Document:

TITAN MOTORCYCLE CO. OF AMERICA

                         CERTIFICATE OF DESIGNATIONS OF
                      SERIES B CONVERTIBLE PREFERRED STOCK

             (Pursuant to Section 78.1955 of the General Corporation
                           Law of the State of Nevada)

     Titan Motorcycle Co. of America, a Nevada corporation (the  "Corporation"),
in accordance with the provisions of Section 78.1955 of the General  Corporation
Law of the State of Nevada (the "NGCL"), DOES HEREBY CERTIFY:

     That  pursuant  to  authority  vested  in the  Board  of  Directors  of the
Corporation by the Restated  Articles of Incorporation  of the Corporation,  the
Board of Directors of the Corporation,  by unanimous written consent dated March
1, 2000,  adopted a  resolution  providing  for the  creation of a series of the
Corporation's  Preferred Stock,  $.001 par value,  which series is designated as
"Series B Convertible Preferred Stock," which resolution is as follows:

     RESOLVED,  that  pursuant to authority  vested in the Board of Directors by
the  Restated  Articles  of  Incorporation  of the  Corporation,  the  Board  of
Directors does hereby  provide for the creation of a series of Preferred  Stock,
$.001 par value (hereinafter  called the "Preferred Stock"), of the Corporation,
and to the extent that the voting powers and the  designations,  preferences and
relative,  participating,  optional  or other  special  rights  thereof  and the
qualifications,  limitations  or  restrictions  of such rights have not been set
forth in the Restated Articles of Incorporation of the Corporation,  does hereby
fix the same as follows:

                      SERIES B CONVERTIBLE PREFERRED STOCK

     SECTION 1. DEFINITIONS.  As used herein, the following terms shall have the
following meanings:

     "Accrual  Amount"  means with respect to any share of Series B  Convertible
Preferred  Stock on any date the amount of all accrued but unpaid  dividends  on
such share from the Issuance Date to the date of determination.

     "Affiliate"  means,  with  respect to any  person,  any other  person  that
directly,  or  indirectly  through  one or  more  intermediaries,  controls,  is
controlled by or is under common control with the subject  person;  for purposes
<PAGE>
of this definition,  "control" (including,  with correlative meanings, the terms
"controlled  by" and "under common control  with"),  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  and policies of such person,
whether through the ownership of voting securities or by contract or otherwise.

     "Aggregated  Person"  means,  with respect to any person,  any person whose
beneficial  ownership  of shares of Common  Stock would be  aggregated  with the
beneficial  ownership  of shares of Common  Stock by such person for purposes of
Section 13(d) of the Exchange Act, and Regulation 13D-G thereunder.

     "Amendment  Event" means an Optional  Redemption  Event described in clause
(4) of the definition of Optional  Redemption Event which arises under the terms
of any amendment of any of the following: this Certificate of Designations,  the
Subscription  Agreements,  the Registration Rights Agreements,  the Warrants, or
any other  agreements or documents  entered into in connection with the issuance
of shares of Series B Convertible Preferred Stock.

     "AMEX" means the American Stock Exchange, Inc.

     "Auditors"  means   PricewaterhouseCoopers   LLP  or  such  other  firm  of
independent  public  accountants of recognized  national  standing as shall have
been engaged by the Corporation to audit its financial statements.

     "Auditors'   Determination"   means  a   determination   requested  by  the
Corporation and signed by the Auditors concurring with the Company's  conclusion
that a requirement  of the  Corporation  to redeem,  or a right of any holder of
shares of Series B Convertible  Preferred Stock to require redemption of, shares
of Series B  Convertible  Preferred  Stock by reason of the  occurrence of (i) a
specified  Inconvertibility  Day or (ii) a specified  Optional  Redemption Event
which  occurs by reason of (x) an event  described  in clause (1), (2) or (5) of
the definition of Optional Redemption Event or (y) an Amendment Event, whichever
is applicable,  would result in the  Corporation  being required to classify the
Series B Convertible  Preferred Stock as redeemable preferred stock on a balance
sheet of the  Corporation  in  accordance  with  Generally  Accepted  Accounting
Principles and Regulation S-X of the SEC. The Auditors'  Determination shall (i)
set forth in reasonable  detail all relevant facts considered by the Auditors in
connection  therewith,  (ii) set forth all applicable  accounting principles and
assumptions  used, and (iii) set forth in reasonable  detail or attach copies of
all legal,  expert  and other  advice or  information  used by the  Auditors  in
reaching their  conclusion.  To the extent any facts are assumed for purposes of
either the Company's conclusion or the Auditor's Determination,  the validity of
such conclusion or determination shall depend upon such assumed facts being true
and complete in all material respects.

     "Average  Market  Price" for any date means the  arithmetic  average of the
Market  Price for each of the  Trading  Days during the  applicable  Measurement
Period.

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     "Biannual  Reset Date" means the date occurring  every six months after the
Initial Reset Date on the same day of each sixth month as the Initial Reset Date
through the third anniversary of the Issuance Date (for example,  if the Initial
Reset Date is February 28, 2001, Biannual Reset Dates shall occur on each August
28 and February 28 thereafter through February 28, 2003).

     "Blackout  Period" means the period of up to 30 consecutive  days after the
date the  Corporation  notifies  holders  of  shares  of  Series  B  Convertible
Preferred  Stock who are bound by any  Registration  Rights  Agreement that such
holders  are  required,  pursuant  to Section  4(d) of the  Registration  Rights
Agreements,  to suspend offers and sales of Registrable  Securities  pursuant to
the Registration  Statement as a result of an event or circumstance described in
Section 3(f)(1) of the Registration  Rights Agreements,  during which period, by
reason of Section 3(f)(2) of the Registration Rights Agreements, the Corporation
is not required to amend the Registration Statement or to supplement the related
prospectus.

     "Board  of  Directors"  or  "Board"  means the  Board of  Directors  of the
Corporation.

     "Business Day" means any day other than a Saturday,  Sunday or other day on
which commercial banks in The City of New York are authorized or required by law
to remain closed.

     "Common Stock" means the Common Stock, $.001 par value, of the Corporation.

     "Computation  Date" means, if a Redemption  Limitation Event occurs, any of
(1) the date which is 30 days after such Redemption  Limitation Event occurs, if
any Redemption  Limitation Event is continuing on such date, (2) each date which
is 30 days after a  Computation  Date,  if any  Redemption  Limitation  Event is
continuing  on such date,  and (3) the date on which all  Redemption  Limitation
Events cease to continue.

     "Control  Notice" means a notice given by the Corporation to the holders of
shares of the Series B Convertible  Preferred  Stock, in accordance with Section
7(a)(5) or Section  11(b)(4),  (i) stating  that an  Inconvertibility  Day or an
Optional  Redemption Event, as the case may be, has occurred by reason of events
which are not solely within the control of the Corporation and (ii) enclosing an
executed copy of an Auditors' Determination.

     "Conversion  Agent"  means  Signature  Stock  Transfer,  Inc.,  or its duly
appointed successor,  as conversion agent for the Series B Convertible Preferred
Stock pursuant to the Transfer Agent Agreement.

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

     "Conversion  Date"  means,  with  respect to each  conversion  of shares of
Series B Convertible  Preferred  Stock pursuant to Section 10, the date on which
the Conversion  Notice relating to such  conversion is actually  received by the

                                      -3-
<PAGE>
Conversion Agent,  whether by mail,  courier,  personal service,  telephone line
facsimile transmission or other means.

     "Conversion  Notice" means a written notice, duly signed by or on behalf of
a holder of shares of Series B Convertible  Preferred Stock,  stating the number
of shares of Series B  Convertible  Preferred  Stock to be converted in the form
specified in the Subscription Agreements.

     "Conversion Price" means:

     (1) for any  Conversion  Date  during the  period  from the  Issuance  Date
through the 364th day thereafter, the Fixed Conversion Price; and

     (2) for any  Conversion  Date during each Reset  Period  commencing  on the
Initial Reset Date and on each successive Biannual Reset Date, the lesser of:

          (a) the Fixed Conversion Price; and

          (b) the Average  Market  Price during the  Measurement  Period for the
Initial Reset Date or such Biannual Reset Date, as the case may be;

PROVIDED,  HOWEVER,  that  the  Conversion  Price  applicable  to  a  particular
conversion  shall be subject to reduction as provided in Section  10(b)(6);  and
PROVIDED FURTHER,  HOWEVER,  that if a Redemption Limitation Event occurs, then,
in  addition  to any other  right or remedy of any  holder of shares of Series B
Convertible Preferred Stock,  thereafter the Conversion Price for the shares not
redeemed  shall be reduced on each  Computation  Date by an amount equal to five
percent  of the  amount  that the  Conversion  Price  otherwise  would have been
without any  reduction  pursuant to this  proviso  (pro rated in the case of any
Computation Date which is less than 30 days after a Redemption  Limitation Event
occurs or less than 30 days after another  Computation Date), such reduction not
to exceed a maximum aggregate  reduction for all Computation Dates of 30% of the
amount that the Conversion Price otherwise would have been without any reduction
pursuant to this proviso,  such  reduction to remain in effect for 30 days after
the end of the Redemption Limitation Event.

     "Conversion Rate" shall have the meaning provided in Section 10(a).

     "Converted  Market  Price"  means,  for any share of  Series B  Convertible
Preferred Stock as of any date of determination,  an amount equal to the product
obtained by multiplying (x) the number of shares of Common Stock which would, at
the time of such  determination,  be issuable on conversion  in accordance  with
Section  10(a)  of one  share  of  Series  B  Convertible  Preferred  Stock if a
Conversion Notice were given by the holder of such share of Series B Convertible
Preferred Stock on the date of such determination  (determined without regard to
any limitation on conversion based on beneficial  ownership contained in Section
10(a))  TIMES (y) the  Average  Market  Price of the  Common  Stock  during  the
Measurement Period for the date of such determination.

                                      -4-
<PAGE>
     "Corporation  Optional  Redemption  Notice"  means a  notice  given  by the
Corporation  to the holders of shares of Series B  Convertible  Preferred  Stock
pursuant to Section 9(a) which notice  shall state (1) that the  Corporation  is
exercising  its right to redeem  all or a portion of the  outstanding  shares of
Series B Convertible Preferred Stock pursuant to Section 9(a), (2) the number of
shares of Series B Convertible  Preferred Stock held by such holder which are to
be  redeemed,  (3) the  Redemption  Price  per  share of  Series  B  Convertible
Preferred  Stock  to be  redeemed  or the  formula  for  determining  the  same,
determined in accordance herewith, and (4) the applicable Redemption Date.

     "Current  Price" means with respect to any date the  arithmetic  average of
the  Market  Price of the  Common  Stock  on the ten  consecutive  Trading  Days
commencing 15 Trading Days before such date.

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

     "Final  Redemption Date" means the date of redemption of shares of Series B
Convertible  Preferred Stock pursuant to Section 9(b),  determined in accordance
therewith.

     "Final  Redemption  Notice" means a notice given by the Corporation to each
holder of Series B Convertible  Preferred Stock pursuant to Section 9(b),  which
notice shall state (1) that the  Corporation  is exercising  its right to redeem
all  outstanding  shares of Series B  Convertible  Preferred  Stock  pursuant to
Section 9(b), (2) the number of shares of Series B Convertible  Preferred  Stock
held by such holder which are to be redeemed, (3) the Final Redemption Price per
share of Series B Convertible  Preferred  Stock held by such holder which are to
be redeemed,  determined in accordance  herewith,  and (4) the Final  Redemption
Date.

     "Final  Redemption  Price"  means,  for any share of  Series B  Convertible
Preferred  Stock on any date, an amount equal to the sum of (i) $1,000 PLUS (ii)
an amount  equal to the  Accrual  Amount  on the  share of Series B  Convertible
Preferred  Stock to be  redeemed  to the Final  Redemption  Date,  PLUS (iii) an
amount equal to the accrued and unpaid  interest on cash dividends in arrears on
such share of Series B Convertible  Preferred Stock to the Final Redemption Date
(determined as provided in Section 5).

     "Fixed Conversion Price" means $1.75 (subject to equitable adjustments from
time to time on terms reasonably  determined by the Board of Directors for stock
splits, stock dividends, combinations, recapitalizations,  reclassifications and
similar events occurring or with respect to which "ex-" trading  commences on or
after the date of filing of this Certificate of Designations  with the Secretary
of State of the State of Nevada).

     "Generally  Accepted  Accounting  Principles"  for  any  person  means  the
generally  accepted  accounting  principles and practices applied by such person
from time to time in the preparation of its audited financial statements.

                                      -5-
<PAGE>
     "Inconvertibility Day" means any Trading Day on which the Corporation would
not have been required to convert in accordance with Section 10(a) any shares of
Series B Convertible  Preferred  Stock as a consequence of the  limitations  set
forth in Section  7(a)(1)  had all  outstanding  shares of Series B  Convertible
Preferred  Stock held by such  holder on such  Trading Day been  converted  into
Common Stock on such Trading Day (without regard to the  limitation,  if any, on
beneficial ownership by such holder contained in Section 10(a)).

     "Inconvertibility  Notice"  shall  have the  meaning  provided  in  Section
7(a)(2).

     "Initial  Reset  Date" means the first  anniversary  of the  Issuance  Date
(having the same calendar month and day as the Issuance Date).

     "Issuance Date" means the first date of original  issuance of any shares of
Series B Convertible Preferred Stock.

     "Junior Dividend Stock" means, collectively, the Common Stock and any other
class or  series  of  capital  stock of the  Corporation  ranking  junior  as to
dividends to the Series B Convertible Preferred Stock.

     "Junior  Liquidation  Stock"  means the Common  Stock or any other class or
series of the  Corporation's  capital  stock  ranking  junior as to  liquidation
rights to the Series B Convertible Preferred Stock.

     "Junior Stock" shall have the meaning provided in Section 10(b)(8).

     "Liquidation  Preference"  means,  for each  share of Series B  Convertible
Preferred Stock, the sum of (i) an amount equal to the Accrual Amount thereon to
the date of final distribution to such holders and (ii) $1,000.00.

     "Majority  Holders"  means at any time the  holders  of  shares of Series B
Convertible   Preferred  Stock  which  shares   constitute  a  majority  of  the
outstanding shares of Series B Convertible Preferred Stock.

     "Market  Price" of the Common Stock on any date means the closing bid price
for one share of Common  Stock on such  date on the first  applicable  among the
following:  (a) the national  securities  exchange on which the shares of Common
Stock are listed  which  constitutes  the  principal  securities  market for the
Common Stock, (b) the Nasdaq, if the Nasdaq constitutes the principal market for
the  Common  Stock on such  date,  or (c) the  Nasdaq  SmallCap,  if the  Nasdaq
SmallCap  constitutes  the principal  securities  market for the Common Stock on
such date, in any such case as reported by Bloomberg,  L.P.; PROVIDED,  HOWEVER,
that if during any  Measurement  Period or other period  during which the Market
Price is being determined:

          (i)  The  Corporation  shall  declare  or  pay a  dividend  or  make a
     distribution  to all holders of the  outstanding  Common Stock in shares of
     Common  Stock or fix any record date for any such  action,  then the Market
     Price for each day in such  Measurement  Period or such other  period which

                                      -6-
<PAGE>
     day is prior to the earlier of (1) the date fixed for the  determination of
     stockholders  entitled to receive such dividend or other  distribution  and
     (2) the date on which ex-dividend  trading in the Common Stock with respect
     to such dividend or distribution begins shall be reduced by multiplying the
     Market Price (determined  without regard to this proviso) for each such day
     in such  Measurement  Period  or  such  other  period  by a  fraction,  the
     numerator  of  which  shall  be  the  number  of  shares  of  Common  Stock
     outstanding  at the close of business on the earlier of (1) the record date
     fixed for such determination and (2) the date on which ex-dividend  trading
     in the Common Stock with respect to such  dividend or  distribution  begins
     and the  denominator of which shall be the sum of such number of shares and
     the  total   number  of  shares   constituting   such   dividend  or  other
     distribution;

          (ii) The Corporation  shall issue rights or warrants to all holders of
     its  outstanding  shares of  Common  Stock,  or fix a record  date for such
     issuance,  which  rights or warrants  entitle  such  holders  (for a period
     expiring  within  forty-five  (45)  days  after  the  date  fixed  for  the
     determination of stockholders  entitled to receive such rights or warrants)
     to  subscribe  for or purchase  shares of Common Stock at a price per share
     less than the Market Price (determined  without regard to this proviso) for
     any day in such Measurement  Period or such other period which day is prior
     to the end of such 45-day  period,  then the Market Price for each such day
     shall be  reduced  so that the same  shall  equal the price  determined  by
     multiplying the Market Price (determined without regard to this proviso) by
     a fraction,  the numerator of which shall be the number of shares of Common
     Stock outstanding at the close of business on the record date fixed for the
     determination  of stockholders  entitled to receive such rights or warrants
     plus the number of shares which the aggregate  offering  price of the total
     number of shares so offered would  purchase at such Market  Price,  and the
     denominator  of  which  shall be the  number  of  shares  of  Common  Stock
     outstanding  on the close of  business  on such  record date plus the total
     number of additional  shares of Common Stock so offered for subscription or
     purchase. In determining whether any rights or warrants entitle the holders
     to subscribe for or purchase shares of Common Stock at less than the Market
     Price (determined  without regard to this proviso),  and in determining the
     aggregate  offering  price of such shares of Common  Stock,  there shall be
     taken into account any consideration  received for such rights or warrants,
     the value of such  consideration,  if other than cash,  to be determined in
     good faith by a resolution of the Board of Directors of the Corporation;

