Document:

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                               I-STAT CORPORATION
                        RESTRICTED SHARE AWARD AGREEMENT
                                      WITH

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

        This Restricted Share Award Agreement (the "Agreement"), dated as of
_________ (the "Award Date") is between i-STAT Corporation, a Delaware
corporation, having its principal place of business at 104 Windsor Center Drive,
East Windsor, New Jersey 08520, (the "Company") and ____________ ("Director").

        In consideration for service as a member of the Board of Directors of
the Company, the Company desires to award to Director, pursuant to the Company's
Equity Incentive Plan (the "Plan"), shares of the Company's Common Stock, ____
par value per share (the "Common Stock"). Accordingly, the Company and Director
hereby agree as follows:

1. Award of Shares. Subject to the terms and conditions set forth herein and in
the Plan, the Company awards to Director ______________ (____) shares of Common
Stock (the "Award Shares").

2.      Forfeiture of Award Shares; Stockholder Rights; Transfer Restrictions.

(a) Termination of Service. If Director ceases to serve as such for any reason
other than death or disability prior to the later of (x) the date that is thirty
(30) days following the Award Date and (y) the date that is the day immediately
preceding the end of the Company's fiscal quarter in which the Award Date occurs
(the "Forfeiture Period"), then Director shall forfeit all of the Award Shares,
whereupon Director shall have no further rights whatsoever with respect to the
Award Shares. From and after the end of the Forfeiture Period the Award Shares
shall no longer be subject to forfeiture.

(b) Death or Disability. If during the Forfeiture Period, Director (x) dies or
(y) becomes disabled (within the meaning of Section 22(e)(3) of the Internal
Revenue Code of 1986, as amended), while he or she is serving as such, then no
Award Shares shall remain subject to forfeiture.

(c) Change in Control. In case, during the Forfeiture Period, (i) of any
consolidation or merger involving the Company, if the persons or entities who
are shareholders of the Company immediately before such merger or consolidation
do not own, directly or indirectly, immediately following such merger or
consolidation, more than fifty percent (50%) of the combined voting power of the
outstanding voting
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securities of the corporation resulting from such merger or consolidation in
substantially the same proportion as their ownership of the shares of Common
Stock immediately before such merger or consolidation; (ii) of any sale, lease,
license, exchange or other transfer (in one transaction or a series of related
transactions) of all, or substantially all, of the business and/or assets of the
Company or assets representing over 50% of the operating revenue of the Company;
or (iii) any person (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) who was not,
on April 21, 1995, a controlling person (as defined in Rule 405 under the
Securities Act of 1933, as amended) (a "Controlling Person") of the Company
shall become (x) the beneficial owner (within the meaning of Rule 13d-3 under
the Exchange Act) of over 50% of the Company's outstanding Common Stock or the
combined voting power of the Company's then outstanding voting securities
entitled to vote generally or (y) a Controlling Person of the Company, then upon
the occurrence of any such event the Award Shares shall no longer be subject to
forfeiture.

         (d) Stock Dividend; Other Events. If, during the Forfeiture Period,
there is (i) any stock dividend, stock split, combination or subdivision or
other change in the character or amount of any of the Company's outstanding
securities or (ii) any consolidation, merger or sale of all or substantially all
of the Company's assets, then, in such event, any and all new, substituted or
additional securities to which Director is entitled by reason of his ownership
of Award Shares which, immediately prior to such event, were subject to
forfeiture, will be immediately subject to the forfeiture provisions of
paragraph (a) of this Section, and shall be included in the term "Award Shares"
for purposes of this Agreement.

         (e) Rights As Stockholder. As long as the Award Shares have not been
forfeited pursuant to paragraph (a) of this Section, Director shall have with
respect to such Award Shares, voting, dividend and all other rights of a holder
of Common Stock.

         (f) Certificates for Award Shares; Transfer Restrictions. Certificates
representing Award Shares subject to forfeiture pursuant to paragraph (a) of
this Section will be held by the Company until such Award Shares are no longer
subject to forfeiture. Award Shares subject to forfeiture may not be sold,
transferred, pledged or otherwise disposed of (including, but not limited to,
through transfer by gift or donation).

         3. Representations of Director; Restrictions on Transfer of Award
Shares. Director represents, warrants and covenants that:

         (a) the Award Shares are being acquired by Director for his own
account, for investment only and not with a view to, or for resale in connection
with, any distribution thereof within the meaning of the Securities Act of 1933,
as amended (the "Securities Act") or any rule or regulation thereunder;

         (b) Director understands that (i) the Award Shares cannot be sold,
transferred or otherwise disposed of unless they are registered under the
Securities Act or an

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exemption from registration is then available; and (ii) any sale, transfer or
other disposition of the Award Shares must be made in accordance with the
Securities Act and any applicable rules and regulations promulgated pursuant
thereto;

         (c) Director acknowledges and agrees that (i) because of his position
with the Company, Director may be deemed to be an "affiliate" thereof (as such
term is defined in Rule 144 promulgated under the Securities Act); (ii) the
resale by an affiliate of the Company of the Award Shares is restricted by law,
notwithstanding any registration of the Award Shares on Form S-8 (or similar
successor form) promulgated under the Securities Act; and (iii) any resale of
the Award Shares by an affiliate of the Company pursuant to said Rule 144 would
be subject to the volume limitations contained in paragraph (e) thereof; and

         (d) Director acknowledges that, for purposes of ensuring compliance
with the exemption from the "short swing profits" rules promulgated under the
Exchange Act, no Award Share may be sold prior to the expiration of six months
from the Award Date.

         4. Tax Consequences. Director hereby represents that prior to or on the
date hereof, Director has generally been advised of the tax consequences to
Director of receiving the Award Shares and has obtained appropriate legal or tax
advice with respect thereto.

         5. Legends. Stock certificates representing the Award Shares may bear
legends reflecting such restrictions as the Company deems appropriate and in its
best interests in accordance with the terms and conditions of this Agreement. In
such event, the Company may refuse to transfer ownership of the Award Shares on
its corporate record books until Director has complied with such restrictions.
In connection with the foregoing, so long as Director remains an affiliate of
the Company within the meaning of Rule 144 under the Securities Act, all stock
certificates representing Award Shares shall have affixed thereto a legend
substantially in the following form, in addition to any other legends required
by applicable state law:

                    "The shares of stock represented by this
                    certificate are subject to the volume
                    limitations of Rule 144(e) promulgated
                    under the Securities Act of 1933, as
                    amended."

         6. Non-transferability of Award Agreement. This Agreement is personal
and no rights hereunder may be transferred, assigned, pledged or hypothecated by
Director in any way (whether by operation of law or otherwise), nor shall any
such rights be subject to execution, attachment or similar process. Upon any
attempt by Director to transfer, assign, pledge, hypothecate or otherwise
dispose of his rights under this Agreement contrary to the provisions hereof, or
upon the levy of any attachment or similar process

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upon such rights, any such rights shall, at the election of the Company, become
null and void.

         7. Delivery of Award Shares. Subject to the terms set forth in Section
2(f) hereof, the Company will make prompt delivery to Director of the Award
Shares, provided that if any law or regulation requires the Company to take any
action with respect to such Award Shares before the issuance thereof, then the
date of delivery of such Award Shares will be extended for the period necessary
to complete such action. No Award Shares will be issued and delivered unless and
until, in the opinion of counsel for the Company, any applicable registration
requirements of the Securities Act, any applicable listing or quotation
requirements of any exchange or quotation system on which stock of the same
class is then listed or quoted, and any other requirements of law or of any
regulatory bodies having jurisdiction over such issuance and delivery shall have
been fully complied with.

         8. Withholding Taxes. The Company's obligation to deliver the Award
Shares upon the expiration of the Forfeiture Period or as otherwise provided
herein shall be subject to Director's satisfaction of all applicable federal,
state and local income and other tax withholding requirements.

         9. Severability. In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any reason, in
whole or in part, in any jurisdiction, the remaining provisions of this
Agreement shall be unaffected thereby and shall remain in full force and effect
to the fullest extent permitted by law in such jurisdiction, and such invalidity
or unenforceability shall have no effect in any other jurisdiction.

         10. Miscellaneous; Notices.

         (a) This Agreement and any instrument delivered pursuant to this
Agreement shall be governed by and interpreted in accordance with the laws of
the State of New Jersey, without regard to the conflicts of law rules thereof.

         (b) Any controversy or claim arising out of or relating to this
Agreement, or any breach thereof, shall be resolved through final and binding
arbitration in accordance with the rules of the American Arbitration Association
then in effect. Judgment upon any arbitration award rendered may be entered in
any court having jurisdiction thereof. The arbitration shall be held in the area
where the Company then has its principal place of business. The arbitration
award may include an award of attorneys' fees and costs.

         (c) This Agreement shall extend to, be binding upon and inure to the
benefit of Director and his legal representatives, heirs, successors and assigns
(subject, however, to the limitations set forth in Sections 2 and 6 with respect
to transfer of this Agreement or any rights hereunder or of the Award Shares),
and upon the Company and its successors and assigns, regardless of any change in
the business structure of the

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Company, be it through spinoff, merger, sale of stock, sale of assets or any
other transaction.

         (d) This Agreement and the Plan contain the entire agreement of the
parties with respect to the subject matter hereof. No waiver, modification or
change of any provision of this Agreement will be valid unless in writing and
signed by both parties.

         (e) The waiver of any breach of any duty, term or condition of this
Agreement shall not be deemed to constitute a waiver of any preceding or
succeeding breach of the same or of any other duty, term or condition of this
Agreement.

         (f) All notices pursuant to this Agreement will be in writing and will
be sent by personal delivery, telecopier, electronic mail or by prepaid
registered or certified mail, return receipt requested, addressed to the parties
hereto at the addresses set forth beneath their names on the signature page
hereto or to such other addresses as may hereafter be specified by like notice
in writing by either of the parties, and will be deemed given (i) upon receipt
if by personal delivery, (ii) on the day on which delivered if delivered by
telecopier (with confirmation of receipt to be established by acceptable
protocol), (iii) on the third day after mailing if sent by registered or
certified mail or (iv) when transmitted if delivered by electronic mail (with
satisfactory evidence of transmittal to be established by acceptable protocol).
Copies of all notices shall be sent to: Paul, Hastings, Janofsky & Walker LLP,
1055 Washington Boulevard, Stamford, Connecticut 06901, Attention: Esteban A.
Ferrer, Esq., Telecopier No. 203-359-3031, E-mail Address: eaferrer@phjw.com.

         (g) The headings of the sections of this Agreement are inserted for
convenience of reference only and will not be deemed to constitute a part hereof
or to affect the meaning hereof.

         (h) This Agreement may be executed in counterparts, each of which will
be deemed an original but all of which will together constitute one and the same
agreement.

                       [signature page follows this page]

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        IN WITNESS WHEREOF, the parties have executed this Agreement effective
as of the day and year first above written.

                                            i-STAT CORPORATION

                                            By:
                                               ----------------------
                                                 Name:
                                                 Title:

                                            Address:

                                            104 Windsor Center Drive
                                            East Windsor, NJ  08520
                                            Telecopier No. : 609-443-3621
                                            E-mail address: general@i-STAT.com

                             Director's Acceptance:

        The undersigned hereby accepts the foregoing Agreement and agrees to the
terms and conditions thereof. The undersigned hereby acknowledges receipt of a
copy of the Company's Equity Incentive Plan.

                                            Director

                                            -----------------------
                                            Name:

                                            Address:

                                            Telecopier No.:
                                            E-mail address:

                                       6<PAGE>   1

                                                                    Exhibit 4.12

                            MGC COMMUNICATIONS, INC.

                   7.25% SERIES D CONVERTIBLE PREFERRED STOCK
                           CERTIFICATE OF DESIGNATION

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

                 Pursuant to Sections 78.195 and 78.1955 of the
                 General Corporation Law of the State of Nevada

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

      MGC Communications, Inc. (the "Company"), a corporation organized and
existing under the General Corporation Law of the State of Nevada, does hereby
certify that, pursuant to authority conferred upon the board of directors of the
Company (the "Board of Directors") by its Articles of Incorporation, as amended
(the "Articles"), and pursuant to the provisions of Sections 78.195 and 78.1955
of the General Corporation Law of the State of Nevada, said Board of Directors,
by unanimous written consent or at a meeting duly called and held, adopted the
following resolution (the "Resolution") which remains in full force and effect:

      RESOLVED that pursuant to the authority vested in the Board of Directors
by its Articles, the Board of Directors does hereby create, authorize and
provide for the issuance of 7.25% Series D Cumulative Convertible Preferred
Stock, par value $0.001 per share, with a liquidation preference of $50.00 per
share, consisting of 4,250,000 shares having the designations, preferences,
relative, participating, optional and other special rights and the
qualifications, limitations and restrictions thereof that are set forth in this
Resolution as follows:

      (a) Designation. There is hereby created out of the authorized and
unissued shares of Preferred Stock of the Company a series of Preferred Stock
designated as the 7.25% Series D Cumulative Convertible Preferred Stock (the
"Series D Preferred Stock"). The number of shares constituting the Series D
Preferred Stock shall be 4,250,000. The liquidation preference of the Series D
Preferred Stock shall be $50.00 per share (the "Liquidation Preference").
Capitalized terms used herein but not defined shall have the meanings assigned
to them in paragraph (l).

