<PAGE>

                                  STATE OF DELAWARE
                                                                          PAGE 1
                           OFFICE OF THE SECRETARY OF STATE

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


    I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
DESIGNATION OF "MONTEREY PASTA COMPANY", FILED IN THIS OFFICE ON THE SEVENTH DAY
OF APRIL, A.D. 1997, AT 9 O'CLOCK A.M.

    A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE
COUNTY RECORDER OF DEED FOR RECORDING.


                                        [SEAL]


                             /s/ Edward J. Freel
                             -----------------------------------
                             EDWARD J. FREEL, SECRETARY OF STATE

                             AUTHENTICATION:    8408362
                                                04-07-97
                                       DATE:

2649613 8100
971112232

<PAGE>

                                                       STATE OF DELAWARE
                                                       SECRETARY OF STATE
                                                    DIVISION OF CORPORATIONS
                                                   FILED 09:00 AM 04/07/1997
                                                      971112232 - 2649613


                                MONTEREY PASTA COMPANY

                             CERTIFICATE OF DESIGNATIONS
                                          OF
                        SERIES B-1 CONVERTIBLE PREFERRED STOCK

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

                                  __________________

         Monterey Pasta Company, a Delaware corporation (the "Corporation"), in
accordance with the provisions of Section 103 of the General Corporation Law of
the State of Delaware (the "DGCL") DOES HEREBY CERTIFY:

         That pursuant to the authority vested in the Board of Directors of the
Corporation by the Certificate of Incorporation, as amended, of the Corporation,
the Board of Directors of the Corporation, at a meeting duly called and held on
March 12, 1997, adopted a resolution providing for the creation of a series of
the Corporation's Preferred Stock, $.001 par value, which Series is designated
"Series B-1 Convertible Preferred Stock," which resolution is as follows:

         RESOLVED, that pursuant to the authority vested in the Board of
Directors of the Corporation by the Certificate of Incorporation of the
Corporation, a series of Preferred Stock, par value $.001 per share, of the
Corporation be, and hereby is, created to be designated "Series B-1 Cumulative
Preferred Stock" (hereinafter referred to as "Series B-1 Preferred Stock"),
consisting of 250 shares, having the powers, preferences and rights, and the
qualifications, limitations and restrictions thereof, as set forth in Annex 1,
which is attached hereto and incorporated herein by this reference.

<PAGE>

         IN WITNESS WHEREOF, Monterey Pasta Company has caused its corporate
seal to be hereunto affixed and this certificate to be signed by Kenneth A.
Steel, Jr., its President and Chief Executive Officer, as of the 4th day of 
April 1997.


                             /s/ Kenneth A. Steel Jr.
                             --------------------------------


                                         -2-

<PAGE>

                                                                    ANNEX 1
                                                                       TO
                                                                   CERTIFICATE
                                                                       OF
                                                                   DESIGNATIONS

                        SERIES B-1 CONVERTIBLE PREFERRED STOCK

         SECTION 1.     DESIGNATION AND AMOUNT.  The shares of such series
shall be designated as "Series B-1 Convertible Preferred Stock" (the "Series B-1
Convertible Preferred Stock"), and the number of shares constituting the Series
B-1 Convertible Preferred Stock shall be 250, and shall not be subject to
increase.

         SECTION 2.     STATED CAPITAL.  The amount to be represented in stated
capital at all times for each share of Series B-1 Convertible Preferred Stock
shall be the greater of (a) the sum of (1) $1,150, (2) to the extent legally
available, the accrued but unpaid dividends on such share of Series B-1
Convertible Preferred Stock, PLUS (3) an amount equal to the accrued and unpaid
interest on dividends in arrears (as provided in Section 4) through the date of
determination and (b) an amount equal to the product obtained by multiplying (x)
the number of shares of Common Stock which would, at the time of such
determination, be issuable on conversion in accordance with Section 9(a) of one
share of Series B-1 Convertible Preferred Stock and any accrued and unpaid
dividends thereon and any accrued and unpaid interest on dividends thereon in
arrears if a Conversion Notice (as defined herein) were given by the holder of
such share of Series B-1 Convertible Preferred Stock on the date of such 
determination (determined without regard to any limitation on conversion 
contained in Section 9(a)) TIMES (y) the arithmetic average of the Closing 
Price (as defined in Section 9(b)) of the Common Stock for the five 
consecutive trading days ending one trading day prior to the date of such 
determination.  The Corporation shall take such action as may be required to 
maintain the amount required by this Section 2 to be represented in stated 
capital for the Series B-1 Convertible Preferred Stock not less frequently 
than monthly.

         SECTION 3.     RANK.  All Series B-1 Convertible Preferred Stock shall
rank (1) senior to the Common Stock, par value $.001 including the related
rights issued pursuant to the Rights Agreement, dated as of May 15, 1996,
between the Company and Corporate Stock Transfer, as Rights Agent, as amended
from time to time in accordance with its terms (the "Rights Agreement") (such
shares and rights, collectively, the "Common Stock"), of the Corporation, now or
hereafter issued, as to payments of dividends and distribution of assets upon
liquidation, dissolution, or winding up of the Corporation, whether voluntary or
involuntary, and (ii) on a parity with the Series A Convertible Preferred Stock
and any additional series of preferred stock of any class which the Board of
Directors or the stockholders may from time to time authorize, both as to
payment of dividends and as to distributions of assets upon liquidation,
dissolution, or winding up the Corporation, whether voluntary or involuntary.

         SECTION 4.     DIVIDENDS AND DISTRIBUTIONS.  (a) The holders of 
shares of Series B-1 Convertible Preferred Stock shall be entitled to 
receive, when, as, and if declared by the Board of Directors of the 
Corporation (the "Board of Directors" or the "Board") out of funds legally 
available for such purpose, dividends at the rate of $80.00 per annum per 
share, and no more, which shall be fully cumulative, shall accrue without 
interest (except as otherwise provided herein as to dividends in arrears) 
from April 1, 1997 and shall be payable in cash quarterly on March 1, June 1, 
September 1, and December 1 of each year commencing June 1, 1997 (except that 
if any such date is a Saturday, Sunday, or legal holiday, then such dividend 
shall be payable on the next succeeding day that is not a Saturday, Sunday, 
or legal holiday) to holders of record as they appear on the stock books of 
the Corporation on such record dates, not more than 20 nor less than 10 days 
preceding the payment dates for such dividends, as shall be fixed by the 
Board.  Dividends on the Series B-1 Convertible Preferred Stock shall be paid 
in cash or, subject to the limitations in Section 4(b) hereof, shares of 
Common Stock of the Corporation or any combination of cash and shares of 
Common Stock, at the option of the


                                         A-1

<PAGE>

Corporation is hereinafter provided.  The amount of the dividends payable per
share of Series B-1 Convertible Preferred Stock for each quarterly dividend
period shall be computed by dividing the annual dividend amount by four.  The
amount of dividends payable for the initial dividend period and any period
shorter than a full quarterly dividend period shall be computed on the basis of
a 360-day year of twelve 30-day months.  Dividends not paid on a payment date,
whether or not such dividends have been declared, will bear interest at the rate
of 12% per annum or at such rate as is legally permitted under applicable law,
until paid.  No dividends or other distributions, other than dividends payable
solely in shares of Common Stock or other capital stock of the Corporation
ranking junior as to dividends to the Series B-1 Convertible Preferred Stock
(collectively, the "Junior Dividend Stock"), shall be paid or set apart for
payment on any shares of Junior Dividend Stock, and no purchase, redemption, or
other acquisition shall be made by the Corporation of any shares of Junior
Dividend Stock unless and until all accrued and unpaid dividends on the Series
B-1 Convertible Preferred Stock and interest on dividends in arrears at the rate
specified herein shall have been paid or declared and set apart for payment.

