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                                                                     EXHIBIT 4.8

                                     BY-LAWS
                                       OF
                          3333 DEVELOPMENT CORPORATION
                             (a Nevada corporation)

            [Amended and restated effective as of November 27, 2001]

                                      * * *

                                    ARTICLE I
                                     OFFICES

         Section 1. The registered office of 3333 Development Corporation (the
"Corporation") shall be located in Carson City, County of Washoe, State of
Nevada.

         Section 2. The Corporation may also have its executive offices and
other offices at such other places, within and without the State of Nevada, as
the Board of Directors may from time to time determine or as the business of the
Corporation may require.
                                   ARTICLE II
                            MEETINGS OF STOCKHOLDERS

         Section 1. All annual meetings of stockholders shall be held at the
offices of the Corporation in the City of Dallas, State of Texas, or at such
other place, within or without the State of Texas, as may be designated by the
Board of Directors and stated in the notice of the meeting or in a duly executed
waiver of notice thereof. Special meetings of stockholders may be held at such
place, within or without the State of Texas, and at such time as shall be stated
in the notice of the meeting or in a duly executed waiver of notice thereof.

         Section 2. Annual meetings of stockholders, commencing with the year
2002 shall be held on such business day in July at 10:00 a.m. as may be
designated by the Board of Directors, or if the Board of Directors does not so
designate an annual meeting date for any year then the annual meeting for that
year shall be held on the last Thursday of July if not a legal holiday, and if a
legal holiday, then on the next secular day following at 10:00 a.m.. At such
annual meeting, the stockholders shall elect by a plurality vote a board of
directors, and transact such other business as may properly be brought before
the meeting.

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         Section 3. Special meetings of the stockholders may be called only by
the Chairman of the Board of Directors or a majority of the directors of the
Board of Directors.

         Section 4. Written or printed notice signed by the Chairman of the
Board, the President, a Vice President, the Secretary, or an Assistant Secretary
and stating the place, day and hour of the meeting of the stockholders and the
purpose or purposes for which the meeting is called shall be given to each
stockholder of record entitled to vote at such meeting either by delivering such
notice personally to such stockholder or by depositing such notice in the United
States mail addressed to the stockholder at the stockholder's address as it
appears on the stock transfer books of the Corporation, with proper postage
prepaid, not less than 10 nor more than 60 days before the day of the meeting,
by or at the direction of the Chairman of the Board, the President, the
Secretary, or the officer or person calling the meeting.

         Section 5. Business transacted at any special meeting shall be confined
to the purposes stated in the notice thereof.

         Section 6. The holders of a majority of the shares entitled to vote,
represented in person or by proxy, shall constitute a quorum at meetings of
stockholders except as otherwise provided in the Articles of Incorporation (the
"Articles of Incorporation"). If, however, a quorum shall not be present or
represented at any meeting of the stockholders, the stockholders present in
person or represented by proxy shall have power to adjourn the meeting from time
to time, without notice other than announcement at the meeting, until a quorum
shall be present or represented. At such adjourned meeting at which a quorum
shall be present or represented, any business may be transacted that might have
been transacted at the meeting as originally notified and called. The
stockholders present at a duly organized meeting may continue to transact
business until adjournment, notwithstanding the withdrawal of some stockholders
prior to adjournment.

         Section 7. The vote of the holders of a majority of the shares entitled
to vote and represented at a meeting at which a quorum is present shall be the
act of the meeting of stockholders, unless the vote of a greater number is
required by applicable and governing law or by the Articles of Incorporation for
the particular proposed action.

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         Section 8. Each outstanding share, regardless of class, shall be
entitled to one vote on each matter submitted to a vote at a meeting of
stockholders, except to the extent that the voting rights of the shares of any
class or series within a class are limited or denied by the Articles of
Incorporation or by the resolutions of the Board of Directors establishing such
class or series pursuant to the Articles of Incorporation. At any election for
directors, every stockholder entitled to vote at any such election shall have
the right to vote, in person or by proxy, the number of shares owned by such
stockholder for as many persons as there are directors to be elected and for
whose election such stockholder has a right to vote. Stockholders the
Corporation are expressly prohibited from cumulating their votes in any election
for directors of the Corporation.