      (b) Rank. The Series D Preferred Stock will, with respect to dividend
rights and rights on liquidation, winding-up and dissolution, rank (i) senior to
all classes of Common Stock and to each other class of Capital Stock of the
Company or series of Preferred Stock of the Company established hereafter by the
Board of Directors of the Company, the terms of which do not expressly provide
that such class or series ranks senior to, or on a parity with, the Series D
Preferred Stock as to dividend rights and rights on liquidation, winding-up and
dissolution of the Company (collectively referred to, together with all classes
of Common Stock of the Company, as "Junior Stock"); (ii) on a parity with the
Company's Series B Preferred Stock and Series C
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Preferred Stock and each class of Capital Stock of the Company or series of
Preferred Stock of the Company established hereafter by the Board of Directors
of the Company, the terms of which expressly provide that such class or series
will rank on a parity with the Series D Preferred Stock as to dividend rights
and rights on liquidation, winding-up and dissolution (collectively referred to,
together with the Company's Series B Preferred Stock and Series C Preferred
Stock, as "Parity Stock"); and (iii) junior to each class of Capital Stock of
the Company or series of Preferred Stock of the Company established hereafter by
the Board of Directors of the Company, the terms of which expressly provide that
such class or series will rank senior to the Series D Preferred Stock as to
dividend rights or rights on liquidation, winding-up and dissolution of the
Company (collectively referred to as "Senior Stock").

      (c) Dividends.

            (i) Subject to the rights of any holders of Senior Stock or Parity
Stock, Holders of the outstanding shares of Series D Preferred Stock will be
entitled to receive, when, as and if declared by the Board of Directors of the
Company, out of funds legally available therefor, dividends on each share of the
Series D Preferred Stock at a rate per annum equal to 7.25% of the Liquidation
Preference of such share payable quarterly (each such quarterly period being
herein called a "Dividend Period"). All dividends on the Series D Preferred
Stock, to the extent accrued, shall be cumulative, whether or not earned or
declared, on a daily basis from the last date through which dividends have been
paid or, if no dividends have been paid, from the Issue Date, and shall be
payable quarterly in arrears on May 15, August 15, November 15 and February 15
of each year (each a "Dividend Payment Date"), commencing on May 15, 2000 to
Holders of record as they appear on the stock register of the Company at the
close of business on the Record Date (as defined hereinafter) immediately
preceding the relevant Dividend Payment Date. No interest or sum of money or
other property or securities in lieu of interest will be payable in respect of
any accumulated and unpaid dividends. "Record Date" means, with respect to a
Dividend Payment Date, the date established by the Board of Directors as the
record date therefor, which date shall, in any event, be a date that is not more
than 60 calendar days nor less than 15 calendar days before such Dividend
Payment Date.

            Any dividend on the Series D Preferred Stock shall be, at the option
of the Company, payable (A) in cash or (B) through the delivery of a number of
shares of the Company's Common Stock (dividends paid or payable in Common Stock
are hereinafter referred to as "Dividend Common Stock") equal to the total
dividend amount divided by the applicable Discounted Current Market Value (as
defined below) of the Common Stock. No fractional shares of Common Stock shall
be issued as a dividend on the Series D Preferred Stock. Instead, the Company
shall pay to the Transfer Agent for distribution to the Holders as provided
herein cash in lieu of the fractional portion of one share which may result from
the computation of the number of shares of Dividend Common Stock as set forth in
the first sentence of this paragraph in an amount equal to the same fraction of
the last sales price of a share of Common Stock on the Nasdaq National Market
(or the principal national securities exchange or other securities market on
which the Common Stock is then being traded) on the fourth Trading Day
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immediately preceding the Dividend Payment Date. The Transfer Agent is hereby
authorized to aggregate any fractional shares of Common Stock that would
otherwise be distributable as dividends, and to sell them at the best available
price and distribute the proceeds to the Holders thereof in proportion to their
respective interests. The Company shall reimburse the Transfer Agent for any
expenses incurred with respect to such sale, including brokerage commissions. If
the Company is precluded from paying cash for fractional shares, it shall pay
cash to the Holders for the fractional shares when it becomes legally and
contractually able to pay such cash.

            The "Discounted Current Market Value" of the Common Stock with
respect to a Dividend Payment Date means the product of (x) 95% and (y) the
"Market Average Value" relating to such Dividend Payment Date. The "Market
Average Value" shall equal the average of the daily closing prices of the Common
Stock for the five consecutive Trading Days ending on (and including) the fourth
Trading Day preceding such Dividend Payment Date. The closing price for each
Trading Day will be the last sales price on such date on the Nasdaq National
Market (or the principal securities exchange or other securities market on which
the Common Stock is then being traded). "Trading Day" means any day on which the
Common Stock is traded for any period on the Nasdaq National Market (or on the
principal securities exchange or other securities market on which the Common
Stock is then being traded).

            (ii) All dividends paid with respect to shares of the Series D
Preferred Stock pursuant to paragraph (c)(i) shall be paid pro rata to the
Holders entitled thereto.

            (iii) Dividends shall accrue whether or not the Company has earnings
or profits, whether or not there are funds legally available for the payment of
such dividends and whether or not dividends are declared. Dividends shall
accumulate to the extent that such dividends are not paid on the Dividend
Payment Date to which they relate. No dividend whatsoever shall be declared or
paid upon, or any sum set apart for the payment of dividends upon, any
outstanding share of the Series D Preferred Stock with respect to any Dividend
Period unless all dividends for all preceding Dividend Periods have been
declared and paid or declared and a sufficient sum set apart for the payment of
such dividend, upon all outstanding shares of Series D Preferred Stock. No
dividend will be declared or paid on any Parity Stock unless full cumulative
dividends have been paid on the Series D Preferred Stock for all prior Dividend
Periods; provided, however, if accrued dividends on the Series D Preferred Stock
for all prior Dividend Periods have not been paid in full, then any dividend
declared for any dividend period on any Parity Stock will be declared ratably in
proportion to accrued and unpaid dividends on the Series D Preferred Stock and
such Parity Stock and if dividends on any Parity Stock are due and payable and
have not been paid in full, then any dividend declared for any Dividend Period
on the Series D Preferred Stock will be declared ratably in proportion to
accrued and unpaid dividends on the Series D Preferred Stock and such Parity
Stock. The Company shall take all actions required or permitted under the
General Corporate Law of the State of Nevada to permit the payment of dividends
on the Series D Preferred Stock.

            (iv) The Company will not (A) declare, pay or set apart funds for
the payment
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of any dividend or other distribution with respect to any Junior Stock or (B)
redeem, purchase or otherwise acquire for consideration any Junior Stock through
a sinking fund or otherwise, unless (1) all accrued and unpaid dividends with
respect to the Series D Preferred Stock at the time such dividends are payable
have been paid or funds have been set apart for payment of such dividends and
(2) sufficient funds have been paid or set apart for, or a sufficient number of
shares of Common Stock have been reserved for, the payment of the dividend for
the current Dividend Period with respect to the Series D Preferred Stock.
Notwithstanding anything in this Certificate of Designation to the contrary, the
Company may declare and pay dividends on Parity Stock which are payable solely
in additional shares of or by the increase in the liquidation value of Parity
Stock or Junior Stock or on Junior Stock which are payable in additional shares
of or by the increase in the liquidation value of Junior Stock, as applicable,
or repurchase, redeem or otherwise acquire Junior Stock in exchange for Junior
Stock and Parity Stock in exchange for Parity Stock or Junior Stock.

            (v) Dividends for any past Dividend Period may be declared and paid
at any time, without reference to any regular Dividend Payment Date, to Holders
of record on a date established by the Board of Directors as the record date
therefor, which date shall be no more than 15 Business Days and no less than one
Business Day prior to the date of payment thereof, as such date may be fixed by
the Board of Directors of the Company.

            (vi) Dividends payable on the Series D Preferred Stock for any
period other than a full Dividend Period shall be computed on the basis of a
360-day year consisting of twelve 30-day months. If a Dividend Payment Date is
not a Business Day, payment of dividends shall be made on the next succeeding
Business Day and dividends accruing for the intervening period shall be paid on
the next succeeding Dividend Payment Date.

      (d) Liquidation Preference.

            (i) Upon any voluntary or involuntary liquidation, dissolution or
winding-up of the Company, and subject to the rights of holders of Senior Stock
and Parity Stock, each Holder of Series D Preferred Stock shall be entitled to
be paid, out of the assets of the Company available for distribution to its
stockholders, an amount equal to the Liquidation Preference for each share of
Series D Preferred Stock held by such Holder, plus, without duplication, an
amount in cash equal to all accumulated and unpaid dividends (whether declared
or undeclared) thereon to the date fixed for liquidation, dissolution or
winding-up, before any distribution is made on any Junior Stock. If, upon any
voluntary or involuntary liquidation,
<PAGE>   5

dissolution or winding-up of the Company, there are not sufficient assets to pay
the amounts payable with respect to the Series D Preferred Stock and all Parity
Stock in full, all accumulated and unpaid dividends on the Series D Preferred
Stock and all Parity Stock will be paid in full and then the Holders of Series D
Preferred Stock and the holders of Parity Stock will share ratably (in
proportion to the other amounts that would be payable on such shares of Series D
Preferred Stock and the Parity Stock, respectively, if all amounts payable
thereon had been paid in full) in any distribution of assets of the Company to
which each is entitled. If, upon any voluntary or involuntary liquidation,
dissolution or winding up of the Company, there are not sufficient assets to pay
all accumulated and unpaid dividends in full, then the Holders of the Series D
Preferred Stock and the holders of Parity Stock will share ratably (in
proportion to the respective accumulated and unpaid dividends) in any
distribution of assets of the Company to which each is entitled. After payment
of the full amount of the Liquidation Preference of the outstanding shares of
Series D Preferred Stock (plus any accumulated and unpaid dividends), the
Holders of shares of Series D Preferred Stock will not be entitled to any
further participation in any distribution of assets of the Company.

            (ii) For the purposes of this paragraph (d), neither the sale,
conveyance, exchange or transfer (for cash, shares of stock, securities or other
consideration) of all or substantially all of the property or assets of the
Company nor the consolidation or merger of the Company with or into one or more
other entities shall be deemed to be a liquidation, dissolution or winding-up of
the Company.

      (e) Redemption.

            (i) (A) Mandatory Redemption. On February 15, 2012 (the "Mandatory
Redemption Date"), the Company shall be required to redeem, subject to the legal
availability of funds therefor, all outstanding shares of Series D Preferred
Stock at a price in cash equal to the Liquidation Preference thereof, plus
accumulated and unpaid dividends, if any, whether declared or undeclared, to the
Mandatory Redemption Date (the "Mandatory Redemption Price"). The Company shall
not be required to make sinking fund payments with respect to the Series D
Preferred Stock. The Company shall take all actions required or permitted under
the laws of the State of Nevada to permit such redemption.

                  (B) Provisional Redemption. The Series D Preferred Stock may
be redeemed, in whole or in part, at the option of the Company at a redemption
price of 105.8% of the Liquidation Preference, plus accumulated and unpaid
dividends, if any, whether declared or undeclared, to the date fixed for such
redemption (the "Provisional Redemption Date") (the foregoing amounts, together
with the Additional Payment, as hereinafter defined, being the "Provisional
Redemption Price"), on or after February 15, 2002, but prior to February 15,
2003, if the closing price of the Common Stock equals or exceeds 150% of the
Conversion Price for at least 20 Trading Days within any 30 Trading Day period
(such redemption, a "Provisional Redemption"). In the event that the Company
undertakes a Provisional Redemption, the Holders of shares of Series D Preferred
Stock that are called for Provisional Redemption will also receive a payment
(the "Additional Payment") in an amount equal to the present value (calculated
using the bond equivalent yield on U.S. Treasury notes or bills having a term
nearest in length to that of the Additional Period (as hereinafter defined) as
of the day immediately preceding the date on which a notice of Provisional
Redemption is mailed to the Holders) of the aggregate amount of the dividends
that would thereafter have been payable on the Series D Preferred Stock (whether
or not such dividends have been declared) for the period from the Provisional
Redemption Date to February 15, 2003 (such period being referred to as the
"Additional Period").
<PAGE>   6

                  The Provisional Redemption Price shall be, at the option of
the Company, payable (v) in cash, (w) through the delivery of a number of shares
of Common Stock equal to the Provisional Redemption Price divided by the
Provisional Redemption Value (as defined below) of the Common Stock or (x) any
combination of (v) and (w). The "Provisional Redemption Value" of the Common
Stock with respect to a Provisional Redemption Date means the product of (y) 95%
and (z) the average of the daily closing prices of the Common Stock for the five
consecutive Trading Days ending on (and including) the fourth Trading Day
preceding such Provisional Redemption Date. The closing price for each Trading
Day will be the last sales price on such date on the Nasdaq National Market (or
the principal securities exchange or other securities market on which the Common
Stock is then being traded). No fractional shares of Common Stock shall be
issued in connection with the payment of the Provisional Redemption Price.
Instead, the Company shall pay to the Transfer Agent for distribution to the
Holders as provided herein cash in lieu of the fractional portion of one share
which may result from the computation of the number of shares of Common Stock to
be paid as set forth in the first two sentences of this paragraph in an amount
equal to the same fraction of the last sales price of a share of Common Stock on
the Nasdaq National Market (or the principal national securities exchange or
other securities market on which the Common Stock is then being traded) on the
fourth Trading Day immediately preceding the Provisional Redemption Date. The
Transfer Agent is hereby authorized to aggregate any fractional shares of Common
Stock that would otherwise be distributed in connection with the payment of the
Provisional Redemption Price, and to sell them at the best available price and
distribute the proceeds to the Holders thereof in proportion to their respective
interests. The Company shall reimburse the Transfer Agent for any expenses
incurred with respect to such sale, including brokerage commissions. If the
Company is precluded from paying cash for fractional shares, it shall pay cash
to the Holders for the fractional shares when it becomes legally and
contractually able to pay such cash.

