<PAGE>  

                                                                  EXHIBIT 3.1(e)


                                                   RESTATED
                                          ARTICLES OF INCORPORATION
                                                      OF
                                              NEORX CORPORATION

         Pursuant to RCW 23B.10.070, the following constitutes Restated Articles
of Incorporation of NeoRx Corporation,  a Washington corporation,  and correctly
sets forth  without  change the  corresponding  provisions  of the  Articles  of
Incorporation  as  previously  stated and amended  and  supersede  the  original
Articles of Incorporation and all amendments thereto.

                                                ARTICLE I NAME

         The name of this corporation is NeoRx Corporation.

                                             ARTICLE II DURATION

         This corporation shall have perpetual existence.

                                             ARTICLE III PURPOSES

         The purposes for which this corporation is organized is to transact any
or all lawful  business for which  corporations  may be  incorporated  under the
Washington Business Corporation Act.

                                              ARTICLE IV POWERS

         The powers of this  corporation  shall be those  powers  granted by the
Washington Business Corporation Act, as amended, including any additional powers
granted by amendments to said Act after the formation of this corporation.

                                           ARTICLE V CAPITAL STOCK

         A. AUTHORIZED CAPITAL. The total number of shares which the corporation
is authorized to issue is sixty-three  million  (63,000,000) shares of two cents
($.02) par value,  consisting  of sixty  million  (60,000,000)  shares of Common
Stock of $.02 par value and three million  (3,000,000) shares of Preferred Stock
of $.02 par value.  The Preferred  Stock is senior to the Common Stock,  and the
Common Stock is subject to the rights and  preferences of the Preferred Stock as
hereinafter set forth.

         B. ISSUANCE OF PREFERRED  STOCK IN SERIES.  The Preferred  Stock may be
issued  from time to time in one or more series in any manner  permitted  by law

<PAGE>  

and the  provisions  of the Articles of  Incorporation  of the  corporation,  as
determined  from  time to time by the  Board  of  Directors  and  stated  in the
resolution or  resolutions  providing for the  issuances  thereof,  prior to the
issuances of any shares thereof. The Board of Directors shall have the authority
to fix  and  determine,  subject  to  the  provisions  hereof,  the  rights  and
preferences  of the shares of any series so  established,  including the rate of
dividend,  whether shares may be redeemed and, if so, the  redemption  price and
the terms and conditions of redemption,  the amount payable upon shares in event
of voluntary and involuntary liquidation,  sinking fund provisions,  if any, for
the redemption or purchase of shares, the terms and conditions, if any, on which
shares may be converted, and voting rights, if any.

         C.       DIVIDENDS.  The holders of shares of Preferred Stock shall be
entitled to receive  dividends,  when and as declared by the Board of Directors,
out of funds of the corporation  legally  available  therefor,  at such rate, at
such time or times and  cumulative or  noncumulative,  as may be provided by the
Board of Directors in designating a particular series of Preferred Stock.



         D.       REDEMPTION.  The Preferred Stock may be redeemable at such 
amount,  and at such time or times as may be provided by the Board of  Directors
in  designating  a particular  series of  Preferred  Stock.  In any event,  such
Preferred  Stock may be  repurchased  by the  corporation  to the extent legally
permissible.

         E.  LIQUIDATION.  In the  event  of any  liquidation,  dissolution,  or
winding up of the affairs of the corporation,  whether voluntary or involuntary,
then, before any distribution  shall be made to the holders of the Common Stock,
the holders of the Preferred Stock at the time outstanding  shall be entitled to
be paid the  preferential  amount or amounts per share as may be provided by the
Board of  Directors in  designating  a  particular  series of  Preferred  Stock,
together with the amount of any unpaid dividends accrued thereon, to the date of
such  payment.  The  holders of the  Preferred  Stock  shall not be  entitled to
receive any distributive amounts upon the liquidation,  dissolution,  or winding
up of the  affairs  of the  corporation  other  than  the  distributive  amounts
referred to in this section.

         F.       CONVERSION.  Shares of Preferred Stock may be convertible to 
Common Stock of the corporation, at such rate and subject to such adjustments as
may be provided by the Board of Directors in designating a particular  series of
Preferred Stock.

         G.  VOTING  RIGHTS.  Each  outstanding  share of Common  Stock shall be
entitled to one vote on each  matter  submitted  to a vote of the  shareholders,
except as may otherwise be provided in these Articles of Incorporation.  Holders
of Preferred Stock shall have such voting rights as may be provided by the Board

                                       2
<PAGE>  
                                       
of Directors in  designating  a particular  series of Preferred  Stock.  At each
election for  directors,  every  shareholder  entitled to vote at such elections
shall have the right to  cumulate  his or her votes by giving one  candidate  as
many votes as the number of such  directors  multiplied  by the number of his or
her shares shall equal, or by  distributing  such votes among any number of such
candidates.

                                       ARTICLE VI NO PREEMPTIVE RIGHTS

         Except as may  otherwise  be  provided  by the Board of  Directors,  no
holder of any  shares of this  corporation  shall have any  preemptive  right to
purchase,  subscribe for or otherwise acquire any securities of this corporation
of any class or kind now or hereafter authorized.

                             ARTICLE VII REGISTERED OFFICE AND REGISTERED AGENT

         A.       The current registered agent of this corporation in the State
of Washington is Lawco of Washington, Inc.

         B. The location and post office address of the current registered agent
and the current registered office of this corporation in the State of Washington
is 1201 Third Avenue, 40th Floor, Seattle, Washington 98101-3099.

                                            ARTICLE VIII DIRECTORS

         A. This  corporation  shall have at least one (1) director,  the actual
number to be prescribed in the Bylaws.  The number of directors may be increased
or decreased from time to time by amendment of the Bylaws, but no decrease shall
have the effect of shortening  the term of any incumbent  director.  The current
Board of Directors consists of six (6) directors.

         B.       The names and post office addresses of the current Board of 
Directors of this corporation are as follows:
                  Paul G. Abrams                         Jack L. Bowman
                  410 West Harrison                      410 West Harrison
                  Seattle, WA 98119                      Seattle, WA  98119
                  James G. Andress                       Lawrence H.N. Kinet
                  410 West Harrison                      410 West Harrison
                  Seattle, WA  98119                     Seattle, WA  98119
                  Fred B. Craves                         Carl-Heinz Pommer
                  410 West Harrison                      410 West Harrison
                  Seattle, WA  98119                     Seattle, WA  98119

                                       3
<PAGE> 

         C. The term of the  current  directors  shall be until the next  annual
meeting of the  shareholders of the corporation and until their successors shall
have been  elected and are  qualified,  unless  removed in  accordance  with the
provisions of the bylaws.

         D. In  evaluating  an offer by another  party to make a tender offer or
exchange  offer  for  securities  of the  Corporation,  or to effect a merger or
consolidation involving the Corporation,  or to acquire all or substantially all
the  assets  of  the  Corporation,  or  otherwise  to  acquire  control  of  the
Corporation,  the Board of Directors,  in considering  the best interests of the
Corporation,  may consider the social,  legal,  economic or other effects of any
such offer upon employees,  customers, suppliers and other constituencies of the
Corporation,  communities in which the  Corporation is located or operates,  and
all other relevant factors.

         E. Advance notice of nominations  for the election of Directors,  other
than nominations by the Board of Directors or a committee  thereof,  and advance
notice of business to be conducted at any annual meeting of shareholders,  other
than business proposed by the Board of Directors or a committee  thereof,  shall
be given within the time and in the manner provided in the Bylaws.

                                       ARTICLE IX CONFLICTING INTERESTS

         This  corporation  may enter  into  contracts  and  otherwise  transact
business with its directors,  officers and shareholders  and with  corporations,
associations,  firms and entities in which they are or may become  interested as
directors,  officers,  shareholders,  members or otherwise,  as freely as though
such interests did not exist,  even though the vote,  action or presence of such
directors,   officers  or  shareholders   may  be  necessary  to  obligate  this
corporation  upon such contracts or  transactions.  In the absence of fraud,  no
such contracts or transactions  shall be void or voidable and no such directors,
officers or shareholders shall be held liable to account to this corporation for
any profit or benefit  realized by them through such  contracts or  transactions
despite  such  interests  or  their  fiduciary  relationship,  if  any,  to this
corporation.  In the case of directors and officers of this corporation (but not
in the  case of  shareholders  who  are  not  directors  or  officers),  for the
foregoing provisions to be available to such directors or officers the nature of
the interest of such  directors or officers  (but not  necessarily  the details)
must have been  disclosed  to the Board of Directors  of the  corporation  at or
prior to the meetings at which said contracts or transactions were authorized or
confirmed.  A general notice that directors or officers of this  corporation are
interested  in any  other  corporation,  association,  firm or  entity  shall be
sufficient  disclosure with respect to all contracts and transactions  with such
corporation, association, firm or entity.

                                       4
<PAGE>
 
                                          ARTICLE X RESERVED RIGHTS

         This corporation  reserves the right to amend, alter, change, or repeal
any provisions  contained in its Articles of  Incorporation in any manner now or
hereafter  prescribed or as permitted by statute.  All rights of shareholders of
this corporation are granted subject to this reservation.

                                            ARTICLE XI REDEMPTION

         This  corporation  shall have the right to purchase,  take,  receive or
otherwise acquire,  hold, own, pledge,  transfer or otherwise dispose of its own
shares.  Subject to the provisions of the Washington  Business  Corporation Act,
purchases  of its own  shares,  whether  direct  or  indirect,  may be made from
unreserved  and  unrestricted  earned  surplus  and  capital  surplus  available
therefor.

                                 ARTICLE XII LIMITATION ON DIRECTOR LIABILITY

         To the fullest  extent  permitted  by  Washington  law at the time this
Article becomes  effective or as may thereafter be in effect, a director of this
corporation  shall not be liable to this  corporation  or its  shareholders  for
monetary  damages  for his or her  conduct as a director.  Any  amendment  to or
repeal of this Article XII shall not adversely affect any right of a director of
this  corporation  hereunder  with  respect  to any  acts or  omissions  of such
director occurring prior to such amendment or repeal.

                                  ARTICLE XIII INDEMNIFICATION OF DIRECTORS

         To the fullest  extent  permitted  by  Washington  law at the time this
Article becomes effective or as may be thereafter in effect, this corporation is
authorized to indemnify any director of this corporation. The Board of Directors
shall be  entitled to  determine  the terms of such  indemnification,  including
advance of expenses,  and to give effect thereto through the adoption of Bylaws,
approval  of  agreements,  or by any  other  manner  approved  by the  Board  of
Directors.  Any  amendment to or repeal of this Article XIII shall not adversely
affect any right of a director of this corporation hereunder with respect to any
right to indemnification that arises prior to such amendment or repeal.


                                       5

<PAGE>


                           ------------------------------
                         STATEMENT OF RIGHTS AND PREFERENCES
           OF THE $2.4375 CONVERTIBLE EXCHANGEABLE PREFERRED STOCK, SERIES 1
                                    ($.02 Par Value)
                           ------------------------------

         (i)      DESIGNATION.  The designation of such series of the Preferred
Stock authorized shall be the "$2.4375 Convertible Exchangeable Preferred Stock,
Series 1" (the "Exchangeable  Preferred Stock"). The maximum number of shares of
Exchangeable Preferred Stock shall be 1,120,000.


         (ii) DIVIDENDS.  Holders of shares of Exchangeable Preferred Stock will
be entitled to  receive,  when,  as and if declared by the Board out of funds of
the Corporation legally available  therefor,  an annual cash dividend of $2.4375
per  share,  payable  in  semi-annual  installments  on  December  1 and  June 1
commencing  June 1, 1990 (each a  "dividend  payment  date").  Dividends  on the
Exchangeable  Preferred  Stock  will be  cumulative  from  the  date of  initial
issuance of shares of Exchangeable Preferred Stock. Dividends will be payable to
holders of record as they appear on the stock books of the  Corporation  on such
record dates,  not more than 60 days nor less than 10 days preceding the payment
dates thereof,  as shall be fixed by the Board (each a "dividend  payment record
date"). If dividends are not paid in full upon the Exchangeable  Preferred Stock
and any other Parity Preferred Stock (as defined in paragraph (iii) below),  all
dividends  paid and declared  upon shares of  Exchangeable  Preferred-Stock  and
Parity  Preferred  Stock will be paid and declared pro rata so that in all cases
the  amount  of  dividends  paid and  declared  per  share  on the  Exchangeable
Preferred  Stock and such other Parity  Preferred Stock shall bear to each other
the same ratio that  accumulated and unpaid dividends per share on the shares of
Exchangeable  Preferred Stock and such other Parity Preferred Stock bear to each
other.  Except as set forth in the preceding  sentence,  unless full  cumulative
dividends on the Exchangeable  Preferred Stock have been paid,  dividends (other
than in Common  Stock of the  Corporation  (as defined in  subparagraph  (iv)(I)
below),  other stock  ranking  junior to the  Exchangeable  Preferred  Stock and
rights to acquire the  foregoing)  may not be paid or declared and set aside for
payment and other  distributions may not be made upon the Common Stock or on any
other  stock  of the  Corporation  ranking  junior  to or on a  parity  with the
Exchangeable  Preferred  Stock as to dividends,  nor may any Common Stock or any
other  stock  of the  Corporation  ranking  junior  to or on a  parity  with the
Exchangeable Preferred Stock as to dividends be redeemed, purchased or otherwise
acquired for any  consideration by the Corporation  (except for repurchases from
employees and  consultants at cost and except by conversion into or exchange for

                                       6

<PAGE>

stock of the Corporation  ranking junior to the Exchangeable  Preferred Stock as
to  dividends).  Dividends  payable for any  partial  dividend  period  shall be
calculated  on the basis of a  360-day  year of 12 30-day  months.  Accrued  but
unpaid dividends shall not bear interest.

