<PAGE>   1
                                                                     EXHIBIT 3.1


                   CERTIFICATE OF DETERMINATION OF PREFERENCES
                                       OF
                            SERIES O PREFERRED STOCK
                                       OF
                                   DISC, INC.



     We, J. Richard Ellis and Henry Madrid, hereby certify that we are the
President and the Chief Financial Officer, respectively, of DISC, INC., a
corporation organized and existing under the General Corporation Law of the
State of California, and further, DO HEREBY CERTIFY:

     That pursuant to the authority conferred upon the Board of Directors by the
Articles of Incorporation of the said Corporation, the said Board of Directors
on February 20, 1998 adopted the following resolution creating a series of
1,320,755 shares of Preferred Stock designated as Series O Preferred Stock, none
of which shares have been issued:

          "RESOLVED, that pursuant to the authority vested in the Board of
     Directors of the corporation by the Articles of Incorporation, the Board of
     Directors does hereby provide for the issuance of a series of Preferred
     Stock, no par value, of the Corporation, to be designated "Series O
     Preferred Stock," initially consisting of 1,320,755 shares and to the
     extent that the designations, powers, preferences and relative and other
     special rights and the qualifications, limitations and restrictions of the
     Series O Preferred Stock are not stated and expressed in the Articles of
     Incorporation, does hereby fix and herein state and express such
     designations, powers, preferences and relative and other special rights and
     the qualifications, limitations and restrictions thereof, as follows (all
     terms used herein which are defined in the Articles of Incorporation shall
     be deemed to have the meanings provided therein):

          Section 1. Designation and Amount. The shares of such series shall be
     designated as "Series O Preferred Stock," no par value, and the number of
     shares constituting such series shall be 1,320,755.

          Section 2. Dividends and Distributions.

               (A) Subject to the prior and superior right of the holders of any
     shares of Series C Preferred Stock ranking prior and superior to the shares
     of Series O Preferred Stock with respect to dividends, and pari passu with
     the rights of the holders of shares of Series D Preferred Stock, Series E
     Preferred Stock, Series F Preferred Stock, Series G Preferred Stock, Series
     H Preferred Stock, Series I Preferred Stock, Series J Preferred Stock,
     Series K Preferred Stock, Series L Preferred Stock, Series M Preferred
     Stock and Series N Preferred Stock with respect to dividends, subject to
     the rights of any series of Preferred Stock which may hereafter come into
     existence, the holders of shares of Series O Preferred Stock shall be
     entitled to receive when, as and if declared by the Board of Directors out
     of funds legally available for the purpose, dividends in the same amount
     per share as declared on the Common Stock, treating such number of shares
     of Series O Preferred Stock for this purpose as equal to the number of
     shares of Common Stock into

<PAGE>   2


     which it is then convertible. In the event any dividends are declared or
     paid on the outstanding shares of Series D Preferred Stock, Series E
     Preferred Stock, Series F Preferred Stock, Series G Preferred Stock, Series
     H Preferred Stock, Series I Preferred Stock, Series J Preferred Stock,
     Series K Preferred Stock, Series L Preferred Stock, Series M Preferred
     Stock or Series N Preferred Stock, dividends shall simultaneously be
     declared and paid on the outstanding shares of Series O Preferred Stock,
     pari passu with the shares of Series D Preferred Stock, Series E Preferred
     Stock, Series F Preferred Stock, Series G Preferred Stock, Series H
     Preferred Stock, Series I Preferred Stock, Series J Preferred Stock, Series
     K Preferred Stock, Series L Preferred Stock, Series M Preferred Stock or
     Series N Preferred Stock, based upon the number of shares of Common Stock
     into which shares of Series D Preferred Stock, Series E Preferred Stock,
     Series F Preferred Stock, Series G Preferred Stock, Series H Preferred
     Stock, Series I Preferred Stock, Series J Preferred Stock, Series K
     Preferred Stock, Series L Preferred Stock, Series M Preferred Stock, Series
     N Preferred Stock, and Series O Preferred Stock are then convertible. In
     the event the Corporation shall at any time after the date of the filing of
     this Certificate of Determination of Preferences (the "Rights Declaration
     Date") (i) declare any dividend on Common Stock payable in shares of Common
     Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
     outstanding Common Stock into a smaller number of shares, then in each such
     case, the amount of Common Stock or other consideration to which holders of
     shares of Series O Preferred Stock were entitled immediately prior to such
     event under the preceding sentence shall be adjusted as set forth in
     Section 4(C) hereof.

