AMENDED AND RESTATED
 
                                     BYLAWS
 
                                       OF
 
                           U.S. GLOBAL INVESTORS, INC.
 
 
 
                      As amended as of November 8, 2006
 
 
 
<PAGE>
 
 
 
                                    Contents
 
 
Article 1:        Offices......................................................1
   1.01           Registered Office and Agent..................................1
 
   1.02           Other Offices................................................1
 
Article 2:        Shareholders.................................................1
   2.01           Place of Meetings............................................1
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   2.02           Annual Meeting...............................................1
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   2.03           Voting Stock; Voting List....................................1
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   2.04           Special Meetings.............................................2
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   2.05           Notice.......................................................2
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   2.06           Quorum.......................................................2
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   2.07           Majority Vote; Withdrawal of Quorum..........................2
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   2.08           Method of Voting.............................................3
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   2.09           Record Date; Closing Transfer Books..........................3
                  -----------------------------------
   2.10           Action Without Meeting.......................................3
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   2.11           Order of Business at Meetings................................3
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   2.12           Notice of Matters to be Considered...........................4
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   2.13           Nominations..................................................4
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Article 3:        Directors....................................................5
   3.01           Management...................................................5
                  ----------
   3.02           Number; Qualifications; Election; and Term...................5
                  ------------------------------------------
   3.03           Change in Number.............................................5
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   3.04           Removal......................................................5
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   3.05           Vacancies....................................................5
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   3.06           Voting in Election of Directors..............................6
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   3.07           Place of Meetings............................................6
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   3.08           Notice.......................................................6
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   3.09           First Meeting................................................6
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   3.10           Regular Meetings.............................................6
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   3.11           Special Meetings.............................................6
                  ----------------
   3.12           Quorum; Majority Vote........................................6
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   3.13           Chairman of the Board........................................7
                  ---------------------
   3.14           Vice Chairman of the Board...................................7
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   3.15           Compensation.................................................7
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   3.16           Procedure....................................................7
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   3.17           Interested Directors and Officers............................7
                  ---------------------------------
   3.18           Action Without Meeting.......................................8
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   3.19           Advisory Directors...........................................8
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Article 4:        Committees...................................................8
   4.01           Designation..................................................8
                  -----------
   4.02           Number; Qualification; Term..................................8
                  ---------------------------
   4.03           Authority....................................................8
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   4.04           Change in Number.............................................9
                  ----------------
   4.05           Removal......................................................9
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                                     -ii-
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   4.06           Vacancies....................................................9
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   4.07           Meetings.....................................................9
                  --------
   4.08           Quorum; Majority Vote.......................................10
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   4.09           Compensation................................................10
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   4.10           Committee Charters..........................................10
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Article 5:        Notice and Attendance Through Use of Electronic Equipment...10
   5.01           Method......................................................10
                  ------
   5.02           Waiver......................................................10
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   5.03           Telephone and Similar Meetings..............................10
                  ------------------------------
 
Article 6:        Officers and Agents.........................................11
   6.01           Number; Qualification; Election; Term.......................11
                  -------------------------------------
   6.02           Removal.....................................................11
                  -------
   6.03           Vacancies...................................................11
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   6.04           Authority...................................................11
                  ---------
   6.05           Compensation................................................11
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   6.06           Chief Executive Officer.....................................11
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   6.07           President...................................................12
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   6.08           Vice Presidents.............................................12
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   6.09           Secretary...................................................12
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   6.10           Assistant Secretary.........................................12
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   6.11           Chief Financial Officer.....................................12
                  -----------------------
   6.12           Assistant Treasurer.........................................13
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Article 7:        Indemnification.............................................13
   7.01           Definitions.................................................13
                  -----------
   7.02           Indemnification.............................................14
                  ---------------
   7.03           Successful Defense..........................................14
                  ------------------
   7.04           Determinations..............................................14
                  --------------
   7.05           Advancement of Expenses.....................................15
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   7.06           Employee Benefit Plans......................................15
                  ----------------------
   7.07           Other Indemnification and Insurance.........................15
                  -----------------------------------
   7.08           Notice......................................................16
                  ------
   7.09           Construction................................................16
                  ------------
   7.10           Continuing Offer, Reliance, etc.............................16
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   7.11           Effect of Amendment.........................................16
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Article 8:        Certificates and Shareholders...............................17
   8.01           Certificates................................................17
                  ------------
   8.02           Issuance....................................................17
                  --------
   8.03           Payment for Shares..........................................17
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   8.04           Lien........................................................17
                  ----
   8.05           Lost, Stolen or Destroyed Certificates......................18
                  --------------------------------------
   8.06           Registration of Transfer....................................18
                  ------------------------
   8.07           Registered Shareholders.....................................18
                  -----------------------
   8.08           Denial of Preemptive Rights.................................19
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Article 9:        General Provisions..........................................19
 
                                     -iii-
 
   9.01           Dividends and Reserves......................................19
                  ----------------------
   9.02           Books and Records...........................................19
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   9.03           Annual Statement............................................19
                  ----------------
   9.04           Checks and Notes............................................19
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   9.05           Fiscal Year.................................................19
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   9.06           Seal........................................................19
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   9.07           Resignation.................................................20
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   9.08           Amendment of Bylaws.........................................20
                  -------------------
   9.09           Construction................................................20
                  ------------
   9.10           Table of Contents; Headings.................................20
                  ---------------------------
   9.11           Relation to Articles of Incorporation.......................20
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                                     -iv-
<PAGE>
 
 
                           AMENDED AND RESTATED
                                 BYLAWS
                                   OF
                       U.S. GLOBAL INVESTORS, INC.
 
 
 
Article 1:    Offices
 
     1.01 Registered  Office and Agent. The registered office of the corporation
shall be at 7900  Callaghan  Road,  San Antonio,  Texas  78229.  The name of the
registered agent at such address is Frank E. Holmes. Anything in these Bylaws to
the contrary notwithstanding revision of the registered office or the registered
agent of the corporation in accordance with the provisions of the Texas Business
Corporation Act, as amended from time to time (the "TBCA"),  shall automatically
and without  further action amend this section to name such newly adopted office
or registered agent.
 
     1.02 Other Offices.  The  corporation may have offices at other places both
within and without the State of Texas as the board of directors may determine or
as the business of the corporation may require.
 
Article 2:    Shareholders
 
     2.01 Place of Meetings.  All meetings of the shareholders  shall be held at
such time and place,  in or out of the State of Texas, as shall be stated in the
notice of the meeting or in a waiver of notice.
 
     2.02 Annual Meeting. An annual meeting of the shareholders entitled to vote
to election the directors  shall be held each year at a time and on a day as may
be selected by the board of  directors,  but not later than  one-hundred  twenty
(120)  days  after the  expiration  of the  corporation's  fiscal  year.  At the
meeting, the shareholders shall elect directors and transact such other business
as may properly be brought before the meeting.
 
2.03 Voting Stock; Voting List.
 
     (a) The holders of record as of the close of  business on the record  date,
determined in accordance with Section 2.09, of shares of the corporation's Class
C Common  Stock,  par value  $0.05 per share,  shall be  entitled to vote on all
matters  presented at each meeting of shareholders and are hereinafter  referred
to as the "Voting Stock." Each share of Class C Common Stock  outstanding on the
record  date shall be  entitled  to one vote on each  matter to come  before the
meeting.
 
     The  holders  of record as of the close of  business  on the  record  date,
determined in accordance with Section 2.09, of shares of the corporation's Class
A and Class B Common Stock, par value $0.05 per share, shall be entitled to vote
solely on such matters where the vote of such class is required  pursuant to the
TBCA and/or the articles of incorporation and are
 
                                     1
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hereinafter  referred to as the "Nonvoting Stock." Each share of Nonvoting Stock
outstanding  on the  record  date  shall be  entitled  to one vote on each  such
matter.
 