          (iii) The outstanding  shares of Common Stock shall be subdivided into
     a greater  number of shares of Common  Stock or a record  date for any such
     subdivision  shall be fixed,  then the Market Price of the Common Stock for
     each day in such Measurement Period or such other period which day is prior
     to the earlier of (1) the day upon which such subdivision becomes effective
     and (2) the date on which  ex-dividend  trading  in the  Common  Stock with
     respect to such subdivision  begins shall be proportionately  reduced,  and
     conversely,  in case  the  outstanding  shares  of  Common  Stock  shall be
     combined into a smaller number of shares of Common Stock,  the Market Price
     for each day in such  Measurement  Period or such other period which day is
     prior to the  earlier  of (1) the date on which  such  combination  becomes
     effective  and (2) the date on which trading in the Common Stock on a basis

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<PAGE>
     which gives effect to such  combination  begins,  shall be  proportionately
     increased;

          (iv) The Corporation  shall,  by dividend or otherwise,  distribute to
     all holders of its Common Stock shares of any class of capital stock of the
     Corporation  (other than any dividends or distributions to which clause (i)
     of this proviso  applies) or evidences of its  indebtedness,  cash or other
     assets including  securities (but excluding any rights or warrants referred
     to in  clause  (ii) of  this  proviso,  dividends  and  distributions  paid
     exclusively in cash and any capital stock, evidences of indebtedness,  cash
     or  assets  distributed  upon a merger  or  consolidation)  (the  foregoing
     hereinafter in this clause (iv) of this proviso  called the  "Securities"),
     or fix a record date for any such  distribution,  then,  in each such case,
     the  Market  Price for each day in such  Measurement  Period or such  other
     period  which day is prior to the  earlier of (1) the record  date for such
     distribution  and (2) the date on which  ex-dividend  trading in the Common
     Stock with respect to such distribution begins shall be reduced so that the
     same shall be equal to the price determined by multiplying the Market Price
     (determined without regard to this proviso) by a fraction, the numerator of
     which shall be the Market Price (determined without regard to this proviso)
     for such date less the fair market  value (as  determined  in good faith by
     resolution  of the Board of Directors of the  Corporation)  on such date of
     the  portion  of  the  Securities  so  distributed  or  to  be  distributed
     applicable to one share of Common Stock and the  denominator of which shall
     be the Market Price  (determined  without  regard to this proviso) for such
     date; PROVIDED,  HOWEVER,  that in the event the then fair market value (as
     so determined)  of the portion of the Securities so distributed  applicable
     to one share of Common  Stock is equal to or greater  than the Market Price
     (determined  without  regard to this clause (iv) of this  proviso)  for any
     such Trading Day, in lieu of the foregoing  adjustment,  adequate provision
     shall  be made so that the  holders  of  shares  of  Series  B  Convertible
     Preferred  Stock  shall have the right to receive  upon  conversion  of the
     shares of Series B Convertible Preferred Stock the amount of Securities the
     holders  of shares of  Series B  Convertible  Preferred  Stock  would  have
     received  had the number of shares of Common  Stock to be issued in payment
     of such  dividends on the shares of Series B  Convertible  Preferred  Stock
     been issued, or had the holders of shares of Series B Convertible Preferred
     Stock  converted the shares of Series B  Convertible  Preferred  Stock,  in
     either such case immediately prior to the record date for such distribution
     (PROVIDED,  HOWEVER,  that if such Securities are not then  available,  the
     Corporation  shall  substitute  cash or  securities  or other  property  of
     equivalent value on terms reasonably  satisfactory to the holders of shares
     of Series B Convertible  Preferred Stock). If the Board of Directors of the
     Corporation  determines  the  fair  market  value of any  distribution  for
     purposes  of this  clause  (iv) by  reference  to the actual or when issued
     trading  market  for  any  securities   comprising  all  or  part  of  such
     distribution, it must in doing so consider the prices in such market on the
     same day for which an adjustment in the Market Price is being determined.

          For  purposes  of this  clause  (iv) and  clauses (i) and (ii) of this
     proviso,  any  dividend  or  distribution  to  which  this  clause  (iv) is
     applicable that also includes shares of Common Stock, or rights or warrants

                                      -8-
<PAGE>
     to subscribe for or purchase  shares of Common Stock to which clause (i) or
     (ii) of this proviso applies (or both), shall be deemed instead to be (1) a
     dividend or distribution of the evidences of indebtedness,  assets,  shares
     of capital stock, rights or warrants other than such shares of Common Stock
     or rights or warrants to which clause (i) or (ii) of this  proviso  applies
     (and any Market Price  reduction  required by this clause (iv) with respect
     to such dividend or distribution  shall then be made) immediately  followed
     by (2) a dividend or  distribution  of such shares of Common  Stock or such
     rights or warrants  (and any further  Market  Price  reduction  required by
     clauses  (i) and (ii) of this  proviso  with  respect to such  dividend  or
     distribution  shall then be made),  except that any shares of Common  Stock
     included in such dividend or distribution shall not be deemed  "outstanding
     at the close of business on the date fixed for such  determination"  within
     the meaning of clause (i) of this proviso;

          (v) The Corporation or any subsidiary of the Corporation  shall (x) by
     dividend or  otherwise,  distribute to all holders of its Common Stock cash
     in (or fix any record date for any such distribution), or (y) repurchase or
     reacquire shares of its Common Stock (other than an Option Share Surrender)
     for, in either  case,  an  aggregate  amount  that,  combined  with (1) the
     aggregate  amount of any other  such  distributions  to all  holders of its
     Common Stock made  exclusively  in cash after the Issuance  Date and within
     the 12 months  preceding the date of payment of such  distribution,  and in
     respect of which no  adjustment  pursuant to this clause (v) has been made,
     (2) the  aggregate  amount  of any  cash  plus the fair  market  value  (as
     determined  in good faith by a resolution  of the Board of Directors of the
     Corporation)  of  consideration  paid in respect of any repurchase or other
     reacquisition  by the  Corporation or any subsidiary of the  Corporation of
     any shares of Common  Stock  (other than an Option  Share  Surrender)  made
     after the  Issuance  Date and  within the 12 months  preceding  the date of
     payment of such distribution or making of such repurchase or reacquisition,
     as the case may be, and in respect of which no adjustment  pursuant to this
     clause (v) has been made,  and (3) the  aggregate of any cash plus the fair
     market value (as  determined  in good faith by a resolution of the Board of
     Directors of the  Corporation) of  consideration  payable in respect of any
     Tender Offer by the Corporation or any of its  subsidiaries  for all or any
     portion of the Common Stock  concluded  within the 12 months  preceding the
     date of payment of such  distribution  or completion of such  repurchase or
     reacquisition,  as the case may be, and in  respect of which no  adjustment
     pursuant  to clause  (vi) of this  proviso  has been made  (such  aggregate
     amount  combined  with the amounts in clauses  (1), (2) and (3) above being
     the  "Combined  Amount"),  exceeds 10% of the  product of the Market  Price
     (determined without regard to this proviso) for any day in such Measurement
     Period or such other  period  which day is prior to the  earlier of (A) the
     record  date with  respect to such  distribution  and (B) the date on which
     ex-dividend  trading in the Common Stock with respect to such  distribution
     begins or the date of such repurchase or reacquisition, as the case may be,
     times the number of shares of Common Stock  outstanding on such date, then,
     and in each such case,  the Market Price for each such day shall be reduced
     so that the same shall equal the price determined by multiplying the Market
     Price  (determined  without  regard  to this  proviso)  for  such  day by a
     fraction  (i) the  numerator  of which  shall be equal to the Market  Price
     (determined  without  regard to this  proviso)  for such day less an amount
     equal to the quotient of (x) the excess of such  Combined  Amount over such

                                      -9-
<PAGE>
     10% and (y) the number of shares of Common  Stock  outstanding  on such day
     and  (ii) the  denominator  of which  shall  be equal to the  Market  Price
     (determined  without  regard  to this  proviso)  for  such  day;  PROVIDED,
     HOWEVER,  that in the event the portion of the cash so  distributed or paid
     for the repurchase or reacquisition  of shares  (determined per share based
     on the  number of shares of Common  Stock  outstanding)  applicable  to one
     share  of  Common  Stock  is equal to or  greater  than  the  Market  Price
     (determined  without  regard to this  clause  (v) of this  proviso)  of the
     Common  Stock for any such day,  then in lieu of the  foregoing  adjustment
     with  respect  to such day,  adequate  provision  shall be made so that the
     holders of shares of Series B  Convertible  Preferred  Stock shall have the
     right to  receive  upon  conversion  of  shares  of  Series  B  Convertible
     Preferred  Stock  the  amount  of cash the  holders  of  shares of Series B
     Convertible  Preferred  Stock would have received had the holders of shares
     of  Series B  Convertible  Preferred  Stock  converted  shares  of Series B
     Convertible  Preferred Stock  immediately prior to the record date for such
     distribution or the payment date of such repurchase, as applicable; or

          (vi) A Tender Offer made by the Corporation or any of its subsidiaries
     for all or any  portion of the Common  Stock  shall  expire and such Tender
     Offer (as amended upon the expiration thereof) shall require the payment to
     stockholders  (based on the acceptance (up to any maximum  specified in the
     terms of the Tender  Offer) of Purchased  Shares (as defined  below)) of an
     aggregate  consideration  having a fair market value (as determined in good
     faith by  resolution  of the Board of  Directors of the  Corporation)  that
     combined  together  with (1) the aggregate of the cash plus the fair market
     value  (as  determined  in good  faith  by a  resolution  of the  Board  of
     Directors of the  Corporation),  as of the expiration of such Tender Offer,
     of  consideration  paid or payable in respect of any other Tender Offers by
     the  Corporation or any of its  subsidiaries  for all or any portion of the
     Common Stock expiring within the 12 months preceding the expiration of such
     Tender Offer and in respect of which no adjustment  pursuant to this clause
     (vi) has been  made,  (2) the  aggregate  amount  of any cash plus the fair
     market value (as  determined  in good faith by a resolution of the Board of
     Directors  of the  Corporation)  of  consideration  paid in  respect of any
     repurchase or other  reacquisition  by the Corporation or any subsidiary of
     the  Corporation  of any shares of Common Stock (other than an Option Share
     Surrender) made after the Issuance Date and within the 12 months  preceding
     the  expiration  of such Tender Offer and in respect of which no adjustment
     pursuant to clause (v) of this proviso has been made, and (3) the aggregate
     amount of any distributions to all holders of Common Stock made exclusively
     in cash within 12 months  preceding the expiration of such Tender Offer and
     in respect of which no  adjustment  pursuant to clause (v) of this  proviso
     has been made,  exceeds 10% of the product of the Market Price  (determined
     without regard to this proviso) for any day in such period times the number
     of shares of Common Stock  outstanding  on such day, then, and in each such
     case, the Market Price for such day shall be reduced so that the same shall
     equal the price  determined  by  multiplying  the Market Price  (determined
     without  regard to this proviso) for such day by a fraction,  the numerator
     of which shall be the number of shares of Common Stock  outstanding on such
     day  multiplied  by the Market  Price  (determined  without  regard to this
     proviso) for such day and the  denominator of which shall be the sum of (x)
     the  fair  market  value   (determined   as  aforesaid)  of  the  aggregate
     consideration  paid or payable to stockholders  based on the acceptance (up

                                      -10-
<PAGE>
     to any maximum  specified  in the terms of the Tender  Offer) of all shares
     validly  tendered and not  withdrawn as of the last time tenders could have
     been made pursuant to such Tender Offer (the "Expiration Time") (the shares
     deemed  so  accepted,  up to any such  maximum,  being  referred  to as the
     "Purchased  Shares")  and (y) the product of the number of shares of Common
     Stock  outstanding (less any Purchased Shares) on such day times the Market
     Price  (determined  without  regard to this proviso) of the Common Stock on
     the Trading Day next succeeding the Expiration Time.

          "Maximum Share Amount" means 3,436,000 shares of Common Stock, or such
     greater  number of shares as permitted by the rules of the Nasdaq  SmallCap
     or other  securities  market on which the Common Stock is then listed (such
     amount to be subject  to  equitable  adjustment  from time to time on terms
     reasonably  determined by the Board of Directors  for stock  splits,  stock
     dividends,   combinations,   capital  reorganizations  and  similar  events
     relating  to the Common  Stock  occurring  or with  respect to which  "ex-"
     trading commences after the date of filing this Certificate of Designations
     with the Secretary of State of the State of Nevada).

     "Measurement  Period"  means,  with respect to any date,  the period of ten
consecutive Trading Days ending on the Trading Day prior to such date.

     "Nasdaq" means the Nasdaq National Market.

     "Nasdaq SmallCap" means the Nasdaq SmallCap Market.

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

     "NYSE" means the New York Stock Exchange, Inc.

     "Option Share  Surrender"  means the surrender of shares of Common Stock to
the Corporation in payment of the exercise price or tax obligations  incurred in
connection with the exercise of a stock option granted by the Corporation to any
of its employees, directors or consultants.

     "Optional Redemption Event" means any one of the following events:

          (1) For any period of five consecutive  Trading Days there shall be no
     closing bid price of the Common Stock on the Nasdaq,  the Nasdaq  SmallCap,
     the NYSE or the AMEX;

          (2) The Common  Stock  ceases to be listed  for  trading on any of the
     Nasdaq, the Nasdaq SmallCap, the NYSE or the AMEX and is not simultaneously
     listed on one of the other such markets or exchanges;

          (3) The inability for 30 or more days (whether or not  consecutive) of
     any holder of shares of Series B Convertible  Preferred  Stock to sell such
     shares of Common Stock issued or issuable on conversion of shares of Series

                                      -11-
<PAGE>
     B Convertible  Preferred Stock pursuant to the  Registration  Statement for
     any reason other than a Blackout Period on each of such 30 days;

          (4) The Corporation shall (A) default in the timely performance of the
     obligation  to issue  shares of Common Stock upon  conversion  of shares of
     Series B Convertible  Preferred Stock as and when required by Section 10 or
     (B) fail or default in the timely  performance  of any material  obligation
     (other than as specifically  set forth  elsewhere in this  definition) to a
     holder of shares of Series B Convertible Preferred Stock under the terms of
     this Certificate of Designations or under the Subscription Agreements,  the
     Registration  Rights  Agreements,  the  Warrants or any other  agreement or
     document entered into in connection with the issuance of shares of Series B
     Convertible  Preferred  Stock, as such instruments may be amended from time
     to time;  PROVIDED,  HOWEVER,  that  (i)  with  respect  to the  first  two
     occurrences of an event described in clause (A) above,  each of such events
     shall be an  Optional  Redemption  Event  only if such  default  shall have
     continued for a period of three Trading Days after notice  thereof is given
     to the  Corporation  by any  holder  of  shares  of  Series  B  Convertible
     Preferred Stock and (ii) an event described in clause (B) above shall be an
     Optional  Redemption  Event  only if such  failure  or  default  shall have
     continued  for a period of 30 days  after  notice  thereof  is given to the
     Corporation  by any  holder of shares  of  Series B  Convertible  Preferred
     Stock.

          (5) (A) Any  consolidation  or merger of the Corporation  with or into
     another entity (other than a merger or consolidation of a subsidiary of the
     Corporation  with or into the  Corporation or a wholly-owned  subsidiary of
     the  Corporation)  where the  shareholders of the  Corporation  immediately
     prior to such  transaction  do not  collectively  own at  least  51% of the
     outstanding  voting  securities  of  the  surviving   corporation  of  such
     consolidation or merger immediately following such transaction and (i) such
     transaction  materially  and adversely  affects the rights of any holder of
     shares of Series B Convertible  Preferred Stock or (ii) the common stock of
     the surviving  corporation is not listed for trading on the NYSE, the AMEX,
     the Nasdaq or the Nasdaq SmallCap; or (B) any sale or other transfer of all
     or  substantially  all of the  assets  of the  Corporation  UNLESS  (i) the
     shareholders of the Corporation  immediately  prior to such transaction own
     at least 51% of the outstanding voting securities of the transferee of such
     assets,  (ii) the common stock of such  transferee is listed for trading on
     the NYSE,  the AMEX,  the  Nasdaq or the  Nasdaq  SmallCap  and (iii)  such
     transferee assumes all of the obligations of the Corporation to the holders
     of the Series B  Convertible  Preferred  Stock  under this  Certificate  of
     Designations,   the  Subscription  Agreements  and  the  other  instruments
     contemplated hereby and thereby; or

          (6) The  adoption of any  amendment to the  Corporation's  Articles of
     Incorporation,   without  the  consent  of  the  Majority  Holders,   which
     materially  and  adversely  affects  the  rights of any holder of shares of
     Series B Convertible Preferred Stock.

                                      -12-
<PAGE>
     "Optional  Redemption  Notice"  means a notice  from a holder  of shares of
Series B Convertible  Preferred Stock to the  Corporation  which states (1) that
the holder delivering such notice is thereby requiring the Corporation to redeem
shares of Series B Convertible  Preferred  Stock  pursuant to Section 11, (2) to
such  holder's  knowledge,  a  summary  of the  circumstances  constituting  the
Optional Redemption Event giving rise to such redemption,  and (3) the number of
shares of Series B Convertible  Preferred Stock held by such holder which are to
be redeemed.

     "Optional  Redemption  Price" means the greater of (i) the Premium Price on
the  applicable  redemption  date  and (ii) the  Converted  Market  Price on the
applicable redemption date.

     "Parity  Dividend  Stock"  means any  class or series of the  Corporation's
capital  stock  ranking,  as  to  dividends,  on a  parity  with  the  Series  B
Convertible  Preferred  Stock,  including,  without  limitation,  the  Series  A
Convertible Preferred Stock.

