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                                                                     Exhibit 3.1

                       RESTATED ARTICLES OF INCORPORATION
                                       OF
                              INTELLON CORPORATION

                                    ********


       Intellon Corporation, whose Restated Articles of Incorporation were filed
with the Florida Department of State on March 27, 1996, does hereby file the
following Restated Articles of Incorporation pursuant to Section 607.1007 of the
Florida Business Corporation Act (the "Act"):

                                     ARTICLE
                                      NAME

       The name of the corporation is Intellon Corporation (the "Corporation").

                                     ARTICLE
                                     PURPOSE

       The Corporation is organized for the purpose of transacting any and all
lawful business.

                                     ARTICLE
                                  CAPITAL STOCK

       The total number of shares of all classes of capital stock that the
Corporation shall have authority to issue is 75,000,000 shares, comprised of
40,000,000 shares of common stock with a par value of $.01 per share (the
"Common Stock") and 35,000,000 shares of preferred stock with a par value of
$.01 per share (the "Preferred Stock"). A description of the respective classes
of stock and a statement of the powers, designations, preferences and relative
participating, optional or other special rights and privileges, and the
qualifications, limitations and restrictions of the Preferred Stock and Common
Stock are set forth below:

PREFERRED STOCK


1.            DESIGNATION. As to the 35,000,000 shares of Preferred Stock, (i)
15,000,000 shares of Preferred Stock are hereby designated "Series A Convertible
Preferred Stock" (the "Series A Preferred Stock"), (ii) 15,000,000 shares of
Preferred Stock are hereby designated "Series B Convertible Preferred Stock"
(the "Series B Preferred Stock"), and (iii) 5,000,000 shares of Preferred Stock
are hereby designated "Series C Convertible Preferred Stock" (the "Series C
Preferred Stock"). The Series A Preferred Stock, the Series B Preferred Stock
and the Series C Preferred Stock are referred to herein collectively as the
Preferred Stock. For so long as any shares of Series A Preferred Stock are
outstanding, all shares designated as Series A

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Preferred Stock not issued and sold pursuant to the Stock Purchase Agreement,
dated as of March 23, 1994 (the "Purchase Agreement"), by and among the
Corporation and certain investors, shall be reserved for issuance as stock
dividends on the outstanding Series A Preferred Stock. For so long as any shares
of Series B Preferred Stock are outstanding, all shares designated as Series B
Preferred Stock not issued and sold pursuant to the Stock Purchase Agreement,
dated as of July 31, 1995, as amended (the "Series B Purchase Agreement") by and
among the Corporation and certain investors, shall be reserved for issuances as
stock dividends on the outstanding Series B Preferred Stock. For so long as any
shares of Series C Preferred Stock are outstanding, all shares designated as
Series C Preferred Stock not issued and sold pursuant to the Stock Purchase
Agreement, dated as of August 25, 1999, as amended (the "Series C Purchase
Agreement") by and among the Corporation and certain investors, shall be
reserved for issuances as stock dividends on the outstanding Series C Preferred
Stock.

2.            RANKING. The Preferred Stock shall, with respect to dividend
rights and rights on liquidation, winding-up and dissolution, rank senior to (i)
all outstanding shares of Common Stock, and (ii) all outstanding classes and
series of stock of the Corporation, whether authorized now or in the future,
that do not expressly provide that they rank senior to, or on a parity with, the
Preferred Stock as to dividend rights and rights on liquidation, winding-up and
dissolution of the Corporation (all such classes and series of stock, together
with the Common Stock, are collectively referred to as the "Junior Securities").

3.            DIVIDEND RIGHTS. (a) The holders of the Series A Preferred Stock
shall be entitled to receive, when, as and if declared by the Board of Directors
of the Corporation (the "Board"), out of any funds legally available therefor,
dividends payable at the option of the Board (1) in cash at the rate per annum
of $.10 per share, (2) in additional shares of Series A Preferred Stock at the
rate per annum of .10 shares per share, or (3) in any combination of cash and
additional shares of Series A Preferred Stock (the "Series A Cumulative
Dividend"). The Series A Cumulative Dividend shall be payable annually,
commencing on the anniversary of the initial issuance of the Series A Preferred
Stock (each such payment date being a "Series A Dividend Payment Date"), to
holders of record at the close of business on the date specified by the Board at
the time such dividend is declared (the "Series A Record Date"), and each Series
A Record Date shall be not less than 10 nor more than 60 days prior to the
Series A Dividend Payment Date. All Series A Cumulative Dividends shall be paid
pro rata to the holders entitled thereto. The holders of the Series B Preferred
Stock shall be entitled to receive, when, as and if declared by the Board, out
of funds legally available therefor, dividends payable at the option of the
Board (1) in cash at the rate per annum of $.186 per share, (2) in additional
shares of Series B Preferred Stock at the rate per annum of .10 shares per
share, or (3) in any combination of cash and additional shares of Series B
Preferred Stock (the "Series B Cumulative Dividend"). The Series B Cumulative
Dividend shall be payable annually, commencing on the anniversary of the initial
issuance of the Series B Preferred Stock (each such payment date being a "Series
B Dividend Payment Date"), to holders of record at the close of business on the
date specified by the Board at the time such dividend is declared (the "Series B
Record Date"), and each Series B Record Date shall be not less than 10 nor more
than 60 days prior to the Series B Dividend Payment Date. All Series B
Cumulative Dividends shall be paid pro rata to the holders entitled thereto. The
holders of the Series C Preferred Stock shall be entitled to receive, when, as
and if

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declared by the Board, out of funds legally available therefor, dividends
payable at the option of the Board (1) in cash at the rate per annum of $.35 per
share, (2) in additional shares of Series C Preferred Stock at the rate per
annum of .10 shares per share, or (3) in any combination of cash and additional
shares of Series C Preferred Stock (the "Series C Cumulative Dividend", together
with the Series A Cumulative Dividend and the Series B Cumulative Dividend, the
"Cumulative Dividends"). The Series C Cumulative Dividend shall be payable
annually, commencing on the anniversary of the initial issuance of the Series C
Preferred Stock (each such payment date being a "Series C Dividend Payment
Date"), to holders of record at the close of business on the date specified by
the Board at the time such dividend is declared (the "Series C Record Date"),
and each Series C Record Date shall be not less than 10 nor more than 60 days
prior to the Series C Dividend Payment Date. All Series C Cumulative Dividends
shall be paid pro rata to the holders entitled thereto. No Cumulative Dividends
shall be declared or paid with respect to any series of Preferred Stock unless a
Cumulative Dividend is declared and paid, as the case may be, with respect to
each series of Preferred Stock, which dividend shall be paid pro rata to the
holders of Series A Preferred Stock, Series B Preferred Stock and Series C
Preferred Stock based upon the amount equal to the accrued and unpaid Cumulative
Dividends with respect to each such series of Preferred Stock. In addition, the
holders of Preferred Stock shall be entitled to receive, when, as and if
declared by the Board, out of any funds legally available therefor, dividends
payable at the option of the Board in cash, in additional shares of Preferred
Stock, as applicable, or in property; provided, however, the Board shall not
declare, pay or set apart for payment any such dividends unless and until it
declares the entire Cumulative Dividends, which have accrued to date, payable.
Such dividends on the Preferred Stock, if declared, shall be payable to holders
of record at the close of business on the date specified by the Board at the
time such dividend is declared, and each such record date shall not be less than
10 nor more than 60 days prior to the payment date with respect to such
Preferred Stock dividend. All such dividends paid with respect to shares of
Preferred Stock shall be paid pro rata to the holders entitled thereto.

              (b)    All shares of Preferred Stock issued as a dividend with
respect to the Preferred Stock will be duly authorized, validly issued, fully
paid and nonassessable.

              (c)    The Cumulative Dividends shall be cumulative and shall
accrue at the rate, as applicable, provided in Section 3(a) of this Article III,
but only in the circumstances and in the manner set forth in Sections 4, 5, and
7(h) of this Article III. The Cumulative Dividends, if paid, or if declared and
set apart for payment, must be paid on, or declared and set apart for payment
on, all outstanding shares of Series A Preferred Stock, Series B Preferred Stock
and Series C Preferred Stock contemporaneously. All other dividends on shares of
Preferred Stock shall not be cumulative and no rights shall accrue to holders of
Preferred Stock by reason of the fact that dividends are not declared or paid on
the Preferred Stock. Further, all other such dividends on the Preferred Stock,
if paid, or if declared and set apart for payment, must be paid on, or declared
and set apart for payment on, all outstanding shares of Preferred Stock
contemporaneously.

              (d)    Each fractional share of Series A Preferred Stock
outstanding, if any, shall be entitled to a ratably proportionate amount of all
dividends paid or other distributions made with respect to the Series A
Preferred Stock, at the same time and in the same manner as distributions on all
other shares of the Series A Preferred Stock. Each fractional share of Series

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B Preferred Stock outstanding, if any, shall be entitled to a ratably
proportionate amount of all dividends paid or other distributions made with
respect to the Series B Preferred Stock, at the same time and in the same manner
as distributions on all other shares of the Series B Preferred Stock. Further,
each fractional share of Series C Preferred Stock outstanding, if any, shall be
entitled to a ratably proportionate amount of all dividends paid or other
distributions made with respect to the Series C Preferred Stock, at the same
time and in the same manner as distributions on all other shares of the Series C
Preferred Stock.

              (e)    So long as any shares of the Preferred Stock are
outstanding, the Corporation shall not declare, pay or set apart for payment any
dividend on any Junior Securities or make any payment on account of, or set
apart for payment money for a sinking or other similar fund for, the purchase,
redemption or other retirement of, any Junior Securities or any warrants,
rights, calls or options exercisable for or convertible into Junior Securities,
or make any distribution in respect thereof, either directly or indirectly,
whether in cash, obligations or shares of the Corporation or other property
(other than distributions or dividends in Junior Securities to holders of Junior
Securities), and shall not permit any Person (as defined below) directly or
indirectly controlled by the Corporation to purchase or redeem any Junior
Securities or any warrants, rights, calls or options exercisable for or
convertible into Junior Securities; provided, however, that the foregoing shall
not prevent the Corporation with approval of the Board from making de minimis
repurchases of shares of Common Stock pursuant to any stock compensation plans
for its employees.

