<PAGE>
 
                                    BY-LAWS


                                      of


                          READING ENTERTAINMENT, INC.



                     As amended through September 16, 1997
<PAGE>
 
                          READING ENTERTAINMENT, INC.

                             A Delaware Corporation


                                    BY-LAWS



                                   ARTICLE I

                                  Stockholders

     Section 1.1  Annual Meeting.

     An annual meeting of stockholders for the purpose of electing directors and
of transacting such other business as may come before it shall be held each year
at such date, time, and place, either within or without the State of Delaware,
as may be specified by the Board of Directors.

     Section 1.2  Special Meetings.

     Special meetings of stockholders for any purpose or purposes may be held at
any time upon call of the Chairman or Vice Chairman of the Board, if any, the
Chief Executive Officer, the President, or any three or more members of the
Board of Directors, at such time and place either within or without the State of
Delaware as may be stated in the notice.  A special meeting of stockholders
shall be called by the President or the Secretary upon the written request,
stating time, place, and the purpose or purposes of the meeting, of stockholders
who together own of record shares of stock entitling them to cast a majority of
the votes entitled to be cast by the holders of the outstanding stock of all
classes entitled to vote at such meeting.

     Section 1.3  Notice of Meetings.

     Written notice of stockholders meetings, stating the place, date, and hour
thereof, and, in the case of a special meeting, the purpose or purposes for
which the meeting is called, shall be given by the Chairman or Vice Chairman of
the Board, if any, the Chief Executive Officer, the President, any Vice
President, the Secretary, or an Assistant Secretary, to each stockholder
entitled to vote thereat at least ten days but not more than sixty days before
the date of the meeting, unless a different period is prescribed by law.

     Section 1.4  Quorum.

     Except as otherwise provided by law or in the Certificate of Incorporation
or these By-Laws, at any meeting of stockholders, the holders of shares of stock
entitling them to cast a majority of the votes entitled to be cast at the
meeting shall be present or represented by proxy in order to constitute a quorum
for the transaction of any business.  In the absence of a quorum, a majority in
interest of the stockholders present or the chairman of the meeting may adjourn
the meeting from time to time in the manner provided in Section 1.5 of these By-
Laws until a quorum shall attend.
<PAGE>
 
     Section 1.5  Adjournment.

     Any meeting of stockholders, annual or special, may adjourn from time to
time to reconvene at the same or some other place, and notice need not be given
of any such adjourned meeting if the time and place thereof are announced at the
meeting at which the adjournment is taken.  At the adjourned meeting, the
Corporation may transact any business which might have been transacted at the
original meeting.  If the adjournment is for more than thirty days, or if after
the adjournment a new record date is fixed for the adjourned meeting, a notice
of the adjourned meeting shall be given to each stockholder of record entitled
to vote at the meeting.

     Section 1.6  Organization.

     The Chairman of the Board, if any, or in his absence the Vice Chairman of
the Board, if any, or in their absence the Chief Executive Officer, or in their
absence the President, or in their absence any Vice President, shall call to
order meetings of stockholders and shall act as chairman of such meetings.  The
Board of Directors or, if the Board fails to act, the stockholders may appoint
any stockholder, director, or officer of the Corporation to act as chairman of
any meeting in the absence of the Chairman of the Board, the President, and all
Vice Presidents.

     The Secretary of the Corporation shall act as secretary of all meetings of
stockholders, but, in the absence of the Secretary, the chairman of the meeting
may appoint any other person to act as secretary of the meeting.

     Section 1.7  Voting.

     Except as otherwise provided by law or in the Certificate of Incorporation
or these By-Laws and except for the election of directors, at any meeting duly
called and held at which a quorum is present, a majority of the votes cast at
such meeting upon a given question by the holders of outstanding shares of stock
of all classes of stock of the Corporation entitled to vote thereon who are
present in person or by proxy shall decide such question.  At any meeting duly
called and held for the election of directors at which a quorum is present,
directors shall be elected by a plurality of the votes cast by the holders
(acting as such) of shares of stock of the Corporation entitled to elect such
directors.

