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                              AMENDED AND RESTATED

                    CERTIFICATE OF DESIGNATION OF RIGHTS AND

                   PREFERENCES OF SERIES B PREFERRED STOCK OF

                       AUTOMOTIVE PERFORMANCE GROUP, INC.

 PURSUANT TO SECTION 151 OF THE GENERAL CORPORATION LAW OF THE STATE OF DELAWARE



         Automotive Performance Group, Inc., a corporation organized and
existing under the General Corporation Law of the State of Delaware (the
"Corporation"), does hereby certify that, pursuant to the authority conferred
upon the board of directors of the Corporation (the "Board of Directors") by its
Certificate of Incorporation, as amended (hereinafter referred to as the
"Certificate of Incorporation"), and pursuant to the provisions of Section 151
of the General Corporation Law of the State of Delaware, the Board of Directors
duly approved and adopted the following resolution (the "Resolution"):

                  RESOLVED, that, pursuant to the authority vested in the Board
         of Directors by the Certificate of Incorporation, the Board of
         Directors does hereby create, authorize and provide for the issuance of
         7,000,000 shares of Preferred Stock, par value $.0001 per share, having
         the designation, and relative rights, limitations and preferences set
         forth herein:

         1.       DESIGNATION.

                  (a) There is hereby created out of the authorized and unissued
         shares of Preferred Stock of the Corporation a class of Preferred Stock
         designated as "Series B Preferred Stock". The number of shares
         constituting such class shall be 7,000,000 and each share shall have a
         stated value of $1.00.

                  (b) The Series B Preferred Stock shall, with respect to (i)
         dividends, (ii) distributions upon liquidation, winding up and
         dissolution of the Corporation, and (iii) distributions upon merger,
         share exchange or a sale or other disposition of all or substantially
         all of the assets of the Corporation, rank senior to all classes of
         Common Stock of the Corporation and to each other series of Preferred
         Stock of the Corporation other than the Series A Preferred Stock
         referenced in the following sentence (the Common Stock and all series
         of Preferred Stock other than the Series A Preferred Stock is
         hereinafter referred to as "Junior Stock"). The Series B Preferred
         Stock shall, with respect to (i) dividends, (ii) distributions upon
         liquidation, winding up and dissolution of the
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         Corporation, and (iii) distribution upon merger, share exchange or a
         sale or other disposition of all or substantially all of the assets of
         the Corporation, rank junior to the Series A Preferred Stock authorized
         pursuant to the Certificate of Designation of Rights of Series A
         Preferred Shares of Automotive Performance Group, Inc., dated August 4,
         1998 ("Senior Stock").

         2.       DIVIDENDS.

                  (a) The holders of the then outstanding shares of Series B
         Preferred Stock shall be entitled to receive, when, as and if declared
         by the Board of Directors, out of funds legally available therefor,
         dividends on each share of Series B Preferred Stock, at a rate per
         annum equal to 13% of the stated value per share of the Series B
         Preferred Stock. All dividends shall be cumulative on a daily basis
         from the date of issuance of the Series B Preferred Stock and shall be
         payable quarterly in arrears; when, as and if declared by the Board of
         Directors, on March 31, June 30, September 30, and December 31 of each
         year (each, a "Dividend Date"). Dividends shall be paid by the issuance
         of additional shares of Series B Preferred Stock (including fractional
         shares) having an aggregate stated value equal to the amount of each
         dividend. Each dividend shall be payable, out of funds legally
         available therefor, pro-rata to the holders of record of Series B
         Preferred Stock as they appear on the stock books of the Corporation on
         the date fifteen days preceding the Dividend Date for such dividend.

                  (b) So long as any share of the Series B Preferred Stock is
         outstanding, the Corporation shall not declare, pay or set apart for
         payment any dividend on any Junior Stock 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 Stock
         or any warrants, rights, calls or options exercisable for or
         convertible into any Junior Stock, whether in cash, obligations or
         shares of the Corporation or other property, and shall not permit any
         corporation or other entity directly or indirectly controlled by the
         Corporation to purchase or redeem any Junior Stock or any such
         warrants, rights, calls or options unless full cumulative dividends
         determined in accordance herewith on the Series B Preferred Stock have
         been paid in full.

                  (c) Dividends payable on the Series B 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 payable.



