<PAGE>
 
                                                                     Exhibit 3.3

                         CERTIFICATE OF DETERMINATION
                                      OF
                       CYPRESS FINANCIAL SERVICES, INC.

            Providing for the Powers, Designations, Preferences and
          Relative, Participating, Optional and Other Special Rights,
          and the Qualifications, Limitations or Restrictions Thereof
                          of Series A Preferred Stock

     The undersigned Farrest Hayden and Otto Lacayo hereby certify that:

     ONE:  They are the duly elected and acting President and Secretary,
respectively, of said Corporation.

     TWO:  The Board of Directors of the Corporation, pursuant to the provisions
of its Articles of Incorporation, duly adopted the following resolutions:

          RESOLVED, that there is hereby established a series of the
     Corporation's Preferred Stock, par value $0.001 per share (the "Preferred
     Stock"), and to the extent that the powers, designation, preferences and
     relative, participating, optional and other special rights, and the
     qualifications, limitations and restrictions thereof, of such series, are
     not fixed by the amended Articles of Incorporation, they are hereby fixed
     as set forth as Exhibit 1 below.

     THREE:  The undersigned certify that the authorized number of Preferred
Stock of the Corporation is 5,000,000 and that none of such shares are currently
outstanding.

     IN WITNESS WHEREOF, the undersigned have executed this certificate on this
30th day of September,1996.
                                         Cypress Financial Services, Inc.
 
                                         By:  /s/ Farrest Hayden
                                           ----------------------
                                         Farrest Hayden, President

 
                                         By:  /s/ Otto Lacayo
                                            -----------------
                                         Otto Lacayo, Secretary

     THE UNDERSIGNED, being the President and Secretary of CYPRESS FINANCIAL
SERVICES, INC. hereby declare and certify that the facts herein stated are true
and correct, and, accordingly, have each set their hand this 30th, day of
September, 1996.

                                    Cypress Financial Services, Inc.

                                    By: /s/ Farrest Hayden
                                        ------------------
                                    Farrest Hayden, President

                                    By: /s/ Otto Lacayo
                                        ---------------
                                    Otto Lacayo, Secretary

                                       1
<PAGE>
 
                                   EXHIBIT 1

                            TERMS AND CONDITIONS OF
                           SERIES A PREFERRED STOCK

     I.    Designation and Amount.
           ---------------------- 

           1.   The distinctive serial designation of this series of Preferred
Stock shall be "Series A Convertible Redeemable Preferred Stock" (hereinafter
called "Series A Preferred Stock"). Each share of Series A Preferred Stock shall
be identical in all respects with the other shares of Series A Preferred Stock.

           2.   The number of shares in Series A Preferred Stock shall initially
be 345,000 Shares in Series A Preferred Stock

     II.   Dividend Provisions.   Subject to the prior rights of any of
           -------------------                                         
those present or future class or series of preferred stock at the time
outstanding having prior rights to dividends, the holders of each share of
Series A Preferred Stock shall be entitled to receive, when and as declared by
the Board of Directors, out of the assets of the Corporation legally available
therefor, such dividends as each share of Common Stock into which such Series A
Preferred Stock could then be converted is entitled, and as may be declared from
time to time by the Board of Directors.

     III.  Liquidation Preference.
           ---------------------- 

           (a)  In the event of any liquidation, dissolution or winding up of
this Corporation, either voluntary or involuntary, the holders of Series A
Preferred Stock shall be entitled to receive, out of the assets of the
Corporation available for distribution to its shareholders, prior and in
preference to any distribution of any of the assets of this Corporation to the
holders of Common Stock by reason of their ownership thereof, an amount per
share equal to the sum of (i) $2.00 for each outstanding share of Series A
Preferred Stock (the "Original Series A Issue Price"). If upon the occurrence of
such event, the assets and funds thus distributed among the holders of the
Series A Preferred Stock shall be insufficient to permit the payment to such
holders of the full aforesaid preferential amounts, then, the entire assets and
funds of the Corporation legally available for distribution shall be distributed
ratably among the holders of the Series A Preferred Stock in proportion to the
amount of such stock owned by each such holder.

