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                                                                     EXHIBIT 4.2


                    CERTIFICATE OF DESIGNATIONS, PREFERENCES
                       AND RELATIVE RIGHTS AND LIMITATIONS
                                       OF
                            SERIES A PREFERRED STOCK
                                       OF
                              RENTERS CHOICE, INC.

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                             Pursuant to Section 151
             of the General Corporation Law of the State of Delaware

                               ------------------

     Renters Choice, Inc., a corporation organized and existing under the
General Corporation Law of the State of Delaware, does by its Assistant
Secretary hereby certify that pursuant to the provisions of Section 151 of the
General Corporation Law of the State of Delaware, its Board of Directors, at a
meeting held on August 4, 1998, duly adopted the following resolution
establishing, the rights, preferences, privileges and restrictions of a series
of preferred stock of the corporation which resolution remains in full force and
effect as of the date hereof:

     "WHEREAS, the Board of Directors of Renters Choice, Inc. (the
"Corporation") is authorized, within the limitations and restrictions stated in
its Amended and Restated Certificate of Incorporation (the "Certificate of
Incorporation"), to fix by resolution or resolutions adopted prior to the
issuance of any shares of each particular series of preferred stock and
incorporated in a certificate of designation filed with the Secretary of State
of the State of Delaware, the designation, powers (including voting powers and
voting rights), preferences and relative, participating, optional or other
special rights, and the qualifications, limitations or restrictions thereof, as
may be fixed from time to time by the Board of the Directors in the resolution
or resolutions adopted pursuant to the authority granted under the Certificate
of Incorporation; and


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     WHEREAS, it is the desire of the Board of Directors of the Corporation,
pursuant to its authority as aforesaid, to authorize and fix the terms of a
series of preferred stock and the number of shares constituting such series;

     NOW, THEREFORE, BE IT RESOLVED, that pursuant to Paragraph Fourth, Section
1 of the Certificate of Incorporation, there is hereby authorized such series of
preferred stock on the terms and with the provisions herein set forth:


 1.      Certain Definitions.

         Unless the context otherwise requires, the terms defined in this
Section 1 shall have, for all purposes of this resolution, the meanings
specified (with terms defined in the singular having comparable meanings when
used in the plural).

         Affiliate. The term "Affiliate" shall mean, with respect to any Person,
any other Person directly or indirectly controlling or controlled by or under
direct or indirect common control with such specified Person and, in the case of
a Person who is an individual, shall include (i) members of such specified
Person's immediate family (as defined in Instruction 2 of Item 404(a) of
Regulation S-K under the Securities Act) and (ii) trusts, the trustee and all
beneficiaries of which are such specified Person or members of such Person's
immediate family as determined in accordance with the foregoing clause (i). For
the purposes of this definition, control when used with respect to any person
means the power to direct the management and policies of such person, directly
or indirectly, whether through the ownership of voting securities, by contract
or otherwise; and the terms "affiliated," "controlling" and "controlled" have
meanings correlative to the foregoing. Notwithstanding the foregoing, the
Initial Holders and their Affiliates shall not be deemed Affiliates of the
Corporation.

         Change of Control. The term "Change of Control" shall mean the
occurrence of any one of the following events: (I) the acquisition after the
Initial Issue Date, in one or more transactions, of beneficial ownership (within
the meaning of Rule 13d-3 under the Exchange Act) by (i) any person or entity
(other than any Permitted Holder) or (ii) any group of persons or entities
(excluding any Permitted Holders) who constitute a group (within the meaning of
Section 13(d)(3) of the Exchange Act), in either case, of any securities of the
Corporation such that, as a result 



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of such acquisition, such person, entity or group beneficially owns (within the
meaning of Rule 13d-3 under the Exchange Act), directly or indirectly, 40% or
more of the then outstanding voting securities entitled to vote on a regular
basis for a majority of the Board of Directors of the Corporation (but only to
the extent that such beneficial ownership is not shared with any Permitted
Holder who has the power to direct the vote thereof), provided, however, that no
such Change of Control shall be deemed to have occurred if (A) the Permitted
Holders beneficially own, in the aggregate, at such time, a greater percentage
of such voting securities than such other person, entity or group or (B) at the
time of such acquisition, the Permitted Holders (or any of them) possess the
ability (by contract or otherwise) to elect, or cause the election of, a
majority of the members of the Corporation's Board of Directors; (II) the
acquisition by any person of all or substantially all of the assets of the
Corporation; (III) the determination by the Corporation's Board of Directors to
recommend the acceptance of any proposal set forth in a tender offer statement
or proxy statement filed by any person with the Securities and Exchange
Commission which indicates the intention on the part of that person to acquire,
or acceptance of which would otherwise have the effect of that person acquiring,
control of the Corporation; or (IV) upon, other than as a result of the death or
disability of one or more of the directors within a three-month period, a
majority of the members of the Board of Directors of the Corporation for any
period of three consecutive months not being persons who (a) had been directors
of the Corporation for at least the preceding 24 consecutive months or were
elected by the holders of the Series A Preferred Stock, voting separately as a
class, or (b) when they initially were elected to the Board of Directors of the
Corporation, (x) were nominated (if they were elected by the stockholders) or
elected (if they were elected by the directors) with the affirmative concurrence
of 66-2/3% of the directors who were Continuing Directors at the time of the
nomination or election by the Board of Directors of the Corporation and (y) were
not elected as a result of an actual or threatened solicitation of proxies or
consents by a person other than the Board or an agreement intended to avoid or
settle such a proxy solicitation (the directors described in clauses (a) and (b)
of this subsection (IV) being "Continuing Directors"); provided, however, that
no Change of Control shall be deemed to have occurred by virtue of any merger of
the Corporation with any wholly owned subsidiary of the Corporation or any
merger of two wholly owned subsidiaries of the 



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Corporation if, in any such merger, the proportionate ownership interests of the
stockholders of the Corporation remain unchanged.

         Common Stock. The term "Common Stock" shall mean the common stock, par
value $.01 per share, of the Corporation.

         Conversion Date. The term "Conversion Date" shall have the meaning set
forth in Sections 8(c) below, as applicable.

         Conversion Price. The term "Conversion Price" shall have the meaning
set forth in Section 8(d) below.

         Convertible Preferred Nominees. The term "Convertible Preferred
Nominees" shall have the meaning set forth in Section 4(b)(i) below.

         Convertible Securities. The term "Convertible Securities" shall have
the meaning set forth in Section 8(f)(iii).

         Corporation Notice. The term "Corporation Notice" shall have the
meaning set forth in Section 5(b)(ii)(A) below.

         Current Market Price. The term "Current Market Price" shall mean the
current market price of the Common Stock as computed in accordance with Section
8(f)(xi) below.

         Dividend Payment Date. The term "Dividend Payment Date" shall have the
meaning set forth in Section 3(a) below.

         Dividend Rate. The term "Dividend Rate" shall have the meaning set
forth in Section 3(a) below.

         Exchange Act. The term "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder.

         Initial Holders. The term "Initial Holders" shall mean those holders of
Series A Preferred Stock as of the Initial Issue Date.

         Initial Issue Date. The term "Initial Issue Date" shall mean the date
that shares of Series A Preferred Stock are first issued by the Corporation.


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         Initial Series A Preferred Shares. The term "Initial Series A Preferred
Shares" shall have the meaning set forth in Section 4(b)(i)(B) below.

         IRR. The term "IRR" shall have the meaning set forth in Section
4(c)(ix) below.

