ARTICLES OF AMENDMENT OF THE ARTICLES OF INCORPORATION
                                       OF
                         EAGLE PACIFIC INDUSTRIES, INC.


         Pursuant to the provisions of Minnesota Statutes Section 302A.139, the
following Amendment of the Articles of Incorporation of Eagle Pacific
Industries, Inc. was adopted on April 27, 2000, by the majority vote of the
shares entitled to vote at the Annual Meeting of Shareholders:

         1.       Article 1 of the Articles is amended in its entirety to read
                  as follows:

                               "ARTICLE 1 -- NAME

                  1.1)     The name of the corporation is PW Eagle, Inc."


         I swear that the foregoing is true and accurate and that I have the
authority to sign this document on behalf of the corporation.




                                                     Dobson West, Secretary

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                            ARTICLES OF INCORPORATION
                                       OF
                         EAGLE PACIFIC INDUSTRIES, INC.
                       (As Amended Through June 30, 1997)




                       Statement of Designation of Shares
                                       of
                         Eagle Pacific Industries, Inc.


         The undersigned hereby certifies that the resolutions set forth on
Exhibit A attached hereto were adopted by unanimous written action of the Board
of Directors of Eagle Pacific Industries, Inc., effective as of May 8, 1997.

         I certify that I am authorized to execute this Statement and I further
certify that I understand that by signing this Statement I am subject to the
penalties of perjury as set forth in Minnesota Statutes, Section 609.48 as if I
had signed this Amendment under oath.




                                       /s/ William H. Spell
                                       William H. Spell, Chief Executive Officer

<PAGE>


         WHEREAS, Article 3.1 of the Articles of Incorporation of this
Corporation authorizes issuance of up to 20,000,000 shares of undesignated
stock.

         WHEREAS, the Board of Directors of the Corporation is authorized to
establish from the undesignated shares by resolution adopted and filed in the
manner provided by law, one or more classes or series of shares, to designate
each such class or series (which may include, but is not limited to, designation
as additional common shares), and to fix the relative rights and preferences of
each such class or series.

                       Designation of Class B Common Stock

         NOW, THEREFORE, BE IT HEREBY AND IT IS RESOLVED, that 3,500,000 shares
of the Corporation's undesignated shares shall be established as a class of
common stock designated as the "Class B Common Stock" of the Corporation.

         FURTHER RESOLVED, that the Class B Common Stock shall be identical in
all respects to all other Common Stock of the Corporation except for certain
voting rights as set forth in this resolution. As used in this Designation of
Class B Common Stock, the term "Common Stock" shall mean the Corporation's
presently authorized shares of common stock, $.01 par value.

         FURTHER RESOLVED, that the designation, the number of shares, the
powers, the relative, participating, optional and other special rights, and the
qualifications, limitations and restrictions, of the Class B Common Stock shall
be as follows:

                  (a) Designation and Number. The class of common stock
         established hereby shall be designated as Class B Common Stock (herein
         called the "Class B Common Stock") which shall have a par value of $.01
         per share and the authorized number of the shares of such class shall
         be 3,500,000, which authorized number shall not be subject to increase.
         Except as otherwise provided by law and except as stated below, all
         shares of Class B Common Stock shall be identical in all respects and
         have equal rights and privileges including without limitation the right
         to share ratably, together with all other shares of Common Stock, on a
         per share basis (i) in such cash, stock, or other dividends and
         distributions as from time to time may be declared by the Board of
         Directors of the Corporation and (ii) in all distributions in assets or
         funds of the Corporation upon the voluntary or involuntary liquidation,
         dissolution or winding up of the affairs of the Corporation.

                  (b) Voting Rights. Except as otherwise required by law, the
         holders of Class B Common Stock shall not be entitled to vote on any
         matter submitted to stockholders for a vote.

                  (c) Conversion. Each holder of Class B Common Stock shall have
         the right at any time and from time to time to convert any or all
         shares of Class B Common Stock registered in the name of such holder
         into an equal number of shares of Common Stock.

                  (d) Mergers, Consolidations, Sales. In the case of any
         consolidation or merger of the Corporation with another entity, or any
         reorganization or reclassification of the Common Stock or other equity
         securities of the Corporation, then, as a condition of such
         consolidation, merger, reorganization or reclassification, lawful and
         adequate provision shall be made whereby the holders of the Class B
         Common Stock shall thereafter have the right to receive upon the basis
         and upon the terms and conditions specified herein and in lieu of the
         shares of Common Stock immediately theretofore receivable hereunder,
         such shares of stock, securities or assets as may (by virtue of such
         consolidation, merger, sale, reorganization or reclassification) be
         issued or payable with respect to or in exchange for a number of
         outstanding shares of Common Stock equal to the number of shares of
         Common Stock immediately theretofore so receivable hereunder had such
         consolidation, merger, sale, reorganization or reclassification not
         taken place, and in any such case appropriate provisions shall be made

<PAGE>

         with respect to the rights and interests of the holders of the Class B
         Common Stock to the end that the provisions hereof shall thereafter be
         applicable as nearly as may be, in relation to any shares of stock,
         securities or assets thereafter deliverable upon conversion of such
         Class B Common Stock.


<PAGE>


                     Designation of Class of Preferred Stock

         NOW, THEREFORE, BE IT HEREBY AND IT IS RESOLVED, that 10,000 shares of
the Corporation's undesignated shares shall be established as a class of
preferred stock designated as the "8% Convertible Preferred Stock" of the
Corporation.

         FURTHER RESOLVED, that the designation, the number of shares, the
powers, the relative, participating, optional and other special rights, and the
qualifications, limitations and restrictions, of the 8% Convertible Preferred
Stock shall be as follows:

                  (a) Designation and Number. The class of Preferred Stock
         established hereby shall be designated as the 8% Convertible Preferred
         Stock (herein called the "8% Preferred Stock") which shall have a par
         value of $.01 per share and the authorized number of the shares of such
         class shall be 10,000, which authorized number shall not be subject to
         increase.

                  (b) Dividends. Except in the case of distributions in
         liquidation, dissolution or winding up of the affairs of the
         Corporation provided for in paragraph (c) below, the holders of the 8%
         Preferred Stock shall be entitled to receive cumulative cash dividends
         at the rate of 8% of the Liquidation Preference provided in
         subparagraph (c) hereof per annum (computed on the basis of a 360-day
         year of twelve 30-day months) per share, such dividends to be payable
         quarterly on each March 30, June 30, September 30 and December 30 in
         each year commencing June 30, 1997 (each such quarterly dividend period
         being hereinafter referred to as a "Quarterly Dividend Period" and each
         such dividend payment date being hereinafter referred to as a
         "Quarterly Dividend Payment Date") and shall accrue on a daily basis
         whether or not they have been declared and whether or not there are
         profits, surplus or other funds of the Corporation legally available
         for the payment of dividends. If on any Quarterly Dividend Payment
         Date, the Corporation shall fail to pay such dividend in cash on the
         Quarterly Dividend Payment Date, dividends on the 8% Preferred Stock
         for each Quarterly Dividend Period thereafter shall be paid at the rate
         of 12% of the Liquidation Preference provided in subparagraph (c)
         hereof per annum per share (the "Adjusted Quarterly Dividend") for each
         Quarterly Dividend Period until all accrued dividends on the 8%
         Preferred Stock have been paid in full, in cash. If the Corporation
         shall fail to pay in cash the accrued dividends payable on any
         Quarterly Dividend Payment Date, to the extent permitted by applicable
         law, an additional amount shall thereafter accrue on such accrued but
         unpaid dividends which shall be computed at the rate of 12% per annum
         on the amount of such accrued but unpaid dividends from the Quarterly
         Dividend Payment Date on which the Corporation shall have failed to pay
         such accrued dividends to the date on which such accrued dividends
         shall be paid in full in cash. In addition, the holders of the 8%
         Preferred Stock shall be entitled to receive cash dividends in the
         amount per share determined by multiplying the amount per share at any
         time distributed in cash on shares of Common Stock by the number of
         shares of Common Stock at the time issuable upon conversion of a share
         of 8% Preferred Stock (such distribution being hereinafter referred to
         as the "Common Equivalent Dividend"), payable on the date that
         distributions shall be paid or set apart for any shares of Common
         Stock. In no event shall any dividend be paid or declared, nor shall
         any distribution be made on the Corporation's Common Stock or preferred
         stock of any other class unless (i) all dividends on the 8% Preferred
         Stock for all past periods shall have been paid or declared and a sum
         sufficient for the payment thereof set apart for payment, and (ii)
         Common Equivalent Dividends as set forth above are declared and paid on
         the 8% Preferred Stock at or prior to such time. In addition, upon any
         conversion of shares of 8% Preferred Stock in accordance with the
         provisions of paragraph (g), all accrued dividends and other amounts,
         if any, payable on the 8% Preferred Stock shall be paid in cash,
         including dividends for the portion of any Quarterly Dividend Period in
         which such conversion shall have occurred. The Corporation covenants
         and agrees that dividends on the 8% Preferred Stock shall be declared
         at the annual rate of 8% of the Liquidation Value per share and shall
         be paid in cash on each Quarterly Dividend Payment Date unless the
         Corporation is prevented by operation of law from the declaration or
         payment of such dividend.


<PAGE>

                  (c) Liquidation Preference. In the event of any liquidation,
         dissolution or winding up of the Corporation, either voluntary or
         involuntary, the holders of 8% Preferred Stock shall be entitled to be
         paid out of the assets of the Corporation available for distribution to
         its stockholders, before any payment or declaration and setting apart
         for payment of any amount shall be made in respect of the Common Stock
         or stock of any other class or series (including the Series A 7%
         Convertible Preferred Stock of the Corporation, hereinafter referred to
         as the "Series A Preferred Stock"), an amount equal to $1,000.00 per
         share of 8% Preferred Stock (as adjusted to reflect stock splits,
         dividends, combinations, and reclassifications) (the "Liquidation
         Preference") plus an amount equal to any accrued but unpaid dividends
         on such share of 8% Preferred Stock and other amounts, if any, payable
         thereon. Thereafter, the assets shall be distributed first, ratably
         among the holders of Series A Preferred Stock, and second, ratably
         among the holders of Common Stock and 8% Preferred Stock, all in
         proportion to the number of shares of Common Stock owned by each such
         holder and, in the case of the 8% Preferred Stock, to which such holder
         would then be entitled upon conversion of such stock owned by such
         holder.