     (b) At least ten days before each meeting of shareholders,  a complete list
of the  shareholders  entitled to vote at the meeting,  arranged in alphabetical
order,  with the  address of each and the number of voting  shares held by each,
shall be prepared by the officer or agent  having  charge of the stock  transfer
books. The list, for a period of ten days prior to the meeting, shall be kept on
file at the  registered  office  of the  corporation  and  shall be  subject  to
inspection by any shareholder at any time during usual business hours.  The list
shall also be produced and kept open at the time and place of the meeting during
the  whole  time  thereof,  and  shall  be  subject  to  the  inspection  of any
shareholder during the whole time of the meeting.
 
     2.04  Special  Meetings.  Special  meetings  of the  shareholders,  for any
purpose or purposes,  unless otherwise  prescribed by statute or by the articles
of  incorporation,  may be called by the chief executive  officer,  the board of
directors,  or the  holders of not less than  twenty-five  percent of all of the
shares of Voting Stock entitled to vote at the meetings.  Business transacted at
a special  meeting shall be confined to the objects  stated in the notice of the
meeting.
 
     2.05 Notice.  Written or printed notice stating the place,  day and hour of
the meeting and, in the case of a special  meeting,  the purpose or purposes for
which the meeting is called,  shall be delivered not less than ten nor more than
fifty days before the date of the meeting,  either  personally or by mail, by or
at the direction of the chief executive officer,  the secretary,  or the officer
or person calling the meeting, to each shareholder of record entitled to vote at
the  meeting.  If  mailed,  such  notice  shall be deemed to be  delivered  when
deposited  in the United  States mail  addressed to the  shareholder  at his/her
address as it  appears  on the stock  transfer  books of the  corporation,  with
postage thereon prepaid.
 
     2.06 Quorum. At all meetings of the shareholders, the presence in person or
by proxy of the holders of a majority of the shares of Voting  Stock  issued and
outstanding  on the  record  date and  entitled  to vote will be  necessary  and
sufficient  to  constitute a quorum for the  transaction  of business  except as
otherwise  provided by law, the articles of incorporation or these bylaws.  If a
quorum is not  present  or  represented  at a meeting of the  shareholders,  the
shareholders  entitled to vote, present in person or represented by proxy, shall
have power to adjourn the meeting from time to time,  without notice (other than
announcement  at the meeting of the time and place at which the meeting is to be
reconvened) until a quorum is present or represented.  At such adjourned meeting
at which a quorum is present or  represented,  any  business  may be  transacted
which might have been  transacted  at the meeting as  originally  notified.  For
purposes of  determining  the presence or absence of a quorum under this Section
2.06,  abstentions  and broker  non-votes  (as such terms are defined in Section
2.07) shall be treated as shares present and entitled to vote.
 
     2.07 Majority Vote;  Withdrawal of Quorum.  When a quorum is present at any
meeting of the shareholders, the vote of the holders of a majority of the shares
of Voting Stock entitled to vote,  present in person or represented by proxy and
voting "for" or "against" any question  brought  before the meeting shall decide
such question,  unless the question is one upon which,  by express  provision of
law, the articles of incorporation or these bylaws, a different vote is required
in which case such  express  provision  shall govern and control the decision of
such question but if
 
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<PAGE>
 
such other express  provision  does not specify that the  affirmative  vote of a
given percent of outstanding  shares are required,  the matter shall be approved
or adopted if the required  percent of the shares  entitled to vote,  present in
person or  represented  by proxy and voting "for" or  "against"  such matter has
voted "for".  Abstentions and broker non-votes are not counted (even though such
shares are considered present and entitled to vote for purposes of determining a
quorum pursuant to Section 2.06). The term  "abstentions"  shall refer to shares
which are not voted  "for" or  "against"  a  particular  question by a holder or
holders  present in person or by proxy at a meeting  and  entitled  to vote such
shares on such question.  The term "broker  non-vote" shall refer to shares held
by brokers or nominees as to which  instructions have not been received from the
beneficial  owners or  persons  entitled  to vote and that the broker or nominee
does not have  discretionary  power to vote on the particular  question on which
the vote is being counted. Anything herein to the contrary notwithstanding,  any
alteration, amendment, or repeal of any of Sections 2.07 or 3.04, or adoption of
any provision inconsistent therewith, by the shareholders shall require the vote
of the holders of two-thirds  (2/3) of the  outstanding  shares of Voting Stock.
The  shareholders  present at a duly organized  meeting may continue to transact
business   until   adjournment,   notwithstanding   the   withdrawal  of  enough
shareholders to leave less than a quorum.
 
     2.08  Method  of  Voting.  At  any  meeting  of  the  shareholders,   every
shareholder  having  the right to vote may vote  either in  person,  or by proxy
executed  in  writing  by  the   shareholder  or  by  his/her  duly   authorized
attorney-in-fact.  No proxy shall be valid after eleven  months from the date of
its  execution,  unless  otherwise  provided  in the proxy.  Each proxy shall be
revocable  unless  expressly  provided  therein  to be  irrevocable  and  unless
otherwise made  irrevocable by law. Each proxy shall be filed with the secretary
of the corporation prior to or at the time of the meeting.  Voting for directors
shall be in accordance with Section 3.06 of these bylaws.  Any vote may be taken
by voice or by show of hands unless someone  entitled to vote objects,  in which
case, written ballots shall be used.
 
     2.09 Record Date; Closing Transfer Books. The board of directors may fix in
advance a record date for the purpose of  determining  shareholders  entitled to
notice of or to vote at a meeting of the shareholders, the record date to be not
less than ten (10) nor more than sixty (60) days  prior to the  meeting;  or the
board of  directors  may close the stock  transfer  books for such purpose for a
period of not less than ten nor more than sixty (60) days prior to such meeting.
In the absence of any action by the board of directors,  the date upon which the
notice of the meeting is mailed shall be the record date.
 
     2.10 Action Without Meeting.  Any action required by statute to be taken at
a meeting of the shareholders,  or any action which may be taken at a meeting of
the  shareholders,  may be taken  without a meeting  if a  consent  in  writing,
setting  forth the action so taken,  shall be signed by all of the  shareholders
entitled to vote with  respect to the subject  matter  thereof and such  consent
shall have the same force and effect as a  unanimous  vote of the  shareholders.
The  consent  may be in more than one  counterpart  so long as each  shareholder
signs one of the counterparts. The consent shall be placed in the minute book.
 
     2.11  Order of  Business  at  Meetings.  The  order of  business  at annual
meetings at other meetings of  shareholders  shall be as determined by the board
of  directors  and as may be required by law or the rules of any  exchange  upon
which the Company's stock is listed.
 
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<PAGE>
 
     2.12  Notice of  Matters  to be  Considered.  At an annual  meeting  of the
shareholders,  only such business shall be conducted as shall have been properly
brought before the meeting.  To be properly  brought  before an annual  meeting,
business must be specified in the notice of meeting (or any supplement  thereto)
given by or at the  direction  of the  board of  directors,  otherwise  properly
brought before the meeting by or at the direction of the board of directors,  or
otherwise  properly brought before the meeting by a shareholder.  In addition to
any other applicable requirements, for business to be properly brought before an
annual meeting by a shareholder,  the shareholder  must have given timely notice
thereof  in  writing  to the  secretary  of the  corporation.  To be  timely,  a
shareholder's  notice  must  be  delivered  to or  mailed  and  received  at the
principal executive offices of the corporation not less than fifty (50) days nor
more than seventy-five (75) days prior to the meeting;  provided,  however, that
in the  event  that less  than  sixty-five  (65)  days'  notice or prior  public
disclosure of the date of the meeting is given or made to  shareholders,  notice
by the  shareholder to be timely must be so received not later than the close of
business on the 15th day  following  the day on which such notice of the date of
the  annual   meeting  was  mailed  or  such  public   disclosure  was  made.  A
shareholder's  notice to the  secretary  shall set forth as to each  matter  the
shareholder  proposes to bring before the annual meeting (i) a brief description
of the business  desired to be brought before the annual meeting and the reasons
for  conducting  such business at the annual  meeting,  (ii) the name and record
address of the shareholder  proposing such business,  (iii) the class and number
of shares of the corporation  which are  beneficially  owned by the shareholder,
and (iv) any material interest of the shareholder in such business.
 