         Section 9. A stockholder may vote in person or may be represented and
vote by a proxy or proxies appointed by such stockholder by an instrument in
writing. In the event that any such instrument in writing shall designate two or
more persons to act as proxies, and such instrument does not specify the manner
in which such proxies may exercise the powers conferred by such instrument, then
a majority of such persons present at the meeting, or, if only one shall be
present, then that one shall have and may exercise all of the powers conferred
by such written instrument upon all of the persons so designated. No such
appointment of proxy shall be valid except for the meeting (including all
adjourned sessions thereof) for which it was given. No such appointment of proxy
shall be valid after the expiration of 6 months following the date of its
execution, unless coupled with an interest, or unless the person executing it
specifies therein the length of time for which it is to continue in force, which
in no case shall exceed the earlier of 11 months following the date of its
execution or the conclusion of the meeting (including all adjourned sessions
thereof) for which such appointment of proxy was given. Subject to the above,
any appointment of proxy duly executed is not revoked and continues in full
force and effect until an instrument revoking it or a duly executed appointment
of proxy bearing a later date is filed with the Secretary of the Corporation.
Each appointment of proxy shall be revocable unless expressly provided therein
to be irrevocable.

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         Section 10. The officer or agent having charge of the stock transfer
books shall make, at least ten days before each meeting of stockholders, a
complete list of the stockholders entitled to vote at such meeting or any
adjournment thereof, arranged in alphabetical order, with the address of and
number of shares held by each. For a period of 10 days prior to such meeting,
shall be kept on file at the registered office of the Corporation and shall be
subject to inspection by any stockholder at any time during the usual business
hours. Such list 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 during the
entire meeting. The original stock transfer books shall be prima facie evidence
as to who are the stockholders entitled to examine such list or transfer book or
to vote at any such meeting of stockholders.

         Section 11. Subject to the rights of the holders of the preferred stock
or any other class or series of stock that may have a preference over the common
stock as to dividends or upon liquidation, any action required or permitted to
be taken by the stockholders of the Corporation must be effected at a duly
called annual or special meeting of stockholders of the Corporation and may not
be effected by any consent in writing by such stockholders.

         Section 12. Voting at meetings of stockholders may be oral or by ballot
at the discretion of the Chairman of the meeting, except that such voting shall
be by written ballot if a vote by written ballot is demanded by a majority of
the stockholders present at such meeting.

         Section 13. Subject to the rights of the holders of any class or series
of stock having a preference over the common stock as to dividends or upon
liquidation, nominations for the election of directors may be made by the Board
of Directors or by any stockholder entitled to vote for the election or
directors. Any stockholder entitled to vote for the election of directors at a
meeting may nominate persons for election as directors only if written notice of
such stockholder's intent to make such nomination is given, either by personal
delivery or by United States mail, postage prepaid, to the Secretary of the
Corporation not later than (i) with respect to an election to be held at an
annual meeting of stockholders, 90 days in advance of such meeting, and (ii)
with respect to an election to be held at a special meeting of stockholders for
the election

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of directors, the close of business on the 7th day following the date on which
notice of such meeting is first given to stockholders. Each such notice shall
set forth: (a) the name and address of the stockholder who intends to make the
nomination and of the person or persons to be nominated; (b) a representation
that the stockholder is a holder of record of stock of the Corporation entitled
to vote at such meeting and intends to appear in person or by proxy at the
meeting to nominate the person or persons specified in the notice; (c) a
description of all arrangements or understandings between the stockholder and
each nominee and any other person or persons (naming such person or persons)
pursuant to which the nomination or nominations are to be made by the
stockholder; (d) such other information regarding each nominee proposed by such
stockholder as would have been required to be included in a proxy statement
filed pursuant to the proxy rules of the Securities and Exchange Commission had
each nominee been nominated, or intended to be nominated by the Board of
Directors; and (e) the consent of each nominee to serve as a director of the
Corporation if so elected. The Chairman of the meeting may refuse to acknowledge
the nomination of any person not made in accordance with the foregoing
procedure.

         Section 14. The Chairman of the Board shall have the power and
authority to limit attendance at any meeting of the stockholders to (a) the
Corporation's stockholders and (b) their validly appointed proxies.

         Section 15. The Chairman of the Board or, in the Chairman's absence,
the Chief Executive Officer, shall be the chairman of any meeting of the
stockholders and shall determine the order of business and rules for the conduct
of any such meeting.

                                   ARTICLE III
                                    DIRECTORS

         Section 1. The number of directors of the Corporation shall be not
fewer than 3 nor more than 13 as shall be established from time to time by
resolution of the Board of Directors of the Corporation. The directors shall be
elected at the annual meeting of the stockholders, except as provided in Section
2 of this Article, and each director elected shall hold office until the next
succeeding annual meeting of the

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stockholders of the Corporation or until such person's successor is duly elected
or until such person's earlier death or resignation or removal from such office.
Directors need not be residents of the State of Nevada or stockholders of the
Corporation.

