address is The Corporation Trust Company.

     3.   The nature of the business or purposes to be conducted or promoted is
          to engage in any lawful act or activity for which corporations may be
          organized under the General Corporation Law of Delaware.

     4.   The total number of shares of stock which the corporation shall have
          authority to issue is One Thousand (1,000) and the par value of each
          of such shares is Zero Dollars and One Cent (S.01) amounting in the
          aggregate to Ten Dollars and No Cents ($10.00).

     5.   The board of directors is authorized to make, alter or repeal the
          bylaws of the corporation. Election of directors need not be by
          written ballot.

     6.   The name and mailing address of the sole incorporator is:

               Laura Vitalo
               Corporation Trust Center
               1209 Orange Street
               Wilmington, Delaware 19801

     7.   A director of the corporation shall not be personally liable to the
          corporation or its stockholders for monetary damages for breach of
          fiduciary duty as a director except for liability (i) for any breach
          of the director's duty of loyalty to the corporation or its
          stockholders, (ii) for acts or omissions not in good faith or which
          involve intentional misconduct or a knowing violation of law, (iii)
          under Section 174 of the Delaware
<PAGE>
          General Corporation Law, or (iv) for any transaction from which the
          director derived an improper personal benefit.

     8.   The corporation shall indemnify its officers, directors, employees and
          agents to the extent permitted by the General Corporation Law of
          Delaware.

     This Restated Certificate of Incorporation was duly adopted by the Board of
Directors in accordance with Sections 241 and 245 of the General Corporation Law
of the State of Delaware. The corporation has not received payment for its
capital.

     This Restated Certificate of Incorporation shall be effective on April
2, 1998.

     IN WITNESS WHEREOF, said Z-Tel Communications, Inc. has caused this
Certificate to be signed by D. Gregory Smith, its president, this 2nd day of
April, 1998.


                                        /s/ D. Gregory Smith
                                        ----------------------------------------
                                        D. Gregory Smith, President
<PAGE>
                              AMENDED AND RESTATED
                          CERTIFICATE OF INCORPORATION
                                       OF
                            Z-TEL TECHNOLOGIES, INC.

     Z-Tel Technologies, Inc., a corporation existing under the laws of the
State of Delaware, does hereby certify as follows:

     1. The name of the corporation is Z-Tel Technologies, Inc. The original
Certificate of Incorporation was filed with the Secretary of State of Delaware
on March 19, 1998.

     2. This Restated Certificate of Incorporation restates and integrates and
also further amends the Certificate of Incorporation of the Corporation. This
Amended and Restated Certificate of Incorporation was proposed by the board of
directors and duly adopted by the stockholders of the Corporation in the manner
and by the vote prescribed by Sections 228, 242 and 245 of the General
Corporation Law of the State of Delaware (as the same exists or may hereafter be
amended). The text of the Certificate of Incorporation is hereby amended and
restated to read in its entirety as follows:

                                    ARTICLE I

                                      NAME

     The name of the corporation is Z-Tel Technologies, Inc.

                                   ARTICLE II

                       REGISTERED OFFICE; REGISTERED AGENT

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

                                   ARTICLE III

                               PURPOSES AND POWERS

     The purpose of the corporation is to engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law of the
State of Delaware.

                                                     (    STATE OF DELAWARE    )
                                                     (    SECRETARY OF STATE   )
                                                     ( DIVISION OF CORPORATIONS)
                                                     (FILED 10:00 AM 10/21/1998)
                                                     (   981405585 - 2873445   )
<PAGE>
                                   ARTICLE IV

                                  CAPITAL STOCK

     The total number of shares of stock which the corporation shall have
authority to issue is 50,000,000, of which 30,000,000 shall be shares of common
stock, $.01 par value per share (the "Common Shares"), and 20,000,000 shall be
shares of preferred stock, $.01 par value per share (the "Preferred Shares").
The designations, voting powers and relative rights and preferences of the two
classes of shares of stock shall be as set forth below.

     A. COMMON SHARES

          1. POWERS, RIGHTS AND PREFERENCES. The Common Shares shall be without
distinction as to powers, rights and preferences, and shall have one vote per
share on all matters on which shareholders are generally entitled to vote.

          2. DIVIDENDS. After the requirements regarding preferential dividends
on the Preferred Shares (fixed in accordance with the provisions of paragraph B
of this Article IV), if any, have been met and after the corporation has
complied with all of the requirements, if any, regarding the setting aside of
sums as sinking funds or redemption or purchase accounts (fixed in accordance
with the provisions of paragraph B of this Article IV) and subject further to
any other conditions which may be fixed in accordance with the provisions of
paragraph B of this Article IV, then but not otherwise, the holders of Common
Shares shall be entitled to receive such dividends, if any, as may be declared
from time to time by the board of directors.

          3. DISTRIBUTIONS. After distribution in full of the preferential
amount (as may be fixed in accordance with the provisions of paragraph B of this
Article IV), if any, to be distributed to the holders of Preferred Shares, and
subject to any further rights of the holders of Preferred Shares (as may be
fixed in accordance with the provisions of paragraph B of this Article IV) to
further participate in a liquidation, distribution or sale or assets,
dissolution or winding-up of the corporation, all its remaining assets, tangible
and intangible, of whatever kind available for distribution to the shareholders,
ratably in proportion to the number of Common Shares held by each.

     B. PREFERRED SHARES

          1. ISSUANCE BY BOARD RESOLUTION; SERIES. The board of directors of the
corporation shall have the authority by resolution to issue from time to time
Preferred Shares on such terms as it may determine and for such consideration as
fixed by the board of directors. The Preferred Shares may be issued in one or
more series as may be determined from time to time by the board of directors.
Each series shall be distinctly designated by number, letter or title. All
Preferred Shares of any one series shall be alike in every particular, except
that there may be different dates from which dividends thereon, if any, shall be
cumulative, if made cumulative. The powers, preferences and relative,
participating, optional and other rights of each such series,


                                        2
<PAGE>
and the qualifications, limitations or restrictions thereof, if any, may differ
from those of any and all other series at any time outstanding.

          2. PREFERENCES AND RIGHTS. Subject to the provisions of subparagraph 3
of this paragraph B of Article IV, the board of directors of the corporation is
hereby expressly granted authority to fix by resolution or resolutions adopted
prior to the issuance of any Preferred Shares of each particular series, the
designation, powers, preferences and relative, participating, optional and other
rights, and the qualifications, limitations and restrictions thereof, if any, of
such series.

          3. ISSUANCE OF PREFERRED SHARES. The relative powers, preferences and
rights of each series of Preferred Shares in relation to the powers, preferences
and rights of other series of Preferred Shares shall, in each case, be as fixed
from time to time by the board of directors in resolutions adopted pursuant to
authority granted in this paragraph B of Article IV, and the consent by series
vote or otherwise, of the holders of such of the series of Preferred Shares as
are from time to time outstanding shall not be required for the issuance by the
board of directors of any other series of Preferred Shares, whether or not the
powers, preferences and rights of such other series shall be fixed by the board
of directors as senior to, or on a parity with, the powers, preferences and
rights of such outstanding series, or any of them; provided, however, that the
board of directors may provide in such resolutions regarding any series of
Preferred Shares that the consent of the holders of a certain percentage, as
fixed therein by the board of directors, of the outstanding Preferred Shares of
such series shall be required for the issuance of any other series of Preferred
Shares.

                                    ARTICLE V

                                  INCORPORATOR

     The name and mailing address of the incorporator is:

               Laura Vitalo
               The Corporation Trust Company
               Corporation Trust Center
               1209 Orange Street
               Wilmington, Delaware 19801

                                   ARTICLE VI

                                    DIRECTORS

     A. NUMBER OF DIRECTORS. The affairs of the corporation shall be managed and
conducted by a board of directors, and unless otherwise provided in the by-laws,
the election of directors need not be by written ballot. The number of directors
which shall constitute the whole board of directors shall be fixed by, or in the
manner provided in, the by-laws of the corporation.


                                        3
<PAGE>
     B. POWER AND AUTHORITY OF THE BOARD OF DIRECTORS: The board of directors
shall have such powers as are conferred on the board of directors by the laws of
the State of Delaware. In furtherance of such powers, the board of directors is
expressly authorized to adopt, amend or repeal the by-laws of the corporation
without the consent or vote of the stockholders.

                                   ARTICLE VII

                    INDEMNIFICATION OF DIRECTORS AND OFFICERS

     Each person who is or was a director or officer of the corporation and each
person who serves or served at the request of the corporation as a director,
officer or partner of another enterprise shall be indemnified by the corporation
in accordance with, and to the fullest extent authorized by, the General
Corporation Law of the State of Delaware as the same now exists or may be
hereafter amended. No amendment to or repeal of this Article VII shall apply to
or have any effect on the rights of any individual referred to in this Article
VII for or with respect to acts or omissions of such individual occurring prior
to such amendment or repeal.

                                  ARTICLE VIII

                  ELIMINATION OF CERTAIN LIABILITY OF DIRECTORS

     To the fullest extent permitted by the General Corporation Law of the State
of Delaware as the same now exists or may be hereafter amended, a director of
the corporation shall not be liable to the corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director. No amendment to or
repeal of this Article VIII shall apply to or have any effect on the liability
or alleged liability of any director of the corporation for or with respect to
any acts or omissions of such director occurring prior to the effective date of
such amendment or repeal.


                                        4
<PAGE>
                                   ARTICLE IX

                              RESERVATION OF POWERS

     The corporation reserves the right to amend, alter or repeal any provision
contained in this certificate of incorporation, in the manner now or hereafter
prescribed by statute, and all rights conferred upon the stockholders herein are
granted subject to this reservation.

     The undersigned, being the Secretary of the corporation does hereby certify
that the corporation has amended and restated its Certificate of Incorporation
as set forth above, does hereby certify that such amendment and restatement has
been duly adopted in accordance with the applicable provisions of Sections 242
and 245 of the General Corporation Law of the State of Delaware, and does hereby
make and file this Amended and Restated Certificate of Incorporation.

Dated: October 20, 1998


                                        /s/ Russell T. Alba
                                        ----------------------------------------
                                        Russell T. Alba, Secretary


                                        5
<PAGE>
                                                     (    STATE OF DELAWARE    )
                                                     (    SECRETARY OF STATE   )
                                                     ( DIVISION OF CORPORATIONS)
                                                     (FILED 10:30 AM 11/04/1998)
                                                     (   981423867 - 2873445   )

                    CERTIFICATE OF DESIGNATIONS, PREFERENCES
                      AND RELATIVE RIGHTS, QUALIFICATIONS,
                          LIMITATIONS AND RESTRICTIONS

                                     OF THE

                      SERIES A CONVERTIBLE PREFERRED STOCK

                                       AND

                      SERIES B CONVERTIBLE PREFERRED STOCK

                                       OF

                            Z-TEL TECHNOLOGIES, INC.

                                   ----------

                     PURSUANT TO SECTION 151 OF THE GENERAL
                    CORPORATION LAW OF THE STATE OF DELAWARE

                                   ----------

          Z-Tel Technologies, Inc., a Delaware corporation (the "Corporation")
certifies that pursuant to the authority contained in Article FOURTH of its
Certificate of Incorporation (the "Certificate of Incorporation") and in
accordance with the provisions of Section 151 of the General Corporation Law of
the State of Delaware, the Board of Directors of the Corporation at a Special
Meeting held on October 30, 1998, adopted the following resolution which
resolution remains in full force and effect on the date hereof.

          RESOLVED, that there are hereby established (i) a series of authorized
preferred stock, having a par value of $0.01 per share, which series be
designated as "Series A Convertible Preferred Stock" (the "Series A Preferred"),
shall consist of 5,930,749 shares and shall have the voting powers, preferences
and relative, participating, optional and other special rights, and
qualifications, limitations and restrictions thereof as set forth herein and
(ii) a series of authorized preferred stock, having a par value of $0.01 per
share, which series be designated as "Series B Convertible Preferred Stock" (the
"Series B Preferred"), shall consist of 1,338,208 shares and shall have the
voting powers, preferences and relative, participating, optional and other
special rights, and qualifications, limitations and restrictions thereof as set
forth herein:

     1. CERTAIN DEFINITIONS. Unless the context otherwise requires, the terms
defined in this SECTION 1 shall have, for all purposes of this resolution, the
meanings herein specified (with terms defined in the singular having comparable
meanings when used in the plural).

          (A) "STOCK PURCHASE AGREEMENT" shall mean the Stock Purchase
Agreement, dated as of November 4, 1998, by and among the Corporation,
NationsBanc Capital Corporation ("NBCC"), and the other parties signatory
thereto.
<PAGE>
          (B) "STOCKHOLDERS' AGREEMENT" shall mean the Stockholders' Agreement,
dated as of November 4, 1998, by and among the Corporation, NBCC and the other
parties signatory thereto.

          (C) "SENIOR BRIDGE FINANCING" shall have the meaning given such term
in the Stock Purchase Agreement.

     2. DIVIDENDS AND DISTRIBUTIONS.

          (A) SERIES A DIVIDENDS. The holders of record of shares of Series A
Preferred shall be entitled to receive dividends at a rate of eight percent (8%)
of the Conversion Value (as defined in SECTION 4(A) below) per annum per share
of Series A Preferred (the "Series A Dividend:), which shall be fully
cumulative, prior and in preference to any declaration or payment of any
dividend or other distribution on any other class or series of Preferred Stock
(other than as set forth herein) or the Common Stock (and excluding any stock
splits and subdivisions for which an adjustment is made under SECTION
4(D)(VI)(1) below). The foregoing dividend on the Series A Preferred shall
accrue from the date of issuance of each share until the earlier of (i) the
conversion of the Series A Preferred to Common Stock, (ii) the liquidation,
distribution or winding up of the Corporation, or (iii) the consummation of the
Put pursuant to Section 7 of the Stockholders' Agreement. Such dividend shall be
payable annually on December 31 of each year (each a "Series A Annual Dividend
Date") commencing on December 31, 1999, except that if any such date is a
Saturday, Sunday or legal holiday (a "Non-Business Day") then such dividend
shall be payable on the next day that is not a Saturday, Sunday or legal holiday
on which banks in the State of Delaware are permitted to be closed (a "Business
Day") to holders of record as they appear on the stock books of the Corporation
on the applicable record date, which shall be not more than sixty (60) nor less
than ten (10) days preceding the payment date for such dividends, as fixed by
the Board of Directors (the "Series A Record Date") The dividends shall be
payable only when, as and if declared by the Board of Directors out of funds
legally available therefor. The dividends shall either (i) accrue, (ii) be
payable in cash, or (iii) be payable in shares of Common Stock, as provided in
the next paragraph. The dividends shall automatically accrue in the absence of
an election by the Board of Directors within sixty (60) days after each Series A
Annual Dividend Date to pay the dividends in cash or in shares of Common Stock,
as provided in the next paragraph. The amount of dividends payable for any
period that is shorter or longer than a full annual dividend shall be computed
on the basis of a 360-day year and the actual number of days elapsed (including
the first day but excluding the last day) occurring in the period for which such
amount is payable. All accrued but unpaid dividends (whether declared or
undeclared) shall accrue interest at a rate of eight percent (8%) per annum
computed on the basis of a 360-day year and the actual number of days elapsed
(including the first day but excluding the last day) occurring in the period for
which such amount is payable, but with interest on such dividend compounded on a
quarterly basis (on each March 31, June 30, September 30 and December 31) for
the year during which such dividend was payable, and thereafter until paid.
Notwithstanding anything else contained herein to the contrary, the Series A
Dividend shall be pari passu with the Series B Dividend (as defined herein). If
the Series A Dividend and the Series B Dividend cannot be paid in full,
dividends shall be paid, to the maximum possible extent, to the holders of the
Series A Preferred and the Series B Preferred on a pari passu basis, on the
basis of the amount of accrued and unpaid dividends outstanding on each share.
No dividend shall be paid to holders of Series A Preferred or Series B Preferred
unless dividends are paid to all holders of Series A Preferred and Series B
Preferred pursuant to the terms of this resolution.


                                        2
<PAGE>
     The Board of Directors of the Corporation may, within sixty (60) days after
each Series A Annual Dividend Date, elect (the "Series A Dividend Election") to
pay the annual cash dividends payable for such year on such Series A Annual
Dividend Date in shares of Common Stock (each a "Series A Payment-in-Kind" or
more than one the "Series A Payments-in-Kind") rather than cash. If such an
election is made, the Corporation shall promptly notify the holders of record of
the Series A Preferred entitled to such annual dividend of the election to make
the Series A Payments-in-Kind in lieu of cash dividends for such Series A Annual
Dividend Date. A Series A Dividend Election for any particular Series A Annual
Dividend Date shall operate only for such Series A Annual Dividend Date. Series
A Payments-in-Kind shall be payable as of the Series A Annual Dividend Date of
each year for which the election is made, except that if such date is a
Non-Business Day then such Series A Payment-in-Kind shall be payable as of the
next Business Day to holders of record as they appear on the stock books of the
Corporation on the applicable Record Date. Each Series A Payment-in-Kind shall
be equal in amount to that number of shares of Common Stock that is equal in
number to the aggregate cash dividend payable on any such dividend date
(including accrued interest compounded on a quarterly basis as indicated above)
divided by the fair market valuation for such Common Stock determined by the
Board of Directors at such time in good faith, and shall be allocated on a pro
rata basis to each holder entitled to receive such dividend. The holders of at
least fifty percent (50%) of the outstanding Series A Preferred shall have the
right to challenge any determination by the Board of Directors of fair market
value pursuant to this SECTION 2(A), in which case the determination of fair
market value shall be made by an independent appraiser or investment banker,
mutually acceptable to the Board of Directors and the challenging parties, who
is qualified in the fair market appraisal of companies, the cost of such
appraisal to be borne (a) by the challenging parties, if the fair market value
as determined by such appraisal does not exceed the determination of fair market
value by the Board of Directors by more than ten percent (10%) and (b) by the
Corporation, if the fair market value as determined by such appraisal exceeds
the determination of fair market value by the Board of Directors by more than
ten percent (10%). Certificates representing the shares of Common Stock issuable
on payment of any Series A Payment-in-Kind shall be delivered to each holder
entitled to receive such Series A Payment-in-Kind (in appropriate denominations)
on or before the ninetieth (90th) day following the Series A Annual Dividend
Date for which such Series A Payment-in-Kind is elected to be made hereunder (or
such later date as the independent determination of fair market value has been
made). Notwithstanding anything else contained herein to the contrary, if, in
respect of any Series A Dividend (I) a Series A Dividend Election is made by the
Corporation and such Series A Dividend is paid by a Series A Payment-in-Kind,
then the Corporation shall make a Series B Dividend Election (as defined herein)
with respect to the corresponding Series B Dividend and such Series B Dividend
shall be paid by a Series B Payment-in-Kind (as defined herein) and (II) such
Series A Dividend is accrued or paid in cash, then the corresponding Series B
Dividend shall also be accrued or paid in cash, as the case may be, in order
that the holders of Series A Preferred and Series B Preferred receive the same
type of consideration with respect to each Series A Dividend and each Series B
Dividend.

          (B) SERIES B DIVIDENDS. The holders of record of shares of Series B
Preferred shall be entitled to receive dividends at a rate of eight percent (8%)
of the Conversion Value per annum per share of Series B Preferred (the "Series B
Dividend"), which shall be fully cumulative, prior and in preference to any
declaration or payment of any dividend or other distribution on any other class
or series of Preferred Stock (other than as set forth herein) or the Common
Stock (and excluding any stock splits and subdivisions for which an adjustment
is made under SECTION


                                        3
<PAGE>
4(D)(VI)(1) below). The foregoing dividend on the Series B Preferred shall
accrue from the date of issuance of each share until the earlier of (i) the
conversion of the Series B Preferred to Common Stock, (ii) the liquidation,
distribution or winding up of the Corporation, or (iii) the consummation of the
Put pursuant to Section 7 of the Stockholders' Agreement. Such dividend shall be
payable annually on December 31 of each year (each a "Series B Annual Dividend
Date") commencing on December 31, 1999, except that if any such date is a
Non-Business Day then such dividend shall be payable on the next day that is a
Business Day to holders of record as they appear on the stock books of the
Corporation on the applicable record date, which shall be not more than sixty
(60) nor less than ten (10) days preceding the payment date for such dividends,
as fixed by the Board of Directors (the "Series B Record Date"). The dividends
shall be payable only when, as and if declared by the Board of Directors out of
funds legally available therefor. The dividends shall either (i) accrue, (ii) be
payable in cash, or (iii) be payable in shares of Common Stock, as provided in
the next paragraph. The dividends shall automatically accrue in the absence of
an election by the Board of Directors within sixty (60) days after each Series B
Annual Dividend Date to pay the dividends in cash or in shares of Common Stock,
as provided in the next paragraph. The amount of dividends payable for any
period that is shorter or longer than a full annual dividend shall be computed
on the basis of a 360-day year and the actual number of days elapsed (including
the first day but excluding the last day) occurring in the period for which such
amount is payable. All accrued but unpaid dividends (whether declared or
undeclared) shall accrue interest at a rate of eight percent (8%) per annum
computed on the basis of a 360-day year and the actual number of days elapsed
(including the first day but excluding the last day) occurring in the period for
which such amount is payable, but with interest on such dividend compounded on a
quarterly basis (on each March 31, June 30, September 30 and December 31) for
the year during which such dividend was payable, and thereafter until paid.
Notwithstanding anything else contained herein to the contrary, the Series B
Dividend shall be pari passu with the Series A Dividend. If the Series A
Dividend and the Series B Dividend cannot be paid in full, dividends shall be
paid, to the maximum possible extent, to the holders of the Series A Preferred
and the Series B Preferred on a pari passu basis, on the basis of the amount of
accrued and unpaid dividends outstanding on each share. No dividend shall be
paid to holders of Series A Preferred or Series B Preferred unless dividends are
paid to all holders of Series A Preferred and Series B Preferred pursuant to the
terms of this resolution.

     The Board of Directors of the Corporation may, within sixty (60) days after
each Series B Annual Dividend Date, elect (the "Series B Dividend Election") to
pay the annual cash dividends payable for such year on such Series B Annual
Dividend Date in shares of Common Stock (each a "Series B Payment-in-Kind" or
more than one the "Series B Payments-in-Kind") rather than cash. If such an
election is made, the Corporation shall promptly notify the holders of record of
the Series B Preferred entitled to such annual dividend of the election to make
the Series B Payments-in-Kind in lieu of cash dividends for such Series B Annual
Dividend Date. A Series B Dividend Election for any particular Series B Annual
Dividend Date shall operate only for such Series B Annual Dividend Date. Series
B Payments-in-Kind shall be payable as of the Series B Annual Dividend Date of
each year for which the election is made, except that if such date is a
Non-Business Day then such Series B Payment-in-Kind shall be payable as of the
next Business Day to holders of record as they appear on the stock books of the
Corporation on the applicable Record Date. Each Series B Payment-in-Kind shall
be equal in amount to that number of shares of Common Stock that is equal in
number to the aggregate cash dividend payable on any such dividend date
(including accrued interest compounded on a quarterly basis as indicated above)
divided by the fair market valuation for such Common Stock determined by the
Board of Directors at such time in good faith, and shall


                                        4
<PAGE>
be allocated on a pro rata basis to each holder entitled to receive such
dividend. Certificates representing the shares of Common Stock issuable on
payment of any Series B Payment-in-Kind shall be delivered to each holder
entitled to receive such Series B Payment-in-Kind (in appropriate denominations)
on or before the ninetieth (90th) day following the Series B Annual Dividend
Date for which such Series B Payment-in-Kind is elected to be made hereunder (or
such later date as the independent determination of fair market value has been
made). Notwithstanding anything else contained herein to the contrary, if, in
respect of any Series B Dividend (I) a Series A Dividend Election is made by the
Corporation and such Series A Dividend is paid by a Series A Payment-in-Kind,
then the Corporation shall make a Series B Dividend Election with respect to the
corresponding Series B Dividend and such Series B Dividend shall be paid by a
Series B Payment-in-Kind and (II) such Series A Dividend is accrued or paid in
cash, then the corresponding Series B Dividend shall also be accrued or paid in
cash, as the case may be, in order that the holders of Series B Preferred and
Series A Preferred receive the same type of consideration with respect to each
Series B Dividend and each Series A Dividend.

          (C) OTHER PERMITTED DISTRIBUTIONS. Notwithstanding SECTION 2(A) and
2(B) hereof, the Corporation may at any time, out of funds legally available
therefor, repurchase shares of Common Stock of the Corporation issued to or held
by any person subject to the Corporation's right of first refusal to purchase
such shares contained in the Stockholders' Agreement, and pursuant to the terms
of the Stockholders' Agreement, whether or not dividends on the Series A
Preferred or Series B Preferred shall have been declared and paid or funds set
aside therefor, in each event subject to any other contractual restrictions
entered into by the Corporation.

     3. LIQUIDATION RIGHTS. In the event of any liquidation, dissolution or
winding-up of the Corporation, whether voluntary or involuntary (a
"Liquidation"), distributions shall be made to the holders of Series A Preferred
and Series B Preferred in respect of such Series A Preferred and Series B
Preferred before any amount shall be paid to the holders of any other class or
series of capital stock of the Corporation in the following manner:

          (A) LIQUIDATION AMOUNT. The holders of the Series A Preferred and
Series B Preferred, subject to the other terms contained herein, shall be
entitled to be paid first out of the assets of the Corporation available for
distribution to holders of its capital stock an amount equal to (i) the
Conversion Value, as appropriately adjusted to reflect any stock split, stock
dividend, combination, recapitalization and the like (collectively a
"Recapitalization"), plus (ii) all accrued but unpaid dividends (whether
declared or undeclared, including any interest accrued thereon calculated
through the date of liquidation), prior to any distribution to the holders of
any other Preferred or Common Stock. If the proceeds from a Liquidation arc not
sufficient to pay to the holders of Series A Preferred and Series B Preferred
the full preference amount set forth above, then such holders shall instead be
entitled to receive the entire assets and funds of the Corporation legally
available for distribution to the holders of capital stock, which assets and
funds shall be distributed ratably among the holders of the Series A Preferred
and Series B Preferred. Notwithstanding anything else contained herein to the
contrary, the holders of Series A Preferred and the holders of Series B
Preferred shall be treated pari passu with respect to distributions to be made
as a result of a Liquidation, on the basis of the amounts per share to be paid
to each.

          (B) EVENTS DEEMED A LIQUIDATION. For purposes of this SECTION 3, the
holders of greater than fifty percent (50%) of the Series A Preferred then
outstanding (which such holders


                                        5
<PAGE>
must include NationsBanc Capital Corporation and, at such time as they become
holders of Series A Preferred, Saskatchewan Telecommunications Holding
Corporation), may elect to have treated as a Liquidation the consolidation or
merger of the Corporation with or into any other corporation or the sale or
other transfer in a single transaction or a series of related transactions of
all or substantially all of the assets of the Corporation, or any other
reorganization of the Corporation. If such election is made by such requisite
holders of Series A Preferred, then and only then, the holders of Series B
Preferred may elect to have such events treated as a Liquidation.

          (C) VALUATION OF SECURITIES AND PROPERTY. In the event the Corporation
proposes to distribute assets other than cash in connection with any
Liquidation, the value of the assets to be distributed to the holders of shares
of Series A Preferred and Series B Preferred shall be determined in good faith
by the Board of Directors. Any securities not subject to an investment letter or
similar restrictions on free marketability shall be valued as follows:

               (i) if traded on a national securities exchange or the NASDAQ
     National Market System ("NASDAQ"), the value shall be deemed to be the
     average of the security's closing prices on such exchange or NASDAQ over
     the thirty (30) trading day period ending three (3) days prior to the
     distribution;

               (ii) if actively traded over-the-counter (other than NASDAQ), the
     value shall be deemed to be the average of the closing bid prices over the
     thirty (30) day period ending three (3) days prior to the distribution; or

               (iii) if there is no active public market, the value shall be the
     fair market value thereof as determined in good faith by the Board of
     Directors.

The method of valuation of securities subject to an investment letter or other
restrictions on free marketability shall be adjusted to make an appropriate
discount from the market value determined as above in clauses (i). (ii) or (iii)
to reflect the fair market value thereof as determined in good faith by the
Board of Directors. The holders of at least fifty percent (50%) of the
outstanding Series A Preferred shall have the right to challenge any
determination by the Board of Directors of fair market value pursuant to this
SECTION 3(C), in which case the determination of fair market value shall be made
by an independent appraiser or investment banker selected jointly by the Board
of Directors and the challenging parties, the cost of such appraisal to be borne
(a) by the challenging parties, if the fair market value as determined by such
appraisal does not exceed the determination of fair market value by the Board of
Directors by more than ten percent (10%) and (b) by the Corporation, if the fair
market value as determined by such appraisal exceeds the determination of fair
market value by the Board of Directors by more than ten percent (10%).

     4. CONVERSION. The holders of Series A Preferred and Series B Preferred
have conversion rights as follows (the "Conversion Rights"):

          (A) RIGHT TO CONVERT. Each share of Series A Preferred and Series B
Preferred shall initially be convertible, at the option of the holder thereof,
at any time on or after the date of issuance thereof, into the number of fully
paid and nonassessable shares of Common Stock which results from dividing the
Conversion Price (as hereinafter specified) per share in effect at the time of
conversion into the per share Conversion Value in effect at the time of
conversion. The initial


                                        6
<PAGE>
Conversion Price of the Series A Preferred and Series B Preferred shall be
$3,7094803 per share, and the Conversion Value of the Series A Preferred and
Series B Preferred shall be $3,7094803 per share ("Conversion Value"). The
initial Conversion Price of the Series A Preferred and Series B Preferred shall
be subject to adjustment from time to time as provided in SECTION 4(D) hereof.
The Conversion Value shall not be subject to adjustment. Upon conversion, all
accrued or declared but unpaid dividends (including any interest accrued thereon
calculated as of the date of conversion) on the Series A Preferred and Series B
Preferred so converted shall be paid in cash or Common Stock, at the option of
the Corporation, and in the case of cash, to the extent permitted by applicable
law (and if not then permitted by applicable law, at such time as the
Corporation is permitted by applicable law to pay any such dividends).

          (B) AUTOMATIC CONVERSION. Each share of Series A Preferred and Series
B Preferred shall automatically be converted into shares of Common Stock upon
the closing of a firm commitment underwritten public offering pursuant to an
effective registration statement under the Securities Act of 1933, as amended,
covering the offer and sale of securities for the account of the Corporation to
the public: (i) the gross proceeds of which equal or exceed $20,000,000 at a per
share price of at least $12; and (ii) whereby the aggregate value of the shares
of Common Stock issuable on conversion of each share of Series A Preferred and
Series B Preferred (utilizing the offering price in such underwriting) is at
least two (2) times the Conversion Value. Upon conversion, all accrued but
unpaid dividends (whether declared or undeclared) on the Series A Preferred and
Series B Preferred shall be paid in cash, to the extent permitted by applicable
law (and if not then permitted by applicable law, at such time as the
Corporation is permitted by applicable law to pay any such dividends).

          (C) MECHANICS OF CONVERSION. Before any holder of Series A Preferred
or Series B Preferred shall be entitled to convert the same into shares of
Common Stock and to receive certificates therefor, such holder shall surrender
the certificate or certificates therefor, duly endorsed, at the principal office
of the Corporation or of any transfer agent for the Series A Preferred and
Series B Preferred, and shall give written notice to the Corporation at such
office that such holder elects to convert the same; provided, however, that in
the event of an automatic conversion pursuant to SECTION 4(b) hereof, the
outstanding shares of Series A Preferred and Series B Preferred shall be
converted automatically without any further action by the holders of such shares
and whether or not the certificates representing such shares are surrendered to
the Corporation or its transfer agent; and provided further that the Corporation
shall not be obligated to issue certificates evidencing the shares of Common
Stock issuable upon such automatic conversion unless and until the certificates
evidencing such shares of Series A Preferred and Series B Preferred are either
delivered to the Corporation or its transfer agent as provided above, or the
holder notifies the Corporation or its transfer agent that such certificates
have been lost, stolen or destroyed and executes an agreement reasonably
satisfactory to the Corporation to indemnify the Corporation from any loss
incurred by it in connection with such certificates. The Corporation shall as
soon as practicable after such delivery, or after such agreement and
indemnification, issue and deliver at such office to such holder of Series A
Preferred or Series B Preferred, a certificate or certificates for the number of
shares of Common Stock to which it, he or she shall be entitled as aforesaid and
a check payable to the holder in the amount of any accrued or declared but
unpaid dividends (including any interest accrued thereon calculated as of the
date of conversion) payable pursuant to SECTION 2 hereof, if any. Such
conversion shall be deemed to have been made immediately prior to the close of
business on the date of such surrender of the shares of Series A Preferred or
Series B Preferred to be converted, or, in the


                                        7

<PAGE>
case of automatic conversion, simultaneously upon the occurrence of the event
leading to such automatic conversion, and the person or persons entitled to
receive the shares of Common Stock issuable upon such conversion shall be
treated for all purposes as the record holder or holders of such shares of
Common Stock on such date. If the Corporation fails to pay all such dividends
(and interest thereon) within twenty (20) days of the date of conversion, the
holder entitled to such dividends (and interest thereon) may elect to have the
Corporation issue to such holder, in lieu of such cash payment, additional
shares of Common Stock calculated by dividing the total amount payable on such
date by the Conversion Price.

          (D) ADJUSTMENTS TO CONVERSION PRICE.

               (I) SPECIAL DEFINITIONS. For purposes of this SECTION 4(D), the
     following definitions shall apply:

               (1) "OPTIONS" shall mean rights, options or warrants to subscribe
     for, purchase or otherwise acquire either Common Stock or Convertible
     Securities.

               (2) "CONVERTIBLE SECURITIES" shall mean any evidences of
     indebtedness, shares or other securities convertible into or exchangeable
     for Common Stock.

               (3) "ADDITIONAL SHARES OF COMMON STOCK" shall mean all shares of
     Common Stock issued (or, pursuant to SECTION 4(D)(III), deemed to be
     issued) by the Corporation after the Original Issue Date, other than shares
     of Common Stock issued or issuable:

                    (A) upon conversion of shares of Series A Preferred or
               shares of Series B Preferred;

                    (B) pursuant to a stock grant, option plan or purchase plan,
               other employee stock incentive program or agreement that in the
               aggregate does not exceed 1,261,000 shares (as adjusted for
               recapitalizations, stock splits, stock dividends and the like)
               (the "Option Pool"), or other options and warrants in existence
               on the Original Issue Date and set forth in Schedule 2.5 of the
               Stock Purchase Agreement;

                    (C) as a dividend or distribution on shares of Series A
               Preferred or shares of Series B Preferred;

                    (D) pursuant to Options or Convertible Securities issued in
               conjunction with the Senior Bridge Financing that upon exercise
               or conversion in the aggregate do not exceed 856,757 shares (as
               adjusted for recapitalizations, stock splits, stock dividends and
               the like, the "Senior Bridge Warrants");

                    (E) in a transaction described in SECTION 4(D)(VI);


                                        8
<PAGE>
                    (F) by way of dividend or other distribution on shares of
               Common Stock excluded from the definition of Additional Shares of
               Common by the foregoing CLAUSES (A), (B), (C), (D), (E) or this
               CLAUSE (F).

               (4) "ORIGINAL ISSUE DATE" shall mean the date on which the first
     share of Series A Preferred was issued.

               (II) NO ADJUSTMENT OF CONVERSION PRICE. Subject to the provisions
     of SECTION 4(D)(IV), no adjustment in the Conversion Price of the Series A
     Preferred or Series B Preferred shall be made in respect of the issuance of
     Additional Shares of Common Stock unless the consideration per share for an
     Additional Share of Common Stock issued or deemed to be issued by the
     Corporation is less than the Conversion Price for the Series A Preferred or
     Series B Preferred in effect on the date of, and immediately prior to, such
     issue.

               (III) DEEMED ISSUE OF ADDITIONAL SHARES OF COMMON STOCK. In the
     event the Corporation at any time or from time to time after the Original
     Issue Date shall issue any Options (other than the issuance of Options
     pursuant to the Option Pool or Senior Bridge Warrants) or Convertible
     Securities or shall fix a record date for the determination of holders of
     any class of securities 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 for a subsequent adjustment of such number) of Common Stock
     issuable upon the exercise of such Options or, in the case of Convertible
     Securities and Options therefor, the exercise of such Options and
     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 or,
     in case such a record date shall have been fixed, as of the close of
     business on such record date, provided that Additional Shares of Common
     Stock shall not be deemed to have been issued, subject to the provisions of
     SECTION 4(D)(IV), unless the consideration per share (determined pursuant
     to SECTION 4(D)(V) hereof) of such Additional Shares of Common Stock would
     be less than the Conversion Price for the Series A Preferred or Series B
     Preferred in effect on the date of and immediately prior to such issue, or
     such record date, as the case may be, and provided further that in any such
     case in which Additional Shares of Common Stock are deemed to be issued;

               (1) except as provided in SECTION 4(D)(III)(2), no further
     adjustment in the Conversion Price shall be made upon the subsequent issue
     of Convertible Securities or shares of Common Stock upon the exercise of
     such Options or conversion or exchange of such Convertible Securities;

               (2) if such Options or Convertible Securities by their terms
     provide, with the passage of time or otherwise, for any change in the
     consideration payable to the Corporation, or change in the number of shares
     of Common Stock issuable, upon the exercise, conversion or exchange thereof
     (other than under or by reason of provisions designed to protect against
     dilution), the Conversion Price computed upon the original issue thereof
     (or upon the occurrence of a record date with respect thereto) and any
     subsequent adjustments based thereon, shall, upon any such increase or
     decrease becoming effective, 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; and


                                        9
<PAGE>
               (3) no readjustment pursuant to CLAUSE (2) above shall have the
     effect of increasing the Conversion Price to an amount which exceeds the
     lower of (A) the Conversion Price on the original adjustment date or (B)
     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.

               (IV) ADJUSTMENT OF CONVERSION PRICE UPON ISSUANCE OF ADDITIONAL
     SHARES OF COMMON STOCK. In the event the Corporation shall issue Additional
     Shares of Common Stock (including Additional Shares of Common Stock deemed
     to be issued pursuant to SECTION 4(D)(III)), then and in each such event
     the Conversion Price of the Series A Preferred and Series B Preferred shall
     be reduced to a price (calculated to the nearest cent) determined as
     follows:

                    (1) if any such Additional Shares of Common Stock are issued
          on or prior to six (6) months subsequent to the Original Issue Date,
          regardless of the consideration received by the Corporation for the
          issuance of such Additional Shares of Common Stock, then the
          Conversion Price of the Series A Preferred and/or the number of shares
          of fully paid and nonassessable shares of Common Stock into which the
          Series A Preferred is exercisable shall be adjusted so that the number
          of shares of fully paid and nonassessable shares of Common Stock into
          which the total number of shares of Series A Preferred are convertible
          in the aggregate shall at all times equal 23.51% of the fully diluted
          Common Stock of the Corporation (such percentage shall be increased or
          decreased, as applicable, to account for the total proceeds from sales
          of Series A Preferred pursuant to the Stock Purchase Agreement being
          greater than or less than $22,000,000 by multiplying such percentage
          by a fraction, the numerator of which is the total proceeds from the
          sales of Series A Preferred pursuant to the Stock Purchase Agreement
          and the denominator of which is $22,000,000) (notwithstanding anything
          else contained herein, there shall be no adjustment to the Conversion
          Price of the Series A Preferred or the Series B Preferred upon the
          issuance of the Senior Bridge Warrants or upon their exercise or
          conversion); and

                    (2) if any such Additional Shares of Common Stock are issued
          on or prior to six (6) months subsequent to the Original Issue Date,
          regardless of the consideration received by the Company for the
          issuance of such Additional Shares of Common Stock, then the
          Conversion Price of the Series B Preferred and/or the number of shares
          of fully paid and nonassessable shares of Common Stock into which the
          Series B Preferred is exercisable shall be adjusted so that the number
          of shares of fully paid and nonassessable shares of Common Stock into
          which the total number of shares of Series B Preferred are convertible
          in the aggregate shall at all times equal 5.305% of the fully diluted
          Common Stock of the Corporation (such percentage shall be increased or
          decreased, as applicable, to account for the total proceeds from sales
          of Series B Preferred being greater than or less than $4,964,200 by
          multiplying such percentage by a fraction, the numerator of which is
          the total proceeds from the sales of Series B Preferred and the
          denominator of which is $4,964,200) (notwithstanding anything else
          contained herein, there shall be no adjustment to the Conversion Price
          of the Series A Preferred or the Series B


                                       10
<PAGE>
          Preferred upon the issuance of the Senior Bridge Warrants or upon
          their exercise or conversion); and

                    (3) if any such Additional Shares of Common Stock are issued
          after six (6) months subsequent to the Original Issue Date, then the
          Conversion Price of Series A Preferred and Series B Preferred shall be
          reduced to the consideration per share received by the Corporation for
          the issuance of such Additional Shares of Common Stock; provided,
          however, that such reduction shall never result in a Conversion Price
          of less than $2.00, subject to the adjustment as set forth in SECTION
          4(D)(VI) below.

               (V) DETERMINATION OF CONSIDERATION. For purposes of this
     SECTION 4(D), the consideration received by the Corporation for the issue
     of any Additional Shares of Common Stock shall be computed as follows:

               (1) CASH AND PROPERTY: Such consideration shall be computed as
               follows:

                    (A) insofar as it consists of cash, such consideration shall
               be computed at the aggregate amount of cash received by the
               Corporation;

                    (B) insofar as it consists of property other than cash, such
               consideration shall be computed at the fair value thereof at the
               time of such issue, as determined by the Board of Directors in
               the good faith exercise of its reasonable business judgment; and

                    (C) in the event Additional Shares of Common Stock are
               issued together with other shares or securities or other assets
               of the Corporation for consideration which covers both, such
               consideration shall be the proportion of such consideration so
               received, computed as provided in CLAUSES (A) and (B) above, as
               determined by the Board of Directors in the good faith exercise
               of its reasonable business judgment.

               (2) 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 SECTION 4(D)(III), 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 for a subsequent adjustment of such consideration)
               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


                                       11
<PAGE>
               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 for a subsequent adjustment of such
               number) issuable upon the exercise of such Options or the
               conversion or exchange of such Convertible Securities.

               (VI) OTHER ADJUSTMENTS.

               (1) SUBDIVISIONS, COMBINATIONS, OR CONSOLIDATE OF COMMON STOCK.
     In the event the outstanding shares of Common Stock shall be subdivided,
     combined or consolidated, by stock split, stock dividend, combination or
     like event, into a greater or lesser number of shares of Common Stock, the
     Conversion Price of the Series A Preferred and Series B Preferred in effect
     immediately prior to such subdivision, combination, consolidation or stock
     dividend shall, concurrently with the effectiveness of such subdivision,
     combination or consolidation, be proportionately adjusted.

               (2) RECLASSIFICATIONS. In the case, at any time after the date
     hereof, of any capital reorganization or any reclassification of the stock
     of the Corporation (other than as a result of a stock dividend or
     subdivision, split-up or combination of shares), or the consolidation or
     merger of the Corporation with or into another person (other than a
     consolidation or merger (A) in which the Corporation is the continuing
     entity and which does not result in any change in the Common Stock or (B)
     which is treated as a Liquidation pursuant to SECTION 3(B) above), the
     shares of Series A Preferred and Series B Preferred shall, after such
     reorganization, reclassification, consolidation or merger be convertible
     into the kind and number of shares of stock or other securities or property
     of the Corporation or otherwise to which such holder would have been
     entitled if immediately prior to such reorganization, reclassification,
     consolidation or merger such holder had converted his shares of Series A
     Preferred or Series B Preferred into Common Stock. The provisions of this
     SECTION 4(D)(VI)(2) shall similarly apply to successive reorganizations,
     reclassifications, consolidations or mergers.

          (E) CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of each
adjustment or readjustment of the Conversion Price of the Series A Preferred or
Series B Preferred pursuant to this SECTION 4, the Corporation at its expense
shall promptly thereafter compute such adjustment or readjustment in accordance
with the terms hereof and furnish to each holder of Series A Preferred and
Series B Preferred a certificate setting forth such adjustment or readjustment
and showing in detail the facts upon which such adjustment or readjustment is
based. The Corporation shall, upon the written request at any time of any holder
of Series A Preferred or Series B Preferred, furnish or cause to be furnished
to such holder a like certificate setting forth (i) such adjustments and
readjustments, if any, (ii) the Conversion Price of the Series A Preferred and
Series B Preferred at the time in effect, and (iii) the number of shares of
Common Stock and the amount, if any, of other property which at the time would
be received upon the conversion of the Series A Preferred or Series B Preferred.


                                       12
<PAGE>
          (F) STATUS OF CONVERTED STOCK. In case any shares of Series A
Preferred or Series B Preferred shall be converted pursuant to SECTION 4 hereof,
the shares so converted shall be canceled, shall not be reissuable and shall
cease to be a part of the authorized capital stock of the Corporation.

          (G) FRACTIONAL SHARES. In lieu of any fractional shares in the
aggregate to which the holder of Series A Preferred or Series B Preferred would
otherwise be entitled upon conversion, the Corporation shall pay cash equal to
such fraction multiplied by the fair market value of one share of Common Stock
as determined by the Board of Directors in the good faith exercise of its
reasonable business judgment.

          (H) MISCELLANEOUS.

               (i) All calculations under this SECTION 4 shall be made to the
     nearest cent or to the nearest one hundredth (1/100) of a share, as the
     case may be.

               (ii) The holders of at least fifty percent (50%) of the
     outstanding Series A Preferred shall have the right to challenge any
     determination by the Board of Directors of fair market value pursuant to
     this SECTION 4, in which case such determination of fair market value shall
     be made by an independent appraiser selected jointly by the Board of
     Directors and the challenging parties, the cost of such appraisal to be
     borne (a) by the challenging parties, if the fair market value as
     determined by such appraisal does not exceed the determination of fair
     market value by the Board of Directors by more than ten percent (10%) and
     (b) by the Corporation, if the fair market value as determined by such
     appraisal exceeds the determination of fair market value by the Board of
     Directors by more than ten percent (10%).

               (iii) No adjustment in the Conversion Price of the Series A
     Preferred or Series B Preferred will be made if such adjustment would
     result in a change in such Conversion Price of less than $0.01. Any
     adjustment of less than $0.01 which is not made shall be carried forward
     and shall be made at the time of and together with any subsequent
     adjustment which, on a cumulative basis, amounts to an adjustment of $0.01
     or more in such Conversion Price.

          (I) NO IMPAIRMENT. The Corporation will not through any
reorganization, recapitalization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms to be observed
or performed hereunder by the Corporation, but will at all times in good faith
assist in the carrying out of all the provisions of this SECTION 4 and in the
taking of all action as may be necessary or appropriate in order to protect the
conversion rights of the holders of Series A Preferred and Series B Preferred
against impairment.

          (J) RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The Corporation
shall at all times reserve and keep available out of its authorized but unissued
shares of Common Stock, solely for the purpose of effecting the conversion of
the shares of Series A Preferred and Series B Preferred, such number of its
shares of Common Stock as shall from time to time be sufficient to effect the
conversion of all outstanding shares of Series A Preferred and Series B
Preferred. If at any


                                       13
<PAGE>
time the number of authorized but unissued shares of Common Stock shall not be
sufficient to effect the conversion of all then outstanding shares of Series A
Preferred or Series B Preferred, the Corporation will take such corporate action
as may, in the opinion of its counsel, be necessary to increase its authorized
but unissued shares of Common Stock to such number of shares as shall be
sufficient for such purpose.

     5. VOTING RIGHTS

          (A) GENERAL. (i) Except as otherwise required by law, by SECTION 5(B)
hereof or by SECTION 8 hereof, the holder of each share of Series A Preferred
will be entitled to vote on all matters with the Common Stock as a single class,
and not as a separate class or series. Each share of Series A Preferred will
entitle the holder to the number of votes per share equal to the full number of
shares of Common Stock into which each share of Series A Preferred is
convertible on the record date for such vote. The holders of Series A Preferred
shall receive notice of and shall be entitled to attend in person or by proxy
any meeting of the holders of Common Stock, (ii) Except as otherwise required by
law, the holder of each share of Series B Preferred will be entitled to vote on
all matters with the Common Stock as a single class, and not as a separate class
or series. Each share of Series B Preferred will entitle the holder to the
number of votes per share equal to the full number of shares of Common Stock
into which each share of Series B Preferred is convertible on the record date
for such vote. The holders of Series B Preferred shall receive notice of and
shall be entitled to attend in person or by proxy any meeting of the holders of
Common Stock. If the holders of preferred stock are required to vote as a class
for any reason, then the holders of Series B Preferred shall vote as a single
class with the holders of Series A Preferred, and not as a separate class or
series.

          (B) ELECTION OF DIRECTORS. For so long as there are any shares of
Series A Preferred outstanding, the holders of a majority of the Series A
Preferred shall be entitled to nominate and elect two (2) directors, and the
holders of the Series A Preferred shall otherwise also be entitled to vote in
the election of directors pursuant to the terms of SECTION 5(A) above.
Notwithstanding the foregoing sentence, if (i) the Corporation shall breach any
of its obligations and/or agreements under Section 4 of the Stock Purchase
Agreement, (ii) the Corporation shall breach its payment obligations pursuant to
the terms of the Senior Bridge Financing, or (iii) a Put is initiated pursuant
to Section 7 of the Stockholders' Agreement, and such breach under (i) or (ii)
above shall remain uncured for a period of one hundred and eighty (180) days
after written notice of such breach by any holder of Series A Preferred or until
the Put is consummated, then in any such event, the holders of the Series A
Preferred shall be entitled then and thereafter to nominate and elect one(l)
additional director, until such time as the later of (x) twelve (12) months from
the election of such director or (y) such time that the applicable breach has
been cured (with respect to the election of an additional director as a result
of clauses (i) and (ii) above), or until the Put is consummated. Any vacancy on
the Board occurring because of the death, resignation or removal of a director
elected by the holders of the Series A Preferred, shall be filled by the vote or
written consent of the holders of a majority of the Series A Preferred;
provided, however, that any designee of a particular holder of Series A
Preferred shall be replaced by the designee of such holder.

     6. NOTICE OF RECORD DATE. In the event of any taking by the Corporation of
a record of the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any dividend or
other distribution, any right to subscribe for, purchase or otherwise acquire
any shares of stock of any class or any other securities or property, or to
receive


                                       14
<PAGE>
any other right, the Corporation shall mail to each holder of Series A Preferred
and Series B Preferred, at least twenty (20) days prior to the date specified
therein, a notice specifying the date on which any such record is to be taken
for the purpose of such dividend, distribution or right, and the anticipated
amount and character of such dividend, distribution or right.

     7. NOTICES. Any notice required by the provisions of this Certificate to be
given to the holders of Series A Preferred or Series B Preferred shall be deemed
given when deposited in the United States mail, postage prepaid, and addressed
to each holder of record at such holder's address appearing on the books of the
Corporation.

     8. APPROVAL OF CERTAIN TRANSACTIONS WHILE ANY SERIES A PREFERRED IS
OUTSTANDING. So long as any shares of Series A Preferred are outstanding, the
Corporation shall not, without first obtaining the written approval of the
holders of greater than fifty percent (50%) of the Series A Preferred then
outstanding (which such holders must include NationsBanc Capital Corporation, a
Texas corporation ("NBCC"), and, at such time as they become a holder of Series
A Preferred, 589531 Saskatchewan, Ltd., a Saskatchewan corporation ("SaskTel");
provided, however, that such group need not include NBCC or SaskTel,
respectively, at such time as NBCC or SaskTel or their respective Affiliates
fail to own at least fifty percent (50%) of the Series A Preferred purchased by
them pursuant to the Stock Purchase Agreement) voting as a separate class:

          (a) alter the rights, preferences or privileges of the Series A
Preferred or Series B Preferred;

          (b) increase or decrease the authorized number of shares of Series A
Preferred or Series B Preferred;

          (c) create any new class or series of shares, or issue any such shares
or Options or Convertible Securities exercisable or convertible into such
shares, that have a preference over or are on a parity with the Series A
Preferred with respect to voting, dividends or liquidation preferences (other
than the Series B Preferred being on a parity with the Series A Preferred with
respect to dividends and liquidation preferences, and except that the
Corporation may grant voting rights to shares of a series of preferred stock
which have the right to vote with holders of Common Stock on an as-converted
basis, but in any event not in preference to shares of Series A Preferred);

          (d) reclassify stock into shares having a preference over or parity
with the Series A Preferred with respect to voting, dividends or liquidation
preferences (except that the Corporation may grant voting rights to shares of a
series of preferred stock which have the right to vote with holders of Common
Stock on an as-converted basis, but in any event not in preference to shares of
Series A Preferred);

          (e) authorize any dividend or other distribution (other than a stock
dividend) with respect to the Preferred Stock or the Common Stock (other than
the cash dividends payable to the holders of Series A Preferred); or

          (f) repurchase, redeem or retire any shares of capital stock of the
Corporation other than pursuant to contractual rights to repurchase shares of
Common Stock held by employees, directors or consultants of the Corporation or
its subsidiaries upon termination of their employment


                                       15
<PAGE>
or services or pursuant to the exercise of a contractual right of first refusal
held by the Corporation and as otherwise permitted by the Stock Purchase
Agreement.

     9. 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.

     10. SEVERABILITY OF PROVISIONS. If any voting powers, preferences and
relative, participating, optional and other special rights of the Series A
Preferred or Series B Preferred and qualifications, limitations and restrictions
thereof set forth in this resolution (as such resolution may be amended from
time to time) are invalid, unlawful or incapable of being enforced by reason of
any rule of law or public policy, all other voting powers, preferences and
relative, participating, optional and other special rights of Series A Preferred
or Series B Preferred and qualifications, limitations and restrictions thereof
set forth in this resolution (as so amended) which can be given effect without
the invalid, unlawful or unenforceable voting powers, preferences and relative,
participating, optional and other special rights of Series A Preferred or Series
B Preferred and qualifications, limitations and restrictions thereof shall,
nevertheless, remain in full force and effect, and no voting powers, preferences
and relative, participating, optional or other special rights of Series A
Preferred or Series B Preferred and qualifications, limitations and restrictions
thereof herein set forth shall be deemed dependent upon any other such voting
powers, preferences and relative, participating, optional or other special
rights of Series A Preferred or Series B Preferred and qualifications,
limitations and restrictions thereof unless so expressed herein.


                                       16
<PAGE>
          IN WITNESS WHEREOF, Z-TEL TECHNOLOGIES, INC. has caused this
Certificate of Designations, Preferences and Relative Rights, Qualifications,
Limitations and Restrictions of the Series A Convertible Preferred Stock and
Series B Convertible Preferred Stock to be signed this 4th day of November,
1998.

                                        Z-TEL TECHNOLOGIES, INC.


                                        By: /s/ Russell T. Alba
                                            ------------------------------------
                                            Name: Russell T. Alba
                                            Title: Senior Vice President,
                                                   Secretary


                                       17
<PAGE>
(    STATE OF DELAWARE    )
(    SECRETARY OF STATE   )
( DIVISION OF CORPORATIONS)
(FILED 11:00 AM 09/20/1999)
(   991391772 - 2873445   )

                            CERTIFICATE OF AMENDMENT

                                       OF

                    CERTIFICATE OF DESIGNATIONS, PREFERENCES,
        AND RELATIVE RIGHTS, QUALIFICATIONS, LIMITATIONS AND RESTRICTIONS

                                     OF THE

                      SERIES A CONVERTIBLE PREFERRED STOCK

                                       AND

                      SERIES B CONVERTIBLE PREFERRED STOCK

                                       OF

                            Z-TEL TECHNOLOGIES, INC.