                  (d) Mandatory Redemption. (i) On the seventh anniversary of
         the original issuance of the 8% Preferred Stock (such date the
         "Redemption Date"), the Corporation shall set apart out of its funds
         lawfully available for such purpose (or to the extent that the same are
         lawfully available therefor) for the redemption of the 8% Preferred
         Stock on the Redemption Date that sum in cash which shall be sufficient
         to redeem, and shall redeem on the Redemption Date, the shares of 8%
         Preferred Stock then outstanding at a price equal to the Liquidation
         Preference of such shares of 8% Preferred Stock set forth in paragraph
         (c) above plus an amount equal to any accrued but unpaid dividends
         thereon and other amounts payable thereon. If the full number of shares
         required to be redeemed as aforesaid shall not be so redeemed, the
         deficiency shall be made good thereafter as soon as funds shall become
         lawfully available therefor.

                           (ii) If a Change in Ownership has occurred or the
                  Corporation obtains knowledge that a Change in Ownership is to
                  occur, the Corporation shall give prompt written notice of
                  such Change in Ownership describing in reasonable detail the
                  definitive terms and date of consummation thereof to each
                  holder of 8% Preferred Stock, but in any event such notice
                  shall not be given later than five business days after the
                  occurrence of such Change in Ownership. The holder or holders
                  of a majority of the 8% Preferred Stock then outstanding may
                  require the Corporation to redeem all or any portion of the
                  Convertible Preferred Stock owned by such holder or holders at
                  a price per share equal to the Liquidation Preference thereof
                  (plus all accrued and unpaid dividends thereon and other
                  amounts, if any, payable thereon) by giving written notice to
                  the Corporation of such election prior to the later of (A) 21
                  days after receipt of the Corporation's notice and (B) five
                  business days prior to the consummation of the Change in
                  Ownership (the "Expiration Date"). The Corporation shall give
                  prompt written notice of any such election to all other
                  holders of 8% Preferred Stock with respect to which an
                  election under this subparagraph (ii) has been made within
                  five days after the receipt of notice thereof, and each such
                  holder shall have until the later of (1) the Expiration Date
                  or (2) ten days after receipt of such second notice to request
                  redemption (by giving written notice to the Corporation) of
                  all or any portion of the shares of 8% Preferred Stock owned
                  by such holder. Upon receipt of such election(s), the
                  Corporation shall be obligated to redeem the aggregate number
                  of shares of 8% Preferred Stock specified therein on the later
                  of (I) the occurrence of the Change in Ownership or (II) five
                  days after the Corporation's receipt of such election(s). If
                  in any case a proposed Change in Ownership does not occur, all
                  requests for redemption in connection therewith shall be
                  automatically rescinded. The term "Change in Ownership" means
                  (x) any sale or series of sales of Common Stock by a member of
                  the Spell Group which results in the Spell Group owning
                  beneficially and of record less than 358,024 shares of Common
                  Stock of the Corporation, provided that shares of Common Stock

<PAGE>

                  sold in an Exempt Sale shall be excluded from any
                  determination of a Change in Ownership, (y) any event which
                  results in an Acceptable Officer ceasing to continue to serve
                  as either the Chief Executive Officer or President of the
                  Corporation, or (z) any sale or issuance or series of sales
                  and/or issuances of shares of the Corporation's capital stock
                  by the Corporation or any holder thereof which results in any
                  person or group of affiliated persons (other than the Spell
                  Group) owning capital stock of the Corporation possessing the
                  voting power (under ordinary circumstances) to elect a
                  majority of the Corporation's Board of Directors. The term
                  "Acceptable Officer" shall mean William H. Spell or such other
                  person as shall be acceptable to the holders of at least a
                  majority of the shares of 8% Preferred Stock at the time
                  outstanding. The term "Exempt Sale" shall mean the sale of
                  Common Stock by the estate of any person included in the Spell
                  Group following the death of such person.

                           (iii) If a Fundamental Change is proposed to occur,
                  the Corporation shall give written notice of such Fundamental
                  Change describing in reasonable detail the definitive terms
                  and date of consummation thereof to each holder of 8%
                  Preferred Stock not more than 45 days nor less than 20 days
                  prior to the consummation thereof. The holder or holders of a
                  majority of the 8% Preferred Stock then outstanding may
                  require the Corporation to redeem all or any portion of the
                  shares of 8% Preferred Stock owned by each such holder or
                  holders at a price per share equal to the Liquidation
                  Preference (plus all accrued and unpaid dividends thereon and
                  other amounts, if any, payable thereon) by giving written
                  notice to the Corporation of such election prior to the later
                  of (A) ten days prior to the consummation of the Fundamental
                  Change or (B) ten days after receipt of notice from the
                  Corporation. The Corporation shall give prompt written notice
                  of such election to all other holders of 8% Preferred Stock
                  with respect to which an election under this subparagraph
                  (iii) has been made (but in any event within five business
                  days prior to the consummation of the Fundamental Change), and
                  each such holder shall have until two days after the receipt
                  of such notice to request redemption (by written notice given
                  to the Corporation) of all or any portion of the shares of 8%
                  Preferred Stock owned by such holder. Upon receipt of such
                  election(s), the Corporation shall be obligated to redeem the
                  aggregate number of shares specified therein upon the
                  consummation of such Fundamental Change. If any proposed
                  Fundamental Change does not occur, all requests for redemption
                  in connection therewith shall be automatically rescinded. The
                  term "Fundamental Change" means (x) a sale or transfer of more
                  than 50% of the assets of the Corporation and its subsidiaries
                  on a consolidated basis (measured by either book value in
                  accordance with generally accepted accounting principles
                  consistently applied or fair market value determined in the
                  reasonable good faith judgment of the Corporation's Board of
                  Directors) in any transaction or series of transactions (other
                  than sales in the ordinary course of business) and (y) any
                  merger or consolidation to which the Corporation is a party,
                  except for a merger in which the Corporation is the surviving
                  corporation and, after giving effect to such merger, no person
                  or group of affiliated persons (other than the Spell Group)
                  owns capital stock of the Corporation possessing the voting
                  power (under ordinary circumstances) to elect a majority of
                  the Corporation's Board of Directors.

                           (iv) If the Corporation shall fail to discharge its
                  obligation to redeem shares of 8% Preferred Stock pursuant to
                  this paragraph (d) (the "Mandatory Redemption Obligation"),
                  the Mandatory Redemption Obligation shall be discharged as
                  soon as the Corporation is permitted by law or by its
                  applicable contracts, agreements, indentures, bonds, notes,
                  debentures or similar instruments to discharge such Mandatory
                  Redemption Obligation. If and so long as the Mandatory
                  Redemption Obligation shall not fully be discharged, the
                  Corporation shall not, directly or indirectly, declare or pay
                  any dividend or make any distributions on, or purchase, redeem
                  or retire, or satisfy any mandatory or optional redemption,
                  sinking fund or other similar obligation in respect of, any
                  other series or class of its stock.


<PAGE>
                           (v) Nothing contained in this paragraph (d) shall
                  prevent or otherwise impair the exercise by any holder of
                  shares of the 8% Preferred Stock of the conversion rights
                  existing under paragraph (g) below at any time prior to the
                  actual redemption of such shares pursuant to this paragraph
                  (d).

                           (vi) All shares of 8% Preferred Stock which shall
                  have been redeemed, purchased or otherwise acquired by the
                  Corporation shall be canceled and shall not be reissued as
                  shares of 8% Preferred Stock.

                           (e)      Voting Rights.  (i) Except as otherwise
                  required by law and as set forth in this paragraph (e) and
                  paragraph (f) below, the holders of the 8% Preferred Stock
                  shall not be entitled to vote on any matter submitted to
                  stockholders for a vote.

                           (ii) If the Corporation shall fail to redeem the 8%
                  Preferred Stock in accordance with the requirements of
                  paragraph (d) above, the number of directors constituting the
                  Corporation's Board of Directors will, at the request of
                  holders of two-thirds of the shares of the 8% Preferred Stock
                  then outstanding, be increased by one member, and the holders
                  of the 8% Preferred Stock will have the special right, voting
                  separately as a single class (with each share being entitled
                  to one vote) and to the exclusion of all other classes of the
                  Corporation's stock, to elect an individual to fill such newly
                  created directorship, to fill any vacancy of such directorship
                  and to remove any individual elected to such directorship. The
                  newly created directorship will constitute a separate class of
                  directors, and the director elected by the holders of the 8%
                  Preferred Stock will be entitled to cast one vote on each
                  matter considered by the Board of Directors (including for
                  purposes of determining the existence of a quorum). The
                  special right of the holders of 8% Preferred Stock to elect
                  members of the Board of Directors may be exercised at the
                  special meeting called pursuant to this subparagraph (ii), at
                  any annual or other special meeting of stockholders and, to
                  the extent and in the manner permitted by applicable law,
                  pursuant to a written consent in lieu of a stockholders
                  meeting. Such special right shall continue until such time as
                  all shares of 8% Preferred Stock shall have been redeemed in
                  accordance with the requirements of paragraph (d) above
                  together with accrued and unpaid dividends thereon, at which
                  time such special right shall terminate.

                           At any time when such special right has vested in the
                  holders of 8% Preferred Stock, a proper officer of the
                  Corporation shall, upon the written request of the holder of
                  at least 10% of the 8% Preferred Stock then outstanding,
                  addressed to the secretary of the Corporation, call a special
                  meeting of the holders of 8% Preferred Stock for the purpose
                  of electing a director pursuant to this paragraph (iii). Such
                  meeting shall be held at the earliest legally permissible date
                  at the principal office of the Corporation, or at such other
                  place designated by the holders of at least 10% of the 8%
                  Preferred Stock then outstanding. If such meeting has not been
                  called by a proper officer of the Corporation within 10 days
                  after personal service of such written request upon the
                  secretary of the Corporation or within 20 days after mailing
                  the same to the secretary of the Corporation at its principal
                  office, then the holders of at least 10% of the 8% 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 Corporation's principal office, or at
                  such other place designated by the holders of at least 10% of
                  the 8% Preferred Stock then outstanding.

