Document:

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                                                                    Exhibit 10.1

                          Administrative Reinsurance
                                  Agreement #

                   (hereinafter referred to as "Agreement")

                                    between

                     Provident Life and Accident Insurance
                                    Company
                           (Chattanooga, Tennessee)

                (hereinafter referred to as the "the Company")

                                      and

                    Reassure America Life Insurance Company
                           (Jacksonville, Illinois)

                     (hereinafter referred to as "REALIC")

                            Effective: July 1, 2000
<PAGE>

                                   Preamble
                                   --------

     WHEREAS, Provident Life and Accident Insurance Company, a Tennessee
insurance corporation (the "Company"), desires to reinsure a block of its in
force individual life and corporate owned life insurance ("COLI") policies; and

     WHEREAS, Reassure America Life Insurance Company, an Illinois insurance
corporation ("REALIC"), desires to reinsure these individual life and COLI
policies from the Company; and

     WHEREAS, the Company and REALIC intend that the basis of the reinsurance
shall be 100% coinsurance by REALIC; and

     WHEREAS, REALIC further wishes to provide certain administrative services
for these policies.

     NOW, THEREFORE, the Company and REALIC have entered into this Reinsurance
Agreement ("Agreement") and mutually agree to reinsure, and to provide
administrative services for the Company's insurance policies on the terms and
conditions set forth in this Agreement.

     This Agreement is solely between the Company and REALIC and performance of
the obligations of the party under this Agreement will be rendered solely to the
other party.  In no instance will anyone other than the Company or REALIC have
any rights under this Agreement.

                                   ARTICLE I

                                  Coinsurance
                                  -----------

1.   Insurance
     ---------

     The Company will cede and REALIC will accept on a coinsurance basis 100% of
the Company's rights, obligations, liabilities and risks written and retained by
the Company on the policies and plans of insurance set forth in Schedule A.
                                                                ----------
Schedule A contains a seriatim list of the policies reinsured hereunder. The
----------
policies or plans set forth in Schedule A that are reinsured under this
                               ----------
Agreement are hereinafter referred to collectively as "Reinsured Policies" and
individually as a "Reinsured Policy."

     The premium to be paid to REALIC by the Company for the Reinsured Policies
will be 100% of the premium paid to the Company for coverage under the Reinsured
Policies on and

                                      -1-
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after July 1, 2000 (the "Effective Date"), inclusive of policy fees
("Premiums"). This Agreement will not be valid and binding until receipt of all
required regulatory approvals.

2.   Transfer of Reserves and Ceding Allowance
     -----------------------------------------

     In consideration for the reinsurance provided by REALIC, the Company will
transfer to REALIC the assets listed in Schedule F with a designated value of
$534,051,578.95, plus cash in an amount necessary to have the sum of the
designated value of the assets and the cash be equal to (i) the reserves
(excluding reserves for claims in the course of settlement and claims that have
been incurred but not reported) (but including for the AMA policies the
experience rating refund balances) for the Reinsured Policies calculated in
accordance with statutory accounting practices permitted for life insurance
companies by the State of Tennessee and consistent with the Company's current
practices and methodologies, less (ii) due and deferred Premiums on the
                             ----
Reinsured Policies, less (iii) any policy loans outstanding on the Reinsured
                    ----
Policies, net of any unearned policy loan interest on those policy loans (each
of items (i),(ii) and (iii) measured as of the Effective Date). REALIC will
transfer to the Company a cash ceding allowance of $486,600,000 for the
Reinsured Policies. REALIC will be entitled to the investment earnings on the
assets transferred from the Effective Date until the date of transfer. REALIC
will pay the Company interest on the ceding allowance at an annual rate equal to
5% from the Effective Date until the date of transfer. Such date of transfer
will be as soon as practicable following receipt of all required regulatory
approvals.

     REALIC agrees with respect to the Reinsured Policies, to establish and
maintain as liability on its statutory statements not less than the statutory
reserves as required by the applicable State of Tennessee regulatory
authorities.

3.   Agent Compensation
     ------------------

     At intervals reasonably requested by the Company, REALIC will provide the
Company with premium payment information in a format reasonably acceptable to
the Company that permits the Company to calculate and pay agent commissions.
REALIC will reimburse the Company for all agent commissions earned on or after
the Effective Date related to the Reinsured Policies, in accordance with
procedures agreed to by the parties. REALIC will not be responsible for
reimbursing the Company for any payments made under the ICG Supplemental Bonus
Program, but will administer the program for the Company.

4.   Payment of Premium Taxes and Guaranty Fund Assessment
     -----------------------------------------------------

     The Company will pay all actual premium taxes incurred on or after the
Effective Date related to the Reinsured Policies, in accordance with procedures
agreed to by the parties. On or about April 1 of each year, the Company will
provide to REALIC a schedule of taxes paid by state, and REALIC will promptly
reimburse the Company for such taxes. The Company

                                      -2-
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shall be entitled to recover from REALIC all premium taxes paid by the Company
incurred on or after the Effective Date related to the Reinsured Policies and to
recover from REALIC the amounts paid by the Company on guaranty fund
assessments, based on insolvencies which occurred after the Effective Date, with
respect to the Reinsured Policies, which are not offset from the premium taxes.
The Company shall prepare a premium tax statement with appropriate documentation
and submit the statement to REALIC and REALIC shall remit to the Company its
payment within thirty (30) days. The Company shall submit a guaranty fund
statement to REALIC with attached documentation within thirty (30) days after
the end of the month in which the Company pays any guaranty fund assessment.
REALIC shall remit, if required, to the Company within thirty (30) days of
receipt of such statement.

5.   Excess Reinsurance
     -------------------

     REALIC will reimburse the Company for all premiums and other charges, if
any, for the existing excess of retention reinsurance for the Reinsured Policies
due for all periods on or after the Effective Date. REALIC will receive from the
Company all recoveries for claims incurred on or after the Effective Date from
the existing excess of retention reinsurance for the Reinsured Policies. REALIC,
on behalf of the Company, will assume all responsibility for administration of
the reinsurance arrangements on the Reinsured Policies at the same time as
REALIC assumes responsibility for the administration of such Reinsured Policies
pursuant to Article IV of this Agreement. In addition, REALIC will assume
responsibility for any credit or payment risk from other reinsurers related to
the Reinsured Policies.

     With the consent of REALIC, the Company may exercise any right it may have
to recapture risk subject to excess reinsurance and REALIC will reinsure such
recaptured risk under this Agreement. Upon request by REALIC, the Company agrees
to take reasonable action to exercise it rights to recapture risk subject to
excess reinsurance and REALIC will reinsure such recaptured risk under this
Agreement.

                                  ARTICLE II

                             Reinsurance Liability
                             ---------------------

     The liability of REALIC on any Reinsured Policy begins on the Effective
Date. The liability of REALIC on any Reinsured Policy ends at the same time as
that of the Company; however, REALIC will have no liability for claims incurred
before the Effective Date.

                                      -3-
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                                  ARTICLE III

                         Plan and Amount of Insurance
                         ----------------------------

1.   Plan
     ----

     Reinsurance under this Agreement is on a coinsurance basis and is subject
to the terms and conditions of the original policy forms for the Reinsured
Policies, and any amendments thereto in effect as of the Effective Date.

2.   Reductions and Terminations
     ---------------------------

     Reinsurance amounts are calculated in terms of coverages on a "per policy"
basis. If the coverage of any Reinsured Policy on an insured is reduced or
terminated, reinsurance under this Agreement on such Reinsured Policy will be
similarly reduced or terminated.

3.   Reinstatements
     --------------

     A Reinsured Policy ceded under this Agreement that is reduced, terminated
or lapsed, and later reinstated pursuant to policy provisions will be reinsured
by REALIC. REALIC will retain any Premiums and interest that the Company has
received for reinstatement.

     A terminated policy that would have been a Reinsured Policy had it been in
force on the date of this Agreement, that later reinstates pursuant to policy
provisions, will be reinsured by REALIC and become a Reinsured Policy. REALIC
will be entitled to retain any Premiums and interest for coverage on or after
the Effective Date that is received for reinstatement, and the Company will
transfer to REALIC the amount of the statutory reserves calculated as of the
Effective Date. The date of reinsurance for such reinstated policies shall be
the Effective Date.

                                  ARTICLE IV

                                Administration
                                --------------

1.   Transfer of Administrative Services.
     -----------------------------------

     On and after the dates set forth in Schedule B, REALIC will be responsible
                                         ----------
for providing administrative services for the Reinsured Policies as set forth in
Schedule B. The effective date on which REALIC assumes responsibility for
----------
administrative services on a Reinsured Policy is referred to as the
"Administrative Transfer Date." Prior to the respective Administrative Transfer
Dates, the Company shall continue to provide administrative services for the
Reinsured Policies in a manner consistent with its current practices. In
consideration for the Company

                                      -4-
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performing these administrative services, REALIC shall pay the Company, on a
monthly basis, the fees computed as set forth in Schedule C.
                                                 ----------

2.   Administrative Services.
     -----------------------

     (a)  The administrative services to be provided by REALIC shall include,
but not be limited to, the following: (i) preparing and mailing all necessary or
appropriate policyholder statements, reports and communications, including
premium notices; (ii) collecting premiums and amounts due under the Reinsured
Policies; (iii) receiving, processing, investigating, evaluating and paying
claims filed by or on behalf of policyholders; (iv) defending any action brought
upon a Reinsured Policy or in connection with the policy liabilities; (v)
providing usual and customary services for policyholders, including, without
limitation, processing loans, non-forfeitures, lapses, reinstatements,
cancellations, conversions or other changes provided for under the Reinsured
Policies and calculations relating thereto, and call center operations; (vi)
providing the Company with information on commissions and the producers entitled
thereto, if any, for the Reinsured Policies; (viii) preparing all accounting and
actuarial information related to the Reinsured Policies that are necessary to
timely meet statutory or tax accounting requirements; (ix) maintaining
appropriate books and records of all transactions related to the Reinsured
Policies; (x) administering other reinsurance ceded related to the Reinsured
Policies; and (xi) providing such additional services as may be necessary or
appropriate to properly administer the Reinsured Policies. REALIC shall perform
such administrative services in accordance with the provisions of the Reinsured
Policies. REALIC's performance of services hereunder shall be in accordance with
any applicable federal and state laws, rules and regulations.