          Z-Tel Technologies, Inc., a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), DOES HEREBY CERTIFY:

          FIRST: That the Board of Directors of the Corporation, at a meeting
duly held on September 9, 1999, duly adopted a resolution amending the
Certificate of Designations, Preferences and Relative Rights, Qualifications,
Limitations and Restrictions of the Series A Convertible Preferred Stock and
Series B Convertible Preferred Stock of the Corporation (the "Certificate of
Designations") to change the number of authorized shares of Series A Convertible
Preferred Stock and Series B Convertible Preferred Stock and directing its
officers to obtain the written approval of the holders of greater than 50% of
the outstanding Series A Convertible Preferred Stock, no other approval of
stockholders being required. The resolution setting forth the proposed Amendment
to the Certificate of Designations filed with the Secretary of State on November
4, 1998 read as follows:

          "WHEREAS, the Board of Directors of this Corporation adopted on
October 30, 1998 a Certificate of Designations, Preferences and Relative Rights,
Qualifications, Limitations and Restrictions of the Series A Convertible
Preferred Stock and Series B Convertible Preferred Stock of this Corporation
designating 5,930,749 shares of Series A Convertible Preferred Stock and
1,338,208 shares of Series B Convertible Preferred Stock;

          WHEREAS, only 2,695,795 shares of Series A Convertible Preferred Stock
have been issued and the Corporation desires to reduce the number of authorized
shares Series A Convertible Preferred Stock; and
<PAGE>
          WHEREAS, all 1,338,208 shares of Series B Convertible Preferred Stock
have been issued and the Corporation desires to increase the number of
authorized shares of Series B Convertible Preferred Stock.

          RESOLVED, that the number of authorized shares of preferred stock,
having a par value of $0.01 per share, which are designated as "Series A
Convertible Preferred Stock" shall be 2,695,795 shares and the number of
authorized shares of preferred stock, having a par value of $0.01 per share,
which are designated as "Series B Convertible Preferred Stock" shall be
4,034,003 shares.

          RESOLVED FURTHER, that the officers of this Corporation are hereby
authorized and directed to obtain the approval of the holders of the Series A
Convertible Preferred Stock to the foregoing changes in authorized preferred
stock.

          RESOLVED FURTHER, that upon obtaining the approval of the Series A
Convertible Preferred Stock, the officers of this Corporation are hereby
authorized and directed to file a Certificate of Amendment of Certificate of
Designations with the Delaware Secretary of State.

          RESOLVED FURTHER, that the officers of this Corporation are hereby
authorized and directed to take such actions and execute such documents as they
shall deem necessary or desirable to carry out the purposes and intent of the
foregoing resolutions."

          SECOND: That, thereafter by written consent holders of more than 50%
of the outstanding Series A Convertible Preferred Stock approved the amendment.

          THIRD: That said amendment of the Certificate of Designations was duly
adopted in accordance with the Certificate of Designations and the provisions of
Section 242 of the General Corporation Law of the State of Delaware.

          IN WITNESS WHEREOF, Z-TEL TECHNOLOGIES, INC. has caused this
Certificate of Amendment to Certificate of Designation to be signed this 20th
day of September, 1999.

                                        Z-TEL TECHNOLOGIES, INC.


                                        By /s/ Mark H. Johnson
                                           -------------------------------------
                                           Mark H. Johnson
                                           Secretary


2
<PAGE>
                                                     (    STATE OF DELAWARE    )
                                                     (    SECRETARY OF STATE   )
                                                     ( DIVISION OF CORPORATIONS)
                                                     (FILED 12:00 PM 10/08/1999)
                                                     (   991427148 - 2873445   )

                                     AMENDED
                    CERTIFICATE OF DESIGNATIONS, PREFERENCES
                      AND RELATIVE RIGHTS, QUALIFICATIONS,
                          LIMITATIONS AND RESTRICTIONS

                                     OF THE

                      SERIES A CONVERTIBLE PREFERRED STOCK,

                      SERIES B CONVERTIBLE PREFERRED STOCK

                                       AND

                      SERIES C CONVERTIBLE PREFERRED STOCK

                                       OF

                            Z-TEL TECHNOLOGIES, INC.

                                   ----------

                     PURSUANT TO SECTION 151 OF THE GENERAL
                    CORPORATION LAW OF THE STATE OF DELAWARE

                                   ----------

     Z-Tel Technologies, Inc., a Delaware corporation (the "Corporation"),
certifies that pursuant to the authority contained in Article FOURTH of its
Certificate of Incorporation (the "Certificate of Incorporation") and in
accordance with the provisions of Section 151 of the General Corporation Law of
the State of Delaware, the Board of Directors of the Corporation, at a Special
Meeting held on September 9, 1999, adopted the following resolution which
resolution remains in full force and effect on the date hereof:

     WHEREAS, at a Special Meeting on October 30, 1998, the Board of Directors
of the Corporation adopted (i) a series of preferred stock, having a par value
of $0.01 per share, which series was designated as "Series A Convertible
Preferred Stock" (the "Series A Preferred"), consisting of 5,930,749 shares and
(ii) a series of preferred stock, having a par value of $0.0l per share, which
series was designated as "Series B Convertible Preferred Stock" (the "Series B
Preferred"), consisting of 1,338,208 shares, with the Series A Preferred and the
Series B Preferred having the powers, designations, preferences and relative,
participating, optional and other rights, and qualifications, limitations and
restrictions set forth in a Certificate of Designations, Preferences and
Relative Rights, Qualifications, Limitations and Restrictions filed with the
Secretary of State of the State of Delaware on November 4, 1998 (the "Original
Certificate");
<PAGE>
     WHEREAS, at a Special Meeting on September 9, 1999, the Board of Directors
of the Corporation declared the advisability of and approved an amendment to the
Original Certificate, subject to attaining the approval of the holders of a
majority of the outstanding shares of the Series A Preferred, to reduce the
authorized number of shares of Series A Preferred to 2,695,795 and increase the
authorized number of shares of Series B Preferred to 4,034,003 (the "Amended
Certificate");

     WHEREAS, at a Special Meeting on September 9, 1999, the Board of Directors
of the Corporation determined it to be in the best interests of the Corporation
and its stockholders to effect a recapitalization of the Corporation involving
the issuance of a new series of preferred stock; and

     WHEREAS, the Board of Directors of the Corporation, together with the
holders of a majority of the outstanding shares of each of the Series A
Preferred and the Series B Preferred, have adopted the following amendments to
the Original Certificate and the Amended Certificate.

     NOW, THEREFORE, BE IT RESOLVED, that the Original Certificate and the
Amended Certificate shall be amended and restated in its entirety (the "Amended
and Restated Certificate") (i) to establish a new series of authorized
preferred stock, having a par value of $0.01 per share, which series shall be
designated as "Series C Convertible Preferred Stock" (the "Series C Preferred"),
shall consist of 2,794,800 shares and shall have the powers, designations,
preferences and relative, participating, optional and other special rights, and
qualifications, limitations and restrictions as set forth herein and (ii) to
amend and restate the powers, designations, preferences and relative,
participating, optional and other special rights and qualifications, limitations
and restrictions of the Series A Preferred and the Series B Preferred as set
forth herein.

     1. Certain Definition. Unless the context otherwise requires, in addition
to the terms defined elsewhere herein, the terms defined in this Section 1 shall
have, for all purposes of this resolution, the meanings herein specified when
used herein with initial capital letters (with terms defined in the singular
having comparable meanings when used in the plural).

     "Stock Purchase Agreement" shall mean (i) in the case of the Series A
Preferred, the Stock Purchase Agreement, dated as of November 4, 1998, by and
among the Corporation, BA Capital Partners, L.P. (formerly known as NationsBanc
Capital Corporation, a Texas corporation ("BACC")), and the other parties
signatory thereto and (ii) in the case of the Series C Preferred, (the Amended
and Restated Stock Purchase Agreement, dated as of September 30, 1999, by and
between the Corporation and Gramercy Z-Tel LLC, a Delaware limited liability
company ("Gramercy").

     "Stockholders' Agreement" shall mean the Amended and Restated Stockholders'
Agreement, dated as of" the Original Issue Date of the Series C Preferred, by
and among the Corporation, BACC, Gramercy and the other parties signatory
thereto.


                                        2
<PAGE>
     2. Dividends and Distributions. (a) Series A Dividends. The holders of
record of shares of Series A Preferred shall be entitled to receive dividends at
a rate of eight percent (8%) of the Conversion Value (as defined herein) per
annum per share of Series A Preferred (the "Series A Dividend"), which shall be
fully cumulative, prior and in preference to any declaration or payment of any
dividend or other distribution on any other class or series of Preferred Stock
(other than as set forth herein) or the Common Stock (and excluding any stock
splits and subdivisions for which an adjustment is made under Section
4(d)(vi)(l) below). The foregoing dividend on the Series A Preferred shall
accrue from the date of issuance of each share until the earlier of (i) the
conversion of such share of Series A Preferred to Common Stock, (ii) a
Liquidation (as defined herein), or (iii) the repurchase or redemption of such
share of Series A Preferred (including pursuant to Section 7 of the
Stockholders' Agreement). Such dividend shall be payable annually on December 31
of each year (each a "Series A Annual Dividend Date") commencing on December 31,
1999, except that if any such date is a Saturday, Sunday or legal holiday (a
"Non-Business Day") then such dividend shall be payable on the next day that is
not a Saturday, Sunday or legal holiday on which banks in the State of Delaware
are permitted to be closed (a "Business Day") to holders of record as they
appear on the stock ledger of the Corporation on the applicable record date,
which shall be not more than sixty (60) nor less than ten (10) days preceding
the payment date for such dividends, as fixed by the Board of Directors (the
"Series A Record Date"). The dividends shall he payable only when, as and if
declared by the Board of Directors out of funds legally available therefor. The
dividends shall either (i) accrue, (ii) be payable in cash, or (iii) be payable
in shares of Common Stock, as provided in the next paragraph. The dividends
shall automatically accrue in the absence of an election by the Board of
Directors within sixty (60) days after each Series A Annual Dividend Date to pay
the dividends in cash or in shares of Common Stock, as provided in the next
paragraph. The amount of dividends payable for any period that is shorter or
longer than a full annual dividend shall be computed on the basis of a 360-day
year and the actual number of days elapsed (including the first day but
excluding the last day) occurring in the period for which such amount is
payable. All accrued but unpaid dividends (whether declared or undeclared) shall
accrue interest at a rate of eight percent (8%) per annum computed on the basis
of a 360-day year and the actual number of days elapsed (including the first day
but excluding the last day) occurring in the period for which such amount is
payable, but with interest on such dividend compounded on a quarterly basis (on
each March 31, June 30, September 30 and December 31) for the year during which
such dividend was payable, and thereafter until paid. Notwithstanding anything
else contained herein to the contrary, the Series A Dividend shall be pari passu
with the Series B Dividend (as defined herein) and the Series C Dividend (as
defined herein). If the Series A Dividend, the Series B Dividend and the Series
C Dividend cannot be paid in full, dividends shall be paid, to the maximum
possible extent, to the holders of the Series A Preferred, the Series B
Preferred and the Series C Preferred on a pari passu basis, on the basis of the
amount of accrued and unpaid dividends outstanding on each share. No dividend
shall be paid to holders of Series A Preferred, Series B Preferred or Series C
Preferred unless dividends are paid to all holders of Series A Preferred, Series
B Preferred and Series C Preferred pursuant to the terms hereof.

     The Board of Directors of the Corporation may, within sixty (60) days after
each Series A Annual Dividend Date, elect (the "Series A Dividend Election") to
pay the annual cash dividends payable for such year on such Series A Annual
Dividend Date in shares of Common Stock (each, a "Series A Payment-in-Kind", or
more than one, the "Series A Payments-in-Kind") rather than cash. If such an
election is made, the Corporation shall promptly notify the holders of record of
the Series A Preferred entitled to such annual dividend of the election to make
the Series A


                                        3
<PAGE>
Payments-in-Kind in lieu of cash dividends for such Series A Annual Dividend
Date. A Series A Dividend Election for any particular Series A Annual Dividend
Date shall operate only for such Series A Annual Dividend Date. Series A
Payments-in-Kind shall be payable as of the Series A Annual Dividend Date of
each year for which the election is made. Each Series A Payment-in-Kind shall be
equal in amount to that number of shares of Common Stock that is equal in number
to the aggregate cash dividend payable on any such dividend date divided by the
fair market valuation for such Common Stock determined by the Board of Directors
at such time in good faith, and shall be allocated on a pro rata basis to each
holder entitled to receive such dividend. Certificates representing the shares
of Common Stock issuable on payment of any Series A Payment-in-Kind (together
with dividends, if any, on such shares of Common Stock with a record date on or
after the Series A Annual Dividend Date and a payment date prior to the date
such certificates have been delivered to the holder entitled to receive such
Series A Payment-in-Kind) shall be delivered or paid, as the case may be, to
each holder entitled to receive such Series A Payment-in-Kind (in appropriate
denominations) on or before the ninetieth (90th) day following the Series A
Annual Dividend Date for which such Series A Payment-in-Kind is elected to be
made hereunder (or such later date as the independent determination of fair
market value has been made pursuant to Section 2(d)). Notwithstanding anything
else contained herein to the contrary, if, in respect of any Series A Dividend
(I) a Series A Dividend Election is made by the Board of Directors of the
Corporation and such Series A Dividend is paid by a Series A Payment-in-Kind,
then the Corporation shall make a Series B Dividend Election (as defined herein)
and Series C Dividend Election (as defined herein) with respect to the
corresponding Series B Dividend and Series C Dividend and such Series B Dividend
and Series C Dividend shall be paid by a Series B Payment-in-Kind (as defined
herein) and a Series C Payment-in-Kind (as defined herein), as the case may be,
and (II) such Series A Dividend is accrued or paid in cash, then the
corresponding Series B Dividend and Series C Dividend shall also be accrued or
paid in cash, as the case may be, in order that the holders of Series A
Preferred, Series B Preferred and Series C Preferred receive the same type of
consideration with respect to each Series A Dividend, Series B Dividend and
Series C Dividend, as the case may be.

     (b) Series B Dividends. The holders of record of shares of Series B
Preferred shall be entitled to receive dividends at a rate of eight percent (8%)
of the Conversion Value per annum per share of Series B Preferred (the "Series B
Dividend"), which shall be fully cumulative, prior and in preference to any
declaration or payment of any dividend or other distribution on any other class
or series of Preferred Stock (other than as set forth herein) or the Common
Stock (and excluding any stock splits and subdivisions for which an adjustment
is made under Section 4(d)(vi)(l) below). The foregoing dividend on the Series B
Preferred shall accrue from the date of issuance of each share until the earlier
of (i) the conversion of such share of Series B Preferred to Common Stock, (ii)
a Liquidation, or (iii) the repurchase or redemption of such share of Series B
Preferred (including pursuant to Section 7 of the Stockholders' Agreement). Such
dividend shall be payable annually on December 31 of each year (each a "Series B
Annual Dividend Date") commencing on December 31, 1999, except that if any such
date is a Non-Business Day then such dividend shall be payable on the next day
that is a Business Day to holders of record as they appear on the stock ledger
of the Corporation on the applicable record date, which shall be not more than
sixty (60) nor less than ten (10) days preceding the payment date for such
dividends, as fixed by the Board of Directors (the "Series B Record Date"). The
dividends shall be payable only when, as and if declared by the Board of
Directors out of funds legally available therefor. The dividends shall either
(i) accrue, (ii) be payable in cash, or (iii) be payable in shares


                                        4
<PAGE>
of Common Stock, as provided in the next paragraph. The dividends shall
automatically accrue in the absence of an election by the Board of Directors
within sixty (60) days after each Series B Annual Dividend Date to pay the
dividends in cash or in shares of Common Stock, as provided in the next
paragraph. The amount of dividends payable for any period that is shorter or
longer than a full annual dividend shall be computed on the basis of a 360-day
year and the actual number of days elapsed (including the first day but
excluding the last day) occurring in the period for which such amount is
payable. All accrued but unpaid dividends (whether declared or undeclared) shall
accrue interest at a rate of eight percent (8%) per annum computed on the basis
of a 360-day year and the actual number of days elapsed (including the first day
but excluding the last day) occurring in the period for which such amount is
payable, but with interest on such dividend compounded on a quarterly basis (on
each March 31, June 30, September 30 and December 31) for the year during which
such dividend was payable, and thereafter until paid. Notwithstanding anything
else contained herein to the contrary, the Series B Dividend shall be pari passu
with the Series A Dividend and the Series C Dividend. If the Series A Dividend,
the Series B Dividend and the Series C Dividend cannot be paid in full,
dividends shall be paid, to the maximum possible extent, to the holders of the
Series A Preferred, the Series B Preferred and the Series C Preferred on a pari
passu basis, on the basis of the amount of accrued and unpaid dividends
outstanding on each share. No dividend shall be paid to holders of Series A
Preferred, Series B Preferred or Series C Preferred unless dividends are paid to
all holders of Series A Preferred, Series B Preferred and Series C Preferred
pursuant to the terms hereof.

     The Board of Directors of the Corporation may, within sixty (60) days after
each Series B Annual Dividend Date, elect (the "Series B Dividend Election") to
pay the annual cash dividends payable for such year on such Series B Annual
Dividend Date in shares of Common Stock (each, a "Series B Payment-in-Kind", or
more than one, the "Series B Payments-in-Kind") rather than cash. If such an
election is made, the Corporation shall promptly notify the holders of record of
the Series B Preferred entitled to such annual dividend of the election to make
the Series B Payments-in-Kind in lieu of cash dividends for such Series B Annual
Dividend Date. A Series B Dividend Election for any particular Series B Annual
Dividend Date shall operate only for such Series B Annual Dividend Date. Series
B Payments-in-Kind shall be payable as of the Series B Annual Dividend Date of
each year for which the election is made. Each Series B Payment-in-Kind shall
be equal in amount to that number of shares of Common Stock that is equal in
number to the aggregate cash dividend payable on any such dividend date divided
by the fair market valuation for such Common Stock determined by the Board of
Directors at such time in good faith, and shall be allocated on a pro rata basis
to each holder entitled to receive such dividend. Certificates representing the
shares of Common Stock issuable on payment of any Series B Payment-in-Kind
(together with dividends, if any, on such shares of Common Stock with a record
date on or after the Series B Annual Dividend Date and a payment date prior to
the date such certificates have been delivered to the holder entitled to receive
such Series B Payment-in-Kind) shall be delivered or paid, as the case may be,
to each holder entitled to receive such Series B Payment-in-Kind (in appropriate
denominations) on or before the ninetieth (90th) day following the Series B
Annual Dividend Date for which such Series B Payment-in-Kind is elected to be
made hereunder (or such later date as the independent determination of fair
market value has been made pursuant to Section 2(d)). Notwithstanding anything
else contained herein to the contrary, if, in respect of any Series B Dividend
(I) a Series B Dividend Election is made by the Board of Directors of the
Corporation and such Series B Dividend is paid by a Series B Payment-in-Kind,
then the Corporation shall make a Series A Dividend Election and Series C
Dividend Election with respect to the corresponding Series A


                                        5
<PAGE>
Dividend and Series C Dividend and such Series A Dividend and Series C Dividend
shall be paid by a Series A Payment-in-Kind and a Series C Payment-in-Kind, as
the case maybe, and (II) such Series B Dividend is accrued or paid in cash, then
the corresponding Series A Dividend and Series C Dividend shall also be accrued
or paid in cash, as the case may be, in order that the holders of Series B
Preferred, Series A Preferred and Series C Preferred receive the same type of
consideration with respect to each Series B Dividend, Series A Dividend and
Series C Dividend, as the case may be.

     (c) Series C Dividends. The holders of record of shares of Series C
Preferred shall be entitled to receive dividends at a rate of eight percent (8%)
of the Conversion Value per annum per share of Series C Preferred (the "Series C
Dividend"), which shall be fully cumulative, prior and in preference to any
declaration or payment of any dividend or other distribution on any other class
or series of Preferred Stock (other than as set forth herein) or the Common
Stock (and excluding any stock splits and subdivisions for which an adjustment
is made under Section 4(d)(vi)(1) below). The foregoing dividend on the Series C
Preferred shall accrue from the date of issuance of each share until the earlier
of (i) the conversion of such share of Series C Preferred to Common Stock, (ii)
a Liquidation, or (iii) the repurchase or redemption of such share of Series C
Preferred (including pursuant to Section 7 of the Stockholders' Agreement). Such
dividend shall be payable annually on December 31 of each year (each a "Series
C Annual Dividend Date") commencing on December 31, 1999, except that if any
such date is a Non-Business Day then such dividend shall be payable on the next
day that is a Business Day to holders of record as they appear on the stock
ledger of the Corporation on the applicable record date, which shall be not more
than sixty (60) nor less than ten (10) days preceding the payment date for such
dividends, as fixed by the Board of Directors (the "Series C Record Date"). The
dividends shall be payable only when, as and if declared by the Board of
Directors out of funds legally available therefor. The dividends shall either
(i) accrue, (ii) be payable in cash, or (iii) be payable in shares of Common
Stock, as provided in the next paragraph. The dividends shall automatically
accrue in the absence of an election by the Board of Directors within sixty (60)
days after each Series C Annual Dividend Date to pay the dividends in cash or in
shares of Common Stock, as provided in the next paragraph. The amount of
dividends payable for any period that is shorter or longer than a full annual
dividend shall be computed on the basis of a 360-day year and the actual number
of days elapsed (including the first day but excluding the last day) occurring
in the period for which such amount is payable. All accrued but unpaid dividends
(whether declared or undeclared) shall accrue interest at a rate of eight
percent (8%) per annum computed on the basis of a 360-day year and the actual
number of days elapsed (including the first day but excluding the last day)
occurring in the period for which such amount is payable, but with interest on
such dividend compounded on a quarterly basis (on each March 31, June 30,
September 30 and December 31) for the year during which such dividend was
payable, and thereafter until paid. Notwithstanding anything else contained
herein to the contrary, the Series C Dividend shall be pari passu with the
Series A Dividend and the Series B Dividend. If the Series A Dividend, the
Series B Dividend and the Series C Dividend cannot be paid in full, dividends
shall be paid, to the maximum possible extent, to the holders of the Series A
Preferred, the Series B Preferred and the Series C Preferred on a pari passu
basis, on the basis of the amount of accrued and unpaid dividends outstanding
on each share. No dividend shall be paid to holders of Series A Preferred,
Series B Preferred or Series C Preferred unless dividends are paid to all
holders of Series A Preferred, Series B Preferred and Series C Preferred
pursuant to the terms hereof.


                                        6
<PAGE>
     The Board of Directors of the Corporation may, within sixty (60) days after
each Series C Annual Dividend Date, elect (the "Series C Dividend Election") to
pay the annual cash dividends payable for such year on such Series C Annual
Dividend Date in shares of Common Stock (each, a "Series C Payment-in-Kind", or
more than one, the "Series C Payments-in-Kind") rather than cash. If such an
election is made, the Corporation shall promptly notify the holders of record of
the Series C Preferred entitled to such annual dividend of the election to make
the Series C Payments-in-Kind in lieu of cash dividends for such Series C Annual
Dividend Date. A Series C Dividend Election for any particular Series C Annual
Dividend Date shall operate only for such Series C Annual Dividend Date. Series
C Payments-in-Kind shall be payable as of the Series C Annual Dividend Date of
each year for which the election is made. Each Series C Payment-in-Kind shall be
equal in amount to that number of shares of Common Stock that is equal in number
to the aggregate cash dividend payable on any such dividend date divided by the
fair market valuation for such Common Stock determined by the Board of Directors
at such time in good faith, and shall be allocated on a pro rata basis to each
holder entitled to receive such dividend. Certificates representing the shares
of Common Stock issuable on payment of any Series C Payment-in-Kind (together
with dividends, if any, on such shares of Common Stock with a record date on or
after the Series C Annual Dividend Date and a payment date prior to the date
such certificates have been delivered to the holder entitled to receive such
Series C Payment-in-Kind) shall be delivered, or paid, as the case may be, to
each holder entitled to receive such Series C Payment-in-Kind (in appropriate
denominations) on or before the ninetieth (90th) day following the Series C
Annual Dividend Date for which such Series C Payment-in-Kind is elected to be
made hereunder (or such later date as the independent determination of fair
market value has been made pursuant to Section 2(d)). Notwithstanding anything
else contained herein to the contrary, if, in respect of any Series C Dividend
(I) a Series C Dividend Election is made by the Board of Directors of the
Corporation and such Series C Dividend is paid by a Series C Payment-in-Kind,
then the Corporation shall make a Series A Dividend Election and Series B
Dividend Election with respect to the corresponding Series A Dividend and Series
B Dividend and such Series A Dividend and Series B Dividend shall be paid by a
Series A Payment-in-Kind and a Series B Payment-in-Kind, as the case may be, and
(II) such Series C Dividend is accrued or paid in cash, then the corresponding
Series A Dividend and Series B Dividend shall also be accrued or paid in cash,
as the case may be, in order that the holders of Series C Preferred, Series A
Preferred and Series B Preferred receive the same type of consideration with
respect to each Series C Dividend, Series A Dividend and Series B Dividend, as
the case may be.

     (d) Determination of Fair Market Value of Common Stock. Notwithstanding
anything else to the contrary in this Section 2, the holders of at least a
majority of the outstanding shares of the Series A Preferred or the holders of
at least a majority of the outstanding shares of the Series C Preferred shall
have the right to challenge any determination by the Board of Directors of fair
market value of the Common Stock pursuant to this Section 2, in which case the
determination of fair market value of the Common Stock shall be made by an
independent appraiser or investment banker, mutually acceptable to the Board of
Directors and the challenging parties, who is qualified in the fair market
appraisal of companies, the cost of such appraisal to be borne (i) by the
challenging parties, if the fair market value as determined by such appraisal
does not exceed the determination of fair market value by the Board of Directors
by more than ten percent (10%) and (ii) by the Corporation, if the fail market
value as determined by such appraisal exceeds the determination of fair market
value by the Board of Directors by more than ten percent (10%).


                                        7
<PAGE>
     (e) Other Permitted Distributions. Notwithstanding Section 2(a), 2(b) and
2(c) hereof, the Corporation may at any time, out of funds legally available
therefor, repurchase shares of Common Stock of the Corporation issued to or held
by any person pursuant to the Corporation's right of first refusal to purchase
such shares contained in the Stockholders' Agreement, whether or not dividends
on the Series A Preferred, Series B Preferred or Series C Preferred shall have
been declared and paid or funds set aside therefor, in each event subject to any
other contractual restrictions entered into by the Corporation and the terms of
this Amended and Restated Certificate.

     (f) Fractional Shares. In lieu of any fractional shares in the aggregate to
which the holder of Series A Preferred, Series B Preferred or Series C Preferred
would otherwise be entitled upon payment of Series A Payment-in-Kind, Series B
Payment-in-Kind or Series C Payment-in-Kind, the Corporation shall pay cash
equal to such fraction multiplied by the fair market value of one share of
Common Stock as determined by the Board of Directors in the good faith exercise
of its reasonable business judgment or pursuant to Section 2(d), if applicable.

     3. Liquidation Rights. In the event of any liquidation, dissolution or
winding-up of the Corporation, whether voluntary or involuntary (a
"Liquidation"), distributions shall be made to the holders of Series A
Preferred, Series B Preferred and Series C Preferred in respect of such Series A
Preferred, Series B Preferred and Series C Preferred before any amount shall be
paid to the holders of any other class or series of capital stock of the
Corporation in the following manner:

     (a) Liquidation Amount. The holders of the Series A Preferred, Series B
Preferred and Series C Preferred, subject to the other terms contained herein,
shall be entitled to be paid first out of the assets of the Corporation
available for distribution to holders of its capital stock an amount (the
"Liquidation Value") equal to (i) the applicable Conversion Value, plus (ii) all
accrued but unpaid dividends (whether declared or undeclared including any
interest accrued thereon calculated through the date of Liquidation), prior to
any distribution to the holders of any other Preferred or Common Stock. If the
proceeds from a Liquidation are not sufficient to pay to the holders of Series A
Preferred, Series B Preferred and Series C Preferred the full preference amount
set forth above, then such holders shall instead be entitled to receive the
entire assets and funds of the Corporation legally available for distribution to
the holders of capital stock, which assets and funds shall be distributed pro
rata among the holders of the Series A Preferred, Series B Preferred and Series
C Preferred on the basis of the amounts per share to be paid to each.

     (b) Events Deemed a Liquidation. For purposes of this Section 3, the
holders of a majority of the outstanding shares of the Series A Preferred (which
must include BACC so long as it holds any Series A Preferred) or the holders of
a majority of the outstanding shares of the Series C Preferred (which must
include Gramercy so long as it holds any Series C Preferred) may elect to have
treated as a Liquidation the consolidation or merger of the Corporation with or
into any other corporation or the sale or other transfer in a single transaction
or a series of related transactions of all or substantially all of the assets of
the Corporation, or any other reorganization or business combination of the
Corporation. If such election is made by such requisite holders of Series A
Preferred or Series C Preferred, then and only then, the holders of Series B
Preferred may elect to have such events treated as a Liquidation.


                                        8
<PAGE>
     (c) Valuation of Securities and Property. In the event the Corporation
proposes to distribute assets other than cash in connection with any
Liquidation, the value of the assets to be distributed to the holders of shares
of Series A Preferred, Series B Preferred and Series C Preferred shall be
determined in good faith by the Board of Directors. Any securities not subject
to an investment letter or similar restrictions on free marketability shall be
valued as follows:

               (i) if traded on a national securities exchange or the NASDAQ
     National Market System ("NASDAQ"), the value shall be deemed to be the
     average of the security's closing prices on such exchange or NASDAQ over
     the thirty (30) trading day period ending three (3) days prior to the
     distribution;

               (ii) if actively traded over-the-counter (other than NASDAQ), the
     value shall be deemed to be the average of the closing bid prices over the
     thirty (30) day period ending three (3) days prior to the distribution; or

               (iii) if there is no active public market, the value shall be the
     fair market value thereof as determined in good faith by the Board of
     Directors.

The method of valuation of securities subject to an investment letter or other
restrictions on free marketability shall be adjusted to make an appropriate
discount from the market value determined as above in clauses (i), (ii) or (iii)
to reflect the fair market value thereof as determined in good faith by the
Board of Directors. The holders of a majority of the outstanding shares of the
Series A Preferred or the holders of a majority of the outstanding shares of the
Series C Preferred shall have the right to challenge any determination by the
Board of Directors of fair market value pursuant to this Section 3(c), in which
case the determination of fair market value shall be made by an independent
appraiser or investment banker selected jointly by the Board of Directors and
the challenging parties, the cost of such appraisal to be borne (I) by the
challenging parties, if the fair market value as determined by such appraisal
does not exceed the determination of fair market value by the Board of Directors
by more than ten percent (10%) and (IT) by the Corporation, if the fair market
value as determined by such appraisal exceeds the determination of fair market
value by the Board of Directors by more than ten percent (10%).

     4. Conversion. The holders of Series A Preferred, Series B Preferred and
Series C preferred have conversion rights as follows (the "Conversion Rights"):

     (a) Right to Convert. Each share of Series A Preferred, Series B Preferred
and Series C Preferred shall initially be convertible, at the option of the
holder thereof, at any time on or after the date of issuance thereof, into the
number of fully paid and nonassessable shares of Common Stock which results from
dividing the applicable Conversion Price (as hereinafter specified) per share in
effect at the time of conversion into the applicable per share Conversion Value
in effect at the time of conversion. The initial Conversion Price of the Series
A Preferred and Series B Preferred shall be $3.7094803 per share, and the
Conversion Value of the Series A Preferred and Series B Preferred shall be
$3.7094803 per share. The initial Conversion Price of the Series C Preferred
shall be $5.3671104 per share, and the Conversion Value of the Series C
Preferred shall be $5.3671104 per share. The initial Conversion Price of the
Series A Preferred, Series B Preferred and Series C Preferred shall be subject
to adjustment from time to time as provided in Section 4(d) hereof. The
Conversion Value shall not be subject to adjustment. Upon conversion, all
accrued or declared but unpaid dividends (including any interest accrued thereon
calculated as


                                        9
<PAGE>
of the date of conversion) on the Series A Preferred, Series B Preferred and
Series C Preferred so converted shall be paid in cash or Common Stock, at the
option of the Corporation, and in the case of cash, to the extent permitted by
applicable law (and if not then permitted by applicable law, at such time as the
Corporation is permitted by applicable law to pay any such dividends).

     (b) Automatic Conversion. Each share of Series A Preferred, Series B
Preferred and Series C Preferred shall automatically be converted into shares of
Common Stock upon the closing of a firm commitment underwritten public offering
pursuant to an effective registration statement under the Securities Act of
1933, as amended, covering the offer and sale of securities for the account of
the Corporation to the public: (i) the gross proceeds of which equal or exceed
$20,000,000 at a per share price of at least $12; and (ii) in the case of the
Series A Preferred and the Series B Preferred whereby the aggregate value of the
shares of Common Stock issuable on conversion of each share of Series A
Preferred and Series B Preferred (utilizing the offering price in such
underwriting) is at least two (2) times the Conversion Value of the Series A
Preferred and Series B Preferred and (iii) in the case of the Series C Preferred
whereby the aggregate value of the shares of Common Stock issuable on conversion
of each share of Series C Preferred (utilizing the offering price in such
underwriting) is at least two (2) times the Conversion Value of the Series C
Preferred (in each case, such event, as applicable, a "Qualified Public
Offering"). Upon conversion, all accrued but unpaid dividends (whether declared
or undeclared) on the Series A Preferred, Series B Preferred and Series C
Preferred shall be paid in cash, to the extent permitted by applicable law (and
if not then permitted by applicable law, at such time as the Corporation is
permitted by applicable law to pay any such dividends).

     (c) Mechanics of Conversion. Before any holder of Series A Preferred,
Series B Preferred or Series C Preferred shall be entitled to convert the same
into shares of Common Stock and to receive certificates therefore, such holder
shall surrender the certificate or certificates therefor, duly endorsed, at the
principal office of the Corporation or of any transfer agent for the Series A
Preferred, Series B Preferred and Series C Preferred, and shall give written
notice to the Corporation at such office that such holder elects to convert the
same; provided, however, that in the event of an automatic conversion pursuant
to Section 4(b) hereof, the outstanding shares of Series A Preferred, Series B
Preferred and Series C Preferred, as applicable, shall be converted
automatically without any further action by the holders of such shares and
whether or not the certificates representing such shares are surrendered to the
Corporation or its transfer agent; and provided further, that the Corporation
shall not be obligated to issue certificates evidencing the shares of Common
Stock issuable upon such automatic conversion unless and until the certificates
evidencing such shares of Series A Preferred, Series B Preferred and Series C
Preferred, as appropriate, are either delivered to the Corporation or its
transfer agent as provided above, or the holder notifies the Corporation or its
transfer agent that such certificates have been lost, stolen or destroyed and
executes an agreement reasonably satisfactory to the Corporation to indemnify
the Corporation from any loss incurred by it in connection with such
certificates. The Corporation shall as soon as practicable after such delivery,
or after such agreement and indemnification, issue and deliver at such office to
such holder of Series A Preferred, Series B Preferred or Series C Preferred, as
appropriate, a certificate or certificates for the number of shares of Common
Stock to which it, he or she shall be entitled as aforesaid and a check payable
to the holder in the amount of any accrued or declared but unpaid dividends
(including any interest accrued thereon calculated as of the date of conversion)
payable pursuant to Section 2 hereof, if any. Such conversion shall be deemed to
have been made immediately prior to the close of business on the date of such
surrender of the shares of


                                       10
<PAGE>
Series A Preferred, Series B Preferred or Series C Preferred to be converted,
or, in the case of automatic conversion, simultaneously upon the occurrence of
the event leading to such automatic conversion, and the person or persons
entitled to receive the shares of Common Stock issuable upon such conversion
shall be treated for all purposes as the record holder or holders of such shares
of Common Stock on such date. If the Corporation fails to pay all such dividends
(and interest thereon) within twenty (20) days of the date of conversion, the
holder entitled to such dividends (and interest thereon) may elect to have the
Corporation issue to such holder, in lieu of such cash payment, additional
shares of Common Stock calculated by dividing the total amount payable on such
date by the applicable Conversion Price.

     (d)  Adjustments to Conversion Price.

               (i) Special Definitions. For purposes of this Section 4(d), the
     following definitions shall apply:

               (1) "Options" shall mean rights, options or warrants to subscribe
     for, purchase or otherwise acquire either Common Stock or Convertible
     Securities.

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

               (3) "Additional Shares of Common Stock" shall mean all shares
     of Common Stock issued (or, pursuant to Section 4(d)(iii), deemed to be
     issued) by the Corporation after the Original Issue Date of the Series C
     Preferred, other than shares of Common Stock issued or issuable:

                    (A) upon conversion of shares of Series A Preferred, Series
               B Preferred or Series C Preferred;

                    (B) pursuant to a stock grant, option plan or purchase plan,
               other employee stock incentive program or agreement that in the
               aggregate does not exceed 218,659 shares (as adjusted for
               recapitalizations, stock splits, stock dividends and the like and
               cancellations of options that have not otherwise expired) (the
               "Option Pool"), or other options in existence on the Original
               Issue Date and set forth in Schedule 2.5 of the Series C
               Preferred Stock Purchase Agreement, other than the warrant set
               forth in clause (C) below;

                    (C) pursuant to a Warrant dated March 15, 1999 issued to CMB
               Capital, LLC in existence on the Original Issue Date, not to
               exceed 474,393 shares of Common Stock (as adjusted to reflect any
               stock split, stock dividend, combination or recapitalization
               after the Original Issue Date of the Series C Preferred);

                    (D) as a dividend or distribution on shares of Series A
               Preferred, Series B Preferred or Series C Preferred;

                    (E) in a transaction described in Section 4(d)(vi); or


                                       11
<PAGE>
                    (F) by way of dividend or other distribution on shares of
               Common Stock excluded from the definition of Additional Shares of
               Common Stock by the foregoing clauses (A), (B), (C), (D), (E) or
               this clause (F).

               (4)  "Original Issue Date" shall mean October 8, 1999.

               (ii) No Adjustment of Conversion Price. Subject to the
     provisions of Section 4(d)(iv), no adjustment in the applicable Conversion
     Price of the Series A Preferred, Series B Preferred or Series C Preferred
     shall be made in respect of the issuance of Additional Shares of Common
     Stock unless the consideration per share for an Additional Share of Common
     Stock issued or deemed to be issued by the Corporation is less than the
     applicable Conversion Price for the Series A Preferred, Series B Preferred
     or Series C Preferred, as the case may be, in effect on the date of, and
     immediately prior to, such issue.

               (iii) Deemed Issue of Additional Shares of Common Stock. In the
     event the Corporation at any time or from time to time after the Original
     Issue Date of the Series C Preferred shall issue any Options (other than
     the issuance of Options pursuant to the Option Pool) or Convertible
     Securities or shall fix a record date for the determination of holders of
     any class of securities 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 for a subsequent adjustment of such number) of Common Stock
     issuable upon the exercise of such Options or, in the case of Convertible
     Securities and Options therefor, the exercise of such Options and
     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
     or, in case such a record date shall have been fixed, as of the close of
     business on such record date, provided that Additional Shares of Common
     Stock shall not be deemed to have been issued, subject to the provisions of
     Section 4(d)(iv), unless the consideration per share (determined pursuant
     to Section 4(d)(v) hereof) of such Additional Shares of Common Stock would
     be less than the applicable Conversion Price for the Series A Preferred,
     Series B Preferred or Series C Preferred, as the case may be, in effect on
     the date of and immediately prior to such issue, or such record date, as
     the case may be, and provided further that in any such case in which
     Additional Shares of Common Stock are deemed to be issued:

               (1) except as provided in Section 4(d)(iii)(2), no further
     adjustment in the Conversion Price shall be made upon the subsequent issue
     of Convertible Securities or shares of Common Stock upon the exercise of
     such Options or conversion or exchange of such Convertible Securities;

               (2) if such Options or Convertible Securities by their terms
     provide, with the passage of time or otherwise, for any change in the
     consideration payable to the Corporation, or change in the number of shares
     of Common Stock issuable, upon the exercise, conversion or exchange thereof
     (other than under or by reason of provisions designed to protect against
     dilution), the Conversion Price computed upon the original issue thereof
     (or upon the occurrence of a record date with respect thereto) and any
     subsequent adjustments based thereon, shall, upon any such increase or
     decrease becoming effective, be recomputed to reflect such increase or
     decrease insofar as it


                                       12
<PAGE>
     affects such Options or the rights of conversion or exchange under such
     Convertible Securities; and

               (3) no readjustment pursuant to clause (2) above shall have the
     effect of increasing the Conversion Price to an amount which exceeds the
     lower of (A) the Conversion Price on the original adjustment date or (B)
     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.

               (iv) Adjustment Conversion Price Upon Issuance of Additional
     Shares of Common Stock. In the event the Corporation shall issue Additional
     Shares of Common Stock (including Additional Shares of Common Stock deemed
     to be issued pursuant to Section 4(d)(iii)), then and in each such event
     the applicable Conversion Price of the Series A Preferred, Series B
     Preferred and Series C Preferred, as the case may be, shall be recomputed
     by multiplying the applicable Conversion Price then in effect by a
     fraction:

               (1) the numerator of which will be the sum of (A) the aggregate
     number of shares of Common Stock issued and outstanding on the date of
     issuance of the Additional Shares of Common Stock (assuming the conversion
     on such date of all of the outstanding shares of Series A Preferred, Series
     B Preferred and Series C Preferred) plus (B) the quotient of the aggregate
     consideration received by the Corporation for the issuance of such
     Additional Shares of Common Stock divided by the then applicable Conversion
     Price; and

               (2) the denominator of which will be the sum of (A) the aggregate
     number of shares of Common Stock issued and outstanding on the date of
     issuance of the Additional Shares of Common Stock (assuming the conversion
     on such date of all of the outstanding shares of Series A Preferred, Series
     B Preferred and Series C Preferred) plus (B) the aggregate number of such
     Additional Shares of Common Stock.

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

               (1)  Cash and Property: Such consideration shall be computed as
                    follows:

                    (A) insofar as it consists of cash, such consideration shall
               be computed at the aggregate amount of cash received by the
               Corporation;

                    (B) insofar as it consists of property other than cash, such
               consideration shall be computed at the fair value thereof at the
               time of such issue, as determined by the Board of Directors in
               the good faith exercise of its reasonable business judgment; and

                    (C) in the event Additional Shares of Common Stock are
               issued together with other shares or securities or other assets
               of the Corporation for consideration which covers both, such
               consideration shall be the


                                       13
<PAGE>
               proportion of such consideration so received, computed as
               provided in clauses (A) and (B) above, as determined by the Board
               of Directors in the good faith exercise of its reasonable
               business judgment.

               (2) 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 Section 4(d)(iii), 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 for a subsequent adjustment of such consideration)
               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 for a subsequent adjustment of such
               number) issuable upon the exercise of such Options or the
               conversion or exchange of such Convertible Securities.

               (vi) Other Adjustments.

               (1) Subdivisions, Combinations, or Consolidations of Common
     Stock. In the event that, with respect to the Series C Preferred, at any
     time after the Original Issue Date of the Series C Preferred, or with
     respect to the Series A Preferred and the Series B Preferred, at any time
     after their respective applicable original issue dates, the outstanding
     shares of Common Stock shall be subdivided, combined or consolidated, by
     stock split, stock dividend, combination or like event, into a greater or
     lesser number of shares of Common Stock, the applicable Conversion Price
     of the Series A Preferred, Series B Preferred and Series C Preferred in
     effect immediately prior to such subdivision, combination, consolidation or
     stock dividend shall, concurrently with the effectiveness of such
     subdivision, combination or consolidation, be proportionately adjusted.

               (2) Reclassifications. In the case, at any time after the
     Original Issue Date of the Series C Preferred, of any capital
     reorganization or any reclassification of the stock of the Corporation
     (other than as a result of a stock dividend or subdivision, split-up or
     combination of shares), or the consolidation or merger of the Corporation
     with or into another person (other than a consolidation or merger (A) in
     which the Corporation is the continuing entity and which does not result in
     any change in the Common Stock or (B) which is treated as a Liquidation
     pursuant to Section 3(b) above), the shares of Series A Preferred, Series B
     Preferred and Series C Preferred shall, after such reorganization,
     reclassification, consolidation or merger, be convertible into the kind and
     number of


                                       14
<PAGE>
     shares of stock or other securities or property of the Corporation or
     otherwise to which such holder would have been entitled if immediately
     prior to such reorganization, reclassification, consolidation or merger
     such holder had converted his shares of Series A Preferred, Series B
     Preferred or Series C Preferred into Common Stock. The provisions of this
     Section 4(d)(vi)(2) shall similarly apply to successive reorganizations,
     reclassifications, consolidations or mergers.

     (e) Certificate as to Adjustments. Upon the occurrence of each adjustment
or readjustment of the applicable Conversion Price of the Series A Preferred,
Series B Preferred or Series C Preferred pursuant to this Section 4, the
Corporation at its expense shall promptly thereafter compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each holder of
Series A Preferred, Series B Preferred and Series C Preferred a certificate
setting forth such adjustment or readjustment and showing in detail the facts
upon which such adjustment or readjustment is based. The Corporation shall, upon
the written request at any time of any holder of Series A Preferred, Series B
Preferred or Series C Preferred, furnish or cause to be furnished to such holder
a like certificate setting forth (i) such adjustments and readjustments, if any,
(ii) the applicable Conversion Price of the Series A Preferred, Series B
Preferred and Series C Preferred at the time in effect, and (iii) the number of
shares of Common Stock and the amount, if any, of other property which at the
time would be received upon the conversion of the Series A Preferred, Series B
Preferred or Series C Preferred.

     (f) Status of Converted Stock. In case any shares of Series A Preferred,
Series B Preferred or Series C Preferred shall be converted pursuant to Section
4 hereof, the shares so converted shall be canceled, shall not be reissuable and
shall cease to be a part of the authorized capital stock of the Corporation.

     (g) Fractional Shares. In lieu of any fractional shares in the aggregate to
which the holder of Series A Preferred, Series B Preferred or Series C Preferred
would otherwise be entitled upon conversion, the Corporation shall pay cash
equal to such fraction multiplied by the fair market value of one share of
Common Stock as determined by the Board of Directors in the good faith exercise
of its reasonable business judgment or pursuant to Section 4(h)(ii), if
applicable.

     (h) Miscellaneous.

               (i) All calculations under this Section 4 shall be made to the
     nearest cent or to the nearest one hundredth (1/100) of a share, as the
     case may be.

               (ii) The holders of a majority of the outstanding shares of
     Series A Preferred or the holders of a majority of the outstanding shares
     of Series C Preferred, as the case may be, shall have the right to
     challenge any determination by the Board of Directors of fair market value
     pursuant to this Section 4, in which case such determination of fair market
     value shall be made by an independent appraiser selected jointly by the
     Board of Directors and the challenging parties, the cost of such appraisal
     to be borne (I) by the challenging parties, if the fair market value as
     determined by such appraisal does not exceed the determination of fair
     market value by the Board of Directors by more than ten percent (10%) and
     (II) by the Corporation, if the fair market


                                       15
<PAGE>
     value as determined by such appraisal exceeds the determination of fair
     market value by the Board of Directors by more than ten percent (10%).

               (iii) No adjustment in the applicable Conversion Price of the
     Series A Preferred, Series B Preferred or Series C Preferred will be made
     if such adjustment would result in a change in such Conversion Price of
     less than $0.01. Any adjustment of less than $0.01 which is not made shall
     be carried forward and shall be made at the time of and together with any
     subsequent adjustment which, on a cumulative basis, amounts to an
     adjustment of $0.01 or more in such Conversion Price.

     (i) No Impairment. The Corporation will not through any reorganization,
recapitalization, transfer of assets, consolidation, merger, dissolution, issue
or sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by the Corporation, but will at all times in good faith assist in the
carrying out of all the provisions of this Section 4 and in the taking of all
action as may be necessary or appropriate in order to protect the conversion
rights of the holders of Series A Preferred, Series B Preferred and Series C
Preferred against impairment.

     (j) Reservation of Stock Issuable Upon Conversion. The Corporation shall
at all times reserve and keep available out of its authorized but unissued
shares of Common Stock, solely for the purpose of effecting the conversion of
the shares of Series A Preferred, Series B Preferred and Series C Preferred,
such number of its shares of Common Stock as shall from time to time be
sufficient to effect the conversion of all outstanding shares of Series A
Preferred, Series B Preferred and Series C Preferred. If at any time the number
of authorized but unissued shares of Common Stock shall not be sufficient to
effect the conversion of all then outstanding shares of Series A Preferred,
Series B Preferred or Series C Preferred, the Corporation will take such
corporate action as may, in the opinion of its counsel, be necessary to increase
its authorized but unissued shares of Common Stock to such number of shares as
shall be sufficient for such purpose.

     5. Voting Rights, (a) General, (i) Except as otherwise required by law, by
Section 5(b) hereof or by Section 8 hereof, the holder of each share of Series A
Preferred will be entitled to vote on all matters with the holders of the Common
Stock as a single class, and not as a separate class or series. Each share of
Series A Preferred will entitle the holder to the number of votes per share
equal to the full number of shares of Common Stock into which each share of
Series A Preferred is convertible on the record date for such vote. The holders
of Series A Preferred shall receive notice of and shall be entitled to attend in
person or by proxy any meeting of the holders of Common Stock.

          (ii) Except as otherwise required by law, the holder of each share of
Series B Preferred will be entitled to vote on all matters with the Common Stock
as a single class, and not as a separate class or series. Each share of Series B
Preferred will entitle the holder to the number of votes per share equal to the
full number of shares of Common Stock into which each share of Series B
Preferred is convertible on the record date for such vote. The holders of Series
B Preferred shall receive notice of and shall be entitled to attend in person or
by proxy any meeting of the holders of Common Stock. If the holders of preferred
stock are required to vote as a class for any reason, then the holders of Series
B Preferred shall vote as a single class with the holders of Series A Preferred
and Series C Preferred, and not as a separate class or series, and the holders


                                       16
<PAGE>
of Series B Preferred shall be entitled to one vote for each share of Series B
Preferred held by them and the holders of Series A Preferred and the holders of
Series C Preferred shall be entitled to five (5) votes for each share of Series
A Preferred and Series C Preferred held by them, as applicable, in connection
with any such vote.

          (iii) Except as otherwise required by law, by Section 5(c) hereof or
by Section 8 hereof, the holder of each share of Series C Preferred will be
entitled to vote on all matters with the Common Stock as a single class, and not
as a separate class or series. Each share of Series C Preferred will entitle the
holder to the number of votes per share equal to the full number of shares of
Common Stock into which each share of Series C Preferred is convertible on the
record date for such vote. The holders of Series C Preferred shall receive
notice of and shall be entitled to attend in person or by proxy any meeting of
the holders of Common Stock.

     (b) Election of Directors by Series A Preferred. For so long as there are
any shares of Series A Preferred outstanding, the holders of a majority of the
outstanding shares of Series A Preferred shall be entitled to nominate and elect
as a single class separately from all other classes and series of capital stock
of the Corporation, by a majority vote of such class, two (2) directors to the
Board of Directors of the Corporation, and the holders of the Series A Preferred
shall otherwise also be entitled to vote in the election of directors pursuant
to the terms of Section 5(a) above. Notwithstanding the foregoing, for so long
as there are any shares of Series A Preferred outstanding, if (i) the
Corporation Shall breach any of its obligations and/or agreements under Section
4 of the Stock Purchase Agreement relating to the Series A Preferred and such
breach shall remain uncured for a period of one hundred and eighty (180) days
after written notice of such breach by any holder of Series A Preferred, (ii) a
Put is initiated pursuant to Section 7 of the Stockholders' Agreement, or (iii)
the Corporation shall not have closed a Qualified Public Offering on or prior to
the second anniversary of the Original Issue Date of the Series C Preferred,
then in any such event, the holders of the Series A Preferred shall be entitled
then and thereafter to nominate and elect as a single class separately from all
other classes and series of capital stock, by a majority vote of such class at a
special meeting called by the holders of at least 10% of the outstanding shares
of the Series A Preferred, one (1) additional director to the Board of Directors
of the Corporation. If a special meeting is called by the holders of the Series
C Preferred pursuant to the provisions of Section 5(c), then the holders of
Series A Preferred shall be entitled to nominate and elect any additional
director at such meeting without the necessity of calling another special
meeting. The term of office of such additional director shall immediately
terminate upon the later of (w) twelve (12) months from the election of such
director, (x) such time that the applicable breach has been cured, (y) if a Put
Notice has been delivered pursuant to the Stockholders' Agreement, the date all
of the shares subject to the Put have been repurchased for cash, or (z) the
closing of the Qualified Public Offering. Any vacancy on the Board of Directors
of the Corporation occurring because of the death, resignation or removal of a
director elected by the holders of the Series A Preferred shall be filled by the
vote or written consent of the holders of a majority of the outstanding shares
of the Series A Preferred.

     (c) Election of Directors by Series C Preferred. For so long as there are
any shares of Series C Preferred outstanding, the holders of a majority of the
outstanding shares of the Series C Preferred shall be entitled to nominate and
elect as a single class separately from all other classes and series of capital
stock of the Corporation, by a majority vote of such class, one (1) director to
the Board of Directors of the Corporation, and the holders of the Series C
Preferred shall otherwise also be entitled to vote in the election of directors
pursuant to the terms of Section 5(a)


                                       17
<PAGE>
above. Notwithstanding the foregoing, for so long as there are any shares of
Series C Preferred outstanding, if (i) the Corporation shall breach any of its
obligations and/or agreements under Section 4 of the Stock Purchase Agreement
relating to the Series C Preferred and such breach shall remain uncured for a
period of one hundred and eighty (180) days after written notice of such breach
by any holder of Series C Preferred, (ii) a Put is initiated pursuant to Section
7 of the Stockholders' Agreement, or (iii) the Corporation shall not have closed
a Qualified Public Offering on or prior to the second anniversary of the
Original Issue Date of the Series C Preferred, then in any such event, the
holders of the Series C Preferred shall be entitled then and thereafter to
nominate and elect as a single class separately from all other classes and
series of capital stock, by a majority vote of such class at a special meeting
called by the holders of at least 10% of the outstanding shares of the Series C
Preferred, one (1) additional director to the Board of Directors of the
Corporation. If a special meeting is called by the holders of the Series A
Preferred pursuant to the provisions of Section 5(b), then the holders of Series
C Preferred shall be entitled to nominate and elect an additional director at
such meeting without the necessity of calling another special meeting. The term
of office of such additional director shall immediately terminate upon the later
of (w) twelve (12) months from the election of such director, (x) such time that
the applicable breach has been cured, (y) if a Put Notice has been delivered
pursuant to the Stockholders' Agreement, the date all of the shares subject to
the Put have been repurchased for cash, or (z) the closing of the Qualified
Public Offering. Any vacancy on the Board of Directors of the Corporation
occurring because of the death, resignation or removal of a director elected by
the holders of the Series C Preferred shall be filled by the vote or written
consent of the holders of a majority of the outstanding shares of the Series C
Preferred.

     6. Notices of Record Date. In the event of any taking by the Corporation of
a record of the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any dividend or
other distribution, any right to subscribe for, purchase or otherwise acquire
any shares of stock of any class or any other securities or property, or to
receive any other right, the Corporation shall mail to each holder of Series A
Preferred, Series B Preferred and Series C Preferred, at least twenty (20) days
prior to the date specified therein, a notice specifying the date on which any
such record is to be taken for the purpose of such dividend, distribution or
right, and the anticipated amount and character of such dividend, distribution
or right.

     7. Notices. Any notice required by the provisions of this Amended or
Restated Certificate to be given to the holders of Series A Preferred, Series B
Preferred or Series C Preferred shall be deemed given (i) when made, if made by
hand delivery, (ii) upon confirmation, if made by fax, or (iii) one business day
after being deposited with a reputable next-day courier, postage prepaid, and in
each case, addressed to each holder of record at such holder's address or fax
number appearing on the books of the Corporation.