         Junior Stock. The term "Junior Stock" shall mean any stock of the
Corporation, other than the Common Stock, ranking junior to the Series A
Preferred Stock as to dividends and upon liquidation. Junior Stock shall not
include the Series B Preferred Stock.

         Liquidation. The term "Liquidation" shall mean any liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary;
provided, that neither the voluntary sale, conveyance, exchange or transfer (for
cash, shares of stock, securities or other consideration) of all or
substantially all of the property or assets of the Corporation, nor the
consolidation or merger of the Corporation with one or more other entities,
shall, by itself, be deemed a Liquidation.

         Liquidation Preference Amount. The term "Liquidation Preference Amount"
shall mean an amount equal to the sum of (i) $1,000 per share of Series A
Preferred Stock, plus (ii) all accrued and unpaid dividends thereon calculated
in accordance with Sections 3(a) and 3(b) hereof.

         Permitted Holder. The term "Permitted Holder" shall mean (i) Apollo
Investment Fund IV, L.P., Apollo Overseas Partners IV, L.P., or any entity
controlled by either of the foregoing or any of the partners of the foregoing,
(ii) an employee benefit plan of the Corporation or any subsidiary of the
Corporation, or any participant therein, (iii) a trustee or other fiduciary
holding securities under an employee benefit plan of the Corporation or any of
its subsidiaries or (iv) any Permitted Transferee of any of the foregoing
persons.

         Permitted Transferee. The term "Permitted Transferee" shall mean, with
respect to any Person, (i) any officer, director or partner of, or Person
controlling, such Person, (ii) any other Person that is (x) an Affiliate of the
general partner(s), investment manager(s) or investment advisor(s) of such
Person, (y) an Affiliate of such Person or a Permitted Transferee of an
Affiliate or (z) an investment fund, investment account or investment entity
whose investment manager, investment advisor or general partner thereof is such
Person or 



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a Permitted Transferee of such Person or (iii) if a Permitted Transferee of a
Person set forth in the foregoing clauses (i) and (ii) is an individual, (x) any
spouse or issue of such individual, or any trust solely for the benefit of such
individual, spouse or issue, and (y) upon such individual's death, any Person to
whom Shares are transferred in accordance with the laws of descent and/or
testamentary distribution, in each case in a bona fide distribution or other
transaction not intended to avoid the provisions of this Agreement.

         Person. The term "Person" shall mean an individual or a corporation,
limited liability company, partnership, trust, or any other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.

         Quarterly Dividend Period. The term "Quarterly Dividend Period" shall
have the meaning set forth in Section 3(a) below.

         Redemption Date. The term "Redemption Date" shall have the meaning set
forth in Section 5(a)(ii) below.

         Redemption Event. A Redemption Event will be deemed to occur at the
earliest of (i) the date upon which there is a Change of Control of the
Corporation, (ii) the date upon which the Corporation's Common Stock is not
listed for trading on a United States national securities exchange or the NASDAQ
National Market System, or (iii) the eleventh anniversary of the Initial Issue
Date.

         Redemption Percentage. The term "Redemption Percentage" shall have the
meaning set forth in Section 5(a)(i) below.

         Redemption Price. The term "Redemption Price" shall have the meaning
set forth in Section 5(a)(i) below.

         Repurchase Date. The term "Repurchase Date" shall have the meaning set
forth in Section 5(b)(i) below.

         Repurchase Price. The term "Repurchase Price" shall have the meaning
set forth in Section 5(b)(i) below.

         Securities Act. The term "Securities Act" shall mean the Securities Act
of 1933, as amended, and the rules and regulations promulgated thereunder.

         Series A Preferred Stock. The term "Series A Preferred Stock" shall
mean the Series A Preferred Stock authorized hereby.


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         Series B Preferred Stock. The term "Series B Preferred Stock" shall
mean the Series B Preferred Stock, par value $.01 per share, of the Corporation.

         Stockholders Agreement. The term "Stockholders Agreement" shall mean
that certain stockholders agreement of the Corporation dated as of August 5,
1998, as in effect on the Initial Issue Date, a copy of which shall be
maintained by the Secretary of the Corporation and which shall be available to
any stockholder of the Corporation upon request.

         Trading Days. The term "Trading Days" shall have the meaning set forth
in Section 8(f)(xi) below.

2.       Designation.

         The series of preferred stock authorized hereby shall be designated as
the "Series A Convertible Preferred Stock." The number of shares constituting
such series shall initially be Four Hundred Thousand (400,000). The par value of
the Series A Preferred Stock shall be $.01 per share.

3.       Dividends.

   (a)      The holders of the shares of Series A Preferred Stock shall be
         entitled to receive cumulative quarterly dividends at a dividend rate
         equal to 3 3/4% per annum (the "Dividend Rate") computed on the basis
         of $1,000 per share, when and as declared by the Board of Directors of
         the Corporation, out of funds legally available for the payment of
         dividends; provided, however, for the five-year period commencing with
         the Initial Issue Date, payments of dividends may be made, at the
         election of the Corporation, either (i) in cash or (ii) by issuing a
         number of additional fully paid and nonassessable shares (and/or
         fractional shares) of Series A Preferred Stock for each such share (or
         fractional share) of Series A Preferred Stock then outstanding
         determined by dividing (x) the dividend then payable on each such share
         (or fractional share) of Series A Preferred Stock (expressed as a
         dollar amount) by (y) 1,000. Quarterly dividend periods (each a
         "Quarterly Dividend Period") shall commence on January 1, April 1, July
         1 and October 1, in each year, except that the first Quarterly Dividend
         Period shall commence on the date of issuance of the Series A Preferred
         Stock, and shall end on and include the day immediately preceding the
         first day of the next Quarterly Dividend Period. Dividends on the
         shares of Series A Preferred Stock shall be payable on March 31, June
         30, September 30, December 31 of each year (a "Dividend Payment Date"),
         commencing September 30, 1998. Each such dividend shall be paid to the
         holders of record of the Series A Preferred 


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         Stock as they shall appear on the stock register of the Corporation on
         such record date, not exceeding 45 days nor less than 10 days preceding
         such Dividend Payment Date, as shall be fixed by the Board of Directors
         of the Corporation or a duly authorized committee thereof.

         Notwithstanding the foregoing paragraph, (A) for the four Quarterly
Dividend Periods commencing with the ninth Quarterly Divided Period following
the Initial Issue Date, no dividend shall be paid or accrued for any Quarterly
Dividend Period in which the Current Market Price as of the related Dividend
Payment Date is equal to or greater than two (2) times the Conversion Price and
(B) for each Quarterly Dividend Period commencing with the thirteenth Quarterly
Dividend Period following the Initial Issue Date, no dividend shall be paid or
accrued for any Quarterly Dividend Period in which the Current Market Price as
of the related Dividend Payment Date is equal to or greater than the Conversion
Price accumulated forward to the payment date at a compound annual growth rate
of Twenty-Five Percent (25%) per annum compounded quarterly.

         If, on any Dividend Payment Date, the full dividends provided for in
this Section 3(a) are not declared or paid to the holders of the Series A
Preferred Stock, whether in cash or in additional shares of Series A Preferred
Stock, then such dividends shall cumulate, with additional dividends thereon,
compounded quarterly, at the dividend rate applicable to the Series A Preferred
Stock as provided in this Section 3(a), for each succeeding full Quarterly
Dividend Period during which such dividends shall remain unpaid. In the event
the Corporation elects to pay dividends in additional shares of Series A
Preferred Stock, the Corporation shall on the Dividend Payment Date deliver to
the holders certificates representing such shares.