         If at any time any dividend on any capital stock of the Corporation
ranking senior as to dividends to the Series B-1 Convertible Preferred Stock
(the "Senior Dividend Stock") shall be in default, in whole or in part, no
dividend shall be paid or declared and set apart for payment on the Series B-1
Convertible Preferred Stock unless and until all accrued and unpaid dividends
with respect to the Senior Dividend Stock, including the full dividends for the
then current dividend period, shall have been paid or declared and set apart for
payment, without interest.  No full dividends shall be paid or declared and set
apart for payment, without interest.  No full dividends shall be paid or
declared and set apart for payment on any class or series or the Corporation's
capital stock ranking, as to dividends, on a parity with the Series B-1
Convertible Preferred Stock (the "Parity Dividend Stock") for any period unless
all accrued but unpaid dividends (and interest on dividends in arrears at the
rate specified herein) have been, or contemporaneously are, paid or declared and
set apart for such payment on the Series B-1 Convertible Preferred Stock. No
full dividends shall be paid or declared and set apart for payment on the Series
B-1 Convertible Preferred Stock for any period unless all accrued but unpaid
dividends have been, or contemporaneously are, paid or declared and set apart
for payment on the Parity Dividend Stock for all dividend periods terminating on
or prior to the date of payment of such full dividends.  When dividends are not
paid in full upon the Series B-1 Convertible Preferred Stock and the Parity
Dividend Stock, all dividends paid or declared and set apart for payment upon
shares of Series B-1 Convertible Preferred Stock (and interest on dividends in
arrears at the rate specified herein) and the Parity Dividend Stock shall be
paid or declared and set apart for payment pro rata, so that the amount of
dividends paid or declared and set apart for payment per share on the Series B-1
Convertible Preferred Stock and the Parity Dividend Stock shall in all cases
bear to each other the same ratio that accrued and unpaid dividends per share on
the shares of Series B-1 Convertible Preferred Stock and the Parity Dividend
Stock bear to each other.

         Any reference to "distribution" contained in this Section 4 shall not
be deemed to include any stock dividend or distributions made in connection with
any liquidation, dissolution, or winding up of the Corporation, whether
voluntary or involuntary.

         (b)     If the Corporation elects in the exercise of its sole 
discretion to issue shares of Common Stock in payment of dividends on the 
Series B-1 Convertible Preferred Stock, the Corporation shall issue and 
dispatch, or cause to be issued and dispatched, to each holder of such shares 
a certificate representing the number of whole shares of Common Stock arrived 
at by dividing the per share Computed Price of such shares of Common Stock 
into the total amount of cash dividends such holder would be entitled to 
receive if the aggregate dividends on the Series B-1 Convertible Preferred 
Stock held by such holder which are being paid in shares of Common Stock were 
being paid in cash; PROVIDED, HOWEVER, that if certificates representing 
shares of Common Stock are issued and dispatched to holders of Series B-1 
Convertible Preferred Stock subsequent to the third trading day after a 
dividend payment date, the percentage used to


                                         A-2

<PAGE>

<PAGE>


calculate the Computed Price will be reduced by one percent for each trading day
after the third trading day following such dividend payment date to the date of
dispatch of shares of Stock.  No fractional shares of Common Stock shall be
issued in payment of dividends.  In lieu thereof, the Corporation may issue a
number of shares of Common Stock to each holder which reflects a rounding to the
nearest whole number of shares of Common Stock or may pay cash.  The Corporation
shall not exercise its right to issue shares of Common Stock in payment of
dividends on Series B-1 Convertible Preferred Stock if:

         (i)       the number of shares of Common Stock at the time authorized,
    unissued and unreserved for all purposes, or held in the Corporation's
    treasury, is insufficient to pay the portion of such dividends to be paid
    in shares of Common Stock;

         (ii)      the inssuance or delivery of shares of Common Stock as a
    dividend payment would require registration with or approval of any
    governmental authority under any law or regulation, and such registration
    or approval has not been effected or obtained;

         (iii)    the shares of Common Stock to be issued as a dividend payment
    have not been authorized for listing, upon official notice of issuance, on
    any securities exchange or market on which the Common Stock is then listed;
    or have not been approved for quotation if the Common Stock is traded in
    the over-the-counter market;

         (iv)      the Computed Price (determined without regard to the proviso
    to the definition thereof) is less than the par value of the shares of
    Common Stock;

         (v)       the shares of Common Stock (A) cannot be sold or transferred
    without restriction by unaffiliated holders who receive such shares of
    Common Stock as a dividend payment or (B) are no longer listed on a
    national securities exchange, on the Nasdaq National Market or the Nasdaq
    SmallCap Market; or

         (vi)     the issuance of shares of Common Stock in payment of
    dividends on Series B-1 Convertible Preferred Stock held by any Restricted
    Person (as defined in Section 9(a) hereof) would result in any Restricted 
    Person beneficially owning more than 4.9% of the Common Stock, determined as
    provided in the proviso to the second sentence of Section 9(a) hereof.

         Shares of Common Stock issued in payment of dividends on Series B-1
Convertible Preferred Stock pursuant to this Section shall be, and for all
purposes shall be deemed to be, validly issued, fully paid and nonassessable
shares of Common Stock of the Corporation; the issuance and delivery thereof is
hereby authorized; and the dispatch thereof will be, and for all purposes shall
be deemed to be, payment in full of the cumulative dividends to which holders
are entitled on the applicable dividend payment date.

         "Computed Price" of shares of Common Stock on any date means 100
percent of the arithmetic average of the per share Closing Price (as defined in
Section 9(b)) of the Common Stock on the five consecutive trading days ending on
the fifth trading day preceding the applicable dividend payment date.

         SECTION 5.     LIQUIDATION PREFERENCE.  In the event of a liquidation,
dissolution, or winding up of the Corporation, whether voluntary or involuntary,
the holders of Series B-1 Convertible Preferred Stock shall be entitled to
receive out of the assets of the Corporation, whether such assets constitute
stated capital or surplus of any nature, an amount per share of Series B-1
Convertible Preferred Stock equal to the sum of (i) all dividends accrued and
unpaid thereon to the date of final distribution to such holders, (ii) accrued
and unpaid interest on dividends in arrears to the date of distribution at the
rate specified in Section 4(a), and (iii)


                                         A-3

<PAGE>

$1,000.00 (collectively, "the Liquidation Preference"), and no more, before any
payment shall be made or any assets distributed to the holders of Common Stock
or any other class or series of the Corporation's capital stock ranking junior
as to liquidation rights to the Series B-1 Convertible Preferred Stock
(collectively, the "Junior Liquidation Stock"); PROVIDED, HOWEVER, that such
rights shall accrue to the holders of Series B-1 Convertible Preferred Stock
only in the event that the Corporation's payments with respect to the
liquidation preference of the holders of capital stock of the Corporation
ranking senior as to liquidation rights to the Series B-1 Convertible Preferred
Stock (the "Senior Liquidation Stock") are fully met.  After the liquidation
preferences of the Senior Liquidation Stock are fully met, the entire assets of
the Corporation available for distribution shall be distributed ratably among
the holders of the Series B-1 Convertible Preferred Stock and any other class or
series of the Corporation's capital stock having parity as to liquidation rights
with the Series B-1 Convertible Preferred Stock (the "Parity Liquidation Stock")
in proportion to the respective preferential amounts to which each is entitled
(but only to the extent of such preferential amounts).  After payment in full of
the liquidation price of the shares of the Series B-1 Convertible Preferred
Stock and the Parity Liquidation Stock, the holders of such shares shall not be
entitled to any further participation in any distribution of assets by the
Corporation.  Neither a consolidation or merger of the Corporation with another
corporation nor a sale or transfer of all or part of the Corporation's assets
for cash, securities, or other property in and of itself will be considered a
liquidation, dissolution, or winding up of the Corporation.