         Section 2. All vacancies occurring in the Board of Directors, including
those resulting from an increase in the number of directors and any vacancies on
the Board of Directors resulting from death, resignation, disqualification,
removal or other cause shall be filled by the affirmative vote of a majority of
the remaining directors then in office, even though such remaining directors may
constitute less than a quorum of the Board of Directors, or by the sole
remaining director. If not filled in that manner, any vacancy shall be filled by
election at an annual meeting or a special meeting of the stockholders entitled
to vote called for that purpose. Any director elected in accordance with the
preceding sentence shall hold office for the remainder of the full term of the
class of directors in which the new directorship was created or the vacancy
occurred and until such director's successor shall have been elected and
qualified. No decrease in the number of directors constituting the Board of
Directors shall shorten the term of any incumbent director.

         Section 3. The business and affairs of the Corporation shall be managed
by its Board of Directors. The Board of Directors may exercise all such powers
of the Corporation and do all such lawful acts and things as are not by statute
or by the Articles of Incorporation or by these By-laws directed or required to
be exercised and done by the stockholders.

         Section 4. Any director of the Corporation may be removed or discharged
with or without cause by the affirmative vote therefor by stockholders
representing not less than two-thirds of the issued and outstanding capital
stock entitled to vote in the election of directors.

                       MEETINGS OF THE BOARD OF DIRECTORS

         Section 5. Meetings of the Board of Directors, regular or special, may
be held either within or without the State of Nevada.

         Section 6. The first meeting of each newly elected Board of Directors
shall be at such time and place as shall be fixed by the vote of the
stockholders at the annual meeting of stockholders and no notice

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of such meeting shall be necessary to the newly elected directors in order
legally to constitute the meeting, provided a quorum shall be present. In the
event of the failure of the stockholders to fix the time and place of such first
meeting of the newly elected Board of Directors, or in the event such meeting of
the newly elected Board of Directors is not held at the time and place so fixed
by the stockholders, the meeting may be held at such time and place as shall be
specified in a notice given as hereinafter provided for special meetings of the
Board of Directors, or as shall be specified in a written waiver signed by all
of the directors.

         Section 7. Regular meetings of the Board of Directors, commencing in
October 2001, shall be held on the third Tuesday of February, May, July and
October in each year, if not a legal holiday, and if a legal holiday, then on
the next secular day following, and in addition a fifth flexible meeting date
may be determined from time to time by the Board of Directors. However, the
Chairman of the Board may designate a day in each such month other than the
third Tuesday as the date for any such regular meeting. Each such meeting shall
be held at such time as shall be designated by the Chairman of the Board. At
such meetings, the Board of Directors may transact such business as may properly
come before the meetings.

         Section 8. Special meetings of the Board of Directors may be called by
the Chairman of the Board of Directors or the President and shall be called by
the Secretary on the written request of two of the directors. Written notice of
special meetings of the Board of Directors shall be given to each director at
least 24 hours before the day of the meeting. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the Board
of Directors need be specified in the notice or waiver of notice of such
meeting.

         Section 9. A majority of the directors shall constitute a quorum for
the transaction of business. The act of at least a majority of the directors
present at a meeting at which a quorum is present shall be required to
constitute the act of the Board of Directors, unless a greater number is
required or a lesser number is permitted by the Articles of Incorporation. If a
quorum shall not be present at any meeting of the Board of Directors, the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
At such adjourned meeting at which a

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quorum shall be present, any business may be transacted that might have been
transacted at the meeting as originally notified and called.

         Section 10. Any director may resign at any time by mailing or
delivering or by transmitting written notice of resignation by mail, telegram,
cable or other electronic transmission to the Board of Directors, the Chairman
of the Board, the President, or to the Secretary of the Corporation. Any such
resignation shall take effect at the time specified therein or, if no time is
specified therein, then such resignation shall take effect immediately upon the
receipt thereof.

         Section 11. Any action required or permitted to be taken at any meeting
of the Board of Directors, or of any committee thereof, may be taken without a
meeting if a consent in writing, setting forth the action so taken, shall be
signed by all of the members of the Board of Directors or of such committee, as
the case may be, and such consent shall have the same force and effect as a
unanimous vote at a duly called and constituted meeting of the Board of
Directors or such committee. All such unanimous written consents shall be filed
with the minutes of the proceedings of the Board of Directors or such committee.

         Section 12. Members of the Board of Directors, or of any committee
thereof, may participate in a meeting of such Board of Directors or committee by
means of a conference telephone network by which all persons participating in
the meeting can hear each other.

