BYLAWS

                                       OF

                             1st STATE BANCORP, INC.


                                    ARTICLE I

                                PRINCIPAL OFFICE

     The principal office of 1st State Bancorp,  Inc. (herein the "Corporation")
shall be at 445 South Main Street, Burlington, North Carolina.


                                   ARTICLE II

                                  STOCKHOLDERS

     SECTION  1.  Place  of  Meetings.   All  annual  and  special  meetings  of
                  --------------------
stockholders shall be held at the principal office of the Corporation or at such
other place within the United States as the board of directors may determine and
as designated in the notice of such meeting.

     SECTION 2. Annual Meeting. A meeting of the stockholders of the Corporation
                ---------------
for the election of directors and for the  transaction  of any other business of
the  Corporation  shall be held  annually  at such date and time as the board of
directors may determine.

     SECTION 3. Special  Meetings.  Special meetings of the stockholders for any
                ------------------
purpose or purposes may be called at any time by the  chairman of the board,  by
the president,  by a majority of the board of directors or by a committee of the
board of  directors  in  accordance  with the  provisions  of the  Corporation's
Articles of Incorporation.

     SECTION  4.  Conduct of  Meetings.  Annual and  special  meetings  shall be
                  ---------------------
conducted in accordance  with the rules and procedures  established by the board
of directors. The board of directors shall designate, when present, the chairman
of the  board,  vice  chairman  of the board or  president  to  preside  at such
meetings.

     SECTION 5. Notice of Meeting.  Written  notice  stating the place,  day and
                ------------------
hour of the meeting and the purpose or purposes  for which the meeting is called
shall be mailed by the secretary or the officer  performing his duties, not less
than ten days nor more than sixty days before the meeting to each stockholder of
record entitled to vote at such meeting.  If mailed, such notice shall be deemed
to be  delivered  when  deposited in the United  States  mail,  addressed to the
stockholder  at his address as it appears on the stock transfer books or records
of the Corporation as of the record date prescribed in Section 6 of this Article
II, with postage  thereon  prepaid.  If a stockholder is present in person or by
proxy at a meeting,  unless the  stockholder  at the  beginning  of the  meeting
objects to holding the meeting or  transacting  business at the  meeting,  or in
writing waives notice thereof before or after the meeting, notice of the meeting
to such stockholder shall be unnecessary. When any stockholders' meeting, either
annual or special, is adjourned to a different date, time or place, it shall not
be necessary to give any notice of the date,  time or place of any meeting or of
the  business  to be  transacted  at  such  adjourned  meeting,  other  than  an
announcement at the meeting at which such  adjournment is taken. If a new record
date for the  adjourned  meeting is or shall be fixed under Section 6 of Article
II of these  Bylaws,  however,  notice of the  adjourned  meeting shall be given
under this Section 5 to persons who are stockholders as of the new record date.

     SECTION  6.  Fixing  of  Record  Date.   For  the  purpose  of  determining
                  -------------------------
stockholders entitled to notice of or to vote at any meeting of stockholders, or
any  adjournment  thereof,  or  stockholders  entitled to receive payment of any
dividend,  or in order to make a  determination  of  stockholders  for any other
proper purpose, the board of directors shall fix in advance a date as the record
date for any such determination of stockholders.  Such date in any case shall be
not more than  seventy  days prior to the date on which the  particular  action,
requiring such




<PAGE>

determination of  stockholders,  is to be taken. A determination of stockholders
entitled to notice of or to vote at a stockholders' meeting is effective for any
adjournment  of the  meeting  unless the board of  directors  fixes a new record
date, which it shall do if the meeting is adjourned to a date more than 120 days
after the date fixed for the original meeting.