         SECTION 6.     NO MANDATORY REDEMPTION.  The shares of Series B-1
Convertible Preferred Stock shall not be subject to mandatory redemption by the
Corporation.

         SECTION 7.     NO SINKING FUND.  The shares of Series B-1 Convertible
Preferred Stock shall not be subject to the operation of a purchase, retirement,
or sinking fund.

         SECTION 8.     OPTIONAL REDEMPTION.  So long as the Corporation is 
in compliance in all material respects with its obligations to the holders of 
shares of Series B-1 Convertible Preferred Stock (including, without 
limitation, its obligations under the Registration Rights Agreement between 
the Corporation and the original holder of the Series B-1 Convertible 
Preferred Stock (the "Registration Rights Agreement") and the provisions of 
this Certificate of Designations), the Corporation shall have the right, 
exercisable on not less than 15 days or more than 20 days written notice to 
the holders of record of the shares of Series B-1 Convertible Preferred Stock 
to be redeemed, at any time on or after the date of initial issuance of 
shares of Series X Convertible Preferred Stock (the "Issuance Date") to 
redeem at any time all, and from time to time any part of the Series B-1 
Convertible Preferred Stock in accordance with this Section 8.  Any notice of 
redemption (a "Notice of Redemption") under this Section shall be delivered 
to the holders of the shares of Series B-1 Convertible Preferred Stock at 
their addresses appearing on the records of the Corporation; PROVIDED, 
HOWEVER, that any failure or defect in the giving of notice to any such 
holder shall not affect the validity of notice to or the redemption of shares 
of Series B-1 Convertible Preferred Stock of any other holder.  Any Notice of 
Redemption shall state (1) that the Corporation is exercising its right to 
redeem all or a portion of the outstanding shares of Series B-1 Convertible 
Preferred Stock pursuant to this Section 8, (2) the number of shares of 
Series B-1 Convertible Preferred Stock held by such holder which are to be 
redeemed, (3) the Redemption Price (as hereinafter defined) per share of 
Series B-1 Convertible Preferred Stock to be redeemed, determined in 
accordance with this Section and (4) the date of redemption of such shares of 
Series B-1 Convertible Preferred Stock, determined in accordance with this 
Section (the "Redemption Date").  On the Redemption Date, the Corporation 
shall make payment of the applicable Redemption Price (as hereinafter 
defined) to each holder of shares of Series B-1 Convertible Preferred Stock 
to be redeemed to or upon the order of such holder as specified by such 
holder in writing to the Corporation at least one business day prior to the 
Redemption Date.  If the Corporation exercises its right to redeem all or a 
portion of the outstanding shares of Series B-1 Convertible Preferred Stock 
the Corporation shall make

                                         A-4

<PAGE>

payment to the holders of the shares of Series B-1 Convertible Preferred 
Stock to be redeemed in respect of each share of Series B-1 Convertible 
Preferred Stock to be redeemed of an amount equal to the greater of (a) 
$1.150, plus all accrued but unpaid dividends to the Redemption Date on the 
share of Series B-1 Convertible Preferred Stock being redeemed and accrued 
but unpaid interest on the dividends on the share of Series B-1 Convertible 
Preferred Stock being redeemed in arrears to the Redemption Date and (b) an 
equal amount to the product obtained by multiplying (x) the number of shares 
of Common Stock which would, but for the redemption pursuant to this Section 
8, be issuable on conversion in accordance with Section 9(a) of one share of 
Series B-1 Convertible Preferred Stock, and any accrued and unpaid dividends 
thereon and any accrued and unpaid interest on dividends thereon in arrears 
if a Conversion Notice were given by the holder of such Series B-1 
Convertible Preferred Stock on the Redemption Date (determined without regard 
to any limitation on conversion contained in Section 9(a)) TIMES (y) the 
arithmetic average of the Closing Price (as defined in Section 9(b)) of the 
Common Stock for the five consecutive trading days ending one trading day 
prior to the Redemption Date (such amount being referred to herein as the 
"Redemption Price"). Upon redemption of less than all of the shares of Series 
B-1 Convertible Preferred Stock evidenced by a particular certificate, 
promptly, but in no event later than three business days after surrender of 
such certificate to the Corporation, the Corporation shall issue a 
replacement certificate for the shares of Series B-1 Convertible Preferred 
Stock which have not been redeemed. Only whole shares of Series B-1 
Convertible Preferred Stock may be redeemed. If the Corporation exercises its 
right to redeem less than all outstanding shares of Series B-1 Convertible 
Preferred Stock, then such redemption shall be made, as nearly as practical, 
pro rata among the holders of record of the Series B-1 Convertible Preferred 
Stock.  No share of Series B-1 Convertible Preferred Stock as to which the 
holder exercises the right of conversion pursuant to Section 9 hereof may be 
redeemed by the Corporation pursuant to this Section 8 on or after the date 
of exercise of such conversion right regardless of whether the Notice of 
Redemption shall have been given prior to the date of exercise of such 
conversion right.

         SECTION 9.     CONVERSION.

         (a)     CONVERSION AT OPTION OF HOLDER. The holders of the Series 
B-1 Convertible Preferred Stock may, at any time after the earlier of (x) 
July 31, 1997 and (y) the date on which the Registration Statement is first 
declared effective by the SEC and on or before two (2) years after the 
Issuance Date, upon surrender of the certificates therefor, convert any or 
all of their shares of Series B-1 Convertible Preferred Stock into fully paid 
and nonassessable shares of Common Stock and such other securities and 
property as hereinafter provided. Commencing on the date which is 90 days 
after the Issuance Date, and at any time thereafter, each share of Series B-1 
Convertible Preferred Stock may be converted at the principal executive 
offices of the Corporation, the office of any transfer agent for the Series 
B-1 Convertible Preferred Stock, if any, the office of any transfer agent for 
the Common Stock or at such other office or offices, if any, as the Board of 
Directors may designate, initially into such number of fully paid and 
nonassessable shares of Common Stock (calculated as to each conversion to the 
nearest 1/100th of a share) determined by dividing (x) the sum of (i) the 
Conversion Amount, (ii) accrued but unpaid dividends to the Conversion Date 
on the share of Series B-1 Convertible Preferred Stock being converted, and 
(iii) accrued but unpaid interest on the dividends on the share of Series B-1 
convertible Preferred Stock being converted in arrears to the Conversion Date 
by (y) the lower of (1) the product of (A) the Conversion Percentage TIMES 
(B) the arithmetic average of the Closing Price of the Common Stock on the 
five consecutive trading days immediately preceding the Conversion Date or 
(2) the product of (A) $5.50 (subject to equitable adjustments for stock 
splits, stock dividends, combinations, recapitalizations, reclassifications 
and similar events occurring on or after the date of filing of this 
Certificate of Designations with the Secretary of State of the State of 
Delaware) TIMES (B) the Conversion Percentage, in each case subject to 
adjustment as hereinafter provided (the "Conversion Rate"); PROVIDED, 
HOWEVER, that in no event shall any holder be entitled to convert any shares 
of Series B-