     Section 1.8  Action By Consent of Stockholders.

     Unless otherwise restricted by the Certificate of Incorporation, any action
required or permitted to be taken at any annual or special meeting of the
stockholders 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 be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and voted
and shall be delivered (by hand or by certified or registered mail, return
receipt requested) to the Corporation by delivery to its registered office in
the State of Delaware, its principal place of business, or an officer or agent
of the Corporation having custody of the book in which proceedings of minutes of
stockholders are recorded.  Prompt notice of the taking of the corporate action
without a meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.

                                      -2-
<PAGE>
 
                                  ARTICLE II

                              Board Of Directors

     Section 2.1  Number and Term of Office.

     The business, property, and affairs of the Corporation shall be managed by
or under the direction of a Board of six directors; provided, however, that the
Board, by resolution adopted by vote of a majority of the then authorized number
of directors, may increase or decrease the number of directors. The directors
shall be elected by the holders of shares entitled to vote thereon at the annual
meeting of stockholders, and each shall serve (subject to the provisions of
Article IV) until the next succeeding annual meeting of stockholders and until
his respective successor has been elected and qualified.

     Section 2.2  Nomination of Stockholders

     No stockholder shall be permitted to nominate a candidate for election as a
director at any annual meeting unless such stockholder shall provide in writing,
not later than 120 days before the first anniversary of the preceding annual
meeting of stockholders, to the Nominating Committee of the Board of Directors
or, in the absence of such committee, to the Secretary of the Corporation,
information about such candidate which, were such candidate a nominee of the
Board of Directors for whom the Corporation solicited proxies, would be required
to be disclosed in the proxy materials pursuant to which such proxies would be
solicited as set forth in Items 7-8 of Schedule 14A promulgated by the
Securities and Exchange Commission or any successor provisions.

     Section 2.3  Chairman and Vice Chairman of the Board.

     The directors may elect one of their members to be Chairman of the Board of
Directors and may elect one of the members to be the Vice Chairman of the Board
of Directors.  The Chairman and Vice Chairman shall be subject to the control of
and may be removed by the Board of Directors.  The Chairman and Vice Chairman
shall perform such duties as may from time to time be assigned to them by the
Board.

     Section 2.4  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.

     Special meetings of the Board of Directors shall be held at such time and
place as shall be designated in the notice of the meeting whenever called by the
Chairman or Vice Chairman of the Board, if any, the Chief Executive Officer, the
President, or by any three of the directors then in office.

     Section 2.5  Notice of Special Meetings.

     The Secretary, or in his absence any other officer of the Corporation,
shall give each director notice of the time and place of holding of special
meetings of the Board of Directors by telecopy or electronic mail at least 48
hours before the meeting, or by mail at least two days before the meeting, or
by telegram, cable, radiogram, or personal service at least two days before the
meeting.  Unless otherwise stated in the notice thereof, any and all business
may be transacted at any meeting without specification of such business in the
notice.

                                      -3-
<PAGE>
 
     Section 2.6  Quorum and Organization of Meetings.

     A majority of the total number of members of the Board of Directors as
constituted from time to time shall constitute a quorum for the transaction of
business, but, if at any meeting of the Board of Directors (whether or not
adjourned from a previous meeting) there shall be less than a quorum present, a
majority of those present may adjourn the meeting to another time and place, and
the meeting may be held as adjourned without further notice or waiver.  Except
as otherwise provided by law or in the Certificate of Incorporation or these By-
Laws, a majority of the directors present at any meeting at which a quorum is
present may decide any question brought before such meeting.  Meetings shall be
presided over by the Chairman of the Board, if any, or in his absence by the
Vice Chairman of the Board, if any, or in their absence by the Chief Executive
Officer, or in their absence by the President, or in the absence of all of the
foregoing by such other person as the directors may select.  The Secretary of
the Corporation shall act as secretary of the meeting, but in his absence the
chairman of the meeting may appoint any person to act as secretary of the
meeting.

     Section 2.7  Committees.