         For the purpose of determining the legality of dividends or redemptions
pursuant to Section 23A.08.420(2) (b) of the Revised Code of Washington,  or any
successor  statute,  dividends on or redemptions of the  Exchangeable  Preferred
Stock may be paid or made without  reference  to the amount  required to satisfy
the holders' Liquidation Preference.

         (iii) RANK. The shares of Exchangeable Preferred Stock shall rank prior
to the shares of Common Stock and of any other class of stock of the Corporation
ranking junior to the Exchangeable Preferred Stock upon liquidation,  so that in
the event of any  liquidation,  dissolution  or winding  up of the  Corporation,
whether  voluntary or  involuntary,  the holders of the  Exchangeable  Preferred
Stock  shall  be  entitled  to  receive  out of the  assets  of the  Corporation
available for distribution to its stockholders, whether from capital, surplus or
earnings,  before any  distribution is made to holders of shares of Common Stock
or any other  such  junior  stock,  an amount  equal to  $25.00  per share  (the
"Liquidation  Preference" of a share of  Exchangeable  Preferred  Stock) plus an
amount equal to all  dividends  (whether or not earned or declared)  accumulated
and unpaid on the shares of  Exchangeable  Preferred  Stock to the date of final
distribution.  If,  upon  any  liquidation,  dissolution  or  winding  up of the
Corporation,  the assets of the Corporation, or proceeds thereof,  distributable
among the holders of shares of Exchangeable Preferred Stock and Parity Preferred
Stock shall be insufficient to pay in full the  preferential  amount  aforesaid,
then such assets,  or the proceeds  thereof,  shall be distributable  among such
holders ratably in accordance with the respective amounts which would be payable
on such shares if all amounts payable  thereon were paid in full.  After payment
of the full amount of the  Liquidation  Preference  and such  dividends to which
holders of shares of Exchangeable  Preferred Stock are entitled,  the holders of
shares of  Exchangeable  Preferred  Stock will not be  entitled  to any  further
participation in any distribution of assets by the Corporation. For the purposes
hereof,  neither a  consolidation  or merger of the  Corporation  with any other
corporation,  nor a sale or  transfer  of all or any  part of the  Corporation's
assets for cash or securities shall be considered a liquidation,  dissolution or
winding up of the Corporation.

         For the purposes of this statement of Rights and  Preferences any stock
of any class or series of the Corporation shall be deemed to rank:

                  (a)  prior to  shares  of the  Exchangeable  Preferred  Stock,
either as to  dividends  or upon  liquidation,  if the  holders of stock of such
class or  series  shall be  entitled  by the terms  thereof  to the  receipt  of
dividends or of amounts  distributable upon liquidation,  dissolution or winding

                                       7
<PAGE> 

up, as the case may be, in  preference  or  priority to the holders of shares of
the Exchangeable Preferred Stock;

                  (b) on a parity  with  shares  of the  Exchangeable  Preferred
Stock,  either as to dividends or upon liquidation,  whether or not the dividend
rates,  dividend  payment dates,  or redemption or liquidation  prices per share
thereof be different from those of the Exchange- able  Preferred  Stock,  if the
holders of stock of such class or series shall be entitled by the terms  thereof
to the  receipt of  dividends  or of  amounts  distributable  upon  liquidation,
dissolution or winding up, as the case may be, in proportion to their respective
dividend rates or liquidation prices, without preference or priority of one over
the other as between  the  holders  of such  stock and the  holders of shares of
Exchangeable  Preferred Stock (the term "Parity  Preferred  Stock" being used to
refer to any stock on a parity with the shares of Exchangeable  Preferred Stock,
either as to dividends or upon liquidation as the context may require); and

                  (c)  junior  to shares of the  Exchangeable  Preferred  Stock,
either as to dividends or upon liquidation,  if such class shall be Common Stock
or if the holders of the  Exchangeable  Preferred Stock shall be entitled to the
receipt of dividends or of amounts  distributable upon liquidation,  dissolution
or winding up, as the case may be, in  preference  or priority to the holders of
stock of such class or series.

         (iv)     CONVERSION.

                  (I) Subject to and upon compliance with the provisions of this
paragraph (iv), the holder of a share of Exchangeable Preferred Stock shall have
the right, at such holder's option, at any time, to convert such share into such
number of fully paid and non-assessable shares of Common Stock (calculated as to
each conversion to the nearest 1/100th of a share) as the Liquidation Preference
of such share  surrendered for conversion is a multiple of the Conversion  Price
(as  defined  below) and by  surrender  of such share so to be  converted,  such
surrender  to be  made  in the  manner  provided  in  subparagraph  (II) of this
paragraph (iv); PROVIDED,  HOWEVER,  that the right to convert shares called for
redemption  pursuant to paragraph  (viii) or for exchange  pursuant to paragraph
(vii)  shall  terminate  at the  close of  business  on the date  fixed for such
redemption or exchange, as the case may be, unless the Corporation shall default
in making  payment of the amount  payable upon such  redemption or in making the
exchange  and payment of any amount  payable upon such  exchange.  A holder of a
share of Exchangeable  Preferred Stock is not entitled to any rights of a holder
of Common  Stock  until such  holder has  converted  such share of  Exchangeable
Preferred Stock.

         The term "Common Stock" shall mean the Common Stock, $.02 par value, of
the  Corporation  as the same exists on the date of this statement of Rights and

                                       8
<PAGE> 

Preferences or as such stock may be constituted  from time to time,  except that
for the purpose of  subparagraph  (V) of this  paragraph  (iv) the term  "Common
Stock"  shall  also mean and  include  stock of the  Corporation  of any  class,
whether now or hereafter  authorized,  which shall have the right to participate
in the  distribution  of either  earnings or assets of the  Corporation  without
limit as to amount or percentage.

         The term "Conversion Price" shall mean $5.50, as adjusted in accordance
with the provisions of this paragraph (iv).

         The term  "Liquidation  Preference" shall have the meaning specified in
paragraph (iii).

                  (II) In order to exercise the conversion privilege, the holder
of each share of  Exchangeable  Preferred  Stock to be converted shall surrender
the certificate  representing  such share at the office of the conversion  agent
for the  Exchangeable  Preferred Stock in the Borough of Manhattan,  City of New
York or Seattle, Washington, appointed for such purpose by the Corporation, with
the Notice of Election to Convert on the back of said certificate  completed and
signed.  Unless the shares  issuable on conversion  are to be issued in the same
name as the  name in  which  such  share  of  Exchangeable  Preferred  Stock  is
registered,  each share  surrendered  for  conversion  shall be  accompanied  by
instruments of transfer, in form satisfactory to the Corporation,  duly executed
by the holder or the holder's duly authorized  attorney and an amount sufficient
to pay any transfer or similar tax.

         The holders of shares of  Exchangeable  Preferred Stock at the close of
business  on a dividend  payment  record  date shall be  entitled to receive the
dividend  payable on such  shares on the  corresponding  dividend  payment  date
notwithstanding  the conversion  thereof after such dividend payment record date
or the  Corporation's  default in payment of the dividend  due on such  dividend
payment date.  However,  shares of Exchangeable  Preferred Stock surrendered for
conversion  during the period  between  the close of  business  on any  dividend
payment  record date and the opening of business on the  corresponding  dividend
payment date (except  shares called for  redemption on a redemption  date during
such period) must be  accompanied  by payment of an amount equal to the dividend
payable on such shares on such dividend  payment date (the  "dividend  amount").
The dividend with respect to a share of Exchangeable  Preferred Stock called for
redemption  on a  redemption  date between the close of business on any dividend
payment  record date and the opening of business on the  corresponding  dividend
payment  date shall be payable on such  dividend  payment  date to the holder of
such share on such dividend payment record date  notwithstanding  the conversion
of such share of Exchangeable Preferred Stock after such dividend payment record
date and prior to such dividend  payment date,  and the holder  converting  such
share of  Exchangeable  Preferred  Stock  need not  include  a  payment  of such

                                       9
<PAGE>
  
dividend amount upon surrender of such share of Exchangeable Preferred Stock for
conversion.  The holders of shares of Exchangeable Preferred Stock on a dividend
payment record date who (or whose transferees)  convert any of such shares on or
after the corresponding  dividend payment date will receive the dividend payable
by the  Corporation  on such  shares  of  Exchangeable  Preferred  Stock on such
dividend  payment date, and need not include payment of the dividend amount upon
surrender  of  such  shares  for  conversion.  Except  as  provided  above,  the
Corporation shall make no payment or adjustment for accrued and unpaid dividends
on shares  of  Exchangeable  Preferred  Stock,  whether  or not in  arrears,  on
conversion  of such shares or for dividends on the shares of Common Stock issued
upon such conversion.

         As  promptly  as  practicable  after the  surrender  by a holder of the
certificates  for  shares of  Exchangeable  Preferred  Stock as  aforesaid,  the
Corporation  shall issue and shall deliver at the office of the conversion agent
to such holder, or on the holder's written order to the holder's  transferee,  a
certificate  or  certificates  for the  number of full  shares  of Common  Stock
issuable upon the conversion of such shares in accordance with the provisions of
this paragraph (iv), and any fractional interest in respect of a share of Common
Stock arising upon such conversion  shall be settled as provided in subparagraph
(III) of this paragraph (iv).

         Each conversion shall be deemed to have been effected immediately prior
to the close of  business  on the date on which the  certificates  for shares of
Exchangeable  Preferred  Stock  shall  have  been  surrendered  and such  notice
received by the  Corporation  as  aforesaid,  and the person or persons in whose
name or names any certificate or  certificates  for shares of Common Stock shall
be issuable  upon such  conversion  shall be deemed to have become the holder or
holders of record of the shares of Common Stock represented thereby at such time
on such date and such conversion  shall be at the Conversion  Price in effect at
such time on such date, unless the stock transfer books of the Corporation shall
be closed on that date, in which event such person or persons shall be deemed to
have  become  such  holder or holders of record at the close of  business on the
next  succeeding  day on which  such  stock  transfer  books are open,  but such
conversion  shall be at the  Conversion  Price in effect on the date upon  which
shares of  Exchangeable  Preferred  Stock shall have been  surrendered  and such
notice  received by the  Corporation.  All shares of Common Stock delivered upon
conversion of the  Exchangeable  Preferred  Stock will upon delivery be duly and
validly issued and fully paid and non-assessable,  free of all liens and charges
and not subject to any  preemptive  rights.  Upon the surrender of  certificates
representing shares of Exchangeable Preferred Stock, such shares shall no longer
be deemed to be  outstanding  and all  rights of a holder  with  respect to such

                                       10
<PAGE> 

shares  surrendered for conversion shall immediately  terminate except the right
to receive the Common Stock or other securities,  cash or other assets as herein
provided.

                  (III) FRACTIONAL  SHARES.  No fractional  shares or securities
representing  fractional  shares of Common Stock shall be issued upon conversion
of the  Exchangeable  Preferred  Stock.  Any  fractional  interest in a share of
Common Stock  resulting  from  conversion of a share of  Exchangeable  Preferred
Stock shall be paid in cash  (computed  to the  nearest  cent) based on the last
reported sale price of the Common Stock (as defined in  subparagraph  (IV)(d) of
this  paragraph  (iv)) on the business day next preceding the day of conversion.
If more than one share shall be  surrendered  for  conversion at one time by the
same holder,  the number of full shares of Common Stock issuable upon conversion
thereof shall be computed on the basis of the aggregate  Liquidation  Preference
of the shares of Exchangeable Preferred Stock so surrendered.

                  (IV)  ADJUSTMENT.  The Conversion Price shall be adjusted from
time to time as follows:

                           (a)      In case the Corporation shall (i) pay a
dividend  or make a  distribution  on its  Common  Stock in shares of its Common
Stock,  (ii)  subdivide its  outstanding  Common Stock into a greater  number of
shares,  or (iii) combine its outstanding  Common Stock into a smaller number of
shares,  the  Conversion  Price in effect  immediately  prior  thereto  shall be
adjusted  so that the  holder  of any  share  of  Exchangeable  Preferred  Stock
thereafter surrendered for conversion shall be entitled to receive the number of
shares of Common Stock of the Corporation which he would have owned or have been
entitled to receive after the happening of any of the events described above had
such share been converted  immediately  prior to the happening of such event. An
adjustment  made pursuant to this  subparagraph  (IV)(a) shall become  effective
immediately,  except as provided in subparagraph (IV)(g) below, after the record
date in the case of a  dividend  or  distribution  and  shall  become  effective
immediately after the effective date in the case of subdivision or combination.

