Document:

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       CERTIFICATE OF DESIGNATION OF POWERS, PREFERENCES AND RIGHTS OF THE
               SERIES C CONVERTIBLE PARTICIPATING PREFERRED STOCK

     All references to any sections contained within this Certificate of
Designation of Powers, Preferences and Rights ("Certificate of Designation") of
the Series C Convertible Participating Preferred Stock ("Series C Preferred" and
also "Series C Preferred Stock") shall unless otherwise specified be deemed to
be references to other sections also within this Certificate of Designation.
Terms used but not otherwise defined herein (including without limitation the
terms "Adjustment Event", "Affiliate", "Ancillary Agreements", "Closing Date",
"Exchange", "Immediately Registrable Securities", "Listing Application", "Per
Share Purchase Price", "Registration Statement", "SEC", "Shareholder Rights
Agreement", "Subsidiary") shall have the meanings herein ascribed thereto in the
Series C Preferred Stock Purchase Agreement, dated as of March 3, 2000, by and
among the Corporation and various other parties thereto, as such may amended
from time to time (the "Series C Purchase Agreement").

     Section 1. Dividends

     (a) Generally.

         (i) The holders of Series C Preferred shall be entitled to receive
dividends as follows, out of funds legally available therefor, payable in each
case in preference and priority to any payment of any dividend on any other
class or series of capital stock other than the Series B Preferred Stock
(including without limitation any class or series of Common Stock or Series A
Preferred Stock) and pari passu with the Series B Preferred Stock and any other
class of Preferred Stock which by its terms is pari passu with the Series C
Preferred Stock (collectively, "Pari Passu Securities") and in any event upon
the liquidation, dissolution or winding-up of the Corporation (subject to the
limitations set forth in subsection (c), below) or the redemption of the Series
C Preferred and accruing on each share of Series C Preferred from the original
date of issuance thereof whether or not earned or declared: (y) a cumulative
dividend, initially at the rate of 8.00% per annum of the Liquidation Value (as
adjusted from time to time as provided hereinbelow, the "Dividend Rate"), or at
such other Dividend Rate as may from time to time be in effect, payable
quarterly in kind in additional shares of Series C Preferred; and (z) the pro
rata portion, on an as-if-converted basis, of any dividend or other distribution
paid, payable or declared upon the Common Stock. The Dividend Rate shall be
increased from time to time as follows: (I) if the Listing Application has not
been accepted and declared effective by a relevant Exchange on the date which is
seven (7) months after the Closing Date (such date being the "Dividend
Adjustment Trigger Date"), then on such date, and on the 90th day of each 90-day
period thereafter on which such Listing Application shall still not have been
declared effective by a relevant Exchange, the then current Dividend Rate shall
be increased by adding 1.00% thereto (in addition to any other increase therein
as may apply pursuant to clause (II), below, of this sentence), e.g., after the
first such adjustment, if any, the Dividend Rate shall increase from 8.00% per
annum to 9.00% per annum; and (II) if the Registration Statement shall not have
been declared effective by the SEC by December 31, 2000, then on such date and
on the last day of each calendar quarter thereafter on which such Registration
Statement shall still not have been declared effective by the SEC, the then
current Dividend Rate shall be increased by adding 1.00% thereto (in addition to
any other increase therein as may apply pursuant to clause (I), above, of this
sentence).

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         (ii) No dividend of cash or other property or other distribution (other
than a stock dividend giving rise to an adjustment under Section 4(e) hereof and
made in accordance with the provisions of Section 6 hereof) shall be paid, or
declared and set apart for payment (A) on any share of Common Stock, unless a
pro rata dividend or other distribution is paid, or declared and set apart for
payment, with respect to all outstanding shares of Series C Preferred, on an as
converted basis, and (B) on any share of any other class or series of capital
stock, including without limitation any other class of Preferred Stock or Common
Stock, unless (I) all accrued and unpaid dividends on shares of Series C
Preferred shall have been paid in full (except that the condition set forth in
this clause (I) shall not apply with respect to Pari Passu Securities), and (II)
a pro rata dividend or other distribution is paid, or declared and set apart for
payment, with respect to all outstanding shares of Series C Preferred, on an
as-if-converted basis.

         (b) Ratable Allocation of Dividends. If at any time the Corporation
pays less than the total amount of dividends then accrued and payable with
respect to all shares of Series C Preferred, as a single class, for which
dividends are required to be declared and paid pursuant to Section 1, such
payment of accrued but unpaid dividends will be distributed ratably among the
holders of Series C Preferred, as a single class, pro rata in proportion to the
number of shares of any of such securities held by each such holder, subject to
any right of the holders of shares of Series B Preferred Stock to payment of
dividends on a pari passu basis.

         Section 2. Liquidation, Dissolution, or Winding-Up.

         (a) Distributions to Holders of Preferred Stock. In the event of any
liquidation, dissolution, or winding-up of the Corporation, whether voluntary or
involuntary, the holders of outstanding shares of Series C Preferred (including
for purposes of this clause (a) any shares of Series C Preferred issuable, but
not yet issued, pursuant to the provisions of Section 1(a)(i), above) shall be
entitled to be paid out of the assets of the Corporation available for
distribution to stockholders, prior and in preference to any payment made to or
set aside for the holders of Common Stock, but pari passu with any payments made
to holders of shares of Series B Preferred Stock and of shares of any series of
Preferred Stock authorized after the date hereof that has rights pari passu with
the Series C Preferred on liquidation ("Subsequent Pari Passu Preferred Stock"),
an amount (the "Liquidation Value") initially equal to the Per Share Purchase
Price and subject to proportionate adjustment on the occurrence of an Adjustment
Event, plus all accrued and unpaid dividends thereon, if any, through the date
of such liquidation, dissolution, or winding-up. If upon any liquidation,
dissolution, or winding-up of the Corporation, the assets lawfully available to
be distributed to the holders of Series C Preferred under the preceding sentence
of this Section 2(a) are insufficient to permit payment to such holders of
Series C Preferred their full respective Liquidation Value per share plus all
accrued and unpaid dividends thereon, then all of the assets of the Corporation
lawfully available for distribution shall be distributed ratably among the
holders of shares of Series B Preferred Stock, Series C Preferred and any series
of Subsequent Pari Passu Preferred Stock, on a pari passu basis as a single
class, in proportion to their relative Liquidation Values as determined in
accordance with the preceding sentence of this Section 2(a). After such payment
shall have been made in full to such holders of such securities, or funds
necessary for such payment shall have been set aside by the Corporation in trust
for the exclusive benefit of such holders of such securities so as to be
available for such payment, any assets remaining available for distribution
shall be distributed to the holders of Series B Preferred Stock, Series C
Preferred and Common Stock of the Corporation, pro rata based on the number of
shares of Common Stock to which the holders of the Series B Preferred Stock and
Series C Preferred would then be entitled upon conversion of such shares.

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         (b) Deemed Liquidations by Holders of Series C Preferred Stock. Upon
the written election of the holders of eighty percent (80%) of the outstanding
shares of Series C Preferred, (A) a consolidation or merger of the Corporation
with or into any other person(s) or entity(ies) (other than a consolidation or
merger in which the Corporation is the surviving corporation and upon
consummation of which the holders of voting securities of the Corporation
immediately prior to such transaction continue to own, directly or indirectly,
not less than a majority of the voting securities of the Corporation, as the
surviving corporation, immediately following such transaction), (B) a sale of
all or substantially all of the assets of the Corporation, (C) a sale or other
disposition of more than 50% of the voting capital stock (in a single
transaction or series of related transactions) of the Corporation (whether
issued and outstanding, newly issued or from treasury, or any combination
thereof) or (D) other similar transaction, shall be regarded as a liquidation,
dissolution, or winding-up of the affairs of the Corporation within the meaning
of this Section 2. Notwithstanding the foregoing, each holder of Series C
Preferred shall have the right to elect the benefits of the applicable
provisions of Section 4(a) hereof in lieu of receiving payment in liquidation,
dissolution, or winding-up of the Corporation pursuant to this Section 2; and if
the holders of eighty percent (80%) of the outstanding shares of Series C
Preferred, as a class, shall elect to avail themselves of the benefits of
Section 4(a), such holders may require that the holders of all outstanding
shares of Series C Preferred shall be bound by the same election. For purposes
of this Section 2 and of Sections 4 and 6 hereof, a sale (whether in a single
transaction or a series of related transactions) of substantially all of the
assets of the Corporation shall mean the sale or other disposition, other than
in the ordinary course of business, of more than 50% of such assets, as
determined by reference to the fair market value of the Corporation.

         (c) Non-Cash Distributions. In the event of a liquidation, dissolution,
or winding-up of the Corporation resulting in the availability of assets other
than cash for distribution to the holders of shares of Series C Preferred, the
holders of Series C Preferred shall be entitled to a distribution of cash and/or
other assets equal in value to the relative liquidation preference and other
distribution rights stated in Section 2(a). In the event that such distribution
to the holders of shares of Series C Preferred shall include any assets other
than cash, the Board of Directors shall first determine in good faith and with
due care the value of such assets for such purpose, and shall notify all holders
of shares of Series C Preferred of such determination. The value of such assets
for purposes of the distribution under this Section 2(c) shall be the value as
so determined by the Board of Directors, unless the holders of a majority of the
outstanding shares of Series C Preferred shall object thereto in writing within
15 days after the date of such notice.

         (d) Dispute Resolution Procedures. In the event of such objection, the
valuation of such assets for purposes of such distribution shall be determined
by an arbitrator mutually agreed upon and selected by the objecting stockholders
and the Board of Directors, or in the event a single arbitrator cannot be agreed
upon within 10 days after the written objection sent by the objecting
stockholders in accordance with subsection (c), the valuation of such assets
shall be determined by an arbitration in which (i) the objecting stockholders
shall name in their notice of objection one arbitrator, (ii) the Board of
Directors shall name a second arbitrator within 15 days from the receipt of such
notice, (iii) the two arbitrators thus selected shall select a third arbitrator
within 15 days thereafter, and (iv) the three arbitrators thus selected shall
determine by majority vote the valuation of such assets within 15 days
thereafter for purposes of such distribution. In the event the third arbitrator
is not selected as provided herein, then such arbitrator shall be selected by
the President of the American Arbitration Association ("AAA"). The costs of such
arbitration shall be borne by the Corporation or by the holders of Series C
Preferred (on a pro rata basis out of the assets otherwise distributable to
them) as follows: (i) if the valuation as determined by the arbitrators is
greater than 90% of the valuation as determined by the Board of Directors, the
holders of Series C Preferred shall pay the costs of the arbitration, and (ii)
otherwise, the Corporation shall bear the costs of the arbitration. The
arbitration shall be held in Boston, Massachusetts, in accordance with the rules
of the AAA. The award made by the arbitrators shall be binding upon the
Corporation and the holders of all shares of Common Stock and Series C
Preferred, no appeal may be taken from such award, and judgment thereon may be
entered in any court of competent jurisdiction.

