Exhibit 3.1

                             STATE OF SOUTH CAROLINA
                               SECRETARY OF STATE

                    SECOND RESTATED ARTICLES OF INCORPORATION
                                       OF
                             THE THAXTON GROUP, INC.



                                    ARTICLE 1

        The name of the Corporation is The Thaxton Group, Inc.


                                    ARTICLE 2

        The address of the registered office of the Corporation is 1542 Pageland
Highway, Lancaster, South Carolina 29721, and the name of the registered agent
at such address is James D. Thaxton.


                                    ARTICLE 3

        The purpose for which the Corporation is organized is to engage in any
lawful business.


                                    ARTICLE 4

        The period of duration of the Corporation shall be perpetual.


                                    ARTICLE 5

        The aggregate number of shares which the Corporation shall have
authority to issue is Fifty-five Million (55,000,000), divided into Fifty
Million (50,000,000) Common Shares and Five Million (5,000,000) Preferred
Shares, all of which shall have a par value of $0.01. The preferences,
limitations and relative rights of each class of shares are as follows:

               Common Shares
               -------------

                      The Common Shares shall be entitled to one vote per share
               and to all other rights of shareholders subject to any rights
               granted to the Preferred Shares.


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               Preferred Shares
               ----------------

                      The Preferred Shares may be issued in one or more classes
               or series with such designations, preferences, limitations, and
               relative rights as the Board of Directors may determine from time
               to time in accordance with applicable law. The following series
               have been designated by the Board of Directors:

                      Series A Convertible Preferred Stock

        Section 1. Designation and Amount. The shares of such series shall be
designated as Series A Convertible Preferred Stock, with a par value of $0.01
per share (the "Series A Preferred Stock"), and the number of shares
constituting such series shall be one million four hundred thousand (1,400,000).

        Section 2. Dividends. The holders of shares of Series A Preferred Stock
shall be entitled to receive dividends, when, as, and if declared by the Board
of Directors or a duly authorized committee thereof, out of funds legally
available for the payment of dividends. Dividends shall be paid in respect of
each share of Series A Preferred Stock outstanding at the rate of seventy-five
cents ($0.75) per share per annum, payable in cash quarterly commencing on March
31, 1998 and thereafter on the last day of June, September, December and March
of each year that any shares of Series A Preferred Stock are outstanding;
provided, however, that dividends in respect of each share of Series A Preferred
Stock issued at any time during the year ending December 31, 1997 or any
calendar quarter thereafter, shall be payable in cash at such annual rate, pro
rated from the date of issuance, on December 31, 1997 or the last day of such
quarter, as applicable. Such dividends are prior and in preference to any
declaration or payment of any distribution (as defined below) on the common
stock of the Company (the "Common Stock"), but shall be paid pro rata and
concurrently with any payment of dividends to holders of Series B Convertible
Preferred Stock (the "Series B Preferred Stock"). Such dividends shall accrue on
each share of Series A Preferred Stock from day to day from the date of initial
issuance thereof whether or not earned or declared so that if such dividends
with respect to any previous dividend period at the rate provided for herein
have not been paid or declared and set apart for all shares of Series A
Preferred Stock at the time outstanding, the deficiency shall be fully paid on,
or declared and set apart for, such shares before any distribution shall be paid
on, or declared and set apart for the Common Stock. For purposes of this Section
2, unless the context otherwise requires, "distribution" shall mean the transfer
of cash or property without consideration, whether by way of dividend or
otherwise, payable other than in Common Stock, for the purchase or redemption of
shares of the Company's Common Stock (other than redemption as set forth in
Section 5) for cash or property, including any such transfer, purchase, or
redemption by a subsidiary of the Company.

        Section 3. Liquidation Preferences. Upon any liquidation, dissolution,
or winding up of the Company, no distribution shall be made to the holders of
shares of stock ranking junior to the Series A Preferred Stock unless, prior
thereto, the holders of shares of Series A Preferred Stock shall have received
$10 per share plus any accrued but unpaid dividends. Following the payment of
the full amount of such liquidation preference, no additional distributions
shall be made to the holders of shares of Series A Preferred Stock. If, upon any
liquidation, dissolution, or winding up of the Company, the assets of the
Company, or proceeds thereof, distributable 




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among the holders of shares of Series A Preferred Stock or any capital stock
ranking on a par with the Series A Preferred Stock upon liquidation,
dissolution, or winding up of the Company, shall be insufficient to pay in full
the preferential amounts to which such stock would be entitled, 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 payable in full.

        Section 4.    Conversion Rights, Antidilution Provisions.

        A. Following the Trigger Date (as defined in subparagraph I of this
Section 4), shares of the Series A Preferred Stock shall be convertible, in
whole or in part, at the option of the holder, into Common Stock, at any time or
from time to time, subject to the following terms and conditions. The Series A
Preferred Stock shall not be convertible into any shares of Common Stock unless
and until the Trigger Date has occurred.

        B. The shares of the Series A Preferred Stock shall be convertible at
the principal executive offices of the Company, and at such other office or
offices, if any, as the Board of Directors may designate, into fully paid and
nonassessable shares of Common Stock of the Company, at an initial conversion
rate of one (1) share of Common Stock for each share of Series A Preferred
Stock, subject to adjustment as described in this Section 4.

        C. In order to convert shares of the Series A Preferred Stock into
Common Stock, the holder thereof shall surrender, after the Trigger Date, at any
office hereinabove mentioned the certificate or certificates therefor, duly
endorsed or assigned to the Company or in blank, and give written notice to the
Company at such office that such holder elects to convert such shares. Shares of
the Series A Preferred Stock shall be deemed to have been converted immediately
prior to the close of business on the day of the surrender of such shares for
conversion in accordance with the foregoing provisions, and the person or
persons entitled to receive the Common Stock issuable upon such conversion shall
be treated for all purposes as the record holder or holders of such Common Stock
at such time. As promptly as practicable on or after the conversion date, the
Company shall issue and shall deliver at such office a certificate or
certificates for the number of full shares of Common Stock issuable upon such
conversion, together with payment in lieu of any fraction of a share, as
hereinafter provided, to the person or persons entitled to receive the same.

        D. If at any time the Company shall subdivide or combine its outstanding
shares of Common Stock into a different number of shares of Common Stock, each
share of Series A Preferred Stock shall thereafter be convertible into the same
number of shares of Common Stock to which the holder of such shares of Series A
Preferred Stock would thereafter have been entitled had such shares of Series A
Preferred Stock been converted into Common Stock immediately prior to the
effective date of such subdivision or combination.

        E. If there occurs any capital reorganization or any reclassification of
the capital stock of the Company or consolidation or merger of the Company with
or into another Company or entity, each share of Series A Preferred Stock shall
thereafter be convertible into, in lieu of Common Stock, the same kind and
amounts of securities or other assets, or both, which were issuable or
distributable to the holders of shares of outstanding Common Stock of the
Company 


<PAGE>


upon such reorganization, reclassification, consolidation, or merger in respect
of that number of shares of Common Stock into which such share of Series A
Preferred Stock would have been converted had such share of Series A Preferred
Stock been converted into Common Stock immediately prior to such reorganization,
reclassification, consolidation, or merger.