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         3.       LIQUIDATION PREFERENCE.

                  (a) Upon any voluntary or involuntary liquidation, dissolution
         or winding up of the affairs of the Corporation, the holders of shares
         of Series B Preferred Stock then outstanding shall be entitled to be
         paid out of the assets of the Corporation available for distribution to
         its stockholders, before any distribution or payment shall be made to
         the holders of Junior Stock but after all required distributions or
         payments have been made to the holders of Senior Stock, an amount (to
         the extent possible, in cash) equal to the greater of (i) the stated
         value of each share plus accumulated and unpaid dividends thereon to
         the date fixed for liquidation, dissolution or winding up (including an
         amount equal to a prorated dividend for the period from the last
         Dividend Date to the date fixed for liquidation, dissolution or winding
         up), and (ii) the amount that would be payable to the holders of the
         Series B Preferred Stock if such holders had converted all outstanding
         shares of Series B Preferred Stock into shares of Common Stock
         immediately prior to such liquidation, dissolution or other winding up.
         If such payment shall have been made in full to the holders of the
         Series B Preferred Stock, the remaining assets and funds of the
         Corporation shall be distributed among the holders of Junior Stock,
         according to their respective shares and priorities. If, upon any such
         liquidation, dissolution or other winding up of the affairs of the
         Corporation, the net assets of the Corporation distributable among the
         holders of all outstanding shares of the Series B Preferred Stock shall
         be insufficient to permit the payment in full to such holders of the
         preferential amounts to which they are entitled, then the entire net
         assets of the Corporation shall be distributed among the holders of the
         Series B Preferred Stock ratably in proportion to the full amounts to
         which they would otherwise be respectively entitled.

                  (b) In the event of any merger or share exchange of the
         Corporation, or a sale or other disposition of all or substantially all
         of the assets of the Corporation ("Capital Transaction"), the holders
         of the Series B Preferred Stock then outstanding shall be entitled to
         receive, before any payment or declaration and setting apart for
         payment of any amount shall be made in respect of Junior Stock, but
         after all required distributions or payments have been made to the
         holders of Senior Stock, for each share of Series B Preferred Stock so
         held, in cash or securities (including, without limitation, debt
         securities) received from the acquiring corporation at the closing of
         any such Capital Transaction, an amount equal to the amount payable
         with respect to each share of Series B Preferred Stock under Section
         3(a) hereof had the Corporation been liquidated at the closing of any
         such Capital Transaction. If the payment required under this Section
         3(b) shall have been made in full to the holders of the Series B
         Preferred Stock, the remaining assets and funds of the Corporation
         shall be distributed among the holders of Junior Stock, according to
         their respective


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         shares and priorities. If the proceeds of a Capital Transaction shall
         be insufficient to permit the payment in full to the holders of the
         Series B Preferred Stock of the preferential amounts to which they are
         entitled, then the entire proceeds of such transaction shall be
         distributed among the holders of the Series B Preferred Stock ratably
         in proportion to the full amounts to which they would otherwise be
         respectively entitled.

                  (c) If non-cash assets are received in a Capital Transaction
         with respect to which Section 3(b) applies, the assets received for
         purposes of Section 3(b) shall be valued as follows:

                           (i) If the assets received are securities that are
         listed on NASDAQ or an exchange, the value shall be deemed to be the
         three day high average closing price (or average between bid/ask if
         OTC) on such exchange or NASDAQ over the thirty day period prior to the
         closing of the Capital Transaction in which the securities are
         received.

                           (ii) If the assets received are of readily
         ascertainable market value, then that value shall be used.

                           (iii) If the assets are unlisted securities or other
         assets that do not have a readily ascertainable value, the Board of
         Directors, in good faith, shall value said assets.

                           (iv) The fact that assets to be received in a Capital
         Transaction may require a valuation process as described herein shall
         not delay closing the transaction by which the assets are to be
         received.

                  (d) With respect to any transaction which involves a merger or
         exchange of shares, or a sale of substantially all of the assets of the
         Corporation, the holders of the Series B Preferred Stock shall receive
         not less than 10 days notice of the transaction and the terms and
         conditions thereof.