                                         A-5

<PAGE>

1 Convertible Preferred Stock in excess of that number of shares of Series 
B-1 Convertible Preferred Stock upon conversion of which the sum of (1) the 
number of shares of Common Stock benefically owned by such holder and any 
person whose beneficial ownership of shares of Common Stock would be 
aggregated with such holder's beneficial ownership of shares of Common Stock 
for purposes of Section 13(d) of the Securities Exchange Act of 1934, as 
amended (the "Exchange Act"), and Regulation 13D-G thereunder (each a 
"Restricted Person" and collectively, the "Restricted Persons") (other than 
shares of Common Stock deemed beneficially owned through the ownership of 
unconverted shares of Series B-1 Convertible Preferred Stock) and (2) the 
number of shares of Common Stock issuable upon the conversion of the number 
of shares of Series B-1 Convertible Preferred Stock with respect to which the 
determination in this proviso is being made, would result in benefical 
ownership by any Restricted Person of more than 4.9% of the outstanding 
shares of Common Stock.  For purposes of the proviso to the immediately 
preceding sentence, beneficial ownership shall be determined in accordance 
with Section 13(d) of the Exchange Act and Regulation 13D-G thereunder, 
except as otherwise provided in clause (1) of the proviso to the immediately 
preceding sentence.  The "Conversion Price" shall be equal to the Conversion 
Amount divided by the Conversion Rate.

         (b)     CERTAIN DEFINITIONS.

         As used herein, the "Closing Price" of any security on any date shall
mean the closing bid price of such security on such date on the principal
securities exchange on which such security is traded.

         As used herein, "Computation Date" means

         (1)     if the Registration Statement is not filed by the Corporation
    with the SEC on or before April 30, 1997:

         (A)     May 7, 1997, if the Corporation has not filed the Registration
    Statement with the SEC on or before such date;

         (B)     each date which is seven days subsequent to May 7, 1997, in
    each such case if the Corporation has not filed the Registration Statement
    with the SEC on or before such subsequent date; and

         (C)     the date on which the Corporation files the Registration
    Statement with the SEC; and

         (2)     if the Registration Statement has not been declared effective
    by the SEC on or before July 31, 1997;

         (A)     August 7, 1997, unless the Registration Statement has been
    declared effective by the SEC on or before August 7, 1997;

         (B)     each date which is seven days subsequent to August 7, 1997, in
    each such case unless the Registration Statement has not been declared
    effective by the SEC on or before such subsequent date; and

         (C)     the date on which the Registration Statement is declared
    effective by the SEC;

PROVIDED, HOWEVER, that if more than one event which could give rise to a
Computation Date during any period shall have occurred, only one of such events
shall be deemed to result in a Computation Date so that the adjustments in the
Conversion Percentage provided herein by


                                         A-6

<PAGE>

reason of the occurrence of a Computation Date shall be made only once in
respect of any period of time and then in the maximum amount based on all such
Computation Dates.

         As used herein, the "Conversion Amount" initially shall be equal to
$1,000.00, subject to adjustment as hereinafter provided.

         As used herein, "Conversion Date" shall mean the date on which the
notice of conversion is actually received by the Corporation, in case of a
conversion at the option of the holder pursuant to Section 9(a).

         As used herein, "Conversion Percentage" shall mean with respect to a 
Conversion Date or a dividend payment date 80%; PROVIDED, HOWEVER, that 
notwithstanding any other provision hereof (1) if (x) the Corporation shall 
fail to file the Registration Statement with the SEC on or before April 30, 
1997, or (y) the Registration Statement is not ordered effective by the SEC 
on or before July 31, 1997, and in any such case the Corporation shall fail 
to make cash payment on a timely basis in the amount specified in Section 
2(c) of the Registration Rights Agreement, then in each such case the 
applicable percentage stated above in this paragraph shall be reduced by one 
percentage point on each Computation Date (pro rated in the case of any 
Computation Date which is less than seven days after a Computation Date) and 
(2) the Conversion Percentage applicable to a particular conversion shall be 
subject to reduction as provided in Section 9(c)(6); PROVIDED FURTHER, 
HOWEVER, that no adjustment pursuant to clause (1) of the first proviso to 
this definition shall be made after the date on which the shares of Common 
Stock issued or issuable upon conversion of shares of Series B Convertible 
Preferred Stock may be sold by all holders thereof pursuant to Rule 144 under 
the Securities Act of 1933, as amended, in a period of 90 consecutive days 
(in which case the Conversion Percentage shall be adjusted to such date as if 
such date were a Computation Date).

         As used herein, "Registration Effective Date" shall mean, with respect
to any share of Series B-1 Convertible Preferred Stock, the date on which the
Registration Statement is first ordered effective by the SEC.

         As used herein, "Registration Statement" shall mean the Registration
Statement required to be filed by the Corporation with the SEC pursuant to
Section 2(a) of the Registration Rights Agreement.

         As used herein, "SEC" shall mean the United States Securities and
Exchange Commission.

         (c)     OTHER PROVISIONS.  (1) Notwithstanding anything in this
Section 9(c) to the contrary, no change in the Conversion Amount pursuant to
Section 9(c) shall actually be made until the cumulative effect of the
adjustments called for by this Section 9(c) since the date of the last change in
the Conversion Amount would change the Conversion Amount by more than 1%.
However, once the cumulative effect would result in such a change, then the
Conversion Rate shall actually be changed to reflect all adjustments called for
by this Section 9(c) and not previously made.  Notwithstanding anything in this
Section 9(c), no change in the Conversion Amount shall be made that would result
in a Conversion Price of less than the par value of the Common Stock into which
shares of Series B-1 Convertible Preferred Stock are at the time convertible.

         (2)     The holders of shares of Series B-1 Convertible Preferred
Stock at the close of business on the record date for any dividend payment to
holders of Series B-1 Convertible Preferred Stock shall be entitled to receive
the dividend payable on such shares on


                                         A-7

<PAGE>

the corresponding dividend payment date notwithstanding the conversion 
thereof after such dividend payment record date or the Corporation's default 
in payment of the dividend due on such dividend payment date; PROVIDED, 
HOWEVER, that the holder of shares of Series B-1 Convertible Preferred Stock 
surrendered for conversion during the period between the close of business on 
any record date for a dividend payment and the opening of business on the 
corresponding dividend payment date must pay to the Corporation, within five 
days after receipt by such holder, an amount equal to the dividend payable on 
such shares on such dividend payment date if such dividend is paid by the 
Corporation to such holder. A holder of shares of Series B-1 Convertible 
Preferred Stock on a record date for a dividend payment who (or whose 
transferee) tenders any of such shares for conversion into shares of Common 
Stock on or after such dividend payment date will receive the dividend 
payable by the Corporation on such shares of Series B-1 Convertible Preferred 
Stock on such date, and the converting holder need not make any payment of 
the amount of such dividend in connection with such conversion of shares of 
Series B-1 Convertible Preferred Stock.  Except as provided above, no 
adjustment shall be made in respect of cash dividends on Common Stock or 
Series B-1 Convertible Preferred Stock that may be accrued and unpaid at the 
date of surrender of shares of Series B-1 Convertible Preferred Stock.