      The Company may elect to pay the Provisional Redemption Price by
delivering shares of Common Stock only if:

            (i) The shares of Common Stock of the Company to be issued as
payment of the Provisional Redemption Price (x) shall not require registration
under any federal securities law before such shares may be freely transferable
without being subject to any transfer restrictions under the Securities Act or,
if such registration is required, such registration shall be completed and shall
become effective prior to the Provisional Redemption Date, and (y) shall not
require registration with or approval of any governmental authority under any
state law or any other federal law before such shares may be validly issued or
delivered or if such registration is required or such approval must be obtained,
such registration shall be completed or such approval shall be obtained prior to
the Provisional Redemption Date;

            (ii) The shares of Common Stock of the Company to be issued are, or
shall have been, approved for listing on the Nasdaq National Market or the New
York Stock Exchange or listed on another national securities exchange, in any
case, prior to the Provisional Redemption
<PAGE>   7

Date; and

            (iii) All shares of Common Stock of the Company which may be issued
as payment of the Provisional Redemption Price will be issued out of the
Company's authorized but unissued Common Stock and, will upon issue, be duly and
validly issued and fully paid and non- assessable and free of any preemptive or
similar rights.

                  (C) In the case of any partial Provisional Redemption,
selection of the Series D Preferred Stock for redemption will be made by the
Company in compliance with the requirements of the principal national securities
exchange, if any, on which the Series D Preferred Stock is listed, or if the
Series D Preferred Stock is not listed on a national securities exchange, on a
pro rata basis, by lot or such other method as the Company, in its sole
discretion, shall deem fair and appropriate; provided, however, that the Company
may redeem all the shares held by Holders of fewer than 100 shares (or all of
the shares held by the Holders who would hold less than 100 shares as a result
of such redemption) as may be determined by the Company.

                  (D) In the case of a Mandatory Redemption Date or Provisional
Redemption Date falling after a Record Date and prior to the related Dividend
Payment Date, the Holders of the Series D Preferred Stock at the close of
business on such Record Date will be entitled to receive the dividend payable on
such shares on the corresponding Dividend Payment Date, notwithstanding the
redemption of such shares following such Record Date. Except as provided for in
the preceding sentence, no payment or allowance will be made for accrued
dividends on any shares of Series D Preferred Stock called for redemption.

            (ii) Procedure for Redemption. (A) On and after the Mandatory
Redemption Date or Provisional Redemption Date, as the case may be, unless the
Company defaults in the payment of the applicable redemption price, dividends
will cease to accumulate on shares of Series D Preferred Stock called for
redemption and all rights of Holders of such shares will terminate except for
the right to receive the Mandatory Redemption Price or Provisional Redemption
Price, as the case may be, without interest.

                  (B) With respect to a redemption pursuant to paragraph (e)(i)
(A) or (B), the Company will send a written notice of redemption by first class
mail to each Holder of record of shares of Series D Preferred Stock, not fewer
than 30 days nor more than 60 days prior to the Mandatory Redemption Date or
Provisional Redemption Date, as applicable, at its registered address (the
"Redemption Notice"); provided, however, that neither the failure to give such
notice nor any deficiency therein shall affect the validity of the procedure for
the redemption of any shares of Series D Preferred Stock to be redeemed except
as to the Holder or Holders to whom the Company has failed to give said notice
or except as to the Holder or Holders whose notice was defective. The Redemption
Notice shall state:

                  (1) that the redemption is pursuant to paragraph (e)(i) (A) or
(B) hereof, as applicable;
<PAGE>   8

                  (2) the Mandatory Redemption Price or Provisional Redemption
Price, as applicable and, in the case of a Provisional Redemption, whether the
Provisional Redemption Price will be paid in cash, through the delivery of
shares of Common Stock, or a combination thereof (and, if a combination thereof,
stating the percentages of the total Provisional Redemption Price that will be
paid in cash and in shares of Common Stock);

                  (3) in the case of a Provisional Redemption as to which all or
a portion of the Provisional Redemption Price is to be paid through the delivery
of shares of Common Stock, that the determination of the number of shares of
Common Stock to be delivered shall be calculated as set forth in paragraph
(e)(i)(B);

                  (4) whether all or less than all the outstanding shares of the
Series D Preferred Stock are to be redeemed and the total number of shares of
the Series D Preferred Stock being redeemed;

                  (5) the Mandatory Redemption Date or Provisional Redemption
Date, as applicable;

                  (6) that the Holder is to surrender to the Company, in the
manner, at the place or places designated, his certificate or certificates
representing the shares of Series D Preferred Stock to be redeemed; and

                  (7) that dividends on the shares of the Series D Preferred
Stock to be redeemed shall cease to accumulate on such Mandatory Redemption Date
or Provisional Redemption Date, as the case may be, unless the Company defaults
in the payment of the Mandatory Redemption Price or Provisional Redemption
Price, as the case may be.

                  (C) Each Holder of Series D Preferred Stock shall surrender
the certificate or certificates representing such shares of Series D Preferred
Stock to the Company, duly endorsed (or otherwise in proper form for transfer,
as determined by the Company), in the manner and at the place designated in the
Redemption Notice, and the full Mandatory Redemption Price or Provisional
Redemption Price, as applicable, for such shares shall be payable in cash and/or
shares of Common Stock, as the case may be, on the Mandatory Redemption Date or
Provisional Redemption Date, as applicable, to the person whose name appears on
such certificate or certificates as the owner thereof, and each surrendered
certificate shall be canceled and retired. In the event that less than all of
the shares represented by any such certificate are redeemed, a new certificate
shall be issued representing the unredeemed shares.

                  (D) The Company shall comply with any securities laws and
regulations, to the extent such laws and regulations are applicable, in
connection with any mandatory or provisional redemption.

      (f) Voting Rights.
<PAGE>   9

                  (A) The Holders of Series D Preferred Stock shall not be
entitled to vote on any matter required or permitted to be voted upon by the
stockholders of the Company, except as otherwise required under Nevada law or as
hereinafter provided.

                  (B) (1) If (x) dividends on the Series D Preferred Stock are
in arrears and unpaid for six or more Dividend Periods (whether or not
consecutive), (y) the Company has not redeemed in cash all of the outstanding
shares of Series D Preferred Stock on the Mandatory Redemption Date, or (z)
after the occurrence of a Non-Stock Change of Control, the Company fails to
offer to repurchase or convert the Series D Preferred Stock in accordance with
the terms of paragraph (g)(H)(2) or fails to repurchase or convert any shares of
Series D Preferred Stock accepting such offer on the Repurchase Date (each a
"Voting Rights Triggering Event"), then the Holders of the then outstanding
shares of Series D Preferred Stock (together with the holders of Parity Stock
upon which like rights have been conferred and are exercisable), voting
separately and as a class, shall have the right and power to elect to serve on
the Board of Directors the lesser of (x) two additional members to the Board of
Directors or (y) that number of directors constituting at least 25% of the
members of the Board of Directors, and the number of members of the Board of
Directors shall, subject to paragraph (f)(B)(5), be immediately and
automatically increased by such number.

                  (2) The voting rights set forth in paragraph (f)(B)(1) above
will continue until such time as all dividends in arrears on the Series D
Preferred Stock are paid in full or all Voting Rights Triggering Events are
cured or waived, at which time the term of any directors elected pursuant to the
provisions of paragraph (f)(B)(1) above (subject to the right of holders of any
other Preferred Stock to elect directors pursuant to the terms of the
instruments governing such Preferred Stock) shall terminate forthwith and the
number of directors constituting the Board of Directors shall be decreased by
such number (until the occurrence of any subsequent Voting Rights Triggering
Event).

            At any time after voting power to elect directors shall have become
vested and be continuing in the Holders of Series D Preferred Stock (together
with the holders of Parity Stock upon which like rights have been conferred and
are exercisable) pursuant to paragraph (f)(B)(1) hereof, or if vacancies shall
exist in the offices of directors elected by such holders, a proper officer of
the Company may, and upon the written request of the Holders of record of at
least 25% of the shares of Series D Preferred Stock then outstanding or the
holders of 25% of the shares of Parity Stock then outstanding upon which like
rights have been conferred and are exercisable addressed to the secretary of the
Company shall, call a special meeting of the Holders of Series D Preferred Stock
and the holders of such Parity Stock for the purpose of electing the directors
which such holders are entitled to elect pursuant to the terms hereof; provided,
however, that no such special meeting shall be called if the next annual meeting
of stockholders of the Company is to be held less than 60 days and more than 30
days after the voting power to elect directors shall have become vested, in
which case such meeting shall be deemed to have been called for such next annual
meeting. If such meeting shall not be called by
<PAGE>   10

a proper officer of the Company within 20 days after personal service to the
secretary of the Company at its principal executive offices, then the Holders of
record of at least 25% of the outstanding shares of Series D Preferred Stock or
the holders of 25% of the shares of Parity Stock upon which like rights have
been conferred and are exercisable may designate in writing one of their members
to call such meeting at the expense of the Company, and such meeting may be
called by the person so designated upon the notice required for the annual
meetings of stockholders of the Company and shall be held at the place for
holding the annual meetings of stockholders. Any holder of Series D Preferred
Stock or such Parity Stock so designated shall have, and the Company shall
provide, access to the lists of Holders of Series D Preferred Stock and the
holders of such Parity Stock to be called pursuant to the provisions hereof. If
no special meeting of the Holders of Series D Preferred Stock and the holders of
such Parity Stock is called as provided in this paragraph (f)(B), then such
meeting shall be deemed to have been called for the next annual meeting of
stockholders of the Company or special meeting of the holders of any other
Capital Stock of the Company.

                  (3) At any meeting held for the purposes of electing directors
at which the Holders of Series D Preferred Stock (together with the holders of
Parity Stock upon which like rights have been conferred and are exercisable)
shall have the right, voting together as a separate class, to elect directors as
aforesaid, the presence in person or by proxy of the holders of at least a
majority in voting power of the outstanding shares of Series D Preferred Stock
(and such Parity Stock) shall be required to constitute a quorum thereof.

                  (4) Any vacancy occurring in the office of a director elected
by the Holders of Series D Preferred Stock (and such Parity Stock) may be filled
by the remaining director elected by the Holders of Series D Preferred Stock
(and such Parity Stock) unless and until such vacancy shall be filled by the
Holders of Series D Preferred Stock (and such Parity Stock).

                  (5) If an event occurs at any time that results in the holders
of any Parity Stock (other than the holders of the Series B Preferred Stock or
the Series C Preferred Stock) having voting rights to elect directors to the
Board of Directors, then Holders of Series D Preferred Stock shall, whether or
not such event otherwise constitutes a Voting Rights Triggering Event pursuant
to paragraph (f)(B)(1), have the voting rights set forth in paragraphs (f)(B)(1)
and (f)(B)(2), and such event shall be deemed (for purposes of this paragraph
(f) only) to constitute a Voting Rights Triggering Event. In addition, in the
event that during a time in which directors elected by the Holders of Series D
Preferred Stock pursuant to this paragraph (f)(B) are serving on the Board of
Directors ("Previously-Elected Directors") an event occurs that results in
holders of Parity Stock (other than the holders of the Series B Preferred Stock
or the Series C Preferred Stock) having voting rights to elect (voting together
with the Holders of Series D Preferred Stock) at least two directors to the
Board of Directors, the Holders of Series D Preferred Stock shall vote together
with the holders of such Parity Stock to elect such new directors, and upon the
election of the new directors the Previously-Elected Directors shall (unless
such Previously-Elected Directors are elected as new directors) cease to serve
on the Board of Directors.
<PAGE>   11

                  (C) (1) So long as any shares of the Series D Preferred Stock
are outstanding, the Company will not (i) authorize, create (by way of
reclassification or otherwise), increase the authorized amount of or issue any
class or series of Senior Stock or any obligation or security convertible into,
exchangeable for or evidencing the right to purchase shares of any class or
series of Senior Stock, or (ii) amend the provisions of paragraph(g)(H) hereof,
without the affirmative vote or consent of Holders of at least two-thirds of the
shares of Series D Preferred Stock then outstanding, voting or consenting, as
the case may be, as one class, given in person or by proxy, either in writing or
by resolution adopted at an annual or special meeting. However, without the
consent of any Holder of Series D Preferred Stock, the Company may increase the
authorized number of shares of, issue additional shares of or create additional
classes of Common Stock, increase the authorized number of shares of Preferred
Stock or issue a series of Parity Stock or Junior Stock.

                  (2) So long as any shares of the Series D Preferred Stock are
outstanding, the Company will not (i) amend this Certificate of Designation,
either directly or indirectly, or through merger or consolidation with another
entity, so as to affect adversely the specified rights, preferences, privileges
or voting rights of Holders of shares of Series D Preferred Stock or to increase
or decrease the aggregate number of authorized shares of Series D Preferred
Stock or (ii) waive any Voting Right Triggering Event or compliance with any
provision hereof without the affirmative vote or consent of Holders of at least
a majority of the issued and outstanding shares of Series D Preferred Stock,
voting or consenting, as the case may be, as one class, given in person or by
proxy, either in writing or by resolution adopted at an annual or special
meeting.