     (b)  Each year in connection with the preparation of the Company's annual
financial statements, REALIC's appointed actuary shall provide to the Company's
appointed actuary a certificate of reliance stating that in his opinion, the
reserves and related actuarial values concerning the Reinsured Policies:

          (i)   are computed in accordance with presently accepted actuarial
          standards consistently applied and are fairly stated, in accordance
          with sound actuarial principles;
          (ii)  are based on actuarial assumptions which produce reserves at
          least as great as those called for in any contract provision as to
          reserve basis and method, and are in accordance with all other policy
          or contract provisions;
          (iii) meet the requirements of the insurance laws and regulations of
          the State of Tennessee;
          (iv)  have been subjected to asset adequacy testing and the reserves
          are adequate;
          (v)   are computed on the basis of assumptions consistent with those
          used in computing the corresponding items in the prior year; and

                                      -5-
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          (vi)  include provision for all actuarial reserves and related
          statement items which ought to be established.

     (c)  REALIC shall make available to the Company a duly qualified actuary,
for appointment by the Company, to serve as the "illustration actuary" with
respect to the Reinsured Policies. Such illustration actuary will use the fully
allocated expense methodology with respect to the Reinsured Policies.

3.   Administrative Software.
     -----------------------

     To the extent permitted by law and subject to applicable licensing or
contractual restrictions, the Company shall provide REALIC with access to all
software and data processing systems currently used to perform the
administrative services. For software systems not owned or developed by the
Company or its affiliates, REALIC shall be responsible for any costs or related
license fees associated with providing access to the software.

4.   Service Transition Matters.
     --------------------------

     The Company and REALIC shall cooperate with each other and use their
commercially reasonable efforts to effect an orderly transition of all
administrative services for the Reinsured Policies as of the respective
Administrative Transfer Dates from the Company to REALIC. The assistance and
services REALIC expects will be needed from the Company in order to effect the
transition of administrative services are set forth in Schedule D. After
                                                       ----------
successful transition of all administrative services no additional charges shall
be incurred pursuant to Article IV, Section 1.

5.   Reports - Transition Period.
     ---------------------------

     Within a time period mutually agreeable to the Company and REALIC, but in
no event more than ten (10) days for cash items and twenty (20) days for reserve
items, following the end of each calendar month prior to the Administrative
Transfer Dates, the Company will provide REALIC with the information needed by
REALIC for reporting the Reinsured Policies in its statutory financial
statements. The form of the report and the information to be provided is set
forth in Schedule E Part 1.
         -----------------

6.   Quarterly Reports - Post Transition Period.
     ------------------------------------------

     Within a time period mutually agreeable to the Company and REALIC, but in
no event more than ten (10) days for cash items and twenty (20) days for reserve
items, following the end of each calendar quarter after the Administrative
Transfer Dates, REALIC will provide the Company with the information needed by
the Company for reporting the Reinsured Policies in its statutory, GAAP, and tax
financial statements. The form of the report and the information to be provided
is set forth in Schedule E Part 2.
                -----------------

                                      -6-
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7.   DAC Tax
     -------

     Each party is subject to United States taxation as defined in Section
1.848-2(h)(2)(ii) of the Income Tax Regulations under Section 848 of the
Internal Revenue Code of 1986, as amended (the "Code"). REALIC and the Company
will comply with the following concerning the capitalization of certain policy
expenses, pursuant to Section 848 of the Code and Income Tax Regulations
Sections 1.848-1 and 1.848-2.

     (a)  The term "party" will refer to either REALIC or the Company as
          appropriate.
     (b)  The terms used in this Article are defined by reference to Regulations
          Section 1.848-1 and 1.848-2 as in effect on the closing date. The term
          "net consideration" will refer to net consideration as defined in
          Regulation Section 1.848-2(f).
     (c)  Each party shall attach a schedule to its federal income tax return
          which identifies the relevant Reinsurance Agreements for which the
          joint election under the Regulation has been made. The first taxable
          year for which the joint election will be effective is the tax year
          ending December 31, 2000.
     (d)  Pursuant to the joint election set forth in Section 1.848-2(g)(8) of
          the Income Tax Regulations, the party with net positive consideration,
          for such Agreement for each taxable year, shall capitalize specified
          policy acquisition expenses with respect to such Agreement without
          regard to the general deductions limitation of Section 848(c)(1).
     (e)  Each party agrees to exchange information pertaining to the amount of
          net consideration under such Agreement each year to ensure
          consistency. REALIC shall provide the Company with the amount of net
          consideration for each taxable year no later than June 15 following
          the end of such year. The Company shall advise REALIC if it disagrees
          with the amounts provided, and the parties agree to act in good faith
          to amicably resolve any differences.

                                  ARTICLE V

                         Complaints and Investigations
                         -----------------------------

1.   Claims Administration
     ---------------------

     As of the respective Administrative Transfer Dates, REALIC will provide
full administrative services for claims involving any Reinsured Policy. REALIC
will fully investigate the claim, including reviewing the documentation for the
claim and determining the validity of the claim. REALIC shall process claims in
accordance with any applicable federal or state laws, rules and regulation. In
the event of an appeal from an adverse claim determination, REALIC will review
all pertinent information relating to the claim, and communicate the
determination on appeal to the claimant. With regard to claims arising under a
Reinsured Policy, REALIC shall be responsible for determining whether the claim
should be paid. REALIC shall

                                      -7-
<PAGE>

promptly pay all claims arising under Reinsured Policies that are determined to
be valid in accordance with this paragraph.

2.   Contested Claims
     ----------------

     Whenever REALIC has formed a preliminary opinion that a claim should be
denied or contested, and before any final action by REALIC indicating to the
claimant that the claim is being denied or contested, REALIC will give the
Company the opportunity to review the complete claim file. REALIC and the
Company will have good faith discussions regarding the claim and agree as to its
appropriate disposition.

3.   Procedure for Handling Litigation
     ---------------------------------

     In any legal action or administrative proceeding arising out of or relating
to the administrative services provided by REALIC or this Agreement ("Legal
Actions"), REALIC shall be responsible, at its cost, for the defense thereof,
including the defense of the Company should the Company be named as defendant.
Notwithstanding the foregoing, the Company shall have the right to elect to
assume the defense of any such Legal Actions. Should the Company so elect,
REALIC shall reimburse the Company for reasonable attorneys' fees, costs and
other expenses of defense incurred by the Company.

     The Company and REALIC shall promptly advise each other of commenced Legal
Actions which come to the respective attention of the parties. the Company and
REALIC agree to cooperate fully in the defense of any Legal Actions, including
furnishing any related documentation or information in their possession to the
party defending such legal Actions.

4.   Complaint Handling Procedure
     ----------------------------

     The parties will cooperate with each other in providing information
necessary to respond to any complaints concerning the Reinsured Policies. After
the respective Administrative Transfer Date, REALIC shall answer all complaints
received by it concerning the Reinsured Policies. All complaints concerning the
Reinsured Policies received by the Company after the Administrative Transfer
Date shall be immediately forwarded by facsimile or overnight mail to a contact
person designated by REALIC for reply. Upon answering such complaints, REALIC
will furnish the Company with a copy of the complaint file. The Company shall be
responsible for maintaining any complaint files, complaint registers or other
reports of any kind, which are required to be maintained under the applicable
laws and regulations. REALIC shall also maintain complaint files and registers
and shall provide the Company with copies of complaint registers, and other
necessary files, concerning the Reinsured Policies on a quarterly basis or upon
request by the Company.

5.   Complaints and Regulatory Proceedings
     -------------------------------------

                                      -8-
<PAGE>

     REALIC agrees to forward to the Company for investigation any insurance
department inquiries, or inquiries of any other regulatory body in connection
with the duties under this Agreement. REALIC and the Company agree to cooperate
fully with each other in any regulatory examination or judicial proceedings, and
in connection with any complaint filed by an insured with an insurance
department or other regulatory authority or the Better Business Bureau.

                                  ARTICLE VI

                                  Insolvency
                                  ----------

     All reinsurance under this Agreement will be paid on demand by REALIC
directly to the Company, its liquidator, receiver, or statutory successor, on
the basis of the liability of the Company under the policy or policies reinsured
without diminution because of the insolvency of the Company. In the event of the
insolvency of the Company, the liquidator, receiver, or statutory successor of
the Company will give written notice to REALIC of a pending claim against REALIC
or the Company on any policy reinsured, such notice will be given within a
reasonable time after the claim is filed in the conservation, liquidation, or
insolvency proceedings. While the claim is pending, REALIC may investigate and
interpose, at its own expense, in the proceedings where the claim is to be
adjudicated, any defenses which it may deem available to the Company or its
liquidator, receiver, or statutory successor. The expense incurred by REALIC
will be charged, subject to court approval, against the Company as an expense of
the conservation, liquidation, or insolvency to the extent of a proportionate
share of the benefit that accrues to the Company as a result of the defenses by
REALIC. Where two or more reinsurers are involved and a majority in interest
elect to defend a claim, the expense will be apportioned in accordance with the
terms of this Agreement as if the expense had been incurred by the Company.

     Nothing hereinabove set forth in this insolvency clause shall in any way
change the relationship or status of the parties hereto, to wit, that of ceding
insurer and reinsurer, nor enlarge the obligations of either party to each
other, except as specifically hereinabove provided, to wit, to pay the statutory
successor on the basis of the amount of liability of the Company under the
Reinsured Policies, rather than on the basis of the actual amount of loss
(dividends) paid by the liquidator, receiver or statutory successor to allowed
claimants, nor shall anything in the insolvency clause in any manner create any
obligation or establish any rights against REALIC in favor of any third parties
or any person not parties to this Agreement.

                                  ARTICLE VII

                            Duration of Coinsurance
                            -----------------------

                                      -9-
<PAGE>

     This Agreement will be effective as of July 1, 2000. This Agreement is
unlimited in duration but may be amended by mutual consent of the Company and
REALIC. The reinsurance provided hereunder will remain in force until
termination of the policy or policies on which the reinsurance is based in
accordance with the terms of this Agreement.

                                 ARTICLE VIII

                                  Arbitration
                                  -----------

     REALIC and the Company intend that any dispute between them under or with
respect to this Agreement be resolved without resort to any litigation.
Accordingly, REALIC and the Company agree that they will negotiate diligently
and in good faith to agree on a mutually satisfactory resolution of any such
dispute; provided, however, that if any such dispute cannot be so resolved by
         --------  -------
them within sixty calendar days (or such longer period as the parties may agree)
after commencing such negotiations, REALIC and the Company agree that they will
submit such dispute to arbitration in the manner specified in, and such
arbitration proceeding will be conducted in accordance with, the Commercial
Arbitration Rules of the American Arbitration Association.