     SECTION 7. Voting  Lists.  The officer or agent having  charge of the stock
                --------------
transfer books for shares of the Corporation shall make, at lest ten days before
each meeting of stockholders,  a complete record of the stockholders entitled to
vote at such  meeting or any  adjournment  thereof,  with the address of and the
number of shares held by each. The record,  for a period of ten days before such
meeting,  shall be kept on file at the registered office or the principal office
of the Corporation or at the office of the Corporation's transfer agent, whether
within  or  outside  the  State of North  Carolina,  and  shall  be  subject  to
inspection by any stockholder for any purpose germane to the meeting at any time
during usual business hours. Such record shall also be produced and kept open at
the time and place of the meeting and shall be subject to the  inspection of any
stockholder  for any purpose germane to the meeting during the whole time of the
meeting.  The original  stock transfer books shall be prima facie evidence as to
who are the stockholders entitled to examine such record or transfer books or to
vote at any meeting of stockholders.

     SECTION 8. Proxies. At all meetings of stockholders, a stockholder may vote
                --------
by proxy  executed  in  writing  by the  stockholder  or by his duly  authorized
attorney in fact.  Proxies  solicited on behalf of the management shall be voted
as  directed  by the  stockholder  or,  in the  absence  of such  direction,  as
determined  by a majority  of the board of  directors.  No proxy  shall be valid
after eleven months from the date of its execution unless otherwise  provided in
the proxy.

     SECTION  9.  Voting.  At each  election  for  directors  every  stockholder
                  -------
entitled to vote at such  election  shall be entitled to one vote for each share
of  stock  held  by  him.   Unless   otherwise   provided  in  the  Articles  of
Incorporation, by statute, or by these Bylaws, a majority of those votes cast by
stockholders at a lawful meeting shall be sufficient to pass on a transaction or
matter which properly  comes before the meeting,  except that a plurality of all
the votes cast at a meeting at which a quorum is present is  sufficient to elect
a director.

     SECTION  10.  Voting  of Shares  in the Name of Two or More  Persons.  When
                   -------------------------------------------------------
ownership of stock stands in the name of two or more persons,  in the absence of
written  directions to the  Corporation  to the contrary,  at any meeting of the
stockholders of the Corporation any one or more of such  stockholders  may cast,
in person or by proxy,  all votes to which such  ownership is  entitled.  In the
event an attempt is made to cast  conflicting  votes,  in person or by proxy, by
the several  persons in whose name shares of stock  stand,  the vote or votes to
which these persons are entitled shall be cast  proportionally  in proportion to
the number of persons voting.

     SECTION 11.  Voting of Shares by Certain  Holders.  Shares  standing in the
                  -------------------------------------
name of another  corporation may be voted by any officer,  agent or proxy as the
bylaws of such corporation may prescribe,  or, in the absence of such provision,
as the board of directors of such  corporation may determine.  Shares held by an
administrator,   executor,   guardian,   conservator,   committee   or   curator
representing  the stockholder may be voted by him, either in person or by proxy,
without a transfer of such shares into his name.  Shares standing in the name of
a trustee  may be voted by him,  either in  person or by proxy,  but no  trustee
shall be  entitled  to vote shares held by him without a transfer of such shares
into his name.  Shares  standing in the name of a receiver  may be voted by such
receiver,  and shares held by or under the control of a receiver may be voted by
such receiver  without the transfer  thereof into his name if authority to do so
is contained in an appropriate  order of the court or other public  authority by
which such receiver was appointed.

     A  stockholder  whose  shares are  pledged  shall be  entitled to vote such
shares until the shares have been  transferred  into the name of the pledgee and
thereafter the pledgee shall be entitled to vote the shares so transferred.

     Shares held by another corporation, if a majority of the shares entitled to
vote for the  election of directors  of such other  corporation  are held by the
Corporation,  shall not be voted at any  meeting or counted in  determining  the
total  number  of  outstanding  shares  at any given  time for  purposes  of any
meeting.