         Notwithstanding anything to the contrary herein, in the event any
conversion, redemption or liquidation occurs as of a date other than on a
Dividend Payment Date, the holders of Series A Preferred Stock shall be paid a
pro rata dividend equal to the dividend payable for that Quarterly Dividend
Period multiplied by a fraction, the numerator of which is the number of days
that have elapsed since the last Dividend Payment Date and the denominator of
which is the number of days in the Quarterly Dividend Period in which the
conversion, redemption or liquidation occurs.

   (b)      The amount of any dividends accrued on any share of the Series A
         Preferred Stock on any Dividend Payment Date shall be deemed to be the
         amount of any unpaid dividends accumulated thereon to and including
         such Dividend Payment Date, whether or not earned or declared. The
         amount of dividends accrued on any share of the Series A Preferred
         Stock on any date other than a Dividend Payment Date shall be deemed to
         be the sum of (i) the amount of any unpaid dividends accumulated
         thereon to and including the last preceding Dividend Payment Date,
         whether or not earned or declared, and (ii) an amount determined by
         multiplying (x) the Dividend Rate by (y) a fraction, the numerator of
         which shall be the number of days from the last preceding Dividend
         Payment Date to and including the date on which such calculation is
         made and the denominator of which shall be the full number of days in
         such Quarterly Dividend Period.


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    (c)      Immediately prior to authorizing or making any distribution in
         redemption or liquidation with respect to the Series A Preferred Stock
         (other than a purchase or acquisition of Series A Preferred Stock
         pursuant to a purchase or exchange offer made on the same terms to
         holders of all outstanding Series A Preferred Stock), the Board of
         Directors shall, to the extent of any funds legally available therefor,
         declare a dividend in cash on the Series A Preferred Stock payable on
         the distribution date in an amount equal to any accrued and unpaid
         dividends on the Series A Preferred Stock as of such date.

4.       Voting Rights.

    (a)      Except as otherwise required by law, the shares of Series A
         Preferred Stock shall be entitled to vote together with the shares of
         voting Common Stock as one class at all annual and special meetings of
         stockholders of the Corporation, and to act by written consent in the
         same manner as the Common Stock, upon the following basis: each holder
         of Series A Preferred Stock shall be entitled to such number of votes
         for the Series A Preferred Stock held by the holder on the record date
         fixed for such meeting, or on the effective date of such written
         consent, as shall be equal to the number of whole shares of Common
         Stock into which all of such holder's shares of Series A Preferred
         Stock are convertible immediately after the close of business on the
         record date fixed for such meeting or the effective date of such
         written consent.

    (b)      (i) The holders of Series A Preferred Stock, voting as a separate
         class shall have the right to elect such number of directors (the
         "Convertible Preferred Nominees") of the Corporation as set forth
         below, in addition to such holders' rights to vote for the election


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         of directors, generally, in accordance with Section 4(a):

         (A) Subject to Section 4(b)(i) (B) below, the number of Convertible
Preferred Nominees shall be two (2). One Convertible Preferred Nominee shall be
classified as a Class I Director of the Corporation, and the other Convertible
Preferred Nominee shall be classified as a Class II Director of the Corporation.
Each of the Finance Committee , the Audit Committee and the Compensation
Committee of the Board of Directors shall have one Convertible Preferred Nominee
as a member; and, in the event the Corporation establishes an Executive
Committee of the Board of Directors, at least one Convertible Preferred Nominee
shall be a member of such Executive Committee.

         (B) At such time as the Initial Holders together with any and all of
their Permitted Transferees cease to hold in aggregate 50% or more of the number
of the Initial Series A Preferred Shares, the holders of Series A Preferred
Stock shall be entitled to elect one Convertible Preferred Nominee under this
Certificate; and, at such time as the Initial Holders cease to hold in aggregate
10 % or more of the number of the Initial Series A Preferred Shares, the holders
of Series A Preferred Stock shall no longer be entitled to elect any Convertible
Preferred Nominees under this Certificate.

      (ii) The holders of the Series A Preferred Stock may exercise any right
under Section 4(b)(i) to elect directors at a special meeting of the holders of
the Series A Preferred Stock, at an annual meeting of the stockholders of the
Corporation held for the purpose of electing directors, and in each written
consent executed in lieu of any such meetings.

      (iii) A director elected in accordance with Section 4(b)(i) will serve
until the next annual meeting of stockholders of the Corporation at which other
directors of the Corporation of the same class shall be elected and until his or
her successor is elected and qualified by the holders of the Series A Preferred
Stock, except as otherwise provided in the Corporation's Amended and Restated
Certificate of Incorporation or Amended and Restated Bylaws.

      (iv) Notwithstanding anything to the contrary contained herein, the
provisions of this Section 4(b) shall inure

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         only to the benefit of the Initial Holders and their Permitted
         Transferees, and any shares of Series A Preferred Stock subsequently
         transferred by the Initial Holders to any Person other than one of
         their Permitted Transferees shall not be entitled to the benefits of
         this Section 4(b).

    (c)      While any shares of Series A Preferred Stock are outstanding, the
         Corporation will not, directly or indirectly, including through a
         merger or consolidation with any other corporation or otherwise,
         without approval of holders of at least a majority of the outstanding
         shares of Series A Preferred Stock, voting separately as a class, (i)
         increase the number of authorized shares of Series A Preferred Stock or
         authorize the issuance or issue of any shares of Series A Preferred
         Stock other than to existing holders of Series A Preferred Stock or
         holders of Series B Preferred Stock, (ii) issue any new class or series
         of equity security, (iii) amend, alter or repeal, in any manner
         whatsoever, the designations, preferences and relative rights and
         limitations and restrictions of the Series A Preferred Stock or the
         Series B Preferred Stock; (iv) amend, alter or repeal any of the
         provisions of the Amended and Restated Certificate of Incorporation or
         Amended and Restated ByLaws of the Corporation in a manner that would
         negatively impact the holders of the Series A Preferred Stock,
         including (but not limited to) any amendment that is in conflict with
         the approval rights set forth in this Section 4; (v) directly or
         indirectly, redeem, purchase or otherwise acquire for value (including
         through an exchange), or set apart money or other property for any
         mandatory purchase or other analogous fund for the redemption, purchase
         or acquisition of any shares of Common Stock or Junior


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         Stock, except for the repurchase by the Corporation of up to
         $25,000,000 in Common Stock from J. Ernest Talley, declare or pay any
         dividend or make any distribution (whether in cash, shares of capital
         stock of the Corporation, or other property) on shares of Common Stock
         or Junior Stock; (vi) cause the number of directors of the Corporation
         to be greater than seven (7); (vii) enter into any agreement or
         arrangement with or for the benefit of any Person who is an Affiliate
         of the Corporation with a value in excess of $5 million in a single
         transaction or a series of related transactions; (viii) effect a
         voluntary liquidation, dissolution or winding up of the Corporation;
         (ix) sell or agree to sell all or substantially all of the assets of
         the Corporation, unless such transaction (1) occurs after the fourth
         anniversary of the Initial Issue Date, (2) is a sale for cash and (3)
         results in an internal rate of return ("IRR") of 30% compounded
         quarterly or greater to the holder of the Series A Preferred Stock with
         respect to each share of Series A Preferred Stock issued on the Initial
         Issue Date; or (x) enter into any merger or consolidation or other
         business combination involving the Corporation (except a merger of a
         wholly-owned subsidiary of the Corporation into the Corporation in
         which the Corporation's capitalization is unchanged as a result of such
         merger) unless such transaction (1) occurs after the fourth anniversary
         of the Initial Issue Date, (2) is for cash and (3) results in an IRR of
         30% compounded quarterly or greater to the holder of the Series A
         Preferred Stock with respect to each share of Series A Preferred Stock
         issued on the Initial Issue Date.