         (3)     The right of the holders of Series B-1 Convertible Preferred 
Stock to convert their shares shall be exercised by delivering (which may be 
done by telephone line facsimile transmission) to the Conversion agent, as 
provided above, a written notice, duly signed by or on behalf of the holder, 
stating the number of shares of Series B-1 Convertible Preferred Stock to be 
converted in the form specified in the Subscription Agreements (the 
"Conversion Notice").  If a holder of Series B-1 Convertible Preferred Stock 
elects to convert any shares of Series B-1 Convertible Preferred Stock in 
accordance with Section 9(a), such holder shall not be required to physically 
surrender the certificate(s) representing such shares of Series B-1 
Convertible Preferred Stock to the Corporation unless all of the shares of 
Series B-1 Convertible Preferred Stock represented thereby are so converted.  
Each holder of shares of Series B-1 Convertible Preferred Stock and the 
Corporation shall maintain records showing the number of shares so converted 
and the dates of such conversions or shall use such other method, 
satisfactory to such holder and the Corporation, so as to not require 
physical surrender of such certificates upon each such conversion.  In the 
event of any dispute or discrepancy, such records of the Corporation shall be 
controlling and determinative in the absence of manifest error.  
Notwithstanding the foregoing, if any shares of Series B-1 Convertible 
Preferred Stock evidenced by a particular certificate therefor are converted 
as aforesaid, the holder of Series B-1 Convertible Preferred Stock may not 
transfer the certificate(s) representing such shares of Series B-1 
Convertible Preferred Stock unless such holder first physically surrenders 
such certificate(s) to the Corporation, whereupon the Corporation will 
forthwith issue and deliver upon the order of such holder of shares of Series 
B-1 Convertible Preferred Stock new certificate(s) of like tenor, registered 
as such holder of shares of Series B-1 Convertible Preferred Stock (upon 
payment by such holder of shares of Series B-1 Convertible Preferred Stock of 
any applicable transfer taxes) may request, representing in the aggregate the 
remaining number of shares of Series B-1 Convertible Preferred Stock 
represented by such certificate(s).  Each holder of shares of Series B-1 
Convertible Preferred Stock, by acceptance of a certificate for such shares, 
acknowledges and agrees that (1) by reason of the provisions of this 
paragraph and Section 8, following conversion of any shares of Series B-1 
Convertible Preferred Stock represented by such certificate, the number of 
shares of Series B-1 Convertible Preferred Stock represented by such 
certificate may be less than the number of shares stated on such certificate 
and the number of shares of Common Stock from the Maximum Share Amount 
allocated to the shares of Series B-1 Convertible Preferred Stock represented 
by such certificate for purposes of conversion of such shares may be less 
than the number thereof on such certificate and (2) the Corporation may place 
a legend on the certificates for shares of Series B-1 Convertible Preferred 
Stock which refers to or describes the provisions of this paragraph.  The 
Corporation shall pay any tax arising in connection with any conversion of 
shares of Series B-1 Convertible Preferred Stock except that

                                         A-8

<PAGE>


the Corporation shall not, however, be required to pay any tax which may be 
payable in respect of any transfer involved in the issue and delivery upon 
conversion of shares of Common Stock or other securities or property in a 
name other than that of the holder of the shares of the Series B-1 
Convertible Preferred Stock being converted, and the Corporation shall not be 
required to issue or deliver any such shares or other securities or property 
unless and until the person or persons requesting the issuance thereof shall 
have paid to the Corporation the amount of any such tax or shall have 
established to the satisfaction of the Corporation that such tax has been 
paid.  The number of shares of Common Stock to be issued upon each conversion 
of shares of Series C Convertible Preferred Stock shall be the number set 
forth in the applicable Conversion Notice which number shall be conclusive 
absent manifest error.  The Corporation shall notify a holder who has given a 
Conversion Notice of any claim of manifest error within one business day 
after such holder gives such Conversion Notice and no such claim of error 
shall limit or delay performance of the Corporation's obligation to issue 
upon such conversion the number of shares of Common Stock which are not in 
dispute.  A Conversion Notice shall be deemed for all purposes to be in 
proper form unless the Corporation notifies a holder of shares of Series B-1 
Convertible Preferred Stock being converted within one business day after a 
Conversion Notice has been given (which notice shall specify all defects in 
the Conversion Notice) and any Conversion Notice containing any such defect 
shall nonetheless be effective on the date given if the converting holder 
promptly undertakes in writing to correct all such defects.

         (4)     The Corporation (and any successor corporation) shall take 
all action necessary so that a number of shares of the authorized but 
unissued Common Stock (or common stock in the case of any successor 
corporation) sufficient to provide for the conversion of the Series B-1 
Convertible Preferred Stock outstanding upon the basis hereinbefore provided 
are at all times reserved by the Corporation (or any successor corporation), 
free from preemptive rights, for such conversion, subject to the provisions 
of the next succeeding paragraph. If the Corporation shall issue any 
securities or make any change in its capital structure which would change the 
number of shares of Common Stock into which each share of the Series B-1 
Convertible Preferred Stock shall be convertible as herein provided, the 
Corporation shall at the same time also make proper provision so that 
thereafter there shall be a sufficient number of shares of Common Stock 
authorized and reserved, free from preemptive rights, for conversion of the 
outstanding Series B-1 Convertible Preferred Stock on the new basis.  If at 
any time the number of authorized but unissued shares of Common Stock shall 
not be sufficient to effect the conversion of all of the outstanding shares 
of Series B-1 Convertible Preferred Stock, the Corporation promptly shall 
seek 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)     In case of any consolidation or merger of the Corporation with
any other corporation (other than a wholly-owned subsidiary of the Corporation)
in which the Corporation is not the surviving corporation, or in case of any
sale or transfer of all or substantially all of the assets of the Corporation,
or in the case of any share exchange pursuant to which all of the outstanding
shares of Common Stock are converted into other securities or property, the
Corporation shall make appropriate provision or cause appropriate provision to
be made so that each holder of shares of Series B-1 Convertible Preferred Stock
then outstanding shall have the right thereafter to convert such shares of
Series B-1 Convertible Preferred Stock into the kind of shares of stock and
other securities and property receivable upon such consolidation, merger, sale,
transfer, or share exchange by a holder of shares of Common Stock into which
such shares of Series B-1 Convertible Preferred Stock could have been converted
immediately prior to the effective date of such consolidation, merger, sale,
transfer, or share exchange and on a basis which preserves the economic benefits
of the conversion rights of the holders of shares of Series B-1 Convertible
Preferred Stock on a basis as nearly as practical as such rights exist hereunder
prior thereto.  If, in connection with any such consolidation, merger, sale,
transfer, or share exchange, each holder of shares of Common Stock is entitled
to elect to receive securities, cash,


                                         A-9

<PAGE>

or other assets upon completion of such transaction, the Corporation shall
provide or cause to be provided to each holder of Series B-1 Convertible
Preferred Stock the right to elect the securities, cash, or other assets into
which the Series B-1 Convertible Preferred Stock held by such holder shall be
convertible after completion of any such transaction on the same terms and
subject to the same conditions applicable to holders of the Common Stock
(including, without limitation, notice of the right to elect, limitations on the
period in which such election shall be made, and the effect of failing to
exercise the election). The Corporation shall not effect any such transaction
unless the provisions of this paragraph have been complied with.  The above
provisions shall similarly apply to successive consolidations, mergers, sales,
transfers, or share exchanges.