     SECTION  12.  Inspectors  of  Election.   In  advance  of  any  meeting  of
                   -------------------------
stockholders, the board of directors may appoint one or more persons, other than
nominees  for office,  as  inspectors  of election to act at such meeting or any
adjournment thereof. If inspectors of election are not so appointed,  the person
presiding at the meeting shall

                                       2
<PAGE>

make such appointment at the meeting.  In case any person appointed as inspector
fails to  appear  or fails or  refuses  to act,  the  vacancy  may be  filled by
appointment  by the board of  directors  in  advance  of the  meeting  or at the
meeting by the person presiding at the meeting.

     Unless  otherwise   prescribed  by  applicable  law,  the  duties  of  such
inspectors  shall  include:  determining  the  number of shares of stock and the
voting power of each share, the shares of stock represented at the meeting,  the
existence  of a quorum,  the  authenticity,  validity  and  effect  of  proxies;
receiving votes, ballots or consents; hearing and determining all challenges and
questions in any way arising in connection with the right to vote;  counting and
tabulating all votes or consents;  determining the result;  and such acts as may
be proper to conduct the election or vote with fairness to all stockholders.

     SECTION 13.  Nominating  Committee.  The board of  directors or a committee
                  ----------------------
appointed by the board of  directors  shall act as a  nominating  committee  for
selecting the management nominees for election as directors.  Except in the case
of a  nominee  substituted  as a result of the  death or other  incapacity  of a
management nominee,  the nominating  committee shall deliver written nominations
to the  secretary at least twenty days prior to the date of the annual  meeting.
Provided such committee  makes such  nominations,  no nominations  for directors
except those made by the nominating  committee shall be voted upon at the annual
meeting  unless  other  nominations  by  stockholders  are made in  writing  and
delivered to the secretary of the  Corporation in accordance with the provisions
of the Corporation's Articles of Incorporation.

     SECTION  14. New  Business.  Any new  business to be taken up at the annual
                  --------------
meeting  shall  be  stated  in  writing  and  filed  with the  secretary  of the
Corporation in accordance with the provisions of the  Corporation's  Articles of
Incorporation.  This provision shall not prevent the  consideration and approval
or  disapproval  at the annual  meeting of reports of  officers,  directors  and
committees,  but in connection  with such reports no new business shall be acted
upon at  such  annual  meeting  unless  stated  and  filed  as  provided  in the
Corporation's Articles of Incorporation.


                                   ARTICLE III

                               BOARD OF DIRECTORS

     SECTION 1. General  Powers.  The  business  and affairs of the  Corporation
                ----------------
shall be under the direction of its board of  directors.  The board of directors
shall annually elect a chairman of the board, a vice chairman of the board and a
president from among its members and shall designate,  when present,  either the
chairman  of the  board,  the vice  chairman  of the board or the  president  to
preside at its meetings.

     SECTION  2.  Number,  Term  and  Election.  The  board of  directors  shall
                  -----------------------------
initially consist of nine members and thereafter shall consist of such number of
members as determined by the board of directors  from time to time in accordance
with the provisions of the Corporation's Articles of Incorporation. The board of
directors  shall be  divided  into three  classes  as nearly  equal in number as
possible.  The  members of each class shall be elected for a term of three years
and until their  successors  are elected or  qualified.  The board of  directors
shall be  classified  in accordance  with the  provisions  of the  Corporation's
Articles of Incorporation.

     SECTION 3. Regular  Meetings.  A regular  meeting of the board of directors
                ------------------
shall be held generally each month at such time and place as shall be determined
by  resolution  of the  board  of  directors  without  other  notice  than  such
resolution.

     SECTION 4. Special Meetings. Special meetings of the board of directors may
                -----------------
be called by or at the request of the chairman of the board, the president, or a
majority of the directors.  The persons  authorized to call special  meetings of
the board of  directors  may fix any place as the place for  holding any special
meeting of the board of directors called by such persons.