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         Section 3. Voting Rights. Except as otherwise expressly provided herein
or as required by applicable law, the holders of Series C Preferred shall be
entitled to vote on all matters on which holders of Common Stock are entitled to
vote, including without limitation, the election of directors. Each share of
Series C Preferred shall entitle the holder thereof to such number of votes per
share as shall equal the number of shares of Common Stock into which such share
of Series C Preferred is convertible pursuant to the applicable provisions of
Section 4(a) hereof as of the record date for the determination of stockholders
entitled to vote on such matter, or if no record date is established, at the
date such vote is taken or any written consent of stockholders is solicited.
Except as otherwise provided herein, in any relevant agreement, or as required
by applicable law, the holders of shares of Series C Preferred and Common Stock,
respectively, shall vote together as a single class on an as-if-converted basis
on all matters submitted to a vote or consent of stockholders.

         Section 4. Conversion. Shares of Series C Preferred shall be entitled
to be converted into shares of Common Stock or other securities, properties, or
rights, as set forth in this Section 4.

         (a) Holders' Option to Convert. Subject to and in compliance with the
provisions of this Section 4 and Section 2(b), any shares of Series C Preferred
(including those shares of Series C Preferred for which a Redemption Notice (as
defined below) has been delivered to the Corporation but which shares have not
yet been redeemed) may, at any time or from time to time at the option of the
holder, be converted into fully paid and non-assessable shares of Common Stock.

                  (i) The number of shares of Common Stock to which a holder of
Series C Preferred shall be entitled upon such conversion shall be equal to the
product obtained by multiplying (y) the number of shares of Series C Preferred
being converted by (z) the Series C Applicable Conversion Rate (determined as
provided in Section 4(c) hereof).

                  (ii) To exercise conversion rights under this Section 4(a), a
holder of Series C Preferred to be so converted shall surrender the certificate
or certificates representing the shares being converted (or affidavit(s) of the
loss thereof) to the Corporation at its principal office, and shall give written
notice to the Corporation at that office that such holder elects to convert such
shares. Such notice shall also state the name or names (with address or
addresses) in which the certificate or certificates for shares of Common Stock
issuable upon such conversion shall be issued. The certificate or certificates
for shares of Series C Preferred surrendered for conversion shall be accompanied
by evidence of proper assignment thereof to the Corporation. The date when such
written notice is received by the Corporation together with the certificate or
certificates representing the shares of Series C Preferred being converted,
shall be the applicable "Conversion Date." As promptly as practicable after the
applicable Conversion Date, the Corporation shall issue and shall deliver to the
holder of the shares of Series C Preferred being converted, a certificate or
certificates in such denominations as such holder may request in writing for the
number of full shares of Common Stock issuable upon the conversion of such
shares of Series C Preferred in accordance with the provisions of this Section
4, plus cash as provided in Section 4(j) below in respect of any fraction of a
share of Common Stock issuable upon such conversion. Such conversion shall be
deemed to have been effected immediately prior to the close of business on the
applicable Conversion Date, and at such time the rights of the holder as holder
of the converted shares of Series C Preferred shall cease and the person or
persons in whose name or names any certificate or certificates for shares of
Common Stock shall be issuable upon such conversion shall be deemed to have
become the holder or holders of record of shares of Common Stock represented
thereby.

                  (iii) In lieu of physical delivery of certificates, provided
the Corporation's transfer agent is participating in the Depositary Trust
Company ("DTC") Fast Automated Securities Transfer (FAST)

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program, upon request of the holder and in compliance with the provisions
hereof, the Corporation shall use its best efforts to cause its transfer agent
to electronically transmit the Common Stock to the holder by crediting the
account of the holder's Prime Broker with DTC through its Deposit Withdrawal
Agent Commission system. The time period for delivery described herein shall
apply to any such electronic transmittals.

         (b) Automatic Conversion.

                  (i) Qualified Public Offering. Each share of Series C
Preferred outstanding (including those shares for which a Redemption Notice (as
defined below) has been delivered to the Corporation but which shares have not
yet been redeemed) shall be converted into the number of fully paid and
non-assessable shares of Common Stock into which such share is then convertible
pursuant to the applicable provision of Section 4(a) hereof, automatically and
without further action, immediately upon the closing of a Qualified Public
Offering. A "Qualified Public Offering" shall mean a public offering of shares
of the Corporation's Common Stock pursuant to an effective registration
statement on Form S-1, or successor form, of the Securities and Exchange
Commission (the "SEC"), pursuant to which the per share price to the public is
not less than 250% of the Per Share Purchase Price (as adjusted equitably on the
occurrence of an Adjustment Event) and the gross proceeds to the Corporation are
not less than $20,000,000.

                  (ii) Class Vote of Series C Preferred Stock. Each share of
Series C Preferred outstanding (including those shares for which a Redemption
Notice (as defined below) has been delivered to the Corporation but which shares
have not yet been redeemed) shall be converted into the number of fully paid and
non-assessable shares of Common Stock into which such share is then convertible
pursuant to Section 4(a) hereof, automatically and without further action,
immediately upon the affirmative vote of holders of eighty percent (80%) of the
outstanding shares of Series C Preferred, voting separately as a class, to cause
such conversion.

                  (iii) Upon Election of the Corporation. Each share of Series C
Preferred outstanding (including those shares for which a Redemption Notice (as
defined below) has been delivered to the Corporation but which shares have not
yet been redeemed) shall be converted into the number of fully paid and
non-assessable shares of Common Stock into which such share is then convertible
pursuant to the applicable provision of Section 4(a) hereof at the written
election of the Corporation, provided, that, both (x) the Registration Statement
covering all of the Immediately Registrable Securities has been declared
effective by the SEC and is then currently effective, and (y) the closing market
price of the Common Stock has been equal to at least 150% of the Per Share
Purchase Price (as adjusted from time to time on the occurrence of an Adjustment
Event) for a period of twenty (20) consecutive business days (provided that such
20-day period shall end no earlier than the day on which the Registration
Statement has been declared effective by the SEC and no earlier than the fifth
(5th) business day prior to the date of the Corporation's election).

                  (iv) Mechanics of Automatic Conversion. Upon any automatic
conversion of shares of Series C Preferred into shares of Common Stock pursuant
to this Section 4(b), the holders of such converted shares shall surrender the
certificates (or affidavit(s) of loss thereof) formerly representing such shares
at the office of the Corporation or of any transfer agent for Common Stock.
Thereupon, there shall be issued and delivered to each such holder, promptly at
such office and in his name as shown on such surrendered certificate or
certificates, a certificate or certificates for the number of shares of Common
Stock into which such shares of Series C Preferred were so converted and cash as
provided in Section 4(j) below in respect of any fraction of a share of Common
Stock issuable upon such conversion. The Corporation shall not be obligated to
issue certificates evidencing the shares of Common Stock issuable upon such
conversion unless and until certificates formerly evidencing the converted
shares of Series C Preferred are either

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delivered to the Corporation or its transfer agent, as hereinafter provided, or
the holder thereof notifies the Corporation or such transfer agent that such
certificates have been lost, stolen, or destroyed and executes and delivers an
agreement to indemnify the Corporation from any loss incurred by it in
connection therewith.

         (c) Applicable Conversion Rates. The conversion rate in effect at any
time for Series C Preferred shall equal (such amount being the "Series C
Applicable Conversion Rate" or "Applicable Conversion Rate") the quotient
obtained by dividing (A) the sum of (I) the Per Share Purchase Price (as
adjusted on the occurrence of an Adjustment Event), plus (II) an amount equal to
all accrued but unpaid dividends on each share of Series C Preferred, if any, by
(B) the Series C Applicable Conversion Value then in effect, calculated as
hereinafter provided.

         (d) Applicable Conversion Values. The "Series C Applicable Conversion
Value" (also referred to herein as the "Applicable Conversion Value") in effect
initially, and until first (and subsequently) adjusted in accordance with
Sections 4(e), 4(f), 4(g) and/or 4(h) hereof, shall be equal to the Per Share
Purchase Price.

         (e) Adjustments for Extraordinary Common Stock Events. Upon the
happening of an Extraordinary Common Stock Event (as defined in Section 4(m)
hereof), automatically and without further action, and simultaneously with the
happening of such Extraordinary Common Stock Event, the Applicable Conversion
Value in effect immediately prior to such Extraordinary Common Stock Event shall
be adjusted by multiplying such then effective Applicable Conversion Value by a
fraction, the numerator of which shall be the number of shares of Common Stock
outstanding (excluding treasury stock) immediately before such Extraordinary
Common Stock Event and the denominator of which shall be the number of shares of
Common Stock outstanding (excluding treasury stock) immediately after such
Extraordinary Common Stock Event, and the product so obtained shall thereafter
be the Applicable Conversion Value. The Applicable Conversion Value, as so
adjusted, shall be readjusted in the same manner upon the happening of any
successive Extraordinary Common Stock Event or Events.

         (f) Adjustments for Dilutive Issues.

                  (i) Except as otherwise provided below in this Section
4(f)(i), and except with respect to an Extraordinary Common Stock Event,
adjustments in respect of which are provided for in Section 4(e), if at any time
while there are any shares of Series C Preferred outstanding the Company issues
or is deemed to issue any additional shares of Common Stock at a Net
Consideration Per Share (as hereinafter defined) less than the Series C
Applicable Conversion Value in respect of the Series C Preferred in effect
immediately prior to such issuance or deemed issuance, then and in each such
case, such Series C Applicable Conversion Value for the Series C Preferred will
be reduced as follows:

                           (A) If such issuance and/or deemed issuance occurs
before the date on which both (x) the Registration Statement has been declared
effective by the SEC in respect of all of the Immediately Registrable
Securities, and (y) the Listing Application in respect of all of the Immediately
Registrable Securities has been accepted by the NASDAQ SmallCap Market or other
relevant Exchange (such date on which both conditions (x) and (y) are satisfied
being the "Ratchet Adjustment Date"), then the Series C Applicable Conversion
Value for the Series C Preferred will be adjusted to equal the Net Consideration
Per Share (as hereinafter defined) at which such additional shares of Common
Stock are issued and/or deemed issued; provided, however, that the Series C
Applicable Conversion Value shall not be adjusted pursuant to this clause (A) in
connection with the issuance of the first 500,000 shares of Common Stock
(subject to adjustment from time to time on the occurrence of an Adjustment
Event) issued or deemed issued after the date of this Certificate of Designation
(the "Carve-Out Shares").