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    (d)      While any shares of Series A Preferred Stock are outstanding, the
         Corporation will not, directly or indirectly, without the majority
         affirmative vote of the Finance Committee, issue debt securities of the
         Corporation with a value in excess of $10 million (including any
         refinancing of existing indebtedness).

    (e)      While any shares of Series A Preferred Stock are outstanding, the
         Corporation will not, directly or indirectly, without the unanimous
         affirmative vote of the Finance Committee, issue equity securities of
         the Corporation with a value in excess of $10 million (including any
         refinancing of existing indebtedness); provided, however, that the
         following equity issuances shall require only a majority affirmative
         vote of the Finance Committee: (A) a Common Stock offering within 24
         months of the Initial Issue Date that is equal to or less than $75
         million of gross proceeds to the Corporation and the selling price is
         equal to or greater than the Conversion Price, (B) a Common Stock
         offering in which the selling price (1) at any time prior to the third
         anniversary of the Initial Issue Date is equal to or greater than two
         times the Conversion Price and (2) thereafter, equal to or greater than
         the price that would imply a 25% or greater IRR compounded quarterly on
         the Conversion Price and (C) an issuance of equity in connection with
         an acquisition if the issuance is equal to or less than 10% of the
         outstanding Common Stock (calculated post-issuance of such shares of
         Common Stock).



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5.       Redemption

     (a)      Optional Redemption.

         (i)      Optional Redemption by the Corporation. (A) The Series A
                  Preferred Stock may not be redeemed, in whole or in part, at
                  the election of the Corporation prior to the fourth
                  anniversary of the Initial Issue Date. The Corporation by
                  resolution of its Board of Directors may redeem the Series A
                  Preferred Stock, in whole or in part, at any time after the
                  fourth anniversary of the Initial Issue Date. The redemption
                  price per share (the "Redemption Price") for such shares of
                  Series A Preferred Stock so redeemed shall equal 105% of the
                  Liquidation Preference Amount on the Redemption Date (as
                  defined below).

         (B) Notwithstanding the forgoing Section 5(a)(i)(A), an Initial Holder
shall be entitled to reserve from redemption by the Corporation pursuant to
Section 5(a)(i)(A) one share of the Series A Preferred Stock until such time as
the Initial Holders and their Permitted Transferees collectively shall own less
than 33 1/3% of the Shares issued to the Initial Holders on the Initial Issuance
Date as defined below. For the purposes of this Section 5(a)(i)(B), "Shares"
shall mean shares of the Common Stock, the Series A Preferred Stock and the
Series B Preferred Stock, and the preceding percentage shall be calculated as if
each of the Shares had been exchanged or converted into shares of Common Stock
immediately prior to each such calculation regardless of the existence of any
restrictions on such exchange or conversion.

         (C) In the event that at any time less than all of the Series A
Preferred Stock outstanding is to be redeemed, the shares to be redeemed will be
selected pro rata. Notwithstanding anything to the contrary, the Corporation may
not redeem less than all of the Series A Preferred Stock outstanding unless all
accrued and unpaid dividends have been paid on all then outstanding shares of
Series A Preferred Stock.

         (ii)     Notice of Redemption. Notice of any redemption pursuant to
                  this 


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         Section 5(a) shall be mailed, postage prepaid, at least 30 days but not
         more than 60 days prior to the date of redemption specified in such
         notice (the "Redemption Date") to each holder of record of the Series A
         Preferred Stock to be redeemed at its address as the same shall appear
         on the stock register of the Corporation. Each such notice shall state:
         (A) the Redemption Date, (B) the place or places where certificates for
         such shares of Series A Preferred Stock are to be surrendered for
         payment, (C) the Redemption Price and (D) that unless the Corporation
         defaults in making the redemption payment, dividends on the shares of
         Series A Preferred Stock called for redemption shall cease to accrue on
         and after the Redemption Date. If less than all the shares of the
         Series A Preferred Stock owned by such holder are then to be redeemed,
         such notice shall also specify the number of shares thereof which are
         to be redeemed and the numbers of the certificates representing such
         shares.

         (iii)    No Preclusion of Conversion. Nothing in this Section 5(a)
                  shall be construed to preclude a holder of Series A Preferred
                  Stock from converting any or all of its shares of Series A
                  Preferred Stock in accordance with Section 8 at any time prior
                  to the Redemption Date.

   (b)      Mandatory Redemption.


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         (i)      Right to Require Redemption. If at any time there shall occur
                  any Redemption Event of the Corporation, then each holder of
                  Series A Preferred Stock shall have the right, at such
                  holder's option, to require the Corporation to redeem, and
                  upon the exercise of such right the Corporation shall redeem,
                  all or any part of such holder's Series A Preferred Stock on
                  the date (the "Repurchase Date") that is 45 days after the
                  date of the Corporation Notice (as defined below). The
                  redemption price per share (the "Repurchase Price") for such
                  shares of Series A Preferred Stock so redeemed shall equal the
                  Liquidation Preference Amount on the Repurchase Date.

         (ii)     Notices; Method of Exercising Redemption Right, etc.

         (A) Unless the Corporation shall have theretofore called for redemption
all the Series A Preferred Stock then outstanding pursuant to Section 5(a)
hereof, within 15 days after the occurrence of a Redemption Event, the
Corporation shall mail to all holders of record of the Series A Preferred Stock
a notice (the "Corporation Notice") of the occurrence of the Redemption Event
and of the redemption right set forth herein arising as a result thereof. Each
Corporation Notice of a redemption right shall state: (I) the Repurchase Date;
(II) the date by which the redemption right must be exercised; (III) the
Repurchase Price; (IV) a description of the procedure which a holder must follow
to exercise a redemption right including a form of the irrevocable written
notice referred to in Section 5(b)(ii)(B) hereof; and (V) the place or places
where such Series A Preferred Stock may be surrendered for redemption.

         No failure of the Corporation to give the foregoing notices or any
defect therein shall limit any holder's right to exercise a redemption right or
affect the validity of the proceedings for the redemption of Series A Preferred
Stock.



                                       16
<PAGE>   17


         (B) To exercise a redemption right, a holder must deliver to the
Corporation on or before the 15th day after the date of the Corporation Notice
(i) irrevocable written notice of the holder's exercise of such rights, which
notice shall set forth the name of the holder, the amount of the Series A
Preferred Stock to be redeemed, a statement that an election to exercise the
redemption right is being made thereby, and (ii) the Series A Preferred Stock
with respect to which the redemption right is being exercised, duly endorsed for
transfer to the Corporation. Such written notice shall be irrevocable. Subject
to the provisions of paragraph (D) below, Series A Preferred Stock surrendered
for redemption together with such irrevocable written notice shall cease to be
convertible from the date of delivery of such notice. If the Repurchase Date
falls after the record date and before the following Dividend Payment Date, any
Series A Preferred Stock to be redeemed must be accompanied by payment of an
amount equal to the dividends thereon which the registered holder thereof is to
receive on such Dividend Payment Date, and, notwithstanding such redemption,
such dividend payment will be made by the Corporation to the registered holder
thereof on the applicable record date; provided that any quarterly payment of
dividends becoming due on the Repurchase Date shall be payable to the holders of
such Series A Preferred Stock registered as such on the relevant record date
subject to the terms of Section 3(b) hereof.