                           (b)      In case the Corporation shall issue rights
or  warrants  to all holders of its Common  Stock  entitling  them (for a period
expiring within 45 days after the record date mentioned  below) to subscribe for
or purchase Common Stock at a price per share less than the current market price
per share of Common  Stock (as  defined in  subparagraph  (IV)(d)  below) at the
record date for the  determination  of  stockholders  entitled  to receive  such
rights or warrants,  the Conversion  Price in effect  immediately  prior thereto
shall  be  adjusted  so that  the same  shall  equal  the  price  determined  by
multiplying  the  Conversion  Price in effect  immediately  prior to the date of
issuance of such rights or warrants by a fraction of which the  numerator  shall
be the number of shares of Common Stock  outstanding  on the date of issuance of

                                       11
<PAGE>  

such  rights or  warrants  plus the number of shares of Common  Stock  which the
aggregate  offering  price  of  the  total  number  of  shares  so  offered  for
subscription  or purchase would  purchase at such current  market price,  and of
which the denominator  shall be the number of shares of Common Stock outstanding
on the date of issuance of such rights or warrants plus the number of additional
shares of Common Stock offered for  subscription  or purchase.  Such  adjustment
shall be made successively  whenever any such rights or warrants are issued, and
shall become effective  immediately,  except as provided in subparagraph (IV)(g)
below,  after such record date.  In  determining  whether any rights or warrants
entitle the holders of the Common Stock to subscribe  for or purchase  shares of
Common Stock at less than such current  market  price,  and in  determining  the
aggregate  offering price of the shares of Common Stock so offered,  there shall
be taken into account any  consideration  received by the  Corporation  for such
rights or warrants,  the value of such consideration,  if other than cash, to be
determined by the Board of Directors.

                           (c)      In case the Corporation shall distribute to
     all  holders  of its  Common  Stock  any  shares  of  capital  stock of the
Corporation  (other than Common  Stock) or evidences of  indebtedness  or assets
(excluding cash dividends or other  distributions paid from retained earnings of
the  Corporation)  or rights or warrants to subscribe for or purchase any of its
securities (excluding those referred to in subparagraph (IV)(b) above), then, in
each such case,  the  Conversion  Price shall be adjusted so that the same shall
equal  the  price  determined  by  multiplying  the  Conversion  Price in effect
immediately  prior to the date of such  distribution  by a fraction of which the
numerator  shall be the  current  market  price per  share of  Common  Stock (as
defined in  subparagraph  (IV)(d) below) on the record date mentioned below less
the then fair market  value (as  determined  by the Board,  whose  determination
shall, if made in good faith, be conclusive) of the portion of the capital stock
or assets or  evidences  of  indebtedness  so  distributed  or of such rights or
warrants  applicable to one share of Common Stock,  and of which the denominator
shall be the current market price per share (as defined in subparagraph  (IV)(d)
below) of the Common Stock. Such adjustment shall become effective  immediately,
except as provided in subparagraph  (IV)(g) below, after the record date for the
determination of shareholders entitled to receive such distribution.


                           (d)      DEFINITION OF CURRENT MARKET PRICE.  For the
purpose of any  computation  under  subparagraphs  (IV)(b)  and (c)  above,  the
current market price per share of Common Stock at any date shall be deemed to be
the average of the last  reported  sale prices for the ten  consecutive  Trading
Days (as defined below) preceding the day before the record date with respect to
any distribution,  issuance or other event requiring such computation.  The last
reported  sale price for each day shall be (i) the last  reported  sale price of
Common  Stock on the  National  Market  System of the  National  Association  of

                                       12
<PAGE>

Securities  Dealers,  Inc. Automated  Quotation System, or any similar system of
automated  dissemination of quotations of securities  prices then in common use,
if so quoted, or (ii) if not quoted as described in clause (i), the mean between
the high bid and low  asked  quotations  for  Common  Stock as  reported  by the
National  Quotation Bureau  Incorporated if at least two securities dealers have
inserted both bid and asked  quotations for such class of stock on at least five
of the ten  preceding  days,  or (iii) if the Common Stock is listed or admitted
for trading on any national  securities  exchange,  the last sale price,  or the
closing bid price if no sale  occurred,  of such class of stock on the principal
securities  exchange on which such class of stock is listed. If the Common Stock
is quoted on a national securities or central market system, in lieu of a market
or quotation  system  described  above,  the last  reported  sale price shall be
determined in the manner set forth in clause (ii) of the  preceding  sentence if
bid and asked  quotations are reported but actual  transactions  are not, and in
the  manner  set  forth in  clause  (iii) of the  preceding  sentence  if actual
transactions are reported. If none of the conditions set forth above is met, the
last  reported sale price of Common Stock on any day or the average of such last
reported sale prices for any period shall be the fair market value of such class
of stock as  determined  by a member firm of the New York Stock  Exchange,  Inc.
selected by the Company.  As used herein the term "Trading Days" with respect to
Common  Stock  means (i) if the Common  Stock is quoted on the  National  Market
System  of the  National  Association  of  securities  Dealers,  Inc.  Automated
Quotation system or any similar system of automated  dissemination of quotations
of securities  prices,  days on which trades may be made on such system, or (ii)
if not quoted as described in clause (i), days on which  quotations are reported
by the National Quotation Bureau  Incorporated,  or (iii) if the Common Stock is
listed or admitted  for trading on any  national  securities  exchange,  days on
which such national securities exchange is open for business.


                           (e)      No adjustment in the Conversion Price shall
be required unless such adjustment would require a change of at least 1% in such
price;  PROVIDED,  HOWEVER,  that  any  adjustments  which  by  reason  of  this
subparagraph  (IV)(e) are not  required to be made shall be carried  forward and
taken into account in any subsequent  adjustment;  [and provided,  further, that
adjustment  shall be required and made in accordance with the provisions of this
paragraph (iv). All calculations  under this paragraph (iv) shall be made to the
nearest  cent or to the nearest one  hundredth  of a share,  as the case may be.
Anything  in  this  subparagraph  (IV)  to  the  contrary  notwithstanding,  the
Corporation  shall be entitled to make such reductions in the Conversion  Price,
in addition to those required by this subparagraph (IV), as it in its discretion
shall determine to be advisable in order that any stock  dividends,  subdivision
or combination of shares, distribution of capital stock or rights or warrants to
purchase stock or securities,  or  distribution  of evidences of indebtedness or

                                       13
<PAGE>

assets (other than cash dividends or distributions  paid from retained earnings)
hereafter made by the Corporation to its stockholders shall not be taxable.

                           (f)  NOTICE OF ADJUSTMENT.  Whenever the Conversion 
Price is adjusted, as herein provided,  the Corporation shall promptly file with
the conversion agent an officers' certificate setting forth the Conversion Price
after such adjustment and setting forth a brief statement of the facts requiring
such  adjustment,   which  certificate  shall  be  conclusive  evidence  of  the
correctness of such adjustment. Promptly after delivery of such certificate, the
Corporation  shall prepare a notice of such  adjustment of the Conversion  Price
setting  forth  the  adjusted  Conversion  Price  and  the  date on  which  such
adjustment  becomes  effective and shall mail such notice of such  adjustment of
the Conversion Price to the holder of each share of Exchangeable Preferred Stock
at his last address as shown on the stock books of the Corporation.

                           (g)      In any case in which this subparagraph (IV)
provides that an adjustment  shall become effective  immediately  after a record
date for an event,  the Corporation may defer until the occurrence of such event
(i) issuing to the holder of any share of Exchangeable 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  Common  Stock  issuable  upon such
conversion  before  giving  effect to such  adjustment  and (ii)  paying to such
holder any amount in cash in lieu of any fraction pursuant to subparagraph (III)
of this paragraph (iv).

                  (V)      If:

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

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

                           (c)      there shall be any reclassification of the 
Common Stock (other than a subdivision or combination of the outstanding  Common
Stock and  other  than a change  in the par  value,  or from par value to no par
value,  or from no par value to par value),  or any  consolidation,  merger,  or
statutory  share  exchange  to which  the  Corporation  is a party and for which
approval of any  stockholders  of the  Corporation  is required,  or any sale or
transfer of all or substantially all the assets of the Corporation or any Change
in Control (as defined in paragraph (ix) below); or
 
                                       14
<PAGE> 


                           (d)      there shall be a voluntary or an involuntary
dissolution, liquidation or winding up of the Corporation;

then the  Corporation  shall cause to be filed with the  conversion  agent,  and
shall cause to be mailed to the holders of shares of the Exchangeable  Preferred
Stock at their  addresses  as shown on the stock  books of the  Corporation,  at
least 15 days  prior to the  applicable  date  hereinafter  specified,  a notice
stating  (i) the date on which a record is to be taken for the  purpose  of such
dividend,  distribution  or  rights  or  warrants,  or, if a record is not to be
taken, the date as of which the holders of Common Stock of record to be entitled
to such  dividend,  distribution  or rights or warrants are to be  determined or
(ii) the date on which such reclassification,  consolidation,  merger, statutory
share exchange, sale, transfer, Change in Control,  dissolution,  liquidation or
winding  up is  expected  to  become  effective,  and the date as of which it is
expected  that  holders of Common  Stock of record shall be entitled to exchange
their shares of Common Stock for securities or other property  deliverable  upon
such reclassification,  consolidation,  merger,  statutory share exchange, sale,
transfer, Change in Control, dissolution,  liquidation or winding up. Failure to
give such notice or any defect therein shall not affect the legality or validity
of the proceedings described in subparagraph (VIII) of this paragraph (iv) or in
subparagraph (V)(a), (V)(b), (V)(c) or (V)(d) of this paragraph (iv).

                  (VI)  RESERVATION OF COMMON STOCK.  The Corporation  covenants
that it will at all times  reserve  and keep  available,  free  from  preemptive
rights,  out of the aggregate of its  authorized  but unissued  shares of Common
Stock or its issued  shares of Common Stock held in its treasury,  or both,  for
the purpose of effecting  conversions of the  Exchangeable  Preferred Stock, the
full number of shares of Common Stock  deliverable  upon the  conversion  of all
outstanding  shares of Exchangeable  Preferred Stock not theretofore  converted.
For  purposes of this  subparagraph  (VI),  the number of shares of Common Stock
which shall be  deliverable  upon the  conversion of all  outstanding  shares of
Exchangeable  Preferred Stock shall be computed as if at the time of computation
all such outstanding shares were held by a single holder.

         Before taking any action which would cause an  adjustment  reducing the
Conversion Price below the then par value (if any) of the shares of Common Stock
deliverable upon conversion of the Exchangeable Preferred Stock, the Corporation
will take any  corporate  action  which may, in the opinion of its  counsel,  be
necessary in order that the Corporation may validly and legally issue fully paid
and non-assessable shares of Common Stock at such adjusted Conversion Price.

         The  Corporation  will  endeavor  to list the  shares of  Common  Stock
required to be delivered upon  conversion of the  Exchangeable  Preferred  Stock

                                       15
<PAGE>  
 
prior to such  delivery  upon each national  securities  exchange,  if any, upon
which the outstanding Common Stock is listed at the time of such delivery.

         Prior to the delivery of any securities which the Corporation  shall be
obligated to deliver upon conversion of the  Exchangeable  Preferred  Stock, the
Corporation  will  endeavor  to  comply  with all  federal  and  state  laws and
regulations  thereunder  requiring the  registration of such securities with, or
any  approval  of or  consent  to the  delivery  thereof  by,  any  governmental
authority.

                  (VII) TAXES.  The Corporation will pay any and all documentary
stamp or  similar  issue or  transfer  taxes  payable in respect of the issue or
delivery of shares of Common Stock on conversion of the  Exchangeable  Preferred
Stock pursuant  hereto;  PROVIDED,  HOWEVER,  that the Corporation  shall not be
required to pay any tax which may be payable in respect of any transfer involved
in the issue or delivery of shares of Common  Stock in a name other than that of
the holder of the Exchangeable Preferred Stock to be converted and no such issue
or delivery shall be made unless and until the person  requesting  such issue or
delivery  has  paid  to  the  Corporation  the  amount  of any  such  tax or has
established,  to the  satisfaction  of the  Corporation,  that such tax has been
paid.

                  (VIII)  MERGERS  OR  OTHER   COMBINATIONS.   In  case  of  any
reclassification  or change of outstanding  shares of Common Stock (other than a
change in par value, or as a result of a subdivision or combination), or in case
of any  consolidation of the Corporation with, or merger of the Corporation with
or into,  any other Person,  any merger of another  Person into the  Corporation
(other  than a merger  which  does not  result  in a  reclassification,  change,
conversion,  exchange or cancellation of outstanding  shares of Common Stock) or
any  sale  or  transfer  of  all or  substantially  all  of  the  assets  of the
Corporation,  the  holder of each  share of  Exchangeable  Preferred  Stock then
outstanding   shall  have  the  right   thereafter  to  convert  such  share  of
Exchangeable  Preferred  Stock into the kind and amount of securities,  cash and
other  property  which the holder would have been  entitled to receive upon such
reclassification,  change, consolidation, merger, sale or transfer if the holder
had  held  the  Common  Stock  issuable  upon the  conversion  of such  share of
Exchangeable Preferred Stock immediately prior to such reclassification, change,
consolidation, merger, sale or transfer, assuming such holder of Common Stock of
the Corporation  (i) is not a Person with which the Corporation  consolidated or
into which the  Corporation  merged or which merged into the  Corporation  or to
which such sale or transfer was made, as the case may be ("constituent Person"),
or an Affiliate of a  constituent  Person and (ii) failed to exercise any rights
of  election  as to the kind or amount of  securities,  cash and other  property
receivable upon such reclassification,  change,  consolidation,  merger, sale or
transfer  (provided,  that if the kind or amount of  securities,  cash and other

                                       16
<PAGE>

property receivable upon such reclassification,  change, consolidation,  merger,
sale or  transfer  is not the  same  for  each  share  of  Common  Stock  of the
Corporation   held   immediately   prior  to  such   reclassification,   change,
consolidation, merger, sale or transfer by other than a constituent Person or an
Affiliate thereof and in respect of which such rights of election shall not have
been exercised ("non-electing share"), then for the purpose of this subparagraph
VIII the kind and amount of securities,  cash and other property receivable upon
such reclassification,  change, consolidation,  merger, sale or transfer by each
non-electing  share shall be deemed to be the kind and amount so receivable  per
share by a plurality of the non-electing  shares).  The above provisions of this
subparagraph  VIII  shall  similarly  apply  to  successive   reclassifications,
changes, consolidations, mergers, sales or transfers.

