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                                                                   EXHIBIT 3.1

                      RESTATED ARTICLES OF INCORPORATION
                                      OF
                            CYANOTECH CORPORATION

     The undersigned  President and Secretary of Cyanotech  Corporation  restate
the Articles of Incorporation of Cyanotech Corporation as follows:

ARTICLE I

     NAME: The name of the corporation is Cyanotech Corporation.

ARTICLE II

     REGISTERED  OFFICE AND AGENT:  The address of the  corporation's  principal
office in Nevada is One East First Street, Reno, NV 89501. The agent for service
of process at that address will be The Corporation Trust Company of Nevada.

ARTICLE III

     PURPOSE:  The purposes for which the corporation is organized are to engage
in any activity or business not in conflict with the laws of the State of Nevada
or of the United States of America,  and without  limiting the generality of the
foregoing, specifically:

     1. To have and to exercise all the powers now or hereafter conferred by the
laws of the State of Nevada  upon  corporations  organized  pursuant to the laws
under which the corporation is organized and any and all acts amendatory thereof
and supplemental thereto.

     2. To discount and negotiate  promissory notes,  drafts, bills of exchange,
and other evidence of debts,  and to collect for others money due them on notes,
checks,  drafts,  bills of  exchange,  commercial  paper and other  evidence  of
indebtedness.

     3. To purchase or otherwise  acquire,  own, hold,  lease,  sell,  exchange,
assign,  transfer,  mortgage,  pledge, or otherwise dispose of, to guaranty,  to
invest,  trade,  and deal in and with  personal  property  of  every  class  and
description.

     4. To enter into any kind of contract of agreement,  cooperative  or profit
sharing  plan with its  officers  or  employees  that the  corporation  may deem
advantageous  or  expedient or otherwise to reward or pay such persons for their
services as the directors may deem fit.

     5. To purchase,  lease,  or  otherwise  acquire,  in whole or in part,  the
business,  the good will, rights,  franchises and property of every kind, and to
undertake  the whole or any part of the assets or  liabilities,  or any  person,
firm, association,  non-profit or profit corporation,  or own property necessary
or  suitable  for its  purposes,  and to pay the same in cash,  in the stocks or
bonds of this  company or  otherwise,  to hold or in any  manner  dispose of the
whole or any part of the business or property so acquired and to exercise all of
the powers necessary or incidental to the conduct of such business.

     6. To lend or borrow money and to negotiate  and make loans,  either on its
own account or as agent or broker for others.

     7. To enter into,  make,  perform and carry out contracts of every kind and
for any lawful  purpose,  without  limit as to amount,  with any  person,  firm,
association, cooperative, profit or non-profit corporation,  municipality, state
or government or any subdivision, district or department thereof.
<PAGE>

     8. To buy, sell, exchange,  negotiate, or otherwise deal in, or hypothecate
securities,  stocks, bonds, debentures,  mortgages, notes or other collateral or
securities,  created or issued by any corporation wherever organized,  including
this corporation,  within such limits as may be provided by law, and while owner
of any such  stocks or other  collateral  to  exercise  all  rights,  powers and
privileges of ownership,  including the right to vote the same; to subscribe for
stock in any corporation to be organized, other than to promote the organization
thereof.

     9. To purchase or otherwise  acquire,  own, hold,  lease,  sell,  exchange,
assign, transfer, mortgage, pledge, license or otherwise dispose of any letters,
patents, copyrights, or trademarks of every class and description.

    10. To do any and all other such acts,  things,  business or  businesses in
any manner connected with or necessary,  incidental,  convenient or auxiliary to
do any of these objects  hereinbefore  enumerated,  or  calculated,  directly or
indirectly,  to promote the interest of the corporation;  and in carrying on its
purposes,  or for the purpose of obtaining or furthering any of its business, to
do any and all acts and things, and to exercise any and all other powers which a
co-partner  or natural  person could do or exercise,  and which now or hereafter
may be authorized by law, and here and in any other part of the world.

    11. The several  clauses  contained  in this  statement  of powers shall be
construed as both purposes and powers,  and the statements  contained in each of
these  clauses  shall be in no way limited or  restricted,  by  reference  to or
inference  from,  the  terms of any other  clauses,  but  shall be  regarded  as
independent  purposes and powers; and no recitations,  expression or declaration
of specific or special powers or purposes herein  enumerated  shall be deemed to
be exclusive;  but it is hereby expressly  declared that all other lawful powers
not inconsistent herewith, are hereby included.

ARTICLE V

     STOCK:      GENERAL PROVISIONS.

     The   Corporation   shall  have  the  authority  to  issue  thirty  million
(30,000,000) shares of stock. Of these shares,  twenty-five million (25,000,000)
shares  shall be  common  stock,  par value  $.005,  having a total par value of
$125,000,  and five  million  (5,000,000)  shares  shall be special or preferred
stock,  par value $.001,  having a total par value of $5,000.  Each common share
issued pursuant to this paragraph shall be fully paid and nonassessable.

     Except as provided herein with respect to the 12%  Cumulative,  Convertible
Preferred Shares - Series A, no holder of shares of common, special or preferred
stock of the  corporation  shall be  entitled,  as such,  to any  preemptive  or
preferential  rights to subscribe to any unissued stock or any other  securities
which the corporation may now or hereafter be authorized to issue.  The board of
directors of the  corporation  may however,  at its  discretion,  by  resolution
determine that any unissued  securities of the corporation  shall be offered for
subscription solely to the holders of common,  special or preferred stock of the
corporation  or solely to the holders of any class or classes of such stock,  in
such  proportions  based on stock  ownership as said board at its discretion may
determine. 