         (C) In the event a redemption right shall be exercised in accordance
with the terms hereof, the Corporation shall pay or cause to be paid the
Repurchase Price in cash, to the holder on the Repurchase Date.

         (D) If any Series A Preferred Stock surrendered for redemption shall
not be so redeemed on the Repurchase Date, such Series A Preferred Stock shall
be convertible at any time from the Repurchase Date until redeemed and, until
redeemed, continue to accrue dividends to the extent permitted by applicable law
from the Repurchase Date at the same rate borne by such Series A Preferred
Stock. The Corporation shall pay to the holder of such Series A Preferred Stock
the additional amounts arising from this Section 5(b)(ii)(D) hereof at the time
that it pays the Repurchase Price, and if applicable such Series A Preferred
Stock shall remain convertible into Common Stock until the Repurchase Price plus
any additional amounts owing on such Series A Preferred Stock shall have been
paid or duly provided for.


                                       17
<PAGE>   18

         (E) Any Series A Preferred Stock which is to be redeemed only in part
shall be surrendered at any office or agency of the Corporation designated for
that purpose pursuant to Section 5(b)(ii)(A)(V) hereof and the Corporation shall
execute and deliver to the holder of such Series A Preferred Stock without
service charge, a new certificate or certificates representing the Series A
Preferred Stock, of any authorized denomination as requested by such holder, in
aggregate amount equal to and in exchange for the unredeemed portion of the
Series A Preferred Stock so surrendered.

6.       Priority.

    (a)      Priority as to Dividends. Holders of shares of the Series A
         Preferred Stock shall be entitled to receive the dividends provided for
         in Section 3 hereof in preference to and in priority over any dividends
         upon any Junior Stock or Common Stock.

    (b)      Series B Preferred Stock. The Corporation's Series A Preferred
         Stock shall rank on parity with the Series B Preferred Stock with
         respect to dividends and redemption.

7.       Liquidation Preference.

    (a)      In the event of any Liquidation, holders of the Series A Preferred
         Stock will be entitled to receive out of the assets of the Corporation
         whether such assets are capital or surplus and whether or not any
         dividends as such are declared, the Liquidation Preference Amount to
         the date fixed for distribution, and no more, before any distribution
         shall be made to the holders of Junior Stock or Common Stock with
         respect to the distribution of assets. If the assets of the Corporation
         are not sufficient to pay in full the Liquidation Preference Amount to
         the holders of outstanding shares of the Series A Preferred Stock, then
         the holders of all such shares shall share ratably in such distribution
         of assets in accordance with the amount which would be otherwise
         payable on such distribution to the holders of Series A Preferred Stock
         were such Liquidation Preference Amount paid in full. Except as
         provided, in this Section 7(a), in the event of any Liquidation of the
         Corporation, the holders of shares of Series A Preferred Stock shall
         not be entitled to any additional payments.

    (b)      The consolidation or merger of the Corporation with or into such
         corporation or corporations shall not itself be deemed to be a
         Liquidation of the Corporation within the meaning of this Section 7.

    (c)      Written notice of any Liquidation of the Corporation, stating a
         payment date and the place where the distributive amounts shall be
         payable, shall be given by mail, 


                                       18

<PAGE>   19

         postage prepaid, not less than 30 days prior to the payment date stated
         therein, to the holders of record of the Series A Preferred Stock at
         their respective addresses as the same shall appear on the books of the
         Corporation.

    (d)      The Series A Preferred Stock shall rank on parity with the Series B
         Preferred Stock with respect to liquidation.

8.       Conversion.

    (a)      Each share of Series A Preferred Stock shall be convertible at any
         time and from time to time, at the option of the holder thereof into
         validly issued, fully paid and nonassessable shares of Common Stock, in
         an amount determined in accordance with Section 8(d) below.

    (b)      Immediately following the conversion of Series A Preferred Stock
         into Common Stock on the Conversion Date (i) such converted shares of
         Series A Preferred Stock shall be deemed no longer outstanding and (ii)
         the Persons entitled to receive the Common Stock upon the conversion of
         such converted Series A Preferred Stock shall be treated for all
         purposes as having become the owners of record of such Common Stock.
         Upon the issuance of shares of Common Stock upon conversion of Series A
         Preferred Stock pursuant to this Section 8, such shares of Common Stock
         shall be deemed to be duly authorized, validly issued, fully paid and
         nonassessable. Notwithstanding anything to the contrary in this Section
         8, any holder of Series A Preferred Stock may convert shares of such
         Series A Preferred Stock into Common Stock in accordance with Section 8
         on a conditional basis, such that such conversion will not take effect
         unless conditions set forth in Section 8(c) are satisfied, and the
         Corporation shall make such arrangements as may be necessary or
         appropriate to allow such conditional conversion and to enable the
         holder to satisfy such other conditions.

    (c)      To convert Series A Preferred Stock into Common Stock at the option
         of the holder pursuant to Section 8(a), a holder must give written
         notice to the Corporation at its principal office that such holder
         elects to convert Series A Preferred Stock into Common Stock, and the
         number of shares to be converted. Such


                                       19
<PAGE>   20

         conversion, to the extent permitted by law, regulation, rule or other
         requirement of any governmental authority (collectively, "Laws") and
         the provisions hereof, including but not limited to Section 5(a)(iii),
         shall be deemed to have been effected as of the close of business on
         the date on which the holder delivers such notice to the Corporation
         (such date is referred to herein as the "Conversion Date" for purposes
         of any conversion of Series A Preferred Stock pursuant to Section
         8(a)). Promptly thereafter the holder shall (i) surrender the
         certificate or certificates evidencing the shares of Series A Preferred
         Stock to be converted, duly endorsed in a form reasonably satisfactory
         to the Corporation, at the office of the Corporation or of the transfer
         agent for the Series A Preferred Stock, (ii) state in writing the name
         or names in which the certificate or certificates for shares of Common
         Stock are to be issued, (iii) provide evidence reasonably satisfactory
         to the Corporation that such holder has satisfied any conditions,
         contained in any agreement or any legend on the certificates
         representing the Series A Preferred Stock, relating to the transfer
         thereof, if shares of Common Stock are to be issued in a name or names
         other than the holder's, and (iv) pay any transfer or similar tax if
         required as provided in Section 8(k) below. As soon as practical
         following receipt of the foregoing, the Corporation shall deliver to
         such former holder of Series A Preferred Stock, a certificate
         representing the shares of Common Stock issued upon the conversion,
         together with a new certificate representing the unconverted portion,
         if any, of the shares of Series A Preferred Stock formerly represented
         by the certificate or certificates surrendered for conversion.

    (d)      For the purposes of the conversion of Series A Preferred Stock into
         Common Stock pursuant to Section 8(a), each share of Series A Preferred
         Stock shall be convertible into the number of shares of Common Stock
         equal to the Liquidation Preference Amount divided by the Conversion
         Price in effect on the Conversion Date. The number of full shares of
         Common Stock issuable to a single holder upon conversion of the Series
         A Preferred Stock shall be based on the aggregate Liquidation
         Preference Amount of all shares of Series A Preferred

                                       20

<PAGE>   21

         Stock owned by such holder. The Conversion Price initially shall equal
         $27.935. In order to prevent dilution of the conversion rights granted
         hereunder, the Conversion Price shall be subject to adjustment from
         time to time in accordance with Sections 8(f) and 8(i) below.