     The arbitration hearing will be before a panel of three disinterested
arbitrators, each of whom must be a present or former officer of a life
insurance or life reinsurance company familiar with the reinsurance business.
REALIC and the Company will each appoint one arbitrator by written notification
to the other party within thirty calendar days after the date of the mailing of
the notification initiating the arbitration. These two arbitrators will then
select the third arbitrator within sixty calendar days after the date of the
mailing of the notification initiating arbitration.

     If either REALIC or the Company fails to appoint an arbitrator, or should
the two arbitrators be unable to agree upon the choice of a third arbitrator,
the president of the American Arbitration Association or of its successor
organization or (if necessary) the president of any similar organization
designated by lot of REALIC and the Company within thirty calendar days after
the request will appoint the necessary arbitrators.

     The arbitrators shall construe this Agreement in light of the prevailing
custom and practices for reinsurance in the insurance industry. The vote or
approval of a majority of the arbitrators will decide any question considered by
the arbitrators. The place of arbitration will be determined by the arbitrator.
Each decision (including without limitation each award) of the arbitrators will
be final and binding on all parties and will be nonappealable, and (at the
request of either REALIC or the Company) any award of the arbitrators may be
confirmed by a judgment entered by any court of competent jurisdiction. No such
award or judgment will bear interest. Each party will be responsible for paying
(a) all fees and expenses charged by its respective counsel, accountants,
actuaries, and other representatives in conjunction with such arbitration and
(b) one-half of the fees and expenses charged by each arbitrator.

                                     -10-
<PAGE>

                                   ARTICLE IX

        Indemnification and Costs for Administrative Processing Issues
        --------------------------------------------------------------

1.   Indemnification of REALIC by the Company
     ----------------------------------------

     The Company will indemnify and hold harmless REALIC from and against
monetary damages which may include but are not limited to punitive, exemplary,
compensatory or consequential damages or plaintiff's litigation-related costs
and fees, together with REALIC's reasonable attorneys' fees, costs and expenses,
resulting from or relating to (i) actions by the Company's employees or agents
in the sale, issuance, or administration of the Reinsured Policies, (ii) the
failure of any Reinsured Policy to have complied with applicable laws and
regulations at the time of its issuance, (iii) any breach or nonfulfillment by
the Company of, or any failure by the Company to perform, any of the terms or
conditions of, or any duties or obligations under, this Agreement, (iv) any
liability not transferred to REALIC, or (v) any enforcement of this indemnity.
Without limiting the foregoing, the Company will indemnify REALIC for any
economic loss stemming from lapsation of the Reinsured Policies set forth in
Part 2 of Schedule A, if (A) such lapsation is the result of such Reinsured
--------- ----------
Policy for U.S. federal income tax purposes being subject to the disallowance of
the statutory interest deduction or the imposition of the $50,000 interest
deduction limit and (B) such disallowance or imposition results from actions by
the Company's employees or agents in the sale, issuance, or administration of
the Reinsured Policy. The Company will not be required to indemnify and hold
harmless REALIC from economic loss stemming from lapsation of Reinsured Policies
resulting from changes in United States tax laws occurring after the Effective
Date.

2.   Indemnification of the Company by REALIC
     ----------------------------------------

     REALIC will indemnify and hold harmless the Company from and against
monetary damages which may include but are not limited to punitive, exemplary,
compensatory or consequential damages or plaintiff's litigation-related costs
and fees, together with the Company's reasonable attorneys' fees, costs and
expenses, resulting from or relating to (i) actions by REALIC's employees or
agents in the administration of the Reinsured Policies after the Administrative
Transfer Date, (ii) REALIC's decision, action, delay or failure to act in
accordance with the terms of this Agreement, (iii) contractual liabilities under
the Reinsured Policies arising after the Effective Date, or (iv) any enforcement
of this indemnity.

3.   Claims Notice
     -------------

     In the event that either the Company or REALIC wishes to assert a claim for
indemnification hereunder, the party seeking indemnification (the "Indemnified
Party") shall deliver written notice (a "Claims Notice") to the other party (the
"Indemnifying Party") no later than ten (10) Business Days after such claim
becomes known to the Indemnified Party,

                                     -11-
<PAGE>

specifying the facts constituting the basis for, and the amount (if known) of
the claim asserted. Failure to deliver a Claims Notice with respect to a claim
(other than a claim based on an Asserted Liability, as defined below) in a
timely manner as specified in the preceding sentence shall not be deemed a
waiver of the Indemnified Party's right to indemnification hereunder for Losses
in connection with such claim, but the amount of reimbursement to which the
Indemnified Party is entitled shall be reduced by the amount, if any, by which
the Indemnified Party's losses would have been less had such Claims Notice been
timely delivered.

4.   Right to Contest Claims of Third Parties
     ----------------------------------------

     (a)  If an Indemnified Party asserts, or may in the future seek to assert,
a claim for indemnification hereunder because of a claim or demand made, or an
action, proceeding or investigation instituted, by any Person not a party to
this Agreement (a "Third Party Claimant") that may result in a liability with
respect to which the Indemnified Party would be entitled to indemnification
pursuant to this Article IX (an "Asserted Liability"), the Indemnified Party,
shall deliver to the Indemnifying Party a Claims Notice with respect thereto,
which Claims Notice shall, in accordance with the provisions of Section 3
hereof, be delivered as promptly as practicable and in any event no later than
ten (10) Business Days after such Asserted Liability is actually known to the
Indemnified Party. Failure to deliver a Claims Notice with respect to a claim in
a timely manner as specified in the preceding sentence shall not be deemed a
waiver of the Indemnified Party's right to indemnification hereunder for a
liability in connection with such claim, but the amount of reimbursement to
which the Indemnified Party is entitled shall be reduced by the amount, if any,
by which the Indemnified Party's resultant liabilities would have been less had
such Claims Notice been timely delivered.

     (b)  The Indemnifying Party shall have the right, upon written notice to
the Indemnified Party, to investigate, contest, defend or settle any Asserted
Liability that may result in a liability with respect to which the Indemnified
Party is entitled to indemnification pursuant to this Article IX, provided that
the Indemnified Party may, at its option and at its own expense, participate in
the investigation, contesting, defense or settlement of any such Asserted
Liability through representatives and counsel of its own choosing; and, provided
further, that the Indemnifying Party shall not settle any Asserted Liability
unless (i) such settlement is on exclusively monetary terms or (ii) the
Indemnified Party shall have consented to the terms of such settlement, which
consent shall not unreasonably be withheld. If requested by the Indemnifying
Party, the Indemnified Party will, at the sole cost and expense of the
Indemnifying Party, cooperate with the Indemnifying Party and its counsel in
contesting any Asserted Liability or, if appropriate and related to the Asserted
Liability in question, in making any counterclaim against the third party
claimant, or any cross-compliant against any Person (other than the Indemnified
Party or its affiliates). Unless and until the Indemnifying Party elects to
defend the Asserted Liability, the Indemnified Party shall have the right, at
its option and at the Indemnifying Party's expense to do so in such manner as it
deems appropriate, provided, however, that the Indemnified Party shall not
settle or compromise any Asserted Liability for

                                     -12-
<PAGE>

which it seeks indemnification hereunder without the prior written consent of
the Indemnifying Party (which shall not be unreasonably withheld).

     (c)  The Indemnifying Party shall be entitled to participate in (but not to
control) the defense of any Asserted Liability which it has not elected to
defend with its own counsel and at its own expense.

     (d)  The Company and REALIC shall make mutually available to each other all
relevant information in their possession relating to any Asserted Liability
(except to the extent that such actin would result in a loss of attorney-client
privilege) and shall cooperate with each other in the defense thereof.

5.   Administrative Processing Issues
     --------------------------------

     The Company and REALIC will in good faith assist each other to resolve
various administrative processing issues related to the Reinsured Policies. If
the resolution of such issues results in (i) fees or additional costs payable to
policyholders or other third parties or (ii) enhanced benefits or policy
modifications, the Company will reimburse REALIC for such costs and compensate
it for such additional benefits or policy modifications.

6.   Cooperation for Policyholder Audits
     -----------------------------------

     If the Company or REALIC receives notice that an owner of a Reinsured
Policy is the subject of an audit being conducted by the United States Internal
Revenue Service, the Company or REALIC will provide good faith cooperation to
the other and to such owner of a Reinsured Policy, to provide information and
support related to the audit.

                                     -13-
<PAGE>

                                   ARTICLE X

                                Confidentiality
                                ---------------

     The Company and REALIC may come into possession or knowledge of
confidential information of the other in connection with the obligations to be
performed by each under this Agreement. The Company and REALIC agree to hold
such confidential information in strictest confidence and to take all reasonable
steps to ensure that such confidential information is not disclosed in any form
by any means by each of them or by any of their employees, agents or
administrators to third parties of any kind, except as is authorized in advance.
"Confidential Information" means any information which (i) is not generally
available to the public, or (ii) has not been lawfully obtained by the parties
prior to the date of disclosure to it by the other, and includes:

          (a)  Information or knowledge about each party's products, processes,
               services, finances, claims management practices, and reserving
               methodology; and
          (b)  Any medical or other private, individually identifiable
               information about other people or business entities with whom the
               parties do business, including customers, individuals covered by
               insurance policies or plans, and each party's producers and
               employees.

                                  ARTICLE XI

                              General Provisions
                              ------------------

1.   Policy Forms and Rates
     ----------------------

     Upon request, the Company will use its best efforts to furnish REALIC with
a copy of its application forms, policy and rider forms, premium and non-
forfeiture value manuals, reserve tables, actuarial memoranda, and any other
forms or tables needed for proper handling of reinsurance under this Agreement.
REALIC must agree in writing before incurring additional liability resulting
from any changes to policies, policy riders or amendments reinsured under this
Agreement.