           (b)  After the distributions to the holders of Series A Preferred
Stock required in subparagraph (a) of this Section III above have been paid, the
remaining assets of the Corporation available for distribution to shareholders
shall be distributed ratably among the holders of Common Stock based on the
number of shares of Common Stock held by each such holder.

           (c)  (i) For purposes of this Section III, a liquidation, dissolution
or winding up of this Corporation shall be deemed to be occasioned by, or to
include, (A) the acquisition of the Corporation by another entity by means of
any transaction or series of related transactions (including, without
limitation, any reorganization, merger or consolidation but, excluding any
merger effected exclusively for the purpose of changing the domicile of the
Corporation); or (B) a sale of all or substantially all of the assets of the
Corporation (with the transaction set forth in (A) and (B) collectively referred
to herein as a "Corporate Transaction"), unless the Corporation's shareholders
of record as constituted immediately prior to such Corporate Transaction,
immediately after such

                                       2
<PAGE>
 
Corporate Transaction (by virtue of securities issued as consideration for the
Corporate Transaction or otherwise hold at least 50% of the voting power of the
surviving or acquiring entity.

          (ii)  In any of such events, if the consideration received by the
Corporation in a Corporate Transaction is other than cash, its value will be
deemed its fair market value.  Any securities shall be valued as follows:

               (A)  Securities not subject to investment letter or other similar
restrictions on free marketability covered by (B) below:

                    (1)  If traded on a securities exchange or through NASDAQ
National Market System, the value shall be deemed to be the average of the
closing prices of the securities on such exchange over the thirty (30) day
period ending three (3) days prior to the closing;

                    (2)  If actively traded over-the-counter, the value shall be
deemed to be the average of the closing bid or sale prices (whichever is
applicable) over the thirty (30) day period ending three (3) days prior to the
closing; and

                    (3)  If there is no active public market, the value shall be
the fair market value thereof, as mutually determined by the Corporation (acting
by its Board of Directors, but excluding any member of the Board of Directors
elected by the holders of Series A Preferred Stock) and the holders of at least
a majority of the voting power of all then outstanding shares of Series A
Preferred Stock.

               (B)  The method of valuation of securities subject to investment
letter or other restrictions on free marketability (other than restrictions
arising solely by virtue of a shareholder's status as an affiliate or former
affiliate) shall be to make an appropriate discount (as mutually determined by
the Corporation and the holders of at least a majority of the voting power of
all then outstanding shares of Series A Preferred Stock or which shall be based
upon the opinion of an independent investment banking firm retained by the
Corporation) from the market value determined as above in (A)(1), (2) or (3) to
reflect the approximate fair market value thereof, as mutually determined by the
Corporation and the holders of at least a majority of the voting power of all
then outstanding shares of Series A Preferred Stock.

          (iii)  The Corporation shall give each holder of record of Series A
Preferred Stock written notice of such impending transaction not later than
twenty (20) days prior to the shareholders' meeting called to approve such
transaction, or twenty (20) days prior to the closing of such transaction,
whichever is earlier, and shall also notify such holders in writing of the final
approval of such transaction. The first of such notices shall describe the
material terms and conditions of the impending transaction and the provisions of
this Section 2, and the Corporation shall thereafter give such holders prompt
notice of any material changes. The transaction shall in no event take place
sooner than twenty (20) days after the Corporation has given the first notice
provided for herein or sooner than ten (10) days after the Corporation has given
notice of any material changes provided for herein; provided, however, that such
periods may be shortened upon the written consent of the holders of Series A
Preferred Stock that are entitled to such notice rights or similar notice rights
and that represent at least a majority of the voting power of all then
outstanding shares of such Series A Preferred Stock.

                                       3
<PAGE>
 
     IV.  Redemption.
          ---------- 

          (a)  The Corporation may at its option, (subject to all of the
provision of this Article IV) redeem all or any portion of the Series A
Preferred Stock then outstanding, at the following redemption prices, payable in
cash:

               (i)   at any time prior to September 29, 1999, the redemption
price shall be two dollars ($2.00) per share, plus any accrued and unpaid
dividends as of the date set for such redemption;

               (ii)  at any time on or after September 29, 1999, the redemption
price shall be Two Dollars and Fifty Cents ($2.50) per share, plus any accrued
and unpaid dividends as of the date set for such redemption;