              "Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, or unincorporated
organization.

              (f)    Dividends payable on the Preferred Stock for any period
less than a year shall be computed on the basis of a 360-day year of twelve
30-day months and the actual number of days elapsed in the period for which such
dividends are payable.

              (g)    If any payment, redemption or conversion shall be required
by the terms of these Restated Articles of Incorporation on a day that is not a
Business Day (as defined below), such payment, redemption or conversion shall be
made on the next Business Day.

              "Business Day" means a day other than a Saturday, Sunday, national
or Florida state holiday or other day on which commercial banks in Florida are
authorized or required by law to close.

4.            LIQUIDATION PREFERENCE. (a) In the event of any liquidation
(partial or complete), dissolution or winding-up of the Corporation (a
"Liquidation"), whether voluntary or not, (i) each holder of Series A Preferred
Stock shall be entitled to receive for each share of Series A Preferred Stock
held by such holder, before any amount or property shall be paid or distributed
on account of any Junior Securities and on par with payment pursuant to this
Section 4 to holders of Series B Preferred Stock and Series C Preferred Stock,
an amount per share equal to the greater of (1) $1.00 plus all accrued and
unpaid Series A Cumulative Dividends on such share from the date such share was
issued assuming such dividends accrued in cash, whether or

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not any such dividends were declared by the Board, plus any other dividends
declared but unpaid thereon assuming such dividends were declared for cash (the
"Series A Liquidation Preference"), and (2) the amount that would have been
paid, or the value of the property that would have been distributed, to such
holder if, immediately prior to such Liquidation, all of such holder's Series A
Preferred Stock had been converted into Common Stock (assuming that immediately
prior to such Liquidation (x) all accrued and unpaid Series A Cumulative
Dividends on all outstanding shares of Series A Preferred Stock from the date
such shares were issued had been paid in additional shares of Series A Preferred
Stock, whether or not any such dividends were declared by the Board, and all
other dividends declared but unpaid thereon had been paid in additional shares
of Series A Preferred Stock (such amount determined using the Series A Common
Equivalent Rate and Series A Conversion Price then in effect), and (y) all
outstanding shares of Preferred Stock including all additional shares deemed
issued pursuant to clauses 4(a)(i)(2)(x), 4(a)(ii)(2)(x) and 4(a)(iii)(2)(x)
hereof) had been converted into Common Stock); (ii) each holder of Series B
Preferred Stock shall be entitled to receive for each share of Series B
Preferred Stock held by such holder, before any amount or property shall be paid
or distributed on account of any Junior Securities and on par with payments
pursuant to this Section 4 to holders of Series A Preferred Stock and Series C
Preferred Stock, an amount per share equal to the greater of (1) $1.86 plus all
accrued and unpaid Series B Cumulative Dividends on such share from the date
such share was issued assuming such dividends accrued in cash, whether or not
any such dividends were declared by the Board, plus any other dividends declared
but unpaid thereon assuming such dividends were declared for cash (the "Series B
Liquidation Preference"), and (2) the amount that would have been paid, or the
value of the property that would have been distributed, to such holder if,
immediately prior to such Liquidation, all of such holder's Series B Preferred
Stock had been converted into Common Stock (assuming that immediately prior to
such Liquidation (x) all accrued and unpaid Series B Cumulative Dividends on all
outstanding shares of Series B Preferred Stock from the date such shares were
issued had been paid in additional shares of Series B Preferred Stock, whether
or not any such dividends were declared by the Board, and all other dividends
declared but unpaid thereon had been paid in additional shares of Series B
Preferred Stock (such amount determined using the Series B Common Equivalent
Rate and Series B Conversion Price then in effect), and (y) all outstanding
shares of Preferred Stock (including all additional shares deemed issued
pursuant to clauses 4(a)(i)(2)(x), 4(a)(ii)(2)(x) and 4(a)(iii)(2)(x) hereof)
had been converted into Common Stock); and (iii) each holder of Series C
Preferred Stock shall be entitled to receive for each share of Series C
Preferred Stock held by such holder, before any amount or property shall be paid
or distributed on account of any Junior Securities and on par with payments
pursuant to this Section 4 to holders of Series A Preferred Stock and Series B
Preferred Stock, an amount per share equal to the greater of (1) $3.50 plus all
accrued and unpaid Series C Cumulative Dividends on such share from the date
such share was issued assuming such dividends accrued in cash, whether or not
any such dividends were declared by the Board, plus any other dividends declared
but unpaid thereon assuming such dividends were declared for cash (the "Series C
Liquidation Preference"), and (2) the amount that would have been paid, or the
value of the property that would have been distributed, to such holder if,
immediately prior to such Liquidation, all of such holder's Series C Preferred
Stock had been converted into Common Stock (assuming that immediately prior to
such Liquidation (x) all accrued and unpaid Series C Cumulative Dividends on all
outstanding shares of Series C Preferred Stock from the date such shares were
issued had been paid in

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additional shares of Series C Preferred Stock, whether or not any such dividends
were declared by the Board, and all other dividends declared but unpaid thereon
had been paid in additional shares of Series C Preferred Stock (such amount
determined using the Series C Common Equivalent Rate and Series C Conversion
Price then in effect), and (y) all outstanding shares of Preferred Stock
(including all additional shares deemed issued pursuant to clauses
4(a)(i)(2)(x), 4(a)(ii)(2)(x) and 4(a)(iii)(2)(x) hereof) had been converted
into Common Stock).

              (b)    If in connection with any Liquidation the assets of the
Corporation available for distribution to its shareholders are not sufficient to
pay in full the Series A Liquidation Preference, the Series B Liquidation
Preference and the Series C Liquidation Preference on all outstanding shares of
Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock,
then holders of Series A Preferred Stock, the holders of Series B Preferred
Stock and the holders of Series C Preferred Stock shall share ratably in the
distribution of assets based upon the amount that would be payable on such
distribution if the amounts to which the holders of outstanding shares of Series
A Preferred Stock, the holders of outstanding Series B Preferred Stock and the
holders of outstanding Series C Preferred Stock are entitled were paid in full.

5.            OPTIONAL REDEMPTION. (a) Subject to Section 5(d) of this Article
III, at any time after December 31, 2000 or upon the occurrence of any
transaction or transactions that will result in a Partial Change of Control (as
defined below), any holder of Preferred Stock may require the Corporation to
redeem, in whole or in part, such holder's shares of Preferred Stock by giving
written notice thereof to the Corporation (a "Redemption Notice"). The
Corporation shall give holders of Preferred Stock at least 45 days prior written
notice of any such transaction or transactions (a "Transaction Notice"). Any
such redemption shall take place on the 45th day (the "Redemption Date")
following (i) in the case of a Redemption Notice delivered after December 31,
2000, the receipt by the Corporation of the Redemption Notice, and (ii) in the
case of a Redemption Notice delivered pursuant to a Transaction Notice, the date
of the Transaction Notice (but in no event later than the closing of the
transaction or transactions giving rise to the Transaction Notice). Each such
redemption shall be paid by the Corporation in cash in an amount per share (the
"Redemption Price") equal to (i) with respect to Series A Preferred Stock, the
Series A Liquidation Preference as set forth in Section 4(a)(i)(1) hereof, (ii)
with respect to Series B Preferred Stock, the Series B Liquidation Preference as
set forth in Section 4(a)(ii)(1) hereof, and (iii) with respect to Series C
Preferred Stock, the Series C Liquidation Preference as set forth in Section
4(a)(iii)(1) hereof; provided, however, that the Company's obligations to redeem
shares of any holders of Preferred Stock shall be subject to the surrender by
such holder to the Corporation of the certificate or certificates representing
the shares to be redeemed. Any holder of Preferred Stock that elects to require
the Corporation to redeem some or all of such holder's shares of Preferred Stock
may rescind such election until the close of business on the third Business Day
preceding the Redemption Date for such shares.

              "Change of Control" means any transaction or series of related
transactions (i) resulting in a merger, consolidation, or other corporate
reorganization (other than a merger, consolidation, or other corporate
reorganization that results in the Corporation being the surviving entity) or
sale of control of the Corporation or (ii) in which all or substantially all of


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the assets of the Corporation are sold (other than to a wholly owned subsidiary
of the Corporation).

              "Partial Change of Control" means any transaction or series of
related transactions (i) resulting in any person or group of persons acting
together, directly or indirectly, acquiring more than 40% of the outstanding
voting power of the Corporation; (ii) involving the sale or other disposition of
assets of the Corporation (including capital stock of any direct or indirect
subsidiary) to any person or entity other than a wholly owned subsidiary of the
Corporation if (a) the net book value of such assets exceeds 40% of the net book
value of the Corporation's consolidated assets or (b) such assets are directly
or indirectly responsible for 40% or more of the Corporation's consolidated
gross revenues for the four fiscal quarters for which financial statements are
available immediately preceding the announcement of the transaction; or (iii)
involving any direct or indirect subsidiary or subsidiaries a majority of whose
voting securities are owned by the Corporation if, as a result of such
transaction or transactions, the Corporation would no longer own a majority of
the voting securities of such subsidiary or subsidiaries; provided, however,
that the Corporation may sell or otherwise dispose of some or all of the voting
securities of any subsidiary or subsidiaries if, in the aggregate, such
subsidiary or subsidiaries (a) own less than 40% of the book value of the
Corporation's consolidated net assets as reported on the balance sheet of the
Corporation for the fiscal quarter immediately preceding the announcement of
such transaction or (b) are not directly or indirectly responsible for 40% or
more of the Corporation's consolidated gross revenues for the fiscal quarter
immediately preceding the announcement of such sale or disposition.

              (b)    If, as a result of the limitation set forth in Section 5(d)
of this Article III, the Corporation is not able to redeem all shares of
Preferred Stock requested to be redeemed by holders of such shares, the
Corporation shall redeem on the applicable Redemption Date the maximum number of
shares of Preferred Stock that the Corporation is able to redeem (allocated pro
rata among holders in accordance with the number of shares that each such holder
is requesting be redeemed on such Redemption Date).