     The Board of Directors may designate one or more committees, each committee
to consist of one or more of the directors of the Corporation.  The Board may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee.  In
the absence or disqualification of a member of a committee, the member or
members thereof present at any meeting and not disqualified from voting, whether
or not he or they constitute a quorum, may unanimously appoint another member of
the Board of Directors to act at the meeting in place of any such absent or
disqualified member.  Any such committee, to the extent provided in the
resolution of the Board of Directors, shall have and may exercise all the powers
and authority of the Board of Directors in the management of the business,
property, and affairs of the Corporation, and may authorize the seal of the
Corporation to be affixed to all papers which may require it; but no such
committee shall have power or authority in reference to (i) approving or
adopting, or recommending to stockholders, any action or matter expressly
required by law to be submitted to stockholders for approval or (ii) adopting,
amending, or repealing these By-Laws.  Each committee which may be established
by the Board of Directors pursuant to these By-Laws may fix its own rules and
procedures.  Notice of meetings of committees, other than of regular meetings
provided for by the rules, shall be given to committee members.  All action
taken by committees shall be recorded in minutes of the meetings.

     Section 2.8  Action Without Meeting.

     Nothing contained in these By-Laws shall be deemed to restrict the power of
members of the Board of Directors or any committee designated by the Board to
take any action required or permitted to be taken by them without a meeting.

     Section 2.9  Telephone Meetings.

     Nothing contained in these By-Laws shall be deemed to restrict the power of
members of the Board of Directors, or any committee designated by the Board, to
participate in a meeting of the Board, or committee, by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other.

                                      -4-
<PAGE>
 
                                  ARTICLE III

                                   Officers

     Section 3.1  Executive Officers.

     The executive officers of the Corporation shall be a Chief Executive
Officer or a President, or both, one or more Vice Presidents, a Treasurer, and a
Secretary, each of whom shall be elected by the Board of Directors. The Board of
Directors may elect or appoint such other officers (including a Controller and
one or more Assistant Treasurers and Assistant Secretaries) as it may deem
necessary or desirable. Each officer shall hold office for such term as may be
prescribed by the Board of Directors from time to time. Any person may hold at
one time two or more offices.

     Section 3.2  Powers and Duties.

     The Chairman of the Board, if any, or, in his absence, the Vice Chairman of
the Board, or in their absence the Chief Executive Officer, or in their absence
the President, shall preside at all meetings of the stockholders and of the
Board of Directors. The officers and agents of the Corporation shall each have
such powers and authority and shall perform such duties in the management of the
business, property, and affairs of the Corporation as generally pertain to their
respective offices, as well as such powers and authorities and such duties as
from time to time may be prescribed by the Board of Directors.


                                   ARTICLE IV

                     Resignations, Removals, And Vacancies

     Section 4.1  Resignations.

     Any director or officer of the Corporation, or any member of any committee,
may resign at any time by giving written notice to the Board of Directors, the
Chairman or Vice Chairman of the Board, the Chief Executive Officer, the
President, or the Secretary of the Corporation. Any such resignation shall take
effect at the time specified therein or, if the time be not specified therein,
then upon receipt thereof. The acceptance of such resignation shall not be
necessary to make it effective.

     Section 4.2  Removals.

     The Board of Directors, by a vote of not less than a majority of the entire
Board, at any meeting thereof, or by written consent, at any time, may, to the
extent permitted by law, remove with or without cause from office or terminate
the employment of any officer or member of any committee and may, with or
without cause, disband any committee.

     Any director or the entire Board of Directors may be removed, with or
without cause, by the holders of a majority of the shares entitled at the time
to vote at an election of directors.

                                      -5-
<PAGE>
 
     Section 4.3  Vacancies.

     Any vacancy in the office of any director or officer through death,
resignation, removal, disqualification, or other cause, and any additional
directorship resulting from increase in the number of directors, may be filled
at any time by a majority of the directors then in office (even though less
than a quorum remains) or, in the case of any vacancy in the office of any
director, by the stockholders, and, subject to the provisions of this Article
IV, the person so chosen shall hold office until his successor shall have been
elected and qualified; or, if the person so chosen is a director elected to fill
a vacancy, he shall (subject to the provisions of this Article IV) hold office
for the unexpired term of his predecessor.