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                           (B) If such issuance and/or deemed issuance occurs
before the Ratchet Adjustment Date and involves all or any portion of the
Carve-Out Shares (but then only to the extent of the Carve-Out Shares), or
occurs after the Ratchet Adjustment Date, then the Series C Applicable
Conversion Value for the Series C Preferred will be adjusted to equal the result
of the following formula:

         New Series C Applicable Conversion Value = (P1 x Q1) + (P2 x Q2)
                                                    ---------------------
                                                                (Q1 + Q2)

         where:

P1 = the Series C Applicable Conversion Value in effect immediately prior to
such issuance or deemed issuance of additional shares of Common Stock;

Q1 = the aggregate number of shares of Common Stock outstanding (including
shares of Common Stock issuable upon conversion of all outstanding shares of
Series C Preferred and Series B Preferred Stock and the conversion, exchange
and/or exercise of all outstanding warrants, options and other convertible
securities, each to the extent then convertible, exchangeable and/or
exercisable) immediately prior to such issuance or deemed issuance of additional
shares of Common Stock;

P2 = the Net Consideration Per Share (as hereinafter defined) received by the
Corporation for the shares of Common Stock issued and/or deemed issued in
respect of such issuance of additional shares of Common Stock; and

Q2 = the number of shares of Common Stock issued and/or deemed issued in respect
of such issuance or deemed issuance of additional shares of Common Stock.

         The following shall not be deemed issuances of additional shares of
Common Stock for the purposes of this Section 4(f)(i): (A) the Corporation's
issuance of shares of Common Stock upon exercise or conversion of outstanding
shares of Series B Preferred Stock, Series C Preferred, or Derivative Securities
issued and outstanding as of the date of filing of this Certificate of
Designation, (B) rights offerings of securities issued by any Subsidiary of the
Corporation in connection with the initial public offering of the equity
securities of any such Subsidiary so long as any such offering is made pro-rata
on an as-if-converted basis to the holders of Series C Preferred, and (C)
certain transactions disclosed on Schedule 5.23 to the Series C Purchase
Agreement.

         For purposes of this Section 4(f), if a part or all of the
consideration received by the Corporation in connection with the issuance or
deemed issuance of shares of Common Stock or the issuance or deemed issuance of
any of the securities described below in paragraph (ii) of this Section 4(f)
consists of property other than cash, such consideration shall be deemed to have
the same value as is recorded on the books of the Corporation with respect to
receipt of such property so long as such recorded value was determined
reasonably and in good faith and with due care by the Board of Directors of the
Corporation, and shall otherwise be deemed to have a value equal to its fair
market value.

         The Series C Applicable Conversion Value, as so reduced, shall be
further reduced in the same manner upon the happening of any successive event or
events that cause reduction under this Section 4(f)(i).

                  (ii) For purposes of this Section 4(f), the issuance of any
Derivative Securities (as defined in Section 4(n)) shall be deemed an issuance
of shares of Common Stock with respect to Section 4(f)(i)(A) and with respect to
Section 4(f)(i)(B) if the Net Consideration Per Share (as defined in Section

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4(f)(ii)(A) and (B) hereof) that may be received by the Corporation for such
Common Stock is less than the Series C Applicable Conversion Value in effect
immediately prior to the time of such issuance, and except as hereinafter
provided, an adjustment in the Series C Applicable Conversion Value shall be
made upon each such issuance of Derivative Securities in the manner provided in
Section 4(f)(i)(A) and (B), as appropriate, as if such deemed Common Stock were
issued for such Net Consideration Per Share. No adjustment of the Series C
Applicable Conversion Value shall be made under this Section 4(f) upon the
issuance of any additional shares of Common Stock that are issued upon the
exercise, conversion, or exchange of any Derivative Securities if any such
adjustment was previously made upon the issuance of such Derivative Securities.
Any adjustment of the Series C Applicable Conversion Value with respect to this
Section 4(f)(ii) shall be disregarded if, as, and to the extent that the
Derivative Securities that gave rise to such adjustment expire or are canceled
without having been exercised, so that the Series C Applicable Conversion Value
effective immediately upon such cancellation or expiration shall be equal to the
Series C Applicable Conversion Value that otherwise would have been in effect
immediately prior to the time of the issuance of the expired or canceled
Derivative Securities, with such additional adjustments as subsequently would
have been made to that Series C Applicable Conversion Value had the expired or
canceled Derivative Securities not been issued. In the event that the terms of
any Derivative Securities previously issued by the Corporation are changed
(whether by their terms or for any other reason, including without limitation,
as a result of the effects of any anti-dilution adjustments contained therein)
so as to lower the Net Consideration Per Share payable with respect thereto
(whether or not the issuance of such Derivative Securities originally gave rise
to an adjustment of the Series C Applicable Conversion Value), the Series C
Applicable Conversion Value shall be recomputed as of the date of such change,
so that the Series C Applicable Conversion Value effective immediately upon such
change shall be equal to the Series C Applicable Conversion Value in effect at
the time of the issuance of the Derivative Securities subject to such change,
adjusted for the issuance thereof in accordance with the terms thereof after
giving effect to such change, and with such additional adjustments as
subsequently would have been made to that Series C Applicable Conversion Value
had the Derivative Securities been issued on such changed terms. For purposes of
this Section 4(f)(ii), the Net Consideration Per Share that may be received by
the Corporation shall be determined as follows:

                           (A) "Net Consideration Per Share" shall mean the
         amount equal to the total amount of consideration, if any, received by
         the Corporation for the issuance of such Derivative Securities or
         Common Stock, as the case may be, plus, in the case of Derivative
         Securities, the minimum amount of additional consideration, if any,
         payable to the Corporation upon exercise, conversion, and/or exchange
         thereof for shares of Common Stock, divided by the number of shares of
         Common Stock issued or the maximum number of shares of Common Stock
         that would be issued if all such Derivative Securities were exercised
         or converted, as the case may be.

                           (B) The Net Consideration Per Share that may be
         received by the Corporation shall be determined in each instance as of
         the date of issuance of Derivative Securities or Common Stock, as the
         case may be, without giving effect to any possible future price
         adjustments or rate adjustments that may be applicable with respect to
         such Derivative Securities and which are contingent upon future events;
         provided, that in the case of an adjustment to be made as a result of a
         change in terms of such Derivative Securities, including such changes
         as may result from the effects of any anti-dilution adjustments
         contained therein, the Net Consideration Per Share shall be determined
         as of the date of such change.

         (g) Adjustments for Reclassifications. If the Common Stock issuable
upon the conversion of shares of Series C Preferred shall be changed into the
same or a different number of shares of any class(es) or series of stock,
whether by reclassification or otherwise (other than an Extraordinary Common
Stock Event or a reorganization, merger, consolidation, or sale of assets
provided for elsewhere in this Section 4), then

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and in each such event the holder of each share of Series C Preferred shall have
the right thereafter to convert such share into the kind and amount of shares of
stock and other securities and property receivable upon such reorganization,
reclassification, or other change by holders of the number of shares of Common
Stock into which such shares of Series C Preferred might have been converted
immediately prior to such reorganization, reclassification, or change, all
subject to further adjustment as provided herein.

         (h) Adjustments for Reorganizations. Except as provided in the
following paragraph, in the event that there shall be a capital reorganization
of Common Stock (other than a subdivision, combination of shares,
reclassification, or exchange of shares provided for elsewhere in this Section
4) or a merger or consolidation of the Corporation with or into another company,
or the sale of all or substantially all of the Corporation's assets or sale of
more than 50% of the voting capital stock (in a single transaction or series of
related transactions) of the Corporation (whether issued and outstanding, newly
issued or from treasury, or any combination thereof) to any other person, then,
as a part of and as a condition to the effectiveness of such reorganization,
merger, consolidation, or sale, lawful and adequate provision shall be made so
that if the Corporation is not in economic effect the surviving company, each
share of Series C Preferred shall be converted into a share of capital stock of
the surviving company having equivalent preferences, rights, and privileges,
except that in lieu of being able to convert into shares of Common Stock of the
Corporation or the successor company, the holders of shares of Series C
Preferred (including any such capital stock issued upon conversion of Series C
Preferred) shall thereafter be entitled to receive upon conversion of such
Series C Preferred (including any such capital stock issued upon conversion of
Series C Preferred) the number of shares of stock or other securities or
property of the Corporation or of the successor company resulting from such
merger or consolidation or sale, to which a holder of the number of shares of
Common Stock deliverable upon conversion of such share of Series C Preferred
immediately prior to the capital reorganization, merger, consolidation, or sale
would have been entitled on such capital reorganization, merger, consolidation,
or sale. In any such case, appropriate provisions shall be made with respect to
the rights of the holders of Series C Preferred (including any such capital
stock issued upon conversion of Series C Preferred) after the reorganization,
merger, consolidation, or sale to the end that the provisions of this Section 4
(including without limitation provisions for adjustment of the Applicable
Conversion Values and the number of shares issuable upon conversion of Series C
Preferred or such capital stock) shall thereafter be applicable, as nearly as
may be, with respect to any shares of stock, securities, or assets to be
deliverable thereafter upon the conversion of such Series C Preferred or such
capital stock.

         Upon the occurrence of a capital reorganization, merger, or
consolidation of the Corporation or the sale of all or substantially all its
assets or sale or other disposition of more than 50% of the voting capital stock
(in a single transaction or series of related transactions) of the Corporation
(whether issued and outstanding, newly issued or from treasury, or any
combination thereof), as such events are more fully set forth in the first
paragraph of this Section 4(h), holders of a majority of the outstanding shares
of Series C Preferred, as a class, may elect treatment of their shares of Series
C Preferred under Section 2(b) hereof, notice of which election shall be
submitted in writing to the Corporation at its principal offices no later than
10 days before the effective date of such event, provided, that any such notice
shall be effective if given not later than 15 days after the date of the
Corporation's notice, pursuant to Section 8, with respect to such event, and if
the holders of the majority of the outstanding shares of Series C Preferred, as
a class, shall elect treatment of their shares of Series C Preferred under
Section 2(b) hereof, then all holders of Series C Preferred shall be bound by
such election. Subject to the provisions of Section 2(b) hereof, a holder who
fails to give such notice of election pursuant to this Section 4(h) shall be
deemed to have elected treatment under this Section 4(h) in lieu of treatment
under Section 2(b).

         (i) Certificate as to Adjustments. In each case of an adjustment or
readjustment of the Applicable Conversion Rate, the Corporation will promptly
furnish each holder of Series C Preferred with

                                       B-9

<PAGE>

a certificate, prepared by the chief financial officer of the Corporation,
showing such adjustment or readjustment, and stating in detail the facts upon
which such adjustment or readjustment is based.

         (j) Fractional Shares. No fractional shares of Common Stock or scrip
representing fractional shares shall be issued upon conversion of shares of
Series C Preferred. Instead of any fractional shares of Common Stock that would
otherwise be issuable upon conversion of shares of Series C Preferred, the
Corporation shall pay to the holder of the shares of Series C Preferred that
were converted a cash adjustment in respect of such fraction in an amount equal
to the same fraction of the market price per share of Common Stock (as
determined in a manner reasonably prescribed by the Board of Directors) at the
close of business on the applicable Conversion Date.