                           At any meeting or at any adjournment thereof at which
                  the holders of 8% Preferred Stock have the special right to
                  elect a director, the presence, in person or by proxy, of the
                  holders of two-thirds of the 8% Preferred Stock then
                  outstanding shall be required to constitute a quorum for the
                  election or removal of any director by the holders of the 8%
                  Preferred Stock exercising such special right. The vote of a
                  majority of such quorum shall be required to elect or remove
                  any such director.
<PAGE>
                           Any director so elected by the holders of 8%
                  Preferred Stock shall continue to serve as a director until
                  the redemption of the shares of 8% Preferred Stock in
                  accordance with the requirements of paragraph (d) above. After
                  the redemption of the 8% Preferred Stock in accordance with
                  the requirements of paragraph (d) above, the director elected
                  by the holders of the 8% Preferred Stock shall cease to be a
                  director and the number of directors constituting the Board of
                  Directors of the Corporation shall decrease to such number as
                  constituted the whole Board of Directors of the Corporation
                  immediately prior to the occurrence of the event giving rise
                  to the special right to elect directors.

                           (f) Restrictions on Corporate Action. So long as any
                  shares of the 8% Preferred Stock shall be outstanding and, in
                  addition to any other approvals or consents required by law,
                  without the consent of the holders of at least two-thirds of
                  the shares of 8% Preferred Stock at the time outstanding as of
                  a record date fixed by the Board of Directors, given either by
                  their affirmative vote at a special meeting called for that
                  purpose, or, if permitted by law, in writing, without a
                  meeting, the Corporation shall not:

                                    (i)     Amend any provision of the Articles
                           of Incorporation or the Bylaws of the Corporation; or

                                    (ii) Declare, pay or obligate itself to pay
                           a dividend or make any other distributions (including
                           payments upon redemption or repurchase) relative to
                           any shares of its Common Stock or any other class or
                           series of its capital stock other than the 8%
                           Preferred Stock unless:

                                            (A) such dividend or distribution is
                                    payable out of earnings or surplus (other
                                    than revaluation surplus or paid-in surplus)
                                    or payable in shares of Common Stock
                                    referred to in subparagraph (iii)(A) of
                                    paragraph (g) or payable in warrants, rights
                                    or Convertible Securities referred to in
                                    subparagraph (iii)(C) of paragraph (g); and

                                            (B)      such dividend or other
                                    distribution is made in compliance with
                                    paragraph (b); or

                                    (iii) Create any new class or series of
                           shares having preferences over or on parity with the
                           8% Preferred Stock as to dividend, liquidation,
                           redemption, sinking fund, or assets including,
                           without limitation, any class or series of stock
                           that:

                                    (A) could be redeemed in whole or in part at
                           a price per share greater than the consideration per
                           share received by the Corporation therefor plus any
                           accrued and unpaid dividends thereon or would be
                           entitled to payment of any redemption price prior to
                           or concurrently with the holders of the 8% Preferred
                           Stock;

                                    (B) would be entitled upon liquidation to
                           receive any amount per share in excess of the sum of
                           the consideration per share received by the
                           Corporation therefor plus any accrued and unpaid
                           dividends thereon or would be entitled to receive any
                           liquidating distribution prior to or concurrently
                           with the holders of the 8% Preferred Stock;

                                    (C) would be entitled to payment of any
                           dividend or distribution prior to or concurrently
                           with the holders of the 8% Preferred Stock; or


<PAGE>

                                    (D) would be convertible into or
                           exchangeable for or carry any option or right to
                           acquire a class or series of stock described in
                           clauses (A), (B) or (C) above; or

                           (iv) Issue any evidence of indebtedness which is
                  convertible into or exchangeable for shares of any class or
                  series of capital stock of the Corporation; or

                           (v) (A) Directly or indirectly, or through any
                  subsidiary, purchase, redeem or retire any shares of its
                  capital stock or any warrant, rights or options to purchase or
                  acquire any shares of its capital stock (any such purchase,
                  redemption or retirement being herein collectively called
                  "Restricted Payments") if either (x) the Corporation shall
                  have failed to pay dividends or any other amount which shall
                  have accrued on the shares of 8% Preferred Stock then
                  outstanding, or (y) the aggregate amount of Restricted
                  Payments made during the period from and after January 1, 1997
                  to and including the date of the making of the Restricted
                  Payment in question would exceed 8.9% of EBITDA for such
                  period, computed on a cumulative basis for said entire period;
                  or

                           (B) For purposes of this subparagraph (v), "EBITDA"
                  for any period shall mean the sum of net income from
                  continuing operations of the Corporation during such period,
                  plus (to the extent deducted in determining net income from
                  continuing operations of the Corporation) (1) interest expense
                  on indebtedness for borrowed money (including non cash
                  amortized interest expense on deferred finance costs, original
                  issue discount, prepaid interest, and amortized costs relating
                  to warrants) of the Corporation during such period, (2) all
                  provisions for any federal, state or other income taxes made
                  by the Corporation during such period and (3) depreciation and
                  amortization expense of the Corporation during such period,
                  all determined in accordance with generally accepted
                  accounting principles at the time in the United States except
                  as otherwise set forth herein; or

                           (vi) Alter or change the specific rights,
                  preferences, or privileges of any class or series of its
                  Preferred Stock so as to have an adverse effect on the 8%
                  Preferred Stock or change any rights or priorities of the 8%
                  Preferred Stock (including the rights of the holders of the 8%
                  Preferred Stock under this paragraph (f)); or

                           (vii) Issue any Additional Shares of Common Stock or
                  any options warrants or other rights to subscribe for or
                  purchase Additional Shares of Common Stock at a price per
                  share which is less than the Conversion Price.

                  (g) Conversion. (i) (A) Optional Conversion. Each share of the
         8% Preferred Stock shall be convertible, at the option of the holder
         thereof, at any time after the date of issuance of such share, at the
         office of the Corporation or any transfer agent for the 8% Preferred
         Stock, into such number of fully paid and nonassessable shares of
         Common Stock as is determined by dividing the Liquidation Preference of
         such share by the Conversion Price then in effect. The Conversion Price
         at which shares of Common Stock shall be delivered upon conversion of
         each share of 8% Preferred Stock without the payment of any additional
         consideration by the holder thereof shall initially be $4.26 per share
         (the "Conversion Price"). Such initial Conversion Price shall be
         subject to adjustment as set forth in subparagraph (iii) of this
         paragraph (g).

                  (B) Mandatory Conversion. (1) Subject to the provisions of
         subparagraph (2) below, if at any time after the second anniversary of
         the initial issuance of the 8% Preferred Stock, the Current Market
         Price per share of Common Stock shall exceed 175% of the Conversion
         Price then in effect, all (but not less than all) of the shares of 8%
         Preferred Stock shall be converted into shares of Common Stock at the
         election of the Corporation as evidenced by a resolution adopted by the
         Board of Directors of the Corporation. Such resolution shall set forth

<PAGE>

         the date upon which the conversion shall occur which shall be not less
         than 5 nor more than 15 days after the date upon which such resolution
         is adopted. Written notice of such conversion together with a copy of
         the resolution of the Board of Directors relating to such conversion
         shall be given to each holder of the 8% Preferred Stock promptly
         following its adoption. Each holder of 8% Preferred Stock so converted
         will be entitled to receive the number of shares of Common Stock into
         which such 8% Preferred Stock held by such holder would have been
         converted if such holder had exercised such holder's conversion rights
         on the conversion date specified in the resolution adopted by the Board
         of Directors.

                  (2) Upon the occurrence of an event specified in subparagraph
         (i)(B) of this paragraph (g), the outstanding shares of the 8%
         Preferred Stock to be converted shall be converted without any further
         action by the holders of such shares and whether or not the
         certificates representing such shares are surrendered to the
         Corporation or its transfer agent; provided, however, (I) that such
         conversion will not violate any legal requirements (such as compliance
         with the Hart-Scott-Rodino Antitrust Improvement Act of 1976) and (II)
         that the Corporation shall not be obligated to issue certificates
         evidencing the shares of Common Stock issuable upon such conversion
         unless certificates evidencing such shares of the 8% Preferred Stock
         being converted are delivered to either the Corporation or any transfer
         agent, as hereinafter provided, or the holder notifies the Corporation
         or any transfer agent, as hereinafter provided, that such certificates
         have been lost, stolen, or destroyed and executes an agreement
         satisfactory to the Corporation to indemnify the Corporation from any
         loss incurred by it in connection therewith. Upon the mandatory
         conversion of the 8% Preferred Stock, the holders of such 8% Preferred
         Stock shall surrender the certificates representing such shares at the
         office of the Corporation or of any transfer agent for the Common
         Stock. Thereupon, there shall be issued and delivered to such holder,
         promptly at such office and in his name as shown on such surrendered
         certificate or certificates, a certificate or certificates for the
         number of shares of Common Stock into which the shares of the 8%
         Preferred Stock surrendered were convertible on the date on which such
         mandatory conversion occurred.