        F. Upon any event described in subparagraphs D and E of this Section 4,
the Company shall promptly mail to each holder of Series A Preferred Stock a
notice which shall describe such event and the change in the number of shares or
other assets or securities issuable upon the conversion of Series A Preferred
Stock, setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based.

        G. The Company shall at all times reserve and keep available, free from
pre-emptive rights, out of its authorized but unissued Common Stock, for the
purpose of effecting the conversion of the Series A Preferred Stock, the full
number of shares of Common Stock then issuable upon the conversion of all shares
of Series A Preferred Stock then outstanding and shall take all such action and
obtain all such permits or orders as may be necessary to enable the Company
lawfully to issue such Common Stock upon such conversion.

        H. If a share of Series A Preferred Stock is called for redemption the
holder may convert it into a share of Common Stock in accordance with subsection
B of this Section 4 at any time before the fifth (5th) day prior to the
Redemption Date by complying with the conversion requirements of subsection C of
this Section 4.

        I. No fractional shares of Common Stock shall be issued upon conversion,
but, instead of any fraction of a share which would otherwise be issuable, the
Company shall pay a cash adjustment in respect of such fraction.

        J.     As used herein, the term "Trigger Date" means December 31, 1997.

        Section 5.    Redemption.

        A. At any time after December 31, 1999, the Company may, at its option,
redeem all or part of the outstanding shares of the Series A Preferred Stock at
the redemption price set forth in subparagraph B below, provided that the
Company shall give written notice by mail, postage prepaid, to the holders of
the Series A Preferred Stock to be redeemed at least 30 but not more than 60
days prior to the date specified for redemption (the "Redemption Date"). Such
notice shall be addressed to each such shareholder at the address of such
shareholder appearing on the books of the Company or given by such holder to the
Company for the purpose of notice, or if no such address appears or if so given,
at the place where the principal office of the Company is located. Such notice
shall state (1) the Redemption Date, (2) the Redemption Price (hereinafter
defined), (3) the number of shares of Series A Preferred Stock to be redeemed,
(4) that holders who wish to convert the shares of Series A Preferred Stock
called for redemption must satisfy the requirements of Section 4 hereof, and (5)
that the shares of Series A Preferred Stock called for redemption must be
surrendered to the Company on or before the Redemption Date, at the place
designated in the notice. On or after the Redemption Date, each holder of shares
of Series A Preferred Stock called for redemption that surrenders the
certificate evidencing such shares to the Company for redemption at the place
designated in such notice shall thereupon be entitled to 




<PAGE>


receive payment of the Redemption Price. If less than all of the outstanding
shares of Series A Preferred Stock are to be redeemed, then the Company shall
redeem a pro rata portion from each holder of Series A Preferred Stock according
to the respective number of shares of Series A Preferred Stock held by such
holder.

        B. The Series A Preferred Stock may be redeemed at a cash price equal to
Fifteen Dollars ($15.00) per share, together with all declared and unpaid
dividends to and including the Redemption Date (the "Redemption Price").

        C. From and after the Redemption Date (unless default shall be made by
the Company in duly paying the Redemption Price in which case all the rights of
holders of shares shall continue) the holders of the shares of the Series A
Preferred Stock called for redemption, who shall not have converted such shares
into Common Stock in accordance with Section 4 hereof, shall cease to have any
rights as shareholders of the Company except the right to receive, without
interest, the Redemption Price thereof upon surrender of certificates
representing the shares of Series A Preferred Stock and such shares shall not
thereafter be transferred (except with the consent of Company) on the books of
the Company and shall not be deemed outstanding for any purpose whatsoever.

        D. There shall be no redemption of any shares of Series A Preferred
Stock of the Company where such action would be in violation of applicable law.

        Section 6. Voting Rights. Except as otherwise required by law, the
holders of the Series A Preferred Stock shall not be entitled to vote at any
annual or special meeting of shareholders of the Company nor may they act by
written consent in lieu of such meetings.

        Section 7. Exchange. Certificates representing shares of the Series A
Preferred Stock and, if converted in accordance with the terms and conditions
hereof, after conversion thereof into Common Stock, certificates representing
such shares, shall be exchangeable, at the option of the holder, for a new
certificate or certificates of the same or different denominations representing
in the aggregate the same number of shares of Series A Preferred Stock or shares
of Common Stock, as the case may be.

        Section 8. Shares to be Retired. All shares of Series A Preferred Stock
which are converted into Common Stock shall revert to the status of authorized
but unissued shares of preferred stock of the Company but shall not thereafter
be reissued as shares of Series A Preferred Stock.

                      Series B Convertible Preferred Stock

        Section 1. Designation and Amount. The shares of such series shall be
designated as Series B Convertible Preferred Stock, with a par value of $0.01
per share (the "Series B Preferred Stock"), and the number of shares
constituting such series shall be forty thousand (40,000).

        Section 2. Dividends. The holders of shares of Series B Preferred Stock
shall be entitled to receive dividends, when, as, and if declared by the Board
of Directors or a duly authorized committee thereof, out of funds legally
available for the payment of dividends.


<PAGE>


        A. Dividends on the Series B Preferred Stock shall be paid in respect of
each share of Series B Preferred Stock outstanding in shares of Series B
Preferred Stock at the annual rate of 0.075 shares of Series B Preferred Stock
per share, payable quarterly commencing on March 31, 1998 and thereafter on the
last day of June, September, December and March of each year that any shares of
Series B Preferred Stock are outstanding; provided, however, that dividends in
respect of each share of Series B Preferred Stock issued at any time during the
year ending December 31, 1997 shall be payable in shares of Series B Preferred
stock at such annual rate, pro rated from the date of issuance, on December 31,
1997. Fractional shares of Series B Preferred Stock may be issued in connection
with the payment of a dividend, and any such fractional shares shall be rounded
down to the nearest one-hundredth (1/100) of a share.

        B. The Board of Directors may, at any time, elect to declare and pay
dividends on all or a portion of the outstanding Series B Preferred Stock in
cash, to the extent legally permissible, in lieu of shares of Series B Preferred
Stock. Upon such election, dividends shall be paid in respect of each share of
Series B Preferred Stock at the rate of seventy-five cents ($0.75) per share per
annum, payable in cash quarterly commencing on March 31, 1998 and thereafter on
the last day of June, September, December and March of each year that any shares
of Series B Preferred Stock are outstanding; provided, however, that dividends
in respect of each share of Series B Preferred Stock issued at any time during
the year ending December 31, 1997 or any calendar quarter thereafter, shall be
payable in cash at such annual rate, pro rated from the date of issuance, on
December 31, 1997 or the last day of such quarter, as applicable.

        C. Dividends on the Series B Preferred Stock are prior and in preference
to any declaration or payment of any distribution (as defined below) on the
common stock of the Company (the "Common Stock"), but shall be paid pro rata and
concurrently with any payment of dividends to holders of Series A Convertible
Preferred Stock (the "Series A Preferred Stock"). Such dividends shall accrue on
each share of Series B Preferred Stock from day to day from the date of initial
issuance thereof whether or not earned or declared so that if such dividends
with respect to any previous dividend period at the rate provided for herein
have not been paid or declared and set apart for all shares of Series B
Preferred Stock at the time outstanding, the deficiency shall be fully paid on,
or declared and set apart for, such shares before any distribution shall be paid
on, or declared and set apart for the Common Stock. For purposes of this Section
2, unless the context otherwise requires, "distribution" shall mean the transfer
of cash or property without consideration, whether by way of dividend or
otherwise, payable other than in Common Stock, for the purchase or redemption of
shares of Common Stock (other than redemption as set forth in Section 5) for
cash or property, including any such transfer, purchase, or redemption by a
subsidiary of the Company.