                  (3) So long as any shares of the Series D Preferred Stock are
outstanding, without the consent of each Holder affected, an amendment or waiver
of the Articles or of this Certificate of Designation may not (with respect to
any shares of Series D Preferred Stock held by a non-consenting Holder) (i)
alter the voting rights with respect to the Series D Preferred Stock (other than
the waiver of a Voting Rights Triggering Event as provided in paragraph
(f)(C)(2)) or reduce the number of shares of Series D Preferred Stock whose
holders must consent to an amendment, supplement or waiver; (ii) reduce the
Liquidation Preference of or alter the provisions with respect to the redemption
of the Series D Preferred Stock; (iii) reduce the rate of or change the time for
payment of dividends on any share of Series D Preferred Stock; (iv) make any
share of Series D Preferred Stock payable in any form other than that stated in
this Certificate of Designation; (v) after the occurrence of a Change of
Control, amend the provisions of paragraph (g)(H) hereof; or (vi) make any
change in the amendment and waiver provisions of this paragraph (f)(C)(3).

                  (4) Notwithstanding the foregoing, the Company when authorized
by resolutions of its Board of Directors may amend or supplement this
Certificate of Designation without the consent of any Holder to (i) cure any
ambiguity, defect or inconsistency or (ii) make any other change provided that
such amendments or supplements shall not adversely affect the
<PAGE>   12

interests of the Holders.

                  (5) Except as set forth in paragraph (f)(C)(1) or (2) above,
(x) the creation, authorization or issuance of any shares of any Junior Stock or
Parity Stock, including the designation of a series of Preferred Stock, or (y)
the increase or decrease in the amount of authorized Capital Stock of any class,
including Preferred Stock, shall not require the consent of Holders of Series D
Preferred Stock and shall not be deemed to affect adversely the interests,
rights, preferences, privileges or voting rights of shares of Series D Preferred
Stock.

                  (D) In any case in which the Holders of Series D Preferred
Stock shall be entitled to vote pursuant to this paragraph (f) or pursuant to
Nevada law, each Holder of Series D Preferred Stock entitled to vote with
respect to such matters shall be entitled to one vote for each share of Series D
Preferred Stock held; provided that any shares of Series D Preferred Stock that
are held by the Company or by any Person controlled by the Company shall not
entitle the Holders thereof to any votes with respect thereto. For purposes of
this provision, "controlled by," as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting equity securities, by agreement or otherwise.

      (g) Conversion.

                  (A) (1) Except as set forth in paragraph (g)(A)(2) below, at
any time after the Issue Date, at the option of the Holder thereof, any share of
Series D Preferred Stock may be converted into such number of fully paid and
nonassessable shares of Common Stock (calculated as to each conversion to the
nearest 1/10 of a share), as equals the Liquidation Preference divided by the
Conversion Price, determined as hereinafter provided, in effect at the time of
conversion. In case a share of Series D Preferred Stock is called for
redemption, such conversion right in respect of the share of Series D Preferred
Stock so called shall expire at the close of business on the Mandatory
Redemption Date or Provisional Redemption Date, as applicable, unless the
Company defaults in making the payment due upon redemption.

                  (2) On or after February 15, 2003, if the closing price of the
Common Stock equals or exceeds 140% of the then current Conversion Price, as
hereinafter provided, for at least 20 Trading Days within any 30 consecutive
Trading Day period, then the Company shall have the right, at its option, to
cancel the conversion rights of the Holders of the Series D Preferred Stock
described in the paragraph above (the "Conversion Rights"). The closing price
for each Trading Day will be the last sales price on such date on the Nasdaq
National Market (or the principal national securities market or exchange on
which the Common Stock is then being traded). The Company may exercise such
right by issuing a press release for publication on the Dow Jones News Service
(or a comparable news service) prior to the opening of business on the second
Trading Day after any period in which the condition in the preceding sentence
has been met. The press release shall announce that (i) the Company is canceling
the Conversion Rights of the Series D Preferred Stock and (ii) the date such
Conversion Rights will expire (the
<PAGE>   13

"Expiration Date"). The press release shall also provide the Conversion Price
and the closing price of the Common Stock, each as of the close of business of
the previous Trading Day. The Company must notify the Holders of the Series D
Convertible Preferred Stock of the expiration of the Conversion Rights by
first-class mail not more than four business days after the issuance of the
press release, provided, however, that neither the failure to give such notice
nor any deficiency therein shall affect the validity of the procedure for the
elimination of conversion rights except with respect to the Holder or Holders to
whom the Company failed to give such notice or whose notice was defective. The
Company will select the date upon which the Conversion Rights will expire, which
date will be not less than 30 nor more that 60 days after the date of the
issuance of the press release. The Conversion Rights of the Holders of the
Series D Convertible Preferred Stock will terminate at the close of business of
the Expiration Date.

                  (3) The price at which Common Stock shall be delivered upon
conversion (herein called the "Conversion Price") shall be initially $65.34 per
share of Common Stock. The Conversion Price shall be adjusted in certain
instances as provided in paragraph (g)(D) or paragraph (g)(H).

                  (B) In order to exercise the conversion privilege provided for
in paragraph (g)(A)(1), the Holder of any share of Series D Preferred Stock to
be converted shall surrender the certificate for such share of Series D
Preferred Stock, duly endorsed or assigned to the Company or in blank, at the
office of the Transfer Agent or at any office or agency of the Company
maintained for that purpose, accompanied by written notice to the Company in the
form of Exhibit B that the Holder elects to convert such share of Series D
Preferred Stock or, if fewer than all the shares of Series D Preferred Stock
represented by a single share certificate are to be converted, the number of
shares represented thereby to be converted. Such notice shall also contain the
office or the address to which the Company should deliver shares of Common Stock
issuable upon conversion (and any other payments or certificates related
thereto).

            Holders of shares of Series D Preferred Stock at the close of
business on a Record Date will be entitled to receive the dividend payable on
such shares on the corresponding Dividend Payment Date notwithstanding the
conversion of such shares following such Record Date and prior to such Dividend
Payment Date. However, shares of Series D Preferred Stock surrendered for
conversion during the period between the close of business on any Record Date
and the opening of business on the corresponding Dividend Payment Date (except
shares converted after the issuance of a notice of redemption with respect to a
redemption date during such period, which will be entitled to such dividend)
must be accompanied by payment of an amount equal to the dividend payable on
such shares on such Dividend Payment Date. A Holder of shares of Series D
Preferred Stock on a Record Date who (or whose transferee) tenders any such
shares for conversion into shares of Common Stock on such Dividend Payment Date
will receive the dividend payable by the Company on such shares of Series D
Preferred Stock on such date, and the converting Holder need not include payment
of the amount of such dividend upon surrender of shares of Series D Preferred
Stock for conversion. Except as provided above, the Company will make no payment
or allowance for unpaid dividends, whether or not in
<PAGE>   14

arrears, on converted shares.

            Shares of Series D Preferred Stock shall be deemed to have been
converted immediately prior to the close of business on the date such shares of
Series D Preferred Stock are surrendered for conversion in accordance with the
foregoing provisions, and at such time the rights of the Holders of such shares
of Series D Preferred Stock as Holders shall cease, and the person or persons
entitled to receive the Common Stock issuable upon conversion shall be treated
for all purposes as the record holder or holders of such Common Stock at such
time. As promptly as practicable on or after the conversion date, the Company
shall issue and shall deliver to such office or agency as the converting Holder
shall have designated in its written notice to the Company a certificate or
certificates for the number of full shares of Common Stock issuable upon
conversion, together with payment in lieu of any fraction of a share, as
provided in paragraph (g)(C) hereof.

            In the case of any conversion of fewer than all the shares of Series
D Preferred Stock evidenced by a certificate, upon such conversion the Company
shall execute and the Transfer Agent shall authenticate and deliver to the
Holder thereof (at the address designated by such Holder), at the expense of the
Company, a new certificate or certificates representing the number of
unconverted shares of Series D Preferred Stock.

                  (C) No fractional shares of Common Stock shall be issued upon
the conversion of a share of Series D Preferred Stock. If more than one share of
Series D Preferred Stock shall be surrendered for conversion at one time by the
same Holder, the number of full shares of Common Stock which shall be issuable
upon conversion thereof shall be computed on the basis of the aggregate shares
of Series D Preferred Stock so surrendered. Instead of any fractional share of
Common Stock which would otherwise be issuable upon conversion of any share of
Series D Preferred Stock, the Company shall pay a cash adjustment in respect of
such fraction in an amount equal to the same fraction of the last sales price of
a share of Common Stock on the Nasdaq National Market (or the principal national
securities exchange or other securities market on which the Common Stock is then
being traded) on the last Trading Day immediately preceding the day of
conversion.

                  (D) The Conversion Price shall be adjusted from time to time
by the Company as follows, each a "Conversion Price Adjustment Event" (the
variables have the definitions set forth in paragraph (g)(D)(7) below):

                  (1) If the Company shall make any redemption payment or
payment of a dividend or other distribution payable in shares of Common Stock to
all holders of any class of Capital Stock of the Company, other than the
issuance of shares of Common Stock in connection with the payment (1) in
redemption for, of dividends on, or upon the conversion of, the Series D
Preferred Stock, (2) in redemption for, of dividends on, or upon the conversion
of the Series B Preferred Stock, Series C Preferred Stock or any Parity Stock in
accordance with the Certificates of Designation governing such securities, or
(3) to all Holders of the Series D
<PAGE>   15

Preferred Stock based upon the number of shares of Common Stock into which the
Series D Preferred Stock is then convertible, then the Conversion Price in
effect immediately prior to such event shall be adjusted pursuant to the
formula: X/Y multiplied by CP=ACP.

                  (2) If the Company shall issue to all holders of shares of
Common Stock rights, options or warrants entitling them to subscribe for or
purchase shares of Common Stock or securities convertible into or exchangeable
for shares of Common Stock at an exercise price that is less than the closing
price of a share of Common Stock on the Nasdaq National Market (or the principal
national securities exchange or other securities market on which the Common
Stock is then being traded) on the last Trading Day immediately preceding the
date of issuance of such rights, options or warrants, then the Conversion Price
in effect immediately prior to such event shall be adjusted pursuant to the
formula: X/X+(U((ClosePrice- EP)/ClosePrice)) multiplied by CP=ACP; provided,
however, that no adjustment will be made with respect to such a distribution if
the Holder of shares of the Series D Preferred Stock would be entitled to
receive such rights, options or warrants at any time on or before the conversion
at any time of shares of the Series D Preferred Stock into Common Stock and
provided, further, that if such rights, options or warrants are only exercisable
upon the occurrence of certain triggering events, then the Conversion Price will
not be adjusted until such triggering events occur. If any options, warrants or
other rights of the nature described in this paragraph (g)(D)(2) ("Rights")
expire without exercise or conversion, the Conversion Price will be readjusted
to the Conversion Price which would otherwise be in effect had the adjustment
made upon the issuance of such Rights been made on the basis of delivery of only
the number of shares of Common Stock actually delivered upon the exercise or
conversion of such Rights.

                  (3) In the case of any subdivision, combination or
reclassification of the Common Stock, then the Conversion Price in effect
immediately prior to such event shall be adjusted pursuant to the formula: X/Y
multiplied by CP=ACP.

                  (4) If the Company shall make any distribution consisting
exclusively of cash (excluding any cash distributed in a transaction for which
paragraph (g)(D)(12) below is applicable) to all holders of shares of Common
Stock (which distribution is not also being made to the Holders of Series D
Preferred Stock based on the number of shares of Common Stock into which the
Series D Preferred Stock is then convertible) in an aggregate amount that,
combined together with (1) all other such cash distributions made within the
then-preceding 12 months in respect of which no adjustment has been made and (2)
any cash and the fair market value (as determined by the Board of Directors in
good faith pursuant to a resolution) of other consideration paid or payable in
respect of any tender offer by the Company or any of its subsidiaries for shares
of Common Stock concluded within the then-preceding 12 months in respect of
which no adjustment has been made, exceeds 15% of the Company's Pre-Distribution
Market Capitalization (as defined in paragraph (g)(D)(7) below), then the
Conversion Price in effect immediately prior to such event shall be adjusted
pursuant to the formula: CP- (CP multiplied by ((Cash-15% PDMC)/PDMC))=ACP.
There will be no adjustment to the Conversion Price if (Cash-15% PDMC) is less
than or equal to zero.
<PAGE>   16

                  (5) In the case of the completion of a tender or exchange
offer made by the Company or any of its subsidiaries for shares of Common Stock
(i) that involves an aggregate consideration that, together with (1) any cash
and other consideration payable in a tender or exchange offer by the Company or
any of its subsidiaries for shares of Common Stock expiring within the
then-preceding 12 months in respect of which no adjustment has been made and (2)
the aggregate amount of any such cash distributions referred to in paragraph
(g)(D)(4) above to all holders of shares of Common Stock within the
then-preceding 12 months in respect of which no adjustments have been made,
exceeds 15% of the Company's Post-Tender Market Capitalization (as defined in
paragraph (g)(D)(7) below) and (ii) where the tender offer price or exchange
offer price per share of Common Stock is greater than the closing price of the
Common Stock on the Trading Day immediately succeeding the Expiration Time, then
the Conversion Price in effect immediately prior to such event shall be adjusted
pursuant to the formula: CP multiplied by ((EX multiplied by TotSh)/(TPur +
(NetSh multiplied by EX))) = ACP. There will be no adjustment to the Conversion
Price if the tender offer price or exchange offer price per share of Common
Stock is less than or equal to EX or if TOff is not greater than 15% of PTMC.