                                   ARTICLE V

                                 Capital Stock

     Section 5.1  Stock Certificates.

     The certificates for shares of the capital stock of the Corporation shall
be in such form as shall be prescribed by law and approved, from time to time,
by the Board of Directors.

     Section 5.2  Transfer of Shares.

     Shares of the capital stock of the Corporation may be transferred on the
books of the Corporation only by the holder of such shares or by his duly
authorized attorney, upon the surrender to the Corporation or its transfer agent
of the certificate representing such stock properly endorsed.

     Section 5.3  Fixing Record Date.

     In order that the Corporation may determine the stockholders entitled to
notice of or to vote at any meeting of stockholders or any adjournment thereof
or to express consent to corporate action in writing without a meeting, or
entitled to receive payment of any dividend or other distribution or allotment
of any rights, or entitled to exercise any rights in respect of any change,
conversion, or exchange of stock, or for the purpose of any other lawful action,
the Board of Directors may fix, in advance, a record date, which, unless
otherwise provided by law, shall not be more than sixty nor less than ten days
before the date of such meeting, nor more than sixty days prior to any other
action.

     Section 5.4  Lost Certificates.

     The Board of Directors or any transfer agent of the Corporation may direct
a new certificate or certificates representing stock of the Corporation to be
issued in place of any certificate or certificates 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 to be lost,
stolen, or destroyed.  When authorizing such issue of a new certificate or
certificates, the Board of Directors (or any transfer agent of the Corporation
authorized to do so by a resolution of 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 certificates, or his
legal representative, to give the Corporation a bond in such sum as the Board of
Directors (or any transfer agent so authorized) shall direct to indemnify the
Corporation against any claim that may be made against the Corporation with
respect to the certificate alleged to have been

                                      -6-
<PAGE>
 
lost, stolen, or destroyed or the issuance of such new certificates, and such
requirement may be general or confined to specific instances.

     Section 5.5  Regulations.

     The Board of Directors shall have power and authority to make all such
rules and regulations as it may deem expedient concerning the issue, transfer,
registration, cancellation, and replacement of certificates representing stock
of the Corporation.


                                   ARTICLE VI

                                 Miscellaneous

     Section 6.1  Corporate Seal.

     The corporate seal shall have inscribed thereon the name of the Corporation
and shall be in such form as may be approved from time to time by the Board of
Directors, the year of its organization, and the words "Corporate Seal" and
"Delaware".

     Section 6.2  Fiscal Year.

     The fiscal year of the Corporation shall be determined by resolution of the
Board of Directors.

     Section 6.3  Notices and Waivers Thereof.

     Whenever any notice whatever is required by law, the Certificate of
Incorporation, or these By-Laws to be given to any stockholder, director, or
officer, such notice, except as otherwise provided by law, may be given
personally, or by mail, or, in the case of directors or officers, by telecopy,
electronic mail, telegram, cable, or radiogram, addressed to such address as
appears on the books of the Corporation.  Any notice given by telecopy,
electronic mail, telegram, cable, or radiogram shall be deemed to have been
given when it shall have been delivered for transmission and any notice given by
mail shall be deemed to have been given when it shall have been deposited in
the United States mail with postage thereon prepaid.

     Whenever any notice is required to be given by law, the Certificate of
Incorporation, or these By-Laws, a written waiver thereof, signed by the person
entitled to such notice, whether before or after the meeting or the time stated
therein, shall be deemed equivalent in all respects to such notice to the full
extent permitted by law.  Attendance of a person at a meeting shall constitute a
waiver of notice of such meeting, except when the person attends a meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened.

     Section 6.4  Stock of Other Corporations or Other Interests.