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     Each share of common  stock shall be  entitled to one vote at  shareholders
meetings,  either in person or by proxy,  except with respect to the election of
the one member of the board of directors  designated as the member to be elected
by holders of 12% Cumulative, Convertible Preferred Shares - Series A. Shares of
common stock shall have no vote in the election of the one director nominated by
holders of 12% Cumulative,  Convertible  Preferred  Shares - Series A. Shares of
12%  Cumulative,  Convertible  Preferred  Shares -  Series A shall  have no vote
except  that each  such  share  shall be  entitled  to one vote at  shareholders
meetings  with  respect  to the  election  of the one  member  of the  board  of
directors  designated  to be elected by holders of 12%  Cumulative,  Convertible
Preferred Shares - Series A. Cumulative voting in elections of directors and all
other matters brought before  stockholders  meetings,  whether they be annual or
special, shall not be permitted.

     The board of  directors  is  authorized  to fix and  determine  the rights,
conditions,  restrictions,  preferences,  designations,  limitations,  and other
terms of special or preferred stock by resolution, either in the resolution that
provides for issuance of special or  preferred  stock or in another  resolution,
including, without limitation, the following:

     Whether the  stock to be  issued  will be one or more  series of a class of
     stock;

     Voting powers or lack thereof;

     Whether the stock to be issued will be subject to  redemption  and the time
     or times and price or prices thereof;

     Dividends and the conditions,  times, and rates thereof, whether payable in
     preference  to or in relation to  dividends  payable on any other series or
     class or classes of stock and whether cumulative or non-cumulative;

     Rights  upon  dissolution  or upon any  distribution  of the  assets of the
     corporation;

     Whether the stock may be convertible into or exchangeable for shares of any
     other  class or  classes  or of any  other  series of the same or any other
     class or classes of stock of the corporation; and

     Whether the stock shall have preemptive rights and the terms and conditions
     thereof, 

together  with  such  other   designations,   preferences,   and  relative,
participating,  optional or any special rights, qualifications,  limitations, or
restrictions thereof as the board of directors may determine.

     12%  CUMULATIVE,  CONVERTIBLE  PREFERRED  SHARES  -  SERIES  A. Of the five
million shares of stock authorized to be issued as special or preferred  shares,
1,250,000 shares are hereby designated as "12% Cumulative, Convertible Preferred
Shares - Series A".

     The rights, voting power, preferences,  restrictions, and qualifications of
12% Cumulative, Convertible Preferred Shares - Series A are as follows:

     A. VOTING POWER. Each share of 12% Cumulative, Convertible Preferred Shares
- Series A shall be entitled to one vote to be cast at  stockholder  meetings in
the  election  of the one  member of the board of  directors  that is elected by
holders of 12% Cumulative,  Convertible  Preferred Shares - Series A. Cumulative
voting shall not be permitted by such holders.

<PAGE>

     B. DIVIDENDS.  The holders of 12% Cumulative,  Convertible Preferred Shares
Series A shall be  entitled  to an annual  dividend  when and as declared by the
board of  directors  if there is surplus or net profits  legally  available  for
dividends  and  payable  quarterly  on the first  business  day of April,  July,
October,  and January of each year. When and if declared,  dividends shall be at
the rate of 12 per cent of the  initial  issue price of 40 cents per share (that
is, 4.8 cents per share per annum or 1.2 cents per share per  quarter) and shall
be cumulative.  Dividends may be paid to 12% Cumulative,  Convertible  Preferred
Shares - Series A only when,  if, and on the same basis as dividends are paid to
12% Cumulative,  Convertible  Preferred  Shares - Series B. Dividends may not be
paid in any year to holders of common  stock until after the  corporation  shall
have paid or  provided  for the  payment  of  dividends  on all 12%  Cumulative,
Convertible Preferred Shares - Series A including any amounts that may have been
accumulated but undeclared and unpaid for each year from the date of issuance to
and  including  the year in  question.  Holders of 12%  Cumulative,  Convertible
Preferred  Shares - Series A shall not be  entitled to any cash  dividend  other
than as provided in this paragraph B.

     C.  CONVERSION.  Until  February  28,  1995,  holders  of  12%  Cumulative,
Convertible  Preferred  Shares - Series A may  exchange  such  shares for common
shares at the rate of one share for one share by  tendering  to the  corporation
such shares of 12%  Cumulative,  Convertible  Preferred  Shares - Series A. Such
rate of exchange  is subject to  adjustment  as set forth in  paragraph H below.
After February 28, 1995, 12% Cumulative, Convertible Preferred Shares - Series A
may not be exchanged for common shares.

     D. RIGHTS IN DISSOLUTION AND  DISTRIBUTIONS  OF ASSETS.  Upon  liquidation,
dissolution,  or  winding  up of the  corporation,  holders  of 12%  Cumulative,
Convertible  Preferred  Shares - Series A shall be entitled to receive  prior to
any distribution to holders of common stock a liquidation preference of 40 cents
per share  plus all  dividends  declared  on such  shares  but  unpaid  less any
distribution  of  assets  before  any  amount  shall  be  paid  in  liquidation,
dissolution  or  winding  up to the  holders  of common  stock.  Holders  of 12%
Cumulative, Convertible Preferred Shares - Series A shall not be entitled to any
further payment as dividends in liquidation or otherwise. In the event assets as
opposed to cash are  distributed  to  shareholders,  holders of 12%  Cumulative,
Convertible  Preferred  Shares - Series A shall be entitled to receive  prior to
any  distribution to holders of common stock a liquidation  preference in assets
equal to 40 cents  per share in  distributions  of  assets  and in  liquidation,
dissolution or winding up of the corporation.