     8. Approval of Certain Transactions While Any Series A Preferred or Series
C Preferred is Outstanding. So long as any shares of Series A Preferred or
Series C Preferred are outstanding, the Corporation shall not, without first
obtaining the written approval of (a) the holders of a majority of the
outstanding shares of Series A Preferred (which must include BACC, until such
time as BACC or its Affiliates fail to own at least fifty percent (50%) of the
Series A Preferred purchased by it pursuant to the Stock Purchase Agreement
relating to the Series A Preferred), voting as a separate class, and (b) the
holders of a majority of the outstanding shares of Series C Preferred (which
must include Gramercy, until such time as Gramercy or its


                                       18
<PAGE>
Affiliates fail to own at least fifty percent (50%) of the Series C Preferred
purchased by them pursuant to the Stock Purchase Agreement relating to the
Series C Preferred), voting as a separate class;

          (i) amend this Amended and Restated Certificate, or the Certificate of
Incorporation or bylaws of the Corporation or take any other action so as to
alter or adversely affect the rights, preferences or privileges of the Series A
Preferred, Series B Preferred or Series C Preferred, including by merger,
consolidation or otherwise;

          (ii) increase or decrease the authorized number of shares of Series A
Preferred, Series B Preferred, Series C Preferred or Common Stock, including by
merger, consolidation or otherwise;

          (iii) create any new class or series of shares, or issue any such
shares or Options or Convertible Securities exercisable or convertible into such
shares, that have a preference over or are on a parity with the Series A
Preferred or Series C Preferred with respect to voting, dividends or liquidation
preferences (other than the Series B Preferred being on parity with the Series A
Preferred and the Series C Preferred with respect to dividends and liquidation
preferences, and except that the Corporation may grant voting rights to shares
of a series of preferred stock which have the right to vote with holders of
Common Stock on an as-converted basis, but in any event not in preference to
shares of Series A Preferred or Series C Preferred);

          (iv) reclassify stock into shares of capital stock of the Corporation
having a preference over or parity with the Series A Preferred or Series C
Preferred with respect to voting, dividends or liquidation preferences (except
that the Corporation may grant voting rights to shares of a series of preferred
stock which have the right to vote with holders of Common Stock on an
as-converted basis, but in any event not in preference to shares of Series A
Preferred or Series C Preferred);

          (v) authorize any dividend or other distribution with respect to the
Preferred Stock or the Common Stock (other than dividends payable to the holders
of Series A Preferred, Series B Preferred and Series C Preferred and stock
dividends for which an adjustment is made pursuant to Section 4(d)(vi)(l));

          (vi) repurchase, redeem or retire any shares of capital stock of the
Corporation, other than pursuant to contractual rights to repurchase shares of
Common Stock held by employees, directors or consultants of the Corporation or
its subsidiaries upon termination of their employment or services (which
purchase has been approved by the Board) or pursuant to the exercise of the Put
pursuant to Section 7 of the Stockholders' Agreement; or

          (vii) merge or consolidate with any other corporation or entity or
sell or exchange all or substantially all of its assets or authorize or effect
any reorganization, dissolution, liquidation or winding up of the Corporation.

     9. 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.


                                       19
<PAGE>
     10. Severability of Provisions. If any voting powers, preferences and
relative, participating, optional and other special rights of the Series A
Preferred, Series B Preferred or Series C Preferred and qualifications,
limitations and restrictions thereof set forth in this resolution (as such
resolution may be amended from time to time) are invalid, unlawful or incapable
of being enforced by reason of any rule of law or public policy, all other
voting powers, preferences and relative, participating, optional and other
special rights of the Series A Preferred, Series B Preferred or Series C
Preferred and qualifications, limitations and restrictions thereof set forth in
this resolution (as so amended) which can be given effect without the invalid,
unlawful or unenforceable voting powers, preferences and relative,
participating, optional and other special rights of the Series A Preferred,
Series B Preferred or Series C Preferred and qualifications, limitations and
restrictions thereof shall, nevertheless, remain in full force and effect, and
no voting powers, preferences and relative, participating, optional or other
special rights of the Series A Preferred, Series B Preferred or Series C
Preferred and qualifications, limitations and restrictions thereof herein set
forth shall be deemed dependent upon any other such voting powers, preferences
and relative, participating, optional or other special rights of the Series A
Preferred, Series B Preferred or Series C Preferred and qualifications,
limitations and restrictions thereof unless so expressed herein.


                                       20
<PAGE>
     IN WITNESS WHEREOF, Z-TEL TECHNOLOGIES, INC. has caused this Amended and
Restated Certificate to be signed this 8th day of October, 1999.

                                        Z-TEL TECHNOLOGIES, INC.


                                        By: /s/ D. Gregory Smith
                                            ------------------------------------
                                            Name:
                                                  ------------------------------
                                            Title:
                                                   -----------------------------


                                       21
<PAGE>
                            CERTIFICATE OF AMENDMENT

                                     TO THE

                              AMENDED AND RESTATED

                          CERTIFICATE OF INCORPORATION

                                       OF

                            Z-TEL TECHNOLOGIES, INC.

          I, the undersigned, Secretary of Z-Tel Technologies, Inc., a
corporation existing under the laws of the State of Delaware (the
"Corporation"), does hereby certify as follows:

          FIRST: That the Certificate of Incorporation of the Corporation was
filed with the Secretary of State of the State of Delaware on March 19, 1998 and
the Amended and Restated Certificate of Incorporation was filed on October
21, 1998.

          SECOND: That this amendment to the Amended and Restated Certificate of
Incorporation is hereby amended, for the purposes of increasing the
Corporation's authorized capital stock, as follows: by striking out ARTICLE IV
thereof as it now exists and inserting in lieu thereof a new ARTICLE IV reading
in its entirety, as follows:

                                   "ARTICLE IV

          The total number of shares that the Corporation shall have authority
to issue is 200,000,000 shares, consisting of 150,000,000 shares of common
stock, par value $0.01 per share (the "Common Stock"), and 50,000,000 shares of
preferred stock, par value $0.0l per share (the "Preferred Stock")."

          THIRD: That such amendment was proposed by the board of directors and
duly adopted by the stockholders of the Corporation in the manner and by the
vote prescribed by Sections 228, 242 ___________ of the General Corporation Law
of the State of Delaware.

                                                     (    STATE OF DELAWARE    )
                                                     (    SECRETARY OF STATE   )
                                                     ( DIVISION OF CORPORATIONS)
                                                     (FILED 04:00 PM 12/13/1999)
                                                     (   991536023 - 2873445   )
<PAGE>
          IN WITNESS WHEREOF, I have subscribed this document on the date set
forth below and do hereby affirm, under the penalties of perjury, that the
statements contained herein have been examined by me and are true and correct.

          Date: November 23, 1999

                                        Z-TEL TECHNOLOGIES, INC.


                                        /s/ Mark Johnson
                                        ----------------------------------------
                                        Mark Johnson
                                        Secretary
<PAGE>
                                                     (    STATE OF DELAWARE    )
                                                     (    SECRETARY OF STATE   )
                                                     ( DIVISION OF CORPORATIONS)
                                                     (FILED 01:30 PM 05/30/2000)
                                                     (   001285349 - 2873445   )

                            CERTIFICATE OF AMENDMENT

                                     TO THE

                              AMENDED AND RESTATED

                          CERTIFICATE OF INCORPORATION

                                       OF

                            Z-TEL TECHNOLOGIES, INC.

     The undersigned Chief Executive Officer and President of Z-Tel
Technologies, Inc., a corporation existing under the laws of the State of
Delaware (the "Corporation"), does hereby certify as follows:

     FIRST: That this Certificate of Amendment to the Amended and Restated
Certificate of Incorporation, filed on October 21, 1998 (the "Amended
Certificate"), hereby further amends the Amended Certificate, for purposes of
dividing the board of directors of the corporation; into three classes, as
follows; by striking our ARTICLE VI thereof in its entirely and inserting in its
place a new ARTICLE VI, as follows:

                                   "ARTICLE VI

                                    Directors

     A. The management of the business and the conduct of the affairs of the
corporation shall be vested in a board of directors.

     B. The directors, other than those who may be elected by the holders of any
class or series of stock having a preference over the Common Shares as to
dividends or upon liquidation, shall be classified, with respect to the time for
which they severally hold office, into three classes, as nearly equal in number
as possible, one class to be originally elected for a term expiring at the
annual meeting of stockholders to be held, in 2001, another class to be
originally elected for a term expiring at the annual meeting of stockholders to
be held in 2002, and another class to be originally elected for a term expiring
at the annual meeting of stockholders to be held in 2003. At each annual meeting
of stockholders following the initial classification and election, the
respective successors of each class shall be elected for three-year terms.

     C. The directors of the corporation need not be elected by written ballot
unless the bylaws of the corporation so provide. A director shall hold office
until the annual meeting for the year in which his term expires and until his
successor shall be elected and
<PAGE>
shall qualify, subject, however, to prior death, resignation, retirement,
disqualification or removal from office.

     D. The number of directors of the corporation shall be fixed and may be
changed from time to time by resolution of the board of directors. If the number
of directors is changed, any increase or decrease shall be apportioned, among
the classes so as to maintain the number of directors in each class as nearly
equal as possible.

     E. Any vacancies on the board of directors resulting from death,
resignation, disqualification, removal, increase in the number of directors
constituting the board of directors, or other causes, unless the board of
directors determines by resolution that any such vacancies or newly created
directorships shall be filled by stockholders, and except as otherwise provided
by law, shall be filled only by the affirmative vote of a majority of the
remaining directors then in office, or by a sole remaining director, even though
less than a quorum of the board of directors, and not by the stockholders. If
any applicable provision of the General Corporation Law of the State of Delaware
expressly confers power on stockholders to fill such a directorship at a special
meeting of stockholders, such a directorship may be filled at such meeting only
by the affirmative vote of at least 80 percent of the voting power of all shares
of the corporation entitled to vote generally in the election of directors
voting as a single class.

     F. Any additional director of any class elected to fill a newly created
directorship shall hold office for a term that shall coincide with the remaining
term of that class, but in no case shall a decrease in the number of directors
constituting the board of directors remove or shorten the term of any incumbent
director. Any director elected to fill a vacancy not resulting from an increase
in the number of directors shall have the same remaining term as that of his
predecessor.

     G. Directors may be removed only for cause, and only by the affirmative
vote of at least 80 percent in voting power of all shares of the corporation
entitled to vote generally in the election of directors, voting as a single
class.

     H. Notwithstanding the foregoing, whenever the holders of any one or more
class or series of capital stock issued by the corporation shall have the right,
voting separately as a class or series or with one or more such other classes or
series, to elect directors at an annual or special meeting of stockholders, the
election, term of office, removal, filling of vacancies and other features of
such directorships shall be governed by the terms of this certificate of
incorporation (including any certificate of designations relating to any class
or series of capital stock) applicable thereto, and such directors so elected
shall not be divided into classes pursuant to this Article VI unless expressly
provided by such terms."

     SECOND: That this Certificate of Amendment was proposed by the board of
directors and duly adopted by the stockholders of the corporation in the manner
and by the vote prescribed by Sections 14l(d) and 242 of the General Corporation
Law of the State of Delaware.
<PAGE>
     IN WITNESS WHEREOF, I have subscribed this document on the date set forth
below and do hereby affirm, under the penalties of perjury, that the statements
contained herein have been examined by me and are true and correct.

Date: May 30, 2000

                                        Z-TEL TECHNOLOGIES, INC


                                        /s/ D. Gregory Smith
                                        ----------------------------------------
                                        D. Gregory Smith
                                        Chief Executive Officer and President
<PAGE>
                                                     (    STATE OF DELAWARE    )
                                                     (    SECRETARY OF STATE   )
                                                     ( DIVISION OF CORPORATIONS)
                                                     (FILED 04:30 PM 07/13/2000)
                                                     (   001357471 - 2873445   )

                            Z-TEL TECHNOLOGIES, INC.

                    CERTIFICATE OF DESIGNATIONS, PREFERENCES
                      AND RELATIVE RIGHTS, QUALIFICATIONS,
                          LIMITATIONS AND RESTRICTIONS

                      SERIES D CONVERTIBLE PREFERRED STOCK

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

     Z-Tel Technologies, Inc., a Delaware corporation (the "Corporation"),
certifies that pursuant to the authority contained in Article FOURTH of its
Certificate of Incorporation (the "Certificate of Incorporation") and in
accordance with the provisions of Section 151 of the General Corporation Law of
the State of Delaware, by authority of the Board of Directors of the
Corporation, the Pricing Committee of the Board of Directors of the Corporation,
at a Special Meeting held on June 30, 2000, adopted the following resolution,
which resolution remains in full force and effect on the date hereof:

     WHEREAS, in connection with the execution by the Corporation of the Stock
Purchase Agreement, it is deemed to be in the best interests of the Corporation
and its stockholders to create a new series of convertible preferred stock;

     NOW, THEREFORE, BE IT RESOLVED, that the Corporation hereby establishes a
new series of authorized preferred stock, having a par value of $0.01 per share,
which series shall be designated as "Series D Convertible Preferred Stock" (the
"Series D Preferred"), and which series shall consist of five million
(5,000,000) shares and shall have the powers, designations, preferences and
relative, participating, optional and other special rights, qualifications,
limitations and restrictions set forth herein.

     1. CERTAIN DEFINITIONS. Unless the context otherwise requires, in addition
to the terms defined elsewhere herein, the terms defined in this Section 1 shall
have, for all purposes of this resolution, the meanings herein specified when
used herein with initial capital letters (with terms defined in the singular
having comparable meanings when used in the plural).

     "Common Stock" shall mean the common stock, $.01 par value per share, of
the Corporation.

     "Junior Stock" means the Common Stock and any other capital stock of the
Corporation the terms of which do not expressly provide that such capital stock
is on a parity with or senior to the Series D Preferred as to dividend rights
and rights upon liquidation.
<PAGE>
     "Stock Purchase Agreement" means the Stock Purchase Agreement, dated July
6, 2000, by and among the Corporation, the Holder and the other investors named
on Schedule I thereto.

     2. DIVIDENDS AND DISTRIBUTIONS.

          (a) Series D Dividends. The holders of record of shares of Series D
Preferred shall be entitled to receive dividends at a rate of eight percent (8%)
of the Liquidation Preference (as defined herein) per annum per share of Series
D Preferred (the "Series D Dividend"), which shall be fully cumulative, prior
and in preference to any declaration or payment of any dividend or other
distribution on any Junior Stock (and excluding any stock splits and
subdivisions for which an adjustment is made under Section 4(c)(v)(l) below).
The Series D Dividend shall accrue from the date of issuance of each share until
the earlier of (i) the conversion of such share of Series D Preferred to Common
Stock, (ii) a Liquidation (as defined herein), or (iii) the repurchase or
redemption of such share of Series D Preferred. Such dividend shall be payable
quarterly in arrears on March 31, June 30, September 30 and December 31 of each
year (each a "Series D Dividend Date") commencing on September 30, 2000, except
that if any such date is a Saturday, Sunday or legal holiday (a "Non-Business
Day"), then such dividend shall be payable on the next day that is not a
Saturday, Sunday or legal holiday on which banks in the State of Delaware are
permitted to be closed (a "Business Day") to holders of record as they appear on
the stock ledger of the Corporation on the applicable record date, which shall
be not more than sixty (60) nor less than ten (10) days preceding the payment
date for such dividends, as fixed by the Board of Directors (the "Series D
Record Date"). Series D Dividends shall be payable only when, as and if declared
by the Board of Directors out of funds legally available therefor. The dividends
shall either (i) accrue, (ii) be payable in cash, or (iii) be payable in shares
of Series D Preferred, as provided in the next paragraph. The dividends shall
automatically accrue in the absence of an election by the Board of Directors
within sixty (60) days after each Series D Dividend Date to pay the dividends.
The amount of dividends payable for any period that is shorter or longer than a
full annual dividend shall be computed on the basis of a 360-day year and the
actual number of days elapsed (including the first day but excluding the last
day) occurring in the period for which such amount is payable. All accrued but
unpaid dividends (whether declared or undeclared) shall accrue interest at a
rate of ten percent (10%) per annum computed on the basis of a 360-day year and
the actual number of days elapsed (including the first day but excluding the
last day) occurring in the period for which such amount is payable, but with
interest on such dividend compounded on a quarterly basis (on each March 31,
June 30, September 30 and December 31) for the year during which such dividend
was payable, and thereafter until paid. If the Series D Dividend cannot be paid
in full, dividends shall be paid, to the maximum possible extent, to the holders
of the Series D Preferred pro rata on the basis of the amount of accrued and
unpaid dividends outstanding on each share.

          (b) Cash Dividends; In-Kind Dividends. Dividends that are declared and
payable on each September 30 shall be paid in cash. Until the fifth anniversary
of the Original Issue Date (or, if such day is not a business day, on the first
business day thereafter), dividends that are declared and payable on each March
31, June 30 and December 31 shall be paid in shares of Series D Preferred (each,
a "Series D Payment-in-Kind") rather than cash, valuing each


                                       2
<PAGE>
such share issued at the Liquidation Preference. Thereafter, all dividends that
are declared and payable shall be paid in cash.

          (c) So long as any shares of the Series D Preferred are outstanding,
no dividend, except as described in the last sentence of Section 2(d) below and
except as described in the next succeeding sentence, shall be declared or paid
or set apart for payment on any parity securities, nor shall any parity
securities be redeemed, purchased or otherwise acquired for any consideration
(or any moneys be paid to or made available for a sinking fund for the
redemption of any shares of any such stock) by the Corporation, directly or
indirectly (except by conversion into or exchange for parity securities or
Junior Stock), unless in each case all accrued and unpaid dividends have been or
contemporaneously are declared and paid or, if payable in cash, declared and a
sum sufficient for the payment thereof is set apart for such payment on the
Series D Preferred for all dividend periods terminating on or prior to the date
of payment of the dividend on, or the date of redemption, purchase, or
acquisition for consideration of, such parity securities. When all accrued and
unpaid dividends on the Series D Preferred are not paid in full or a sum
sufficient for such payment is not set apart, as aforesaid, any dividends and
additional amounts declared upon shares of the Series D Preferred and any
dividends and additional amounts declared upon any other parity securities shall
be declared ratably in proportion to the respective amounts of accrued and
unpaid dividends and additional amounts accumulated and unpaid on the Series D
Preferred and dividends and additional amounts accumulated and unpaid on such
parity securities.

          (d) So long as any shares of the Series D Preferred are outstanding,
no dividends shall be declared or paid or set apart for payment and no other
distribution shall be declared or made upon Junior Stock, nor shall any Junior
Stock be redeemed, purchased or otherwise acquired (any such dividend,
distribution, redemption, purchase or acquisition being hereinafter referred to
as a "Junior Stock Distribution") for any consideration (or any moneys be paid
to or made available for a sinking fund for the redemption of any shares of any
such stock) by the Corporation, directly or indirectly (except by conversion
into or exchange for Junior Stock), unless in each case (i) all accrued and
unpaid dividends and additional amounts on all outstanding shares of the Series
D Preferred shall have been paid or set apart for payment for all past dividend
periods with respect to the Series D Preferred and (ii) sufficient funds shall
have been paid or set apart for the payment of the dividend for the current
dividend period with respect to the Series D Preferred. Notwithstanding anything
in this Certificate of Designation to the contrary, the Corporation may declare
and pay dividends on parity stock which are payable solely in additional shares
of, or by the increase in the liquidation value of, parity stock or on Junior
Stock which are payable in additional shares of, or by the increase in the
liquidation value of, Junior Stock, as applicable, or repurchase, redeem or
otherwise acquire Junior Stock in exchange for Junior Stock, and Parity Stock in
exchange for Parity Stock or Junior Stock.

          3. LIQUIDATION RIGHTS. In the event of any liquidation, dissolution or
winding-up of the Corporation, whether voluntary or involuntary (a
"Liquidation"), distributions shall be made to the holders of Series D
Preferred, before any amount shall be paid to the holders of Junior Stock, in
the following manner:


                                       3
<PAGE>
          (a) Liquidation Preference; Liquidation Amount. The Liquidation
Preference of the Series D Preferred shall be $12.00 per share. The Liquidation
Preference shall not be subject to adjustment. In the event of a Liquidation,
the holders of the outstanding Series D Preferred, subject to the other terms
contained herein, shall be entitled to be paid first out of the assets of the
Corporation available for distribution to holders of its capital stock an amount
(the "Liquidation Value") equal to (i) the applicable Liquidation Preference,
plus (ii) all accrued but unpaid dividends (whether declared or undeclared
including any interest accrued thereon calculated through the date of
Liquidation), prior to any distribution to the holders of any Junior Stock. If
the proceeds from a Liquidation are not sufficient to pay to the holders of
Series D Preferred then such holders shall instead be entitled to receive the
entire assets and funds of the Corporation legally available for distribution to
the holders of capital stock, which assets and funds shall be distributed pro
rata among the holders of the Series D Preferred on the basis of the amounts per
share to be paid to each. After payment of the full preferential amount, such
holders shall not be entitled to any further participation in any distribution
of assets of the Corporation.

          (b) Events Deemed a Liquidation. For purposes of this Section 3, the
holders of a majority of the outstanding shares of the Series D Preferred may
elect to have treated as a Liquidation the consolidation or merger of the
Corporation with or into any other corporation or the sale or other transfer in
a single transaction or a series of related transactions of all or substantially
all of the assets of the Corporation, or any other reorganization or business
combination of the Corporation or a Change of Control. A "Change of Control"
will be deemed to have occurred at such time as any person or persons acting
together that would constitute a "group" for purposes of Section 13(d) of the
Exchange Act shall beneficially own (within the meaning of Rule 13d-3 under the
Exchange Act, or any successor provision thereto) more than 50% of the aggregate
voting power of all classes of capital stock having the power to vote for the
election of directors or other members of the governing body of the Corporation.

     4. CONVERSION. The Series D Preferred are subject to conversion rights as
follows (the "Conversion Rights"):

          (a) Conversion at Option of the Holder; Conversion at Option of the
Company. Each share of Series D Preferred shall initially be convertible, at the
option of the holder thereof, at any time on or after the date of issuance
thereof and up to and including the day immediately preceding the Mandatory
Redemption Date, into the number of fully paid and nonassessable shares of
Common Stock which results from dividing the applicable Conversion Price (as
hereinafter specified) per share in effect at the time of conversion into the
applicable per share Liquidation Preference in effect at the time of conversion.
The initial Conversion Price of the Series D Preferred shall be $12.00 per
share. The initial Conversion Price of the Series D Preferred shall be subject
to adjustment from time to time as provided in Section 4(c) hereof. Upon
conversion, all accrued or declared but unpaid dividends (including any interest
accrued thereon calculated as of the date of conversion) on the Series D
Preferred so converted shall be paid in cash or Common Stock, as applicable, and
in the case of cash, to the extent permitted by applicable law (and if not then
permitted by applicable law, at such time as the Corporation is permitted by
applicable law to pay any such dividends).


                                       4
<PAGE>
               At any time that the closing price of the Common Stock on The
Nasdaq Stock Market (or on the exchange or quotation system on which the
Corporation's Common Stock is then traded) as reported in The Wall Street
Journal (such price on a given day, referred to as the "Current Market Price"
for such day) equals or exceeds two (2) times the then-applicable Conversion
Price for twenty (20) or more consecutive trading days beginning on or after
July 13, 2002 then, beginning on the day following the 20th such consecutive
trading day and ending sixty (60) calendar days after the last such consecutive
trading day, the Corporation shall have the right to convert all, but not less
than all, of the shares of Series D Preferred into shares of Common Stock, with
each share of Series D Preferred converting into the number of fully paid and
nonassessable shares of Common Stock which results from dividing the applicable
Conversion Price per share in effect at the time of conversion into the
applicable per share Liquidation Preference in effect at the time of conversion.

          (b) Mechanics of Conversion at the Option of the Holder. Before any
holder of Series D Preferred shall be entitled to convert the same into shares
of Common Stock and to receive certificates therefor, such holder shall
surrender the certificate or certificates therefor, duly endorsed, at the
principal office of the Corporation or of any transfer agent for the Series D
Preferred and shall give written notice to the Corporation at such office that
such holder elects to convert the same. The Corporation shall as soon as
practicable after such delivery issue and deliver at such office to such holder
of Series D Preferred a certificate or certificates for the number of shares of
Common Stock to which it, he or she shall be entitled as aforesaid and a check
payable to the holder in the amount of any accrued or declared but unpaid
dividends (including any interest accrued thereon calculated as of the date of
conversion) payable pursuant to Section 2 hereof, if any. Such conversion shall
be deemed to have been made immediately prior to the close of business on the
date of such surrender of the shares of Series D Preferred and the person or
persons entitled to receive the shares of Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder or holders of
such shares of Common Stock on such date. If the Corporation fails to pay all
such dividends (and interest thereon) within twenty (20) days of the date of
conversion, the holder entitled to such dividends (and interest thereon) may
elect to have the Corporation issue to such holder, in lieu of such cash
payment, additional shares of Common Stock calculated by dividing the total
amount payable on such date by the applicable Conversion Price.

          (c) Adjustments to Conversion Price.

               (i) Special Definitions. For purposes of this Section 4(c), the
following definitions shall apply:

                    (1) "Options" shall mean rights, options or warrants to
     subscribe for, purchase or otherwise acquire either Common Stock or
     Convertible Securities.

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


                                       5
<PAGE>
                    (3) "Additional Shares of Common Stock" shall mean all
     shares of Common Stock issued (or, pursuant to Section 4(c)(iii), deemed to
     be issued) by the Corporation after the Original Issue Date of the Series D
     Preferred, other than shares of Common Stock issued or issuable:

                    (A) upon conversion of shares of Series D Preferred;

                    (B) pursuant to any stock grant, option plan or purchase
               plan, other employee stock incentive program or agreement of the
               Corporation;

                    (C) pursuant to convertible securities of the Company
               outstanding as of the Original Issue Date;

                    (D) as a dividend or distribution on shares of Series D
               Preferred;

                    (E) in a transaction described in Section 4(c)(v); or

                    (F) by way of dividend or other distribution on shares of
               Common Stock excluded from the definition of Additional Shares of
               Common Stock by the foregoing clauses (A), (B), (C), (D), (E) or
               this clause (F).

                    (4) "Original Issue Date" shall mean July 13, 2000.

                    (5) "Derivative Securities" shall mean securities, other
     than Options and Convertible Securities, issued for cash by the Corporation
     or an Affiliate of the Corporation, the value of which is directly based
     upon or derived by reference to the market value of the Common Stock. The
     consideration received by the Corporation for Additional Shares of Common
     Stock deemed to be issued in connection with the issuance of Derivative
     Securities shall be determined by a recognized financial institution
     agreeable to the Corporation and holders of at least two-thirds of the
     outstanding shares of Series D Preferred.

               (ii) No Adjustment of Conversion Price. No adjustment in the
applicable Conversion Price of the Series D Preferred shall be made in respect
of the issuance of Additional Shares of Common Stock unless the consideration
per share for an Additional Share of Common Stock issued or deemed to be issued
by the Corporation is less than the greater of (i) the Current Market Price in
effect on the date of such issue or (ii) the then-existing Conversion Price.

               (iii) Deemed Issue of Additional Shares of Common Stock. In the
event the Corporation at any time or from time to time after the Original Issue
Date of the Series D Preferred shall issue any Options or Convertible Securities
or Derivative Securities or shall fix a record date for the determination of
holders of any class of securities entitled to receive any such Options or
Convertible Securities or Derivative Securities, then the maximum number of
shares (as set forth in the instrument relating thereto without regard to any
provisions contained therein for a subsequent adjustment of such number) of
Common Stock issuable upon the exercise of such Options or, in the case of
Convertible Securities and Options therefor, the exercise of such


                                       6
<PAGE>
Options and conversion or exchange of such Convertible Securities, or in the
case of Derivative Securities, the settlement of such Derivative Securities,
shall be deemed to be Additional Shares of Common Stock issued as of the time of
such issue or, in case such a record date shall have been fixed, as of the close
of business on such record date, provided that Additional Shares of Common Stock
shall not be deemed to have been issued unless the consideration per share of
such Additional Shares of Common Stock (such consideration, in the case of
Derivative Securities, determined as set forth in Section 4(c)(i)(5)) would be
less than the greater of the Current Market Price and the applicable Conversion
Price for the Series D Preferred in effect on the date of and immediately prior
to such issue, or such record date, as the case may be, and provided further
that in any such case in which Additional Shares of Common Stock are deemed to
be issued:

                    (1) except as provided in Section 4(c)(iii)(2), no further
     adjustment in the Conversion Price shall be made upon the subsequent issue
     of Convertible Securities or shares of Common Stock upon the exercise of
     such Options or conversion or exchange of such Convertible Securities or
     settlement of such Derivative Securities;

                    (2) if such Options or Convertible Securities or Derivative
     Securities by their terms provide, with the passage of time or otherwise,
     for any change in the consideration payable to the Corporation, or change
     in the number of shares of Common Stock issuable, upon the exercise,
     conversion, settlement or exchange thereof (other than under or by reason
     of provisions designed to protect against dilution), the Conversion Price
     computed upon the original issue thereof (or upon the occurrence of a
     record date with respect thereto) and any subsequent adjustments based
     thereon, shall, upon any such increase or decrease becoming effective, 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 or settlement rights under such Derivative Securities; and

                    (3) no readjustment pursuant to clause (2) above shall have
     the effect of increasing the Conversion Price to an amount which exceeds
     the lower of (A) the Conversion Price on the original adjustment date or
     (B) 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.

               (iv) Adjustment of Conversion Price Upon Issuance of Additional
Shares of Common Stock. In the event the Corporation shall issue Additional
Shares of Common Stock (including Additional Shares of Common Stock deemed to be
issued pursuant to Section 4(c)(iii)) for a consideration per share that is less
than the greater of (i) the Current Market Price in effect on the trading day
immediately prior to the date of such issue and (ii) the then-applicable
Conversion Price, then and in each such event the applicable Conversion Price of
the Series D Preferred shall be recomputed by multiplying the applicable
Conversion Price then in effect by a fraction:


                                       7
<PAGE>
                    (1) the numerator of which will be the sum of (A) the
     aggregate number of shares of Common Stock issued and outstanding on the
     date of issuance of the Additional Shares of Common Stock (assuming the
     conversion on such date of all of the outstanding shares of Series D
     Preferred) plus (B) the quotient of the aggregate consideration received by
     the Corporation for the issuance of such Additional Shares of Common Stock
     divided by the greater of (1) the Current Market Price in effect on the
     trading day immediately prior to the date of such issue and (2) the
     then-applicable Conversion Price; and

                    (2) the denominator of which will be the sum of (A) the
     aggregate number of shares of Common Stock issued and outstanding on the
     date of issuance of the Additional Shares of Common Stock (assuming the
     conversion on such date of all of the outstanding shares of Series D
     Preferred) plus (B) the aggregate number of such Additional Shares of
     Common Stock.

               (v) Other Adjustments.

                    (1) Subdivisions. Combinations, or Consolidations of Common
     Stock. In the event that, at any time after the Original Issue Date of the
     Series D Preferred, the outstanding shares of Common Stock shall be
     subdivided, combined or consolidated, by stock split, stock dividend,
     combination or like event, into a greater or lesser number of shares of
     Common Stock, the applicable Conversion Price of the Series D Preferred in
     effect immediately prior to such subdivision, combination, consolidation or
     stock dividend shall, concurrently with the effectiveness of such
     subdivision combination or consolidation, be proportionately adjusted.

                    (2) Rectifications. In the case, at any time after the
     Original Issue Date of the Series D Preferred, of any capital
     reorganization or any reclassification of the stock of the Corporation
     (other than as a result of a stock dividend or subdivision, split-up or
     combination of shares), or the consolidation or merger of the Corporation
     with or into another person (other than a consolidation or merger (A) in
     which the Corporation is the continuing entity and which does not result in
     any change in the Common Stock or (B) which is treated as a Liquidation
     pursuant to Section 3(b) above), the shares of Series D Preferred shall,
     after such reorganization, reclassification, consolidation or merger, be
     convertible into the kind and number of shares of stock or other securities
     or property of the Corporation or otherwise to which such holder would have
     been entitled if immediately prior to such reorganization,
     reclassification, consolidation or merger such holder had converted his
     shares of Series D Preferred into Common Stock. The provisions of this
     Section 4(c)(v)(2) shall similarly apply to successive reorganizations,
     reclassifications, consolidations or mergers.

                    (3) If the Corporation shall hereafter pay a dividend or
     make a distribution to all holders of the outstanding shares of Common
     Stock in shares of Common Stock, the Conversion Price in effect at the
     opening of business on the date following the date fixed for the
     determination of shareholders entitled to receive such dividend or other
     distribution shall be reduced by multiplying such Conversion Price by a


                                       8
<PAGE>
     fraction of which the numerator shall be the number of shares of Common
     Stock outstanding at the close of business on the record date fixed for
     such determination and the denominator shall be the sum of such number of
     shares and the total number of shares constituting such dividend or other
     distribution, such reduction to become effective immediately after the
     opening of business on the day following such record date. If any dividend
     or distribution of the type described in this Section is declared but not
     so paid or made, the Conversion Price shall again be adjusted to the
     Conversion Price which would then be in effect if such dividend or
     distribution had not been declared.

                    (4) If the Corporation shall offer or issue rights or
     warrants to all holders of its outstanding shares of Common Stock entitling
     them to subscribe for or purchase shares of Common Stock at a price per
     share less than the greater of (i) the Current Market Price on the record
     date fixed for the determination of shareholders entitled to receive such
     rights or warrants or (ii) the then-existing Conversion Price, the
     Conversion Price shall be adjusted so that the same shall equal the price
     determined by multiplying the Conversion Price in effect at the opening of
     business on the date after such Common Stock record date by a fraction of
     which the numerator shall be the number of shares of Common Stock
     outstanding at the close of business on the record date plus the number of
     shares of Common Stock which the aggregate offering price of the total
     number of shares of Common Stock subject to such rights or warrants would
     purchase at such Current Market Price and of which the denominator shall be
     the number of shares of Common Stock outstanding at the close of business
     on such record date plus the total number of additional shares of Common
     Stock subject to such rights or warrants for subscription or purchase. Such
     adjustment shall become effective immediately after the opening of business
     on the day following the record date fixed for determination of
     shareholders entitled to purchase or receive such rights or warrants. To
     the extent that shares of Common Stock are not delivered pursuant to such
     rights or warrants, upon the expiration or termination of such rights or
     warrants the Conversion Price shall again be adjusted to be the Conversion
     Price which would then be in effect had the adjustments made upon the
     issuance of such rights or warrants been made on the basis of delivery of
     only the number of shares of Common Stock actually delivered. If such
     rights or warrants are not so issued, the Conversion Price shall again be
     adjusted to be the Conversion Price which would then be in effect if such
     date fixed for the determination of shareholders entitled to receive such
     rights or warrants had not been fixed. In determining whether any rights or
     warrants entitle the holders to subscribe for or purchase shares of Common
     Stock at less than such Current Market Price or Conversion Price, and in
     determining the aggregate offering price of such shares of Common Stock,
     there shall be taken into account (x) any consideration received for such
     rights or warrants, with the value of such consideration and the amount of
     such exercise or subscription price, if other than cash, to be determined
     by the Board of Directors and (y) the amount of any exercise price or
     subscription price required to be paid upon exercise of such warrants or
     rights.

               (d) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Conversion Price of the Series D Preferred
pursuant to this Section 4, the Corporation at its expense shall promptly
thereafter compute such adjustment or readjustment in accordance with the terms
hereof and furnish to each holder of Series D Preferred a certificate


                                       9
<PAGE>
setting forth such adjustment or readjustment and showing in detail the facts
upon which such adjustment or readjustment is based. The Corporation shall, upon
the written request at any time of any holder of Series D Preferred furnish or
cause to be furnished to such holder a like certificate setting forth (i) such
adjustments and readjustments, if any, (ii) the applicable Conversion Price of
the Series D Preferred at the time in effect, and (iii) the number of shares of
Common Stock and the amount, if any, of other property which at the time would
be received upon the conversion of the Series D Preferred

          (e) Status of Converted Stock. In case any shares of Series D
Preferred shall be converted pursuant to Section 4 hereof, the shares so
converted shall be canceled, shall not be reissuable and shall cease to be a
part of the authorized capital stock of the Corporation.

          (f) Fractional Shares, In lieu of any fractional shares in the
aggregate to which the holder of Series D Preferred would otherwise be entitled
upon conversion, the Corporation shall pay cash equal to such fraction
multiplied by the fair market value of one share of Common Stock.

          (g) Miscellaneous.

               (i) All calculations under this Section 4 shall be made to the
nearest cent or to the nearest one hundredth (1/100) of a share, as the case may
be.

               (ii) The holders of a majority of the outstanding shares of
Series D Preferred shall have the right to challenge any determination by the
Board of Directors of fair market value pursuant to this Section 4, in which
case such determination of fair market value shall be made by an independent
appraiser selected jointly by the Board of Directors and the challenging
parties, the cost of such appraisal to be borne (I) by the challenging parties,
if the fair market value as determined by such appraisal does not exceed the
determination of fair market value by the Board of Directors by more than ten
percent (10%) and (II) by the Corporation, if the fair market value as
determined by such appraisal exceeds the determination of fair market value by
the Board of Directors by more than ten percent (10%).

               (iii) No adjustment in the applicable Conversion Price of the
Series D Preferred will be made if such adjustment would result in a change in
such Conversion Price of less than $0.01. Any adjustment of less than $0.01
which is not made shall be carried forward and shall be made at the time of and
together with any subsequent adjustment which, on a cumulative basis, amounts to
an adjustment of $0.01 or more in such Conversion Price.

          (h) No Impairment. The Corporation will not through any
reorganization, recapitalization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms to be observed
or performed hereunder by the Corporation, but will at all times in good faith
assist in the carrying out of all the provisions of this Section 4 and in the
taking of all action as may be necessary or appropriate in order to protect the
conversion rights of the holders of Series D Preferred against impairment.


                                       10
<PAGE>
          (i) Reservation of Stock Issuable Upon Conversion. The Corporation
shall at all times reserve and keep available out of its authorized but unissued
shares of Common Stock, solely for the purpose of effecting the conversion of
the shares of Series D Preferred such number of its shares of Common Stock as
shall from time to time be sufficient to effect the conversion of all
outstanding shares of Series D Preferred. If at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to effect
the conversion of all then outstanding shares of Series D Preferred the
Corporation will take such corporate action as may, in the opinion of its
counsel, be necessary to increase its authorized but unissued shares of Common
Stock to such number of shares as shall be sufficient for such purpose.

     5. VOTING RIGHTS. Except as otherwise required by law or by Section 8
hereof, the holder of each share of Series D Preferred will be entitled to vote
on all matters with the holders of the Common Stock as a single class, and not
as a separate class or series. Each share of Series D Preferred will entitle the
holder to the number of votes per share equal to the full number of shares of
Common Stock into which such share of Series D Preferred is convertible on the
record date for such vote. The holders of Series D Preferred shall receive
notice of and shall be entitled to attend in person or by proxy any meeting of
the holders of Common Stock.

     6. NOTICES OF CERTAIN RECORD DATES. In the event of any taking by the
Corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend or other distribution, any right to subscribe for, purchase or
otherwise acquire any shares of stock of any class or any other securities or
property, or to receive any other right, the Corporation shall mail to each
holder of Series D Preferred at least twenty (20) days prior to the record date
specified therein, a notice specifying the date on which any such record is to
be taken for the purpose of such dividend, distribution or right, and the
anticipated amount and character of such dividend, distribution or right.

     7. NOTICES. Any notice required by the provisions of this Amended or
Restated Certificate to be given to the holders of Series D Preferred shall be
deemed given (i) when made, if made by hand delivery, (ii) upon confirmation, if
made by fax, or (iii) one business day after being deposited with a reputable
next-day courier, postage prepaid, and in each case, addressed to each holder of
record at such holder's address or fax number appearing on the books of the
Corporation.

     8. APPROVAL OF CERTAIN TRANSACTIONS. So long as any shares of Series D
Preferred are outstanding, the Corporation shall not, without first obtaining
the written approval of the holders of seventy percent (70%) of the outstanding
shares of Series D Preferred voting as a separate class,

     (i) amend this Certificate or the Certificate of Incorporation or bylaws of
the Corporation or take any other action, in each case which adversely affects
the rights, preferences or privileges of the Series D Preferred;

     (ii) increase or decrease the authorized number of shares of Series D
Preferred;


                                       11
<PAGE>
     (iii) create any new class or series of shares, or issue any such shares or
Options or Convertible Securities exercisable or convertible into such shares,
that have a preference over or are on a parity with the Series D Preferred with
respect to voting, dividends or liquidation preferences; or

     (iv) reclassify stock into shares of capital stock of the Corporation
having a preference over or parity with the Series D Preferred with respect to
voting, dividends or liquidation preferences (except that the Corporation may
grant voting rights to shares of a series of preferred stock which have the
right to vote with holders of Common Stock on an as converted basis);

     9. REDEMPTION.

          (a) The Series D Preferred shall not be redeemed by the Corporation
prior to the third anniversary of the Original Issue Date. The Corporation may
at its option redeem the Series D Preferred in whole or in part on or after the
third anniversary of the Original Issue Date, at any time or from time to time,
upon at least thirty days' prior notice, at a redemption price equal to the
percentage of the Liquidation Preference per share of Series D Preferred set
forth below, plus any accumulated unpaid dividends (whether or not declared) up
to but excluding such redemption date. Shares so redeemed shall be cancelled and
upon such cancellation shall be deemed to be authorized and unissued shares of
Preferred Stock, without par value, of the Corporation but shall not be reissued
as shares of the same series.

<TABLE>
<CAPTION>
IF REDEEMED ON OR AFTER   AND REDEEMED BEFORE THE
THE ANNIVERSARY OF THE       ANNIVERSARY OF THE
     ORIGINAL ISSUE            ORIGINAL ISSUE             PERCENT OF
    DATE OCCURING IN         DATE OCCURRING IN      LIQUIDATION PREFERENCE
-----------------------   -----------------------   ----------------------
<S>                       <C>                       <C>
          2003                      2004                     105%
          2004                      2005                     104%
          2005                      2006                     103%
          2006                      2007                     102%
          2007                      2008                     101%
</TABLE>

          (b) Mandatory Redemption. To the extent permitted by law, the
Corporation shall redeem, on the eighth anniversary of the Original Issue Date
(or, if such day is not a business day, on the first business day thereafter)
(the "Mandatory Redemption Date"), all remaining shares of Series D Preferred
then outstanding, for an amount equal to the Liquidation Preference for each
share outstanding, plus an amount in cash equal to all accrued but unpaid
dividends thereon to the Mandatory Redemption Date (the "Redemption Price").
Prior to authorizing or making such redemption with respect to the Series D
Preferred, the Corporation, by resolution of the Board of Directors shall, to
the extent of funds legally available therefor, declare a dividend on the Series
D Preferred payable on the Mandatory Redemption Date in an amount equal to any
accrued and unpaid dividends on the Series D Preferred as of such date and, if
the Corporation does not have sufficient legally available funds to declare and
pay all dividends accrued at the time of such redemption, any remaining accrued
and unpaid dividends


                                       12
<PAGE>
shall be added to the redemption price. After paying any accrued and unpaid
dividends pursuant to the foregoing sentence, if the funds of the Corporation
legally available for redemption of shares of the Series D Preferred then
required to be redeemed are insufficient to redeem the total number of such
shares then outstanding, those funds which are legally available shall be used
to redeem the maximum possible number of shares of the Series D Preferred, which
shares to be redeemed shall be allocated pro rata among the holders of the
Series D Preferred based on the number of shares of Series D Preferred held by
such holders. At any time and from time to time thereafter, when additional
funds of the Corporation are legally available to discharge its obligation to
redeem all of the outstanding shares of Series D Preferred required to be
redeemed pursuant to this section (the "Mandatory Redemption Obligation"), such
funds shall be immediately used to discharge such Mandatory Redemption
Obligation until the balance of such shares have been redeemed. If and so long
as the Mandatory Redemption Obligation shall not be fully discharged, dividends
on any remaining outstanding shares of Series D Preferred shall continue to
accrue and be added to the dividend payable pursuant to the second preceding
sentence.

          (c) Notice. The Corporation will provide notice of any redemption of
shares of Series D Preferred to holders of record of the Series D Preferred to
be redeemed not less than 30 nor more than 60 days prior to the date fixed for
such redemption. Such notice shall be provided by first-class mail postage
prepaid, to each holder of record of the Series D Preferred to be redeemed, at
such holder's address as it appears on the stock transfer books of the
Corporation. Each such mailed notice shall state, as appropriate, the following:

          (i) the redemption date;

          (ii) the number of shares of Series D Preferred to be redeemed and, if
     fewer than all the shares held by any holder are to be redeemed, the number
     of such shares to be redeemed from such holder;

          (iii) the Redemption Price;

          (iv) the place or places where certificates for such shares are to be
     surrendered for redemption;

          (v) the amount of full cumulative dividends per share of Series D
     Preferred to be redeemed accrued and unpaid up to but excluding such
     redemption date, and that dividends on shares of Series D Preferred to be
     redeemed will cease to accrue on such redemption date unless the
     Corporation shall default in payment of the Redemption Price plus such full
     cumulative dividends accrued and unpaid thereon;

          (vi) the name and location of any bank or trust company with which the
     Corporation will deposit redemption funds pursuant to subsection (e) below;

          (vii) the then-effective Conversion Price; and


                                       13
<PAGE>
          (viii) that the right of holders to convert shares of Series D
     Preferred to be redeemed will terminate at the close of business on the
     business day next preceding the date fixed for redemption (unless the
     Corporation shall default in the payment of the Redemption Price and such
     full cumulative dividends accrued and unpaid thereon).

Any notice that is mailed as set forth above shall be conclusively presumed to
have been duly given, whether or not the holder of shares of Series D Preferred
receives such notice, and failure to give such notice by mail, or any defect in
such notice, to the holders of any shares designated for redemption shall not
affect the validity of the proceedings for the redemption of any other shares of
Series D Preferred.

          (d) Mechanics of Redemption. Upon surrender in accordance with the
aforesaid notice of the certificate for any shares so redeemed (duly endorsed or
accompanied by appropriate instruments of transfer if so required by the
Corporation), the holders of record of such shares shall be entitled to receive
the redemption price, without interest, plus full cumulative dividends thereon
accrued and unpaid up to but excluding such redemption date out of funds legally
available therefor. If fewer than all the shares represented by any such
certificate are redeemed, a new certificate representing the unredeemed shares
shall be issued without cost to the holder thereof.

          (e) Redemption Funds. On the date of any redemption being made
pursuant to this Section, the Corporation shall, and at any time after notice of
such redemption shall have been mailed and before the date of redemption the
Corporation may, deposit for the benefit of the holders of shares of Series D
Preferred to be redeemed the funds necessary for such redemption with a bank or
trust company having a capital and surplus of at least $1 billion, with
instructions to such bank or trust company to pay the full redemption amounts as
provided herein to the holders of shares of Series D Preferred upon surrender of
certificates for such shares; provided, however, that the making of such deposit
shall not release the Corporation from any of its obligations hereunder. Any
moneys so deposited by the Corporation and unclaimed at the end of two years
from the date designated for such redemption shall revert to the general funds
of the Corporation and, upon demand, such bank or trust company shall pay over
to the Corporation such unclaimed amounts and thereupon such bank or trust
company shall be relieved of all responsibility in respect thereof and any
holder of shares of Series D Preferred so redeemed shall look only to the
Corporation for the payment of the full redemption amounts, as provided herein.

          (f) Rights After Redemption. Notice of redemption having been given as
aforesaid, upon the deposit pursuant to subsection (e) of the full redemption
amounts as provided herein in respect of all shares of Series D Preferred then
to be redeemed, notwithstanding that any certificates for such shares shall not
have been surrendered in accordance with subsection (d), from and after the date
of redemption designated in the notice of redemption: (i) the shares represented
thereby shall no longer be deemed outstanding, (ii) the rights to receive
dividends thereon shall cease to accrue, and (iii) all rights of the holders of
such shares of Series D Preferred shall cease and terminate, excepting only the
right to receive the full redemption amounts as provided herein without interest
thereon. If the funds deposited are not sufficient for redemption of the shares
of the Series D Preferred that were to be redeemed, then no certificates
evidencing such shares shall be deemed surrendered and such shares shall remain
outstanding


                                       14
<PAGE>
and the rights of holders of shares of Series D Preferred shall continue to be
those of holders of shares of the Series D Preferred.

     10. HEADINGS AND 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.

     11. SEVERABILITY OF PROVISIONS. If any voting powers, preferences and
relative, participating, optional and other special rights of the Series D
Preferred and qualifications, limitations and restrictions thereof set forth in
this resolution (as such resolution may be amended from time to time) are
invalid, unlawful or incapable of being enforced by reason of any rule of law or
public policy, all other voting powers, preferences and relative, participating,
optional and other special rights of the Series D Preferred and qualifications,
limitations and restrictions thereof set forth in this resolution (as so
amended) which can be given effect without the invalid, unlawful or
unenforceable voting powers, preferences and relative, participating, optional
and other special rights of the Series D Preferred and qualifications,
limitations and restrictions thereof shall, nevertheless, remain in full force
and effect, and no voting powers, preferences and relative, participating,
optional or other special rights of the Series D Preferred and qualifications,
limitations and restrictions thereof herein set forth shall be deemed dependent
upon any other such powers, preferences and relative, participating, optional or
other special rights of the Series D Preferred and qualifications, limitations
and restrictions thereof unless so expressed herein.


                                       15
<PAGE>
     IN WITNESS WHEREOF, Z-TEL TECHNOLOGIES, INC. has caused this Certificate
of Designations, Preferences and Relative Rights, Qualifications, Limitations
and Restrictions to be signed this 13th day of July 2000.

                                        Z-TEL TECHNOLOGIES, INC.


                                        By: /s/ D. Gregory Smith
                                            ------------------------------------
                                        Name: D. Gregory Smith
                                        Title: President and CEO


                                       16
<PAGE>
(    STATE OF DELAWARE    )
(    SECRETARY OF STATE   )
( DIVISION OF CORPORATIONS)
(FILED 10:00 AM 11/13/2000)
(   001568151 - 2873445   )

                            Z-TEL TECHNOLOGIES, INC.

                  CERTIFICATE OF DESIGNATION OF 8% CONVERTIBLE
              PREFERRED STOCK, SERIES E, SETTING FORTH THE POWERS,
              PREFERENCES, RIGHTS, QUALIFICATIONS, LIMITATIONS AND
                 RESTRICTIONS OF SUCH SERIES OF PREFERRED STOCK

          Pursuant to Section 151 of the Delaware General Corporation Law, Z-Tel
Technologies, Inc., a Delaware corporation (the "Corporation"), DOES HEREBY
CERTIFY:

          That pursuant to the authority conferred upon the Board of Directors
of the Corporation by the Certificate of Incorporation of the Corporation (the
"Charter"), the Board of Directors of the Corporation on October 17, 2000 duly
adopted the following resolution creating a series of Preferred Stock designated
as 8% Convertible Preferred Stock, Series E, and such resolution has not been
modified and is in full force and effect on the date hereof:

          RESOLVED that, pursuant to the authority vested in the Board of
Directors of the Corporation in accordance with the provisions of the Charter, a
series of the class of authorized Preferred Stock, par value $0.01 per share, of
the Corporation is hereby created and that the designation and number of shares
thereof and the voting powers, preferences and relative, participating, optional
and other special rights of the shares of such series, and the qualifications,
limitations and restrictions thereof are as follows:

Section 1. Designation and Number; Ranking

          (a) The shares of such series shall be designated as Series E
Convertible Preferred Stock (the "Series E Preferred"). The number of authorized
shares of the Series E Preferred shall be 6,250,000, which number may be
decreased (but not increased) by the Board of Directors without a vote of
stockholders; provided, however, that such number may not be decreased below the
number of then outstanding shares of Series E Preferred or shares of Series E
Preferred to be issued pursuant to the Stock Purchase Agreement (as defined
below).

          (b) The Series E Preferred shall, with respect to dividend rights and
rights on liquidation, dissolution or winding up, rank on a parity with the
Series D Convertible Preferred Stock, par value of $0.01 per share of the
Corporation and prior to all other classes and series of Junior Stock (as
defined below) of the Corporation now or hereafter authorized including, without
limitation, the Common Stock (as defined below).

          (c) Capitalized terms used herein and not otherwise defined shall have
the meanings set forth in Section 11.

Section 2. Dividends and Distributions.

          (a) Series E Dividends. The holders of shares of Series E Preferred,
in preference to the holders of shares of Common Stock and of any shares of
other Junior
<PAGE>
                                                                               2


Stock of the Corporation, shall be entitled to receive, when, as and if declared
by the Board of Directors, out of the assets of the Corporation legally
available therefor, cumulative cash dividends at an annual rate per share of
Series E Preferred equal to 8.00% of the Liquidation Preference with respect to
such share per annum ("Series E Dividend Rate"), calculated on the basis of a
360-day year consisting of twelve 30-day months, accruing and payable in equal
quarterly payments, in immediately available funds, on the last day of March,
June, September and December or, if any such day is not a Business Day, the next
succeeding Business Day, in each year (each such date being referred to herein
as a "Quarterly Dividend Payment Date"), commencing on the first quarterly
dividend date to occur after the issue date of such shares; provided that the
dividend payable on the first Quarterly Dividend Payment Date to occur after the
original issue date shall be computed based on the number of days prior to such
date that the Series E Preferred has been issued and outstanding; and provided
further that, notwithstanding the foregoing (i) no dividends shall be paid or
payable in cash with respect to any share of Series E Preferred until the
earliest of the date (x) such share is redeemed in accordance with the terms of
the Series E Preferred and (y) payment is made to the Series E Preferred
pursuant to Section 7 and (ii) upon conversion of any share of Series E
Preferred, accrued dividends shall be treated as contemplated by Section 8 or
Section 10.

          (b) Dividend Arrearage. If as of any Quarterly Dividend Payment Date
there is a Dividend Arrearage (as hereinafter defined), an additional dividend
(the "Additional Dividend") shall accrue on each share of the Series E Preferred
for the period from such Quarterly Dividend Payment Date through the earlier of
(x) the date on which such Dividend Arrearage is paid in full and (y) the next
succeeding Quarterly Dividend Payment Date, in an amount equal to the product of
(i) the Series E Dividend Rate and (ii) the amount of such Dividend Arrearage as
of such Quarterly Dividend Payment Date. For purposes of this Section 2(b),
"Dividend Arrearage" shall mean, with respect to each share of Series E
Preferred, as of any Quarterly Dividend Payment Date, the excess, if any of (i)
the sum of all dividends theretofore accrued on such share in accordance with
Section 2(a) (including those accrued as of and including such Quarterly
Dividend Payment Date) plus all Additional Dividends, if any, theretofore
accrued on such share in accordance with this Section 2(b) (including those
accrued as of and including such Quarterly Dividend Payment Date), over (ii) all
dividends actually paid with respect to such share on or before such Quarterly
Dividend Payment Date.

          (c) Accrual of Dividends. Dividends payable pursuant to Section 2(a)
shall begin to accrue and be cumulative from the Issue Date, and shall accrue on
a daily basis, in each case whether or not declared. Dividends paid on the
shares of Series E Preferred in an amount less than the total amount of such
dividends at the time accrued and payable on such shares shall be allocated pro
rata on a share-by-share basis among all such shares of Series E Preferred at
the time outstanding. The Board of Directors may fix a record date for the
determination of holders of shares of Series E Preferred entitled to receive
payment of a dividend declared thereon, which Record date shall be no more than
60 days or less than 10 days prior to the date fixed for the payment thereof.
Accumulated
<PAGE>
                                                                               3


but unpaid dividends for any past quarterly dividend periods may be declared and
paid at any time, without reference to any regular Quarterly Dividend Payment
Date, to holders of record on such date, not more than 60 nor less than 10 days
preceding the payment date thereof, as may be fixed by the Board of Directors.

          (d) Other Dividends. In addition to the dividends or distributions on
the Series E Preferred described in Section 2(a), in the event that the
Corporation shall declare a dividend or make any other distribution (including,
without limitation, in cash, in capital stock (which shall include, without
limitation, any options, warrants or other rights to acquire capital stock) of
the Corporation, whether or not pursuant to a shareholder rights plan, "poison
pill" or similar arrangement, or other property or assets)) to holders of Common
Stock, then the Board of Directors shall declare and the holder of each share of
Series E Preferred shall be entitled to receive a dividend or distribution in an
amount equal to the amount of such dividend or distribution received by a holder
of the number of shares of Common Stock for which such share of Series E
Preferred is convertible on the record date for such dividend or distribution.
Any such amount shall be paid to the holders of shares of Series E Preferred at
the same time such dividend or distribution is made to holders of Common Stock.

Section 3. Voting Rights.