     Notwithstanding anything in these Bylaws to the contrary, no business shall
be conducted at the annual meeting except in accordance  with the procedures set
forth in this Section 2.12; provided, however, that nothing in this Section 2.12
shall be  deemed to  preclude  discussion  by any  shareholder  of any  business
properly brought before the annual meeting in accordance with said procedure.
 
     The chairman of an annual  meeting shall,  if the facts warrant,  determine
and declare to the meeting that  business was not  properly  brought  before the
meeting in accordance  with the  provisions of this Section 2.12,  and if he/she
should  so  determine,  he/she  shall so  declare  to the  meeting  and any such
business not properly brought before the meeting shall not be transacted.
 
     2.13  Nominations.  Only persons who are nominated in  accordance  with the
following procedures shall be eligible for election as directors. Nominations of
persons for election to the board of directors of the corporation may be made at
a meeting of  shareholders  by or at the  direction of the board of directors by
any nominating committee or person appointed by the board of directors or by any
shareholder of the corporation entitled to vote for the election of directors at
the meeting who complies  with the notice  procedures  set forth in this Section
2.13.  Such  nominations,  other than those made by or at the  direction  of the
board of  directors,  shall be made  pursuant to timely notice in writing to the
secretary of the  corporation.  To be timely,  a  shareholder's  notice shall be
delivered to or mailed and received at the  principal  executive  offices of the
corporation not less than fifty (50) days nor more than  seventy-five  (75) days
prior to the  meeting;  provided,  however,  that in the  event  that  less than
sixty-five  (65)  days'  notice or prior  public  disclosure  of the date of the
meeting is given or made to shareholders, notice by the shareholder to be timely
must be so  received  not  later  than  the  close of  business  on the 15th day
following the date on which such notice of the date of the meeting was mailed or
such public
 
                                     4
<PAGE>
 
disclosure was made. Such shareholder's  notice to the secretary shall set forth
(a) as to each person whom the shareholder  proposes to nominate for election or
re-election as a director,  (i) the name,  age,  business  address and residence
address of the  person,  (ii) the  principal  occupation  or  employment  of the
person, (iii) the class and number of shares of capital stock of the corporation
which are  beneficially  owned by the  person,  and (iv) any  other  information
relating to the person that is required to be  disclosed  in  solicitations  for
proxies  for  election  of  directors  pursuant  to  Regulation  14A  under  the
Securities  Exchange  Act of 1934,  as  amended;  and (b) as to the  shareholder
giving the notice,  (i) the name and record address of the  shareholder and (ii)
the class and number of shares of  capital  stock of the  corporation  which are
beneficially owned by the shareholder.  The corporation may require any proposed
nominee to furnish such other  information  as may reasonably be required by the
corporation to determine the eligibility of such proposed  nominee to serve as a
director  of the  corporation.  No person  shall be eligible  for  election as a
director of the corporation  unless  nominated in accordance with the procedures
set forth herein.
 
     The chairman of the meeting  shall,  if the facts  warrant,  determine  and
declare to the meeting that a  nomination  was not made in  accordance  with the
foregoing procedure, and if he/she should so determine,  he/she shall so declare
to the meeting and the defective nomination shall be disregarded.
 
Article 3:    Directors
 
     3.01  Management.  The  business  and affairs of the  corporation  shall be
managed  by the  board of  directors  who may  exercise  all such  powers of the
corporation  and do all such lawful acts and things as are not (by statute or by
the articles of  incorporation  or by these  bylaws)  directed or required to be
exercised or done by the shareholder.
 
     3.02 Number;  Qualifications;  Election;  and Term.  The board of directors
shall  consist of at least four (4) but not more than nine (9)  directors  until
changed by  resolution  adopted by the board of  directors  pursuant  to Section
3.03.  None of the members of the board of directors need to be  shareholders or
residents of the State of StateplaceTexas. The directors shall be elected at the
annual  meeting of the  shareholders,  except as provided  in Sections  3.03 and
3.05.  Each director shall hold office until his/her  successor shall be elected
and shall qualify.
 
     3.03  Change  in  Number.  The  number of  directors  may be  increased  or
decreased from time to time by resolution adopted by the board of directors,  or
if no such  designation has been made, the number of Directors will be four (4),
but no decrease  shall have the effect of  shortening  the term of any incumbent
director.
 
     3.04  Removal.  Any director may be removed  either for or without cause at
any special or annual meeting of  shareholders,  by the affirmative vote of over
two-thirds  in number  of shares of the  issued  and  outstanding  Voting  Stock
entitled to vote for the election of such director if notice of intention to act
upon such matter shall have been given in the notice calling such meeting.
 
     3.05 Vacancies.  Any vacancy occurring in the board of directors (by death,
resignation  or removal) may be filled by an  affirmative  vote of a majority of
the remaining directors though
 
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less than a quorum of the  board of  directors.  A  director  elected  to fill a
vacancy  shall be  elected  for the  unexpired  term of his/her  predecessor  in
office.  Any directorship to be filled by reason of an increase in the number of
directors  shall be filled  either (i) by election at an annual  meeting or at a
special meeting of shareholders  called for that purpose or (ii) by the board of
directors,  provided  the  board of  directors  may not fill  more than two such
directorships  during the period between any two successive  annual  meetings of
shareholders.
 
     3.06  Voting in  Election  of  Directors.  Directors  shall be  elected  by
plurality  vote of the holders of Voting Stock.  Cumulative  voting shall not be
permitted.
 
     3.07 Place of  Meetings.  Meetings  of the board of  directors,  regular or
special, may be held either within or without the State of Texas.
 
     3.08 Notice.  Written or printed notice stating the place,  day and hour of
the meeting  and, in the case of a special  meeting or  committee  meeting,  the
purpose or purposes for which the meeting is called, shall be delivered not less
than twenty five (25) hours before the date of the meeting, either personally or
by mail,  by or at the direction of the chairman of the board,  chief  executive
officer,  the secretary,  or the officer or person calling the meeting,  to each
director or committee member of record entitled to vote at the meeting.
 
     3.09 First Meeting.  The first meeting of each newly elected board shall be
held  without  further  notice  immediately  following  the  annual  meeting  of
shareholders,  and at the  same  place,  unless  (by  unanimous  consent  of the
directors then elected and serving) such time or place shall be changed.
 
     3.10 Regular  Meetings.  Regular  meetings of the board of directors may be
held  without  notice  at such  time and  place as  shall  from  time to time be
determined by the board.
 
     3.11 Special  Meetings.  Special  meetings of the board of directors may be
called by the  chairman  of the board or the chief  executive  officer  on three
days'  notice to each  director,  either  personally  or by mail or by telegram.
Special  meetings  shall be  called  by the  chairman  of the  board,  the chief
executive  officer or the  secretary  in like  manner and on like  notice on the
request of any two of the directors.  Except as otherwise  expressly provided by
statute,  or by the articles of incorporation,  or by these bylaws,  neither the
business to be  transacted  at, nor the purpose of, any special  meeting need be
specified in a notice or waiver of notice.
 