                             COMMITTEES OF DIRECTORS

         Section 13. The Board of Directors may, by resolution adopted by a
majority of the Board of Directors, designate one or more directors to
constitute an Executive Committee that, to the extent provided in such
resolution (if not expressly denied by applicable law or the Articles of
Incorporation) shall have and may exercise the powers of the Board of Directors
in the management of the business and affairs of the Corporation and may have
power to authorize the seal of the Corporation to be affixed to all papers that
may require it. Vacancies in the membership of the Executive Committee shall be
filled by resolution adopted by a majority of the Board of Directors at a
regular or special meeting of the Board of Directors. The Executive Committee
shall keep regular minutes of its proceedings and report such minutes to the
Board of

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Directors when required. The designation of such committee and the delegation of
authority thereto shall not operate to relieve the Board of Directors or any
member thereof of any responsibility imposed on the Board of Directors or such
member by law.

         Section 14. The Board of Directors may, by resolution adopted by a
majority of the Board of Directors, designate one or more committees in addition
to the Executive Committee, each such other committee to consist of one or more
directors of the Corporation, which committee or committees, to the extent
provided in such resolution or resolutions (if not theretofore granted to the
Executive Committee and if not expressly denied by applicable law or the
Articles of Incorporation), shall have and may exercise all of the authority of
the Board of Directors in the business and affairs of the Corporation, and may
have power to authorize the seal of the Corporation to be affixed to all papers
that may require it. Vacancies in the membership of any such committees shall be
filled by resolution adopted by a majority of the Board of Directors at a
regular or special meeting of the Board of Directors. Each committee shall keep
regular minutes of its proceedings and report such minutes to the Board of
Directors when required. The designation of such committees and the delegation
of authority thereto shall not operate to relieve the Board of Directors, or any
member thereof, or any responsibility imposed upon the Board of Directors or
such member by law.

                            COMPENSATION OF DIRECTORS

         Section 15. The directors may be paid their expenses, if any, of
attendance at each meeting of the Board of Directors and may be paid a fixed sum
for attendance at each meeting of the Board of Directors or a stated salary as
director. No such payment shall preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed similar compensation for
attending committee meetings.

                                   ARTICLE IV
                                     NOTICES

         Section 1. Notices to directors and stockholders shall be in writing
and delivered personally or mailed to the directors or stockholders at their
respective addresses appearing on the books of the

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Corporation. Notice by mail shall be deemed to be given at the time when such
notice shall be mailed. Notice to directors may also be given by telegram,
facsimile or other electronic transmission, and shall be deemed delivered when
such notice shall be deposited at a telegraph office for transmission and all
appropriate fees therefor have been paid or upon receipt of confirmation of
other electronic transmission.

         Section 2. Whenever any notice is required to be given to any
stockholder or director under the provisions of applicable law or of the
Articles of Incorporation or of these By-laws, a waiver thereof in writing
signed by the person or persons entitled to such notice, whether before or after
the time stated therein, shall be equivalent to the giving of such notice.

         Section 3. Attendance of a director at a meeting shall constitute a
waiver of notice of such meeting, except where a director attends a meeting for
the express purpose of objecting to the transaction of any business on the
ground that the meeting is not lawfully called or convened.

                                   ARTICLE V
                                    OFFICERS

         Section 1. The officers of the Corporation shall consist of a Chairman
of the Board, a Chief Executive Officer, a President, one or more Vice
Presidents (one or more of which may be designated Executive Vice President or
Senior Vice President), a Secretary and a Treasurer, each of whom shall be
elected by the Board of Directors. Any two or more offices may be held by the
same person, except that one person shall not simultaneously hold the offices of
Chairman of the Board and Secretary, Chief Executive Officer and Secretary, or
President and Secretary.

         Section 2. The Board of Directors, at its first meeting after each
annual meeting of stockholders, shall elect a Chairman of the Board, a Chief
Executive Officer, a President, one or more Vice Presidents (one or more of
which may be designated Executive Vice President or Senior Vice President), a
Secretary and a Treasurer, none of whom need be a member of the Board of
Directors, except the Chairman of the Board.

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         Section 3. The Board of Directors or the Chairman of the Board may from
time to time elect or appoint a Controller and such assistant officers as the
Board of Directors or the Chairman of the Board, as the case may be, may deem
necessary or desirable. Any such elections or appointments made by the Chairman
of the Board shall be reported to the Board of Directors at its next succeeding
regular meeting.

         Section 4. The salaries of all executive officers of the Corporation
shall be fixed by the Board of Directors.

         Section 5. Each officer and assistant officer of the Corporation shall
hold office until the next annual meeting of the Board of Directors or until a
successor is duly elected or appointed, or until such person's death,
resignation, or removal from such office. Any officer or member of any committee
elected or appointed by the Board of Directors may be removed by the Board of
Directors whenever in its judgment the best interests of the Corporation will be
served thereby, but such removal shall be without prejudice to the contract
rights, if any, of the person so removed. Any vacancy occurring in any office of
the Corporation by death, resignation, removal or otherwise shall be filled by
the Board of Directors.