         (v) STATUS.  Upon any  conversion,  exchange or redemption of shares of
Exchangeable  Preferred  Stock,  the shares of  Exchangeable  Preferred Stock so
converted,  exchanged  or  redeemed  shall  have the  status of  authorized  and
unissued shares of preferred  stock, and the number of shares of preferred stock
which the  Corporation  shall have  authority to issue shall not be decreased by
the  conversion,  exchange or  redemption  of shares of  Exchangeable  Preferred
Stock.

         (vi) VOTING  RIGHTS.  The holders of shares of  Exchangeable  Preferred
Stock shall have no voting  rights  whatsoever,  except for any voting rights to
which they may be entitled under the laws of the State of Washington, and except
as follows:

                  (I) If and whenever at any time or times dividends  payable on
the  Exchangeable  Preferred Stock or Parity  Preferred Stock shall have been in
arrears and unpaid in an aggregate  amount  equal to or exceeding  the amount of
dividends  payable thereon for three  semi-annual  periods,  then the holders of
such  Exchangeable  Preferred  Stock and Parity  Preferred  Stock having similar
voting  rights then  exercisable  shall have the  exclusive  right,  voting as a
single  class  without  regard  to  series,   to  elect  two  directors  of  the
Corporation,  such  directors  to be in  addition  to the  number  of  directors
constituting  the Board of  Directors  immediately  prior to the accrual of such
right.  The  remaining  directors  shall  be  elected  in  accordance  with  the
provisions of the Corporation's Restated Articles of Incorporation and Bylaws by
the other class or classes of stock entitled to vote therefor at each meeting of
stockholders  held for the purpose of electing  directors.  Such voting right of
the  Exchangeable  Preferred  Stock  shall  continue  until  such  time  as  all
cumulative dividends accumulated on the Exchangeable  Preferred Stock and Parity
Preferred  Stock  having  cumulative  dividends  shall have been paid in full at
which time such voting right of the holders of the Exchangeable  Preferred Stock
shall terminate,  subject to revesting in the event of each and every subsequent
event of default of the character indicated above.

                                       17
<PAGE> 


         Whenever  such  voting  right  shall  have  vested,  such  right may be
exercised  initially  either  at  a  special  meeting  of  the  holders  of  the
Exchangeable  Preferred  Stock and Parity  Preferred Stock having similar voting
rights  then  exercisable,  called as  hereinafter  provided,  or at any  annual
meeting  of  stockholders  held  for the  purpose  of  electing  directors,  and
thereafter at each successive annual meeting.

         At any time when such voting  right shall have vested in the holders of
the Exchangeable  Preferred Stock, and if such right shall not already have been
initially exercised, a proper officer of the Corporation shall, upon the written
request of the holders of record of 10% in number of shares of the  Exchangeable
Preferred Stock then outstanding, addressed to the Secretary of the Corporation,
call a special  meeting of the holders of the  Exchangeable  Preferred Stock and
Parity  Preferred  Stock having similar voting rights then  exercisable  for the
purpose  of  electing  directors.  Such  meeting  shall be held at the  earliest
practicable date upon the notice required for annual meetings of stockholders at
the place for holding of annual meetings of stockholders of the Corporation, or,
if none,  at a place  designated by the  Secretary of the  Corporation.  If such
meeting shall not be called by the proper officers of the Corporation  within 30
days after the personal  service of such written  request upon the  Secretary of
the  Corporation,  or within 30 days after  mailing  the same  within the United
States of  America,  by  registered  mail,  addressed  to the  Secretary  of the
Corporation  at its  principal  office  (such  mailing  to be  evidenced  by the
registry receipt issued by the postal  authorities),  then the holders of record
of 10% in number of shares of the Exchangeable  Preferred Stock then outstanding
may designate in writing one of their number to call such meeting at the expense
of the Corporation,  and such meeting may be called by such person so designated
upon the notice required for annual  meetings of stockholders  and shall be held
at the same place as is  elsewhere  provided for in this  subparagraph  (I). Any
holder of the Exchangeable  Preferred Stock shall have access to the stock books
of the  Corporation  for the purpose of causing a meeting of  stockholders to be
called  pursuant  to the  provisions  of  this  paragraph.  Notwithstanding  the
provisions of this paragraph,  however,  no such special meeting shall be called
during a period within 90 days immediately preceding the date fixed for the next
annual meeting of stockholders.

         At any meeting held for the purpose of electing  directors at which the
holders  of the  Exchangeable  Preferred  Stock  shall  have the  right to elect
directors as provided herein,  the presence in person or by proxy of the holders
of 33-1/3% of the then outstanding  shares of the  Exchangeable  Preferred Stock
and Parity Preferred Stock having similar voting rights then  exercisable  shall
be required and be sufficient to constitute a quorum of such preferred stock for
the  election of  directors  by such  preferred  stock.  At any such  meeting or
adjournment  thereof  (A)  the  absence  of a  quorum  of  the  holders  of  the
Exchangeable  Preferred  Stock and Parity  Preferred Stock having similar voting

                                       18
<PAGE> 

rights then  exercisable  shall not prevent the election of directors other than
those to be elected by the holders of such preferred stock, and the absence of a
quorum or quorums of the  holders  of other  classes or series of capital  stock
entitled  to elect  such other  directors  shall not  prevent  the  election  of
directors to be elected by the holders of the  Exchangeable  Preferred Stock and
Parity Preferred Stock having similar voting rights then exercisable, and (B) in
the  absence of a quorum of the  holders  of  Exchangeable  Preferred  Stock and
Parity Preferred Stock having similar voting rights then exercisable, a majority
of the holders  present in person or by proxy of such preferred stock shall have
the power to adjourn  the  meeting,  or  appropriate  portion  thereof,  for the
election of directors  which the holders of such preferred stock are entitled to
elect, from time to time, without notice other than announcement at the meeting,
until a quorum shall be present.

         The directors  elected  pursuant to this  subparagraph  (I) shall serve
until the next annual  meeting or until  their  respective  successors  shall be
elected and shall qualify; PROVIDED, HOWEVER, that when the right of the holders
of the Exchangeable  Preferred Stock to elect directors as herein provided shall
terminate,  the terms of office of all  persons so elected by the holders of the
Exchangeable Preferred Stock shall terminate, and the number of directors of the
Corporation shall thereupon be such number as may be provided in accordance with
the  Restated   Articles  of  Incorporation   and  Bylaws  of  the  Corporations
irrespective of any increase made pursuant to this subparagraph (I).

         So long as any shares of Exchangeable  Preferred Stock are outstanding,
the  Restated  Articles of  Incorporation  and Bylaws of the  Corporation  shall
contain  provisions  ensuring  that the number of Directors  of the  Corporation
shall at all  times be such  that the  exercise  by the  holders  of  shares  of
Exchangeable  Preferred  Stock  of  the  right  to  elect  Directors  under  the
circumstances  provided  in  this  subparagraph  (I)  will  not  contravene  any
provisions of the Corporation's Restated Articles of Incorporation or Bylaws.

                  (II) So long as any shares of the Exchangeable Preferred Stock
remain  outstanding,  the Corporation will not, either directly or indirectly or
through  merger  or  consolidation  with  any  other  corporation,  without  the
affirmative  vote at a meeting or the written  consent with or without a meeting
of the  holders  of at least  66-2/3%  in number  of shares of the  Exchangeable
Preferred Stock then  outstanding,  (A) create any class or classes or series of
stock ranking prior to, or on a parity with, the  Exchangeable  Preferred  Stock
either as to dividends or upon liquidation or increase the authorized  number of
shares of any class or  classes  or  series of stock  ranking  prior to, or on a
parity with,  the  Exchangeable  Preferred  Stock either as to dividends or upon
liquidation,  (B) amend,  alter or repeal any of the  provisions of the Restated

                                       19
<PAGE> 

Articles of  Incorporation  (including this Statement of Rights and Preferences)
so as to  affect  adversely  the  preferences,  special  rights or powers of the
Exchangeable   Preferred  Stock,  (C)  authorize  any  reclassification  of  the
Exchangeable  Preferred  Stock or (D) incur or suffer to exist any Debt that, by
its terms or the terms of the  instrument  creating  or  evidencing  it, is pari
passu  with or  subordinate  in  right  of  payment  to the  9-3/4%  Convertible
Subordinated  Debentures  due  2014  issued  by the  Company  in May 1989 or the
Debentures  described  in  paragraph  (vii)  herein.  "Debt"  shall mean (i) all
indebtedness and other  obligations for the payment of money of the Corporation,
whenever  created,  incurred,  or  assumed,  which  is (a) for  borrowed  money,
evidenced  by a note or  similar  instrument,  or (b) for the  payment  of money
relating to (x) any obligations of the Corporation as lessee under leases of any
type of property  required to be  capitalized on the balance sheet of the lessee
under generally accepted accounting  principles and leases of property or assets
made as part of any sale and lease-back  transaction to which the Corporation is
a party or (y) any other  agreement to lease,  or lease of, any real or personal
property or mixture  thereof,  or (c) evidenced by a note or similar  instrument
given by the  Corporation in connection  with the acquisition by the Corporation
or any subsidiary of any businesses, properties or assets of any kind other than
trade accounts payable or accrued  liabilities arising in the ordinary course of
business, or (d) arising from letters of credit, bankers' acceptances,  currency
agreements or interest rate swaps, or (e) relating to performance, completion or
similar bonds of the Corporation;  (ii) any liability of others described in the
preceding  clause which the Corporation has guaranteed or which is otherwise its
legal liability; and (iii) any modification,  amendment,  renewal,  extension or
refunding of any such indebtedness or obligation.

         (vii)  EXCHANGE.  The  Exchangeable  Preferred Stock is exchangeable in
whole at the option of the  Corporation  on any dividend  payment date beginning
June 1, 1992, for the Corporation's 9-3/4% Convertible  Subordinated  Debentures
due 2014 (the  "Debentures")  as  described  in the  Corporation's  Registration
Statement on Form S-4, as amended (Registration No. 33-33152), as filed with the
Securities  and  Exchange   Commission.   Holders  of   outstanding   shares  of
Exchangeable Preferred Stock will be entitled to receive $25.00 principal amount
of Debentures in exchange for each share of Exchangeable Preferred Stock held by
them at the time of exchange;  PROVIDED that the Debentures  will be issuable in
denominations  of $25.00 and integral  multiples  thereof.  The Corporation will
mail to each record holder of the Exchangeable Preferred Stock written notice of
its  intention  to exchange  not less than 30 nor more than 60 days prior to the
date of exchange (the "Exchange  Date").  The notice shall specify the effective
date of the exchange and the place where certificates for shares of Exchangeable
Preferred  Stock are to be  surrendered  for  Debentures  and shall  state  that
dividends on  Exchangeable  Preferred Stock will cease to accrue on such date of
exchange. Prior to giving notice of intention to exchange, the Corporation shall

                                       20
<PAGE>

execute and deliver with a bank or trust company  selected by the Corporation an
Indenture  substantially  in the form filed as an  Exhibit to such  Registration
Statement  with such changes as may be required by law,  stock  exchange rule or
usage.  The  Corporation  will cause the Debentures to be  authenticated  on the
Exchange Date; at such time the rights of the holders of Exchangeable  Preferred
Stock as  stockholders  of the  Corporation  shall  cease  (except  the right to
receive  accumulated and unpaid  dividends to the Exchange Date) and such shares
of Exchangeable  Preferred Stock shall no longer be deemed outstanding and shall
represent  only the right to receive the  Debentures  and such  accumulated  and
unpaid dividends.  Notwithstanding the foregoing, if notice of exchange has been
given pursuant to this paragraph  (vii) and any holder of shares of Exchangeable
Preferred Stock shall, prior to the close of business on the Exchange Date, give
written notice to the  Corporation  pursuant to paragraph (iv) of the conversion
of any or all of the shares held by such holder (accompanied by a certificate or
certificates  for such shares,  duly  endorsed or assigned to the  Corporation),
then such exchange shall not become  effective as to such shares to be converted
and such  conversion  shall become  effective as provided in paragraph (iv). The
Debentures will be delivered to the persons  entitled  thereto upon surrender to
the Corporation or its agent appointed for that purpose of the  certificates for
the shares of  Exchangeable  Preferred Stock being  exchanged  therefor.  If the
Corporation has not paid full cumulative dividends on the Exchangeable Preferred
Stock to the Exchange Date (or set aside a sum therefor) the Corporation may not
exercise its option to exchange the  Debentures for the  Exchangeable  Preferred
Stock.