     3.12 Quorum;  Majority  Vote. At all meetings of the board of directors,  a
majority of the board of  directors  fixed by these  Bylaws  shall  constitute a
quorum for the  transaction of business.  The act of a majority of the directors
present  at any  meeting  at which a quorum is  present  shall be the act by the
board of directors, except as otherwise specifically provided by statute, by the
Articles of  Incorporation  or by these Bylaws.  Anything herein to the contrary
not withstanding, any alteration,  amendment, or repeal of any of Sections 2.07,
3.02, 3.03, 3.04, 3.05, 3.11 or 9.08, or adoption of any provision  inconsistent
therewith,  by the board of  directors  shall  require the  affirmative  vote of
two-thirds  (2/3) of the board of directors of the  corporation.  If a quorum is
not  present  at a meeting  of the board of  directors,  the  directors  present
thereat may adjourn the meeting  from time to time,  without  notice  other than
announcement at the meeting, until a quorum is present.
 
                                     6
<PAGE>
 
     3.13 Chairman of the Board.  The board of directors shall from time to time
elect from their  number an  individual  to serve as chairman of the board.  The
chairman of the board shall preside at all meetings of the  shareholders and the
directors,  but  he/she  shall not be  deemed  an  officer  or  employee  of the
corporation by virtue of holding such position.
 
     3.14 Vice  Chairman of the Board.  The board of directors  may from time to
time elect from their  number an  individual  to serve as vice  chairman  of the
board.  The vice chairman of the board,  if one shall be elected,  shall perform
the duties of the  chairman of the board in relation to meetings of the board of
directors and shareholders in the event of the unavailability of the chairman of
the board and shall  perform such  services for the board of directors  and such
additional duties, and shall exercise such powers, as the board of directors may
from time to time  prescribe,  but  he/she  shall not be  deemed an  officer  or
employee of the corporation by virtue of holding such position.
 
     3.15 Compensation.  By resolution of the board of directors,  the directors
may be paid their  expenses,  if any, of attendance at each meeting of the board
of directors  and may be paid a fixed sum for  attendance at each meeting of the
board of  directors  or a stated  salary  as  director.  No such  payment  shall
preclude any director  from serving the  corporation  in any other  capacity and
receiving compensation therefor.  Members of special or standing committees may,
by  resolution  of the board of  directors,  be allowed  like  compensation  for
attending committee meetings.
 
     3.16  Procedure.  The board of directors  shall keep regular minutes of its
proceedings. The minutes shall be placed in the minute book of the corporation.
 
3.17 Interested Directors and Officers.
 
     (a) An otherwise valid contract or transaction  between the corporation and
one or more of its  directors or officers,  or between the  corporation  and any
other  corporation,  partnership  or other  entity  in which  one or more of the
directors  or officers are  directors or officers or have a financial  interest,
shall be valid  notwithstanding  that the  director  or officer is present at or
participates in the meeting of the board of directors or committee thereof which
authorizes the contract or transaction, or solely because his/her or their votes
are counted for such purposes, if:
 
          (1) The material facts as to his or her  relationship  or interest and
     as to the contract or  transaction  are disclosed or are known to the board
     of directors or the  committee,  and the board of directors or committee in
     good faith  authorizes the contract or transaction by the affirmative  vote
     of a majority of the disinterested directors, even though the disinterested
     directors be less than a quorum; or
 
          (2) The material facts as to his/her  relationship  or interest and as
     to  the  contract  or  transaction  are  disclosed  or  are  known  to  the
     shareholders  entitled to vote thereon,  and the contract or transaction is
     specifically approved in good faith by vote of the shareholders; or
 
                                     7
<PAGE>
 
          (3) The contract or  transaction  is fair as to the  corporation as of
     the time it is authorized, approved, or ratified by the board of directors,
     a committee thereof, or the shareholders.
 
     (b)  Common or  interested  directors  may be counted  in  determining  the
presence of a quorum at a meeting of the board of directors.
 
     3.18 Action Without  Meeting.  Any action required or permitted to be taken
at a  meeting  of the board of  directors  may be taken  without a meeting  if a
consent in writing,  setting forth the action so taken, is signed by all members
of the board of directors.  Such consent shall have the same force and effect as
a  unanimous  vote at a meeting  and may be stated  as such in any  document  or
instrument filed with the Secretary of State.
 
     3.19 Advisory Directors.  The board of directors,  by resolution adopted by
not less than a majority of the directors then in office,  may from time to time
appoint  such  number  of  individuals  as it may deem  appropriate  to serve as
advisory directors at the pleasure of the board of directors. Advisory directors
may  be  given  such  designations   (including  without  limitation   "advisory
director," "director emeritus" or "honorary director") as the board of directors
may from time to time determine.  Advisory directors are not, and shall not have
the duties and responsibilities of, directors of the corporation,  and the terms
"director"  or "member of the board of  directors" as used in these Bylaws shall
not be deemed to mean or include advisory  directors;  provided that an advisory
director  who was  previously  a director of the  corporation  shall be deemed a
director  for the sole  purpose  of  preventing  options  previously  granted to
him/her under the stock option plans of the  corporation  from  terminating as a
result of his/her  ceasing to serve as a director  of the  corporation.  Without
limiting  the  generality  of the  foregoing,  advisory  directors  shall not be
entitled (a) to receive any notice of any meeting of the board of directors, (b)
to attend any meeting of the board of directors  except at the invitation of the
board of directors,  (c) to vote on any matter presented for action by the board
of  directors  or,  except  at the  invitation  of the  board of  directors,  to
participate  in the  consideration  of any such  matter  or the  formulation  or
determination  of corporate  policy,  (d) to receive any non-public  information
regarding the business or affairs of the  corporation  or any matters  presented
for action or  consideration  by the board of  directors,  or (e) to receive any
compensation  for  serving  as an  advisory  director  except  as the  board  of
directors may otherwise determine by resolution.
 
Article 4:    Committees
 
     4.01  Designation.  The board of directors may, by resolution  adopted by a
majority  of the whole  board,  designate  from  among its  members  one or more
committees as it may determine necessary.
 
     4.02 Number;  Qualification;  Term. Any such  designated  committees  shall
consist of two or more directors,  not less than a majority of whom in each case
shall be directors  who are not officers or  employees of the  corporation.  The
committees shall serve at the pleasure of the board of directors.
 
     4.03 Authority.  Each committee, to the extent provided in such resolution,
shall have and may  exercise  all of the  authority of the board of directors in
the management of the business
 
                                     8
<PAGE>
 
and affairs of the corporation, except in the following matters and except where
action of the full board of  directors is required by statute or by the articles
of incorporation:
 
          (a) Amending the articles of incorporation;
 
          (b) Amending,  altering or repealing the bylaws of the  corporation or
     adopting new bylaws;
 
          (c) Approving and/or recommending or submitting to shareholders:
 
               (1) merger;
 
               (2) consolidation;
 
               (3) sale, lease (as lessor), exchange or other disposition of all
          or substantially all the property and assets of the corporation; or
 
               (4) dissolution;
 
          (d) Filling vacancies in the board of directors or any such committee;
 
          (e) Electing or removing officers of the corporation or members of any
     such committee;
 
          (f)  Fixing  compensation  of any  person  who is a member of any such
     committee;
 
          (g) Declaring dividends; and
 
          (h) Altering or repealing any resolution of the board of directors.
 
     4.04 Change in Number.  The number of committee members may be increased or
decreased  (but not  below  two) from time to time by  resolution  adopted  by a
majority of the whole board of directors.
 
     4.05 Removal. Any committee member may be removed by the board of directors
by the affirmative vote of a majority of the whole board of directors,  whenever
in its judgment the best interests of the corporation will be served thereby.
 
     4.06   Vacancies.   A  vacancy   occurring  in  any  committee  (by  death,
resignation,  removal or  otherwise)  may be filled by the board of directors in
the manner provided for original designation in Section 4.01.
 