               (B) The Corporation shall declare a dividend or distribution on
     the Series O Preferred Stock as provided in paragraph (A) above prior to
     declaring a dividend payable on shares of Common Stock.

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

               (A) Each holder of Series O Preferred Stock is entitled to a
     number of votes equal to the number of shares of Common Stock into which
     the holder's Series O Preferred Stock is then convertible. Except as
     provided by law, the Common Stock and Series O Preferred Stock (and any
     series of Preferred Stock which may be subsequently authorized which is
     convertible into shares of Common Stock and which has voting rights equal
     to the number of shares of Common Stock into which such series of Preferred
     Stock is then convertible) shall vote together as a single class on all
     matters to come before the shareholders for approval. In the event the
     Corporation shall at any time after the Rights Declaration Date (i) declare
     any dividend on Common Stock payable in shares of Common Stock, (ii)
     subdivide the outstanding Common Stock, or (iii) combine the outstanding
     Common Stock into a smaller number of shares, then in each such case the
     number of votes per share to which holders of shares of Series O Preferred
     Stock were entitled immediately prior to such event shall be adjusted as
     set forth in Section 4(C) hereof.

               (B) Except as otherwise provided herein or by law, the holders of
     shares of Series O Preferred Stock and the holders of shares of Common
     Stock (and any series of Preferred Stock which may be subsequently
     authorized which is convertible into shares of


                                       2

<PAGE>   3


     Common Stock and which has voting rights equal to the number of shares of
     Common Stock into which such series of Preferred Stock is then convertible)
     shall vote together as one class on all matters submitted to a vote of
     shareholders of the Corporation.

               (C) Except as required by law or under Section 8 hereof, holders
     of Series O Preferred Stock shall have no special 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. Conversion Rights.

               (A) Each holder of Series O Preferred Stock may, at any time, in
     such holder's sole discretion, convert all or any part of such holder's
     shares of Series O Preferred Stock into fully paid and nonassessable shares
     of Common Stock at the rate of one (1) share of Common Stock for each share
     of Series O Preferred Stock surrendered for conversion.

               (B) Such conversion may be effected by surrender of such holder's
     certificate or certificates for the shares of Series O Preferred Stock to
     be converted, duly endorsed, at the principal office of the Corporation,
     with a written notice stating (i) that such holder elects to convert all or
     a specified number of shares of Series O Preferred Stock into shares of
     Common Stock, and (ii) the name in which such holder desires a certificate
     for the shares of Common Stock to be issued. Promptly thereafter, the
     Company shall issue and deliver to such holder a certificate for the number
     of shares of Common Stock to which such holder shall be entitled. Such
     conversion shall be deemed to have been made at the close of business on
     the date of such surrender, and such holder shall be treated for all
     purposes as the record holder of such shares of Common Stock on that date.

               (C) In the event the Corporation shall at any time after the
     Rights Declaration Date (i) declare any dividend on Common Stock payable in
     shares of Common Stock, (ii) subdivide the outstanding Common Stock, or
     (iii) combine the outstanding Common Stock into a smaller number of shares,
     then, in each case, the number of shares of Common Stock issuable upon the
     conversion of each share of Series O 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 are
     outstanding immediately prior to such event.

               (D) In the event the Corporation shall at any time or from time
     to time after the Rights Declaration Date make or issue, or fix a record
     date for the determination of holders of Common Stock entitled to receive,
     a dividend or other distribution payable in securities of the Corporation
     or any of its subsidiaries, or of any other corporation or third party,
     other than in shares of Common Stock, then, in each such event, provisions
     shall be made so that the holders of Series O Preferred Stock shall
     receive, upon the conversion thereof, securities of the Corporation or any
     of its subsidiaries or of any other corporation

                                       3

<PAGE>   4

     or third party which they would have received had their stock been
     converted into Common Stock on the date of such event.

          Section 5. Reacquired Shares. Any shares of Series O 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 to be created by resolution or resolutions of the Board of
     Directors, subject to the conditions and restrictions on issuance set forth
     herein.