    (e)      If the Corporation shall at any time subdivide, by stock split,
         reclassification or otherwise, the outstanding shares of Common Stock
         or shall issue a dividend on its outstanding Common Stock payable in
         capital stock, the Conversion Price in effect immediately prior to such
         subdivision or the issuance of such dividend shall be proportionately
         decreased, and in case the Corporation shall at any time combine, by
         stock split, reclassification or otherwise, the outstanding shares of
         Common Stock, the Conversion Price in effect immediately prior to such
         combination shall be proportionately increased, effective at the close
         of business on the date of such subdivision, dividend, combination or
         other event, as the case may be.

    (f)      The number of shares issuable upon conversion and the Conversion
         Price (and each component thereof) are subject to adjustment by the
         Corporation from time to time upon the occurrence of the events
         enumerated in this Section 8.

         (i)      Changes in Capital Stock.

         (A) If the Corporation (i) pays a dividend or makes a distribution on
its Common Stock in shares of its Common Stock, (ii) subdivides its outstanding
shares of Common Stock into a greater number of shares, (iii) combines its
outstanding shares of Common Stock into a smaller number of shares, (iv) makes a
distribution on its Common Stock in shares of its capital stock other than
Common Stock or (v) issues by reclassification of its Common Stock any shares of
its capital stock, then the Conversion Price (and each component thereof) in
effect immediately prior to such action shall be proportionately adjusted so
that each holder of shares of Series A Preferred Stock may receive the aggregate
number and kind of shares of capital stock of the Corporation which such holder
would have owned immediately following such action if such holder had converted
all of his shares of Series A Preferred Stock into Common Stock immediately
prior to such action.

         (B) The adjustment shall become effective immediately after the record
date in the case of a dividend or distribution and immediately after the
effective date in the case of a subdivision, combination or reclassification.


                                       21


<PAGE>   22

         (C) If after an adjustment a holder of shares of Series A Preferred
Stock upon conversion may receive shares of two or more classes of capital stock
of the Corporation, the Corporation shall determine the allocation of the
adjusted Conversion Price between the classes of capital stock. After such
allocation, the conversion privilege and the Conversion Price of each class of
capital stock shall thereafter be subject to adjustment on terms comparable to
those applicable to Common Stock in this Section 8(f)(i).

         (D) Any adjustments made pursuant to this Section 8(f)(i) shall be made
successively.

             (ii) Common Stock Issue.

         (A) If the Corporation issues any additional shares of Common Stock for
a consideration per share less than the Current Market Price (as hereinafter
defined) on the date the Corporation fixes the offering price of such additional
shares, the Conversion Price shall be adjusted as set forth below, such that a
holder of shares of Series A Preferred Stock, upon conversion of his shares of
Series A Preferred Stock into shares of Common Stock, shall have the right to
receive that number of shares of Common Stock which, after giving effect to the
following adjustment, such holder would receive if such holder elected to
convert his shares of Series A Preferred Stock into Common Stock. The Conversion
Price shall be adjusted to the number determined by multiplying the Conversion
Price in effect immediately prior to such issuance or sale by a fraction, the
numerator of which shall be the sum of (i) the number of shares of Common Stock
outstanding immediately prior to the issuance or sale of such additional shares
of Common Stock plus (ii) the number of such additional shares which the
aggregate consideration received (or by express provision hereof deemed to have
been received) by the Corporation for such additional shares so issued or sold
would purchase at a consideration per share equal to the Current Market Price,
and the denominator of which shall be the number of shares of Common Stock
outstanding immediately after the issuance or sale of such additional shares of
Common Stock. For the purposes of this Section 8(f)(ii), the date as of which
the Current Market Price shall be determined shall be the date of the actual
issuance or sale of such shares.

         (B) The adjustment shall be made successively whenever any such
issuance is made, and shall become effective immediately after such issuance.

         (C) This Section 8(f)(ii) does not apply to: (i) any of the
transactions described in Section 8(f)(iii) and 8(f)(iv); (ii) the conversion of
the shares of Series A Preferred Stock; and (iii) any shares issued under the
Corporation's Amended and Restated 1994 Long-Term Incentive Plan, and any other
such plans adopted by the Board of Directors.

              (iii) Rights Issue.

         (A) If the Corporation issues or sells any warrants or options or other
rights entitling the holders of Common Stock to subscribe for or purchase either
any additional shares of Common Stock or evidences of indebtedness, shares of
stock or other securities which are 

                                       22
<PAGE>   23

convertible into or exchangeable, with or without payment of additional
consideration in cash or property, for additional shares of Common Stock (such
convertible or exchangeable evidence of indebtedness, shares of stock or other
securities hereinafter being called "Convertible Securities"), and the
consideration per share for which additional shares of Common Stock may at any
time thereafter be issuable pursuant to such warrants, options or other rights
or pursuant to the terms of such Convertible Securities (when added to the
consideration per share of Common Stock, if any, received for such warrants,
options or other rights), shall be less than the Current Market Price at the
time of the issuance of the warrants, options or other rights, then the
Conversion Price shall be adjusted as provided below, such that a holder of
shares of the Series A Preferred Stock, upon conversion of his shares of Series
A Preferred Stock into shares of Common Stock, shall have the right to receive
that number of shares of Common Stock which, after giving effect to the
following adjustment, such holder would receive if such holder elected to
convert his shares of Series A Preferred Stock into Common Stock. The Conversion
Price shall be adjusted to the number determined by multiplying the current
Conversion Price by a fraction, (A) the numerator of which shall be the sum of
(i) the number of shares of Common Stock outstanding on the record date plus
(ii) the quotient of (x) the number of additional shares of Common Stock covered
by such warrants, options or rights, multiplied by the sales price per share of
additional shares covered by such warrants, options or other rights, divided by
(y) the Current Market Price per share of Common Stock on the record date, and
(B) the denominator of which shall be the sum of (i) the number of shares of
Common Stock outstanding on the record date and (ii) the number of additional
shares of Common Stock covered by such warrants, options or other rights. For
purposes of this Section 8(f)(iii), the foregoing adjustment shall be made on
the basis that (i) the maximum number of additional shares of Common Stock
issuable pursuant to all such warrants, options or other rights or necessary to
effect the conversion or exchange of all such Convertible Securities shall be
deemed to have been issued and (ii) the aggregate consideration for such maximum
number of additional shares shall be deemed to be the minimum consideration
received and receivable by the Corporation for the issuance of such additional
shares (plus the consideration, if any, received for such warrants, options or
other rights) pursuant to such warrants, options or other rights or pursuant to
the terms of such Convertible Securities.

         (B) The adjustment shall be made successively whenever any such
warrants, options or other rights are issued and shall become effective
immediately after the record date for the determination of shareholders entitled
to receive the warrants, options or other rights.

         (C) This Section 8(f)(iii) does not apply to: (i) the conversion of the
shares of Series A Preferred Stock; and (ii) any shares issued under the
Corporation's Amended and Restated 1994 Long-Term Incentive Plan, and any other
such plans adopted by the Board of Directors.

             (iv) Convertible Securities Issue.