     Unless otherwise ordered by the Board of Directors, the Chief Executive
Officer, the President, the Secretary, and such attorneys or agents of the
Corporation as may be from time to time authorized by the Board of Directors or
the President, shall have full power and authority on behalf of this Corporation
to attend and to act and vote in person or by proxy at any meeting of the
holders of securities of any

                                      -7-
<PAGE>
 
corporation or other entity in which this Corporation may own or hold shares or
other securities, and at such meetings shall possess and may exercise all the
rights and powers incident to the ownership of such shares or other securities
which this Corporation, as the owner or holder thereof, might have possessed
and exercised if present.  The Chief Executive Officer, the President, the
Secretary, or such attorneys or agents, may also execute and deliver on behalf
of this Corporation powers of attorney, proxies, consents, waivers, and other
instruments relating to the shares or securities owned or held by this
Corporation.

         
                                  ARTICLE VII

                                   Amendments

     The holders of shares entitled at the time to vote for the election of
directors shall have power to adopt, amend, or repeal the By-Laws of the
Corporation by vote of not less than a majority in interest of such shares, and
except as otherwise provided by law, the Board of Directors shall have power
equal in all respects to that of the stockholders to adopt, amend, or repeal
the By-Laws by vote of not less than a majority of the entire Board.  However,
any By-Law adopted by the Board may be amended or repealed by vote of the
holders of a majority of the shares entitled at the time to vote for the
election of directors.


                                  ARTICLE VIII

                                Indemnification

     Section 8.1  Indemnification Generally.

     The Corporation shall indemnify each person who was or is made a party or
is threatened to be made a party to or is involved in any threatened, pending,
or completed action, suit, or proceeding, whether civil, criminal,
administrative, or investigative (hereinafter a "Proceeding"), by reason of the
fact that he or she, or a person of which he or she is the legal representative,
is or was a director or officer, or had agreed to serve as a director or
officer, of the Corporation or is or was serving or has agreed to serve at the
request of the Corporation as a director, officer, employee, or agent of another
corporation or of a partnership, joint venture, trust, or other enterprise,
including service with respect to employee benefit plans, or by reason of any
act alleged to have been taken or omitted in such capacity, whether the basis of
such Proceeding is alleged action in an official capacity as a director,
officer, employee, or agent or alleged action in any other capacity while
serving as a director, officer, employee, or agent, to the maximum extent
authorized by the General Corporation Law of the State of Delaware, as the same
exists or may hereafter be amended (but, in the case of any such amendment, only
to the extent that such amendment permits the Corporation to provide broader
indemnification rights than such law permitted the Corporation to provide prior
to such amendment), against all cost, expense, liability, and loss (including
attorneys' fees, judgments, fines, ERISA excise taxes or penalties, and amounts
paid or to be paid in settlement) reasonably incurred by such person or on his
or her behalf in connection with such Proceeding, and such indemnification shall
continue as to a person who has ceased to be a director, officer, employee, or
agent and shall inure to the benefit of his or her heirs, executors, and
administrators.  The right to indemnification conferred in this Article Eighth
shall be a contract right and shall include the right to be paid by the
Corporation the expenses incurred in defending any such Proceeding in advance of
its final disposition; provided that, if the General Corporation Law so
requires, the payment of such expenses incurred by a director or officer in
advance of the final disposition of a Proceeding shall be made only

                                      -8-
<PAGE>
 
upon receipt by the Corporation of an undertaking by or on behalf of such person
to repay all amounts so advanced if it shall ultimately be determined that such
person is not entitled to be indemnified by the Corporation as authorized in
this Article Eighth or otherwise and provided that the Corporation shall not be
required to advance expenses in connection with a Proceeding (or part thereof)
alleging liability under Section 16(b) of the Securities Exchange Act of 1934,
as amended (a "16(b) Claim").  The termination of any Proceeding by judgment,
order, settlement, or conviction, or upon a plea of nolo contendre or its
equivalent, shall not, of itself, create a presumption that the person did not
meet any standard of conduct for indemnification imposed by the General
Corporation Law.  The Corporation shall be required to indemnify a person in
connection with a Proceeding (or part thereof) initiated by such person only if
such Proceeding (or part thereof) was authorized by the Board of Directors of
the Corporation.

     Section 8.2  Indemnification for Costs, Charges, and Expenses for
                  Successful Party.

