<PAGE>
 
                     SERIES A CONVERTIBLE PREFERRED STOCK


     100,000 shares of the Preferred Stock shall be designated "Series A
Convertible Preferred Stock" and shall have the powers, preferred rights,
qualifications, limitations and restrictions as follows:

          (i)    Dividends. The Series A Convertible Preferred Stock shall not
                 ---------                             
be entitled to receive any dividends.

          (ii)   Redemption.
                 ---------- 

                 (a) Optional Redemption. The Series A Convertible Preferred
                     -------------------                             
Stock shall be redeemable, in whole or in part, at the option of the
Corporation, at any time after five years from the date of issue or from time to
time thereafter, at a redemption price equal to $5.00 per share.

                 (b) Selection of Shares to be Redeemed. In the case of a
                     ----------------------------------              
redemption of only a part of the outstanding shares of a class of Preferred
Stock, all shares of the class of Preferred Stock to be redeemed shall be
selected pro rata and there shall be so redeemed from each registered holder in
whole shares, as nearly as practicable to the nearest share, that proportion of
all of the shares to be redeemed which the number of shares held of record by
such holder bears to the total number of shares of such class of Preferred
Stock at the time outstanding.

          (iii)  Liquidation. Upon dissolution, liquidation or winding up of the
                 -----------                                              
Corporation, the holders of the Series A Convertible Preferred Stock shall be
entitled to receive, before any distribution is made to the holders of shares of
Common Stock of the Corporation, the sum of $5.00 per share.

          (iv)   Voting. Each share of Series A Convertible Preferred Stock
                 ------                                            
shall entitle the holder thereof to twenty (20) votes on all matters as to which
shareholders of the Corporation have a right to vote as provided in the
Certificate of Incorporation and/or under applicable law. On all matters
presented to a vote of shareholders of the Corporation, the holders of the
Series A Convertible Preferred Stock and Common Stock shall vote together as a
single class.

          (v)    Conversion.
                 ---------- 

                 (a) Subject to the provision for adjustment hereinafter set
forth, shares of Series A Convertible Preferred Stock shall be convertible at
any time at the option of the holder thereof, upon surrender to the transfer
agent for the Series A Convertible Preferred Stock of the certificate or
certificates evidencing the shares so to be converted, into fully paid and
nonassessable shares of Common Stock of the Corporation, as follows:

                 (1) The initial conversion rate shall be ten (10) shares of
Common Stock for each share of Series A Convertible Preferred Stock so
surrendered for conversion.
<PAGE>
 
                 (2) In the event that the Corporation has consolidated net
income, before income taxes and any extraordinary income or loss, of $1 million
in any of the five (5) fiscal years beginning after the fiscal year ending
September 30, 1997 the conversion rate shall be twenty (20) shares of Common
Stock for each share of Series A Convertible Preferred Stock so surrendered for
conversion.

                 (3) In the event that the Corporation does not meet the
earnings requirement of the foregoing subsection but has cumulative consolidated
net income before income taxes and extraordinary income or loss of $1 million in
the five (5) fiscal years ending September 30, 2002, then the conversion rate
shall be fifteen (15) shares of Common Stock for each share of Series A.
Convertible Preferred Stock so surrendered for conversion.

                 (4) In the event that the conversion rate does not meet the
earnings requirements of the foregoing two subsections, then, in that event,
five (5) years after the date of issue the conversion rate shall be ten (10)
shares of Common Stock for each share of Series A Convertible Preferred Stock so
surrendered for conversion.

                 The right to convert shares of the Series A Convertible
Preferred Stock called for redemption shall terminate thirty (30) days after the
notice of redemption has been mailed to the registered holders of the Series A
Convertible Preferred Stock by certified mail to the address of record of the
holders of such shares.

          (b)    The number of shares of Common Stock into which such shares of
Series A Convertible Preferred Stock may be converted shall be subject to
adjustment as follows:

                 (1) In the event of a stock split, reverse stock split, stock
dividend, reorganization or recapitalization affecting the number of shares of
outstanding Common Stock, then in each such case, the number of shares of Common
Stock into which shares of Series A Convertible Preferred Stock may be converted
shall be equitably adjusted so as not to impair the conversion rights of the
Series B Convertible Preferred Stock.