                  (ii) Mechanics of Conversion. The shares of Common Stock
         issued to the holders of 8% Preferred Stock pursuant to this paragraph
         (g) will be shares of Class B Common Stock; except that any holder of
         8% Preferred Stock may request by written notice to the Corporation
         that shares of Voting Common Stock be issued upon conversion of the 8%
         Preferred Stock of such holder. Before any holder of 8% Preferred Stock
         shall be entitled to convert the same into shares of Common Stock
         pursuant to subparagraph (i)(A) of this paragraph (g), he or she shall
         surrender the certificate or certificates therefor, duly endorsed, at
         the office of the Corporation or of any transfer agent for the 8%
         Preferred Stock, and shall give written notice by mail, postage
         prepaid, to the Corporation at its principal corporate office of the
         election to convert the same and shall state therein the name or names
         in which the certificate or certificates for shares of Common Stock are
         to be issued. The Corporation shall as soon as practicable thereafter,
         issue and deliver at such office to such holder of 8% Preferred Stock,
         or to the nominee or nominees of such holder, a certificate or
         certificates for the number of shares of Common Stock to which such
         holder shall be entitled as aforesaid. Such conversion shall be deemed
         to have been made immediately prior to the close of business on the
         date of such surrender of the shares of 8% Preferred Stock to be
         converted, and the person or person entitled to receive the shares of
         Common Stock issuable upon such conversion shall be treated for all
         purposes as the record holder or holders of such shares of Common Stock
         as of such date. If the conversion is in connection with an
         underwritten offer of securities registered pursuant to the Securities
         Act of 1933, the conversion may, at the option of any holder tendering
         the 8% Preferred Stock for conversion, be conditioned upon the closing
         with the underwriter of the sale of securities pursuant to such
         offering, in which event the person(s) entitled to receive the Common
         Stock issuable upon such conversion of the 8% Preferred Stock shall not
         be deemed to have converted such 8% Preferred Stock until immediately
         prior to the closing of such sale of securities.

                  (iii) Conversion Price Adjustments of 8% Preferred Stock. The
         Conversion Price shall be subject to adjustment from time to time as
         follows:


<PAGE>

                           (A)      Stock Dividends, Subdivisions and
                  Combinations.  In case after April 30, 1997 the Corporation
                  shall

                                    (1) take a record of the holders of its
                           Common Stock for the purpose of entitling them to
                           receive a dividend payable in, or other distribution
                           of, Common Stock, or

                                    (2)     subdivide its outstanding shares of
                           Common Stock into a larger number of shares of
                           Common Stock, or

                                    (3)     combine its outstanding shares of
                           Common Stock into a smaller number of shares of
                           Common Stock,

                           then the Conversion Price shall be adjusted to that
                           rate determined by multiplying the Conversion Price
                           in effect immediately prior to such event by a
                           fraction (I) the numerator of which shall be the
                           total number of outstanding shares of Common Stock of
                           the Corporation immediately prior to such event, and
                           (II) the denominator of which shall be the total
                           number of outstanding shares of Common Stock of the
                           Corporation immediately after such event. In the
                           event that the dividend or distribution referenced in
                           subparagraph (iii)(A)(1) above is lawfully abandoned,
                           the Conversion Price shall be appropriately
                           readjusted.

                           (B) Issuance of Additional Shares of Common Stock. In
                  case after April 30, 1997 the Corporation shall (except as
                  hereinafter provided) issue any Additional Shares of Common
                  Stock for a consideration which is less than the Current
                  Market Price per share, then the per share Conversion Price
                  upon each such issuance shall be adjusted to that price
                  determined by multiplying the per share Conversion Price in
                  effect immediately prior to such event by a fraction:

                                            (x) the numerator of which shall be
                                    the number of shares of Common Stock
                                    outstanding immediately prior to the
                                    issuance of such Additional Shares of Common
                                    Stock plus the number of full shares of
                                    Common Stock which the aggregate
                                    consideration for the total number of such
                                    Additional Shares of Common Stock so issued
                                    would purchase at the Current Market Price
                                    per share, and

                                            (y) the denominator of which shall
                                    be the number of shares of Common Stock
                                    outstanding immediately prior to the
                                    issuance of such Additional Shares of Common
                                    Stock plus the number of such Additional
                                    Shares of Common Stock so issued.

                  The provisions of this subparagraph (iii)(B) shall not apply
                  to any Additional Shares of Common Stock that are distributed
                  to holders of Common Stock as a stock dividend or subdivision,
                  for which an adjustment is provided for under subparagraph
                  (iii)(A) above. No adjustment of the per share Conversion
                  Price shall be made under this subparagraph (iii)(B) upon the
                  issuance of any Additional Shares of Common Stock that are
                  issued pursuant to the exercise of any warrants or other
                  subscription or purchase rights or pursuant to the exercise of
                  any conversion or exchange rights in any Convertible
                  Securities, if any such adjustment shall previously have been
                  made upon the issuance of such warrants or other rights or
                  upon the issuance of such Convertible Securities (or upon the
                  issuance of any warrants or other rights therefor) pursuant to
                  subparagraph (iii)(C) below.


<PAGE>
                           (C) Issuance of Warrants, Other Rights or Convertible
                  Securities. In case the Corporation shall issue any options,
                  warrants or other rights to subscribe for or purchase any
                  Additional Shares of Common Stock or issue Convertible
                  Securities and the consideration per share for which
                  Additional Shares of Common Stock may at any time thereafter
                  be issuable pursuant to such options, warrants or other rights
                  or pursuant to the terms of such Convertible Securities shall
                  be less than the Current Market Price, then the per share
                  Conversion Price shall be adjusted as provided in subparagraph
                  (iii)(B) above.

                  For purposes of adjustments in the Conversion Price pursuant
                  to this subparagraph (iii)(C), the number of shares of Common
                  Stock outstanding shall be deemed to include the maximum
                  number of Additional Shares of Common Stock issuable pursuant
                  to all outstanding options, warrants or other rights or
                  necessary to effect the conversion or exchange of all such
                  outstanding Convertible Securities of the Corporation. All
                  such options, warrants, other rights or Convertible Securities
                  shall be deemed to have been issued as of, and the date as of
                  which the Current Market Price per share of Common Stock shall
                  be computed shall be, the earlier of (1) the date on which the
                  Corporation shall enter a firm contract or commitment for the
                  issuance of such options, warrants, other rights or
                  Convertible Securities or (2) the date of actual issuance of
                  such options, warrants, other rights or Convertible
                  Securities.

                  No adjustment of the per share Conversion Price shall be made
                  under this subparagraph (iii)(C) upon the issuance of any
                  Convertible Securities that are issued pursuant to the
                  exercise of any options, warrants or other subscription or
                  purchase rights therefor if any such adjustment shall
                  previously have been made upon the issuance of such options,
                  warrants or other rights pursuant to said paragraph.

                           (D) Other Provisions Applicable to Adjustments Under
                  This Subparagraph. The following provisions shall be
                  applicable to the making of adjustments to the Conversion
                  Price hereinbefore provided in this subparagraph (iii):

                                    (1) Computation of Consideration. To the
                           extent that any Additional Shares of Common Stock or
                           any Convertible Securities or any options, warrants
                           or other rights to subscribe for or purchase any
                           Additional Shares of Common Stock or any Convertible
                           Securities shall be issued for a cash consideration,
                           the consideration received by the Corporation
                           therefor shall be deemed to be the amount of the cash
                           received by the Corporation therefor, or, if such
                           Additional Shares of Common Stock or Convertible
                           Securities or options, warrants or other rights are
                           offered by the Corporation for subscription, the
                           subscription price, or, if such Additional Shares of
                           Common Stock or Convertible Securities or options,
                           warrants or other rights are sold to underwriters or
                           dealers for public offering without a subscription
                           offering, the initial public offering price, in any
                           such case excluding any amounts paid or receivable
                           for accrued interest or accrued dividends and without
                           deduction of any compensation, discounts or expenses
                           paid or incurred by the Corporation for and in the
                           underwriting thereof, or otherwise in connection with
                           the issue thereof. To the extent that such issuance
                           shall be for a consideration other than cash, then,
                           except as herein otherwise expressly provided, the
                           amount of such consideration shall be deemed to be
                           the fair value of such consideration at the time of
                           such issuance as determined in good faith by the
                           Board of Directors of the Corporation. The
                           consideration for any Additional Shares of Common
                           Stock issuable pursuant to any options, warrants or
                           other rights to subscribe for or purchase the same
                           shall be the consideration received by the
                           Corporation for issuing such options, warrants or
                           other rights, plus the additional consideration
                           payable to the Corporation upon the exercise of such
                           options, warrants or other rights. The consideration
<PAGE>
                           for any Additional Shares of Common Stock issuable
                           pursuant to the terms of any Convertible Securities
                           shall be the consideration received by the
                           Corporation for issuing any options, warrants or
                           other rights to subscribe for or purchase such
                           Convertible Securities plus the consideration paid or
                           payable to the Corporation in respect of the
                           subscription for or purchase of such Convertible
                           Securities, plus the additional consideration, if
                           any, payable to the Corporation upon the exercise of
                           the right of conversion or exchange in such
                           Convertible Securities. In case of the issuance at
                           any time of any Additional Shares of Common Stock or
                           Convertible Securities in payment or satisfaction of
                           any dividend upon any class of equity securities
                           other than Common stock, the Corporation shall be
                           deemed to have received for such Additional Shares of
                           Common Stock or Convertible Securities a
                           consideration equal to the amount of such dividend so
                           paid or satisfied.

                                    (2) Readjustment of Conversion Price. Upon
                           expiration of the right of conversion or exchange of
                           any Convertible Securities, or upon the expiration of
                           any rights, options or warrants, or upon any increase
                           in the minimum consideration receivable by the
                           Corporation for the issuance of Additional Shares of
                           Common Stock pursuant to such Convertible Securities,
                           rights, options or warrants, if any such Convertible
                           Securities shall not have been converted or
                           exchanged, or if any such rights, options or warrants
                           shall not have been exercised, the number of shares
                           of Common Stock deemed to be issued and outstanding
                           by reason of the fact that they were issuable upon
                           conversion or exchange of any such Convertible
                           Securities or upon exercise of any such rights,
                           options or warrants shall no longer be computed as
                           set forth above, and the Conversion Price shall
                           forthwith be readjusted and thereafter be the rate
                           which it would have been (but reflecting any other
                           adjustments in the Conversion Price made pursuant to
                           the provisions of this paragraph (g) after the
                           issuance of such Convertible Securities, rights,
                           options or warrants) had the adjustment of the
                           Conversion Price made upon the issuance or sale of
                           such Convertible Securities or the issuance of such
                           rights, options or warrants been made on the basis of
                           the issuance only of the number of Additional Shares
                           of Common Stock actually issued upon conversion or
                           exchange of such Convertible Securities or upon the
                           exercise of such rights, options or warrants, or upon
                           the basis of such increased minimum consideration, as
                           the case may be, and thereupon only the number of
                           Additional Shares of Common Stock actually so issued
                           or the number thereof issuable upon the basis of such
                           increased minimum consideration shall be deemed to
                           have been issued and only the consideration actually
                           received or such increased minimum consideration
                           receivable by the Corporation (computed as in
                           subparagraph (iii)(D)(1) of this paragraph (g)) shall
                           be deemed to have been received by the Corporation.