         4.       REDEMPTION.

                  (a) The Corporation may, at its option, at any time on or
         after the fourth anniversary of the date of issuance of Series B
         Preferred Stock, redeem such Series B Preferred Stock, in whole or in
         part, for a redemption price (the "Redemption Price") equal to the
         stated value of the stock being redeemed, plus an amount equal to all
         accumulated and unpaid dividends (including, but not limited to, an
         amount equal to a prorated dividend for the period from the immediately
         preceding Dividend Date to the redemption date) thereon.



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                  (b) At least thirty (30) days and not more than sixty (60)
         days prior to the date fixed for any redemption of the Series B
         Preferred Stock, written notice (the "Redemption Notice") shall be
         given by first class mail, postage prepaid, to each holder of record on
         the record date fixed for such redemption of the Series B Preferred
         Stock ("Holder") at such Holder's address as it appears on the stock
         books of the Corporation, provided that no failure to give such notice
         nor any deficiency therein shall affect the validity of the procedure
         for the redemption of any shares of Series B Preferred Stock to be
         redeemed except as to the Holder or Holders to whom the Corporation has
         failed to give said notice or except as to the Holder or Holders whose
         notice was defective. The Redemption Notice shall state:

                           (i) The redemption price;

                           (ii) Whether all or less than all the outstanding
         shares of the Series B Preferred Stock are to be redeemed and the total
         number of shares of the Series B Preferred Stock being redeemed
         ("Redeemed Shares");

                           (iii) The date fixed for redemption ("Redemption
         Date");

                           (iv) That the Holder is to surrender to the
         Corporation, in the manner, at the place or places and at the price
         designated, his certificate or certificates representing the shares of
         Series B Preferred Stock to be redeemed; and

                           (v) That dividends on the shares of the Series B
         Preferred Stock to be redeemed shall cease to accumulate on such
         Redemption Date unless the Corporation defaults in the payment of the
         Redemption Price.

                  (c) Each Holder shall surrender the certificate or
         certificates representing the Redeemed Shares to the Corporation, duly
         endorsed (or otherwise in proper form for transfer, as determined by
         the Corporation), in the manner and at the place designated in the
         Redemption Notice, and on the Redemption Date the full redemption price
         for such shares shall be payable in cash to the Holder thereof, and
         each surrendered certificate shall be canceled and retired. In the
         event that less than all of the shares represented by any such
         certificate are redeemed, a new certificate shall be issued
         representing the unredeemed shares.

                  (d) On and after the Redemption Date, unless the Corporation
         fails to make payment in full of the applicable Redemption Price,
         dividends on the Series B Preferred Stock called for redemption shall
         cease to accumulate and all rights of the Holders of Redeemed Shares
         (including, without limitation, the


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<PAGE>   6
         conversion rights set forth in Section 5 hereof) shall terminate with
         respect thereto, other than the right to receive the Redemption Price;
         provided, however, that if a Redemption Notice shall have been given as
         provided in Section (4)(a) above and the funds necessary for redemption
         (including an amount in cash in respect of all dividends that will
         accumulate to the Redemption Date) shall have been irrevocably
         deposited in trust for the equal and ratable benefit of the Holders of
         the shares to be redeemed, then, at the close of business on the day on
         which such funds are segregated and set aside, all rights of the
         Holders of the shares to be redeemed (including, without limitation,
         the conversion rights set forth in Section 5 hereof) shall terminate.

         5. CONVERSION RIGHTS. The Series B Preferred Stock shall be convertible
         as follows:

                  (a) Subject to and upon compliance with the provisions of this
         Section 5, the holder of any share of Series B Preferred Stock shall
         have the rights, at such holder's option, to convert such share of
         Series B Preferred Stock into fully paid and nonassessable shares of
         Common Stock, in each case at the Conversion Price set forth in Section
         5(b), below, in effect on the Conversion Date (as defined in Section
         5(c) below). If the Series B Preferred Stock has been called for
         redemption, such right of conversion shall terminate as provided in
         Section 5(d) hereof.

                  (b) Each share of Series B Preferred Stock shall be converted
         into a number of shares of Common Stock determined by dividing (i) the
         stated value of such Series B Preferred Stock plus an amount equal to
         the accumulated and unpaid dividends thereon to the Conversion Date
         (including an amount equal to a prorated dividend for the period from
         the last Dividend Date to the Conversion Date) by (ii) the "Conversion
         Price." For purposes hereof, the Conversion Price shall initially be
         Two Dollars ($2.00) per share and shall be subject to adjustment in
         accordance with the provisions of Section 5(e) below.