     "Parity  Liquidation  Stock" means any class or series of the Corporation's
capital  stock  having  parity  as to  liquidation  rights  with  the  Series  B
Convertible  Preferred  Stock,  including,  without  limitation,  the  Series  A
Convertible Preferred Stock.

     "Premium Percentage" means 120%.

     "Premium  Price"  means,  for any share of Series B  Convertible  Preferred
Stock as of any date of  determination,  the sum of (a) the product  obtained by
multiplying (x) the sum of (1) the Conversion Amount PLUS (2) an amount equal to
the Accrual Amount on such share of Series B Convertible  Preferred Stock to the
date of determination, TIMES (y) the Premium Percentage PLUS (b) an amount equal
to the accrued and unpaid  interest on cash dividends in arrears (as provided in
Section 5) to the date of determination.

     "Redemption  Date"  means  the date of a  redemption  of shares of Series B
Convertible  Preferred Stock pursuant to Section 9(a),  determined in accordance
therewith.

     "Redemption  Limitation  Event" means the failure of the Corporation to pay
the applicable redemption price when due for some or all of the shares of Series
B Convertible  Preferred Stock required to be redeemed  pursuant to Section 7 or
Section 11 by reason of a restriction contained in the Company's loan agreements
or  facilities  with Wells Fargo Credit,  Inc., or with any other  institutional
lender,  whether such  agreements  or  facilities  are now existing or hereafter
created; and such Redemption  Limitation Event shall be deemed to continue until
such  redemption  price is paid in full in  accordance  with  the  terms of this
Certificate of Designations.

     "Redemption  Price" means the Premium  Price on the  applicable  Redemption
Date.

     "Registration  Rights  Agreements"  means the several  Registration  Rights
Agreements  entered into between the Corporation and the original holders of the
shares of Series B Convertible Preferred Stock, as amended or modified from time
to time in accordance with their respective terms.

                                      -13-
<PAGE>
     "Registration  Statement" means the Registration  Statement  required to be
filed  by  the  Corporation  with  the  SEC  pursuant  to  Section  2(a)  of the
Registration Rights Agreements.

     "Reset  Period"  means the  applicable  six month period  commencing on the
Initial Reset Date and on each Biannual Reset Date  thereafter and ending on the
day immediately prior to the next Biannual Reset Date.

     "SEC" means the United States Securities and Exchange Commission.

     "SEC  Effective  Date" means the date the  Registration  Statement is first
declared effective by the SEC.

     "Senior  Dividend  Stock" means any class or series of capital stock of the
Corporation ranking senior as to dividends to the Series B Convertible Preferred
Stock.

     "Senior  Liquidation  Stock" means any class or series of capital  stock of
the  Corporation  ranking  senior  as to  liquidation  rights  to the  Series  B
Convertible Preferred Stock.

     "Series A  Convertible  Preferred  Stock"  means the  Series A  Convertible
Preferred Stock, $.001 par value, of the Corporation.

     "Series B  Convertible  Preferred  Stock"  means the  Series B  Convertible
Preferred Stock, $.001 par value, of the Corporation.

     "Share Limitation Redemption Date" means each date on which the Corporation
is required to redeem shares of Series B Convertible Preferred Stock as provided
in Section 7(a).

     "Share  Limitation  Redemption  Price" means the greater of (a) the Premium
Price on the applicable Share  Limitation  Redemption Date and (b) the Converted
Market Price on the applicable Share Limitation Redemption Date.

     "Stockholder  Approval"  shall mean the approval by a majority of the votes
cast by the  holders  of  shares of  Common  Stock (in  person or by proxy) at a
meeting of the stockholders of the Corporation  (duly convened at which a quorum
was present), or a written consent of holders of shares of Common Stock entitled
to such  number  of votes  given  without  a  meeting,  of the  issuance  by the
Corporation of 20% or more of the Common Stock of the Corporation outstanding on
the Issuance  Date for less than the greater of the book or market value of such
Common Stock on conversion of the Series B Convertible  Preferred  Stock, as and
to the extent  required under Rule  4310(c)(25)(H)  of the Nasdaq SmallCap as in
effect  from time to time or any  successor,  replacement  or similar  provision
thereof or of any other market on which the Common Stock is listed for trading.

                                      -14-
<PAGE>
     "Subscription  Agreements" means the several Subscription Agreements by and
between  the  Corporation  and the  original  holders  of  shares  of  Series  B
Convertible Preferred Stock pursuant to which the shares of Series B Convertible
Preferred Stock were issued.

     "Tender Offer" means a tender offer or exchange offer.

     "Trading  Day"  means a day on  whichever  of (x) the  national  securities
exchange,  (y)  the  Nasdaq  or (z)  the  Nasdaq  SmallCap,  which  at the  time
constitutes  the principal  securities  market for the Common Stock, is open for
general trading.

     "Transfer Agent Agreement" means the Transfer Agent Agreement  entered into
by and among the  Corporation,  the Conversion Agent and the original holders of
the Series B  Convertible  Preferred  Stock for the benefit of the holders  from
time to time of shares of Series B Convertible Preferred Stock.

     "Warrants"  means  the  Common  Stock  Purchase   Warrants  issued  by  the
Corporation  in  connection  with  the  issuance  of  the  shares  of  Series  B
Convertible Preferred Stock.

     SECTION 2.  DESIGNATION  AND  AMOUNT.  The shares of such  series  shall be
designated as "Series B Convertible  Preferred Stock",  and the number of shares
constituting the Series B Convertible  Preferred Stock shall be 2,000, and shall
not be subject to increase. The Corporation shall not issue any shares of Series
B  Convertible   Preferred  Stock  other  than  pursuant  to  the   Subscription
Agreements,  unless  such  issuance  shall have been  approved  by the  Majority
Holders.  Any shares of Series B Convertible  Preferred Stock which are redeemed
by the Corporation and retired and any shares of Series B Convertible  Preferred
Stock which are converted in accordance with Section 10 shall be restored to the
status of  authorized,  unissued and  undesignated  shares of the  Corporation's
class of  Preferred  Stock and shall not be  subject  to  issuance,  and may not
thereafter be outstanding, as shares of Series B Convertible Preferred Stock.

     SECTION 3. [RESERVED.]

     SECTION  4.  RANK.  Subject to  Section  12(b),  all  Series B  Convertible
Preferred  Stock  shall rank (i) senior to the Common  Stock,  now or  hereafter
issued,  as to payment of dividends and distribution of assets upon liquidation,
dissolution, or winding up of the Corporation, whether voluntary or involuntary,
(ii) on a parity with the Series A Convertible  Preferred Stock as to payment of
dividends and distribution of assets upon liquidation,  dissolution,  or winding
up of the  Corporation,  whether  voluntary or involuntary,  (iii) senior to any
additional  series of the class of  Preferred  Stock  which  series the Board of
Directors may from time to time  authorize,  both as to payment of dividends and
as to distributions of assets upon  liquidation,  dissolution,  or winding up of
the  Corporation,  whether  voluntary  or  involuntary,  and (iv)  senior to any
additional class of preferred stock (or series of preferred stock of such class)
which the Board of Directors or the stockholders may from time to time authorize
in accordance herewith.

                                      -15-
<PAGE>
     SECTION 5. DIVIDENDS AND DISTRIBUTIONS. (a) The holders of shares of Series
B Convertible  Preferred  Stock shall be entitled to receive,  when,  as, and if
declared  by the Board of  Directors  out of funds  legally  available  for such
purpose, dividends at the rate of $60.00 per annum per share, and no more, which
shall be fully  cumulative,  shall accrue without  interest (except as otherwise
provided  herein as to dividends in arrears) from the date of original  issuance
of each  share of Series B  Convertible  Preferred  Stock  and shall be  payable
quarterly on March 1, June 1, September 1 and December 1 of each year commencing
June 1, 2000  (except  that if any such  date is a  Saturday,  Sunday,  or legal
holiday,  then such dividend shall be payable on the next succeeding day that is
not a Saturday, Sunday, or legal holiday) to holders of record as they appear on
the stock books of the Corporation on such record dates, which record dates must
be not more than 20 nor less than 10 days  preceding  the payment dates for such
dividends, as shall be fixed by the Board. Dividends on the Series B Convertible
Preferred  Stock shall be paid in cash or, in lieu of paying such  dividends and
subject to the limitations in Section 5(b) hereof,  the amount of such dividends
shall be  included in the  Accrual  Amount for each share,  at the option of the
Corporation as  hereinafter  provided.  The amount of the dividends  payable per
share of Series B Convertible Preferred Stock for each quarterly dividend period
shall be computed by dividing the annual  dividend amount by four. The amount of
dividends  payable for the initial dividend period and any period shorter than a
full quarterly  dividend period shall be computed on the basis of a 360-day year
of twelve  30-day  months.  Dividends  required  to be paid in cash  pursuant to
Section 5(b) which are not paid on a payment date, whether or not such dividends
have been  declared,  will bear interest at the rate of 14% per annum until paid
(or such lesser rate as shall be the maximum rate allowable by applicable  law).
No dividends or other distributions,  other than the dividends payable solely in
shares of any Junior Dividend  Stock,  shall be paid or set apart for payment on
any shares of Junior  Dividend  Stock,  and no  purchase,  redemption,  or other
acquisition  shall be made by the  Corporation of any shares of Junior  Dividend
Stock  (except for Option  Share  Surrenders),  unless and until all accrued and
unpaid cash dividends on the Series B Convertible  Preferred  Stock and interest
on  dividends  in arrears at the rate  specified  herein shall have been paid or
declared and set apart for payment.

     If at any  time any  dividend  on any  Senior  Dividend  Stock  shall be in
arrears,  in whole or in part,  no dividend  shall be paid or  declared  and set
apart for payment on the Series B Convertible  Preferred  Stock unless and until
all accrued and unpaid  dividends  with  respect to the Senior  Dividend  Stock,
including the full dividends for the then current  dividend  period,  shall have
been paid or  declared  and set apart for  payment,  without  interest.  No full
dividends  shall be paid or  declared  and set apart for  payment  on any Parity
Dividend  Stock for any period  unless all  accrued  but unpaid  dividends  (and
interest on dividends  in arrears at the rate  specified  herein) have been,  or
contemporaneously  are,  paid or declared  and set apart for such payment on the
Series  B  Convertible  Preferred  Stock.  No full  dividends  shall  be paid or
declared and set apart for payment on the Series B Convertible  Preferred  Stock
for  any  period  unless  all  accrued  but  unpaid   dividends  have  been,  or
contemporaneously  are, paid or declared and set apart for payment on the Parity
Dividend Stock for all dividend  periods  terminating on or prior to the date of
payment of such full  dividends.  When  dividends  are not paid in full upon the
Series  B  Convertible  Preferred  Stock  and the  Parity  Dividend  Stock,  all
dividends  paid or declared  and set apart for  payment  upon shares of Series B
Convertible  Preferred  Stock (and  interest on dividends in arrears at the rate

                                      -16-
<PAGE>
specified  herein) and the Parity  Dividend  Stock shall be paid or declared and
set apart for payment pro rata, so that the amount of dividends paid or declared
and set apart for payment per share on the Series B Convertible  Preferred Stock
and the  Parity  Dividend  Stock  shall in all cases bear to each other the same
ratio  that  accrued  and unpaid  dividends  per share on the shares of Series B
Convertible Preferred Stock and the Parity Dividend Stock bear to each other.

                  Any references to  "distribution"  contained in this Section 5
     shall not be deemed to include any stock dividend or distributions made in
connection with any liquidation,  dissolution, or winding up of the Corporation,
whether voluntary or involuntary.

     (b) If (x) prior to any dividend payment date the Corporation  notifies the
holders of Series B Convertible  Preferred Stock that the dividends with respect
to such  date  will be paid in  cash or (y) on any  dividend  payment  date  the
Corporation is not in compliance in all material  respects with its  obligations
to the holders of the Series B Convertible  Preferred Stock (including,  without
limitation,  its obligations under the Subscription Agreements, the Registration
Rights  Agreements,  the Warrants and this Certificate of Designations) and such
noncompliance  continues for a period of ten days after notice  thereof is given
to the Corporation by any holder of Series B Convertible  Preferred Stock,  such
dividends  must be timely paid in cash.  If clauses (x) or (y) of the  foregoing
sentence do not apply on any dividend  payment date,  the  Corporation  may, but
shall not be required to, pay the  applicable  dividends in cash.  The amount of
any dividends not paid in cash shall be included in the Accrual  Amount for each
share of Series B Convertible Preferred Stock.

     (c) Neither the  Corporation  nor any subsidiary of the  Corporation  shall
redeem,  repurchase  or otherwise  acquire in any one  transaction  or series of
related transactions any shares of Common Stock, Junior Dividend Stock or Junior
Liquidation Stock if the number of shares so repurchased,  redeemed or otherwise
acquired in such  transaction or series of related  transactions  (excluding any
Option  Share  Surrender)  is more  than 10% of the  number  of shares of Common
Stock,  Junior Dividend Stock or Junior  Liquidation  Stock, as the case may be,
outstanding   immediately  prior  to  such  transaction  or  series  of  related
transactions  unless the Corporation or such  subsidiary  offers to purchase for
cash from each holder of shares of Series B Convertible  Preferred  Stock at the
time of such  redemption,  repurchase or acquisition the same percentage of such
holder's shares of Series B Convertible Preferred Stock as the percentage of the
number of outstanding  shares of Common Stock,  Junior  Dividend Stock or Junior
Liquidation  Stock,  as the  case  may be,  to be so  redeemed,  repurchased  or
acquired at a purchase price per share of Series B Convertible  Preferred  Stock
equal to the greater of (i) the Premium  Price in effect on the date of purchase
pursuant to this Section 5(c) and (ii) the Converted Market Price on the date of
purchase pursuant to this Section 5(c).

     (d) Neither the Corporation nor any subsidiary of the Corporation shall (1)
make any Tender Offer for 10% or more of the outstanding shares of Common Stock,
unless the Corporation  contemporaneously therewith makes an offer, or (2) enter
into an agreement regarding such a Tender Offer for outstanding shares of Common
Stock  by any  person  other  than  the  Corporation  or any  subsidiary  of the
Corporation, unless such person agrees with the Corporation to make an offer, in

                                      -17-
<PAGE>
either such case to each holder of  outstanding  shares of Series B  Convertible
Preferred  Stock to  purchase  for cash at the time of  purchase  in such Tender
Offer the same percentage of shares of Series B Convertible Preferred Stock held
by such holder as the percentage of outstanding  shares of Common Stock actually
purchased  in such  Tender  Offer at a price per  share of Series B  Convertible
Preferred  Stock equal to the greater of (i) the Premium  Price in effect on the
date of purchase  pursuant to this  Section 5(d) and (ii) the  Converted  Market
Price on the date of purchase pursuant to this Section 5(d).

     SECTION  6.  LIQUIDATION  PREFERENCE.   In  the  event  of  a  liquidation,
dissolution, or winding up of the Corporation, whether voluntary or involuntary,
the holders of Series B Convertible Preferred Stock shall be entitled to receive
out of the assets of the  Corporation,  whether  such assets  constitute  stated
capital or surplus of any  nature,  an amount per share of Series B  Convertible
Preferred Stock equal to the  Liquidation  Preference,  and no more,  before any
payment  shall  be made or any  assets  distributed  to the  holders  of  Junior
Liquidation  Stock;  PROVIDED,  HOWEVER,  that such rights  shall  accrue to the
holders  of Series B  Convertible  Preferred  Stock  only in the event  that the
Corporation's payments with respect to the liquidation preference of the holders
of Senior Liquidation Stock are fully met. After the liquidation  preferences of
the Senior Liquidation Stock are fully met, the entire assets of the Corporation
available for distribution shall be distributed ratably among the holders of the
Series  B  Convertible  Preferred  Stock  and any  Parity  Liquidation  Stock in
proportion to the respective preferential amounts to which each is entitled (but
only to the extent of such preferential  amounts).  After payment in full of the
liquidation price of the shares of the Series B Convertible  Preferred Stock and
the Parity  Liquidation  Stock, the holders of such shares shall not be entitled
to any further  participation  in any distribution of assets by the Corporation.
Neither a consolidation  or merger of the Corporation  with another  corporation
nor a sale or  transfer  of all or part of the  Corporation's  assets  for cash,
securities, or other property in and of itself will be considered a liquidation,
dissolution or winding up of the Corporation.

                  SECTION 7.        MAXIMUM SHARE AMOUNT REDEMPTION.