                            THE CHAIRMAN OF THE BOARD
                       AND THE VICE CHAIRMAN OF THE BOARD

         Section 6. The Chairman of the Board shall be selected from the members
of the Board of Directors of the Corporation. The Chairman of the Board, or in
the Chairman's absence, the Chief Executive Officer or the President, shall
preside at meetings of the stockholders and the Board of Directors. The Chairman
of the Board shall advise and counsel the Chief Executive Officer and the
President and other officers and shall exercise such powers and perform such
duties as shall be assigned to or required of the Chairman of the Board from
time to time by the Board of Directors or these By-laws. The Chairman of the
Board does not have the general and active management of the business and does
not have authority to execute and deliver on behalf of the Corporation contracts
and other instruments and documents relating to the usual and ordinary business
of the Corporation, except where required by law to be otherwise executed, and
except where the execution thereof shall be expressly delegated by the Board of
Directors to the

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Chairman of the Board. The Board may, in its discretion, create the office of
Vice Chairman of the Board. The Vice Chairman of the Board shall be selected
from the members of the Board of the Corporation and shall have such authority,
powers and duties as the Board shall provide. During the absence or disability
of the Chairman of the Board, the Vice Chairman of the Board shall perform the
duties of the Chairman of the Board.

                           THE CHIEF EXECUTIVE OFFICER

         Section 7. The Chief Executive Officer of the Corporation shall have
general and active management of the business of the Corporation and, subject to
the Chairman of the Board if a different person holds such office, shall see
that all orders and resolutions of the Board of Directors are carried into
effect. The Chief Executive Officer shall have such additional duties as may be
assigned to the Chief Executive Officer from time to time by the Board of
Directors or the Chairman of the Board. The Chief Executive Officer shall have
authority, without further authorization from the Board, to execute and deliver
on behalf of the Corporation all bonds, deeds, mortgages and other instruments
(and if any such instrument requires a seal of the Corporation, then under such
seal) relating to the usual and ordinary business of the Corporation.

                                  THE PRESIDENT

         Section 8. The President shall be the Chief Operating Officer of the
Corporation and shall assist the Chief Executive Officer in the general and
active management of the operations of the Corporation. The President shall have
such additional duties as may be assigned to the President from time to time by
the Board of Directors, the Chairman of the Board or the Chief Executive
Officer. The President shall have the same authority as the Chief Executive
Officer to execute on behalf of the Corporation bonds, deeds, mortgages and
other instruments requiring a seal and contracts and other documents. During any
absence or disability of the Chief Executive Officer, the President shall
perform the duties of the Chief Executive Officer.

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                               THE VICE PRESIDENTS

         Section 9. The Vice Presidents, in the order of their seniority, unless
otherwise determined by the Board of Directors, shall, in the absence or
disability of the President, perform the duties and exercise the powers of the
President. Executive Vice Presidents shall be senior to Senior Vice Presidents
and Vice Presidents. Senior Vice Presidents shall be senior to Vice Presidents.
They shall perform such other duties and have such other powers as the Board of
Directors, the Chairman of the Board, the Chief Executive Officer and the
President shall from time to time prescribe. The Vice Presidents shall have the
same authority as the Chairman of the Board and the President to execute on
behalf of the Corporation bonds, deeds, mortgages and other instruments
requiring a seal and contracts and other documents.

                      THE SECRETARY AND ASSISTANT SECRETARY

         Section 10. The Secretary shall attend all meetings of the Board of
Directors and all meetings of the stockholders and record all the proceedings of
the meetings of the stockholders of the Corporation and of the Board of
Directors in a book or books to be kept for that purpose and shall perform
similar duties for any committees of the Board of Directors when required. The
Secretary shall give, or cause to be given, notice of all meetings of the
stockholders and special meetings of the Board of Directors, and shall perform
such other duties as may be prescribed by the Board of Directors, the Chairman
of the Board, the Chief Executive Officer or the President. The Secretary shall
keep in safe custody the seal of the Corporation and, when authorized by the
Board of Directors, affix such seal to any instrument requiring it and, when so
affixed, it may be attested by the Secretary's signature or by the signature of
the Treasurer or an Assistant Secretary.

         Section 11. The Assistant Secretaries in the order of their seniority,
unless otherwise determined by the Board of Directors, shall, in the absence or
disability of the Secretary, perform the duties and exercise the powers of the
Secretary. They shall perform such other duties and have such other powers as
the Board of Directors, the Chairman of the Board, the Chief Executive Officer,
the President or the Secretary may from time to time prescribe.

