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                                                                     EXHIBIT 3.1



APPENDIX A


                              AMENDED AND RESTATED
                           ARTICLES OF INCORPORATION
                                       OF
                             MULTIMEDIA GAMES, INC.


                                  ARTICLE ONE

                                      NAME

       The name of the Corporation is Multimedia Games, Inc.


                                  ARTICLE TWO

                                    DURATION

       The period of its duration is perpetual.


                                 ARTICLE THREE

                                    PURPOSE

       The purposes for which the Corporation is organized are to engage in any
activities in which corporations may lawfully engage under the Texas Business
Corporation Act.


                                  ARTICLE FOUR

                               AUTHORIZED SHARES

       The aggregate number of shares which the Corporation shall have
authority to issue is set forth as follows:

       A.     COMMON STOCK.  The Corporation shall have the authority to issue
25,000,000 shares of Common Stock with a par value of $0.01 per share.

       B.     PREFERRED STOCK.  The Corporation shall have the authority to
issue 2,000,000 shares of Preferred Stock with a par value of $0.01 per share.
The par value, powers, designations, preferences and relative, participating,
optional or other special rights, qualifications, limitations or restrictions
to the Preferred Stock shall be as follows:

              1.     (a)    The Preferred Stock may be issued from time to time
              as shares of one or more series of Preferred Stock, and in the
              resolution or resolutions providing for issue of shares of each




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              particular series, before issuance, the Board of Directors of the
              Corporation is expressly authorized to fix:

                               (i) the distinctive designation of such series
                     and the number of shares which shall constitute such
                     series, which number may be increased (except where
                     otherwise provided by the Board of Directors in creating
                     such series) or decreased (but not below the number of
                     shares thereof then outstanding) from time to time by like
                     action of the Board of Directors;

                              (ii) the rate of dividends payable on such
                     series, whether or not dividends shall be cumulative, the
                     date or date from which dividends shall accrue and, if
                     cumulative, shall be cumulative and the relationships
                     which the dividends shall bear to dividends payable on any
                     other series;

                             (iii) whether or not the shares of such series
                     shall be subject to the redemption by the Corporation and,
                     if so, the times, prices and other terms and conditions of
                     such redemption;

                              (iv) whether or not shares of such series shall
                     be subject to the operation of a sinking fund or a fund of
                     a similar nature and, if so, the terms thereof;

                               (v) the rights of the shares of each series in
                     case of liquidation, dissolution or winding up of the
                     Corporation, whether voluntary or involuntary, or upon any
                     distribution of its assets;

                              (vi) whether or not the shares of such series
                     shall be convertible into or exchangeable for shares of
                     any other series or class of stock of the Corporation and,
                     if so, the terms of conversion or exchange;

                             (vii) whether or not the shares of such series
                     shall have voting rights in addition to the voting rights
                     provided by law in paragraph 5 below and, if so, the
                     nature and extent thereof; and

                            (viii) the consideration to be received by the
                     Corporation for the shares of such series.

                     (b)    The shares of the Preferred Stock of any one series
              shall be identical with each other in all respects except as to
              the dates from which dividends thereon shall accrue or be
              cumulative.

                     (c)    In case the stated dividends and the amounts, if
              any, payable on liquidation, dissolution or winding up of the





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              Corporation are not paid in full, the shares of each series of
              the Preferred Stock, after the payment in full of such dividends
              and amounts to all series of the Preferred Stock ranking senior
              to such series and before any payment to any series ranking
              junior thereto, shall share ratably in the payment of dividends,
              including accumulations, if any, in accordance with the sums
              which would be payable on said shares if all dividends were
              declared and paid in full, and in any distribution of assets
              other than by way of dividends, in accordance with the sums which
              would be payable on such distribution if all sums payable were
              discharged in full.

                     (d)    Prior to the issuance of any series of Preferred
              Stock, a statement, including a copy of the resolution or
              resolutions (including the designation, description and terms of
              such series) adopted by the Board of Directors with respect to
              such series shall be made and filed in accordance with the then
              applicable requirements, if any, of the laws of the State of
              Texas, or, if no certificate is then so required, such
              certificate shall be signed and acknowledged on behalf of the
              Corporation by its Chairman of the Board, President or a Vice
              President, and its corporate seal shall be affixed thereto and
              attested by its Secretary or an Assistant Secretary, and such
              certificate shall be filed and kept on file at the principal
              office of the corporation in the State of Texas or at such other
              place or places as the Board of Directors shall designate.

              2.     The holder of each series of the Preferred Stock shall be
       entitled to receive, when and as declared by the Board of Directors, but
       only out of funds of the Corporation legally available for the payment
       of dividends, dividends in cash at the annual rate of such series
       provided by the Board of Directors in the Statement made pursuant to
       subparagraph (d) of paragraph 1 with respect to such series.