     Notwithstanding the other provisions of this Article Eighth, to the extent
that a director or officer of the Corporation has been successful on the merits
or otherwise, including, without limitation, the dismissal of an action without
prejudice, in defense of any Proceeding referred to in Section 8.1, or in the
defense of any claim, issue, or matter therein, he shall be indemnified against
all costs, charges, and expenses (including attorneys' fees) actually and
reasonably incurred by him or on his behalf in connection therewith.

     Section 8.3  Determination of Right to Indemnification.

     Any indemnification under Section 8.1 or 8.2 (unless ordered by a court)
shall be paid by the Corporation unless a determination is made (a) by the Board
of Directors by a majority vote of a quorum consisting of directors who were not
parties to such action, suit, or proceeding, or (b) if such a quorum is not
obtainable, or, even if obtainable, a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or (c) by the
stockholders, that indemnification of the director or officer is not proper in
the circumstances because he has not met the applicable standards of conduct set
forth in the General Corporation Law.

     Section 8.4  Advance of Costs, Charges and Expenses.

     Costs, charges, and expenses (including attorneys' fees) incurred by a
person referred to in section 8.1 of this Article Eighth in defending a civil or
criminal Proceeding (including investigations by any government agency and all
costs, charges, and expenses incurred in preparing for any threatened
Proceeding) shall be paid by the Corporation in advance of the final disposition
of such Proceeding; provided, however, that the payment of such costs, charges,
and expenses incurred by a director or officer in his or her capacity as a
director or officer (and not in any other capacity in which service was or is
rendered by such person while a director or officer) in advance of the final
disposition of such Proceeding shall be made only upon receipt of an undertaking
by or on behalf of the director or officer to repay all amounts so advanced if
it shall ultimately be determined that such director or officer is not entitled
to be indemnified by the Corporation as authorized in this Article Eighth and
provided that the Corporation shall not be required to advance expenses in
connection with a 16(b) Claim.  No security shall be required for such
undertaking and such undertaking shall be accepted without reference to the
recipient's financial ability to make repayment.  The Board of Directors may, in
the manner set forth above, and subject to the approval of such director or
officer, authorize the Corporation's counsel to represent such person in any
Proceeding, whether or not the Corporation is a party to such Proceeding.

                                      -9-
<PAGE>
 
     Section 8.5  Procedure for Indemnification.

     Any indemnification under Section 8.1 or advance of costs, charges, and
expenses under Section 8.4 shall be made promptly, and in any event within 60
days, upon the written request of the director or officer directed to the
Secretary of the Corporation.  The right to indemnification or advances as
granted by this Article Eighth shall be enforceable by the director or officer
in any court of competent jurisdiction if the Corporation denies such request,
in whole or in part, or if no disposition thereof is made within 60 days.  Such
person's costs and expenses incurred in connection with successfully
establishing his or her right to indemnification or advances, in whole or in
part, in any such action shall also be indemnified by the Corporation.  It shall
be a defense to any such action (other than an action brought to enforce a claim
for the advance of costs, charges, and expenses under Section 8.4 where the
required undertaking, if any, has been received by the Corporation) that the
claimant has not met the standard of conduct, if any, set forth in the General
Corporation Law, but, to the extent permitted by applicable law, the burden of
proving that such standard of conduct has not been met shall be on the
Corporation.  To the extent permitted by applicable law, neither the failure of
the Corporation (including its Board of Directors, its independent legal
counsel, and its stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is proper in
the circumstances because he or she has met the applicable standard of conduct,
if any, set forth in the General Corporation Law, nor the fact that there has
been an actual determination by the Corporation (including its Board of
Directors, its independent legal counsel, and its stockholders) that the
claimant has not met such applicable standard of conduct, shall be a defense to
the action or create a presumption that the claimant has not met the applicable
standard of conduct.

     Section 8.6  Other Rights; Continuation of Right of Indemnification.