          In addition to any voting rights provided by law, the holders of
shares of Series E Preferred shall have the following voting rights:

          (a) So long as the Series E Preferred is outstanding, each share of
Series E Preferred shall entitle the holder thereof to vote, in person or by
proxy, at a special or annual meeting of stockholders, on all matters voted on
by holders of Common Stock voting together as a single class with other shares
entitled to vote thereon. With respect to any such vote, each share of Series E
Preferred shall entitle the holder thereof to cast that number of votes per
share as is equal to the number of votes that such holder would be entitled to
cast had such holder converted such share of Series E Preferred into Common
Stock on the record date for determining the stockholders of the Corporation
eligible to vote on any such matters.

          (b) Protective Provisions. Unless the consent or approval of a greater
number of shares shall then be required by law, the affirmative vote of the
holders of at least 50% of the outstanding shares of Series E Preferred, voting
separately as a single class, shall be necessary to:

               (i) authorize, increase the authorized number of shares of, or
issue (including on conversion or exchange of any convertible or exchangeable
securities or by reclassification), any shares of any class or classes of Senior
Stock, Parity Stock, the Series E Preferred or Junior Stock, if in the case of
Junior Stock, such Stock has a mandatory or optional redemption date and such
dates could be earlier than the Mandatory Redemption Date or the Optional
Redemption Date;
<PAGE>
                                                                               4


               (ii) authorize, adopt or approve an amendment to the Charter that
would increase or decrease the par value of the shares of Series E Preferred, or
alter or change the powers, preferences or special rights of the shares of
Series E Preferred or the shares of any class of Parity Stock or Senior Stock;

               (iii) amend or alter the Charter so as to affect the shares of
Series E Preferred adversely, including by granting any voting right to any
holder of notes, bonds, debentures or other debt obligations of the Corporation,
by reclassifying any capital stock into Senior Stock or Parity Stock or by
amending the terms of any class of Parity Stock or Senior Stock or amending the
terms covering redemption of any Junior Stock;

               (iv) authorize or issue any security convertible into,
exchangeable for or evidencing the right to purchase or otherwise receive any
shares of any class or classes of Senior Stock or Parity Stock;

               (v) effect any sale or merger of a Material Subsidiary or effect
a sale of assets of the Corporation in any transaction or series of transactions
having an aggregate fair market value of more than $50 million during any 365
day period;

               (vi) incur any indebtedness for borrowed money other than
indebtedness under receivable financing arrangements not to exceed $50 million
in the aggregate total if, after giving effect to the incurrence of such
indebtedness, the indebtedness for borrowed money of the Corporation exceeds the
Permissible Amount;

               (vii) take any action which would have the effect of reducing
stockholders equity as defined by GAAP by more than 10% during any 365 day
period;

               (viii) issue shares of Common Stock or securities convertible
into Common Stock (other than issuances for cash or issuances pursuant to a
stock option plan approved by the Board of Directors of the Corporation) if such
issuance would increase, during any 365 day period, the number of shares of
Common Stock outstanding on a fully-diluted basis by more than 20%;

               (ix) effect any Change of Control of the Corporation in
connection with which a vote of shareholders of the Corporation is required; or

               (x) effect the voluntary liquidation, dissolution, winding up,
recapitalization or reorganization of the Corporation, or the consolidation or
merger of the Corporation with or into any other Person (except a wholly-owned
subsidiary of the Corporation), or the sale or other distribution to another
Person of all or substantially all of the assets of the Corporation in each case
not constituting a Change of Control in connection with which a vote of
shareholders of the Corporation is required; provided, however, that no separate
vote of the holders of the Series E Preferred as a class shall be
<PAGE>
                                                                               5


required under this clause (x) in the case of a recapitalization,
reorganization, consolidation or merger of the Corporation if:

                    (A) the resulting or surviving corporation will have after
such recapitalization, reorganization, consolidation or merger no Senior Stock
or Parity Stock either authorized or outstanding (except such Senior Stock or
Parity Stock of the Corporation as may have been authorized or outstanding
immediately preceding such consolidation or merger, or such stock of the
resulting or surviving corporation (having the same powers, preferences and
special rights of any such Senior Stock or Parity Stock) as may be issued in
exchange therefor),

                    (B) each holder of shares of Series E Preferred immediately
preceding such recapitalization, reorganization, consolidation or merger will
receive in exchange therefor the same number of shares of stock, with the same
preferences, rights and powers, of the resulting or surviving corporation, and

                    (C) after such recapitalization, reorganization,
consolidation or merger the resulting or surviving corporation shall not be in
breach of any of the terms hereof.

          (c) Exercise of Voting Rights. The foregoing right of holders of
shares of Series E Preferred to take any action as provided in Section 3(b) may
be exercised at any annual meeting of stockholders or at a special meeting of
holders of shares of Series E Preferred held for such purpose or at any
adjournment thereof, or by the written consent, delivered to the Secretary of
the Corporation, of the holders of the minimum number of shares required to take
such action.

                    In connection with the exercise of such right (and unless
such right has been exercised by written consent of the minimum number of shares
required to take such action), the President of the Corporation may call, and
upon the written request of holders of record of at least 5% of the outstanding
shares of Series E Preferred, addressed to the Secretary of the Corporation at
the principal office of the Corporation, shall call, a special meeting of the
holders of Series E Preferred. Such meeting shall be held within 30 days after
delivery of such request to the Secretary, at the place and upon the notice
provided by law and in the by-laws of the Corporation for the holding of
meetings of stockholders.

               (i) At each meeting of stockholders at which the holders of
shares of Series E Preferred shall have the right, voting separately as a single
class, to take any action, the presence in person or by proxy of the holders of
record of one third of the total number of shares of Series E Preferred then
outstanding and entitled to vote on the matter shall be necessary and sufficient
to constitute a quorum of such holders. At any such meeting or at any
adjournment thereof:
<PAGE>
                                                                               6


                    (A) the absence of a quorum of the holders of shares of
Series E Preferred shall not prevent the election of directors, and the absence
of a quorum of the holders of shares of any other class of series of capital
stock shall not prevent the taking of any action as provided in this Section 3;
and

                    (B) in the absence of a quorum of the holders of shares of
Series E Preferred, a majority of the holders of such shares present in person
or by proxy shall have the power to adjourn the meeting as to the actions to be
taken by the holders of shares of Series E Preferred from time to time and place
to place without notice other than announcement at the meeting until a quorum
shall be present.

          For taking of any action by the holders of shares of Series E
Preferred, voting separately as a class, each such holder shall have one vote
for each share of such stock standing in his name on the transfer books of the
Corporation as of any record date fixed for such purpose or, if no such date be
fixed, at the close of business on the Business Day next preceding the day on
which notice is given, or if notice is waived, at the close of business on the
Business Day next preceding the day on which the meeting is held; provided,
however, that shares of Series E Preferred held by the Corporation or any
Affiliate of the Corporation shall not be deemed to be outstanding for purposes
of taking any action as provided in this Section 3.

Section 4. Certain Restrictions.

          (a) No Dividends. Whenever quarterly dividends payable on shares of
Series E Preferred as provided in Section 2 are not paid in full in cash, at
such time and thereafter until all unpaid dividends payable, whether or not
declared, on the outstanding shares of Series E Preferred shall have been paid
in full in cash or declared and set apart in cash for payment, or whenever the
Corporation shall not have converted or exchanged shares of Series E Preferred
at a time required by Section 8 or 10, at such time and thereafter until all
conversion and exchange obligations provided in Section 8 or 10 that have come
due shall have been satisfied the Corporation shall not: (A) declare or pay
dividends, or make any other distributions, on any shares of Junior Stock or (B)
declare or pay dividends, or make any other distributions, on any shares of
Parity Stock, except (i) dividends or distributions paid ratably on the Series E
Preferred and all Parity Stock on which dividends are payable or in arrears, in
proportion to the total amounts to which the holders of all shares of the Series
E Preferred and such Parity Stock are then entitled and (ii) dividends paid on
the Series D Convertible Preferred Stock pursuant to the Certificate of
Designation of the Series D Convertible Preferred Stock dated July 13, 2000 so
long as dividends on the Series E Preferred are not payable at that time.

          (b) No Redemption. Whenever dividends payable on shares of Series E
Preferred as provided in Section 2(a) are not paid in full in cash, at such time
and thereafter until all unpaid dividends payable, whether or not declared, on
the outstanding shares of Series E Preferred shall have been paid in full in
cash or declared and set apart in cash for payment, or whenever the Corporation
shall not have converted or exchanged shares of Series E Preferred at a time
required by Section 8 or 10, at such time and there-
<PAGE>
                                                                               7


after until all conversion and exchange obligations provided in Section 8 or 10
that have come due shall have been satisfied, the Corporation shall not redeem,
purchase or otherwise acquire for consideration any shares of Junior Stock or
Parity Stock; provided, however, that (A) the Corporation may accept shares of
any Senior Stock, Parity Stock or Junior Stock for conversion into Junior Stock
and (B) the Corporation may at any time redeem, purchase or otherwise acquire
shares of any Parity Stock pursuant to any mandatory redemption, put, sinking
fund or other similar obligation contained in such Parity Stock, pro rata with
the Series E Preferred in proportion to the total amount then required to be
applied by the Corporation to redeem, repurchase, convert, exchange or otherwise
acquire shares of Series E Preferred and shares of such Parity Stock.

          (c) Subsidiary Action. The Corporation shall not permit any Subsidiary
of the Corporation, or cause any other Person, to purchase or otherwise acquire
for consideration any shares of capital stock of the Corporation unless the
Corporation could, pursuant to Section 4(b), purchase such shares at such time
and in such manner; provided that this provision shall not prohibit sales of
shares of capital stock by the Corporation to any third party.

Section 5. Redemption.

          (a) Optional Redemption. Except as otherwise set forth in this Section
5, the Corporation shall not have any right to redeem any shares of Series E
Preferred prior to the third anniversary of the Issue Date. On and after the
third anniversary of the Issue Date, or in connection with any Change in
Control, the Corporation shall have the right, at its sole option and election,
to redeem the shares of Series E Preferred, in whole but not in part, on not
less than 30 days notice of the date of redemption (any such date an "Optional
Redemption Date") at a price per share (the "Optional Redemption Price") equal
to the applicable percentage set forth below of the sum of the (i) Liquidation
Preference per share and (ii) any accrued and unpaid dividends thereon
(including Additional Dividends), whether or not declared or payable, to the
applicable Optional Redemption Date, in immediately available funds.
<PAGE>
                                                                               8


<TABLE>
<CAPTION>
   IF REDEEMED ON OR AFTER THE           AND REDEEMED BEFORE THE
ANNIVERSARY OF THE ORIGINAL ISSUE   ANNIVERSARY OF THE ORIGINAL ISSUE
        DATE OCCURRING IN                   DATE OCCURRING IN           APPLICABLE PERCENTAGE
---------------------------------   ---------------------------------   ---------------------
<S>                                 <C>                                 <C>
              2003                                2004                           105%
              2004                                2005                           104%
              2005                                2006                           103%
              2006                                2007                           102%
              2007                                2008                           101%
</TABLE>

          (b) Mandatory Redemption. To the extent permitted by law, the
Corporation shall redeem, on the eighth anniversary of the Original Issue Date
(or, if such day is not a Business Day, on the first Business Day thereafter)
(the "Mandatory Redemption Date"), all remaining shares of Series E Preferred
then outstanding, for an amount equal to the Liquidation Preference for each
share outstanding, plus an amount in cash equal to all accrued but unpaid
dividends thereon (including Additional Dividends) to the Mandatory Redemption
Date (the "Mandatory Redemption Price"), in immediately available funds. Prior
to authorizing or making such redemption with respect to the Series E Preferred,
the Corporation, by resolution of the Board of Directors shall, to the extent of
funds legally available therefor, declare a dividend on the Series E Preferred
payable on the Mandatory Redemption Date in an amount equal to any accrued and
unpaid dividends on the Series E Preferred as of such date (including Additional
Dividends) and, if the Corporation does not have sufficient legally available
funds to declare and pay all dividends accrued at the time of such redemption,
any remaining accrued and unpaid dividends (including Additional Dividends)
shall be added to the Mandatory Redemption Price. After paying any accrued and
unpaid dividends pursuant to the foregoing sentence, if the funds of the
Corporation legally available for redemption of shares of the Series E Preferred
then required to be redeemed are insufficient to redeem the total number of such
shares then outstanding, those funds which are legally available shall be used
to redeem the maximum possible number of shares of the Series E Preferred, which
shares to be redeemed shall be allocated pro rata among the holders of the
Series E Preferred based on the number of shares of Series E Preferred held by
such holders. At any time and from time to time thereafter, when additional
funds of the Corporation are legally available to discharge its obligation to
redeem all of the outstanding shares of Series E Preferred required to be
redeemed pursuant to this Section (the "Mandatory Redemption Obligation"), such
funds shall be immediately used to discharge such Mandatory Redemption
Obligation until the balance of such shares have been redeemed. If and so long
as the Mandatory Redemption Obligation shall not be fully discharged, dividends
on any remaining outstanding shares of Series E Preferred shall continue to
accrue and be added to the dividend payable pursuant to the second preceding
sentence.

          (c) Change of Control. If, on or prior to the third anniversary of the
Issue Date, (i) a Change of Control occurs, a holder of Series E Preferred may
<PAGE>
                                                                               9


require the Corporation to redeem the holder's shares of Series E Preferred, in
whole but not in part (the "Holder's Put Right") or (ii) the corporation wishes
to effect a Change of Control in connection with which a vote of the
shareholders is required and the holders of a majority of the shares of Series E
Preferred notify the Corporation that they intend to exercise their right under
Section 3(b)(ix) to vote against a proposed transaction that would result in a
Change of Control, the Corporation may require the holders of Series E Preferred
to surrender all but not less than all their shares of Series E Preferred for
redemption (the "Company Call Right"), in either case at a price per share (the
"Control Redemption Price") equal to 125% of the sum of the (a) Liquidation
Preference plus (B) an amount per share equal to all accrued and unpaid
dividends thereon (including Additional Dividends), whether or not declared or
payable, in immediately available funds. (The Control Redemption Price, Optional
Redemption Price and Mandatory Redemption Price are sometimes referred to as the
"Applicable Redemption Price," which Price in all cases, includes full
cumulative dividends accrued and unpaid (including Additional Dividends) on the
shares of Series E Preferred being redeemed. The Control Redemption Date (as
defined below). Optional Redemption Date, and Mandatory Redemption Date are
sometimes referred to as the "Applicable Redemption Date".)

          (d) Notice.

               (i) The Corporation will provide notice to holders of record of
the Series E Preferred (x) of any redemption pursuant to Section 5(a) or 5(b)
not less than 30 nor more than 60 days prior to the date fixed for such
redemption (a "Redemption Notice") and (y) of any Change of Control within 30
days of such Change of Control, provided that in the case of a Change of Control
requiring a shareholder vote, the Corporation shall provide such notice at least
30 days prior to the date fixed for the meeting of holders of Series E Preferred
called to vote on that proposed transaction (a "Change of Control Notice"). Any
Notice provided pursuant to this Section 8(d) shall be provided by first-class
mail postage prepaid, to each holder of record of the Series E Preferred, at
such holder's address as it appears on the stock transfer books of the
Corporation.

               (ii) Each Redemption Notice shall state, as appropriate, (x) the
Applicable Redemption Date; (y) the number of shares of Series E Preferred to be
redeemed and, if fewer than all the shares held by any holder are to be
redeemed, the number of such shares to be redeemed from such holder; and (z) the
Optional Redemption Price or Mandatory Redemption Price.

               (iii) Each Change of Control Notice shall stale that: (v) the
Corporation proposes to effect a Change of Control in connection with which a
vote of shareholders is required and the holders of the Series E Preferred have
the right to approve such transaction; (w) if holders of 50% or more of the
outstanding shares of Series E Preferred notify the Corporation that they will
not approve such transaction within 20 days of the receipt of the Change of
Control Notice, the Corporation may redeem all but not less than all the shares
of Series E Preferred; (x) if a Change of Control
<PAGE>
                                                                              10


occurs, each holder has the right to require the Company to redeem its shares of
Series E Preferred and any shares of Series E Preferred not tendered for
redemption will remain outstanding and continue to accrue dividends (including
Additional Dividends); (y) the Control Redemption Price; and (z) the date on
which the Corporation must redeem the shares upon exercise of the Holder's Put
Right or the Company Call Right, whichever is applicable (in either case, the
"Control Redemption Date"), which shall be not later than 30 days from the date
the Change of Control Notice is mailed. Within 20 days of receipt of the Change
of Control Notice notifying that the Corporation proposes to effect a Change of
Control in connection with which a shareholder vote is required, each holder of
Series E Preferred shall notify the Corporation as to whether it will vote to
approve or vote against such transaction. If it states it will approve such
transaction, then that holder of Series E Preferred agrees to vote in favor of
the transaction.

                    (iv) In addition, each Redemption Notice and Change of
Control Notice shall state, as appropriate, (v) the place or places where
certificates for such shares are to be surrendered for redemption; (w) the
amount of full cumulative dividends per share of Series E Preferred to be
redeemed (including Additional Dividends) up to but excluding the Applicable
Redemption Date, and that dividends on shares of Series E Preferred to be
redeemed will cease to accrue on such Redemption Date unless the Corporation
shall default in payment of the Applicable Redemption Price; (x) the name and
location of any bank or trust company with which the Corporation will deposit
redemption funds pursuant to subsection (f) below; (y) the then-effective
Conversion Price; and (z) that the right of holders to convert shares of Series
E Preferred to be redeemed will terminate at the close of business on the
Business Day next preceding the date fixed for redemption (unless the
Corporation shall default in the payment of the Applicable Redemption Price).

Any Notice that is mailed pursuant to clause (i) shall be conclusively presumed
to have been duly given, whether or not the holder of shares of Series E
Preferred receives such notice, and failure to give such notice by mail, or any
defect in such notice, to the holders of any shares designated for redemption
shall not affect the validity of the proceedings for the redemption of any other
shares of Series E Preferred.

               (e) Mechanics of Redemption. Upon surrender in accordance with
any notice referred to in subsection (d) above of the certificate for any shares
redeemed pursuant to Section 8(a), (b) or (c) (duly endorsed or accompanied by
appropriate instruments of transfer if so required by the Corporation), the
holders of record of such shares shall be entitled to receive the Applicable
Redemption Price, without interest, up to but excluding such Redemption Date out
of funds legally available therefor. If fewer than all the shares represented
by any such certificate are redeemed, a new certificate representing the
unredeemed shares shall be issued without cost to the holder thereof.

               (f) Redemption Funds. On the date of any redemption being made
pursuant to this Section, the Corporation shall, and at any time after mailing
the
<PAGE>
                                                                              11


Redemption Notice or Change of Control Notice and before the Applicable
Redemption Date the Corporation may, deposit for the benefit of the holders of
shares of Series E Preferred to be redeemed the funds necessary for such
redemption with a bank or trust company having a capital and surplus of at least
$1 billion, with instructions to such bank or trust company to pay the full
redemption as provided herein to the holders of shares of Series E Preferred
upon surrender of certificates for such shares; provided, however, that the
making of such deposit shall not release the Corporation from any of its
obligations hereunder. Any moneys so deposited by the Corporation and unclaimed
at the end of two years from the Applicable Redemption Date shall revert to the
general funds of the Corporation and, upon demand, such bank or trust company
shall pay over to the Corporation such unclaimed amounts and thereupon such bank
or trust company shall be relieved of all responsibility in respect thereof and
any holder of shares of Series E Preferred so redeemed shall look only to the
Corporation for the payment of the full redemption amounts, as provided herein.

               (g) Rights After Redemption. Notice of redemption having been
given as provided in Section 8(d), upon the deposit pursuant to subsection (f)
of the full redemption amounts as provided herein in respect of all shares of
Series E Preferred then to be redeemed, notwithstanding that any certificates
for such shares shall not have been surrendered in accordance with subsection
(e), from and after the Applicable Redemption Date: (i) the shares represented
thereby shall no longer be deemed outstanding, (ii) the right to receive
dividends thereon shall cease to accrue, and (iii) all rights of the holders of
such shares of Series E Preferred shall cease and terminate, excepting only the
right to receive the full redemption amounts as provided herein without interest
thereon. If the funds deposited are not sufficient for redemption of the shares
of the Series E Preferred that were to be redeemed, then no certificates
evidencing such shares shall be deemed surrendered and such shares shall remain
outstanding and the rights of holders of shares of Series E Preferred shall
continue to be those of holders of shares of the Series E Preferred.

Section 6. Reacquired Shares.

               Any shares of Series E Preferred converted, exchanged, redeemed,
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
shares of Series E Preferred shall upon their cancellation become authorized but
unissued shares of preferred stock, par value $.01 per share, of the Corporation
and, upon the filing of an appropriate Certificate of Designation with the
Secretary of State of the State of Delaware, may be reissued as part of another
series of preferred stock, par value $.01 per share, of the Corporation subject
to the conditions or restrictions on issuance set forth therein, but in any
event may not be reissued as shares of Series E Preferred unless all shares of
the Series E Preferred issued on the Issue Date shall have already been
redeemed, converted or exchanged.

Section 7. Liquidation, Dissolution or Winding Up.
<PAGE>
                                                                              12


          (a) Effect of Liquidation. If the Corporation shall commence a
voluntary case under the United States bankruptcy laws or any applicable
bankruptcy, insolvency or similar law of any other country, or consent to the
entry of an order for relief in an involuntary case under any such law or to the
appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or other similar official) of the Corporation or of any
substantial part of its property, or make an assignment for the benefit of its
creditors, or admit in writing its inability to pay its debts generally as they
become due (any such event, a "Voluntary Liquidation Event"), or if a decree or
order for relief in respect of the Corporation shall be entered by a court
having jurisdiction in the premises in an involuntary case under the United
States bankruptcy laws or any applicable bankruptcy, insolvency or similar law
of any other country, or appointing a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or other similar official) of the Corporation or of any
substantial part of its property, or ordering the winding up or liquidation of
its affairs, and on account of any such event the Corporation shall liquidate,
dissolve or wind up, or if the Corporation shall otherwise liquidate, dissolve
or wind up, no distribution shall be made:

               (i) to the holders of shares of Junior Stock unless, prior
thereto, the holders of shares of Series E Preferred, subject to Section 8,
shall have received the greater of (A) (1) if a Voluntary Liquidation Event
shall have occurred, the Optional Redemption Price with respect to each share
(or if such event is a Change of Control, the amount payable under Section 5(c)
with respect to such share) and (2) if a Voluntary Liquidation Event shall not
have occurred, the Liquidation Preference, plus all accrued and unpaid
dividends, whether or not declared or currently payable, to the date of
distribution, with respect to each share and (B) the amount per share (subject
to adjustment to reflect stock splits, stock dividends, stock combinations,
recapitalizations and like occurrences) for each outstanding share of Series E
Preferred as if the holders had converted such shares into shares of Common
Stock immediately prior to the liquidation, dissolution or winding up, or

               (ii) to the holders of shares of Parity Stock, except
distributions made ratably on the Series E Preferred and all other Parity Stock
in proportion to the total amounts to which the holders of all shares of the
Series E Preferred and other Parity Stock are entitled upon such liquidation,
dissolution or winding up;

provided that any distributions referred to in clauses (i) and (ii) shall also
include all amounts payable to the holders of shares of Series E Preferred under
this Section 7 or Section 5(c) as a result of a Change in Control.

Nothing in this section shall affect the rights of holders of shares of Series E
Preferred under Section 3 with respect to a Voluntary Liquidation Event.

          (b) Voluntary Liquidation. For purposes of this Section 7, the holders
of a majority of the outstanding shares of the Series E Preferred may elect to
have treated
<PAGE>
                                                                              13


as a Voluntary Liquidation Event the consolidation or merger of the Corporation
with or into any other corporation or the sale or other transfer in a single
transaction or a series of related transactions of all or substantially all of
the assets of the Corporation, or any other reorganization or business
combination of the Corporation or a Change of Control.

Section 8. Voluntary Conversion.

          (a) Conversion Right. Any holder of Series E Preferred shall have the
right, at its option, at any time and from time to time, to convert, subject to
the terms and provisions of this Section 8, any or all of such holder's shares
of Series E Preferred into such number of fully paid and non-assessable shares
of Common Stock as is equal, subject to Section 8(f), to the product of the
number of shares of Series E Preferred being so converted multiplied by the
quotient of (i) the sum of the Liquidation Preference and all dividends accrued
and unpaid (including Additional Dividends) on the Series E Preferred so
converted to the date of conversion divided by (ii) the Conversion Price (as
defined below) then in effect, except that with respect to any shares which
shall be called for exchange or redemption, such right shall terminate at the
close of business on the date of exchange or redemption for such shares, unless
in any such case the Corporation shall default in performance or payment due
upon exchange or redemption thereof. The Conversion Price shall be $12.00,
subject to adjustment as set forth in Section 8(c). Such conversion right shall
be exercised by the surrender of the shares to be converted to the Corporation
at any time during usual business hours at its principal place of business to be
maintained by it, accompanied by written notice that the holder elects to
convert such Shares and, subject to Section 8(j), specifying the name or names
(with address) in which a certificate or certificates for shares of Common Stock
are to be issued and (if so required by the Corporation) by a written instrument
or instruments of transfer in form reasonably satisfactory to the Corporation
duly executed by the holder or its duly authorized legal representative and
transfer tax stamps or funds therefor, if required pursuant to Section 8(j). All
shares of Series E Preferred surrendered for conversion shall be delivered to
the Corporation for cancellation and canceled by it and no shares of Series E
Preferred shall be issued in lieu thereof.

          (b) Mechanics of Conversion. As promptly as practicable after the
surrender, as herein provided, of any shares of Series E Preferred for
conversion pursuant to Section 8(a), the Corporation shall deliver to or upon
the written order of the holder of such shares so surrendered a certificate or
certificates representing the number of fully paid and non-assessable shares of
Common Stock into which such shares of Series E Preferred have been converted in
accordance with the provisions of this Section 8. Subject to the following
provisions of this paragraph and of Section 8(c), such conversion shall be
deemed to have been made immediately prior to the close of business on the date
that such shares of Series E Preferred shall have been surrendered in
satisfactory form for conversion, and the Person or Persons entitled to receive
the Common Stock deliverable upon conversion of such shares of Series E
Preferred shall be treated for all purposes as having become the record holder
or holders of such Common Stock at such time, and such conversion shall be at
the Conversion Price in effect at such time; provided,
<PAGE>
                                                                              14


however, that no surrender shall be effective to constitute the Person or
Persons entitled to receive the Common Stock deliverable upon such conversion as
the record holder or holders of such Common Stock while the share transfer books
of the Corporation shall be closed (but not for any period in excess of five
days), but such surrender shall be effective to constitute the Person or Persons
entitled to receive such Common Stock as the record holder or holders thereof
for all purposes immediately prior to the close of business on the next
succeeding day on which such share transfer books are open, and such conversion
shall be deemed to have been made at, and shall be made at the Conversion Price
in effect at, such time on such next succeeding day.

          (c) Adjustment of Conversion Price. The Conversion Price (and the
price at which a share of Common Stock is valued pursuant to Section 10) shall
be subject to adjustment as follows:

               (i) In case the Corporation shall at any time or from time to
time after the Issue Date (A) pay a dividend or make a distribution (other than
a dividend or distribution paid or made to holders of shares of Series E
Preferred in the manner provided in Section 2(d)) on the outstanding shares of
Common Stock in capital stock (which, for purposes of this Section 8(c) shall
include, without limitation, any options, warrants or other rights to acquire
capital stock) of the Corporation, (B) subdivide the outstanding shares of
Common Stock into a larger number of shares, (C) combine the outstanding shares
of Common Stock into a smaller number of shares, (D) issue any shares of its
capital stock in a reclassification of the Common Stock or (E) pay a dividend or
make a distribution (other than a dividend or distribution paid or made to
holders of shares of Series E Preferred in the manner provided in Section 2(d))
on the outstanding shares of Common Stock in securities of the Corporation
pursuant to a shareholder rights plan, "poison pill" or similar arrangement,

then, and in each such case, the Conversion Price in effect immediately prior to
such event shall be adjusted (and any other appropriate actions shall be taken
by the Corporation) so that the holder of any share of Series E Preferred
thereafter surrendered for conversion shall be entitled to receive the number of
shares of Common Stock or other securities of the Corporation that such holder
would have owned or would have been entitled to receive upon or by reason of any
of the events described above, had such share of Series E Preferred been
converted immediately prior to the occurrence of such event. An adjustment made
pursuant to this Section 8(c)(i) shall become effective retroactively (A) in the
case of any such dividend or distribution, to a date immediately following the
close of business on the record date for the determination of holders of Common
Stock entitled to receive such dividend or distribution or (B) in the case of
any such subdivision, combination or reclassification, to the close of business
on the day upon which such corporate action becomes effective.

               (ii) In case the Corporation shall at any time or from time to
time after the Issue Date issue shares of Common Stock (or securities
convertible into or exchangeable for Common Stock, or any options, warrants or
other rights to acquire
<PAGE>
                                                                              15


shares of Common Stock) for a consideration per share less than either the
Conversion Price or the Current Market Price per share of Common Stock then in
effect at the record date or issuance date, as the case may be (the "Date"),
referred to in the following sentence (treating the price per share of any
security convertible or exchangeable or exercisable into Common Stock as equal
to (A) the sum of the price for such security convertible, exchangeable or
exercisable into Common Stock plus any additional consideration payable (without
regard to any anti-dilution adjustments) upon the conversion, exchange or
exercise of such security into Common Stock divided by (B) the number of shares
of Common Stock initially underlying such convertible, exchangeable or
exercisable security),

then, and in each such case, the Conversion Price then in effect shall be
adjusted by dividing the Conversion Price in effect on the day immediately prior
to the Date by a fraction (x) the numerator of which shall be the sum of the
number of shares of Common Stock outstanding on the Date plus the number of
additional shares of Common Stock issued or to be issued (or the maximum number
into which such convertible or exchangeable securities initially may convert or
exchange or for which such options, warrants or other rights initially may be
exercised) and (y) the denominator of which shall be the sum of the number of
shares of Common Stock outstanding on the Date plus the number of shares of
Common Stock which the aggregate consideration for the total number of such
additional shares of Common Stock so issued or to be issued upon the conversion,
exchange or exercise of such convertible or exchangeable securities or options,
warrants or other rights (plus the aggregate amount of any additional
consideration initially payable upon such conversion, exchange or exercise of
such security) would purchase at the greater of the Conversion Price or Current
Market Price per share of Common Stock on the Date, as the case may be.

Such adjustment shall be made whenever such shares, securities, options,
warrants or other rights are issued, and shall, in each case, become effective,
in each case, retroactively to a date immediately following the close of
business (1) in the case of issuance to stockholders of the Corporation, as
such, on the record date for the determination of stockholders entitled to
receive such shares, securities, options, warrants or other rights and (2) in
all other cases, on the date ("issuance date") of such issuance; provided that:

                    (A) the determination as to whether an adjustment is
required to be made pursuant to this Section 8(d)(ii) shall be made upon the
issuance of such shares or such convertible or exchangeable securities, options,
warrants or other rights;

                    (B) if any convertible or exchangeable securities, options,
warrants or other rights (or any portions thereof) which shall have given rise
to an adjustment pursuant to this Section 8(d)(ii) shall have expired or
terminated without the exercise thereof and/or if by reason of the terms of such
convertible or exchangeable securities, options, warrants or other rights there
shall have been an increase or increases,
<PAGE>
                                                                              16


with the passage of time or otherwise, in the price payable upon the exercise or
conversion thereof, then the Conversion Price hereunder shall be readjusted (but
to no greater extent than originally adjusted) on the basis of (1) eliminating
from the computation any additional shares of Common Stock corresponding to such
convertible or exchangeable securities, options, warrants or other rights as
shall have expired or terminated, (2) treating the additional shares of Common
Stock, if any, actually issued or issuable pursuant to the previous exercise of
such convertible or exchangeable securities, options, warrants or other rights
as having been issued for the consideration actually received and receivable
therefor and (3) treating any of such convertible or exchangeable securities,
options, warrants or other rights which remain outstanding as being subject to
exercise or conversion on the basis of such exercise or conversion price as
shall be in effect at this time; and

                    (C) no adjustment in the Conversion Price shall be made
pursuant to this Section 8(d)(ii) as a result of any issuance of securities by
the Corporation in respect of which an adjustment to the Conversion Price is
made pursuant to Section 8(c)(i).

               (iii) In case the Corporation shall at any time or from time to
time after the Issue Date distribute to all holders of shares of its Common
Stock (including any such distribution made in connection with a consolidation
or merger in which the Corporation is the resulting or surviving corporation and
the Common Stock is not changed or exchanged) cash, evidences of indebtedness of
the Corporation or another issuer, securities of the Corporation or another
issuer or other assets (excluding (A) dividends or distributions paid or made to
holders of shares of Series E Preferred in the manner provided in Section 2(d),
and (B) dividends payable in shares of Common Stock for which adjustment is made
under Section 8(c)(i)) or rights or warrants to subscribe for or purchase
securities of the Corporation (excluding those referred to in Section 8(c)(ii)
or those in respect of which an adjustment in the Conversion Price is made
pursuant to Section 8(c)(i) or (ii)), then, and in each such case, the
Conversion Price then in effect shall be adjusted by dividing the Conversion
Price in effect immediately prior to the date of such distribution by a fraction
(x) the numerator of which shall be the Market Price of the Common Stock on the
record date referred to below and (y) the denominator of which shall be such
Market Price of the Common Stock less the then Fair Market Value (as determined
by the Board of Directors of the Corporation) of the portion of the cash,
evidences of indebtedness, securities or other assets so distributed or of such
subscription rights or warrants applicable to one share of Common Stock (but
such denominator not to be less than one). Such adjustment shall be made
whenever any such distribution is made and shall become effective retroactively
to a date immediately following the close of business on the record date for the
determination of stockholders entitled to receive such distribution.

               (iv) In the case the Corporation, at any time or from time to
time after the Issue Date, shall take any action affecting its Common Stock
similar to or having an effect similar to any of the actions described in any of
Section 8(c)(i) through
<PAGE>
                                                                              17


Section 8(c)(iii), inclusive, or Section 8(g) (but not including any action
described in any such Section) and the Board of Directors of the Corporation in
good faith determines that it would be equitable in the circumstances to adjust
the Conversion Price as a result of such action, then, and in each such case,
the Conversion Price shall be adjusted in such manner and at such time as the
Board of Directors of the Corporation in good faith determines would be
equitable in the circumstances (such determination to be evidenced in a
resolution, a certified copy of which shall be mailed to the holders of the
Series E Preferred).

               (v) Notwithstanding anything herein to the contrary, no
adjustment under this Section 8(c) need be made to the Conversion Price unless
such adjustment would require an increase or decrease of at least 1 % of the
Conversion Price then in effect. Any lesser adjustment shall be carried forward
and shall be made at the time of and together with the next subsequent
adjustment, which, together with any adjustment or adjustments so carried
forward, shall amount to an increase or decrease of at least 1% of such
Conversion Price. Any adjustment to the Conversion Price carried forward and not
theretofore made shall be made immediately prior to the conversion of any shares
of Series E Preferred pursuant hereto.

               (vi) Notwithstanding anything herein to the contrary, no
adjustment under this Section 8(c)(ii) or (iii) shall be made upon (A) the grant
of options to employees or directors of the Corporation permitted under benefit
plans in existence on the Issue Date pursuant to the terms of such plans in
effect on the Issue Date, (B) the issuance of any Common Stock upon conversion
of the Series E Preferred in accordance with the terms of its Certificate of
Designation, (C) the issuance of any Common Stock upon conversion of the Series
D Preferred in accordance with the terms of its Certificate of Designation in
effect on the Issue Date and (D) the issuance of any Common Stock upon
conversion or exercise of any convertible securities outstanding on the Issue
Date in accordance with terms of such security in effect on the Issue Date.

          (d) Effect of Setting Record Date. If the Corporation shall take a
record of the holders of its Common Stock for the purpose of entitling them to
receive a dividend or other distribution, and shall thereafter and before the
distribution to stockholders thereof legally abandon its plan to pay or deliver
such dividend or distribution, then thereafter no adjustment in the Conversion
Price then in effect shall be required by reason of the taking of such record.

          (e) Certificate of Adjustment. Upon any increase or decrease in the
Conversion Price, then, and in each such case, the Corporation promptly shall
deliver to each registered holder of Series E Preferred at least five Business
Days prior to effecting any of the foregoing transactions a certificate, signed
by the President or a Vice-President and by the Treasurer or an Assistant
Treasurer or the Secretary or an Assistant Secretary of the Corporation, setting
forth in reasonable detail the event requiring the adjustment and specifying, to
the extent feasible, (x) the method by which such adjustment was
<PAGE>
                                                                              18


calculated and (y) the increased or decreased Conversion Price then in effect
following such adjustment.

          (f) No Fractional Shares. No fractional shares or scrip representing
fractional shares shall be issued upon the conversion of any shares of Series E
Preferred. If more than one share of Series E Preferred shall be surrendered for
conversion at one time by the same holder, the number of full shares of Common
Stock issuable upon conversion thereof shall be computed on the basis of the
aggregate Liquidation Preference (plus accrued and unpaid dividends, including
any Additional Dividends) of the shares of Series E Preferred so surrendered. If
the conversion of any share or shares of Series E Preferred results in a
fraction, an amount equal to such fraction multiplied by the Current Market
Price of the Common Stock on the Business Day preceding the day of conversion
shall be paid to such holder in cash by the Corporation.

          (g) Transactions. In case of any capital reorganization or
reclassification or other change of outstanding shares of Common Stock (other
than a change in par value, or from par value to no par value, or from no par
value to par value), or in case of any consolidation or merger of the
Corporation with or into another Person (other than a consolidation or merger in
which the Corporation is the resulting or surviving Person and which does not
result in any reclassification or change of outstanding Common Stock) (any of
the foregoing, a "Transaction"), the Corporation, or such successor or
purchasing Person, as the case may be, shall execute and deliver to each holder
of Series E Preferred at least 10 Business Days prior to effecting any of the
foregoing Transactions a certificate that the holder of each share of Series E
Preferred then outstanding shall have the right after the Transaction to convert
such share of Series E Preferred into the kind and amount of shares of stock or
other securities (of the Corporation or another issuer) or property or cash
receivable upon such Transaction by a holder of the number of shares of Common
Stock into which such share of Series E Preferred could have been converted
immediately prior to such Transaction. Such certificate shall provide for
adjustments which shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 8. If, in the case of any such
Transaction, the stock, other securities, cash or property receivable thereupon
by a holder of Common Stock includes shares of stock or other securities of a
Person other than the successor or purchasing Person and other than the
Corporation, which controls or is controlled by the successor or purchasing
Person or which, in connection with such Transaction, issues stock, securities,
other property or cash to holders of Common Stock, then such certificate also
shall be executed by such Person, and such Person shall, in such certificate,
specifically acknowledge the obligations of such successor or purchasing Person
and acknowledge its obligations to issue such stock, securities, other property
or cash to the holders of Series E Preferred upon conversion of the shares of
Series E Preferred as provided above. The provisions of this Section 8(h) and
any equivalent thereof in any such certificate similarly shall apply to
successive Transactions.

          (h) Notice. In case at any time or from time to time:
<PAGE>
                                                                              19


               (i) the Corporation shall declare a dividend (or any other
distribution) on its Common Stock;

               (ii) the Corporation shall authorize the granting to the holders
of its Common Stock of rights or warrants to subscribe for or purchase any
shares of stock of any class or of any other rights or warrants;

               (iii) there shall be any reclassification of the Common Stock, or
any consolidation or merger to which the Corporation is a party and for which
approval of any shareholders of the Corporation is required, or any sale or
other disposition of all or substantially all of the assets of the Corporation;
or

               (iv) there shall be any voluntary or involuntary dissolution,
liquidation or winding up of the Corporation;

then the Corporation shall mail to each holder of shares of Series E Preferred
at such holder's address as it appears on the transfer books of the Corporation,
as promptly as possible but in any event at least 10 days prior to the
applicable date hereinafter specified, a notice stating (x) the date on which a
record is to be taken for the purpose of such dividend, distribution or rights
or warrants or, if a record is not to be taken, the date as of which the holders
of Common Stock of record to be entitled to such dividend, distribution or
rights are to be determined, or (y) the date on which such reclassification,
consolidation, merger, sale, conveyance, dissolution, liquidation or winding up
is expected to become effective. Such notice also shall specify the date as of
which it is expected that holders of Common Stock of record shall be entitled to
exchange their Common Stock for shares of stock or other securities or property
or cash deliverable upon such reclassification, consolidation, merger, sale,
conveyance, dissolution, liquidation or winding up.

          (i) Reservation of Common Stock. The Corporation shall at all times
reserve and keep available for issuance upon the conversion of the Series E
Preferred pursuant to Section 8(a) or 10(a), such number of its authorized but
unissued shares of Common Stock as will from time to time be sufficient to
permit the conversion of all outstanding shares of Series E Preferred, and shall
take all action required to increase the authorized number of shares of Common
Stock if at any time there shall be insufficient authorized but unissued shares
of Common Stock to permit such reservation or to permit the conversion of all
outstanding shares of Series E Preferred.

          (j) Issuance of Certificates. The issuance or delivery of certificates
for Common Stock upon the conversion of shares of Series E Preferred pursuant to
Section 8(a) or 10(a) shall be made without charge to the converting holder of
shares of Series E Preferred for such certificates or for any tax in respect of
the issuance or delivery of such certificates or the securities represented
thereby, and such certificates shall be issued or delivered in the respective
names of, or (subject to compliance with the applicable provisions of federal
and state securities laws) in such names as may be
<PAGE>
                                                                              20


directed by, the holders of the shares of Series E Preferred converted;
provided, however, that the Corporation shall not be required to pay any tax
which may be payable in respect of any transfer involved in the issuance and
delivery of any such certificate in a name other than that of the holder of the
shares of Series E Preferred converted, and the Corporation shall not be
required to issue or deliver such certificate unless or until the Person or
Persons requesting the issuance or delivery thereof shall have paid to the
Corporation the amount of such tax or shall have established to the reasonable
satisfaction of the Corporation that such tax has been paid.

Section 9. Certain Remedies.

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

Section 10. Conversion at the Option of the Corporation.

          (a) Time of Conversion. At any time after the third anniversary of the
Issue Date, if for 20 consecutive Trading Days beginning on or after such
anniversary, the Market Price of the Common Stock at the end of each such
Trading Day during such period exceeds 250% of the Conversion Price in effect on
each such Trading Day, then on the 20th Business Day following such 20-day
period (the "Optional Conversion Date"), the Corporation shall have the right to
cause all, but not less then all, of the outstanding shares of Series E
Preferred to be converted automatically into such number of fully paid and
non-assessable shares of Common Stock as is equal, subject to Section 8(g), to
the product of the number of shares of Series E Preferred being so converted
multiplied by the quotient of (i) the Liquidation Preference (plus accrued and
unpaid dividends, including any Additional Dividends) divided by (ii) the
Conversion Price in effect on the Optional Conversion Date.

          (b) Officer's Certificate. The Corporation will provide notice to
holders of record of Series E Preferred of its election to cause all the Series
E Preferred to be converted pursuant to Section 10(a) on the Optional Conversion
Date. The Corporation shall deliver such notice at least ten Business Days prior
to the Optional Conversion Date, by first-class mail postage prepaid, to each
holder of record of the Series E Preferred, at such holder's address as it
appears on the stock transfer books of the Corporation. Such notice shall
include an officer's certificate attesting to the satisfaction of the condition
precedent to optional conversion, stating the Conversion Price and the number of
fully paid and non-assessable shares of Common Stock into which such shares of
Series E Preferred will be converted in accordance with Section 8 and this
Section 10.
<PAGE>
                                                                              21


          (c) The Corporation shall deposit for the benefit of the holders of
shares of Series E Preferred the share certificates representing the shares of
Common Stock deliverable upon conversion of the shares of Series E Preferred
with a bank or trust company having a capital and surplus of at least $1
billion, with instructions to such bank or trust company to deliver the
certificates to the holders of shares of Series E Preferred upon surrender of
the certificates for such shares; provided, however, that the making of such
deposit shall not release the Corporation from any of its obligations hereunder.
Any certificates so deposited by the Corporation and unclaimed at the end of two
years from the Optional Redemption Date shall revert to the Corporation and the
bank or trust company shall be relieved of all responsibility in respect thereof
and any holder of shares of Series E Preferred so converted shall look only to
the Corporation for the certificate representing the Common Stock issued upon
the conversion, as provided herein.

          (d) Effect of Conversion. Notice of conversion having been given as
provided in Section 10(b), upon the deposit pursuant to subsection (c) of the
certificates representing the shares of Common Stock issuable upon conversion of
the shares of Series E Preferred, notwithstanding that any certificates for such
shares shall not have been surrendered for cancellation, from and after the
Optional Conversion Date (i) the shares represented thereby shall no longer be
deemed outstanding, (ii) the rights to receive dividends thereon shall cease to
accrue, and (iii) all rights of the holders of shares of Series E Preferred to
be converted shall cease and terminate, excepting only the right to receive the
shares of Common Stock and Dividends. If the Corporation shall default in the
execution and delivery of the shares of Common Stock, then no certificates
evidencing such shares shall be deemed surrendered and such shares shall remain
outstanding and the rights of holders of Series E Preferred shall continue to be
those of holders of shares of the Series E Preferred.

Section 11. Definitions.

          For the purposes of this Certificate of Designation of Series E
Preferred, the following terms shall have the meanings indicated:

          "Affiliate" shall have the meaning ascribed to such term in Rule 12b-2
of the General Rules and Regulations under the Exchange Act; provided that for
purposes of this Certificate, the Purchaser shall not be considered an Affiliate
of the Corporation.

          "Business Day" shall mean any day other than a Saturday, Sunday or
other day on which commercial banks in the Slate of Delaware are authorized or
required by law or executive order to close.

          A "Change of Control" of the Corporation shall mean such times as:

               (i) Any Person or "group" (within the meaning of Section 13(d)(3)
of the Exchange Act) is or becomes the beneficial owner, directly or indirectly,
of outstanding shares of stock of the Corporation entitling such Person or
Persons to exercise 50% or more of the total votes (excluding the Series E
Preferred)
<PAGE>
                                                                              22


entitled to be cast at a regular or special meeting, or by action by written
consent, of shareholders of the Corporation (the term "beneficial owner" shall
be determined in accordance with Rule 13d-3, promulgated by the Commission under
the Exchange Act);

               (ii) A majority of the Board of Directors of the Corporation
shall consist of Persons other than Continuing Directors. The term "Continuing
Director" shall mean any member of the Board of Directors on the Closing Date
(as defined in the Stock Purchase Agreement) and any other member of the Board
of Directors who shall be recommended or elected to succeed or become a
Continuing Director by a majority of Continuing Directors who are then members
of the Board of Directors;

               (iii) The shareholders of the Corporation shall have approved a
recapitalization, reorganization, merger, consolidation or similar transaction,
in each case with respect to which all or substantially all the Persons who were
the respective beneficial owners, directly or indirectly, of the outstanding
shares of capital stock of the Corporation immediately prior to such
recapitalization, reorganization, merger, consolidation or similar transaction,
will own less than 50% of the combined voting power of the then outstanding
shares of capital stock of the Corporation resulting from such recapitalization,
reorganization, merger, consolidation or similar transaction; provided that any
such recapitalization shall not be considered a Change of Control if the holders
of Series E Preferred have the right to participate on at least a pari passu
basis;

               (iv) The shareholders of the Corporation shall have approved of
the sale or other disposition of all or substantially all the assets of the
Corporation in one transaction or in a series of related transactions;

               (v) Any transaction occurs (other than one described in (iii)
above or (vi) below), the result of which is that the Common Stock is not
required to be registered under Section 12 of the Exchange Act and that the
holders of Common Stock do not receive common stock of the Person surviving such
transaction which is required to be registered under Section 12 of the Exchange
Act; or

               (vi) Immediately after any merger, consolidation,
recapitalization or similar transaction, D. Gregory Smith or a "group" (within
the meaning of Section 13(d)(3) of the Exchange Act) shall be the beneficial
owners, directly or indirectly, of outstanding shares of capital stock of the
Corporation (or any Person surviving such transaction) entitling them
collectively to exercise 50% or more of the total voting power of shares of
capital stock of the Corporation (or the surviving Person in such transaction)
and in connection with or as a result of such transaction, the Corporation (or
such surviving Person) shall have incurred or issued additional indebtedness
such that the total indebtedness so incurred or issued equals at least 50% of
the consideration payable in such transaction; provided that any such
transactions shall not be considered a Change of Control if the holders of
Series E Preferred have the right to participate on at least a pari passu
basis.
<PAGE>
                                                                              23


          "Common Stock" shall mean the common stock, par value $.01 per share,
and each other class of capital stock of the Corporation into which such stock
is reclassified or reconstituted.

          "Consolidated EBITDA" shall mean for any period, the Consolidated Net
Income for such period, plus, to the extent deducted in determining such
Consolidated Net Income (i) Consolidated Interest Expense; (ii) depreciation;
(iii) depletion; (iv) amortization; (v) all federal, state, local and foreign
income taxes; and (vi) all other non-cash expenses, minus, to the extent added
in determining such Consolidated Net Income, any non-cash income or non-cash
gains, all as determined on a consolidated basis in accordance with GAAP.

          "Consolidated Interest Expense" shall mean for any period, the net
interest expense of the Corporation and its Subsidiaries for such period as
determined on a consolidated basis in accordance with GAAP.

          "Consolidated Net Income" shall mean for any period, the net income of
the Corporation and its Subsidiaries for such period as determined on a
consolidated basis in accordance with GAAP, but excluding from the determination
of Consolidated Net Income (without duplication) (a) any extraordinary or
non-recurring gains or losses or gains or losses from asset sales; (b) effects
of discontinued operations; (c) the income (or loss) of any Person in which any
other Person (other than the Corporation or any of the Subsidiaries) has a joint
interest, except to the extent of the amount of dividends or other distributions
actually paid in cash to the Corporation or any of its Subsidiaries by such
Person during such period; and (d) the income (or loss) of any Person accrued
prior to the date it becomes a Subsidiary of the Corporation or is merged into
or consolidated with the Corporation or any of its Subsidiaries or the date such
Person's assets are acquired by the Corporation or any of its Subsidiaries.

          "Current Market Price" per share shall mean, on any date specified
herein for the determination thereof, (a) the average daily Market Price of the
Common Stock for those days during the period of 20 days, ending on such date,
which are Trading Days, and (b) if the Common Stock is not then listed or
admitted to trading on any national securities exchange or quoted in the
over-the-counter market, the Market Price on such date.

          "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Securities and Exchange Commission
thereunder.

          "Fair Market Value" shall mean the amount which a willing buyer, under
no compulsion to buy, would pay a willing seller, under no compulsion to sell,
in an arm's-length transaction (assuming that the Common Stock is valued "as if
fully distributed" so that, among other things, there is no consideration given
for minority investment discounts or discounts related to illiquidity or
restrictions on transferability).
<PAGE>
                                                                              24


          "GAAP" shall mean the generally accepted United States accounting
principles in effect from time to time.

          "Issue Date" shall mean the original date of issuance of shares of
Series E Preferred to the holders pursuant to the Stock Purchase Agreement.

          "Junior Stock" shall mean any capital stock of the corporation ranking
junior (either as to dividends or upon liquidation, dissolution or winding up)
to the Series E Preferred including, without limitation, the Common Stock.

          "Liquidation Preference" with respect to a share of Series E Preferred
shall mean $12.00.

          "Market Price" shall mean, per share of Common Stock on any date
specified herein: (a) the closing price per share of the Common Stock on such
date published in The Wall Street Journal or, if no such closing price on such
date is published in The Wall Street Journal, the average of the closing bid and
asked prices on such date, as officially reported on the principal national
securities exchange on which the Common Stock is then listed or admitted to
trading; (b) if the Common Stock is not then listed or admitted to trading on
any national securities exchange but is designated as a national market system
security, the last trading price of the Common Stock on such date; or (c) if
there shall have been no trading on such date or if the Common Stock is not so
designated, the average of the reported closing bid and asked prices of the
Common Stock on such date as shown by NASDAQ and reported by any member firm of
the NYSE, selected by the Corporation. If neither (a), (b) or (c) is applicable,
Market Price shall mean the Fair Market Value per share determined in good faith
by the Board of Directors of the Corporation which shall be deemed to be Fair
Market Value unless holders of at least 15% of the outstanding shares of Series
E Preferred request that the Corporation obtain an opinion of a nationally
recognized investment banking firm chosen by such holders and the Corporation
(at the Corporation's expense), in which event Fair Market Value shall be as
determined by such investment banking firm.

          "Material Subsidiary" shall mean the subsidiaries of the Corporation
set forth on the Schedule attached hereto and any other Subsidiary that would
constitute a Significant Subsidiary (as defined in Article I of Regulation S-X
promulgated under the Securities Act of 1933, as amended).

          "NASDAQ" shall mean the National Market System of the NASDAQ Stock
Market.

          "NYSE" shall mean the New York Stock Exchange, Inc.

          "Parity Stock" shall mean any capital stock of the corporation,
including the Series D Preferred, ranking on a par (either as to dividends or
upon liquidation, dissolution or winding up) with the Series E Preferred.
<PAGE>
                                                                              25


          "Permissible Amount" shall mean:

               (i) if the Consolidated EBITDA for the immediately preceding four
fiscal quarters is $25 million or less, $100 million; or

               (ii) if the Consolidated EBITDA for the immediately preceding
four fiscal quarters is greater than $25 million, an amount equal to the
Consolidated EBITDA for the immediately preceding four fiscal quarters
multiplied by 4.

          "Per Share Equity Value" of a share of Common Stock shall mean the
quotient obtained by dividing (a) the "as if fully distributed value" (so that,
among other things, there is no consideration given for any minority investment
discounts or discounts related to illiquidity or restrictions on
transferability) of all the Corporation's outstanding shares of Common Stock (on
a fully diluted basis), by (b) the number of outstanding shares of Common Stock
on a fully diluted basis.

          "Person" shall mean any individual, firm, corporation, partnership,
limited liability company trust, incorporated or unincorporated association,
joint venture, joint stock company, government (or an agency or political
subdivision thereof) or other entity of any kind, and shall any successor (by
merger) of such entity.

          "Senior Stock" shall mean any capital stock of the Corporation ranking
senior (either as to dividends or upon liquidation, dissolution or winding up)
to the Series E Preferred.

          "Stock Purchase Agreement" shall mean the Stock Purchase Agreement,
dated October 19, 2000 between the Corporation, The 1818 Fund III, L.P. and the
other persons listed therein, as the same may be amended from time to time.

          "Subsidiary" shall mean, with respect to any Person, a corporation or
other entity of which 50% or more of the voting power of the voting equity
securities or equity interest is owned, directly or indirectly, by such Person.

          "Trading Days" shall mean a day on which the national securities
exchanges are open for trading.

Section 12. Modification or Amendment.

          Except as specifically set forth herein, modifications or amendments
to this Certificate of Designation may be made by the Corporation with the
consent of the holders of at least 50% of the outstanding shares of Series E
Preferred.
<PAGE>
                                                                              26


          IN WITNESS WHEREOF, Z-Tel Technologies, Inc. has caused this
Certificate to be duly executed in its corporate name on this 10th day of
November, 2000.

                                        Z-TEL TECHNOLOGIES, INC.


                                        By: /s/ D. Gregory Smith
                                            ------------------------------------
                                            Name: D. Gregory Smith
                                            Title: CEO
<PAGE>
                                                     (    STATE OF DELAWARE    )
                                                     (    SECRETARY OF STATE   )
                                                     ( DIVISION OF CORPORATIONS)
                                                     (FILED 04:30 PM 02/22/2001)
                                                     (   010089969 - 2873445   )

                           CERTIFICATE OF DESIGNATIONS

                                       of

                  SERIES F JUNIOR PARTICIPATING PREFERRED STOCK

                                       of

                            Z-TEL TECHNOLOGIES, INC.

                         (Pursuant to Section 151 of the
                        Delaware General Corporation Law)

     Z-Tel Technologies, Inc., a corporation organized and existing under the
General Corporation Law of the State of Delaware (hereinafter called the
"Corporation"), hereby certifies that the following resolution was adopted by
the Board of Directors of the Corporation as required by Section 151 of the
General Corporation Law on February 19, 2001.