     E.   PRE-EMPTIVE  RIGHTS.  Each  holders  of  12%  Cumulative,  Convertible
Preferred Shares - Series A shall have preemptive  rights to acquire  additional
shares of stock which may be issued by this corporation, as follows:

     1. Before any unissued shares (at any time  authorized) of this corporation
are offered for sale or otherwise  disposed  of, the holders of 12%  Cumulative,
Convertible  Preferred  Shares - Series A shall have the first right to purchase
such shares ("preempted shares"). Each such holder shall be entitled to purchase
a percentage of such preempted  shares equal to the percentage he or she owns of
all shares then  outstanding,  such  percentage to be calculated as if each such
holder had fully  converted  his or her 12%  Cumulative,  Convertible  Preferred
Shares - Series A immediately  prior to such issuance,  or such lessor number of
the preempted shares as the holder elects to purchase. Such allocation of shares
shall be subject to  adjustments  as determined by the board of directors  which
are necessary to avoid the issue of fractional shares.

     2. The purchase of preempted  shares by existing holders of 12% Cumulative,
Convertible  Preferred  Shares - Series  A shall  be on  terms  and  conditions,
including  purchase  price,  not less  favorable  than those  under  which it is
proposed  that such  shares be  offered  for sale or  otherwise  disposed  of to
others.

     3. Written notice shall be given shall be given (sic) to each holder of 12%
Cumulative,  Convertible  Preferred Shares - Series A of a proposal for the sale
or other disposition of the preempted  shares,  which notice shall set forth the
sale or other  disposition.  The preemptive  rights of any such holders shall be
deemed waived as follows:

<PAGE>

     a. If the  holder at any time  agrees in writing to waive his or her rights
as to any specific  preempted shares, the waiver shall be deemed effective as to
those shares;

     b. If,  within 30 days  after  the  written  notice is mailed by  certified
mailed (sic), postage prepaid, to a holder as provided in this paragraph E, such
holder does not agree in writing to purchase some or all of the preempted shares
he or she is entitled to purchase,  the waiver  shall be deemed  effective as to
those shares such holder has not agreed to purchase.

     4. If there is a waiver of rights under  paragraph E, the  corporation  may
during the 60 days  immediately  following  such waiver sell the shares to which
such waiver  pertains to anyone at a price to the purchaser of not less than the
price set forth in the notice,  and otherwise on terms and  conditions  not less
favorable  to the  corporation  than  those  set forth in such  notice,  but the
corporation  may pay, or there may be deducted from such price,  such reasonable
compensation  to  underwriters  or  dealers  as  may  be  lawfully  paid  by the
corporation.

     5. If it is proposed to dispose of preempted shares for property other than
cash,  including without limitation,  dispositions in connection with mergers or
consolidations,  acquisitions  of assets or  outstanding  securities  of another
corporation,  or other reorganizations,  the per share price to the shareholders
hereunder  shall  be the pro  rata  portion  of the  fair  market  value of such
property, as such value is set in good faith by the board of directors.

     6. Notices shall be deemed given hereunder when mailed, postage prepaid, to
either  the last  known  address  of a  holder  of 12%  Cumulative,  Convertible
Preferred  Shares - Series A or the latest  address  provided by such holder and
shown on the corporation's stock records for such holder.

     7. There shall exist no preemptive rights with respect to shares issued:

     a. to satisfy the obligations of the corporation  upon exercise of warrants
or options heretofore (April 21, 1985) issued;

     b. to satisfy the obligations of the corporation in connection with present
and future  employee stock option plans and incentive  stock option plans not to
exceed five percent of authorized shares;

     c. to  purchasers  of shares  registered  or to be  registered  pursuant to
section 12 of the  Securities  Exchange Act of 1934 (15 U.S. sec. 78 l) provided
holder has been given at least 60 days written  notice of such offering and been
given the opportunity to include,  at no cost to holder,  at least 15 percent of
holder's shares of common stock in such registered offering; or,

     d. to satisfy the  company's  obligations  upon the exercise of warrants or
options issued to investment  bankers or other parties not  affiliated  with the
corporation as compensation  in connection with a registered  public offering of
securities of the corporation.

     8. There shall exist no  preemptive  rights with  respect to shares of this
corporation except as provided in this paragraph E.

     9. Preemptive rights for holders of 12% Cumulative,  Convertible  Preferred
Shares - Series A shall terminate on February 28, 1995.