         (A) If the Corporation issues Convertible Securities (other than
securities issued in transactions described in Section 8(f)(iii)) and the
consideration per share for which additional shares of Common Stock may at any
time thereafter be issuable pursuant to the 


                                       23

<PAGE>   24

terms of such Convertible Securities is less than the Current Market Price on
the date of issuance of such securities, the Conversion Price shall be adjusted
as provided below, such that a holder of shares of Series A Preferred Stock,
upon conversion of his shares of Series A Preferred Stock into shares of Common
Stock, shall have the right to receive that number of shares of Common Stock
which, after giving effect to the following formula, such holder would receive
if such holder elected to convert his shares of Series A Preferred Stock into
Common Stock. The Conversion Price shall be adjusted to the number determined by
multiplying the current Conversion Price by a fraction, (A) the numerator of
which shall be the sum of (i) the number of shares of Common Stock outstanding
immediately prior to the issuance of such securities and (ii) the quotient of
(x) the aggregate consideration received for the issuance of such securities,
divided by (y) the Current Market Price per share on the date of issuance of
such securities and (B) the denominator of which shall be the sum of (i) the
number of shares of Common Stock outstanding immediately prior to the issuance
of such securities and (ii) the maximum number of shares deliverable upon
conversion or in exchange for such securities at the initial conversion or
exchange rate. The adjustment shall be made on the basis that (i) the maximum
number of additional shares of Common Stock necessary to effect the conversion
or exchange of all such Convertible Securities shall be deemed to have been
issued and (ii) the aggregate consideration for such maximum number of
additional shares of Common Stock shall be deemed to be the minimum
consideration received and receivable by the Corporation for the issuance of
such additional shares pursuant to the terms of such Convertible Securities. No
adjustment of the Conversion Price shall be made under this Section 8(f)(iv)
upon the issuance of any Convertible Securities which are issued pursuant to the
exercise of any warrants or other subscription or purchase rights therefor, if
such adjustment shall previously have been made upon the issuance of such
warrants or other rights pursuant to Section 8(f)(iii).

         (B) The adjustment shall be made successively whenever any such
issuance is made, and shall become effective immediately after such issuance.

         (C). This Section 8(f)(iv) does not apply to: (i) the conversion of the
shares of Series A Preferred Stock and (ii) any shares issued under the
Corporation's Amended and Restated 1994 Long-Term Incentive Plan, and any other
such plans adopted by the Board of Directors.

                  (v)      Conversion Price Date. For purposes of Sections
                           8(f)(iii) and 8(f)(iv), the date as of which the
                           Conversion Price shall be computed shall be the
                           earliest of (i) the date on which the Corporation
                           shall take a record of the holders of its Common
                           Stock for the purpose of entitling them to receive
                           any warrants or other rights referred to in Section
                           8(f)(iii) or to receive any Convertible Securities,
                           (ii) the date on which the Corporation shall enter
                           into a firm contract for the issuance of such
                           warrants or other rights or Convertible Securities or
                           (iii) the date of the actual 


                                       24

<PAGE>   25

                           issuance of such warrants or other rights or
                           Convertible Securities.

                  (vi)     No Compound Adjustment. No adjustment of the
                           Conversion Price shall be made under Section 8(f)(ii)
                           upon the issuance of any additional shares of Common
                           Stock which 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
                           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 Sections 8(f)(iii).

                  (vii)    Readjustment. If any warrants or other rights (or any
                           portions thereof) which shall have given rise to an
                           adjustment pursuant to Section 8(f)(iii) or
                           conversion rights pursuant to Convertible Securities
                           which shall have given rise to an adjustment pursuant
                           to Section 8(f)(iv) shall have expired or terminated
                           without the exercise thereof and/or if by reason of
                           the terms of such warrants or other rights or
                           Convertible Securities there shall have been an
                           increase or increases, with the passage of time
                           otherwise, in the price payable upon the exercise or
                           conversion thereof, then the Conversion Price
                           hereunder shall be readjusted (but to no greater
                           extent than originally adjusted), taking into account
                           all transactions described in Sections 8(f)(i)
                           through 8(f)(iv) hereof that have occurred in the
                           interim, on the basis of (i) eliminating from the
                           computation any additional shares of Common Stock
                           corresponding to such warrants or other rights or
                           conversion rights as shall have expired or
                           terminated, (ii) treating the additional shares of
                           Common Stock, if any, actually issued or issuable
                           pursuant to the previous exercise of such warrants or
                           other rights or of conversion rights pursuant to any
                           Convertible Securities as having been issued for the
                           consideration actually received and receivable
                           therefor and (iii) treating any of such warrants or
                           other rights or conversion rights pursuant to any
                           Convertible Securities which remain



                                       25

<PAGE>   26

                           outstanding as being subject to exercise or
                           conversion on the basis of such exercise or
                           Conversion Price as shall be in effect at the time;
                           provided, however, that any consideration which was
                           actually received by the Corporation in connection
                           with the issuance or sale of such warrants or other
                           rights shall form part of the readjustment
                           computation even though such warrants or other rights
                           shall have expired or terminated without the exercise
                           thereof.

                  (viii)   Consideration Received. To the extent that any
                           additional shares of Common Stock, any warrants,
                           options or other rights to subscribe for or purchase
                           any additional shares of Common Stock, or any
                           Convertible Securities shall be issued for 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, warrants, options or other
                           rights or Convertible Securities 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 of, or otherwise in
                           connection with, the issuance thereof. If and 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 by the Board of Directors of the
                           Corporation. If additional shares of Common Stock
                           shall be issued as part of a unit with warrants or
                           other rights, then the amount of consideration for
                           the warrant or other right shall be deemed to be the
                           amount determined at the time of issuance by the
                           Board of Directors of the Corporation. If the Board
                           of Directors of the Corporation shall not make any
                           such determination, the consideration for the
                           warrant, option or other right shall be deemed to be
                           zero.



                                       26
<PAGE>   27

                  (ix)     Other Conversions. If a state of facts shall occur
                           which, without being specifically controlled by the
                           provisions of this Section 8, would not fairly
                           protect the conversion rights of the holders of
                           shares of Series A Preferred Stock in accordance with
                           the essential intent and principles of such
                           provisions, then the Board of Directors of the
                           Corporation shall make an adjustment in the
                           application of such provisions, in accordance with
                           such essential intent and principles, so to protect
                           such conversion rights.

                  (x)      De Minimis Adjustment. Anything herein to the
                           contrary notwithstanding, no adjustment in the
                           Conversion Price shall be required unless such
                           adjustment, either by itself or with other
                           adjustments not previously made, would require a
                           change of at least one percent (1%) in the Conversion
                           Price; provided, however, that any adjustment which
                           by reason of this Section 8(f)(x) is not required to
                           be made shall be carried forward and taken into
                           account in any subsequent adjustment. All
                           calculations under this Section 8 shall be made to
                           the nearest one-tenth of a cent ($.001) (rounded to
                           the nearest cent ($.01) with respect to any monetary
                           amount to be actually paid) or to the nearest one
                           hundredth (0.01) of a share, as the case may be.