     (a) REDEMPTION BASED ON MAXIMUM SHARE AMOUNT. (1) Notwithstanding any other
provision herein,  unless the Stockholder Approval shall have been obtained from
the  stockholders  of the  Corporation  or  waived  by the  Nasdaq,  the  Nasdaq
SmallCap,  or other securities  market on which the Common Stock is then listed,
so long as the Common Stock is listed on the Nasdaq,  the Nasdaq  SmallCap,  the
NYSE or the AMEX the Corporation  shall not be required to issue upon conversion
of shares of Series B Convertible  Preferred  Stock  pursuant to Section 10 more
than the Maximum Share Amount. The Maximum Share Amount shall be allocated among
the  shares  of  Series B  Convertible  Preferred  Stock at the time of  initial
issuance  thereof  pro rata based on the  initial  issuance  of 2,000  shares of
Series B Convertible  Preferred  Stock.  Each certificate for shares of Series B
Convertible  Preferred  Stock  initially  issued shall bear a notation as to the
number of shares  constituting the portion of the Maximum Share Amount allocated
to the  shares of  Series B  Convertible  Preferred  Stock  represented  by such
certificate  for  purposes  of  conversion   thereof.   Upon  surrender  of  any
certificate  for shares of Series B Convertible  Preferred Stock for transfer or

                                      -18-
<PAGE>
re-registration  thereof  (or,  at the  option  of the  holder,  for  conversion
pursuant to Section 10(a) of less than all of the shares of Series B Convertible
Preferred Stock represented  thereby),  the Corporation shall make a notation on
the new certificate  issued upon such transfer or  re-registration or evidencing
such  unconverted  shares,  as the case may be,  as to the  remaining  number of
shares of Common Stock from the Maximum  Share Amount  remaining  available  for
conversion of the shares of Series B Convertible  Preferred  Stock  evidenced by
such new  certificate.  If any  certificate  for shares of Series B  Convertible
Preferred  Stock is  surrendered  for  split-up  into  two or more  certificates
representing  an aggregate  number of shares of Series B  Convertible  Preferred
Stock  equal to the  number of shares of Series B  Convertible  Preferred  Stock
represented by the certificate so surrendered (as reduced by any contemporaneous
conversion of shares of Series B Convertible  Preferred Stock represented by the
certificate so surrendered), each certificate issued on such split-up shall bear
a  notation  of the  portion  of the  Maximum  Share  Amount  allocated  thereto
determined  by pro rata  allocation  from  among the  remaining  portion  of the
Maximum Share Amount allocated to the certificate so surrendered.  If any shares
of Series B Convertible  Preferred Stock represented by a single certificate are
converted  in full  pursuant  to Section  10, all of the  portion of the Maximum
Share Amount  allocated to such shares of Series B Convertible  Preferred  Stock
which remains  unissued after such conversion  shall be re-allocated pro rata to
the outstanding shares of Series B Convertible Preferred Stock held of record by
the holder of record at the close of business on the date of such  conversion of
the shares of Series B Convertible  Preferred  Stock so converted,  and if there
shall be no other shares of Series B Convertible  Preferred Stock held of record
by such holder at the close of business on such date,  then such  portion of the
Maximum  Share Amount  shall be allocated  pro rata among the shares of Series B
Convertible Preferred Stock outstanding on such date.

     (2) The  Corporation  shall  promptly,  but in no  event  later  than  five
Business  Days after the  occurrence,  give  notice to each  holder of shares of
Series B Convertible  Preferred Stock (by telephone line facsimile  transmission
at such number as such holder has  specified in writing to the  Corporation  for
such purposes or, if such holder shall not have  specified  any such number,  by
overnight courier or first class mail, postage prepaid, at such holder's address
as the same  appears on the stock  books of the  Corporation)  and any holder of
shares  of  Series B  Convertible  Preferred  Stock  may at any time  after  the
occurrence give notice to the Corporation, in either case, if on any ten Trading
Days within any period of 20 consecutive  Trading Days the Corporation would not
have been required to convert shares of Series B Convertible  Preferred Stock of
such holder in accordance with Section 10(a) as a consequence of the limitations
set forth in Section  7(a)(1) had the shares of Series B  Convertible  Preferred
Stock held by such holder been  converted in full into Common Stock on each such
day,  determined  without  regard  to the  limitation,  if any,  on such  holder
contained  in the  proviso to the  second  sentence  of Section  10(a) (any such
notice,  whether  given by the  Corporation  or a holder,  an  "Inconvertibility
Notice").  If the  Corporation  shall  have given or been  required  to give any
Inconvertibility  Notice,  or if a holder shall have given any  Inconvertibility
Notice, then within ten Trading Days after such Inconvertibility Notice is given
or was required to be given, the holder receiving or giving, as the case may be,
such  Inconvertibility  Notice  shall  have the right by  written  notice to the
Corporation  (which  written  notice may be  contained  in the  Inconvertibility
Notice given by such holder) to direct the  Corporation to redeem the portion of
such holder's outstanding shares of Series B Convertible Preferred Stock (which,
if  applicable,  shall be all of such  holder's  outstanding  shares of Series B

                                      -19-
<PAGE>
Convertible Preferred Stock) as shall not, on the Business Day prior to the date
of such redemption,  be convertible into shares of Common Stock by reason of the
limitations  set forth in  Section  7(a)(1)  (determined  without  regard to the
limitation,  if any,  on  beneficial  ownership  of Common  Stock by such holder
contained  in the proviso to the second  sentence of Section  10(a)),  within 15
Trading Days after such holder so directs the Corporation,  at a price per share
equal to the Share Limitation  Redemption Price. If a holder of shares of Series
B Convertible  Preferred  Stock directs the  Corporation  to redeem  outstanding
shares  of  Series B  Convertible  Preferred  Stock  and,  prior to the date the
Corporation is required to redeem such shares of Series B Convertible  Preferred
Stock, the Corporation would have been able, within the limitations set forth in
Section 7(a)(1),  to convert all of such holder's shares of Series B Convertible
Preferred  Stock  (determined  without  regard  to the  limitation,  if any,  on
beneficial  ownership of shares of Common Stock by such holder  contained in the
proviso to the second  sentence of Section 10(a)) on any ten Trading Days within
any period of 15  consecutive  Trading  Days  commencing  after the period of 20
consecutive  Trading  Days  which gave rise to the  applicable  Inconvertibility
Notice from the  Corporation  or such  holder of shares of Series B  Convertible
Preferred Stock, as the case may be, had all of such holder's shares of Series B
Convertible Preferred Stock been surrendered for conversion into Common Stock on
each of such ten  Trading  Days  within  such 15 Trading  Day  period,  then the
Corporation  shall not be required to redeem any shares of Series B  Convertible
Preferred Stock by reason of such Inconvertibility Notice.

     (3)  Notwithstanding  the  giving  of any  Inconvertibility  Notice  by the
Corporation to the holders of Series B Convertible  Preferred  Stock pursuant to
Section 7(a)(2) or the giving or the absence of any notice by the holders of the
Series B Convertible  Preferred  Stock in response  thereto or any redemption of
shares of Series B  Convertible  Preferred  Stock  pursuant to Section  7(a)(2),
thereafter the provisions of Section  7(a)(2) shall continue to be applicable on
any occasion unless the  Stockholder  Approval shall have been obtained from the
stockholders of the Corporation or waived by the Nasdaq, the Nasdaq SmallCap, or
other securities market on which the Common Stock is then listed.

     (4) On each  Share  Limitation  Redemption  Date (or such  later  date as a
holder of shares of Series B Convertible  Preferred Stock shall surrender to the
Corporation the certificate(s) for the shares of Series B Convertible  Preferred
Stock being redeemed  pursuant to this Section 7(a)), the Corporation shall make
payment  in  immediately  available  funds of the  applicable  Share  Limitation
Redemption  Price to such  holder of shares  of Series B  Convertible  Preferred
Stock to be redeemed to or upon the order of such  holder as  specified  by such
holder in writing to the  Corporation  at least one  Business  Day prior to such
Share Limitation Redemption Date. Upon redemption of less than all of the shares
of Series B Convertible  Preferred Stock evidenced by a particular  certificate,
promptly, but in no event later than three Business Days after surrender of such
certificate  to the  Corporation,  the  Corporation  shall  issue a  replacement
certificate for the shares of Series B Convertible  Preferred Stock evidenced by
such  certificate  which have not been  redeemed.  Only whole shares of Series B
Convertible Preferred Stock may be redeemed.

     (5)  (A)  Notwithstanding  any  other  provision  of  this  Certificate  of
Designations,  if an  Inconvertibility  Day occurs by reason of events which are

                                      -20-
<PAGE>
not solely within the control of the Corporation, the Corporation shall have the
right to give a Control Notice to the holders of Series B Convertible  Preferred
Stock at any time  after  such  Inconvertibility  Day  occurs  and  prior to the
earlier of (1) the date on which all  holders of shares of Series B  Convertible
Preferred  Stock  who had the  right  (other  than as  limited  by this  Section
7(a)(5)) to require  redemption of any shares of Series B Convertible  Preferred
Stock by reason of the  occurrence of such  Inconvertibility  Day no longer have
such right and (2) the applicable Share Limitation  Redemption Date by reason of
the  earliest  notice  given by any  holder of  shares  of Series B  Convertible
Preferred  Stock  directing the  Corporation to redeem such shares in accordance
with  Section  7(a)(2) by reason of such  Inconvertibility  Day. For purposes of
this Section 7(a)(5), an  Inconvertibility  Day shall be deemed to have occurred
by reason of events which are not solely  within the control of the  Corporation
if a  requirement  of the  Corporation  to  redeem,  or a right of any holder of
shares of Series B Convertible  Preferred Stock to require redemption of, shares
of Series B Convertible  Preferred  Stock by reason  thereof would result in the
Corporation being required to classify the Series B Convertible  Preferred Stock
as redeemable  preferred stock on a balance sheet of the Corporation prepared in
accordance with Generally Accepted  Accounting  Principles and Regulation S-X of
the SEC.  If the  Corporation  timely  gives a Control  Notice to the holders of
shares of Series B Convertible  Preferred Stock,  then in lieu of payment of the
Share Limitation  Redemption Price pursuant to a redemption  notice given by any
holder of shares of Series B  Convertible  Preferred  Stock in  accordance  with
Section  7(a)(2) by reason of such  Inconvertibility  Day and commencing on such
Inconvertibility Day the Conversion Price for all outstanding shares of Series B
Convertible Preferred Stock will be 80% of the amount the Conversion Price would
otherwise be. Such  adjustment of the Conversion  Price shall continue in effect
until  the  earliest  of (x) the date  which is 90 days  after  the  Stockholder
Approval shall have been obtained from the  stockholders  of the  Corporation or
waived by the Nasdaq  SmallCap  or other  securities  market on which the Common
Stock is then listed, (y) the date any further  adjustments are made following a
failure to obtain the Stockholder  Approval as provided below,  and (z) the date
when shares of Series B Convertible  Preferred Stock are no longer  outstanding.
On or after the date the Corporation gives such Control Notice, upon notice from
the Majority Holders,  the Corporation  promptly shall call a special meeting of
its stockholders,  to be held not later than 90 days after such notice is given,
to seek the Stockholder  Approval for the issuance of all shares of Common Stock
issuable  upon  conversion  of the  Series  B  Convertible  Preferred  Stock  in
accordance  with  Section  10 and  shall  use its best  efforts  to  obtain  the
Stockholder Approval. The Corporation shall prepare and file with the SEC within
20 days after such notice is given preliminary proxy materials which set forth a
proposal to seek such Stockholder  Approval.  The Corporation  shall provide the
Majority  Holders an opportunity to consult with the  Corporation  regarding the
content  of such  proxy  materials  insofar  as it  relates  to the  Stockholder
Approval by providing copies of such preliminary proxy materials and any revised
preliminary  proxy materials to the Majority Holders a reasonable period of time
prior to their filing with the SEC. The Corporation shall furnish to each holder
of shares of Series B Convertible Preferred Stock a copy of its definitive proxy
materials for such special  meeting and any  amendments or  supplements  thereto
promptly after the same are mailed to  stockholders  or filed with the SEC. Upon
the earlier of (i) the failure to obtain the Stockholder Approval at the special
meeting or (ii) the  failure to hold the  special  meeting  within  such  90-day
period,  the  Corporation  shall so  notify  the  holders  of shares of Series B
Convertible  Preferred  Stock and such of the following as shall be specified by
notice to the Corporation  from the Majority Holders shall occur: (1) commencing

                                      -21-
<PAGE>
on the Business Day  following  the  Corporation's  receipt of such notice,  the
Conversion  Price of the  outstanding  shares of Series B Convertible  Preferred
Stock will be 60% of the amount the Conversion  Price would otherwise be without
regard to other adjustments pursuant to this Section 7(a)(5) or Section 11(b)(4)
and (2) the  Corporation  shall  promptly file  applications  and take all other
actions  necessary to (i) list the Common Stock for trading and quotation on the
OTC Bulletin  Board or such other  securities  market or exchange which will not
restrict the number of shares of Common Stock  issuable  upon  conversion of the
Series B  Convertible  Preferred  Stock and (ii) upon filing such  applications,
request the immediate removal of the Common Stock from listing on the securities
market on which it is then  listed  which  restricts  the  issuance of shares of
Common Stock upon  conversion of shares of Series B Convertible  Preferred Stock
without the Stockholder Approval.

     (B) If and  for so  long  as an  adjustment  of  the  Conversion  Price  is
simultaneously  required by this Section  7(a)(5) and by Section  11(b)(4),  the
applicable  Conversion  Price shall be the lower of the two amounts  required by
each such section.

     (C) The rights of holders of shares of Series B Convertible Preferred Stock
to require  redemption  of their  shares and exercise  other rights  pursuant to
Sections  7(a)(1)  through  7(a)(4) by reason of an  Inconvertibility  Day as to
which the Corporation  does not have a right to give a Control Notice,  or fails
to exercise such right on a timely basis,  shall not be limited by the operation
of this Section 7(a)(5).

     (b) NO OTHER REDEMPTION. The shares of Series B Convertible Preferred Stock
shall not be  subject  to  redemption  by the  Corporation  at the option of the
Holders except as provided in this Section 7 and in Section 11.

     SECTION 8. NO SINKING FUND.  The shares of Series B  Convertible  Preferred
Stock shall not be subject to the operation of a purchase, retirement or sinking
fund.

     SECTION 9. OPTIONAL REDEMPTION.

     (a) CORPORATION  OPTIONAL  REDEMPTION.  If (1) the Corporation  shall be in
compliance  in all  material  respects  with its  obligations  to the holders of
shares of Series B Convertible  Preferred Stock (including,  without limitation,
its obligations  under the  Subscription  Agreements,  the  Registration  Rights
Agreements,   the  Warrants  and  the   provisions   of  this   Certificate   of
Designations),  (2) on the date the Corporation  Optional  Redemption  Notice is
given and at all times until the Redemption Date, the Registration  Statement is
effective and available for use by each holder of shares of Series B Convertible
Preferred Stock for the resale of shares of Common Stock acquired by such holder
upon  conversion of all shares of Series B Convertible  Preferred  Stock held by
such  holder and (3) no  Optional  Redemption  Event  shall have  occurred  with
respect to which, on the date a Corporation  Optional Redemption Notice is to be
given or on the  Redemption  Date,  any holder of shares of Series B Convertible
Preferred  Stock (A) shall be entitled to exercise  optional  redemption  rights
under Section 11 by reason of such Optional  Redemption  Event or (B) shall have
exercised optional redemption rights under Section 11 by reason of such Optional
Redemption Event and the Corporation shall not have paid the Optional Redemption

                                      -22-
<PAGE>
Price to such holder, then the Corporation shall have the right,  exercisable by
giving a Corporation  Optional  Redemption  Notice not less than 30 days or more
than 50 days prior to the Redemption Date to all holders of record of the shares
of Series B Convertible  Preferred Stock, at any time to redeem all or from time
to time to redeem  any part of the  outstanding  shares of Series B  Convertible
Preferred Stock in accordance  with this Section 9(a). If the Corporation  shall
redeem less than all outstanding shares of Series B Convertible Preferred Stock,
such  redemption  shall be made as nearly as practical pro rata from all holders
of shares of Series B Convertible  Preferred  Stock.  Any  Corporation  Optional
Redemption  Notice  under this  Section  9(a)  shall be given to the  holders of
record of the shares of Series B Convertible  Preferred Stock at their addresses
appearing on the records of the Corporation; PROVIDED, HOWEVER, that any failure
or defect in the giving of such notice to any such  holder  shall not affect the
validity  of notice  to or the  redemption  of  shares  of Series B  Convertible
Preferred Stock of any other holder.  On the Redemption Date (or such later date
as a holder of shares of Series B Convertible  Preferred Stock surrenders to the
Corporation  the  certificate(s)  for shares of Series B  Convertible  Preferred
Stock to be redeemed  pursuant to this Section 9(a)), the Corporation shall make
payment of the applicable  Redemption Price to each holder of shares of Series B
Convertible  Preferred  Stock to be redeemed in immediately  available  funds to
such account as specified by such holder in writing to the  Corporation at least
one  Business Day prior to the  Redemption  Date. A holder of shares of Series B
Convertible  Preferred Stock to be redeemed  pursuant to this Section 9(a) shall
be entitled to convert such shares of Series B  Convertible  Preferred  Stock in
accordance  with Section 10 (x) through the day prior to the Redemption Date and
(y) if the  Corporation  shall fail to pay the Redemption  Price of any share of
Series B  Convertible  Preferred  Stock when due, at any time after the due date
thereof until such date as the  Corporation  pays the  Redemption  Price of such
share of Series B Convertible  Preferred Stock. No share of Series B Convertible
Preferred  Stock  as to which  the  holder  exercises  the  right of  conversion
pursuant to Section 10 or the optional  redemption  right pursuant to Section 11
may be redeemed by the Corporation pursuant to this Section 9(a) on or after the
date of exercise of such conversion right or optional  redemption  right, as the
case may be,  regardless of whether the Corporation  Optional  Redemption Notice
shall have been given  prior to, or on or after,  the date of  exercise  of such
conversion right or optional redemption right, as the case may be.