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                     THE TREASURER AND ASSISTANT TREASURERS

         Section 12. The Treasurer shall have the custody of the corporate funds
and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the Corporation in
such depositories as may be designated by the Board of Directors.

         Section 13. The Treasurer shall disburse the funds of the Corporation
as may be ordered or authorized by the Board of Directors, taking proper
vouchers of such disbursements, and shall render to the Chairman of the Board,
the Chief Executive Officer, the President and the Board of Directors at its
regular meetings or when the Board of Directors so requires an account of all of
the Treasurer's transactions as Treasurer and of the financial condition of the
Corporation. The Treasurer shall have such other duties as may be prescribed
from time to time by the Board of Directors, the Chairman of the Board, the
Chief Executive Officer and the President.

         Section 14. If required by the Board of Directors, the Treasurer shall
give the Corporation a bond in such sum and with such surety or sureties as
shall be satisfactory to the Board of Directors for the faithful performance of
the duties of the Treasurer's office and for the restoration to the Corporation,
in case of death, resignation, retirement or removal from office, of all books,
papers, vouchers, money and other property of whatever kind in the Treasurer's
possession or under the Treasurer's control belonging to the Corporation.

         Section 15. The Assistant Treasurers in the order of their seniority,
unless otherwise determined by the Board of Directors, shall, in the absence or
disability of the Treasurer, perform the duties and exercise the powers of the
Treasurer. They shall perform such other duties and have such other powers as
the Board of Directors, the Chairman of the Board, the Chief Executive Officer,
the President or the Treasurer may from time to time prescribe.

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                                   ARTICLE VI
                       ELIMINATION OF DIRECTOR AND OFFICER
                        LIABILITY AND INDEMNIFICATION OF
                         OFFICERS, DIRECTORS AND OTHERS

         Section 1. Elimination of Director or Officer Liability. No director or
officer of the Corporation shall be personally liable to the Corporation or any
of its stockholders for damages for breach of fiduciary duty as a director or
officer involving any act or omission of any such director or officer occurring
on or after July 15, 1987; provided, however, that the foregoing provision shall
not eliminate or limit the liability of a director or officer (a) for acts or
omissions that involve intentional misconduct, fraud or a knowing violation of
law, or (b) the payment of dividends in violation of Section 78.300 of the
Nevada Revised Statutes.

         Section 2. Indemnification. The Corporation shall indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of the
Corporation), by reason of the fact that such person is or was a director,
officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust, or other enterprise, or by
reason of the fact that such person is or was a director, officer or employee of
the Corporation serving in any fiduciary capacity with respect to any profit
sharing pension or other type of welfare plan or trust for the benefit of
employees of the Corporation or any subsidiary of the Corporation, against
expenses (including attorneys' fees), judgments, fines, and amounts paid in
settlement actually and reasonably incurred by such person in connection with
the action, suit or proceeding, if such person acted in good faith and in a
manner which such person reasonably believed to be in or not opposed to the best
interests of the Corporation or of such employee benefit plan or trust, and,
with respect to any criminal action or proceeding had no reasonable cause to
believe such person's conduct was unlawful. The termination of any action, suit
or proceeding by judgment, order, settlement or conviction, or upon a plea of
nolo contendere or its equivalent, shall not, of itself, create

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a presumption that the person did not act in good faith and in a manner which
such person reasonably believed to be in or not opposed to the best interests of
the Corporation, or of such employee benefit plan or trust, and that, with
respect to any criminal action or proceeding, such person had reasonable cause
to believe that such person's conduct was unlawful.

         Section 3. The Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the Corporation or by or in the
right of any employee benefit plan or trust to procure a judgment in its favor
by reason of the fact that such person is or was a director, officer, employee
or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, or by reason of the fact
that such person is or was a director, officer or employee of the Corporation
serving in any fiduciary capacity with respect to any profit sharing pension or
other type of welfare plan or trust for the benefit of employees of the
Corporation or any subsidiary of the Corporation, against expenses, including
amounts paid in settlement and attorneys' fees, actually and reasonably incurred
by such person in connection with the defense or settlement of the action or
suit if such person acted in good faith and in a manner such person reasonably
believed to be in or not opposed to the best interests of the Corporation or of
such employee benefit plan or trust. Indemnification may not be made for any
claim, issue or matter as to which such a person has been adjudged by a court of
competent jurisdiction, after exhaustion of all appeals therefrom, to be liable
to the Corporation or of such employee benefit plan or trust, or for amounts
paid in settlement to the Corporation, unless and only to the extent that the
court in which the action or suit was brought or other court of competent
jurisdiction determines upon application that in view of all the circumstances
of the case, the person is fairly and reasonably entitled to indemnity for such
expenses as the court deems proper.

