CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS

                                       Of

                      Series E Convertible Preferred Stock

                                       Of

                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY

                   Pursuant to Section 16-10a-602 Utah Revised
                            Business Corporation Act


          We, Karl  Badger,  President  and  Stephen B.  Spencer,  Secretary  of
American Resources and Development Company, a corporation organized and existing
under  the Laws of the  State of Utah,  in  accordance  with the  provisions  of
Section 16-10a-602 thereof, DO HEREBY CERTIFY:

          That pursuant to the authority  conferred  upon the Board of Directors
by the  Certificate  of  Incorporation  of said  Corporation,  the said Board of
Directors  on May 20, 1997,  adopted a resolution  creating a series of Series E
Convertible  Preferred Stock and that the  designations  and amounts thereof and
the powers, preferences and relative, participating,  optional and other special
rights of the shares of such  series,  and the  qualifications,  limitations  or
restrictions thereof are as follows:

    1.    Designation of Series and Number of Shares.

          A series of Preferred Stock is hereby designated "Series E Convertible
Preferred Stock"  (hereinafter  referred to as "Series E Preferred Stock"),  and
the number of shares which shall constitute such Series shall be 500,000 shares,
which number of shares may be  increased or decreased  (but not below the number
of shares thereof then outstanding) from time to time by the Board of Directors.
Shares of Series E  Preferred  Stock shall be issued and become  outstanding  as
determined by the Board of Directors from time to time.

    2.    Dividends.

          No dividends  shall be payable on the Series E  Convertible  Preferred
Stock.

    3.    Conversion of Series E Preferred Stock into Common Stock.

          The holders of record of Series E Preferred Stock shall have the right
to convert such shares into shares of common stock of the  Corporation  ("Common
Stock") in accordance with and subject to the following terms and conditions:

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          (a) 25,400  shares of Series E Preferred  Stock  shall be  immediately
convertible into 25,400 shares of Common Stock.

          (b)  After  June  30,  1999  and  before   September  30,  1999,  each
outstanding share of Series E Preferred Stock may be convertible into fully paid
and non-assessable shares of Common Stock.

               The  aggregate  number of  shares of Common Stock  into which all
500,000 Series E Preferred  Stock shall be converted  shall be that number equal
to 500,000  divided by $5,000,000  multiplied by the number that is equal to the
net pre-tax  income of Finally  Communities,  Inc. for the two year period ended
March 31, 1999 multiplied by ten and divided by the Average Trading Price of the
Common Stock  (hereinafter the "Aggregate  Number").  Each outstanding  share of
Series E Preferred  Stock is convertible  into the number of shares equal to the
Aggregate Number minus 25,400 divided by 474,600.

          (c) Within 100 days of the end of the Corporation's  fiscal year dated
March 31, 1999,  the  Corporation  shall give notice to all holders of record of
the Series E Preferred  Stock of their right to convert and the notice shall set
forth the  calculation  by the  Corporation  of the number of Common  Stock into
which the Series E Preferred Stock is  convertible.  In the event the holders of
the Series E Preferred  Stock question the calculation of the  Corporation,  the
determination  of the  Corporation's  independent  auditor  shall be  final  and
binding on the holders of the Series E Preferred Stock.

          (d) In the event all shares of Series E Preferred  Stock have not been
converted into Common Stock by October 15, 1999 the same shall be  automatically
cancelled and shall become null and void.

          (e) In order to receive  share  certificates  representing  the Common
Stock into which the Series E Preferred Stock was converted,  the holder thereof
shall surrender to the Corporation the certificate or certificates  for Series E
Preferred  Stock (or, in the case of a lost or destroyed  certificate,  proof of
loss  or  destruction  and  indemnity  as  required  by  the  Corporation).  The
Corporation will, as soon as practicable thereafter,  deliver to such holder, or
to his nominee or nominees, a certificate or certificates for the number of full
shares of Common Stock to which he shall be entitled as aforesaid, together with
an amount in cash with respect to any fractional share, as provided in Paragraph
6.