         (k) Partial Conversion. In the event some but not all of the shares of
Series C Preferred represented by a certificate or certificates surrendered by a
holder are converted, the Corporation shall execute and deliver to or on the
order of the holder, at the expense of the Corporation, a new certificate
representing the number of shares of Series C Preferred that were not converted.

         (l) Reservation of Common Stock. 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 shares of Series C
Preferred, such number of shares of Common Stock as shall from time to time be
sufficient to effect the conversion of all outstanding shares of Series C
Preferred, and 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 C Preferred, then subject to the provisions of
Section 6(a) hereof, the Corporation shall 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.

         (m) Extraordinary Common Stock Event. As used herein, "Extraordinary
Common Stock Event" means (i) the issuance of additional shares of Common Stock
or any Derivative Security as a dividend or other distribution on outstanding
Common Stock or any Derivative Security, (ii) the subdivision of outstanding
shares of Common Stock or any Derivative Security into a greater number of
shares of Common Stock or any Derivative Security, or (iii) the combination of
outstanding shares of Common Stock or any Derivative Security into a smaller
number of shares of Common Stock or any Derivative Security.

         (n) Derivative Securities. As used herein, "Derivative Securities"
means (i) all shares of stock and other securities that are convertible into or
exchangeable for shares of Common Stock and (ii) all options, warrants, and
other rights to acquire shares of Common Stock or securities convertible into or
exchangeable for shares of Common Stock.

         (o) Further Adjustment Provisions. In the event that, at any time as a
result of an adjustment made pursuant to this Section 4, the holder of any
shares of Series C Preferred upon thereafter surrendering such shares for
conversion shall become entitled to receive any shares or other securities of
the Corporation other than shares of Common Stock, the Applicable Conversion
Rates in respect of such other shares or securities so receivable upon
conversion of shares of Series C Preferred shall thereafter be adjusted, and
shall be subject to further adjustment from time to time, in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to
Series C Preferred contained in this Section 4, and the remaining provisions
hereof with respect to Series C Preferred shall apply on like or similar terms
to any such other shares or securities.

                                      B-10

<PAGE>

         Section 5. Redemption.

         (a) Redemption Request. If on and as of December 31, 2000 (x) the
Registration Statement has not been filed in respect of all of the Immediately
Registrable Securities, or (y) the Listing Application in respect of all of the
Immediately Registrable Securities has not been filed with the NASDAQ SmallCap
Market or other relevant Exchange, then holders of eighty percent (80%) of the
outstanding shares of Series C Preferred may request redemption of all, but not
less than all, of the outstanding shares of Series C Preferred by giving not
less than sixty (60) days prior written notice (a "Redemption Notice") to the
Corporation specifying the number of shares held by such holder. (The date upon
which such notice is provided to the Corporation is referred to herein as a
"Redemption Notice Date.") Upon receipt of a Redemption Notice, the Corporation
shall send a copy of the Redemption Notice to each other holder of shares of
Series C Preferred, and each such other holder shall then be bound by the
decision of the holders of eighty percent (80%) of the outstanding shares of
Series C Preferred that all, but not less than all, of the outstanding shares of
Series C Preferred be redeemed. The Corporation shall redeem at the Redemption
Price (as provided for in Section 5(c) below) all outstanding shares of Series C
Preferred either on the date fixed for redemption as set forth in the Redemption
Notice or in three installments as follows: (i) one-third of all such shares
shall be redeemed on the date fixed for redemption as set forth in the
Redemption Notice, (ii) one- half of the balance of all such shares shall be
redeemed twelve (12) months after the date fixed for redemption as set forth in
the Redemption Notice, and (iii) all the remaining shares shall be redeemed
twenty-four (24) months after the Redemption Notice Date, (each of the
foregoing, the applicable "Redemption Date"). Each holder of outstanding shares
of Series C Preferred shall be bound to redeem such shares as described in this
Section 5(a) and such Redemption Notice (except as otherwise set forth in this
Certificate of Designation) and the Corporation shall also be bound to redeem
such shares as described herein. If at any time, any holders of any other series
of Preferred Stock or Common Stock of the Corporation have elected to have any
of their shares redeemed at the same time as outstanding shares of Series C
Preferred are required to be redeemed hereunder, the Corporation shall pay the
applicable Redemption Price (as provided for in Section 5(c)) on shares of
Series C Preferred prior to any other payment on or redemption of the
Corporation's other classes of capital stock, including any other series of
Preferred Stock or Common Stock.

         (b) Class Vote of Series C Preferred Stock. In the case of (i) any
voluntary or involuntary bankruptcy of the Corporation, receivership, assignment
for the benefit of creditors, liquidation, acceleration of any third party
obligations, (ii) any payment default continuing for at least 120 days under the
terms of any funded debt where the aggregate amount in default and/or
accelerated as a result of such payment default equals or is greater than
$750,000, or (iii) the use of proceeds of the issuance of the Series C Preferred
in a manner other than as described in the Use of Proceeds schedule attached to
the Series C Purchase Agreement (as defined in Section 6 below), the holders of
eighty percent (80%) of the outstanding shares of Series C Preferred, voting
separately as a class, may elect early redemption of all of the outstanding
shares of Series C Preferred by giving written notice thereof to the Corporation
of such election. The Corporation shall redeem all outstanding shares of Series
C Preferred within sixty (60) days of such written notice to the Corporation at
the Redemption Price set forth in Section 5(c).

         (c) Redemption Price. (i) The redemption price per share of Series C
Preferred (the "Redemption Price") shall be equal to the greater of (i) the
Liquidation Value thereof plus any accrued and unpaid dividends thereon and (ii)
the then current fair market value per share, based on a valuation of the
Company as finally determined in accordance with Sections 5(c)(ii)-(iv) below as
of the applicable Redemption Date, plus all accrued and unpaid dividends
thereon.

                  (ii) Promptly upon receipt of a Redemption Notice, the
Corporation and the holders of a majority of the shares of Series C Preferred
shall mutually agree on the valuation of the Corporation. In

                                      B-11

<PAGE>

the event such an agreement cannot be reached within fifteen (15) days after
delivery of a Redemption Notice, the Corporation shall retain a nationally
recognized, reputable investment banking firm reasonably acceptable to the
holders of a majority of the shares of Series C Preferred, the cost of which
shall be split evenly between the Corporation and the holders of Series C
Preferred (pro rata in proportion to the relative number of shares held by each
of them). As promptly as is practicable, such investment banking firm shall
deliver to the Corporation a written report as to the fair market value of the
Corporation as a whole, on a going-concern basis, using customary and
appropriate valuation methods, as of the date of the most recent audited
financial statements of the Corporation (and not taking into account any
discount for minority ownership or restrictions on transfer of the capital stock
of the Corporation); provided, that if such date is more than six months prior
to the Redemption Notice Date, then another audit as of the most recent
practicable date shall be conducted and used for such purpose, and the
out-of-pocket expenses of such audit shall be paid by the Corporation. Upon
receipt of such report, the Corporation shall promptly send a copy thereof to
each holder of Series C Preferred.

                  (iii) The valuation set forth in such report (the "First
Valuation") shall be conclusive and binding on the Corporation and each holder
of Series C Preferred unless within 14 days after receipt of such report, the
holders of a majority of the outstanding shares of Series C Preferred notify the
Corporation in writing that they disagree with such valuation. If such
stockholders do so notify the Corporation, they shall promptly engage another
nationally recognized, reputable investment banking firm, at the expense of the
holders of Series C Preferred, pro rata in proportion to the relative number of
shares held by each of them, to render another written report as to the fair
market value of the Corporation (but without regard to any discount for minority
ownership or restrictions on transfer of the capital stock of the Corporation)
as of the appropriate valuation date, a copy of which shall be promptly
delivered to the Corporation.

                  (iv) If the Corporation does not agree with the valuation of
the Corporation set forth in the second investment banking firm's report (the
"Second Valuation"), then either (i) the Corporation and the holders of a
majority of the outstanding shares of Series C Preferred shall agree on the fair
market value or (ii) in the absence of such agreement, the redemption price
shall be the arithmetic average of the First Valuation and the Second Valuation,
unless, the difference between the First Valuation and Second Valuation is
greater than an amount equal to 5% of the higher of the two valuations, in which
case a third investment banking firm shall be appointed by the two prior
investment banking firms to render a written report as to fair market value (but
without regard to any discount for minority ownership or restrictions on
transfer of the capital stock of the Corporation), the cost of which shall be
split between the Corporation and the holders of Series C Preferred (pro rata
among them in proportion to the relative number of shares held by each of them)
equally, and the fair market value shall be equal to the arithmetic average of
the two (2) closest valuations, unless the third valuation equals the arithmetic
average of the First Valuation and the Second Valuation, in which case the fair
market value shall be equal to the third valuation.

         (d) Insufficient Funds. If the Corporation on any Redemption Date does
not have sufficient funds legally available to redeem the shares of Series C
Preferred for which redemption is required pursuant to Section 5(a) or 5(b)
hereof, then it shall, prior to redeeming any other series or class of the
Company's Preferred Stock or Common Stock, to the maximum lawful extent redeem
such shares of Series C Preferred on a pro rata basis among the Series C
Preferred stockholders in proportion to the number of shares held by each of
them, and shall redeem the remaining shares to be redeemed as soon as sufficient
funds are legally available.

         (e) Mechanics of Redemption. Each holder of outstanding shares of
Series C Preferred shall promptly surrender the certificate or certificates (or
affidavit(s) of loss thereof) representing such shares to the Corporation at the
Corporation's principal executive office, and thereupon the Corporation shall
pay the

                                      B-12

<PAGE>

portion of the Redemption Price for such shares to be paid as described in
Section 5(a) or 5(b) hereof in immediately available funds, by wire transfer to
an account designated by the holder of such shares or by certified or bank check
payable to the order of such holder. Each stock certificate surrendered for
redemption shall be canceled and retired.

         (f) Ranking. At no time shall the Corporation redeem shares of any
other series of Preferred Stock of the Corporation or pay the applicable
redemption price for or make any other payment on shares of any other series of
Preferred Stock of the Corporation to holders of such other series of Preferred
Stock so long as any shares of Series C Preferred are outstanding and have not
been redeemed with the exception that the shares of Series C Preferred shall
rank pari passu with the Series B Preferred Stock as to redemption.