        Section 3. Liquidation Preferences. Upon any liquidation, dissolution,
or winding up of the Company, no distribution shall be made to the holders of
shares of stock ranking junior to the Series B Preferred Stock unless, prior
thereto, the holders of shares of Series B Preferred Stock shall have received
$10 per share plus any accrued but unpaid dividends. Following the payment of
the full amount of such liquidation preference, no additional distributions
shall be made to the holders of shares of Series B Preferred Stock. If, upon any
liquidation, dissolution, or winding up of the Company, the assets of the
Company, or proceeds thereof, distributable among the holders of shares of
Series B Preferred Stock or any capital stock ranking on a par 


<PAGE>



with the Series B Preferred Stock upon liquidation, dissolution, or winding up
of the Company, shall be insufficient to pay in full the preferential amounts to
which such stock would be entitled, 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 payable in full.

        Section 4.    Conversion Rights, Antidilution Provisions.

        A. Following the Trigger Date (as defined in subparagraph I of this
Section 4), shares of the Series B Preferred Stock shall be convertible, in
whole or in part, at the option of the holder, into Common Stock, at any time or
from time to time, subject to the following terms and conditions. The Series B
Preferred Stock shall not be convertible into any shares of Common Stock unless
and until the Trigger Date has occurred.

        B. The shares of the Series B Preferred Stock shall be convertible at
the principal executive offices of the Company, and at such other office or
offices, if any, as the Board of Directors may designate, into fully paid and
nonassessable shares of Common Stock of the Company, at an initial conversion
rate of one (1) share of Common Stock for each share of Series B Preferred
Stock, subject to adjustment as described in this Section 4.

        C. In order to convert shares of the Series B Preferred Stock into
Common Stock, the holder thereof shall surrender, after the Trigger Date, at any
office hereinabove mentioned the certificate or certificates therefor, duly
endorsed or assigned to the Company or in blank, and give written notice to the
Company at such office that such holder elects to convert such shares. Shares of
the Series B Preferred Stock shall be deemed to have been converted immediately
prior to the close of business on the day of the surrender of such shares for
conversion in accordance with the foregoing provisions, and the person or
persons entitled to receive the Common Stock issuable upon such conversion shall
be treated for all purposes as the record holder or holders of such Common Stock
at such time. As promptly as practicable on or after the conversion date, the
Company shall issue and shall deliver at such office a certificate or
certificates for the number of full shares of Common Stock issuable upon such
conversion, together with payment in lieu of any fraction of a share, as
hereinafter provided, to the person or persons entitled to receive the same.

        D. If at any time the Company shall subdivide or combine its outstanding
shares of Common Stock into a different number of shares of Common Stock, each
share of Series B Preferred Stock shall thereafter be convertible into the same
number of shares of Common Stock to which the holder of such shares of Series B
Preferred Stock would thereafter have been entitled had such shares of Series B
Preferred Stock been converted into Common Stock immediately prior to the
effective date of such subdivision or combination.

        E. If there occurs any capital reorganization or any reclassification of
the capital stock of the Company or consolidation or merger of the Company with
or into another Company or entity, each share of Series B Preferred Stock shall
thereafter be convertible into, in lieu of Common Stock, the same kind and
amounts of securities or other assets, or both, which were issuable or
distributable to the holders of shares of outstanding Common Stock of the
Company upon such reorganization, reclassification, consolidation, or merger in
respect of that number of 




<PAGE>


shares of Common Stock into which such share of Series B Preferred Stock would
have been converted had such share of Series B Preferred Stock been converted
into Common Stock immediately prior to such reorganization, reclassification,
consolidation, or merger.

        F. Upon any event described in subparagraphs D and E of this Section 4,
the Company shall promptly mail to each holder of Series B Preferred Stock a
notice which shall describe such event and the change in the number of shares or
other assets or securities issuable upon the conversion of Series B Preferred
Stock, setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based.

        G. The Company shall at all times reserve and keep available, free from
pre-emptive rights, out of its authorized but unissued Common Stock, for the
purpose of effecting the conversion of the Series B Preferred Stock, the full
number of shares of Common Stock then issuable upon the conversion of all shares
of Series B Preferred Stock then outstanding and shall take all such action and
obtain all such permits or orders as may be necessary to enable the Company
lawfully to issue such Common Stock upon such conversion.

        H. If a share of Series B Preferred Stock is called for redemption the
holder may convert it into a share of Common Stock in accordance with subsection
B of this Section 4 at any time before the fifth (5th) day prior to the
Redemption Date by complying with the conversion requirements of subsection C of
this Section 4.

        I. No fractional shares of Common Stock shall be issued upon conversion,
but, instead of any fraction of a share which would otherwise be issuable, the
Company shall pay a cash adjustment in respect of such fraction.

        J.     As used herein, the term "Trigger Date" means December 31, 1997.

        Section 5.    Redemption.

        A. At any time after December 31, 1999, the Company may, at its option,
redeem all or part of the outstanding shares of the Series A Preferred Stock at
the redemption price set forth in subparagraph B below, provided that the
Company shall give written notice by mail, postage prepaid, to the holders of
the Series A Preferred Stock to be redeemed at least 30 but not more than 60
days prior to the date specified for redemption (the "Redemption Date"). Such
notice shall be addressed to each such shareholder at the address of such
shareholder appearing on the books of the Company or given by such holder to the
Company for the purpose of notice, or if no such address appears or if so given,
at the place where the principal office of the Company is located. Such notice
shall state (1) the Redemption Date, (2) the Redemption Price (hereinafter
defined), (3) the number of shares of Series A Preferred Stock to be redeemed,
(4) that holders who wish to convert the shares of Series A Preferred Stock
called for redemption must satisfy the requirements of Section 4 hereof, and (5)
that the shares of Series A Preferred Stock called for redemption must be
surrendered to the Company on or before the Redemption Date, at the place
designated in the notice. On or after the Redemption Date, each holder of shares
of Series A Preferred Stock called for redemption that surrenders the
certificate evidencing such shares to the Company for redemption at the place
designated in such notice shall thereupon be entitled to 




<PAGE>


receive payment of the Redemption Price. If less than all of the outstanding
shares of Series A Preferred Stock are to be redeemed, then the Company shall
redeem a pro rata portion from each holder of Series A Preferred Stock according
to the respective number of shares of Series A Preferred Stock held by such
holder.

        B. The Series A Preferred Stock may be redeemed at a cash price equal to
Fifteen Dollars ($15.00) per share, together with all declared and unpaid
dividends to and including the Redemption Date (the "Redemption Price").

        C. From and after the Redemption Date (unless default shall be made by
the Company in duly paying the Redemption Price in which case all the rights of
holders of shares shall continue) the holders of the shares of the Series A
Preferred Stock called for redemption, who shall not have converted such shares
into Common Stock in accordance with Section 4 hereof, shall cease to have any
rights as shareholders of the Company except the right to receive, without
interest, the Redemption Price thereof upon surrender of certificates
representing the shares of Series A Preferred Stock and such shares shall not
thereafter be transferred (except with the consent of Company) on the books of
the Company and shall not be deemed outstanding for any purpose whatsoever.