          Section 6. Liquidation, Dissolution or Winding Up.

               (A) Upon any liquidation (voluntary or otherwise), dissolution or
     winding up of the Corporation, following the first priority liquidation
     preference of the Series C Preferred Stock in the amount of $5.00 per share
     plus any declared but unpaid dividends, and pari passu with the liquidation
     preference of the Series D Preferred Stock in the amount of $5.00 per share
     plus any declared but unpaid dividends ("Series D Liquidation Preference"),
     the liquidation preference of the Series E Preferred Stock in the amount of
     $4.00 per share plus any declared but unpaid dividends ("Series E
     Liquidation Preference"), the liquidation preference of the Series F
     Preferred Stock in the amount of $8.00 per share plus any declared but
     unpaid dividends ("Series F Liquidation Preference"), the liquidation
     preference of the Series G Preferred Stock in the amount of $20.00 per
     share plus any declared but unpaid dividends ("Series G Liquidation
     Preference"), the liquidation preference of the Series H Preferred Stock in
     the amount of $38.30 per share plus any declared but unpaid dividends
     ("Series H Liquidation Preference"), the liquidation preference of the
     Series I Preferred Stock in the amount of $4.19 per share plus any declared
     but unpaid dividends ("Series I Liquidation Preference"), the liquidation
     preference of the Series J Preferred Stock in the amount of $2.98 per share
     plus any declared but unpaid dividends ("Series J Liquidation Preference"),
     the liquidation preference of the Series K Preferred Stock in the amount of
     $3.19 per share plus any declared but unpaid dividends ("Series K
     Liquidation Preference"), the liquidation preference of the Series L
     Preferred Stock in the amount of $2.76 per share plus any declared but
     unpaid dividends ("Series L Liquidation Preference"), the liquidation
     preference of the Series M Preferred Stock in the amount of $2.23 per share
     plus any declared but unpaid dividends ("Series M Liquidation Preference"),
     the liquidation preference of the Series N Preferred Stock in the amount of
     $.90 per share plus any declared but unpaid dividends ("Series N
     Liquidation Preference"), no distribution shall be made to the holders of
     shares of stock ranking junior (either as to dividends or upon liquidation,
     dissolution or winding up) to the Series O Preferred Stock unless, prior
     thereto, the holders of shares of Series O Preferred Stock shall have
     received an amount equal to $1.06 per share of Series O Preferred Stock
     plus any declared but unpaid dividends ("Series O Liquidation Preference").

               (B) In the event, however, that there are not sufficient assets
     available to permit payment in full of the Series D Liquidation Preference,
     the Series E Liquidation Preference, the Series F Liquidation Preference,
     the Series G Liquidation Preference, the

                                       4

<PAGE>   5


     Series H Liquidation Preference, the Series I Liquidation Preference, the
     Series J Liquidation Preference, the Series K Liquidation Preference, the
     Series L Liquidation Preference, the Series M Liquidation Preference, the
     Series N Liquidation Preference, and the Series O Liquidation Preference
     and the liquidation preferences of all other series of Preferred Stock, if
     any, which rank on a parity with the Series O Preferred Stock, then such
     remaining assets shall be distributed ratably to the holders of such parity
     shares in proportion to their respective liquidation preferences.

          Section 7. No Redemption. The shares of Series O Preferred Stock shall
     not be redeemable.

          Section 8. Amendment. The Articles of Incorporation of the Corporation
     shall not be further amended in any manner which would (a) alter or change
     the powers, preferences or special rights or privileges of the Series O
     Preferred Stock so as to affect them adversely or (b) grant to any other
     class of shares any rights superior to those of the Series O Preferred
     Stock without the affirmative vote of the holders of a majority or more of
     the outstanding shares of Series O Preferred Stock, voting separately as a
     class.

          Section 9. Fractional Shares. Series O 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 Series O Preferred Stock."

     The undersigned declare under penalty of perjury that the matters set forth
in the foregoing Certificate are true of their own knowledge.

     Executed at Milpitas, California on February 23, 1998.

                                       /S/ J. Richard Ellis
                                       -----------------------------------------
                                       J. Richard Ellis
                                       President and Chief Executive Officer


                                       /S/ Henry Madrid
                                       -----------------------------------------
                                       Henry Madrid
                                       Chief Financial Officer

                                       5