     4.07 Meetings.  Time,  place and notice (if any) of all committee  meetings
shall be determined by the respective committee.  Unless otherwise determined by
a particular committee, meetings of the committees may be called by any director
of the  corporation on not less than twenty (25) hours' notice to each member of
the committee,  either personally or by mail,  telephone (including voice mail),
email or other electronic or other delivery means.
 
                                     9
<PAGE>
 
Neither the business to be  transacted  at, nor the purpose of, any meeting need
be specified  in a notice or waiver of notice of any meeting.  (see also Section
5.03).
 
     4.08 Quorum; Majority Vote. At meetings of any committee, a majority of the
number of members designated by the board of directors shall constitute a quorum
for the transaction of business. The act of a majority of the members present at
any  meeting  at which a quorum is  present  shall be the act of the  committee,
except as  otherwise  specifically  provided  by statute or by the  articles  of
incorporation or by these bylaws. If a quorum is not present at a meeting of the
committee,  the members  present  thereat  may adjourn the meeting  from time to
time, without notice other than an announcement at the meeting until a quorum is
present.
 
     4.09  Compensation.  Compensation  of  committee  members  shall  be  fixed
pursuant to the provisions of Section 3.15 of these bylaws.
 
     4.10 Committee Charters.  Any committee designated by the board may adopt a
charter  governing any of the matters  covered by Sections 4.02 and 4.04 through
4.09 and, to the extent  approved by the board of  directors,  any such  charter
shall supercede the provisions of Sections 4.02 and 4.04 through 4.09.
 
Article 5:    Notice and Attendance Through Use of Electronic Equipment
 
     5.01 Method.  Whenever by statute or the articles of incorporation or these
bylaws,  notice is required to be given to any director or  shareholder,  and no
provision is made as to how the notice shall be given, it shall not be construed
to mean  personal  notice,  but any such notice may be given (a) in writing,  by
mail,  postage prepaid,  addressed to the director or shareholder at the address
appearing on the books of the corporation,  or (b) in any other method permitted
by law.  Any notice  required or  permitted  to be given by mail shall be deemed
given   at   the   time   when   the   same   is   thus    deposited    in   the
country-regionplaceUnited States mails.
 
     5.02 Waiver. Whenever, by statute or the articles of incorporation or these
bylaws,  notice is required to be given to any shareholder or director, a waiver
thereof in writing  signed by the person or  persons  entitled  to such  notice,
whether  before or after the time stated in such notice,  shall be equivalent to
the  giving  of  such  notice.  Attendance  of a  director  at a  meeting  shall
constitute a waiver of notice of such meeting,  except where a director  attends
for the express  purpose of objecting to the  transaction of any business on the
ground that the meeting is not lawfully called or convened.
 
     5.03 Telephone and Similar Meetings. Shareholders,  directors and committee
members may  participate in and hold a meeting by means of conference  telephone
or similar communications  equipment by means of which all persons participating
in the meeting shall constitute presence in person at the meeting,  except where
a person participates in the meeting for the express purpose of objecting to the
transaction  of any  business  on the ground  that the  meeting is not  lawfully
called or convened.
 
                                     10
<PAGE>
 
Article 6:    Officers and Agents
 
     6.01 Number; Qualification; Election; Term.
 
          (a) The corporation shall have:
 
               (1) a  chairman  of the  board,  a  chief  executive  officer,  a
          secretary and a chief financial officer, and
 
               (2) such other officers and assistant  officers and agents as the
          board of directors may determine.
 
          (b) No  officer  or  agent  need be a  shareholder,  a  director  or a
     resident of StateplaceTexas.
 
          (c) Officers named in Section 6.01(a)(1) shall be elected by the board
     of directors on the  expiration of an officer's  term or whenever a vacancy
     exists.  Officers and agents named in Section  6.01(a)(2) may be elected by
     the board at any meeting.
 
          (d) Unless otherwise specified by the board at the time of election or
     appointment,  or in any  employment  contract  approved by the board,  each
     officer's  and  agent's  term shall end at the first  meeting of  directors
     after the next annual meeting of shareholders. He/She shall serve until the
     end of his/her term or, if earlier, his/her death, resignation or removal.
 
          (e) Any two or more  offices  may be held by the same  person,  except
     that the chief  executive  officer and the secretary  shall not be the same
     person.
 
     6.02  Removal.  Any officer or agent  elected or  appointed by the board of
directors may be removed by the board of directors  whenever in its judgment the
best interests of the corporation will be served thereby.  Such removal shall be
without  prejudice  to the  contract  rights,  if any, of the person so removed.
Election  or  appointment  of an  officer  or agent  shall not of itself  create
contract rights.
 
     6.03 Vacancies.  Any vacancy occurring in any office of the corporation (by
death,  resignation,  removal  or  otherwise)  maybe  filled  by  the  board  of
directors.
 
     6.04  Authority.  Officers and agents shall have such authority and perform
such duties in the management of the corporation as are provided in these bylaws
or as may be determined by resolution of the board of directors not inconsistent
with these bylaws.
 
     6.05  Compensation.  The compensation of officers and agents shall be fixed
from time to time by the  compensation  committee  pursuant  to the terms of the
compensation committee charter.
 
     6.06 Chief Executive Officer. The chief executive officer shall be the most
senior  officer  of the  corporation;  he/she  shall  have  general  and  active
management  of the business and affairs of the  corporation,  and shall see that
all orders and  resolutions  of the board are carried
 
                                     11
<PAGE>
 
into  effect.  He/She  shall  perform  such  other  duties  and have such  other
authority and powers as the board of directors may from time to time prescribe.
 
     6.07  President.  The president  shall, in the absence or disability of the
chief executive officer,  perform the duties and have the authority and exercise
the powers of the chief  executive  officer.  He/She  shall  perform  such other
duties and have such other  authority  and powers as the board of directors  may
from time to time prescribe or as the chief  executive  officer may from time to
time delegate.
 
     6.08 Vice Presidents.  The vice  presidents,  if any, in the order of their
ranking (by category or  otherwise)  determined by the board of directors or, in
the absence of any such  ranking or any specific  determination  by the board of
directors,  in the order of the  length of their  service  as a vice  president,
shall,  in  the  absence  or  disability  of the  chief  executive  officer  and
president,  perform the duties and have the authority and exercise the powers of
the chief executive officer.  They shall perform such other duties and have such
other  authority  and  powers  as the board of  directors  may from time to time
prescribe or as the chief executive officer may from time to time delegate.
 
     6.09 Secretary.
 
          (a) The secretary  shall attend all meetings of the board of directors
     and  all  meetings  of the  shareholders  and  record  the  minutes  of all
     proceedings in a book to be kept for that purpose.
 
          (b) The  secretary  shall  give,  or cause to be given,  notice of all
     meetings  of  the  shareholders  and  special  meetings  of  the  board  of
     directors.
 
          (c)  The  secretary  shall  keep  in  safe  custody  the  seal  of the
     corporation and, when authorized by the board of directors,  affix the same
     to any instrument requiring it.
 
          (d)  The  secretary  shall  be  under  the  supervision  of the  chief
     executive  officer and shall  perform such other duties and have such other
     authority  and  powers  as the  board of  directors  may from  time to time
     prescribe or as the chief executive officer may from time to time delegate.
 
     6.10 Assistant Secretary.  The assistant secretary shall, in the absence or
disability  of the  secretary,  perform  the duties and have the  authority  and
exercise the powers of the secretary. He/She shall perform such other duties and
have such other powers as the board of directors may from time to time prescribe
or as the chief executive officer may from time to time delegate.
 