              (c)    A Redemption Notice shall be deemed delivered upon personal
delivery or 7 days after deposit in the United States mail, registered or
certified, addressed to the Corporation. On or after each Redemption Date, each
holder that elected to have shares of Preferred Stock redeemed shall surrender
the certificate for such shares to the Corporation. From and after each
Redemption Date, unless there has been a default in the payment of the
Redemption Price for each share redeemed, all rights of holders of Preferred
Stock (except the right to receive payment of the Redemption Price on surrender
of their certificates for such shares) shall cease with respect to the shares
redeemed. If less than all of the shares of Preferred Stock represented by a
surrendered certificate are redeemed, a new certificate for the unredeemed
shares shall promptly be issued to the holder of such shares.

              (d)    The Corporation shall not be required to, and shall not,
expend funds for the redemption of Preferred Stock if, and to the extent that,
such expenditure would violate any provision of the Act.


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6.            PREFERRED STOCK VOTING RIGHTS. (a) Except as otherwise required by
law or these Restated Articles of Incorporation, each holder of Preferred Stock
shall (1) be entitled to notice of any shareholders meeting, and (2) have one
vote for each share of Common Stock then issuable upon its conversion for each
share of Preferred Stock held by such holder on all matters, other than the
election of directors, submitted to a vote of shareholders of the Corporation
and shall vote together as a single class with the holders of Common Stock and
all other holders of Preferred Stock on such matters.

              (b)    Except as provided in Section 6(c) of this Article III, for
so long as Fidelity Ventures Limited ("Fidelity") owns at least 25% of the
outstanding Series A Preferred Stock, Fidelity shall be entitled to (i) appoint
to the Board 1 representative of Fidelity, (ii) appoint to the Board 1 other
person who is not an employee of Fidelity and who is approved by Dr. James
Vander Mey, and (iii) approve the appointment of 2 independent directors, 1
nominated to the Board by Dr. James Vander Mey (approved by IAI Investment Funds
IV, Inc., IAI Investment Funds VI, Inc. and IAI Investment Funds VIII, Inc.
(collectively, "Investment Advisors Inc.")) and 1 nominated to the Board by
Investment Advisors Inc. (approved by Dr. James Vander Mey). Any vacancy
occurring in the office of a director appointed or nominated pursuant to this
Section 6(b) shall be filled by the nomination, appointment or approval, as the
case may be, by Fidelity and the nomination or approval of Dr. James Vander Mey
or Investment Advisors Inc., as the case may be, if applicable, not later than
30 days after such vacancy occurs. If Fidelity owns less than 25% of the
outstanding Series A Preferred Stock, the rights of Fidelity in the preceding 2
sentences shall be exercised by the holders of a majority of the Series A
Preferred Stock voting as a class.

              (c)    If on any Redemption Date the Corporation does not redeem
all of the shares of Series A Preferred Stock requested to be redeemed by
holders of Series A Preferred Stock pursuant to Section 5 of this Article III,
then holders of a majority of outstanding shares of Series A Preferred Stock
shall be entitled to elect or appoint such number of directors as shall equal a
majority of the Board (taking into account the directors already appointed by
Fidelity pursuant to Section 6(b) of this Article III) at a special meeting to
be called by the Corporation not later than 30 days after such Redemption Date
and, during such period, the Corporation may take any of the actions described
in Sections 3(a) and (b) of Article IV by an approval of a majority of the
Board. Directors elected by holders of Series A Preferred Stock pursuant to this
Section 6(c) shall be entitled to serve only until the earlier of the date on
which (i) the Corporation has redeemed all shares of Series A Preferred Stock
that were requested to be redeemed on such Redemption Date but which could not
be redeemed due to the limitation set forth in Section 5(d) of this Article III,
and (ii) all outstanding shares of Series A Preferred Stock have been converted
into Common Stock. Any vacancy occurring in the office of a director elected by
holders of the Series A Preferred Stock pursuant to this Section 6(c) may be
filled by the remaining directors elected by the holders of the Series A
Preferred Stock unless and until such vacancy is filled by holders of the Series
A Preferred Stock.

              (d)    Directors elected by holders of Series A Preferred Stock
may only be removed from office with the vote or written consent of holders of a
majority of outstanding


<PAGE>   9

shares of Series A Preferred Stock, and any director elected by holders of the
Series A Preferred Stock may be removed from office at any time, with or without
cause.

              (e)    Each holder of Series A Preferred Stock shall have one vote
for each share of Common Stock (including fractions) then issuable upon its
conversion for each share of Series A Preferred Stock held by such holder with
respect to the election or removal of the directors that holders of Series A
Preferred Stock are entitled to elect pursuant to this Section 6.

              (f)    For purposes of exercising any vote, election or consent
under these Restated Articles of Incorporation or under applicable law, shares
of Series A Preferred Stock held by the Corporation or any of its subsidiaries
shall not be deemed outstanding and shall not be counted in determining the
outcome of any such vote, election or consent solicitation.

7.            CONVERSION. (a) Each share of Preferred Stock, including
additional shares issued as dividends, shall be convertible at the option of the
holder thereof at any time into fully paid and nonassessable shares of Common
Stock on the terms and conditions set forth in this Section 7. The number of
shares of Common Stock deliverable upon conversion of each share of Preferred
Stock, adjusted as hereinafter provided, is referred to herein as the "Common
Equivalent Rate." For purposes of Section 7 of this Article III, the Common
Equivalent Rate to be used to determine the number of shares of Common Stock to
be delivered on the conversion of any share of Series A Preferred Stock into
shares of Common Stock shall be initially 1 share of Common Stock to each share
of Series A Preferred Stock (the "Series A Common Equivalent Rate"), provided,
however, that such Series A Common Equivalent Rate shall be subject to
adjustment from time to time as provided below in this Section 7. For purposes
of Section 7 of this Article III, the Common Equivalent Rate to be used to
determine the number of shares of Common Stock to be delivered on the conversion
of any share of Series B Preferred Stock into shares of Common Stock shall be
initially 1 share of Common Stock to each share of Series B Preferred Stock (the
"Series B Common Equivalent Rate"), provided, however, that such Series B Common
Equivalent Rate shall be subject to adjustment from time to time as provided
below in this Section 7. Further, for purposes of Section 7 of this Article III,
the Common Equivalent Rate to be used to determine the number of shares of
Common Stock to be delivered on the conversion of any share of Series C
Preferred Stock into shares of Common Stock shall be initially 1 share of Common
Stock to each share of Series C Preferred Stock (the "Series C Common Equivalent
Rate"), provided, however, that such Series C Common Equivalent Rate shall be
subject to adjustment from time to time as provided below in this Section 7. All
adjustments to the applicable Common Equivalent Rate shall be calculated to the
nearest 1/100th of a share of Common Stock. The "Conversion Price" for Common
Stock with respect to the conversion of Series A Preferred Stock shall, at any
given time, be equal to $1.00 divided by the Series A Common Equivalent Rate in
effect at such time (the "Series A Conversion Price"). The "Conversion Price"
for Common Stock with respect to the conversion of Series B Preferred Stock
shall, at any given time, be equal to $1.86 divided by the Series B Common
Equivalent Rate in effect at such time (the "Series B Conversion Price"). The
"Conversion Price" for Common Stock with respect to the conversion of Series C
Preferred Stock shall, at any given time, be equal to $3.50


<PAGE>   10

divided by the Series C Common Equivalent Rate in effect at such time (the
"Series C Conversion Price").

              (b)    Conversion of Preferred Stock may be effected by any holder
of Preferred Stock by delivering to the Corporation at its principal office or
at such other office or agency maintained by the Corporation for such purpose
(i) the certificate for the shares of the Preferred Stock to be converted and
(ii) a written notice stating that such holder elects to convert all or a
specified whole number of such holder's shares of Preferred Stock in accordance
with the provisions of this Section 7 and specifying the name or names in which
such holder wishes the certificate or certificates for shares of Common Stock to
be issued. If any such notice specifies a name or names other than that of such
holder, such notice shall be accompanied by payment of all transfer taxes
payable upon the issuance of shares of Common Stock in such name or names. Other
than such taxes, the Corporation will pay any and all issue and other taxes
(other than taxes based on income) that may be payable in respect of any
issuance or delivery of shares of Common Stock upon conversion of the Preferred
Stock. As promptly as practicable, and in any event within 10 Business Days
after the surrender of such Preferred Stock certificate or certificates and the
receipt of such notice relating thereto and, if applicable, payment of all
transfer taxes (or the demonstration to the reasonable satisfaction of the
Corporation that such taxes have been paid), the Corporation shall deliver or
cause to be delivered (i) certificates representing the number of validly
issued, fully paid and nonassessable shares of Common Stock to which the holder
of shares of the Preferred Stock being converted shall be entitled and (ii) if
less than the full number of shares of the Preferred Stock evidenced by the
surrendered certificate or certificates is being converted, a new certificate or
certificates for the number of shares evidenced by such surrendered certificate
or certificates less the number of shares being converted. Such conversion shall
be deemed to have been made at the close of business on the date of giving of
such notice and of such surrender of the certificate or certificates
representing the shares of the Preferred Stock to be converted so that the
rights of the holder thereof as to the shares being converted shall cease except
for the right to receive shares of Common Stock in accordance herewith, and the
person entitled to receive the shares of Common Stock shall be treated for all
purposes as having become the record holder of such shares of Common Stock at
such time.

              (c)    If any holder of Preferred Stock has elected to require the
Corporation to redeem some or all of such holder's shares of Preferred Stock
pursuant to Section 5 of this Article III, such holder's right to convert such
shares into shares of Common Stock shall terminate at the close of business on
the third Business Day preceding the Redemption Date for such shares unless the
Corporation defaults in the payment of the Redemption Price for such shares on
such Redemption Date, in which case the conversion rights with respect to any
such shares not redeemed shall be reinstated.

              (d)    Except as provided in Section 7(g) of this Article III,
upon conversion of any shares of Preferred Stock, the holder of such shares
shall be entitled to receive all declared but unpaid dividends, if any, on such
shares.

<PAGE>   11

              (e)    The Corporation shall at all times reserve and keep
available for issuance upon conversion of the Preferred Stock such number of its
authorized but unissued shares of Common Stock as will from time to time be
sufficient to permit the conversion of all outstanding shares of the Preferred
Stock, and shall take all action required to increase the authorized number of
shares of Common Stock if and to the extent necessary to permit the conversion
of all outstanding shares of the Preferred Stock.