          (b)  At least 30 but not more than 60 days prior to the date fixed by
the Corporation's Board of Directors for redemption of any of the Series A
Preferred Stock ( the "Redemption Date"), written notice shall be hand delivered
or mailed, first class postage prepaid, to each holder of record of the Series A
Preferred Stock to be redeemed at the address last shown on the records of the
Corporation for such holder or given by the holder to the Corporation for the
purpose of notice, notifying such holder of the redemption to be effected and
specifying (a) the Redemption Date, (b) the redemption price, (c) the place or
places at which payment may be obtained, (d) the method used or to be used in
determining what shares are to be redeemed in the event that less than all share
are to be redeemed, (e) that on and after the Redemption Date dividends will
cease to accrue on such shares, (f) the then effective conversion rate of the
shares to be redeemed, (g) the date on which such holder's conversion rights as
to such shares terminate, and (h) calling upon such holder to surrender to the
Corporation, in the manner and at the place designated, his certificate or
certificates represent the shares to be redeemed (the "Redemption Notice").

          (c)  Any Redemption Notice that is mailed as herein provided shall be
conclusively presumed to have been duly given, whether or not the holder
receives it; and failure to give a Redemption Notice by mail to the holders of
any shares designated for redemption, or any defect in such Redemption Notice,
shall not effect the validity of the proceeding for the redemption of any other
share os Series A Preferred Stock.

          (d) Any holder of a share of Series A Preferred Stock shall have the
right, following the mailing of any Redemption Notice, to convert such shares of
Series A Preferred Stock into shares of Common Stock of the Corporation as
provided in Article V below provided only that such holder shall have given the
Corporation written notice of intent to so convert prior to the close of
business on the business day prior to the Redemption Date relating to such
share.

          (e) On or after the date fixed for redemption as stated in such
notice, each holder of the shares called for redemption shall surrender the
certitude or certificates evidencing such shares to the Corporation at the place
designated in such notice and shall thereupon be entitled to receive payment of
the redemption price.  If less than all the shares represented by any such
surrendered certificate or certificates are redeemed, a new certificate shall be
issued representing the unredeemed shares.

          (f) From and after the Redemption Date, all rights of the holders of
the Series A Preferred Stock so redeemed (except the right to receive the
redemption price without interest upon 

                                       4
<PAGE>
 
          (a) The Corporation may at its option, (subject to all of the 
provision of this Article IV) redeem all or any portion of the Series A 
Preferred Stock then outstanding, at the following redemption prices, payable in
cash:

              (i)  at any time prior to September 29, 1999, the redemption price
shall be two dollars ($2.00) per share, plus any accrued and unpaid dividends as
of the date set for such redemption;

              (ii) at any time on or after September 29, 1999, the redemption 
price shall be Two Dollars and Fifty Cents ($2.50) per share, plus any accrued 
and unpaid dividends as of the date set for such redemption;


          (b) At least 30 but not more than 60 than days prior to the date fixed
the Corporation's Board of Directors for redemption of any of the Series A
Preferred Stock (the "Redemption Date"), written notice shall be hand delivered
or mailed, first class postage prepaid, to each holder of record of the Series A
Preferred Stock to be redeemed at the address last shown on the records of the
Corporation for such holder or given by the holder to the Corporation for the
purpose of notice, notifying such holder of the redemption to be effected and
specifying (a) the Redemption Date, (b) the redemption price, (c) the place or
places at which payment may be obtained, (d) the method used or to be used in
determining what shares are to be redeemed in the event that less than all share
are to be redeemed, (e) that on and after the Redemption Date dividends will
cease to accrue on such shares, (f) the then effective conversion rate of the
shares to be redeemed, (g) the date on which such holder's conversion rights as
to such shares terminate, and (h) calling upon such holder to surrender to the
Corporation, in the manner and at the place designated, his certificate or
certificates represent the shares to be redeemed (the "Redemption Notice").

         (c) Any Redemption Notice that is mailed as herein provided shall be 
conclusively presumed to have been duly given, whether or not the holder 
receives it; and failure to give a Redemption Notice by mail to the holders of 
any shares designated for redemption, or any defect in such Redemption Notice, 
shall not effect the validity of the proceeding for the redemption of any other 
share os Series A Preferred Stock.