                  (6) If the Company shall make a distribution to all holders of
Common Stock (which distribution is not also being made to the Holders of the
Series D Preferred Stock based on the number of shares of Common Stock into
which the Series D Preferred Stock is then convertible) consisting of (i)
evidences of indebtedness, (ii) shares of Capital Stock of the Company other
than Common Stock, or (iii) assets other than cash, including securities, but
excluding those dividends and those issuances of rights, options, warrants and
other distributions for which an adjustment to the Conversion Price as referred
to above is applicable (other than in connection with a merger effected solely
to reflect a change in the jurisdiction of incorporation of the Company), then
the Conversion Price in effect immediately prior to such event shall be adjusted
pursuant to the formula: CP-(Value/#Sh)=ACP.

                  (7) Variables. In the preceding descriptions, the variables
have the following definitions:

            "U" equals the number of shares of Common Stock underlying all
rights, options or warrants issued to holders of Common Stock pursuant to
paragraph (g)(D)(2) above entitling such holders to subscribe for or purchase
shares of Common Stock or securities convertible into or exchangeable for shares
of Common Stock issued in the Conversion Price Adjustment Event;

            "X" equals the total number of shares of Common Stock outstanding
immediately prior to the Conversion Price Adjustment Event (excluding
unexercised options, warrants or rights);

            "Y" equals the total number of shares of Common Stock outstanding
immediately after the Conversion Price Adjustment Event (excluding unexercised
options, warrants or rights);
<PAGE>   17

            "Cash" equals the sum of (a) any distribution consisting exclusively
of cash (excluding any cash distributed upon a merger or consolidation to which
paragraph (g)(D)(12) below applies) to all holders of shares of Common Stock
(which distribution is not also being made to the Holders of Series D Preferred
Stock based upon the number of shares of Common Stock into which the Series D
Preferred Stock is then convertible) and (b) all other such all-cash
distributions made within the then-preceding 12 months in respect of which no
adjustment has been made and (c) any cash and the fair market value of other
consideration (as determined by the Board of Directors in good faith and
pursuant to a resolution) paid or payable in respect of any tender offer by the
Company or any of its subsidiaries for shares of any class of Common Stock
concluded within the then-preceding 12 months in respect of which no adjustment
has been made pursuant to paragraph (g)(D)(4) or (5);

            "ClosePrice" means, with respect to any date, the last sales price
of a share of Common Stock on the Nasdaq National Market (or the principal
national securities exchange or other securities market on which the Common
Stock is then being traded) on the last Trading Day immediately preceding such
date;

            "EP" equals the exercise price or other consideration to be paid by
the holder upon the conversion or exchange of "U";

            "EX" equals the closing price of the Common Stock on the Trading Day
immediately succeeding the Expiration Time;

            "Expiration Time" means, with respect to a tender or exchange offer
giving rise to a Conversion Price Adjustment Event pursuant to paragraph
(g)(D)(5), the last time that tenders of shares of Common Stock could have been
made pursuant to the terms of such tender or exchange offer (as the same may be
amended);

            "NetSh" means a number of shares of Common Stock equal to (a) TotSh
minus (b) Purchased Shares;

            "PDMC" or "Pre-Distribution Market Capitalization" means, with
respect to a Conversion Price Adjustment Event pursuant to paragraph (g)(D)(4),
an amount equal to the product of (a) the ClosePrice of the Common Stock as of
the record date with respect to the distribution constituting such Conversion
Price Adjustment Event multiplied by (b) the number of shares of Common Stock
outstanding at the close of business on the record date for such distribution;

            "PTMC" or "Post-Tender Market Capitalization" means, with respect to
a Conversion Price Adjustment Event pursuant to paragraph (g)(D)(5), an amount
equal to the product of (a) EX multiplied by (b) TotSh;
<PAGE>   18

            "Purchased Shares" means, in connection with a tender or exchange
offer giving rise to a Conversion Price Adjustment Event pursuant to paragraph
(g)(D)(5), the number of shares of Common Stock accepted (up to any maximum
number of such shares specified in the terms of such tender or exchange offer)
and validly tendered and not withdrawn as of the Expiration Time;

            "#Sh" equals the number of shares of Common Stock receiving the
distribution contemplated in paragraph (g)(D)(6);

            "TOff" equals the sum of (a) the aggregate consideration paid by the
Company or any of its subsidiaries for shares of Common Stock in a tender or
exchange offer made by the Company or any of its subsidiaries for shares of
Common Stock and (b) any cash or other consideration payable in a tender or
exchange offer by the Company or any of its subsidiaries for shares of Common
Stock expiring within the then- preceding 12 months in respect of which no
adjustment has been made and (c) the aggregate amount of any such all-cash
distributions referred to in paragraph (g)(D)(4) to all holders of shares of
Common Stock within the then- preceding 12 months in respect of which no
adjustments have been made;

            "TotSh" equals the total number of shares of Common Stock
outstanding (including any shares tendered in the tender or exchange offer) at
the Expiration Time;

            "TPur" equals the product of (a) the fair market value (as
determined by the Board of Directors in good faith pursuant to a resolution) of
the consideration payable for one share of Common Stock under the terms of the
tender or exchange offer giving rise to a Conversion Price Adjustment Event
pursuant to paragraph (g)(D)(5) multiplied by (b) the number of Purchased
Shares;

            "Value" equals the aggregate fair market value of the distribution
described in paragraph (g)(D)(6), as determined in good faith by the Board of
Directors of the Company pursuant to a resolution;

            "CP" equals the Conversion Price immediately prior to the Conversion
Price Adjustment Event;

            "ACP" equals the Conversion Price immediately after the Conversion
Price Adjustment Event.

            An adjustment made pursuant to paragraph (g)(D) shall become
effective: (A) in the case of a Conversion Price Adjustment Event described in
paragraph (g)(D)(1), (2), (4) or (6), immediately following the close of
business on the record date for the determination of holders of Common Stock
entitled to participate in such event; or (B) in the case of a Conversion Price
Adjustment Event described in paragraph (g)(D)(3), the close of business on the
day upon which such corporate action becomes effective; or (C) in the case of a
Conversion
<PAGE>   19

Price Adjustment Event described in paragraph (g)(D)(5), the close of business
on the Trading Day immediately succeeding the Expiration Time of such tender
offer or exchange offer.

                  (8) De Minimis Adjustments. No adjustment in the Conversion
Price shall be required (a) unless such adjustment would require an increase or
decrease of at least 1% in such price or (b) with respect to rights, options or
warrants issued pursuant to the Company's employee benefit plans; provided,
however, that any adjustments which by reason of paragraph (g)(D)(8)(a) are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this paragraph (g)(D)(8) shall be
made by the Company and shall be made to the nearest cent or to the nearest
one-hundredth of a share, as the case may be. No adjustment need be made for a
change in the par value or no par value of the Common Stock.

                  (9) Reductions in Conversion Price. The Company shall be
entitled to make such reductions in the Conversion Price, in addition to those
required by this paragraph (g)(D), as the Company in its discretion shall
determine to be advisable in order that any stock dividends, subdivision of
shares, distribution of rights to purchase stock or securities or distribution
of securities convertible into or exchangeable for stock hereafter made by the
Company to its stockholders shall not be taxable to the recipients. In the event
the Company elects to make such a reduction in the Conversion Price, the Company
will comply with the requirements of Rule 14e-1 under the Exchange Act, and any
other securities laws and regulations thereunder if and to the extent that such
laws and regulations are applicable in connection with the reduction of the
Conversion Price. Whenever the Conversion Price is so decreased, the Company
shall mail to Holders of record of shares of Series D Preferred Stock a notice
of the decrease at least 15 days before the date the decreased Conversion Price
takes effect, and such notice shall state the decreased Conversion Price.

                  (10) Decreases in Conversion Price. The Company from time to
time may decrease the Conversion Price by an amount determined by the Board of
Directors and described in a notice as hereinafter provided for any period of
time if the period is at least 20 days and if the decrease is irrevocable during
such period. Whenever the Conversion Price is so decreased, the Company shall
mail to Holders of record of shares of Series D Preferred Stock a notice of the
decrease at least 15 days before the date the decreased Conversion Price takes
effect, and such notice shall state the decreased Conversion Price and the
period it will be in effect.

                  (11) Distribution of Rights, Options or Warrants. In the event
that, after the issuance of the Series D Preferred Stock, the Company
distributes rights, options or warrants (other than those referred to in
paragraph (g)(D)(2) above and other than a distribution of rights, options or
warrants being made pro rata to the Holders of the Series D Preferred Stock
based upon the number of shares of Common Stock into which the Series D
Preferred Stock is then convertible) pro rata to all holders of shares of Common
Stock, so long as any such rights, options or warrants have not expired or been
redeemed by the Company, the Holder of any
<PAGE>   20

shares of Series D Preferred Stock surrendered for conversion will be entitled
to receive upon such conversion, in addition to the shares of Common Stock then
issuable upon such conversion (the "Conversion Shares"), a number of rights,
options or warrants to be determined as follows:

                        (a) if such conversion occurs on or prior to the date (a
"Distribution Date") for the distribution to the holders of rights, options or
warrants of separate certificates evidencing such rights, options or warrants,
the same number of rights, options or warrants to which a holder of a number of
shares of Common Stock equal to the number of Conversion Shares is entitled at
the time of such conversion in accordance with the terms and provisions
applicable to the rights, options or warrants; and

                        (b) if such conversion occurs after such Distribution
Date, the same number of rights, options or warrants to which a holder of the
number of shares of Common Stock into which such Series D Preferred Stock was
convertible immediately prior to such Distribution Date would have been entitled
on such Distribution Date in accordance with the terms and provisions of and
applicable to the rights, options or warrants.

                  (12) Merger or Consolidation. (a) In case of:

                        (i) any merger or consolidation of the Company with or
into another Person; or

                        (ii) any sale, transfer or other disposition to another
Person of all or substantially all of the assets of the Company computed on a
consolidated basis; or

                        (iii) any statutory exchange of securities with another
Person, other than in connection with a merger or acquisition, (any of the
events described in this paragraph (g)(D)(12)(a) being referred to as a
"Transaction"), there will be no adjustment to the Conversion Price except as
required by paragraph (g)(H).

            Upon the occurrence of a Transaction (other than (x) a consolidation
or merger in which the Company is the resulting or continuing Person and which
does not result in any reclassification or exchange of Common Stock outstanding
immediately prior to the merger or consolidation for cash, securities or other
property of another Person or (y) the sale, transfer, assignment or distribution
of shares of Capital Stock or assets to a subsidiary of the Company) and subject
to any adjustment to the Conversion Price required by paragraph (g)(H)(1), each
share of Series D Preferred Stock then outstanding shall, without the consent of
any Holder of Series D Preferred Stock (except as expressly required by
applicable law), become convertible only into the kind and amount of shares of
stock or other securities (of the Company or another issuer), cash or other
property receivable upon such Transaction by a holder of the number of shares of
Common Stock into which such share of Series D Preferred Stock could have been
converted immediately prior to the effective date of such Transaction, assuming
such holder of Common Stock failed to exercise his rights of election, if any,
as to the kind of amount of
<PAGE>   21

securities, cash or other property receivable upon such Transaction.

                        (b) The provisions of this paragraph (g)(D)(12)
similarly shall apply to successive Transactions. The provisions of this
paragraph (g)(D)(12), and the provisions of paragraph (g)(H) to the extent
applicable, shall be the sole right of Holders of Series D Preferred Stock in
connection with any Transaction and, except as expressly provided by applicable
law and paragraph (f), such Holders shall have no separate vote thereon.

                  (13) Notice of Adjustment. Whenever the Conversion Price is
adjusted as provided in this paragraph (g)(D) or paragraph (g)(H), the Company
shall promptly file with the Transfer Agent an Officers' Certificate setting
forth the Conversion Price after such adjustment and setting forth a brief
statement of the facts requiring such adjustment. Promptly after delivery of
such certificate, the Company shall prepare a notice of such adjustment of the
Conversion Price setting forth the adjusted Conversion Price and the date on
which such adjustment becomes effective and shall mail such notice of such
adjustment of the Conversion Price to each Holder of Series D Preferred Stock at
such Holder's last address appearing on the register of holders maintained for
that purpose within 20 days of the effective date of such adjustment. Failure to
deliver such notice shall not affect the legality or validity of any such
adjustment.

                  (14) Deferred Issuance. In any case in which this paragraph
(g)(D) provides that an adjustment shall become effective immediately after a
record date for an event, the Company may defer until the occurrence of such
event issuing to the Holder of any share of Series D Preferred Stock converted
after such record date and before the occurrence of such event the additional
Common Stock issuable upon such conversion by reason of the adjustment required
by such event over and above the Common Stock issuable upon such conversion
before giving effect to such adjustment.

                  (15) Treasury Stock. For purposes of this paragraph (g)(D),
the number of shares of Common Stock at any time outstanding shall not include
shares held in the treasury of the Company but shall include shares issuable in
respect of scrip certificates issued in lieu of fractions of Common Stock. The
Company shall not pay any dividend or make any distribution on Common Stock held
in the treasury of the Company.