              (f)    Each Common Equivalent Rate shall be subject to adjustment
as follows:

                     (i)    If the Corporation (1) pays a dividend or makes a
distribution with respect to Common Stock in shares of Common Stock or other
shares of capital stock (including, without limitation, securities convertible
into or exchangeable for shares of Common Stock) of the Corporation or in rights
to purchase capital stock or other securities if such rights are not separable
from the Common Stock except upon the occurrence of a contingency, or (2)
subdivides or splits its outstanding shares of Common Stock into a larger number
of shares, or (3) combines its outstanding shares of Common Stock into a smaller
number of shares, or (4) issues by reclassification of its shares of Common
Stock any shares of capital stock of the Corporation, then, in each such event,
(x) the Series A Common Equivalent Rate in effect immediately prior to such
event shall be adjusted so that the holder of each share of Series A Preferred
Stock shall be entitled to receive on the conversion of such share of Series A
Preferred Stock the number of shares of Common Stock and other shares and rights
to purchase capital stock or other securities (or, in the event of the
redemption of any such shares or rights, any cash, property or securities paid
in respect of such redemption) that such holder would have owned or been
entitled to receive after the happening of any of such event had such shares of
the Series A Preferred Stock been surrendered for conversion at the applicable
Series A Common Equivalent Rate in effect immediately prior to such event or the
record date therefor, whichever is earlier, (y) the Series B Common Equivalent
Rate in effect immediately prior to such event shall be adjusted so that the
holder of each share of Series B Preferred Stock shall be entitled to receive on
the conversion of such share of Series B Preferred Stock the number of shares of
Common Stock and other shares and rights to purchase capital stock or other
securities (or, in the event of the redemption of any such shares or rights, any
cash, property or securities paid in respect of such redemption) that such
holder would have owned or been entitled to receive after the happening of any
such event had such shares of the Series B Preferred Stock been surrendered for
conversion at the applicable Series B Common Equivalent Rate in effect
immediately prior to such event or the record date therefor, whichever is
earlier, and (z) the Series C Common Equivalent Rate in effect immediately prior
to such event shall be adjusted so that the holder of each share of Series C
Preferred Stock shall be entitled to receive on the conversion of such share of
Series C Preferred Stock the number of shares of Common Stock and other shares
and rights to purchase capital stock or other securities (or, in the event of
the redemption of any such shares or rights, any cash, property or securities
paid in respect of such redemption) that such holder would have owned or been
entitled to receive after the happening of any such event had such shares of the
Series C Preferred Stock been surrendered for conversion at the applicable
Series C Common Equivalent Rate in effect immediately prior to such event or the
record date therefor, whichever is earlier. Such adjustments shall become
effective at the opening of business on the Business Day next following the
record date for determination of shareholders

<PAGE>   12

entitled to receive such dividend or distribution in the case of a dividend or
distribution, and shall become effective immediately after the effective date in
the case of a subdivision, split, combination or reclassification; and any
shares of Common Stock issuable in payment of a dividend shall be deemed to have
been issued immediately prior to the close of business on the record date for
such dividend for purposes of calculating the number of outstanding shares of
Common Stock under Sections 7(f)(ii) and (iii) of this Article III.

                     (ii)   If the Corporation at any time after the date of the
Purchase Agreement issues rights or warrants to all holders of its Common Stock
entitling them to subscribe for or purchase shares of Common Stock at a price
per share less than the Series A Conversion Price on the date fixed for the
determination of shareholders entitled to receive such rights or warrants, or
issues securities convertible into or exchangeable for Common Stock to all
holders of its Common Stock entitling them to purchase shares of Common Stock at
a price per share less than such Series A Conversion Price on the date fixed for
the determination of shareholders entitled to receive such securities, then in
each such event the Series A Common Equivalent Rate shall be adjusted by
multiplying the Series A Common Equivalent Rate in effect immediately prior to
any such event by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding on the date fixed for such determination plus
the number of additional shares of Common Stock offered for subscription or
purchase pursuant to such rights or warrants or convertible or exchangeable
securities, and the denominator of which shall be the number of shares of Common
Stock outstanding on the date fixed for such determination plus the number of
shares of Common Stock which the aggregate offering price of the total number of
shares of Common Stock so offered for subscription or purchase would purchase at
the Series A Conversion Price (determined by dividing (a) the product of (1) the
total number of shares being offered and (2) the exercise price of such rights
or warrants or convertible or exchangeable securities, by (b) the Series A
Conversion Price). To the extent that shares of Common Stock are not delivered
as of or prior to the expiration of such rights or warrants, the Series A Common
Equivalent Rate shall be readjusted to the Series A Common Equivalent Rate that
would then be in effect had the adjustments made upon the issuance of such
rights or warrants been made upon the basis of delivery of only the number of
shares of Common Stock actually delivered. If the Corporation changes the terms
of any securities convertible into shares of Common Stock (other than the
Preferred Stock pursuant to this Section 7) to decrease the conversion price or
increase the number of shares of Common Stock issuable upon conversion, then the
Series A Common Equivalent Rate shall be adjusted as if (a) securities with the
new terms had been issued on the effective date of the change, and (b) the
securities outstanding prior to the change had been redeemed or retired without
being converted into Common Stock. Further, if the Corporation at any time after
the date of the Series B Purchase Agreement issues rights or warrants to all
holders of its Common Stock entitling them to subscribe for or purchase shares
of Common Stock at a price per share less than the Series B Conversion Price on
the date fixed for the determination of shareholders entitled to receive such
rights or warrants, or issues securities convertible into or exchangeable for
Common Stock to all holders of its Common Stock entitling them to purchase
shares of Common Stock at a price per share less than such Series B Conversion
Price on the date fixed for the determination of shareholders entitled to
receive such securities, then in each such event the Series B Common Equivalent
Rate shall be adjusted by multiplying the Series B Common Equivalent Rate in

<PAGE>   13

effect immediately prior to any such event by a fraction, the numerator of which
shall be the number of shares of Common Stock outstanding on the date fixed for
such determination plus the number of additional shares of Common Stock offered
for subscription or purchase pursuant to such rights or warrants or convertible
or exchangeable securities, and the denominator of which shall be the number of
shares of Common Stock outstanding on the date fixed for such determination plus
the number of shares of Common Stock which the aggregate offering price of the
total number of shares of Common Stock so offered for subscription or purchase
would purchase at the Series B Conversion Price (determined by dividing (a) the
product of (1) the total number of shares being offered and (2) the exercise
price of such rights or warrants or convertible or exchangeable securities, by
(b) the Series B Conversion Price). To the extent that shares of Common Stock
are not delivered as of or prior to the expiration of such rights or warrants,
the Series B Common Equivalent Rate shall be readjusted to the Series B Common
Equivalent Rate that would then be in effect had the adjustments made upon the
issuance of such rights or warrants been made upon the basis of delivery of only
the number of shares of Common Stock actually delivered. If the Corporation
changes the terms of any securities convertible into shares of Common Stock
(other than the Preferred Stock pursuant to this Section 7) to decrease the
conversion price or increase the number of shares of Common Stock issuable upon
conversion, then the Series B Common Equivalent Rate shall be adjusted as if (a)
securities with the new terms had been issued on the effective date of the
change, and (b) the securities outstanding prior to the change had been redeemed
or retired without being converted into Common Stock. Further, if the
Corporation at any time after the date of the Series C Purchase Agreement issues
rights or warrants to all holders of its Common Stock entitling them to
subscribe for or purchase shares of Common Stock at a price per share less than
the Series C Conversion Price on the date fixed for the determination of
shareholders entitled to receive such rights or warrants, or issues securities
convertible into or exchangeable for Common Stock to all holders of its Common
Stock entitling them to purchase shares of Common Stock at a price per share
less than such Series C Conversion Price on the date fixed for the determination
of shareholders entitled to receive such securities, then in each such event the
Series C Common Equivalent Rate shall be adjusted by multiplying the Series C
Common Equivalent Rate in effect immediately prior to any such event by a
fraction, the numerator of which shall be the number of shares of Common Stock
outstanding on the date fixed for such determination plus the number of
additional shares of Common Stock offered for subscription or purchase pursuant
to such rights or warrants or convertible or exchangeable securities, and the
denominator of which shall be the number of shares of Common Stock outstanding
on the date fixed for such determination plus the number of shares of Common
Stock which the aggregate offering price of the total number of shares of Common
Stock so offered for subscription or purchase would purchase at the Series C
Conversion Price (determined by dividing (a) the product of (1) the total number
of shares being offered and (2) the exercise price of such rights or warrants or
convertible or exchangeable securities, by (b) the Series C Conversion Price).
To the extent that shares of Common Stock are not delivered as of or prior to
the expiration of such rights or warrants, the Series C Common Equivalent Rate
shall be readjusted to the Series C Common Equivalent Rate that would then be in
effect had the adjustments made upon the issuance of such rights or warrants
been made upon the basis of delivery of only the number of shares of Common
Stock actually delivered. If the Corporation changes the terms of any securities
convertible into shares of Common Stock (other than the Preferred Stock pursuant
to this Section 7) to decrease

<PAGE>   14

the conversion price or increase the number of shares of Common Stock issuable
upon conversion, then the Series C Common Equivalent Rate shall be adjusted as
if (a) securities with the new terms had been issued on the effective date of
the change, and (b) the securities outstanding prior to the change had been
redeemed or retired without being converted into Common Stock.