     RESOLVED, that pursuant to the authority granted to and vested in the Board
of Directors of this Corporation (hereinafter called the "Board of Directors" or
the "Board") in accordance with the provisions of the Corporation's Restated
Certificate of Incorporation (the "Certificate of Incorporation") the Board of
Directors hereby creates anew series of Preferred Stock, par value $0.001 per
share (the "Junior Preferred Stock"), of the Corporation and hereby states the
designation and number of shares of each such series, and fixes the relative
rights, preferences, and limitations of each such series as follows:

     Section 1. Designation and Amount. The shares of such series shall be
designated as "Series F Junior Participating Preferred Stock" (the "Junior
Preferred Stock") and the number of shares constituting the Junior Preferred
Stock shall be 200,000. Such number of shares may be increased or decreased by
resolution of the Board of Directors; provided, that no decrease shall reduce
the number of shares of Junior Preferred Stock to a number less than the number
of shares then outstanding plus the number of shares reserved for issuance upon
the exercise of outstanding options, rights or warrants or upon the conversion
of any outstanding securities issued by the Corporation convertible into Junior
Preferred Stock.

     Section 2. Dividends and Distributions.

          (A) Subject to the rights of the holders of any shares of any series
     of Preferred Stock (or any similar stock) ranking prior and superior to the
     Junior Preferred Stock with respect to dividends, the holders of shares of
     Junior Preferred Stock, in preference to the holders of the Common Stock,
     par value $0.01 per share (the "Common Stock"), of the Corporation, and of
     any other junior stock, shall be entitled to receive, when, as and if
     declared by the Board of Directors out of funds legally available for the
     purpose, quarterly dividends payable in cash on the first day of March,
     June, September and December in each year (each such date being referred to
     herein as a "Quarterly Dividend
<PAGE>
     Payment Date"), commencing on the first Quarterly Dividend Payment Date
     after the first issuance of a share or fraction of a share of Junior
     Preferred Stock, in an amount per share (rounded to the nearest cent) equal
     to the greater of (a) $1.00 or (b) subject to the provision for adjustment
     hereinafter set forth, 1000 times the aggregate per share amount of all
     cash dividends, and 1000 times the aggregate per share amount (payable in
     kind) of all non-cash dividends or other distributions, other than a
     dividend payable in shares of Common Stock or a subdivision of the
     outstanding shares of Common Stock (by reclassification or otherwise),
     declared on the Common Stock since the immediately preceding Quarterly
     Dividend Payment Date or, with respect to the first Quarterly Dividend
     Payment Date, since the first issuance of any share or fraction of a share
     of Junior Preferred Stock. If the Corporation shall at any time declare or
     pay any dividend on the Common Stock payable in shares of Common Stock, or
     effect a subdivision or combination or consolidation of the outstanding
     shares of Common Stock (by reclassification or otherwise than by payment of
     a dividend in shares of Common Stock) into a greater or lesser number of
     shares of Common Stock, then in each such case the amount to which holders
     of shares of Junior Preferred Stock were entitled immediately prior to
     such event under clause (b) of the preceding sentence shall be adjusted by
     multiplying such amount by a fraction, the numerator of which is the number
     of shares of Common Stock outstanding immediately after such event and the
     denominator of which is the number of shares of Common Stock that were
     outstanding immediately prior to such event.

          (B) The Corporation shall declare a dividend or distribution on the
     Junior Preferred Stock as provided in paragraph (A) of this Section
     immediately after it declares a dividend or distribution on the Common
     Stock (other than a dividend payable in shares of Common Stock); provided
     that, if no dividend or distribution shall have been declared on the Common
     Stock during the period between any Quarterly Dividend Payment Date and the
     next subsequent Quarterly Dividend Payment Date, a dividend of $1.00 per
     share on the Junior Preferred Stock shall nevertheless be payable on such
     subsequent Quarterly Dividend Payment Date.

          (C) Dividends shall begin to accrue and be cumulative on outstanding
     shares of Junior Preferred Stock from the Quarterly Dividend Payment Date
     next preceding the date of issue of such shares, unless the date of issue
     of such shares is prior to the record date for the first Quarterly Dividend
     Payment Date, in which case dividends on such shares shall begin to accrue
     from the date of issue of such shares, or unless the date of issue is a
     Quarterly Dividend Payment Date or is a date after the record date for the
     determination of holders of shares of Junior Preferred Stock entitled to
     receive a quarterly dividend and before such Quarterly Dividend Payment
     Date, in either of which events such dividends shall begin to accrue and be
     cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid
     dividends shall not bear interest. Dividends paid on the shares of Junior
     Preferred Stock in an amount less than the total amount of such dividends
     at the time accrued and payable on such shares shall be allocated pro rata
     on a share-by-share basis among all such shares at the time outstanding.
     The Board of Directors may fix a record date for the determination of
     holders of shares of Junior Preferred Stock entitled to receive payment of
     a dividend or distribution declared thereon,


                                        2
<PAGE>
     which record date shall be not more than 60 days prior to the date fixed
     for the payment thereof.

     Section 3. Voting Rights. The holders of shares of Junior Preferred Stock
shall have the following voting rights:

          (A) Subject to the provision for adjustment hereinafter set forth,
     each share of Junior Preferred Stock shall entitle the holder thereof to
     1000 votes on all matters submitted to a vote of the stockholders of the
     Corporation. If the Corporation shall at any time declare or pay any
     dividend on the Common Stock payable in shares of Common Stock, or effect a
     subdivision or combination or consolidation of the outstanding shares of
     Common Stock (by reclassification or otherwise than by payment of a
     dividend in shares of Common Stock) into a greater or lesser number of
     shares of Common Stock, then in each such case the number of votes per
     share to which holders of shares of Junior Preferred Stock were entitled
     immediately prior to such event shall be adjusted by multiplying such
     number by a fraction, the numerator of which is the number of shares of
     Common Stock outstanding immediately after such event and the denominator
     of which is the number of shares of Common Stock that were outstanding
     immediately prior to such event.

          (B) Except as otherwise provided herein, in any other Certificate of
     Designations creating a series of Preferred Stock or any similar stock, or
     by law, the holders of shares of Junior Preferred Stock and the holders of
     Common Stock and any other capital stock of the Corporation having general
     voting rights shall vote together as one class on all matters submitted to
     a vote of stockholders of the Corporation.

          (C) Except as set forth herein, or as otherwise provided by law,
     holders of Junior Preferred Stock shall have no voting rights and their
     consent shall not be required (except to the extent they are entitled to
     vote with holders of Common Stock as set forth herein) for taking any
     corporate action.

     Section 4. Liquidation, Dissolution or Winding Up. Upon any liquidation,
dissolution or winding up of the Corporation, no distribution shall be made (1)
to the holders of shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Junior Preferred Stock unless,
prior thereto, the holders of shares of Junior Preferred Stock shall have
received $1000 per share, plus an amount equal to accrued and unpaid dividends
and distributions thereon, whether or not declared, to the date of such payment,
provided that the holders of shares of Junior Preferred Stock shall be entitled
to receive an aggregate amount per share, subject to the provision for
adjustment hereinafter set forth, equal to 1000 times the aggregate amount to be
distributed per share to holders of shares of Common Stock, or (2) to the
holders of shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Junior Preferred Stock, except
distributions made ratably on the Junior Preferred Stock and all such parity
stock in proportion to the total amounts to which the holders of all such shares
are entitled upon such liquidation, dissolution or winding up. If the
Corporation shall at any time declare or pay any dividend on the Common Stock
payable in shares of Common Stock, or effect a subdivision or combination or
consolidation of the


                                        3
<PAGE>
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the aggregate amount to which
holders of shares of Junior Preferred Stock were entitled immediately prior to
such event under the proviso in clause (1) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.

     Section 5. Consolidation, Merger, etc. If the Corporation shall enter into
any consolidation, merger, combination or other transaction in which the shares
of Common Stock are exchanged for or changed into other stock or securities,
cash or any other property, then in any such case each share of Junior Preferred
Stock shall at the same time be similarly exchanged or changed into an amount
per share, subject to the provision for adjustment hereinafter set forth, equal
to 1000 times the aggregate amount of stock, securities, cash or any other
property (payable in kind), as the case may be, into which or for which each
share of Common Stock is changed or exchanged. If the Corporation shall at any
time declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the amount set forth in the
preceding sentence with respect to the exchange or change of shares of Junior
Preferred Stock shall be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.

     Section 6. Certain Restrictions.

          (A) Whenever quarterly dividends or other dividends or distributions
     payable on the Junior Preferred Stock are in arrears, thereafter and until
     all accrued and unpaid dividends and distributions, whether or not
     declared, on shares of Junior Preferred Stock outstanding shall have been
     paid in full, the Corporation shall not:

               (i) declare or pay dividends, or make any other distributions, on
          any shares of stock ranking junior (either as to dividends or upon
          liquidation, dissolution or winding up) to the Junior Preferred Stock;

               (ii) declare or pay dividends, or make any other distributions,
          on any shares of stock ranking on parity (either as to dividends or
          upon liquidation, dissolution or winding up) with the Junior Preferred
          Stock, except dividends paid ratably on the Junior Preferred Stock and
          all such parity stock on which dividends are payable or in arrears in
          proportion to the total amounts to which the holders of all such
          shares are then entitled;

               (iii) redeem or purchase or otherwise acquire for consideration
          shares of any stock ranking junior (either as to dividends or upon
          liquidation, dissolution or


                                       4
<PAGE>
          winding up) to the Junior Preferred Stock, provided that the
          Corporation may at any time redeem, purchase or otherwise acquire
          shares of any such junior stock in exchange for shares of any stock of
          the Corporation ranking junior (either as to dividends or upon
          dissolution, liquidation or winding up) to the Junior Preferred Stock;
          or

               (iv) redeem or purchase or otherwise acquire for consideration
          any shares of Junior Preferred Stock, or any shares of stock ranking
          on a parity with the Junior Preferred Stock, except in accordance with
          a purchase offer made in writing or by publication (as determined by
          the Board of Directors) to all holders of such shares upon such terms
          as the Board of Directors, after consideration of the respective
          annual dividend rates and other relative rights and preferences of the
          respective series and classes, shall determine in good faith will
          result in fair and equitable treatment among the respective series or
          classes.

          (B) The Corporation shall not permit any subsidiary of the Corporation
     to purchase or otherwise acquire for consideration any shares of stock of
     the Corporation unless the Corporation could, under paragraph (A) of this
     Section 1, purchase or otherwise acquire such shares at such time and in
     such manner.

     Section 7. Reacquired Shares. Any shares of Junior Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
subject to the conditions and restrictions on issuance set forth herein, in the
Certificate of Incorporation, or in any other Certificate of Designations
creating a series of Preferred Stock or any similar stock or as otherwise
required by law.

     Section 8. No Redemption. The shares of Junior Preferred Stock shall not be
redeemable.

     Section 9. Rank. The Junior Preferred Stock shall rank, with respect to the
payment of dividends and the distribution of assets, junior to all series of any
other class of the Corporation's Preferred Stock.

     Section 10. Amendment. The Certificate of Incorporation shall not be
amended in any manner which would alter or change the powers, preferences or
special rights of the Junior Preferred Stock so as to affect them adversely
without the affirmative vote of the holders of at least two-thirds of the
outstanding Junior Preferred Stock.

     Section 11. Fractional Shares. The Junior Preferred Stock may be issued in
fractions of a share which shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of the Junior Preferred Stock.


                                       5
<PAGE>
     IN WTTNESS WHEREOF, this Certificate of Designation is executed on behalf
of the Corporation by its Chairman of the Board and attested by its Secretary
this __th day of February, 2001.


                                        /s/ D. Gregory Smith
                                        ----------------------------------------
                                        Chairman of the Board

Attest:


/s/ Mark H. Johnson
-------------------------------------
Secretary


                                       6
<PAGE>
(    STATE OF DELAWARE    )
(    SECRETARY OF STATE   )
( DIVISION OF CORPORATIONS)
(FILED 03:30 PM 06/04/2001)
(   010267117 - 2873445   )

                            CERTIFICATE OF AMENDMENT
                                     TO THE
                              AMENDED AND RESTATED
                          CERTIFICATE OF INCORPORATION
                                       OF
                            Z-TEL TECHNOLOGIES, INC.

     The undersigned Chief Executive Officer and President of Z-Tel
Technologies, Inc., a corporation existing under the laws of the State of
Delaware (the "Corporation), does hereby certify as follows:

     FIRST: That this Certificate of Amendment to the Amended and Restated
Certificate of Incorporation, filed on October 21, 1998 (the "Amended
Certificate"), hereby further amends the Amended Certificate, by adding a new
ARTICLE X, as follows:

                                    ARTICLE X

                               STOCKHOLDER ACTION

     Any action required or permitted to be taken at any annual or special
     meeting of stockholders of this corporation may be taken only upon the vote
     of such stockholders at an annual or special meeting thereof duly called in
     accordance with the terms of the by-laws of this corporation, and may not
     be taken by written consent of such stockholders.

     SECOND: That this Certificate of Amendment was proposed by the board of
directors and duly adopted by the stockholders of the corporation in the manner
and by the vote prescribed by Sections 14l(d) and 242 of the General Corporation
Law of the State of Delaware.

     IN WITNESS WHEREOF, I have subscribed this document on the date set forth
below and do hereby affirm, under the penalties of perjury, that the statements
contained herein have been examined by me and are true and correct.

Date: June 4, 2001

ATTEST:                                 Z-TEL TECHNOLOGIES, INC.


/s/ Jeffrey H. Kupor                    /s/ D. Gregory Smith
-------------------------------------   ----------------------------------------
Jeffrey H. Kupor                        D. Gregory Smith
Secretary                               Chief Executive Officer and President
<PAGE>
                                                     (    STATE OF DELAWARE    )
                                                     (    SECRETARY OF STATE   )
                                                     ( DIVISION OF CORPORATIONS)
                                                     (FILED 09:00 AM 07/02/2001)
                                                     (   010319698 - 2873445   )

                            Z-TEL TECHNOLOGIES, INC.

              AMENDED AND RESTATED CERTIFICATE OF DESIGNATION OF 8%
            CONVERTIBLE PREFERRED STOCK, SERIES E, SETTING FORTH THE
            POWERS, PREFERENCES, RIGHTS, QUALIFICATIONS, LIMITATIONS
               AND RESTRICTIONS OF SUCH SERIES OF PREFERRED STOCK

          Pursuant to Section 242 of the Delaware General Corporation Law, Z-Tel
Technologies, Inc., a Delaware corporation (the "Corporation"), DOES HEREBY
CERTIFY:

          FIRST: That pursuant to the authority conferred upon the Board of
Directors of the Corporation by the Certificate of Incorporation of the
Corporation (the "Charter"), the Board of Directors of the Corporation on
October 17, 2000 duly adopted resolutions creating a series of Preferred Stock
designated as 8% Convertible Preferred Stock, Series E.

          SECOND: Resolutions, setting forth a proposed Amended and Restated
Certificate of Designation of Series E Convertible Preferred Stock (the "Amended
Certificate"), declaring the Amended Certificate to be advisable and directing
that this Amended Certificate be considered by the stockholders of the
Corporation entitled to vote thereon, were duly adopted by unanimous written
consent of the Board of Directors of the Corporation.

          THIRD: Thereafter, the Amended Certificate was approved at a special
meeting, duly called and convened in accordance with Section 222 of the General
Corporation Law of the State of Delaware on June 29, 2001, by vote in respect
thereof of the requisite percentage of the stockholders of the Corporation
entitled to vote thereon.

          FOURTH: The Amended Certificate was duly adopted in accordance with
Section 242 of the General Corporation Law of the State of Delaware.

          FIFTH: The Amended Certificate would amend and restate the
Corporation's Certificate of Designation of Series E Convertible Preferred Stock
in its entirety and replace it with the following:

Section 1. Designation and Number; Ranking.

          (a) The shares of such series shall be designated as Series E
Convertible Preferred Stock (the "Series E Preferred"). The number of authorized
shares of the Series E Preferred shall be 6,250,000, which number may be
decreased (but not increased) by the Board of Directors without a vote of
stockholders; provided, however, that such number may not be decreased below the
number of then outstanding shares of Series E Preferred or shares of Series E
Preferred to be issued pursuant to the Stock Purchase Agreement (as defined
below).
<PAGE>
                                                                               2


          (b) The Series E Preferred shall, with respect to dividend rights and
rights on liquidation, dissolution or winding up, rank on a parity with the
Series D Convertible Preferred Stock, par value of $0.01 per share of the
Corporation and prior to all other classes and series of Junior Stock (as
defined below) of the Corporation now or hereafter authorized including, without
limitation, the Common Stock (as defined below).

          (c) Capitalized terms used herein and not otherwise defined shall have
the meanings set forth in Section 11.

Section 2. Dividends and Distributions.

          (a) Series E Dividends. The holders of shares of Series E Preferred,
in preference to the holders of shares of Common Stock and of any shares of
other Junior Stock of the Corporation, shall be entitled to receive, when, as
and if declared by the Board of Directors, out of the assets of the Corporation
legally available therefore, cumulative cash dividends at an annual rate per
share of Series E Preferred equal to 8.00% of the Liquidation Preference with
respect to such share per annum ("Series E Dividend Rate"), calculated on the
basis of a 360-day year consisting of twelve 30-day months, accruing and payable
in equal quarterly payments, in immediately available funds, on the last day of
March, June, September and December or, if any such day is not a Business Day,
the next succeeding Business Day, in each year (each such date being referred to
herein as a "Quarterly Dividend Payment Date"), commencing on the first
quarterly dividend date to occur after the issue date of such shares; provided
that the dividend payable on the first Quarterly Dividend Payment Date to occur
after the original issue date shall be computed based on the number of days
prior to such date that the Series E Preferred has been issued and outstanding;
and provided further that, notwithstanding the foregoing (i) no dividends shall
be paid or payable in cash with respect to any share of Series E Preferred until
the earliest of the date (x) such share is redeemed in accordance with the terms
of the Series E Preferred and (y) payment is made to the Series E Preferred
pursuant to Section 7 and (ii) upon conversion of any share of Series E
Preferred, accrued dividends shall be treated as contemplated by Section 8 or
Section 10.

          (b) Dividend Arrearage. If as of any Quarterly Dividend Payment Date
there is a Dividend Arrearage (as hereinafter defined), an additional dividend
(the "Additional Dividend") shall accrue on each share of the Series E Preferred
for the period from such Quarterly Dividend Payment Date through the earlier of
(x) the date on which such Dividend Arrearage is paid in full and (y) the next
succeeding Quarterly Dividend Payment Date, in an amount equal to the product of
(i) the Series E Dividend Rate and (ii) the amount of such Dividend Arrearage as
of such Quarterly Dividend Payment Date. For purposes of this Section 2(b),
"Dividend Arrearage" shall mean, with respect to each share of Series E
Preferred, as of any Quarterly Dividend Payment Date, the excess, if any of (i)
the sum of all dividends theretofore accrued on such share in accordance with
Section 2(a) (including those accrued as of and including such Quarterly
Dividend Payment Date) plus all Additional Dividends, if any, theretofore
accrued on such share in accordance with this Section 2(b) (including those
accrued as of and including such
<PAGE>
                                                                               3


Quarterly Dividend Payment Date), over (ii) all dividends actually paid with
respect to such share on or before such Quarterly Dividend Payment Date.

          (c) Accrual of Dividends. Dividends payable pursuant to Section 2(a)
shall begin to accrue and be cumulative from the Issue Date, and shall accrue on
a daily basis, in each case whether or not declared. Dividends paid on the
shares of Series E Preferred in an amount less than the total amount of such
dividends at the time accrued and payable on such shares shall be allocated pro
rata on a share-by-share basis among all such shares of Series E Preferred at
the time outstanding. The Board of Directors may fix a record date for the
determination of holders of shares of Series E Preferred entitled to receive
payment of a dividend declared thereon, which record date shall be no more than
60 days or less than 10 days prior to the date fixed for the payment thereof.
Accumulated but unpaid dividends for any past quarterly dividend periods may be
declared and paid at any time, without reference to any regular Quarterly
Dividend Payment Date, to holders of record on such date, not more than 60 nor
less than 10 days preceding the payment date thereof, as may be fixed by the
Board of Directors.

          (d) Other Dividends. In addition to the dividends or distributions on
the Series E Preferred described in Section 2(a), in the event that the
Corporation shall declare a dividend or make any other distribution (including,
without limitation, in cash, in capital stock (which shall include, without
limitation, any options, warrants or other rights to acquire capital stock) of
the Corporation, whether or not pursuant to a shareholder rights plan, "poison
pill" or similar arrangement, or other property or assets)) to holders of Common
Stock, then the Board of Directors shall declare and the holder of each share of
Series E Preferred shall be entitled to receive a dividend or distribution in an
amount equal to the amount of such dividend or distribution received by a holder
of the number of shares of Common Stock for which such share of Series E
Preferred is convertible on the record date for such dividend or distribution.
Any such amount shall be paid to the holders of shares of Series E Preferred at
the same time such dividend or distribution is made to holders of Common Stock.

Section 3. Voting Rights.

          In addition to any voting rights provided by law, the holders of
shares of Series E Preferred shall have the following voting rights:

          (a) So long as the Series E Preferred is outstanding, each share of
Series E Preferred shall entitle the holder thereof to vote, in person or by
proxy, at a special or annual meeting of stockholders, on all matters voted on
by holders of Common Stock voting together as a single class with other shares
entitled to vote thereon. With respect to any such vote, each share of Series E
Preferred shall entitle the holder thereof to cast that number of votes per
share as is equal to the number of votes that such holder would be entitled to
cast had such holder converted such share of Series E Preferred into Common
Stock on the record date for determining the stockholders of the Corporation
eligible to vote on any such matters.
<PAGE>
                                                                               4


          (b) Protective Provisions. Unless the consent or approval of a greater
number of shares shall then be required by law, the affirmative vote of the
holders of at least 50% of the outstanding shares of Series E Preferred, voting
separately as a single class, shall be necessary to:

               (i) authorize, increase the authorized number of shares of, or
issue (including on conversion or exchange of any convertible or exchangeable
securities or by reclassification), any shares of any class or classes of Senior
Stock, Parity Stock, the Series E Preferred or Junior Stock, if in the case of
Junior Stock, such Stock has a mandatory or optional redemption date and such
dates could be earlier than the Mandatory Redemption Date or the Optional
Redemption Date;

               (ii) authorize, adopt or approve an amendment to the Charter that
would increase or decrease the par value of the shares of Series E Preferred, or
alter or change the powers, preferences or special rights of the shares of
Series E Preferred or the shares of any class of Parity Stock or Senior Stock;

               (iii) amend or alter the Charter so as to affect the shares of
Series E Preferred adversely, including by granting any voting right to any
holder of notes, bonds, debentures or other debt obligations of the Corporation,
by reclassifying any capital stock into Senior Stock or Parity Stock or by
amending the terms of any class of Parity Stock or Senior Stock or amending the
terms covering redemption of any Junior Stock;

               (iv) authorize or issue any security convertible into,
exchangeable for or evidencing the right to purchase or otherwise receive any
shares of any class or classes of Senior Stock or Parity Stock;

               (v) effect any sale or merger of a Material Subsidiary or effect
a sale of assets of the Corporation in any transaction or series of transactions
having an aggregate fair market value of more than $50 million during any 365
day period;

               (vi) incur any indebtedness for borrowed money other than
indebtedness under receivable financing arrangements not to exceed $50 million
in the aggregate total if, after giving effect to the incurrence of such
indebtedness, the indebtedness for borrowed money of the Corporation exceeds the
Permissible Amount;

               (vii) take any action which would have the effect of reducing
defined by GAAP by more than 10% during any 365 day period;

               (viii) issue shares of Common Stock or securities convertible
into Common Stock (other than issuances for cash or issuances pursuant to a
stock option plan approved by the Board of Directors of the Corporation) if such
issuance would increase, during any 365 day period, the number of shares of
Common Stock outstanding on a fully-diluted basis by more than 20%;
<PAGE>
                                                                               5


               (ix) effect any Change of Control of the Corporation in
connection with which a vote of shareholders of the Corporation is required; or

               (x) effect the voluntary liquidation, dissolution, winding up,
recapitalization or reorganization of the Corporation, or the consolidation or
merger of the Corporation with or into any other Person (except a wholly-owned
subsidiary of the Corporation), or the sale or other distribution to another
Person of all or substantially all of the assets of the Corporation in each case
not constituting a Change of Control in connection with which a vote of
shareholders of the Corporation is required; provided, however, that no separate
vote of the holders of the Series E Preferred as a class shall be required under
this clause (x) in the case of a recapitalization, reorganization, consolidation
or merger of the Corporation if:

                    (A) the resulting or surviving corporation will have after
such recapitalization, reorganization, consolidation or merger no Senior Stock
or Parity Stock either authorized or outstanding (except such Senior Stock or
Parity Stock of the Corporation as may have been authorized or outstanding
immediately preceding such consolidation or merger, or such stock of the
resulting or surviving corporation (having the same powers, preferences and
special rights of any such Senior Stock or Parity Stock) as may be issued in
exchange therefor),

                    (B) each holder of shares of Series E Preferred immediately
preceding such recapitalization, reorganization, consolidation or merger will
receive in exchange therefor the same number of shares of stock, with the same
preferences, rights and powers, of the resulting or surviving corporation, and

                    (C) after such recapitalization, reorganization,
consolidation or merger the resulting or surviving corporation shall not be in
breach of any of the terms hereof.

          (c) Exercise of Voting Rights. The foregoing right of holders of
shares of Series E Preferred to take any action as provided in Section 3(b) may
be exercised at any annual meeting of stockholders or at a special meeting of
holders of shares of Series E Preferred held for such purpose or at any
adjournment thereof, or by the written consent, delivered to the Secretary of
the Corporation, of the holders of the minimum number of shares required to take
such action.

          In connection with the exercise of such right (and unless such right
has been exercised by written consent of the minimum number of shares required
to take such action), the President of the Corporation may call, and upon the
written request of holders of record of at least 5% of the outstanding shares of
Series E Preferred, addressed to the Secretary of the Corporation at the
principal office of the Corporation, shall call, a special meeting of the
holders of Series E Preferred. Such meeting shall be held within 30 days after
delivery of such request to the Secretary, at the place and upon the notice
provided by law and in the by-laws of the Corporation for the holding of
meetings of stockholders.
<PAGE>
                                                                               6


               (i) At each meeting of stockholders at which the holders of
shares of Series E Preferred shall have the right, voting separately as a single
class, to take any action, the presence in person or by proxy of the holders of
record of one third of the total number of shares of Series E Preferred then
outstanding and entitled to vote on the matter shall be necessary and sufficient
to constitute a quorum of such holders. At any such meeting or at any
adjournment thereof:

                    (A) the absence of a quorum of the holders of shares of
Series E Preferred shall not prevent the election of directors, and the absence
of a quorum of the holders of shares of any other class of series of capital
stock shall not prevent the taking of any action as provided in this Section 3;
and

                    (B) in the absence of a quorum of the holders of shares of
Series E Preferred, a majority of the holders of such shares present in person
or by proxy shall have the power to adjourn the meeting as to the actions to be
taken by the holders of shares of Series E Preferred from time to time and place
to place without notice other than announcement at the meeting until a quorum
shall be present.

          For taking of any action by the holders of shares of Series E
Preferred, voting separately as a class, each such holder shall have one vote
for each share of such stock standing in his name on the transfer books of the
Corporation as of any record date fixed for such purpose or, if no such date be
Fixed, at the close of business on the Business Day next preceding the day on
which notice is given, or if notice is waived, at the close of business on the
Business Day next preceding the day on which the meeting is held; provided,
however, that shares of Series E Preferred held by the Corporation or any
Affiliate of the Corporation shall not be deemed to be outstanding for purposes
of taking any action as provided in this Section 3.

Section 4. Certain Restrictions.

          (a) No Dividends. Whenever quarterly dividends payable on shares of
Series E Preferred as provided in Section 2 are not paid in full in cash, at
such time and thereafter until all unpaid dividends payable, whether or not
declared, on the outstanding shares of Series E Preferred shall have been paid
in full in cash or declared and set apart in cash for payment, or whenever the
Corporation shall not have converted or exchanged shares of Series E Preferred
at a time required by Section 8 or 10, at such time and thereafter until all
conversion and exchange obligations provided in Section 8 or 10 that have come
due shall have been satisfied the Corporation shall not: (A) declare or pay
dividends, or make any other distributions, on any shares of Junior Stock or (B)
declare or pay dividends, or make any other distributions, on any shares of
Parity Stock, except (i) dividends or distributions paid ratably on the Series E
Preferred and all Parity Stock on which dividends are payable or in arrears, in
proportion to the total amounts to which the holders of all shares of the Series
E Preferred and such Parity Stock are then entitled and (ii) dividends paid on
the Series D Convertible Preferred Stock pursuant to the Certificate of
Designation of the Series D Convertible Preferred Stock dated July 13, 2000 so
long as dividends on the Series E Preferred are not payable at that time.
<PAGE>
                                                                               7


          (b) No Redemption. Whenever dividends payable on shares of Series E
Preferred as provided in Section 2(a) are not paid in full in cash, at such time
and thereafter until all unpaid dividends payable, whether or not declared, on
the outstanding shares of Series E Preferred shall have been paid in full in
cash or declared and set apart in cash for payment, or whenever the Corporation
shall not have converted or exchanged shares of Series E Preferred at a time
required by Section 8 or 10, at such time and thereafter until all conversion
and exchange obligations provided in Section 8 or 10 that have come due shall
have been satisfied, the Corporation shall not redeem, purchase or otherwise
acquire for consideration any shares of Junior Stock or Parity Stock; provided,
however, that (A) the Corporation may accept shares of any Senior Stock, Parity
Stock or Junior Stock for conversion into Junior Stock and (B) the Corporation
may at any time redeem, purchase or otherwise acquire shares of any Parity Stock
pursuant to any mandatory redemption, put, sinking fund or other similar
obligation contained in such Parity Stock, pro rata with the Series E Preferred
in proportion to the total amount then required to be applied by the Corporation
to redeem, repurchase, convert, exchange or otherwise acquire shares of Series E
Preferred and shares of such Parity Stock.

          (c) Subsidiary Action. The Corporation shall not permit any Subsidiary
of the Corporation, or cause any other Person, to purchase or otherwise acquire
for consideration any shares of capital stock of the Corporation unless the
Corporation could, pursuant to Section 4(b), purchase such shares at such time
and in such manner; provided that this provision shall not prohibit sales of
shares of capita] stock by the Corporation to any third party.

Section 5. Redemption.

          (a) Optional Redemption. Except as otherwise set forth in this Section
5, the Corporation shall not have any right to redeem any shares of Series E
Preferred prior to the fifth anniversary of the Effective Date. On and after the
fifth anniversary of the Effective Date, or during a Change of Control Window,
the Corporation shall have the right, at its sole option and election, to redeem
the shares of Series E Preferred, in whole but not in part, on not less than 30
days notice of the date of redemption (any such date an "Optional Redemption
Date") at a price per share (the "Optional Redemption Price") equal to the
applicable percentage set forth below of the sum of the (i) Liquidation
Preference per share and (ii) any accrued and unpaid dividends thereon
(including Additional Dividends), whether or not declared or payable, to the
applicable Optional Redemption Date, in immediately available funds.
<PAGE>
                                                                               8


<TABLE>
<CAPTION>
 IF REDEEMED ON OR AFTER THE        AND REDEEMED BEFORE THE
ANNIVERSARY OF THE EFFECTIVE   ANNIVERSARY OF THE EFFECTIVE DATE
      DATE OCCURRING IN                   OCCURRING IN             APPLICABLE PERCENTAGE
----------------------------   ---------------------------------   ---------------------
<S>                            <C>                                 <C>
            2006                              2007                          102%
            2007                        October 19, 2008                    101%
</TABLE>

          (b) Mandatory Redemption. To the extent permitted by law, the
Corporation shall redeem, on the eighth anniversary of the Original Issue Date
(or, if such day is not a Business Day, on the first Business Day thereafter)
(the "Mandatory Redemption Date"), all remaining shares of Series E Preferred
then outstanding, for an amount equal to the Liquidation Preference for each
share outstanding, plus an amount in cash equal to all accrued but unpaid
dividends thereon (including Additional Dividends) to the Mandatory Redemption
Date (the "Mandatory Redemption Price"), in immediately available funds. Prior
to authorizing or making such redemption with respect to the Series E Preferred,
the Corporation, by resolution of the Board of Directors shall, to the extent of
funds legally available therefor, declare a dividend on the Series E Preferred
payable on the Mandatory Redemption Date in an amount equal to any accrued and
unpaid dividends on the Series E Preferred as of such date (including Additional
Dividends) and, if the Corporation does not have sufficient legally available
funds to declare and pay all dividends accrued at the time of such redemption,
any remaining accrued and unpaid dividends (including Additional Dividends)
shall be added to the Mandatory Redemption Price. After paying any accrued and
unpaid dividends pursuant to the foregoing sentence, if the funds of the
Corporation legally available for redemption of shares of the Series E Preferred
then required to be redeemed are insufficient to redeem the total number of such
shares then outstanding, those funds which are legally available shall be used
to redeem the maximum possible number of shares of the Series E Preferred, which
shares to be redeemed shall be allocated pro rata among the holders of the
Series E Preferred based on the number of shares of Series E Preferred held by
such holders. At any time and from time to time thereafter, when additional
funds of the Corporation are legally available to discharge its obligation to
redeem all of the outstanding shares of Series E Preferred required to be
redeemed pursuant to this Section (the "Mandatory Redemption Obligation"), such
funds shall be immediately used to discharge such Mandatory Redemption
Obligation until the balance of such shares have been redeemed. If and so long
as the Mandatory Redemption Obligation shall not be fully discharged, dividends
on any remaining outstanding shares of Series E Preferred shall continue to
accrue and be added to the dividend payable pursuant to the second preceding
sentence.

          (c) Change of Control. If, on or prior to the fifth anniversary of the
Effective Date, (i) a Change of Control occurs, a holder of Series E Preferred
may require the Corporation to redeem the holder's shares of Series E Preferred,
in whole but not in part (the "Holder's Put Right") or (ii) the corporation
wishes to effect a Change of Control in connection with which a vote of the
shareholders is required and the holders of a majority of the shares of Series E
Preferred notify the Corporation that they intend to exercise their right under
Section 3(b)(ix) to vote against a proposed transaction that
<PAGE>
                                                                               9


would result in a Change of Control, the Corporation may require the holders of
Series E Preferred to surrender all but not less than all their shares of Series
E Preferred for redemption (the "Company Call Right"), in either case at a price
per share (the "Control Redemption Price") equal to 125% of the sum of (A) the
Liquidation Preference plus (B) an amount per share equal to all accrued and
unpaid dividends thereon (including Additional Dividends), whether or not
declared or payable, in immediately available funds. (The Control Redemption
Price, Optional Redemption Price and Mandatory Redemption Price are sometimes
referred to as the "Applicable Redemption Price," which Price in all cases,
includes full cumulative dividends accrued and unpaid (including Additional
Dividends) on the shares of Series E Preferred being redeemed. The Control
Redemption Date (as defined below), Optional Redemption Date, and Mandatory
Redemption Date are sometimes referred to as the "Applicable Redemption Date.")

          (d) Notice.

               (i) The Corporation will provide notice to holders of record of
the Series E Preferred (x) of any redemption pursuant to Section 5(a) or 5(b)
not less than 30 nor more than 60 days prior to the date fixed for such
redemption (a "Redemption Notice") and (y) of any Change of Control within 30
days of such Change of Control, provided that in the case of a Change of Control
requiring a shareholder vote, the Corporation shall provide such notice at least
30 days prior to the date fixed for the meeting of holders of Series E Preferred
called to vote on that proposed transaction (a "Change of Control Notice"). Any
Notice provided pursuant to this Section 8(d) shall be provided by first-class
mail postage prepaid, to each holder of record of the Series E Preferred, at
such holder's address as it appears on the stock transfer books of the
Corporation.

               (ii) Each Redemption Notice shall state, as appropriate, (x) the
Applicable Redemption Date; (y) the number of shares of Series E Preferred to be
redeemed and, if fewer than all the shares held by any holder are to be
redeemed, the number of such shares to be redeemed from such holder; and (z) the
Optional Redemption Price or Mandatory Redemption Price.

               (iii) Each Change of Control Notice shall state that: (v) the
Corporation proposes to effect a Change of Control in connection with which a
vote of shareholders is required and the holders of the Series E Preferred have
the right to approve such transaction; (w) if holders of 50% or more of the
outstanding shares of Series E Preferred notify the Corporation that they will
not approve such transaction within 20 days of the receipt of the Change of
Control Notice, the Corporation may redeem all but not less than all the shares
of Series E Preferred; (x) if a Change of Control occurs, each holder has the
right to require the Company to redeem its shares of Series E Preferred and any
shares of Series E Preferred not tendered for redemption will remain outstanding
and continue to accrue dividends (including Additional Dividends); (y) the
Control Redemption Price; and (z) the date on which the Corporation must redeem
the shares upon exercise of the Holder's Put Right or the Company Call Right,
whichever is applicable (in either case, the "Control Redemption Date"), which
shall be not later than
<PAGE>
                                                                              10


30 days from the date the Change of Control Notice is mailed. Within 20 days of
receipt of the Change of Control Notice notifying that the Corporation proposes
to effect a Change of Control in connection with which a shareholder vote is
required, each holder of Series E Preferred shall notify the Corporation as to
whether it will vote to approve or vote against such transaction. If it states
it will approve such transaction, then that holder of Series E Preferred agrees
to vote in favor of the transaction.

               (iv) In addition, each Redemption Notice and Change of Control
Notice shall state, as appropriate, (v) the place or places where certificates
for such shares are to be surrendered for redemption; (w) the amount of full
cumulative dividends per share of Series E Preferred to be redeemed (including
Additional Dividends) up to but excluding the Applicable Redemption Date, and
that dividends on shares of Series E Preferred to be redeemed will cease to
accrue on such Redemption Date unless the Corporation shall default in payment
of the Applicable Redemption Price; (x) the name and location of any bank or
trust company with which the Corporation will deposit redemption funds pursuant
to subsection (f) below; (y) the then-effective Conversion Price; and (z) that
the right of holders to convert shares of Series E Preferred to be redeemed will
terminate at the close of business on the Business Day next preceding the date
fixed for redemption (unless the Corporation shall default in the payment of the
Applicable Redemption Price).

Any Notice that is mailed pursuant to clause (i) shall be conclusively presumed
to have been duly given, whether or not the holder of shares of Series E
Preferred receives such notice, and failure to give such notice by mail, or any
defect in such notice, to the holders of any shares designated for redemption
shall not affect the validity of the proceedings for the redemption of any other
shares of Series E Preferred.

          (e) Mechanics of Redemption. Upon surrender in accordance with any
notice referred to in subsection (d) above of the certificate for any shares
redeemed pursuant to Section 8(a), (b) or (c) (duly endorsed or accompanied by
appropriate instruments of transfer if so required by the Corporation), the
holders of record of such shares shall be entitled to receive the Applicable
Redemption Price, without interest, up to but excluding such Redemption Date out
of funds legally available therefor, If fewer than all the shares represented by
any such certificate are redeemed, a new certificate representing the unredeemed
shares shall be issued without cost to the holder thereof.

          (f) Redemption Funds. On the date of any redemption being made
pursuant to this Section, the Corporation shall, and at any time after mailing
the Redemption Notice or Change of Control Notice and before the Applicable
Redemption Date the Corporation may, deposit for the benefit of the holders of
shares of Series E Preferred to be redeemed the funds necessary for such
redemption with a bank or trust company having a capital and surplus of at least
$1 billion, with instructions to such bank or trust company to pay the full
redemption as provided herein to the holders of shares of Series E Preferred
upon surrender of certificates for such shares; provided, however, that the
making of such deposit shall not release the Corporation from any of its
obligations hereunder. Any moneys so deposited by the Corporation and unclaimed
at the end of two
<PAGE>
                                                                              11


years from the Applicable Redemption Date shall revert to the general funds of
the Corporation and, upon demand, such bank or trust company shall pay over to
the Corporation such unclaimed amounts and thereupon such bank or trust company
shall be relieved of all responsibility in respect thereof and any holder of
shares of Series E Preferred so redeemed shall look only to the Corporation for
the payment of the full redemption amounts, as provided herein.

          (g) Rights After Redemption. Notice of redemption having been given as
provided in Section 8(d), upon the deposit pursuant to subsection (f) of the
full redemption amounts as provided herein in respect of all shares of Series E
Preferred then to be redeemed, notwithstanding that any certificates for such
shares shall not have been surrendered in accordance with subsection (e), from
and after the Applicable Redemption Date: (i) the shares represented thereby
shall no longer be deemed outstanding, (ii) the right to receive dividends
thereon shall cease to accrue, and (iii) all rights of the holders of such
shares of Series E Preferred shall cease and terminate, excepting only the right
to receive the full redemption amounts as provided herein without interest
thereon. If the funds deposited are not sufficient for redemption of the shares
of the Series E Preferred that were to be redeemed, then no certificates
evidencing such shares shall be deemed surrendered and such shares shall remain
outstanding and the rights of holders of shares of Series E Preferred shall
continue to be those of holders of shares of the Series E Preferred.

Section 6. Reacquired Shares.

          Any shares of Series E Preferred converted, exchanged, redeemed,
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
shares of Series E Preferred shall upon their cancellation become authorized but
unissued shares of preferred stock, par value $.01 per share, of the Corporation
and, upon the filing of an appropriate Certificate of Designation with the
Secretary of State of the State of Delaware, may be reissued as part of another
series of preferred stock, par value $.01 per share, of the Corporation subject
to the conditions or restrictions on issuance set forth therein, but in any
event may not be reissued as shares of Series E Preferred unless all shares of
the Series E Preferred issued on the Issue Date shall have already been
redeemed, converted or exchanged.

Section 7. Liquidation, Dissolution or Winding Up.

          (a) Effect of Liquidation. If the Corporation shall commence a
voluntary case under the United States bankruptcy laws or any applicable
bankruptcy, insolvency or similar law of any other country, or consent to the
entry of an order for relief in an involuntary case under any such law or to the
appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or other similar official) of the Corporation or of any
substantial part of its property, or make an assignment for the benefit of its
creditors, or admit in writing its inability to pay its debts generally as they
become due (any such event, a "Voluntary Liquidation Event"), or if a decree or
order for relief in respect of the Corporation shall be entered by a court
having jurisdiction in the
<PAGE>
                                                                              12


premises in an involuntary case under the United States bankruptcy laws or any
applicable bankruptcy, insolvency or similar law of any other country, or
appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator
(or other similar official) of the Corporation or of any substantial part of its
property, or ordering the winding up or liquidation of its affairs, and on
account of any such event the Corporation shall liquidate, dissolve or wind up,
or if the Corporation shall otherwise liquidate, dissolve or wind up, no
distribution shall be made:

               (i) to the holders of shares of Junior Stock unless, prior
thereto, the holders of shares of Series E Preferred, subject to Section 8,
shall have received the greater of (A) (1) if a Voluntary Liquidation Event
shall have occurred, the Optional Redemption Price with respect to each share
(or if such event is a Change of Control, the amount payable under Section 5(c)
with respect to such share) and (2) if a Voluntary Liquidation Event shall not
have occurred, the Liquidation Preference, plus all accrued and unpaid
dividends, whether or not declared or currently payable, to the date of
distribution, with respect to each share and (B) the amount per share (subject
to adjustment to reflect stock splits, stock dividends, stock combinations,
recapitalizations and like occurrences) for each outstanding share of Series E
Preferred as if the holders had converted such shares into shares of Common
Stock immediately prior to the liquidation, dissolution or winding up, or

               (ii) to the holders of shares of Parity Stock, except
distributions made ratably on the Series E Preferred and all other Parity Stock
in proportion to the total amounts to which the holders of all shares of the
Series E Preferred and other Parity Stock are entitled upon such liquidation,
dissolution or winding up;

provided that any distributions referred to in clauses (i) and (ii) shall also
include all amounts payable to the holders of shares of Series E Preferred under
this Section 7 or Section 5(c) as a result of a Change in Control.

Nothing in this section shall affect the rights of holders of shares of Series E
Preferred under Section 3 with respect to a Voluntary Liquidation Event.

          (b) Voluntary Liquidation. For purposes of this Section 7, the holders
of a majority of the outstanding shares of the Series E Preferred may elect to
have treated as a Voluntary Liquidation Event the consolidation or merger of the
Corporation with or into any other corporation or the sale or other transfer in
a single transaction or a series of related transactions of all or substantially
all of the assets of the Corporation, or any other reorganization or business
combination of the Corporation or a Change of Control.

Section 8. Voluntary Conversion.

          (a) Conversion Right. Any holder of Series E Preferred shall have the
right, at its option, at any time and from time to time, to convert, subject to
the terms and provisions of this Section 8, any or all of such holder's shares
of Series E Preferred into such number of fully paid and non-assessable shares
of Common Stock as is equal, subject to Section 8(f), to the product of the
number of shares of Series E Preferred being
<PAGE>
                                                                              13


so converted multiplied by the quotient of (i) the sum of the Liquidation
Preference and (x) in the event of a conversion during a Change of Control
Window, an amount equal to the Additional Amount, or (y) in the event of a
conversion other than during a Change of Control Window, all dividends accrued
and unpaid (including Additional Dividends) on the Series E Preferred so
converted to the date of conversion divided by (ii) the Conversion Price (as
defined below) then in effect, except that with respect to any shares which
shall be called for exchange or redemption, such right shall terminate at the
close of business on the date of exchange or redemption for such shares, unless
in any such case the Corporation shall default in performance or payment due
upon exchange or redemption thereof. The Conversion Price shall be $12.00,
subject to adjustment as set forth in Section 8(c). Such conversion right shall
be exercised by the surrender of the shares to be converted to the Corporation
at any time during usual business hours at its principal place of business to be
maintained by it, accompanied by written notice that the holder elects to
convert such Shares and, subject to Section 8(j) specifying the name or names
(with address) in which a certificate or certificates for shares of Common Stock
are to be issued and (if so required by the Corporation) by a written instrument
or instruments of transfer in form reasonably satisfactory to the Corporation
duly executed by the holder or its duly authorized legal representative and
transfer tax stamps or funds therefor, if required pursuant to Section 8(j). All
shares of Series E Preferred surrendered for conversion shall be delivered to
the Corporation for cancellation and canceled by it and no shares of Series E
Preferred shall be issued in lieu thereof.

          (b) Mechanics of Conversion. As promptly as practicable after the
surrender, as herein provided, of any shares of Series E Preferred for
conversion pursuant to Section 8(a), the Corporation shall deliver to or upon
the written order of the holder of such shares so surrendered a certificate or
certificates representing the number of fully paid and non-assessable shares of
Common Stock into which such shares of Series E Preferred have been converted in
accordance with the provisions of this Section 8. Subject to the following
provisions of this paragraph and of Section 8(c), such conversion shall be
deemed to have been made immediately prior to the close of business on the date
that such shares of Series E Preferred shall have been surrendered in
satisfactory form for conversion, and the Person or Persons entitled to receive
the Common Stock deliverable upon conversion of such shares of Series E
Preferred shall be treated for all purposes as having become the record holder
or holders of such Common Stock at such time, and such conversion shall be at
the Conversion Price in effect at such time; provided, however, that no
surrender shall be effective to constitute the Person or Persons entitled to
receive the Common Stock deliverable upon such conversion as the record holder
or holders of such Common Stock while the share transfer books of the
Corporation shall be closed (but not for any period in excess of five days), but
such surrender shall be effective to constitute the Person or Persons entitled
to receive such Common Stock as the record holder or holders thereof for all
purposes immediately prior to the close of business on the next succeeding day
on which such share transfer books are open, and such conversion shall be deemed
to have been made at, and shall be made at the Conversion Price in effect at,
such time on such next succeeding day.
<PAGE>
                                                                              14


          (c) Adjustment of Conversion Price. The Conversion Price (and the
price at which a share of Common Stock is valued pursuant to Section 10) shall
be subject to adjustment as follows:

               (i) In case the Corporation shall at any time or from time to
time after the Issue Date (A) pay a dividend or make a distribution (other than
a dividend or distribution paid or made to holders of shares of Series E
Preferred in the manner provided in Section 2(d)) on the outstanding shares of
Common Stock in capital stock (which, for purposes of this Section 8(c) shall
include, without limitation, any options, warrants or other rights to acquire
capital stock) of the Corporation, (B) subdivide the outstanding shares of
Common Stock into a larger number of shares, (C) combine the outstanding shares
of Common Stock into a smaller number of shares, (D) issue any shares of its
capital stock in a reclassification of the Common Stock or (E) pay a dividend or
make a distribution (other than a dividend or distribution paid or made to
holders of shares of Series E Preferred in the manner provided in Section 2(d))
on the outstanding shares of Common Stock in securities of the Corporation
pursuant to a shareholder rights plan, "poison pill" or similar arrangement,

then, and in each such case, the Conversion Price in effect immediately prior to
such event shall be adjusted (and any other appropriate actions shall be taken
by the Corporation) so that the holder of any share of Series E Preferred
thereafter surrendered for conversion shall be entitled to receive the number of
shares of Common Stock or other securities of the Corporation that such holder
would have owned or would have been entitled to receive upon or by reason of any
of the events described above, had such share of Series E Preferred been
converted immediately prior to the occurrence of such event. An adjustment made
pursuant to this Section 8(c)(i) shall become effective retroactively (A) in the
case of any such dividend or distribution, to a date immediately following the
close of business on the record date for the determination of holders of Common
Stock entitled to receive such dividend or distribution or (B) in the case of
any such subdivision, combination or reclassification, to the close of business
on the day upon which such corporate action becomes effective.

               (ii) In case the Corporation shall at any time or from time to
time after the Issue Date issue shares of Common Stock (or securities
convertible into or exchangeable for Common Stock, or any options, warrants or
other rights to acquire shares of Common Stock) for a consideration per share
less than either the Conversion Price or the Current Market Price per share of
Common Stock then in effect at the record date or issuance date, as the case may
be (the "Date"), referred to in the following sentence (treating the price per
share of any security convertible or exchangeable or exercisable into Common
Stock as equal to (A) the sum of the price for such security convertible,
exchangeable or exercisable into Common Stock plus any additional consideration
payable (without regard to any anti-dilution adjustments) upon the conversion,
exchange or exercise of such security into Common Stock divided by (B) the
number of shares of Common Stock initially underlying such convertible,
exchangeable or exercisable security),
<PAGE>
                                                                              15


then, and in each such case, the Conversion Price then in effect shall be
adjusted by dividing the Conversion Price in effect on the day immediately prior
to the Date by a fraction (x) the numerator of which shall be the sum of the
number of shares of Common Stock outstanding on the Date plus the number of
additional shares of Common Stock issued or to be issued (or the maximum number
into which such convertible or exchangeable securities initially may convert or
exchange or for which such options, warrants or other rights initially may be
exercised) and (y) the denominator of which shall be the sum of the number of
shares of Common Stock outstanding on the Date plus the number of shares of
Common Stock which the aggregate consideration for the total number of such
additional shares of Common Stock so issued or to be issued upon the conversion,
exchange or exercise of such convertible or exchangeable securities or options,
warrants or other rights (plus the aggregate amount of any additional
consideration initially payable upon such conversion, exchange or exercise of
such security) would purchase at the greater of the Conversion Price or Current
Market Price per share of Common Stock on the Date, as the case may be.

Such adjustment shall be made whenever such shares, securities, options,
warrants or other rights are issued, and shall, in each case, become effective,
in each case, retroactively to a date immediately following the close of
business (1) in the case of issuance to stockholders of the Corporation, as
such, on the record date for the determination of stockholders entitled to
receive such shares, securities, options, warrants or other rights and (2) in
all other cases, on the date ("issuance date") of such issuance; provided that:

                    (A) the determination as to whether an adjustment is
required to be made pursuant to this Section 8(d)(ii) shall be made upon the
issuance of such shares or such convertible or exchangeable securities, options,
warrants or other rights;

                    (B) if any convertible or exchangeable securities, options,
warrants or other rights (or any portions thereof) which shall have given rise
to an adjustment pursuant to this Section 8(d)(ii) shall have expired or
terminated without the exercise thereof and/or if by reason of the terms of such
convertible or exchangeable securities, options, warrants or other rights there
shall have been an increase or increases, with the passage of time or otherwise,
in the price payable upon the exercise or conversion thereof, then the
Conversion Price hereunder shall be readjusted (but to no greater extent than
originally adjusted) on the basis of (1) eliminating from the computation any
additional shares of Common Stock corresponding to such convertible or
exchangeable securities, options, warrants or other rights as shall have expired
or terminated, (2) treating the additional shares of Common Stock, if any,
actually issued or issuable pursuant to the previous exercise of such
convertible or exchangeable securities, options, warrants or other rights as
having been issued for the consideration actually received and receivable
therefor and (3) treating any of such convertible or exchangeable securities,
options, warrants or other rights which remain outstanding as being subject to
exercise or conversion on the basis of such exercise or conversion price as
shall be in effect at this time; and
<PAGE>
                                                                              16


                    (C) no adjustment in the Conversion Price shall be made
pursuant to this Section 8(d)(ii) as a result of any issuance of securities by
the Corporation in respect of which an adjustment to the Conversion Price is
made pursuant to Section 8(c)(i).

               (iii) In case the Corporation shall at any time or from time to
time after the Issue Date distribute to all holders of shares of its Common
Stock (including any such distribution made in connection with a consolidation
or merger in which the Corporation is the resulting or surviving corporation and
the Common Stock is not changed or exchanged) cash, evidences of indebtedness of
the Corporation or another issuer, securities of the Corporation or another
issuer or other assets (excluding (A) dividends or distributions paid or made to
holders of shares of Series E Preferred in the manner provided in Section 2(d),
and (B) dividends payable in shares of Common Stock for which adjustment is made
under Section 8(c)(i)) or rights or warrants to subscribe for or purchase
securities of the Corporation (excluding those referred to in Section 8(c)(ii)
or those in respect of which an adjustment in the Conversion Price is made
pursuant to Section 8(c)(i) or (ii)), then, and in each such case, the
Conversion Price then in effect shall be adjusted by dividing the Conversion
Price in effect immediately prior to the date of such distribution by a fraction
(x) the numerator of which shall be the Market Price of the Common Stock on the
record date referred to below and (y) the denominator of which shall be such
Market Price of the Common Stock less the then Fair Market Value (as determined
by the Board of Directors of the Corporation) of the portion of the cash,
evidences of indebtedness, securities or other assets so distributed or of such
subscription rights or warrants applicable to one share of Common Stock (but
such denominator not to be less than one). Such adjustment shall be made
whenever any such distribution is made and shall become effective retroactively
to a date immediately following the close of business on the record date for the
determination of stockholders entitled to receive such distribution.

               (iv) In the case the Corporation, at any time or from time to
time after the Issue Date, shall take any action affecting its Common Stock
similar to or having an effect similar to any of the actions described in any of
Section 8(c)(i) through Section 8(c)(iii), inclusive, or Section 8(g) (but not
including any action described in any such Section) and the Board of Directors
of the Corporation in good faith determines that it would be equitable in the
circumstances to adjust the Conversion Price as a result of such action, then,
and in each such case, the Conversion Price shall be adjusted in such manner and
at such time as the Board of Directors of the Corporation in good faith
determines would be equitable in the circumstances (such determination to be
evidenced in a resolution, a certified copy of which shall be mailed to the
holders of the Series E Preferred).

               (v) Notwithstanding anything herein to the contrary, no
adjustment under this Section 8(c) need be made to the Conversion Price unless
such adjustment would require an increase or decrease of at least 1% of the
Conversion Price then in effect. Any lesser adjustment shall be carried forward
and shall be made at the time of and together with the next subsequent
adjustment, which, together with any adjustment or adjustments so carried
forward, shall amount to an increase or decrease of
<PAGE>
                                                                              17


at least 1% of such Conversion Price. Any adjustment to the Conversion Price
carried forward and not theretofore made shall be made immediately prior to the
conversion of any shares of Series E Preferred pursuant hereto.