     F. CONSENT OF HOLDERS  REQUIRED.  So long as any shares of 12%  Cumulative,
Convertible  Preferred Shares - Series A are outstanding,  the corporation shall
not  without the prior  written  consent of the holders of a majority of the 12%
Cumulative, Convertible Preferred Stock - Series A:

     1.  Issue  or  propose  to  issue  any  other  shares  of  12%  Cumulative,
Convertible Preferred Shares - Series A;

     2.  Sell all or  substantially  all of the  assets  of the  corporation  or
consolidate or merge the corporation with any other corporation (an "Acquisition

<PAGE>

     Transaction")   unless  any   securities   exchange  for  12%   Cumulative,
Convertible  Preferred  Shares  -  Series  A shall  be  cumulative,  convertible
preferred stock the terms of which are identical in all material  respect to the
12% Cumulative Convertible Preferred Shares - Series A of the corporation;

     3.  Alter or change  the  powers,  preferences  or rights  given to the 12%
Cumulative, Convertible Preferred Shares - Series A;

     4. Enter into any  transaction in which the holders of the 12%  Cumulative,
Convertible  Preferred  Shares - Series A would be  required  to accept  cash in
exchange for their shares;

     5. Enter into any transaction in which the  corporation's  trade secrets or
proprietary  technical  information  or  know  how is  assigned,  sold  or  made
available  to any other  entity,  provided  this  subparagraph  (5) shall not be
construed to prevent the  corporation  from entering  into  contracts to provide
research and  development  to other  entities,  on an arms length basis,  in the
ordinary course of business;

     G. STOCK  FULLY PAID;  RESERVATION  OF SHARES.  All shares of common  stock
which  may be  issued  upon  the  exercise  of the  right of  conversion  of 12%
Cumulative,  Convertible  Preferred Shares - Series A (the  "conversion  right")
will,  upon  issuance,  be fully paid,  nonassessable,  and free from all taxes,
liens and charges with respect to issuance.  During the period  within which the
conversion  right may be  exercised,  the  corporation  will at all  times  have
authorized  and reserved for the purpose of issue a sufficient  number of shares
of common stock to provide for the exercise of the conversion right.

     H.  ADJUSTMENT OF NUMBER OF SHARES.  Upon the happening of certain  events,
the  number  and  kind of  securities  for  which  12%  Cumulative,  Convertible
Preferred  Shares - Series A may be  exchanged  pursuant to paragraph C shall be
subject to adjustment from time to time as follows:

     1.   RECLASSIFICATION,   CONSOLIDATION   OR   MERGER.   In   case   of  any
reclassification  or change of outstanding  common shares issuable upon exercise
of the conversion  right (other than a change in par value, or from par value to
no par value, or from no par value to par value, or as a result of a subdivision
or  combination),  or in case of any  consolidation or merger of the corporation
with or into another  corporation (other than a merger with another  corporation
in which the corporation is the surviving  corporation and which does not result
in any reclassification or change--other than a change in par value, or from par
value to no par value,  or from no par value to par  value,  or as a result of a
subdivision or combination--or outstanding common shares issuable upon exercise

<PAGE> 

of the conversion  right),  or in case of any sale or transfer to another
corporation of the property of the  corporation as an entirety or  substantially
as an entirety,  the corporation,  as the case may be, shall, without payment of
any additional  consideration  therefor,  issue new 12% Cumulative,  Convertible
Preferred  Shares - Series A that  provide  that the  holder  of 12%  Cumulative
Convertible  Preferred  Shares - Series A shall have the right to exchange  such
shares for such new 12%  Cumulative,  Convertible  Preferred  Shares - Series A.
Such new shares shall provide  conversion  rights and other rights,  privileges,
and preferences  substantially  identical to those provided  herein.  They shall
also provide that,  upon such exercise of the conversion  right,  the holder may
procure  in lieu  of each  share  of  common  stock  theretofore  issuable  upon
conversion the kind and amount of shares of stock,  other securities,  money and
property receivable upon such reclassification,  change, consolidation,  merger,
sale or transfer. Such new 12% Cumulative, Convertible Preferred Shares - Series
A shall  provide  for  adjustments  which shall be nearly  equivalent  as may be
practicable to the adjustments  provided for in this paragraph H. The provisions
of this  subparagraph (1) shall similarly apply to successive  reclassification,
changes, consolidations, mergers, sales and transfers.

     2. SUBDIVISION OR COMBINATION OF SHARES.  If the  corporation,  at any time
while the conversion  right is effective  shall  subdivide or combine its common
shares,  the  number of common  shares  for  which 12%  Cumulative,  Convertible
Preferred Shares - Series A may be exchanged shall be proportionately increased,
in case of subdivision of shares,  as at the effective date of such subdivision,
or if the  corporation  shall take a record of holders of its common  shares for
the purpose of so subdividing as at such record date,  whichever is earlier,  or
shall be proportionately  decreased, in the case of combination of shares, as at
the  effective  date of such  combination  or, if the  corporation  shall take a
record of holders of its common  shares for the purpose of so  combining,  as at
such record date, whichever is earlier.

     3. STOCK DIVIDENDS AND DISTRIBUTION.  If the corporation, at any time while
the conversion right remains effective, shall pay a dividend payable in, or make
any other  distribution  of, common shares,  there shall be an adjustment in the
number of shares  issuable  upon  exercise of the  conversion  right which shall
equal the number of shares issued  pursuant to such dividend or  distribution as
if the holder had exercised his conversion right immediately prior to the record
date used for such dividend or distribution.

     4. ISSUANCE OF ADDITIONAL SHARES OF COMMON. If the corporation, at any time
while the Conversion Right remains effective,  shall issue any Additional Shares
of Common  (otherwise  than as provided in the foregoing  subparagraph 3 of this
paragraph H), at a price per share less than 40 cents or without  consideration,
then the number of shares of Common  issuable  upon  exercise of the  Conversion
Right shall be adjusted as follows:

<PAGE>

     a. It shall be assumed for purposes of this  adjustment that the Conversion
Right is based upon a Conversion Price of 40 cents per each share of Common (the
"Conversion Price") and that each share of 12% Cumulative, Convertible Preferred
Shares - Series A shall have a value of 40 cents;

     b. Upon each such issuance of Additional Shares, the Conversion Price shall
be reduced to that price  determined by multiplying  the  Conversion  Price by a
fraction:
     
                    (i) The  numerator of which shall be the number of shares of
               Common  outstanding  immediately  prior to the  issuance  of such
               Additional  Shares of Common  plus the number of shares of Common
               which the aggregate consideration received by the Corporation for
               the total number of shares of Common so issued would  purchase at
               the Conversion Price, and
     
                    (ii) the  denominator of which shall be the number of Shares
               of Common  outstanding  immediately  after the  issuance  of such
               Additional Shares of Common.