                     (iii)  If the Corporation pays a dividend or makes a
distribution to all holders of its Common Stock, any evidence of indebtedness
owed to the Corporation or other assets (including shares of capital stock of
the Corporation (other than Common Stock), but excluding any ordinary cash
dividends paid out of retained earnings of the Corporation or any distributions
and dividends referred to in Section 7(f)(i) of this Article III), or issues to
all holders of its Common Stock rights or warrants to subscribe for or purchase
any of its assets or securities (other than those referred to in Section
7(f)(ii) of this Article III), then in each such case (x) the Series A Common
Equivalent Rate shall be adjusted by multiplying the Series A Common Equivalent
Rate in effect on the date fixed for the determination of shareholders entitled
to receive such dividend or distribution by a fraction, the numerator of which
shall be the Series A Conversion Price on the date fixed for such determination
and the denominator of which shall be such Series A Conversion Price less the
fair value (as determined by the Board in good faith) as of the date fixed for
such determination of the portion of the assets or evidences of indebtedness so
distributed, or of such subscription rights or warrants, applicable to one share
of Common Stock, (y) the Series B Common Equivalent Rate shall be adjusted by
multiplying the Series B Common Equivalent Rate in effect on the date fixed for
the determination of shareholders entitled to receive such dividend or
distribution by a fraction, the numerator of which shall be the Series B
Conversion Price on the date fixed for such determination and the denominator of
which shall be such Series B Conversion Price less the fair value (as determined
by the Board in good faith) as of the date fixed for such determination of the
portion of the assets or evidences of indebtedness so distributed, or of such
subscription rights or warrants, applicable to one share of Common Stock, and
(z) the Series C Common Equivalent Rate shall be adjusted by multiplying the
Series C Common Equivalent Rate in effect on the date fixed for the
determination of shareholders entitled to receive such dividend or distribution
by a fraction, the numerator of which shall be the Series C Conversion Price on
the date fixed for such determination and the denominator of which shall be such
Series C Conversion Price less the fair value (as determined by the Board in
good faith) as of the date fixed for such determination of the portion of the
assets or evidences of indebtedness so distributed, or of such subscription
rights or warrants, applicable to one share of Common Stock. Such adjustments
shall become effective on the opening of business on the Business Day next
following the date fixed for the determination of shareholders entitled to
receive such dividend or distribution. In addition to the foregoing, holders of
Preferred Stock shall be given notice of any dividend or distribution described
in this Section 7(f)(iii) at least 30 days prior to the date for determining
shareholders entitled to receive such dividend or distribution.

                     (iv)   If the Corporation issues any shares of Common Stock
at a price per share less than the Series A Conversion Price on the date of
issuance, then the Series A Common Equivalent Rate shall be adjusted by
multiplying such Series A Common Equivalent Rate in effect immediately prior to
any such issuance by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding on the date of issuance plus the number

<PAGE>   15

of additional shares of Common Stock offered to be issued, and the denominator
of which shall be the number of shares of Common Stock outstanding on the date
of issuance (without giving effect to the issuance of the additional shares of
Common Stock) plus the number of shares of Common Stock which the aggregate
offering price of the total number of shares of Common Stock so offered would
purchase at the Series A Conversion Price (determined by dividing (1) the
product of (a) the total number of additional shares and (b) the purchase price
paid or payable with respect to such additional shares, by (2) such Series A
Conversion Price). Further, if the Corporation issues any shares of Common Stock
at a price per share less than the Series B Conversion Price on the date of
issuance, then the Series B Common Equivalent Rate shall be adjusted by
multiplying such Series B Common Equivalent Rate in effect immediately prior to
any such issuance by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding on the date of issuance plus the number of
additional shares of Common Stock offered to be issued, and the denominator of
which shall be the number of shares of Common Stock outstanding on the date of
issuance (without giving effect to the issuance of the additional shares of
Common Stock) plus the number of shares of Common Stock which the aggregate
offering price of the total number of shares of Common Stock so offered would
purchase at the Series B Conversion Price (determined by dividing (1) the
product of (a) the total number of additional shares and (b) the purchase price
paid or payable with respect to such additional shares, by (2) such Series B
Conversion Price). Further, if the Corporation issues any shares of Common Stock
at a price per share less than the Series C Conversion Price on the date of
issuance, then the Series C Common Equivalent Rate shall be adjusted by
multiplying such Series C Common Equivalent Rate in effect immediately prior to
any such issuance by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding on the date of issuance plus the number of
additional shares of Common Stock offered to be issued, and the denominator of
which shall be the number of shares of Common Stock outstanding on the date of
issuance (without giving effect to the issuance of the additional shares of
Common Stock) plus the number of shares of Common Stock which the aggregate
offering price of the total number of shares of Common Stock so offered would
purchase at the Series C Conversion Price (determined by dividing (1) the
product of (a) the total number of additional shares and (b) the purchase price
paid or payable with respect to such additional shares, by (2) such Series C
Conversion Price). Notwithstanding the foregoing, no adjustments shall be made
pursuant to this Section 7(f)(iv) if an adjustment is made pursuant to Section
7(f)(ii) or 7(f)(v) of this Article III.

                     (v)    If the Corporation issues securities convertible
into or exchangeable for Common Stock (including, without limitation, rights or
warrants, but excluding those referred to in Section 7(f)(ii) of this Article
III) at a price per share of Common Stock initially deliverable upon conversion
or exchange of such securities less than the Series A Conversion Price on the
date of issuance, then the Series A Common Equivalent Rate shall be adjusted by
multiplying such Series A Common Equivalent Rate in effect immediately prior to
such issuance by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding on the date of issuance plus the number of
shares of Common Stock deliverable upon conversion of or in exchange for such
securities, and the denominator of which shall be the number of shares of Common
Stock outstanding on the date of issuance plus the number of shares of Common
Stock which the aggregate consideration received for such securities would
purchase at the Series A Conversion Price (determined by dividing (1) the

<PAGE>   16

product of (a) the total number of shares of Common Stock deliverable upon
conversion of or in exchange for such securities and (b) the aggregate
consideration received for such securities, by (2) such Series A Conversion
Price). To the extent that shares of Common Stock are not delivered as of or
prior to the expiration, if any, of the conversion or exchange rights of such
securities, the Series A Common Equivalent Rate shall be readjusted to the
Series A Common Equivalent Rate that would then be in effect had the adjustments
made upon the issuance of such convertible or exchangeable securities been made
upon the basis of delivery of only the number of shares of Common Stock actually
delivered. Further, if the Corporation issues securities convertible into or
exchangeable for Common Stock (including, without limitation, rights or
warrants, but excluding those referred to in Section 7(f)(ii) of this Article
III) at a price per share of Common Stock initially deliverable upon conversion
or exchange of such securities less than the Series B Conversion Price on the
date of issuance, then the Series B Common Equivalent Rate shall be adjusted by
multiplying such Series B Common Equivalent Rate in effect immediately prior to
such issuance by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding on the date of issuance plus the number of
shares of Common Stock deliverable upon conversion of or in exchange for such
securities, and the denominator of which shall be the number of shares of Common
Stock outstanding on the date of issuance plus the number of shares of Common
Stock which the aggregate consideration received for such securities would
purchase at the Series B Conversion Price (determined by dividing (1) the
product of (a) the total number of shares of Common Stock deliverable upon
conversion of or in exchange for such securities and (b) the aggregate
consideration received for such securities, by (2) such Series B Conversion
Price). To the extent that shares of Common Stock are not delivered as of or
prior to the expiration, if any, of the conversion or exchange rights of such
securities, the Series B Common Equivalent Rate shall be readjusted to the
Series B Common Equivalent Rate that would then be in effect had the adjustments
made upon the issuance of such convertible or exchangeable securities been made
upon the basis of delivery of only the number of shares of Common Stock actually
delivered. Further, if the Corporation issues securities convertible into or
exchangeable for Common Stock (including, without limitation, rights or
warrants, but excluding those referred to in Section 7(f)(ii) of this Article
III) at a price per share of Common Stock initially deliverable upon conversion
or exchange of such securities less than the Series C Conversion Price on the
date of issuance, then the Series C Common Equivalent Rate shall be adjusted by
multiplying such Series C Common Equivalent Rate in effect immediately prior to
such issuance by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding on the date of issuance plus the number of
shares of Common Stock deliverable upon conversion of or in exchange for such
securities, and the denominator of which shall be the number of shares of Common
Stock outstanding on the date of issuance plus the number of shares of Common
Stock which the aggregate consideration received for such securities would
purchase at the Series C Conversion Price (determined by dividing (1) the
product of (a) the total number of shares of Common Stock deliverable upon
conversion of or in exchange for such securities and (b) the aggregate
consideration received for such securities, by (2) such Series C Conversion
Price). To the extent that shares of Common Stock are not delivered as of or
prior to the expiration, if any, of the conversion or exchange rights of such
securities, the Series C Common Equivalent Rate shall be readjusted to the
Series C Common Equivalent Rate that would then be in effect had the adjustments
made upon the

<PAGE>   17

issuance of such convertible or exchangeable securities been made upon the basis
of delivery of only the number of shares of Common Stock actually delivered.

                     (vi)   If there shall occur any merger or consolidation of
the Corporation with or into another Person (other than a merger or
consolidation that does not result in any conversion, exchange or cancellation
of outstanding shares of Common Stock), any sale or transfer of all or
substantially all of the assets of the Corporation or any compulsory share
exchange that results in the conversion or exchange of the Common Stock into, or
the right to receive, other securities or other property (whether of the
Corporation or any other entity), then the Preferred Stock will thereafter no
longer be subject to conversion into shares of Common Stock pursuant to this
Section 7, but instead will be subject to conversion into the kind and amount of
securities or other property that the holder of such shares of the Preferred
Stock would have owned immediately after such merger, consolidation, sale or
share exchange if such holder's shares of the Preferred Stock had been converted
into shares of Common Stock immediately before the effective time of such merger
or consolidation. If this Section 7(f)(vi) applies, then no adjustment in
respect of the same merger or consolidation shall be made pursuant to the other
provisions of this Section 7. In the event that at any time, as a result of an
adjustment made pursuant to this clause (vi), the Preferred Stock shall become
subject to conversion into any securities other than shares of Common Stock,
thereafter the number of such other securities so issuable upon conversion of
the shares of the Preferred Stock shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the shares of the Preferred Stock contained in this
Section 7.

                     (vii)  If any event shall occur as to which the other
provisions of this Section 7 are not strictly applicable but the failure to make
any increase in adjustment to the Series A Common Equivalent Rate, the Series B
Common Equivalent Rate and the Series C Common Equivalent Rate would adversely
affect the conversion rights of the holders of the Series A Preferred Stock, the
Series B Preferred Stock and the Series C Preferred Stock, as the case may be,
then, in each such case, the Board in the exercise of its good faith judgment
(which shall be evidenced by a written resolution filed with the minutes of
meetings of the Board) shall increase the Common Equivalent Rates on a basis
consistent with the essential intent and principles established in this Section
7, necessary to preserve, without dilution, the conversion rights with respect
to the Preferred Stock.