                  (b) FINAL REDEMPTION.  The Corporation shall have the right to
redeem all, but not less than all,  outstanding  shares of Series B  Convertible
Preferred  Stock at any time on or after the third  anniversary  of the Issuance
Date so long as (1) the  Corporation  shall  be in  compliance  in all  material
respects  with its  obligations  to the  holders  of the  Series  B  Convertible
Preferred  Stock  (including,  without  limitation,  its  obligations  under the
Subscription  Agreements,  the Registration Rights Agreements,  the Warrants and
this  Certificate of  Designations)  and (2) no Optional  Redemption Event shall
have occurred with respect to which on the date a Final Redemption  Notice is to
be given or on the  Final  Redemption  Date,  any  holder  of shares of Series B
Convertible   Preferred  Stock  (a)  shall  be  entitled  to  exercise  optional
redemption  rights under Section 11 by reason of such Optional  Redemption Event
or (b) shall have  exercised  optional  redemption  rights  under  Section 11 by
reason of such Optional Redemption Event and the Corporation shall not have paid
the Optional  Redemption  Price to such holder.  In order to exercise its rights
under this Section 9(b), the Corporation  shall give a Final  Redemption  Notice

                                      -23-
<PAGE>
not less than 30 days or more than 50 days prior to the Final Redemption Date to
all holders of record of the shares of Series B Convertible Preferred Stock. Any
Final Redemption Notice shall be given to the holders of record of the shares of
Series B Convertible Preferred Stock by telephone line facsimile transmission to
such  number  as shown  on the  records  of the  Corporation  for such  purpose;
PROVIDED,  HOWEVER,  that any  failure or defect in the giving of such notice to
any such holder shall not affect the validity of notice to or the  redemption of
shares of Series B Convertible Preferred Stock of any other holder. On the Final
Redemption  Date  (or  such  later  date as a  holder  of  shares  of  Series  B
Convertible Preferred Stock surrenders to the Corporation the certificate(s) for
shares of Series B Convertible  Preferred Stock to be redeemed  pursuant to this
Section  9(b)),  the  Corporation  shall make  payment of the  applicable  Final
Redemption  Price to each  holder of shares  of Series B  Convertible  Preferred
Stock to be redeemed in immediately available funds to such account as specified
by such holder in writing to the  Corporation at least one Business Day prior to
the Final Redemption Date. A holder of shares of Series B Convertible  Preferred
Stock to be redeemed  pursuant to this Section 9(b) shall be entitled to convert
such shares of Series B Convertible  Preferred  Stock in accordance with Section
10 (x)  through  the day  prior  to the  Final  Redemption  Date  and (y) if the
Corporation  shall fail to pay the Final Redemption Price of any share of Series
B Convertible  Preferred  Stock when due, at any time after the due date thereof
until such date as the Corporation pays the Final Redemption Price of such share
of Series B  Convertible  Preferred  Stock to such holder.  No share of Series B
Convertible  Preferred  Stock  as to  which a  holder  exercises  the  right  of
conversion  pursuant to Section 10 or the optional  redemption right pursuant to
Section 11 may be redeemed by the  Corporation  pursuant to this Section 9(b) on
or after the date of exercise of such  conversion  right or optional  redemption
right,  as the case may be,  regardless of whether the Final  Redemption  Notice
shall have been given  prior to, or on or after,  the date of  exercise  of such
conversion right or optional redemption right, as the case may be.

     (c) NO OTHER  OPTIONAL  REDEMPTION.  The  shares  of  Series B  Convertible
Preferred  Stock  shall  not be  subject  to  redemption  at the  option  of the
Corporation except as provided in Sections 9(a) and 9(b).

SECTION 10. CONVERSION.

     (a) CONVERSION AT OPTION OF HOLDER. The holders of the Series B Convertible
Preferred  Stock may at any time on or after the  Issuance  Date  convert at any
time all or from time to time any part of their  shares of Series B  Convertible
Preferred  Stock into fully paid and  nonassessable  shares of Common  Stock and
such other  securities and property as herein  provided.  Each share of Series B
Convertible  Preferred  Stock may be converted  at the office of the  Conversion
Agent or at such other  additional  office or  offices,  if any, as the Board of
Directors may designate, into such number of fully paid and nonassessable shares
of Common Stock  (calculated as to each  conversion to the nearest  1/100th of a
share) determined by dividing (x) the sum of (i) the Conversion Amount,  (ii) an
amount  equal  to the  Accrual  Amount  on the  share of  Series  B  Convertible
Preferred  Stock being  converted to the applicable  Conversion  Date, and (iii)
accrued but unpaid interest on the dividends  required to be paid in cash on the
share of Series B Convertible  Preferred Stock being converted in arrears to the
applicable  Conversion  Date  at the  rate  provided  in  Section  5 BY (y)  the
Conversion  Price for such Conversion Date (the  "Conversion  Rate");  PROVIDED,

                                      -24-
<PAGE>
HOWEVER,  that in no event  shall any  holder of shares of Series B  Convertible
Preferred  Stock be  entitled  to  convert  any  shares of Series B  Convertible
Preferred  Stock in  excess of that  number  of  shares of Series B  Convertible
Preferred  Stock upon conversion of which the sum of (1) the number of shares of
Common Stock  beneficially  owned by such holder and all  Aggregated  Persons of
such holder (other than shares of Common Stock deemed beneficially owned through
the ownership of (x) unconverted shares of Series B Convertible  Preferred Stock
and (y) the  unconverted or unexercised  portion of any  instrument,  including,
without limitation,  the Warrants and the Series A Convertible  Preferred Stock,
which contains  limitations similar to those set forth in this sentence) and (2)
the number of shares of Common Stock  issuable upon the conversion of the number
of shares of Series B  Convertible  Preferred  Stock  with  respect to which the
determination  in this  proviso  is  being  made,  would  result  in  beneficial
ownership by such holder and all Aggregated  Persons of such holder of more than
4.9% of the outstanding  shares of Common Stock.  For purposes of the proviso to
the immediately preceding sentence,  beneficial ownership shall be determined in
accordance  with  Section  13(d)  of  the  Exchange  Act  and  Regulation  13D-G
thereunder,  except as  otherwise  provided  in clause (1) of the proviso to the
immediately preceding sentence.

     (b) OTHER PROVISIONS. (1) Notwithstanding anything in this Section 10(b) to
the contrary,  no change in the Conversion Amount pursuant to this Section 10(b)
shall actually be made until the cumulative effect of the adjustments called for
by this Section 10(b) since the date of the last change in the Conversion Amount
would change the Conversion Amount by more than 1%. However, once the cumulative
effect would result in such a change,  then the Conversion Amount shall actually
be changed to reflect all  adjustments  called for by this Section 10(b) and not
previously  made.  Notwithstanding  anything in this Section 10(b), no change in
the  Conversion  Amount  shall be made that would result in the price at which a
share of Series B Convertible  Preferred  Stock is converted being less than the
par  value of the  Common  Stock  into  which  shares  of  Series B  Convertible
Preferred Stock are at the time convertible.

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

                                      -25-
<PAGE>
Preferred  Stock that may be  accrued  and  unpaid at the date of  surrender  of
shares of Series B Convertible Preferred Stock.

     (3) (A) The right of the holders of Series B Convertible Preferred Stock to
convert  their  shares  shall  be  exercised  by  giving  (which  may be done by
telephone line  facsimile  transmission)  a Conversion  Notice to the Conversion
Agent,  with a copy to the  Corporation.  If a holder  of  Series B  Convertible
Preferred  Stock elects to convert any shares of Series B Convertible  Preferred
Stock in  accordance  with Section  10(a),  such holder shall not be required to
surrender the  certificate(s)  representing  such shares of Series B Convertible
Preferred  Stock  to the  Corporation  unless  all of the  shares  of  Series  B
Convertible Preferred Stock represented thereby are so converted. Each holder of
shares  of  Series B  Convertible  Preferred  Stock  and the  Corporation  shall
maintain records showing the number of shares so converted and the dates of such
conversions or shall use such other method,  satisfactory to such holder and the
Corporation,  so as to not require physical  surrender of such certificates upon
each such conversion.  In the event of any dispute or discrepancy,  such records
of the  Corporation  shall be controlling  and  determinative  in the absence of
manifest  error.  Notwithstanding  the  foregoing,  if any  shares  of  Series B
Convertible  Preferred Stock evidenced by a particular  certificate therefor are
converted as aforesaid,  the holder of Series B Convertible  Preferred Stock may
not transfer the certificate(s) representing such shares of Series B Convertible
Preferred   Stock  unless  such  holder   first   physically   surrenders   such
certificate(s)  to the  Corporation,  whereupon the  Corporation  will forthwith
issue  and  deliver  upon  the  order  of such  holder  of  shares  of  Series B
Convertible Preferred Stock new certificate(s) of like tenor, registered as such
holder of shares of Series B Convertible  Preferred  Stock (upon payment by such
holder  of  shares of Series B  Convertible  Preferred  Stock of any  applicable
transfer taxes) may request,  representing in the aggregate the remaining number
of  shares  of  Series  B  Convertible   Preferred  Stock  represented  by  such
certificate(s).  Each holder of shares of Series B Convertible  Preferred Stock,
by acceptance of a certificate for such shares, acknowledges and agrees that (1)
by reason of the  provisions  of this  paragraph,  following  conversion  of any
shares of Series B Convertible  Preferred Stock represented by such certificate,
the number of shares of Series B Convertible Preferred Stock represented by such
certificate  may be less than the number of shares  stated on such  certificate,
and (2) the  Corporation  may place a legend on the  certificates  for shares of
Series B Convertible Preferred Stock which refers to or describes the provisions
of this paragraph.

     (B) The  Corporation  shall pay any transfer tax arising in connection with
any conversion of shares of Series B Convertible Preferred Stock except that the
Corporation shall not, however,  be required to pay any tax which may be payable
in respect of any transfer involved in the issue and delivery upon conversion of
shares of Common Stock or other securities or property in a name other than that
of the holder of the shares of the Series B  Convertible  Preferred  Stock being
converted,  and the  Corporation  shall not be  required to issue or deliver any
such  shares or other  securities  or  property  unless  and until the person or
persons  requesting the issuance  thereof shall have paid to the Corporation the
amount of any such tax or shall  have  established  to the  satisfaction  of the
Corporation that such tax has been paid. The number of shares of Common Stock to
be issued upon each conversion of shares of Series B Convertible Preferred Stock
shall be the number set forth in the applicable  Conversion  Notice which number
shall be conclusive absent manifest error. The Corporation shall notify a holder

                                      -26-
<PAGE>
who has given a  Conversion  Notice of any claim of  manifest  error  within one
Trading Day after such holder gives such Conversion  Notice and no such claim of
error shall limit or delay performance of the Corporation's  obligation to issue
upon such  conversion  the  number of  shares of Common  Stock  which are not in
dispute.  A  Conversion  Notice shall be deemed for all purposes to be in proper
form unless the Corporation  notifies a holder of shares of Series B Convertible
Preferred Stock being converted within one Trading Day after a Conversion Notice
has been given (which notice shall specify all defects in the Conversion Notice)
and any  Conversion  Notice  containing  any such defect  shall  nonetheless  be
effective on the date given if the converting  holder promptly corrects all such
defects.

     (4) The Corporation (and any successor  corporation)  shall take all action
necessary so that a number of shares of the authorized but unissued Common Stock
(or common stock in the case of any successor corporation) sufficient to provide
for the conversion of the Series B Convertible  Preferred Stock outstanding upon
the basis hereinbefore provided are at all times reserved by the Corporation (or
any successor  corporation),  free from preemptive  rights, for such conversion,
subject to the provisions of the next succeeding  paragraph.  If the Corporation
shall issue any  securities  or make any change in its capital  structure  which
would  change the number of shares of Common  Stock into which each share of the
Series B Convertible  Preferred  Stock shall be convertible as herein  provided,
the  Corporation  shall at the same  time  also make  proper  provision  so that
thereafter  there  shall be a  sufficient  number  of  shares  of  Common  Stock
authorized  and reserved,  free from  preemptive  rights,  for conversion of the
outstanding  Series B Convertible  Preferred  Stock on the new basis.  If at any
time the number of authorized  but unissued  shares of Common Stock shall not be
sufficient to effect the conversion of all of the outstanding shares of Series B
Convertible  Preferred Stock,  the Corporation  promptly shall seek, and use its
best  efforts to obtain  and  complete,  such  corporate  action as may,  in the
opinion of its counsel,  be necessary  to increase its  authorized  but unissued
shares of Common Stock to such number of shares as shall be sufficient  for such
purpose.

     (5) In case of any  consolidation  or  merger of the  Corporation  with any
other corporation  (other than a wholly-owned  subsidiary of the Corporation) in
which the Corporation is not the surviving  corporation,  or in case of any sale
or transfer of all or substantially all of the assets of the Corporation,  or in
the case of any share exchange  pursuant to which all of the outstanding  shares
of Common Stock are converted into other securities or property, the Corporation
shall make appropriate  provision or cause  appropriate  provision to be made so
that  each  holder  of  shares of  Series B  Convertible  Preferred  Stock  then
outstanding  shall have the right  thereafter to convert such shares of Series B
Convertible  Preferred  Stock  into  the  kind of  shares  of  stock  and  other
securities  and  property  receivable  upon such  consolidation,  merger,  sale,
transfer,  or share  exchange  by a holder of shares of Common  Stock into which
such shares of Series B Convertible  Preferred  Stock could have been  converted
immediately  prior to the effective date of such  consolidation,  merger,  sale,
transfer, or share exchange and on a basis which preserves the economic benefits
of the  conversion  rights of the  holders  of  shares  of Series B  Convertible
Preferred Stock on a basis as nearly as practical as such rights exist hereunder
prior thereto.  If, in connection  with any such  consolidation,  merger,  sale,
transfer,  or share exchange,  each holder of shares of Common Stock is entitled
to elect to receive  securities,  cash, or other assets upon  completion of such
transaction,  the  Corporation  shall  provide or cause to be  provided  to each

                                      -27-
<PAGE>
holder  of  Series  B  Convertible  Preferred  Stock  the  right  to  elect  the
securities,  cash, or other assets into which the Series B Convertible Preferred
Stock held by such holder  shall be  convertible  after  completion  of any such
transaction on the same terms and subject to the same  conditions  applicable to
holders of the Common Stock (including,  without limitation, notice of the right
to elect,  limitations  on the period in which such election  shall be made, and
the effect of failing to exercise the election); PROVIDED, HOWEVER, that if such
securities  or other  assets are not then  available,  in whole or in part,  the
Corporation  shall  substitute  other  securities,   cash  or  other  assets  of
equivalent  value on terms  reasonably  satisfactory to the holders of shares of
Series B Convertible  Preferred Stock. The Corporation shall not effect any such
transaction unless the provisions of this paragraph have been complied with. The
above  provisions shall similarly apply to successive  consolidations,  mergers,
sales, transfers, or share exchanges.

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

                                      -28-
<PAGE>
     (7) No fractional shares of Common Stock shall be issued upon conversion of
Series B Convertible  Preferred Stock but, in lieu of any fraction of a share of
Common Stock to purchase fractional shares of Common Stock which would otherwise
be issuable in respect of the aggregate  number of such shares  surrendered  for
conversion at one time by the same holder,  the Corporation shall pay in cash an
amount equal to the product of (i) the arithmetic average of the Market Price of
one share of Common  Stock on the three  consecutive  Trading Days ending on the
Trading Day  immediately  preceding the Conversion Date TIMES (ii) such fraction
of a share.

     (8) The Conversion Amount shall be adjusted from time to time under certain
circumstances, subject to the provisions of Section 10(b)(1), as follows:

     (i) In case the  Corporation  shall issue  rights or warrants on a pro rata
basis to all holders of the Common Stock entitling such holders to subscribe for
or purchase  Common  Stock on the record  date  referred to below at a price per
share less than the Current  Price for such record date,  then in each such case
the  Conversion  Amount in effect  on such  record  date  shall be  adjusted  in
accordance with the following formula:

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

where

     C1   = the adjusted Conversion Amount

     C    = the current Conversion Amount

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

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

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

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

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

                                      -29-
<PAGE>
     (ii) In case the Corporation shall, by dividend or otherwise, distribute to
all  holders of its  Junior  Stock (as  hereinafter  defined)  evidences  of its
indebtedness  or assets  (including  securities,  but  excluding any warrants or
subscription  rights referred to in  subparagraph  (i) above and any dividend or
distribution paid in cash out of the retained earnings of the Corporation), then
in each such case the  Conversion  Amount  then in effect  shall be  adjusted in
accordance with the formula

         C1 = C x    M
                   -----
                   M - F

where

     C1   = the adjusted Conversion Amount

     C    = the current Conversion Amount

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

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

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

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

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

     (9) Except as otherwise provided above in this Section 10, no adjustment in
the  Conversion  Amount  shall be made in  respect of any  conversion  for share
distributions  or  dividends  theretofore  declared  and paid or  payable on the
Common Stock.

                                      -30-
<PAGE>
     (10) Whenever the  Conversion  Amount is adjusted as herein  provided,  the
Corporation  shall send to each holder and each transfer  agent, if any, for the
Series B  Convertible  Preferred  Stock and the  transfer  agent for the  Common
Stock, a statement  signed by the Chairman of the Board,  the President,  or any
Vice  President of the  Corporation  and by its Treasurer or its Secretary or an
Assistant  Secretary  stating  the  adjusted  Conversion  Amount  determined  as
provided in this  Section 10, and any  adjustment  so  evidenced,  given in good
faith, shall be binding upon all stockholders and upon the Corporation. Whenever
the Conversion  Amount is adjusted,  the Corporation will give notice by mail to
the holders of record of Series B  Convertible  Preferred  Stock,  which  notice
shall be made within 15 days after the  effective  date of such  adjustment  and
shall  state the  adjustment  and the  Conversion  Amount.  Notwithstanding  the
foregoing notice provisions, failure by the Corporation to give such notice or a
defect in such  notice  shall not affect the  binding  nature of such  corporate
action of the Corporation.