        D. There shall be no redemption of any shares of Series A Preferred
Stock of the Company where such action would be in violation of applicable law.

        Section 6. Voting Rights. Except as otherwise required by law, the
holders of the Series A Preferred Stock shall not be entitled to vote at any
annual or special meeting of shareholders of the Company nor may they act by
written consent in lieu of such meetings.

        Section 7. Exchange. Certificates representing shares of the Series A
Preferred Stock and, if converted in accordance with the terms and conditions
hereof, after conversion thereof into Common Stock, certificates representing
such shares, shall be exchangeable, at the option of the holder, for a new
certificate or certificates of the same or different denominations representing
in the aggregate the same number of shares of Series A Preferred Stock or shares
of Common Stock, as the case may be.

        Section 8. Shares to be Retired. All shares of Series A Preferred Stock
which are converted into Common Stock shall revert to the status of authorized
but unissued shares of preferred stock of the Company but shall not thereafter
be reissued as shares of Series A Preferred Stock.

                      Series B Convertible Preferred Stock

        Section 1. Designation and Amount. The shares of such series shall be
designated as Series B Convertible Preferred Stock, with a par value of $0.01
per share (the "Series B Preferred Stock"), and the number of shares
constituting such series shall be forty thousand (40,000).

        Section 2. Dividends. The holders of shares of Series B Preferred Stock
shall be entitled to receive dividends, when, as, and if declared by the Board
of Directors or a duly authorized committee thereof, out of funds legally
available for the payment of dividends.


<PAGE>


        A. Dividends on the Series B Preferred Stock shall be paid in respect of
each share of Series B Preferred Stock outstanding in shares of Series B
Preferred Stock at the annual rate of 0.075 shares of Series B Preferred Stock
per share, payable quarterly commencing on March 31, 1998 and thereafter on the
last day of June, September, December and March of each year that any shares of
Series B Preferred Stock are outstanding; provided, however, that dividends in
respect of each share of Series B Preferred Stock issued at any time during the
year ending December 31, 1997 shall be payable in shares of Series B Preferred
stock at such annual rate, pro rated from the date of issuance, on December 31,
1997. Fractional shares of Series B Preferred Stock may be issued in connection
with the payment of a dividend, and any such fractional shares shall be rounded
down to the nearest one-hundredth (1/100) of a share.

        B. The Board of Directors may, at any time, elect to declare and pay
dividends on all or a portion of the outstanding Series B Preferred Stock in
cash, to the extent legally permissible, in lieu of shares of Series B Preferred
Stock. Upon such election, dividends shall be paid in respect of each share of
Series B Preferred Stock at the rate of seventy-five cents ($0.75) per share per
annum, payable in cash quarterly commencing on March 31, 1998 and thereafter on
the last day of June, September, December and March of each year that any shares
of Series B Preferred Stock are outstanding; provided, however, that dividends
in respect of each share of Series B Preferred Stock issued at any time during
the year ending December 31, 1997 or any calendar quarter thereafter, shall be
payable in cash at such annual rate, pro rated from the date of issuance, on
December 31, 1997 or the last day of such quarter, as applicable.

        C. Dividends on the Series B Preferred Stock are prior and in preference
to any declaration or payment of any distribution (as defined below) on the
common stock of the Company (the "Common Stock"), but shall be paid pro rata and
concurrently with any payment of dividends to holders of Series A Convertible
Preferred Stock (the "Series A Preferred Stock"). Such dividends shall accrue on
each share of Series B Preferred Stock from day to day from the date of initial
issuance thereof whether or not earned or declared so that if such dividends
with respect to any previous dividend period at the rate provided for herein
have not been paid or declared and set apart for all shares of Series B
Preferred Stock at the time outstanding, the deficiency shall be fully paid on,
or declared and set apart for, such shares before any distribution shall be paid
on, or declared and set apart for the Common Stock. For purposes of this Section
2, unless the context otherwise requires, "distribution" shall mean the transfer
of cash or property without consideration, whether by way of dividend or
otherwise, payable other than in Common Stock, for the purchase or redemption of
shares of Common Stock (other than redemption as set forth in Section 5) for
cash or property, including any such transfer, purchase, or redemption by a
subsidiary of the Company.

        Section 3. Liquidation Preferences. Upon any liquidation, dissolution,
or winding up of the Company, no distribution shall be made to the holders of
shares of stock ranking junior to the Series B Preferred Stock unless, prior
thereto, the holders of shares of Series B Preferred Stock shall have received
$10 per share plus any accrued but unpaid dividends. Following the payment of
the full amount of such liquidation preference, no additional distributions
shall be made to the holders of shares of Series B Preferred Stock. If, upon any
liquidation, dissolution, or winding up of the Company, the assets of the
Company, or proceeds thereof, distributable among the holders of shares of
Series B Preferred Stock or any capital stock ranking on a par 


<PAGE>



with the Series B Preferred Stock upon liquidation, dissolution, or winding up
of the Company, shall be insufficient to pay in full the preferential amounts to
which such stock would be entitled, 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 payable in full.

        Section 4.    Conversion Rights, Antidilution Provisions.

        A. Following the Trigger Date (as defined in subparagraph I of this
Section 4), shares of the Series B Preferred Stock shall be convertible, in
whole or in part, at the option of the holder, into Common Stock, at any time or
from time to time, subject to the following terms and conditions. The Series B
Preferred Stock shall not be convertible into any shares of Common Stock unless
and until the Trigger Date has occurred.

        B. The shares of the Series B Preferred Stock shall be convertible at
the principal executive offices of the Company, and at such other office or
offices, if any, as the Board of Directors may designate, into fully paid and
nonassessable shares of Common Stock of the Company, at an initial conversion
rate of one (1) share of Common Stock for each share of Series B Preferred
Stock, subject to adjustment as described in this Section 4.

        C. In order to convert shares of the Series B Preferred Stock into
Common Stock, the holder thereof shall surrender, after the Trigger Date, at any
office hereinabove mentioned the certificate or certificates therefor, duly
endorsed or assigned to the Company or in blank, and give written notice to the
Company at such office that such holder elects to convert such shares. Shares of
the Series B Preferred Stock shall be deemed to have been converted immediately
prior to the close of business on the day of the surrender of such shares for
conversion in accordance with the foregoing provisions, and the person or
persons entitled to receive the Common Stock issuable upon such conversion shall
be treated for all purposes as the record holder or holders of such Common Stock
at such time. As promptly as practicable on or after the conversion date, the
Company shall issue and shall deliver at such office a certificate or
certificates for the number of full shares of Common Stock issuable upon such
conversion, together with payment in lieu of any fraction of a share, as
hereinafter provided, to the person or persons entitled to receive the same.

        D. If at any time the Company shall subdivide or combine its outstanding
shares of Common Stock into a different number of shares of Common Stock, each
share of Series B Preferred Stock shall thereafter be convertible into the same
number of shares of Common Stock to which the holder of such shares of Series B
Preferred Stock would thereafter have been entitled had such shares of Series B
Preferred Stock been converted into Common Stock immediately prior to the
effective date of such subdivision or combination.