                  (c) The holder of any shares of Series B Preferred Stock may
         exercise the conversion right specified in Section 5(a) by surrendering
         to the Corporation or any transfer agent of the Corporation the
         certificate or certificates for the shares to be converted, accompanied
         by written notice specifying the number of shares to be converted.
         Conversion shall be deemed to have been effected on the date when
         delivery of notice of an election to convert and certificates for
         shares is received by the Corporation and such date is referred to
         herein as the "Conversion Date." Subject to the provisions of
         Subsection 5(e)(vii), as promptly as practicable thereafter, the
         Corporation shall issue and deliver to or upon the written order of
         such holder a certificate or certificates for the number of full shares
         of Common Stock to which such holder


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<PAGE>   7
         is entitled, and a check or cash with respect to any fractional
         interest in a share of Common Stock, as provided in Section 5(d).

                           Subject to the provisions of Subsection 5(e)(vii),
         the person in whose name the certificate or certificates for Common
         Stock are to be issued shall be deemed to have become a holder of
         record of such Common Stock, immediately prior to the close of business
         on the Conversion Date. Upon conversion of only a portion of the number
         of shares covered by a certificate representing shares of Series B
         Preferred Stock surrendered for conversion, the Corporation shall issue
         and deliver to or upon the written order of the holder of the
         certificate so surrendered for conversion, at the expense of the
         Corporation, a new certificate covering the number of shares of Series
         B Preferred Stock representing the unconverted portion of the
         certificate so surrendered.

                  (d) No fractional shares of Common Stock shall be issued upon
         conversion of shares of Series B Preferred Stock. Instead of any
         fractional shares of Common Stock that would otherwise be issuable upon
         conversion of any shares of Series B Preferred Stock, the Corporation
         shall pay a cash adjustment in respect of such fractional interest in
         an amount equal to that fractional interest of a share of Common Stock
         multiplied by the then market price of each share.

                  (e) The Conversion Price shall be subject to adjustment from
         time to time as follows:

                           (i) If the Corporation shall issue any Common Stock,
         other than "Excluded Stock" (as defined below), without consideration
         or for a consideration per share less than $2.00/share (other than
         pursuant to a bona fide underwritten offering (including so-called Rule
         144A offerings) or in connection with a bona fide acquisition of a
         business or a line of business or division to be used in the operation
         of the business of the Corporation (whether pursuant to a merger, asset
         acquisition or otherwise)), the Conversion Price in effect immediately
         prior to each such issuance shall immediately (except as provided
         below) be reduced to the price determined by multiplying the Conversion
         Price in effect immediately prior to such issuance by a fraction (A)
         the numerator of which is the sum of (1) the number of shares of Common
         Stock outstanding immediately prior to such issuance and (2) the number
         of shares of Common Stock that the aggregate consideration, if any,
         received by the Corporation upon such issuance, would purchase at
         $2.00/share and (B) the denominator of which is the total number of
         shares of Common Stock outstanding immediately after such issuance.



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                                    For purposes of this Section 5(e), "Excluded
         Stock" means shares of Common Stock issued or reserved for issuance by
         the Corporation (i) as a stock dividend payable in shares of Common
         Stock, (ii) upon any subdivision or split up of the outstanding shares
         of Common Stock, (iii) upon conversion of shares of preferred stock of
         any class, (iv) pursuant to the Corporation's stock option plan, (v) in
         a transaction that is addressed in this Section 5(e) (other than this
         Subsection 5(e)(i)), or (vi) with respect to the exercise of warrants
         issued to Lancer Offshore, Inc., the Orbiter Fund or Dominion Income
         Management Corp. under Warrants all of which were issued on July 30,
         1999.

                                    For the purposes of any adjustment of the
         Conversion Price pursuant to this Section 5(e), the following
         provisions shall be applicable:

                                    (A) In the case of the issuance of Common
         Stock for cash, the amount of the consideration received by the
         Corporation shall be deemed to be the amount of the cash proceeds
         received by the Corporation for such Common Stock before deducting
         therefrom any discounts, commissions, taxes or other expenses allowed,
         paid or incurred by the Corporation for any underwriting or otherwise
         in connection with the issuance and sale thereof.