         (viii)  REDEMPTION BY THE  CORPORATION.  The shares of the Exchangeable
Preferred Stock may be redeemed at the option of the Corporation, as a whole, or
from time to time,  in part,  upon not less than 30 nor more than 60 days' prior
notice mailed to the holders of the shares to be redeemed at their  addresses as
shown on the stock books of the Corporation,  at the following redemption prices
per share during the 12-month period beginning June 1:
<TABLE>
<CAPTION>

YEAR     REDEMPTION PRICE       YEAR                    REDEMPTION PRICE
----     ----------------       ----                    ----------------
<S>      <C>                    <C>                     <C>     
1989     27.43750               1995                    25.97500
1990     27.19375               1996                    25.73125
1991     26.95000               1997                    25.48750
1992     26.70625               1998                    25.24375
1993     26.46250               1999 and thereafter     25.00000
1994     26.21875
</TABLE>

together  in each case with an amount  equal to all  dividends  accumulated  and
unpaid to the date fixed for redemption;  PROVIDED that no such redemption shall
be effected on or before June 1, 1992 unless (i) the last reported sale price of

                                       21
<PAGE>

the Common Stock, as determined in subparagraph  (iv)(IV)(d)  herein,  equals or
exceeds  150% of the  conversion  price for at least 20  Trading  Days  within a
period of 30  consecutive  Trading Days ending within five Trading Days prior to
the  date on  which  the  notice  of  redemption  is  first  mailed  or (ii) the
redemption  is effected in  connection  with certain  circumstances  involving a
Change in Control (as defined  below).  If the  Exchangeable  Preferred Stock is
redeemed in connection with certain circumstances  involving a Change in Control
prior to June 1, 1992 then,  in  addition  to the  amounts  payable as set forth
above, the holders of redeemed shares of Exchangeable Preferred Stock shall also
receive as an  additional  premium an amount equal to the  dividends  they would
have received on the shares of  Exchangeable  Preferred Stock redeemed from, and
including,  the date of  redemption  to June 1, 1992.  For the  purposes of this
paragraph  (viii), a "Change in Control" of the Corporation  shall have the same
meaning as applicable  to the holder's  optional  repurchase  right set forth in
paragraph (ix)(ii)(f) hereof, except that the proviso shall not apply.

         If full cumulative  dividends on the Exchangeable  Preferred Stock have
not been paid, the Exchangeable  Preferred Stock may not be redeemed in part and
the  Corporation  may not  purchase  or acquire  any shares of the  Exchangeable
Preferred  Stock otherwise than pursuant to a purchase or exchange offer made on
the same terms to all holders of the Exchangeable  Preferred Stock. If less than
all the outstanding  shares of Exchangeable  Preferred Stock are to be redeemed,
the  Corporation  will select  those to be  redeemed  by lot or a  substantially
equivalent method.

         If a notice of  redemption  has been given  pursuant to this  paragraph
(viii) and if, on or before the date fixed for  redemption,  the funds necessary
for such redemption shall have been set aside by the  Corporation,  separate and
apart from its other funds,  in trust for the pro rata benefit of the holders of
the shares so called for redemption, then, notwithstanding that any certificates
for such shares have not been  surrendered for  cancellation,  on the redemption
date  dividends  shall cease to accrue on the shares of  Exchangeable  Preferred
Stock to be redeemed,  and at the close of business on the  redemption  date the
holders of such  shares  shall  cease to be  stockholders  with  respect to such
shares and shall have no interest in or claims against the Corporation by virtue
thereof and shall have no voting or other  rights with  respect to such  shares,
except the right to receive  the moneys  payable  upon such  redemption  and the
right to  accumulated  and unpaid  dividends,  without  interest  thereon,  upon
surrender  (and   endorsement,   if  required  by  the   Corporation)  of  their
certificates,  and the  shares  evidenced  thereby  shall no  longer  be  deemed
outstanding.  Notwithstanding  the  foregoing,  if notice of redemption has been
given pursuant to this paragraph (viii) and any holder of shares of Exchangeable
Preferred  Stock  shall,  prior to the close of  business  on the date fixed for

                                       22
<PAGE> 

redemption, give written notice to the Corporation pursuant to paragraph (iv) of
the conversion of any or all of the shares held by such holder (accompanied by a
certificate or  certificates  for such shares,  duly endorsed or assigned to the
Corporation),  then such redemption shall not become effective as to such shares
to be  converted  and such  conversion  shall  become  effective  as provided in
paragraph  (iv).  Subject to applicable  escheat laws, any moneys  necessary for
redemption  set aside by the  Corporation  and unclaimed at the end of two years
from the redemption  date shall revert to the general funds of the  Corporation,
after which  reversion the holders of such shares so called for  redemption  but
not surrendered  shall look only to the general funds of the Corporation for the
payment of the amounts  payable upon such  redemption.  Any interest  accrued on
funds so deposited shall be paid to the Corporation from time to time. Any funds
which have been deposited by the  Corporation,  or on its behalf,  with a paying
agent or segregated and held in trust by the  Corporation  for the redemption of
shares  converted  into  Common  Stock on or prior  to the date  fixed  for such
redemption  shall  (subject to any right of the holder of such shares to receive
the dividend  payable  thereon as provided in paragraph (iv))  immediately  upon
such  conversion be returned to the Corporation or, if then held in trust by the
Corporation, shall be discharged from such trust.

         (ix)  REPURCHASE  BY THE HOLDER.  In the event  that,  prior to June 1,
1994,  there  shall occur a Change in Control  (as  hereinafter  defined) of the
Corporation,  then  each  holder  of a share  of  Exchangeable  Preferred  Stock
("Holder")  shall have the  right,  at such  Holder's  option,  to  require  the
Corporation to repurchase,  and upon the exercise of such right the  Corporation
shall  repurchase,  all or any  part of such  Holder's  shares  of  Exchangeable
Preferred  Stock  that is an  integral  multiple  of  $25.00,  on a date that is
forty-five  days  after  the  date of the  notice  of the  Corporation  provided
pursuant to subparagraph (I) hereof at a repurchase price equal to the aggregate
Liquidation  Preference  of  the  shares  to  be  repurchased,   plus  dividends
accumulated and unpaid to the repurchase date. At the option of the Corporation,
the  repurchase  price  may be paid in cash or by  delivery  of shares of Common
Stock having a fair market value equal to the  repurchase  price,  PROVIDED that
payment may not be made in Common Stock unless at the time of payment such stock
is listed on a national securities exchange or quoted on the automated quotation
system of the National  Association of Securities  Dealers,  Inc.  ("NASDAQ") or
another  comparable  quotation system.  For purposes of this paragraph (ix), the
fair market value of shares of Common Stock shall be equal to 95% of the average
of the last sale  prices,  as computed  under  paragraph  (iv) (IV) (d), of such
Common  Stock  for each of the  five  consecutive  Trading  Days  ending  on and
including the third Trading Day immediately preceding the repurchase date.

                  (I) (a) Unless the Corporation  shall have theretofore  called
for  redemption  all the  outstanding  shares of  Exchangeable  Preferred  Stock

                                       23
<PAGE>

pursuant to paragraph (viii) on or before the thirtieth day after the occurrence
of a Change in Control,  the Corporation or, at the request of the  Corporation,
the paying,  or transfer agent, if any, shall mail a notice of the occurrence of
the Change in Control and of the repurchase  right set forth herein arising as a
result  thereof  at least  thirty and not more than sixty days prior to the date
fixed for repurchase to the Holders of shares of Exchangeable Preferred Stock so
to be  repurchased  at their last  addresses  as the same appear on the registry
books of the Company.  Such mailing shall be by first class mail.  The notice if
mailed in the manner herein provided shall be conclusively presumed to have been
duly given,  whether or not the Holder  receives  such notice.  The  Corporation
shall also deliver a copy of such notice of a repurchase right to the paying, or
transfer  agent,  if any,  and cause a copy of such notice to be  published in a
newspaper of general  circulation  in the Borough of Manhattan,  The City of New
York.

         Each notice of a repurchase right shall state:

         (l)      the repurchase date,

         (2)      the date by which the repurchase right must be exercised,

         (3)      the repurchase price,

         (4)      a description of the procedure which a Holder of Exchangeable
Preferred Stock must follow to exercise a repurchase right, and

         (5) the Conversion Price then in effect, the date on which the right to
convert  the  shares of  Exchangeable  Preferred  Stock to be  repurchased  will
terminate  and the place or places where such shares of  Exchangeable  Preferred
Stock may be surrendered for conversion.

         In addition,  at least two Trading Days preceding the repurchase  date,
the  Corporation  shall  cause  to  be  published,  in a  newspaper  of  general
circulation  in the  Borough  of  Manhattan,  The  City of New  York,  a  notice
specifying  whether the repurchase price will be payable in cash or in shares of
Common Stock.

         No failure of the  Corporation to give the foregoing  notices or defect
therein shall limit any Holder's right to exercise a repurchase  right or affect
the validity of the proceedings for the repurchase of the shares of Exchangeable
Preferred Stock.

                           (b)      To exercise a repurchase right, a Holder
shall deliver to the Corporation or the paying or transfer agent, if any, as the
case may be, on or before the  thirtieth day after the date of the notice by the
Corporation of a repurchase  right (i) written notice of such Holder's  exercise

                                       24
<PAGE> 
 
of such  right,  which  notice  shall  set  forth  the name of the  Holder,  the
aggregate  Liquidation  Preference of the shares to be repurchased,  a statement
that an election to exercise the repurchase right is being made thereby, and, in
the event that the repurchase price shall be paid in shares of Common Stock, the
name or names (with  addresses) in which the  certificate  or  certificates  for
shares of Common  Stock  shall be issued,  and (ii) the  shares of  Exchangeable
Preferred Stock with respect to which the repurchase  right is being  exercised,
duly  endorsed for  transfer to the  Corporation.  Such written  notice shall be
irrevocable,  except  that the right of the  Holder  to  convert  the  shares of
Exchangeable Preferred Stock with respect to which the repurchase right is being
exercised shall continue until the close of business on the repurchase  date. If
the  repurchase  date falls  during the period from the close of business on any
dividend  payment record date preceding any dividend payment date to the opening
of business on such dividend payment date, the shares of Exchangeable  Preferred
Stock to be  repurchased  must be  accompanied  by payment in New York  Clearing
House or  other  funds  acceptable  to the  Company  of an  amount  equal to the
dividend  payable on such  dividend  payment  date on the number of shares being
repurchased and, notwithstanding such repurchase,  such dividend payment will be
made by the Company to the holder of such share on such dividend  payment record
date. Promptly thereafter,  the paying, or transfer agent, if any, shall deliver
to the Corporation written notice of the aggregate Liquidation Preference of the
shares to be  repurchased,  the name of each Holder who exercised the repurchase
right and the aggregate Liquidation Preference to be repurchased with respect to
each such Holder.

                           (c)     Upon receipt of the notice from the paying or
transfer agent, if any, or upon notice from each Holder, as the case may be, and
as described in subparagraph  (I), the Corporation shall pay or cause to be paid
the repurchase  price in cash or shares of Common Stock,  as provided  above, to
the  Holders  on the  repurchase  date,  together  with  accumulated  and unpaid
dividends  to  the  repurchase  date  payable  with  respect  to the  shares  of
Exchangeable  Preferred  Stock  as  to  which  the  repurchase  right  has  been
exercised.

                           (d)      Any issuance of shares of Common Stock in
respect  of  the  repurchase  price  shall  be  deemed  to  have  been  effected
immediately prior to the close of business on the repurchase date and the Person
or Persons in whose name or names any certificate or certificates  for shares of
Common  Stock shall be  issuable  upon such  repurchase  shall be deemed to have
become on the  repurchase  date the  holder or  holders  of record of the shares
represented  thereby,  PROVIDED that any surrender for repurchase on a date when
the stock transfer books of the Corporation shall be closed shall constitute the
Person or Persons in whose name or names the  certificate  or  certificates  for
such  shares are to be issued as the  recordholder  or holders  thereof  for all
purposes at the opening of  business  on the next  succeeding  day on which such

                                       25
<PAGE> 

stock  transfer  books are open.  No  payment  or  adjustment  shall be made for
dividends or  distributions  on any Common Stock issued upon  conversion  of any
share of Exchangeable Preferred Stock.

                           (e)     No fractions of shares or script representing
fractions of shares shall be issued upon  repurchase  of shares of  Exchangeable
Preferred  Stock.  If more than one  share  shall be  repurchased  from the same
Holder and the repurchase  price shall be payable in shares of Common Stock, the
number of full  shares  which shall be issuable  upon such  repurchase  shall be
computed on the basis of the aggregate  Liquidation  Preference of the shares so
repurchased.  Instead  of any  fractional  share of  Common  Stock  which  would
otherwise be issuable on the repurchase of any share or shares,  the Corporation
shall make payment in lieu thereof in an amount of United  States  dollars equal
to the value of such  fraction  computed  on the basis of the last sale price of
the Common Stock on the last Trading Day prior to the repurchase date.