2.   Non-Guaranteed Elements.
     -----------------------

     (a)  The Company shall set all non-guaranteed elements of the Reinsured
Policies, taking into account the recommendations of REALIC. With respect to the
Reinsured Policies, the Company shall, in its absolute discretion, either (i)
follow such recommendations, or (ii) reject such recommendations. If the Company
rejects any such recommendation, the

                                     -14-
<PAGE>

Company shall indemnify REALIC for any Direct Economic Loss to the extent such
Direct Economic Loss results from the Company's rejection of such
recommendation. The Company's obligation to indemnify REALIC shall not apply if
implementing such recommendation would violate any applicable law or regulation.
For purposes of this Article XI, Section 1, "Direct Economic Loss" means (x)
with respect to credited interest rates, the amount by which the aggregate
amount due to policyholders in respect of the period to which REALIC's
recommendation relates exceeds the aggregate amount that would have been due to
such policyholders in respect of such period to the extent that the Company had
followed such recommendation, and (y) with respect to charges under the
Reinsured Policies included in the non-guaranteed elements, the amount by which
the aggregate amount due from policyholders in respect of the period to which
REALIC's recommendation relates is less than the aggregate amount that would
have been due from such policyholders in respect of such period if the Company
had followed such recommendation.

     (b)  If the Company accepts REALIC's recommendation with respect to any
aspect of the non-guaranteed elements and the propriety of REALIC's
recommendation is challenged by any Person, REALIC shall indemnify the Company,
its affiliates and their respective directors, officers, shareholders, employees
and representatives, and the respective successors and assigns of any of the
foregoing (collectively, the "Indemnified Parties"), for 100% of any and all
liabilities, claims, damages, losses, fines, penalties, assessments, costs or
other obligations (collectively, the "Obligations") incurred by, asserted
against or imposed upon any of the Indemnified Parties to the extent such
Obligations result from the Company following any recommendation of REALIC with
respect to any aspect of the non-guaranteed elements.

3.   Reinsurance Conditions
     ----------------------

     The reinsurance is subject to the same limitations and conditions as the
insurance under the policy or policies written by the Company on which the
reinsurance is based.

4.   Errors and Omissions
     --------------------

     If either the Company or REALIC unintentionally fails to perform an
obligation that affects this Agreement and such failure results in an error on
the part of the Company or REALIC, the error will be corrected by restoring both
the Company and REALIC to the positions they would have occupied had no such
error occurred. Any amounts due under this Section will bear interest at a rate
mutually agreeable to REALIC and the Company.

5.   Offset
     ------

     Any amount which either the Company or REALIC is contractually obligated to
pay to the other party may be paid out of any amount which is due and unpaid
under this Agreement.

                                     -15-
<PAGE>

The application of this offset provision will not be deemed to constitute
diminution in the event of insolvency.

6.   Inspection
     ----------

     Upon reasonable notice, REALIC may inspect any and all books, records,
documents or similar information relating to or affecting reinsurance under this
Agreement at the appropriate office of the Company during normal business hours.
Upon reasonable notice, the Company may inspect any and all books, records,
documents or similar information relating to or affecting reinsurance or
administration under this Agreement at the appropriate office of REALIC during
normal business hours.

7.   Subcontracting
     --------------

     REALIC may arrange for a duly authorized third party administrator to
perform any portion of the services that REALIC has agreed to provide under this
Agreement. REALIC shall remain liable to the Company in accordance with the
terms of this Agreement for any such work performed by a subcontractor. REALIC
shall absorb any additional costs incurred as a result of its subcontracting the
services to be provided under this Agreement.

8.   Authority
     ---------

     Neither the Company nor REALIC shall have any power or authority to act for
or on behalf of the other except as herein expressly granted, and no other or
greater power or authority shall be implied by the grant or denial of power or
authority specifically mentioned herein.

9.   Entire Agreement
     ----------------

     This Agreement and the Schedules attached hereto supersede all prior
discussions and written and oral agreements between the parties with respect to
the subject matter of this Agreement. This Agreement and the Schedules attached
hereto contain the sole and entire agreement between the parties hereto with
respect to the subject matter hereof.

10.  Amendment
     ---------

     This Agreement may be modified or amended only by a writing duly executed
by or on behalf of the Company and REALIC.

                                     -16-
<PAGE>

11.  Counterparts
     ------------

     This Agreement may be executed simultaneously in any number of
counterparts, each of which will be deemed an original, but all of which will
constitute one and the same instrument.

12.  No Assignment
     -------------

     Except as otherwise provided herein, neither party hereto may assign this
Agreement or any right hereunder or part hereof without the prior written
consent of the other party hereto.

13.  Binding Effect
     --------------

     This Agreement is binding upon and will inure to the benefit of the parties
and their respective successors and permitted assignees.

14.  Notices
     -------

     Any notice, request, instruction, or other document to be given hereunder
by any party hereto to the other party hereto will be in writing and (a)
delivered personally, (b) sent by facsimile, (c) delivered by overnight express,
or (d) sent by registered or certified mail, postage prepaid, as follows:

     If to the Company, to:

               Provident Life and Accident Insurance Company
               1 Fountain Square
               Chattanooga, Tennessee 37402
               Attention:  Robert C. Greving
               Facsimile: 423/642-4259

     with a copy to:

               Office of the General Counsel
               Provident Life and Accident Insurance Company
               1 Fountain Square
               Chattanooga, Tennessee 37402
               Facsimile: 423/755-2590

                                     -17-
<PAGE>

     If to REALIC, to:

               Reassure America Life Insurance Company
               969 High Ridge Road
               Stamford, Connecticut 06905
               Attention: President
               Facsimile: 203/968-0920

or at such other address for a party as will be specified by like notice.  Each
notice or other communication required or permitted under this Agreement that is
addressed as provided in this section will be deemed given upon delivery.

15.  Invalid Provisions
     ------------------

     If any provision of this Agreement is held to be illegal, invalid, or
unenforceable under any present or future law, and if the rights or obligations
of the Company or REALIC under this Agreement will not be materially and
adversely affected thereby, (i) such provision will be fully severable, (ii)
this Agreement will be construed and enforced as if such illegal, invalid, or
unenforceable provision had never comprised a part hereof, (iii) the remaining
provisions of this Agreement will remain in full force and effect and will not
be affected by the illegal, invalid, or unenforceable provision or by its
severance herefrom, and (iv) in lieu of such illegal, invalid, or unenforceable
provision, there will be added automatically as a part of this Agreement a
legal, valid, and enforceable provision as similar in terms to such illegal,
invalid, or unenforceable provision as may be possible.

                                     -18-
<PAGE>

                                  ARTICLE XII

                                   Execution
                                   ---------

     IN WITNESS WHEREOF, REALIC and the Company have executed this Agreement on
the dates and at the places set forth below.

                                        PROVIDENT LIFE AND ACCIDENT
                                        INSURANCE COMPANY

Date:  August 25, 2000                  By:  /s/ Robert C. Greving
     ---------------------------            -------------------------------

Place:  Chattanooga, TN                 Name:  Robert C. Greving
       -------------------------

Witness:  /s/ Kathy Burke               Title:  Senior Vice President, Finance
         -----------------------

                                        REASSURE AMERICA LIFE
                                        INSURANCE COMPANY

Date:     August 25, 2000               By:  /s/ W. Weldon Wilson
     ---------------------------            -----------------------------

Place:  Stanford, CT                    Name:  W. Weldon Wilson
       -------------------------

Witness:  Patricia Rup                  Title:  Vice President
         -----------------------
                                     -19-
<PAGE>

                                  Schedule A
                                  ----------

PART 1

[SEE ATTACHED]

                                      -1-
<PAGE>

                                  Schedule A
                                  ----------

PART 2

[SEE ATTACHED]

                                      -2-
<PAGE>

                                  Schedule B
                                  ----------

                         Administrative Transfer Dates
                         -----------------------------

     Administrative System              Conversion Date
     ---------------------              ---------------

     The ALIS System                    February 28, 2001

     The CAPSIL System                  April 30, 2001

     The Non-COLI Business
     on the PARIS System                April 30, 2001

     The COLI  Business
     on the PARIS System                May 31, 2001

     The Life70 System                  June 30, 2001

                                      -3-
<PAGE>

                                  Schedule C
                                  ----------

                          Administrative Service Fees
                          ---------------------------

Until the Administrative Transfer Dates, REALIC will pay the fees outlined in
this schedule to the Company. Within ten days after the end of each month, the
Company will provide REALIC with the average number of policies in force in the
preceding month for which the Company was providing administrative services.
Within ten days of receipt of such information, REALIC shall pay the appropriate
fees to the Company.

     Type of Policy                     Fee to be Paid
     --------------                     --------------

     Traditional Permanent Policies     $2.00 per policy per month
     Traditional Term Policies          $1.75 per policy per month
     Universal Life Policies            $3.00 per policy per month
     Interest Sensitive Life            $3.00 per policy per month
     COLI                               $2.00 per policy per month

If an Administrative Transfer Date set forth in Schedule B is not met, the fees
                                                ----------
provided above will double for the Reinsured Policies on such administrative
system.

                                      -4-
<PAGE>

                                  Schedule D
                                  ----------

                 Services Needed for Administrative Transition
                 ---------------------------------------------

The Company will assist REALIC as follows in the transition of the
administrative systems. Such assistance will be provided to REALIC or, as
requested by REALIC, its designated third party administrator that will be
administering the Reinsured Policies.

(1)  The Company will permit REALIC to assign one or more representatives on-
     site at the Company's offices in Chattanooga for a period of time as
     necessary. The representatives will work with the Company's PARIS IT staff
     to learn the PARIS system in order to facilitate the ultimate migration of
     the PARIS System to REALIC or its designated third party administrator.

(2)  The Company will be prepared to accept premium payment information for
     commission calculation and payment for each administrative system as of the
     respective Administrative Transfer Date.

(3)  The Company will complete that portion of the KPMG guideline project
     calculations which involves calculating the CAPSIL ISWL guideline premiums
     and "7 pay" factors for the Successor/Protector policies. The Company will
     then update the CAPSIL records with, or have available for REALIC, the
     correct values by December 31, 2000.

(4)  The Company will make available sufficient experienced support staff to aid
     in the conversion and administrative transfer of products residing on the
     PARIS, ALIS, CAPSIL, and Life70 Systems.

(5)  The Company will ensure that all billing, collection and policyholder
     notifications are current as of the various Administrative Transfer Dates
     according to existing Company servicing levels.

                                      -5-
<PAGE>

                                  Schedule E
                                  ----------

                          Format of Quarterly Reports
                          ---------------------------

[SEE ATTACHED]

                                      -6-
<PAGE>

                                  Schedule F
                                  ----------

                           Assets to be Transferred
                           ------------------------

[SEE ATTACHED]

                                      -7-<PAGE>

                                                                     EXHIBIT 4.1

                      TANGRAM ENTERPRISE SOLUTIONS, INC.