                           (E) Common Equivalent Dividends. In case the
                  Corporation shall declare, to the extent otherwise permitted
                  herein, a dividend upon its Common Stock (except a dividend
                  payable in shares of Common Stock referred to in subparagraph
                  (iii)(A) of this paragraph (g)) or a dividend payable in
                  warrants, rights or Convertible Securities referred to in
                  subparagraph (iii)(C) of this paragraph (g) payable otherwise
                  than out of earnings or surplus (other than revaluation
                  surplus or paid-in surplus), the Corporation shall
                  simultaneously declare a dividend, in cash, upon the 8%
                  Preferred Stock equal to, in the case of a cash dividend, the
                  amount of the per share dividend declared upon the Common
                  Stock times the number of shares of Common Stock to be
                  received by the holders of the 8% Preferred Stock upon
                  conversion at the Conversion Price then in effect and, in the
                  case of a dividend payable other than in cash, the fair value
                  of such dividend declared upon the Common Stock as determined
                  by the Board of Directors of the Corporation. For the purposes
                  of the foregoing, a dividend payable other than in cash shall
                  be considered payable out of earnings or surplus (other than
                  revaluation surplus or paid-in surplus) only to the extent
<PAGE>
                  that such earnings or surplus are charged an amount equal to
                  the fair value of such dividend as determined by the Board of
                  Directors of the Corporation.

                           (F) Minimum Adjustment. Except as hereinafter
                  provided, no adjustment of the Conversion Price hereunder
                  shall be made if such adjustment results in a change of the
                  Conversion Price then in effect of less than one cent ($.01).
                  Any adjustment of less than one cent ($.01) of any Conversion
                  Price shall be carried forward and shall be made at the time
                  of and together with any subsequent adjustment that, together
                  with adjustment or adjustments so carried forward, amounts to
                  one cent ($.01) of the Conversion Price then in effect or
                  more. However, upon the conversion of any share of the 8%
                  Preferred Stock, the Corporation shall make all necessary
                  adjustments not theretofore made to the Conversion Price up to
                  and including the date upon which the conversion is exercised.

                           (G) Notice of Adjustments. Whenever the Conversion
                  Price shall be adjusted pursuant to this subparagraph (iii),
                  the Corporation shall promptly make a certificate signed by
                  the President or a Vice President and by the Treasurer or an
                  Assistant Treasurer setting forth, in reasonable detail, the
                  event requiring the adjustment, the amount of the adjustment,
                  the adjusted Conversion Price, the method by which such
                  adjustment was calculated (including a description of the
                  basis on which the Board of Directors of the Corporation made
                  any determination hereunder), and shall promptly cause copies
                  of such certificate to be mailed (by first class mail postage
                  prepaid) to each of the holders of the 8% Preferred Stock.

                  (iv) Mergers, Consolidations, Sales. In the case of any
         consolidation or merger of the Corporation with another entity, or any
         reorganization or reclassification of the Common Stock or other equity
         securities of the Corporation (except a split-up or combination,
         provision for which is made in subparagraph (iii)(A) of this paragraph
         (g)), then, as a condition of such consolidation, merger,
         reorganization or reclassification, lawful and adequate provision shall
         be made whereby the holders of the 8% Preferred Stock shall thereafter
         have the right to receive upon the basis and upon the terms and
         conditions specified herein and in lieu of the shares of Common Stock
         immediately theretofore receivable hereunder, such shares of stock,
         securities or assets as may (by virtue of such consolidation, merger,
         sale, reorganization or reclassification) be issued or payable with
         respect to or in exchange for a number of outstanding shares of Common
         Stock equal to the number of shares of Common Stock immediately
         theretofore so receivable hereunder had such consolidation, merger,
         sale, reorganization or reclassification not taken place, and in any
         such case appropriate provisions shall be made with respect to the
         rights and interests of the holders of the 8% Preferred Stock to the
         end that the provisions hereof (including, without limitation,
         provisions for adjustment of the Conversion Price) shall thereafter be
         applicable as nearly as may be, in relation to any shares of stock,
         securities or assets thereafter deliverable upon conversion of such 8%
         Preferred Stock.

                  (v) Dissolution or Liquidation. In the event of any proposed
         distribution of the assets of the Corporation in dissolution or
         liquidation (except under circumstances when the foregoing subparagraph
         (iv) of this paragraph (g) shall be applicable) the Corporation shall
         mail notice thereof to the holders of the 8% Preferred Stock and shall
         make no distribution to shareholders until the expiration of 30 days
         from the date of mailing of the aforesaid notice, and in any such case,
         the holders of the 8% Preferred Stock may exercise the conversion
         rights with respect to the 8% Preferred Stock within 30 days from the
         date of mailing such notice and all rights herein granted not so
         exercised within such 30-day period shall thereafter become null and
         void.

                  (vi) No Impairment. The Corporation will not, by amendment of
         its Articles of Incorporation or through any reorganization,
         recapitalization, transfer of assets, consolidation, merger,

<PAGE>

         dissolution, issue or sale of securities or any other voluntary action,
         avoid or seek to avoid the observance or performance of any of the
         terms to be observed or performed hereunder by the Corporation, but
         will at all times in good faith assist in the carrying out of all of
         the provisions of this paragraph (g) and in the taking of all such
         action as may be necessary or appropriate in order to protect the
         conversion rights of the holders of the 8% Preferred Stock against
         impairment.

                  (vii) Fully Paid Stock; Taxes. The shares of stock represented
         by each and every certificate for its Common Stock to be delivered on
         the exercise of the conversion rights herein provided for shall, at the
         time of such delivery, be validly issued and outstanding and be fully
         paid and nonassessable. The Corporation shall pay when due and payable
         any and all federal and state taxes (other than income taxes) which may
         be payable in respect of the 8% Preferred Stock or any Common Stock or
         certificates therefor upon the exercise of the conversion rights herein
         provided for pursuant to the provisions hereof. The Corporation shall
         not, however, be required to pay any tax which may be payable in
         respect of any transfer involved in the transfer and delivery of stock
         certificates in the name other than that of the holder of the 8%
         Preferred Stock converted, and any such tax shall be paid by such
         holder at the time of presentation.

                  (viii) Closing of Transfer Books. The right to convert any of
         the 8% Preferred Stock shall not be suspended during any period while
         the stock transfer books of the Corporation for its Common Stock may be
         closed. The Corporation shall not be required, however, to deliver
         certificates of its Common Stock upon such exercise while such books
         are duly closed for any purpose, but the Corporation may postpone the
         delivery of the certificate for such Common Stock until the opening of
         such books, and they shall, in such case, be delivered forthwith upon
         the opening thereof, or as soon as practicable thereafter.

                  (ix) Reservation of Common Stock. The Corporation will at all
         times reserve and keep available such number of authorized shares of
         its Voting Common Stock and Class B Common Stock, solely for the
         purpose of issue upon the conversion of the 8% Preferred Stock as
         herein provided for, as shall then be issuable upon the conversion of
         all outstanding shares of 8% Preferred Stock and such shares of Common
         Stock shall at no time have a par value which is in excess of the
         Conversion Price then in effect.

                  (h) Preemptive Rights. If at any time after the date of
         initial issuance of the 8% Preferred Stock, the Corporation grants,
         issues or sells any Additional Shares of Common Stock, or issues or
         sells any options, Convertible Securities or any warrants or other
         rights to subscribe for or purchase Additional Shares of Common Stock,
         then each holder of the 8% Preferred Stock shall be entitled to
         acquire, upon the same terms provided in any such grant, or applicable
         to any such issuance or sale of such additional securities, such number
         of additional securities so as to cause the percentage of outstanding
         shares of Common Stock to which such holder would be entitled upon
         conversion of the 8% Preferred Stock (determined as of the date of
         issuance of such additional securities) to remain unchanged.

                  (i) Definitions. In addition to the terms defined elsewhere in
         this Designation of Class of Preferred Stock, the following terms have
         the following respective meanings:

         The term "Additional Shares of Common Stock" shall mean all shares of
         Common Stock issued by the Corporation on and after April 30, 1997,
         except:

                           (A) Common Stock issued upon conversion of the Series
                  A Preferred Stock or the 8% Preferred Stock; and

                           (B) 2,512,466 shares of Common Stock which may be
                  issued pursuant to stock option plans, warrants and
                  contractual commitments in effect on April 30, 1997.


<PAGE>

                  The term "Class B Common Stock" shall mean the Corporation's
         Class B Common Stock, $.01 par value, authorized on the date of
         issuance of the 8% Preferred Stock.

                  The term "Common Stock" shall mean (i) the Voting Common
         Stock, (ii) the Class B Common Stock, and (iii) any other class of
         capital stock of the Corporation hereafter authorized which is not
         limited to a fixed amount or percentage in respect of the rights of the
         holders thereof to participate in dividends or in the distribution of
         assets upon the voluntary or involuntary liquidation, dissolution or
         winding up of the Corporation; provided that the shares to be received
         by the holders of the 8% Preferred Stock upon conversion shall be
         either the Voting Common Stock or the Class B Common Stock authorized
         on the date of issuance of the 8% Preferred Stock.

                  The term "Convertible Securities" shall mean evidences of
         indebtedness, shares of stock or other securities that are convertible
         into or exchangeable for Additional Shares of Common Stock, either
         immediately or upon the arrival of a specified date or the happening of
         a specified event.