                  (E) In case:

                  (1) the Company shall declare a dividend (or any other
distribution) on its Common Stock payable otherwise than in cash out of its
earned surplus; or

                  (2) the Company shall authorize the granting to all holders of
its Common Stock of rights or warrants to subscribe for or purchase any shares
of Capital Stock of any class or of any other rights; or
<PAGE>   22

                  (3) of any reclassification of the Common Stock of the Company
(other than a subdivision or combination of its outstanding Common Stock), or of
any consolidation or merger to which the Company is a party and for which
approval of any stockholders of the Company is required, or the sale or transfer
of all or substantially all the assets of the Company; or

                  (4) of the voluntary or involuntary dissolution, liquidation
or winding up of the Company;

then the Company shall cause to be filed with the Transfer Agent and at each
office or agency maintained for the purpose of conversion of the Series D
Preferred Stock, and shall cause to be mailed to all Holders at their last
addresses as they shall appear in the register of Holders maintained for that
purpose, at least 20 days (or 10 days in any case specified in clause (1) or (2)
above) prior to the applicable date hereinafter specified, a notice stating (x)
the date on which a record is to be taken for the purpose of such dividend,
distribution, rights or warrants, or, if a record is not to be taken, the date
as of which the holders of Common Stock of record to be entitled to such
dividend, distribution, rights or warrants are to be determined or (y) the date
on which such reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding up is expected to become effective, and the
date as of which it is expected that holders of Common Stock of record shall be
entitled to exchange their Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding up. Failure to give the notice required by
this paragraph (g)(E) or any defect therein shall not affect the legality or
validity of any dividend, distribution, right, warrant, reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or winding up,
or the vote upon any such action.

                  (F) The Company shall at all times reserve and keep available,
free from preemptive rights, out of its authorized but unissued shares of Common
Stock (or out of its authorized shares of Common Stock held in the treasury of
the Company), for the purpose of effecting the conversion of the Series D
Preferred Stock, the full number of shares of Common Stock then issuable upon
the conversion of all outstanding shares of Series D Preferred Stock.

                  (G) The Company will pay any and all document, stamp or
similar issue or transfer taxes that may be payable in respect of the issue or
delivery of Common Stock on conversion of the Series D Preferred Stock pursuant
hereto. The Company shall not, however, be required to pay any tax which may be
payable in respect of any transfer involved in the issue and delivery of shares
of Common Stock in a name other than that of the Holder of the share of Series D
Preferred Stock or the shares of Series D Preferred Stock to be converted, and
no such issue or delivery shall be made unless and until the Person requesting
such issue has paid to the Company the amount of any such tax, or has
established to the satisfaction of the Company that such tax has been paid.

                  (H) (1) Notwithstanding any other provision in the preceding
<PAGE>   23

paragraphs to the contrary, if any Common Stock Change of Control occurs, then
the Conversion Price in effect shall be adjusted immediately after such Common
Stock Change of Control as described below and, each share of the Series D
Preferred Stock shall be convertible solely into common stock of the kind
received by holders of Common Stock as the result of such Common Stock Change of
Control. For purposes of calculating any adjustment to be made pursuant to this
paragraph, immediately after a Common Stock Change of Control, the Conversion
Price in effect immediately prior to such Common Stock Change of Control, but
after giving effect to any prior adjustments, shall be adjusted by multiplying
such Conversion Price by a fraction, of which the numerator shall be the
Purchaser Stock Price (as defined in this paragraph (g)(H)(3)) and the
denominator shall be the Applicable Price (as defined in this paragraph
(g)(H)(3)); provided, however, that in the event of a Common Stock Change of
Control in which (x) 100% of the value of the consideration received by a holder
of Common Stock is common stock of the successor, acquirer, or other third party
(and cash, if any, is paid only with respect to any fractional interest in such
common stock resulting from such Common Stock Change of Control) and (y) all of
the Common Stock will have been exchanged for, converted into, or acquired for,
common stock (and cash only with respect to fractional interests) of the
successor, acquirer or other third party, the Conversion Price in effect
immediately prior to such Common Stock Change of Control shall thereupon be
adjusted by multiplying such Conversion Price by a fraction, of which the
numerator shall be one (1) and the denominator shall be the number of shares of
common stock of the successor, acquirer, or other third party received by a
holder of one share of Common Stock as a result of such Common Stock Change of
Control.

                  (2) If a Non-Stock Change of Control occurs, each Holder of
Series D Preferred Stock may require the Company to redeem all such Holder's
shares of Series D Preferred Stock at a price (the "Repurchase Price") equal to
100% of the Liquidation Preference, plus accumulated and unpaid dividends, if
any, whether declared or undeclared, to the date fixed for such redemption (the
"Repurchase Date"); provided, however, that no Holder of Series D Preferred
Stock shall have the right to require the redemption or repurchase of Series D
Preferred Stock prior to the date on which the Company's Senior Secured Notes
mature or such earlier date on which the Senior Secured Notes have been paid in
full (the "Debt Maturity Date").

            Following a Non-Stock Change of Control prior to the Debt Maturity
Date, if the Holders of Series D Preferred Stock, but for the proviso set forth
in the immediately preceding paragraph of this paragraph (H)(2), would have the
right to require the Company to redeem all such Holder's shares of Series D
Preferred Stock, then each Holder of Series D Preferred Stock may, instead of
requiring the Company to redeem or repurchase such Holder's shares of Series D
Preferred Stock, require the Company to convert such Holder's shares of Series D
Preferred Stock into Common Stock on the Repurchase Date as provided below.

            Subject to the conditions set forth below, the Repurchase Price
shall be, at the option of the Company, payable (v) in cash, (w) through the
delivery of a number of shares of Common Stock equal to the Repurchase Price
divided by the Discounted Stock Value or (x) any combination of (v) and (w). The
"Discounted Stock Value" means the product of (y) 95% and
<PAGE>   24

(z) the average of the daily closing prices of the Common Stock for the five
consecutive Trading Days ending on (and including) the fourth Trading Day
preceding such Repurchase Date. The closing price for each Trading Day will be
the last sales price on such date on the Nasdaq National Market (or the
principal securities exchange or other securities market on which the Common
Stock is then being traded). No fractional shares of Common Stock shall be
issued in connection with the payment of the Repurchase Price. Instead, the
Company shall pay to the Transfer Agent for distribution to the Holders as
provided herein cash in lieu of the fractional portion of one share which may
result from the computation of the number of shares of Common Stock as set forth
in the first two sentences of this paragraph in an amount equal to the same
fraction of the last sales price of a share of Common Stock on the Nasdaq
National Market (or the principal national securities exchange or other
securities market on which the Common Stock is then being traded) on the fourth
Trading Day immediately preceding the Repurchase Date. The Transfer Agent is
hereby authorized to aggregate any fractional shares of Common Stock that would
otherwise be distributable in connection with the payment of the Repurchase
Price, and to sell them at the best available price and distribute the proceeds
to the Holders thereof in proportion to their respective interests. The Company
shall reimburse the Transfer Agent for any expenses incurred with respect to
such sale, including brokerage commissions. If the Company is precluded from
paying cash for fractional shares, it shall pay cash to the Holders for the
fractional shares when it becomes legally and contractually able to pay such
cash.

            The Company may elect to pay the Repurchase Price by delivering
shares of Common Stock only if:

            (i) The shares of Common Stock of the Company to be issued as
payment of the Repurchase Price (x) shall not require registration under any
federal securities law before such shares may be freely transferable without
being subject to any transfer restrictions under the Securities Act or, if such
registration is required, such registration shall be completed and shall become
effective prior to the Repurchase Date, and (y) shall not require registration
with or approval of any governmental authority under any state law or any other
federal law before such shares may be validly issued or delivered or if such
registration is required or such approval must be obtained, such registration
shall be completed or such approval shall be obtained prior to the Repurchase
Date;

            (ii) The shares of Common Stock of the Company to be issued are, or
shall have been, approved for listing on the Nasdaq National Market or the New
York Stock Exchange or listed on another national securities exchange, in any
case, prior to the Repurchase Date; and

            (iii) All shares of Common Stock of the Company which may be issued
as payment of the Repurchase Price will be issued out of the Company's
authorized but unissued Common Stock and, will upon issue, be duly and validly
issued and fully paid and non- assessable and free of any preemptive or similar
rights.

            In the event the Company is restricted from repurchasing shares of
the Series D
<PAGE>   25

Preferred Stock on the Repurchase Date pursuant to the terms of its outstanding
indebtedness, Holders of the Series D Preferred Stock may convert each share of
Series D Preferred Stock into a number of shares of Common Stock equal to the
Repurchase Price divided by the Discounted Stock Value.

      In connection with the conversion of shares of Series D Preferred Stock on
the Repurchase Date, the Company shall apply and use its best efforts to have
the shares of Common Stock to be issued upon conversion of the Series D
Preferred Stock approved for listing on the Nasdaq National Market or the New
York Stock Exchange or listing on another national securities exchange prior to
the Repurchase Date. All shares of Common Stock of the Company which may be
issued upon conversion of the Series D Preferred Stock as provided in this
paragraph (H)(2) will be issued out of the Company's authorized but unissued
Common Stock and will, upon issue, be duly and validly issued and fully paid and
non-assessable and free of any pre-emptive or similar rights.

                        In the case of a Repurchase Date falling after a Record
Date and prior to the related Dividend Payment Date, the Holders of the Series D
Preferred Stock at the close of business on such Record Date will be entitled to
receive the dividend payable on such shares on the corresponding Dividend
Payment Date, notwithstanding the redemption or conversion of such shares
following such Record Date. Except as provided for in the preceding sentence, no
payment or allowance will be made for accrued dividends on any shares of Series
D Preferred Stock redeemed or converted pursuant to this paragraph (H) (2).

            On and after the Repurchase Date, unless the Company defaults in the
payment of the Repurchase Price or the conversion of the Series D Preferred
Stock, dividends will cease to accumulate on shares of Series D Preferred Stock
to be redeemed or converted and all rights of Holders of such shares will
terminate except for the right to receive the Repurchase Price, without
interest, or the number of shares of Common Stock into which the shares of the
Series D Preferred Stock have been converted.

            Within 30 days after the occurrence of a Non-Stock Change of
Control, the Company will (a) publish a notice of the occurrence of a Non-Stock
Change of Control in the Wall Street Journal or similar daily business
publication of national distribution and (b) send a written notice by first
class mail to each Holder of record of shares of Series D Preferred Stock, at
its registered address, and to the Transfer Agent (the "Company Notice");
provided, however, that neither the failure to give such notice nor any
deficiency therein shall affect the validity of the procedure for the redemption
or conversion of any shares of Series D Preferred Stock to be redeemed or
converted except as to the Holder or Holders to whom the Company has failed to
give said notice or except as to the Holder or Holders whose notice was
defective. The Company Notice shall state:

            (i) that a Non-Stock Change of Control has occurred,
<PAGE>   26

            (ii) the Repurchase Price, whether shares of the Series D Preferred
Stock will be redeemed or converted, and in the event of a redemption, whether
the Repurchase Price will be paid in cash, through the delivery of shares of
Common Stock, or a combination thereof (and, if a combination thereof, stating
the percentages of the total Repurchase Price that will be paid in cash and in
shares of Common Stock);

            (iii) in the event of a redemption, if all or a portion of the
Repurchase Price is to be paid through the delivery of shares of Common Stock,
that the determination of the number of shares of Common Stock to be delivered
shall be calculated as set forth above;

            (iv) in the event of a conversion, that the determination of the
number of shares of Common Stock to be delivered shall be calculated as set
forth above;

            (v) the Repurchase Date, which shall be no earlier than the 30 days
and no later than 60 days following the date of the Company Notice;

            (vi) that to elect to participate in the redemption or conversion,
as the case may be, the Holder must deliver to the Transfer Agent the
certificate or certificates representing the shares of Series D Preferred Stock
to be redeemed or converted along with a written election to participate, on or
before 5:00 p.m., New York City time, on the 30th day after the date of the
Company Notice;

            (vii) that unless the Company defaults in the payment of the
Repurchase Price or the conversion of the Series D Preferred Stock, dividends on
the shares of the Series D Preferred Stock tendered to the Company shall cease
to accumulate on such Repurchase Date; and

            (viii) that any shares of Series D Preferred Stock not tendered to
the Company will continue to accumulate dividends in accordance with the terms
hereof.

            To exercise the repurchase right or conversion right granted by this
paragraph (H)(2), a Holder of Series D Preferred Stock must surrender the
certificate or certificates representing such shares of Series D Preferred
Stock, duly endorsed (or otherwise in proper form for transfer, as determined by
the Company), together with a written notice of election to participate in the
repurchase right or conversion right, as the case may be, to the Transfer Agent
on or before 5:00 p.m., New York City time, on the 30th day after the date of
the Company Notice, and on the Repurchase Date (A) in the event of a redemption,
the Repurchase Price for such shares shall be payable in cash and/or shares of
Common Stock, as the case may be, to the person whose name appears on such
certificate or certificates as the owner thereof, and each surrendered
certificate shall be canceled and retired, or (B) such shares shall be converted
into shares of Common Stock and each surrendered certificate shall be canceled
and retired.

            On the Repurchase Date, the Company shall, to the extent lawful, (A)
accept for payment or conversion shares of Series D Preferred Stock validly
tendered and (B) promptly
<PAGE>   27

deliver the Repurchase Price or the number of shares of Common Stock into which
such shares of Series D Preferred Stock have been converted to each holder of
shares of Series D Preferred Stock validly tendered to the Company. The Company
shall publicly announce the results of the Non-Stock Change of Control offer on
or as soon as practicable after the Repurchase Date.

            The Company shall comply with any securities laws and regulations,
to the extent such laws and regulations are applicable to the repurchase or
conversion of shares of the Series D Preferred Stock, in connection with a
Non-Stock Change of Control.