               STATEMENT OF DESIGNATIONS, PREFERENCES AND RIGHTS
                  OF THE SERIES F CONVERTIBLE PREFERRED STOCK

                        Pursuant to Section 1522 of the
         Business Corporation Law of the Commonwealth of Pennsylvania

         Tangram Enterprise Solutions, Inc., a corporation organized and
existing under the laws of the Commonwealth of Pennsylvania, does hereby certify
that, pursuant to the authority conferred upon the Corporation's Board of
Directors (the "Board") by Article 5 of these Articles of Incorporation of the
Corporation, which authorized 2,000,000 shares of Preferred Stock of the
Corporation, $.01 par value per share ("Preferred Stock"), and pursuant to the
provisions of the Pennsylvania Business Corporation Law of 1988, as amended (the
"PBCL"), the Board of Directors, at a duly called meeting held on February 19,
2001, has duly adopted resolutions providing for the issuance of up to 3,000
shares of Series F Convertible Preferred Stock and setting forth the voting
powers, designations, preferences and relative, participating, optional and
other special rights, and the qualifications, limitations and restrictions
thereof, which are as follows:

     1.  Designation of the Series. The shares of such series of preferred stock
         -------------------------
shall be designated as "Series F Convertible Preferred Stock" (the "Series F
Preferred Stock") and the number of shares constituting such series shall be
3,000. The par value of the Series F Preferred Stock shall be $.01 per share and
the issuance price of the Series F Preferred Stock shall be $1,000 per share
(the "Purchase Price").

     2.  Dividends.
         ---------

         2.1  Accrual of Dividends. The holders of the then outstanding shares
              --------------------
of Series F Preferred Stock shall be entitled to receive, out of funds legally
available therefor, cumulative quarterly dividends when and as if they may be
declared by the Board at a rate per share equal to two percent (2%) per quarter
of the Purchase Price. The amount of such dividend shall be compounded daily
such that if the dividend is not paid for such day, the unpaid amount shall be
added to the original Purchase Price for purposes of calculating succeeding
days' dividends. Such dividends shall accrue on the Series F Preferred Stock
commencing on the date of original issuance thereof and be cumulative, whether
or not earned or declared and whether or not there are profits, surplus or other
funds of the Corporation legally available for the payment of dividends. If such
cumulative dividends in respect of any prior or current daily dividend period
shall not have been declared and paid or if there shall not have been a sum
sufficient for the payment thereof set apart, the deficiency shall first be
fully-paid before any dividend or other distribution shall be paid or declared
and set apart with respect to any class of the Corporation's capital stock, now
or hereafter outstanding. All numbers relating to the calculation of dividends

                                      -1-
<PAGE>

pursuant to this Section 2.1 shall be subject to appropriate adjustment whenever
there shall occur a stock split, combination, reclassification or other similar
event involving or affecting a change in the Corporation's capital structure.

         2.3  Dividends In Kind. Notwithstanding anything to the contrary
              -----------------
contained herein, in the event the Corporation shall make or Issue, or shall fix
a record date for the determination of holders of the Corporation's Common Stock
("Common Stock") entitled to receive, a dividend or other distribution with
respect to the Common Stock payable in (i) securities of the Corporation other
than shares of Common Stock or (ii) assets, then, and in each such event, the
holders of Series F Preferred Stock shall receive, at the same time such
distribution is made with respect to Common Stock, the number of securities or
other such assets of the Corporation which such holders would have received had
their shares of Series F Preferred Stock been converted into Common Stock, in
the manner hereinafter set forth, immediately prior to the record date for
determining holders of Common Stock entitled to receive such distribution.

         2.4  Restrictions On Distributions. Except to the extent that in any
              -----------------------------
instance approval is provided in writing by the Majority Interest of the holders
of the outstanding shares of Series F Preferred Stock, for so long as any shares
of Series F Preferred Stock are outstanding the Corporation shall not declare or
pay any dividends on, or purchase, redeem, retire, or otherwise acquire for
value, any shares of its capital stock (or rights, options or warrants to
purchase such shares) now or hereafter outstanding, return any capital or make
any distribution to the holders of any capital stock, or permit any Subsidiary
(as defined below) to do any of the foregoing, except as set forth in these
Articles of Incorporation in connection with the Series F Preferred Stock.
"Subsidiary" or "Subsidiaries" means any corporation, partnership, or joint
venture or other entity of which the Corporation and/or any of its other
Subsidiaries (as herein defined) directly or indirectly owns at the time at
least fifty percent (50%) of the outstanding voting shares or similar interests.
Notwithstanding the foregoing, Subsidiaries may declare and make payment of cash
and stock dividends, return capital and make distributions of assets to the
Corporation, and nothing contained in the foregoing shall prevent the
Corporation from: (i) effecting a stock split or declaring or paying any
dividend consisting of shares of any class of capital stock paid to the holders
of shares of such class of capital stock, subject to the provisions of these
Articles of Incorporation; (ii) complying with any specific provision of the
terms of any currently or subsequently designated series of Preferred Stock in
accordance with its terms; (iii) redeeming or repurchasing any stock of a
deceased shareholder out of proceeds of insurance held by the Corporation on
that shareholder's life; or (iv) redeeming or repurchasing any stock of any
director, officer, employee, advisor, consultant or other person or entity,
pursuant to a stock repurchase agreement, stock restriction agreement or other
similar agreement under which the Corporation has the right or obligation to
repurchase such shares in the event of death, termination of employment or of
the consulting arrangement, or other similar discontinuation of a business
relationship.

     3.  Liquidation, Dissolution and Winding Up.
         ---------------------------------------

         3.1 Treatment at Liquidation, Dissolution or Winding Up.
             ---------------------------------------------------

                                      -2-
<PAGE>

               3.1.1  Liquidation Preference. In the event of any liquidation,
                      ----------------------
dissolution or winding up of the Corporation, whether voluntary or involuntary,
or in the event of its insolvency, the holders of each share of Series F
Preferred Stock shall be entitled to be paid out of the assets of the
Corporation available for distribution to holders of the Corporation's capital
stock of all classes, whether such assets are capital, surplus or earnings
("Available Assets"), before any distribution or payment is made to any holders
of Common Stock or any other class or series of capital stock of the Corporation
designated to be junior to the Series F Preferred Stock in liquidation
preference (collectively, "Junior Stock"), an amount (the "Liquidation
Preference") equal to: (i) an amount per share of Series F Preferred Stock equal
to the Purchase Price plus all accrued but unpaid dividends on such Series F
Preferred Stock, if such amount plus the amount which should be payable to the
holders of the shares of Series F Preferred Stock pursuant to Section 3.1.2
below (assuming that the distribution to such holders was made pursuant to this
clause (i)) is greater than such amount per share of Series F Preferred Stock as
would have been payable had each share of Series F Preferred Stock been
converted into Common Stock immediately prior to such liquidation, dissolution
or winding up (the "Conversion Amount"), and otherwise (ii) the Conversion
Amount. If, upon liquidation, dissolution or winding up of the Corporation, the
Available Assets shall be insufficient to pay the holders of Series F Preferred
Stock the full amounts to which such holders otherwise would be entitled, the
holders of Series F Preferred Stock shall share ratably in any distribution of
Available Assets pro rata in proportion to the respective liquidation preference
amounts which would otherwise be payable upon liquidation with respect to the
outstanding shares of the Series F Preferred Stock if all liquidation preference
dollar amounts with respect to such shares were paid in full.

               3.1.2  Participation Rights. After payment of all liquidation
                      --------------------
preference amounts to all holders of Preferred Stock pursuant to Section 3.1.1
above but only if such payment was made pursuant to clause (i) of Section 3.1.1,
the entire remaining Available Assets, if any, shall be distributed among the
holders of Common Stock, Series F Preferred Stock and any other class or series
of Preferred Stock entitled to participate with the Common Stock in a
liquidating distribution, in proportion to the shares of Common Stock then held
by them and the shares of Common Stock which they then have the right to acquire
upon conversion of such shares of Preferred Stock held by them.

         3.2  Treatment of Reorganization.
              ---------------------------

               3.2.1  Transaction Payment. Within five (5) business days after
                      -------------------
receipt of an Event Notice, pursuant to Section 5.2.3 below, a Majority Interest
of the holders of the shares of Series F Preferred Stock may provide the
Corporation with written notice of its election to treat the Liquidity Event as
a liquidation, dissolution or winding up of the Corporation in which case the
Corporation and each holder of shares of Series F Preferred Stock shall require
that prior to or concurrent with consideration from any such transaction being
paid to the Corporation (if the consideration is to be received by the
Corporation in an asset transaction) or by any third party to other shareholders
of the Corporation (if the consideration is to be received directly by the
shareholders in a merger or stock purchase transaction), a payment (the
"Transaction Payment") shall be made to the holders of the shares of Series F
Preferred Stock

                                      -3-
<PAGE>

equal to the amount that the holders of shares of Series F Preferred Stock would
have received had the entire consideration in the transaction with respect to a
Liquidity Event involving the sale of all or substantially all of the assets of
the Corporation, net of any liabilities of the Corporation not assumed or
otherwise paid by the acquiring entity including, without limitation, taxes,
fees and expenses arising in connection with such transaction, been deemed
Available Assets for distribution to the shareholders of the Corporation upon
liquidation pursuant to Section 3.1 hereof.

               3.2.2  Partial Sale or Transfer. If the Liquidity Event involves
                      ------------------------
the sale or transfer of fewer than all of the shares or assets of the
Corporation, the aggregate consideration shall be appropriately increased as if
all of the shares or assets had been sold (such amount to be calculated to
reflect, in a partial asset sale, the value of assets and liabilities not
transferred and in a partial sale of the shares or assets of the Corporation,
the value of the shares not transferred, including with respect to the shares of
Series F Preferred Stock, their rights and priorities established herein).