                                       3
<PAGE>

     Members of the board of  directors  may  participate  in regular or special
meetings by means of conference telephone or similar communications equipment by
which  all  persons  participating  in the  meeting  can hear each  other.  Such
participation shall constitute presence in person.

     SECTION 5. Notice.  Written notice of any special meeting shall be given to
                -------
each  director at least two days  previous  thereto  delivered  personally or by
telegram  or at least  seven  days  previous  thereto  delivered  by mail at the
address at which the director is most likely to be reached. Such notice shall be
deemed to be delivered  when  deposited in the United  States mail so addressed,
with  postage  thereon  prepaid  if mailed or when  delivered  to the  telegraph
company if sent by  telegram.  Any director may waive notice of any meeting by a
writing  filed with the  secretary.  The  attendance  of a director at a meeting
shall constitute a waiver of notice of such meeting,  except where a director at
the  beginning  of a meeting  or  promptly  upon his or her  arrival  objects to
holding  the  meeting  or  transacting  business  at the  meeting  and  does not
thereafter  vote for or assent  to  action  taken at the  meeting.  Neither  the
business  to be  transacted  at, nor the purpose of, any meeting of the board of
directors need be specified in the notice or waiver of notice of such meeting.

     SECTION 6. Quorum. A majority of the number of directors fixed by Section 2
                -------
of this Article III shall constitute a quorum for the transaction of business at
any meeting of the board of directors, but if less than such majority is present
at a meeting,  a majority of the directors  present may adjourn the meeting from
time to time.  Notice of any adjourned meeting shall be given in the same manner
as prescribed by Section 5 of this Article III.

     SECTION  7.  Manner of Acting.  The act of the  majority  of the  directors
                  -----------------
present at a meeting at which a quorum is present  shall be the act of the board
of  directors,  unless a  greater  number is  prescribed  by these  Bylaws,  the
Corporation's Articles of Incorporation, or the Virginia Stock Corporation Act.

     SECTION 8. Action Without a Meeting. Any action required or permitted to be
                -------------------------
taken by the board of directors at a meeting may be taken without a meeting if a
consent in writing, setting forth the action so taken, shall be signed by all of
the  directors  and  filed  with the  minutes  or  proceedings  of the  board of
directors.

     SECTION 9.  Resignation.  Any  director may resign at any time by sending a
                 ------------
written notice of such  resignation to the principal  office of the  Corporation
addressed to the board of directors, the chairman of the board, the president or
the  secretary.   Unless  otherwise  specified  in  such  written  notice,  such
resignation shall take effect upon delivery of the notice in accordance with the
terms of the preceding sentence.

     SECTION 10.  Vacancies.  Any vacancy  occurring  in the board of  directors
                  ----------
shall be filled in accordance with the provisions of the Corporation's  Articles
of  Incorporation.  The term of any  director  elected  or  appointed  to fill a
vacancy shall be in accordance with the provisions of the Corporation's Articles
of Incorporation.

     SECTION 11.  Removal of  Directors.  Any  director  or the entire  board of
                  ----------------------
directors  may  be  removed  only  in  accordance  with  the  provisions  of the
Corporation's Articles of Incorporation.

     SECTION 12. Compensation.  Directors,  as such, may receive a stated salary
                 -------------
and/or fees for their  services.  By  resolution  of the board of  directors,  a
reasonable  fixed sum, and  reasonable  expenses of  attendance,  if any, may be
allowed for actual attendance at each regular or special meeting of the board of
directors.  Members of either standing or special committees may be allowed such
compensation  for  actual  attendance  at  committee  meetings  as the  board of
directors  may  determine.  Nothing  herein  shall be  construed to preclude any
director  from  serving the  Corporation  in any other  capacity  and  receiving
remuneration  therefor.