              3.     If so provided by the Board of Directors in the Statement
       made pursuant to subparagraph (d) of paragraph 1, the Corporation, at
       the option of the Board of Directors (or in accordance with the
       requirements of any sinking fund for any one or more series of Preferred
       Stock established by the Board of Directors), may redeem the whole or
       any part of the Preferred Stock at any time outstanding, or the whole or
       any part of any series thereof, at such time or times and from time to
       time and at such redemption price or prices as may be provided by the
       Board of Directors in such Statement, together in each case with all
       dividends accrued and accumulated but unpaid (other than noncumulative
       dividends from past dividend periods), but computed without interest,
       and otherwise upon the terms and conditions fixed by the Board of
       Directors for any such redemptions.

              4.     In the event of any liquidation, dissolution or winding up
       of the Corporation, whether voluntary or involuntary, the holders





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       of each series of the Preferred Stock then outstanding shall be entitled
       to receive, after the payment in full of all amounts to which the
       holders of all series of the Preferred Stock ranking senior thereto are
       entitled, out of the assets of the Corporation, before any distribution
       or payment shall be made to the holders of any series of the Preferred
       Stock ranking junior to such series upon liquidation, dissolution or
       winding up of the Corporation or of any junior stock, the amount, if
       any, for each share provided by the Board of Directors in the Statement
       made pursuant to subparagraph (d) of paragraph 1, plus, in respect of
       each such share, all dividends accrued and accumulated but unpaid (other
       than noncumulative dividends from past-dividend periods), but computed
       without interest.  If payment shall have been made in full to the
       holders of each series of the Preferred Stock, the remaining assets of
       the Corporation shall be distributed among the holders of the junior
       stock, according to their respective rights and preferences and pro rata
       in accordance with their respective holdings.

              5.     On all matters with respect to which holders of the
       Preferred Stock or of certain series thereof are entitled to vote as a
       single class, each holder of Preferred Stock afforded such class voting
       right shall be entitled to one vote for each share held.

              6.     For purposes of this Article Four, the term "junior stock"
       shall mean the Common Stock and any other class of stock of the
       Corporation hereafter authorized which shall rank junior to all series
       of Preferred Stock as to all dividends or preference on dissolution,
       liquidation or winding up of the Corporation.

       C.     SERIES A PREFERRED STOCK.

              1.     Designation and Amount.  An aggregate of 2,000,000 shares
       of Preferred Stock, $.01 par value, of the Corporation are hereby
       constituted as a series designated as "Series A Preferred Stock (the
       "Series A Preferred Stock").  Such number of shares may be increased or
       decreased by resolution of the Board of Directors, provided, that no
       decrease shall reduce the number of shares of Series A Preferred Stock
       to a number less than the number of shares then outstanding plus the
       number of shares reserved for issuance upon the exercise of outstanding
       options, rights or warrants or upon the conversion of any outstanding
       securities issued by the Corporation convertible into Series A Preferred
       Stock.

              2.     Dividends.

                     (a)    The holders of shares of Series A Preferred Stock,
              in preference to the holders of Common Stock (as hereinafter
              defined) and of any other junior stock (as hereinafter defined),
              shall be entitled to receive, when, as and if declared by the
              Board of Directors out of funds legally available for that
              purpose, quarterly dividends payable in cash on the first day of
              January, April, July and October in each





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              year (each such data being referred to herein as a "Quarterly
              Dividend Payment Date"), commencing on the first Quarterly
              Dividend Payment Date after the first issuance of a share or
              fraction of a share of Series A Preferred Stock, in an amount per
              share equal to $.275 (rounded to the nearest cent).

                     (b)    Dividends shall begin to accrue and be cumulative,
              whether or not earned or declared, on outstanding shares of
              Series A Preferred Stock from and after the date of issue of such
              shares, unless the date of issue of such shares is prior to the
              record date for the first Quarterly Dividend Payment Date, in
              which case dividends on such shares shall begin to accrue from
              the date of issue of such shares, or unless the date of issue is
              a Quarterly Dividend Payment Date or is a date after the record
              date for the determination of holders of shares of Series A
              Preferred Stock entitled to receive a Quarterly Dividend and
              before such Quarterly Dividend Payment Date, in either of which
              events such dividends shall begin to accrue and be cumulative
              from such Quarterly Dividend Payment Date.  Accrued but unpaid
              dividends shall not bear interest.  Dividends paid on the shares
              of Series A Preferred Stock in an amount less than the total
              amount of such dividends at the time accrued and payable on such
              shares shall be allocated pro rata on a share-by-share basis
              among all such shares at the time outstanding.  The Board of
              Directors may fix a record date for the determination of holders
              of shares of Series A Preferred Stock entitled to receive payment
              of a dividend declared, which record date shall not be more than
              60 days prior to the date fixed for the payment thereof.