                  The term "Current Market Price" per share of Common Stock for
         the purposes of any provision of paragraph (g) means the average of the
         closing prices of such security's sales on all securities exchanges on
         which such security may at the time be listed, or, if there has been no
         sales on any such exchange on any day, the average of the highest bid
         and lowest asked prices on all such exchanges at the end of such day,
         or, if on any day such security is not so listed, the average of the
         representative bid and asked prices quoted in the Nasdaq Stock Market
         as of 4:00 P.M., New York time, or, if on any day such security is not
         quoted in the Nasdaq Stock Market, the average of the highest bid and
         lowest asked prices on such day in the domestic over-the-counter market
         as reported by the National Quotation Bureau, Incorporated, or any
         similar successor organization, in each such case averaged over a
         period of 31 days consisting of the day as of which "Market Price" is
         being determined and the 30 consecutive business days prior to such
         day. For purposes of determination pursuant to subparagraph (i)(B) of
         paragraph (g), if at any time the Common Stock of the Company is not
         listed on any national securities exchange or quoted in the Nasdaq
         Stock Market, the "Market Price" shall be deemed to be 0. For purposes
         of determination pursuant to subparagraph (iii) of paragraph (g), if at
         any time the Common Stock of the Company is not listed on any
         securities exchange or quoted in the Nasdaq Stock Market or the
         over-the-counter market, the "Market Price" shall be the fair value
         thereof determined by resolution of the Board of Directors of the
         Corporation in good faith; provided that if such valuation by the Board
         of Directors is contested by a majority of the holders of the 8%
         Preferred Stock within 20 days after receipt of written notice of the
         adoption of such resolution, then as determined by any member of the
         National Association of Securities Dealers, Inc. selected by the
         Corporation.

                  The term "Family Trust" means, in respect of any person, any
         trust for the exclusive benefit of such individual, his/her spouse and
         lineal descendants, so long as such individual has the exclusive right
         to control such trust.

                  The term "Related Party" means, with respect to any person (i)
         a spouse or child of such person, (ii) a Family Trust, or (iii) a
         corporation, partnership or limited liability company in which such
         person owns or holds a 51% or more controlling interest.

                  The term "Spell Group" shall mean any one or more of Harry W.
         Spell, William H. Spell, Richard Perkins and Bruce Richard and their
         respective Related Parties; provided that the Spell Group shall at
         all times include either Harry W. Spell or William H. Spell.

                  The term "Voting Common Stock" shall mean the Corporation's
         voting Common Stock, $.01 par value, authorized pursuant to the
         Articles of Incorporation as in effect on the date of issuance of the
         8% Preferred Stock.

<PAGE>


                     AMENDMENT OF ARTICLES OF INCORPORATION
                                       OF
                            BLACK HAWK HOLDINGS, INC.


         Article 1 of the Articles of Incorporation of the above corporation has
been amended to read as follows:


                                "ARTICLE 1 - NAME

         1.1)  The name of the corporation shall be Eagle Pacific Industries,
               Inc."

         The foregoing amendment has been approved pursuant to Chapter 302A,
Minnesota Statutes.

         I certify that I am authorized to execute this Amendment and I further
certify that I understand that by signing this Amendment I am subject to the
penalties of perjury as set forth in Minnesota Statutes, Section 609.48, as if I
had signed this Amendment under oath.


                                                 /s/ William H. Spell, President

<PAGE>


                       STATEMENT OF DESIGNATION OF SHARES
                                       OF
                            BLACK HAWK HOLDINGS, INC.



         The undersigned hereby certifies that the resolutions set forth on
Exhibit A attached hereto were adopted by unanimous written action of the Board
of Directors of Black Hawk Holdings, Inc. effective as of September 23, 1993.

         I certify that I am authorized to execute this Statement and I further
certify that I understand that by signing this Statement I am subject to the
penalties of perjury as set forth in Minnesota Statutes, Section 609.48 as if I
had signed this Amendment under oath.



                                                 /s/ William H. Spell, President


<PAGE>


             WRITTEN ACTION IN LIEU OF MEETING OF BOARD OF DIRECTORS
                                       OF
                            BLACK HAWK HOLDINGS, INC.


         The undersigned, being all the members of the Board of Directors of
Black Hawk Holdings, Inc., a Minnesota corporation, acting pursuant to the
provisions of Minnesota Statutes, Section 302A.239, does hereby consent to the
adoption of and does hereby adopt the following resolutions, as of September 23,
1993:


                     Designation of Class of Preferred Stock

         WHEREAS, Article 3.1 of the Articles of Incorporation of this
corporation authorizes issuance of 20,000,000 shares of undesignated stock.

         WHEREAS, the Board of Directors of the corporation is authorized to
establish from the undesignated shares by resolution adopted and filed in the
manner provided by law, one or more classes or series of shares, to designate
each such class or series (which may include, but is not limited to, designation
as additional common shares), and to fix the relative rights and preferences of
each such class or series.

         NOW, THEREFORE, RESOLVED, that 2,000,000 shares of the corporation's
undesignated shares shall be designated as Series A 7% Convertible Preferred
Stock.

         FURTHER RESOLVED, that the rights and preferences of the Series A 7%
Convertible Preferred Stock (the "Series A Shares") shall be as follows:

                  (a) Dividends. The holders of the Series A Shares shall be
         entitled to receive out of any funds at any time legally available for
         the declaration of dividends, when and as declared by the Board of
         Directors, cash dividends at the rate of 7% of the liquidation payment
         provided in subparagraph (c) hereof per annum per share, such dividends
         to be payable quarterly each March 31, June 30, September 30 and
         December 31, provided that the first dividend shall not be payable
         until March 31, 1994. Dividends on shares of the Series A Shares shall
         on the date they are issued be cumulative, whether or not earned. In no
         event shall any dividend be paid or declared, nor shall any
         distribution be made on the corporation's Common Stock, nor shall any
         Common Stock be purchased, redeemed or otherwise acquired by the
         corporation for value, unless all dividends on the Series A Shares for
         all past periods shall have been paid or declared and a sum sufficient
         for the payment thereof set apart for payment.

                  (b) Voting. Each holder of Series A Shares will have the right
         to vote for all shareholder purposes the number of votes that is equal
         to the number of shares of Common Stock into which such holder's Series
         A Shares are then convertible, as hereinafter provided. Except as
         otherwise required by law, the holders of Series A Shares shall vote
         together with the holders of Common Stock as though the Series A Shares
         and Common Stock were a single class.

                  (c) Liquidation. In the event of any liquidation, dissolution
         or winding-up of the corporation, whether voluntary or involuntary,
         before any other distribution or payment is made to the holders of the
         Common Stock, the holders of Series A Shares will be entitled to
         receive, out of the assets of the corporation legally available
         therefor, a liquidation payment in cash per Series A Shares equal to
         $2.00 (subject to equitable adjustment in the event of any stock
         dividend, split, distribution or combination with respect to Series A
         Shares). In addition to such amount, a further amount equal to the
         dividends accumulated and unpaid thereon to the date of such
         liquidation payment will also be paid. At any time prior to the making
         of a liquidation payment, a holder of the Series A Shares may convert,
         at the holder's option, the holder's Series A shares into shares of
         Common Stock in accordance with the provisions set forth below. If upon

<PAGE>

         any liquidation or dissolution of the corporation, the assets available
         for distribution are insufficient to pay the holders of all outstanding
         Series A Shares such amount per Series A Share, the holders of Series A
         Shares will share pro rata in any such distribution of assets.

                  (d) Redemption. Neither the holders of Series A Shares nor the
         corporation will have the right to require the redemption of all or any
         part of the outstanding Series A Shares.

                  (e) Conversion Right. At the option of the holder thereof,
         each Series A Share will be convertible into a number of fully paid and
         nonassessable shares (calculated as to each conversion to the nearest
         1/100th of a share) of Common Stock of the corporation equal to the
         number obtained by dividing $2.00 by the Conversion Price (determined
         as hereinafter provided) in effect at the time of conversion. The
         initial price at which shares of Common Stock will be delivered upon
         conversion of a Series A Share (the "Conversion Price") will be $2.00
         per share of Common Stock and, accordingly, the initial conversion rate
         shall be one share of Common Stock for each Series A Share. The initial
         Conversion Price will be subject to adjustment from time to time in
         certain instances as hereinafter provided. The following provisions
         will govern such right of conversion:

                           (1) Certificates. In order to convert Series A Shares
                  into shares of Common Stock of the Corporation, the holder
                  thereof will surrender at the office of the corporation (or at
                  such other office or offices, if any, as the Board of
                  Directors may designate), the certificate or certificates
                  therefor, duly endorsed to the corporation or in blank.
                  Further, the holder will give written notice to the
                  corporation at such office that such holder elects to convert
                  such shares. Series A Shares will be deemed to have been
                  converted immediately prior to the close of business on the
                  day of the surrender of such shares for conversion as herein
                  provided. The person entitled to receive the shares of Common
                  Stock of the corporation issuable upon such conversion will be
                  treated for all purposes as the record holder of such shares
                  of Common Stock at such time. As promptly as practicable on or
                  after the conversion date, the corporation will issue and
                  deliver, or cause to be issued and delivered, at such office a
                  certificate or certificates for the number of shares of Common
                  Stock of the corporation issuable upon such conversion.

                           (2) Adjustment to Conversion Price. The Conversion
                  Price will be subject to adjustment from time to time as
                  hereinafter provided. Upon each adjustment of the Conversion
                  Price each holder of Series A Shares will thereafter be
                  entitled to receive the number of shares of Common Stock of
                  the corporation obtained by dividing $2.00 by the Conversion
                  Price after the adjustment.

                           (3) Subdivision of Shares. In case the corporation at
                  any time subdivides its outstanding shares of Common Stock
                  into a greater number of shares, whether by stock split, stock
                  dividend or otherwise, the Conversion Price in effect
                  immediately prior to such Subdivision will be proportionately
                  reduced. Conversely, in case the outstanding shares of Common
                  Stock of the corporation are combined into a smaller number of
                  shares, whether by reverse stock split or otherwise, the
                  Conversion Price in effect immediately prior to such
                  combination will be proportionately increased.