The provisions of this subparagraph 4 shall not apply under any of the
circumstances for which an adjustment is provided in subparagraphs 1, 2, or 3 of
this paragraph H. No adjustment of the Conversion Price shall be made under this
subparagraph  4 upon  issuance of any Addition  (sic) Shares of Common which are
issued pursuant to any Common Stock  Equivalent if upon the issuance of any such
Common Stock  Equivalent (i) any such adjustment shall previously have been made
pursuant to  subparagraph  5 of this  paragraph H or (2) (sic) no adjustment was
required pursuant to subparagraph 5 of this paragraph H.

     5. ISSUANCE OF COMMON STOCK EQUIVALENTS.  In case the corporation shall, at
any time while the  conversion  right remains in effect,  issue any Common Stock
Equivalent and the price per share for which Additional  Shares of Common may be
issuable  thereafter pursuant to such Common Stock Equivalent shall be less than
40  cents,  or if,  after  any such  issuance,  the  price  per  share for which
Additional  Shares of Common may be issuable  thereafter  is  amended,  and such
price as so amended  shall be less than 40 cents at the time of such  amendment;
such issuance or amendment  shall be adjusted as provided in  subparagraph  4 of
this paragraph H on the basis that (a) the maximum  number of Additional  shares
of Common issuable pursuant to all such Common Stock Equivalents shall be deemed
to have been issued as of the  earlier of (1) the date on which the  corporation
shall  enter  into a firm  contract  for  the  issuance  of  such  Common  Stock
Equivalent,  or (2) the date of actual issuance of such Common Stock Equivalent,

<PAGE> 

and (b) the aggregate consideration for such maximum number of Additional
Shares of Common  shall be deemed to be the minimum  consideration  received and
receivable  by the  corporation  for the issuance of such  Additional  Shares of
Common  pursuant to such Common Stock  Equivalent.  No adjustment  shall be made
under this subparagraph 5 upon the issuance of any convertible security which is
issued  pursuant  to the  exercise  of any  warrants  or other  subscription  or
purchase rights therefor, if any adjustment shall previously have been made upon
the issuance of such warrants or other rights pursuant to this subparagraph 5.

     6. OTHER PROVISIONS  APPLICABLE TO ADJUSTMENTS  UNDER THIS PARAGRAPH H. The
following  provisions shall be applicable to the making of adjustments  pursuant
to this paragraph H:

     a.   COMPUTATION OF  CONSIDERATION.  In case of the issuance at any time of
          any Additional Shares of Common or Common Stock Equivalents in payment
          or  satisfaction  of any  dividend  upon any class of stock other than
          common,  the  corporation  shall be deemed to have  received  for such
          Additional   Shares  of  Common  or   Common   Stock   Equivalents   a
          consideration  equal  to the  amount  of  such  dividend  so  paid  or
          satisfied.  In any case in which the  consideration  to be received or
          paid shall be other than cash,  the Board  shall  notify the Holder of
          12%  Cumulative,  Convertible  Preferred  Shares  -  Series  A of  its
          determination of the fair market value of such consideration  prior to
          payment or  accepting  receipt  thereof.  If,  within  then days after
          receipt of said  notice,  the Holders of 12%  Cumulative,  Convertible
          Preferred  Shares - Series A  convertible  into at least a majority of
          Conversion  Stock then  unissued  shall notify the Board in writing of
          their objection to such determination,  a determination of fair market
          value of such consideration shall be made by arbitration in accordance
          with  the  Rules  of  the  American  Arbitration   Association  by  an
          arbitrator in the City of New York, New York.

     b.   READJUSTMENT. Upon the expiration of the right to convert, exchange or
          exercise any Common Stock Equivalent the issuance of which effected an
          adjustment  in the  number  of shares  for  which the 12%  Cumulative,
          Convertible Preferred Shares - Series A may be exchanged,  if any such
          Common Stock  Equivalent  shall not have been converted,  exercised or
          exchanged, the number of

<PAGE>

shares of common  shares  deemed to be issued and  outstanding  by reason of the
fact that they were issuable upon  conversion,  exchange or exercise of any such
Common Stock  Equivalent and thereupon  only the number of Additional  Shares of
Common  actually  so issued  shall be deemed  to have been  issued  and only the
consideration  actually received by the corporation  (computed as in clause a of
this subparagraph 6) shall be deemed to have been received by the corporation.

     c.   TREASURY  SHARES.   The  number  of  shares  of  common  at  any  time
          outstanding  shall not include  any shares  thereof  then  directly or
          indirectly  owned or held by or for the account of the  corporation or
          any of its subsidiaries.