               (vi) Notwithstanding anything herein to the contrary, no
adjustment under this Section 8(C)(ii) or (iii) shall be made upon (A) the grant
of options to employees or directors of the Corporation permitted under benefit
plans in existence on the Issue Date pursuant to the terms of such plans in
effect on the Issue Date, (B) the issuance of any Common Stock upon conversion
of the Series E Preferred in accordance with the terms of its Certificate of
Designation, (C) the issuance of any Common Stock upon conversion of the Series
D Preferred in accordance with the terms of its Certificate of Designation in
effect on the Issue Date and (D) the issuance of any Common Stock upon
conversion or exercise of any convertible securities outstanding on the Issue
Date in accordance with terms of such security in effect on the Issue Date.

          (d) Effect of Setting Record Date. If the Corporation shall take a
record of the holders of its Common Stock for the purpose of entitling them to
receive a dividend or other distribution, and shall thereafter and before the
distribution to stockholders thereof legally abandon its plan to pay or deliver
such dividend or distribution, then thereafter no adjustment in the Conversion
Price then in effect shall be required by reason of the taking of such record.

          (e) Certificate of Adjustment. Upon any increase or decrease in the
Conversion Price, then, and in each such case, the Corporation promptly shall
deliver to each registered holder of Series E Preferred at least five Business
Days prior to effecting any of the foregoing transactions a certificate, signed
by the President or a Vice-President and by the Treasurer or an Assistant
Treasurer or the Secretary or an Assistant Secretary of the Corporation,
setting forth in reasonable detail the event requiring the adjustment and
specifying, to the extent feasible, (x) the method by which such adjustment was
calculated and (y) the increased or decreased Conversion Price then in effect
following such adjustment.

          (f) No Fractional Shares. No fractional shares or scrip representing
fractional shares shall be issued upon the conversion of any shares of Series E
Preferred. If more than one share of Series E Preferred shall be surrendered for
conversion at one time by the same holder, the number of full shares of Common
Stock issuable upon conversion thereof shall be computed on the basis of the
aggregate Liquidation Preference (plus accrued and unpaid dividends, including
any Additional Dividends) of the shares of Series E Preferred so surrendered. If
the conversion of any share or shares of Series E Preferred results in a
fraction, an amount equal to such fraction multiplied by the Current Market
Price of the Common Stock on the Business Day preceding the day of conversion
shall be paid to such holder in cash by the Corporation.

          (g) Transactions. In case of any capital reorganization or
reclassification or other change of outstanding shares of Common Stock (other
than a change in par value, or from par value to no par value, or from no par
value to par value), or in case of any consolidation or merger of the
Corporation with or into another Person
<PAGE>
                                                                              18


(other than a consolidation or merger in which the Corporation is the resulting
or surviving Person and which does not result in any reclassification or change
of outstanding Common Stock) (any of the foregoing, a "Transaction"), the
Corporation, or such successor or purchasing Person, as the case may be, shall
execute and deliver to each holder of Series E Preferred at least 10 Business
Days prior to effecting any of the foregoing Transactions a certificate that the
holder of each share of Series E Preferred then outstanding shall have the right
after the Transaction to convert such share of Series E Preferred into the kind
and amount of shares of stock or other securities (of the Corporation or another
issuer) or property or cash receivable upon such Transaction by a holder of the
number of shares of Common Stock into which such share of Series E Preferred
could have been converted immediately prior to such Transaction. Such
certificate shall provide for adjustments which shall be as nearly equivalent as
may be practicable to the adjustments provided for in this Section 8. If, in the
case of any such Transaction, the stock, other securities, cash or property
receivable thereupon by a holder of Common Stock includes shares of stock or
other securities of a Person other than the successor or purchasing Person and
other than the Corporation, which controls or is controlled by the successor or
purchasing Person or which, in connection with such Transaction, issues stock,
securities, other property or cash to holders of Common Stock, then such
certificate also shall be executed by such Person, and such Person shall, in
such certificate, specifically acknowledge the obligations of such successor or
purchasing Person and acknowledge its obligations to issue such stock,
securities, other property or cash to the holders of Series E Preferred upon
conversion of the shares of Series E Preferred as provided above. The provisions
of this Section 8(h) and any equivalent thereof in any such certificate
similarly shall apply to successive Transactions.

          (h) Notice. In case at any time or from time to time:

               (i) the Corporation shall declare a dividend (or any other
distribution) on its Common Stock;

               (ii) the Corporation shall authorize the granting to the holders
of its Common Stock of rights or warrants to subscribe for or purchase any
shares of stock of any class or of any other rights or warrants;

               (iii) there shall be any reclassification of the Common Stock, or
any consolidation or merger to which the Corporation is a party and for which
approval of any shareholders of the Corporation is required, or any sale or
other disposition of all or substantially all of the assets of the Corporation;
or

               (iv) there shall be any voluntary or involuntary dissolution,
liquidation or winding up of the Corporation;

then the Corporation shall mail to each holder of shares of Series E Preferred
at such holder's address as it appears on the transfer books of the Corporation,
as promptly as possible but in any event at least 10 days prior to the
applicable date hereinafter specified, a notice stating (x) the date on which a
record is to be taken for the purpose of such dividend, distribution or rights
or warrants or, if a record is not to be taken, the date as of
<PAGE>
                                                                              19


which the holders of Common Stock of record to be entitled to such dividend,
distribution or rights are to be determined, or (y) the date on which such
rectification, consolidation, merger, sale, conveyance, dissolution, liquidation
or winding up is expected to become effective. Such notice also shall specify
the date as of which it is expected that holders of Common Stock of record shall
be entitled to exchange their Common Stock for shares of stock or other
securities or property or cash deliverable upon such reclassification,
consolidation, merger, sale, conveyance, dissolution, liquidation or winding up.

          (i) Reservation of Common Stock. The Corporation shall at all times
reserve and keep available for issuance upon the conversion of the Series E
Preferred pursuant to Section 8(a) or l0(a), such number of its authorized but
unissued shares of Common Stock as will from time to time be sufficient to
permit the conversion of all outstanding shares of Series E Preferred, and shall
take all action required to increase the authorized number of shares of Common
Stock if at any time there shall be insufficient authorized but unissued shares
of Common Stock to permit such reservation or to permit the conversion of all
outstanding shares of Series E Preferred.

          (j) Issuance of Certificates. The issuance or delivery of certificates
for Common Stock upon the conversion of shares of Series E Preferred pursuant to
Section 8(a) or 10(a) shall be made without charge to the converting holder of
shares of Series E Preferred for such certificates or for any tax in respect of
the issuance or delivery of such certificates or the securities represented
thereby, and such certificates shall be issued or delivered in the respective
names of, or (subject to compliance with the applicable provisions of federal
and state securities laws) in such names as may be directed by, the holders of
the shares of Series E Preferred converted; provided, however, that the
Corporation shall not be required to pay any tax which may be payable in respect
of any transfer involved in the issuance and delivery of any such certificate in
a name other than that of the holder of the shares of Series E Preferred
converted, and the Corporation shall not be required to issue or deliver such
certificate unless or until the Person or Persons requesting the issuance or
delivery thereof shall have paid to the Corporation the amount of such tax or
shall have established to the reasonable satisfaction of the Corporation that
such tax has been paid.

Section 9. Certain Remedies.

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

Section 10. Conversion at the Option of the Corporation.

          (a) Time of Conversion. At any time after the fifth anniversary of the
Effective Date, if for 20 consecutive Trading Days beginning on or after such
<PAGE>
                                                                              20


anniversary, the Market Price of the Common Stock at the end of each such
Trading Day during such period exceeds 250% of the Conversion Price in effect on
each such Trading Day, then on the 20th Business Day following such 20-day
period (the "Optional Conversion Date"), the Corporation shall have the right to
cause all, but not less then all, of the outstanding shares of Series E
Preferred to be converted automatically into such number of fully paid and
non-assessable shares of Common Stock as is equal, subject to Section 8(g), to
the product of the number of shares of Series E Preferred being so converted
multiplied by the quotient of (i) the Liquidation Preference (plus accrued and
unpaid dividends, including any Additional Dividends) divided by (ii) the
Conversion Price in effect on the Optional Conversion Date.

          (b) Officer's Certificate. The Corporation will provide notice to
holders of record of Series E Preferred of its election to cause all the Series
E Preferred to be converted pursuant to Section 10(a) on the Optional Conversion
Date. The Corporation shall deliver such notice at least ten Business Days prior
to the Optional Conversion Date, by first-class mail postage prepaid, to each
holder of record of the Series E Preferred, at such holder's address as it
appears on the stock transfer books of the Corporation. Such notice shall
include an officer's certificate attesting to the satisfaction of the condition
precedent to optional conversion, stating the Conversion Price and the number of
fully paid and non-assessable shares of Common Stock into which such shares of
Series E Preferred will be converted in accordance with Section 8 and this
Section 10.

          (c) The Corporation shall deposit for the benefit of the holders of
shares of Series E Preferred the share certificates representing the shares of
Common Stock deliverable upon conversion of the shares of Series E Preferred
with a bank or trust company having a capital and surplus of at least $1
billion, with instructions to such bank or trust company to deliver the
certificates to the holders of shares of Series E Preferred upon surrender of
the certificates for such shares; provided, however, that the making of such
deposit shall not release the Corporation from any of its obligations hereunder.
Any certificates so deposited by the Corporation and unclaimed at the end of two
years from the Optional Redemption Date shall revert to the Corporation and the
bank or trust company shall be relieved of all responsibility in respect thereof
and any holder of shares of Series E Preferred so converted shall look only to
the Corporation for the certificate representing the Common Stock issued upon
the conversion, as provided herein.

          (d) Effect of Conversion. Notice of conversion having been given as
provided in Section 10(b), upon the deposit pursuant to subsection (c) of the
certificates representing the shares of Common Stock issuable upon conversion of
the shares of Series E Preferred, notwithstanding that any certificates for such
shares shall not have been surrendered for cancellation, from and after the
Optional Conversion Date (i) the shares represented thereby shall no longer be
deemed outstanding, (ii) the rights to receive dividends thereon shall cease to
accrue, and (iii) all rights of the holders of shares of Series E Preferred to
be converted shall cease and terminate, excepting only the right to receive the
shares of Common Stock and Dividends. If the Corporation shall default in the
execution and delivery of the shares of Common Stock, then no certificates
<PAGE>
                                                                              21


evidencing such shares shall be deemed surrendered and such shares shall remain
outstanding and the rights of holders of Series E Preferred shall continue to be
those of holders of shares of the Series E Preferred.

Section 11. Definitions.

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

          "Additional Amount" means an amount equal to the amount of dividends
to accrue on a share of Series E Preferred pursuant to Section 2(a) hereof from
the date of issuance of such share to and including the fifth anniversary of the
Effective Date, assuming that on each Quarterly Dividend Payment Date such
dividends to be paid on such date were added to the Liquidation Preference on
such Quarterly Dividend Payment Date for purposes of Section 2(a).

          "Affiliate" shall have the meaning ascribed to such term in Rule 12b-2
of the General Rules and Regulations under the Exchange Act; provided that for
purposes of this Certificate, the Purchaser shall not be considered an Affiliate
of the Corporation.

          "Business Day" shall mean any day other than a Saturday, Sunday or
other day on which commercial banks in the State of Delaware are authorized or
required by law or executive order to close.

          A "Change of Control" of the Corporation shall mean such times as:

               (i) Any Person or "group" (within the meaning of Section 13(d)(3)
of the Exchange Act) is or becomes the beneficial owner, directly or indirectly,
of outstanding shares of stock of the Corporation entitling such Person or
Persons to exercise 50% or more of the total votes (excluding the Series E
Preferred) entitled to be cast at a regular or special meeting, or by action by
written consent, of shareholders of the Corporation (the term "beneficial owner"
shall be determined in accordance with Rule 13d-3, promulgated by the Commission
under the Exchange Act);

               (ii) A majority of the Board of Directors of the Corporation
shall consist of Persons other than Continuing Directors. The term "Continuing
Director" shall mean any member of the Board of Directors on the Closing Date
(as defined in the Stock Purchase Agreement) and any other member of the Board
of Directors who shall be recommended or elected to succeed or become a
Continuing Director by a majority of Continuing Directors who are then members
of the Board of Directors;

               (iii) The shareholders of the Corporation shall have approved a
recapitalization, reorganization, merger, consolidation or similar transaction,
in each case with respect to which all or substantially all the Persons who were
the respective beneficial owners, directly or indirectly, of the outstanding
shares of capital stock of the Corporation immediately prior to such
recapitalization, reorganization, merger, consolidation or similar transaction,
will own less than 50% of the combined voting
<PAGE>
                                                                              22


power of the then outstanding shares of capital stock of the Corporation
resulting from such recapitalization, reorganization, merger, consolidation or
similar transaction; provided that any such recapitalization shall not be
considered a Change of Control if the holders of Series E Preferred have the
right to participate on at least a pari passu basis;

               (iv) The shareholders of the Corporation shall have approved of
the sale or other disposition of all or substantially all the assets of the
Corporation in one transaction or in a series of related transactions;

               (v) Any transaction occurs (other than one described in (iii)
above or (vi) below), the result of which is that the Common Stock is not
required to be registered under Section 12 of the Exchange Act and that the
holders of Common Stock do not receive common stock of the Person surviving such
transaction which is required to be registered under Section 12 of the Exchange
Act; or

               (vi) Immediately after any merger, consolidation,
recapitalization or similar transaction, D. Gregory Smith or a "group" (within
the meaning of Section 13(d)(3) of the Exchange Act) shall be the beneficial
owners, directly or indirectly, of outstanding shares of capital stock of the
Corporation (or any Person surviving such transaction) entitling them
collectively to exercise 50% or more of the total voting power of shares of
capital stock of the Corporation (or the surviving Person in such transaction)
and in connection with or as a result of such transaction, the Corporation (or
such surviving Person) shall have incurred or issued additional indebtedness
such that the total indebtedness so incurred or issued equals at least 50% of
the consideration payable in such transaction; provided that any such
transactions shall not be considered a Change of Control if the holders of
Series E Preferred have the right to participate on at least a pari passu basis.

          "Change of Control Window" shall mean, as to any Change of Control,
the period beginning on the earlier of (x) the date such Change of Control
occurs and (y) the first date as of which the Corporation has given written
notice of such Change of Control to each registered holder of Series G
Preferred, and ending on the date 180 days after the later to occur of (i) the
date such Change of Control occurs and (ii) the first date as of which the
Corporation has given written notice of such Change of Control to each
registered holder of Series G Preferred.

          "Common Stock" shall mean the common stock, par value $.01 per share,
and each other class of capital stock of the Corporation into which such stock
is reclassified or reconstituted.

          "Consolidated EBITDA" shall mean for any period, the Consolidated Net
Income for such period, plus, to the extent deducted in determining such
Consolidated Net Income (i) Consolidated Interest Expense; (ii) depreciation;
(iii) depletion; (iv) amortization; (v) all federal, state, local and foreign
income taxes; and (vi) all other non-cash expenses, minus, to the extent added
in determining such Consolidated Net Income, any non-cash income or non-cash
gains, all as determined on a consolidated basis in accordance with GAAP.
<PAGE>
                                                                              23


          "Consolidated Interest Expense" shall mean for any period, the net
interest expense of the Corporation and its Subsidiaries for such period as
determined on a consolidated basis in accordance with GAAP.

          "Consolidated Net Income" shall mean for any period, the net income of
the Corporation and its Subsidiaries for such period as determined on a
consolidated basis in accordance with GAAP, but excluding from the determination
of Consolidated Net Income (without duplication) (a) any extraordinary or
non-recurring gains or losses or gains or losses from asset sales; (b) effects
of discontinued operations; (c) the income (or loss) of any Person in which any
other Person (other than the Corporation or any of the Subsidiaries) has a joint
interest, except to the extent of the amount of dividends or other distributions
actually paid in cash to the Corporation or any of its Subsidiaries by such
Person during such period; and (d) the income (or loss) of any Person accrued
prior to the date it becomes a Subsidiary of the Corporation or is merged into
or consolidated with the Corporation or any of its Subsidiaries or the date such
Person's assets are acquired by the Corporation or any of its Subsidiaries.

          "Current Market Price" per share shall mean, on any date specified
herein for the determination thereof, (a) the average daily Market Price of the
Common Stock for those days during the period of 20 days, ending on such date,
which are Trading Days, and (b) if the Common Stock is not then listed or
admitted to trading on any national securities exchange or quoted in the
over-the-counter market, the Market Price on such date.

          "Effective Date" shall mean July 2, 2001.

          "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Securities and Exchange Commission
thereunder.

          "Fair Market Value" shall mean the amount which a willing buyer, under
no compulsion to buy, would pay a willing seller, under no compulsion to sell,
in an arm's-length transaction (assuming that the Common Stock is valued "as if
fully distributed" so that, among other things, there is no consideration given
for minority investment discounts or discounts related to illiquidity or
restrictions on transferability).

          "GAAP" shall mean the generally accepted United States accounting
principles in effect from time to time.

          "Issue Date" shall mean the original data of issuance of shares of
Series E Preferred to the holders pursuant to the Stock Purchase Agreement.

          "Junior Stock" shall mean any capital stock of the corporation ranking
junior (either as to dividends or upon liquidation, dissolution or winding up)
to the Series E Preferred including, without limitation, the Common Stock.
<PAGE>
                                                                              24


          "Liquidation Preference" with respect to a share of Series E Preferred
shall mean $12.00.

          "Market Price" shall mean, per share of Common Stock on any date
specified herein: (a) the closing price per share of the Common Stock on such
date published in The Wall Street Journal or, if no such closing price on such
date is published in The Wall Street Journal, the average of the closing bid and
asked prices on such date, as officially reported on the principal national
securities exchange on which the Common Stock is then listed or admitted to
trading; (b) if the Common Stock is not then listed or admitted to trading on
any national securities exchange but is designated as a national market system
security, the last trading price of the Common Stock on such date; or (c) if
there shall have been no trading on such date or if the Common Stock is not so
designated, the average of the reported closing bid and asked prices of the
Common Stock on such date as shown by NASDAQ and reported by any member firm of
the NYSE, selected by the Corporation. If neither (a), (b) or (c) is applicable,
Market Price shall mean the Fair Market Value per share determined in good faith
by the Board of Directors of the Corporation which shall be deemed to be Fair
Market Value unless holders of at least 15% of the outstanding shares of Series
E Preferred request that the Corporation obtain an opinion of a nationally
recognized investment banking firm chosen by such holders and the Corporation
(at the Corporation's expense), in which event Fair Market Value shall be as
determined by such investment banking firm.

          "Material Subsidiary" shall mean the subsidiaries of the Corporation
set forth on the Schedule attached hereto and any other Subsidiary that would
constitute a Significant Subsidiary (as defined in Article 1 of Regulation S-X
promulgated under the Securities Act of 1933, as amended).

          "NASDAQ" shall mean the National Market System of the NASDAQ Stock
Market.

          "NYSE" shall mean the New York Stock Exchange, Inc.

          "Parity Stock" shall mean any capital stock of the corporation,
including the Series D Preferred, ranking on a par (either as to dividends or
upon liquidation, dissolution or winding up) with the Series E Preferred.

          "Permissible Amount" shall mean:

               (i) if the Consolidated EBITDA for the immediately preceding four
fiscal quarters is $25 million or less, $100 million; or

               (ii) if the Consolidated EBITDA for the immediately preceding
four fiscal quarters is greater than $25 million, an amount equal to the
Consolidated EBITDA for the immediately preceding four fiscal quarters
multiplied by 4.

          "Per Share Equity Value" of a share of Common Stock shall mean the
quotient obtained by dividing (a) the "as if fully distributed value" (so that,
among other
<PAGE>
                                                                              25


things, there is no consideration given for any minority investment discounts or
discounts related to illiquidity or restrictions on transferability) of all the
Corporation's outstanding shares of Common Stock (on a fully diluted basis), by
(b) the number of outstanding shares of Common Stock on a fully diluted basis.

          "Person" shall mean any individual, firm, corporation, partnership,
limited liability company trust, incorporated or unincorporated association,
joint venture, joint stock company, government (or an agency or political
subdivision thereof) or other entity of any kind, and shall any successor (by
merger) of such entity.

          "Senior Stock" shall mean any capital stock of the Corporation ranking
senior (either as to dividends or upon liquidation, dissolution or winding up)
to the Series E Preferred.

          "Stock Purchase Agreement" shall mean the Stock Purchase Agreement,
dated October 19, 2000 between the Corporation, The 1818 Fund III, L.P. and the
other persons listed therein, as the same may be amended from time to time.

          "Subsidiary" shall mean, with respect to any Person, a corporation or
other entity of which 50% or more of the voting power of the voting equity
securities or equity interest is owned, directly or indirectly, by such Person.

          "Trading Days" shall mean a day on which the national securities
exchanges are open for trading.

Section 12. Modification or Amendment.

          Except as specifically set forth herein, modifications or amendments
to this Certificate of Designation may be made by the Corporation with the
consent of the holders of at least 50% of the outstanding shares of Series E
Preferred.
<PAGE>
                                                                              26


          IN WITNESS WHEREOF, Z-Tel Technologies, Inc. has caused this
Certificate of Designation to be duly executed in its corporate name on this 2nd
day of July, 2001.

                                        Z-TEL TECHNOLOGIES, INC.


                                        By: /s/ D. Gregory Smith
                                            ------------------------------------
                                            Name: D. Gregory Smith
                                            Title: CEO
<PAGE>
                                                     (    STATE OF DELAWARE    )
                                                     (    SECRETARY OF STATE   )
                                                     ( DIVISION OF CORPORATIONS)
                                                     (FILED 09:01 AM 07/02/2001)
                                                     (   010319736 - 2873445   )

                            Z-TEL TECHNOLOGIES, INC.

                        CERTIFICATE OF DESIGNATION OF 12%
                     JUNIOR REDEEMABLE CONVERTIBLE PREFERRED
                   STOCK, SERIES G, SETTING FORTH THE POWERS,
                PREFERENCES, RIGHTS, QUALIFICATIONS, LIMITATIONS
               AND RESTRICTIONS OF SUCH SERIES OF PREFERRED STOCK

          Pursuant to Section 151 of the Delaware General Corporation Law, Z-Tel
Technologies, Inc., a Delaware corporation (the "Corporation'"). DOES HEREBY
CERTIFY:

          That pursuant to the authority conferred upon the Board of Directors
of the Corporation by the Certificate of Incorporation of the Corporation (the
"Charter"), the Board of Directors of the Corporation on June 29, 2001 duly
adopted the following resolution creating a series of Preferred Stock designated
as 12% Junior Redeemable Convertible Preferred Stock, Series G, and such
resolution has not been modified and is in full force and effect on the date
hereof:

          RESOLVED that, pursuant to the authority vested in the Board of
Directors of the Corporation in accordance with the provisions of the Charter, a
series of the class of authorized Preferred Stock, par value $0.01 per share, of
the Corporation is hereby created and that the designation and number of shares
thereof and the voting powers, preferences and relative, participating, optional
and other Special rights of the shares of such series, and the qualifications,
limitations and restrictions thereof are as follows:

Section 1. Designation and Number; Ranking

          (a) The shares of such series shall be designated as 12% Junior
Redeemable Convertible Preferred Stock, Series G (the "Series G Preferred").
The number of authorized shares of the Series G Preferred shall be 175, which
number may be decreased (but not increased) by the Board of Directors without a
vote of stockholders; provided, however, that such number may not be decreased
below the number of then outstanding shares of Series G Preferred or shares of
Series G Preferred to be issued pursuant to the Investment Agreement.

          (b) The Series G Preferred shall, with respect to dividend rights and
rights on liquidation, dissolution or winding up, rank on a parity with the
Parity Stock and prior to all classes and series of Junior Stock of the
Corporation now or hereafter authorized.

          (c) Capitalized terms used herein and not otherwise defined shall have
the meanings set forth in Section 11.
<PAGE>
                                                                               2


Section 2. Dividends and Distributions.

          (a) Series G Dividends. The holders of shares of Series G Preferred,
in preference to the holders of shares of Common Stock and of any shares of
other Junior Stock of the Corporation, shall be entitled to receive, when, as
and if declared by the Board of Directors, out of the assets of the Corporation
legally available therefor, cumulative cash dividends at an annual rate per
share of Series G Preferred equal to 12.00% of the Liquidation Preference with
respect to such share per annum ("Series G Dividend Rate"), calculated on the
basis of a 360-day year consisting of twelve 30-day months, accruing and payable
in equal quarterly payments, in immediately available funds, on the last day of
March, June, September and December or, if any such day is not a Business Day,
the next succeeding Business Day, in each year (each such date being referred to
herein as a "Quarterly Dividend Payment Date"), commencing on the first
quarterly dividend date to occur after the issue date of such shares; provided
that the dividend payable on the first Quarterly Dividend Payment Date to occur
after the Issue Date of each share of Series G Preferred shall be computed based
on the number of days prior to the date that such share has been issued and
outstanding; and provided further that, notwithstanding the foregoing (i) no
such dividends shall be paid or payable in cash with respect to any share of
Series G Preferred until the earliest of the date (x) such share is redeemed in
accordance with the terms of the Series G Preferred and (y) payment is made to
the Series G Preferred pursuant to Section 7 and (ii) upon conversion of any
share of Series G Preferred, accrued dividends shall be treated as contemplated
by Section 8 or Section 10.

          (b) Dividend Arrearage. If as of any Quarterly Dividend Payment Date
there is a Dividend Arrearage (as hereinafter defined), an additional dividend
(the "Additional Dividend") shall accrue on each share of the Series G Preferred
for the period from such Quarterly Dividend Payment Date through the earlier of
(x) the date on which such Dividend Arrearage is paid or converted pursuant to
the terms hereof in full and (y) the next succeeding Quarterly Dividend Payment
Date, in an amount equal to the product of (i) the Series G Dividend Rate and
(ii) the amount of such Dividend Arrearage as of such Quarterly Dividend Payment
Date. For purposes of this Section 2(b), "Dividend Arrearage" shall mean, with
respect to each share of Series G Preferred, as of any Quarterly Dividend
Payment Date, the excess, if any of (i) the sum of all dividends theretofore
accrued on such share in accordance with Section 2(a) (including those accrued
as of and including such Quarterly Dividend Payment Date) plus all Additional
Dividends, if any, theretofore accrued on such share in accordance with this
Section 2(b) (including those accrued as of and including such Quarterly
Dividend Payment Date), over (ii) all dividends actually paid or converted (but
only to the extent so paid or converted) pursuant to the terms hereof with
respect to such share on or before such Quarterly Dividend Payment Date.

          (c) Accrual of Dividends. Dividends payable pursuant to Section 2(a)
shall begin to accrue and be cumulative from the Issue Date, and shall accrue on
a daily basis, in each case whether or not declared. Dividends paid on the
shares of Series G Preferred in an amount less than the total amount of such
dividends at the time accrued and payable on such shares shall be allocated pro
rata on a share-by-share basis among all
<PAGE>
                                                                               3


such shares of Series G Preferred at the time outstanding. The Board of
Directors may fix a record date for the determination of holders of shares of
Series G Preferred entitled to receive payment of a dividend declared thereon,
which record date shall be no more than 60 days or less than 10 days prior to
the date fixed for the payment thereof. Accumulated but unpaid dividends for any
past quarterly dividend periods may be declared and paid at any time, without
reference to any regular Quarterly Dividend Payment Date, to holders of record
on such date, not more than 60 nor less than 10 days preceding the payment date
thereof, as may be fixed by the Board of Directors.

          (d) Other Dividends. In addition to the dividends or distributions on
the Series G Preferred described in Section 2(a), in the event that the
Corporation shall declare a dividend or make any other distribution (including,
without limitation, in cash, in capital stock (which shall include, without
limitation, any options, warrants or other rights to acquire capital stock) of
the Corporation, whether or not pursuant to a shareholder rights plan, "poison
pill" or similar arrangement, or other property or assets)) to holders of Common
Stock, then the Board of Directors shall declare and the holder of each share of
Series G Preferred shall be entitled to receive a dividend or distribution in an
amount equal to the amount of such dividend or distribution received by a holder
of the number of shares of Common Stock for which such share of Series G
Preferred is convertible on the record date for such dividend or distribution
(without regard to the Conversion Limit). Any such amount shall be paid to the
holders of shares of Series G Preferred at the same time such dividend or
distribution is made to holders of Common Stock.

Section 3. Voting Rights.

          Except for any voting rights provided by law, the holders of shares of
Series G Preferred shall not be entitled to vote.

Section 4. Certain Restrictions.

          (a) No Dividends. Whenever quarterly dividends payable on shares of
Series G Preferred as provided in Section 2 are not paid in full in cash
(whether or not such payment is permitted by the terms hereof), at such time and
thereafter until all unpaid dividends payable, whether or not declared, on the
outstanding shares of Series G Preferred shall have been paid in full in cash or
declared and set apart in cash for payment, or whenever the Corporation shall
not have converted or exchanged shares of Series G Preferred at a time required
by Section 8 or 10, at such time and thereafter until all conversion and
exchange obligations provided in Section 8 or 10 that have come due shall have
been satisfied, the Corporation shall not: (A) declare or pay dividends, or make
any other distributions, on any shares of Junior Stock; or (B) declare or pay
dividends, or make any other distributions, on any shares of Parity Stock,
except (i) dividends or distributions paid ratably on the Series G Preferred and
all Parity Stock on which dividends are payable or in arrears, in proportion to
the total amounts to which the holders of all shares of the Series G Preferred
and such Parity Stock are then entitled.
<PAGE>
                                                                               4


          (b) No Redemption. Whenever dividends payable on shares of Series G
Preferred as provided in Section 2(a) are not paid in full in cash (whether or
not such payment is permitted by the terms hereof), at such time and thereafter
until all unpaid dividends payable, whether or not declared, on the outstanding
shares of Series G Preferred shall have been paid in full in cash or declared
and set apart in cash for payment, or whenever the Corporation shall not have
converted or exchanged shares of Series G Preferred at a time required by
Section 8 or 10, at such time and thereafter until all conversion and exchange
obligations provided in Section 8 or 10 that have come due shall have been
satisfied, the Corporation shall not redeem, purchase or otherwise acquire for
consideration any shares of Junior Stock or Parity Stock; provided, however,
that (A) the Corporation may accept shares of any Parity Stock or Junior Stock
for conversion into Junior Stock and (B) the Corporation may at any time redeem,
purchase or otherwise acquire shares of any Parity Stock pursuant to any
mandatory redemption, put, sinking fund or other similar obligation contained in
such Parity Stock, pro rata with the Series G Preferred in proportion to the
total amount then required to be applied by the Corporation to redeem,
repurchase, convert, exchange or otherwise acquire shares of Series G Preferred
and shares of such Parity Stock.

          (c) Subsidiary Action. The Corporation shall not permit any
Subsidiary of the Corporation, or cause any other Person, to purchase or
otherwise acquire for consideration any shares of capital stock of the
Corporation unless the Corporation could, pursuant to Section 4(b), purchase
such shares at such time and in such manner; provided that this provision shall
not prohibit sales of shares of capital stock by the Corporation to any third
party.

          (d) Prohibited Actions. The Corporation shall not (i) declare or pay
dividends, or make any other distributions, on or with respect to any shares of
Series G Preferred, (ii) redeem, purchase or otherwise acquire for consideration
any shares of Series G Preferred, or (iii) make any distribution in respect of
liquidation to the holders of Series G Preferred, in each case if and to the
extent prohibited by the terms of any Senior Stock.

Section 5. Redemption.

          (a) Optional Redemption. Except as otherwise set forth in this Section
5, the Corporation shall not have any right to redeem any shares of Series G
Preferred prior to the first anniversary of the Drawdown Date. On and after the
first anniversary of the Drawdown Date, the Corporation shall have the right, at
its sole option and election, to redeem the shares of Series G Preferred, in
whole but not in part, on not less than 10 days notice of the date of redemption
(any such date an "Optional Redemption Date") for cash at a price per share
(the "Optional Redemption Price") equal to the sum of the (i) Liquidation
Preference per share and (ii) any accrued and unpaid dividends thereon
(including Additional Dividends), whether or not declared or payable, to the
applicable Optional Redemption Date, in immediately available funds; provided
that (i) the Optional Redemption Price for any shares of Series G Preferred
redeemed under this Section 5(a) during a Change of Control Window shall be the
Control
<PAGE>
                                                                               5


Redemption Price and (ii) the Corporation may not exercise its right under this
Section 5(a) outside of a Change of Control Window in anticipation of a Change
of Control.

          (b) Mandatory Redemption. To the extent permitted by law, the
Corporation shall redeem, on:

               (i) December 31, 2001, if the Stockholder Approval Certification
Date has not then occurred, the number of shares of Series G Preferred presented
for redemption by the holders thereof for cash, at a price per share, in
immediately available funds, equal to the sum of (x) the Liquidation Preference
per share plus (y) any accrued and unpaid dividends thereon (including
Additional Dividends) whether or not declared or payable; or

               (ii) the fifth anniversary of the Drawdown Date, all remaining
shares of Series G Preferred then outstanding, for cash at a price per share
equal to the Liquidation Preference, plus an amount equal to all accrued but
unpaid dividends thereon (including Additional Dividends), whether or not
declared or payable to the Mandatory Redemption Date, in immediately available
funds.

(Each of the dates referred to in Sections 5(b)(i) and (ii) above, a "Mandatory
Redemption Date" and each of the redemption amounts referred to in Sections
5(b)(i) and (ii) above, a "Mandatory Redemption Price"). Prior to authorizing or
making such redemption with respect to the Series G Preferred, the Corporation,
by resolution of the Board of Directors shall, to the extent of funds legally
available therefor, declare a dividend on the Series G Preferred payable on the
Mandatory Redemption Date in an amount equal to any accrued and unpaid dividends
on the Series G Preferred as of such date (including Additional Dividends) and,
if the Corporation does not have sufficient legally available funds to declare
and pay all dividends accrued at the time of such redemption, any remaining
accrued and unpaid dividends (including Additional Dividends) shall be added to
the Mandatory Redemption Price. After paying any accrued and unpaid dividends
pursuant to the foregoing sentence, if the funds of the Corporation legally
available for redemption of shares of the Series G Preferred then required to be
redeemed are insufficient to redeem the total number of such shares then
outstanding, those funds which are legally available shall be used to redeem the
maximum possible number of shares of the Series G Preferred, which shares to be
redeemed shall be allocated pro rata among the holders of the Series G Preferred
based on the number of shares of Series G Preferred held by such holders. At any
time and from time to time thereafter, when additional funds of the Corporation
are legally available to discharge its obligation to redeem all of the
outstanding shares of Series G Preferred required to be redeemed pursuant to
this Section (the "Mandatory Redemption Obligation"), such funds shall be
immediately used to discharge such Mandatory Redemption Obligation until the
balance of such shares have been redeemed. If and so long as the Mandatory
Redemption Obligation shall not be fully discharged, dividends on any remaining
outstanding shares of Series G Preferred shall continue to accrue and be added
to the dividend payable pursuant to the second preceding sentence.
<PAGE>
                                                                               6


          (c) Change of Control.

               (i) If, on or prior to the fifth anniversary of the Effective
Date a Change of Control occurs, a holder of Series G Preferred may require the
Corporation to redeem the holder's shares of Series G Preferred, in whole but
not in part (the "Holder's Put Right") for cash at a price per share (the
"Control Redemption Price") equal to 125% of the sum of (A) the Liquidation
Preference, plus (B) an amount per share equal to all accrued and unpaid
dividends thereon (including Additional Dividends), whether or not declared or
payable, in immediately available funds. (The Control Redemption Price, Optional
Redemption Price and Mandatory Redemption Price are sometimes referred to as the
"Applicable Redemption Price".) The Control Redemption Date, Optional Redemption
Date, and Mandatory Redemption Date are sometimes referred to as the "Applicable
Redemption Date".)

               (ii) Section 5(c)(i) notwithstanding, in the event of a Change of
Control prior to the Stockholder Approval Certification Date, the Control
Redemption Price shall be the greater of (A) the Control Redemption Price
specified in Section 5(c)(i), and (B) an amount per share for each outstanding
share of Series G Preferred equal to (x) the number of shares of Common Stock
into which such outstanding share of Series G Preferred could have been
converted immediately after such Change of Control (without regard to the
Conversion Limit), multiplied by (y) the aggregate amount (including the fair
market value of all non-cash consideration, determined as of the date of the
Change of Control) received by the holders of Common Stock for and in
consideration of each share of Common Stock in connection with the Change of
Control.

          (d) Notice.

               (i) The Corporation will provide notice to holders of record of
the Series G Preferred (x) of any redemption pursuant to Section 5(a) or 5(b)
not less than 10 (in the case of Section 5(a)) and 30 (in the case of Section
5(b)) nor more than 60 days prior to the date fixed for such redemption (a
"Redemption Notice") and (y) of any Change of Control within 30 days of such
Change of Control, provided that in the case of a Change of Control requiring a
shareholder vote, the Corporation shall provide such notice at least 30 days
prior to the date fixed for the meeting of holders of Series G Preferred called
to vote on that proposed transaction (a "Change of Control Notice"). Any Notice
provided pursuant to this Section 8(d) shall be provided by first-class mail
postage prepaid, to each holder of record of the Series G Preferred, at such
holder's address as it appears on the stock transfer books of the Corporation.

               (ii) Each Redemption Notice shall state, as appropriate: (x) the
Applicable Redemption Date; (y) the number of shares of Series G Preferred to be
redeemed and, if fewer than all the shares held by any holder are to be
redeemed, the number of such shares to be redeemed from such holder; and (z) the
Optional Redemption Price or Mandatory Redemption Price.
<PAGE>
                                                                               7


               (iii) Each Change of Control Notice shall state that: (w) the
Corporation proposes to effect a Change of Control, (x) if a Change of Control
occurs, each holder has the right to require the Corporation to redeem its
shares of Series G Preferred and any shares of Series G Preferred not tendered
for redemption will remain outstanding and continue to accrue dividends
(including Additional Dividends); (y) the Control Redemption Price; and (z) the
date on which the Corporation must redeem the shares upon exercise of the
Holder's Put Right (the "Control Redemption Date"), which shall be not later
than 30 days from the date the Change of Control Notice is mailed.

               (iv) In addition, each Redemption Notice and Change of Control
Notice shall state, as appropriate: (v) the place or places where certificates
for such shares are to be surrendered for redemption; (w) the amount of full
cumulative dividends per share of Series G Preferred to be redeemed (including
Additional Dividends) up to but excluding the Applicable Redemption Date, and
that dividends on shares of Series G Preferred to be redeemed will cease to
accrue on such Redemption Date unless the Corporation shall default in payment
of the Applicable Redemption Price; (x) the name and location of any bank or
trust company with which the Corporation will deposit redemption funds pursuant
to subsection (f) below; (y) the then-effective Conversion Price; and (z) that
the right of holders to convert shares of Series G Preferred to be redeemed will
terminate at the close of business on the Business Day next preceding the date
fixed for redemption (unless the Corporation shall default in the payment of the
Applicable Redemption Price).

Any Notice that is mailed pursuant to clause (i) shall be conclusively presumed
to have been duly given; whether or not the holder of shares of Series G
Preferred receives such notice, and failure to give such notice by mail, or any
defect in such notice, to the holders of any shares designated for redemption
shall not affect the validity of the proceedings for the redemption of any other
shares of Series G Preferred.

          (e) Mechanics of Redemption. Upon surrender in accordance with any
notice referred to in subsection (d) above of the certificate for any shares
redeemed pursuant to Section 8(a), (b) or (c) (duly endorsed or accompanied by
appropriate instruments of transfer if so required by the Corporation), the
holders of record of such shares shall be entitled to receive the Applicable
Redemption Price, without interest, up to but excluding such Redemption Date out
of funds legally available therefor. If fewer than all the shares represented by
any such certificate are redeemed, a new certificate representing the unredeemed
shares shall be issued without cost to the holder thereof.

          (f) Redemption Funds. On the date of any redemption being made
pursuant to this Section, the Corporation shall, and at any time after mailing
the Redemption Notice or Change of Control Notice and before the Applicable
Redemption Date the Corporation may, deposit for the benefit of the holders of
shares of Series G Preferred to be redeemed the funds necessary for such
redemption with a bank or trust company having a capital and surplus of at least
$1 billion, with instructions to such bank or trust company to pay the full
redemption as provided herein to the holders of shares of Series G Preferred
upon surrender of certificates for such shares; provided, however, that the
making of such deposit shall not release the Corporation from any of its
obligations
<PAGE>
                                                                               8


hereunder. Any moneys so deposited by the Corporation and unclaimed at the end
of two years from the Applicable Redemption Date shall revert to the general
funds of the Corporation and, upon demand, such bank or trust company shall pay
over to the Corporation such unclaimed amounts and thereupon such bank or trust
company shall be relieved of all responsibility in respect thereof and any
holder of shares of Series G Preferred so redeemed shall look only to the
Corporation for the payment of the full redemption amounts, as provided herein.

          (g) Rights After Redemption. Notice of redemption having been given as
provided in Section 8(d), upon the deposit pursuant to subsection (f) of the
full redemption amounts as provided herein in respect of all shares of Series G
Preferred then to be redeemed, notwithstanding that any certificates for such
shares shall not have been surrendered in accordance with subsection (e), from
and after the Applicable Redemption Date: (i) the shares represented thereby
shall no longer be deemed outstanding, (ii) the right to receive dividends
thereon shall cease to accrue, and (iii) all rights of the holders of such
shares of Series G Preferred shall cease and terminate, excepting only the right
to receive the full redemption amounts as provided herein without interest
thereon. If the funds deposited are not sufficient for redemption of the shares
of the Series G Preferred that were to be redeemed, then no certificates
evidencing such shares shall be deemed surrendered and such shares shall remain
outstanding and the rights of holders of shares of Series G Preferred shall
continue to be those of holders of shares of the Series G Preferred.

Section 6. Reacquired Shares.

          Any shares of Series G Preferred converted, exchanged, redeemed,
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
shares of Series G Preferred shall upon their cancellation become authorized but
unissued shares of preferred stock, par value $.01 per share, of the Corporation
and, upon the filing of an appropriate Certificate of Designation with the
Secretary of State of the State of Delaware, may be reissued as part of another
series of preferred stock, par value $.01 per share, of the Corporation subject
to the conditions or restrictions on issuance set forth therein, but in any
event may not be reissued as shares of Series G Preferred unless all shares of
the Series G Preferred issued on each of the Issue Dates shall have already been
redeemed, converted or exchanged.

Section 7. Liquidation, Dissolution or Winding Up.

          (a) Effect of Liquidation. If the Corporation shall commence a
voluntary case under the United States bankruptcy laws or any applicable
bankruptcy, insolvency or similar law of any other country, or consent to the
entry of an order for relief in an involuntary case under any such law or to the
appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or other similar official) of the Corporation or of any
substantial part of its property, or make an assignment for the benefit of its
creditors, or admit in writing its inability to pay its debts generally as they
become due (any such event, a "Voluntary Liquidation Event'"), or if a decree or
order for
<PAGE>
                                                                               9


relief in respect of the Corporation shall be entered by a court having
jurisdiction in the premises in an involuntary case under the United States
bankruptcy laws or any applicable bankruptcy, insolvency or similar law of any
other country, or appointing a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or other similar official) of the Corporation or of any
substantial part of its property, or ordering the winding up or liquidation of
its affairs, and on account of any such event the Corporation shall liquidate,
dissolve or wind up, or if the Corporation shall otherwise liquidate, dissolve
or wind up, no distribution shall be made:

               (i) to the holders of shares of Junior Stock unless, prior
thereto, the holders of shares of Series G Preferred, subject to Section 8,
shall have received the greater of (A) (1) if a Voluntary Liquidation Event
shall have occurred, the Optional Redemption Price with respect to each share
(or if such event is a Change of Control, the amount payable under Section 5(c)
with respect to such share) and (2) if a Voluntary Liquidation Event shall not
have occurred, the Liquidation Preference, plus all accrued and unpaid dividends
(including Additional Dividends), whether or not declared or currently payable,
to the date of distribution, with respect to each share, and (B) the amount per
share (subject to adjustment to reflect stock splits, stock dividends, stock
combinations, recapitalizations and like occurrences) for each outstanding share
of Series G Preferred as if the holders had converted such shares into shares of
Common Stock (without regard to the Conversion Limit) immediately prior to the
liquidation, dissolution or winding up, or

               (ii) to the holders of shares of Parity Stock, except
distributions made ratably on the Series G Preferred and all other Parity Stock
in proportion to the total amounts to which the holders of all shares of the
Series G Preferred and other Parity Stock are entitled upon such liquidation,
dissolution or winding up;

          (b) Voluntary Liquidation. For purposes of this Section 7, the holders
of a majority of the outstanding shares of the Series G Preferred may elect to
have treated as a Voluntary Liquidation Event the consolidation or merger of the
Corporation with or into any other corporation or the sale or other transfer in
a single transaction or a series of related transactions of all or substantially
all of the assets of the Corporation, or any other reorganization or business
combination of the Corporation or a Change of Control.

Section 8. Voluntary Conversion.

          (a) Conversion Right. Any holder of Series G Preferred shall have the
right, at its option, at any time and from time to time, to convert, subject to
the terms and provisions of this Section 8, any or all of such holder's shares
of Series G Preferred into such number of fully paid and non-assessable shares
of Common Stock as is equal, subject to Section 8(f), to the product of the
number of shares of Series G Preferred being so converted multiplied by the
quotient of (i) the sum of the Liquidation Preference and (x) in the event of a
conversion during a Change of Control Window, an amount equal to the Additional
Amount, or (y) in the event of a conversion other than during a Change of
Control Window, all dividends accrued and unpaid (including Additional
Dividends) on the Series G Preferred so converted to the date of conversion,
divided by (ii) the
<PAGE>
                                                                              10


Conversion Price then in effect, except that with respect to any shares which
shall be called for exchange or redemption, such right shall terminate at the
close of business on the date of exchange or redemption for such shares, unless
in any such case the Corporation shall default in performance or payment due
upon exchange or redemption thereof, The Conversion Price shall be calculated in
accordance with Section 8(k) and shall be subject to adjustment as set forth in
Section 8(c). Such conversion right shall be exercised by the surrender of the
shares to be converted to the Corporation at any time during usual business
hours at its principal place of business to be maintained by it, accompanied by
written notice that the holder elects to convert such Shares and, subject to
Section 8(j), specifying the name or names (with address) in which a certificate
or certificates for shares of Common Stock are to be issued and (if so required
by the Corporation) by a written instrument or instruments of transfer in form
reasonably satisfactory to the Corporation duly executed by the holder or its
duly authorized legal representative and transfer tax stamps or funds therefor,
if required pursuant to Section 8(j). All shares of Series G Preferred
surrendered for conversion shall be delivered to the Corporation for
cancellation and canceled by it and no shares of Series G Preferred shall be
issued in lieu thereof.

          (b) Mechanics of Conversion. As promptly as practicable after the
surrender, as herein provided, of any shares of Series G Preferred for
conversion pursuant to Section 8(a), the Corporation shall deliver to or upon
the written order of the holder of such shares so surrendered a certificate or
certificates representing the number of fully paid and non-assessable shares of
Common Stock into which such shares of Series G Preferred have been converted in
accordance with the provisions of this Section 8. Subject to the following
provisions of this paragraph and of Section 8(c), such conversion shall be
deemed to have been made immediately prior to the close of business on the date
that such shares of Series G Preferred shall have been surrendered in
satisfactory form for conversion, and the Person or Persons entitled to receive
the Common Stock deliverable upon conversion of such shares of Series G
Preferred shall be treated for all purposes as having become the record holder
or holders of such Common Stock at such time, and such conversion shall be at
the Conversion Price in effect at such time; provided, however, that no
surrender shall be effective to constitute the Person or Persons entitled to
receive the Common Stock deliverable upon such conversion as the record holder
or holders of such Common Stock while the share transfer books of the
Corporation shall be closed (but not for any period in excess of five days), but
such surrender shall be effective to constitute the Person or Persons entitled
to receive such Common Stock as the record holder or holders thereof for all
purposes immediately prior to the close of business on the next succeeding day
on which such share transfer books are open, and such conversion shall be deemed
to have been made at, and shall be made at the Conversion Price in effect at,
such time on such next succeeding day.

          (c) Adjustment of Conversion Price. The Conversion Price shall be
subject to adjustment as follows:

               (i) In case the Corporation shall at any time or from time to
time after the Effective Date (A) pay a dividend or make a distribution (other
than a dividend or distribution paid or made to holders of shares of Series G
Preferred in the
<PAGE>
                                                                              11


manner provided in Section 2(d)) on the outstanding shares of Common Stock in
capital stock (which, for purposes of this Section 8(c) shall include, without
limitation, any options, warrants or other rights to acquire capital stock) of
the Corporation, (B) subdivide the outstanding shares of Common Stock into a
larger number of shares, (C) combine the outstanding shares of Common Stock into
a smaller number of shares, (D) issue any shares of its capital stock in a
reclassification of the Common Stock or (E) pay a dividend or make a
distribution (other than a dividend or distribution paid or made to holders of
shares of Series G Preferred in the manner provided in Section 2(d)) on the
outstanding shares of Common Stock in securities of the Corporation pursuant to
a shareholder rights plan, "poison pill" or similar arrangement,

then, and in each such case, the Conversion Price in effect immediately prior to
such event shall be adjusted (and any other appropriate actions shall be taken
by the Corporation) so that the holder of any share of Series G Preferred
thereafter surrendered for conversion shall be entitled to receive the number of
shares of Common Stock or other securities of the Corporation that such holder
would have owned or would have been entitled to receive upon or by reason of any
of the events described above, had such share of Series G Preferred been
converted immediately prior to the occurrence of such event. An adjustment made
pursuant to this Section 8(c)(i) shall become effective retroactively (A) in the
case of any such dividend or distribution, to a date immediately following the
close of business on the record date for the determination of holders of Common
Stock entitled to receive such dividend or distribution or (B) in the case of
any such subdivision, combination or reclassification, to the close of business
on the day upon which such corporate action becomes effective.

               (ii) In case the Corporation shall at any time or from time to
time after the Effective Date issue shares of Common Stock (or securities
convertible into or exchangeable for Common Stock, or any options, warrants or
other rights to acquire shares of Common Stock for a consideration per share
(the "New Issue Price") less than either the Conversion Price or the Current
Market Price per share of Common Stock, in each case, as in effect at the record
date or issuance date referred to in the following sentence (the "Date")
(treating the New Issue Price of any security convertible or exchangeable or
exercisable into Common Stock as equal to (A) the sum of the price for such
security convertible, exchangeable or exercisable into Common Stock plus any
additional consideration payable (without regard to any anti-dilution
adjustments) upon the conversion, exchange or exercise of such security into
Common Stock divided by (B) the number of shares of Common Stock initially
underlying such convertible, exchangeable or exercisable security),

then, and in each such case, the Conversion Price then in effect shall be
reduced to an amount equal to the New Issue Price; provided that in no event
shall such adjustment increase the Conversion Price then in effect.

Such adjustment shall be made whenever such shares, securities, options,
warrants or other rights are issued, and shall, in each case, become effective,
in each case, retroactively to a date immediately following the close of
business (1) in the case of issuance to stockholders of the Corporation, as
such, on the record date for the
<PAGE>
                                                                              12


determination of stockholders entitled to receive such shares, securities,
options, warrants or other rights and (2) in all other cases, on the date
("issuance date") of such issuance; provided, that:

                    (A) the determination as to whether an adjustment is
required to be made pursuant to this Section 8(d)(ii) shall be made upon the
issuance of such shares or such convertible or exchangeable securities, options,
warrants or other rights;

                    (B) if any convertible or exchangeable securities, options,
warrants or other rights (or any portions thereof) which shall have given rise
to an adjustment pursuant to this Section 8(d)(ii) shall have expired or
terminated without the exercise thereof and/or if by reason of the terms of such
convertible or exchangeable securities, options, warrants or other rights there
shall have been an increase or increases, with the passage of time or otherwise,
in the price payable upon the exercise or conversion thereof, then the
Conversion Price hereunder shall be readjusted (but to no greater extent than
originally adjusted) on the basis of (1) eliminating from the computation any
additional shares of Common Stock corresponding to such convertible or
exchangeable securities, options, warrants or other rights as shall have expired
or terminated, (2) treating the additional shares of Common Stock, if any,
actually issued or issuable pursuant to the previous exercise of such
convertible or exchangeable securities, options, warrants or other rights as
having been issued for the consideration actually received and receivable
therefor and (3) treating any of such convertible or exchangeable securities,
options, warrants or other rights which remain outstanding as being subject to
exercise or conversion on the basis of such exercise or conversion price as
shall be in effect at this time; and

                    (C) no adjustment in the Conversion Price shall be made
pursuant to this Section 8(d)(ii) as a result of any issuance of securities by
the Corporation in respect of which an adjustment to the Conversion Price is
made pursuant to Section 8(c)(i).

               (iii) In case the Corporation shall at any time or from time to
time after the Effective Date distribute to all holders of shares of its Common
Stock (including any such distribution made in connection with a consolidation
or merger in which the Corporation is the resulting or surviving corporation and
the Common Stock is not changed or exchanged) cash, evidences of indebtedness of
the Corporation or another issuer, securities of the Corporation or another
issuer or other assets (excluding, (A) dividends or distributions paid or made
to holders of shares of Series G Preferred in the manner provided in Section
2(d), and (B) dividends payable in shares of Common Stock for which adjustment
is made under Section 8(c)(i)) or rights or warrants to subscribe for or
purchase securities of the Corporation (excluding those referred to in Section
8(c)(ii) or those in respect of which an adjustment in the Conversion Price is
made pursuant to Section 8(c)(i) or (ii)), then, and in each such case, the
Conversion Price then in effect shall be adjusted by dividing the Conversion
Price in effect immediately prior to the date of such distribution by a fraction
(x) the numerator of which shall be the Market Price of the Common Stock on the
record date referred to below and
<PAGE>
                                                                              13


(y) the denominator of which shall be such Market Price of the Common Stock less
the then Fair Market Value (as determined by the Board of Directors of the
Corporation) of the portion of the cash, evidences of indebtedness, securities
or other assets so distributed or of such subscription rights or warrants
applicable to one share of Common Stock (but such denominator not to be less
than one). Such adjustment shall be made whenever any such distribution is made
and shall become effective retroactively to a date immediately following the
close of business on the record date for the determination of stockholders
entitled to receive such distribution.

               (iv) In the case the Corporation, at any time or from time to
time after the Effective Date, shall take any action affecting its Common Stock
similar to or having an effect similar to any of the actions described in any of
Section 8(c)(i) through Section 8(c)(iii), inclusive, or Section 8(g) (but not
including any action described in any such Section) and the Board of Directors
of the Corporation in good faith determines that it would be equitable in the
circumstances to adjust the Conversion Price as a result of such action, then,
and in each such case, the Conversion Price shall be adjusted in such manner and
at such time as the Board of Directors of the Corporation in good faith
determines would be equitable in the circumstances (such determination to be
evidenced in a resolution, a certified copy of which shall be mailed to the
holders of the Series G Preferred).

               (v) Notwithstanding anything herein to the contrary, no
adjustment under this Section 8(c) need be made to the Conversion Price unless
such adjustment would require an increase or decrease of at least 1% of the
Conversion Price then in effect. Any lesser adjustment shall be carried forward
and shall be made at the time of and together with the next subsequent
adjustment, which, together with any adjustment or adjustments so carried
forward, shall amount to an increase or decrease of at least 1% of such
Conversion Price. Any adjustment to the Conversion Price carried forward and not
theretofore made shall be made immediately prior to the conversion of any shares
of Series G Preferred pursuant hereto.