     SECTION 13.  Presumption of Assent.  A director of the  Corporation  who is
                  ----------------------
present at a meeting of the board of directors at which action on any  corporate
matter is taken shall be presumed to have  assented to the action  taken  unless
(i) he objects at the beginning of the meeting, or promptly upon his arrival, to
holding it or transacting  specified  business at the meeting,  or (ii) he votes
against, or abstains from, the action taken.

     SECTION 14.  Advisory  Directors.  The board of directors may by resolution
                  --------------------
appoint  advisory  directors  to the  board,  who may also  serve  as  directors
emeriti,  and shall  have such  authority  and  receive  such  compensation  and

                                       4
<PAGE>

reimbursement  as the board of directors  shall provide.  Advisory  directors or
directors  emeriti  shall not have the authority to  participate  by vote in the
transaction of business.

     SECTION 15. Age  Limitation  for  Non-Employee  Directors.  A person who is
                 ----------------------------------------------
seventy-five  (75)  years  of age or  older  and who is not an  employee  of the
Corporation  or 1st State Bank shall not be eligible for election,  re-election,
appointment,  or  re-appointment  to the  board  of  directors.  A  non-employee
director  shall  not  serve  beyond  the  annual  meeting  of  the   Corporation
immediately following the non-employee director becoming seventy-five (75).


                                   ARTICLE IV

                      COMMITTEES OF THE BOARD OF DIRECTORS

     The board of directors may, by resolution passed by a majority of the whole
board,  designate one or more committees,  as they may determine to be necessary
or  appropriate  for the  conduct of the  business of the  Corporation,  and may
prescribe the duties,  constitution and procedures thereof. Each committee shall
consist of one or more directors or officers of the  Corporation.  The board may
designate  one or  more  directors  or  officers  as  alternate  members  of any
committee,  who may replace any absent or disqualified  member at any meeting of
the committee.

     The board of  directors  shall have  power,  by the  affirmative  vote of a
majority  of the  authorized  number of  directors,  at any time to  change  the
members of, to fill  vacancies  in, and to discharge any committee of the board.
Any member of any such  committee may resign at any time by giving notice to the
Corporation;  provided,  however,  that notice to the board, the chairman of the
board, the president,  the chairman of such committee, or the secretary shall be
deemed to constitute  notice to the  Corporation.  Such  resignation  shall take
effect upon receipt of such notice or at any later time specified therein;  and,
unless otherwise specified therein,  acceptance of such resignation shall not be
necessary to make it effective.  Any member of any such committee may be removed
at any time, either with or without cause, by the affirmative vote of a majority
of the  authorized  number of  directors  at any meeting of the board called for
that purpose.


                                    ARTICLE V

                                    OFFICERS

     SECTION 1. Positions.  The officers of the Corporation shall be a chairman,
                ----------
a president, one or more vice presidents,  a secretary and a treasurer,  each of
whom shall be  elected by the board of  directors.  The board of  directors  may
designate one or more vice presidents as executive vice president or senior vice
president. The board of directors may also elect or authorize the appointment of
such other officers as the business of the Corporation may require. The officers
shall have such  authority and perform such duties as the board of directors may
from time to time authorize or determine.  In the absence of action by the board
of  directors,  the  officers  shall have such  powers  and duties as  generally
pertain to their respective offices.

     SECTION 2.  Election and Term of Office.  The  officers of the  Corporation
                 ----------------------------
shall be elected  annually by the board of directors at the first meeting of the
board of directors  held after each annual meeting of the  stockholders.  If the
election of officers is not held at such meeting, such election shall be held as
soon thereafter as possible.  Each officer shall hold office until his successor
shall have been duly elected and  qualified or until his death or until he shall
resign or shall have been removed in the manner hereinafter  provided.  Election
or  appointment  of an officer,  employee  or agent  shall not of itself  create
contract  rights.  The board of directors may authorize the Corporation to enter
into an employment  contract with any officer in accordance  with state law; but
no such contract  shall impair the right of the board of directors to remove any
officer at any time in accordance with Section 3 of this Article V.