     7. OTHER ACTION AFFECTING COMMON SHARES.  In case after the date hereof the
corporation  shall take any action  affecting its common  shares,  other than an
action  described  in any of the  foregoing  subparagraphs  1  through 6 of this
paragraph  H,  inclusive,  which,  in the  opinion  of the  Board,  would have a
materially  adverse  effect  upon the rights of the  holders of 12%  Cumulative,
Convertible  Preferred  Shares - Series A, the number of common shares for which
such 12%  Cumulative,  Convertible  Preferred  Shares - Series A, the  number of
common shares for which such 12% Cumulative, Convertible Preferred Shares Series
A (sic) may be  exchanged  shall be  adjusted in such manner and at such time as
the Board may in good faith determine to be equitable in the circumstances.

     8. ADJUSTMENT OF NUMBER OF SHARES.  Upon the happening of any of the events
requiring an adjustment in the Conversion  Price listed in this paragraph H, the
number  of shares of common  for  which 12%  Cumulative,  Convertible  Preferred
Shares - Series A may be exchanged  hereunder shall be adjusted,  to the nearest
one  hundredth of a whole share,  to the product  obtained by  multiplying  such
number of shares  purchasable  using the Conversion Price  immediately  prior to
such  adjustment in the Conversion  Price by a fraction,  the numerator of which
shall be the  Conversion  Price  immediately  prior to such  adjustment  and the
denominator of which shall be the Conversion Price  immediately  thereafter.  If
the  corporation  shall be in default under its agreement  contained in the last
sentence of paragraph G so that  applicable  law prevents the issuance of shares
adjusted in accordance  with this paragraph H, the adjustment of shares provided
in the  foregoing  sentence  shall  nonetheless  be made and the  holder  of 12%
Cumulative,  Convertible  Preferred  Shares  - Series  A shall  be  entitled  to
exchange  12%  Cumulative,  Convertible  Preferred  Shares  -  Series A for such
greater  number  of  shares  for  which  the  right  of  conversion  may then be
exercised.  Such  exercise  shall not  constitute a waiver of any claim  arising
against the  corporation by reason of its default under the agreement  contained
in the last sentence of paragraph G.

     9. NOTICE OF  ADJUSTMENTS.  Whenever  adjustment  shall be made pursuant to
paragraph H, the corporation shall make a certificate signed by its President or
a Vice  President  and by  its  Treasurer,  Assistant  Treasurer,  Secretary  or
Assistant Secretary setting forth, in reasonable  detail,  the event requiring

<PAGE>

the  adjustment,  the  amount  of the  adjustment,  the  method  by  which  such
adjustment  was  calculated  (including a description  of the basis on which the
Board made any  determination  hereunder),  and the number of common  shares for
which 12% Cumulative,  Convertible  Preferred Shares - Series A may be exchanged
after  giving  effect  to  such  adjustment,  and  shall  cause  copies  of such
certificate to be mailed (by first class mail postage  prepaid) to the holder of
12%  Cumulative,  Convertible  Preferred  Shares - Series A promptly  after each
adjustment.% Cumulative,  Convertible Preferred Shares - Series A promptly after
each adjustment.

     10.  FRACTIONAL  SHARES.  No fractional  shares of common will be issued in
connection  with  any  exchange,  but in  lieu of such  fractional  shares,  the
corporation shall make a cash payment therefor equal in amount to the product of
the  applicable  fraction  multiplied by the share value then  determined by the
board.
     11. DEFINITIONS.  For the purposes of paragraph H, the following terms have
the following meanings:

          "ADDITIONAL  SHARES OF COMMON"  shall mean all shares of Common issued
     by the corporation after the date hereof except

     (a)  250,000  shares of Common  Stock  issuable  upon  exercise of the
     conversion right of 12% Cumulative, Convertible Preferred Shares - Series
     B;

     (b) 125,000  shares of Common Stock issuable upon exercise of warrants
     issued together with 12% Cumulative, Convertible Preferred Shares - Series
     B as part of a unit offering; and

     (c)  1,555,000   shares  of  Common  Stock  issuable  to  satisfy  the
     obligations of the  corporation  in connection  with (i) present and future
     employee  stock option plans and  incentive  stock  options  plans and (ii)
     warrants heretofore (April 21, 1985) issued.

          "COMMON" AND "COMMON STOCK" shall mean the corporation's common stock,
     par value $.001 per share,  and any stock into which such common  stock may
     hereafter be changed.

          "COMMON  STOCK  EQUIVALENT"  shall mean any  Convertible  Security  or
     warrant,  option or other right to subscribe for or purchase any Additional
     Shares of Common or any Convertible Security.

          "CONVERSION RIGHT" shall mean the right set forth in paragraph C.
<PAGE>
          "CONVERTIBLE SECURITIES" shall mean evidences of indebtedness,  shares
     of Stock or other  securities  which are or may be at any time  convertible
     into or exchangeable for Additional Shares of Common. The term "Convertible
     Security" shall mean one of the Convertible Securities.

          "STOCK"  shall  include  any  and  all  shares,   interests  or  other
     equivalents (however designated) of or participation in corporate stock.

          "SUBSIDIARY"  shall  mean  any  corporation  at  least  50%  of  whose
     outstanding  Voting Stock shall at the time be owned directly or indirectly
     by the corporation or by one or more Subsidiaries or by the corporation and
     one or more Subsidiaries.

          "VOTING STOCK" as applied to the Stock of any corporation,  shall mean
     Stock of any class or classes (however  designated)  having ordinary voting
     power  for the  election  of a  majority  of the  members  of the  Board of
     Directors (or other governing body) of such  corporation,  other than Stock
     having such power only by reason of the happening of a contingency.