          (d) Any holder of a share of Series A Preferred Stock shall have the 
right, following the mailing of any Redemption Notice, to convert such shares of
Series A Preferred Stock into shares of Common Stock of the Corporation as 
provided in Article V below provided only that such holder shall have given the 
Corporation written notice of intent to so convert prior to the close of 
business on the business day prior to the Redemption Date relating to such 
share.
          (e) On or after the date fixed for redemption as stated in such 
notice, each holder of the shares called for redemption shall surrender the 
certitude or certificates evidencing such shares to the Corporation at the place
designated in such notice and shall thereupon be entitled to receive payment of 
the redemption price. If less than all the shares represented by any such 
surrendered certificate or certificates are redeemed, a new certificate shall be
issued representing the unredeemed shares.

          (f) From and after the Redemption Date, all rights of the holders of 
the Series A Preferred Stock so redeemed (expect the right to receive the 
redemption price without interest upon surrender of their certificate or 
certificates) shall terminate with respect to such shares, and such shares shall
not thereafter be transferred on the books of the Corporation or be deemed to be
outstanding for any purpose whatsoever, unless, (a) a given holder shall have 
given notice of intention to convert as
<PAGE>
 
provided in Article V, below or (b) there shall have been a default in payment
of the redemption price. Any shares of Series A Preferred Stock not redeemed,
shall remain outstanding and entitled to all the rights and preferences provided
herein.

          (g)  If fewer than all of the outstanding shares of Series A Preferred
Stock are to be redeemed, the Corporation shall designates those shares to be
redeemed pro rata or by lot or in such other manner as the Board of Directors
may determine. There shall be no mandatory redemption, retirement or sinking
fund obligation of the Corporation with respect to the Series A Preferred Stock.
In the event that the Corporation is in arrears on the payment of accrued and
unpaid dividends on the Series A Preferred Stock, it may not redeem any of the
then outstanding shares of the Series A Preferred Stock until all such accrued
and unpaid dividends have been paid in full on all outstanding shares of Series
A Preferred Stock, unless the holders of a majority of the then outstanding
shares of Series A Preferred Stock shall otherwise consent, in writing.

     V.  Conversion.  The holders of the Series A Preferred Stock shall
         ----------                                                    
have conversion rights as follows (the "Conversion Rights"):

          (a)  Right to Convert. Each share of Series A 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 this Corporation or any transfer agent
for such stock, into such number of fully paid and nonassessable shares of
Common Stock as is determined by dividing the Original Series A Issue Price by
the Conversion Price applicable to such share, determined as hereafter provided,
in effect on the date the certificate is surrendered for conversion. The initial
Conversion Price per share for shares of Series A Preferred Stock will be the
Original Series A Issue Price; provided, however, that the Conversion Price for
the Series A Preferred Stock shall be subject to adjustment as set forth in
subsections V(d) and V(e).

          (b)  Automatic Conversion.  Each share of Series A Preferred Stock
               --------------------                                         
shall automatically be converted into shares of Common Stock at the Conversion
Price at the time in effect for such Series A Preferred Stock immediately upon
the closing of a sale of the Corporation's Common Stock in a firm commitment,
underwritten public offering pursuant to an effective registration statement
under the Securities Act of 1933, as amended.

          (c)  Mechanics of Conversion.  Before any holder of Series A Preferred
               -----------------------                                          
Stock shall be entitled to convert the same into shares of Common Stock, he
shall surrender the certificate or certificates therefor, duly endorsed, at the
offices of this Corporation or of any transfer agent for the Series A Preferred
Stock, and shall give written notice to this Corporation at its principal
corporate office, of the election to convert the same and shall state therein
the number of shares of Preferred Stock to be converted and the name or names in
which the certificate or certificates for shares of Common Stock are to be
issued. This Corporation shall, as soon as practicable thereafter, issue and
deliver at such office to such holder of Series A 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 Series A Preferred
Stock to be converted, and the person or persons 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 offering of securities
registered pursuant to the Securities Act of 1933 as provided for in paragraph
V(b) above, the conversion may, at the option of any holder tendering Series A
Preferred Stock for conversion, be

                                       5
<PAGE>
 
conditioned upon the closing with the underwriters of the sale of securities
pursuant to such offering, in which event the person(s) entitled to receive the
Common Stock upon conversion of the Series A Preferred Stock shall not be deemed
to have converted such Series A Preferred Stock until immediately prior to the
closing of such sale of securities.