         (6)     If a holder shall have given a Conversion Notice for shares 
of Series B-1 Convertible Preferred Stock, the Corporation shall issue and 
deliver to such person certificates for the Common Stock issuable upon such 
conversion within three business days after such Conversion Notice is given 
and the person converting shall be deemed to be the holder of record of the 
Common Stock issuable upon such conversion, and all rights with respect to 
the shares surrendered shall forthwith terminate except the right to receive 
the Common Stock or other securities, cash, or other assets as herein 
provided.  If a holder shall have given a Conversion Notice as provided 
herein, the Corporation's obligation to issue and deliver the certificates 
for Common Stock shall be absolute and unconditional, irrespective of any 
action or inaction by the converting holder to enforce the same, any waiver 
or consent with respect to any provision thereof, the recovery of any 
judgment against any person or any action to enforce the same, any failure or 
delay in the enforcement of any other obligation of the Corporation to the 
holder of record, or any setoff, counterclaim, recoupment, limitation or 
termination, or any breach or alleged breach by the holder of any obligation 
to the Corporation, and irrespective of any other circumstance which might 
otherwise limit such obligation of the Corporation to the holder in 
connection with such conversion.  If the Corporation fails to issue and 
deliver the certificates for the Common Stock to the holder converting shares 
of Series B-1 Convertible Preferred Stock pursuant to the first sentence of 
this paragraph as and when required to do so, in addition to any other 
liabilities the Corporation may have hereunder and under applicable law (1) 
the Corporation shall pay or reimburse such holder on demand for all 
out-of-pocket expenses including, without limitation, fees and expenses of 
legal counsel incurred by such holder as a result of such failure, (2) the 
Conversion Percentage applicable to such conversion shall be reduced by 
two-and-one-half percentage points from the Conversion Percentage applicable 
to such conversion and (3) such holder may by written notice (which may be 
given by mail, courier, personal service or telephone line facsimile 
transmission) or oral notice (promptly confirmed in writing) given at any 
time prior to delivery to such holder of the certificates for the shares of 
Common Stock issuable upon such conversion of shares of Series B-1 
Convertible Preferred Stock, rescind such conversion, whereupon such holder 
shall have the right to convert such shares of Series B-1 Convertible 
Preferred Stock thereafter in accordance herewith.

         (7)     No fractional shares of Common Stock shall be issued upon 
conversion of Series B-1 Convertible Preferred Stock but, in lieu of any 
fraction of a share of Common Stock to purchase fractional shares of Common 
Stock which would otherwise be issuable in respect of the aggregate number of 
such shares surrendered for conversion at one time by the same holder, the 
Corporation at its option (a) may pay in cash an amount equal to the product 
of (i) the arithmetic average of the Closing Price of a share of Common Stock 
on the three consecutive trading days ending on the trading day immediately 
preceding the Conversion Date and (ii) such fraction of a share or (b) may 
issue an additional share of Common Stock.

         (8)     The Conversion Amount shall be adjusted from time to time
under certain circumstances, subject to the provisions of the first three
sentences of Section 9(c)(1), as follows:

         (i) In case the Corporation shall issue rights or warrants on a pro
rata basis to all holders of the Common Stock entitling such holders to
subscribe for or purchase Common Stock


                                         A-10

<PAGE>

on the record date referred to below at a price per share less than the average
daily Closing Prices of the Common Stock on the 30 consecutive business days
commencing 45 business days before the record date (the "Current Market Price")
excluding, however, any rights issued pursuant to the Rights Agreement, then in
each case the Conversion Amount in effect on such record date shall be adjusted
in accordance with the formula



    C1 = C x O + N
             -----
         O + N x P
             -----
                 M

where

    C1   = the adjusted Conversion Amount

    C    = the current Conversion Amount

    O    = the number of shares of Common Stock outstanding on the record
           date.

    N    = the number of additional shares of Common Stock issuable pursuant
           to the exercise of such rights or warrants.

    P    = the offering price per share of the additional shares (which
           amount shall include amounts received by the Corporation in
           respect of the issuance and the exercise of such rights or
           warrants).

    M    = the Current Market Price per share of Common Stock on the record
           date.

Such adjustment shall become effective immediately after the record date for 
the determination of stockholders entitled to receive such rights or 
warrants.  If any or all such rights or warrants are not so issued or expire 
or terminate before being exercised, the Conversion Amount then in effect 
shall be readjusted appropriately.

         (ii) In case the Corporation shall, by dividend or otherwise,
distribute to all holders of its Junior Stock (as hereinafter defined) evidences
of its indebtedness or assets (including securities, but excluding any warrants
or subscription rights referred to in subparagraph (i) above and any dividend or
distribution paid in cash out of the retained earnings of the Corporation), then
in each such case the Conversion Amount then in effect shall be adjusted in
accordance with the formula

    C1 = C x M
             --
         M - F

where


    C1   = the adjusted Conversion Amount

    C    = the current Conversion Amount

    M    = the Current Market Price per share of Common Stock on the record date
           mentioned below.


                                         A-11

<PAGE>

    F    = the aggregate amount of such cash dividend and/or the fair market
           value on the record date of the assets or securities to be
           distributed divided by the number of shares of Common Stock
           outstanding on the record date.  The Board of Directors shall
           determine such fair market value, which determination shall be
           conclusive.

Such adjustment shall become effective immediately after the record date for 
the determination of stockholders entitled to receive such dividend or 
distribution. For purposes of this subparagraph (ii), "Junior Stock" shall 
include any class of capital stock ranking junior as to dividends or upon 
liquidation to the Series B-1 Convertible Preferred Stock.

         (iii) All calculations hereunder shall be made to the nearest cent or
to the nearest 1/100 of a share, as the case may be.

         (iv) If at any time as a result of an adjustment made pursuant to
Section 9(c)(5), the holder of any Series B-1 Convertible Preferred Stock
thereafter surrendered for conversion shall become entitled to receive
securities, cash, or assets other than Common Stock, the number or amount of
such securities or property so receivable upon conversion shall be subject to
adjustment from time to time in a manner and on terms nearly equivalent as
practicable to the provisions with respect to the Common Stock contained in
subparagraphs (i) to (iii) above.

         (9)     Except as otherwise provided above in this Section 9, no 
adjustment in the Conversion Amount shall be made in respect of any 
conversion for share distributions or dividends theretofore declared and paid 
or payable on the Common Stock.