              3.     Voting Rights.  The holders of shares of Series A
       Preferred Stock shall have the following voting rights:

                     (a)    Subject to the provisions for adjustment
              hereinafter set forth, each share of Series A Preferred Stock
              shall entitle the holder thereof to one vote on all matters
              submitted to a vote of the shareholders of the Corporation.  In
              the event the Corporation shall at any time declare or pay any
              dividend on the Common Stock payable in shares of Common Stock,
              or affect a subdivision or combination or consolidation of the
              outstanding shares of Common Stock (by reclassification or
              otherwise than by payment of a dividend in shares of Common
              Stock) into a greater or lesser number of shares of Common Stock,
              then in each such case the number of votes per share to which
              holders of shares of Series A Preferred Stock were entitled
              immediately prior to such event shall be adjusted by multiplying
              such number by a fraction, the numerator of which is the number
              of shares of Common Stock outstanding immediately after such
              event and the denominator of which is the number of shares of
              Common Stock that were outstanding immediately prior to such
              event.





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                     (b)    Except as otherwise provided herein, in any other
              Statement of Resolution creating a series of Preferred Stock or
              any similar stock, or by law, the holders of shares of Series A
              Preferred Stock and the holders of shares of Common Stock and any
              other capital stock of the Corporation having general voting
              rights shall vote together as one class on all matters submitted
              to a vote of stockholders of the Corporation.

                     (c)    If at any time quarterly dividends payable on the
              Series A Preferred Stock as provided in Paragraph 2 hereof are in
              arrears for two consecutive quarterly periods, thereafter and
              until all accrued and unpaid dividends, whether or not earned or
              declared, on shares of Series A Preferred Stock outstanding shall
              be paid in full, the holders of record of the Series A Preferred
              Stock, voting separately as a class, shall immediately have the
              right (subject to compliance with all applicable law, without
              limitation including any applicable provisions of the Securities
              Exchange Act of 1934) to elect a majority of the Board of
              Directors of the Corporation, and the holders of the Common Stock
              and any other class of stock of the Corporation shall not be
              entitled to vote in the election of such directors so to be
              elected by holders of record of the Series A Preferred Stock.
              Upon the vesting of the aforesaid voting rights in the Series A
              Preferred Stock, the number of directors constituting the Board
              of Directors shall, without the necessity of any further action
              by any party or any amendment of the Bylaws of the Corporation,
              be automatically increased by such number as shall permit the
              election of the majority of the Board of Directors by the holders
              of record of the Series A Preferred Stock.  Whenever the holders
              of record of the Series A Preferred Stock shall have the right to
              elect directors as provided hereinabove, a meeting of the holders
              of record of the Series A Preferred Stock for the election of
              such directors shall be held on the earliest practicable date at
              the principal office of the Corporation.  If not called pursuant
              to the Bylaws of the Corporation, such meeting shall be
              immediately called by the Secretary of the Corporation upon the
              written request of the holders of record of at least 100
              outstanding shares of the Series A Preferred Stock.  At such time
              as the right of the holders of record of the Series A Preferred
              Stock to  elect such directors shall terminate, the respective
              terms of office of any directors in office shall immediately
              terminate, and the number of directors constituting the Board of
              Directors shall, without the necessity of any further action by
              any party or any amendment of the Bylaws of the Corporation, be
              automatically decreased by the number added as aforesaid so as to
              permit exercise by the holders of record of the Series A
              Preferred Stock of their rights as aforesaid.





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              4.     Conversion.

                     (a)    Right to Convert.  Subject to and upon compliance
              with the provisions hereof, each holder of record of shares of
              Series A Preferred Stock shall have the right, at such holder's
              option, at any time or from time to time subsequent to two years
              after the issuance, respectively, of the shares held by such
              holder (except that upon any liquidation of the Corporation the
              right of conversion shall terminate at the close of business on
              the last full business day next preceding the date fixed for
              payment of the amount distributable on the Series A Preferred
              Stock), to convert any such shares into such number of shares of
              Common Stock as is obtained by multiplying the number of shares
              of Series A Preferred Stock so to be converted by $10.00 and
              dividing the result by the applicable Conversion Price (as
              hereinafter defined).