          (d)  Conversion Price Adjustments of Series A Preferred Stock for
               ------------------------------------------------------------
Certain Dilutive Issuances, Splits and Combinations.  The Conversion Price of
---------------------------------------------------                          
the Series A Preferred Stock shall be subject to adjustment from time to time as
follows:

               (i)  (A) If the Corporation shall issue, after the date upon
which any shares of Series A Preferred Stock were first issued (the "Purchase
Date" with respect to such series), any Additional Stock (as defined below)
without consideration or for a consideration per share less than the Conversion
Price for such series in effect immediately prior to the issuance of such
Additional Stock, the Conversion Price for such series in effect immediately
prior to each such issuance shall forthwith (except as otherwise provided in
this clause (i)) be adjusted to a price equal to the price paid per share
determined by multiplying the Conversion price 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 Stock plus the number of shares of
Common Stock which the aggregate consideration received by the Corporation for
the total number of shares of Additional Stock so issued would purchase at the
Conversion Price in effect immediately prior to such issuance, and (y) the
denominator of which shall be the number of shares of Common Stock outstanding
immediately prior to such issuance of Additional Stock plus the number of shares
of such Additional Stock so issued. For purposes of the above determination, the
number of shares of Common Stock outstanding immediately prior to such issuance
shall be calculated as if all shares of Series A preferred Stock had been fully
converted into shares of Common Stock immediately prior to such issuance at the
Conversion price then in effect.

                    (B)  No adjustment of the Conversion Price for the Series A
Preferred Stock shall be made in an amount less than one cent ($0.01) per share,
provided that any adjustments which are not required to be made by reason of
this sentence shall be carried forward and shall be either taken into account in
any subsequent adjustment made prior to three (3) years from the date of the
event giving rise to the adjustment being carried forward, or shall be made at
the end of three (3) years from the date of the event giving rise to the
adjustment being carried forward, and upon such adjustment the Conversion Price
shall be rounded up or down to the nearest cent. Except to the limited extent
provided for in subsections (E)(3) and (E)(4), no adjustment of such Conversion
Price pursuant to this subsection V(d)(i) shall have the effect of increasing
the Conversion Price above the Conversion Price in effect immediately prior to
such adjustment.

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

                    (D) In the case of the issuance of the Common Stock for a
consideration in whole or in part other than cash, the consideration other than
cash shall be deemed to be the fair value thereof as determined by the Board of
Directors irrespective of any accounting treatment.

                    (E) In the case of the issuance of options (whether before
on or after the applicable Purchase Date) of options to purchase or rights to
subscribe for Common Stock,

                                       6
<PAGE>
 
securities by their terms convertible into or exchangeable for Common Stock or
options to purchase or rights to subscribe for such convertible or exchangeable
securities, the following provisions shall apply for all purposes of this
subsection V(d)(i) and subsection V(d)(ii):

                    (1)  The aggregate maximum number of shares of Common Stock
deliverable upon exercise (assuming the satisfaction of any conditions to
exercisability, including without limitation, the passage of time, but without
taking into account potential antidilution adjustments) of such options to
purchase or rights to subscribe for Common Stock shall be deemed to have been
issued at the time such options or rights were issued and for a consideration
equal to the consideration (determined in the manner provided in subsections
V(d)(i)(C) and (d)(i)(D)), if any, received by the Corporation upon the issuance
of such options or rights plus the minimum exercise price provided in such
options or rights (without taking into account potential antidilution
adjustments) for the Common Stock covered thereby.

                    (2)  The aggregate maximum number of shares of Common Stock
deliverable upon conversion of or in exchange (assuming the satisfaction of any
conditions to convertibility or exchangeability, including, without limitation,
the passage of time, but without taking into account potential antidilution
adjustments) for any such convertible or exchangeable securities or upon the
exercise of options to purchase or rights to subscribe for such convertible or
exchangeable securities and subsequent conversion or exchange thereof shall be
deemed to have been issued at the time such securities were issued or such
options or rights were issued and for a consideration equal to the
consideration, if any, received by the Corporation for any such securities and
related options or rights (excluding any cash received on account of accrued
interest or accrued dividends), plus the minimum additional consideration, if
any, to be received by the Corporation (without taking into account potential
antidilution adjustments) upon the conversion or exchange of such securities or
the exercise of any related options or rights (the consideration in each case to
be determined in the manner provided in subsections V(d)(i)(C) and (d)(i)(D)).