               (vi) Notwithstanding anything herein to the contrary, no
adjustment under this Section 8(c)(ii) or (iii) shall be made upon (A) the grant
of options to employees or directors of the Corporation permitted under benefit
plans in existence on the Effective Date pursuant to the terms of such plans in
effect on the Effective Date, (B) the issuance of any Common Stock upon
conversion of the Series G Preferred in accordance with the terms of its
Certificate of Designation, (C) the issuance of any Common Stock upon conversion
of the Series E Preferred in accordance with the terms of its Certificate of
Designation in effect on the Issue Date (D) the issuance of Common Stock upon
the conversion of Series D Preferred in accordance with the terms of its
Certificate of Designations, (E) the issuance of any Common Stock upon
conversion or exercise of any convertible securities outstanding on the Issue
Date in accordance with terms of such security in effect on the Effective Date,
(F) the issuance of any shares of Series G Preferred pursuant to the Investment
Agreement, and (G) the grant to Breckenridge Securities Corp., pursuant to the
Investment Agreement or in connection with the prior offer and sale of shares of
Series E Preferred, of one or more warrants to purchase shares of Common Stock,
or the exercise of any such warrant.
<PAGE>
                                                                              14


          (d) Effect of Setting Record Date. If the Corporation shall take a
record of the holders of its Common Stock for the purpose of entitling them to
receive a dividend or other distribution, and shall thereafter and before the
distribution to stockholders thereof legally abandon its plan to pay or deliver
such dividend or distribution, then thereafter no adjustment in the Conversion
Price then in effect shall be required by reason of the taking of such record.

          (e) Certificate of Adjustment. Upon any increase or decrease in the
Conversion Price, then, and in each such case, the Corporation promptly shall
deliver to each registered holder of Series G Preferred at least five Business
Days prior to effecting any of the foregoing transactions a certificate, signed
by the President or a Vice-President and by the Treasurer or an Assistant
Treasurer or the Secretary or an Assistant Secretary of the Corporation, setting
forth in reasonable detail the event requiring the adjustment and specifying, to
the extent feasible, (x) the method by which such adjustment was calculated and
(y) the increased or decreased Conversion Price then in effect following such
adjustment. Notwithstanding the foregoing, on each Issue Date the Corporation
shall send to each registered holder a certificate signed by the President or a
Vice-President and by the Treasurer or an Assistant Treasurer or the Secretary
or an Assistant Secretary of the Corporation setting forth the Conversion Price
as of such Date.

          (f) No Fractional Shares. No fractional shares or scrip representing
fractional shares shall be issued upon the conversion of any shares of Series G
Preferred. If more than one share of Series G Preferred shall be surrendered for
conversion at one time by the same holder, the number of full shares of Common
Stock issuable upon conversion thereof shall be computed on the basis of the
aggregate Liquidation Preference (plus accrued and unpaid dividends, including
any Additional Dividends) of the shares of Series G Preferred so surrendered. If
the conversion of any share or shares of Series G Preferred results in a
fraction, an amount equal to such fraction multiplied by the Current Market
Price of the Common Stock on the Business Day preceding the day of conversion
shall be paid to such holder in cash by the Corporation.

          (g) Transactions. In case of any capital reorganization or
reclassification or other change of outstanding shares of Common Stock (other
than a change in par value, or from par value to no par value, or from no par
value to par value), or in case of any consolidation or merger of the
Corporation with or into another Person (other than a consolidation or merger in
which the Corporation is the resulting or surviving Person and which does not
result in any reclassification or change of outstanding Common Stock) (any of
the foregoing, a "Transaction"), the Corporation, or such successor or
purchasing Person, as the case may be, shall execute and deliver to each holder
of Series G Preferred at least 10 Business Days prior to effecting any of the
foregoing Transactions a certificate that the holder of each share of Series G
Preferred then outstanding shall have the right after the Transaction to convert
such share of Series G Preferred into the kind and amount of shares of stock or
other securities (of the Corporation or another issuer) or property or cash
receivable upon such Transaction by a holder of the number of shares of Common
Stock into which such share of Series G Preferred could have been converted
immediately prior to such Transaction (without giving effect to the Conversion
Limit). Such certificate shall provide for adjustments
<PAGE>
                                                                              15


which shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Section 8. If, in the case of any such Transaction, the
stock, other securities, cash or property receivable thereupon by a holder of
Common Stock includes shares of stock or other securities of a Person other than
the successor or purchasing Person and other than the Corporation, which
controls or is controlled by the successor or purchasing Person or which, in
connection with such Transaction, issues stock, securities, other property or
cash to holders of Common Stock, then such certificate also shall be executed by
such Person, and such Person shall, in such certificate, specifically
acknowledge the obligations of such successor or purchasing Person and
acknowledge its obligations to issue such stock, securities, other property or
cash to the holders of Series G Preferred upon conversion of the shares of
Series G Preferred as provided above. The provisions of this Section 8(g) and
any equivalent thereof in any such certificate similarly shall apply to
successive Transactions.

          (h) Notice. In case at any time or from time to time:

               (i) the Corporation shall declare a dividend (or any other
distribution) on its Common Stock;

               (ii) the Corporation shall authorize the granting to the holders
of its Common Stock of rights or warrants to subscribe for or purchase any
shares of stock of any class or of any other rights or warrants;

               (iii) there shall be any reclassification of the Common Stock, or
any consolidation or merger to which the Corporation is a party and for which
approval of any shareholders of the Corporation is required, or any sale or
other disposition of all or substantially all of the assets of the Corporation
(other than a Change of Control, the notice requirements for which are governed
by Section 5(d)); or

               (iv) there shall be any voluntary or involuntary dissolution,
liquidation or winding up of the Corporation;

then the Corporation shall mail to each holder of shares of Series G Preferred
at such holder's address as it appears on the transfer books of the Corporation,
as promptly as possible but in any event at least 10 days prior to the
applicable date hereinafter specified, a notice stating (x) the date on which a
record is to be taken for the purpose of such dividend, distribution or rights
or warrants or, if a record is not to be taken, the date as of which the holders
of Common Stock of record to be entitled to such dividend, distribution or
rights are to be determined, or (y) the date on which such reclassification,
consolidation, merger, sale, conveyance, dissolution, liquidation or winding up
is expected to become effective. Such notice also shall specify the date as of
which it is expected that holders of Common Stock of record shall be entitled to
exchange their Common Stock for shares of stock or other securities or property
or cash deliverable upon such reclassification, consolidation, merger, sale,
conveyance, dissolution, liquidation or winding up.
<PAGE>
                                                                              16


          (i) Reservation of Common Stock. The Corporation shall at all times
reserve and keep available for issuance upon the conversion of the Series G
Preferred pursuant to Section 8(a) or 10(a), such number of its authorized but
unissued shares of Common Stock as will from time to time be sufficient to
permit the conversion of all outstanding shares of Series G Preferred, and shall
take all action required to increase the authorized number of shares of Common
Stock if at any time there shall be insufficient authorized but unissued shares
of Common Stock to permit such reservation or to permit the conversion of all
outstanding shares of Series G Preferred,

          (j) Issuance of Certificates. The issuance or delivery of certificates
for Common Stock upon the conversion of shares of Series G Preferred pursuant to
Section 8(a) or 10(a) shall be made without charge to the converting holder of
shares of Series G Preferred for such certificates or for any tax in respect of
the issuance or delivery of such certificates or the securities represented
thereby, and such certificates shall be issued or delivered in the respective
names of, or (subject to compliance with the applicable provisions of federal
and state securities laws) in such names as may be directed by, the holders of
the shares of Series G Preferred converted; provided, however, that the
Corporation shall not be required to pay any tax which may be payable in respect
of any transfer involved in the issuance and delivery of any such certificate in
a name other than that of the holder of the shares of Series G Preferred
converted, and the Corporation shall not be required to issue or deliver such
certificate unless or until the Person or Persons requesting the issuance or
delivery thereof shall have paid to the Corporation the amount of such tax or
shall have established to the reasonable satisfaction of the Corporation that
such tax has been paid.

          (k) Calculation of Conversion Price. On each Issue Date, each share of
Series G Preferred to be issued on such date shall have a proposed conversion
price (the "Proposed Conversion Price") equal to the lesser of (x) $2.25 and
(y) 115% of the average of the volume-weighted average of all trades reported on
NASDAQ over the five Trading Days immediately preceding to such Issue Date;
provided, that, if the Corporation issues shares of Series G Preferred having an
aggregate Liquidation Preference of at least $8,000,000 on or before July 5,
2001, the Conversion Price for such shares shall be $2.00, subject to adjustment
pursuant to Section 8(c) and this Section 8(k). On each Issue Date, the weighted
average of the Conversion Price of all shares of Series G Preferred (if any)
outstanding immediately prior to such Issue Date and the Proposed Conversion
Price of all shares of Series G Preferred to be issued on such Issue Date (the
"Weighted Average Amount") shall be calculated. On each Issue Date, the
Conversion Price of all shares of Series G Preferred, including those issued
prior to such Issue Date and those to be issued on such Issue Date, shall as of
such Issue Date, and thereafter unless and until the Corporation issues
additional shares of Series G Preferred, be equal to the Weighted Average Amount
as of such date, which Conversion Price shall be subject to adjustment pursuant
to Section 8(c).

          (1) Conversion Limit. Notwithstanding anything to the contrary, on any
day prior to the Stockholder Approval Certification Date, the maximum number of
whole or fractional shares of Series G Preferred that may be converted into
Common Stock pursuant to any provision of this Certificate of Designation shall
be the number of
<PAGE>
                                                                              17


shares of Series G Preferred that, if converted into shares of Common Stock at
the then applicable Conversion Price, would convert into the "Maximum Remaining
Pre-Approval Shares." The "Maximum Remaining Pre-Approval Shares" means a number
of shares of Common Stock equal to (1) the Pre-Stockholder Approval Number,
minus (2) the number of shares of Common Stock, if any, then already issued by
the Corporation pursuant to the conversion of any Series G Preferred.
Thereafter, no additional shares of Series G Preferred may be converted while
the Conversion Limit is in effect. Until the Stockholder Approval Certification
Date, no Series G Preferred holder may convert pursuant to Section 8(a) without
approval of holders of a majority of the Series G Preferred. The preceding
portion of Section 8(l) is referred to in this Certificate of Designation as the
"Conversion Limit." The Conversion Limit shall act merely to limit the number of
shares of Common Stock issuable upon conversion of the Series G Preferred prior
to the Stockholder Approval Certification Date and not to restrict any
adjustments to the Conversion Price, whether pursuant to Section 8(c) or
otherwise, and shall not affect any matter other than the conversion of shares
of Series G Preferred into shares of Common Stock. For the avoidance of doubt,
the adjustments to the Conversion Price pursuant to Section 8(c) shall be
calculated regardless of whether the Conversion Limit is in effect and the
Conversion Limit shall act merely to limit the number of shares of Common Stock
issuable upon conversion of the Series G Preferred prior to Stockholder Approval
(and not to restrict any adjustments to the Conversion Price).

Section 9. Certain Remedies.

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

Section 10. Automatic Conversion.

          (a) Time of Conversion. If at any time after the first anniversary of
the Effective Date, the Market Price of the Common Stock for 20 consecutive
Trading Days exceeds $10.00 per share (as appropriately adjusted for stock
splits, stock combinations and similar events), then on the 30th Business Day
following the end of such 20-day period (the "Conversion Date"), all outstanding
shares of Series G Preferred shall automatically convert, subject to the
Conversion Limit (if any), without any action by the holders thereof, into such
number of fully paid and non-assessable shares of Common Stock as is equal,
subject to Section 8(f), to the product of the number of shares of Series G
Preferred being so converted multiplied by the quotient of (i) the Liquidation
Preference (plus accrued and unpaid dividends, including any Additional
Dividends to and including the Conversion Date) divided by (ii) the Conversion
Price in effect on the Conversion Date.

          (b) Officer's Certificate. The Corporation will provide notice to
holders of record of Series G Preferred of the conversion pursuant to Section
10(a) at
<PAGE>
                                                                              18


least 20 Business Days prior to the Conversion Date, by first-class mail postage
prepaid, to each holder of record of the Series G Preferred, at such holder's
address as it appears on the stock transfer books of the Corporation. Such
notice shall include an officer's certificate attesting to the satisfaction of
the condition precedent to optional conversion, stating the Conversion Price in
effect on the Conversion Date and the number of fully paid and non-assessable
shares of Common Stock into which such shares of Series G Preferred will be
converted in accordance with Section 8 and this Section 10.

          (c) The Corporation shall deposit for the benefit of the holders of
shares of Series G Preferred the share certificates representing the shares of
Common Stock deliverable upon conversion of the shares of Series G Preferred
with a bank or trust company having a capital and surplus of at least $1
billion, with instructions to such bank or trust company to deliver the
certificates to the holders of shares of Series G Preferred upon surrender of
the certificates for such shares; provided, however, that the making of such
deposit shall not release the Corporation from any of its obligations hereunder.
Any certificates so deposited by the Corporation and unclaimed at the end of two
years from the Conversion Date shall revert to the Corporation and the bank or
trust company shall be relieved of all responsibility in respect thereof and any
holder of shares of Series G Preferred so converted shall look only to the
Corporation for the certificate representing the Common Stock issued upon the
conversion, as provided herein.

          (d) Effect of Conversion. Notice of conversion having been given as
provided in Section 10(b), upon the deposit pursuant to subsection (c) of the
certificates representing the shares of Common Stock issuable upon conversion of
the shares of Series G Preferred, notwithstanding that any certificates for such
shares shall not have been surrendered for cancellation, from and after the
Conversion Date (i) the shares represented thereby shall no longer be deemed
outstanding, (ii) the rights to receive dividends thereon shall cease to accrue,
and (iii) all rights of the holders of shares of Series G Preferred to be
converted shall cease and terminate, excepting only the right to receive the
shares of Common Stock. If the Corporation shall default in the execution and
delivery of the shares of Common Stock, then no certificates evidencing such
shares shall be deemed surrendered and such shares shall remain outstanding and
the rights of holders of Series G Preferred shall continue to be those of
holders of shares of the Series G Preferred.

Section 11. Definitions.

          For the purposes of this Certificate of Designation of Series G
Preferred, the following terms shall have the meanings indicated:

          "Additional Amount" means an amount equal to the amount of dividends
to accrue on a share of Series G Preferred pursuant to Section 2(a) hereof from
the date of issuance of such share to and including the fifth anniversary
thereof, assuming that on each Quarterly Dividend Date such dividends to be paid
on such date were added to the Liquidation Preference on such Quarterly Dividend
Date for purposes of Section 2(a).
<PAGE>
                                                                              19


          "Affiliate" shall have the meaning ascribed to such term in Rule 12b-2
of the General Rules and Regulations under the Exchange Act; provided, that for
purposes of this Certificate, neither the 1818 Fund III, L.P. nor any of its
Affiliates shall be considered an Affiliate of the Corporation.

          "Business Day" shall mean any day other than a Saturday, Sunday or
other day on which commercial banks in the State of Delaware are authorized or
required by law or executive order to close.

          A "Change of Control" of the Corporation shall mean such times as:

               (i) Any Person or "group" (within the meaning of Section 13(d)(3)
of the Exchange Act) is or becomes the beneficial owner, directly or indirectly,
of outstanding shares of stock of the Corporation entitling such Person or
Persons to exercise 50% or more of the total votes (excluding the Series G
Preferred) entitled to be cast at a regular or special meeting, or by action by
written consent, of shareholders of the Corporation (the term "beneficial owner"
shall be determined in accordance with Rule 13d-3, promulgated by the Commission
under the Exchange Act);

               (ii) A majority of the Board of Directors of the Corporation
shall consist of Persons other than Continuing Directors. The term "Continuing
Director" shall mean any member of the Board of Directors on the Effective Date
and any other member of the Board of Directors who shall be recommended or
elected to succeed or become a Continuing Director by a majority of Continuing
Directors who are then members of the Board of Directors;

               (iii) The shareholders of the Corporation shall have approved a
recapitalization, reorganization, merger, consolidation or similar transaction,
in each case with respect to which all or substantially all the Persons who were
the respective beneficial owners, directly or indirectly, of the outstanding
shares of capital stock of the Corporation immediately prior to such
recapitalization, reorganization, merger, consolidation or similar transaction,
will own less than 50% of the combined voting power of the then outstanding
shares of capital stock of the Corporation resulting from such recapitalization,
reorganization, merger, consolidation or similar transaction; provided, that any
such recapitalization shall not be considered a Change of Control if the holders
of Series G Preferred have the right to participate on at least a pari passu
basis;

               (iv) The shareholders of the Corporation shall have approved of
the sale or other disposition of all or substantially all the assets of the
Corporation in one transaction or in a series of related transactions;

               (v) Any transaction occurs (other than one described in (iii)
above or (vi) below), the result of which is that the Common Stock is not
required to be registered under Section 12 of the Exchange Act and that the
holders of Common Stock do not receive common stock of the Person surviving such
transaction which is required to be registered under Section 12 of the Exchange
Act; or
<PAGE>
                                                                              20


               (vi) Immediately after any merger, consolidation,
recapitalization or similar transaction, D. Gregory Smith or a "group" (within
the meaning of Section 13(d)(3) of the Exchange Act) shall be the beneficial
owners, directly or indirectly, of outstanding shares of capital stock of the
Corporation (or any Person surviving such transaction) entitling them
collectively to exercise 50% or more of the total voting power of shares of
capital stock of the Corporation (or the surviving Person in such transaction)
and in connection with or as a result of such transaction, the Corporation (or
such surviving Person) shall have incurred or issued additional indebtedness
such that the total indebtedness so incurred or issued equals at least 50% of
the consideration payable in such transaction; provided, that any such
transactions shall not be considered a Change of Control if the holders of
Series G Preferred have the right to participate on at least a pari passu basis.

          "Change of Control Window" shall mean, as to any Change of Control,
the period beginning on the earlier of (x) the date such Change of Control
occurs and (y) the first date as of which the Corporation has given written
notice of such Change of Control to each registered holder of Series G
Preferred, and ending on the date 180 days after the later to occur of (i) the
date such Change of Control occurs and (ii) the first date as of which the
Corporation has given written notice of such Change of Control to each
registered holder of Series G Preferred.

          "Common Stock" shall mean the common stock, par value $.01 per share,
and each other class of capital stock of the Corporation into which such stock
is reclassified or reconstituted.

          "Conversion Limit" shall mean the limitation set forth in Section
8(1).

          "Current Market Price" per share shall mean, on any date specified
herein for the determination thereof, (a) the average daily Market Price of the
Common Stock for those days during the period of 20 days, ending on such date,
which are Trading Days, and (b) if the Common Stock is not then listed or
admitted to trading on any national securities exchange or quoted in the
over-the-counter market, the Market Price on such date.

          "Drawdown Date" shall mean September 18, 2001.

          "Effective Date" shall mean July 2, 2001.

          "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Securities and Exchange Commission
thereunder.

          "Fair Market Value" shall mean the amount which a willing buyer, under
no compulsion to buy, would pay a willing seller, under no compulsion to sell,
in an arm's-length transaction (assuming that the Common Stock is valued "as if
fully distributed" so that, among other things, there is no consideration given
for minority investment discounts or discounts related to illiquidity or
restrictions on transferability).
<PAGE>
                                                                              21


          "GAAP" shall mean the generally accepted United States accounting
principles in effect from time to time.

          "Investment Agreement" shall mean the Stock and Warrant Purchase
Agreement, dated July 2, 2001 between the Corporation, The 1818 Fund III, L.P.
and the other persons listed therein, as the same may be amended from time to
time.

          "Issue Date" shall mean, with respect to any share of Series G
Preferred, the original date of issuance of such share of Series G Preferred
pursuant to the Investment Agreement.

          "Junior Stock" shall mean any capital stock of the corporation other
than Senior Stock or Parity Stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series G Preferred including,
without limitation, the Series F Junior Preferred Stock of the Corporation and
the Common Stock.

          "Liquidation Preference" with respect to a share of Series G
Preferred shall mean $100,000.

          "Market Price" shall mean, per share of Common Stock on any date
specified herein: (a) the closing price per share of the Common Stock on such
date published in The Wall Street Journal or, if no such closing price on such
date is published in The Wall Street Journal, the average of the closing bid and
asked prices on such date, as officially reported on the principal national
securities exchange on which the Common Stock is then listed or admitted to
trading; (b) if the Common Stock is not then listed or admitted to trading on
any national securities exchange but is designated as a national market system
security, the last trading price of the Common Stock on such date; or (c) if
there shall have been no trading on such date or if the Common Stock is not so
designated, the average of the reported closing bid and asked prices of the
Common Stock on such date as shown by NASDAQ and reported by any member firm of
the NYSE, selected by the Corporation. If neither (a), (b) or (c) is applicable,
Market Price shall mean the Fair Market Value per share determined in good faith
by the Board of Directors of the Corporation which shall be deemed to be Fair
Market Value unless holders of at least 50% of the outstanding shares of Series
G Preferred request that the Corporation obtain an opinion of a nationally
recognized investment banking firm chosen by such holders and the Corporation
(at the Corporation's expense), in which event Fair Market Value shall be as
determined by such investment banking firm.

          "NASDAQ" shall mean the National Market System of the Nasdaq Stock
Market.

          "NYSE" shall mean the New York Stock Exchange, Inc.

          "Parity Stock" shall mean any capital stock of the corporation, other
than Senior Stock, ranking on a par (either as to dividends or upon liquidation,
dissolution or winding up) with the Series G Preferred.
<PAGE>
                                                                              22


          "Person" shall mean any individual, firm, corporation, partnership,
limited liability company trust, incorporated or unincorporated association,
joint venture, joint stock company, government (or an agency or political
subdivision thereof) or other entity of any kind, and shall any successor (by
merger) of such entity.

          "Pre-Stockholder Approval Number" shall mean as of any date 20% of the
number of shares of Common Stock issued and outstanding prior to the Effective
Date (subject to adjustment to reflect stock splits, stock dividends, stock
combinations, recapitalizations and like occurrences), rounded down to the
nearest whole number of shares, minus the sum of (x) the number of shares of
Common Stock then issuable upon exercise of all then-outstanding warrants issued
pursuant to the Investment Agreement (the "Warrants"), plus (y) the number of
shares of Common Stock previously issued upon exercise of the Warrants, if any,
plus (z) one; in the case of both (x) and (y) rounded down to the nearest whole
number.

          "Senior Stock" shall mean the Series D Preferred, the Series E
Preferred and any other capital stock of the Corporation ranking senior (either
as to dividends or upon liquidation, dissolution or winding up) to the Series G
Preferred.

          "Series D Preferred" shall mean the Corporation's Series D Convertible
Preferred Stock.

          "Series E Preferred" shall mean the Corporation's 8% Convertible
Preferred Stock, Series E.

          "Stockholder Approval" shall mean the vote, by a majority of the votes
cast in the Stockholder Vote, in favor of approval of the matter considered in
such vote.

          "Stockholder Approval Certification Date" shall mean earlier of (i)
the date that the Stockholder Meeting occurred and that Stockholder Approval has
been obtained, or (ii) the date of a certificate, delivered by the Corporation
to each registered holder of Series G Preferred, signed by the President or a
Vice-President and by the Secretary or an Assistant Secretary of the
Corporation, stating that the Corporation has determined that the Corporation is
not required by any Law or by any NASDAQ Rule to obtain Stockholder Approval,
the basis for such determination, and that the Corporation has then confirmed
that such determination is acceptable to Persons holding a majority of the then
outstanding shares of Series G Preferred.

          "Stockholder Meeting" shall mean a special meeting of the
Corporation's stockholders, duly called and convened, at which a quorum is
present throughout and at which the Stockholder Vote is conducted.

          "Stockholder Vote" shall mean a vote, by those of the Corporation's
stockholders entitled to vote thereon, on the matter of approval of the terms of
the Investment Agreement and of the Series G Preferred.
<PAGE>
                                                                              23


          "Subsidiary" shall mean, with respect to any Person, a corporation or
other entity of which 50% or more of the voting power of the voting equity
securities or equity interest is owned, directly or indirectly, by such Person.

          "Trading Days" shall mean a day on which the national securities
exchanges are open for trading.

Section 12. Modification or Amendment.

          Except as specifically set forth herein, modifications or amendments
to this Certificate of Designation may be made by the Corporation with the
consent of the holders of at least 50% of the outstanding shares of Series G
Preferred.
<PAGE>
                                                                              24


          IN WITNESS WHEREOF, Z-Tel Technologies, Inc. has caused this
Certificate to be duly executed in its corporate name on this 2nd day of July,
2001.

                                        Z-TEL TECHNOLOGIES, INC.


                                        By: /s/ D. Gregory Smith
                                            ------------------------------------
                                            Name: D. Gregory Smith
                                            Title: CEO
<PAGE>
                            Z-TEL TECHNOLOGIES, INC.

                            CERTIFICATE OF AMENDMENT

     The Certificate of Designations, Preferences and Relative Rights,
Qualifications. Limitations and Restrictions, Series D Convertible Preferred
Stock, of Z-Tel Technologies, Inc. is amended by inserting the following
provision as Section 2(e):

               (e) Notwithstanding anything in this Certificate of Designation
     to the contrary, the Corporation may during any twelve month period redeem,
     purchase or otherwise acquire for consideration not more than 1,000,000
     shares of the Common Stock.

     The foregoing amendment was adopted in accordance Section 242 of the
General Corporation Law of the State of Delaware.

     IN WITNESS WHEREOF, this Certificate of Amendment has been executed this
11th day of March 2003.

                                        Z-TEL TECHNOLOGIES, INC.


                                    By: /s/ D. Gregory Smith
                                        ----------------------------------------
                                        D. Gregory Smith
                                        As President and Chief Executive Officer

Attestation:


By: /s/ N. Dumas Garrett
    -----------------------------
    N. Dumas Garrett
    As Secretary

                                                     (    STATE OF DELAWARE    )
                                                     (    SECRETARY OF STATE   )
                                                     ( DIVISION OF CORPORATIONS)
                                                     (FILED 10:00 AM 03/13/2003)
                                                     (   030168607 - 2873445   )
<PAGE>
                            Z-TEL TECHNOLOGIES, INC.

                            CERTIFICATE OF AMENDMENT

     The Amended and Restated Certificate of Designation of 8% Convertible
Preferred Stock, Series E, of Z-Tel technologies, Inc. is amended by removing
Section 4(b) in its entirety and inserting in lieu thereof the following:

               (b) No Redemption. Whenever dividends payable on shares of Series
     E Preferred as provided in Section 2(a) are not paid in full in cash, at
     such time and thereafter until all unpaid dividends payable, whether or not
     declared, on the outstanding shares of Series E Preferred shall have been
     paid in full in cash or declared and set apart in cash for payment, or
     whenever the Corporation shall not have converted or exchanged shares of
     Series E Preferred at a time required by Section 8 or 10, at such time and
     thereafter until all conversion and exchange obligations provided in
     section 8 or 10 that have come due shall have been satisfied, the
     Corporation shall not redeem, purchase or otherwise acquire for
     consideration any shares of Junior Stock or Parity Stock; provided,
     however, that (A) the Corporation may accept shares of any Senior Stock,
     Parity Stock or Junior Stock for conversion into Junior Stock, (B) the
     Corporation may at any time redeem, purchase or otherwise acquire shares of
     any Parity Stock pursuant to any mandatory redemption, put, sinking fund or
     similar obligation contained in such Parity Stock, pro rata with the Series
     E Preferred in proportion to the total amount then required to be applied
     by the Corporation to redeem, repurchase, convert, exchange or otherwise
     acquire shares of Series E Preferred and shares of such Parity Stock, and
     (C) the Corporation may during any twelve month period redeem, purchase or
     otherwise acquire for consideration not more than 1,000,000 shares of the
     Common Stock.

     The foregoing amendment was adopted in accordance Section 242 of the
General Corporation Law of the State of Delaware.

     IN WITNESS WHEREOF, this Certificate of Amendment has been executed this
11th day of March 2003.

                                        Z-TEL TECHNOLOGIES, INC.


                                    By: /s/ D. Gregory Smith
                                        ----------------------------------------
                                        D. Gregory Smith
                                        As President and Chief Executive Officer

Attestation:


By: /s/ N. Dumas Garrett
    -----------------------------
    N. Dumas Garrett
    As Secretary

                                                     (    STATE OF DELAWARE    )
                                                     (    SECRETARY OF STATE   )
                                                     ( DIVISION OF CORPORATIONS)
                                                     (FILED 10:01 AM 03/13/2003)
                                                     (   030168616 - 2873445   )
<PAGE>
                            Z-TEL TECHNOLOGIES, INC.

                            CERTIFICATE OF AMENDMENT

     The Certificate of Designation of 12% Junior Redeemable Convertible
Preferred Stock, Series G, of Z-Tel Technologies, Inc. is amended by removing
Section 4(b) in its entirety and inserting in lieu thereof the following:

               (b) No Redemption. Whenever dividends payable on shares of Series
     G Preferred as provided in Section 2(a) are not paid in full in cash
     (whether or not such payment is permitted by the terms hereof), at such
     time and thereafter until all unpaid dividends payable, whether or not
     declared, on the outstanding shares of Series G Preferred shall have been
     paid in full in cash or declared and set apart in cash for payment, or
     whenever the Corporation shall not have converted or exchanged shares of
     Series G Preferred at a time required by Section 8 or 10, at such time and
     thereafter until all conversion and exchange obligations provided in
     section 8 or 10 that have come due shall have been satisfied, the
     Corporation shall not redeem, purchase or otherwise acquire for
     consideration any shares of Junior Stock or Parity Stock; provided,
     however, that (A) the Corporation may accept shares of any Parity Stock or
     Junior Stock for conversion into Junior Stock, (B) the Corporation may at
     any time redeem, purchase or otherwise acquire shares of any Parity Stock
     pursuant to any mandatory redemption, put, sinking fund or similar
     obligation contained in such Parity Stock, pro rata with the Series G
     Preferred in proportion to the total amount then required to be applied by
     the Corporation to redeem, repurchase, convert, exchange or otherwise
     acquire shares of Series G Preferred and shares of such Parity Stock and
     (C) the Corporation may during any twelve month period redeem, purchase or
     otherwise acquire for consideration not more than 1,000,000 shares of the
     Common Stock.

     The foregoing amendment was adopted in accordance Section 242 of the
General Corporation Law of the State of Delaware.

     IN WITNESS WHEREOF, this Certificate of Amendment has been executed this
llth day of March 2003.

                                        Z-TEL TECHNOLOGIES, INC.


                                    By: /s/ D. Gregory Smith
                                        ----------------------------------------
                                        D. Gregory Smith
                                        As President and Chief Executive Officer

Attestation:


By: /s/ N. Dumas Garrett
    -----------------------------
    N. Dumas Garrett
    As Secretary

                                                     (    STATE OF DELAWARE    )
                                                     (    SECRETARY OF STATE   )
                                                     ( DIVISION OF CORPORATIONS)
                                                     (FILED 10:01 AM 03/13/2003)
                                                     (   030168617 - 2873445   )
<PAGE>
                                                 (      State of Delaware      )
                                                 (      Secretary of State     )
                                                 (   Division of Corporations  )
                                                 (Delivered 01:03 PM 10/12/2004)
                                                 (  FILED 12:58 PM 10/12/2004  )
                                                 ( SRV 040734765 - 2873445 FILE)

                            CERTIFICATE OF CORRECTION
                                     TO THE
                            CERTIFICATE OF AMENDMENT
                                       OF
                          CERTIFICATE OF INCORPORATION
                                       OF
                            Z-TEL TECHNOLOGIES, INC.

          Z-Tel Technologies, Inc. (the "Corporation"), a corporation organized
and existing under and by virtue of the General Corporation Law of the State of
Delaware, DOES HEREBY CERTIFY:

          1. The name of the Corporation is Z-Tel Technologies, Inc.

          2. A Certificate of Amendment of Certificate of Incorporation of the
Corporation was filed with the Secretary of State of Delaware on December 13,
1999, and said Certificate of Amendment requires correction as permitted by
subsection (f) of Section 103 of the General Corporation Law of the State of
Delaware.

          3. The inaccuracy or defect of said Certificate of Amendment to be
corrected is that Article IV of the Amended and Restated Certificate of
Incorporation, filed with the Secretary of State on October 21, 1998, was
inadvertently struck out in its entirely. The replacement language was only
intended to supersede the portion of the first paragraph of Article IV that set
forth the authorized number of common and preferred shares of the Corporation.
As a result of this error, the portions of Article IV setting forth additional
details related to the common and -preferred shares were inadvertently removed
from the Certificate of Incorporation.

          4. Article SECOND of the Certificate of Amendment is corrected to read
in its entirety as follows:

          "SECOND; That this amendment to the Amended and Restated Certificate
          of Incorporation is hereby amended, for the purposes of increasing the
          Corporation's authorized capital stock, as follows: by striking out
          the first sentence of the first paragraph of ARTICLE IV thereof as it
          now exists and inserting in lieu thereof a new first sentence of the
          first paragraph of ARTICLE IV reading in its entirety, as follows:

                                   'ARTICLE IV

                                  Capital Stock
<PAGE>
          The total number of shares that the Corporation shall have authority
to issue is 200,000,000 shares, consisting of 150,000,000 shares of common
stock, par value $0.01 per share (the "Common Shares"), and 50,000,000 shares of
preferred stock, par value $0.01 per share (the "Preferred Shares")."'

          IN WITNESS WHEREOF, Z-Tel Technologies, Inc. has caused this
Certificate to be executed this 11th day of October, 2004.

                                        Z-TEL TECHNOLOGIES, INC.


                                        By: /s/ TREY DAVIS
                                            ------------------------------------
                                            Name: TREY DAVIS
                                            Title: CEO


                                        2
<PAGE>
                                                 (      State of Delaware      )
                                                 (      Secretary of State     )
                                                 (   Division of Corporations  )
                                                 (Delivered 01:03 PM 10/12/2004)
                                                 (  FILED 01:03 PM 10/12/2004  )
                                                 ( SRV 040734770 - 2873445 FILE)

                            CERTIFICATE OF CORRECTION
                                     TO THE
                            CERTIFICATE OF AMENDMENT
                                       OF
                          CERTIFICATE OF INCORPORATION
                                       OF
                            Z-TEL TECHNOLOGIES, INC.

          Z-Tel Technologies, Inc. (the "Corporation"), a corporation organized
and existing under and by virtue of the General Corporation Law of the State of
Delaware, DOES HEREBY CERTIFY:

          1. The name of the Corporation is Z-Tel Technologies, Inc.

          2. A Certificate of Amendment of Certificate of Incorporation of the
Corporation was filed with the Secretary of State of Delaware on May 30, 2000,
and said Certificate of Amendment requires correction as permitted by
subsection (f) of Section 103 of the General Corporation Law of the State of
Delaware.

          3. The inaccuracy or defect of said Certificate of Amendment to be
corrected is that Article VI of the Amended and Restated Certificate of
Incorporation, filed with the Secretary of State on October 21, 1998, was
inadvertently struck out in its entirety. The replacement language was only
intended to supersede paragraph A of Article VI that set forth general
provisions related to the directors of the Corporation. As a result of this
error, paragraph B of Article VI was inadvertently removed from the Certificate
of Incorporation,

          4. Article FIRST of the Certificate of Amendment is corrected to read
in its entirety as follows;

          "FIRST: That this Certificate of Amendment to the Amended and Restated
          Certificate of Incorporation, filed on October 21, 1998 (the "Amended
          Certificate"), hereby further amends the Amended Certificate, for
          purposes of dividing the board of directors of the corporation into
          three classes, as follows: by relettering paragraph B thereof to be
          paragraph I and by striking out paragraph A of ARTICLE VI thereof in
          its entirety and inserting in its place new paragraphs A-H of ARTICLE
          VI, as follows:

                                   'ARTICLE VI

                                    Directors
<PAGE>
A. The management of the business and the conduct of the affairs of the
corporation shall be vested in a board of directors.

B. The directors, other than those who may be elected by the holders of any
class or series of stock having a preference over the Common Shares as to
dividends or upon liquidation, shall be classified, with respect to the time for
which they severally hold office, into three classes, as nearly equal in number
as possible, one class to be originally elected for a term expiring at the
annual meeting of stockholders to be held in 2001, another class to be
originally elected for a term expiring at the annual meeting of stockholders to
be held in 2002, and another class to be originally elected for a term expiring
at the annual meeting of stockholders to be held in 2003, At each annual meeting
of stockholders following the initial classification and election, the
respective successors of each class shall be elected for three-year terms.

C. The directors of the corporation need not be elected by written ballot unless
the bylaws of the corporation so provide. A director shall hold office until the
annual meeting for the year in which his term expires and until his successor
shall be elected and shall qualify, subject, however, to prior death,
resignation, retirement, disqualification or removal from office.

D. The number of directors of the corporation shall be fixed and may be changed
from time to time by resolution of the board of directors. If the number of
directors is changed, any increase or decrease shall be apportioned among the
classes so as to maintain the number of directors in each class as nearly equal
as possible.

E. Any vacancies on the board of directors resulting from death, resignation,
disqualification, removal, increase in the number of directors constituting the
board of directors, or other causes, unless the board of directors determines by
resolution that any such vacancies or newly created directorships shall be
filled by stockholders, and except as otherwise provided by law, shall be filled
only by the affirmative vote of a majority of the remaining directors then in
office, or by a sole remaining director, even though less than a quorum of the
board of directors, and not by the stockholders. If any applicable provision of
the General Corporation Law of the State of Delaware expressly confers power on
stockholders to fill such a directorship at a special meeting of stockholders,
such a directorship may be filled at such meeting only by the affirmative vote
of at least 80 percent of the voting power of all shares of the corporation
entitled to vote generally in the election of directors voting as a single
class.


                                        2
<PAGE>
F. Any additional director of any class elected to fill a newly created
directorship shall hold office for a term that shall coincide with the remaining
term of that class, but in no case shall a decrease in the number of directors
constituting the board of directors remove or shorten the term of any incumbent
director. Any director elected to fill a vacancy not resulting from an increase
in the number of directors shall have the same remaining term as that of his
predecessor.

G. Directors may be removed only for cause, and only by the affirmative vote of
at least 80 percent in voting power of all shares of the corporation entitled to
vote generally in the election of directors, voting as a single class.

H. Notwithstanding the foregoing, whenever the holders of any one or more class
or series of capital stock issued by the corporation shall have the right,
voting separately as a class or series or with one or more such other classes or
series, to elect directors at an annual or special meeting of stockholders, the
election, term of office, removal, filling of vacancies and other features of
such directorships shall be governed by the terms of this certificate of
incorporation (including any certificate of designations relating to any class
or series of capital stock) applicable thereto, and such directors so elected
shall not be divided into classes pursuant to this Article VI unless expressly
provided by such terms.'"

          IN WITNESS WHEREOF, Z-Tel Technologies, Inc. has caused this
Certificate to be executed this 11th day of October, 2004.

                                        Z-TEL TECHNOLOGIES, INC.


                                        By: /s/ TREY DAVIS
                                            ------------------------------------
                                            Name: TREY DAVIS
                                            Title: CEO


                                        3
<PAGE>
                            Z-TEL TECHNOLOGIES, INC.

                       AMENDED CERTIFICATE OF DESIGNATION
                 OF 12% JUNIOR REDEEMABLE CONVERTIBLE PREFERRED
                   STOCK, SERIES G, SETTING FORTH THE POWERS,
                PREFERENCES, RIGHTS, QUALIFICATIONS, LIMITATIONS
               AND RESTRICTIONS OF SUCH SERIES OF PREFERRED STOCK

          Pursuant to the Delaware General Corporation Law, Z-Tel Technologies,
Inc., a Delaware corporation (the "Corporation"), DOES HEREBY CERTIFY:

          FIRST: That pursuant to the authority conferred upon the Board of
Directors of the Corporation by the Certificate of Incorporation of the
Corporation (the "Charter"), the Board of Directors of the Corporation on June
29, 2001 duly adopted resolutions creating a series of 12% Junior Redeemable
Convertible Preferred Stock, Series G (the "Series G Preferred").

          SECOND: Resolutions setting forth a proposed Amended Certificate of
Designation of Series G Preferred (the "Amended Certificate"), declaring the
Amended Certificate to be advisable and directing that this Amended Certificate
be considered by the stockholders of the Corporation entitled to vote thereon
were duly adopted by the Board of Directors of the Corporation.

          THIRD: Thereafter, the Amended Certificate was approved at a special
meeting duly called and convened in accordance with Section 222 of the General
Corporation Law of the State of Delaware on October 4, 2004 by vote in respect
thereof of the requisite percentage of the stockholders of the Corporation
entitled to vote thereon.

          FOURTH: The Amended Certificate was duly adopted in accordance with
Section 242 of the General Corporation Law of the State of Delaware.

          FIFTH: For accounting purposes only, the Amended Certificate will be
effective as of 5:01 p. m. eastern time on November 29, 2004.

          SIXTH: The Amended Certificate amends the Corporation's Certificate of
Designation of Series G Preferred, as amended, in its entirety and hereby
replaces it with the following:

Section 1 Designation and Number; Ranking.

          (a) The shares of such series shall be designated as 12% Junior
Redeemable Convertible Preferred Stock, Series G. The number of authorized
shares of the Series G Preferred shall be 175, which number may be decreased
(but not increased) by the Board of Directors without a vote of stockholders;
provided, however, that such number may not be decreased below the number of
then outstanding shares of Series G Preferred or shares of Series G Preferred to
be issued pursuant to the Investment Agreement.

                                                 (       State of Delaware     )
                                                 (      Secretary of State     )
                                                 (   Division of Corporations  )
                                                 (Delivered 11:08 PM 11/29/2004)
                                                 (   FILED 11:08 PM 11/29/2004 )
                                                 ( SRV 040855822 - 2873445 FILE)
<PAGE>
          (b) Capitalized terms used herein and not otherwise defined shall have
the meanings set forth in Section 10.

Section 2. Dividends and Distributions.

          (a) Series G Dividends. The holders of shares of Series G Preferred
shall be entitled to receive, when, as and if declared by the Board of
Directors, out of the assets of the Corporation legally available therefor,
cumulative cash dividends at an annual rate per share of Series G Preferred
equal to 12.00% of the Liquidation Preference with respect to such share per
annum ("Series G Dividend Rate"), calculated on the basis of a 360-day year
consisting of twelve 30-day months, accruing and payable in equal quarterly
payments, in immediately avail able funds, on the last day of March, June,
September and December or, if any such day is not a Business Day, the next
succeeding Business Day, in each year (each such date being referred to herein
as a "Quarterly Dividend Payment Date"), commencing on the first quarterly
dividend date to occur after the issue date of such shares; provided that the
dividend payable on the first Quarterly Dividend Payment Date to occur after the
Issue Date of each share of Series G Preferred shall be computed based on the
number of days prior to the date that such share has been issued and
outstanding.

          (b) Dividend Arrearage. If as of any Quarterly Dividend Payment Date
there is a Dividend Arrearage (as hereinafter defined), an additional dividend
(the "Additional Dividend") shall accrue on each share of the Series G Preferred
for the period from such Quarterly Dividend Payment Date through the earlier of
(x) the date on which such Dividend Arrearage is paid or converted pursuant to
the terms hereof in full and (y) the next succeeding Quarterly Dividend Payment
Date, in an amount equal to the product of (i) the Series G Dividend Rate and
(ii) the amount of such Dividend Arrearage as of such Quarterly Dividend Payment
Date. For purposes of this Section 2(h), "Dividend Arrearage" shall mean, with
respect to each share of Series G Preferred, as of any Quarterly Dividend
Payment Date, the excess, if any of (i) the sum of all dividends theretofore
accrued on such share in accordance with Section 2(a) (including those accrued
as of and including such Quarterly Dividend Payment Date) plus all Additional
Dividends, if any, theretofore accrued on such share in accordance with this
Section 2(b) (including those accrued as of and including such Quarterly
Dividend Payment Data), over (ii) all dividends actually paid or converted (but
only to the extent so paid or converted) pursuant to the terms hereof with
respect to such share on or before such Quarterly Dividend Payment Date.

          (c) Accrual of Dividends. Dividends payable pursuant to Section 2(a)
shall begin to accrue and be cumulative from the Issue Date, and shall accrue on
a daily basis, in each case whether or not declared. Dividends paid on the
shares of Series G Preferred in an amount less than the total amount of such
dividends at the time accrued and payable on such shares shall be allocated pro
rata on a share-by-share basis among all such shares of Series G Preferred at
the time outstanding, The Board of Directors may fix a record date for the
determination of holders of shares of Series G Preferred entitled to receive
payment of a dividend declared thereon, which record date shall be no more than
60 days or less than 10 days prior to the date fixed for the payment thereof.
Accumulated but unpaid dividends for any past quarterly dividend periods may be
declared and paid at any time, without reference to any regular Quarterly
Dividend Payment


                                       -2-
<PAGE>
Date, to holders of record on such date, not more than 60 nor less than 10 days
preceding the payment date thereof, as may be fixed by the Board of Directors.

          (d) Other Dividends. In addition to the dividends or distributions on
the Series G Preferred described in Section 2(a), in the event that the
Corporation shall declare a dividend or make any other distribution (including,
without limitation, in cash, in capital stock (which shall include, without
limitation, any options, warrants or other rights to acquire capital stock) of
the Corporation, whether or not pursuant to a shareholder rights plan, "poison
pill" or similar arrangement, or other property or assets)) to holders of Common
Stock, then the Board of Directors shall declare and the holder of each share of
Series G Preferred shall be entitled to receive a dividend or distribution in an
amount equal to (the amount of such dividend or distribution received by a
holder of the number of shares of Common Stock for which such share of Series G
Preferred is convertible on the record date for such dividend or distribution
(without regard to the Conversion Limit). Any such amount shall be paid to the
holders of shares of Series G Preferred at the same time such dividend or
distribution is made to holders of Common Stock.

Section 3. Voting Rights.

          Except for any voting rights provided by law, the holders of shares of
Series G Preferred shall not be entitled to vote.

Section 4. Redemption.

          (a) Optional Redemption. Except as otherwise set forth in this Section
4, the Corporation shall not have any right to redeem any shares of Series G
Preferred prior to the first anniversary of the Drawdown Date. On and after the
first anniversary of the Drawdown Date, the Corporation shall have the right, at
its sole option and election, to redeem the shares of Series G Preferred, in
whole but not in part, on not less than 10 days notice of the date of redemption
(any such date an "Optional Redemption Date") for cash at a price per share (the
"Optional Redemption Price") equal to the sum of (i) the Liquidation Preference
per share and (ii) any accrued and unpaid dividends thereon (including
Additional Dividends), whether or not declared or payable, to the applicable
optional Redemption Date, in immediately available funds.

          (b) Mandatory Redemption. To the extent permitted by law, the
Corporation shall redeem, on:

          (i) December 31, 2001, if the Stockholder Approval Certification Date
     has not then occurred, the number of shares of Series G Preferred presented
     for redemption by the holders thereof for cash, at a price per share, in
     immediately available funds, equal to the sum of (x) the Liquidation
     Preference per share plus (y) any accrued and unpaid dividends thereon
     (including Additional Dividends), whether or not declared or payable; or

          (ii) the fifth anniversary of the Drawdown Date, all remaining shares
     of Series G Preferred then outstanding, for cash at a price per share equal
     to the Liquidation Preference, plus an amount equal to all accrued but
     unpaid dividends thereon (including


                                      -3-
<PAGE>
     Additional Dividends), whether or not declared or payable to the Mandatory
     Redemption Date, in immediately available funds

(each of the dates referred to in Sections 4(b)(i) and (ii) above, a "Mandatory
Redemption Date" and each of the redemption amounts referred to in Sections
4(b)(i) and (ii) above, a "Mandatory Redemption Price"). Prior to authorizing or
making such redemption with respect to the Series G Preferred, the Corporation,
by resolution of the Board of Directors shall, to the extent of funds legally
available therefor, declare a dividend on the Series G Preferred payable on the
Mandatory Redemption Date in an amount equal to any accrued and unpaid dividends
on the Series G Preferred as of such date (including Additional Dividends) and,
if the Corporation does not have sufficient legally available funds to declare
and pay all dividends accrued at the time of such redemption, any remaining
accrued and unpaid dividends (including Additional Dividends) shall be added to
the Mandatory Redemption Price. After paying any accrued and unpaid dividends
pursuant to the foregoing sentence, if the funds of the Corporation legally
available for redemption of shares of the Series G Preferred then required to be
redeemed are insufficient to redeem the total number of such shares then
outstanding, those funds which are legally available shall be used to redeem the
maximum possible number of shares of the Series G Preferred, which shares to be
redeemed shall be allocated pro rata among the holders of the Series G Preferred
based on the number of shares of Series G Preferred held by such holders. At any
time and from time to time thereafter, when additional funds of the Corporation
are legally available to discharge its obligation to redeem all of the
outstanding shares of Series G Preferred required to be redeemed pursuant to
this Section (the "Mandatory Redemption Obligation"), such funds shall be
immediately used to discharge such Mandatory Redemption Obligation until the
balance of such shares have been redeemed. If and so long as the Mandatory
Redemption Obligation shall not be fully discharged, dividends on any remaining
outstanding shares of Series G Preferred shall continue to accrue and be added
to the dividend payable pursuant to the second preceding sentence.

          (c) Notice.

          (i) The Corporation will provide notice to holders of record of (the
Series G Preferred of any redemption pursuant to Section 4(a) or 4(b) not less
than 10 (in the case of Section 4(a)) and 30 (in the case of Section 4(b)) nor
more than 60 days prior to the date fixed for such redemption (a "Redemption
Notice"). Any Notice provided pursuant to this Section 4(c) shall be provided by
first-class mail, postage prepaid, to each holder of record of the Series G
Preferred, at such holder's address as it appears on the stock transfer books of
the Corporation.

          (ii) Each Redemption Notice shall state, as appropriate: (x) the
Applicable Redemption Date; (y) the number of shares of Series G Preferred to be
redeemed and, if fewer than all the shares held by any holder are to be
redeemed, the number of such shares to be redeemed from such holder, and (z) the
Optional Redemption Price or Mandatory Redemption Price.

          (iii) In addition, each Redemption Notice shall state, as appropriate:
(v) the place or places where certificates for such shares are to be surrendered
for redemption, (w) the amount of full cumulative dividends per share of Series
G Preferred to be redeemed (including Additional Dividends) up to but excluding
the Applicable Redemption Date, and that dividends


                                      -4-
<PAGE>
on shares of Series G Preferred to be redeemed will cease to accrue on such
Redemption Date unless the Corporation shall default in payment of the
Applicable Redemption Price; (x) the name and location of any bank or trust
company with which the Corporation will deposit redemption funds pursuant to
subsection (e) below; (y) the then-effective Conversion Price; and( z) that the
right of holders to convert shares of Series G Preferred to be redeemed will
terminate at the close of business on the Business Day next preceding the date
fixed for redemption (unless the Corporation shall default in the payment of the
Applicable Redemption Price).

          Any Notice that is mailed pursuant to clause (i) shall be conclusively
presumed to have been duly given, whether or not the holder of shares of Series
G Preferred receives such notice, and failure to give such notice by mail, or
any defect in such notice, to the holders of any shares designated for
redemption shall not affect the validity of the proceedings for the redemption
of any other shares of Series G Preferred.

          (d) Mechanics of Redemption. Upon surrender in accordance with any
notice referred to in subsection (d) above of the certificate for any shares
redeemed pursuant to Section 4(a) or (b) (duly endorsed or accompanied by
appropriate instruments of transfer if so required by the Corporation), the
holders of record of such shares shall be entitled to receive the Applicable
Redemption Price, without interest, up to but excluding such Redemption Date out
of funds legally available therefor. If fewer than all the shares represented by
any such certificate are redeemed, a new certificate representing the unredeemed
shares shall be issued without cost to the holder thereof.

          (e) Redemption Funds. On the date of any redemption being made
pursuant to this Section, the Corporation shall, and at any time after mailing
the Redemption Notice and before the Applicable Redemption Date the Corporation
may, deposit for the benefit of the holders of shares of Series G Preferred to
be redeemed the funds necessary for such redemption with a bank or trust company
having a capital and surplus of at least $1 billion, with instructions to such
bank or trust company to pay the full redemption as provided herein to the
holders of shares of Series G Preferred upon surrender of certificates for such
shares; provided, however, that the making of such deposit shall not release the
Corporation from any of its obligations hereunder. Any moneys so deposited by
the Corporation and unclaimed at the end of two years from the Applicable
Redemption Date shall revert to the general funds of the Corporation and, upon
demand, such bank or trust company shall pay over to the Corporation such
unclaimed amounts and thereupon such bank or trust company shall be relieved of
all responsibility in respect thereof and any holder of shares of Series G
Preferred so redeemed shall look only to the Corporation for the payment of the
full redemption amounts, as provided herein.

          (f) Rights After Redemption. Notice of redemption having been given as
provided in Section 4(c), upon the deposit pursuant to subsection (e) of the
full redemption amounts as provided herein in respect of all shares of Series G
Preferred then to be redeemed, notwithstanding that any certificates for such
shares shall not have been surrendered in accordance with subsection (d), from
and after the Applicable Redemption Date: (i) the shares represented thereby
shall no longer be deemed outstanding, (ii) the right to receive dividends
thereon shall cease to accrue, and (iii) all rights of the holders of such
shares of Series G Preferred shall cease and terminate, excepting only the right
to receive the full redemption amounts as provided herein


                                      -5-
<PAGE>
without interest thereon. If the funds deposited are not sufficient for
redemption of the shares of the Series G Preferred that were to be redeemed,
then no certificates evidencing such shares shall be deemed surrendered and
such shares shall remain outstanding and the rights of holders of shares of
Series G Preferred shall continue to be those of holders of shares of the Series
G Preferred.

Section 5. Reacquired Shares.

          Any shares of Series G Preferred converted, exchanged, redeemed,
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
shares of Series G Preferred shall upon their cancellation become authorized but
unissued shares of preferred stock, par value $.01 per share of the Corporation
and, upon the filing of an appropriate Certificate of Designation with the
Secretary of State of the State of Delaware, may be reissued as part of another
series of preferred stock, par value $.01 per share, of the Corporation subject
to the conditions or restrictions on issuance set forth therein, but in any
event may not be reissued as shares of Series G Preferred unless all shares of
the Series G Preferred issued on each of the Issue Dates shall have already been
redeemed, converted or exchanged.

Section 6. Liquidation, Dissolution or Winding Up.

          Upon any voluntary or involuntary dissolution, liquidation or winding
up of the Corporation, the Corporation shall pay to holders of shares of Series
G Preferred for cash, at a price per share, in immediately available funds,
equal to the sum of (x) the Liquidation Preference per share plus (y) any
accrued and unpaid dividends thereon (including Additional Dividends), whether
or not declared or payable, prior to any distribution to the holders of any
Common Stock. If the proceeds from any such event are not sufficient to pay to
the holders of Series G Preferred then such holders shall instead be entitled to
receive, pro rata with the holders of all other series of preferred stock of the
Corporation, the entire assets and funds of the Corporation legally available
for distribution to the holders of capital stock, which assets and funds shall
be distributed pro rata among the holders of the Series G Preferred on the basis
of the amounts per share to be paid to each. After payment of the full
preferential amount, such holders shall not be entitled to any further
participation in any distribution of assets of the Corporation.

Section 7. Voluntary Conversion.

          (a) Conversion Right. Any holder of Series G Preferred shall have the
right, at its option, at any time and from time to time, to convert, subject to
the terms and provisions of this Section 7, any or all of such holder's shares
of Series G Preferred into such number of fully paid and non-assessable shares
of Common Stock as is equal, subject to Section 7(f), to the product of the
number of shares of Series G Preferred being so converted multiplied by the
quotient of (i) the sum of the Liquidation Preference and all dividends accrued
and unpaid (including Additional Dividends) on the Series G Preferred so
converted to the date of conversion, divided by (ii) the Conversion Price then
in effect, except that with respect to any shares which shall be called for
exchange or redemption, such right shall terminate at the close of business on
the date of exchange or redemption for such shares, unless in any such case the
Corporation shall default in performance or payment due upon exchange or
redemption thereof. The Conversion Price


                                       -6-
<PAGE>
shall be calculated in accordance with Section 7(k) and shall be subject to
adjustment as set forth in Section 7(c). Such conversion right shall be
exercised by the surrender of the shares to be converted to the Corporation at
any time (during usual business hours at its principal place of business to be
maintained by it, accompanied by written notice that the holder elects to
convert such Shares and, subject to Section 7(j), specifying the name or names
(with address) in which a certificate or certificates for shares of Common Stock
are to be issued and (if so required by the Corporation) by a written instrument
or instruments of transfer in form reasonably satisfactory to the Corporation
duly executed by the holder or its duly authorized legal representative and
transfer tax stamps or funds therefor, if required pursuant to Section 7(j). All
shares of Series G Preferred surrendered for conversion shall be delivered to
the Corporation for cancellation and canceled by it and no shares of Series G
Preferred shall be issued in lieu thereof.