            Notwithstanding the foregoing, the Company shall not be required to
offer to repurchase or convert, and repurchase or convert, securities tendered
pursuant to this paragraph (H)(2) following a Non-Stock Change of Control if a
third party makes the offer to repurchase securities tendered pursuant to this
paragraph (H)(2) in the manner, at the times and otherwise in compliance with
the requirements set forth in this paragraph (H)(2) and purchases all of the
Series D Preferred Stock validly tendered and not withdrawn pursuant to such
provision.

                  (3) For purposes of this paragraph (H), the following terms
shall have the meanings indicated:

            "Applicable Price" means the average of the closing bid prices for
the Common Stock during the ten Trading Days prior to and including the record
date for the determination of the holders of Common Stock entitled to receive
cash, securities, property or other assets in connection with such Common Stock
Change of Control or, if there is no such record date, the date upon which the
holders of the Common Stock shall have the right to receive such cash,
securities, property or other assets, in each case, as adjusted in good faith by
the Board of Directors to appropriately reflect any of the events referred to in
paragraph (g)(D)(1) through (6).

            "Beneficial Owner" means a beneficial owner as defined in Rules
13d-3 and 13d- 5 under the Exchange Act (or any successor rules), including the
provision of such Rules that a Person shall be deemed to have beneficial
ownership of all securities that such Person has a right to acquire within 60
days; provided that a Person will not be deemed a beneficial owner of, or to own
beneficially, any securities if such beneficial ownership (1) arises solely as a
result of a revocable proxy delivered in response to a proxy or consent
solicitation made pursuant to, and in accordance with, the Exchange Act and (2)
is not also then reportable on Schedule 13D or Schedule 13G (or any successor
schedule) under the Exchange Act.

            "Change of Control" means: (i) the sale, lease, transfer,
conveyance, other disposition (other than by way of merger or consolidation), in
one or a series of related transactions, of all or substantially all the assets
of the Company and its subsidiaries taken as a whole to any "person" (as such
term is used in Section 13(d)(3) of the Exchange Act), (ii) the adoption of a
plan relating to the liquidation, dissolution or winding-up of the Company,
(iii) the consummation of any transaction (including any merger or
consolidation) the result of which is
<PAGE>   28

that any "person" (as defined above) other than any Permitted Holder becomes the
Beneficial Owner, directly or indirectly, of more than 50% of the Voting Stock
of the Company plus any voting stock not yet outstanding but deemed to be
Beneficially Owned by such "person" (as defined above); (iv) the first day on
which the Permitted Holders collectively become the Beneficial Owners, directly
or indirectly, of more than 70% of the Voting Stock of the Company plus any
voting stock not yet outstanding but deemed to be Beneficially Owned by the
Permitted Holders; or (v) the first day on which a majority of the members of
the Board of Directors are not Continuing Directors.

            "Common Stock Change of Control" means any Change of Control in
which more than 50% of the value (as determined in good faith by the Board of
Directors of the Company) of the consideration received by holders of Common
Stock consists of common stock that for each of the ten consecutive Trading Days
referred to in the definition of "Applicable Price" has been admitted for
listing or admitted for listing subject to notice of issuance on a national
securities exchange or quoted on the Nasdaq National Market; provided, however,
that a Change of Control shall not be a Common Stock Change of Control unless
either (i) the Company continues to exist after the occurrence of such Change of
Control and the outstanding shares of Series D Preferred Stock continue to exist
as outstanding shares of Series D Preferred Stock, or (ii) not later than the
occurrence of such Change of Control, the outstanding shares of Series D
Preferred Stock are converted into or exchanged for shares of convertible
preferred stock of a corporation succeeding to the business of the Company,
which convertible preferred stock has powers, preferences and relative,
participating, optional or other rights, and qualifications, limitations and
restrictions, substantially similar to those of the Series D Preferred Stock.

            "Continuing Directors" means, as of any date of determination,
individuals who on the Issue Date constituted the Board of Directors (together
with any new directors whose election by the Board of Directors or whose
nomination for election by the Company's stockholders was approved by a vote of
a majority of the members of the Board of Directors then in office who either
were members of the Board of Directors on the Issue Date or whose election or
nomination for election was previously so approved).

            "Non-Stock Change of Control" means any Change of Control other than
a Common Stock Change of Control.

            "Permitted Holders" means: (i) Providence Equity Partners Inc., JK&B
Capital, L.P., or any of their affiliates, (ii) any of Maurice J. Gallagher,
Jr., Timothy P. Flynn, Rolla P. Huff or their respective spouses or lineal
descendants and their respective spouses (collectively, the "Individual Family
Holders") whether acting in their own name or as a majority of persons having
the power to exercise the voting rights attached to, or having investment power
over, shares held by others, (iii) any affiliate of any member of the Individual
Family Holders, (iv) any trust principally for the benefit of one or more
members of the Individual Family Holders (whether or not any member of the
Individual Family Holders is a trustee of such trust) and (v)
<PAGE>   29

any charitable foundation whose majority of members, trustees or directors, as
the case may be, are persons referred to in (ii) above.

            "Purchaser Stock Price" means, the product of (i) the number of
shares of common stock received as consideration in such Common Stock Change of
Control for each share of Common Stock, and (ii) the average of the per share
closing bid prices for the common stock received as consideration in such Common
Stock Change of Control for the ten consecutive Trading Days prior to and
including the record date for the determination of the holders of Common Stock
entitled to receive such common stock, or if there is no such record date, the
date upon which the holders of the Common Stock shall have the right to receive
such common stock, in each case, as adjusted in good faith by the Board of
Directors to appropriately reflect any of the events referred to in paragraph
(g)(D)(1) through (6); provided, however, that if no such closing bid prices
exist, then the Purchaser Stock Price shall be set at a price determined in good
faith by the Board of Directors of the Company.

            "Senior Secured Notes" means the Company's 13% Senior Secured Notes
due 2004.

      (h) Reissuance of Series D Preferred Stock. Shares of Series D Preferred
Stock that have been issued and reacquired in any manner, including shares
purchased, redeemed, converted or exchanged, shall not be reissued as shares of
Series D Preferred Stock and shall (upon compliance with any applicable
provisions of the laws of Nevada) have the status of authorized and unissued
shares of Preferred Stock undesignated as to series and may be redesignated and
reissued as part of any series of Preferred Stock; provided, however, that so
long as any shares of Series D Preferred Stock are outstanding, any issuance of
such shares must be in compliance with the terms hereof. Upon any such
reacquisitions, the number of shares of Series D Preferred Stock authorized
pursuant to this Certificate of Designation shall be reduced by the number of
shares so acquired.

      (i) Business Day. If any payment, redemption or exchange shall be required
by the terms hereof to be made on a day that is not a Business Day, such
payment, redemption or exchange shall be made on the immediately succeeding
Business Day.

      (j) Limitation on Mergers and Asset Sales. Without the vote or consent of
the holders of a majority of the then outstanding shares of Series D Preferred
Stock, the Company may not consolidate or merge with or into, or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
assets to, any Person unless: (A) (1) the successor, transferee or lessee (if
not the Company) is organized and existing under the laws of the United States
of America or any State thereof or the District of Columbia; (2) the Series D
Preferred Stock shall be converted into or exchanged for and shall become shares
of such successor, transferee or lessee, having in respect of such successor,
transferee, or lessee substantially the same powers, preference and relative
participating, optional or other special rights and the qualifications,
limitations or restrictions thereon, that the Series D Preferred Stock had
immediately prior to such transaction;
<PAGE>   30

and (3) the Company delivers to the Transfer Agent an Officers' Certificate and
an Opinion of Counsel stating that such consolidation, merger or transfer
complies with this Certificate of Designation, or (B) (1) the consideration
received by the holders of Common Stock consists entirely of cash, (2) upon
consummation of such transaction, each share of Series D Preferred Stock shall
be converted into or exchanged for cash in an amount at least equal to the
greater of (a) the amount which would be paid to a holder of the number of
shares of Common Stock into which such share of Series D Preferred Stock could
convert immediately prior to the consummation of such transaction and (b) the
liquidation preference of such share of Series D Preferred Stock plus all
accumulated and unpaid dividends, if any, whether or not declared, to the date
of the consummation of such transaction and (3) the Company delivers to the
Transfer Agent an Officers' Certificate and an Opinion of Counsel stating that
such consolidation, merger or transfer complies with this Certificate of
Designation, or (C) (1) the consideration to be received by the holders of
Common Stock in respect of each share of Common Stock has a value which, for any
five Business Days during the period commencing on the date that the Company
publicly announces such consolidation, merger or transfer and ending ten
Business Days thereafter, is equal to or greater than 140% of the Conversion
Price in effect on the date of such public announcement by the Company, (2) the
Consolidated Net Worth of the successor, transferee or lessee is equal to or
exceeds an amount equal to the product of two, multiplied by the Consolidated
Net Worth of the Company immediately prior to such consolidation, merger, or
transfer, and (3) the Company delivers to the Transfer Agent an Officers'
Certificate and an Opinion of Counsel stating that such consolidation, merger or
transfer complies with this Certificate of Designation.

            For purposes of this paragraph (j), "Consolidated Net Worth" shall
mean, in respect of any Person, the total amount shown on the balance sheet of
such Person and its consolidated subsidiaries, determined on a consolidated
basis in accordance with generally accepted accounting principles, as of the end
of the most recent fiscal quarter of such Person for which internal financial
statements are then available, prior to the taking of any action for which the
determination is made, as (i) the par or stated value of all of the outstanding
capital stock of such Person, plus (ii) paid-in capital or capital surplus
relating to such capital stock, plus (iii) any retained earnings or earned
surplus, less any accumulated deficit.

            In the event of any consolidation or merger or conveyance, transfer
or lease of all or substantially all of the assets of the Company that is
permitted pursuant to this paragraph (j), the successor resulting from such
consolidation or into which the Company is merged or the transferee or lessee to
which such conveyance, transfer or lease is made, will succeed to, and be
substituted for, and may exercise every right and power of, the Company with
respect to the Series D Preferred Stock, and thereafter, except in the case of a
lease, the predecessor (if still in existence) shall be released from its
obligations and covenants with respect to the Series D Preferred Stock.

      (k) Certificates.
<PAGE>   31

            (i) Form and Dating. The Series D Preferred Stock and the Transfer
Agent's certificate of authentication shall be substantially in the form of
Exhibit A, which is hereby incorporated in and expressly made a part of this
Certificate of Designation. The Series D Preferred Stock certificate may have
notations, legends or endorsements required by law, stock exchange rules,
agreements to which the Company is subject, if any, or usage (provided that any
such notation, legend or endorsement is in a form acceptable to the Company).
Each Series D Preferred Stock certificate shall be dated the date of its
authentication. The terms of the Series D Preferred Stock certificate set forth
in Exhibit A are part of the terms of this Certificate of Designation.

            (ii) Execution and Authentication. Two Officers shall sign the
Series D Preferred Stock certificates for the Company by manual or facsimile
signature. The Company's seal shall be impressed, affixed, imprinted or
reproduced on the Series D Preferred Stock certificates and may be in facsimile
form.

            If an Officer whose signature is on a Series D Preferred Stock
certificate no longer holds that office at the time the Transfer Agent
authenticates the Series D Preferred Stock certificate, the Series D Preferred
Stock certificates shall be valid nevertheless. A Series D Preferred Stock
certificate shall not be valid until an authorized signatory of the Transfer
Agent manually signs the certificate of authentication on the Series D Preferred
Stock certificate. The signature shall be conclusive evidence that the Series D
Preferred Stock certificate has been authenticated under this Certificate of
Designation. The Transfer Agent shall authenticate and deliver certificates for
up to 4,250,000 shares of Series D Preferred Stock for original issue upon a
written order of the Company signed by two Officers of the Company. Such order
shall specify the number of shares of Series D Preferred Stock to be
authenticated and the date on which the original issue of Series D Preferred
Stock is to be authenticated.

            The Transfer Agent may appoint an authenticating agent reasonably
acceptable to the Company to authenticate the certificates for Series D
Preferred Stock. Unless limited by the terms of such appointment, an
authenticating agent may authenticate certificates for Series D Preferred Stock
whenever the Transfer Agent may do so. Each reference in this Certificate of
Designation to authentication by the Transfer Agent includes authentication by
such agent. An authenticating agent has the same rights as the Transfer Agent or
agent for service of notices and demands.

            (iii) Transfer and Exchange of Shares of Series D Preferred Stock.
(A) When shares of Series D Preferred Stock are presented to the Transfer Agent
with a request to register the transfer of such shares of Series D Preferred
Stock or to exchange such shares of Series D Preferred Stock for an equal number
of shares of Series D Preferred Stock of other authorized denominations, the
Transfer Agent shall register the transfer or make the exchange as requested if
its reasonable requirements for such transaction are met; provided, however,
that the certificate representing such shares of Series D Preferred Stock
surrendered for transfer or exchange shall be duly endorsed or accompanied by a
written instrument of transfer in form
<PAGE>   32

reasonably satisfactory to the Company and the Transfer Agent, duly executed by
the Holder thereof or its attorney duly authorized in writing.

                  (B) Obligations with Respect to Transfers and Exchanges of
Series D Preferred Stock. (1) To permit registrations of transfers and
exchanges, the Company shall execute and the Transfer Agent shall authenticate
certificates representing shares of Series D Preferred Stock as required
pursuant to the provisions of this paragraph (k)(iii).

                  (2) All shares of Series D Preferred Stock issued upon any
registration of transfer or exchange of shares of Series D Preferred Stock shall
be the valid obligations of the Company, entitled to the same benefits under
this Certificate of Designation as the shares of Series D Preferred Stock
surrendered upon such registration of transfer or exchange.