                                    (B) In the case of the issuance of Common
         Stock (otherwise than upon the conversion of shares of capital stock or
         other securities of the Corporation) for a consideration in whole or in
         part other than cash, including securities acquired in exchange
         therefor (other than securities by their terms so exchangeable), the
         consideration other than cash shall be deemed to be the fair market
         value thereof, irrespective of any accounting treatment.

                                    (C) In the case of the issuance of (1)
         options, warrants or other rights to purchase or acquire Common Stock
         (whether or not at the time exercisable), (2) securities by their terms
         convertible into or exchangeable for Common Stock (whether or not at
         the time so convertible or exchangeable) or options, warrants or rights
         to purchase such convertible or exchangeable securities (whether or not
         at the time exercisable):

                                             (1) The aggregate maximum number of
         shares of Common Stock deliverable upon exercise of such options,
         warrants or other rights to purchase or acquire Common Stock shall be
         deemed to have been issued at the time such options, warrants or rights
         were issued and for a consideration equal to the consideration
         (determined in the manner provided in subclauses (A) and (B) above), if
         any, received by the Corporation upon the issuance of such options,
         warrants or rights plus the minimum purchase price



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<PAGE>   9
         provided in such options, warrants or rights for the shares of Common
         Stock covered thereby;

                                             (2) The aggregate maximum number of
         shares of Common Stock deliverable upon conversion of or in exchange
         for any such convertible or exchangeable securities, or upon the
         exercise of options, warrants or other rights to purchase or acquire
         such convertible or exchangeable securities and the subsequent
         conversion or exchange thereof, shall be deemed to have been issued at
         the time such securities were issued or such options, warrants or
         rights were issued and for a consideration equal to the consideration,
         if any, received by the Corporation for any such securities and related
         options, warrants or rights (excluding any cash received on account of
         accrued interest or accrued dividends), plus the additional
         consideration (determined in the manner provided in subclauses (A) and
         (B) above), if any, to be received by the Corporation upon the
         conversion or exchange of such securities, or upon the exercise of any
         related options, warrants or rights to purchase or acquire such
         convertible or exchangeable securities and the subsequent conversion or
         exchange thereof;

                                             (3) On any change in the number of
         shares of Common Stock deliverable upon exercise of any such options,
         warrants or rights or conversion or exchange of such convertible or
         exchangeable securities or any change in the consideration to be
         received by the Corporation upon such exercise, conversion or exchange,
         including, but not limited to, a change resulting from the
         anti-dilution provisions thereof, the Conversion Price as then in
         effect shall forthwith be readjusted to such Conversion Price as would
         have been obtained had an adjustment been made upon the issuance of
         such options, warrants or rights not exercised prior to such change, or
         of such convertible or exchangeable securities not converted or
         exchanged prior to such change, upon the basis of such change;

                                             (4) On the expiration or
         cancellation of any such options, warrants or rights that are
         unexercised, or the termination of the right to convert or exchange
         such convertible or exchangeable securities, if the Conversion Price
         shall have been adjusted upon the issuance thereof, the Conversion
         Price shall forthwith be readjusted to such Conversion Price as would
         have been obtained had an adjustment been made upon the issuance of
         such options, warrants, rights or such convertible or exchangeable
         securities on the basis of the issuance of only the number of shares of
         Common Stock actually issued upon the exercise of such options,
         warrants or rights, or upon the conversion or exchange of such
         convertible or exchangeable securities; and



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                                             (5) If the Conversion Price shall
         have been adjusted upon the issuance of any such options, warrants,
         rights or convertible or exchangeable securities, no further adjustment
         of the Conversion Price shall be made for the actual issuance of Common
         Stock upon the exercise, conversion or exchange thereof.

                           (ii) All shares of Excluded Stock which the
         Corporation has reserved for issuance shall be deemed to be outstanding
         for all purposes of computations under Subsection 5(e)(i).

                           (iii) If the Corporation shall (A) declare a dividend
         or make a distribution on its Common Stock in shares of its Common
         Stock, (B) subdivide or reclassify the outstanding shares of Common
         Stock into a greater number of shares, or (C) combine or reclassify the
         outstanding Common Stock into a smaller number of shares, the
         Conversion Price in effect at the time of the record date for such
         dividend or distribution or the effective date of such subdivision,
         combination or reclassification shall be proportionately adjusted so
         that the holder of any shares of Series B Preferred Stock surrendered
         for conversion after such date shall be entitled to receive the number
         of shares of Common Stock that such holder would have owned or been
         entitled to receive had such Series B Preferred Stock been converted
         immediately prior to such date. Successive adjustments in the
         Conversion Price shall be made whenever any event specified above in
         this clause (iii) shall occur.