                    (3)  In the event of any change in the number of shares of
Common Stock deliverable or in the consideration payable to this Corporation
upon exercise of such options or rights or upon conversion of or in exchange for
such convertible or exchangeable securities, including, but not limited to, a
change resulting from the antidilution provisions thereof, the Conversion Price
of the Series A Preferred Stock, to the extent in any way affected by or
computed using such options, rights or securities, shall be recomputed to
reflect such change, but no further adjustment shall be made for the actual
issuance of Common Stock or any payment of such consideration upon the exercise
of any such options or rights or the conversion or exchange of such securities.

                    (4)  Upon the expiration of any such options or rights, the
termination of any such rights to convert or exchange or the expiration of any
options or rights related to such convertible or exchangeable securities, the
Conversion Price of the Series A Preferred Stock, to the extent in any way
affected by or computed using such options, rights or securities or options or
rights related to such securities, shall be recomputed to reflect the issuance
of only the number of shares of Common Stock (and convertible or exchangeable
securities which remain in effect) actually issued upon the exercise of such
options or rights, upon the conversion or exchange of such securities or upon
the exercise of the options or rights related to such securities.

                    (5)  The number of shares of Common Stock deemed issued and
the consideration deemed paid therefor pursuant to subsections V(d)(i)(E)(1) and
(2) shall be

                                       7
<PAGE>
 
appropriately adjusted to reflect any change, termination or expiration of the
type described in either subsection V(d)(i)(E)(3) or (4).

          (ii)  "Additional Stock" shall mean any shares of Common Stock issued
(or deemed to have been issued pursuant to subsection V(d)(i)(E)) by this
Corporation after the Purchase Date other than:

               (A)  Upon conversion of the Series A Preferred Stock or as a
dividend or distribution thereon;

               (B)  Common Stock issued pursuant to a transaction described in
subsection V(d)(iii) hereof;

               (C)  shares of Common Stock issuable to or issued to employees,
consultants, directors or vendors (if in transactions with primarily non-
financing purposes) of this Corporation directly or pursuant to a stock option
plan or restricted stock plan approved by the Board of Directors of this
Corporation at any time when the total number of shares of Common Stock so
issuable or issued (and not repurchased at cost by the Corporation in connection
with the termination of employment) does not exceed Four Hundred and Fifty
Thousand (450,000) shares, in the aggregate.

               (D)  shares of Common Stock issued or issuable in a firm
commitment public offering in connection with which all outstanding shares of
Series A preferred Stock will be converted to Common Stock as provided in
Section V(b) above.

          (iii)  In the event the Corporation should at any time or from time to
time after the Purchase Date fix a record date for the effectuation of a split
or subdivision of the outstanding shares of Common Stock, receive a dividend or
other distribution payable in additional shares of Common Stock or other
securities or rights convertible into, or entitling the holder thereof to
receive directly or indirectly, additional shares of Common Stock (hereinafter
referred to as "Common Stock Equivalents") without payment of any consideration
by such holder for the additional shares of Common Stock or the Common Stock
Equivalents (including the additional shares of Common Stock issuable upon
conversion or exercise thereof), then, as of such record date (or the date of
such dividend distribution, split or subdivision if no record date is fixed),
the Conversion Price of the Series A Preferred Stock shall be appropriately
decreased so that the number of shares of Common Stock issuable on conversion of
each share of such series shall be increased in proportion to such increase of
the aggregate of shares of Common Stock outstanding and those issuable with
respect to such Common Stock Equivalents with the number of shares issuable with
respect to Common Stock Equivalents determined from time to time in the manner
provided for deemed issuances in subsection V(d)(i)(E).

          (iv)  If the number of shares of Common Stock outstanding at any time
after the Purchase Date is decreased by a combination of the outstanding shares
of Common Stock, then, following the record date of such combination, the
Conversion Price for the Series A Preferred Stock shall be appropriately
increased so that the number of shares of Common Stock issuable on conversion of
each share of such series shall be decreased in proportion to such decrease in
outstanding shares.