                  (3) Prior to due presentment for registration of transfer of
any shares of Series D Preferred Stock, the Transfer Agent and the Company may
deem and treat the person in whose name such shares of Series D Preferred Stock
are registered as the absolute owner of such Series D Preferred Stock and
neither the Transfer Agent nor the Company shall be affected by notice to the
contrary.

                  (4) No service charge shall be made to a Holder for any
registration of transfer or exchange upon surrender of any certificate
representing shares of Series D Preferred Stock or shares of Common Stock at the
office of the Transfer Agent maintained for that purpose. However, the Company
may require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or
exchange of Series D Preferred Stock certificates or Common Stock certificates.

                  (C) No Obligation of the Transfer Agent. The Transfer Agent
shall have no obligation or duty to monitor, determine or inquire as to
compliance with any restrictions on transfer imposed under this Certificate of
Designation or under applicable law with respect to any transfer of any interest
in any Series D Preferred Stock other than to require delivery of such
certificates and other documentation or evidence as are expressly required by,
and to do so if and when expressly required by, the terms of this Certificate of
Designation, and to examine the same to determine substantial compliance as to
form with the express requirements hereof.

      (iv) Replacement Certificates. If a modified Series D Preferred Stock
certificate is surrendered to the Transfer Agent or if the Holder of a Series D
Preferred Stock certificate claims that the Series D Preferred Stock certificate
has been lost, destroyed or wrongfully taken, the Company shall issue and the
Transfer Agent shall countersign a replacement Series D Preferred Stock
certificate if the reasonable requirements of the Transfer Agent and of Section
8- 405 of the Uniform Commercial Code as in effect in the State of New York are
met. If required by the Transfer Agent or the Company, such Holder shall furnish
an indemnity bond sufficient in the judgment of the Company and the Transfer
Agent to protect the Company and the Transfer Agent from any loss which either
of them may suffer if a Series D Preferred Stock
<PAGE>   33

certificate is replaced. The Company and the Transfer Agent may charge the
Holder for their expenses in replacing a Series D Preferred Stock certificate.

      (v) Temporary Certificates. Until definitive Series D Preferred Stock
certificates are ready for delivery, the Company may prepare and the Transfer
Agent shall countersign temporary Series D Preferred Stock certificates.
Temporary Series D Preferred Stock certificates shall be substantially in the
form of definitive Series D Preferred Stock certificates but may have variations
that the Company considers appropriate for temporary Series D Preferred Stock
certificates. Without unreasonable delay, the Company shall prepare and the
Transfer Agent shall countersign definitive Series D Preferred Stock
certificates and deliver them in exchange for temporary Series D Preferred Stock
certificates.

      (vi) Cancellation. In the event the Company shall purchase or otherwise
acquire shares of Series D Preferred Stock, the certificate(s) representing the
same shall thereupon be delivered to the Transfer Agent for cancellation.

            The Transfer Agent and no one else shall cancel and destroy all
Series D Preferred Stock certificates surrendered for transfer, exchange,
replacement or cancellation and deliver a certificate of such destruction to the
Company unless the Company directs the Transfer Agent to deliver canceled Series
D Preferred Stock certificates to the Company. The Company may not issue new
Series D Preferred Stock certificates to replace Series D Preferred Stock
certificates to the extent they evidence Series D Preferred Stock which the
Company has purchased or otherwise acquired.

            (7) Certain Definitions. As used in this Certificate of Designation,
the following terms shall have the following meanings (and (1) terms defined in
the singular have comparable meanings when used in the plural and vice versa,
(2) "including" means including without limitation, (3) "or" is not exclusive,
(4) "to" any date means to and including such date and (5) an accounting term
not otherwise defined has the meaning assigned to it in accordance with United
States generally accepted accounting principles as in effect on the Issue Date
and all accounting calculations will be determined in accordance with such
principles), unless the content otherwise requires:

            "Business Day" means each day which is not a Legal Holiday.

            "Capital Stock" means, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) in equity of such Person, whether now outstanding
or issued after the Issue Date, including all Common Stock and Preferred Stock.

            "Common Stock" means the Company's common stock, par value $0.001
per share.
<PAGE>   34

            "Dividend Period" means such period between two consecutive Dividend
Payment Dates and the period from the Issue Date to the first Dividend Payment
Date.

            "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

            "Holders" means the registered holders from time to time of the
Series D Preferred Stock.

            "Issue Date" means the date on which the Series D Preferred Stock is
initially issued.

            "Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions are not required to be open in the State of New York.

            "Officer" means the Chairman of the Board of Directors, the
President, any Vice President, the Treasurer, the Secretary, any Assistant
Secretary or Assistant Treasurer of the Company.

            "Officers' Certificate" means a certificate signed by two Officers.

            "Opinion of Counsel" means a written opinion from legal counsel who
is acceptable to the Transfer Agent. The counsel may be an employee of or
counsel to the Company or the Transfer Agent.

            "person" or "Person" means any individual, corporation, partnership,
joint venture, limited liability company, association, joint-stock company,
trust, unincorporated organization, governmental or any agency or political
subdivision thereof or any other entity.

            "Preferred Stock" means, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) of such Person's preferred or preference stock,
whether now outstanding or issued after the Issue Date, including all series and
classes of such preferred or preference stock.

            "SEC" or "Commission" means the Securities and Exchange Commission.

            "Securities Act" means the Securities Act of 1933, as amended.

            "Series B Preferred Stock" means the 5,278,000 shares of the
Company's Preferred Stock which, as of the Issue Date, have been designated as
Series B Convertible Preferred Stock.

            "Series C Preferred Stock" means the 1,250,000 shares of the
Company's Preferred Stock which, as of the Issue Date, have been designated as
the Series C Convertible Preferred Stock.
<PAGE>   35

            "Subsidiary" means with respect to any Person, any corporation,
association or other business entity of which Voting Stock representing more
than 50% of the voting power of shares of outstanding Voting Stock is owned,
directly or indirectly, by such Person, or one or more other Subsidiaries of
such Person.

            "Transfer Agent" means the transfer agent for the Series D Preferred
Stock appointed by the Company, which initially shall be Continental Stock
Transfer and Trust Company.

            "Voting Stock" of a corporation means all classes of Capital Stock
of such corporation then outstanding and normally entitled to vote in the
election of directors.

      (8) SEC Reports and Reports to Holders. So long as any shares of Series D
Preferred Stock remain outstanding, the Company will file with the SEC (whether
or not the Company is required to do so) all such reports and other information
as the Company would be required to file with the SEC pursuant to Section 13(a)
or 15(d) of the Exchange Act. Upon the written request of a Holder of Series D
Preferred Stock, the Company will supply to such Holder, at no cost to such
Holder, copies of such reports or other information.
<PAGE>   36

            IN WITNESS WHEREOF, said MGC Communications, Inc. has caused this
Certificate of Designation to be signed by its President, and attested to by its
Secretary, on February 2, 2000.

                                        MGC COMMUNICATIONS, INC.

                                        By______________________________________
                                          Name: Rolla P. Huff
                                          Title: President

Attest:

_____________________________________
Name: Kent F. Heyman
Title: Secretary

STATE OF __________________ )
ss.:                        )
COUNTY OF _________________ )

      On the 2nd day of February, 2000, before me personally came Rolla Huff to
me known, who, being by me duly sworn, did depose and say he resides at 14
Moraine Point, Victor, New York 14564, and that he is the President of MGC
Communications, Inc., the corporation described in and which executed the above
instrument; and that he acknowledged said instruments to be the free act and
deed of said corporation.

______________________________________
Notary Public
My Commission Expires: _______________
<PAGE>   37

                                    EXHIBIT A

                        FORM OF SERIES D PREFERRED STOCK

                                FACE OF SECURITY

Certificate Number: [ ]
Number of Shares of Series D Preferred Stock: [ ]
CUSIP NO.: 552763 500

              7.25% Series D Cumulative Convertible Preferred Stock
                          (par value $0.001 per share)
                    (liquidation preference $50.00 per share)

                                       of

                            MGC Communications, Inc.

      MGC Communications, Inc., a Nevada corporation (the "Company"), hereby
certifies that [________________] (the "Holder") is the registered owner of
fully paid and non-assessable preferred securities of the Company designated the
7.25% Series D Cumulative Convertible Preferred Stock (par value $0.001 per
share) (liquidation preference $50.00 per share) (the "Series D Preferred
Stock"). The shares of Series D Preferred Stock are transferable on the books
and records of the Transfer Agent, in person or by a duly authorized attorney,
upon surrender of this certificate duly endorsed and in proper form for
transfer. The Series D Preferred Stock represented hereby are issued and shall
in all respects be subject to the provisions of the Certificate of Designation
of Series D Cumulative Convertible Preferred Stock dated February 2, 2000, as
the same may be amended from time to time (the "Certificate of Designation").
Capitalized terms used herein but not defined shall have the meaning given them
in the Certificate of Designation. The Company will provide a copy of the
Certificate of Designation to a Holder without charge upon written request to
the Company at its principal place of business.

      Reference is hereby made to select provisions of the Series D Preferred
Stock set forth on the reverse hereof, and to the Certificate of Designation,
which select provisions and the Certificate of Designation shall for all
purposes have the same effect as if set forth at this place. Upon receipt of
this certificate, the Holder is bound by the Certificate of Designation and is
entitled to the benefits thereunder.

      This certificate is not valid unless countersigned and registered by the
Transfer Agent.
<PAGE>   38

            IN WITNESS WHEREOF, the Company has executed this certificate this
[      ] day of [  ], [  ].

                                        MGC COMMUNICATIONS, INC.

                                        By______________________________________
                                          Name:
                                          Title:

[Seal]

                                        By______________________________________
                                          Name:
                                          Title:
<PAGE>   39

                               REVERSE OF SECURITY

      Dividends on each share of Series D Preferred Stock shall be payable at a
rate per annum set forth in the face hereof or as provided in the Certificate of
Designation. Dividends may be paid in cash or in shares of Common Stock of the
Company, at the option of the Company.

      The shares of Series D Preferred Stock shall be redeemable as provided in
the Certificate of Designation and in the Articles. The shares of Series D
Preferred Stock shall be convertible into the Company's Common Stock in the
manner and according to the terms set forth in the Certificate of Designation.

      As required under Nevada law, the Company shall furnish to any Holder upon
request and without charge, a statement setting forth in full or summarizing the
voting powers, designations, preferences, limitations, restrictions and relative
rights of the various classes of stock of the Company or series thereof. All
such requests should be directed to MGC Communications, Inc., 171 Sully's Trail,
Suite 202, Pittsford, New York 14534, Attention: General Counsel.
<PAGE>   40

                                   ASSIGNMENT

         FOR VALUE RECEIVED, the undersigned assigns and transfers the shares of
                                   Series D Preferred Stock evidenced hereby to:

(Insert assignee's social security or tax identification number)

(Insert address and zip code of assignee)

and irrevocably appoints:

agent to transfer the shares of Series D Preferred Stock evidenced hereby on the
books of the Transfer Agent. The agent may substitute another to act for him or
her.

Date:

Signature:
(Sign exactly as your name appears on the other side of this Series D Preferred
Stock Certificate)

Signature

                                                                   Guarantee:(1)

----------

(1)   (Signature must be guaranteed by an "eligible guarantor institution" that
      is, a bank, stockbroker, savings and loan association or credit union
      meeting the requirements of the Transfer Agent, which requirements include
      membership or participation in the Securities Transfer Agents Medallion
      Program ("STAMP") or such other "signature guarantee program" as may be
      determined by the Transfer Agent in addition to, or in substitution for,
      STAMP, all in accordance with the Securities Exchange Act of 1934, as
      amended.)
<PAGE>   41

                                    EXHIBIT B

                              NOTICE OF CONVERSION

                    (To be Executed by the Registered Holder
                in order to Convert the Series D Preferred Stock)

The undersigned hereby irrevocably elects to convert (the "Conversion") shares
of 7.25% Series D Cumulative Convertible Preferred Stock (the "Series D
Preferred Stock"), represented by stock certificate No(s). _____ (the "Series D
Preferred Stock Certificates") into shares of Common Stock ("Common Stock") of
MGC Communications, Inc. (the "Company") according to the conditions of the
Certificate of Designation of the Series D Preferred Stock (the "Certificate of
Designation"), as of the date written below. If shares are to be issued in the
name of a person other than the undersigned, the undersigned will pay all
transfer taxes payable with respect thereto and is delivering herewith payment
of all applicable taxes or evidence that such taxes have been paid. No fee will
be charged to the holder for any conversion, except for transfer taxes, if any.
A copy of each Series D Preferred Stock Certificate is attached hereto (or
evidence of loss, theft or destruction thereof).*

Capitalized terms used but not defined herein shall have the meanings ascribed
thereto in or pursuant to the Certificate of Designation.

Date of Conversion:

Conversion Price:

Number of shares of Series D Preferred Stock to be Converted:

Number of shares of Common Stock to be Issued:

Signature:

Name:

Address:**

Fax No.:

*The Company is not required to issue shares of Common Stock until the original
Series D Preferred Stock Certificate(s) (or evidence of loss, theft or
destruction thereof and indemnity reasonably satisfactory to the Company and the
Transfer Agent) to be converted are received by the Company or its Transfer
Agent. The Company shall issue and deliver shares of Common Stock by hand or by
delivery to an overnight courier not later than three business days following
receipt of the original Series D Preferred Stock Certificate(s) to be converted.
<PAGE>   42

**Address where shares of Common Stock and any other payments or certificates
shall be sent by the Company.

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