     SECTION 3. Removal. Any officer may be removed by vote of two-thirds of the
                --------
board  of  directors  whenever,  in its  judgment,  the  best  interests  of the
Corporation  will be served  thereby,  but such  removal,  other than for cause,
shall be without  prejudice  to the  contract  rights,  if any, of the person so
removed.


<PAGE>

     SECTION  4.   Vacancies.   A  vacancy  in  any  office  because  of  death,
                   ----------
resignation,  removal, disqualification or otherwise, may be filled by the board
of directors for the unexpired portion of the term.

     SECTION 5.  Remuneration.  The  remuneration of the officers shall be fixed
                 -------------
from time to time by the board of  directors  and no officer  shall be prevented
from  receiving  such salary by reason of the fact that he is also a director of
the Corporation.


                                   ARTICLE VI

                      CONTRACTS, LOANS, CHECKS AND DEPOSITS

     SECTION 1. Contracts. To the extent permitted by applicable law, and except
                ----------
as otherwise prescribed by the Corporation's  Articles of Incorporation or these
Bylaws with  respect to  certificates  for shares,  the board of  directors  may
authorize any officer,  employee,  or agent of the Corporation to enter into any
contract or execute and deliver any  instrument  in the name of and on behalf of
the  Corporation.  Such  authority  may  be  general  or  confined  to  specific
instances.

     SECTION 2. Loans.  No  indebtedness  shall be  contracted  on behalf of the
                ------
Corporation and no evidence of  indebtedness  shall be issued in its name unless
authorized by the board of directors.  Such authority may be general or confined
to specific instances.

     SECTION 3. Checks,  Drafts, Etc. All checks, drafts or other orders for the
                ---------------------
payment of money, notes or other evidences of indebtedness issued in the name of
the Corporation shall be signed by one or more officers,  employees or agents of
the  Corporation  in such  manner as shall  from time to time be  determined  by
resolution of the board of directors.

     SECTION 4. Deposits.  All funds of the Corporation  not otherwise  employed
                ---------
shall be deposited from time to time to the credit of the  Corporation in any of
its duly authorized depositories as the board of directors may select.


                                   ARTICLE VII

                   CERTIFICATES FOR SHARES AND THEIR TRANSFER

     SECTION 1. Certificates for Shares.  The shares of the Corporation shall be
                ------------------------
represented by certificates  signed by the chairman of the board of directors or
by the  president  or a vice  president  and by the  treasurer  or an  assistant
treasurer or by the secretary or an assistant secretary of the Corporation,  and
may be sealed with the seal of the  Corporation or a facsimile  thereof.  Any or
all of the signatures upon a certificate may be facsimiles if the certificate is
countersigned by a transfer agent, or registered by a registrar,  other than the
Corporation  itself of an  employee of the  Corporation.  If any officer who has
signed or whose facsimile  signature has been placed upon such certificate shall
have  ceased to be such  officer  before the  certificate  is issued,  it may be
issued by the Corporation with the same effect as if he were such officer at the
date of its issue.

     SECTION 2. Form of Share Certificates. All certificates representing shares
                ---------------------------
issued  by the  Corporation  shall  set  forth  upon the  face or back  that the
Corporation  will furnish to any  stockholder  upon written  request and without
charge a full statement of the designations,  relative rights, preferences,  and
limitations applicable to each class and the variations in rights,  preferences,
and  limitations  determined  for each series (and the authority of the board of
directors to determine variations for future series).

     Each certificate representing shares shall state upon the face thereof: the
name of the Corporation; that the Corporation is organized under the laws of the
Commonwealth of Virginia;  the name of the person to whom issued; the number and
class of shares; the date of issue; the designation of the series, if any, which
such  certificate  represents;  the par value of each share  represented by such
certificate, or a statement that the shares are without par value. Other matters
in regard to the form of the  certificates  shall be  determined by the board of
directors.