               3.2.3  Payment of Transaction Payment. Except as provided in the
                      ------------------------------
immediately succeeding sentence, the Transaction Payment shall be paid in cash.
If securities of the acquiring entity are Issued to the holders of the
Corporation's Common Stock in the Liquidity Event (the "Acquiring Stock"), the
Transaction Payment shall be paid in such portions of cash and Acquiring Stock
as shall be determined by the Majority Interest of the holders of the shares of
Series F Preferred Stock, in their sole discretion. The Acquiring Stock utilized
to make the Transaction Payment, if any, shall have the same rights, preferences
and restrictions (including whether the issuance or sale of such Acquiring Stock
is registered or entitled to registration rights under the Securities Act of
1933, as amended), and shall have an equivalent value for purposes of
determining the number of shares required to be Issued hereunder, as the
Acquiring Stock Issued to the holders of the Corporation's Common Stock in the
Liquidity Event. If the Acquiring Stock is valued by the parties to the
Liquidity Event, the value so agreed upon shall control for purposes of
determining that amount of the entire consideration in the transaction, the
Transaction Payment and the payments thereof. If the Acquiring Stock is not so
valued, the value determined in good faith by the Board as the fair value of
such stock shall control for purposes of determining the amount of the entire
consideration in the transaction, the Transaction Payment and the payment
thereof. Upon the payment in full of the Transaction Payment, shares of Series F
Preferred Stock shall be deemed retired and no longer outstanding and the
holders of shares of Series F Preferred Stock shall not be entitled to any
further rights in respect therein.

  4.      Voting Rights. In addition to the specific voting rights provided
          -------------
herein, each holder of Series F Preferred Stock shall be entitled to vote
together with the Common Stock and all other series and classes of stock
permitted to vote with the Common Stock on all matters submitted to a vote of
the holders of Common Stock (including election of directors) in accordance with
the provisions of this Section 4, except with respect to matters in respect of
which one or more other classes of capital stock of the Corporation is entitled
to vote as a separate class under the PBCL or the provisions of these Articles
of Incorporation. Each holder of Series F Preferred Stock shall be entitled to
notice of any shareholders' meeting in accordance with the bylaws of the
Corporation at the same time and in the same manner as notice is given to

                                      -4-
<PAGE>

all other shareholders entitled to vote at such meetings. For each vote in which
holders of Series F Preferred Stock are entitled to participate, the holder of
each share of Series F Preferred Stock shall be entitled to that number of votes
per share to which such holder would have been entitled had such share of Series
F Preferred Stock then been converted into shares of Common Stock pursuant to
the provisions of Section 5.1.1 hereof, at the record date for the determination
of those holders entitled to vote on such matters or, if no such record date is
established, at the date such vote is taken or any written consent of
shareholders is solicited.

     5.   Conversion. The holders of Series F Preferred Stock shall have the
          ----------
following rights and be subject to the following obligations with respect to the
conversion of such shares into shares of Common Stock.

          5.1  Right to Convert Series F Preferred Stock.
               -----------------------------------------

               5.1.1 Subject to and in compliance with the provisions of this
Section 5, each share of Series F Preferred Stock may, at the option of the
holder thereof, be converted at any time and from time to time into fully-paid
and non-assessable shares of Common Stock. The number of shares of Common Stock
which a holder of Series F Preferred Stock shall be entitled to receive upon
conversion shall be equal to the product obtained by multiplying (i) the number
of shares of Series F Preferred Stock being converted at any time by (ii) the
rate (the "Conversion Rate") equal to the quotient obtained by dividing the
Purchase Price by the Conversion Price. The initial "Conversion Price," subject
to adjustment in accordance with this Section 5.1, shall be $2.00.

               5.1.2 Such rights of conversion shall be exercised by the holder
of Series F Preferred Stock by giving written notice that such holder elects to
convert a stated number of shares of Series F Preferred Stock into shares of
Common Stock and by surrendering the certificate or certificates for the shares
of Series F Preferred Stock to be converted to the Corporation at its principal
office (or such other office or agency of the Corporation as the Corporation may
designate by notice in writing to the holders of shares of Series F Preferred
Stock) at any time during its usual business hours on the date set forth in such
notice, together with a statement of the name or names (with address) in which
the certificate or certificates for the shares of Common Stock shall be Issued.

          5.2  Anti-Dilution Adjustments.
               -------------------------

               5.2.1 Adjustment of Price Upon Issuance of Shares of Common
                     -----------------------------------------------------
                     Stock.
                     -----
Except as provided in Section 5.2.2 while there are any shares of Series F
Preferred Stock outstanding, if and whenever the Corporation shall Issue, or is,
in accordance with Sections 5.2.1(1) through 5.2.1(7) below, deemed to have
Issued, any shares of Common Stock for no consideration or a consideration per
share less than the Conversion Price in effect immediately prior to the time of
such Issuance or, as to Common Stock Equivalents, Net Consideration Per Share
less than the Conversion Price in effect immediately prior to the time of such
Issuance, then, forthwith upon such Issue or sale, the Conversion Price shall be
reduced to the price determined by multiplying such Conversion Price by the
following fraction:

                                      -5-
<PAGE>

                              N(0) + N(1)
                              ---------------
                              N(0) + N(2)

          Where:

          N(0) = the number of shares of Common Stock outstanding immediately
prior to the Issuance of such additional shares of Common Stock or Common Stock
Equivalents (calculated on a Fully-Diluted Basis (as defined below)).

          N(1) = the number of shares of Common Stock which the aggregate
consideration, if any, (including the Net Consideration Per Share with respect
to the issuance of Common Stock Equivalents) received or receivable by the
Corporation for the total number of such additional shares of Common Stock so
Issued or deemed to be Issued would purchase at the Conversion Price in effect
immediately prior to such issuance.

          N(2) = the number of such additional shares of Common Stock so Issued
or deemed to be Issued.

          The provisions of this Section 5.2.1 may be waived as to all shares of
Series F Preferred Stock in any instance upon the written agreement of the
holders of a Majority Interest of the outstanding shares of Series F Preferred
Stock.

          For purposes of this Section 5.2.1, the following Sections 5.2.1(1)to
5.2.1(7)shall also be applicable:

          (1) Issuance of Common Stock Equivalent, Expiration of Common Stock
              ---------------------------------------------------------------
Equivalents. For the purposes of this Section 5.2.1(1), the Issuance of any
-----------
Common Stock Equivalents shall be deemed an Issuance of shares of Common Stock.
Any obligation, agreement or undertaking to Issue Common Stock Equivalent at any
time in the future shall be deemed to be an Issuance of shares of Common Stock
at the time such obligation, agreement or undertaking is made or arises. If, as,
and when such Common Stock Equivalent expires or is canceled without being
exercised, the Conversion Price effective immediately upon such cancellation or
expiration shall be equal to the Conversion Price that would have been in effect
(a) had the expired or canceled Common Stock Equivalent not been Issued, and (b)
had the adjustments made to the Conversion Price since the date of Issuance of
such Common Stock Equivalent been made to the Conversion Price which would have
been in effect had the expired or canceled Common Stock Equivalent not been
Issued.

          (2) Change in Net Consideration Per Share of Common Stock Equivalents.
              -----------------------------------------------------------------
Should the Net Consideration Per Share of any such Common Stock Equivalents be
decreased from time to time other than as a result of the application of anti-
dilution provisions substantially similar to the provisions of this Section 5.2,
then, commencing upon, and with respect to, a conversion occurring after the
effectiveness of each such change, the Conversion

                                      -6-
<PAGE>

Price will be that which would have been obtained (a) had the adjustments made
pursuant to Section 5.2.1 upon the Issuance of such Common Stock Equivalents
been made upon the basis of the new Net Consideration Per Share of such
securities, and (b) had the adjustments made to the Conversion Price since the
date of issuance of such Common Stock Equivalent been made to such Conversion
Price as adjusted pursuant to clause (a) above.

          (3) Net Consideration Per Share. The "Net Consideration Per Share"
              ---------------------------
which shall be receivable by the Corporation for any shares of Common Stock
Issued upon the exercise or conversion of any Common Stock Equivalents shall
mean the amount equal to the total amount of consideration, if any, received by
the Corporation for the issuance of such Common Stock Equivalents, plus the
amount of consideration, if any, payable to the Corporation upon exercise or
conversion thereof, divided by the aggregate number of shares of Common Stock
that would be used if such Common Stock Equivalents were exercised, exchanged or
converted assuming satisfaction of all vesting or similar requirements and
achievements of all thresholds or other criteria which would increase the number
of shares of Common Stock ultimately issuable upon exercise, exchange or
conversion..

          (4) Allocations. In case the Corporation shall make any allocation or
              -----------
other distribution upon any share of the Corporation payable in shares of Common
Stock (except for allocations or distributions upon the shares of Common Stock
or the shares of Series F Preferred Stock) or Common Stock Equivalent, any
shares of Common Stock or Common Stock Equivalents, as the case may be, Issuable
in payment of such allocation or distribution shall be deemed to have been
Issued or sold for a consideration of $.001.

          (5) Consideration for Shares. In case any shares of Common Stock or
              ------------------------
Common Stock Equivalents shall be Issued or sold for cash, the consideration
received therefor shall be deemed to be the amount received by the Corporation
therefor, without deduction therefrom of any expenses incurred or any
underwriting commissions or concessions paid or allowed by the Corporation in
connection therewith. In case any shares of Common Stock or Common Stock
Equivalents shall be Issued or sold for a consideration other than cash, the
amount of the consideration other than cash received by the Corporation shall be
deemed to be the fair value of such consideration as determined in good faith by
the Board, without deduction of any expenses incurred or any underwriting
commissions or concessions paid or allowed by the Corporation in connection
therewith. In case Common Stock Equivalent shall be Issued in connection with
the Issue and sale of other securities of the Corporation, together comprising
one integral transaction in which no special consideration is allocated to such
Common Stock Equivalents by the parties thereto, such Common Stock Equivalents
shall be deemed to have been Issued for such consideration as determined in good
faith by the Board.

          (6) Record Date. In case the Corporation shall establish a record date
              -----------
with respect to the holders of its shares of Common Stock for the purpose of
entitling them (i) to receive an allocation or other distribution payable in
shares of Common Stock or Common Stock Equivalents or (ii) to subscribe for or
purchase shares of Common Stock or Common Stock Equivalents, then such record
date shall be deemed to be the date of the Issuance of the shares of Common
Stock deemed to have been Issued upon the declaration of such

                                      -7-
<PAGE>

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.