     (11) In case on or after the Issuance Date:

     (A) the Corporation shall declare a dividend (or any other distribution) on
the Common Stock (other than in cash out of retained earnings); or

     (B) the  Corporation  shall  authorize  the  granting to the holders of the
Common Stock of rights or warrants to subscribe for or purchase any share of any
class or any other rights or warrants; or

     (C) the Board of Directors  shall  authorize  any  reclassification  of the
Common Stock (other than a subdivision or combination of the outstanding  Common
Stock,  or a change in par value,  or from par value to no par value, or from no
par value to par  value),  or any  consolidation  or  merger  or other  business
combination  transaction  to which  the  Corporation  is a party  and for  which
approval of any  stockholders  of the  Corporation  is required,  or the sale or
transfer of all or substantially all of the assets of the Corporation; or

     (D) there  shall be  pending  the  voluntary  or  involuntary  dissolution,
liquidation or winding-up of the Corporation;

the  Corporation  shall give the  holders of record of the Series B  Convertible
Preferred  Stock,  as promptly as possible but in any event at least ten Trading
Days 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 or 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 or rights are to be determined, or (y) the date on which
such  reclassification,   consolidation,   merger,  other  business  combination
transaction, sale, transfer, dissolution,  liquidation or winding-up is expected
to become  effective  or  occur,  and the date as of which it is  expected  that
holders of Common Stock of record who shall be entitled to exchange their Common
Stock for securities or other property  deliverable upon such  reclassification,
consolidation,  merger, other business combination transaction,  sale, transfer,

                                      -31-
<PAGE>
dissolution,  liquidation or winding-up  shall be determined.  Such notice shall
not include any information which would be material  non-public  information for
purposes of the 1934 Act.  Failure to give such notice,  or any defect  therein,
shall not  affect the  legality  or  validity  of such  dividend,  distribution,
reclassification,    consolidation,   merger,   sale,   transfer,   dissolution,
liquidation  or  winding-up.  In the  case  of any  such  action  of  which  the
Corporation  gives  such  notice  to the  holders  of  record  of the  Series  B
Convertible  Preferred Stock or is required to give such notice to such holders,
such holders  shall be entitled to give a Conversion  Notice which is contingent
on the completion of such action.

SECTION 11. REDEMPTION AT OPTION OF HOLDERS.

     (a) REDEMPTION  RIGHT.  If an Optional  Redemption  Event occurs,  then, in
addition  to any  other  right or  remedy  of any  holder  of shares of Series B
Convertible  Preferred  Stock,  each  holder of  shares of Series B  Convertible
Preferred  Stock shall have the right, at such holder's  option,  to require the
Corporation  to redeem  all of such  holder's  shares  of  Series B  Convertible
Preferred  Stock, or any portion  thereof,  on the date that is 15 Business Days
after the date such holder gives the Corporation an Optional  Redemption  Notice
with  respect to such  Optional  Redemption  Event at any time while any of such
holder's shares of Series B Convertible  Preferred Stock are  outstanding,  at a
price equal to the Optional Redemption Price.

     (b) NOTICES;  METHOD OF EXERCISING  OPTIONAL REDEMPTION RIGHTS, ETC. (1) On
or before the fifth Business Day after the occurrence of an Optional  Redemption
Event, the Corporation shall give to each holder of outstanding shares of Series
B  Convertible  Preferred  Stock a notice  of the  occurrence  of such  Optional
Redemption  Event and of the  redemption  right set forth  herein  arising  as a
result thereof. Such notice from the Corporation shall set forth:

     (i) the date by which the optional redemption right must be exercised, and

     (ii) a  description  of the  procedure  (set forth  below)  which each such
holder must follow to exercise such holder's optional redemption right.

No failure of the  Corporation to give such notice or defect therein shall limit
the right of any  holder of shares of Series B  Convertible  Preferred  Stock to
exercise the optional redemption right or affect the validity of the proceedings
for the  redemption  of such holder's  shares of Series B Convertible  Preferred
Stock.

     (2) To exercise its optional  redemption  right, each holder of outstanding
shares of Series B Convertible  Preferred Stock shall deliver to the Corporation
on or before the 30th day after the notice required by Section 11(b)(1) is given
to such holder (or if no such notice has been given by the  Corporation  to such
holder,  within  40 days  after  such  holder  first  learns  of  such  Optional
Redemption  Event) an  Optional  Redemption  Notice to the  Corporation.  At the
Corporation's  option,  an  Optional  Redemption  Notice  may be revoked by such
holder  giving  such  Optional  Redemption  Notice  by  giving  notice  of  such
revocation to the Corporation at any time prior to the time the Corporation pays
the Optional Redemption Price to such holder.

     (3) If a holder of shares of Series B  Convertible  Preferred  Stock  shall
have given an Optional  Redemption Notice, on the date which is 15 Business Days
after the date such Optional  Redemption  Notice is given (or such later date as
such holder  surrenders  such holder's  certificates  for the shares of Series B
Convertible  Preferred Stock to be redeemed) the Corporation  shall make payment

                                      -32-
<PAGE>
in immediately  available funds of the applicable  Optional  Redemption Price to
such account as specified by such holder in writing to the  Corporation at least
one Business Day prior to the applicable redemption date.

     (4)   Notwithstanding   any  other   provision  of  this   Certificate   of
Designations, if an Optional Redemption Event occurs by reason of the occurrence
of (x) an event  described  in clause (1), (2) or (5) of the  definition  of the
term Optional Redemption Event or (y) an Amendment Event, and such occurrence is
by reason of events which are not solely within the control of the  Corporation,
the Corporation  shall have the right to give a Control Notice to the holders of
shares of Series B Convertible  Preferred  Stock at any time after such Optional
Redemption  Event  occurs and prior to the  earlier of (1) the date on which all
holders  of  shares of Series B  Convertible  Preferred  Stock who had the right
(other than as limited by this Section  11(b)(4)) to require  redemption  of any
shares of Series B Convertible  Preferred  Stock by reason of the  occurrence of
such Optional  Redemption Event no longer have such right and (2) the applicable
Optional  Redemption Date by reason of the earliest  Optional  Redemption Notice
given by any holder of shares of Series B Convertible  Preferred Stock by reason
of such Optional  Redemption Event. If the Corporation timely gives such Control
Notice to the holders of shares of Series B Convertible Preferred Stock, then in
lieu of payment of the Optional  Redemption Price by reason of any such Optional
Redemption  Event  and  commencing  on the  first  date on which  such  Optional
Redemption Event occurs the following  adjustments shall take effect (subject to
the provisions of Section 7(a)(5)(B)):

          (A) In the case of an Optional  Redemption  Event described in clauses
     (1) or (2) of the  definition of the term Optional  Redemption  Event or in
     the case of an Amendment  Event,  for so long as such  Optional  Redemption
     Event or  Amendment  Event  continues  and for a period of ten Trading Days
     thereafter  the  Conversion  Price  will  be 70% of the  amount  which  the
     Conversion Price would otherwise be.

          (B) In the case of an Optional  Redemption  Event  described in clause
     (5) of the definition of the term Optional Redemption Event, for so long as
     any shares of Preferred Stock are outstanding the Conversion  Price will be
     70% of the amount which the Conversion Price would otherwise be.

For purposes of this Section 11(b)(4), an Optional Redemption Event described in
clause (1), (2) or (5) of the definition of the term Optional  Redemption  Event
or an Amendment Event shall be deemed to have occurred by reason of events which
are not solely within the control of the  Corporation  if a  requirement  of the
Corporation  to  redeem,  or a  right  of any  holder  of  shares  of  Series  B
Convertible  Preferred  Stock to  require  redemption  of,  shares  of  Series B
Convertible  Preferred  Stock by reason thereof would result in the  Corporation
being  required  to  classify  the  Series  B  Convertible  Preferred  Stock  as
redeemable  preferred  stock on a balance sheet of the  Corporation  prepared in
accordance with Generally Accepted  Accounting  Principles and Regulation S-X of
the SEC, and, in the case of an Optional  Redemption  Event  described in clause
(5) of the definition of the term Optional  Redemption  Event,  the Board or the
stockholders  of the  Corporation do not have the right to approve or disapprove
the transactions resulting in such event.

                                      -33-
<PAGE>
     (c) OTHER. (1) In connection with a redemption  pursuant to this Section 11
of less than all of the shares of Series B Convertible Preferred Stock evidenced
by a particular certificate, promptly, but in no event later than three Business
Days after  surrender of such  certificate to the  Corporation,  the Corporation
shall issue and deliver to such holder a replacement  certificate for the shares
of Series B Convertible Preferred Stock evidenced by such certificate which have
not been redeemed.

     (2) An Optional  Redemption  Notice given by a holder of shares of Series B
Convertible  Preferred  Stock  shall be deemed for all  purposes to be in proper
form  unless  the  Corporation  notifies  such  holder in writing  within  three
Business Days after such Optional Redemption Notice has been given (which notice
shall specify all defects in such Optional Redemption Notice),  and any Optional
Redemption  Notice  containing any such defect shall nonetheless be effective on
the date given if such holder  promptly  undertakes to correct all such defects.
No such claim of error shall  limit or delay  performance  of the  Corporation's
obligation to redeem all shares of Series B Convertible  Preferred  Stock not in
dispute whether or not such holder makes such undertaking.

SECTION 12. VOTING RIGHTS; CERTAIN RESTRICTIONS.

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

     (b) ARTICLES OF  INCORPORATION;  CERTAIN  STOCK.  The  affirmative  vote or
consent of the Majority Holders,  voting separately as a class, will be required
for (1) any amendment, alteration, or repeal, whether by merger or consolidation
or otherwise,  of the Corporation's  Articles of Incorporation if the amendment,
alteration, or repeal materially and adversely affects the powers,  preferences,
or  special  rights of the  Series B  Convertible  Preferred  Stock,  or (2) the
creation and issuance of any Senior Dividend Stock or Senior  Liquidation Stock;
PROVIDED,  HOWEVER,  that any increase in the authorized  Preferred Stock of the
Corporation  or the  creation  and  issuance  of any stock  which is both Junior
Dividend  Stock  and  Junior  Liquidation  Stock  shall  not be deemed to affect
materially  and adversely  such powers,  preferences,  or special rights and any
such  increase or creation and issuance may be made without any such vote by the
holders of Series B Convertible  Preferred Stock except as otherwise required by
law.

     (c) REPURCHASES OF SERIES B CONVERTIBLE  PREFERRED  STOCK.  The Corporation
shall not  repurchase  or otherwise  acquire any shares of Series B  Convertible
Preferred Stock (other than pursuant to Sections 7(a),  9(a), 9(b) or 11) unless
the Corporation  offers to repurchase or otherwise acquire  simultaneously a pro
rata portion of each holder's shares of Series B Convertible Preferred Stock for
cash at the same price per share.

     (d) OTHER.  So long as any shares of Series B Convertible  Preferred  Stock
are outstanding:

                                      -34-
<PAGE>
     (1) PAYMENT OF  OBLIGATIONS.  The Corporation  will pay and discharge,  and
will cause each subsidiary of the Corporation to pay and discharge, when due all
their  respective   obligations  and  liabilities  which  are  material  to  the
Corporation  and  its  subsidiaries  taken  as  a  whole,   including,   without
limitation,  tax  liabilities,  except  where the same may be  contested in good
faith by appropriate proceedings.

     (2) MAINTENANCE OF PROPERTY;  INSURANCE. (A) The Corporation will keep, and
will cause each  subsidiary of the  Corporation to keep,  all material  property
useful and  necessary  in its  business  in good  working  order and  condition,
ordinary wear and tear excepted.

     (B) The  Corporation  will maintain,  and will cause each subsidiary of the
Corporation  to  maintain,  with  financially  sound and  responsible  insurance
companies,  insurance  against loss or damage by fire or other casualty and such
other insurance,  including but not limited to, product liability insurance,  in
such amounts and covering such risks as is  reasonably  adequate for the conduct
of their businesses and the value of their properties.

     (3) CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE.  The Corporation will
continue,  and will cause each  subsidiary of the  Corporation  to continue,  to
engage in business of the same general type as conducted by the  Corporation and
its operating subsidiaries at the time this Certificate of Designations is filed
with the Secretary of State of the State of Nevada, and will preserve, renew and
keep in full force and effect, and will cause each subsidiary of the Corporation
to preserve, renew and keep in full force and effect, their respective corporate
existence  and their  respective  material  rights,  privileges  and  franchises
necessary or desirable in the normal conduct of business.

     (4) COMPLIANCE WITH LAWS. The Corporation will comply,  and will cause each
subsidiary  of the  Corporation  to comply,  in all material  respects  with all
applicable  laws,  ordinances,   rules,  regulations,   decisions,   orders  and
requirements  of  governmental   authorities  and  courts  (including,   without
limitation,  environmental  laws)  except  (i)  where  compliance  therewith  is
contested in good faith by appropriate  proceedings or (ii) where non-compliance
therewith could not reasonably be expected to have a material  adverse effect on
the business,  condition  (financial  or  otherwise),  operations,  performance,
properties  or  prospects of the  Corporation  and its  subsidiaries  taken as a
whole.

     (5)  INVESTMENT  COMPANY  ACT.  The  Corporation  will not be or  become an
open-end  investment  trust,  unit investment  trust or face-amount  certificate
company  that  is or is  required  to  be  registered  under  Section  8 of  the
Investment Company Act of 1940, as amended, or any successor provision.

     SECTION  13.  OUTSTANDING  SHARES.  For  purposes  of this  Certificate  of
Designations, all authorized and issued shares of Series B Convertible Preferred
Stock  shall be deemed  outstanding  except (i) from the  applicable  Conversion
Date,  each share of Series B Convertible  Preferred Stock converted into Common
Stock,  unless the  Corporation  shall  default in its  obligation  to issue and
deliver  shares of Common  Stock upon such  conversion  as and when  required by

                                      -35-
<PAGE>
Section 10; (ii) from the date of registration of transfer, all shares of Series
B  Convertible  Preferred  Stock  held  of  record  by  the  Corporation  or any
subsidiary  or  Affiliate  of the  Corporation  (other than an  Affiliate of the
Corporation who is a natural person or any original holder of shares of Series B
Convertible  Preferred  Stock) and (iii) from the  applicable  Redemption  Date,
Share  Limitation  Redemption  Date, Final Redemption Date or date of redemption
pursuant to Section 11, all shares of Series B Convertible Preferred Stock which
are redeemed or repurchased,  so long as in each case the Redemption  Price, the
Share Limitation  Redemption  Price,  the Final  Redemption  Price, the Optional
Redemption Price or other  repurchase  price, as the case may be, of such shares
of Series B Convertible  Preferred Stock shall have been paid by the Corporation
as and when due hereunder.

SECTION 14. MISCELLANEOUS.

     (a) NOTICES.  Any notices required or permitted to be given under the terms
of this  Certificate of Designations  shall be in writing and shall be delivered
personally  (which shall include  telephone line facsimile  transmission)  or by
courier and shall be deemed given upon  receipt,  if delivered  personally or by
courier (a) in the case of the Corporation, addressed to the Corporation at 2222
West Peoria Avenue, Phoenix,  Arizona 85029, Attention:  Chief Executive Officer
(telephone line facsimile  transmission  number (602)  331-0941),  or (b) in the
case of any holder of shares of Series B Convertible  Preferred  Stock,  at such
holder's  address or telephone line facsimile  transmission  number shown on the
stock  books  maintained  by  the  Corporation  with  respect  to the  Series  B
Convertible  Preferred Stock or such other address as the Corporation shall have
provided  by notice to the holders of shares of Series B  Convertible  Preferred
Stock in  accordance  with  this  Section  or any  holder  of shares of Series B
Convertible Preferred Stock shall have provided to the Corporation in accordance
with this Section.

     (b)  REPLACEMENT  OF  CERTIFICATES.  Upon  receipt  by the  Corporation  of
evidence reasonably  satisfactory to the Corporation of the ownership of and the
loss, theft, destruction or mutilation of any certificate for shares of Series B
Convertible  Preferred Stock and (1) in the case of loss,  theft or destruction,
of indemnity from the record holder of the certificate for such shares of Series
B Convertible Preferred Stock reasonably satisfactory in form to the Corporation
(and without the  requirement  to post any bond or other security if such holder
has  and  agrees  to  maintain  reasonably  sufficient  assets  to  support  the
indemnity) or (2) in the case of mutilation,  upon surrender and cancellation of
the certificate  for such shares of Series B Convertible  Preferred  Stock,  the
Corporation  will execute and deliver to such holder a new  certificate for such
shares of Series B Convertible Preferred Stock without charge to such holder.

     (c) OVERDUE AMOUNTS. Except as otherwise specifically provided in Section 5
with  respect to  dividends  in arrears  on the Series B  Convertible  Preferred
Stock,  whenever  any  amount  which is due to any  holder of shares of Series B
Convertible  Preferred  Stock is not paid to such holder  when due,  such amount
shall bear interest at the rate of 14% per annum (or such other rate as shall be
the maximum rate allowable by applicable law) until paid in full.

                                      -36-
<PAGE>
     IN  WITNESS  WHEREOF,  Titan  Motorcycle  Co. of America  has  caused  this
Certificate of Designations to be signed by , its , and , its , as of the day of
March, 2000.

                                       TITAN MOTORCYCLE CO. OF AMERICA

                                       By: /s/ Patrick Keery
                                          --------------------------------------
                                       Title: President

                                       By: /s/ Barbara Keery
                                          --------------------------------------
                                       Title: Secretary

                                      -37-THE SECURITIES  REPRESENTED BY THIS  CERTIFICATE  HAVE NOT BEEN REGISTERED UNDER
THE  SECURITIES ACT OF 1933, AS AMENDED.  THE SECURITIES  HAVE BEEN ACQUIRED FOR
INVESTMENT  AND MAY NOT BE RESOLD,  TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN
EFFECTIVE  REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR AN OPINION OF COUNSEL REASONABLY  ACCEPTABLE TO THE COMPANY
THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT.