                           (iv) In case the Corporation shall fix a record date
         for the making of a distribution (an "Extraordinary Distribution") to
         all holders of shares of its Common Stock (A) of shares of any class
         other than its Common Stock or (B) of evidences of indebtedness of the
         Corporation or (C) of assets, including but not limited to, securities
         issued by or others (excluding dividends or distributions referred to
         in Subsection 5(e)(iii) above), or (D) of options, warrants or other
         rights (excluding those referred to in Subsection 5(e)(i) above), then
         in each such case either, at the option of the Corporation, (x) the
         Corporation shall declare and distribute to each holder of shares of
         Series B Preferred Stock a dividend or distribution in the same form
         and kind, and at the same time, as the Extraordinary Distribution and
         in an amount so that such holder shall receive the same dividend or
         distribution as if such shares of Series B Preferred Stock had been
         converted to Common Stock immediately prior to the record date for the
         Extraordinary Distribution, or (y) the Conversion Price in effect
         immediately prior thereto shall be reduced immediately thereafter to
         the price determined by dividing (1) an amount equal to the difference
         resulting from (A) the number of shares of Common Stock outstanding on
         such record date multiplied by the Conversion Price per share on such
         record date, less (B) the fair market value of said shares or evidences
         of indebtedness or assets or


                                       10
<PAGE>   11
         rights or warrants to be so distributed, by (2) the number of shares of
         Common Stock outstanding on such record date. Such adjustment shall be
         made successively whenever such a record date is fixed. In the event
         that such distribution is not so made, the Conversion Price then in
         effect shall be readjusted, effective as of the date when the Board of
         Directors determines not to distribute such shares, evidences of
         indebtedness, assets, rights or warrants, as the case may be, to the
         Conversion Price which would then be in effect if such record date had
         not been fixed.

                           (v) In case of any consolidation with or merger of
         the Corporation with or into another corporation or entity, or in case
         of any sale, lease or conveyance to another corporation of the assets
         of the Corporation as an entirety or substantially as an entirety, each
         share of Series B Preferred Stock shall after the date of such
         consolidation, merger, sale, lease or conveyance be convertible into
         the number of shares of stock or other securities or property
         (including cash) to which the Common Stock issuable (immediately prior
         to the time of such consolidation, merger, sale, lease or conveyance)
         upon conversion of such share of Series B Preferred Stock would have
         been entitled upon such consolidation, merger, sale, lease or
         conveyance; and in any such case, if necessary, the provisions set
         forth herein with respect to the rights and interests thereafter of the
         holders of the shares of Series B Preferred Stock shall be
         appropriately adjusted so as to be applicable, as nearly as may
         reasonably be, to any shares of stock or other securities or property
         thereafter deliverable on the conversion of the shares of Series B
         Preferred Stock.

                           (vi) All calculations under this Section 5(e) shall
         be made to the nearest cent or to the nearest one ten thousandth of a
         share, as the case may be.

                           (vii) In any case in which the provisions of this
         Section 5(e) shall require that an adjustment shall become effective
         immediately after a record date for an event, the Corporation may defer
         until the occurrence of such event (A) issuing to the holder of any
         share of Series B Preferred Stock converted after such record date and
         before the occurrence of such event the additional shares of Common
         Stock issuable upon such conversion by reason of the adjustment
         required by such event over and above the shares of Common Stock
         issuable upon such conversion before giving effect to such adjustment
         and (B) paying to such holder any amount of cash in lieu of a
         fractional share of Common Stock pursuant to Section 5(d); provided
         that the Corporation, upon request, shall deliver to such holder a due
         bill or other appropriate instrument evidencing such holder's right to
         receive such additional shares, and such cash, upon the occurrence of
         the event requiring such adjustment.