          (7) Exceptions to Anti-Dilution Adjustments; Basket for Reserved
              ------------------------------------------------------------
Employee Shares. The anti-dilution adjustments set forth in this Section 5.2.1
---------------
shall not apply under any of the circumstances contemplated in Section 5.2.2
hereof. Further, this Section 5.2.1 shall not apply with respect to the (i)
Issuance or sale of Common Stock or Common Stock Equivalents to purchase or
otherwise obtain shares of Common Stock, to directors, employees and consultants
of the Corporation or any Subsidiary pursuant to any qualified or non-qualified
option plan or agreement, purchase plan or agreement, restriction agreement,
employee ownership plan, consulting agreement, or such other options, Issuances,
arrangements, agreements, or plans intended principally as a means of providing
compensation for employment or services provided that in each such case such
plan, agreement, or other arrangement or Issuance is approved by the Board, (ii)
conversion or exercise of currently outstanding convertible or exercisable
securities or other Common Stock Equivalents Issued on the date of original
Issuance of the shares of Series F Preferred Stock, (iii) the Issuance of any
shares which are Issued pursuant to the exercise or conversion of any Common
Stock Equivalents, or (iv) 3,000,000 shares of Common Stock to be issued
pursuant to the Asset Purchase Agreement, dated February 13, 2001, by and among
the Corporation, Axial Technology Holding AG and Wyzdom Solutions, Inc..

          5.2.2     Adjustment Upon Extraordinary Common Stock Event. Upon the
                    ------------------------------------------------
happening of an Extraordinary Common Stock Event (as hereinafter defined), the
Conversion Price of each share of Series F Preferred Stock shall, simultaneously
with the happening of such Extraordinary Common Stock Event, be adjusted by
multiplying such Conversion Price by a fraction, the numerator of which shall be
the shares of Common Stock outstanding immediately prior to such Extraordinary
Common Stock Event and the denominator of which shall be the number of shares of
Common Stock outstanding immediately after such Extraordinary Common Stock
Event, and the product so obtained shall thereafter be the Conversion Price of
the Series F Preferred Stock, which, as so adjusted, shall be readjusted in the
same manner upon the happening of any successive Extraordinary Common Stock
Event or Events. An "Extraordinary Common Stock Event" shall mean (i) the issue
of additional shares of Common Stock as a dividend or other distribution on
outstanding shares of Common Stock, (ii) a subdivision of outstanding shares of
Common Stock, or (iii) a combination or reverse stock split of outstanding
shares of Common Stock into a smaller number of shares of Common Stock.

          5.2.3     Liquidity Event; Reorganization or Reclassification. At
                    ---------------------------------------------------
least ten (10) business days prior to the consummation of a Liquidity Event,
reorganization or reclassification of the shares of the Corporation, the
Corporation and the other holders of shares to the extent a party to such event
shall provide the holders of the shares of Series F Preferred Stock written
notice of such event (the "Event Notice"). If any Liquidity Event, capital
reorganization or reclassification of the shares of the Corporation shall be
effected in such a way that holders of shares of Common Stock shall be entitled
to receive shares, securities or assets with respect to or in exchange for
shares of Common Stock, then, as a condition of such Liquidity Event,
reorganization or reclassification, lawful and adequate provisions shall be made

                                      -8-
<PAGE>

whereby each holder of shares of Series F Preferred Stock shall thereupon have
the right to receive, upon the basis and upon the terms and conditions specified
herein and in lieu of the shares of Common Stock immediately theretofore
receivable upon the conversion of such shares of Series F Preferred Stock, such
shares, securities or assets as may be Issued or payable with respect to or in
exchange for a number of outstanding shares of Common Stock equal to the number
of shares of Common Stock immediately theretofore receivable upon such
conversion had such Liquidity Event, reorganization or reclassification not
taken place, and in any such case appropriate provisions shall be made with
respect to the rights and interests of such holder to the end that the
provisions hereof (including, without limitation, provisions for adjustments of
the Conversion Price) shall thereafter be applicable, as nearly as may be, in
relation to any shares, securities or assets thereafter deliverable upon the
exercise of such conversion rights. In the case of a transaction to which both
this Section 5.2.3 and Section 3.2 hereof apply, the Majority Interest of the
outstanding shares of Series F Preferred Stock shall have the option to elect
treatment for the shares of Series F Preferred Stock under either this Section
5.2.3 or under Section 3.2.1, notice of which election shall be submitted in
writing to the Corporation at its principal office no later than five (5)
business days after receipt of the Event Notice.

          5.2.4     Notice of Adjustment. Upon any adjustment of the Conversion
                    --------------------
Price, then in each such case the Corporation shall give written notice thereof,
by delivery in person, certified or registered mail, return receipt requested,
telecopier, or telex, addressed to each holder of shares of Series F Preferred
Stock at the address of such holder as shown on the books of the Corporation,
which notice shall state the Conversion Price resulting from such adjustment,
setting forth in reasonable detail the method upon which such calculation is
based.

          5.2.5     Issue Tax. The issuance of certificates for shares of Common
                    ---------
Stock upon conversion of shares of Series F Preferred Stock shall be made
without charge to the holders thereof for any issuance tax in respect thereof,
provided that the Corporation 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
certificate in a name other than that of the holder of the shares of Series F
Preferred Stock which is being converted.

          5.2.6     Closing of Books. The Corporation will at no time close its
                    ----------------
transfer books against the transfer of any shares of Series F Preferred Stock or
of any shares of Common Stock Issued or Issuable upon the conversion of any
shares of Series F Preferred Stock in any manner which interferes with the
timely conversion of such shares of Series F Preferred Stock, except as may
otherwise be required to comply with applicable securities or tax laws.

          5.2.7     Fractional Shares; Distributions; Partial Conversion. No
                    ----------------------------------------------------
fractional shares of Common Stock shall be Issued upon conversion of shares of
Series F Preferred Stock into shares of Common Stock and no payment or
adjustment shall be made upon any conversion on account of any cash
distributions on the shares of Common Stock Issued upon such conversion. In case
the number of shares of Series F Preferred Stock represented by the certificate
or certificates surrendered pursuant to Section 5.1 exceeds the number of shares
of Series F Preferred Stock converted, the Corporation shall, upon such
conversion, execute and deliver to the holder, at the expense of the
Corporation, a new certificate or certificates for the number of shares of
Series F Preferred Stock represented by the certificate or certificates

                                      -9-
<PAGE>

surrendered that are not to be converted. If any fractional shares of Common
Stock would, except for the provisions of the first sentence of this Section
5.2.7, be delivered upon such conversion, the Corporation, in lieu of delivering
such fractional share, shall pay to the holder surrendering the shares of Series
F Preferred Stock for conversion an amount in cash equal to the current market
price of such fractional share as determined in good faith by the Board of the
Corporation.

          5.3  Conversion Issuance Limit - Prohibition. Notwithstanding anything
               ---------------------------------------
to the contrary herein, in no event shall the Conversion Price be reduced to an
amount such that the number of shares of Common Stock thereafter issuable upon
conversion of the Series F Preferred Stock (together with any shares of Common
Stock previously issued pursuant to the conversion of shares of Series F
Preferred Stock) would be equal to or greater than 3,281,110 shares of Common
Stock (as adjusted for any stock splits, stock dividends or other
recapitalizations) (the "Conversion Issuance Limit"), unless the Nasdaq
marketplace rules (Rule 4300 and 4400 Series) then in effect (i) would permit
such an issuance in excess of the Conversion Issuance Limit to occur, or (ii)
would permit such an issuance in excess of the Conversion Issuance Limit to
occur upon receipt of the approval of the Corporation's shareholders, and such
approval is obtained.

          5.4  Conversion Issuance Limit - Consent. If the Corporation at any
               -----------------------------------
time or from time to time desires to Issue (or in accordance with Sections
5.2.1(1) through 5.2.1(7) above would if such transaction were contemplated, be
deemed to have Issued) any shares of Common or Common Stock Equivalents as a
result of which the Conversion Price would, but for Section 5.3 above, be
reduced to an amount such that the number of shares of Common Stock thereafter
issuable upon conversion of the Series F Preferred Stock (together with any
shares of Common Stock previously issued pursuant to the conversion of shares of
Series F Preferred Stock) would be equal to or greater than the Conversion
Issuance Limit, then the Corporation shall first give written notice thereof to
the holders of the Series F Preferred Stock, and request that such holders
consent to any such Issue (or deemed Issue) (the "Issuance Notice"). In the
event that a Majority Interest of the holders of the Series F Preferred Stock
shall give such consent to Corporation in writing within five (5) business days
of the holders of the Series F Preferred Stock's receipt of the Issuance Notice,
and the Corporation shall consummate such Issue, then the all accrued but unpaid
dividends on the Series F Preferred Stock as of the date thereof shall be
immediately declared and paid to the holders of the Series F Preferred Stock and
all subsequent dividends on the Series F Preferred Stock shall be declared and
paid in cash semi-annually (on each six and twelve month anniversary from the
date of issuance) to the holders of the Series F Preferred Stock. In the event
that a Majority Interest of the holders of the Series F Preferred Stock do not
so consent within such five (5) business day period above, then the Corporation
may not consummate such Issue. All notices in this Section 5.4 shall be hand-
delivered or delivered by nationally recognized overnight courier.

                                      -10-
<PAGE>

     6.   Restrictions and Limitations on Corporate Action. As long as any of
          ------------------------------------------------
the shares of Series F Preferred Stock are outstanding, the holders of Series F
Preferred Stock shall vote as a separate voting group on, and the affirmative
vote of the Majority Interest of the holders of the Series F Preferred Stock
then outstanding (whether by written consent or by a duly called meeting) shall
be required to authorize, any action by the Corporation or its Subsidiaries
which would:

          6.1  in any manner (A) authorize, create, amend or Issue any class or
series of capital stock ranking, either as to payment of dividends, distribution
of assets upon liquidation or otherwise, or redemption, prior to or on parity
with the Series F Preferred Stock or (B) authorize, create, amend or Issue any
shares of any class or series or any bonds, debentures, notes or other
obligations convertible into or exchangeable for, or having optional rights to
purchase, any shares having any such priority or on parity with the Series F
Preferred Stock;

          6.2  in any manner alter or change the designation or the powers,
preferences or rights or the qualifications, limitations or restrictions of the
Series F Preferred Stock;

          6.3  reclassify shares of Common Stock, or any other shares of any
class or series of capital stock hereinafter created junior to the Series F
Preferred Stock into shares of any class or series of capital stock ranking,
either as to payment of dividends, distribution of assets upon liquidation or
otherwise, or redemption, prior to or on a parity with the Series F Preferred
Stock;

          6.4  increase the authorized number of shares of Series F Preferred
Stock, issue additional shares of Series F Preferred Stock or authorize any
other class or series of capital stock of the Corporation or its Subsidiaries;

          6.5  result in any material change in the nature of the business
engaged in by the Corporation;