                                      Right to Purchase 187,500 Shares of Common
                                        Stock of Titan Motorcycle Co. of America

                         TITAN MOTORCYCLE CO. OF AMERICA

                          COMMON STOCK PURCHASE WARRANT
NO. W-B-1

     TITAN  MOTORCYCLE CO. OF AMERICA,  a Nevada  corporation  (the  "Company"),
hereby certifies that, for value received,  ADVANTAGE FUND II LTD. or registered
assigns (the  "Holder"),  is entitled,  subject to the terms set forth below, to
purchase  from the  Company  at any  time or from  time to time  after  the date
hereof,  and before 5:00 p.m.,  New York City time, on the  Expiration  Date (as
hereinafter  defined),  187,500  fully paid and  nonassessable  shares of Common
Stock (as  hereinafter  defined)  at a  purchase  price  per share  equal to the
Purchase  Price (as  hereinafter  defined).  The number of such shares of Common
Stock and the  Purchase  Price are  subject to  adjustment  as  provided in this
Warrant.

     As used herein the following terms,  unless the context otherwise requires,
have the following respective meanings:

          "Closing  Price" means $2.25  (subject to equitable  adjustments  from
     time to time on terms  reasonably  determined  by the Board of Directors of
     the   Company   for   stock   splits,   stock   dividends,    combinations,
     recapitalizations,  reclassifications  and similar events occurring or with
     respect to which "ex-" trading commences on or after the Issuance Date).
<PAGE>
          "Common Stock"  includes the Company's  Common Stock,  $.001 par value
     per share, as authorized on the date hereof,  and any other securities into
     which or for which the Common Stock may be converted or exchanged  pursuant
     to a plan of  recapitalization,  reorganization,  merger, sale of assets or
     otherwise.

          "Company"  shall  include  Titan  Motorcycle  Co. of  America  and any
     corporation  that  shall  succeed  to or assume  the  obligations  of Titan
     Motorcycle Co. of America hereunder in accordance with the terms hereof.

          "Expiration Date" means March 9, 2005.

          "Issuance  Date"  means the first date of  original  issuance  of this
     Warrant.

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

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

          "Other  Securities"  refers to any stock (other than Common Stock) and
     other  securities  of  the  Company  or  any  other  person  (corporate  or
     otherwise)  which the Holder at any time shall be entitled  to receive,  or
     shall have  received,  on the  exercise of this  Warrant,  in lieu of or in
     addition to Common  Stock,  or which at any time shall be issuable or shall
     have been issued in exchange for or in replacement of Common Stock or Other
     Securities pursuant to Section 4.

          "Purchase Price" shall mean $2.00 per share,  subject to adjustment as
     provided in this Warrant.

          "Registration   Rights   Agreement"  means  the  Registration   Rights
     Agreement,  dated as of March 7, 2000 by and  between  the  Company and the
     original Holder of this Warrant, as amended from time to time in accordance
     with its terms.

          "Subscription Agreement" means the Subscription Agreement, dated as of
     March 7, 2000,  by and between the Company and the original  Holder of this
     Warrant, as amended from time to time in accordance with its terms.

          "Trading Day" means a day on which the principal securities market for
     the Common Stock is open for general trading of securities.

     1. EXERCISE OF WARRANT.

     1.1  EXERCISE.  (a) This Warrant may be  exercised by the Holder  hereof in
full or in part at any time or from  time to time  during  the  exercise  period
specified in the first  paragraph  hereof until the Expiration Date by surrender
of this Warrant and the  subscription  form annexed hereto (duly executed by the
Holder),  to the  Company's  transfer  agent and registrar for the Common Stock,
with a copy to the Company,  and by making  payment,  in cash or by certified or
official bank check payable to the order of the Company,  in the amount obtained
by multiplying (a) the number of shares of Common Stock designated by the Holder

                                       2
<PAGE>
in the  subscription  form by (b) the  Purchase  Price  then in  effect.  On any
partial  exercise  the Company will  forthwith  issue and deliver to or upon the
order of the Holder hereof a new Warrant or Warrants of like tenor,  in the name
of the  Holder  hereof  or as the  Holder  (upon  payment  by the  Holder of any
applicable  transfer taxes) may request,  providing in the aggregate on the face
or faces  thereof for the  purchase of the number of shares of Common  Stock for
which such Warrant or Warrants may still be exercised.

     (b)  Notwithstanding any other provision of this Warrant, in no event shall
the  Holder be  entitled  at any time to  purchase  a number of shares of Common
Stock on  exercise  of this  Warrant  in  excess of that  number of shares  upon
purchase  of  which  the  sum of (1)  the  number  of  shares  of  Common  Stock
beneficially  owned by the Holder and all persons whose beneficial  ownership of
shares  of  Common  Stock  would  be  aggregated  with the  Holder's  beneficial
ownership of shares of Common  Stock for  purposes of Section  13(d) of the 1934
Act and Regulation 13D-G thereunder,  (each such person other than the Holder an
"Aggregated  Person" and all such persons  other than the Holder,  collectively,
the "Aggregated Persons") (other than shares of Common Stock deemed beneficially
owned  through the  ownership  by the Holder and all  Aggregated  Persons of the
Holder  of the  unexercised  portion  of this  Warrant  and the  unexercised  or
unconverted  portion of any other security of the Company which contains similar
provisions)  and (2) the number of shares of Common Stock issuable upon exercise
of the portion of this Warrant with respect to which the  determination  in this
sentence is being made,  would result in beneficial  ownership by the Holder and
all Aggregated Persons of the Holder of more than 4.9% of the outstanding shares
of Common Stock. For purposes of the immediately preceding sentence,  beneficial
ownership  shall be determined in accordance  with Section 13(d) of the 1934 Act
and Regulation 13D-G thereunder,  except as otherwise  provided in clause (1) of
the immediately preceding sentence.

     1.2 NET  ISSUANCE.  Notwithstanding  anything to the contrary  contained in
Section 1.1, if on the date this Warrant is exercised or on the date the Company
delivers stock certificates in connection with such exercise pursuant to Section
2 below (a) the Registration  Statement (as defined in the  Registration  Rights
Agreement)  is not  available to the Holder for the public  resale of any of the
shares of Common Stock  issued upon  exercise of this Warrant or (b) the Company
is not in compliance in all material respects with its obligations to the Holder
(including,   without  limitation,  its  obligations  under  this  Warrant,  the
Subscription Agreement, the Registration Rights Agreement and the Certificate of
Designations (as defined in the Subscription  Agreement)),  the Holder may elect
to exercise this Warrant in whole or in part by receiving shares of Common Stock
equal to the net issuance  value (as determined  below) of this Warrant,  or any
part hereof,  upon surrender of this Warrant to the Company's transfer agent and
registrar  for the Common  Stock  together  with the  subscription  form annexed
hereto (duly executed by the Holder),  in which event the Company shall issue to
the  Holder a number  of shares of Common  Stock  computed  using the  following
formula:

                  X = Y (A-B)
                      -------
                         A

                                       3
<PAGE>
 where:   X    = the number of shares of Common Stock to be issued to the Holder

          Y    = the number of shares of Common  Stock as to which this  Warrant
               is to be exercised

          A    = the  current  fair  market  value of one share of Common  Stock
               calculated as of the last Trading Day  immediately  preceding the
               exercise of this Warrant

          B    = the Purchase Price

     As used herein, current fair market value of Common Stock as of a specified
date shall mean with  respect to each  share of Common  Stock the  closing  sale
price of the Common Stock on the principal securities market on which the Common
Stock  may at the time be  listed  or,  if there  have been no sales on any such
exchange on such day,  the average of the highest bid and lowest asked prices on
the principal  securities  market at the end of such day, or, if on such day the
Common Stock is not so listed,  the average of the  representative bid and asked
prices quoted in the Nasdaq System as of 4:00 p.m.,  New York City time,  or, if
on such day the Common Stock is not quoted in the Nasdaq System,  the average of
the  highest  bid  and  lowest   asked  price  on  such  day  in  the   domestic
over-the-counter   market  as  reported  by  the  National   Quotation   Bureau,
Incorporated,  or any similar successor organization, in each such case averaged
over a period of five consecutive Trading Days consisting of the day as of which
the current fair market value of a share of Common Stock is being determined (or
if such day is not a Trading Day, the Trading Day next  preceding  such day) and
the four  consecutive  Trading  Days prior to such day. If on the date for which
current fair market value is to be determined  the Common Stock is not listed on
any securities  exchange or quoted in the Nasdaq System or the  over-the-counter
market, the current fair market value of Common Stock shall be the highest price
per share  which the  Company  could  then  obtain  from a willing  buyer (not a
current  employee or  director)  for shares of Common Stock sold by the Company,
from authorized but unissued shares, as determined in good faith by the Board of
Directors  of the  Company,  unless  prior to such date the  Company  has become
subject to a merger,  acquisition or other  consolidation  pursuant to which the
Company is not the surviving  party, in which case the current fair market value
of the Common  Stock shall be deemed to be the value  received by the holders of
the  Company's  Common Stock for each share  thereof  pursuant to the  Company's
acquisition.

     2.  DELIVERY  OF  STOCK  CERTIFICATES,   ETC.,  ON  EXERCISE.  As  soon  as
practicable  after the exercise of this  Warrant,  and in any event within three
Trading Days thereafter, the Company at its expense (including the payment by it
of any  applicable  issue or stamp taxes) will cause to be issued in the name of
and delivered to the Holder hereof, or as the Holder (upon payment by the Holder
of any applicable  transfer taxes) may direct, a certificate or certificates for
the  number of fully  paid and  nonassessable  shares of Common  Stock (or Other
Securities)  to which the Holder  shall be  entitled on such  exercise,  in such
denominations as may be requested by the Holder, plus, in lieu of any fractional
share to which the  Holder  would  otherwise  be  entitled,  cash  equal to such
fraction  multiplied  by the then current fair market  value (as  determined  in
accordance with subsection 1.2) of one full share, together with any other stock

                                       4
<PAGE>
or other securities and property (including cash, where applicable) to which the
Holder is entitled upon such exercise  pursuant to Section 1 or otherwise.  Upon
exercise of this Warrant as provided herein,  the Company's  obligation to issue
and  deliver  the   certificates   for  Common   Stock  shall  be  absolute  and
unconditional,  irrespective  of the  absence  of any  action  by the  Holder to
enforce the same,  any waiver or consent with respect to any provision  thereof,
the  recovery  of any  judgment  against any person or any action to enforce the
same,  any failure or delay in the  enforcement  of any other  obligation of the
Company to the Holder, or any setoff,  counterclaim,  recoupment,  limitation or
termination,  or any breach or alleged  breach by the Holder or any other person
of any obligation to the Company,  and  irrespective  of any other  circumstance
which  might  otherwise  limit such  obligation  of the Company to the Holder in
connection  with such  exercise.  If the Company  fails to issue and deliver the
certificates  for the Common Stock to the Holder  pursuant to the first sentence
of this  paragraph  as and when  required  to do so,  in  addition  to any other
liabilities the Company may have hereunder and under applicable law, the Company
shall pay or  reimburse  the  Holder on demand  for all  out-of-pocket  expenses
including,  without  limitation,  reasonable  fees and expenses of legal counsel
incurred by the Holder as a result of such failure.

     3.   ADJUSTMENT   FOR   DIVIDENDS   IN   OTHER   STOCK,   PROPERTY,   ETC.;
RECLASSIFICATION,  ETC.  In case at any  time or  from  time to time  after  the
Issuance Date, all the holders of Common Stock (or Other  Securities) shall have
received,  or (on or after  the  record  date  fixed  for the  determination  of
stockholders eligible to receive) shall have become entitled to receive, without
payment therefor,

          (a) other or additional  stock or other  securities or property (other
     than cash) by way of dividend, or

          (b) any cash (excluding cash dividends  payable solely out of earnings
     or earned surplus of the Company), or

          (c)  other  or  additional  stock  or  other  securities  or  property
     (including   cash)  by  way  of   spin-off,   split-up,   reclassification,
     recapitalization, combination of shares or similar corporate rearrangement,

other than additional shares of Common Stock (or Other  Securities)  issued as a
stock dividend or in a stock-split (adjustments in respect of which are provided
for in Section 5), then and in each such case the Holder, on the exercise hereof
as  provided  in Section 1, shall be entitled to receive the amount of stock and
other  securities  and  property  (including  cash in the cases  referred  to in
subdivisions  (b) and (c) of this  Section 3;  PROVIDED,  HOWEVEr,  that if such
property is not then available,  the Company shall either (A) substitute cash or
property of equivalent  value or (B) reduce the Purchase  Price and/or  increase
the number of shares of Common Stock  issuable upon the exercise of this Warrant
to reflect the value of the property distributable to stockholders, in each case
in a manner  reasonably  satisfactory to the Holder) which the Holder would hold
on the date of such  exercise  if on the date  thereof  the  Holder had been the
holder of record of the number of shares of Common  Stock called for on the face
of this  Warrant and had  thereafter,  during the period from the date hereof to
and including the date of such exercise, retained such shares and all such other
or additional  stock and other  securities and property  (including  cash in the

                                       5
<PAGE>
case  referred to in  subdivisions  (b) and (c) of this Section 3) receivable by
the Holder as aforesaid  during such period,  giving  effect to all  adjustments
called for during  such  period by Section 4.  Notwithstanding  anything in this
Section 3 to the  contrary,  no  adjustments  pursuant  to this  Section 3 shall
actually be made until the cumulative  effect of the  adjustments  called for by
this Section 3 since the date of the last adjustment  actually made would change
the amount of stock or other securities and property which the Holder would hold
by more than 1%.

     4. EXERCISE UPON REORGANIZATION, CONSOLIDATION, MERGER, ETC. In case at any
time or from time to time after the Issuance  Date, the Company shall (a) effect
a  reorganization,  (b)  consolidate  with or merge into any other  person,  (c)
effect an exchange of  outstanding  shares of the Company for  securities of any
other person or (d)  transfer  all or  substantially  all of its  properties  or
assets  to any other  person  under any plan or  arrangement  contemplating  the
dissolution  of the  Company,  then,  in each such case,  as a condition of such
reorganization,  consolidation,  merger, share exchange, sale or conveyance, (i)
the  Company  shall give at least 15 days  notice to the Holder of such  pending
transaction  whereby the Holder  shall have the right to exercise  this  Warrant
prior to any such reorganization, consolidation, merger, share exchange, sale or
conveyance and (ii) if the Holder does not so exercise this Warrant in full, the
Company  shall cause  effective  provisions  to be made so that the Holder shall
have the right thereafter,  by exercising this Warrant (in lieu of the shares of
Common Stock of the Company  purchasable  and  receivable  upon  exercise of the
rights represented hereby immediately prior to such transaction) to purchase the
kind and amount of shares of stock and other securities and property  (including
cash);  PROVIDED,  HOWEVER,  that if such  property is not then  available,  the
Company shall either (A) substitute cash or property of equivalent  value or (B)
reduce the Purchase  Price and/or  increase the number of shares of Common Stock
issuable  upon the exercise of this Warrant to reflect the value of the property
distributable to stockholders,  in each case in a manner reasonably satisfactory
to the Holder) receivable upon such reorganization, consolidation, merger, share
exchange, sale or conveyance by a holder of the number of shares of Common Stock
that might have been received upon exercise of this Warrant immediately prior to
such reorganization,  consolidation, merger, share exchange, sale or conveyance.
Any exercise of this  Warrant  pursuant to notice under this Section may, at the
option of the Holder,  be conditioned  upon the closing of such  reorganization,
consolidation, merger, sale or conveyance which is the subject of the notice and
the  exercise  of this  Warrant  shall  not be  deemed  to have  occurred  until
immediately prior to the closing of such transaction.

     5.  ADJUSTMENT  FOR  EXTRAORDINARY  EVENTS.  In the  event  that  after the
Issuance Date the Company shall (i) issue additional shares of Common Stock as a
dividend or other  distribution on outstanding  Common Stock,  (ii) subdivide or
reclassify  its  outstanding  shares  of  Common  Stock,  or (iii)  combine  its
outstanding  shares of Common  Stock  into a smaller  number of shares of Common
Stock, then, in each such event, the Purchase Price shall,  simultaneously  with
the happening of such event,  be adjusted by  multiplying  the Purchase Price in
effect  immediately  prior to such event by a fraction,  the  numerator of which
shall be the number of shares of Common Stock  outstanding  immediately prior to
such event and the  denominator of which shall be the number of shares of Common
Stock  outstanding  immediately  after such  event,  and the product so obtained
shall thereafter be the Purchase Price then in effect. The Purchase Price, as so
adjusted,  shall be  readjusted  in the same  manner upon the  happening  of any
successive  event or events described herein in this Section 5. The Holder shall

                                       6
<PAGE>
thereafter,  on the  exercise  hereof as  provided  in Section 1, be entitled to
receive  that number of shares of Common Stock  determined  by  multiplying  the
number of shares  of Common  Stock  which  would be  issuable  on such  exercise
immediately  prior to such  issuance by a fraction of which (i) the numerator is
the Purchase  Price in effect  immediately  prior to such  issuance and (ii) the
denominator is the Purchase Price in effect on the date of such exercise.