                     (b)    Exercise.  In order to exercise the conversion
              privilege, the holder of Series A Preferred Stock shall surrender
              a certificate or certificates for the shares so to be converted
              to the Corporation at the principal executive offices of the
              Corporation at 1920 S. West Union Road, Topeka, Kansas 66614 (or
              such other office or agency of the Corporation as the Corporation
              may designate by notice in writing to the holders of record of
              Series A Preferred Stock), accompanied by written notice to the
              Corporation that the holder elects to convert a stated number of
              shares of Series A Preferred Stock into Common Stock.  Such
              notice shall also state the name or names (with address or
              addresses) in which the certificate or certificates for shares of
              Common Stock which shall be issuable on such conversion shall be
              issued, in each case subject to the provisions of applicable law.
              As soon as practicable after the receipt of such notice and the
              surrender of the certificate or certificates for the shares of
              Series A Preferred Stock to be converted, the Corporation shall
              issue and shall deliver at said offices to the holder a
              certificate or certificates for the number of full shares of
              Common Stock issuable upon the conversion of such share or shares
              of Series A Preferred Stock, and provision shall be made for any
              fraction of a share as provided in Subparagraph (c) hereof.  Such
              conversion shall be deemed to have been effected immediately
              prior to the close of business on the date on which such notice
              shall have been received by the Corporation and conversion shall
              be at the Conversion Price in effect at such time, and at such
              time the rights of the holder of such share or shares of Series A
              Preferred Stock shall cease and the person or persons in whose
              name or names any certificate or certificates for shares of
              Common Stock shall be issuable upon such conversion shall be
              deemed to have become the holder or holders of record of the
              shares of Common Stock represented thereby.

                     (c)    Adjustment for Fractional Shares; Dividends;
              Partial Conversions.  No fractional shares of Common Stock or
              scrip shall be issued upon conversion of Series A Preferred
              Stock,





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              and no payment or adjustment shall be made upon any conversion on
              account of any cash dividends on the Common Stock issued upon
              such conversion.  In case the number of shares of Series A
              Preferred Stock represented by the certificate or certificates
              surrendered pursuant to Subparagraph (b) exceeds the number of
              shares converted, the Corporation shall, upon such conversion,
              execute and deliver to the holder thereof, at the expense of the
              Corporation, a new certificate or certificates for the number of
              shares of Series A Preferred Stock represented by the certificate
              or certificates surrendered which are not to be converted.
              Instead of any fractional shares of Common Stock which would
              otherwise be issuable upon conversion, the Corporation shall pay
              a cash adjustment in respect of such fractional share of Common
              Stock in an amount equal to the same fraction of the then current
              fair value of a share of Common Stock, as determined in good
              faith by the Board of Directors of the Corporation.

                     (d)    Conversion Price.  The Conversion Price per share
              of Common Stock shall be $2.00, subject to adjustment as herein
              provided.

                     (e)    Adjustment for Dividends.  In case the Corporation
              shall declare a dividend upon the shares of Common Stock payable
              otherwise than out of earned surplus or otherwise than in shares
              of Common Stock or convertible securities of the Corporation, the
              Conversion Price in effect immediately prior to the declaration
              of such dividend shall be reduced by an amount equal, in the case
              of a dividend in cash, to the amount thereof payable per share of
              Common Stock or, in the case of any other dividend, to the fair
              value thereof per share of Common Stock as determined in good
              faith by the Board of Directors of the Corporation.  For the
              purposes of the foregoing, a dividend other than in cash shall be
              considered payable out of earned surplus only to the extent that
              such earned surplus is charged an amount equal to the fair value
              of such dividend as determined in good faith by the Board of
              Directors of the Corporation.  Such reductions shall take effect
              as of the date on which a record is taken for the purpose of such
              dividend, or, if a record is not taken, the date as of which the
              holders of shares of Common Stock of record entitled to such
              dividend are to be determined.

                     (f)    Subdivisions and Combinations; Stock Dividends.  In
              case the Corporation shall at any time subdivide its outstanding
              shares of Common Stock into a greater number of shares of Common
              Stock, the Conversion Price in effect immediately prior to such
              subdivision shall be proportionately reduced, and conversely, in
              case the outstanding shares of Common Stock of the Corporation
              shall be combined into a smaller number of shares of Common
              Stock, the Conversion Price in effect immediately prior to such
              combination shall be





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              proportionately increased.  In case the Corporation shall declare
              a dividend or make any other distribution upon any stock of the
              Corporation payable in Common Stock, rights to subscribe for or
              to purchase, or any options for the purchase of, Common Stock or
              any stock or securities convertible into or exchangeable for
              Common Stock, any Common Stock, rights to subscribe for or to
              purchase, or any options for the purchase of, Common Stock or any
              stock or securities convertible into or exchangeable for Common
              Stock, as the case may be, issuable in payment of such dividend
              or distribution shall be deemed to have been issued in a
              subdivision of outstanding shares as provided in this
              Subparagraph (f).

                     (g)    Issuance of Rights or Warrants; Evidences of
              Indebtedness or Assets.