     (e)  Automatic Conversion Price Adjustment. Notwithstanding any
          --------------------------------------                    
adjustment provided for in subsection V(d), on or after September 29, 1999, the
conversion Price per share or shares of Series A Preferred Stock shall
automatically be reduced by 25% per share.

                                       8
<PAGE>
 
               (f)  Other Distributions. In the event this Corporation shall
                    -------------------
declare a distribution payable in securities of other persons, evidences of
indebtedness issued by this Corporation or other persons, assets (excluding cash
dividends) or options or rights not referred to in subsection 4(d)(iii), then,
in each such case for the purpose of this subsection 4(e), the holders of the
Series A Preferred Stock shall be entitled to a proportionate share of any such
distribution as though they were the holders of the number of shares of Common
Stock of the Corporation into which their shares of Series A Preferred Stock are
convertible as of the record date fixed for the determination of the holders of
Common Stock of the Corporation entitled to receive such distribution.

               (g)  Recapitalization. If at any time or from time to time there
                    -----------------   
shall be a recapitalization of the Common Stock (other than a subdivision,
combination or merger or sale of assets transaction provided for elsewhere in
this Section 4 or Section 2) provision shall be made so that the holders of the
Series A Preferred Stock shall thereafter be entitled to receive upon conversion
of the Series A Preferred Stock the number of shares of stock or other
securities or property of the Corporation or otherwise, to which a holder of
Common Stock deliverable upon conversion would have been entitled on such
recapitalization. In any such case, appropriate adjustment shall be made in the
application of the provisions of this Section 4 with respect to the rights of
the holders of the Series A Preferred Stock after the recapitalization to the
end that the provisions of this Section 4 (including adjustment of the
Conversion Price then in effect and the number of shares purchasable upon
conversion of the Series A Preferred Stock) shall be applicable after that event
as nearly equivalent as may be practicable.

               (h) No Impairment. This Corporation will not, by amendment of its
                   -------------     
Articles of Incorporation or through any reorganization, recapitalization,
transfer or assets, consolidation, merger, 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 this
Corporation, but will at all times in good faith assist in the carrying out of
all the provisions of this Section 4 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 Series A Preferred Stock against impairment.

               (i)  No Fractional Shares and Certificate as to Adjustments.
                    ------------------------------------------------------ 

                    (i)   No fractional shares shall be issued upon the
conversion of any share or shares of the Series A Preferred Stock, and the
number of shares of Common Stock to be issued shall be rounded to the nearest
whole share. Whether or not fractional shares are issuable upon such conversion
shall be determined on the basis of the total number of shares of Series A
Preferred Stock the holder is at the time converting into Common Stock and the
number of shares of Common Stock issuable upon such aggregate conversion.

                    (ii)  Upon the occurrence of each adjustment or readjustment
of the Conversion Price of Series A Preferred Stock pursuant to this Section 4,
this Corporation, at its expense, shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and prepare and furnish to each
holder of Series A Preferred Stock a certificate setting forth such adjustment
or readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. This Corporation shall, upon the written request at any
time of any holder of Series A Preferred Stock, furnish or cause to be furnished
to such holder a like certificate setting forth (A) such adjustment and
readjustment, (B) the Conversion Price for such series of Preferred Stock at the
time in effect, and (C) the number of shares of Common Stock and the amount, if
any, of other property which at the time would be received upon the conversion
of a share of Series A Preferred Stock.

                                       9
<PAGE>
 
               (j)  Notices of Record Date.  In the event of any taking by this
                    ----------------------                                     
Corporation of a record of the holder of any class of securities for the purpose
of determining the holders thereof who are entitled to receive any dividend
(other than a cash dividend) or other distribution, any right to subscribe for,
purchase or otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other right, this Corporation shall
mail to each holder of Series A Preferred Stock, at least twenty (20) days prior
to the date specified therein, a notice specifying the date on which any such
record is to be taken for the purpose of such dividend, distribution or right,
and the amount and character of such dividend, distribution or right.