                 (2) In the event the Corporation determines to offer rights to
the holders of the outstanding Common Stock entitling them to subscribe for
additional shares of Common Stock or securities convertible into Common Stock,
the Corporation shall also extend such rights to the holders of Series A
Convertible Preferred Stock. There shall be no adjustment in the conversion rate
by virtue of such rights offering or by virtue of any sale of any class of
securities of the Corporation.

                 (3) No fractional share of Common Stock shall be issued upon
any conversion or redemption but, in lieu thereof, there shall be paid to the
holder of the shares of Series A
<PAGE>
 
Convertible Preferred Stock surrendered for conversion as soon as practicable
after the date such shares are surrendered for conversion, an amount in cash
equal to the same fraction of the current market price per share of Common
Stock, unless the Board of Directors shall determine to adjust fractional shares
in some other manner.

                 (4) No adjustment in the number of shares of Common Stock into
which each share of Series A Convertible Preferred Stock is convertible or
redeemable shall be required unless such adjustment would require an increase or
decrease of at least 1/25th of a share in the number of shares of Common Stock
into which such share is then convertible; provided, however, that any
adjustments which by reason of this subparagraph are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.

                 (5) Whenever any adjustment is required in the shares into
which each share of Series A Convertible Preferred Stock is convertible or
redeemable, the Corporation shall forthwith (i) file with the transfer agent, if
any, for the Series A Convertible Preferred Stock a statement describing in
reasonable detail the adjustment and the method of calculation used and (ii)
cause a copy of such notice to be mailed to the holders of record of the shares
of Series A Convertible Preferred Stock.

          (c)    The Corporation shall at all times reserve and keep available
out of its authorized but unissued shares the full number of shares into which
all shares of Series A Convertible Preferred Stock from time to time outstanding
are convertible or redeemable.

          (d)    The Corporation will pay any and all issue and other taxes that
may be payable in respect of any issue or delivery of shares of Common Stock on
conversion or redemption of shares of Series A Convertible Preferred Stock. The
Corporation shall not, however, be required to pay any tax which may be payable
in respect of any transfer involved in the issue and delivery of Common Stock in
a name other than that in which the shares of Series A Convertible Preferred
Stock is converted were registered, and no such issue or delivery shall be made
unless and until the person requesting such issue has paid to the Corporation
the amount of any such tax, or has established, to the satisfaction of the
Corporation, that such tax has been paid.
<PAGE>
 
                     SERIES C CONVERTIBLE PREFERRED STOCK


     250,000 shares of the Preferred Stock shall be designated "Series C
Convertible Preferred Stock" and shall have the powers, preferred rights,
qualifications, limitations and restrictions as follows:

          (i)    Dividends. The Series C Convertible Preferred Stock shall not
                 ---------                                  
be entitled to receive any dividends.

          (ii)   Redemption.
                 ---------- 

                 (a) Optional Redemption. The Series C Convertible Preferred
                     -------------------        
Stock shall be redeemable, in whole or in part, at the option of the
Corporation, at any time or from time to time, at a redemption price equal to
$5.00 per share.

                 (b) Selection of Shares to be Redeemed. In the case of a
                     ----------------------------------  
redemption of only a part of the outstanding shares of a class of Preferred
Stock, all shares of the class of Preferred Stock to be redeemed shall be
selected pro rata and there shall be so redeemed from each registered holder in
whole shares, as nearly as practicable to the nearest share, that proportion of
all of the shares to be redeemed which the number of shares held of record by
such holder bears to the total number of shares of such class of Preferred Stock
at the time outstanding.

          (iii)  Liquidation. Upon dissolution, liquidation or winding up of the
                 -----------                                 
Corporation, the holders of the Series C Convertible Preferred Stock shall be
entitled to receive, before any distribution is made to the holders of shares of
Common Stock of the Corporation, the sum of $5.00 per share.