         Section 6. Negative Covenants. So long as any shares of Series C
Preferred are outstanding, the Corporation shall not do nor shall it cause any
of its subsidiaries, if any, to do any of the following nor alter, amend, modify
or terminate any provision of this Section 6, without the affirmative vote or
written consent of the holders of eighty percent (80%) of the shares of Series C
Preferred (on an as converted basis), in addition to the right of any other
class or classes of capital stock to vote on such matters and any other vote
required by law, and any attempt to do so will be wholly void:

                  (a) Create or authorize the creation of, or authorize the
issuance of, any additional class(es) or series or shares of capital stock, or
any shares of any existing class(es) or series of capital stock, senior to the
Series C Preferred as to any one or more of liquidation, dividends, redemption
or registration rights ("Senior Shares"), or create or authorize any obligation
or security convertible into Senior Shares, each as approved by a majority of
the non-management members of the Board of Directors.

                  (b) Amend the Corporation's Certificate of Incorporation or
the bylaws of the Corporation so as to adversely affect the rights and
preferences of the Series C Preferred (it being understood that the
authorization and/or issuance of any shares of any series of stock or securities
of the Corporation with preference or priority senior to the Series C Preferred
as to any one or more of dividends, redemption or the distribution of assets on
liquidation, dissolution or winding-up of the Corporation (as provided in
Section 2 hereof) shall be deemed to affect adversely the rights and preferences
of the Series C Preferred).

                  (c) Become subject to any agreement that would restrict the
Corporation's performance of its obligations under the terms of this Certificate
of Designation, its bylaws, the Series C Purchase Agreement or under any of the
Ancillary Agreements.

                  (d) Obligate itself to do any of the foregoing.

         Section 7. No Reissuance of Shares of Preferred Stock. No share or
shares of Series C Preferred acquired by the Corporation by reason of
redemption, purchase, conversion, or otherwise shall be reissued, and all such
shares shall be canceled, retired, and eliminated from the shares that the
Corporation is authorized to issue. The Corporation shall from time to time take
such appropriate corporate action as may be necessary to reduce the authorized
number of shares of Series C Preferred accordingly.

         Section 8. Notices of Record Dates, Etc. In the event (i) the
Corporation establishes a record date to determine the holders of any class of
securities who are entitled to receive any dividend or other distribution, or
(ii) there occurs any capital reorganization of the Corporation, any
reclassification or recapitalization of the capital stock of the Corporation,
any merger or consolidation of the Corporation, or sale or transfer of all or
substantially all of the assets of the Corporation or more than 50% of the
voting capital stock (in a single transaction or series of related transactions)
of the Corporation (whether issued and

                                      B-13

<PAGE>

outstanding, newly issued or from treasury or any combination thereof) to any
other company, entity or person, or any voluntary or involuntary dissolution,
liquidation, or winding-up of the Corporation, the Corporation shall deliver to
each holder of Series C Preferred, in accordance with Section 11(a) hereof, at
least 20 days prior to such record date or the proposed effective date of the
transaction specified therein, as the case may be, a notice specifying (a) the
date of such record date for the purpose of such dividend or distribution and a
description of such dividend or distribution, (b) the date on which any such
reorganization, reclassification, transfer, consolidation, merger, dissolution,
liquidation, or winding-up is expected to become effective, and (c) the time, if
any, that is to be fixed, as to when the holders of record of Common Stock (or
other securities) shall be entitled to exchange their shares of Common Stock (or
other securities) for cash, securities, and/or other property deliverable upon
such reorganization, reclassification, transfer, consolidation, merger,
dissolution, liquidation, or winding-up.

         Section 9. Ranking. The Series C Preferred shall rank senior to all
other series of Preferred Stock (other than the Series B Preferred Stock),
including the Series A Preferred Stock, and the Common Stock, as to dividends,
redemption and distribution of assets on liquidation of the Corporation, but
shall rank pari passu with the Series B Preferred Stock as to all of the
foregoing.

         Section 10. Definition of Common Stock. For purposes of Section 4
hereof only, the term "Common Stock" shall mean and include the Corporation's
authorized Common Stock, par value $0.001 per share, as constituted on the date
of filing of this Certificate of Designation, and shall also include any capital
stock of any class of the Corporation thereafter authorized which shall neither
be limited to a fixed sum or percentage of par value in respect of the rights of
the holders thereof to participate in dividends or any distributions of earnings
or assets of the Corporation, whether or not such capital stock is entitled to a
preference in the distribution of assets upon the voluntary or involuntary
liquidation, dissolution or winding- up of the Corporation; provided that the
shares of Common Stock receivable upon conversion of shares of Series C
Preferred shall include only shares designated as Common Stock of the
Corporation on the date of filing of this Certificate of Designation, or in case
of any reorganization or reclassification of the outstanding shares thereof, the
stock, securities or assets provided for in Sections 4(g) or (h) hereof.

         Section 11. Miscellaneous.

         (a) Notices. All notices, requests, payments, instructions or other
documents to be given hereunder shall be delivered in accordance with Section
10.2 of the Series C Purchase Agreement.

         (b) Transfer Taxes, Etc. The Corporation shall pay any and all stock
transfer, documentary stamp taxes, and the like that may be payable in respect
of any issuance or delivery of shares of Series C Preferred or shares of Common
Stock or other securities issued in respect of shares of Series C Preferred
pursuant hereto or certificates representing such shares or securities. The
Corporation shall not, however, be required to pay any such tax that may be
payable in respect of any transfer involved in the issuance or delivery of
shares of Series C Preferred or Common Stock or other securities in a name other
than that in which such shares were registered, or in respect of any payment to
any person other than the registered holder thereof with respect to any such
shares, and shall not be required to make any such issuance, delivery or payment
unless and until the person otherwise entitled to such issuance, delivery, or
payment has paid to the Corporation the amount of any such tax or has
established, to the satisfaction of the Corporation, that such tax has been paid
or is not payable.

         (c) Transfer Agents. The Corporation may appoint, and from time to time
discharge and change, a transfer agent for the Series C Preferred. Upon any such
appointment or discharge of a transfer agent, the Corporation shall send written
notice thereof to each holder of record of Series C Preferred.

                                      B-14

<PAGE>

         (d) Restriction on Conversion by Either the Holder or the Company.
Notwithstanding anything herein to the contrary, and except as provided in
Section 4(b) hereof, in no event shall any holder of the Series C Preferred or
the Company have the right or be required to convert shares of Series C
Preferred to the extent that such conversion would cause the aggregate number of
shares of Common Stock beneficially owned by such holder and its Affiliates to
exceed 4.99% of the outstanding shares of the Common Stock following such
conversion. For purposes of this Section 11(d), beneficial ownership shall be
calculated in accordance with Section 13(d) of the Securities Exchange Act of
1934. The provisions of this Section 11(d) may be waived by a holder as to
itself (and solely as to itself) upon not less than sixty-five (65) days prior
written notice to the Company, and the provisions of this Section 11(d) shall
continue to apply until such 65th day (or later, if stated in the notice of
waiver). Notwithstanding anything to the contrary set forth herein, the
provisions of this Section 11(d) shall not apply to any Tudor Entity or any
Affiliate of any Tudor Entity.

                                      B-15<PAGE>

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED WITH THE SECURITIES
AND EXCHANGE COMMISSION IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM,
OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT.

 March  3, 2000

______ shares                                                   Warrant No. ____

                                     FORM OF
                            NET VALUE HOLDINGS, INC.
                             STOCK PURCHASE WARRANT

Registered Owner: __________

         This certifies that, for value received, Net Value Holdings, Inc., a
Delaware corporation (the "Company"), grants the following rights to the
Registered Owner, or assigns, of this Warrant:

         1. Definitions. Capitalized terms used herein and not otherwise defined
herein shall have the meanings given to such terms in the Purchase Agreement. As
used in this Warrant, the following terms have the following meanings:

         "Affiliate" means, with respect to any Person, any other Person that
directly or indirectly controls or is controlled by or under direct or indirect
common control with such Person. For the purposes of this definition, "control,"
when used with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities, by
contract or otherwise; and the terms of "affiliated," "controlling" and
"controlled" have meanings correlative to the foregoing.

         "Appraiser" means a nationally recognized or major regional investment
banking firm or firm of independent certified public accountants of recognized
standing.

          "Business Day" means any day except Saturday, Sunday and any day which
shall be a legal holiday or a day on which banking institutions in the state of
Delaware generally are authorized or required by law or other government actions
to close.

         "Cashless Exercise" has the meaning assigned to it in Section 6(b)
hereof.

<PAGE>

         "Change of Control Transaction" means the occurrence of any of (i) the
merger or consolidation of the Company with or into another entity, unless the
holders of the Company's securities immediately prior to such transaction or
series of transactions continue to hold at least 50% of such securities
following such transaction or series of transactions, (ii) a sale, conveyance,
lease, transfer or disposition of all or substantially all of the assets of the
Company in one or a series of related transactions or (iii) the execution by the
Company of an agreement to which the Company is a party or by which it is bound,
providing for any of the events set forth above in (i) or (ii).

         "Closing" and "Closing Date" have the meanings set forth in Section 1.3
of the Purchase Agreement.

         "Common Stock" means the shares of the Company's Common Stock, par
value $.001 per share.

         "Common Stock Deemed Outstanding" means, at any given time, the sum of
the number of shares of Common Stock actually outstanding at such time plus the
number of shares of Common Stock issuable upon the exercise of all options,
rights and warrants and the conversion or exchange of convertible or
exchangeable securities outstanding at such time, whether or not such options,
rights, or warrants, or convertible or exchangeable securities are actually
exercisable, convertible or exchangeable at such time.

         "Company" means Net Value Holdings, Inc., a Delaware corporation.

         "Excluded Securities" means (i) shares of Common Stock issued or
issuable pursuant to the Purchase Agreement and the Warrants, (ii) shares of
Common Stock deemed to have been issued by the Company in connection with a
transaction set forth on Schedule 5.23 to the Purchase Agreement or (iii) shares
of Common Stock (including options and warrants) issuable upon the exercise of
any options or warrants outstanding on the date hereof and listed in Schedule
2.5(b) of the Purchase Agreement.

         "Exercise Period" has the meaning assigned to it in Section 5 hereof.

         "Exercise Price" has the meaning assigned to it in Section 4 hereof.

         "Mandatory Exercise" has the meaning assigned to it in Section 8
hereof.

         "Mandatory Exercise Date" has the meaning assigned to it in Section 8
hereof.

         "Mandatory Exercise Period" has the meaning assigned to it in Section 8
hereof.

         "Mandatory Exercise Price" has the meaning assigned to it in Section 8
hereof

         "OTCBB" means the OTC Bulletin Board of the National Association of
Securities Dealers, Inc.