               (k)  Reservation of Stock Issuable Upon Conversion. This
                    ---------------------------------------------            
Corporation shall at all times reserve and keep available out of its authorized
but unissued shares of Common Stock, solely for the purpose of effecting the
conversion of the shares of the Series A Preferred Stock, such number of its
share of Common Stock as shall from time to time be sufficient to effect the
conversion of all outstanding shares of the Series A Preferred Stock; and if at
any time the number of authorized but unissued shares of Common Stock shall not
be sufficient to effect the conversion of all then outstanding shares of the
Series A Preferred Stock, in addition to such other remedies as shall be
available to the holder of such Series A Preferred Stock, this Corporation will
take such corporate action as may, in the opinion of its counsel, be necessary
to increase its authorized but unissued shares of Common Stock to such number of
shares as shall be sufficient for such purposes, including without limitation,
engaging in best efforts to obtain the requisite shareholder approval of any
necessary amendment to these articles.

               (l)  Notices. Any notice required by the provisions of this
                    -------  
Section 4 to be given to the holders of shares of Series A Preferred Stock shall
be deemed given if deposited in the United States mail, postage prepaid, and
addressed to each holder of record at his address appearing on the books of this
Corporation.

          VI.  Voting Rights.  The holder of each share of Series A Preferred
               -------------                                                 
Stock shall have the right to one vote for each share of Common Stock into which
such Series A Preferred Stock could then be converted and with respect to such
vote, such holder shall have full voting rights and powers equal to the voting
rights and powers of the holders of Common Stock, and shall be entitled,
notwithstanding any provision hereof, to notice of any shareholders' meeting in
accordance with the bylaws of this Corporation, and shall be entitled to vote,
together with holders of Common Stock, with respect to any question upon which
holders of Common Stock have the right to vote.  Fractional votes shall not,
however, be permitted and any fractional voting rights available on an as-
converted basis (after aggregating all shares into which shares of Series A
Preferred Stock held by each holder could be converted) shall be rounded to the
nearest whole number (with one-half being rounded upward).

          VII.  Status of Converted or Redeemed Stock.  In the event any shares
                -------------------------------------                          
of Series A Preferred Stock redeemed, purchased or otherwise acquired by the
Corporation (including shares surrendered for conversion) shall be cancelled and
thereupon restored to the status of authorized but unissued shares of Preferred
Stock undesignated as to series.  The Articles of Incorporation of this
Corporation shall be appropriately amended to effect the corresponding reduction
in the Corporation's authorized capital stock.

          VIII.  Repurchase of Shares.  In connection with repurchases by this
                 --------------------                                         
Corporation of its Common Stock pursuant to its agreements with certain of the
holders thereof, Sections 502 and 503 of the California Corporations Code shall
not apply in whole or in part with respect to such repurchases.

                                       10
<PAGE>
 
          VIIII. No Denial of Rights. Notwithstanding any provision contained in
                 -------------------   
this Article III to the contrary, no denial or limitation of voting rights shall
be effective unless at the time one or more classes or series of outstanding
shares or debt securities, singly or in the aggregate, are entitled to full
voting rights, and no denial or limitation of dividend or liquidation rights
shall be effective unless at the time one or more classes or series of
outstanding shares, singly or in the aggregate, are entitled to unlimited
dividend and liquidation rights.

                                       11
<PAGE>
 
                                ACKNOWLEDGMENT


STATE OF CALIFORNIA )
                    )  ss.
COUNTY OF ORANGE    )

     On this  6th  day of December, 1996, before me, Kelly J. Woodward, a Notary
Public, personally appeared Farrest Hayden, personally known to me, and who
acknowledged to me that he is the President of Cypress Financial Services, Inc.
and that he executed the above instrument.

                                      /s/ Kelly J. Woodward
                                     ---------------------------------
                                     Kelly J. Woodward, Notary Public



STATE OF CALIFORNIA )
                    )  ss.
COUNTY OF ORANGE    )

     On this  6th  day of December, 1996, before me, Kelly J. Woodward, a Notary
Public, personally appeared Otto Lacayo, personally known to me, and who
acknowledged to me that he is the  Secretary of Cypress Financial Services, Inc.
and that he executed the above instrument.

                                      /s/ Kelly J. Woodward
                                     ---------------------------------
                                     Kelly J. Woodward, Notary Public

                                       12