        E. If there occurs any capital reorganization or any reclassification of
the capital stock of the Company or consolidation or merger of the Company with
or into another Company or entity, each share of Series B Preferred Stock shall
thereafter be convertible into, in lieu of Common Stock, the same kind and
amounts of securities or other assets, or both, which were issuable or
distributable to the holders of shares of outstanding Common Stock of the
Company upon such reorganization, reclassification, consolidation, or merger in
respect of that number of 




<PAGE>


shares of Common Stock into which such share of Series B Preferred Stock would
have been converted had such share of Series B Preferred Stock been converted
into Common Stock immediately prior to such reorganization, reclassification,
consolidation, or merger.

        F. Upon any event described in subparagraphs D and E of this Section 4,
the Company shall promptly mail to each holder of Series B Preferred Stock a
notice which shall describe such event and the change in the number of shares or
other assets or securities issuable upon the conversion of Series B Preferred
Stock, setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based.

        G. The Company shall at all times reserve and keep available, free from
pre-emptive rights, out of its authorized but unissued Common Stock, for the
purpose of effecting the conversion of the Series B Preferred Stock, the full
number of shares of Common Stock then issuable upon the conversion of all shares
of Series B Preferred Stock then outstanding and shall take all such action and
obtain all such permits or orders as may be necessary to enable the Company
lawfully to issue such Common Stock upon such conversion.

        H. If a share of Series B Preferred Stock is called for redemption the
holder may convert it into a share of Common Stock in accordance with subsection
B of this Section 4 at any time before the fifth (5th) day prior to the
Redemption Date by complying with the conversion requirements of subsection C of
this Section 4.

        I. No fractional shares of Common Stock shall be issued upon conversion,
but, instead of any fraction of a share which would otherwise be issuable, the
Company shall pay a cash adjustment in respect of such fraction.

        J.     As used herein, the term "Trigger Date" means December 31, 1997.

        Section 5.    Redemption.

        A. At any time after December 31, 1999, the Company may, at its option,
redeem all or part of the outstanding shares of the Series B Preferred Stock at
the redemption price set forth in subparagraph B below, provided that the
Company shall give written notice by mail, postage prepaid, to the holders of
the Series B Preferred Stock to be redeemed at least 30 but not more than 60
days prior to the date specified for redemption (the "Redemption Date"). Such
notice shall be addressed to each such shareholder at the address of such
shareholder appearing on the books of the Company or given by such holder to the
Company for the purpose of notice, or if no such address appears or if so given,
at the place where the principal office of the Company is located. Such notice
shall state (1) the Redemption Date, (2) the Redemption Price (hereinafter
defined), (3) the number of shares of Series B Preferred Stock to be redeemed,
(4) that holders who wish to convert the shares of Series B Preferred Stock
called for redemption must satisfy the requirements of Section 4 hereof, and (5)
that the shares of Series B Preferred Stock called for redemption must be
surrendered to the Company on or before the Redemption Date, at the place
designated in the notice. On or after the Redemption Date, each holder of shares
of Series B Preferred Stock called for redemption that surrenders the
certificate evidencing such shares to the Company for redemption at the place
designated in such notice shall thereupon be entitled to receive payment of the
Redemption Price. If less than all of the outstanding shares of Series B




<PAGE>



Preferred Stock are to be redeemed, then the Company shall redeem a pro rata
portion from each holder of Series B Preferred Stock according to the respective
number of shares of Series B Preferred Stock held by such holder.

        B. The Series B Preferred Stock may be redeemed at a cash price equal to
Fifteen Dollars ($15.00) per share, together with all declared and unpaid
dividends to and including the Redemption Date (the "Redemption Price").

        C. From and after the Redemption Date (unless default shall be made by
the Company in duly paying the Redemption Price in which case all the rights of
holders of shares shall continue) the holders of the shares of the Series B
Preferred Stock called for redemption, who shall not have converted such shares
into Common Stock in accordance with Section 4 hereof, shall cease to have any
rights as shareholders of the Company except the right to receive, without
interest, the Redemption Price thereof upon surrender of certificates
representing the shares of Series B Preferred Stock and such shares shall not
thereafter be transferred (except with the consent of Company) on the books of
the Company and shall not be deemed outstanding for any purpose whatsoever.

        D. There shall be no redemption of any shares of Series B Preferred
Stock of the Company where such action would be in violation of applicable law.

        Section 6. Voting Rights. Except as otherwise required by law, the
holders of the Series B Preferred Stock shall not be entitled to vote at any
annual or special meeting of shareholders of the Company nor may they act by
written consent in lieu of such meetings.

        Section 7. Exchange. Certificates representing shares of the Series B
Preferred Stock and, if converted in accordance with the terms and conditions
hereof, after conversion thereof into Common Stock, certificates representing
such shares, shall be exchangeable, at the option of the holder, for a new
certificate or certificates of the same or different denominations representing
in the aggregate the same number of shares of Series B Preferred Stock or shares
of Common Stock, as the case may be.

        Section 8. Shares to be Retired. All shares of Series B Preferred Stock
which are converted into Common Stock shall revert to the status of authorized
but unissued shares of preferred stock of the Company but shall not thereafter
be reissued as shares of Series B Preferred Stock.

                      Series C Convertible Preferred Stock

        Section 1. Designation and Amount. The shares of such series shall be
designated as Series C Convertible Preferred Stock, with a par value of $0.01
per share (the "Series C Preferred Stock"), and the number of shares
constituting such series shall be fifty thousand (50,000).

        Section 2. Dividends. The holders of shares of Series C Preferred Stock
shall be entitled to receive dividends, when, as, and if declared by the Board
of Directors or a duly authorized committee thereof, out of funds legally
available for the payment of dividends. Through December 31, 2000, dividends
shall be paid in respect of each share of Series C 

<PAGE>


Preferred Stock outstanding at the rate of one dollar ($1.00) per share per
annum, and thereafter at the rate of one dollar and eighty cents ($1.80) per
share per annum, payable in cash quarterly commencing on March 31, 1998 and
thereafter on the last day of June, September, December and March of each year
that any shares of Series C Preferred Stock are outstanding; provided, however,
that dividends in respect of each share of Series C Preferred Stock issued at
any time during the year ending December 31, 1997 or any calendar quarter
thereafter, shall be payable in cash at such annual rate, pro rated from the
date of issuance, on December 31, 1997 or the last day of such quarter, as
applicable. Such dividends are prior and in preference to any declaration or
payment of any distribution (as defined below) on the common stock of the
Company (the "Common Stock"), but shall be paid pro rata and concurrently with
any payment of dividends to holders of Series A Convertible Preferred Stock
("the Series A Preferred Stock") and Series B Convertible Preferred Stock (the
"Series B Preferred Stock"). Such dividends are cumulative and shall accrue on
each share of Series C Preferred Stock from day to day from the date of initial
issuance thereof whether or not earned or declared so that if such dividends
with respect to any previous dividend period at the rate provided for herein
have not been paid or declared and set apart for all shares of Series C
Preferred Stock at the time outstanding, the deficiency shall be fully paid on,
or declared and set apart for, such shares before any distribution shall be paid
on, or declared and set apart for the Common Stock. For purposes of this Section
2, unless the context otherwise requires, "distribution" shall mean the transfer
of cash or property without consideration, whether by way of dividend or
otherwise, payable other than in Common Stock, for the purchase or redemption of
shares of the Company's Common Stock (other than redemption as set forth in
Section 5) for cash or property, including any such transfer, purchase, or
redemption by a subsidiary of the Company.