          (f) The conversion rate provided in clause (ii) above shall be subject
to  adjustment  as set  forth  in  Paragraph  6.  Upon  each  adjustment  of the
conversion  rate a written  instrument  signed by an officer of the  Corporation
setting forth the  adjustment  and  accompanied  by an opinion of an independent
public  accountant or accountants (who may be the independent  public accountant
or accountants then acting as auditor or auditors for the  Corporation)  setting
forth the computation of the adjustment and a summary of the facts upon which it

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is  based,  together  with a copy of the  resolutions,  if any,  of the Board of
Directors  passed in  connection  therewith,  shall  forthwith be filed with the
Transfer  Agent  for the  Series  E  Preferred  Stock  and  made  available  for
inspection by stockholders, and any adjustment so evidenced, made in good faith,
shall be binding upon all stockholders and the Corporation.

          (g) All shares of the Series E  Preferred  Stock which shall have been
converted into Common Stock as herein provided shall not be reissued as Series E
Preferred  Stock but shall have the status of authorized and unissued  shares of
Preferred Stock undesignated as to series.

    4.    Priority of Series E Preferred Stock on Dissolution.

          In the event of any  dissolution,  liquidation  or  winding-up  of the
affairs of the Corporation,  whether voluntary or involuntary,  after payment or
provision for payment of the debts and other liabilities of the Corporation, the
holders of Series E Preferred Stock shall be entitled to receive, out of the net
assets  of the  Corporation,  an  amount  equal to $5.00  per share and no more,
before any distribution shall be made to the holders of Common Stock;  provided,
however,  that no such  distribution  shall be made to the  holders  of Series E
Preferred Stock unless at the same time a like proportionate  distribution shall
be  made,   ratably  in  proportion  to  the  respective  amounts  payable  upon
dissolution, liquidation or winding-up of the affairs of the Corporation, to the
holders of all  shares of  Preferred  Stock of all other  series,  if any,  then
outstanding and ranking as to distribution of assets on a parity with the Series
E Preferred Stock.  Neither the merger or consolidation of the Corporation,  nor
the sale, lease or conveyance of all or a part of its assets, shall be deemed to
be a liquidation,  dissolution  or winding-up of the affairs of the  Corporation
within the meaning hereof.

    5.    Voting Powers of Series E Preferred Stock.

          (a) The  holders  of Series E  Preferred  Stock  shall  have no voting
rights except as set forth in Paragraph 5(b).

          (b) Without the affirmative  vote or written consent of the holders of
at least one-half of the aggregate  number of shares of Series E Preferred Stock
outstanding, unless the vote or consent of a greater number of shares shall then
be  required by law,  the  Corporation  shall not, by action of the  Articles of
Incorporation,  or by an amendment to the Articles of Incorporation or by merger
or  consolidation  or in any other  manner  change the  rights,  preferences  or
limitations with respect to the Series E Preferred Stock in any material respect
prejudicial to the holders thereof.

    6.    Adjustment of Conversion Rate.

          The rate at which  each  share of  Series  E  Preferred  Stock  may be
converted into Common Stock  (hereinafter  called the conversion  rate) shall be
subject to the following adjustments:

          (a) While any such  shares of the Series E  Preferred  Stock  shall be
outstanding,  in case this Corporation shall subdivide the outstanding shares of
Common  Stock into a greater  number of shares of Common  Stock,  or combine the

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outstanding  shares of Common  Stock  into a smaller  number of shares of Common
Stock,  the conversion rate in effect  immediately  prior to such subdivision or
combination,  as  the  case  may  be,  shall  be  proportionately  increased  or
decreased,  as the case  may  require,  such  increase  or  decrease  to  become
effective  immediately  after the opening of business on the date  following the
day upon which such subdivision or combination becomes effective.

          (b) Any  dividend to holders of Common Stock in shares of Common Stock
equal in  number to  twenty-five  percent  (25%) or more of the total  number of
shares of the Common Stock  outstanding at the closing of business on the record
date fixed for the  determination of the stockholders  entitled to such dividend
shall be considered a subdivision of the outstanding shares of Common Stock (and
not a dividend  under clause (c) of this  Paragraph 6) and an  adjustment in the
conversion rate shall be made in accordance with the provisions of clause (a) of
this Paragraph 6 with respect to the subdivision of outstanding shares of Common
Stock.