                           (4) Reorganizations; Mergers; Etc. If any capital
                  reorganization or reclassification of the capital stock of the
                  corporation, or consolidation or merger of the corporation
                  with another corporation, or the sale of all or substantially
                  all of its assets to another corporation is effected in such a
                  way that holders of Common Stock are entitled to receive
                  stock, securities or assets with respect to or in exchange for
                  Common Stock, then, as a condition of such reorganization,
                  reclassification, consolidation, merger or sale, lawful and

<PAGE>

                  adequate provision will be made whereby the holders of Series
                  A Shares will thereafter have the right to receive (upon the
                  basis and the terms and conditions specified herein) upon the
                  conversion of Series A Shares, such shares of stock,
                  securities or assets as may be issued or payable with respect
                  to or in exchange for a number of outstanding shares of such
                  Common Stock equal to the number of shares of such stock
                  immediately theretofore receivable upon the conversion of the
                  Series A Shares had such reorganization, reclassification,
                  consolidation, merger or sale not taken place. In any such
                  case, appropriate provisions will be made with respect to the
                  rights and interests of the holders of Series A Shares to the
                  end that the provisions hereof (including, without limitation,
                  provisions for adjustment of the Conversion Price and of the
                  number of shares receivable upon the conversion of Series A
                  Shares) are thereafter applicable, as nearly as may be in
                  relation to any shares of stock, securities or assets
                  thereafter receivable upon the conversion of Series A Shares.
                  The corporation will not effect any such consolidation, merger
                  or sale, unless prior to the consummation thereof the
                  successor corporation (if other than the corporation)
                  resulting from such consolidation or merger, or the
                  corporation purchasing such assets, assumes by written
                  instrument executed and mailed to the holders of Series A
                  Shares, at the last addresses of such holders appearing on the
                  books of the corporation, the obligation to deliver to such
                  holder such shares of stock, securities or assets as, in
                  accordance with the foregoing provisions, such holder may be
                  entitled to receive.

                           (5) Adjustment Notices. Upon any adjustment of the
                  Conversion Price, then and in each case the corporation will
                  give written notice thereof, by first class mail, postage
                  prepaid, addressed to the holders of Series A Shares at the
                  addresses of such holders as shown on the books of the
                  corporation. Such notice will state the Conversion Price
                  resulting from such adjustment and the increase or decrease,
                  if any, in the number of shares receivable at such price upon
                  the conversion of Series A Shares. Such notice will set forth
                  in reasonable detail the method of calculation and the facts
                  upon which such calculation is based.

                           (6)      Prior Notices of Certain Events.  In case at
                                    any time:

                                    (A) the corporation shall pay any dividends
                           payable in stock upon its shares of Common Stock, or
                           makes any distribution other than cash distributions
                           to the holders of its shares of Common Stock;

                                    (B) the corporation offers for subscription
                           pro rata to the holders of its Common Stock any
                           additional shares of stock of any class or other
                           rights;

                                    (C) there if any capital reorganization, or
                           reclassification of the capital stock of the
                           corporation, or consolidation or merger of the
                           corporation with, or sale of all or substantially all
                           of its assets to, another corporation; or

                                    (D)     there is a voluntary or involuntary
                           dissolution, liquidation, or winding up of the
                           corporation;

                  then, in any one or more of such cases, the corporation will
                  give written notice, by first class mail, postage prepaid,
                  addressed to the holders of Series A Shares at the addresses
                  of such holders as shown on the books of the corporation, of
                  the date on which (i) the books of the corporation will close
                  or a record will be taken for such dividend, distribution or
                  subscription rights, or (ii) such reorganization,
                  reclassification, consolidation, merger, sale, dissolution,
                  liquidation or winding up will take place, as the case may be.
                  Such notice will also specify the date as of which the holders
                  of Common Stock of record will participate in such dividend,
                  distribution or subscription rights, or will be entitled to
                  exchange their Common Stock for securities or other property
                  deliverable upon such reorganization, reclassification,
<PAGE>
                  consolidation, merger, sale, dissolution, liquidation, or
                  winding up, as the case may be. Such written notice will be
                  given at least 20 days prior to the action in question and not
                  less than 20 days prior to the record date or the date on
                  which the corporation's transfer books are closed in respect
                  thereto. At any time prior to such date the holders of the
                  Series A Shares, at their option, may convert their Series A
                  Shares into shares of Common Stock in accordance with the
                  terms hereof.

                           (7) Common Stock. As used in this Section 3.4(e), the
                  term "Common Stock" means and includes the corporation's
                  presently authorized shares of Common Stock. The term "Common
                  Stock" also includes any capital stock of any class of the
                  corporation hereafter authorized which is not limited to a
                  fixed amount or percentage in respect of the rights of the
                  holders thereof to participate in dividends or in the
                  distribution of assets upon the voluntary or involuntary
                  liquidation, dissolution or winding up of the corporation;
                  provided that the shares receivable pursuant to conversion of
                  Series A Shares will include shares designated as Common Stock
                  of the corporation as of the date of issuance of such Series A
                  Shares.

                           (8) Fractional Shares. The corporation shall not be
                  required to issue fractional shares of Common Stock upon
                  conversion of the Series A Shares. If the corporation does not
                  issue fractional shares, the corporation will pay a cash
                  adjustment in respect of such fraction that would otherwise be
                  issuable in an amount equal to the same fraction of the Market
                  Price per share of Common Stock as of the close of business on
                  the day of conversion. As used in this Section (e), "Market
                  Price" means the average of the high and low prices of the
                  Common Stock sales on all exchanges on which the Common Stock
                  may at the time be listed. If there will have been no sales on
                  any such exchange on any such day, the Market Price means the
                  average of the bid and asked prices at the end of such day. If
                  the Common Stock is not so listed, the Market Price means the
                  average of the bid and asked prices at the end of the day in
                  the over-the-counter market, in each case averaged over a
                  period of 20 consecutive business days prior to the date as of
                  which Market Price is being determined. If at any time the
                  Common Stock is not listed on any exchange or quoted in the
                  over-the-counter market, the Market Price will be deemed to be
                  the higher of (i) the book value thereof as determined by any
                  firm of independent public accountants of recognized standing,
                  selected by the Board of Directors of the corporation as of
                  the last day of any month ending within 60 days preceding the
                  date as of which the determination is to be made; or (ii) the
                  fair value thereof determined in good faith by the Board of
                  Directors of the corporation as of a date which is within 15
                  days of the date as of which the determination is to be made.

                  (f) Mandatory Conversion. The Series A Shares may be converted
         into shares of Common Stock of the corporation upon five days notice by
         the Board of Directors of the corporation to the holders of the Series
         A Shares at any time after the Common Stock of the corporation trades
         in a public market for 20 consecutive trading days at an average of the
         bid and asked prices greater than $4.00 per share. Each holder of the
         former Series A Shares so converted will be entitled to receive the
         full number of shares of Common Stock into which such Series A Shares
         held by such holder would have been converted if such holder had
         exercised such holder's conversion prior to the conversion and the
         corporation shall forthwith issue and deliver to such holder the
         certificate(s) therefor. Upon such conversion, each holder of Series A
         Shares shall forthwith surrender such holder's certificate(s) for such
         former Series A Shares.



<PAGE>


                               ARTICLES OF MERGER
                                       OF
                            BLACK HAWK HOLDINGS, INC.
                              (an Iowa corporation)
                                       and
                           LIBERTY CAPITAL CORPORATION
                              (an Iowa corporation)
                                      into
                                    BHH, INC.
                            (a Minnesota corporation)


         Pursuant to the provisions of Sections 302A.601-302A.651, Minnesota
Statutes, and Sections 496A.68-496A.74 of the Iowa Business Corporation Act, the
following Articles of Merger are executed on the date hereinafter set forth:

         FIRST: The names of the corporations which are parties to the merger
are Black Hawk Holdings, Inc., an Iowa corporation ("Black Hawk"), Liberty
Capital Corp., an Iowa corporation ("LCC"), and BHH, Inc., a Minnesota
corporation and the surviving corporation ("BHH").

         SECOND: Black Hawk has 8,543,095 outstanding common shares, 5,959,550
of which were voted in favor of the Plan of Merger attached hereto as Exhibit A
(the "Plan of Merger") and 7,470 of which were voted against the Plan of Merger.

         THIRD: LCC has 4,000 outstanding Class A common shares, all of which
were voted in favor of the Plan of Merger; and LCC has 888.4 outstanding Class B
common shares, 804.7 of which were voted in favor of the Plan of Merger and none
of which were voted against the Plan of Merger.

         FOURTH: BHH has 100 outstanding common shares, all of which were voted
in favor of the Plan of Merger.

         FIFTH: The merger shall be effective at the time at which these
Articles of Merger are filed with the Secretary of State of the State of
Minnesota.

         The undersigned swear that the foregoing is true and accurate and that
they have the authority to sign these Articles of Merger on behalf of Black
Hawk, LCC and BHH.

Dated:  October 6, 1989.

                                           BLACK HAWK HOLDINGS, INC.

                                           By:  /s/ Dobson West, President
                                           And:  /s/ David L. Schinke, Secretary

                                           LIBERTY CAPITAL CORP.

                                           By:  /s/ Dobson West, President
                                           And:  /s/ David L. Schinke, Secretary


                                           BHH, INC.

                                           By:  /s/ Dobson West, President and
                                                    Secretary


<PAGE>

STATE OF MINNESOTA         )
                           ) SS
COUNTY OF HENNEPIN         )

         On this 6th day of October, 1989, before me, a Notary Public,
personally appeared Dobson West and David L. Schinke, known to me to be the
President and Secretary, respectively, of Black Hawk Holdings, Inc., an Iowa
corporation, and acknowledged to me that they executed the same on behalf of
said corporation.

(Notarial Seal)                                              /s/ Robert K. Ranum
                                                             Notary Public

STATE OF MINNESOTA         )
                           ) SS
COUNTY OF HENNEPIN         )

         On this 6th day of October, 1989, before me, a Notary Public,
personally appeared Dobson West and David L. Schinke, known to me to be the
President and Secretary, respectively, of Liberty Capital Corp., an Iowa
corporation, and acknowledged to me that they executed the same on behalf of
said corporation.

(Notarial Seal)                                              /s/ Robert K. Ranum
                                                             Notary Public

STATE OF MINNESOTA         )
                           ) SS
COUNTY OF HENNEPIN         )

         On this 6th day of October, 1989, before me, a Notary Public,
personally appeared Dobson West, known to me to be the President and Secretary
of BHH, Inc., a Minnesota corporation, and acknowledged to me that he executed
the same on behalf of said corporation.