                  (xi)     Current Market Price. For the purpose of any
                           computation hereunder, the "Current Market Price" on
                           any date will be the average of the last reported
                           sale prices per share (the "Quoted Price") of the
                           Common Stock on each of the fifteen consecutive
                           Trading Days (as defined below) preceding the date of
                           the computation. The Quoted Price of the Common Stock
                           on each day will be (A) the last reported sales price
                           of the Common Stock on the principal stock exchange
                           on which the Common Stock is listed, or (B) if the
                           Common Stock is not listed on a stock exchange, the
                           last reported sales price of the Common Stock on the
                           principal automated securities price quotation system
                           on which sale prices of the Common Stock are
                           reported, or (C) if the Common Stock is not listed on
                           a stock exchange and sale prices of the Common Stock
                           are not reported on an automated


                                       27

<PAGE>   28

                           quotation system, the mean of the high bid and low
                           asked price quotations for the Common Stock as
                           reported by National Quotation Bureau Incorporated if
                           at least two securities dealers have inserted both
                           bid and asked quotations for the Common Stock on a
                           day will be the Quoted Price of the Common Stock on
                           that day as determined by a member firm of the New
                           York Stock Exchange, Inc. selected by the Board of
                           Directors. If no two securities dealers have inserted
                           such bid and ask quotations, or such Quoted Prices
                           otherwise are not available, the Current Market Price
                           means the fair market value of the Common Stock as of
                           the date prior to the date on which the Current
                           Market Price is determined, which such fair market
                           value shall be determined by the Board of Directors
                           of the Corporation. As used with regard to the Series
                           A Preferred Stock, the term "Trading Day" means (x)
                           if the Common Stock is listed on at least one stock
                           exchange, a day on which there is trading on the
                           principal stock exchange on which the Common Stock is
                           listed, (y) if the Common Stock is not listed on a
                           stock exchange, but sale prices of the Common Stock
                           are reported on an automated quotation system, a day
                           on which trading is reported on the principal
                           automated quotation system on which sales of the
                           Common Stock are reported, or (z) if the Common Stock
                           is not listed on a stock exchange and sale prices of
                           the Common Stock are not reported on an automated
                           quotation system, a day on which quotations are
                           reported by National Quotation Bureau Incorporated.

    (g)      No fractional shares of Common Stock shall be issued upon the
         conversion of Series A Preferred Stock. If any fractional interest in a
         share of Common Stock would, except for the provisions of this
         subparagraph (g), be deliverable upon the conversion of any Series A
         Preferred Stock, the Corporation shall, in lieu of delivering the
         fractional share therefor, adjust such fractional interest by payment
         to the holder of such converted Series A Preferred Stock of an amount
         in cash equal (computed to the nearest cent) to the Current


                                       28

<PAGE>   29

         Market Price of such fractional interest as of the end of the
         Corporation's last fiscal year as determined in good faith in the sole
         discretion of the Board of Directors of the Corporation.

    (h)      Whenever the Conversion Price is adjusted, as herein provided, the
         Corporation shall promptly mail a notice of the adjustment to holders
         of Series A Preferred Stock by first class mail. The Corporation shall
         forthwith maintain at its principal executive office and file with the
         transfer agent, if any, for Series A Preferred Stock, a statement,
         signed by the Chairman of the Board, or the President, or a Vice
         President of the Corporation and by its chief financial officer or an
         Assistant Treasurer, showing in reasonable detail the facts requiring
         such adjustment and the Conversion Price after such adjustment. Such
         transfer agent shall be under no duty or responsibility with respect to
         any such statement except to exhibit the same from time to time to any
         holder of Series A Preferred Stock desiring an inspection thereof.

    (i)      If there shall occur any capital reorganization or any
         reclassification of the capital stock of the Corporation, consolidation
         or merger of the Corporation with or into another entity, or the
         conveyance of all or substantially all of the assets of the Corporation
         to another person or entity, each share of Series A Preferred Stock
         shall thereafter be convertible into the number of shares or other
         securities or property to which a holder of the number of shares of
         Common Stock of the Corporation deliverable upon conversion of such
         Series A Preferred Stock would have been entitled upon such
         reorganization, reclassification, consolidation, merger or conveyance;
         and, in any such case, appropriate adjustment (as determined in good
         faith in the sole discretion of the Board of Directors of the
         Corporation) shall be made in the application of the provisions herein
         set forth with respect to the rights and interests thereafter of the
         holders of the Series A Preferred Stock, to the end that the provisions
         set forth herein (including provisions with respect to changes in and
         other adjustments of the Conversion Price) shall be



                                       29

<PAGE>   30

         applicable, as nearly as reasonably may be, in relation to any shares
         or other property thereafter deliverable upon the conversion of the
         Series A Preferred Stock.

    (j)      The Corporation shall at all times reserve and keep available, out
         of its authorized but unissued shares of Common Stock or treasury
         shares thereof, solely for the purpose of issuance upon the conversion
         of Series A Preferred Stock, the full number of shares of Common Stock
         deliverable upon the conversion of all Series A Preferred Stock from
         time to time outstanding. The Corporation shall from time to time, in
         accordance with the laws of the State of Delaware, increase the
         authorized amount of its Common Stock if at any time the authorized
         number of shares of Common Stock remaining unissued shall not be
         sufficient to permit the conversion of all of the Series A Preferred
         Stock at the time outstanding.

    (k)      The Corporation shall pay any documentary, stamp or similar issue
         or transfer tax due on the issue of shares of Common Stock upon
         conversion of the Series A Preferred Stock into Common 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 any security in a name other than that in which the Series A
         Preferred Stock so converted was registered, and no such issue or
         delivery shall be made unless and until the person requested 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.

9.       Exclusion of Other Rights.

         Except as otherwise required by law, shares of Series A Preferred Stock
shall not have any preferences or relative, participating, optional or other
special rights, other than those specifically set forth in this resolution and
in the Certificate of Designations filed pursuant hereto (as such Certificate
may be amended from time to time) and in the Certificate of Incorporation. No
shares of Series A Preferred Stock shall have any rights of preemption or
subscription whatsoever as to any securities of the Corporation, except as
expressly provided in any written agreement


                                       30

<PAGE>   31

among the Corporation and any holder or holders of Series A Preferred Stock.

10.      Reissuance of Preferred Stock.

         Shares of Series A Preferred Stock that have been issued and reacquired
in any manner, including shares purchased or redeemed or exchanged, shall (upon
compliance with any applicable provisions of the General Corporation Law of the
State of Delaware) be canceled and shall not be reissued.

11.      Headings of Subdivisions.

         The headings of the various subdivisions hereof are for convenience of
reference only and shall not affect the interpretation of any of the provisions
hereof.

12.      Severability of Provisions.

         If any right, preference or limitation of the Series A Preferred Stock
set forth in this resolution and in the Certificate of Designations for the
Series A Preferred Stock (as such Certificate may be amended from time to time)
is invalid, unlawful or incapable of being enforced by reason of any rule or law
or public policy, all other rights, preferences and limitations set forth in
such Certificate of Designations (as so amended) which can be given effect
without the invalid, unlawful or unenforceable right, preference or limitation
shall, nevertheless, remain in full force and effect, and no right, preference
or limitation herein set forth shall be deemed dependent upon any other such
right, preference or limitation unless so expressed herein.

13.      Notice.

         All notices and other communications required or permitted to be given
to the Corporation hereunder shall be made by hand delivery or registered or
certified mail, return receipt requested, to the Corporation at its principal
executive offices (currently located on the date of the adoption of these
resolutions at 13800 Montfort Drive, Suite 300, Dallas, Texas 75240, Attention:
Secretary. Minor imperfections in any such notice shall not affect the validity
thereof.



                                       31
<PAGE>   32



         IN WITNESS WHEREOF, Renters Choice, Inc. has caused this certificate to
be signed by _______________________, its __________________, this ____ day of
August, 1998.


                                      RENTERS CHOICE, INC.
                                      a Delaware corporation



                                      By:
                                            ---------------------------------
                                      Name:
                                            ---------------------------------
                                      Title:
                                            ---------------------------------