          (c) If this  Corporation  shall  declare and pay to the holders of the
Common  Stock a  dividend  in  Common  Stock,  the  conversion  rate  in  effect
immediately  prior  to the  record  date  fixed  for  the  determination  of the
stockholders entitled to such dividend shall be increased proportionately to the
amount  of  Common  Stock  so paid as a  dividend,  such  adjustment  to  become
effective  immediately  after the opening of business on the day  following  the
record date for the determination of the Corporation's  stockholders entitled to
receive such dividend.  If the Corporation  shall declare and pay to the holders
of the Common Stock a dividend in any securities of the Corporation  convertible
into Common Stock,  such dividend shall,  for all purposes of clause (c) of this
Paragraph  6, be deemed a  dividend  of the  maximum  number of shares of Common
Stock into which such securities are convertible,  but shall no longer be deemed
such a dividend in Common  Stock  whenever  and to the extent that such right of
conversion shall terminate without having been exercised.

          (d) No  adjustment of the  conversion  rate shall be made by reason of
the issuance of common stock in exchange for cash, property or services.

          (e) In case  the  Corporation  shall  be  recapitalized  or  shall  be
consolidated  with or merged  into,  or shall sell or transfer  its property and
assets as, or substantially as, an entirety,  proper provisions shall be made as
part of the  terms  of such  recapitalization,  consolidation,  merger,  sale or
transfer  whereby  the  holder of any  shares of the  Series E  Preferred  Stock
outstanding immediately prior to such event shall thereafter be entitled to such
conversion  rights with respect to securities of the corporation  resulting from
such  recapitalization,  consolidation  or  merger,  or to  which  such  sale or
transfer shall be made, as shall be  substantially  equivalent to the conversion
rights provided for herein with respect to such Series E Preferred Stock.

          (f) No  fraction  of a share of Common  Stock shall be issued upon any
conversion but, in lieu thereof,  there shall be paid an amount in cash equal to
the same fraction of the market value of a full share of Common Stock.

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<PAGE>

    7.    Other Rights.

          Except as  provided  by law,  the shares of Series E  Preferred  Stock
shall  not  have  any  designation,  preferences,  or  relative,  participating,
optional or other special rights, or qualifications, limitations or restrictions
thereof,  other than as set forth herein and in the Articles of Incorporation of
this Corporation.  The Series E Preferred Stock shall not be assignable  without
the prior written consent of the Corporation.

    8.    Definitions.

          (a) As used in this document "net income" shall mean all revenues less
all expenses before interest and tax.

          (b) "Average  trading price" or "market value" shall be the average of
the daily closing prices for the 20 consecutive  trading days ending on the last
full trading day on the exchange or market specified in the succeeding  sentence
prior to the determination date. The closing price for any day shall be the last
reported  sale price or, in case no such  reported sale takes place on such day,
the average of the  closing bid and asked  prices for such day, in each case (1)
on the  principal  national  securities  exchange  on which the shares of Common
Stock are listed or to which such  shares are  admitted to trading or (2) if the
Common  Stock is not listed or  admitted  to  trading  on a national  securities
exchange, in the over-the-counter market as reported by NASDAQ or any comparable
system or (3) if the  Common  Stock is not  listed  on  NASDAQ  or a  comparable
system, as furnished by two members of NASDAQ selected from time to time in good
faith by the Board of  Directors of the  Corporation  for that  purpose.  In the
absence of all of the  foregoing,  or if for any other reason the current market
price per share cannot be  determined  pursuant to the  foregoing  provisions of
this  paragraph,  the  current  market  price per share shall be the fair market
value  thereof  as  determined  in good faith by the Board of  Directors  of the
Corporation.

          IN WITNESS  WHEREOF,  we have executed and subscribed this Certificate
of  Designations  and do affirm the foregoing as true under penalties of perjury
this 8th day of July, 1997.

ATTEST:


-----------------------------                     -----------------------------
Stephen B. Spencer, Secretary                     Karl F. Badger, President

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