     6.11 Chief Financial Officer.
 
          (a)  The  chief  financial  officer  shall  have  the  custody  of the
     corporate funds and securities and shall keep full and accurate accounts of
     receipts and  disbursements of the corporation and shall deposit all monies
     and other valuable effects in the name and to the credit of the corporation
     in such depositories as may be designated by the board of directors.
 
                                     12
<PAGE>
 
          (b)  He/She  shall  disburse  the funds of the  corporation  as may be
     ordered  by the  board  of  directors,  taking  proper  vouchers  for  such
     disbursements,  and  shall  render  to  the  chief  executive  officer  and
     directors,  at the  regular  meetings of the board,  or  whenever  they may
     require  it, an  account of all  his/her  transactions  as chief  financial
     officer and of the financial condition of the corporation.
 
          (c) If  required  by the board of  directors,  he/she  shall  give the
     corporation  a bond in such  form,  in such sum,  and with  such  surety or
     sureties as shall be satisfactory to the board for the faithful performance
     of the duties of his/her office and for the restoration to the corporation,
     in case of his/her death,  resignation,  retirement or removal from office,
     of all books, papers,  vouchers,  money and other property of whatever kind
     in  his/her   possession  or  under  his/her   control   belonging  to  the
     corporation.
 
          (d)  He/She  shall  perform  such  other  duties  and have such  other
     authority  and  powers  as the  board of  directors  may from  time to time
     prescribe or as the chief executive officer may from time to time delegate.
 
     6.12 Controller.  The Controller shall, in the absence or disability of the
chief financial officer,  perform the duties and have the authority and exercise
the powers of the chief  financial  officer.  He/She  shall  perform  such other
duties and have such  other  powers as the board of  directors  may from time to
time prescribe or the chief executive officer may from time to time delegate.
 
Article 7:    Indemnification
 
7.01 Definitions.  In this Article:
 
          (a) "Indemnitee"  means (i) any present or former  director,  advisory
     director or officer (including assistant officers) of the corporation, (ii)
     any person who while serving in any of the capacities referred to in clause
     (i) hereof  served at the  corporation's  request as a  director,  officer,
     partner,  venturer,   proprietor,   trustee,  employee,  agent  or  similar
     functionary of another foreign or domestic corporation,  partnership, joint
     venture,  trust,  employee benefit plan or other enterprise,  and (iii) any
     person nominated or designated by (or pursuant to authority granted by) the
     board  of  directors  or  any  committee  thereof  to  serve  in any of the
     capacities referred to in clauses (i) or (ii) hereof.
 
          (b)  "Official  Capacity"  means  (i)  when  used  with  respect  to a
     director,  the office of  director of the  corporation,  and (ii) when used
     with respect to a person other than a director,  the elective or appointive
     office of the  corporation  held by such person or the employment or agency
     relationship undertaken by such person on behalf of the corporation, but in
     each case  does not  include  service  for any other  foreign  or  domestic
     corporation or any partnership, joint venture, sole proprietorship,  trust,
     employee benefit plan or other enterprise.
 
          (c) "Proceeding"  means any threatened,  pending or completed  action,
     suit or proceeding, whether civil, criminal, administrative, arbitrative or
     investigative,  any appeal in such an action,  suit or proceeding,  and any
     inquiry  or  investigation  that  could  lead to such  an  action,  suit or
     proceeding.
 
                                     13
<PAGE>
 
     7.02  Indemnification.  The corporation  shall  indemnify every  Indemnitee
against all judgments,  penalties  (including excise and similar taxes),  fines,
amounts paid in settlement  and  reasonable  expenses  actually  incurred by the
Indemnitee  in  connection  with any  Proceeding  in which  he/she was, is or is
threatened to be named  defendant or respondent,  or in which he/she was or is a
witness without being named a defendant or respondent, by reason, in whole or in
part,  of  his/her  serving  or having  served,  or  having  been  nominated  or
designated to serve, in any of the capacities referred to in Section 7.01, if it
is determined in accordance  with Section 7.04 that the Indemnitee (a) conducted
himself/herself in good faith, (b) reasonably  believed,  in the case of conduct
in his/her Official Capacity, that his/her conduct was in the corporation's best
interests,  and,  in all other  cases,  that  his/her  conduct  was at least not
opposed to the corporation's best interests, and (c) in the case of any criminal
proceeding,  had no  reasonable  cause  to  believe  that  his/her  conduct  was
unlawful;  provided,  however,  that in the event  that an  Indemnitee  is found
liable to the corporation or is found liable on the basis that personal  benefit
was improperly  received by the Indemnitee the indemnification (i) is limited to
reasonable  expenses  actually incurred by the Indemnitee in connection with the
Proceeding  and (ii) shall not be made in respect of any Proceeding in which the
Indemnitee shall have been found liable for willful or intentional misconduct in
the  performance of his/her duty to the  corporation.  Except as provided in the
immediately  preceding  proviso to the first  sentence of this Section  7.02, no
indemnification  shall  be  made  under  this  Section  7.02 in  respect  of any
Proceeding  in which such  Indemnitee  shall  have been (x) found  liable on the
basis that personal  benefit was improperly  received by him, whether or not the
benefit resulted from an action taken in the Indemnitee's  Official Capacity, or
(y) found  liable to the  corporation.  The  termination  of any  Proceeding  by
judgment,  order,  settlement or conviction,  or on a plea of nolo contendere or
its equivalent,  is not of itself determinative that the Indemnitee did not meet
the  requirements  set forth in clauses (a), (b) or (c) in the first sentence of
this Section 7.02.  An  Indemnitee  shall be deemed to have been found liable in
respect of any claim,  issue or matter only after the Indemnitee shall have been
so adjudged by a court of competent jurisdiction after exhaustion of all appeals
therefrom.  Reasonable  expenses shall include,  without  limitation,  all court
costs  and all fees and  disbursements  of  attorneys  for the  Indemnitee.  The
indemnification provided herein shall be applicable whether or not negligence or
gross negligence of the Indemnitee is alleged or proven.
 
     7.03 Successful Defense. Without limitation of Section 7.02 and in addition
to the  indemnification  provided for in Section  7.02,  the  corporation  shall
indemnify every Indemnitee against  reasonable  expenses incurred by such person
in  connection  with any  Proceeding  in which  he/she is a  witness  or a named
defendant or respondent because he/she served in any of the capacities  referred
to in Section 7.01, if such person has been wholly successful,  on the merits or
otherwise, in defense of the Proceeding.
 
     7.04 Determinations. Any indemnification under Section 7.02 (unless ordered
by a court of competent jurisdiction) shall be made by the corporation only upon
a  determination  that  indemnification  of  the  Indemnitee  is  proper  in the
circumstances  because he/she has met the applicable  standard of conduct.  Such
determination  shall be made (a) by the board of directors by a majority vote of
a quorum  consisting of directors  who, at the time of such vote,  are not named
defendants  or  respondents  in the  Proceeding;  (b) if such a quorum cannot be
obtained, then by a majority vote of a committee of the board of directors, duly
designated  to act in the matter by a majority  vote of all  directors (in which
designation  directors who are named defendants or respondents in the Proceeding
may participate),  such committee to consist solely
 
                                     14
<PAGE>
 
of two (2) or more  directors  who, at the time of the committee  vote,  are not
named defendants or respondents in the Proceeding;  (c) by special legal counsel
selected by the board of directors  or a committee  thereof by vote as set forth
in clauses (a) or (b) of this Section 7.04 or, if the requisite quorum of all of
the  directors  cannot  be  obtained  therefor  and  such  committee  cannot  be
established,  by a majority vote of all of the directors (in which directors who
are named defendants or respondents in the Proceeding may  participate);  or (d)
by the  shareholders  in a vote that excludes the shares held by directors  that
are named  defendants or  respondents  in the  Proceeding.  Determination  as to
reasonableness of expenses shall be made in the same manner as the determination
that  indemnification  is  permissible,  except that if the  determination  that
indemnification  is permissible is made by special legal counsel,  determination
as to  reasonableness of expenses must be made in the manner specified in clause
(c) of the preceding sentence for the selection of special legal counsel. In the
event a  determination  is made under this Section 7.04 that the  Indemnitee has
met the applicable  standard of conduct as to some matters but not as to others,
amounts to be indemnified may be reasonably prorated.
 