                     (viii) Notwithstanding anything to the contrary in this
Section 7, the Corporation shall be entitled to make such upward adjustments in
the Series A Common Equivalent Rate, the Series B Common Equivalent Rate or the
Series C Common Equivalent Rate, in addition to those required by this Section
7, as the Corporation in its sole discretion may determine to be advisable, in
order that any stock dividends, subdivision of shares, distribution of rights to
purchase stock or securities, or a distribution of securities convertible into
or exchangeable for stock (or any transaction that could be treated as any of
the foregoing transactions pursuant to Section 305 of the Internal Revenue Code
of 1986, as amended) hereafter made by the Corporation to its shareholders shall
not be taxable.

<PAGE>   18

                     (ix)   If the Corporation issues more than one class of
Common Stock and takes any action with respect to one or more (but less than
all) classes of Common Stock and such action, if taken with respect to all
classes of Common Stock, would result in an adjustment to (x) the Series A
Common Equivalent Rate pursuant to this Section 7, the Series A Common
Equivalent Rate shall be adjusted as if such action had been taken with respect
to all classes of Common Stock, (y) the Series B Common Equivalent Rate pursuant
to this Section 7, the Series B Common Equivalent Rate shall be adjusted as if
such action had been taken with respect to all classes of Common Stock, and (z)
the Series C Common Equivalent Rate pursuant to this Section 7, the Series C
Common Equivalent Rate shall be adjusted as if such action had been taken with
respect to all classes of Common Stock.

                     (x)    The Corporation at any time may increase the Series
A Common Equivalent Rate, the Series B Common Equivalent Rate and the Series C
Common Equivalent Rate by an equal amount for an equal period of time, if the
period is at least 10 days and if the increase is irrevocable during such
period. The period of time in which such increases shall be in effect shall be
identical for such Common Equivalent Rates. Whenever the Series A Common
Equivalent Rate, the Series B Common Equivalent Rate and the Series C Common
Equivalent Rate are increased pursuant to this Section 7(x), the Corporation
shall mail to holders of Series A Preferred Stock, holders of Series B Preferred
Stock and holders of Series C Preferred Stock at such holder's last registered
address, a notice of the increase. The Corporation shall mail the notices at
least 15 days before the date the increased Series A Common Equivalent Rate,
Series B Common Equivalent Rate and Series C Common Equivalent Rate take effect.
The notices to the holders of Series A Preferred Stock shall state the increased
Series A Common Equivalent Rate and the period during which it will be in
effect, the notice to the holders of Series B Preferred Stock shall state the
increased Series B Common Equivalent Rate and the period during which it will be
in effect, and the notice to the holders of Series C Preferred Stock shall state
the increased Series C Common Equivalent Rate and the period during which it
will be in effect. An increase in the Series A Common Equivalent Rate pursuant
to this Section 7(x) does not change or adjust such Series A Common Equivalent
Rate otherwise in effect for purposes of this Section 7. An increase in the
Series B Common Equivalent Rate pursuant to this Section 7(x) does not change or
adjust such Series B Common Equivalent Rate otherwise in effect for purposes of
this Section 7. An increase in the Series C Common Equivalent Rate pursuant to
this Section 7(x) does not change or adjust such Series C Common Equivalent Rate
otherwise in effect for purposes of this Section 7.

                     (xi)   For purposes of this Section 7, the number of shares
of Common Stock outstanding at any time shall not include any shares of Common
Stock then owned or held by or for the account of the Corporation.

                     (xii)  Notwithstanding anything to the contrary in this
Section 7, the Corporation shall not be required to give effect to any
adjustment in the Series A Common Equivalent Rate, the Series B Common
Equivalent Rate or the Series C Common Equivalent Rate unless and until the net
effect of one or more adjustments (each of which shall be carried forward),
determined as above provided, shall have resulted in a change of such conversion
rate by at least one-hundredth of one share of Common Stock, and when the
cumulative net effect of more than one adjustment so determined shall be to
change the conversion rate by at least one-

<PAGE>   19

hundredth of one share of Common Stock, such change in conversion rate shall
thereupon be given effect.

                     (xiii) Upon the occurrence of any event specified in this
Section 7 that would result in any adjustment of the Series A Common Equivalent
Rate, then, and in each such case, the Corporation shall promptly deliver by
first-class mail, postage prepaid to each holder of Series A Preferred Stock at
his or its address as it appears in the records of the Corporation, a
certificate signed by an executive officer of the Corporation setting forth in
reasonable detail the event requiring the adjustment and the method by which
such adjustment was calculated and specifying the Series A Common Equivalent
Rate in effect following such adjustment. Further, upon the occurrence of any
event specified in this Section 7 that would result in any adjustment of the
Series B Common Equivalent Rate, then, and in each such case, the Corporation
shall promptly deliver by first-class mail, postage prepaid to each holder of
Series B Preferred Stock at his or its address as it appears in the records of
the Corporation, a certificate signed by an executive officer of the Corporation
setting forth in reasonable detail the event requiring the adjustment and the
method by which such adjustment was calculated and specifying the Series B
Common Equivalent Rate in effect following such adjustment. Further, upon the
occurrence of any event specified in this Section 7 that would result in any
adjustment of the Series C Common Equivalent Rate, then, and in each such case,
the Corporation shall promptly deliver by first-class mail, postage prepaid to
each holder of Series C Preferred Stock at his or its address as it appears in
the records of the Corporation, a certificate signed by an executive officer of
the Corporation setting forth in reasonable detail the event requiring the
adjustment and the method by which such adjustment was calculated and specifying
the Series C Common Equivalent Rate in effect following such adjustment.

                     (xiv)  Notwithstanding anything to the contrary in this
Section 7, there shall be no adjustment in the Series A Common Equivalent Rate,
the Series B Common Equivalent Rate, or the Series C Common Equivalent Rate for
shares of Common Stock issued upon the conversion of the Warrants (as defined in
Section 9(d) of this Article III) or upon the exercise or conversion of stock
warrants and options issued pursuant to employee and director plans, or, as to
the shares of Series C Preferred Stock, for shares of Series C Preferred Stock
issued pursuant to Section 8(g) of the Series C Purchase Agreement.

              (g)    In connection with (i) the closing of a firm underwritten
initial public offering of Common Stock pursuant to a registration statement
under the Securities Act of 1933, as amended, in which the aggregate price paid
for such shares by the public shall be at least $12,000,000 or (ii) any Change
of Control (as defined in Section 5 of Article III) resulting in $40 million or
greater of gross proceeds to the shareholders of the Corporation or the
Corporation, as applicable, the Corporation shall cause the conversion of all
(but not less than all) of the outstanding shares of Preferred Stock into shares
of Common Stock at the Series A Common Equivalent Rate then in effect with
respect to the Series A Preferred Stock, the Series B Common Equivalent Rate
then in effect with respect to the Series B Preferred Stock, and the Series C
Common Equivalent Rate then in effect with respect to the Series C Preferred
Stock; provided, however, if, prior to the effective date of any such Change of
Control, any holder of Preferred Stock that is entitled pursuant to Section 5 of
this Article III to require the Corporation

<PAGE>   20

to redeem some or all of such holder's shares of Preferred Stock notifies the
Corporation of such holder's election to require the Corporation to redeem such
shares, the Corporation shall redeem such shares as set forth in Section 5 of
this Article III and such shares shall not be subject to conversion into shares
of Common Stock pursuant to this Section 7(g). A conversion of Preferred Stock
into Common Stock pursuant to this Section 7(g) shall be referred to as a
"Mandatory Conversion." On and after a Mandatory Conversion, notwithstanding
that any certificates for the shares of Preferred Stock shall not have been
surrendered for conversion, the shares of such Preferred Stock evidenced thereby
shall be deemed to be no longer outstanding, and all rights with respect thereto
shall forthwith cease and terminate, except only the rights of the holder to
receive (i) the shares of Common Stock upon conversion of such holder's
Preferred Stock, and (ii)(x) with respect to holders of Series A Preferred Stock
all accrued and unpaid Series A Cumulative Dividends, (y) with respect to
holders of Series B Preferred Stock all accrued and unpaid Series B Cumulative
Dividends, and (z) with respect to holders of Series C Preferred Stock all
accrued and unpaid Series C Cumulative Dividends. If any holder of Preferred
Stock surrenders a certificate for such holder's shares of Preferred Stock to
the Corporation or its transfer agent upon such conversion, a certificate for
the number of shares of Common Stock into which the shares of Preferred Stock
surrendered were convertible shall promptly be issued and delivered to such
holder.

              (h)    In connection with any Change of Control (as defined in
Section 5 of Article III) resulting in less than $40 million of gross proceeds
to the shareholders of the Corporation or the Corporation, as applicable, each
holder of Preferred Stock shall be entitled to receive an amount per share equal
to the greater of (i) the Series A Liquidation Preference with respect to
holders of Series A Preferred Stock, the Series B Liquidation Preference with
respect to holders of Series B Preferred Stock, or the Series C Liquidation
Preference with respect to holders of Series C Preferred Stock (each as defined
in Section 4 of Article III) and (ii) the amount that would have been paid, or
the value of the property that would have been distributed, to such holder if,
immediately prior to such Change of Control, all of such holder's Preferred
Stock had been converted into Common Stock (assuming that immediately prior to
such Change of Control (x) with respect to holders of Series A Preferred Stock
(1) all accrued and unpaid Series A Cumulative Dividends on all outstanding
shares of Series A Preferred Stock from the date such shares were issued had
been paid in additional shares of Series A Preferred Stock and all other
dividends declared but unpaid thereon had been paid in additional shares of
Series A Preferred Stock (such amount determined using the Series A Common
Equivalent Rate and Series A Conversion Price then in effect), and (2) all
outstanding shares of Preferred Stock (including all additional shares deemed
issued pursuant to clauses (h)(x)(1), (h)(y)(1), and (h)(z)(1) hereof) had been
converted into Common Stock, (y) with respect to holders of Series B Preferred
Stock (1) all accrued and unpaid Series B Cumulative Dividends on all
outstanding shares of Series B Preferred Stock from the date such shares were
issued had been paid in additional shares of Series B Preferred Stock and all
other dividends declared but unpaid thereon had been paid in additional shares
of Series B Preferred Stock (such amount determined using the Series B Common
Equivalent Rate and Series B Conversion Price then in effect) and (2) all
outstanding shares of Preferred Stock (including all additional shares deemed
issued pursuant to clauses (h)(x)(1), (h)(y)(1), and (h)(z)(1) hereof) had been
converted into Common Stock), and (z) with respect to holders of Series C
Preferred Stock (1) all accrued and unpaid Series C

<PAGE>   21

Cumulative Dividends on all outstanding shares of Series C Preferred Stock from
the date such shares were issued had been paid in additional shares of Series C
Preferred Stock and all other dividends declared but unpaid thereon had been
paid in additional shares of Series C Preferred Stock (such amount determined
using the Series C Common Equivalent Rate and Series C Conversion Price then in
effect) and (2) all outstanding shares of Preferred Stock (including all
additional shares deemed issued pursuant to clauses (h)(x)(1), (h)(y)(1), and
(h)(z)(1) hereof) had been converted into Common Stock).