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<PAGE>   12
                  (f) Whenever the Conversion Price shall be adjusted, the
         Corporation shall forthwith file, at the office of any transfer agent
         for the Series B Preferred Stock and at the principal office of the
         Corporation, a statement showing in detail the facts requiring such
         adjustment and the Conversion Price that shall be in effect after such
         adjustment, and the Corporation shall also cause a copy of such
         statement to be sent by mail, first class postage prepaid, to each
         holder of shares of Series B Preferred Stock at its address appearing
         on the Corporation's records. Where appropriate, such copy may be given
         in advance and may be included as part of a notice required to be
         mailed under the provisions of Section 5(g).

                  (g) In the event the Corporation shall propose to take any
         action of the type described in clause (i) (but only if the action of
         the type described in clause (i) would result in an adjustment in the
         Conversion Price), (iii), (iv) or (v) of Section 5(e), the Corporation
         shall give notice to each holder of shares of Series B Preferred Stock,
         in the manner set forth in Section 5(f), which notice shall specify the
         record date, if any, with respect to any such action and the
         approximate date on which such action is to take place. Such notice
         shall also set forth such facts with respect thereto as shall be
         reasonably necessary to indicate the effect of such action (to the
         extent such effect may be known at the date of such notice) on the
         Conversion Price and the number, kind or class of shares or other
         securities or property which shall be deliverable upon conversion of
         shares of Series B Preferred Stock. In the case of any action which
         would require the fixing of a record date, such notice shall be given
         at least ten days prior to the date so fixed, and in case of all other
         action, such notice shall be given at least fifteen days prior to the
         taking of such proposed action. Failure to give such notice, or any
         defect therein, shall not affect the legality or validity of any such
         action.

                  (h) For the purposes of this Section 5, the sale or other
         disposition of any Common Stock theretofore held in the Corporation's
         treasury shall be deemed to be an issuance thereof.

                  (i) The Corporation shall pay all documentary, stamp, transfer
         or other transnational taxes attributable to the issuance or delivery
         of shares of Common Stock, upon conversion of any shares of Series B
         Preferred Stock; provided that the Corporation shall not be required to
         pay any taxes which may be payable in respect of any transfer involved
         in the issuance or delivery of any certificate for such shares in a
         name other than that of the holder of the shares of Series B Preferred
         Stock in respect of which such shares are being issued.

                  (j) The Corporation shall reserve at all times so long as any
         shares of Series B Preferred Stock remain outstanding, free from
         preemptive rights, out


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<PAGE>   13
         of its treasury stock (if applicable) or its authorized but unissued
         shares, or both, solely for the purpose of effecting the conversion of
         the shares of Series B Preferred Stock, sufficient shares of Common
         Stock to provide for the conversion of all outstanding shares of Series
         B Preferred Stock.

                  (k) If, and so long as, any Common Stock into which the shares
         of Series B Preferred Stock are then convertible is then listed on any
         national securities exchange, the Corporation will, if permitted by the
         rules of such exchange, list and keep listed on such exchange, upon
         official notice of issuance, all shares of such Common Stock issuable
         upon conversion.

                  (l) All shares of Common Stock which may be issued upon
         conversion of the shares of Series B Preferred Stock will upon issuance
         by the Corporation be duly and validly issued, fully paid and
         nonassessable, and free from all taxes, liens and charges with respect
         to the issuance thereof, and the Corporation shall take no action which
         will cause a contrary result (including without limitation, any action
         which would cause the Conversion Price to be less than the par value,
         if any, of the Common Stock).

         6.       REGISTRATION RIGHTS.

                  (a) If the holders of a majority of the Series B Preferred
         Stock shall have given notice of election for a conversion as provided
         in Section 5, said holders may request registration of the Common Stock
         to be received on conversion in a single registration. Such
         registration rights shall not apply, unless waived by the Corporation,
         to Common Stock received upon prior conversions.

                  (b) Upon such a request being made by the holders of a
         majority of the Series B Preferred Stock, the Corporation will notify
         all of the remaining holders of Series B Preferred Stock, and they
         shall be deemed to have requested the registration and shall be fully
         subject thereto.

                  (c) The Corporation will use its best efforts to effect a
         single public registration on the appropriate form available thereto of
         all converted shares before delivery to the holders of the Series B
         Preferred Stock so converted. The Corporation will be under no
         obligation to secure an underwriter or other seller for the shares, and
         sales of shares after the registration will be solely the
         responsibility of said holders.