     7.05 Advancement of Expenses.  Reasonable  expenses  (including court costs
and  attorneys'  fees) incurred by an Indemnitee who was or is a witness or was,
is or is threatened  to be made a named  defendant or respondent in a Proceeding
shall be paid by the corporation at reasonable intervals in advance of the final
disposition of such  Proceeding,  and without  making any of the  determinations
specified in Section  7.04,  after receipt by the  corporation  of (a) a written
affirmation by such  Indemnitee of his/her good faith belief that he/she has met
the standard of conduct necessary for  indemnification  by the corporation under
this Article and (b) a written undertaking by or on behalf of such Indemnitee to
repay the amount paid or reimbursed by the corporation if it shall ultimately be
determined  that he/she is not entitled to be indemnified by the  corporation as
authorized  in this  Article.  Such  written  undertaking  shall be an unlimited
obligation  of the  Indemnitee  but need not be secured  and it may be  accepted
without  reference to financial ability to make repayment.  Notwithstanding  any
other provision of this Article,  the corporation may pay or reimburse  expenses
incurred by an Indemnitee in connection with his/her  appearance as a witness or
other  participation  in a  Proceeding  at a time  when  he/she  is not  named a
defendant or respondent in the Proceeding.
 
     7.06 Employee Benefit Plans. For purposes of this Article,  the corporation
shall be deemed to have requested an Indemnitee to serve as a trustee, employee,
agent,  or  similar  functionary  of  an  employee  benefit  plan  whenever  the
performance by him/her of his/her duties to the corporation  also imposes duties
on or  otherwise  involves  services by him/her to the plan or  participants  or
beneficiaries  of the plan.  Excise taxes assessed on an Indemnitee with respect
to an employee benefit plan pursuant to applicable law are deemed fines.  Action
taken or omitted by an  Indemnitee  with respect to an employee  benefit plan in
the performance of his/her duties for a purpose  reasonably  believed by him/her
to be in the  interest  of the  participants  and  beneficiaries  of the plan is
deemed to be for a purpose  which is not  opposed to the best  interests  of the
corporation.
 
7.07 Other Indemnification and Insurance.
 
     The board of directors shall have, in its discretion, the power to purchase
and  maintain  insurance  on behalf  of any  person  who is or was a  directors,
officer,  committee member,  employee or agent of the corporation,  or is or was
serving at the request of the  corporation as a
 
                                     15
<PAGE>
 
director,  officer,  employee  or agent  of  another  corporation,  partnership,
GivenNamejoint venture, trust or other enterprise against any liability asserted
against  him/her and incurred by him/her in any such  capacity or arising out of
his/her status as such,  whether or not the corporation  would have the power to
indemnify  him/her  against such liability under the provisions of the TBCA, the
articles of incorporation or these Bylaws.
 
     The  indemnification  provided  by this  Article  shall  (a) not be  deemed
exclusive  of,  or  to  preclude,  any  other  rights  to  which  those  seeking
indemnification may at any time be entitled under the corporation's  articles of
incorporation,  any law,  agreement  or vote of  shareholders  or  disinterested
directors,  or otherwise, or under any policy or policies of insurance purchased
and maintained by the corporation on behalf of any Indemnitee, both as to action
in  his/her  Official  Capacity  and as to  action in any  other  capacity,  (b)
continue as to a person who has ceased to be in the  capacity by reason of which
he/she was an  Indemnitee  with  respect to  matters  arising  during the period
he/she  was in such  capacity,  and  (c)  inure  to the  benefit  of the  heirs,
executors and administrators of such a person.
 
     7.08 Notice. Any indemnification of or advance of expenses to an Indemnitee
in accordance with this Article shall be reported in writing to the shareholders
of the  corporation  with or before  the  notice or waiver of notice of the next
shareholders' meeting or with or before the next submission to shareholders of a
consent to action  without a meeting and, in any case,  within the  twelve-month
period immediately following the date of the indemnification or advance.
 
     7.09 Construction.  The  indemnification  provided by this Article shall be
subject to all valid and applicable laws, including, without limitation, Article
2.02-1 of the TBCA,  and,  in the event this  Article  or any of the  provisions
hereof or the  indemnification  contemplated hereby are found to be inconsistent
with or contrary to any such valid laws,  the latter  shall be deemed to control
and this Article shall be regarded as modified accordingly, and, as so modified,
to continue in full force and effect.
 
     7.10 Continuing  Offer,  Reliance,  etc. The provisions of this Article (a)
are for  the  benefit  of,  and  may be  enforced  by,  each  Indemnitee  of the
corporation,  the same as if set forth in their entirety in a written instrument
duly  executed and  delivered by the  corporation  and such  Indemnitee  and (b)
constitute  a  continuing  offer to all  present  and  future  Indemnitees.  The
corporation,  by its adoption of these Bylaws,  (x) acknowledges and agrees that
each  Indemnitee  of the  corporation  has relied upon and will continue to rely
upon the  provisions  of this  Article in  becoming,  and  serving in any of the
capacities  referred to in Section 7.01(a) of this Article,  (y) waives reliance
upon, and all notices of acceptance of, such provisions by such Indemnitees, and
(z)  acknowledges  and  agrees  that no present  or future  Indemnitee  shall be
prejudiced  in  his/her  right to  enforce  the  provisions  of this  Article in
accordance  with  their  terms by any act or  failure  to act on the part of the
corporation.
 
     7.11 Effect of  Amendment.  No amendment,  modification,  or repeal of this
Article or any provision hereof shall in any manner terminate,  reduce or impair
the right of any past,  present or future  Indemnitees  to be indemnified by the
corporation,  nor the  obligation  of the  corporation  to  indemnify  any  such
Indemnitees,  under and in accordance  with the  provisions of the Article as in
effect immediately prior to such amendment,  modification or repeal with respect
 
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to claims  arising from or relating to matters  occurring,  in whole or in part,
prior to such amendment,  modification or repeal, regardless of when such claims
may arise or be asserted.
 
Article 8:    Certificates and Shareholders
 
     8.01  Certificates.  Certificates  in the form  determined  by the board of
directors shall be delivered  representing all shares to which  shareholders are
entitled,  unless the board  determines  by  resolution  to have  uncertificated
shares. Certificates shall be consecutively numbered and shall be entered in the
books of the  corporation  or its agents as they are  issued.  Each  certificate
shall state on its face the holder's name,  the number and class of shares,  the
par value of shares or a statement  that such shares are without par value,  and
such other  matters as may be required by law. They shall be signed by the chief
executive  officer or a vice president and such other officer or officers as the
board of  directors  shall  designate,  and may be  sealed  with the seal of the
corporation or a facsimile  thereof.  If any certificate is  countersigned  by a
transfer  agent or registered by a registrar  (either of which is other than the
corporation  or an  employee  of the  corporation),  the  signature  of any such
officer may be facsimile.  In case any officer who has signed or whose facsimile
signature  has been  placed upon such  certificate  shall have ceased to be such
officer before such  certificate is issued,  it may be issued by the corporation
with the same effect as if he/she were such officer at the date of its issuance.
 
     8.02  Issuance.  Shares (both  treasury and authorized but unissued) may be
issued for such  consideration  (not less than par value) and to such persons as
the board of directors may determine from time to time. Shares may not be issued
until the full amount of the  consideration,  fixed as provided by law, has been
paid.
 