          (b) Mechanics of Conversion. As promptly as practicable after the
surrender, as herein provided, of any shares of Series G Preferred for
conversion pursuant to Section 7(a), the Corporation shall deliver to or upon
the written order of the holder of such shares so surrendered a certificate or
certificates representing the number of fully paid and non-assessable shares of
Common Stock into which such shares of Series G Preferred have been converted in
accordance with the provisions of this Section 7. Subject to the following
provisions of this paragraph and of Section 7(c), such conversion shall be
deemed to have been made immediately prior to the close of business on the date
that such shares of Series G Preferred shall have been surrendered in
satisfactory form for conversion, and the Person or Persons entitled to receive
the Common Stock deliverable upon conversion of such shares of Series G
Preferred shall be treated for all purposes as having become the record holder
or holders of such Common Stock at such time, and such conversion shall be at
the Conversion Price in effect at such time; provided, however, that no
surrender shall be effective to constitute the Person or Persons entitled to
receive the Common Stock deliverable upon such conversion as the record holder
or holders of such Common Stock while the share transfer books of the
Corporation shall be closed (but not for any period in excess of five days), but
such surrender shall be effective to constitute the Person or Persons entitled
to receive such Common Stock as the record holder or holders thereof for all
purposes immediately prior to the close of business on the next succeeding day
on which such share transfer books are open, and such conversion shall be
deemed to have been made at, and shall be made at the Conversion Price in effect
at, such time on such next succeeding day.

          (c) Adjustment of Conversion Price. If the Corporation shall, while
shares of Series G Preferred remain outstanding, (i) pay a dividend, or make a
distribution to holders of Common Stock, in either case in shares of its Common
Stock, (ii) subdivide its outstanding shares of Common Stock, (iii) combine its
outstanding shares of Common Stock into a smaller number of shares or (iv) issue
by reclassification of its shares of Common Stock any shares of capital stock of
the Corporation, in each case, at any time after the consummation of the
Recapitalization Transactions (as defined below), then thereafter the Conversion
Price shall be automatically (and without notice or further action) increased or
decreased, as the case may be, in direct proportion to the increase or decrease
in the number of shares of Common Stock by reason of such change so that the
aggregate Conversion Price of shares of Series G Preferred shall be unchanged by
such change.


                                       -7-
<PAGE>
          (d) Effect of Setting Record Date. If the Corporation shall take a
record of the holders of its Common Stock for the purpose of entitling them to
receive a dividend or other distribution, and shall thereafter and before the
distribution to stockholders thereof legally abandon its plan to pay or deliver
such dividend or distribution, then thereafter no adjustment in the Conversion
Price then in effect shall be required by reason of the taking of such record.

          (e) Determination of Adjustment. The determination of the Board of
Directors of adjustments pursuant to Section 7(c) shall, absent manifest error,
be final on all holders of Series G Preferred.

          (f) No Fractional Shares. No fractional shares or scrip representing
fractional shares shall be issued upon the conversion of any shares of Series G
Preferred. If more than one share of Series G Preferred shall be surrendered for
conversion at one time by the same holder, the number of full shares of Common
Stock issuable upon conversion thereof shall be computed on the basis of the
aggregate liquidation Preference (plus accrued and unpaid dividends, including
any Additional Dividends) of the shares of Series G Preferred so surrendered. If
the conversion of any share or shares of Series G Preferred results in a
fraction, an amount equal to such fraction multiplied by the Current Market
Price of the Common Stock on the Business Day preceding the day of conversion
shall be paid to such holder in cash by the Corporation.

          (g) Transactions. In case of any capital reorganization or
reclassification or other change of outstanding shares of Common Stock (other
than a change in par value, or from par value to no par value, or from no par
value to par value), or in case of any consolidation or merger of the
Corporation with or into another Person (other than a consolidation or merger in
which the Corporation is the resulting or surviving Person and which does not
result in any reclassification or change of outstanding Common Stock) (any of
the foregoing, a "Transaction"), the Corporation, or such successor or
purchasing Person, as the case may be, shall execute and deliver to each holder
of Series G Preferred at least 10 Business Days prior to effecting any of the
foregoing Transactions a certificate that the holder of each share of Series G
Preferred then outstanding shall have the right after the Transaction to convert
such share of Series G Preferred into the kind and amount of shares of stock or
other securities (of the Corporation or another issuer) or property or cash
receivable upon such Transaction by a holder of the number of shares of Common
Stock into which such share of Series G Preferred could have been converted
immediately prior to such Transaction (without giving effect to the Conversion
Limit). Such certificate shall provide for adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this
Section 7. If, in the case of any such Transaction, the stock, other
securities, cash or property receivable thereupon by a holder of Common Stock
includes shares of stock or other securities of a Person other than the
successor or purchasing Person and other than the Corporation, which controls or
is controlled by the successor or purchasing Person or which, in connection with
such Transaction, issues stock, securities, other property or cash to holders of
Common Stock, then such certificate also shall be executed by such Person, and
such Person shall, in such certificate, specifically acknowledge the obligations
of such successor or purchasing Person and acknowledge its obligations to issue
such stock, securities, other property or cash to the holders of Series G
Preferred upon conversion of the shares of Series G Preferred


                                       -8-
<PAGE>
as provided above. The provisions of this Section 7(g) and any equivalent
thereof in any such certificate similarly shall apply to successive
Transactions.

          (h) Notice. In case at any time or from time to time:

          (i) the Corporation shall declare a dividend (or any other
     distribution) on its common stock;

          (ii) the Corporation shall authorize the granting to the holders of
     its Common Stock of rights or warrants to subscribe for or purchase any
     shares of stock of any class or of any other rights or warrants;

          (iii) there shall be any reclassification of the Common Stock, or any
     consolidation or merger to which the Corporation is a party and for which
     approval of any shareholders of the Corporation is required, or any sale or
     other disposition of all or substantially all of the assets of the
     Corporation; or

          (iv) there shall be any voluntary or involuntary dissolution,
     liquidation or winding up of the Corporation;

then the Corporation shall mail to each holder of shares of Series G Preferred
at such holder's address as it appears on the transfer books of the Corporation,
as promptly as possible but in any event at least 10 days prior to the
applicable date hereinafter specified, a notice stating (x) the date on which a
record is to be taken for the purpose of such dividend, distribution or rights
or warrants or, if a record is not to be taken, the date as of which the holders
of Common Stock of record to be entitled to such dividend, distribution or
rights are to be determined, or (y) the date on which such reclassification,
consolidation, merger, sale, conveyance, dissolution, liquidation or winding up
is expected to become effective. Such notice also shall specify the date as of
which it is expected that holders of Common Stock of record shall be entitled to
exchange their Common Stock for shares of stock or other securities or property
or cash deliverable upon such reclassification, consolidation, merger, sale,
conveyance, dissolution, liquidation or winding up.

          (i) Reservation of Common Stock. The Corporation shall at all times
reserve and keep available for issuance upon the conversion of the Series G
Preferred pursuant to Section 7(a) or 9(a), such number of its authorized but
unissued shares of Common Stock as will from time to time be sufficient to
permit the conversion of all outstanding shares of Series G Preferred, and shall
take all action required to increase the authorized number of shares of Common
Stock if at any time there shall be insufficient authorized but unissued shares
of Common Stock to permit such reservation or to permit the conversion of all
outstanding shares of Series G Preferred.

          (j) Issuance of Certificates. The issuance or delivery of certificates
for Common Stock upon the conversion of shares of Series G Preferred pursuant to
Section 7(a) or 9(a) shall be made without charge to the converting holder of
shares of Series G Preferred for such certificates or for any tax in respect of
the issuance or delivery of such certificates or the securities represented
thereby, and such certificates shall be issued or delivered in the respective
names of, or (subject to compliance with the applicable provisions of federal
and state securities


                                       -9-
<PAGE>
laws) in such names as may be directed by, the holders of the shares of Series G
Preferred converted; provided, however, that the Corporation shall not be
required to pay any tax which may be payable in respect of any transfer involved
in the issuance and delivery of any such certificate in a name other than that
of the holder of the shares of Series G Preferred converted, and the Corporation
shall not be required to issue or deliver such certificate unless or until the
Person or Persons requesting the issuance or delivery thereof shall have paid to
the Corporation the amount of such tax or shall have established to the
reasonable satisfaction of the Corporation that such tax has been paid.

          (k) Conversion Price. The conversion price (the "Conversion Price")
for each share of Series G Preferred after giving effect to the exchange offer
and the amendments to the Corporation's certificate of incorporation each as
described in the Corporation's proxy statement dated November 2, 2004
(collectively, the "Recapitalization Transactions") shall be $1.28 per share.

          (l) Conversion Limit. Notwithstanding anything to the contrary, on any
day prior to the Stockholder Approval Certification Date, the maximum number of
whole or fractional shares of Series G Preferred that may be converted into
Common Stock pursuant to any provision of this Certificate of Designation shall
be the number of shares of Series G Preferred that, if converted into shares of
Common Stock at the then applicable Conversion Price, would convert into the
"Maximum Remaining Pre-Approval Shares." The "Maximum Remaining Pre-Approval
Shares" means a number of shares of Common Stock equal to (1) the Pre-
Stockholder Approval Number, minus (2) the number of shares of Common Stock, if
any, then already issued by the Corporation pursuant to the conversion of any
Series G Preferred. Thereafter, no additional shares of Series G Preferred may
be converted while the Conversion Limit is in effect. Until the Stockholder
Approval Certification Date, no Series G Preferred holder may convert pursuant
to Section 7(a) without approval of holders of a majority of the Series G
Preferred. The preceding portion of Section 7(l) is referred to in this
Certificate of Designation as the "Conversion Limit." The Conversion Limit shall
act merely to limit the number of shares of Common Stock issuable upon
conversion of the Series G Preferred prior to the Stockholder Approval
Certification Date and not to restrict any adjustments to the Conversion Price,
whether pursuant to Section 7(c) or otherwise, and shall not affect any matter
other than the conversion of shares of Series G Preferred into shares of Common
Stock. For the avoidance of doubt, the adjustments to the Conversion Price
pursuant to Section 7(c) shall be calculated regardless of whether the
Conversion Limit is in effect and the Conversion Limit shall act merely to limit
the number of shares of Common Stock issuable upon conversion of the Series G
Preferred prior to Stockholder Approval (and not to restrict any adjustments to
the Conversion Price).

Section 8. Certain Remedies;

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


                                      -10-
<PAGE>
Section 9. Automatic Conversion.

          (a) Time of Conversion. If at any time after the first anniversary of
the Effective Date, the Market Price of the Common Stock for 20 consecutive
Trading Days exceeds $10.00 per share (as appropriately adjusted for stock
splits, stock combinations and similar events), then on the 30th Business Day
following the end of such 20-day period (the "Conversion Date"), all outstanding
shares of Series G Preferred shall automatically convert, subject to the
Conversion Limit (if any), without any action by the holders thereof, into such
number of fully paid and non-assessable shares of Common Stock as is equal,
subject to Section 7(f), to the product of the number of shares of Series G
Preferred being so converted multiplied by the quotient of (i) the Liquidation
Preference (plus accrued and unpaid dividends, including any Additional
Dividends to and including the Conversion Date) divided by (ii) the Conversion
Price in effect on the Conversion Date.

          (b) Officer's  Certificate. The Corporation will provide notice to
holders of record of Series G Preferred of the conversion pursuant to Section
9(a) at least 20 Business Days prior to the Conversion Date, by first-class mail
postage prepaid, to each holder of record of the Series G Preferred, at such
holder's address as it appears on the stock transfer books of the Corporation.
Such notice shall include an officer's certificate attesting to the satisfaction
of the condition precedent to optional conversion, stating the Conversion Price
in effect on the Conversion Date and the number of fully paid and non-assessable
shares of Common Stock into which such shares of Series G Preferred will be
converted in accordance with Section 7 and this Section 9.

          (c) The Corporation shall deposit for the benefit of the holders of
shares of Series G Preferred the share certificates representing the shares of
Common Stock deliverable upon conversion of the shares of Series G Preferred
with a bank or trust company having a capital and surplus of at least $1
billion, with instructions to such bank or trust company to deliver the
certificates to the holders of shares of Series G Preferred upon surrender of
the certificates for such shares; provided, however, that the making of such
deposit shall not release the Corporation from any of its obligations hereunder.
Any certificates so deposited by the Corporation and unclaimed at the end of
two years from the Conversion Date shall revert to the Corporation and the bank
or trust company shall be relieved of all responsibility in respect thereof and
any holder of shares of Series G Preferred so converted shall look only to the
Corporation for the certificate representing the Common Stock issued upon the
conversion, as provided herein.

          (d) Effect of Conversion. Notice of conversion having been given as
provided in Section 9(b), upon the deposit pursuant to subsection (c) of the
certificates representing the shares of Common Stock issuable upon conversion of
the shares of Series G Preferred, notwithstanding that any certificates for
such shares shall not have been surrendered for cancellation, from and after the
Conversion Date (i) the shares represented thereby shall no longer be deemed
outstanding, (ii) the rights to receive dividends thereon shall cease to accrue,
and (iii) all rights of the holders of shares of Series G Preferred to be
converted shall cease and terminate, excepting only the right to receive the
shares of Common Stock. If the Corporation shall default in the execution and
delivery of the shares of Common Stock, then no certificates evidencing such
shares shall be deemed surrendered and such shares shall remain outstanding and
the rights of


                                      -11-
<PAGE>
holders of Series G Preferred shall continue to be those of holders of shares of
the Series G Preferred.

Section 10. Definitions.

          For the purposes of this Certificate of Designation of Series G
Preferred, the following terms shall have the meanings indicated:

          "Additional Amount" means an amount equal to the amount of dividends
to accrue on a share of Series G Preferred pursuant to Section 2(a) hereof from
the date of issuance of such share to and including the fifth anniversary
thereof, assuming that on each Quarterly Dividend Date such dividends to be paid
on such date were added to the Liquidation Preference on such Quarterly Dividend
Date for purposes of Section 2(a).

          "Affiliate" shall have the meaning ascribed to such term in Rule 12b-2
of the General Rules and Regulations under the Exchange Act; provided, that for
purposes of this Certificate, neither the 1818 Fund 111, L.P. nor any of its
Affiliates shall be considered an Affiliate of the Corporation.

          "Business Day" shall mean any day other than a Saturday, Sunday or
other day on which commercial banks in the State of Delaware are authorized or
required by law or executive order to close.

          "Common Stock" shall mean the common stock, par value $.01 per share,
and each other class of capital stock of the Corporation into which such stock
is reclassified or reconstituted.

          "Conversion Limit" shall mean the limitation set forth in Section
7(1).

          "Current Market Price" per share shall mean, on any date specified
herein for the determination thereof, (a) the average daily Market Price of the
Common Stock for those days during the period of 20 days, ending on such date,
which are Trading Days, and (b) if the Common Stock is not then listed or
admitted to trading on any national securities exchange or quoted in the
over-the-counter market, the Market Price on such date.

          "Drawdown Date" shall mean September 18, 2001.

          "Effective Date" shall mean July 2, 2001.

          "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Securities and Exchange Commission
thereunder.

          "Fair Market Value" shall mean the amount which a willing buyer, under
no compulsion to buy, would pay a willing seller, under no compulsion to sell,
in an arm's-length transaction (assuming that the Common Stock is valued "as if
fully distributed" so that, among other things, there is no consideration given
for minority investment discounts or discounts related to illiquidity or
restrictions on transferability).


                                      -12-
<PAGE>
          "GAAP" shall mean the generally accepted United States accounting
principles in effect from time to time.

          "Investment Agreement" shall mean the Stock and Warrant Purchase
Agreement, dated July 2, 2001 between the Corporation. The 1818 Fund III, L.P.
and the other persons listed therein, as the same may be amended from time to
time.

          "Issue Date" shall mean, with respect to any share of Series G
Preferred, the original date of issuance of such share of Series G Preferred
pursuant to the Investment Agreement.

          "Liquidation Preference" with respect to a share of Series G Preferred
shall mean $100,000.

          "Market Price" shall mean, per share of Common Stock on any date
specified herein: (a) the closing price per share of the Common Stock on such
date published in The Wall Street Journal or, if no such closing price on such
date is published in The Wall Street Journal, the average of the closing bid and
asked prices on such date, as officially reported on the principal national
securities exchange on which the Common Stock is then listed or admitted to
trading; (b) if the Common Stock is not then listed or admitted to trading on
any national securities exchange but is designated as a national market system
security, the last trading price of the Common Stock on such date; or (c) if
there shall have been no trading on such date or if the Common Stock is not so
designated, the average of the reported closing bid and asked prices of the
Common Stock on such date as shown by NASDAQ and reported by any member firm of
the NYSE, selected by the Corporation. If neither (a), (b) nor (c) is
applicable, Market Price shall mean the Fair Market Value per share determined
in good faith by the Board of Directors of the Corporation which shall be deemed
to be Fair Market Value unless holders of at least 50% of the outstanding
shares of Series G Preferred request that the Corporation obtain an opinion of a
nationally recognized investment banking firm chosen by such holders and the
Corporation (at the Corporation's expense), in which event Fair Market Value
shall be as determined by such investment banking firm.

          "NASDAQ" shall mean the National Market System of the Nasdaq Stock
Market.

          "NYSE" shall mean the New York Stock Exchange, Inc.

          "Person" shall mean any individual, firm, corporation, partnership,
limited liability company trust, incorporated or unincorporated association,
joint venture, joint stock company, government (or an agency or political
subdivision thereof) or other entity of any kind, and shall any successor (by
merger) of such entity.

          "Pre-Stockholder Approval Number" shall mean as of any date 20% of the
number of shares of Common Stock issued and outstanding prior to the Effective
Date (subject to adjustment to reflect stock splits, stock dividends, stock
combinations, recapitalizations and like occurrences), rounded down to the
nearest whole number of shares, minus the sum of (x) the number of shares of
Common Stock then issuable upon exercise of all then-outstanding warrants issued
pursuant to the Investment Agreement (the "Warrants"), plus (y) the number of
shares of


                                      -13-
<PAGE>
Common Stock previously issued upon exercise of the Warrants, if any, plus (z)
one in the case of both (x) and (y) rounded down to the nearest whole number.

          "Stockholder Approval" shall mean the vote, by a majority of the votes
cast in the stockholder vote, in favor of approval of the matter considered in
such vote.

          "Stockholder Approval Certification Date" shall mean earlier of (i)
the date that the Stockholder Meeting occurred and that Stockholder Approval has
been obtained, or (ii) the date of a certificate, delivered by the Corporation
to each registered holder of Series G Preferred, signed by the President or a
Vice-President and by the Secretary or an Assistant Secretary of the
Corporation, Stating that the Corporation has determined that the Corporation is
not required by any Law or by any NASDAQ Rule to obtain stockholder Approval,
the basis for such determination, and that the Corporation has then confirmed
that such determination is acceptable to Persons holding a majority of the then
outstanding shares of Series G Preferred.

          "Stockholder Meeting" shall mean a special meeting of the
Corporation's stockholders, duly called and convened, at which a quorum is
present throughout and at which the Stockholder Vote is conducted.

          "Stockholder Vote" shall mean a vote, by those of the Corporation's
stockholders entitled to vote thereon, on the matter of approval of the terns
of the Investment Agreement and of the Series G Preferred.

          "Subsidiary" shall mean, with respect to any Person, a corporation or
other entity of which 50% or more of the voting power of the voting equity
securities or equity interest is owned, directly or indirectly, by such Person.

          "Trading Days" shall mean a day on which the national securities
exchanges are open for trading.

Section 11. Modification at Amendment.

          Except as specifically set forth herein, modifications or amendments
to this Certificate of Designation may be made by the Corporation with the
consent of the holders of at least 50% of the outstanding shares of Series G
Preferred.


                                      -14-
<PAGE>
     IN WITNESS WHEREOF, Z-TEL TECHNOLOGIES, INC. has caused this Amended
Certificate of Designations, Preferences and Relative Rights, Qualifications,
Limitations and Restrictions to be signed this 29th day of November, 2004.

                                      Z-TEL TECHNOLOGIES, INC.


                                      By: /s/ Trey Davis
                                          ------------------------------------
                                      Name: Trey Davis
                                      Title: Acting Chief Executive Officer,
                                             Treasurer and Executive Vice
                                             President - Chief Financial Officer
<PAGE>
                                                 (      State of Delaware      )
                                                 (      Secretary of State     )
                                                 (   Division of Corporations  )
                                                 (Delivered 11:09 PM 11/29/2004)
                                                 (  FILED 11:09 PM 11/29/2004  )
                                                 ( SRV 040855817 - 2873445 FILE)

                            CERTIFICATE OF AMENDMENT

                                     OF THE

                AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

                                       OF

                            Z-TEL TECHNOLOGIES, INC.

          Z-TEL TECHNOLOGIES, INC., a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware (the
"DGCL"), hereby certifies as follows:

          FIRST: The name of the Corporation is Z-TEL TECHNOLOGIES, INC. (the
"Corporation").

          SECOND: Article IV of the Corporation's current Restated Certificate
of Incorporation, as amended, is hereby amended to include the following text as
Subsection C to Article IV:

     "C. Upon this Certificate of Amendment to the Amended and Restated
Certificate of Incorporation of the corporation becoming effective in accordance
with the General Corporation Law of the State of Delaware (the "Effective
Time"), each five (5) shares of Common Stock, par value $.01 per share, of the
corporation ("Old Common Stock") issued and outstanding immediately prior to the
Effective Time shall be automatically reclassified as and converted into one (1)
share of Common Stock, par value $.01 per share, of the corporation ("New Common
Stock").

     Notwithstanding the immediately preceding sentence, no fractional shares of
New Common Stock shall be issued in connection with the foregoing
reclassification of shares of Old Common Stock. In lieu thereof, upon surrender
after the Effective Time of a certificate formerly representing shares of Old
Common Stock, the corporation shall pay to the holder of the certificate an
amount in cash at a price equal to the fraction to which the stockholder would
otherwise be entitled multiplied by the closing price of the Common Stock, as
reported in the Wall Street Journal, on the first trading date after the date on
which the Effective Time occurs.

     Each stock certificate that, immediately prior to the Effective Time,
represented shares of Old Common Stock shall, from and after the Effective Time,
automatically and without the
<PAGE>
          IN WITNESS WHEREOF, Z-TEL TECHNOLOGIES,INC. has caused this
certificate of Amendment to be signed this 29th day of November, 2004.

                                        Z-TEL TECHNOLOGIES, INC.


                                        BY: /s/ Trey Davis
                                            ------------------------------------
                                            Name: Trey Davis
                                            Title: Acting Chief Executive
                                                   Officer, Treasure and
                                                   Executive Vice President -
                                                   Chief Financial Officer
<PAGE>
(      State of Delaware      )
(      Secretary of State     )
(   Division of Corporations  )
(Delivered 11:15 PM 11/29/2004)
(  FILED 11:15 PM 11/29/2004  )
( SRV 040855819 - 2873445 FILE)

                            Z-TEL TECHNOLOGIES, INC.

                      AMENDED CERTIFICATE OF DESIGNATIONS,
                PREFERENCES AND RELATIVE RIGHTS, QUALIFICATIONS,
                          LIMITATIONS AND RESTRICTIONS

                      SERIES D CONVERTIBLE PREFERRED STOCK

          Pursuant to the Delaware General Corporation Law, Z-Tel Technologies,
Inc., a Delaware corporation (the "Corporation"), DOES HEREBY CERTIFY:

          FIRST: That pursuant to the authority conferred upon the Board of
Directors of the Corporation by the Certificate of Incorporation of the
Corporation (the "Charter"), the Board of Directors of the Corporation on June
30, 2000 duly adopted resolutions creating a series of Preferred Stock
designated as Series D Convertible Preferred Stock (the "Series D Preferred").

          SECOND: Resolutions, setting forth a proposed Amended Certificate of
Designation of Series D Preferred (the "Amended Certificate"), declaring the
Amended Certificate to be advisable and directing that this Amended Certificate
be considered by the stockholders of the Corporation entitled to vote thereon,
were duly adopted by the Board of Directors of the Corporation.

          THIRD: Thereafter, the Amended Certificate was approved at a special
meeting, duly called and convened in accordance with Section 222 of the General
Corporation Law of the State of Delaware on October 4, 2004, by vote in respect
thereof of the requisite percentage of the stockholders of the Corporation
entitled to vote thereon.

          FOURTH: The Amended Certificate was duly adopted in accordance with
Section 242 of the General Corporation Law of the State of Delaware.

          FIFTH: For accounting purposes only, the Amended Certificate will be
effective as of 5:01 p.m. eastern time on November 29, 2004.

          SIXTH: The Amended Certificate amends the Corporation's Certificate of
Designation of Series D Preferred, as amended, in its entirety and hereby
replaces it with the following:

          1.   General.

          (a) Authorization. The series of authorized preferred stock shall have
a par value of $0.01 per share, shall be designated as "Series D Convertible
Preferred Stock," and shall consist of five million (5,000,000) shares and shall
have the powers, designations, preferences
<PAGE>
and relative, participating, optional and other special rights, qualifications,
limitations and restrictions set forth herein.

          (b) Certain Definitions. Unless the context otherwise requires, in
addition to the terms defined elsewhere herein, the terms defined in this
Section 1 shall have, for all purposes of this resolution, the meanings herein
specified when used herein with initial capital letters (with terms defined in
the singular having comparable meanings when used in the plural).

          "Common Stock" shall mean the common stock, $.01 par value per share,
of the Corporation.

          "Stock Purchase Agreement" means the Stock Purchase Agreement, dated
July 6, 2000, by and among the Corporation, the Holder and the other investors
named on Schedule I thereto.

          2.   Dividends and Distributions.

          (a) Series D Dividends. The holders of record of shares of Series D
Preferred shall be entitled to receive dividends at a rate of eight percent (8%)
of the Liquidation Preference (as defined herein) per annum per share of Series
D Preferred (the "Series D Dividend"), which shall be fully cumulative. The
Series D Dividend shall accrue from the date of issuance of each share until the
earlier of (i) the conversion of such share of Series D Preferred to Common
Stock, (ii) a Liquidation (as defined herein), or (iii) the repurchase or
redemption of such share of Series D Preferred. Such dividend shall be payable
quarterly in arrears on March 31, June 30, September 30 and December 31 of each
year (each a "Series D Dividend Date") commencing on September 30, 2000, except
that if any such date is a Saturday, Sunday or legal holiday (a "Non-Business
Day"), then such dividend shall be payable on the next day that is not a
Saturday, Sunday or legal holiday on which banks in the State of Delaware are
permitted to be closed (a "Business Day") to holders of record as they appear on
the stock ledger of the Corporation on the applicable record date, which shall
be not more than sixty (60) nor less than ten (10) days preceding the payment
date for such dividends, as fixed by the Board of Directors (the "Series D
Record Date"). Series D Dividends shall be payable only when, as and if declared
by the Board of Directors out of funds legally available therefor. The dividends
shall either be payable in (i) shares of Series D Preferred or (ii) cash, as
provided in the next paragraph. The dividends shall automatically accrue in the
absence of an election by the Board of Directors within sixty (60) days after
each Series D Dividend Date to pay the dividends. The amount of dividends
payable for any period that is shorter or longer than a full annual dividend
shall be computed on the basis of a 360-day year and the actual number of days
elapsed (including the first day but excluding the last day) occurring in the
period for which such amount is payable. All accrued but unpaid dividends
(whether declared or undeclared) shall accrue interest at a rate of ten percent
(10%) per annum computed on the basis of a 360-day year and the actual number of
days elapsed (including the first day but excluding the last day) occurring in
the period for which such amount is payable, but with interest on such dividend
compounded on a quarterly basis (on each March 31, June 30, September 30 and
December 31) for the year during which such dividend was payable, and thereafter
until paid. If the Series D Dividend cannot be paid in full, dividends shall be
paid, to the maximum possible extent, to the holders of the Series D Preferred
pro rata on the basis of the amount of accrued and unpaid dividends outstanding
on each share.
<PAGE>
          (b) Cash Dividends; In-Kind Dividends. Dividends that are declared and
payable on each September 30 shall be paid in cash. Until the fifth anniversary
of July 13, 2000 (the "Original Issue Date") (or, if such day is not a business
day, on the first business day thereafter), dividends that are declared and
payable on each March 31, June 30 and December 31 shall be paid in shares of
Series D Preferred (each, a "Series D Payment-in Kind") rather than cash,
valuing each such share issued at the Liquidation Preference. Thereafter, all
dividends that are declared and payable shall be paid in cash.

          3. Liquidation Rights. In the event of any liquidation, dissolution or
winding-up of the Corporation, whether voluntary or involuntary (a
"Liquidation"), the Liquidation Preference of the Series D Preferred shall be
$12.00 per share. The Liquidation Preference shall not be subject to adjustment.
In the event of a Liquidation, the holders of the outstanding Series D
Preferred, subject to the other terms contained herein, shall be entitled to be
paid first out of the assets of the Corporation available for distribution to
holders of its capital stock an amount (the "Liquidation Value") equal to (i)
the applicable liquidation Preference, plus (ii) all accrued but unpaid
dividends (whether declared or undeclared including any interest accrued thereon
calculated through the date of Liquidation), prior to any distribution to the
holders of any Common Stock. If the proceeds from a Liquidation are not
sufficient to pay to the holders of Series D Preferred then such holders shall
instead be entitled to receive, pro rata with the holders of all other series of
preferred stock of the Corporation, the entire assets and funds of the
Corporation legally available for distribution to the holders of capital stock,
which assets and funds shall be distributed pro rata among the holders of the
Series D Preferred on the basis of the amounts per share to be paid to each.
After payment of the full preferential amount, such holders shall not be
entitled to any further participation in any distribution of assets of the
Corporation.

          4. Conversion. The Series D Preferred are subject to conversion rights
as follows (the "Conversion Rights"):

          (a) Conversion at Option of the Holder; Conversion at Option of the
     Company. Each share of Series D Preferred shall initially be convertible,
     at the option of the holder thereof, at any time on or after the date of
     issuance thereof and up to and including the day immediately preceding the
     Mandatory Redemption Date, into the number of fully paid and nonassessable
     shares of Common Stock which results from dividing the applicable
     Conversion Price (as hereinafter specified) per share in effect at the time
     of conversion into the applicable per share Liquidation Preference in
     effect at the time of conversion. The initial Conversion Price of the
     Series D Preferred after giving effect to the exchange offer and the
     amendments to the Corporation's certificate of incorporation each as
     described in the Corporation's proxy statement dated November 2, 2004
     (collectively, the "Transactions") shall be $[8.47] per share. The initial
     Conversion Price of the Series D Preferred shall be subject to adjustment
     from time to time as provided in Section 4(c) hereof, Upon conversion, all
     accrued or declared but unpaid dividends (including any interest accrued
     thereon calculated as of the date of conversion) on the Series D Preferred
     so converted shall be paid in Common Stock. In making such payment, the
     number of shares of Common Stock will be determined by dividing the
     applicable Conversion Price per share in effect at the time of conversion
     into the amount of the accrued or declared but unpaid dividends (including
     any interest accrued thereon calculated as of the date of conversion). Such
     shares of Common Stock will be fully paid and nonassessable.
<PAGE>
          At any time that the closing price of the Common Stock on The Nasdaq
     Stock Market (or on the exchange or quotation system on which the
     Corporation's Common Stock is then traded) as reported in The Wall Street
     Journal (such price on a given day, referred to as the "Current Market
     Price" for such day) equals or exceeds two (2) times the then-applicable
     Conversion Price for twenty (20) or more consecutive trading days beginning
     on or after July 13, 2002, then, beginning on the day following the 20th
     such consecutive trading day and ending sixty (60) calendar days after the
     last such consecutive trading day, the Corporation shall have the right to
     convert all, but not less than all, of the shares of Series D Preferred
     into shares of Common Stock, with each share of Series D Preferred
     converting into the number of fully paid and nonassessable shares of Common
     Stock which results from dividing the applicable Conversion Price per share
     in effect at the time of conversion into the applicable per share
     Liquidation Preference in effect at the time of conversion.

          (b) Mechanics of Conversion at the Option of the Holder. Before any
     holder of Series D Preferred shall be entitled to convert the same into
     shares of Common Stock and to receive certificates therefor, such holder
     shall surrender the certificate or certificates therefore, duly endorsed,
     at the principal office of the Corporation or of any transfer agent for the
     Series D Preferred and shall give written notice to the Corporation at such
     office that such holder elects to convert the same. The Corporation shall
     as soon as practicable after such delivery issue and deliver at such office
     to such holder of Series D Preferred a certificate or certificates for the
     number of shares of Common Stock to which it, he or she shall be entitled
     as aforesaid. Such conversion shall be deemed to have been made immediately
     prior to the close of business on the date of such surrender of the shares
     of Series D Preferred and the person or persons entitled to receive the
     shares of Common Stock issuable upon such conversion shall be treated for
     all purposes as the record holder or holders of such shares of Common Stock
     on such date.

          (c) Adjustments to Conversion Price. If the Corporation shall, while
     shares of Series D Preferred remain outstanding, (i) pay a dividend, or
     make a distribution to holders of Common Stock, in either case in shares of
     its Common Stock, (ii) subdivide its outstanding shares of Common Stock,
     (iii) combine its outstanding shares of Common Stock into a smaller number
     of shares or (iv) issue by reclassification of its shares of Common Stock
     any shares of capital stock of the Corporation, in each case, at any time
     after consummation of the Transactions, then thereafter the Conversion
     Price shall be automatically (and without notice or further action)
     increased or decreased, as the case may be, in direct proportion to the
     increase or decrease in the number of shares of Common Stock by reason of
     such change, so that the aggregate Conversion Price of shares of Series D
     Preferred shall be unchanged by such change.

          (d) Status of Converted Stock. In case any shares of Series D
     Preferred shall be converted pursuant to Section 4 hereof, the shares so
     converted shall be canceled, shall not be reissuable and shall cease to be
     a part of the authorized capital stock of the Corporation.

          (e) Fractional Shares, In lieu of any fractional shares in the
     aggregate to which the holder of Series D Preferred would otherwise be
     entitled upon conversion, the
<PAGE>
     Corporation shall pay cash equal to such fraction multiplied by the fair
     market value of one share of Common Stock.

          (f) Miscellaneous.

          (i) All calculations under this Section 4 shall be made to the nearest
     cent or to the nearest one hundredth (1/100) of a share, as the case may
     be.

          (ii) The determination of the Board of Directors of adjustments
     pursuant to this Section 4 shall, absent manifest error, be final on all
     holders of Series D Preferred,

          (iii) No adjustment in the applicable Conversion Price of the Series D
     Preferred will be made if such adjustment would result in a change in such
     Conversion Price of less than $0.01. Any adjustment of less than $0.01
     which is not made shall be carried forward and shall be made at the time of
     and together with any subsequent adjustment which, on a cumulative basis,
     amounts to an adjustment of $0.01 or more in such Conversion Price.

          (g) No Impairment. The Corporation will not through any
     reorganization, recapitalization, transfer of assets, consolidation,
     merger, dissolution, issue or sale of securities or any other voluntary
     action, avoid or seek to avoid the observance or performance of any of the
     terms to be observed or performed hereunder by the Corporation, but will at
     all times in good faith assist in the carrying out of all the provisions of
     this Section 4 and in the taking of all action as may be necessary or
     appropriate in order to protect the conversion rights of the holders of
     Series D Preferred against impairment.

          (i) Reservation of Stock Issuable Upon Conversion. The Corporation
     shall at all times reserve and keep available out of its authorized but
     unissued shares of Common Stock, solely for the purpose of effecting the
     conversion of the shares of Series D Preferred such number of its shares of
     Common Stock as shall from time to time be sufficient to effect the
     conversion of all outstanding shares of Series D Preferred. If at any time
     the number of authorized but unissued shares of Common Stock shall not be
     sufficient to effect the conversion of all then outstanding shares of
     Series D Preferred the Corporation will take such corporate action as may,
     in the opinion of its counsel, be necessary to increase its authorized but
     unissued shares of Common Stock to such number of shares as shall be
     sufficient for such purpose.

          5. Voting Rights. Except as otherwise required by law, the holder of
each share of Series D Preferred will be entitled to vote on all matters with
the holders of the Common Stock as a single class, and not as a separate class
or series. Each share of Series D Preferred will entitle the holder to the
number of votes per share equal to the full number of shares of Common Stock
into which such share of Series D Preferred is convertible on the record date
for such vote. The holders of Series D Preferred shall receive notice of and
shall be entitled to attend in person or by proxy any meeting of the holders of
Common Stock.

          6. Notices of Certain Record Dates. In the event of any taking by the
Corporation of a record of the holders of any class of securities for me purpose
of determining the holders thereof who are entitled to receive any dividend or
other distribution, any right to sub-
<PAGE>
scribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right, the Corporation
shall mail to each holder of Series D Preferred at least twenty (20) days prior
to the record date specified therein, a notice specifying the date on which any
such record is to be taken for the purpose of such dividend, distribution or
right, and the anticipated amount and character of such dividend, distribution
or right.

          7. Notices. Any notice required by the provisions of this Amended or
Restated Certificate to be given to the holders of Series D Preferred shall be
deemed given (i) when made, if made by hand delivery, (ii) upon confirmation, if
made by fax, or (iii) one business day after being deposited with a reputable
next-day courier, postage prepaid, and in each case, addressed to each holder of
record at such holder's address or fax number appearing on the books of the
Corporation.

          8. Redemption.

          (a) The Corporation may at its option redeem the Series D Preferred in
whole or in part, at any time or from time to time, upon at least thirty days'
prior notice, at a redemption price equal to the percentage of the Liquidation
Preference per share of Series D Preferred set forth below, plus any accumulated
unpaid dividends (whether or not declared) up to but excluding such redemption
date. Shares so redeemed shall be cancelled and upon such cancellation shall be
deemed to be authorized and unissued shares of Preferred Stock, without par
value, of the Corporation but shall not be reissued as shares of the same
series.

<TABLE>
<CAPTION>
If Redeemed on or After the An-   And Redeemed Before the Anniver-
niversary of the Original Issue    sary of the Original Issue Date   Percent of Liquida-
       Date Occurring In                    Occurring In               tion Preference
-------------------------------   --------------------------------   -------------------
<S>                               <C>                                <C>
              2004                              2005                         104%
              2005                              2006                         103%
              2006                              2007                         102%
              2007                              2008                         101%
</TABLE>

          (b) Mandatory Redemption. To the extent permitted by law, the
Corporation shall redeem, on the eighth anniversary of the Original Issue Date
(or, if such day is not a business day, on the first business day thereafter)
(the "Mandatory Redemption Date"), all remaining shares of Series D Preferred
then outstanding, for an amount equal to the Liquidation Preference for each
share outstanding, plus an amount in cash equal to all accrued but unpaid
dividends thereon to the Mandatory Redemption Date (the "Redemption Price").
Prior to authorizing or making such redemption with respect to the Series D
Preferred, the Corporation, by resolution of the Board of Directors shall, to
the extent of funds legally available therefor, declare a dividend on the Series
D Preferred payable on the Mandatory Redemption Date in an amount equal to any
accrued and unpaid dividends on the Series D Preferred as of such date and, if
the Corporation does not have sufficient legally available funds to declare and
pay all dividends accrued at the time of such redemption, any remaining accrued
and unpaid dividends shall be added to the redemption price. After paying any
accrued and unpaid dividends pursuant to the foregoing sentence, if the funds of
the Corporation legally available for redemption of shares of the Series D
<PAGE>
Preferred then required to be redeemed are insufficient to redeem the total
number of such shares then outstanding, those funds which are legally available
shall be used to redeem the maximum possible number of shares of the Series D
Preferred which, shares to be redeemed shall be allocated pro rata among the
holders of the Series D Preferred based on the number of shares of Series D
Preferred held by such holders. At any time and from time to time thereafter,
when additional funds of the Corporation are legally available to discharge its
obligation to redeem all of the outstanding shares of Series D Preferred
required to be redeemed pursuant to this Section (the "Mandatory Redemption
obligation"), such funds shall be immediately used to discharge such Mandatory
Redemption Obligation until the balance of such shares have been redeemed. If
and so long as the Mandatory Redemption Obligation shall not be fully
discharged, dividends on any remaining outstanding shares of Series D Preferred
shall continue to accrue and be added to the dividend payable pursuant to the
second preceding sentence.

          (c) Notice. The Corporation will provide notice of any redemption of
shares of Series D Preferred to holders of record of the Series D Preferred to
be redeemed not less than 30 nor more than 60 days prior to the date fixed for
such redemption. Such notice shall be provided by first-class mail postage
prepaid, to each holder of record of the Series D Preferred to be redeemed, at
such holder's address as it appears on the stock transfer books of the
Corporation. Each such mailed notice shall state, as appropriate, the following:

          (i) the redemption date;

          (ii) the number of shares of Series D Preferred to be redeemed and, if
     fewer than all the shares held by any holder are to be redeemed, the number
     of such shares to be redeemed from such holder;

          (iii) the Redemption Price;

          (iv) the place or places where certificates for such shares are to be
     surrendered for redemption;

          (v) the amount of full cumulative dividends per share of Series D
     Preferred to be redeemed accrued and unpaid up to but excluding such
     redemption date, and that dividends on shares of Series D Preferred to be
     redeemed will cease to accrue on such redemption date unless the
     Corporation shall default in payment of the Redemption Price plus such full
     cumulative dividends accrued and unpaid thereon;

          (vi) the name and location of any bank or trust company with which
     the Corporation will deposit redemption funds pursuant to subsection (e)
     below;

          (vii) the then-effective Conversion Price; and

          (viii) that the right of holders to convert shares of Series D
     Preferred to be redeemed will terminate at the close of business on the
     business day next preceding the date fixed for redemption (unless the
     Corporation shall default in the payment of the Redemption Price and such
     full cumulative dividends accrued and unpaid thereon).
<PAGE>
Any notice that is mailed as set forth above shall be conclusively presumed to
have been duly given, whether or not the holder of shares of Series D Preferred
receives such notice, and failure to give such notice by mail, or any defect in
such notice, to the holders of any shares designated for redemption shall not
affect the validity of the proceedings for the redemption of any other shares of
Series D Preferred.

          (d) Mechanics of Redemption. Upon surrender in accordance with the
aforesaid notice of the certificate for any shares so redeemed (duly endorsed or
accompanied by appropriate instruments of transfer if so required by the
Corporation), the holders of record of such shares shall be entitled to receive
the redemption price, without interest, plus full cumulative dividends thereon
accrued and unpaid up to but excluding such redemption date out of funds legally
available therefor, If fewer than all the shares represented by any such
certificate are redeemed, a new certificate representing the unredeemed shares
shall be issued without cost to the holder thereof.

          (e) Redemption Funds. On the date of any redemption being made
pursuant to this Section, the Corporation shall, and at any time after notice of
such redemption shall have been mailed and before the date of redemption the
Corporation may, deposit for the benefit of the holders of shares of Series D
Preferred to be redeemed the funds necessary for such redemption with a bank or
trust company having a capital and surplus of at least $1 billion, with
instructions to such bank or trust company to pay the full redemption amounts as
provided herein to the holders of shares of Series D Preferred upon surrender of
certificates for such shares; provided, however, that the making of such deposit
shall not release the Corporation from any of its obligations hereunder. Any
moneys so deposited by the Corporation and unclaimed at the end of two years
from the date designated for such redemption shall revert to the general funds
of the Corporation and, upon demand, such bank or trust company shall pay over
to the Corporation such unclaimed amounts and thereupon such bank or trust
company shall be relieved of all responsibility in respect thereof and any
holder of shares of Series D Preferred so redeemed shall look only to the
Corporation for the payment of the full redemption amounts, as provided herein.

          (f) Rights After Redemption. Notice of redemption having been given as
aforesaid, upon the deposit pursuant to subsection (e) of the full redemption
amounts as provided herein in respect of all shares of Series D Preferred then
to be redeemed, notwithstanding that any certificates for such shares shall not
have been surrendered in accordance with subsection (d), from and after the date
of redemption designated in the notice of redemption: (i) the shares represented
thereby shall no longer be deemed outstanding, (ii) the rights to receive
dividends thereon shall cease to accrue, and (iii) all rights of the holders of
such shares of Series D Preferred shall cease and terminate, excepting only the
right to receive the full redemption amounts as provided herein without interest
thereon. If the funds deposited are not sufficient for redemption of the shares
of the Series D Preferred that were to be redeemed, then no certificates
evidencing such shares shall be deemed surrendered and such shares shall remain
outstanding and the rights of holders of shares of Series D Preferred shall
continue to be those of holders of shares of the Series D Preferred.

          9. Headings and 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.
<PAGE>
          10. Severability of Provisions. If any voting powers, preferences and
relative, participating, optional and other special rights of the Series D
Preferred and qualifications, limitations and restrictions thereof set forth in
this resolution (as such resolution may be amended from time to time) are
invalid, unlawful or incapable of being enforced by reason of any rule of law or
public policy, all other voting powers, preferences and relative, participating,
optional and other special rights of the Series D Preferred and qualifications,
limitations and restrictions thereof set forth in this resolution (as so
amended) which can be given effect without the invalid, unlawful or
unenforceable voting powers, preferences and relative, participating, optional
and other special rights of the Series D Preferred and qualifications,
limitations and restrictions thereof shall, nevertheless, remain in full force
and effect, and no voting powers, preferences and relative, participating,
optional or other special rights of the Series D Preferred and qualifications,
limitations and restrictions thereof herein set forth shall be deemed dependent
upon any other such powers, preferences and relative, participating, optional or
other special rights of the Series D Preferred and qualifications, limitations
and restrictions thereof unless so expressed herein.
<PAGE>
          IN WITNESS WHEREOF, Z-TEL TECHNOLOGIES, INC. has caused this Amended
Certificate of Designations, Preferences and Relative Rights, Qualifications,
limitations and Restrictions to be signed this 29th day of November, 2004.

                                        Z-TEL TECHNOLOGIES, INC.


                                        By: /s/ Trey Davis
                                            ------------------------------------
                                            Name: Trey Davis
                                            Title: Acting Chief Executive
                                                   Officer, Treasurer and
                                                   Executive Vice President-
                                                   Chief Financial Officer
<PAGE>
                            CERTIFICATE OF AMENDMENT
                           OF THE AMENDED AND RESTATED
                         CERTIFICATE OF INCORPORATION OF
                            Z-TEL TECHNOLOGIES, INC.

          Pursuant to the Delaware General Corporation LAW, Z-Tel Technologies,
Inc., a Delaware corporation (the "Corporation"), DOES HEREBY CERTIFY:

          FIRST: That pursuant to the authority conferred upon the Board of
Directors of the Corporation by the Certificate of Incorporation of the
Corporation (the "Charter"), the Board of Directors of the Corporation on
October 17, 2000, duly adopted resolutions creating a series of Preferred Stock
designated as 8% Convertible Preferred Stock, Series E (the "Series E
Convertible Preferred Stock"), the terms of which were subsequently amended by
the Amended and Restated Certificate of Designation, dated July 2, 2001 and the
Certificate of Amendment dated March 11, 2003 (as amended, the "Certificate of
Designation").

          SECOND: Resolutions, setting forth this proposed Certificate of
Amendment (the "Certificate of Amendment"), declaring this Certificate of
Amendment to be advisable and directing that this Certificate of Amendment be
considered by the stockholders of the Corporation entitled to vote thereon, were
duly adopted by the Board of Directors of the Corporation.

          THIRD: Thereafter, this Certificate of Amendment was approved at a
special meeting, duly called and convened in accordance with Section 222 of the
General Corporation Law of the State of Delaware on October 4, 2004, by vote in
respect thereof of the requisite percentage of the stockholders of the
Corporation entitled to vote thereon.

          FOURTH: This Certificate of Amendment was duly adopted in accordance
with Section 242 of the General Corporation Law of the State of Delaware.

          FIFTH: The Corporation has acquired all of the outstanding shares of
the Series E Convertible Preferred Stock through an exchange offer completed on
November 29, 2004,

          SIXTH: This Certificate of Amendment amends the Amended and Restated
Certificate of Incorporation of the Corporation by eliminating the Certificate
of Designation in its entirety.

          SEVENTH: This Certificate of Amendment shall be effective as of 9:00
a.m. eastern time on November 30, 2004.

                                                 (      State of Delaware      )
                                                 (     Secretary of State      )
                                                 (  Division of Corporations   )
                                                 (Delivered 08:52 AM 11/30/2004)
                                                 (  FILED 08:52 AM 11/30/2004  )
                                                 (SRV 040855998 - 2873445 FILE )
<PAGE>
          IN WITNESS WHEREOF, Z-TEL TECHNOLOGIES, INC. has caused this
Certificate of Amendment to be signed this 29th day of November, 2004.

                                        Z-TEL TECHNOLOGIES, INC.


                                        By: /s/ Trey Davis
                                            ------------------------------------
                                            Name: Trey Davis
                                            Title: Acting Chief Executive
                                                   Officer, Treasurer and
                                                   Executive Vice President-
                                                   Chief Financial Officer
<PAGE>
                            CERTIFICATE OF AMENDMENT
                           OF THE AMENDED AND RESTATED
                         CERTIFICATE OF INCORPORATION OF
                            Z-TEL TECHNOLOGIES, INC.

          Pursuant to the Delaware General Corporation Law, Z-Tel Technologies,
Inc., a Delaware corporation (the "Corporation"), DOES HEREBY CERTIFY:

          FIRST: That pursuant to the authority conferred upon the Board of
Directors of the Corporation by the Certificate of Incorporation of the
Corporation (the "Charter"), the Board of Directors of the Corporation on June
30, 2000 duly adopted resolutions creating a series of Preferred Stock
designated as Series D Convertible Preferred Stock (the "Series D Convertible
Preferred Stock"), the terms of which were subsequently amended by the
Certificate of Amendment dated March 11, 2003 and November 29, 2004 (as amended,
the "Certificate of Designation").

          SECOND: Resolutions, setting forth this proposed Certificate of
Amendment (the "Certificate of Amendment"), declaring this Certificate of
Amendment to be advisable and directing that this Certificate of Amendment be
considered by the stockholders of the Corporation entitled to vote thereon, were
duly adopted by the Board of Directors of the Corporation,

          THIRD: Thereafter, this Certificate of Amendment was approved at a
special meeting, duly called and convened in accordance with Section 222 of the
General Corporation Law of the State of Delaware on October 4, 2004, by vote in
respect thereof of the requisite percentage of the stockholders of the
Corporation entitled to vote thereon.

          FOURTH: This Certificate of Amendment was duly adopted in accordance
with Section 242 of the General Corporation Law of the State of Delaware.

          FIFTH The Corporation has acquired all of the outstanding shares of
the Series D Convertible Preferred Stock through art exchange offer completed on
November 29, 2004,

          SIXTH: This Certificate of Amendment amends the Amended and Restated
Certificate of Incorporation of the Corporation by eliminating the Certificate
of Designation in its entirety.

          SEVENTH: This Certificate of Amendment shall be effective as of 9:01
a.m. eastern time on November 30, 2004.

(      State of Delaware      )
(      Secretary of State     )
(   Division of Corporations  )
(Delivered 08:52 AM 11/30/2004)
(  FILED 08:53 AM 11/30/2004  )
(SRV 040855999 - 2873445 FILE )
<PAGE>
          IN WITNESS WHEREOF, Z-TEL TECHNOLOGIES, INC. has caused this
Certificate of Amendment to be signed this 29th day of November, 2004.

                                        Z-TEL TECHNOLOGIES, INC.


                                        By: /s/ Trey Davis
                                            ------------------------------------
                                            Name: Trey Davis
                                            Title: Acting Chief Executive
                                                   Officer, Treasurer and
                                                   Executive Vice President-
                                                   Chief Financial Officer
<PAGE>
                            CERTIFICATE OF AMENDMENT
                           OF THE AMENDED AND RESTATED
                         CERTIFICATE OF INCORPORATION OF
                            Z-TEL TECHNOLOGIES, INC.

          Pursuant to the Delaware General Corporation Law, Z-Tel Technologies,
Inc., a Delaware corporation (the "Corporation"), DOES HEREBY CERTIFY:

          FIRST: That pursuant to the authority conferred upon the Board of
Directors of the Corporation by the Certificate of Incorporation of the
Corporation (the "Charter"), the Board of Directors of the Corporation on June
30, 2000 duly adopted resolutions creating a series of Preferred Stock
designated as Series D Convertible Preferred Stock (the "Series D Convertible
Preferred Stock"), the terms of which were subsequently amended by the
Certificate of Amendment dated March 11, 2003 and November 29, 2004 (as amended,
the "Certificate of Designation").

          SECOND: Resolutions, setting forth this proposed Certificate of
Amendment (the "Certificate of Amendment"), declaring this Certificate of
Amendment to be advisable and directing that this Certificate of Amendment be
considered by the stockholders of the Corporation entitled to vote thereon, were
duly adopted by the Board of Directors of the Corporation.

          THIRD: Thereafter, this Certificate of Amendment was approved at a
special meeting, duly called and convened in accordance with Section 222 of the
General Corporation Law of the State of Delaware on October 4, 2004, by vote in
respect thereof of the requisite percentage of the stockholders of the
Corporation entitled to vote thereon.

          FOURTH: This Certificate of Amendment was duly adopted in accordance
with Section 242 of the General Corporation Law of the State of Delaware.

          FIFTH: The Corporation has acquired all of the outstanding shares of
the Series D Convertible Preferred Stock through an exchange offer completed on
November 29, 2004.

          SIXTH: This Certificate of Amendment amends the Amended and Restated
Certificate of Incorporation of the Corporation by eliminating the Certificate
of Designation in its entirety.

          SEVENTH: This Certificate of Amendment shall be effective as of 9:02
a.m. eastern time on November 30, 2004.

                                                 (      State of Delaware      )
                                                 (     Secretary of State      )
                                                 (  Division of Corporations   )
                                                 (Delivered 08:52 AM 11/30/2004)
                                                 (  FILED 08:54 AM 11/30/2004  )
                                                 (SRV 040856000 - 2873445 FILE )
<PAGE>
          IN WITNESS WHEREOF, Z-TEL TECHNOLOGIES, INC. has caused this
Certificate of Amendment to be signed this 29th day of November, 2004.

                                        Z-TEL TECHNOLOGIES, INC.


                                        By: /s/ Trey Davis
                                            ------------------------------------
                                            Name: Trey Davis
                                            Title: Acting Chief Executive
                                                   Officer, Treasurer and
                                                   Executive Vice President-
                                                   Chief Financial Officer
<PAGE>
                                                 (      State of Delaware      )
                                                 (      Secretary of State     )
                                                 (  Division of Corporations   )
                                                 (Delivered 11:29 AM 12/28/2004)
                                                 (  FILED 11:23 AM 12/28/2004  )
                                                 ( SRV 040943873 - 2873445 FILE)

                            CERTIFICATE OF AMENDMENT
                           TO THE AMENDED AND RESTATED
                          CERTIFICATE OF INCORPORATION
                                       OF
                            Z-TEL TECHNOLOGIES, INC.

     Z-TEL TECHNOLOGIES, INC., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware (the "DGCL"),
hereby certifies as follows:

          FIRST: The name of the Corporation is Z-TEL TECHNOLOGIES, INC. (the
"Corporation").

          SECOND: Article I of the Corporation's current Restated Certificate of
Incorporation, as amended (the "Certificate of Incorporation"), is hereby
amended in its entirety so it reads:

                                   "ARTICLE I
                                      Name
                  The name of the corporation is Trinsic, Inc."

          THIRD: All other references to "Z-Tel Technologies, Inc." in the
Certificate of Incorporation shall be amended to be references to "Trinsic,
Inc."

          FOURTH: This Certificate of Amendment of the Corporation's Amended and
Restated Certificate of Incorporation has been duly adopted by the Board of
Directors and Stockholders of the Corporation in accordance with the provisions
of Section 242 of the DGCL.

          FIFTH: This Certificate of Amendment shall be effective at 5:00 p.m.
Eastern Standard Time on January 3, 2005.

     IN WITNESS WHEREOF, Z-TEL TECHNOLOGIES, INC., has caused this certificate
to be duly executed in its corporate name on this 27TH day of December, 2004.

                                        Z-TEL TECHNOLOGIES, INC.


                                        By: /s/ Victoria Neil
                                            ------------------------------------
                                        Name: Victoria Neil
                                        Title: Assistant Secretary