                           (f      Any issuance and delivery of certificates for
shares of Common Stock on repurchase of shares of  Exchangeable  Preferred Stock
shall be made without charge to the holder of shares being  repurchased for such
certificates  or for any tax or duty in respect of the  issuance  or delivery of
such  certificates  or the  securities  represented  thereby,  PROVIDED that the
Corporation shall not be required to pay any tax or duty which may be payable in
respect of any transfer  involved in the issue or delivery of  certificates  for
shares of Common  Stock in a name other than that of the holder of the shares of
Exchangeable  Preferred Stock being  repurchased,  and no such issue or delivery
shall be made unless and until the Person  requesting such issue or delivery has
paid to the Corporation  the amount of any such tax or duty or has  established,
to the satisfaction of the Corporation, that such tax or duty has been paid.

                           (g)   If any shares of Common Stock to be issued upon
repurchase  of  shares  of  Exchangeable   Preferred  Stock  hereunder   require
registration with or approval of any governmental authority under any federal or
state law before such shares may be validly issued or delivered upon repurchase,
the  Corporation  covenants that it will in good faith and as  expeditiously  as
possible endeavor to secure such  registration or approval,  as the case may be,
PROVIDED  that nothing in this subpart  shall be deemed to affect in any way the
obligations of the  Corporation to repurchase  Exchangeable  Preferred  Stock as
provided in this paragraph (ix).

                           (h)      The Corporation covenants that any shares of
Common Stock which may be issued upon repurchase of Exchangeable Preferred Stock
will be issued from its  authorized  but unissued  shares and upon issue will be
duly and validly issued and fully paid and non-assessable by the Corporation and
free of  preemptive  rights  and that the  shares of Common  Stock  which may be
issued upon repurchase of shares of Exchangeable  Preferred Stock will be listed

                                       26
<PAGE> 

on any national  securities  exchange on which the  outstanding  Common Stock is
listed at the time of such issuance.

                           (i)      If any share of Exchangeable Preferred Stock
surrendered  for  repurchase  shall not be so paid on the  repurchase  date, the
Liquidation  Preference  of such share shall,  until paid,  bear interest to the
extent  permitted by applicable law from the repurchase date at 9-3/4% per annum
and such share of  Exchangeable  Preferred Stock shall remain  convertible  into
Common Stock until the principal of such share of  Exchangeable  Preferred Stock
shall have been paid or duly provided for.

                  (II)     For purposes of paragraph (ix):

                           (a)    The term "Person" shall mean a corporation, an
association,  a partnership,  an organization,  an individual, a government or a
political subdivision thereof or a governmental agency.

                           (b)      The term "Subsidiary" shall mean a corpora-
tion more than 50% of the outstanding  voting stock of which is owned,  directly
or indirectly,  by the Corporation or by one or more other  Subsidiaries,  or by
the  Corporation  and one or more other  Subsidiaries.  For the purposes of this
definition, "voting stock" means stock which ordinarily has voting power for the
election of  directors,  whether at all times or only so long as no senior class
of stock has such voting power by reason of any contingency.

                           (c)      The term "Affiliate" of any specified Person
shall mean any other Person directly or indirectly  controlling or controlled by
or under direct or indirect common control with such specified  Person.  For the
purposes of this  definition,  "control" when used with respect to any specified
Person  means  power to direct  the  management  and  policies  of such  Person,
directly or  indirectly,  whether  through  ownership of voting  securities,  by
contract  or  otherwise;  and the  terms  "controlling"  and  "controlled"  have
meanings correlative to the foregoing.

                           (d)     the term "Associate" of any Person, means (1)
any corporation or  organization  (other than the Corporation or a Subsidiary of
the Corporation or any Person  controlled  directly or indirectly (as defined in
the  definition of Affiliate  above) by the  Corporation  or a Subsidiary of the
Corporation)  of which  such  Person is an  officer  or  general  partner or is,
directly or indirectly, the beneficial owner of ten percent or more of any class
of equity securities,  (2) any trust or other estate in which such Person serves
as trustee or in a similar fiduciary capacity, and (3) any relative or spouse of
such  Person,  or any  relative  of such  spouse,  who has the same home as such
Person or who is a director or officer of the  Corporation or any of its parents
or Subsidiaries;

                                       27
<PAGE> 

                           (e)      the term "beneficial owner" shall be deter-
mined in accordance with Rule 13d-3  promulgated  under the Securities  Exchange
Act of 1934,  as  amended,  as in  effect on the date of  effectiveness  of this
Statement of Rights and Preferences; and

                           (f)      a "Change in Control" of the Corporation
shall be deemed to have  occurred  at such time as any Person is or becomes  the
beneficial owner,  directly or indirectly,  through a purchase,  merger or other
acquisition transaction or series of transactions, of shares of capital stock of
the Corporation  entitling such Person to exercise  seventy-five percent or more
of the total  voting  power of all  shares of capital  stock of the  Corporation
entitled to vote in elections of  directors;  PROVIDED  that a Change in Control
shall not be deemed to have  occurred  if either  (i) the last sale price of the
Common  Stock  on any  five  Trading  Days  during  the 10  Trading  Day  period
immediately  preceding  the date of the Change in Control  shall equal or exceed
105% of the  conversion  price in effect on such  Trading Day or (ii) all of the
consideration (excluding cash payments for fractional shares) to be paid for the
Common  Stock in the  transaction  or  transactions  constituting  the Change in
Control  consists  of shares of common  stock  traded on a  national  securities
exchange or through NASDAQ or another comparable quotation system.

         (x) CONSENT.  Subject to the provisions set forth in paragraph (vi), no
consent of the holders of the Exchangeable Preferred Stock shall be required for
(a) the creation of any  indebtedness  of any kind of the  Corporation,  (b) the
creation, or increase or decrease in the amount, of any class or series of stock
of the Corporation  not ranking prior to, or on a parity with, the  Exchangeable
Preferred Stock either as to dividends or upon liquidation,  (c) any increase or
decrease in the amount of authorized  Common Stock or any increase,  decrease or
change  in the par  value  thereof  or in any  other  terms  thereof  or (d) the
creation,  or any increase or decrease in the amount,  of  authorized  preferred
stock issuable by the Board of Directors in series.

         (xi) NUMBER OF SHARES OF EXCHANGEABLE  PREFERRED STOCK.  Subject to the
provisions of paragraph (vi) hereof,  the Board reserves the right by subsequent
amendment  of this  resolution  from time to time to increase  or  decrease  the
number of shares which  constitute  the  Exchangeable  Preferred  Stock (but not
below the number of shares  thereof then  outstanding)  and in other respects to
amend this resolution  within the  limitations  provided by law, this resolution
and the Restated Articles of Incorporation.

                                       28
<PAGE> 


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

                   DESIGNATION OF RIGHTS AND PREFERENCES OF
                     SERIES 2 CONVERTIBLE PREFERRED STOCK
                       ------------------------------

         A  series  of  Preferred  Stock  is  hereby   designated  as  Series  2
Convertible  Preferred  Stock which series shall consist of 50,000  shares,  par
value $.02 per share (the  "Series 2 Shares"),  and which shall have the rights,
preferences, privileges and limitations as set forth below:

         (1) DIVIDENDS.  The holders of the Series 2 Shares shall be entitled to
a  dividend  of eight  percent  (8%) per annum of the Stated  Value (as  defined
below),  on a cumulative  basis with  quarterly  compounding  (prorated  for any
portion  of  the  applicable  period  during  which  the  Series  2  Shares  are
outstanding).  Dividends  shall accrue from the date of issuance of the Series 2
Shares and shall be paid on each  Series 2 Share at the time that such  Series 2
Share is  converted  or  redeemed.  Dividends  (including  dividends  payable to
holders  of Series 2 Shares as of the date such  holder  elects to  convert  the
Series 2 Shares into Common Stock as provided in Section 2 below) may be paid at
the Company's  option in cash or Common Stock valued based on the Average Market
Price  (as  defined  below)  of the  Common  Stock  for the  period  of five (5)
consecutive  trading days ending on the trading day before the dividend  payment
dates or the date of conversion  or  redemption,  as the case may be;  PROVIDED,
HOWEVER,  that in no event shall  accrued  dividends be paid in shares of Common
Stock if,  after  giving  effect to such  distribution,  the number of shares of
Common  Stock  beneficially  owned by such  holder and all other  holders  whose
holdings  would be  aggregated  with such  holder for  purposes  of  calculating
beneficial  ownership in accordance with Sections 13(d) and 16 of the Securities
Exchange Act of 1934,  as amended,  and the  regulations  thereunder  ("Sections
13(d) and 16"), including,  without limitation, any person serving as an adviser
to any holder  (collectively,  the  "Related  Persons"),  would  exceed four and
nine-tenths percent (4.9%) of the outstanding shares of Common Stock (calculated
in  accordance  with  Sections  13(d) and 16); cash shall be paid in lieu of any
shares which cannot be issued  pursuant to this  proviso.  The Company shall not
issue any  fraction  of a share of Common  Stock in payment of a  dividend,  but
shall pay cash  therefor.  The  Company  shall,  so long as any of the  Series 2
Shares are  outstanding,  reserve and keep  available out of its  authorized and
unissued Common Stock,  such number of shares of Common Stock as shall from time
to time be sufficient to pay dividends hereunder.  Every reference herein to the
Common Stock of the Company (unless a different intention is expressed) shall be
to the shares of the Common Stock of the Company,  $.02 par value, as such stock

                                       29
<PAGE> 

exists  immediately  after the  issuance  of the  Series 2 Shares  provided  for
hereunder,  or to stock into which such Common Stock may be changed from time to
time thereafter.

         "Average Market Price" of any security for any period shall be computed
as the  arithmetic  average of the closing bid prices for such security for each
trading day in such period on the National  Association  of  Securities  Dealers
Automated  Quotation  National  Market  System  (the  "Nasdaq-NMS"),  or, if the
Nasdaq-NMS  is not the  principal  trading  market  for  such  security,  on the
principal  trading  market  for such  security,  or, if market  value  cannot be
calculated  for such period on any of the foregoing  bases,  the Average  Market
Price shall be the average fair market  value  during such period as  reasonably
determined  in good  faith by the  Board of  Directors  of the  Company  (all as
appropriately  adjusted  for any stock  dividend,  stock split or other  similar
transaction during such period or between the end of such period and the date of
conversion or dividend payment, as applicable).

         (2)  CONVERSION OF SERIES 2 SHARES.  The holders of the Series 2 Shares
shall have the right,  at their  option,  to  convert  the Series 2 Shares  into
shares of Common Stock on the following terms and conditions:

                  (a)(i) Each Series 2 share  shall be  convertible  at any time
after the date of issuance (or, if such Series 2 Share is called for redemption,
at any time up to and  including,  but not after,  the close of  business on the
fifth  full  business  day prior to the date filed for such  redemption,  unless
default  shall be made by the Company in providing  the funds for the payment of
the redemption price),  into fully paid and nonassessable  shares (calculated to
the  nearest  whole  share)  of  Common  Stock  at  the  conversion  price  (the
"Conversion  Price")  in  effect  at  the  time  of  conversion   determined  as
hereinafter  provided;  PROVIDED,  HOWEVER, that in no event shall any holder be
entitled to convert Series 2 Shares if, after giving effect to such  conversion,
the number of shares of Common Stock  beneficially  owned by such holder and all
Related  Persons  would  exceed  four  and  nine-tenths  percent  (4.9%)  of the
outstanding shares of Common Stock (calculated in accordance with Sections 13(d)
and 16).  Each Series 2 Share shall have a value of One Hundred  Dollars  ($100)
(the "Stated Value") for the purpose of such conversion.

                  (ii) Commencing on the later of (A) 180 days after the date of
original issue of Series 2 Shares or (B) 90 days after the effective date of the
Registration  Statement  (the  "Registration  Statement")  filed by the  Company
pursuant  to the  Registration  Rights  Agreement  between  the  Company and the
original  purchasers  of the Series 2 Shares,  the Company may at any time cause
the automatic  conversion of all outstanding Series 2 Shares pursuant to written
notice  to the  holders  given  not less  than 30 days and not more than 60 days
prior to the date fixed in the  notice.  Any and all Series 2 Shares  which have

                                       30
<PAGE>  

not been previously  converted by the holders shall be  automatically  converted
into shares of Common  Stock as provided  in Section  (2)(a)(i)  at the close of
business  on the date fixed in such  notice,  at the  Conversion  Price which is
eighty-three  percent (83%) (the "Conversion  Percentage") of the Average Market
Price for the Common Stock for the five (5) consecutive  trading days ending one
trading day prior to the date of automatic conversion;  provided,  however, that
in no event  shall the  Conversion  Price be an amount more than one hundred ten
percent (110%) of the Average Market Price for the Common Stock for the five (5)
consecutive  trading  days  ending one trading day prior to the date of original
issue of Series 2 Shares. The Conversion Price Floor described in Section (2)(b)
shall  not  be   applicable  to  an  automatic   conversion   pursuant  to  this
Section(2)(a)(ii).