                  (d) To the extent required to effect the registration,
         converting shareholders shall fully cooperate with the Corporation and
         its counsel. Failure



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<PAGE>   14
         to cooperate will entitle the Corporation to exclude a holder from the
         registration.

                  (e) The Corporation may effect the registration required under
         this Section 6 by piggyback registration on a Corporation offering if
         it so elects, or a piggyback registration by another corporation, if
         made in conjunction with an issuance of shares by that company to the
         shareholders of the Corporation or if the Corporation is subject to an
         acquisition, plan of reorganization, consolidation, exchange or merger,
         and registered shares are to be issued in conjunction therewith.

         7.       VOTING RIGHTS.

                  (a) Each holder of Series B Preferred Stock shall be entitled
         to vote on all matters, including election of the Board of Directors,
         and, except as otherwise expressly provided herein, shall be entitled
         to the number of votes equal to the number of shares of Common Stock
         into which the holder's shares of Series B Preferred Stock could then
         be converted.

                  (b) Unless otherwise required by law, the holders of Series B
         Preferred Stock and the holders of Common Stock shall vote together on
         all matters upon which shareholders are permitted to vote and not as
         separate classes. In those cases where the holders of the Series B
         Preferred Stock are required by law to vote as a separate class, the
         vote required by said class for approval of the proposed action shall
         be a simple majority of the class.

         8. REISSUANCE OF SERIES B PREFERRED STOCK. Shares of Series B Preferred
         Stock that have been issued and reacquired in any manner, including
         shares purchased or redeemed or exchanged, shall (upon compliance with
         any applicable provisions of the laws of Delaware) have the status of
         authorized and unissued shares of Preferred Stock undesignated as to
         series and may be redesignated and reissued as part of any series of
         Preferred Stock, provided that any issuance of such shares of Preferred
         Stock must be in compliance with the terms hereof.

         9. SEC REPORTS. The Corporation will provide to the holders of the
         Series B Preferred Stock within 15 days after it files them with the
         Securities Exchange Commission ("Commission"), copies of the annual
         reports and of the information, documents and other reports (or copies
         of such portions of any of the foregoing as the Commission may by rules
         and regulations prescribe) which the Corporation files with the
         Commission pursuant to Section 13 or 15 (d) of the Exchange Act.



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<PAGE>   15
         10. EXCLUSION OF OTHER RIGHTS. Except as may otherwise be required by
         law, the shares of Series B Preferred Stock shall not have any
         preferences or relative, participating, optional or other special
         rights, other than those specifically set forth in this Resolution (as
         this Resolution may be amended from time to time) and in the
         Corporation's Certificate of Incorporation. Shares of Series B
         Preferred Stock shall have no preemptive or subscription rights.

         11. MAJORITY CONSENT OF SERIES B PREFERRED STOCK HOLDERS REQUIRED
         BEFORE ISSUANCE OF NEW SERIES A PREFERRED STOCK. Prior to the date
         hereof, all of the outstanding shares of Series A Preferred Stock of
         the Corporation have been converted into Common Stock of the
         Corporation. The Corporation covenants and agrees that it shall not
         issue any new or further shares of Series A Preferred Stock without the
         prior written consent of the holders of a majority of the outstanding
         shares of Series B Preferred Stock at such time.

         12. SEVERABILITY OF PROVISIONS OF ANY RIGHT, PREFERENCE OR LIMITATION
         OF THE SERIES B PREFERRED STOCK. If any provision set forth in this
         Resolution (as this Resolution may be amended from time to time) is
         invalid, unlawful or incapable of being enforced by reason of any rule
         of law or public policy, all other rights, preferences and limitations
         set forth in this Resolution (as so amended) which can be given effect
         without the invalid, unlawful or unenforceable right, preference or
         limitation shall, nevertheless, remain in full force and effect, and no
         right, preference or limitation herein set forth shall be deemed
         dependent upon any such other right, preference or limitation unless so
         expressed herein.



         IN WITNESS WHEREOF, said Automotive Performance Group, Inc. has caused
this Certificate of Designation to be signed by Carl Walker, its Secretary, this
29th day of July, 1999.

                                   AUTOMOTIVE PERFORMANCE, GROUP, INC.


                                   By: /s/ Carl Walker                         .
                                       -----------------------------------------
                                           Carl Walker, Secretary




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