                              (i)  In case the Corporation shall hereafter
                     issue rights or warrants to holders of its outstanding
                     Common Stock generally entitling them to subscribe for or
                     purchase Common Stock at a price per share less than the
                     current market price per share less than the current
                     market price per share (as determined pursuant to
                     Subparagraph (iii) of this Paragraph (g)) of the Common
                     Stock on the effective date of the adjustment under this
                     paragraph mentioned below, the Conversion Price shall be
                     adjusted to equal the price determined by multiplying the
                     Conversion Price then in effect by a fraction the
                     numerator of which shall be the number of shares of Common
                     Stock outstanding on the date of issuance of such rights
                     or warrants plus the number of shares which the aggregate
                     offering price of the total number of shares so offered
                     would purchase at such current market price, and the
                     denominator of which shall be the number of shares of
                     Common Stock outstanding on the date of issuance of such
                     rights or warrants plus the number of additional shares of
                     Common Stock offered for subscription or purchase.  Such
                     adjustment shall take effect as of the date on which a
                     record is taken for the purpose of such issuance, or, if a
                     record is not taken, the date as of which the holders of
                     shares of Common Stock of record entitled to receive such
                     rights or warrants are to be determined.

                             (ii)  In case the Corporation shall hereafter
                     distribute to holders of its outstanding Common Stock
                     generally evidences of its indebtedness or assets
                     (excluding any cash dividend paid from retained earnings
                     of the Corporation and dividends or distributions payable
                     in stock for such adjustment is made pursuant to
                     Subparagraph (e) or rights or warrants to subscribe to
                     securities of the Corporation (excluding those referred to
                     in clause (i) of this Subparagraph (g), then in each such
                     case the Conversion Price shall be adjusted to equal





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                     the price determined by multiplying the Conversion Price
                     then in effect by a fraction the numerator of which shall
                     be the current market price per share (determined as
                     provided in clause (iii) of this Subparagraph (g)) of the
                     Common Stock on the effective date of the adjustment under
                     this clause mentioned below less the then fair market
                     value (as determined in good faith by the Board of
                     Directors of the Corporation) of the portion of the
                     evidences of indebtedness or assets so distributed to the
                     holder of one share of Common Stock or of such
                     subscription rights or warrants applicable to one share of
                     Common Stock, and the denominator of which shall be such
                     current market price per share of Common Stock.  Such
                     adjustment shall take effect as of the date on which a
                     record is taken for the purpose of such distribution, or,
                     if a record is not taken, the date as of which the holders
                     of shares of Common Stock of record entitled to receive
                     such distribution are to be determined.

                            (iii)  For the purposes of any computation under
                     clauses (i) and (ii) of this Subparagraph (g), the current
                     market price per share of Common Stock on any date shall
                     be deemed to be the average of the daily market prices for
                     the 30 consecutive business days commencing 45 business
                     days before the day in question.  The market price for
                     each day shall be:  (1) if the Common Stock is listed or
                     admitted to the trading on a national securities exchange,
                     the closing price on the NYSE-Consolidated Tape (or any
                     successor composite tape reporting transactions on
                     national securities exchanges) or, if such a composite
                     tape shall not be in use or shall not report transactions
                     in the Common Stock, the last reported sales price regular
                     way on the principal national securities exchange on which
                     the Common Stock is listed or admitted to trading (which
                     shall be the national securities exchange on which the
                     greatest number of shares of Common Stock have been traded
                     during such 30 consecutive trading days), or, if there is
                     no transaction on any such day in any such situation, the
                     mean of the bid and asked prices on such day, or (2) if
                     the Common Stock is not listed or admitted to trading on
                     any such exchange, the last sales price, if reported, or,
                     if the last sales price is not reported, the average of
                     the closing bid and asked prices as reported by the
                     National Association of Securities Dealers Automated
                     Quotations System or a similar source selected from time
                     to time by the Corporation for the purpose, or (3) if the
                     Common Stock is not quoted by any such organization, the
                     fair value of the Common Stock on such date as determined
                     in good faith by the Board of Directors of the
                     Corporation.





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                     (h)    Consolidation Merger, Sale of Assets Reorganization
              or Reclassification.  If any consolidation or merger of the
              Corporation with or into another corporation, or the sale or all
              or substantially all of its assets to another corporation shall
              be effected, or in case of any capital reorganization or
              reclassification of the capital stock of the Corporation, then,
              as a condition of such consolidation, merger or sale,
              reorganization or reclassification, lawful and adequate provision
              shall be made whereby the holders of record of the Series A
              Preferred Stock shall thereafter have the right to receive upon
              the basis and upon the terms and conditions specified herein and
              in lieu of the shares of Common Stock of the Corporation
              immediately theretofore receivable upon the conversion of Series
              A Preferred Stock, such shares of stock, securities or assets as
              may be issued or payable with respect to or in exchange for a
              number of outstanding shares of Common Stock equal to the number
              or shares of Common Stock immediately theretofore so receivable
              by such holder had such consolidation, merger, sale,
              reorganization or reclassification not taken place, and in any
              such case appropriate provision shall be made with respect to the
              rights and interest of such holder to the end that the provisions
              hereof (including without limitation provisions for adjustment of
              the Conversion Price) shall thereafter be applicable, as nearly
              as may be, in relation to any shares of stock, securities or
              assets thereafter deliverable upon the exercise of such
              conversion rights.