     6. ADJUSTMENT FOR CERTAIN STOCK ISSUANCES.  In case at any time the Company
shall issue shares of its Common Stock or debt or equity securities  convertible
into or exercisable or  exchangeable  for shares of Common Stock  (collectively,
the  "Newly  Issued  Securities"),  other than (i) an  issuance  pro rata to all
holders of its  outstanding  Common Stock,  (ii) issuances  pursuant to options,
warrants and convertible  securities outstanding on the Issuance Date (including
securities  issued pursuant to the  Subscription  Agreement) and (iii) issuances
pursuant  to stock  option  plans and other  stock-based  plans or  arrangements
approved by the Board of Directors of the Company,  at a price below the Closing
Price in effect at the time of such  issuance,  then  following such issuance of
Newly  Issued  Securities  the number of shares of Common Stock which the Holder
shall be entitled to receive upon  exercise of this  Warrant  shall be increased
and the Purchase Price shall be decreased to the respective  amounts  determined
pursuant  to this  Section 6. The number of shares of Common  Stock  purchasable
upon  the  exercise  of this  Warrant  following  any such  adjustment  shall be
determined by multiplying the number of shares purchasable upon exercise of this
Warrant  immediately  prior to such  adjustment by a fraction,  the numerator of
which shall be the sum of (a) the number of shares of Common  Stock  outstanding
immediately prior to the issuance of the Newly Issued Securities  (calculated on
a  fully-diluted  basis  assuming  the  exercise or  conversion  of all options,
warrants, purchase rights or convertible securities which are exercisable at the
time of the  issuance of the Newly  Issued  Securities),  plus (b) the number of
Newly Issued  Securities,  and the  denominator of which shall be the sum of (a)
the  number  of  shares of Common  Stock  outstanding  immediately  prior to the
issuance of the Newly Issued  Securities  (calculated on a  fully-diluted  basis
assuming the conversion of all options, warrants, purchase rights or convertible
securities which are exercisable at the time of the issuance of the Newly Issued
Securities),  plus (b) the number of shares of Common Stock which the  aggregate
consideration,  if any,  received by the Company for the number of Newly  Issued
Securities would purchase at a price equal to the Closing Price in effect at the
time of such issuance.  Upon any adjustment  under this Section 6, the number of
shares of  Common  Stock  purchasable  upon  exercise  of this  Warrant  in full
immediately   after  such   adjustment   shall  be   rounded   to  the   nearest
one-one-hundredth  of a share of Common Stock subject,  however, to Section 2 of
this Warrant relating to fractional  shares of Common Stock.  Such adjustment of
the number of shares purchasable provided for in this Section 6 may be expressed
as the following mathematical formula:

                      X  =  W x [O+N]
                                ------
                               [O+(A/C)]

where:

          A    = aggregate  consideration  received by the Company for the Newly
               Issued Securities

                                       7
<PAGE>
          C    =  Closing  Price in effect  at the time of the  issuance  of the
               Newly Issued Securities

          N    = number of Newly Issued Securities

          O    = number  of  shares  of  Common  Stock  outstanding  (on a fully
               diluted basis,  as described  above) prior to the issuance of the
               Newly Issued Securities

          W    = number of shares  issuable  upon exercise of this Warrant prior
               to the issuance of the Newly Issued Securities

          X    = number of shares  issuable  upon exercise of this Warrant after
               the issuance of the Newly Issued Securities

Upon the issuance of such Newly  Issued  Securities,  the Purchase  Price shall,
simultaneously  with the happening of such event, be adjusted by multiplying the
Purchase  Price in effect  immediately  prior to such event by a  fraction,  the
numerator of which shall be the number of shares of Common Stock  issuable  upon
exercise of this Warrant  prior to the  issuance of the Newly Issued  Securities
and the  denominator  of which  shall be the  number of  shares of Common  Stock
issuable  upon the  exercise  of this  Warrant  after the  issuance of the Newly
Issued  Securities  as provided  in this  Section 6, and the product so obtained
shall  thereafter  be the  Purchase  Price then in effect.  The number of shares
issuable  upon  exercise of this Warrant and the Purchase  Price,  as each is so
adjusted,  shall be  readjusted  in the same  manner upon the  happening  of any
successive issuances of Newly Issued Securities described in this Section 6.

     7.  FURTHER  ASSURANCES.  The  Company  will  take all  action  that may be
necessary or appropriate in order that the Company may validly and legally issue
fully paid and  nonassessable  shares of stock,  free from all taxes,  liens and
charges with respect to the issue thereof, on the exercise of all or any portion
of this Warrant from time to time outstanding.

     8. NOTICES OF RECORD DATE, ETC. In the event of

          (a) any taking by the  Company of a record of the holders of any class
     of securities  for the purpose of determining  the holders  thereof who are
     entitled  to  receive  any  dividend  on,  or any right to  subscribe  for,
     purchase or otherwise acquire any shares of stock of any class or any other
     securities or property, or to receive any other right, or

          (b) any capital reorganization of the Company, any reclassification or
     recapitalization of the capital stock of the Company or any transfer of all
     or  substantially  all of the assets of the Company to or  consolidation or
     merger  of the  Company  with  or  into  any  other  person  (other  than a
     wholly-owned subsidiary of the Company), or

          (c)  any  voluntary  or   involuntary   dissolution,   liquidation  or
     winding-up of the Company,

                                       8
<PAGE>
then and in each such event the  Company  will mail or cause to be mailed to the
Holder, at least ten days prior to such record date, a notice specifying (i) the
date on which any such record is to be taken for the  purpose of such  dividend,
distribution  or right,  and stating the amount and character of such  dividend,
distribution  or  right,  (ii)  the  date  on  which  any  such  reorganization,
reclassification,    recapitalization,    transfer,    consolidation,    merger,
dissolution, liquidation or winding-up is to take place, and the time, if any is
to be fixed,  as of which  the  holders  of  record  of  Common  Stock (or Other
Securities) shall be entitled to exchange their shares of Common Stock (or Other
Securities) for securities or other property deliverable on such reorganization,
reclassification,    recapitalization,    transfer,    consolidation,    merger,
dissolution,  liquidation or  winding-up,  and (iii) the amount and character of
any stock or other  securities,  or  rights or  options  with  respect  thereto,
proposed to be issued or granted,  the date of such proposed  issue or grant and
the  persons or class of persons to whom such  proposed  issue or grant is to be
offered or made. Such notice shall also state that the action in question or the
record date is subject to the  effectiveness  of a registration  statement under
the 1933 Act, or a favorable vote of  stockholders  if either is required.  Such
notice  shall be mailed at least ten days  prior to the date  specified  in such
notice on which any such action is to be taken or the record date,  whichever is
earlier.  Any  failure to receive  such  notice  shall not affect the  corporate
action taken.

     9.  RESERVATION  OF STOCK,  ETC.,  ISSUABLE ON EXERCISE  OF  WARRANTS.  The
Company will at all times reserve and keep  available out of its  authorized but
unissued  shares of capital  stock,  solely for  issuance  and  delivery  on the
exercise of this  Warrant,  a  sufficient  number of shares of Common  Stock (or
Other  Securities) to effect the full exercise of this Warrant and the exercise,
conversion  or  exchange  of any  other  warrant  or  security  of  the  Company
exercisable for,  convertible into,  exchangeable for or otherwise entitling the
holder to acquire  shares of Common Stock (or Other  Securities),  and if at any
time the number of  authorized  but  unissued  shares of Common  Stock (or Other
Securities)  shall not be  sufficient  to effect such  exercise,  conversion  or
exchange, the Company shall take such action as may be necessary to increase its
authorized  but unissued  shares of Common Stock (or Other  Securities)  to such
number as shall be sufficient for such purposes.

     10.  TRANSFER OF WARRANT.  This  Warrant  shall inure to the benefit of the
successors to and assigns of the Holder.  This Warrant and all rights hereunder,
in whole or in part,  are  registrable  at the  office or agency of the  Company
referred  to below by the  Holder  hereof in  person  or by his duly  authorized
attorney, upon surrender of this Warrant properly endorsed.

     11.  REGISTER OF WARRANTS.  The Company  shall  maintain,  at the principal
office of the Company (or such other office as it may designate by notice to the
Holder  hereof),  a  register  in which the  Company  shall  record the name and
address of the person in whose name this Warrant has been issued, as well as the
name and address of each successor and prior owner of such Warrant.  The Company
shall  be  entitled  to treat  the  person  in whose  name  this  Warrant  is so
registered as the sole and absolute owner of this Warrant for all purposes.

     12. EXCHANGE OF WARRANT.  This Warrant is exchangeable,  upon the surrender
hereof by the Holder  hereof at the office or agency of the Company  referred to
in Section 11, for one or more new  Warrants of like tenor  representing  in the

                                       9
<PAGE>
aggregate the right to subscribe for and purchase the number of shares of Common
Stock which may be  subscribed  for and  purchased  hereunder,  each of such new
Warrants to  represent  the right to subscribe  for and purchase  such number of
shares  as  shall  be  designated  by said  Holder  hereof  at the  time of such
surrender.

     13. REPLACEMENT OF WARRANT. On receipt of evidence reasonably  satisfactory
to the Company of the loss,  theft,  destruction  or  mutilation of this Warrant
and, in the case of any such loss,  theft or  destruction  of this  Warrant,  on
delivery of an indemnity agreement or security  reasonably  satisfactory in form
and amount to the Company or, in the case of any such  mutilation,  on surrender
and  cancellation  of this Warrant,  the Company at its expense will execute and
deliver, in lieu thereof, a new Warrant of like tenor.

     14. WARRANT AGENT. In accordance with the Transfer Agent  Agreement,  dated
as of March 7, 2000, by and among the Company,  Signature Stock Transfer,  Inc.,
as Transfer Agent and Registrar (the "Transfer Agent"),  and the original Holder
of this  Warrant  and the other  common  stock  purchase  warrants of like tenor
issued by the  Company in  connection  with the  issuance of this  Warrant,  the
Company has appointed the Transfer  Agent as the exercise  agent for purposes of
issuing  shares of Common  Stock (or Other  Securities)  on the exercise of this
Warrant pursuant to Section 1. The Company may, by notice to the Holder, appoint
an agent  having an office in the United  States of America  for the  purpose of
exchanging  this  Warrant  pursuant  to Section 12 and  replacing  this  Warrant
pursuant  to Section 13, or either of the  foregoing,  and  thereafter  any such
exchange  or  replacement,  as the case may be,  shall be made at such office by
such agent.

     15. REMEDIES. The Company stipulates that the remedies at law of the Holder
in the  event  of any  default  or  threatened  default  by the  Company  in the
performance  of or compliance  with any of the terms of this Warrant are not and
will not be  adequate,  and that such terms may be  specifically  enforced  by a
decree for the specific  performance of any agreement  contained herein or by an
injunction against a violation of any of the terms hereof or otherwise.

     16. NO RIGHTS OR  LIABILITIES  AS A  STOCKHOLDER.  This  Warrant  shall not
entitle the Holder  hereof to any voting rights or other rights as a stockholder
of the  Company.  No provision of this  Warrant,  in the absence of  affirmative
action by the Holder hereof to purchase  Common Stock,  and no mere  enumeration
herein of the rights or privileges of the Holder hereof,  shall give rise to any
liability  of the  Holder  for the  Purchase  Price or as a  stockholder  of the
Company,  whether  such  liability is asserted by the Company or by creditors of
the Company.

     17. NOTICES,  ETC. All notices and other communications from the Company to
the  registered  Holder or from the  registered  Holder to the Company  shall be
delivered personally (which shall include telephone line facsimile  transmission
with  answer  back  confirmation)  or by  courier  and shall be  effective  upon
receipt,  addressed  to each party at the address or  telephone  line  facsimile
transmission number for each party set forth in the Subscription Agreement or at
such other address or telephone  line facsimile  transmission  number as a party
shall have provided to the other party in accordance with this provision.

                                       10
<PAGE>
     18.  TRANSFER  RESTRICTIONS.  By  acceptance  of this  Warrant,  the Holder
represents to the Company that the Holder is an "accredited investor" as defined
in Regulation D under the 1933 Act, has reviewed the Company's  periodic filings
made  under the 1934 Act and  desires no  further  information,  is aware of the
risks of  investing  in the  Company,  and  confirms  that this Warrant is being
acquired for the Holder's own account and for the purpose of investment  and not
with a view to, or for sale in connection  with, the distribution  thereof,  nor
with any present intention of distributing or selling this Warrant or the Common
Stock issuable upon exercise of this Warrant. The Holder acknowledges and agrees
that this Warrant and, except as otherwise  provided in the Registration  Rights
Agreement, the shares of Common Stock issuable upon exercise of this Warrant (if
any) have not been (and at the time of acquisition by the Holder,  will not have
been or will not be), registered under the 1933 Act or under the securities laws
of any state,  in reliance upon certain  exemptive  provisions of such statutes.
The Holder further  recognizes and  acknowledges  that because this Warrant and,
except as  provided  in the  Registration  Rights  Agreement,  the Common  Stock
issuable upon exercise of this Warrant (if any) are  unregistered,  they may not
be  eligible  for  resale,  and may only be resold in the future  pursuant to an
effective  registration  statement  under the 1933 Act and any applicable  state
securities  laws,  or  pursuant  to a valid  exemption  from  such  registration
requirements.  Unless the shares of Common Stock  issuable upon exercise of this
Warrant  have  theretofore  been  registered  for resale under the 1933 Act, the
Company may  require,  as a condition  to the  issuance of Common Stock upon the
exercise  of this  Warrant (i) in the case of an  exercise  in  accordance  with
Section 1.1 hereof,  a  confirmation  as of the date of exercise of the Holder's
representations  pursuant to this Section 18, or (ii) in the case of an exercise
in  accordance  with  Section  1.2  hereof,  an opinion  of  counsel  reasonably
satisfactory  to the Company  that the shares of Common  Stock to be issued upon
such exercise may be issued without registration under the 1933 Act.

     19. LEGEND.  Unless  theretofore  registered for resale under the 1933 Act,
each  certificate for shares issued upon exercise of this Warrant shall bear the
following legend:

     The securities  represented by this  certificate  have not been  registered
     under the  Securities  Act of 1933, as amended.  The  securities  have been
     acquired for investment  and may not be resold,  transferred or assigned in
     the absence of an effective registration statement for the securities under
     the Securities Act of 1933, as amended, or an opinion of counsel reasonably
     acceptable to the Company that registration is not required under said Act.

     20.  AMENDMENT;  WAIVER.  This Warrant and any terms hereof may be changed,
waived,  discharged or terminated only by an instrument in writing signed by the
party against which enforcement of such change, waiver, discharge or termination
is  sought.   Notwithstanding  any  other  provision  of  this  Warrant  or  the
Subscription  Agreement,  in addition  to the  requirements  of the  immediately
preceding  sentence,  any amendment of (x) Section 1.1(b), (y) the definition of
the term  Aggregated  Person or (z) this sentence shall require  approval by the
affirmative  vote of the  holders of a  majority  of the  outstanding  shares of
Common  Stock,  present  in person or  represented  by proxy at a duly  convened
meeting of  stockholders  of the Company,  and entitled to vote,  or the consent
thereto in writing by holders of a majority of the outstanding  shares of Common
Stock, and the stockholders of the Company are hereby expressly made third party
beneficiaries of this sentence.

                                       11
<PAGE>
     21.  MISCELLANEOUS.  This  Warrant  shall  be  construed  and  enforced  in
accordance  with and governed by the internal laws of the State of Arizona.  The
headings in this Warrant are for purposes of reference only, and shall not limit
or otherwise affect any of the terms hereof. The invalidity or  unenforceability
of any provision hereof shall in no way affect the validity or enforceability of
any other provision.

     IN WITNESS  WHEREOF,  the Company has caused this Warrant to be executed on
its behalf by one of its officers thereunto duly authorized.

Dated: March 9, 2000                    TITAN MOTORCYCLE CO. OF AMERICA

                                        By: /s/ Francis S. Keery
                                           -------------------------------------
                                        Title: Chief Executive Officer

                                       12
<PAGE>
                              FORM OF SUBSCRIPTION

                         TITAN MOTORCYCLE CO. OF AMERICA

                   (To be signed only on exercise of Warrant)

TO: Signature Stock Transfer & Trust, Inc.,    CC: Titan Motorcycle Co.
    as Exercise Agent                              of America
    14675 Midway Road                              2222 West Peoria Avenue
    Suite 221                                      Phoenix, Arizona  85029
    Dallas, Texas 75244

     1. The undersigned Holder of the attached original, executed Warrant hereby
elects to  exercise  its  purchase  right  under such  Warrant  with  respect to
______________  shares of Common  Stock,  as  defined in the  Warrant,  of Titan
Motorcycle Co. of America, a Nevada corporation (the "Company").

     2. The undersigned Holder (check one):

     [ ]  (a)  elects to pay the  aggregate  purchase  price for such  shares of
          Common Stock (the "Exercise Shares") (i) by lawful money of the United
          States or the  enclosed  certified or official  bank check  payable in
          United  States  dollars  to the order of the  Company in the amount of
          $___________,  or (ii) by wire  transfer of United States funds to the
          account of the Company in the amount of $____________,  which transfer
          has been made before or simultaneously  with the delivery of this Form
          of Subscription pursuant to the instructions of the Company;

     or

     [ ]  (b) elects to receive  shares of Common  Stock having a value equal to
          the value of the Warrant as permitted by and  calculated in accordance
          with Section 1.2 of the Warrant.

     3.  Please  issue a stock  certificate  or  certificates  representing  the
appropriate  number of shares of Common Stock in the name of the  undersigned or
in such other name as is specified below:

                  Name:
                       ------------------------------------------
                  Address:
                          ---------------------------------------

     4. The  undersigned  Holder  confirms  with  respect to such Holder and the
shares of Common Stock  issuable  pursuant to this exercise the  representations
set forth in Section 18 of the Warrant.

                                      S-1
<PAGE>

Dated:                              --------------------------------------------
      --------- --, ----            (Signature must conform to name of Holder as
                                    specified on the face of the Warrant)

                                    --------------------------------------------
                                    (Address)

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

                                      S-2

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