         Section 4. To the extent that a director, officer, employee or agent of
the Corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in Sections 2 and 3 of this Article VI,
or in defense of any claim, issue or matter therein, such person must be
indemnified

                                      -16-
<PAGE>
by the Corporation against expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection with the defense.

         Section 5. Any indemnification under Sections 2 and 3 of this Article
VI, unless ordered by a court or advanced pursuant to Section 6 of this Article
VI, must be made by the Corporation only as authorized in the specific case upon
a determination that indemnification of the director, officer, employee or agent
is proper in the circumstances. The determination must be made (a) by the Board
of Directors by majority vote of a quorum consisting of directors who were not
parties to the action, suit or proceeding, or (b) if a majority vote of a quorum
consisting of directors who were not parties to the action, suit or proceeding
so orders, by independent legal counsel in a written opinion, or (c) if a quorum
consisting of directors who were not parties to the action, suit or proceeding
cannot be obtained, by independent legal counsel in a written opinion, or (d) by
the stockholders.

         Section 6. The expenses of officers and directors incurred in defending
a civil or criminal action, suit or proceeding must be paid by the Corporation
as they are incurred and in advance of the final disposition of the action, suit
or proceeding upon receipt of an undertaking by or on behalf of the director or
officer to repay the amount if it shall be determined by a court of competent
jurisdiction that such person is not entitled to be indemnified by the
Corporation. The provisions of this Section 6 do not affect any rights to
advancement of expenses to which corporate personnel other than directors or
officers may be entitled under any contract or otherwise.

         Section 7. The indemnification and advancement of expenses authorized
in or ordered by a court pursuant to this Article VI: (a) shall not be deemed
exclusive of any other rights to which a person seeking indemnification or
advancement of expenses may be entitled under any By-law, agreement, vote of
stockholders, disinterested directors, or otherwise, for either an action in
such person's official capacity or an action in another capacity while holding
office, except that indemnification, unless ordered by a court pursuant to
Section 3 of this Article VI, or for the advancement of expenses made pursuant
to Section 6 of this Article VI, may not be made to or on behalf of any director
or officer if a final adjudication establishes

                                      -17-
<PAGE>

that such person's acts or omissions involved intentional misconduct, fraud or a
knowing violation of the law and was material to the cause of action; and (b)
continues for a person who has ceased to be a director, officer, employee or
agent and inures to the benefit of the heirs, executors and administrators of
such a person.

         Section 8. The Corporation shall have power to purchase and maintain
insurance or make other financial arrangements on behalf of any person who is or
was a director, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise or is or was a director, officer or employee of the Corporation
serving in any fiduciary capacity with respect to any profit sharing, pension or
other type of welfare plan or trust for the benefit of employees of the
Corporation or any subsidiary of the Corporation, for any liability asserted
against such person and any liability and expenses incurred by such person in
any such capacity or arising out of such person's status as such.

                                   ARTICLE VII
                             CERTIFICATES FOR SHARES

         Section 1. The Corporation shall deliver certificates representing all
shares to which stockholders are entitled. Such certificates shall be signed by
the Chairman of the Board, or the President, or a Vice President, and the
Secretary or an Assistant Secretary of the Corporation, and may be sealed with
the seal of the Corporation or a facsimile thereof. No certificate shall be
issued for any share until the consideration therefor has been fully paid. Such
certificate representing shares shall state upon the face thereof that the
Corporation is organized under the laws of the State of Nevada, the name of the
person to whom issued, the number and class and the designation of the series,
if any, which such certificate represents, and may, in addition, state upon the
face thereof the par value of each share represented by such certificate or that
the shares are without par value.

         Section 2. The signatures of the Chairman of the Board, the President
or Vice President and the Secretary or Assistant Secretary upon a certificate
may be facsimiles, if the certificate is countersigned

                                      -18-
<PAGE>
by a transfer agent and registered by a registrar, other than the Corporation
itself or an employee of the Corporation. In case any officer who has signed or
whose facsimile signature has been placed upon such certificate shall have
ceased to be such officer before such certificate is issued, it may be issued by
the Corporation with the same effect as if such person were such officer at the
date of issuance.

                               LOST CERTIFICATES

         Section 3. The Board of Directors may direct a new certificate or
certificates to be issued or empower the Corporation's transfer agent to issue a
new certificate or certificates in place of any certificate or certificates
theretofore issued by the Corporation that are alleged to have been lost or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost or destroyed. When authorizing such issue of
a new certificate or certificates, the Board of Directors may, in its discretion
and as a condition precedent to the issuance thereof, require the owner of such
lost or destroyed certificate or certificates, or such person's legal
representative, to advertise the same in such manner as it shall require and/or
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 or destroyed.