                     (i)    Notice of Adjustment of Conversion Price.  Upon any
              adjustment of the Conversion Price, then and in each such case
              the Corporation shall give written notice thereof, by first class
              mail, postage prepaid, to each holder of record of Series A
              Preferred Stock, which notice shall state the Conversion Price
              resulting from such adjustment, setting forth in reasonable
              detail the method of calculation and the facts upon which such
              calculation is based.

                     (j)    Notice of Certain Actions.  In case at any time:

                              (i)  the Corporation shall declare to the holders
                     of its shares of Common Stock any cash dividend at a rate
                     in excess of the rate of the last cash dividend
                     theretofore paid;

                             (ii)  the Corporation shall declare any dividend
                     upon its shares of Common Stock payable in stock or make
                     any special dividend or other distribution (other than a
                     cash dividend to the holders of its shares of Common
                     Stock);

                            (iii)  the Corporation shall offer for subscription
                     pro rata to the holders of its shares of





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                     Common Stock any additional shares of stock of any class
                     or other rights;

                             (iv)  there shall be any capital reorganization or
                     reclassification of the capital stock of the Corporation,
                     or consolidation or merger of the Corporation with, or
                     sale of all or substantially all its assets to, another
                     corporation; or

                              (v)  there shall be a voluntary or involuntary
                     dissolution, liquidation or winding-up of the Corporation;

                     then, in any one or more of said cases, the Corporation
                     shall give written notice, by first class mail, postage
                     prepaid, to each holder of record of Series A Preferred
                     Stock, of the date on which (A) the books of the
                     Corporation shall close or a record shall be taken for
                     such dividend, distribution or subscription rights, or (B)
                     such reorganization, reclassification, consolidation,
                     merger, sale, dissolution, liquidation or winding-up shall
                     take place, as the case may be.  Such notice shall also
                     specify the date as of which the holders of shares of
                     Common Stock of record shall participate in such dividend,
                     distribution or subscription rights or shall be entitled
                     to exchange their shares of Common Stock for securities or
                     other property deliverable upon such reorganization,
                     reclassification, consolidation, merger, sale,
                     dissolution, liquidation, or winding-up, as the case may
                     be.  Such written notice shall be given at least 30 days
                     prior to the action in question and not less than 30 days
                     prior to the record data or the date on which the
                     Corporation's transfer books are closed in respect
                     thereto.

                     (k)    Reservation of Shares.  The Corporation shall at
              all times reserve and keep available out of its authorized shares
              of Common Stock or its treasury shares, solely for the purpose of
              issue upon the conversion of shares of Series A Preferred Stock,
              such number of shares of Common Stock as shall then be issuable
              upon the conversion of all outstanding shares of Series A
              Preferred Stock.  The Corporation shall not take any action which
              results in any adjustment of the Conversion Price if the total
              number of shares of Common Stock issued and issuable after such
              action upon conversion of the Series a Preferred Stock would
              exceed the total number of shares of Common Stock then authorized
              by the Articles of Incorporation of the Corporation.

                     (l)    Taxes.  The issuance of certificates of shares of
              Common Stock upon the conversions of Series A Preferred Stock
              shall be made without charge to the holders thereof for any





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              issuance tax in respect thereto; provided, however, that the
              Corporation shall not be required to pay any tax which may be
              payable in respect of any transfer involved in the issuance and
              delivery of any certificate in a name other than that of the
              holders of record of Series A Preferred Stock, respectively.

                     (m)    Closing of Books.  The Corporation will at no time
              close its transfer books against the transfer of any shares of
              Common Stock issued or issuable upon the conversion of any shares
              of Series A Preferred Stock in any manner which interferes with
              the timely conversion of Series A Preferred Stock.

                     (n)    Miscellaneous.  Notwithstanding any other provision
              of this Paragraph 4, conversion of the Series A Preferred Stock
              shall be subject to the requirement that if at any time the Board
              of Directors shall determine that the registration, listing or
              qualification of the shares of Common Stock covered thereby upon
              any securities exchange or under any federal or state law, or the
              consent or approval of any governmental regulatory body is
              necessary or desirable as a condition of, or in connection with,
              the acquisition of shares of Common Stock upon conversion, no
              such conversion may be effected unless and until such
              registration, listing, qualification, consent or approval shall
              have been effected or obtained free of any conditions not
              acceptable to the Board of Directors.  The Company may require
              that any person converting Series A Preferred Stock shall make
              such representations and agreements and furnish such information
              as it deems appropriate to assure compliance with the foregoing
              or any other applicable legal requirement.