     8.03 Payment for Shares.
 
          (a) Kind. The  consideration  for the issuance of shares shall consist
     of any tangible or intangible  benefit to the corporation,  including cash,
     promissory  notes,  services  performed,   contracts  for  services  to  be
     performed,  other  securities  of the  corporation,  or  securities  of any
     corporation or other entity.
 
          (b)  Validation.  In the  absence  of  fraud in the  transaction,  the
     judgment  of the  board  of  directors  as to the  value  of  consideration
     received shall be conclusive.
 
          (c) Effect.  When  consideration,  fixed as provided by law,  has been
     paid,  the  shares  shall  be  deemed  to have  been  issued  and  shall be
     considered fully paid and nonassessable.
 
          (d) Allocation of Consideration. The consideration received for shares
     shall be  allocated  by the  board of  directors  in  accordance  with law,
     between stated capital and capital surplus accounts.
 
     8.04 Lien. For any  indebtedness of a shareholder to the  corporation,  the
corporation  shall have a first and prior lien on all shares of its stock  owned
by him/her and on all dividends or other distributions declared thereon.
 
     8.05 Lost, Stolen or Destroyed Certificates.  The corporation shall issue a
new certificate in place of any certificate for shares  previously issued if the
registered owner of the certificate:
 
          (a)  Claim.  Makes  proof in  affidavit  form  that it has been  lost,
     destroyed or wrongfully taken; and
 
          (b) Timely Request.  Requests the issuance of a new certificate before
     the  corporation  has notice that the  certificate  has been  acquired by a
     purchaser for value in good faith and without  notice of an adverse  claim;
     and
 
          (c) Bond. Gives a bond in such form, and with such surety or sureties,
     with fixed or open penalty, as the corporation may direct, to indemnify the
     corporation  (and its  transfer  agent and  registrar,  if any) against any
     claim that may be made on account of the alleged loss, destruction or theft
     of the certificate; and
 
          (d) Other  Requirements.  Satisfies any other reasonable  requirements
     imposed by the corporation.
 
     When a certificate has been lost, apparently destroyed or wrongfully taken,
and the holder of record  fails to notify the  corporation  within a  reasonable
time after he/she has notice of it, and the corporation  registers a transfer of
the shares  represented by the certificate  before receiving such  notification,
the holder of record is precluded from making any claim against the  corporation
for the transfer or for a new certificate.
 
     8.06 Registration of Transfer.  The corporation shall register the transfer
of a certificate for shares presented to it for transfer if:
 
          (a)  Endorsement.   The  certificate  is  properly   endorsed  by  the
     registered owner or by his/her duly authorized attorney; and
 
          (b) Guarantee and  Effectiveness  of Signature.  The signature of such
     person has been guaranteed by a national  banking  association or member of
     the New York Stock  Exchange,  and reasonable  assurance is given that such
     endorsements are effective; and
 
          (c) Adverse Claims.  The corporation has no notice of an adverse claim
     or has discharged any duty to inquire into such a claim; and
 
          (d) Collection of Taxes. Any applicable law relating to the collection
     of taxes has been complied with.
 
     8.07 Registered  Shareholders.  The corporation  shall be entitled to treat
the  holder of  record  of any  share or  shares of stock as the  holder in fact
thereof and, accordingly, shall not be bound to recognize any equitable or other
claim to or  interest  in such share or shares on the part of any other  person,
whether  or not it has  express or other  notice  thereof,  except as  otherwise
provided by law.
 
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     8.08 Denial of Preemptive  Rights.  No shareholder of corporation nor other
person shall have any preemptive rights whatsoever.
 
Article 9:    General Provisions
 
     9.01 Dividends and Reserves.
 
          (a) Declaration  and Payment.  Subject to the TBCA and the articles of
     incorporation  dividends  may be declared by the board of  directors at any
     regular or  special  meeting  and may be paid in cash,  in  property  or in
     shares of the  corporation.  The  declaration  and payment  shall be at the
     discretion of the board of directors.
 
          (b) Record Date.  The board of  directors  may fix in advance a record
     date for the  purpose  of  determining  shareholders  entitled  to  receive
     payment of any  dividend,  the  record  date to be not more than fifty (50)
     days prior to the payment date of such dividend,  or the board of directors
     may close the stock  transfer  books for such  purpose  for a period of not
     more than fifty (50) days prior to the payment  date of such  dividend.  In
     the  absence of any action by the board of  directors,  the date upon which
     the board of directors  adopts the resolution  declaring the dividend shall
     be the record date.
 
          (c)  Reserves.  By  resolution  the board of directors may create such
     reserve or reserves  out of the earned  surplus of the  corporation  as the
     directors from time to time, in their  discretion,  think proper to provide
     for contingencies,  or to equalize dividends,  or to repair or maintain any
     property of the corporation, or for any other purpose they think beneficial
     to the corporation. The directors may modify or abolish any such reserve in
     the manner in which it was created.
 
     9.02 Books and  Records.  The  corporation  shall keep correct and complete
books and records of account and shall keep  minutes of the  proceedings  of its
shareholders and board of directors,  and shall keep at its registered office or
principal  place  of  business,  or at the  office  of  its  transfer  agent  or
registrar,  a record of its shareholders,  giving the names and addresses of all
shareholders and the number and class of the shares held by each.
 
     9.03  Annual  Statement.  The  board  of  directors  shall  present  to the
shareholders at or prior to each annual meeting of shareholders a full and clear
statement  of the  business  and  condition  of  the  corporation,  including  a
reasonably detailed balance sheet, income statement and surplus statement.
 
     9.04  Checks  and Notes.  All checks or demands  for money and notes of the
corporation  shall be signed by such officer or officers or such other person or
persons as the board of directors may from time to time designate.
 
     9.05 Fiscal Year. The fiscal year of the  corporation  shall end on June 30
of each year unless otherwise fixed by resolution of the board of directors.
 
     9.06 Seal. The  corporation  seal (of which there may be one or more) shall
contain the name of the corporation and the name of the state of  incorporation.
The seal may be used by  impressing  it or  reproducing  a  facsimile  of it, or
otherwise.
 
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<PAGE>
 
 
     9.07  Resignation.  Any  director,  officer  or agent may  resign by giving
written notice to the chief executive officer or the secretary.  The resignation
shall take effect at the time  specified  therein,  or immediately if no time is
specified therein.  Unless otherwise  specified therein,  the acceptance of such
resignation shall not be necessary to make it effective.
 
     9.08 Amendment of Bylaws. These Bylaws may be altered,  amended or repealed
or new  Bylaws  may be  adopted  by  the  board  of  directors  (subject  to the
shareholders  repealing  or changing  the action of the board of  directors,  or
making new Bylaws,  at an annual or special  meeting called and held as provided
in these Bylaws) at any meeting at which a quorum is present.
 
     9.09  Construction.  Whenever the context so requires,  the masculine shall
include the feminine and neuter,  and the singular shall include the plural, and
conversely.  If any  portion of these  bylaws  shall be invalid or  inoperative,
then, so far as is reasonable and possible:
 
          (a) The  remainder  of these  bylaws  shall be  considered  valid  and
     operative, and
 
          (b) Effect shall be given to the intent manifested by the portion held
     invalid or inoperative.
 
     9.10 Table of Contents;  Headings.  The table of contents and headings used
in these bylaws have been inserted for  convenience  only and do not  constitute
matter to be construed in interpretation.
 
     9.11 Relation to Articles of Incorporation. These bylaws are subject to and
governed by the Articles of Incorporation  of the Company,  as amended from time
to time.
 
 
 
     APPROVED AND ADOPTED by the Board of Directors  effective as of the 8th day
of November, 2006.
 
 
                                             /s/ Deanna Gunn, Secretary
                                             --------------------------
                                             Deanna Gunn, Secretary