                  (b) The Conversion  Price shall be eighty-three  percent (83%)
of the Average  Market Price for the Common  Stock for the five (5)  consecutive
trading days ending one trading day prior to the date the Conversion  Notice (as
defined  below) is received by the Company,  subject to  adjustment  as provided
herein;  PROVIDED,  HOWEVER, in no event shall the Conversion Price be an amount
less than $4.41 per share of Common Stock (the "Conversion Price Floor") or more
than one hundred ten percent  (110%) of the Average  Market Price for the Common
Stock for the five (5) consecutive  trading days ending one trading day prior to
the issuance of the Series 2 Shares.

                  (c) If the Company  shall  consolidate  with or merge into any
corporation or reclassify its outstanding  shares of Common Stock (other than by
way of  subdivision  or reduction of such shares) (each a "Major  Transaction"),
then each  Series 2 Share shall  thereafter  be  convertible  into the number of
shares of stock or securities  (the  "Resulting  Securities") or property of the
Company,  or of the entity resulting from such consolidation or merger, to which
a holder of the number of shares of Common Stock  delivered  upon  conversion of
such Series 2 Share would have been  entitled upon such Major  Transaction,  had
the holder of such Series 2 Share exercised its right of conversion and had such
Common Stock been issued and  outstanding and had such holder been the holder of
record  of such  Common  Stock at the time of such  Major  Transaction,  and the
Company shall make lawful  provision  therefor as a part of such  consolidation,
merger or reclassification; PROVIDED, HOWEVER, that during the period commencing
on the date of original  issue of Series 2 Shares and ending on the later of (A)
180 days  after  the date of  original  issue of  Series 2 Shares or (B) 90 days
after the effective date of the  Registration  Statement,  the Company shall not
consummate a Major Transaction without the approval of the holders of a majority
of the outstanding Series 2 Shares,  unless (A) the Resulting Securities (or the
securities  into which the  Resulting  Securities  are  immediately  convertible
without the payment of additional  consideration) are, at the date of the giving

                                       31
<PAGE>

of the notice referred to in clause (B) below,  listed or included for quotation
on  NASDAQ-NMS,  the New York Stock Exchange or the American Stock Exchange (and
are, at the date of the giving of such notice,  reasonably  expected to continue
to be so listed or included for  quotation for at least the six (6) month period
subsequent to the closing of the Major  Transaction);  and (B) the Company gives
such holder notice of such Major  Transaction  at least thirty (30) trading days
prior to the closing  thereof  (excluding  any trading days that sales cannot be
made pursuant to the Registration Statement for any reason); PROVIDED,  FURTHER,
that in any event the  Company  shall  give the  holders  of the Series 2 Shares
written  notice of any  Major  Transaction  not less  than 30 days  prior to its
consummation.

                  (d) The  Company  shall not issue any  fraction  of a share of
Common Stock upon any conversion,  but shall pay cash therefor at the Conversion
Price then in effect multiplied by such fraction.

                  (e) On  presentation  and  surrender to the Company (or at any
office or agency  maintained  for the  transfer  of the  Series 2 Shares) of the
certificates  of Series 2 Shares so to be converted,  duly endorsed in blank for
transfer or accompanied by proper instruments of assignment or transfer in blank
(a "Conversion Notice"), with signatures guaranteed, the holder of such Series 2
Shares  shall be  entitled,  subject to the  limitations  herein  contained,  to
receive in exchange  therefor a certificate or  certificates  for fully paid and
nonassessable  shares,  which  certificates  shall be  delivered  by the  second
trading day after the date of delivery of the  Conversion  Notice,  and cash for
fractional  shares,  of Common Stock on the foregoing basis. The Series 2 Shares
shall be deemed to have been  converted,  and the person  converting the same to
have  become the holder of record of Common  Stock,  for all  purposes as of the
date of delivery of the Conversion Notice.

                  (f) The Company  shall,  so long as any of the Series 2 Shares
are  outstanding,  reserve and keep available out of its authorized and unissued
Common Stock, solely for the purpose of effecting the conversion of the Series 2
Shares,  such  number of shares  of Common  Stock as shall  from time to time be
sufficient  to  effect  the  conversion  of all  of the  Series  2  Shares  then
outstanding.

                  (g) The  Company  shall  pay any and all  taxes  which  may be
imposed  upon it with  respect to the issuance and delivery of Common Stock upon
the conversion of the Series 2 Shares as herein provided.  The Company shall not
be  required  in any event to pay any  transfer  or other taxes by reason of the
issuance  of such  Common  Stock in names other than those in which the Series 2
Shares surrendered for conversion are registered on the Company's  records,  and
no such  conversion  or issuance of Common  Stock shall be made unless and until
the person  requesting  such  issuance has paid to the Company the amount of any

                                       32
<PAGE>  

such tax, or has established to the satisfaction of the Company and its transfer
agent, if any, that such tax has been paid.

         (3)      VOTING RIGHTS. Holders of Series 2 Shares shall have no voting
rights, except as required by law.

         (4) REDEMPTION.  The Company may, at any time subsequent to ninety (90)
days after the issuance of the Series 2 Shares,  redeem the whole or any part of
the Series 2 Shares then outstanding at a redemption price of One Hundred Twenty
Dollars and Fifty Cents  ($120.50)  per Series 2 Share,  plus in each case a sum
equal to all accrued  and unpaid  dividends  thereon  through the date fixed for
redemption, in accordance with the following redemption procedures:

                  (a) In case of  redemption of only part of the Series 2 Shares
at any time  outstanding,  the Company  shall  designate  the amount of Series 2
Shares so to be  redeemed  and shall  redeem  such Series 2 Shares on a PRO RATA
basis. Subject to the limitations and provisions herein contained,  the Board of
Directors  shall  have the  power  and  authority  to  prescribe  the  terms and
conditions upon which the Series 2 Shares shall be redeemed from time to time.

                  (b) Notice of every redemption shall be given by mail to every
holder of record of any Series 2 Shares  then to be  redeemed,  at least  thirty
(30), but no more than ninety (90), days prior to the date fixed as the date for
the redemption thereof, at the respective  addresses of such holders as the same
shall appear on the stock transfer books of the Company.  The notice shall state
that the Series 2 Shares  shall be  redeemed  by the  Company at the  redemption
price  specified  above,  upon the surrender for  cancellation,  at the time and
place designated in such notice,  of the certificates  representing the Series 2
Shares to be redeemed,  properly endorsed in blank for transfer,  or accompanied
by proper  instruments  of  assignment  and transfer in blank,  with  signatures
guaranteed,  and bearing all necessary  transfer tax stamps thereto  affixed and
cancelled.  On and after the date specified in the notice described above,  each
holder of Series 2 Shares  called for  redemption  shall be  entitled to receive
therefor the specified  redemption price upon  presentation and surrender at the
place  designated in such notice of the  certificates for Series 2 Shares called
for redemption, properly endorsed in blank for transfer or accompanied by proper
instruments of assignment or transfer in blank, with signatures guaranteed,  and
bearing all necessary transfer tax stamps thereto affixed and cancelled.

                  (c)  If  the  Company  shall  give  notice  of  redemption  as
aforesaid (and unless the Company shall fail to pay the redemption  price of the
Series 2 Shares  presented for redemption in accordance  with such notice),  all
Series 2 Shares called for  redemption  shall be deemed to have been redeemed on

                                       33
<PAGE>  

the date  specified in such  notice,  whether or not the  certificates  for such
Series 2 Shares shall be surrendered for redemption, and such Series 2 Shares so
called for  redemption  shall from and after  such date cease to  represent  any
interest  whatsoever  in the Company or its  property,  and the holders  thereof
shall  have no rights  other  than the right to receive  such  redemption  price
without any interest thereof from and after such date.

         (5) LIQUIDATION, DISSOLUTION, WINDING UP. In the event of any voluntary
or  involuntary  liquidation,  dissolution  or  winding up of the  Company,  the
holders of the Series 2 Shares  shall be  entitled to receive in cash out of the
assets of the  Company,  whether from capital or from  earnings,  available  for
distribution to its stockholders (the "Series 2 Funds"), before any amount shall
be paid to the holders of the Common Stock,  an amount equal to the Stated Value
per Series 2 Share plus any accrued and unpaid dividends,  provided that, if the
Series 2 Funds are  insufficient  to pay the full  amount due to the  holders of
Series 2 Shares and  holders of shares of other  classes or series of  preferred
stock of the  Company  that are of equal  rank  with the  Series 2 Shares  as to
payments of Series 2 Funds (the "Pari Passu Shares"), then each holder of Series
2 Shares and Pari Passu Shares shall  receive a percentage of the Series 2 Funds
equal  to the  full  amount  of  Series  2 Funds  payable  to such  holder  as a
percentage of the full amount of Series 2 Funds payable to all holders of Series
2 Shares and Pari Passu  Shares.  The purchase or  redemption  by the Company of
stock of any class, in any manner  permitted by law, shall not, for the purposes
hereof, be regarded as a liquidation,  dissolution or winding up of the Company.
Neither  the  consolidation  nor  merger of the  Company  with or into any other
corporation  or  corporations,  nor the sale or  transfer by the Company of less
than substantially all of its assets,  shall, for the purposes hereof, be deemed
to be a  liquidation,  dissolution  or winding up of the  Company.  No holder of
Series 2 Shares shall be entitled to receive any amounts  with  respect  thereto
upon any  liquidation,  dissolution  or winding up of the Company other than the
amounts provided for herein.

         (6) SERIES 2 RANK.  All shares of Common  Stock shall be of junior rank
to  all  Series  2  Shares  in  respect  to  the  preferences  as to  dividends,
distributions  and payments upon the  liquidation,  dissolution or winding up of
the  Company.  The rights of the shares of Common  Stock shall be subject to the
preferences  and  relative  rights of the  Series 2 Shares.  The Series 2 Shares
shall rank junior to the Company's  Convertible  Exchangeable  Preferred  Stock,
Series 1 in  respect  of  dividends  and  distributions  and  payments  upon the
liquidation, dissolution or winding up of the Company. The Company may authorize
and issue  additional or other  preferred  stock which is of equal rank with the
Series 2 Shares in respect of the preferences as to dividends and  distributions
and payments upon the liquidation,  dissolution or winding up of the Company. In
the event of the merger or  consolidation  of the Company  with or into  another

                                       34
<PAGE> 

corporation,   the  Series  2  Shares  shall  maintain  their  relative  powers,
designations and preferences provided for herein.

         (7) VOTE TO CHANGE THE TERMS OF SERIES 2 SHARES.  The affirmative  vote
at a meeting  duly  called for such  purpose of the  written  consent  without a
meeting  of the  holders  of the not  less  than  two-thirds  (2/3)  of the then
outstanding Series 2 Shares shall be required to amend,  alter, change or repeal
any of the powers, designations, preferences and rights of the Series 2 Shares.

         (8) AMENDMENTS  UPON  CONVERSION OR REDEMPTION OF OUTSTANDING  SERIES 2
SHARES.  When,  as a result of the  conversion  or  redemption  of the  Series 2
Shares,  no Series 2 Shares remain  outstanding,  the Board of Directors may, at
its discretion and without a vote of the  shareholders of the Company,  withdraw
this  Designation  in its entirety by providing for the filing of the applicable
amendment or restatement of the Company's  Restated  Articles of  Incorporation,
and the Series 2 Shares  designated hereby shall thereby return to the status of
authorized  but  unissued  and  undesignated  shares of  Preferred  Stock of the
Company.

                                       35

<PAGE>  

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

                    DESIGNATION OF RIGHTS AND PREFERENCES
              OF SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
                       ------------------------------

         SECTION 1.   DESIGNATION OF SERIES A JUNIOR PARTICIPATING PREFERRED 
                      STOCK AND AMOUNT.

         The  shares of such  series  shall be  designated  as  "Series A Junior
Participating  Preferred Stock" (the "Series A Preferred  Stock") and the number
of shares constituting the Series A Preferred Stock shall be 600,000,  par value
$.02 per  share.  Such  number  of  shares  may be  increased  or  decreased  by
resolution of the Board of Directors;  PROVIDED, HOWEVER, that no decrease shall
reduce the number of shares of Series A  Preferred  Stock to a number  less than
the number of shares then  outstanding  plus the number of shares  reserved  for
issuance  upon the  exercise of Rights  (the  "Rights")  issued  pursuant to the
Rights  Agreement  dated as of April 10, 1996 between the  Corporation and First
Interstate Bank of Washington,  N.A., as Rights Agent (the "Rights  Agreement"),
and provided,  further,  that if more than a total of 600,000 shares of Series A
Preferred Stock shall be issuable upon the exercise of the Rights,  the Board of
Directors, pursuant to Section 23B.06.020 of the Washington Business Corporation
Act, shall direct by resolution that Articles of Amendment be properly  executed
and filed, in accordance with the provisions thereof,  providing for an increase
in the  authorized  shares of Series A Preferred  Stock to the largest number of
whole shares issuable upon exercise of the Rights.

         SECTION 2.        DIVIDENDS AND DISTRIBUTIONS.