8.            COVENANTS. (a) In addition to any other rights provided by law, so
long as any shares of Series A Preferred Stock are outstanding, the Corporation
shall not, without first obtaining the affirmative vote or written consent of
the holders of more than 67% of the then outstanding shares of the Series A
Preferred Stock:

              (i)    amend or repeal any provision of, or add any provision to,
these Restated Articles of Incorporation or By-Laws of the Corporation that
changes the terms of the Series A Preferred Stock or any rights of holders of
the Series A Preferred Stock;

              (ii)   authorize or issue shares of any class or series of stock
having any preference or priority superior to or on a parity with any such
preference or priority of the Series A Preferred Stock or in any manner which
adversely affects the rights of the holders of the Series A Preferred Stock;

              (iii)  authorize or issue shares of any class or series of stock,
convertible into or exchangeable for, or having option rights to purchase, any
shares of stock having any preference or priority superior to or on a parity
with any preference or priority of the Series A Preferred Stock; or

              (iv)   reclassify any class or series of any Common Stock into
shares having any preference or priority superior to or on a parity with any
such preference or priority of Series A Preferred Stock.

       (b)    In addition to any other rights provided by law, so long as any
shares of Series B Preferred Stock are outstanding, the Corporation shall not,
without first obtaining the affirmative vote or written consent of the holders
of more than 67% of the then outstanding shares of the Series B Preferred Stock:

              (i)    amend or repeal any provision of, or add any provision to,
these Restated Articles of Incorporation or By-Laws of the Corporation that
changes the terms of the Series B Preferred Stock or any rights of holders of
the Series B Preferred Stock;

              (ii)   authorize or issue shares of any class or series of stock
having any preference or priority superior to or on a parity with any such
preference or priority of the Series B Preferred Stock or in any manner which
adversely affects the rights of the holders of the Series B Preferred Stock;

<PAGE>   22

              (iii)  authorize or issue shares of any class or series of stock,
convertible into or exchangeable for, or having option rights to purchase, any
shares of stock having any preference or priority superior to or on a parity
with any preference or priority of the Series B Preferred Stock; or

              (iv)   reclassify any class or series of any Common Stock into
shares having any preference or priority superior to or on a parity with any
such preference or priority of Series B Preferred Stock.

       (c)    In addition to any other rights provided by law, so long as any
shares of Series C Preferred Stock are outstanding, the Corporation shall not,
without first obtaining the affirmative vote or written consent of the holders
of more than 67% of the then outstanding shares of the Series C Preferred Stock:

              (i)    amend or repeal any provision of, or add any provision to,
these Restated Articles of Incorporation or By-Laws of the Corporation that
changes the terms of the Series C Preferred Stock or any rights of holders of
the Series C Preferred Stock;

              (ii)   authorize or issue shares of any class or series of stock
having any preference or priority superior to or on a parity with any such
preference or priority of the Series C Preferred Stock or in any manner which
adversely affects the rights of the holders of the Series C Preferred Stock;

              (iii)  authorize or issue shares of any class or series of stock,
convertible into or exchangeable for, or having option rights to purchase, any
shares of stock having any preference or priority superior to or on a parity
with any preference or priority of the Series C Preferred Stock; or

              (iv)   reclassify any class or series of any Common Stock into
shares having any preference or priority superior to or on a parity with any
such preference or priority of Series C Preferred Stock.

9.            PREEMPTIVE RIGHTS. (a) Each holder of Series A Preferred Stock,
each holder of Series B Preferred Stock, each holder of Series C Preferred Stock
and each holder of Common Stock into which Preferred Stock was converted (any
such holder, a "Holder") shall be entitled to purchase its pro rata share of any
New Securities (as defined in Section 9(d) of this Article III) that the Company
proposes to issue or sell. For purposes of this Section 9, a Holder's pro rata
share ("Pro Rata Share") of New Securities is equal to a fraction (calculated to
the nearest 1/100th of a share of Common Stock), the numerator of which is equal
to the Common Stock held by such Holder on the date immediately prior to the
date such New Securities are issued or sold assuming the exercise or conversion
in full of all outstanding options and warrants to purchase capital stock of the
Corporation held by such Holder and after giving effect to the conversion of all
outstanding Series A Preferred Stock held by such Holder at the Series A Common
Equivalent Rate, Series B Preferred Stock held by such Holder at the Series B
Common Equivalent Rate, and Series C Preferred Stock held by such Holder at the
Series C

<PAGE>   23

Common Equivalent Rate, and the denominator of which is equal to the total
number of shares of Common Stock outstanding on the date immediately prior to
the date such New Securities are issued or sold assuming the exercise or
conversion in full of all outstanding options and warrants to purchase capital
stock of the Corporation and after giving effect to the conversion of all
outstanding Series A Preferred Stock at the Series A Common Equivalent Rate, all
outstanding Series B Preferred Stock at the Series B Common Equivalent Rate, and
all outstanding Series C Preferred Stock at the Series C Common Equivalent Rate
each as in effect immediately prior to the issuance or sale of the New
Securities.

              (b)    If the Corporation proposes to issue or sell any New
Securities, it shall give each Holder written notice of the type of New
Securities to be issued or sold, the price of such securities and the principal
terms upon which the Corporation proposes to issue or sell such securities. Each
Holder shall have 30 days after delivery of any such notice to elect to purchase
up to its Pro Rata Share for the price and upon the terms specified in such
notice by giving written notice to the Corporation and stating therein the
quantity of New Securities that such holder will purchase. If some Holders elect
not to purchase their entire Pro Rata Share of New Securities while the quantity
of New Securities that other Holders (the "Purchasers") are willing to purchase
exceeds their Pro Rata Share, the Corporation shall sell, to the extent that the
Purchasers are willing to purchase, the aggregate unpurchased amount of the
Holders' Pro Rata Share of such securities to the Purchasers. If the Purchasers
are willing to purchase more than the aggregate unpurchased amount of the
Holders' Pro Rata Share of New Securities, the unpurchased securities shall be
allocated among the Purchasers in proportion to the number of shares of Common
Stock held by them on the date immediately prior to the date such New Securities
are issued or sold assuming the exercise or conversion in full of all of such
Holder's outstanding options and warrants to purchase capital stock of the
Corporation and after giving effect to the conversion of all of such Holder's
outstanding Series A Preferred Stock at the Series A Common Equivalent Rate,
such Holder's Series B Preferred Stock at the Series B Common Equivalent Rate,
and such Holder's Series C Preferred Stock at the Series C Common Equivalent
Rate each as in effect immediately prior to the issuance or sale of the New
Securities.

              (c)    For a period of 90 days after the 30-day period in which
Holders may elect to purchase any New Securities, the Corporation shall have the
right to sell all New Securities not purchased by the Holders to any persons or
entities, but only at or above the price, and only upon terms not materially
more favorable than those, offered to the Holders. If the Corporation has not
sold any such New Securities within such 90-day period, the Corporation shall
not thereafter issue or sell such New Securities without first offering such New
Securities to the Holders in the manner provided in this Section 9.

              (d)    For purposes of this Section 9, the term "New Securities"
means any shares of Common Stock, whether authorized now or in the future, and
any rights, or options or warrants to purchase, or any securities convertible
into, shares of Common Stock; provided, however, that the following shall not
constitute New Securities: (i) securities issued pursuant to the acquisition of
another business entity by the Corporation by merger, purchase of substantially
all of the assets of such entity, or other reorganization whereby the
Corporation owns more than 50% of the voting power of such entity; (ii)
securities issued pursuant to any arrangement

<PAGE>   24

approved by the Corporation's Board to employees, officers and directors of, or
consultants, advisors or other persons performing services to the Corporation or
its subsidiaries; (iii) securities issued in connection with any stock split,
stock dividend, or recapitalization of the Corporation; (iv) Common Stock issued
upon exercise or conversion of any Convertible Security if the Holders elected
not to purchase such Convertible Security pursuant to this Section 9; (v) shares
of Preferred Stock issued as dividends on outstanding shares of Preferred Stock;
(vi) Common Stock issued upon exercise of the Warrants issued pursuant to that
certain Warrant Agreement dated as of March 23, 1994, and the Warrants issued to
Alex. Brown & Sons Incorporated pursuant to separate Series B Preferred Stock
Warrants dated April 15, 1996, June 27, 1996, and June 27, 1996 (collectively,
the foregoing are referred to as the "Warrants"); or (vii) shares of Series C
Preferred Stock issued pursuant to Section 8(g) of the Series C Purchase
Agreement.

COMMON STOCK

10.           COMMON STOCK VOTING RIGHTS. (a) Except as otherwise required by
law or these Restated Articles of Incorporation, each holder of Common Stock
shall (i) be entitled to notice of any shareholders meeting, and (ii) have one
vote for each share of Common Stock held by such holder on all matters, other
than the election of directors, submitted to a vote of shareholders of the
Corporation and shall vote together as a single class with the holders of the
Preferred Stock on such matters to which the holders of Preferred Stock are
entitled to vote.