         (10)    Whenever the Conversion Amount is adjusted as herein 
provided, the Corporation shall send to each transfer agent, if any, for the 
Series B-1 Convertible Preferred Stock and the Common Stock, and to the 
principal securities exchange, if any, on which the Series B-1 Convertible 
Preferred Stock and the Common Stock is traded, or the Nasdaq National Market 
if the Series B-1 Convertible Preferred Stock or Common Stock is admitted for 
a quotation thereon, a statement signed by the Chairman of the Board, the 
President, or any Vice President of the Corporation and by its Treasurer or 
its Secretary or an Assistant Secretary stating the adjusted Conversion 
Amount determined as provided in this Section 9, and any adjustment so 
evidenced, given in good faith, shall be binding upon all stockholders and 
upon the Corporation. Whenever the Conversion Amount is adjusted, the 
Corporation will give notice by mail to the holders of record of Series B-1 
Convertible Preferred Stock, which notice shall be made within 15 days after 
the effective date of such adjustment and shall state the adjustment and the 
Conversion Amount.  Notwithstanding the foregoing notice provisions, failure 
by the Corporation to give such notice or a defect in such notice shall not 
affect the binding nature of such corporate action of the Corporation.

         (11)    Whenever the Corporation shall propose to take any of the 
actions specified in Section 9(c)(5) or in subparagraphs (i) or (ii) of 
Section 9(c)(8) which would result in any adjustment in the Conversion Amount 
under this Section 9(c), the Corporation shall cause a notice to be mailed at 
least 20 days prior to the date on which the books of the Corporation will 
close or on which a record will be taken for such action, to the holders of 
record of the outstanding Series B-1 Convertible Preferred Stock on the date 
of such notice. Such notice shall specify the action proposed to be taken by 
the Corporation and the date as of which holders of record of the Common 
Stock shall participate in any such actions or be entitled to exchange their 
Common Stock for securities or other property, as the case may be.  Failure 
by the Corporation to mail the notice or any defect in such notice shall not 
affect the validity of the transaction.

         (12)    Notwithstanding any other provision of this Section 9, no 
adjustment in the Conversion Amount need be made (a) for a transaction 
referred to in subparagraphs (i) or (ii) of Section 9(c)(8) if holders of 
Series B-1 Convertible Preferred Stock are to participate in the

                                         A-12

<PAGE>

transaction or distribution on a basis and with notice that the Board of 
Directors determines such transaction to be fair to the holders of the Series 
B-1 Convertible Preferred Stock and appropriate in light of the basis on 
which holders of the Common Stock or, in the case of a transaction referred 
to in said subparagraph (ii) holders of Junior Stock participate in the 
transaction; (b) for sales of Common Stock pursuant to a plan for 
reinvestment of dividends and interest, PROVIDED, that the purchase price in 
any such sale is at least equal to the fair market value of the Common Stock 
at the time of such purchase, or pursuant to any plan adopted by the 
Corporation for the benefit of its employees, directors, or consultants; or 
(c) after such time as a holder of shares of Series B-1 Convertible Preferred 
Stock becomes entitled to receive only cash upon conversion of such shares 
(in which case no interest shall accrue on the amount of such cash for any 
period prior to the date which is three business days after surrender of the 
certificates for such shares for conversion).

         (d)     MANDATORY CONVERSION.  So long as the Corporation shall be 
in compliance in all material respects with its obligations to the holders of 
the Series B-1 Convertible Preferred Stock (including its obligations under 
the Registration Rights Agreement and the provisions of this Certificate of 
Designations) and so long as the Registration Statement shall be effective, 
(1) on the date the Registration Statement is first declared effective by the 
SEC or on any date within five business days thereafter the Corporation may, 
by notice to the holders of the shares of Series B-1, require all of the 
outstanding shares of Series B-1 Convertible Preferred Stock to be converted 
and (2) on the date which is 730 days after the Registration Effective Date 
(the "Mandatory Conversion Date") all of the shares of Series B-1 Convertible 
Preferred Stock then outstanding shall be converted, in either such case, in 
accordance with the provisions, and subject to the limitations, of Section 
9(a), into shares of Common Stock to the extent the same are at such time 
convertible into shares of Common Stock.  On the Mandatory Conversion Date, 
the Corporation shall mail by first class mail or otherwise deliver to each 
holder of Series B-1 Convertible Preferred Stock a notice (a "Section 9(d) 
Notice"), which shall state (1) the number of shares of Series B-1 
Convertible Preferred Stock held by such holder which have been converted 
into shares of Common Stock in accordance with this Section 9(d) and (2) the 
Mandatory Conversion Date.  If the Corporation shall give a Section 9(d) 
Notice, then, unless theretofore converted by the holder in accordance 
herewith or redeemed by the Corporation, and so long as the Registration 
Statement shall remain effective on the Mandatory Conversion Date and the 
Corporation shall be in compliance in all material respects with its 
obligations to the holders of the Series B-1 Convertible Preferred Stock 
(including its obligations under the Registration Rights Agreements and the 
provisions of this Certificate of Designations) on the Mandatory Conversion 
Date, then on the Mandatory Conversion Date properly set forth therein, all 
shares of Series B-1 Convertible Preferred Stock which, on the Mandatory 
Conversion Date are convertible in accordance with Section 9(a) hereof, shall 
be converted into such number of shares of Common Stock as shall be 
determined pursuant to this Section 9 as if the conversion of such number of 
shares of Series B-1 Convertible Preferred Stock were made by the holders 
thereof in accordance herewith and as if the Mandatory Conversion Date were 
the Conversion Date.  Upon the surrender of certificates for shares of Series 
B-1 Convertible Preferred Stock by the holder after a Section 9(d) Notice is 
given, the Corporation shall issue, and, within three trading days after such 
surrender, deliver to or upon the order of such holder that number of shares 
of Common Stock as shall be issuable in respect to the conversion of the 
number of shares of Series B-1 Convertible Preferred Stock converted, 
together with accrued and unpaid dividends thereon to the date of conversion 
and accrued and unpaid interest on dividends on such shares which are in 
arrears, into Common Stock as shall be determined in accordance herewith.

         (e)     LIMITATION ON NUMBER OF SHARES ISSUED ON CONVERSION; 
MANDATORY REDEMPTION.  (1) Notwithstanding any other provision herein, unless 
the Stockholder Approval (or waiver from the National Association of 
Securities Dealers, Inc.) has been obtained, the corporation shall not be 
required to issue upon conversion of shares of Series B-1 Convertible

                                         A-13

<PAGE>

Preferred Stock, more than 321,191 shares of Common Stock, such amount to be 
subject to adjustment from time to time for stock splits, stock dividends, 
combinations, capital reorganizations and similar events relating to the 
Common Stock occurring after the date of filing of this Certificate of 
Designations with the Secretary of State of the State of Delaware, upon 
conversion of shares of Series B-1 Convertible Preferred Stock (the "Maximum 
Share Amount").  The Maximum Share Amount shall be allocated pro rata among 
the initial holders of the Series B-1 Convertible Preferred Stock in the rato 
that the respective number of shares of Series B-1 Convertible Preferred 
Stock issued to each holder bears to 250 shares and each certificate for such 
shares initially issued shall bear a notation to that effect.  Upon each 
surrender of a certificate for conversion of a portion of the shares of 
Series B-1 Convertible Preferred Stock represented thereby shall bear a 
notation as to the remaining portion of the Maximum Shares Amount allocated 
to the shares of Series B-1 Convertible Preferred Stock represented by such a 
certificate.  Upon any split up of a certificate for outstanding shares of 
Series B-1 Convertible Preferred Stock into two or more certificates for 
shares of Series A Convertible Preferred Stock (including, without 
limitation, in connection with a transfer thereof), each new certificate 
shall bear a notation as to the portion of Maximum Share Amount allocated to 
conversions of the shares of Series B-1 Convertible Preferred Stock 
represented by such new certificate (which shall be determined as a pro rata 
portion of the portion of the Maximum Share Amount represented by the 
certificate so split up).