          12%  CUMULATIVE,  CONVERTIBLE  PREFERRED  SHARES  -  SERIES  B, of the
     5,000,000  shares of stock  authorized  by  amendment  of the  Articles  of
     Incorporation to be issued as special or preferred  shares,  625,000 shares
     are hereby  designated as "12%  Cumulative,  Convertible  Preferred  Shares
     Series B".

     The rights, voting power, preferences,  restrictions, and qualifications of
12% Cumulative, Convertible Preferred Shares - Series B are as follows:

     A. NO VOTING POWER. 12% Cumulative, Convertible Preferred Shares - Series B
do not entitle the holder to vote at  shareholders'  meetings or otherwise  give
the  holder  any  voting  power.  The  consent  of  holders  of 12%  Cumulative,
Convertible Preferred Shares - Series B is not required for corporate actions.

     B. DIVIDENDS.  The holders of 12% Cumulative,  Convertible Preferred Shares
Series B shall be  entitled  to  dividends  when and as declared by the board of
directors in its absolute  discretion  and payable on such dates as fixed by the
board in its absolute  discretion.  When and if declared,  dividends shall be at
the rate of 12 per cent of the  initial  issue price of 40 cents per share (that
is,  4.8 cents per share) per annum and shall be  cumulative.  Dividends  may be
paid to 12% Cumulative,  Convertible  Preferred Shares - Series B only when, if,
and on the same  basis as  dividends  are  paid to 12%  Cumulative,  Convertible
Preferred  Shares - Series A.  Dividends  may be paid in any year to  holders of
common  stock only after the  corporation  shall have paid or  provided  for the
payment of dividends on all 12% Cumulative,  Convertible Preferred Shares Series
B for each year from the date of issuance to and including the year in question.
Holders of 12% Cumulative,  Convertible Preferred Shares - Series B shall not be
entitled to any dividend other than as provided in this  paragraph  B.other than
as provided in this paragraph B. 

<PAGE>

     C. CONVERSION  WITHIN FIVE YEARS.  Until February 28, 1993,  holders of 12%
Cumulative, Convertible Preferred Shares - Series B may exchange such shares for
common  shares  at the  rate of one  share  for one  share by  tendering  to the
corporation such 12% Cumulative,  Convertible Preferred Shares - Series B. After
February 28, 1993, 12% Cumulative,  Convertible  Preferred Shares - Series B may
not be exchanged for common shares.

     D. RIGHTS IN DISSOLUTION AND  DISTRIBUTIONS  OF ASSETS.  Upon  liquidation,
dissolution,  or  winding  up of the  corporation,  holders  of 12%  Cumulative,
Convertible  Preferred  Shares - Series B shall be entitled to receive  prior to
any  distribution  to  holders  of  common  stock 40 cents  per  share  plus all
dividends  declared on such shares but unpaid  less any  distribution  of assets
before any amount shall be paid in liquidation, dissolution or winding up to the
holders of common stock. Holders of 12% Cumulative, Convertible Preferred Shares
-  Series B shall  not be  entitled  to any  further  payment  as  dividends  in
liquidation or otherwise. In the event assets as opposed to cash are distributed
to shareholders,  holders of 12% Cumulative, Convertible Preferred Shares Series
B shall be  entitled  to receive  prior to any  distribution  to the  holders of
common stock of a  liquidation  preference in assets equal to 40 cents per share
in distributions of assets and in liquidation, dissolution, or winding up of the
corporation.

     E.  NO  PRE-EMPTIVE  RIGHTS.  No  holder  of  12%  Cumulative,  Convertible
Preferred  Shares - Series B shall be entitled,  as such, to any  pre-emptive of
preferential  rights to subscribe to any unissued stock or any other  securities
which the corporation may be authorized to issue.

ARTICLE VI

     STOCKHOLDERS  MEETING:  Meetings of the shareholders  shall be held at such
place  within or without the State of Nevada as may be provided by the bylaws of
the  corporation.  Special  meetings  of the  shareholders  may be called by the
president of (sic) any other executive officer of the corporation,  the board of
directors, of (sic) any member thereof, or by the record holder or holders of at
least ten  percent  (10%) of all shares  entitled  to vote at the  meeting.  Any
action otherwise  required to be taken at a meeting of the shareholders,  except
election of  directors,  may be taken without a meeting if a consent in writing,
setting  forth the action so taken,  shall be signed by  shareholders  having at
least a majority of the voting power. 

<PAGE>

ARTICLE VII

     COMMENCING  BUSINESS:  The corporation shall not commence business until at
least  $1,000.00  has been received by it as  consideration  for the issuance of
shares.

ARTICLE VIII

     STOCK RIGHTS:  The board of directors shall have the authority to determine
the classes and series of any subsequent stock issued by the corporation and the
right and preferences pertaining thereto.

ARTICLE IX

     BOARD OF DIRECTORS: The board of directors of the corporation shall consist
of not less than three nor more than  twenty-five  members.  A  majority  of the
board of  directors  shall be necessary to  constitute  a quorum;  and,  when so
constituted,  the board shall be  authorized to transact such business as may be
delegated to it by the stockholders and whenever the board of directors shall be
so assembled  and act as a board,  either within or without the State of Nevada,
any  action  taken  shall be the action of the board of  directors  and shall be
binding  upon the  corporation,  provided  that three days prior  notice,  given
either  orally or in  writing,  of the time and place of the  meeting and of the
nature of the business  proposed to be  transacted  shall have been given to the
entire board of directors, unless such notice be waived as hereinafter provided.
Any  director  may waive  notice of any  meeting;  in the event of such  waiver,
notice  shall be in  writing  or a written  memorandum  shall be made of an oral
waiver of notice.