        Section 3. Liquidation Preferences. Upon any liquidation, dissolution,
or winding up of the Company, no distribution shall be made to the holders of
shares of Common Stock or shares of any other class or series of stock ranking
junior to the Series C Preferred Stock unless, prior thereto, the holders of
shares of Series C Preferred Stock shall have received $10 per share plus any
accrued but unpaid dividends. Following the payment of the full amount of such
liquidation preference, no additional distributions shall be made to the holders
of shares of Series C Preferred Stock. If, upon any liquidation, dissolution, or
winding up of the Company, the assets of the Company, or proceeds thereof,
distributable among the holders of shares of Series C Preferred Stock or any
capital stock ranking on a par with the Series C Preferred Stock upon
liquidation, dissolution, or winding up of the Company, shall be insufficient to
pay in full the preferential amounts to which such stock would be entitled, 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 payable in full.

        Section 4.    Conversion Rights, Antidilution Provisions.

        A. Shares of the Series C Preferred Stock shall be convertible, in whole
or in part, at the option of the holder, into Common Stock, at any time or from
time to time, subject to the following terms and conditions.

        B. The shares of the Series C Preferred Stock shall be convertible at
the principal executive offices of the Company, and at such other office or
offices, if any, as the Board of 

<PAGE>



Directors may designate, into fully paid and nonassessable shares of Common
Stock of the Company, at an initial conversion rate of one (1) share of Common
Stock for each share of Series C Preferred Stock, subject to adjustment as
described in this Section 4.

        C. In order to convert shares of the Series C Preferred Stock into
Common Stock, the holder thereof shall surrender, at any office hereinabove
mentioned the certificate or certificates therefor, duly endorsed or assigned to
the Company or in blank, and give written notice to the Company at such office
that such holder elects to convert such shares. Shares of the Series C Preferred
Stock shall be deemed to have been converted immediately prior to the close of
business on the day of the surrender of such shares for conversion in accordance
with the foregoing provisions, and the person or persons entitled to receive the
Common Stock issuable upon such conversion shall be treated for all purposes as
the record holder or holders of such Common Stock at such time. As promptly as
practicable on or after the conversion date, the Company shall issue and shall
deliver at such office a certificate or certificates for the number of full
shares of Common Stock issuable upon such conversion, together with payment in
lieu of any fraction of a share, as hereinafter provided, to the person or
persons entitled to receive the same.

        D. If at any time the Company shall subdivide or combine its outstanding
shares of Common Stock into a different number of shares of Common Stock, each
share of Series C Preferred Stock shall thereafter be convertible into the same
number of shares of Common Stock to which the holder of such shares of Series C
Preferred Stock would thereafter have been entitled had such shares of Series C
Preferred Stock been converted into Common Stock immediately prior to the
effective date of such subdivision or combination.

        E. If there occurs any capital reorganization or any reclassification of
the capital stock of the Company or consolidation or merger of the Company with
or into another Company or entity, each share of Series C Preferred Stock shall
thereafter be convertible into, in lieu of Common Stock, the same kind and
amounts of securities or other assets, or both, which were issuable or
distributable to the holders of shares of outstanding Common Stock of the
Company upon such reorganization, reclassification, consolidation, or merger in
respect of that number of shares of Common Stock into which such share of Series
C Preferred Stock would have been converted had such share of Series C Preferred
Stock been converted into Common Stock immediately prior to such reorganization,
reclassification, consolidation, or merger.

        F. Upon any event described in subparagraphs D and E of this Section 4,
the Company shall promptly mail to each holder of Series C Preferred Stock a
notice which shall describe such event and the change in the number of shares or
other assets or securities issuable upon the conversion of Series C Preferred
Stock, setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based.

        G. The Company shall at all times reserve and keep available, free from
pre-emptive rights, out of its authorized but unissued Common Stock, for the
purpose of effecting the conversion of the Series C Preferred Stock, the full
number of shares of Common Stock then issuable upon the conversion of all shares
of Series C Preferred Stock then outstanding and shall take all such action and
obtain all such permits or orders as may be necessary to enable the Company
lawfully to issue such Common Stock upon such conversion.

<PAGE>


        H. If a share of Series C Preferred Stock is called for redemption the
holder may convert it into a share of Common Stock in accordance with subsection
B of this Section 4 at any time before the fifth (5th) day prior to the
Redemption Date by complying with the conversion requirements of subsection C of
this Section 4.

        I. No fractional shares of Common Stock shall be issued upon conversion,
but, instead of any fraction of a share which would otherwise be issuable, the
Company shall pay a cash adjustment in respect of such fraction.

        Section 5.    Redemption.

        A. At any time after December 31, 2000, the Company may, at its option,
redeem all or part of the outstanding shares of the Series C Preferred Stock at
the redemption price set forth in subparagraph B below, provided that the
Company shall give written notice by mail, postage prepaid, to the holders of
the Series C Preferred Stock to be redeemed at least 30 but not more than 60
days prior to the date specified for redemption (the "Redemption Date"). Such
notice shall be addressed to each such shareholder at the address of such
shareholder appearing on the books of the Company or given by such holder to the
Company for the purpose of notice, or if no such address appears or if so given,
at the place where the principal office of the Company is located. Such notice
shall state (1) the Redemption Date, (2) the Redemption Price (hereinafter
defined), (3) the number of shares of Series C Preferred Stock to be redeemed,
(4) that holders who wish to convert the shares of Series C Preferred Stock
called for redemption must satisfy the requirements of Section 4 hereof, and (5)
that the shares of Series C Preferred Stock called for redemption must be
surrendered to the Company on or before the Redemption Date, at the place
designated in the notice. On or after the Redemption Date, each holder of shares
of Series C Preferred Stock called for redemption that surrenders the
certificate evidencing such shares to the Company for redemption at the place
designated in such notice shall thereupon be entitled to receive payment of the
Redemption Price. If less than all of the outstanding shares of Series C
Preferred Stock are to be redeemed, then the Company shall redeem a pro rata
portion from each holder of Series C Preferred Stock according to the respective
number of shares of Series C Preferred Stock held by such holder.

        B. The Series C Preferred Stock may be redeemed at a cash price equal to
Ten Dollars ($10.00) per share, together with all declared, unpaid and/or
accrued dividends to and including the Redemption Date (the "Redemption Price").

        C. From and after the Redemption Date (unless default shall be made by
the Company in duly paying the Redemption Price in which case all the rights of
holders of shares shall continue) the holders of the shares of the Series C
Preferred Stock called for redemption, who shall not have converted such shares
into Common Stock in accordance with Section 4 hereof, shall cease to have any
rights as shareholders of the Company except the right to receive, without
interest, the Redemption Price thereof upon surrender of certificates
representing the shares of Series C Preferred Stock and such shares shall not
thereafter be transferred (except with the consent of Company) on the books of
the Company and shall not be deemed outstanding for any purpose whatsoever.