              (b)    Except as otherwise provided in Section 6(b) and 6(c) of
this Article III, the holders of a majority of the outstanding shares of Common
Stock shall be entitled to elect all directors to the Board.

              (c)    For purposes of exercising any vote, election or consent
hereunder or under applicable law, shares of Common Stock held by the
Corporation or any of its subsidiaries shall not be deemed outstanding and shall
not be counted in determining the outcome of any such vote, election or consent
solicitation.

11.           DIVIDENDS. Subject to the preferential rights of the Preferred
Stock, the holders of Common Stock shall be entitled to receive, when, as and if
declared by the Board, out of funds legally available therefor, dividends
payable either in cash, in property or in shares of capital stock.
Notwithstanding the foregoing, except as provided in Section 3(e) of this
Article III, so long as any shares of the Preferred Stock are outstanding, the
Corporation shall not declare, pay or set apart for payment any dividend on any
Common Stock (other than distributions or dividends in Common Stock to holders
of Common Stock).

12.           LIQUIDATION. In the event of any Liquidation after distribution in
full of the preferential amounts and other amounts to be distributed to the
holders of shares of the Preferred Stock, holders of Common Stock shall be
entitled, unless otherwise provided by law or these Restated Articles of
Incorporation, including any certificate of designations for a series of
Preferred Stock, to receive all of the remaining assets of the Corporation of
whatever kind

<PAGE>   25

available for distribution to shareholders ratably in proportion to the number
of shares of Common Stock held by them.

                                   ARTICLE IV
                                    DIRECTORS

       1.     NUMBER OF DIRECTORS. The Board shall consist of 6 directors;
provided, however, that the number of directors may exceed 6 directors to the
extent necessary to comply with the requirements of Section 6(c) of Article III
or as otherwise provided in Section 3(a)(xii) of this Article IV. At any given
date, the number of directors established from time to time as the number of
directors of the Corporation shall be referred to as the "Authorized Directors."

       2.     COMPOSITION OF THE BOARD. No more than 2 directors may be officers
or employees of the Corporation or its subsidiaries or relatives of such persons
(collectively, the "Inside Directors"). Four (4) directors shall be appointed to
the Board as provided in Section 6(b) of Article III, and the remaining
directors shall be appointed to the Board by the holders of Common Stock (the
"Common Directors").

       3.     ACTION REQUIRING APPROVAL OF SUPERMAJORITY. (a) Except in the
event the holders of Series A Preferred Stock are entitled to elect or appoint a
majority of the Board pursuant to Section 6(c) of Article III, so long as any
shares of Series A Preferred Stock, Series B Preferred Stock or Series C
Preferred Stock are outstanding, the Corporation may not take any of the
following actions without the prior approval of at least 5 of the 6 Authorized
Directors, or such other number of Authorized Directors as may be determined by
the Board in the event the size of the Board is changed pursuant to Section
3(a)(xii) of this Article IV (a "Supermajority"):

                     (i)    expand into any business unrelated to the businesses
that the Corporation is engaged in as of July 1, 1999;

                     (ii)   lease, sell or otherwise dispose of assets or
property with a net book value in excess of the greater of $1,000,000 or 10% of
the net book value of the consolidated assets of the Corporation;

                     (iii)  create, incur or assume any indebtedness in excess
of the lesser of (a) $600,000 or (b) 10% of the sum of (1) the shareholders'
equity of the Corporation (the "Equity Value") as of the date of the proposed
indebtedness and (2) the aggregate amount of indebtedness of the Corporation the
maturity of which is at least one year (the "Long Term Debt") after the
applicable date of determination;

                     (iv)   mortgage, grant a security interest in, pledge or
otherwise encumber any of its assets if the value of such assets, when added to
the value of all other assets that have been mortgaged, secured, pledged or
encumbered, exceeds the greater of (a) $600,000 or (b) 10% of the sum of the
Equity Value at the date of the proposed mortgage or pledge and the Long Term
Debt at such date;

                     (v)    issue or sell any securities of the Corporation,
except pursuant to the payment of dividends on the Preferred Stock, the exercise
of stock options, the conversion of

<PAGE>   26

the Preferred Stock, the exercise of the Warrants, the exercise of the warrants
in favor of P. Eisenhauer, and the issuance of Series C Preferred Stock pursuant
to Section 8(g) of the Series C Purchase Agreement;

                     (vi)   declare or pay any dividend;

                     (vii)  except as provided in Section 5 of Article III,
apply any of its assets to the redemption, retirement, purchase or acquisition,
directly or indirectly, or through any subsidiary of any shares of any class or
series of its capital stock or debt securities except, with respect to debt
securities, to the extent that any such purchase, redemption or acquisition is
in accordance with the terms of such debt securities;

                     (viii) make any capital expenditures in excess of the
greater of (i) $250,000 or (ii) 2% of the net book value of the consolidated
assets of the Corporation;

                     (ix)   except as required by the Amended and Restated
Information and Registration Rights Agreement dated as of July 31, 1995 by and
among the Corporation, and certain holders of Series A Preferred Stock and
purchasers of the Series B Preferred Stock, and as required by the Information
and Registration Rights Agreement dated August 25, 1999 by and among the
Corporation and certain holders of Series C Preferred Stock, register any of its
securities under the Act or grant any registration rights with respect to any of
its securities;

                     (x)    enter into any transaction with any Affiliate (as
defined below), including without limitation, (a) any loans, cash advances,
capital contributions or other transfers of assets from the Corporation to an
Affiliate, and (b) any guarantee of any obligation of an Affiliate;

                     (xi)   take any action to amend or repeal any provision of,
or add any provision to, these Restated Articles of Incorporation or the By-Laws
of the Corporation;

                     (xii)  change the size of the Board except to the extent
necessary to comply with the requirements of Section 6(c) of Article III;

                     (xiii) issue any capital stock or other equity pursuant to
employee and director options and plans beyond 5,250,000 shares reserved as of
the date hereof;

                     (xiv)  approve the Corporation's annual operating budget;
or

                     (xv)   adopt or amend any employment contracts or benefit
plans of the executive management of the Corporation (including, without
limitation, any employment contracts between the Corporation and Dr. James
Vander Mey and Timothy Vander Mey).

              "Affiliate" means any Person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Corporation.
For purposes of this definition, "control" of any Person means the possession,
directly or indirectly, of the power to direct or

<PAGE>   27

cause the direction of the management policies of such Person, whether through
the ownership of voting securities, by agreement or otherwise.

              (b)    Except in the event the holders of Series A Preferred Stock
are entitled to elect or appoint a majority of the Board pursuant to Section
6(c) of Article III, so long as any shares of Series A Preferred Stock, Series B
Preferred Stock or Series C Preferred Stock are outstanding, the Corporation may
not take any of the following actions without the prior approval of at least 4
of the 6 Authorized Directors, or such other number of Authorized Directors as
may be determined by the Board in the event the size of the Board is changed
pursuant to Section 3(a)(xii) of this Article IV:

                     (i)    merge or consolidate with or into any other Person;

                     (ii)   commence a Liquidation;

                     (iii)  permit the acquisition of the Corporation by another
entity or any other Change of Control;

                     (iv)   enter into any significant joint ventures,
partnerships, licensing agreement or establish non-wholly owned subsidiaries, or
another business entity;

                     (v)    call any warrants then outstanding pursuant to the
applicable agreement governing the call of such warrants;

                     (vi)   appoint or remove any member of executive management
of the Corporation; or

                     (vii)  change the Corporation's independent public
accountants.

              (c)    The Board shall take such action as it determines in
good faith to be reasonably necessary to prevent any Person or group of related
Persons from acquiring in one or more transactions, directly or indirectly,
beneficial ownership of more than 40% of the outstanding voting securities of
the Corporation unless (A) such acquisition is approved by a Supermajority of
directors, or (B) such Person (1) makes an offer to purchase 100% of the other
outstanding voting securities (and securities convertible into or exchangeable
for voting securities) of the Corporation on the same terms and (2) such Person
purchases either (x) 100% of the other outstanding voting securities or (y) such
amount as may be necessary to effect a "second stage merger" and then effects
such merger on the same terms and conditions specified in the offer to purchase
the securities.

                                    ARTICLE V
                 AMENDMENT OF RESTATED ARTICLES OF INCORPORATION

<PAGE>   28

       Except to the extent limited by these Restated Articles of Incorporation,
the Corporation reserves the right to amend or repeal any provision contained in
these Restated Articles of Incorporation in the manner now or hereafter
prescribed by statute.

                                   ARTICLE VI
                                    DURATION

       The Corporation shall exist perpetually, commencing November 3, 1986.

                                   ARTICLE VII
                PRINCIPAL AND REGISTERED OFFICE; REGISTERED AGENT

       The address of the Corporation's principal and registered office in the
State of Florida is 5100 West Silver Springs Boulevard, Ocala, Florida 34482.
The name of its registered agent at such address is Horst G. Sandfort.

<PAGE>   29

                                   CERTIFICATE

       The foregoing Restated Articles of Incorporation (i) contain an amendment
to the Corporation's Restated Articles of Incorporation requiring shareholder
approval and (ii) were duly adopted in accordance with the Act by the Board of
Directors of the Corporation on July 15, 1999 and approved by the holders of the
shares of Common Stock, holders of the shares of Series A Preferred Stock, and
holders of the shares of Series B Preferred Stock, being the sole shares
entitled to vote thereon, on August 24, 1999, and the votes cast for the
foregoing Restated Articles of Incorporation were sufficient for approval by
such holders of Common Stock, Series A Preferred Stock and Series B Preferred
Stock.





       IN WITNESS WHEREOF, the undersigned President and Chief Executive Officer
of this Corporation has executed these Restated Articles of Incorporation as of
August 25, 1999.


                                             INTELLON CORPORATION


                                             By:
                                                --------------------------------
                                                   Horst G. Sandfort
                                                   President and Chief Executive

       Officer



STATE OF FLORIDA
COUNTY OF MARION

       The foregoing instrument was acknowledged before me this 25th day of
August, 1999, by Horst G. Sandfort, as President and Chief Executive Officer of
Intellon Corporation.


                                             Printed Name:
                                                          ----------------------
                                             Notary Public, State of Florida

Personally Known [ ] or Produced Identification [ ]
Type of Identification Produced



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