                                       6
<PAGE>

     SECTION 3. Form of Payment for Shares.  The  consideration for the issuance
                ---------------------------
of shares shall be paid in accordance  with the provisions of the  Corporation's
Articles of Incorporation.

     SECTION 4.  Transfer of Shares.  Transfer of shares of capital stock of the
                 -------------------
Corporation  shall be made only on its stock transfer books.  Authority for such
transfer  shall be given  only by the  holder of record  thereof or by his legal
representative,  who shall furnish proper evidence of such authority,  or by his
attorney there unto authorized by power of attorney duly executed and filed with
the Corporation.  Such transfer shall be made only on surrender for cancellation
of the certificate  for such shares.  The person in whose name shares of capital
stock stand on the books of the  Corporation  shall be deemed by the Corporation
to be the owner thereof for all purposes.

     SECTION 5. Stock Ledger.  The stock ledger of the Corporation  shall be the
                -------------
only  evidence  as to who are the  stockholders  entitled  to examine  the stock
ledger or the books of the  Corporation  or to vote in person or by proxy at any
meeting of stockholders.

     SECTION  6. Lost  Certificates.  The board of  directors  may  direct a new
                 -------------------
certificate to be issued in place of any certificate  theretofore  issued by the
Corporation alleged to have been lost, stolen, or destroyed,  upon the making of
an affidavit of that fact by the person  claiming the certificate of stock to be
lost,  stolen,  or destroyed.  When authorizing such issue of a new certificate,
the board of directors may, in its  discretion  and as a condition  precedent to
the  issuance  thereof,  require the owner of such lost,  stolen,  or  destroyed
certificate, or his legal representative, to give the Corporation a bond in such
sum as it may direct as indemnity against any claim that may be made against the
Corporation with respect to the certificate  alleged to have been lost,  stolen,
or destroyed.

     SECTION  7.  Beneficial  Owners.  The  Corporation  shall  be  entitled  to
                  -------------------
recognize the exclusive  right of a person  registered on its books as the owner
of shares to  receive  dividends,  and to vote as such  owner,  and shall not be
bound to recognize any equitable or other claim to or interest in such shares on
the part of any other person,  whether or not the Corporation shall have express
or other notice thereof, except as otherwise provided by law.


                                  ARTICLE VIII

                            FISCAL YEAR; ANNUAL AUDIT

     The fiscal year of the  Corporation  shall end on the 30th day of September
of each year. The Corporation  shall be subject to an annual audit as of the end
of  its  fiscal  year  by  independent  public  accountants   appointed  by  and
responsible to the audit committee of the board of directors.


                                   ARTICLE IX

                                    DIVIDENDS

     Subject to the provisions of the  Corporation's  Articles of  Incorporation
and  applicable  law,  the board of  directors  may,  at any  regular or special
meeting,  declare  dividends on the  Corporation's  outstanding  capital  stock.
Dividends may be paid in cash, in property or in the Corporation's own stock.


                                       7
<PAGE>

                                    ARTICLE X

                                 CORPORATE SEAL

     The corporate seal of the Corporation shall be in such form as the board of
directors shall prescribe.

                                   ARTICLE XI

                                   AMENDMENTS

     In  accordance  with the  Corporation's  Articles of  Incorporation,  these
Bylaws may be repealed, altered, amended or rescinded by the stockholders of the
Corporation  only by vote of not less  than  80% of the  outstanding  shares  of
capital stock of the  Corporation  entitled to vote generally in the election of
directors  (considered  for this  purpose as one class) cast at a meeting of the
stockholders  called for that  purpose  (provided  that notice of such  proposed
repeal,  alteration,  amendment or  rescission is included in the notice of such
meeting).  In  addition,  the board of  directors  may repeal,  alter,  amend or
rescind  these Bylaws by vote of two-thirds of the board of directors at a legal
meeting held in accordance with the provisions of these Bylaws.




                                       8