          6.6  create, authorize, reserve or involve the issuance of shares of
Common Stock which in the aggregate exceeds 3,323,700 in connection with Common
Stock Equivalents hereafter issued to officers, employees, directors or
consultants of the Corporation pursuant to any plan, agreement or other
arrangements, including without limitation, options granted pursuant to the
Corporation's 1998 Stock Option Plan, the Corporation's Stock Option Plan for
Directors and the Corporation's 1997 Equity Compensation Plan adopted by the
Corporation on May 21, 1997 each as amended or restated from time to time;

          6.7  result in the redemption, repurchase or other acquisition by the
Corporation of capital stock or other securities of the Corporation or its
Subsidiaries, except for (i) redemption of the Series F Preferred Stock as set
forth in these Articles of Incorporation and (ii) repurchases or other
acquisitions of capital stock of the Corporation at a purchase price not in
excess of the original purchase price of such capital stock, from employees of
the Corporation upon such employees' termination of employment from the
Corporation pursuant to the terms

                                       11
<PAGE>

and conditions of agreements which provide the Corporation the right to
repurchase such capital stock upon such termination of employment;

          6.8  result in (i) any liquidation, dissolution, winding-up or similar
transaction of the Corporation or its Subsidiaries, (ii) a sale of all or
substantially all of the assets of the Corporation or its Subsidiaries or a
merger, consolidation, sale of capital stock or other transaction in which the
holders of capital stock of the Corporation and its Subsidiaries, in the
aggregate, immediately prior to such transaction will hold, immediately after
such transaction, less than 50% of the aggregate voting power of outstanding
capital stock of the surviving company, or (iii) any acquisition by the
Corporation or its Subsidiaries of another corporation or other business entity,
or the assets thereof, in which the aggregate consideration paid, or to be paid,
by the Corporation equals or exceeds $10,000,000 (including, without limitation,
all assumed debt, all cash payments, and the fair market value of all securities
or other property issued as consideration);

          6.9  result in the creation of indebtedness of the Corporation or its
Subsidiaries, including, without limitation, any loan agreement, promissory note
(or other evidence of indebtedness), mortgage, security agreement or lease, such
that after such transaction the aggregate indebtedness of the Corporation and
its Subsidiaries to all parties would exceed $3,500,000 (other than indebtedness
relating to that certain lease under the Master Equipment Lease Agreement dated
July 23, 1997 by and between the Corporation and Triangle Technology Leasing);
or

          6.10 that would in any way amend, alter, restate or otherwise change
these Articles of Incorporation or the Bylaws of the Corporation, or the
organizational documents of the Corporation's Subsidiaries.

     7.   Redemption.
          ----------

          7.1  Commencing at any time on or after February 20, 2003, upon at
least 30 days prior written notice by the Corporation to the holders of the
Series F Preferred Stock (the "Redemption Notice"), the Corporation may, to the
extent it may lawfully do so, redeem all of the shares of Series F Preferred
Stock as of the date set forth in the Redemption Notice (the "Redemption Date"),
by paying in cash therefor on such Redemption Date a sum per share equal to one
hundred three percent (103%) of the Purchase Price (as appropriately adjusted
for splits, combinations, dividends or similar transactions) plus all accrued
but unpaid dividends on the Series F Preferred Stock (the total amount of such
payment is hereafter referred to collectively, as the "Redemption Price").

          7.2  Except as provided herein, on or after the Redemption Date, the
holders of the Series F Preferred Stock shall surrender to the Corporation the
certificate or certificates representing such shares and thereupon the
Redemption Price of such shares shall be immediately payable and shall be
immediately paid to the order of the person whose name appears on such
certificate or certificates as the owner thereof and each surrendered
certificate shall be canceled.

                                       12
<PAGE>

          7.3  From and after the Redemption Date, unless there shall have been
a default in payment of the Redemption Price, all rights of the holders of
shares of Series F Preferred Stock (except the right to receive the Redemption
Price without interest upon surrender of their certificate or certificates)
shall cease with respect to such shares at such time, and such shares shall not
thereafter be transferred on the books of the Corporation or be deemed to be
outstanding for any purpose whatsoever.

     8.   No Dilution or Impairment.  The Corporation will not, by amendment of
          -------------------------
its Articles of Incorporation or through any reorganization, transfer of capital
stock or 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 of the Series F Preferred Stock set forth
herein, but will at all times in good faith assist in the carrying out of all
such terms.  Without limiting the generality of the foregoing, the Corporation
(a) will not increase the par value of any shares of stock receivable on the
conversion of the Series F Preferred Stock above the Purchase Price, and (b)
will take such action as may be necessary or appropriate in order that the
Corporation may validly and legally Issue fully-paid and nonassessable shares of
stock on the conversion of all Series F Preferred Stock from time to time
outstanding.

     9.   Notices of Record Date.  In the event of (a) any taking by the
          ----------------------
Corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividends or other distribution, or any right to subscribe for, purchase or
otherwise acquire any shares of capital stock of any class or any other
securities or property, or to receive any other right; (b) 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 any transfer of all or substantially all of the assets of the
Corporation to any other corporation, or any other entity or person; or (c) any
voluntary or involuntary dissolution, liquidation or winding up of the
Corporation; then and in each such event the Corporation shall mail or cause to
be mailed to each holder of Series F Preferred Stock a notice specifying (i) the
date on which any such record is to be taken for the purpose of such dividend,
distribution or right and a description of such dividend, distribution or right,
(ii) the date on which any such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, dissolution, liquidation or
winding up is expected to become effective, and (iii) 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 securities or other property deliverable upon such
reorganization, reclassification, recapitalization, transfer, consolidation,
merger, dissolution, liquidation or winding up.  Such notice shall be mailed by
first class mail, postage prepaid, at least fifteen (15) days prior to the date
specified in such notice on which action is being taken.

     10.  Status of Converted or Repurchased Series F Preferred Stock.  Any
          -----------------------------------------------------------
share or shares of Series F Preferred Stock acquired by the Corporation by
reason of redemption, purchase, conversion or otherwise shall be returned to the
status of authorized but unissued shares of undesignated Series F Preferred
Stock, and may only be reissued in compliance with the provisions of  these
Articles of Incorporation.  Upon the cancellation of all outstanding shares

                                       13
<PAGE>

of Series F Preferred Stock, the provisions of the designation of Series F
Preferred Stock shall terminate and have no further force and effect.

     11.  Definitions.  For purposes of these Articles of Incorporation, the
          -----------
following terms used herein shall have the meanings ascribed below:

          "Acquiring Stock" shall have the meaning set forth in Section 3.2.3
hereof.

          "Affiliates" shall mean any person that is an "affiliate" as defined
in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange
Act of 1934, as amended, but with respect to Safeguard, neither the Corporation
nor any of its directors and officers, in such capacities, shall be considered
affiliates of Safeguard hereunder.

          "Available Assets" shall have the meaning as set forth in Section
3.1.1

          "Board" shall have the meaning set forth in introductory paragraph of
these Articles of Incorporation.

          "Common Stock" shall have the meaning set forth in Section 2.3 hereof.

          "Common Stock Equivalents" shall mean warrants, options, subscription
or other rights to purchase or otherwise obtain Common Stock and the Issuance of
any securities or other rights convertible into or exchangeable for Common Stock
and the Issuance of any warrants, options, subscription or other rights to
purchase or otherwise obtain such convertible or exchangeable securities.

          "Conversion Price" shall have the meaning as set forth Section 5.1.1
hereof.

          "Conversion Rate" shall have the meaning as set forth in Section 5.1.1
hereof.
         "Corporation" shall mean Tangram Enterprise Solutions, Inc., a
Pennsylvania corporation.

          "Event Notice" shall have the meaning as set forth in Section 5.2.3
hereof.

          "Extraordinary Common Stock Event" shall have the meaning as set forth
in Section 5.2.2 hereof.

          "Fully Diluted Basis" shall mean as to any class of capital stock the
number of shares of such class of capital stock which would then be outstanding,
assuming the exercise or conversion of all then exercisable or convertible
Common Stock Equivalents which, directly or indirectly, on exercise, exchange or
conversion result in the issuance of shares of such class of capital stock,
assuming in each instance that the holder thereof receives the maximum number of
shares of capital stock or securities issuable, directly or indirectly, under
the terms of the respective instrument, assuming satisfaction of all vesting or
similar requirements and

                                       14
<PAGE>

achievements of all thresholds or other criteria which would increase the amount
of capital stock ultimately issuable upon exercise or conversion.

          "Issue" in any of its forms, for the purposes of these Articles of
Incorporation shall mean to sell, grant or otherwise issue in any manner or any
agreement or commitment to do any of the foregoing.

          "Junior Stock" shall have the meaning as set forth in Section 3.1.1
hereof.

          "Liquidity Event" shall mean any acquisition of all or substantially
all of the assets of the Corporation, or transaction or series of transactions
involving the Corporation, or its securities, whether by consolidation, merger,
purchase of shares of capital stock or other reorganization or combination or
otherwise, in which the holders of the Corporation's outstanding shares of
capital stock immediately prior to such transaction own, immediately after such
transaction, securities representing less than fifty percent (50%) of the voting
power of the entity surviving such transaction.

          "Liquidation Preference" shall have the meaning as set forth in
Section 3.1.1

          "Majority Interest" shall mean, with respect to a particular class of
capital stock entitled to vote on a particular matter, the votes of such class
of capital stock representing greater than fifty percent (50%) of the total
number of votes eligible to be cast on the matter being voted on.

          "Net Consideration Per Share" shall have the meaning as set forth in
Section 5.2.1(3) hereof.

          "PBCL" shall have the meaning as set forth in the introductory
paragraph of these Articles of Incorporation.

          "Preferred Stock" shall have the meaning as set forth in the
introductory paragraph of these Articles of Incorporation.

          "Purchase Price" shall have the meaning set forth in Section 1 hereof.

          "Redemption Date" shall have the meaning as set forth in Section 7.1
hereof.

          "Redemption Notice" shall have the meaning as set forth in Section 7.1
hereof.

          "Redemption Price" shall have the meaning as set forth in Section 7.1
hereof.

          "Safeguard" shall mean Safeguard Scientifics, Inc., a Pennsylvania
corporation, and/or any Affiliate.

          "Series F Preferred Stock" shall have the meaning set forth in Section
1 hereof.

                                       15
<PAGE>

          "Subsidiary" and "Subsidiaries" shall have the meaning as set forth in
Section 2.4 hereof.

          "Transaction Payment" shall have the meaning as set forth in Section
3.2.1 hereof.

                                       16

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