              5.     Certain Restrictions.  Whenever quarterly dividends
       payable on the Series A Preferred Stock as provided in Paragraph 2
       hereof are in arrears for two consecutive quarterly periods, thereafter
       and until all accrued and unpaid dividends, whether or not earned or
       declared, on shares of Series A Preferred Stock outstanding shall have
       been paid in full, the Corporation shall not:

                     (a)    declare or pay dividends on any shares of stock
              ranking junior (either as to dividends or upon liquidation,
              dissolution or winding up) to the Series A Preferred Stock;

                     (b)    declare or pay dividends on any shares ranking pari
              passu (either as to dividends or upon liquidation, dissolution or
              winding up) with the Series A Preferred Stock, except dividends
              paid ratably on the Series A Preferred Stock and all such parity
              stock on which dividends are payable or in arrears in proportion
              to the total amounts to which the holders of all such shares are
              then entitled;





                                      A-13
<PAGE>   14
                     (c)    redeem or purchase or otherwise acquire for
              consideration shares of any stock ranking junior (either as to
              dividends or upon liquidation, dissolution or winding up) to the
              Series A Preferred Stock, provided that the Corporation may at
              any time, redeem, purchase or otherwise acquire shares of any
              such junior stock in exchange for shares of any stock of this
              Corporation ranking junior (either as to dividends or upon
              dissolution, liquidation or winding up) to the Series A Preferred
              Stock; and

                     (d)    redeem or purchase or otherwise acquire for
              consideration shares of Series A Preferred Stock, or any shares
              of stock ranking pari passu with the Series A Preferred Stock
              except in accordance with a purchase offer made in writing or by
              publication (as determined by the Board of Directors) to all
              holders of such shares upon such terms as the Board of Directors,
              after consideration of the respective annual dividend rate and
              other relative rights and preferences of the respective series
              and classes, shall determine in good faith will result in fair
              and equitable treatment among the respective series or classes.

              6.     Reacquired Shares.  Any shares of the Series A Preferred
       Stock purchased or otherwise acquired by this Corporation in any manner
       whatsoever shall be retired and canceled promptly after the acquisition
       thereof.  All such shares shall upon their cancellation become
       authorized but unissued as shares of Preferred Stock and may be reissued
       as Series A Preferred Stock or as part of a new series of Preferred
       Stock subject to the conditions and restrictions of issuance set forth
       herein, in the Articles of Incorporation or as otherwise required by
       law.

              7.     Liquidation, Dissolution or Winding Up.

                     (a)    Upon any liquidation, dissolution or winding up of
              this Corporation, no distribution shall be made to the holders of
              shares of stock ranking junior (either as to dividends, or upon
              liquidation, dissolution or winding up) to the Series A Preferred
              Stock unless prior thereto, the holders of shares of Series A
              Preferred Stock shall have received $10 per share, plus an amount
              equal to accrued and unpaid dividends thereon, whether or not
              declared or earned, to the date of such payment.  After such
              payments to holders of Series A Preferred Stock, the holders
              thereof, as such, shall not have any right to participate in any
              further distribution of or payment out of the assets of the
              Corporation.

                     (b)    If upon any voluntary or involuntary liquidation,
              dissolution or winding up of the Corporation, the assets
              available for distribution to holders of shares of Series A
              Preferred Stock shall be insufficient to pay such holders the
              full preferential amount to which they are entitled, then such





                                      A-14
<PAGE>   15
              assets shall be distributed ratably among the shares of Series A
              Preferred Stock in accordance with the respective preferential
              amounts, including unpaid cumulative dividends, if any, payable
              with respect thereto.

              8.     Optional Redemption.  Each share of Series A Preferred
       Stock shall, out of funds legally available for that purpose, be subject
       to redemption, at the election of the Corporation, on any date (the
       "Redemption Date") subsequent to issuance, at a redemption price of $10,
       plus an amount equal to all accrued and unpaid dividends on such share,
       whether or not declared or earned, to the Redemption Date.  Notice of
       each redemption shall be mailed at least 30 days prior to the Redemption
       Date with respect thereto, shall state that the Series A Preferred
       Stock, or part thereof, shall be redeemed, and the date, place and
       purchase price of such redemption, upon surrender of the certificates
       representing shares of Series A Preferred Stock, and shall be given to
       the holders of record of the shares of Series A Preferred Stock to be
       redeemed, by first class mail, postage prepaid, at such holder's address
       of record.  In the event that the Corporation at any particular time
       proposes to redeem fewer than all of the then outstanding shares of
       Series A Preferred Stock, the shares of Series A Preferred Stock to be
       redeemed shall be selected to such manner that the number of shares of
       Series A Preferred Stock (to the nearest full share) to be redeemed from
       each holder of record of Series A Preferred Stock shall bear the same
       proportional relationship to all shares of Series A Preferred Stock held
       by such holder is the aggregate number of shares to be redeemed bears to
       all the shares of Series A Preferred Stock then outstanding.  On the
       Redemption Date, all dividends on the shares to be redeemed shall cease
       to accrue, all rights with respect to such shares so to be redeemed
       shall forthwith on such date cease and determine (except only the right
       of the holder to receive the redemption price therefor, but without any
       interest) and such shares so called for redemption shall no longer be
       deemed outstanding.  On or before each Redemption Date, the respective
       holders of record of shares to be redeemed shall deliver to the
       Corporation the certificates for the shares to be redeemed.