                                        2

<PAGE>

         "Per Share Market Value" means on any particular date (i) the closing
bid price per share of the Common Stock on such date on (a) the OTCBB, as
reported by the National Quotation Bureau Incorporated (or similar organization
or agency succeeding to its functions of reporting prices) at the close of
business on such date, or (b) such other Subsequent Market on which the Common
Stock is then listed or quoted or, if there is no such price on such date, then
the closing bid price on such exchange or quotation system on the date nearest
preceding such date, or (ii) if the Common Stock is not then publicly traded the
fair market value of a share of Common Stock as determined by an Appraiser
selected in good faith by the registered owners of a majority of the Underlying
Shares and Warrants then outstanding; provided, however, that, after receipt of
the determination by such Appraiser, the Company shall have the right to select,
in good faith, an additional Appraiser, in which case the fair market value
shall be equal to the average of the determinations by each such Appraiser; and
provided, further that all determinations of the Per Share Market Value shall be
appropriately adjusted for any stock dividends, stock splits or other similar
transactions during such period.

         "Person" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or political subdivision
thereof) or other entity of any kind.

         "Purchase Agreement" means that certain Series C Preferred Stock
Purchase Agreement, dated March 3, 2000, among the Company and the Purchasers.

         "Purchasers" has the meaning set forth in the Purchase Agreement.

         "Registered Owner" means the Person identified on the face of this
Warrant as the registered owner hereof or their assigns.

         "Registration Statement" has the meaning set forth in Section 5.20 of
the Purchase Agreement.

         "Subsequent Market" means the NASDAQ SmallCap Market, the NASDAQ
National Market, the New York Stock Exchange or the American Stock Exchange.

         "Trading Day(s)" means any day on which the primary market on which
shares of Common Stock are listed is open for trading.

         "Underlying Shares" means the shares of Common Stock issuable upon
exercise of the Warrants.

         "Warrant(s)" means the warrants issuable at the Closing, including this
Warrant and the Compensation Warrants (as defined in the Purchase Agreement), if
any.

         "Warrant Shares" has the meaning assigned to it in Section 3 hereof.

                                        3

<PAGE>

         2. Issue. Upon tender to the Company pursuant to Section 6 hereof, the
Company, within three (3) Business Days of the date thereof, shall issue to the
Registered Owner, or its designee, up to the number of shares specified in
Section 3 hereof of fully paid and nonassessable shares of Common Stock that the
Registered Owner, or assigns, is otherwise entitled to purchase.

         3. Number of Shares. The total number of shares of Common Stock that
the Registered Owner, or assigns, of this Warrant is entitled to receive upon
exercise of this Warrant is _____ shares (the "Warrant Shares"), subject to
adjustment from time to time as provided herein. The Company shall at all times
reserve and hold available out of its authorized and unissued shares of Common
Stock or other securities, as the case may be, sufficient shares of Common Stock
to satisfy all conversion, exercise and purchase rights represented by
outstanding convertible securities, options and warrants, including this
Warrant. The Company covenants and agrees that all shares of Common Stock that
may be issued upon the exercise of this Warrant shall, upon issuance, be duly
and validly issued, fully paid and nonassessable, free from all taxes, liens and
charges with respect to the purchase and the issuance of the shares, shall not
have any legend or restrictions on resale, expect as required by Section 7.3 of
the Purchase Agreement and, subsequent to the effectiveness of the Registration
Statement (as defined in the Purchase Agreement), shall be freely tradable.

         4. Exercise Price. The initial per share exercise price of this
Warrant, representing the price per share at which each share of Common Stock
issuable upon exercise of this Warrant may be purchased, is $26.58, subject to
adjustment from time to time pursuant to the provisions of Section 7 hereof (the
"Exercise Price").

         5. Exercise Period. This Warrant may be exercised, in whole or in part,
from the Closing Date up to and including March 2, 2003 (3 years less 1 day)
(the "Exercise Period"). If not exercised during this period, this Warrant and
all rights granted under this Warrant shall expire and lapse.

         6.   Tender; Issuance of Certificates.

                  a. This Warrant may be exercised, in whole or in part, by (a)
         delivery of the applicable Exercise Price for the number of Warrant
         Shares in respect of which this Warrant is exercisable, (b) delivery of
         a duly executed Warrant Exercise Form, a copy of which is attached to
         this Warrant as Exhibit A, properly executed by the Registered Owner,
         or assigns, of this Warrant and (c) surrender of this Warrant. The
         number of Warrant Shares so purchased shall be designated on the
         Warrant Exercise Form and shall be deemed to be issued to the
         Registered Owner as of the close of business on the date on which this
         Warrant shall have been surrendered, the completed Warrant Exercise
         Form shall have been delivered and payment shall have been made for
         such shares as set forth above. The payment and Warrant Exercise Form
         must be delivered to the registered office of the Company or of the
         Company's transfer agent, either in person or as set for in Section 13
         hereof.

                  b. In addition to the exercise of all or a part of this
         Warrant by payment of the Exercise Price in cash as provided above, and
         in lieu of such payment, the Registered Owner shall have the right to
         effect a cashless exercise (a "Cashless Exercise"). In the event of a

                                        4

<PAGE>

         Cashless Exercise the Registered Owner may exercise this Warrant in
         whole or in part by surrendering this Warrant in exchange for the
         number of shares of Common Stock equal to the product of (i) the number
         of shares as to which this Warrant is being exercised multiplied by
         (ii) a fraction, the numerator of which is the Per Share Market Value
         on such date less the Exercise Price then in effect and the denominator
         of which is the Per Share Market Value on such date (in each case
         adjusted for fractional shares as herein provided).

                  c. In lieu of physical delivery of this Warrant, provided the
         Company's transfer agent is participating in the Depositary Trust
         Company ("DTC") Fast Automated Securities Transfer (FAST) program, upon
         request of the Registered Owner and in compliance with the provisions
         hereof, the Company shall use its best efforts to cause its transfer
         agent to electronically transmit the Warrant Shares to the Registered
         Owner by crediting the account of the Registered Owner's Prime Broker
         with DTC through its Deposit Withdrawal Agent Commission system. The
         time period for delivery described herein shall apply to any such
         electronic transmittals.

                  d. Certificates for the Warrant Shares so purchased,
         representing the aggregate number of shares specified in the Warrant
         Exercise Form, and any cash payments due under Section 15 hereof shall
         be delivered to the Registered Owner, or its designee, within three (3)
         Business Days after this Warrant shall have been so exercised. The
         certificates so delivered shall be in such denominations as may be
         requested by the Registered Owner and shall be registered in the name
         of the Registered Owner or such other name as shall be designated by
         such Registered Owner. If this Warrant shall have been exercised only
         in part then, unless this Warrant has expired, the Company shall, at
         its expense and at the time of delivery of such certificates, deliver
         to the Registered Owner a new Warrant representing the number of shares
         with respect to which this Warrant shall not then have been exercised.

         7. Adjustment of Exercise Price.

                  a. Common Stock Dividends; Common Stock Splits;
         Reclassification. If the Company, at any time while this Warrant is
         outstanding, (a) shall pay or make a stock dividend on its Common Stock
         in shares of Common Stock, (b) subdivide outstanding shares of Common
         Stock into a larger number of shares or (c) issue by reclassification
         of shares of Common Stock any shares of capital stock of the Company,
         then (i) the Exercise Price shall be multiplied by a fraction, the
         numerator of which shall be the number of shares of Common Stock
         outstanding before such event and the denominator of which shall be the
         number of shares of Common Stock outstanding after such event and (ii)
         the number of Warrant Shares shall be multiplied by a fraction, the
         numerator of which shall be the number of shares of Common Stock
         outstanding immediately after such event and the denominator of which
         shall be the number of shares of Common Stock outstanding immediately
         prior to such event. Any adjustment made pursuant to this Section 7(a)
         shall become effective immediately after the record date for the
         determination of shareholders entitled to receive such dividend or
         distribution or, in the case of a subdivision or re-classification,
         shall become effective immediately after the effective date thereof.

                                        5

<PAGE>

                  b. Rights; Options; Warrants or Other Securities. If the
         Company, at any time while this Warrant is outstanding, shall fix a
         record date for the issuance of rights, options, warrants or other
         securities (collectively, "Rights") to the holders of its Common Stock
         entitling them to subscribe for or purchase, convert into, exchange for
         or otherwise acquire shares of Common Stock, or any stock or other
         securities convertible into or exchangeable for Common Stock for no
         consideration or for a price per share less than the Exercise Price,
         then the Exercise Price shall be multiplied by a fraction, the
         numerator of which shall be (i) the number of shares of Common Stock
         outstanding immediately prior to such record date plus (ii) the number
         of shares of Common Stock which the aggregate consideration received by
         the Company for the issuance of such Rights and the aggregate
         consideration receivable by the Company upon exercise, conversion,
         exchange or other acquisition of Common Stock pursuant to such rights
         would purchase at the Exercise Price, and the denominator of which
         shall be (i) the number of shares of Common Stock outstanding
         immediately prior to such record date plus (ii) the number of
         additional shares of Common Stock offered for subscription, purchase,
         conversion, exchange or acquisition, as the case may be, pursuant to
         such Rights. Such adjustment shall be made whenever such rights,
         options, warrants or other securities are issued, and shall become
         effective immediately after the record date for the determination of
         shareholders entitled to receive such rights, options, warrants or
         other securities. However, upon the expiration of any such Rights, the
         issuance of which resulted in an adjustment in the Exercise Price
         pursuant to this Section 6(b), if all or any portion of such Rights
         shall not have been exercised, the Exercise Price shall immediately
         upon such expiration be increased to the price which it would have been
         after the issuance of such Rights on the basis of the number of shares
         of Common Stock (if any) actually purchased upon the exercise of such
         Rights actually exercised.

                  c. Subscription Rights. If the Company, at any time while this
         Warrant is outstanding, shall fix a record date for the distribution to
         holders of its Common Stock evidence of its indebtedness or assets or
         rights, options, warrants or other securities entitling them to
         subscribe for or purchase, convert into, exchange for or otherwise
         acquire any security (excluding those referred to in Sections 7(a) and
         (b) above), then in each such case the Exercise Price at which this
         Warrant shall thereafter be exercisable shall be determined by
         multiplying the Exercise Price in effect immediately prior to such
         record date by a fraction, the numerator of which shall be the Per
         Share Market Value on such record date less the then fair market value
         at such record date of the portion of such assets, evidence of
         indebtedness, rights, options, warrants or other securities so
         distributed applicable to one outstanding share of Common Stock as
         determined by the Board of Directors in good faith, and the denominator
         of which shall be the Per Share Market Value as of such record date;
         provided, however, that in the event of a distribution exceeding ten
         percent (10%) of the net assets of the Company, such fair market value
         shall be determined by an Appraiser selected in good faith by the
         registered owners of a majority of the Warrants and Underlying Shares
         then outstanding; and provided, further, that the Company, after
         receipt of the determination by such Appraiser shall have the right to
         select in good faith an additional Appraiser meeting the same
         qualifications, in which case the fair market value shall be equal to
         the average of the determinations by each such Appraiser. Such
         adjustment shall be made whenever any

                                        6

<PAGE>

         such distribution is made and shall become effective immediately after
         the record date mentioned above.