(Notarial Seal)                                              /s/ Robert K. Ranum
                                                             Notary Public

<PAGE>


                                    EXHIBIT A

                                 PLAN OF MERGER
                                       OF
                            BLACK HAWK HOLDINGS, INC.
                              (an Iowa corporation)
                                       AND
                              LIBERTY CAPITAL CORP.
                              (an Iowa corporation)
                                      INTO
                                    BHH, INC.
                            (a Minnesota corporation)


                                    ARTICLE I
                        NAMES OF CONSTITUENT CORPORATIONS
                            AND SURVIVING CORPORATION

         The names of the corporations involved in this merger are Black Hawk
Holdings, Inc., an Iowa corporation ("Black Hawk"), Liberty Capital Corp., an
Iowa corporation ("LCC") and BHH, Inc., a Minnesota corporation ("BHH"). Black
Hawk, LCC and BHH together may be referred to herein as the "Constituent
Corporations." The Constituent Corporations shall be combined by the merger of
Black Hawk and LCC into BHH, as the Surviving Corporation, pursuant to the
provisions of Minnesota Statutes, Sections 302A.601-302A.651 and Iowa Statutes,
Sections 496A.68-496A.74. The Surviving Corporation shall continue under the
name Black Hawk Holdings, Inc.

                                   ARTICLE II
                              TERMS AND CONDITIONS

         1. The merger shall be effective on the filing of Articles of Merger
with the Secretary of State of the State of Minnesota (the "Effective Time"). At
the Effective Time, the separate existence of Black Hawk and LCC shall cease and
BHH shall alone continue in existence as the Surviving Corporation. All
transactions on and after the Effective Time shall be deemed transactions of and
for the account of BHH as the Surviving Corporation.

         2. As of the Effective Time, BHH, as the Surviving Corporation, shall
succeed to and possess all the rights, privileges, powers, immunities,
franchises, concessions, certificates and authority, of a public as well as a
private nature, of each of the Constituent Corporations; and all property, real,
personal and mixed, and every interest therein, and all other choses in action
of or belonging to any of the Constituent Corporations on whatever account shall
be vested in BHH, as the Surviving Corporation, without any further act or deed;
and all property, assets, rights, privileges, powers, immunities, franchises,
concessions, certificates and authority shall be thereafter as effectively the
property of BHH, as the Surviving Corporation, as they were or would be of the
Constituent Corporations or any of them; and title to any real estate or any
interest therein vested by deed or otherwise in any of the Constituent
Corporations shall not revert or be in any way impaired by reason of this
merger.

         3. BHH, as the Surviving Corporation, shall be responsible and liable
for all the debts, liabilities, duties and obligations of each of the
Constituent Corporations, and as of the Effective Time all such debts,
liabilities, duties and obligations shall attach to BHH, as the Surviving
Corporation, and may be enforced against it to the same extent as if such debts,
liabilities, duties and obligations had been originally incurred or contracted
by it; and any claim existing or action or proceeding pending by or against any
of the Constituent Corporations may be prosecuted to judgment as if the merger
had not taken place; or BHH, as the Surviving Corporation, may be substituted in
its place; and neither the rights of creditors nor any liens upon property of
any of the Constituent Corporations shall be impaired by the merger.


<PAGE>

         4. If at any time after the Effective Time the Surviving Corporation
shall consider or be advised that any instruments of further assurance are
desirable in order to evidence the vesting in it of the title of any of the
Constituent Corporations to any of the property rights of the Constituent
Corporations, the appropriate officers or directors of Black Haw, LCC or BHH are
hereby authorized to execute, acknowledge and deliver all such instruments of
further assurance and to do all acts or things, in the name of Black Hawk, LCC
or BHH, as may be requisite or desirable to carry out the provisions of this
Plan of Merger.

         5. The Board of Directors of the Surviving Corporation shall consist of
the persons serving as directors of Black Hawk immediately prior to the
Effective Time. Such directors shall hold office, subject to the applicable
provisions of the Bylaws of the Surviving Corporation, until the expiration of
the term for which such director was elected and until such director's successor
shall have been duly elected and qualified.

         6. The officers of Black Hawk immediately prior to the Effective Time
shall be the officers of the Surviving Corporation until their respective
successors shall have been duly elected and qualified.

         7. The Articles of Incorporation and Bylaws of BHH in effect at the
Effective Time shall constitute the Articles of Incorporation and Bylaws of the
Surviving Corporation, except that Section 1.1 shall be amended in its entirety
to read as follows:

         "1.1)  The name of the corporation shall be Black Hawk Holdings, Inc."

                                   ARTICLE III
                      MANNER AND BASIS OF CONVERTING STOCK

         1. Each share of Common Stock of Black Hawk outstanding immediately
prior to the Effective Time shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into One (1) share of
Common Stock of BHH.

         2. Each share of Class A Common Stock of LCC outstanding immediately
prior to the Effective Time (other than shares owned of record by Black Hawk)
shall, by virtue of the Merger and without any action on the part of the holder
thereof, be converted into One Hundred Fifty (150) shares of Common Stock of
BHH. The shares of Class A Common Stock of LCC outstanding immediately prior to
the Effective Time which are owned of record by Black Hawk shall not be
converted into shares of BHH but shall, as of the Effective Time, be cancelled,
extinguished and cease to exist without the payment of any cash or the delivery
of any other consideration.

         3. Each share of Class B Common Stock of LCC outstanding immediately
prior to the Effective Time shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into One Hundred Fifty
(150) shares of Common Stock of BHH.

         4. The shares of Common Stock of BHH outstanding immediately prior to
the Effective Time shall, as of the Effective Time, be cancelled, extinguished
and cease to exist and the holder of such shares shall receive One Hundred
Dollars ($100) for such shares.


<PAGE>


                            ARTICLES OF INCORPORATION
                                       OF
                                    BHH, INC.


         The undersigned individual, being of full age, for the purpose of
forming a corporation under and pursuant to Chapter 302A of the Minnesota
Statutes, as amended, hereby adopts the following Articles of Incorporation.


                                ARTICLE 1 - NAME

         1.1)     The name of the corporation shall be BHH, Inc.


                          ARTICLE 2 - REGISTERED OFFICE

         2.1) The registered office of the corporation is located at 1010 First
Bank Place West, 120 South Sixth Street, Minneapolis, Minnesota 55402.


                            ARTICLE 3 - CAPITAL STOCK

         3.1) Authorized Shares; Establishment of Classes and Series. The
aggregate number of shares the corporation has authority to issue shall be
50,000,000 shares, which shall have a par value of $.01 per share solely for the
purpose of a statute or regulation imposing a tax or fee based upon the
capitalization of the corporation, and which shall consist of 30,000,000 common
shares and 20,000,000 undesignated shares. The Board of Directors of the
corporation is authorized to establish from the undesignated shares, by
resolution adopted and filed in the manner provided by law, one or more classes
or series of shares, to designate each such class or series (which may include
but is not limited to designation as additional common shares), and to fix the
relative rights and preferences of each such class or series.

         3.2) Issuance of Shares. The Board of Directors of the corporation is
authorized from time to time to accept subscriptions for, issue, sell and
deliver shares of any class or series of the corporation to such persons, at
such times and upon such terms and conditions as the Board shall determine,
valuing all nonmonetary consideration and establishing a price in money or other
consideration, or a minimum price, or a general formula or method by which the
price will be determined.

         3.3) Issuance of Rights to Purchase Shares. The Board of Directors is
further authorized from time to time to grant and issue rights to subscribe for,
purchase, exchange securities for, or convert securities into, shares of the
corporation of any class or series, and to fix the terms, provisions and
conditions of such rights, including the exchange or conversion basis or the
price at which such shares may be purchased or subscribed for.

         3.4) Issuance of Shares to Holders of Another Class or Series. The
Board is further authorized to issue shares of one class or series to holders of
that class or series or to holders of another class or series to effectuate
share dividends or splits.


                       ARTICLE 4 - RIGHTS OF SHAREHOLDERS

         4.1) No Preemptive Rights. No shares of any class or series of the
corporation shall entitle the holders to any preemptive rights to subscribe for
or purchase additional shares of that class or series or any other class or
series of the corporation now or hereafter authorized or issued.


<PAGE>

         4.2) No Cumulative Voting Rights. There shall be no cumulative voting
by the shareholders of the corporation.


                              ARTICLE 5 - DIRECTORS

         5.1) Written Action by Directors. Any action required or permitted to
be taken at a Board meeting may be taken by written action signed by all of the
directors.


          ARTICLE 6 - MERGER, EXCHANGE, SALE OF ASSETS AND DISSOLUTION

         6.1) Where approval of shareholders is required by law, the affirmative
vote of the holders of at least a majority of the voting power of all shares
entitled to vote shall be required to authorize the corporation (i) to merge
into or with one or more other corporations, (ii) to exchange its shares for
shares of one or more other corporations, (iii) to sell, lease, transfer or
otherwise dispose of all or substantially all of its property and assets,
including its good will, or (iv) to commence voluntary dissolution.


               ARTICLE 7 - AMENDMENT OF ARTICLES OF INCORPORATION

         7.1) After the issuance of shares by the corporation, any provision
contained in these Articles of Incorporation may be amended, altered, changed or
repealed by the affirmative vote of the holders of at least a majority of the
voting power of the shares present and entitled to vote at a duly held meeting
or such greater percentage as may be otherwise prescribed by the laws of the
State of Minnesota.


                  ARTICLE 8 - LIMITATION OF DIRECTOR LIABILITY

         8.1) To the fullest extent permitted by Chapter 302A, Minnesota
Statutes, as the same exists or may hereafter be amended, a director of this
corporation shall not be personally liable to the corporation or its
shareholders for monetary damages for breach of fiduciary duty as a director.


                            ARTICLE 9 - INCORPORATOR

         9.1) The name and mailing address of the incorporator are as follows:

                  Dobson West
                  1100 International Centre
                  900 Second Avenue South
                  Minneapolis, Minnesota  55042


         IN WITNESS WHEREOF, the undersigned incorporator has hereunto set his
hand this 23rd day of June, 1989.


                                                              /s/ Dobson West