              9.     Junior Stock; Common Stock.  For purposes hereof:  (a) the
       term "junior stock" shall mean the Common Stock and any other class of
       stock of the Corporation hereinafter authorized which shall rank junior
       to the Series A Preferred Stock as to all dividends or preference on
       dissolution, liquidation or winding up of the Corporation; and (b) the
       term "Common Stock" shall mean shares of the common stock, $.01 par
       value, of the Corporation and shall also include shares of any capital
       stock of any class of the Corporation hereinafter authorized which shall
       not be limited to a fixed sum or percentage or par value in respect of
       the rights of the holders thereof to participate in dividends and in the
       distribution of assets upon the voluntary liquidation, dissolution or
       winding up of the Corporation; provided, however, that the shares of
       Common Stock receivable upon conversion, of shares of Series A Preferred
       Stock





                                      A-15
<PAGE>   16
       shall include only shares of Common Stock, as constituted on January 11,
       1995 (including any stock into which it may be changed, reclassified or
       converted).

              10.    No Pre-Emption Amendment.   No right to subscribe for or
       to take any stock of any class or any securities convertible to any
       stock, at any time issued by the Corporation shall vest in or accrue to
       any holder of shares of Series A Preferred Stock with respect to any
       shares which he holds.  The Articles of Incorporation of this
       Corporation shall not be amended in any manner which would materially
       alter or change the powers, preferences or special rights of the Series
       A Preferred Stock so as to affect them adversely without the affirmative
       vote of the holders of at least two-thirds of the outstanding shares of
       Series A Preferred Stock, voting together as a single series.
       Furthermore, whenever the Series A Preferred Stock shall have elected
       the Board of Directors of the Corporation in accordance with the
       provisions of Subparagraph (c) of Paragraph 3 hereof, and until such
       right shall terminate, the Articles of Incorporation of this Corporation
       shall not be amended in any manner which would materially alter or
       change the powers, preferences or special rights of the Series A
       Preferred Stock so as to affect them favorably without the affirmative
       vote of the holders of at least two-thirds of the outstanding shares of
       Common Stock, voting together as a single series.


                                  ARTICLE FIVE

                            COMMENCEMENT OF BUSINESS

       The Corporation will not commence business until it has received for the
issuance of its shares consideration of the value of One Thousand Dollars
($1,000), consisting of money, labor done or property actually received.


                                  ARTICLE SIX

                    PREEMPTIVE RIGHTS AND CUMULATIVE VOTING

       No shareholder or other person shall have any preemptive right
whatsoever.  Cumulative voting shall not be permitted.


                                 ARTICLE SEVEN

                               AGENT FOR PROCESS

       The street address of the Corporation's initial registered office is
1301 West 25th Street, Suite 300, Austin, Texas, and the name of its initial
registered agent at such address is Gordon Graves.





                                      A-16
<PAGE>   17
                                 ARTICLE EIGHT

                                   DIRECTORS

       The number of directors constituting the Corporation's initial board of
directors is two (2), and the names and addresses of the persons who are to
serve as directors until the first meeting of the shareholders or until their
successors are elected and have qualified are:

       NAME                 ADDRESS
       ----                 -------

       Gordon Graves        1301 West 25th Street
                            Suite 300
                            Austin, Texas 78705

       Don Wilson           2250 Ridgepoint, #503
                            Austin, Texas 78754



                                  ARTICLE NINE

                    ACTION OF SHAREHOLDERS WITHOUT A MEETING

       Any action required by the Texas Business Corporation Act to be taken at
any annual or special meeting of shareholders, or any action which may be taken
at any annual or special meeting of shareholders, may be taken without a
meeting, without prior notice and without a vote, if a consent or consents in
writing, setting forth the action so taken, shall have been signed by the
holder or holders of shares having not less than the minimum number of votes
that would be necessary to take such action at a meeting at which the holders
of all shares entitled to vote on the action were present and voted.


                                  ARTICLE TEN

                     EXEMPTION OF DIRECTORS FROM LIABILITY

       A director of the Corporation shall not be liable to the Corporation or
its shareholders for monetary damages for an act or omission in the director's
capacity as a director, except to the extent that any applicable law may
prevent such director from being relieved of such personal liability.  Any
repeal or modification of this Article shall be prospective only and shall not
adversely affect any limitation of the personal liability of a director of the
Corporation existing at the time of such repeal or modification.





                                      A-17
<PAGE>   18
                                 ARTICLE ELEVEN

                                 INCORPORATORS

       The name and address of the incorporator of the Corporation is:

       NAME                        ADDRESS
       ----                        -------

       Gordon Graves               1301 West 25th Street
                                   Suite 300
                                   Austin, Texas 78705





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