<PAGE>


        D. There shall be no redemption of any shares of Series C Preferred
Stock of the Company where such action would be in violation of applicable law.

        Section 6. Voting Rights. Except as otherwise required by law, the
holders of the Series C Preferred Stock shall not be entitled to vote at any
annual or special meeting of shareholders of the Company nor may they act by
written consent in lieu of such meetings.

        Section 7. Exchange. Certificates representing shares of the Series C
Preferred Stock and, if converted in accordance with the terms and conditions
hereof, after conversion thereof into Common Stock, certificates representing
such shares, shall be exchangeable, at the option of the holder, for a new
certificate or certificates of the same or different denominations representing
in the aggregate the same number of shares of Series C Preferred Stock or shares
of Common Stock, as the case may be.

        Section 8. Shares to be Retired. All shares of Series C Preferred Stock
which are converted into Common Stock shall revert to the status of authorized
but unissued shares of preferred stock of the Company but shall not thereafter
be reissued as shares of Series C Preferred Stock.

                            Series D Preferred Stock

        Section 1. Designation and Amount. The shares of such series shall be
designated as Series D Preferred Stock, with a par value of $0.01 per share (the
"Series D Preferred Stock"), and the number of shares constituting such series
shall be Fifty-Six Thousand Two Hundred Seventy-Six (56,276).

        Section 2. Dividends. The holders of shares of Series D Preferred Stock
shall be entitled to receive dividends, when, as, and if declared by the Board
of Directors or a duly authorized committee thereof, out of funds legally
available for the payment of dividends. Dividends shall be paid in respect of
each share of Series D Preferred Stock outstanding at the rate of eighty cents
($0.80) per share per annum, payable in cash quarterly commencing on September
30, 1998 and thereafter on the last day of March, June, September, and December
of each year that any shares of Series D Preferred Stock are outstanding;
provided, however, that dividends in respect of each share of Series D Preferred
Stock issued at any time during any calendar quarter thereafter shall be payable
in cash at such annual rate, pro rated from the date of issuance, on the last
day of such quarter. Such dividends are prior and in preference to any
declaration or payment of any distribution (as defined below) on the common
stock of the Company (the "Common Stock"), but shall be paid pro rata and
concurrently with any payment of dividends to holders of the Series A
Convertible Preferred Stock, the Series B Convertible Preferred Stock and the
Series C Convertible Preferred Stock. Such dividends are cumulative and shall
accrue on each share of Series D Preferred Stock from day to day from the date
of initial issuance thereof whether or not earned or declared so that if such
dividends with respect to any previous dividend period at the rate provided for
herein have not been paid or declared and set apart for all shares of Series D
Preferred Stock at the time outstanding, the deficiency shall be fully paid on,
or declared and set apart for, such shares before any distribution shall be paid
on, or declared and set apart for the Common Stock. For purposes of this Section
2, unless the context otherwise requires, "distribution" shall mean the transfer
of cash or property without 


<PAGE>



consideration, whether by way of dividend or otherwise, payable other than in
Common Stock, for the purchase or redemption of shares of the Company's Common
Stock (other than redemption as set forth in Section 4) for cash or property,
including any such transfer, purchase, or redemption by a subsidiary of the
Company.

        Section 3. Liquidation Preferences. Upon any liquidation, dissolution,
or winding up of the Company, no distribution shall be made to the holders of
shares of stock ranking junior to the Series D Preferred Stock unless, prior
thereto, the holders of shares of Series D Preferred Stock shall have received
Ten Dollars ($10.00) per share plus any accrued but unpaid dividends. Following
the payment of the full amount of such liquidation preference, no additional
distributions shall be made to the holders of shares of Series D Preferred
Stock. If, upon any liquidation, dissolution, or winding up of the Company, the
assets of the Company, or proceeds thereof, distributable among the holders of
shares of Series D Preferred Stock or any capital stock ranking on a par with
the Series D Preferred Stock upon liquidation, dissolution, or winding up of the
Company, shall be insufficient to pay in full the preferential amounts to which
such stock would be entitled, 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 payable in full.

        Section 4.    Redemption.

        A. At any time, the Company may, at its option, redeem all or part of
the outstanding shares of the Series D Preferred Stock at the redemption price
set forth in subparagraph B below, provided that the Company shall give written
notice by mail, postage prepaid, to the holders of the Series D Preferred Stock
to be redeemed at least thirty (30) but not more than sixty (60) days prior to
the date specified for redemption (the "Redemption Date"). Such notice shall be
addressed to each such shareholder at the address of such shareholder appearing
on the books of the Company or given by such holder to the Company for the
purpose of notice, or if no such address appears or if so given, at the place
where the principal office of the Company is located. Such notice shall state
(1) the Redemption Date, (2) the Redemption Price (hereinafter defined), (3) the
number of shares of Series D Preferred Stock to be redeemed and (4) that the
shares of Series D Preferred Stock called for redemption must be surrendered to
the Company on or before the Redemption Date, at the place designated in the
notice. On or after the Redemption Date, each holder of shares of Series D
Preferred Stock called for redemption that surrenders the certificate evidencing
such shares to the Company for redemption at the place designated in such notice
shall thereupon be entitled to receive payment of the Redemption Price. If less
than all of the outstanding shares of Series D Preferred Stock are to be
redeemed, then the Company shall redeem a pro rata portion from each holder of
Series D Preferred Stock according to the respective number of shares of Series
D Preferred Stock held by such holder.

        B. The Series D Preferred Stock may be redeemed at a cash price equal to
Ten Dollars ($10.00) per share, together with all declared and unpaid dividends
to and including the Redemption Date (the "Redemption Price").

        C. From and after the Redemption Date (unless default shall be made by
the Company in duly paying the Redemption Price in which case all the rights of
holders of shares shall continue) the holders of the shares of the Series D
Preferred Stock called for redemption 


<PAGE>


shall cease to have any rights as shareholders of the Company except the right
to receive, without interest, the Redemption Price thereof upon surrender of
certificates representing the shares of Series D Preferred Stock and such shares
shall not thereafter be transferred (except with the consent of Company) on the
books of the Company and shall not be deemed outstanding for any purpose
whatsoever.

        D. There shall be no redemption of any shares of Series D Preferred
Stock of the Company where such action would be in violation of applicable law.

        Section 5. Voting Rights. Except as otherwise required by law, the
holders of the Series D Preferred Stock shall not be entitled to vote at any
annual or special meeting of shareholders of the Company nor may they act by
written consent in lieu of such meetings.

                            Series E Preferred Stock

        Section 1. Designation and Amount. The shares of such series shall be
designated as Series E Preferred Stock, with a par value of $0.01 per share (the
"Series E Preferred Stock"), and the number of shares constituting such series
shall be Eight Hundred Thousand (800,000).