         (2) The Corporation shall promptly, but in no event later than five 
business days after the occurrence, give notice to each holder (by first 
class mail, postage prepaid, at such holder's address as the same appears on 
the stock books of the Corporation) if on any date the Corporation would not 
have been required to convert shares of Series B-1 Convertible Preferred 
Stock as a consequence of the limitation set forth in Section 9(e)(1) had all 
outstanding shares of Series B-1 Convertible Preferred Stock been surrendered 
for conversion into Common Stock on such date.  If the Corporation shall have 
given or been required to give any such notice, the Corporation shall 
promptly, but in no event later than fifteen business days thereafter, 
redeem, out of funds legally available for such redemption, all or such 
portion of the outstanding shares of Series B-1 Convertible Preferred Stock 
as shall not, on the business day prior to the date of giving notice of such 
redemption, be convertible into shares of Common Stock by reason of the 
limitations set forth in Section 9(a)(1), at a redemption price per share 
equal to the Redemption Price which would be payable on the date such share 
is redeemed pursuant to this Section if such share were redeemed on such date 
pursuant to Section 8 (the "Special Redemption Price").  The Corporation 
shall not have the right to delay or to defer any redemption required by this 
Section 9(e)(2) in order to seek the Shareholder Approval unless consented to 
by the holders of all outstanding shares of Series B-1 Convertible Preferred 
Stock.

         (3) The provisions of Section 9(e)(2) shall continue to apply
notwithstanding the giving of any notice or any redemption of shares of Series
B-1 Convertible Preferred Stock pursuant thereto on any particular occasion.

         (4) Any notice of redemption (a "Section 9(e) Notice") under this 
Section 9(e) shall be delivered to the holders of the shares of Series B-1 
Convertible Preferred Stock at their addresses appearing on the records of 
the Corporation; PROVIDED, HOWEVER, that any failure or defect in the giving 
of notice to any such holder shall not affect the validity of notice to, or 
the redemption of shares of Series B-1 Convertible Preferred Stock of, any 
other holder.  Any Section 9(e) Notice shall state (1) that the Corporation 
is redeeming all or a portion of the outstanding shares of Series B-1 
Convertible Preferred Stock pursuant to this Section 9(e), (2) the number of 
shares of Series B-1 Convertible Preferred Stock held by such holder which 
are to be redeemed, (3) that the share are to be redeemed at the Special 
Redemption Price per share of Series B-1 Convertible Preferred Stock, 
determined in accordance with this Section 9(e), and (4) the date of 
redemption of such shares of Series B-1 Convertible Preferred Stock, 
determined in accordance with this Section 9(e) (the "Special Redemption 
Date").  On the Special Redemption

                                         A-14

<PAGE>

Date, the Corporation shall make payment in immediately available funds, out 
of funds legally available for such redemption, of the Special Redemption 
Price to each holder of shares of Series B-1 Convertible Preferred Stock to 
be redeemed to or upon the order of such holder as specified by such holder 
in writing to the Corporation at least two business days prior to the Special 
Redemption Date. Upon redemption of less than all of the shares of Series B-1 
Convertible Preferred Stock evidenced by a particular certificate, promptly, 
but in no event later than three business days after surrender of such 
certificate to the Corporation, the Corporation shall issue a replacement 
certificate for the shares of Series B-1 Convertible Preferred Stock which 
have not been redeemed. Only whole shares of Series B-1 Convertible Preferred 
Stock may be redeemed.  If the Corporation is required to redeem less than 
all outstanding shares of Series B-1 Convertible Preferred Stock, then such 
redemption shall be made, as nearly as practical, pro rata among the holders 
of record the Series B-1 Convertible Preferred Stock.  Notwithstanding any 
other provision of this Certificate of Designations or any Section 9(e) 
Notice, no share of Series B-1 Convertible Preferred Stock as to which the 
holder has exercised at any time prior to the applicable Special Redemption 
Date the right of conversion pursuant to Section 9 hereof may be redeemed by 
the Corporation on or after the date of exercise of such conversion right 
(Whether such conversion right is exercised prior to, on or after the giving 
of a Section 9(e) Notice).

         (5)     As used in this Section 9(e). "Stockholder Approval" means 
the approval by a majority of the votes cast by the holders of shares of 
Common Stock (in person or by proxy) at a meeting of the shareholders of the 
Corporation (duly convened at which a quorum was present), or a written 
consent of holders of shares of Common Stock entitled to such number of votes 
given without a meeting of the issuance by the Corporation of 20% or more of 
the outstanding Common Stock of the Corporation for less than the greater of 
the book or market value of such Common Stock on conversion of the Series B-1 
Convertible Preferred Stock, as and to the extent required under Section 
4460(i)(1)(D) of the rules of the National Association of Securities Dealers, 
Inc. (or any successor or replacement provisions thereof).

         SECTION 10.    VOTING RIGHTS.  Except as otherwise required by law or
expressly provided herein, shares of Series B-1 Convertible Preferred Stock
shall not be entitled to vote on any matter.

         The affirmative vote or consent of the holders of a majority of the
outstanding shares of the Series B-1 Convertible Preferred Stock, voting
separately as a class, will be required for (1) any amendment, alteration, or
repeal, whether by merger or consolidation of otherwise, of the Corporation's
Certificate of Incorporation if the amendment, alteration, or repeal materially
and adversely affects the powers, preferences, or special rights of the Series
B-1 Convertible Preferred Stock, or (2) the creation and issuance of any Senior
dividend Stock or Senior Liquidation Stock; PROVIDED, HOWEVER, that any increase
in the authorized preferred stock of the Corporation or the creation and
issuance of any stock which is both Junior Dividend Stock and Junior Liquidation
Stock or any other capital stock of the Corporation ranking on a parity with the
Series B-1 Convertible Preferred Stock shall not be deemed to affect materially
and adversely such powers, preferences, or special rights.

         SECTION 11.   OUTSTANDING SHARES.  For purposes of this Certificate 
of Designations, all shares of Series B-1 Convertible Preferred Stock shall 
be deemed outstanding except (i) from the date of surrender of certificates 
representing shares of Series B-1 Convertible Preferred Stock for conversion 
into Common Stock, all shares of Series B-1 Convertible Preferred Stock 
converted into Common Stock; (ii) from the date of registration of transfer, 
all shares of Series B-1 Convertible Preferred Stock held of record by the 
Corporation or any subsidiary or Affiliate (as defined herein) of the 
Corporation and (iii) from the Redemption Date, all shares of Series B-1 
Convertible Preferred Stock which are redeemed, so long as in each case the 
Redemption Price of such shares of Series B-1 Convertible Preferred Stock 
shall have been paid by the Corporation as and when required hereby.  For the 
purposes of this Certificate of

                                         A-15

<PAGE>

Designations, "Affiliate" means any person directly or indirectly or indirectly
controlling or controlled by or under direct or indirect common control with the
Corporation.  "Control" is the power to direct the management and policies of a
person, directly or through one or more intermediaries, whether through the
ownership of voting securities, by contract, or otherwise.


                                         A-16