                  (A)  Subject to the rights of the holders of any shares of any
series of Preferred  Stock (or any similar  stock) ranking prior and superior to
the Series A Preferred Stock with respect to dividends, the holders of shares of
Series A Preferred  Stock,  in preference  to the holders of Common  Stock,  par
value $.02 per share (the "Common Stock"), of the Corporation,  and of any other
junior  stock,  shall be entitled to  receive,  when,  as and if declared by the
Board of Directors  out of funds legally  available  for the purpose,  quarterly
dividends  payable  in cash on the  first  day of  March,  June,  September  and
December in each year (each such date being  referred to herein as a  "Quarterly
Dividend Payment Date"), commencing on the first Quarterly Dividend Payment Date
after the first issuance of a share or fraction of a share of Series A Preferred
Stock, in an amount per share (rounded to the nearest cent) equal to the greater
of (i) $1 and (ii)  subject to the  provision  for  adjustment  hereinafter  set
forth,  100 times the aggregate per share amount of all cash dividends,  and 100

                                       36
<PAGE> 

times the aggregate per share amount (payable in kind) of all noncash  dividends
or other distributions,  other than a dividend payable in shares of Common Stock
or a subdivision of the outstanding shares of Common Stock (by  reclassification
or  otherwise),  declared on the Common  Stock since the  immediately  preceding
Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend
Payment  Date,  since the first  issuance of any share or fraction of a share of
Series A Preferred Stock. In the event the Corporation shall at any time declare
or pay any dividend on the Common Stock  payable in shares of Common  Stock,  or
effect a subdivision or combination or consolidation  of the outstanding  shares
of Common Stock (by  reclassification or otherwise than by payment of a dividend
in shares of Common  Stock) into a greater or lesser  number of shares of Common
Stock,  then in each such case the amount to which holders of shares of Series A
Preferred Stock were entitled  immediately prior to such event under clause (ii)
of the  preceding  sentence  shall be adjusted by  multiplying  such amount by a
fraction  the  numerator  of which is the  number  of  shares  of  Common  Stock
outstanding  immediately  after such event and the  denominator  of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.

                  (B) The  Corporation  shall declare a dividend or distribution
on the Series A Preferred  Stock as provided in paragraph  (A) of this Section 2
immediately  after it declares a dividend or  distribution  on the Common  Stock
(other than a dividend  payable in shares of Common Stock);  PROVIDED,  however,
that, in the event no dividend or  distribution  shall have been declared on the
Common Stock during the period between any Quarterly  Dividend  Payment Date and
the next subsequent  Quarterly Dividend Payment Date, a dividend of $1 per share
on the Series A Preferred Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.

                  (C)  Dividends  shall  begin to accrue  and be  cumulative  on
outstanding  shares of Series A  Preferred  Stock  from the  Quarterly  Dividend
Payment Date next preceding the date of issue of such shares, unless the date of
issue of such  shares  is  prior to the  record  date  for the  first  Quarterly
Dividend  Payment  Date,  in which case  dividends on such shares shall begin to
accrue from the date of issue of such  shares,  or unless the date of issue is a
Quarterly  Dividend  Payment  Date or is a date  after the  record  date for the
determination  of  holders of shares of Series A  Preferred  Stock  entitled  to
receive a quarterly dividend and before such Quarterly Dividend Payment Date, in
either of which events such  dividends  shall begin to accrue and be  cumulative
from such Quarterly  Dividend  Payment Date.  Accrued but unpaid dividends shall
not bear interest.  Dividends paid on the shares of Series A Preferred  Stock in
an amount less than the total  amount of such  dividends at the time accrued and
payable on such shares shall be  allocated  pro rata on a  share-by-share  basis

                                       37
<PAGE> 

among all such shares at the time outstanding.  The Board of Directors may fix a
record  date for the  determination  of holders of shares of Series A  Preferred
Stock  entitled  to  receive  payment  of a dividend  or  distribution  declared
thereon,  which  record  date  shall be not more than 60 days  prior to the date
fixed for the payment thereof.

         SECTION 3.        VOTING RIGHTS.

         The  holders  of shares  of Series A  Preferred  Stock  shall  have the
following voting rights:

                  (A) Subject to the provision for  adjustment  hereinafter  set
forth,  each share of Series A Preferred  Stock shall entitle the holder thereof
to 100  votes on all  matters  submitted  to a vote of the  shareholders  of the
Corporation.  In the event the Corporation  shall at any time declare or pay any
dividend  on the Common  Stock  payable in shares of Common  Stock,  or effect a
subdivision or combination or consolidation of the outstanding  shares of Common
Stock (by  reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common Stock, then
in each such case the  number of votes per share to which  holders  of shares of
Series A Preferred Stock were entitled  immediately prior to such event shall be
adjusted by multiplying  such number by a fraction the numerator of which is the
number of shares of Common Stock  outstanding  immediately  after such event and
the  denominator  of which is the  number of shares  of Common  Stock  that were
outstanding immediately prior to such event.

                  (B)  Except  as  otherwise   provided  herein,  in  any  other
Certificate of Designations  creating a series of Preferred Stock or any similar
stock,  or by law,  the  holders of shares of Series A  Preferred  Stock and the
holders of shares of Common Stock and any other capital stock of the Corporation
having  general  voting  rights shall vote  together as one class on all matters
submitted to a vote of shareholders of the Corporation.

                  (C) Except as set forth  herein,  or as otherwise  provided by
law, holders of Series A Preferred Stock shall have no special voting rights and
their consent  shall not be required  (except to the extent they are entitled to
vote with holders of Common Stock as set forth  herein) for taking any corporate
action.

         SECTION 4.        CERTAIN RESTRICTIONS.

                  (A)  Whenever  quarterly   dividends  or  other  dividends  or
distributions  payable on the Series A Preferred  Stock as provided in Section 2
are in  arrears,  thereafter  and until all  accrued  and unpaid  dividends  and

                                       38
<PAGE> 

distributions,  whether or not declared,  on shares of Series A Preferred  Stock
outstanding shall have been paid in full, the Corporation shall not:

                           (i)declare  or  pay  dividends,  or  make  any  other
                           distributions,  on any shares of stock ranking junior
                           (either  as  to   dividends   or  upon   liquidation,
                           dissolution  or winding up) to the Series A Preferred
                           Stock;

                           (ii)declare  or pay  dividends,  or  make  any  other
                           distributions,  on any  shares of stock  ranking on a
                           parity  (either as to dividends or upon  liquidation,
                           dissolution   or  winding   up)  with  the  Series  A
                           Preferred Stock, except dividends paid ratably on the
                           Series A Preferred Stock and all such parity stock on
                           which   dividends   are  payable  or  in  arrears  in
                           proportion  to the total amounts to which the holders
                           of all such shares are then entitled;

                           (iii)  redeem or  purchase or  otherwise  acquire for
                           consideration  shares  of any  stock  ranking  junior
                           (either  as  to   dividends   or  upon   liquidation,
                           dissolution  or winding up) to the Series A Preferred
                           Stock,  provided that the Corporation may at any time
                           redeem,  purchase or otherwise  acquire shares of any
                           such junior stock in exchange for shares of any stock
                           of  the  Corporation  ranking  junior  (either  as to
                           dividends or upon dissolution, liquidation or winding
                           up) to the Series A Preferred Stock; or

                           (iv)redeem  or  purchase  or  otherwise  acquire  for
                           consideration any shares of Series A Preferred Stock,
                           or any shares of stock  ranking on a parity  with the
                           Series A Preferred Stock, except in accordance with a
                           purchase offer made in writing or by publication  (as
                           determined  by the Board of Directors) to all holders
                           of such  shares  upon  such  terms  as the  Board  of
                           Directors,  after  consideration  of  the  respective
                           annual  dividend rates and other relative  rights and
                           preferences  of the  respective  series and  classes,
                           shall determine in good faith will result in fair and
                           equitable  treatment  among the respective  series or
                           classes.

                  (B) The  Corporation  shall not permit any  subsidiary  of the
Corporation  to purchase or otherwise  acquire for  consideration  any shares of
stock of the Corporation  unless the Corporation  could,  under paragraph (A) of
this Section 4,  purchase or  otherwise  acquire such shares at such time and in
such manner.
 
                                       39
<PAGE> 



         SECTION 5.        REACQUIRED SHARES.

         Any shares of Series A Preferred Stock purchased or otherwise  acquired
by the  Corporation  in any manner  whatsoever  shall be retired  and  cancelled
promptly  after the  acquisition  thereof.  All such  shares  shall  upon  their
cancellation become authorized but unissued shares of Preferred Stock and may be
reissued as part of a new series of Preferred  Stock  subject to the  conditions
and   restrictions  on  issuance  set  forth  herein,   in  the  Certificate  of
Incorporation of the Corporation (the "Certificate of Incorporation"), or in any
other  Certificate of  Designations  creating a series of Preferred Stock or any
similar stock or as otherwise required by law.

         SECTION 6.        LIQUIDATION, DISSOLUTION OR WINDING UP.

         Upon any liquidation,  dissolution or winding up of the Corporation, no
distribution  shall be made (a) to the holders of shares of stock ranking junior
(either as to dividends or upon  liquidation,  dissolution or winding up) to the
Series A Preferred Stock unless,  prior thereto, the holders of shares of Series
A Preferred  Stock shall have received  $100 per share,  plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not declared,
to the date of such  payment,  provided  that the  holders of shares of Series A
Preferred  Stock  shall be entitled  to receive an  aggregate  amount per share,
subject to the  provision for  adjustment  hereinafter  set forth,  equal to 100
times the aggregate  amount to be distributed  per share to holders of shares of
Common  Stock,  or (b) to the  holders  of shares of stock  ranking  on a parity
(either as to dividends or upon liquidation, dissolution or winding up) with the
Series A Preferred  Stock,  except  distributions  made  ratably on the Series A
Preferred  Stock and all such parity stock in proportion to the total amounts to
which the  holders  of all such  shares  are  entitled  upon  such  liquidation,
dissolution  or  winding  up.  In the event  the  Corporation  shall at any time
declare  or pay any  dividend  on the Common  Stock  payable in shares of Common
Stock,  or  effect  a  subdivision  or  combination  or   consolidation  of  the
outstanding  shares of Common Stock (by  reclassification  or otherwise  than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock,  then in each such case the aggregate amount to which
holders of shares of Series A Preferred Stock were entitled immediately prior to
such event under the proviso in clause (a) of the  preceding  sentence  shall be
adjusted by multiplying  such amount by a fraction the numerator of which is the
number of shares of Common Stock  outstanding  immediately  after such event and
the  denominator  of which is the  number of shares  of Common  Stock  that were
outstanding immediately prior to such event.

                                       40

<PAGE> 



         SECTION 7.        CONSOLIDATION, MERGER, ETC.

         In case the  Corporation  shall enter into any  consolidation,  merger,
combination  or other  transaction  in which  the  shares  of  Common  Stock are
exchanged for or changed into other stock or  securities,  cash and/or any other
property,  then in any such case each share of Series A Preferred Stock shall at
the same time be  similarly  exchanged  or  changed  into an amount  per  share,
subject to the  provision for  adjustment  hereinafter  set forth,  equal to 100
times the aggregate amount of stock, securities,  cash and/or any other property
(payable  in kind),  as the case may be,  into  which or for which each share of
Common Stock is changed or exchanged.  In the event the Corporation shall at any
time declare or pay any dividend on the Common Stock payable in shares of Common
Stock,  or  effect  a  subdivision  or  combination  or   consolidation  of  the
outstanding  shares of Common Stock (by  reclassification  or otherwise  than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common  Stock,  then in each such case the  amount set forth in the
preceding  sentence with respect to the exchange or change of shares of Series A
Preferred  Stock shall be adjusted by multiplying  such amount by a fraction the
numerator  of  which  is the  number  of  shares  of  Common  Stock  outstanding
immediately  after  such  event and the  denominator  of which is the  number of
shares of Common Stock that were outstanding immediately prior to such event.

         SECTION 8.        NO REDEMPTION.

         The shares of Series A Preferred Stock shall not be redeemable.

         SECTION 9.        RANK.

         The Series A Preferred Stock shall rank, with respect to the payment of
dividends  and the  distribution  of  assets,  junior to all series of any other
class of the Preferred Stock.

         SECTION 10.  AMENDMENT.

         The  Certificate  of  Incorporation  shall not be amended in any manner
that would materially alter or change the powers,  preferences or special rights
of the Series A  Preferred  Stock so as to affect  them  adversely  without  the
affirmative vote of the holders of at least two-thirds of the outstanding shares
of Series A Preferred Stock, voting together as a single class.


                                       41


<PAGE>  



         These  Restated   Articles  of  Incorporation  are  executed  by  NeoRx
Corporation by its duly authorized officer.

Dated:  April ____, 1996

                                                     NEORX CORPORATION



                                                     By_________________________
                                                           Jeffrey J. Miller
                              Senior Vice President


                                       42

<PAGE> 






                             CERTIFICATE REGARDING
                        RESTATED ARTICLES OF INCORPORATION

                               NEORX CORPORATION


         Pursuant to RCW 23B.10.070,  the undersigned  hereby certifies that the
foregoing Restated Articles of Incorporation of NeoRx Corporation do not include
an amendment to the Articles of Incorporation as heretofore amended.

Dated:  April ____, 1996

                                                     NEORX CORPORATION



                                                     By_________________________
                                                           Jeffrey J. Miller
                              Senior Vice President


                                       43