          (iv)   Voting. In each share of Series C Convertible Preferred Stock
                 ------
shall entitle the holder thereof to five (5) votes on all matters as to which
shareholders of the Corporation have a right to vote as provided in the
Certificate of Incorporation and/or under applicable law. On all matters
presented to a vote of shareholders of the Corporation, the holders of the
Series C Convertible Preferred Stock and Common Stock shall vote together as a
single class.

          (v)    Conversion.
                 ---------- 

                 (a) Subject to the provisions for adjustment hereinafter set
forth, shares of Series C Convertible Preferred Stock shall be convertible at
any time at the option of the holder thereof, upon surrender to the transfer
agent for the Series C Convertible Preferred Stock of the certificate or
certificates evidencing the shares so to be converted, into fully paid and
nonassessable shares of Common Stock of the Corporation at the rate of five (5)
shares of Common Stock for each share of Series C Convertible Preferred Stock so
surrendered for conversion. The right to convert shares of the Series C
Convertible Preferred Stock called for redemption shall terminate thirty (30)
days after the notice of redemption has been mailed to the registered holders of
the Series C Convertible Preferred Stock by certified mail to the
<PAGE>
 
address of record of the holders of such shares.

          (b)    The number of shares of Common Stock into which such shares of
Series C Convertible Preferred Stock may be converted shall be subject to
adjustment as follows:

                 (1) In the event of a stock split, reverse stock split, stock
dividend, reorganization or recapitalization affecting the number of shares of
outstanding Common Stock, then in each such case, the number of shares of Common
Stock into which shares of Series C Convertible Preferred Stock may be converted
shall be equitably adjusted so as not to impair the conversion rights of the
Series B Convertible Preferred Stock.

                 (2) In the event the Corporation determines to offer rights to
the holders of the outstanding Common Stock entitling them to subscribe for
additional shares of Common Stock or securities convertible into Common Stock,
the Corporation shall also extend such rights to the holders of Series C
Convertible Preferred Stock. There shall be no adjustment in the conversion rate
by virtue of such rights offering or by virtue of any sale of any class of
securities of the Corporation.

                 (3) No fractional share of Common Stock shall be issued upon
any conversion or redemption but, in lieu thereof, there shall be paid to the
holder of the shares of Series C Convertible Preferred Stock surrendered for
conversion as soon as practicable after the date such shares are surrendered for
conversion, an amount in cash equal to the same fraction of the current market
price per share of Common Stock, unless the Board of Directors shall determine
to adjust fractional shares in some other manner.

                 (4) No adjustment in the number of shares of Common Stock into
which each share of Series C Convertible Preferred Stock is convertible or
redeemable shall be required unless such adjustment would require an increase or
decrease of at least 1/25th of a share in the number of shares of Common Stock
into which such share is then convertible; provided, however, that any
adjustments which by reason of this subparagraph are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.

                 (5) Whenever any adjustment is required in the shares into
which each share of Series C Convertible Preferred Stock is convertible or
redeemable, the Corporation shall forthwith (i) file with the transfer agent, if
any, for the Series C Convertible Preferred Stock a statement describing in
reasonable detail the adjustment and the method of calculation used and (ii)
cause a copy of such notice to be mailed to the holders of record of the shares
of Series C Convertible Preferred Stock.

          (c)    The Corporation shall at all times reserve and keep available
out of its authorized but unissued shares the full number of shares into which
all shares of Series C Convertible Preferred Stock from time to time outstanding
are convertible or redeemable.

          (d)    The Corporation will pay any and all issue and other 
<PAGE>
 
taxes that may be payable in respect of any issue or delivery of shares of
Common Stock on conversion or redemption of shares of Series C Convertible
Preferred Stock. The Corporation shall not, however, be required to pay any tax
which may be payable in respect of any transfer involved in the issue and
delivery of Common Stock in a name of other than that in which the shares of
Series C Convertible Preferred Stock is converted were registered, and no such
issue of delivery shall be made unless and until the person requesting such
issue has paid to the Corporation the amount of any such tax, or has
established, to the satisfaction of the Corporation, that such tax has been
paid.