        Section 2. Dividends. The holders of shares of Series E Preferred Stock
shall be entitled to receive dividends, when, as, and if declared by the Board
of Directors or a duly authorized committee thereof, out of funds legally
available for the payment of dividends. Dividends shall be paid in respect of
each share of Series E Preferred Stock outstanding at the prime rate published
by Citibank, N.A. (or other money center bank designated by Finova Capital
Corporation ("Finova")) on the first Business Day of any month during which any
shares of Series E Preferred Stock are outstanding, less one percent (1.0%) per
share per annum if the Dividend Payment Date (as hereafter defined) is prior to
October 31, 2003, or plus three percent (3.00%) per share per annum if the
Dividend Payment Date (as hereafter defined) is on or following October 31, 2003
(the initial dividend rate and the subsequent dividend rate herein referred to
as the "Dividend Rate"), payable in cash monthly commencing on December 15, 1998
and thereafter on the same day of each month (or, if such day is not a Business
Day (as defined below), the immediately following Business Day) (the "Dividend
Payment Date") of each year that any shares of Series E Preferred Stock are
outstanding; provided, however, that dividends in respect of each share of
Series E Preferred Stock issued at any time during any month shall be payable in
cash at the Dividend Rate, pro rated from the date of issuance, on the Dividend
Payment Date immediately following the date of issuance. Such dividends are
prior and in preference to any declaration or payment of any distribution (as
defined below) on the common stock of the Company (the "Common Stock"), but
shall be paid pro rata and concurrently with any payment of dividends to holders
of the Series A Convertible Preferred Stock, the Series B Convertible Preferred
Stock, the Series C Convertible Preferred Stock and the Series D Preferred
Stock. Such dividends are cumulative and shall accrue on each share of Series E
Preferred Stock from day to day from the date of initial issuance thereof
whether or not earned or declared so that if such dividends with respect to any
previous dividend period at the rate provided for herein have not been paid or
declared and set apart for all shares of Series E Preferred Stock at the time
outstanding, the deficiency shall be fully paid on, or declared and set apart
for, such shares before any distribution shall be paid on, or declared and set
apart for the Common Stock. "Business Day" shall mean a day other than a
Saturday, Sunday or other day on which the Company is 

<PAGE>


required to close. For purposes of this Section 2, unless the context otherwise
requires, "distribution" shall mean the transfer of cash or property without
consideration, whether by way of dividend or otherwise, payable other than in
Common Stock, for the purchase or redemption of shares of the Company's Common
Stock (other than redemption as set forth in Section 4) for cash or property,
including any such transfer, purchase, or redemption by a subsidiary of the
Company.

        Section 3. Liquidation Preferences. Upon any liquidation, dissolution,
or winding up of the Company, no distribution shall be made to the holders of
shares of stock ranking junior to the Series E Preferred Stock unless, prior
thereto, the holders of shares of Series E Preferred Stock shall have received
Ten Dollars ($10.00) per share plus any accrued but unpaid dividends. For
purposes of this Section 3, the Series E Preferred Stock ranks senior to the
Common Stock, the Series A Convertible Preferred Stock, the Series B Convertible
Preferred Stock, the Series C Convertible Preferred Stock and the Series D
Preferred Stock. Following the payment of the full amount of such liquidation
preference, no additional distributions shall be made to the holders of shares
of Series E Preferred Stock. If, upon any liquidation, dissolution, or winding
up of the Company, the assets of the Company, or proceeds thereof, distributable
among the holders of shares of Series E Preferred Stock or any capital stock
ranking on par with the Series E Preferred Stock upon liquidation, dissolution,
or winding up of the Company, shall be insufficient to pay in full the
preferential amounts to which such stock would be entitled, 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 payable in full.

        Section 4.    Redemption

        A. At any time, the Company may, at its option, redeem all or part of
the outstanding shares of the Series E Preferred Stock at the redemption price
set forth in subparagraph B below, provided that the Company shall give written
notice by mail, postage prepaid, to the holders of the Series E Preferred Stock
to be redeemed at least thirty (30) but not more than sixty (60) days prior to
the date specified for redemption (the "Redemption Date"). Such notice shall be
addressed to each such shareholder at the address of such shareholder appearing
on the books of the Company or given by such holder to the Company for the
purpose of notice, or if no such address appears or if so given, at the place
where the principal office of the Company is located. Such notice shall state
(1) the Redemption Date, (2) the Redemption Price (hereinafter defined), (3) the
number of shares of Series E Preferred Stock to be redeemed and (4) that the
shares of Series E Preferred Stock called for redemption must be surrendered to
the Company on or before the Redemption Date, at the place designated in the
notice. On or after the Redemption Date, each holder of shares of Series E
Preferred Stock called for redemption that surrenders the certificate evidencing
such shares to the Company for redemption at the place designated in such notice
shall thereupon be entitled to receive payment of the Redemption Price. If less
than all of the outstanding shares of Series E Preferred Stock are to be
redeemed, then the Company shall redeem a pro rata portion from each holder of
Series E Preferred Stock according to the respective number of shares of Series
E Preferred Stock held by such holder.


<PAGE>


        B. The Series E Preferred Stock may be redeemed at a cash price equal to
Ten Dollars ($10.00) per share, together with all declared and unpaid dividends
to and including the Redemption Date (the "Redemption Price").

        C. From and after the Redemption Date (unless default shall be made by
the Company in duly paying the Redemption Price in which case all the rights of
holders of shares shall continue) the holders of the shares of the Series E
Preferred Stock called for redemption shall cease to have any rights as
shareholders of the Company except the right to receive, without interest, the
Redemption Price thereof upon surrender of certificates representing the shares
of Series E Preferred Stock and such shares shall not thereafter be transferred
(except with the consent of Company) on the books of the Company and shall not
be deemed outstanding for any purpose whatsoever.

        D. There shall be no redemption of any shares of Series E Preferred
Stock of the Company where such action would be in violation of applicable law.

        Section 5. Voting Rights. Except as otherwise required by law, the
holders of the Series E Preferred Stock shall not be entitled to vote at any
annual or special meeting of shareholders of the Company nor may they act by
written consent in lieu of such meetings.


                                    ARTICLE 6

        Except as may otherwise be provided herein, the shareholders of the
Corporation shall have no preemptive right to acquire additional or treasury
shares of the Corporation.


                                    ARTICLE 7

        To the fullest extent permitted by Section 33-2-102(e) of the South
Carolina Business Corporation Act of 1988, as the same exists or may hereafter
be amended, or other law, a director of the Corporation shall not be personally
liable to the Corporation, its shareholders or otherwise for monetary damages
for breach of fiduciary duty as a director. Any repeal or modification of this
Article 7 shall be prospective only and shall not adversely affect any
limitation on the personal liability of a director of the Corporation existing
at the time of such repeal or modification.


                                    ARTICLE 8

        Title 35, Chapter 2, Article 1 of the Code of Laws of South Carolina
1976, as the same exists or may hereafter be amended, which addresses certain
control share acquisitions, shall not be applicable to the Corporation.


                                    ARTICLE 9


<PAGE>


        Title 35, Chapter 2, Article 2 of the Code of Laws of South Carolina
1976, as the same exists or may hereafter be amended, which addresses certain
business combinations, shall not be applicable to the Corporation.


                                   ARTICLE 10

        Pursuant to Section 33-7-280(b) of the South Carolina Business
Corporation Act of 1988, as the same exists or may hereafter be amended,
shareholders of the Corporation shall not have the right to cumulate their votes
for directors.


                                   ARTICLE 11

        Amendment of these Articles of Incorporation shall require approval by:
(1) a majority of the votes entitled to be cast on the amendment, regardless of
the class or voting group to which the shares belong and (2) a majority of the
votes entitled to be cast on the amendment within each voting group entitled to
vote as a separate voting group on the amendment.