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

                  e. Notice of Adjustment. Whenever the Exercise Price is
         adjusted pursuant to this Section 7 the Company shall promptly deliver
         to the Registered Owner a notice setting forth the Exercise Price after
         such adjustment and setting forth a brief statement of the facts
         requiring such adjustment. Such notice shall be signed by the chairman,
         president or chief financial officer of the Company.

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

                  g. Change of Control; Compulsory Share Exchange. In case of
         (A) any Change of Control Transaction or (B) any compulsory share
         exchange pursuant to which the Common Stock is converted into other
         securities, cash or property (each, an "Event"), lawful provision shall
         be made so that the Registered Owner shall have the right thereafter to
         exercise this Warrant for shares of stock and other securities, cash
         and property receivable upon or deemed to be held by holders of Common
         Stock following such Event, and the Registered Owner shall be entitled
         upon such Event to receive such amount of shares of stock and other
         securities, cash or property as the shares of the Common Stock of the
         Company into which this Warrant could have been exercised immediately
         prior to such Event (without taking into account any limitations or
         restrictions on the exercisability of this Warrant) would have been
         entitled; provided, however, that in the case of a transaction
         specified in (A), above, in which holders of the Company's Common Stock
         receive cash, the Registered Owner shall have the right to exercise the
         Warrant for such number of shares of the surviving company equal to the
         amount of cash into which this Warrant is then exercisable, divided by
         the fair market value of the shares of the surviving company on the
         effective date of such Event. The terms of any such Event shall include
         such terms so as to continue to give to the Registered Owner the right
         to receive the securities, cash or property set forth in this Section
         7(g) upon any exercise or redemption following such Event. In any such
         case appropriate adjustment shall be made in the application of the
         provisions of this Section 7 with respect to the rights of the
         Registered Owner after such transaction to the end that the provisions
         of this Section 7 (including adjustment of the Exercise Price then in
         effect and the number of Warrant Shares issuable upon exercise of this
         Warrant) shall be applicable after that Event and be as nearly

                                        7

<PAGE>

         equivalent as practicable. In the case of an Event specified in (A),
         above, the successor corporation or other entity (if other than the
         Company) resulting from such Event, or the Person acquiring the
         properties and assets, or such other controlling corporation or entity
         as may be appropriate, shall expressly assume the obligation to deliver
         the cash, securities or other property which the Registered Owner is
         entitled to receive hereunder. The provisions of this Section 7(g)
         shall similarly apply to successive Events.

                  h. Issuance's Below Exercise Price. If the Company, at any
         time while this Warrant is outstanding:

                           (i) issues or sells, or is deemed to have issued or
                  sold, any Common Stock (other than any Excluded Securities);

                           (ii) in any manner grants, issues or sells any
                  rights, options, warrants, options to subscribe for or to
                  purchase Common Stock or any stock or other securities
                  convertible into or exchangeable for Common Stock (other than
                  any Excluded Securities) (such rights, options or warrants
                  being herein called "Options" and such convertible or
                  exchangeable stock or securities being herein called
                  "Convertible Securities"); or

                           (iii) in any manner issues or sells any Convertible
                  Securities (other than Excluded Securities);

         for (a) with respect to paragraph (h)(i), above, a price per share, or
         (b) with respect to paragraphs h(ii) or h(iii), above, a price per
         share (including the consideration per share paid on issuance of the
         Option or Convertible Securities) for which Common Stock issuable upon
         the exercise of such Options or upon conversion or exchange of such
         Convertible Securities is, less than the Exercise Price in effect
         immediately prior to such issuance, sale or grant, then, immediately
         after such issuance, sale or grant, the Exercise Price shall be reduced
         to the amount determined by dividing (1) the sum of (x) the product
         derived by multiplying the Exercise Price in effect immediately prior
         to such issue or sale by the number of shares of Common Stock Deemed
         Outstanding immediately prior to such issue or sale, plus (y) the
         consideration, if any, received or deemed to have been received by the
         Company upon such issue or sale, by (2) the number of shares of Common
         Stock Deemed Outstanding immediately after such issue or sale. No
         modification of the issuance terms shall be made upon the actual
         issuance of such Common Stock upon exercise, conversion or exchange of
         such Options or Convertible Securities. If there is a change at any
         time in (i) the exercise price provided for in any Options, (ii) the
         additional consideration, if any, payable upon the issuance, conversion
         or exchange of any Convertible Securities or (iii) the rate at which
         any Convertible Securities are convertible into or exchangeable for
         Common Stock, then immediately after such change the Exercise Price
         shall be adjusted to the Exercise Price which would have been in effect
         at such time had such Options or Convertible Securities still
         outstanding provided for such changed exercise price, additional
         consideration or changed conversion rate, as the case may be, at the
         time initially granted, issued or sold; provided that

                                        8

<PAGE>

         no adjustment shall be made if such adjustment would result in an
         increase of the Exercise Price then in effect. However, upon the
         expiration of any such Options or Convertible Securities, the issuance
         of which resulted in an adjustment in the Exercise Price pursuant to
         this Section 6(h), if all or any portion of any such Options or
         Convertible Securities shall not have been exercised, the Exercise
         Price shall immediately upon such expiration be increased to the price
         which it would have been after the issuance of such Options or
         Convertible Securities on the basis of the Company offering for
         subscription, purchase, conversion, exchange or acquisition only that
         number of shares of Common Stock (if any) actually purchased upon the
         exercise of such Rights actually exercised.

                  i. Effect on Exercise Price of Certain Events. For purposes of
         determining the adjusted Exercise Price under Section 7(h), the
         following shall be applicable:

                         (i) Calculation of Consideration Received. If any
                  Common Stock, Options or Convertible Securities are issued or
                  sold or deemed to have been issued or sold for cash, the
                  consideration received therefor will be deemed to be the net
                  amount received by the Company therefor, without deducting any
                  expenses paid or incurred by the Company or any commissions or
                  compensations paid or concessions or discounts allowed to
                  underwriters, dealers or others performing similar services in
                  connection with such issue or sale. In case any Common Stock,
                  Options or Convertible Securities are issued or sold for a
                  consideration other than cash, the amount of the consideration
                  other than cash received by the Company will be the fair value
                  of such consideration, except where such consideration
                  consists of securities listed or quoted on a national
                  securities exchange or national quotation system, in which
                  case the amount of consideration received by the Company will
                  be the arithmetic average of the closing sale price of such
                  security for the five (5) consecutive Trading Days immediately
                  preceding the date of receipt thereof. In case any Common
                  Stock, Options or Convertible Securities are issued to the
                  owners of the non-surviving entity in connection with any
                  merger in which the Company is the surviving entity, the
                  amount of consideration therefor will be deemed to be the fair
                  value of such portion of the net assets and business of the
                  non-surviving entity as is attributable to such Common Stock,
                  Options or Convertible Securities, as the case may be. The
                  fair value of any consideration other than cash or securities
                  listed or quoted on a national securities exchange or national
                  quotation system will be determined jointly by the Company and
                  the registered owners of a majority of the Underlying Shares
                  and Warrants then outstanding. If such parties are unable to
                  reach agreement within ten (10) days after the occurrence of
                  an event requiring valuation (the "Valuation Event"), the fair
                  value of such consideration will be determined within
                  forty-eight (48) hours of the tenth (10th) day following the
                  Valuation Event by an Appraiser selected in good faith by the
                  Company and agreed upon in good faith by registered owners of
                  a majority of the Underlying Shares and Warrants then
                  outstanding. The determination of such Appraiser shall be
                  binding upon all parties absent manifest error.

                         (ii) Integrated Transactions. In case any Option is
                  issued in connection with the issue or sale of other
                  securities of the Company, together comprising one integrated

                                        9

<PAGE>

                  transaction in which no specific consideration is allocated to
                  such Options by the parties thereto, the Options will be
                  deemed to have been issued for an aggregate consideration of
                  $.001.

                  j. Notice of Certain Events. If:

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

                           (ii) the Company shall declare a special nonrecurring
                  cash dividend on or a redemption of its Common Stock;

                           (iii) the Company shall authorize the granting to the
                  holders of its Common Stock rights, options or warrants to
                  subscribe for or purchase any shares of capital stock of any
                  class or of any rights;

                           (iv) the approval of any shareholders of the Company
                  shall be required in connection with any reclassification of
                  the Common Stock or any Change of Control Transaction; or

                           (v) the Company shall authorize the voluntary or
                  involuntary dissolution, liquidation or winding up of the
                  affairs of the Company;

         then the Company shall cause to be filed at each office or agency
         maintained for the purpose of exercise of this Warrant, and shall cause
         to be delivered to the Registered Owner, at least 30 (thirty) calendar
         days prior to the applicable record or effective date hereinafter
         specified, a notice (provided such notice shall not include any
         material non-public information) stating (a) the date on which a record
         is to be taken for the purpose of such dividend, distribution,
         redemption, or granting of options, 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, distributions, redemption,
         rights or warrants are to be determined or (b) the date on which such
         reclassification or Change of Control Transaction is expected to become
         effective or close, and the date as of which it is expected that
         holders of record of Common Stock shall be entitled to exchange their
         shares of Common Stock for securities, cash or other property
         deliverable in connection with such reclassification or Change of
         Control Transaction; provided, however, that the failure to mail such
         notice or any defect therein or in the mailing thereof shall not affect
         the validity of the corporate action required to be specified in such
         notice. Nothing herein shall prohibit the Registered Owner from
         exercising this Warrant during the 30-day period commencing on the date
         of such notice.

                  k. Rounding. All calculations under this Section 7 shall be
         made to the nearest cent or the nearest l/l00th of a share, as the case
         may be.

                  l. Other Events. If any event occurs that would adversely
         affect the rights of the Registered Owner of this Warrant but is not
         expressly provided for by Section 7 hereof

                                       10

<PAGE>

         (including, without limitation, the granting of stock appreciation
         rights, phantom stock rights or other rights with equity features),
         then the Company's Board of Directors will make an appropriate
         adjustment in the Exercise Price so as to protect the rights of the
         Registered Owner; provided, however, that no such adjustment will
         increase the Exercise Price.

                  m. Increase in Exercise Price. In no event shall any provision
         in this Section 7 cause the Exercise Price to be greater than the
         Exercise Price on the date of issuance of this Warrant.

         8. Mandatory Exercise. If, at any time during the Exercise Period, the
Per Share Market Value equals or exceeds $39.87 (the "Mandatory Exercise Price")
for any period of thirty (30) consecutive Trading Days (ending no earlier than
the day that the Registration Statement has been declared effective by the
Securities and Exchange Commission) (the "Mandatory Exercise Period"), then so
long as (i) any Registration Statement required to be filed and be effective
pursuant to the Purchase Agreement is then in effect and (ii) the Company has a
sufficient number of authorized shares of Common Stock reserved for issuance
upon full exercise of the Warrants, the Registered Owner shall be required to
exercise this Warrant in full (the "Mandatory Exercise") in accordance with the
provisions of Section 6 hereof upon written notice from the Company of
satisfaction of the foregoing requirements. This Warrant shall be exercised
pursuant to the Mandatory Exercise on no later than the fifth (5th) Trading Day
following the receipt of such notice from the Company (such date that this
Warrant is exercised pursuant to the Mandatory Exercise, the "Mandatory Exercise
Date").