     The indemnification provided by this Article Eighth shall not be deemed
exclusive of any other rights to which a person seeking indemnification may be
entitled under any law (common or statutory), agreement, vote of stockholders or
disinterested directors, or otherwise, both as to action in his or her official
capacity and as to action in another capacity while holding office, and shall
continue as to a person who has ceased to be a director or officer and shall
inure to the benefit of the estate, heirs, executors, and administrators of such
person.  All rights to indemnification under this Article Eighth shall be deemed
to be a contract between the Corporation and each director and officer of the
Corporation who serves or served in such capacity at any time while this Article
Eighth is in effect.  No amendment or repeal of this Article Eighth or of any
relevant provisions of the General Corporation Law or any other applicable laws
shall adversely affect or deny to any director or officer any rights to
indemnification which such person may have, or change or release any obligations
of the Corporation under this Article Eighth with respect to any costs,
charges, expenses (including attorneys' fees), judgments, fines, and amounts
paid in settlement which arise out of an Proceeding based in whole or
substantial part on any act, actual or alleged, which takes place before or
while this Article Eighth is in effect.  The provisions of this Section 8.6
shall apply to any such Proceeding whenever commenced, including any such
Proceeding commenced after any amendment or repeal of this Article Eighth.  The
right to indemnification and advancement of expenses conferred on any person by
this Article Eighth shall not limit the Corporation from providing any other
indemnification permitted by law.


                                     -10-
<PAGE>
 
     Section 8.7   Definitions.

     For purposes of this Article Eighth:

     "the Corporation" includes any constituent corporation (including any
constituent of a constituent) absorbed in a consolidation or merger which, if
its separate existence continued, would have had power and authority to
indemnify its directors or officers, so that any person who is or was a director
or officer of such constituent corporation, or is or was serving at the request
of such constituent corporation as a director, officer, employee, or agent of
another corporation, partnership, joint venture, trust, or other enterprise,
shall stand in the same position under the provisions of this Article Eighth
with respect to the resulting or surviving corporation ass he would have with
respect to such constituent corporation if its separate existence had continued;

     "other enterprises" includes employee benefit plans, including but not
limited to any employee benefit plans of the Corporation;

     "serving at the request of the Corporation" includes, but is not limited
to, any service which imposes duties on, or involves services by, a director or
officer of the Corporation with respect to an employee benefit plan, its
participants, or beneficiaries, including acting as a fiduciary there;

     "fines" shall include any penalties and any excise or similar taxes
assessed on a person with respect to an employee benefit plan;

     a person who acted in good faith and in a manner he reasonably believed to
be in the interest of the participants and beneficiaries of an employee benefit
plan shall be deemed to have acted in a manner "not opposed to the best
interests of the Corporation" as referred to in Section 8.1; and

     service as a partner, trustee, or member of management or similar committee
of a partnership or joint venture, or as a director, officer, employee, or agent
of a corporation which is a partner, trustee, or joint venturer, shall be
considered service as a director, officer, employee, or agent of the
partnership, joint venture, trust, or other enterprise.

     Section 8.8  Saving Clause.

     If this Article Eighth or any portion hereof shall be invalidated on any
ground by a court of competent jurisdiction, then the Corporation shall
nevertheless indemnify each director and officer of the Corporation as to costs,
charges, expenses (including attorneys' fees), judgments, fines, and amounts
paid in settlement with respect to any action, suit, or proceeding, whether
civil, criminal, administrative, or investigative, including an action by or in
the right of the Corporation, to the full extent permitted by any applicable
portion of this Article Eighth that shall not have been invalidated and to the
full extent permitted by applicable law.

     Section 8.9  Indemnification of Other Persons.

     If authorized by the Board of Directors, the Corporation may indemnify and
advance expenses to any other person whom it has the power to indemnify under
the General Corporation Law to the fullest extent permitted by such statute.


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<PAGE>
 
     Section 8.10  Insurance.

     The Corporation may purchase and maintain insurance, at its expense, to
protect itself and any director, officer, employee, or agent of the Corporation
or another corporation, partnership, joint venture, trust, or other enterprises
against any expense, liability or claim, whether or not the Corporation would
have the power to indemnify such person under the General Corporation Law.



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