ARTICLE X

     OFFICERS:  The officers of the  corporation  shall consist of a chairman of
the  board  of  directors,  a  chief  executive  officer,  a  president,  a vice
president,  a secretary and a treasurer,  who shall perform such duties and have
such authority as usually  pertain to such offices of a corporation or as may be
prescribed by the board of directors from time to time.

     QUALIFICATION  OF OFFICERS:  Officers and directors of the corporation need
not be  residents  of the  State  of  Nevada  and  need  not own  shares  of the
corporation's  stock. The secretary and treasurer may, but need not be, the same
person.

     ELECTION:  Directors  shall  be  elected  at  the  annual  meeting  of  the
shareholders,  and the person  receiving  the  highest  number of votes shall be
declared duly elected,  providing such numbers shall represent a majority of all
votes cast.  Within ten (10) days after the election,  the directors  shall meet
and elect a president, vice president, secretary and treasurer.

<PAGE>

     TERM OF OFFICE:  The term of office of all directors and officers  shall be
one year,  provided all  directors  and  officers  shall hold office until their
successors are duly elected and qualified.

     RESIGNATION  OF OFFICERS:  Any officer or director may resign by filing his
written resignation with the secretary of the corporation or, in the case of the
secretary,  with the president of the corporation and upon acceptance thereof by
the  board  of  directors  or if such  board  shall  neglect  to act  upon  such
resignation  within  fourteen (14) days after  receipt,  the  resignation  shall
become effective and the office shall be deemed vacant.

     REMOVAL OF OFFICERS: Any officers (sic) or director of this corporation may
be moved (sic) at any time without  cause in the manner  provided by the laws of
the State of  Nevada  for the  removal  of such  officer  or  director,  or by a
majority vote of the outstanding stock of the corporation at any special meeting
of the stockholders called for that purpose as herein provided.

     VACANCIES: In the case of death, disability, or resignation of any officers
(sic) or director of the  company,  the  remaining  directors or director of the
company,  even though less than a quorum, shall fill vacancies for the unexpired
term or terms.

ARTICLE XI

     DIRECTORS:  The  number of  directors  constituting  the  initial  board of
directors of the  corporation  is three (3), and the names and  addresses of the
persons who are to serve as the directors  until the first annual meeting of the
shareholders or until their successors are elected and qualified are:

     1.    Clifford D. Hughes      2929 Hillsden Drive
                                   Salt Lake City, Utah 84117

     2.    Kelly L. Hunsaker       2323 Arbor Lane
                                   Salt Lake City, Utah 84117

     3.    Hyrum D. Hunsaker       2323 Arbor Lane
                                   Salt Lake City, Utah 84117

ARTICLE XII

     DURATION: The period of duration of the corporation shall be perpetual.

<PAGE>

ARTICLE XIII

     AMENDMENT: These articles of incorporation,  by vote of not less than fifty
percent of the issued and outstanding  capital stock of the corporation,  may be
deemed  amended in any respect  amendable at law at any  meeting.  A copy of the
proposed  amendment shall be given to the stockholders as provided in Article VI
hereof, for calling and holding meetings of the stockholders.

ARTICLE XIV

     BYLAWS:  The board of directors of the corporation  shall have authority to
adopt such bylaws as in their judgment may be deemed  necessary or advisable for
the management and transaction of the business of the corporation  provided that
such bylaws are not in conflict  with these  articles  of  incorporation  or the
constitution of the State of Nevada.

ARTICLE XV

     INCORPORATORS: The name and address of each incorporator is:

     1.    Clifford D. Hughes      2929 Hillsden Drive
                                   Salt Lake City, Utah 84117

     2.    Kelly L. Hunsaker       2323 Arbor Lane
                                   Salt Lake City, Utah 84117

     3.    Hyrum D. Hunsaker       2323 Arbor Lane
                                   Salt Lake City, Utah 84117

ARTICLE XVI

     LIABILITY: A director or officer of the corporation shall not be personally
liable  to the  corporation  or its  stockholders  for  damages  for  breach  of
fiduciary duty as a director or officers (sic),  except that this provision does
not eliminate of (sic) limit the liability of a director or officer for (a) acts
or omissions which involve intentional misconduct, fraud, or a knowing violation
of law or (b)  payment  of  dividends  in  violation  of NRS  78.300.  If Nevada
statutes are subsequently amended to authorize corporate action further limiting
the  personal  liability  of directors  or  officers,  then the  corporation  is
authorized  to take such  actions as the Board of  Directors  may  determine  to
further limit the fullest extent  permitted by Nevada  statutes,  as so amended.
Any repeal or modification of the foregoing paragraph by the stockholders of the
corporation  shall not adversely affect any right or protection of a director or
officer of the corporation existing at the time of such repeal or modification.

<PAGE>

     By resolution of the board of directors  duly adopted on November 13, 1996,
the undersigned  were  authorized to prepare and execute the foregoing  Restated
Articles of Incorporation, which correctly set forth the text of the Articles of
Incorporation as amended to and including January 28, 1997.



 /s/ Gerald R. Cysewski                    /s/ Ronald P. Scott
 ----------------------                    -------------------
Gerald R. Cysewski                        Ronald P. Scott
Chairman of the Board,                    Executive Vice President and
Chief Executive Officer and               Secretary
President