         9.   [INTENTIONALLY OMITTED.]

         10. Registration on Company Books. This Warrant shall be numbered and
shall be registered upon issuance in a warrant register maintained the Company.
The Company may deem and treat the Registered Owner of this Warrant as the
absolute owner thereof, unless the Registered Owner shall have presented this
Warrant to the Company for transfer and the transferee shall have been entered
in the register as a subsequent holder. The ownership of this Warrant shall be
proven by such register, absent manifest error.

         11. Registration Rights. The Company will undertake the registration of
the Common Stock into which this Warrant is exercisable at such times and upon
such terms pursuant to Section 5.20 of the Purchase Agreement.

         12. Reservation of Underlying Shares; Listing. The Company covenants
that it will at all times reserve and keep available out of its authorized
shares of Common Stock, free from preemptive rights, solely for the purpose of
issue upon exercise of this Warrants as herein provided, such number of shares
of the Common Stock as shall then be issuable upon the exercise of all
outstanding Warrants into Common Stock. The Company shall promptly secure the
listing of the shares of Common Stock issuable upon exercise of this Warrant
upon each national securities exchange or automated quotation system upon which
shares of Common Stock are then listed (subject to official notice of issuance
upon exercise of this Warrant) and shall maintain, so long as

                                       11

<PAGE>

any other shares of Common Stock shall be so listed, such listing of all shares
of Common Stock from time to time issuable upon the exercise of this Warrant.

         13. Notices. Any notice or other communication required or permitted to
be given hereunder shall be in writing and shall be deemed to have been received
(a) upon hand delivery (receipt acknowledged) or delivery by telex (with correct
answer back received), telecopy or facsimile (with transmission confirmation
report) at the address or number designated below (if received by 5:00 p.m.
Eastern time where such notice is to be received), or the first Business Day
following such delivery (if received after 5:00 p.m. Eastern time where such
notice is to be received) or (b) on the second Business Day following the date
of mailing by express courier service, fully prepaid, addressed to such address,
or upon actual receipt of such mailing, whichever shall first occur. The
addresses for such communications are (i) if to the Company or the Company's
transfer agent to the address set forth in the Purchase Agreement (with copies
to the Company's counsel), and (ii) if to the Registered Owner to the addresses
set forth on the Purchase Agreement (with copies to the Registered Owner's
counsel) or such other address as may be designated in writing hereafter, in the
same manner, by such Person.

         14. Compliance With Governmental Requirements. The Company covenants
that if any shares of Common Stock required to be reserved for purposes of
exercise this Warrant requires registration with or approval of any governmental
authority under any federal or state law, or any national securities exchange,
before such shares may be issued upon exercise, the Company will use its best
efforts to cause such shares to be duly registered or approved, as the case may
be.

         15. Fractional Shares. Upon any exercise hereunder, the Company shall
not be required to issue stock certificates representing fractions of shares of
Common Stock, but may if otherwise permitted make a cash payment in respect of
any final fraction of a share based on the Per Share Market Value at such time.
If the Company elects not, or is unable, to make such a cash payment, the
Registered Owner shall be entitled to receive, in lieu of the final fraction of
a share, one whole share of Common Stock.

         16. Payment of Tax Upon Issue of Transfer. The issuance of certificates
for shares of the Common Stock upon exercise of this Warrant shall be made
without charge to the Registered Owner hereof for any documentary stamp or
similar taxes that may be payable in respect of the issue or delivery of such
certificate, provided that the Company shall not be required to pay any tax that
may be payable in respect of any transfer involved in the issuance and delivery
of any such certificate upon exercise in a name other than that of the
Registered Owner of this Warrant and the Company shall not be required to issue
or deliver such certificates unless or until the Person or Persons requesting
the issuance thereof shall have paid to the Company the amount of such tax or
shall have established to the satisfaction of the Company that such tax has been
paid.

         17. Warrants Owned by Company Deemed Not Outstanding. In determining
whether the holders of the outstanding Warrants have concurred in any direction,
consent or waiver under this Warrant, warrants which are owned by the Company or
any other obligor thereof shall be disregarded and deemed not to be outstanding
for the purpose of any such determination; provided, that any

                                       12

<PAGE>

Warrants owned by the Registered Owner shall be deemed outstanding for purposes
of making such a determination.

         18. Effect of Headings. The section headings herein are for convenience
only and shall not affect the construction hereof.

         19. No Rights as Stockholder. This Warrant shall not entitle the
Registered Owner to any rights as a stockholder of the Company, including
without limitation, the right to vote, to receive dividends and other
distributions, or to receive notice of, or to attend, meetings of stockholders
or any other proceedings of the Company, unless and to the extent exercised into
shares of Common Stock in accordance with the terms hereof.

         20. Certain Actions Prohibited. The Company will not, by amendment of
its charter or through any reorganization, 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 by it hereunder, but will at all times in good faith
assist in the carrying out of all the provisions of this Warrant and in the
taking of all such action as may reasonably be requested by the Registered Owner
in order to protect the exercise privilege of the Registered Owner against
dilution or other impairment, consistent with the tenor and purpose of this
Warrant. Without limiting the generality of the foregoing, the Company (i) will
not increase the par value of any shares of Common Stock receivable upon the
exercise of this Warrant and (ii) will take all such actions as may be necessary
or appropriate in order that the Company may validly and legally issue fully
paid and nonassessable shares of Common Stock upon the exercise of this Warrant.

         21. Shareholder Rights Plan. In the event that the Company shall
distribute "poison pill" rights pursuant to a "poison pill" shareholder rights
plan (the "Shareholder Rights"), the Company shall, in lieu of making any
adjustment pursuant to Section 7 hereof, make proper provision so that each
Registered Owner who exercises this Warrant after the record date for such
distribution and prior to the expiration or redemption of the Shareholder Rights
shall be entitled to receive upon such exercise, in addition to the shares of
Common Stock issuable upon such exercise, a number of Shareholder Rights to be
determined as follows: (i) if such exercise occurs on or prior to the date for
the distribution to the holders of Shareholder Rights of separate certificates
evidencing such Shareholder Rights (the "Distribution Date"), the same number of
Shareholder Rights to which a holder of a number of shares of Common Stock equal
to the number of shares of Common Stock issuable upon such exercise at the time
of such exercise would be entitled in accordance with the terms and provisions
of and applicable to the Shareholder Rights; and (ii) if such exercise occurs
after the Distribution Date, the same number of Shareholder Rights to which a
holder of the number of shares into which this Warrant was exercisable
immediately prior to the Distribution Date would have been entitled on the
Distribution Date, in accordance with the terms and provisions of such
Shareholder Rights, and in each case subject to the terms and conditions of the
Shareholder Rights.

         22. Successors and Assigns. This Warrant shall be binding upon and
inure to the benefit of the Registered Owners and its assigns, and shall be
binding upon any entity succeeding to the

                                       13

<PAGE>

Company by merger or acquisition of all or substantially all the assets of the
Company. The Company may not assign this Warrant or any rights or obligations
hereunder without the prior written consent of the Registered Owner. The
Registered Owner may assign this Warrant without the prior written consent of
the Company.

         23. Governing Law. This Warrant shall be governed by and construed and
enforced in accordance with the internal laws of the State of Delaware, as
applied to agreements under seal made, and entirely to be performed, within
Delaware, without regard to the principles of conflicts of law thereof. Each
party hereby irrevocably waives personal service of process and consents to
process being served in any such suit, action or proceeding by mailing a copy
thereof to such party at the address for such notices to it under this Warrant
and agrees that such service shall constitute good and sufficient service of
process and notice thereof. Nothing contained herein shall be deemed to limit in
any way any right to serve process in any manner permitted by law. EACH PARTY
HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A
JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION
HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY.

         24. Remedies. In the event of a breach by the Company of any of their
obligations under this Warrant, the Registered Owner, in addition to being
entitled to exercise all rights granted by law and under the Purchase Agreement,
including recovery of damages, will be entitled to specific performance of its
rights under this Warrant. The Company agrees that monetary damages would not
provide adequate compensation for any losses incurred by reason of a breach by
it of any of the provisions of this Warrant and hereby further agree that, in
the event of any action for specific performance in respect of such breach, it
shall waive the defense that a remedy at law would be adequate.

         25. Mutilated or Missing Warrants. In case this Warrant shall be
mutilated, lost, stolen or destroyed, the Company, upon request of the
Registered Owner, shall issue and deliver in exchange and substitution for and
upon cancellation of such mutilated Warrant (upon surrender thereof), or in the
event that this Warrant is lost, stolen or destroyed, a new Warrant of like
tenor and representing an equivalent right or interest upon any indemnification
undertaking by the Holder to the Company in customary form as reasonably
required by the Company.

                                       14

<PAGE>

         IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its duly authorized officer as of the date first set forth above.

                                                NET VALUE HOLDINGS, INC.

                                                By:
                                                Name:  Andrew P. Panzo
                                                Title: Chief Executive Officer

                                       15

<PAGE>

                                    EXHIBIT A

                              Warrant Exercise Form
                              ---------------------

TO:      NET VALUE HOLDINGS, INC.

         The undersigned hereby: (1) irrevocably subscribes for and offers to
purchase _______ shares of Common Stock of Net Value Holdings, Inc., pursuant to
Warrant No. ___ heretofore issued to ___________________ on ____________, ____ ;
(2) encloses either (a) a cash payment of $__________ or (b) a Warrant
representing _____ shares of Common Stock valued at the Per Share Market Price
of $ _____ on ________, ____, for these shares at a price of $____ per share (as
adjusted pursuant to the provisions of the Warrant); and (3) requests that a
certificate for the shares be issued in the name of the undersigned, or the
undersigned's designee, and delivered to the undersigned, or the undersigned's
designee, at the address specified below.

                  Date:

                  Investor Name:

                  Taxpayer Identification Number:

                  By:

                  Printed Name:

                  Title:

                  Address:

                  Cashless Exercise (Y or N):

                  Note: The above signature should correspond exactly with the
                  name on the face of this Warrant Certificate or with the name
                  of assignee appearing in assignment form below.

AND, if said number of shares shall not be all the shares purchasable under the
within Warrant, a new Warrant Certificate is to be issued in the name of said
undersigned for the balance remaining of the shares purchasable thereunder less
any fraction of a share paid in cash and delivered to the address stated above.

                                       16

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