         Section 4. Upon surrender to the Corporation or the transfer agent of
the Corporation of a certificate for shares duly endorsed or accompanied by
proper evidence of succession, assignment or authority to transfer, it shall be
the duty of the Corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.

                CLOSING OF TRANSFER BOOKS AND FIXING RECORD DATE

         Section 5. For the purpose of determining stockholders entitled to of
or to vote at any meeting of stockholders or any adjournment thereof, or
entitled to receive payment of any dividend, or in order to make a determination
of stockholders for any other purpose, the Board of Directors may provide that
the stock transfer books shall be closed for a stated period not to exceed, in
any case, 60 days. If the stock transfer books shall be closed for the purpose
of determining stockholders entitled to notice of or to vote at a meeting of
stockholders, such books shall be closed for at least 10 days immediately
preceding such

                                      -19-
<PAGE>
meeting. In lieu of closing the stock transfer books, the Board of Directors may
fix in advance a date as the record date for any such determination of
stockholders, such date in any case to be not more than 60 days, and, in case of
a meeting of stockholders, not less than 10 days, prior to the date on which the
particular action requiring such determination of stockholders is to be taken.
If the stock transfer books are not closed and no record date is fixed for the
determination of stockholders entitled to notice of or to vote at a meeting of
stockholders, or stockholders entitled to receive payment of a dividend, the
date on which the notice of the meeting is mailed or the date on which the
resolution of the Board of Directors declaring such dividend is adopted, as the
case may be, shall be the record date for such determination of stockholders.
When a determination of stockholders entitled to vote at any meeting of
stockholders has been made as provided in this section, such determination shall
apply to any adjournment thereof, except where the determination has been made
through the closing of stock transfer books and the stated period of closing has
expired.

                            REGISTERED STOCKHOLDERS

         Section 6. The Corporation shall be entitled to recognize the exclusive
rights 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 share or shares on the part of
any other person, whether or not it shall have express or other notice thereof,
except as otherwise provided by the laws of the State of Nevada.

                                  ARTICLE VIII
                               GENERAL PROVISIONS

         Section 1. The Board of Directors may declare and the Corporation may
pay dividends on its outstanding shares in cash, property, or its own shares
pursuant to law and subject to the provisions of its Articles of Incorporation.

         Section 2. The Board of Directors may by resolution create a reserve or
reserves out of earned surplus for any proper purpose or purposes, and may
abolish any such reserve in the same manner.

                                      -20-
<PAGE>

                             REPORT TO STOCKHOLDERS

         Section 3. The Board of Directors must, when required by the holders of
at least 1/3 of the outstanding shares of the Corporation, present written
reports of the situation and amount of business of the Corporation.

                                     CHECKS

         Section 4. All checks or demands for money and notes of the Corporation
shall be signed by such officer or officers or such other person or persons as
may from time to time be designated by the Board of Directors or by such
officers of the Corporation who may be authorized by the Board of Directors to
make such designations.
                                   FISCAL YEAR

         Section 5. The fiscal year of the Corporation shall be fixed by the
resolution of the Board of Directors.

                                      SEAL

         Section 6. The corporate seal shall have inscribed thereon the name of
the Corporation, the year of its organization and the words "Corporate Seal,
Nevada". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or in any other manner reproduced.

                                   ARTICLE IX
                                   AMENDMENTS

         Section 1. These By-laws may be altered, amended or repealed or
rescinded, or new by-laws may be adopted, by the vote of a majority of the
entire Board of Directors at any meeting thereof, provided that such proposed
action in respect thereof shall be stated in the notice of such meeting. The
stockholders of the Corporation shall have the power to alter, amend, repeal or
rescind any provision of these By-laws, or adopt new by-laws, only to the extent
and in the manner provided in the following sentence. In addition to any
requirements of law and any other provision of these By-laws or the
Corporation's Articles of Incorporation or any resolution or resolutions of the
Board of Directors adopted pursuant to Article IV of

                                      -21-
<PAGE>
the Corporation's Articles of Incorporation (and notwithstanding the fact that a
lesser percentage may be specified by law, these By-laws, the Corporation's
Articles of Incorporation or any such resolution or resolutions), the
affirmative vote of the holders of 66 2/3 percent or more of the combined voting
power of the then outstanding shares of stock entitled to vote generally in the
election of directors, voting together as a single class, shall be required to
alter, amend, repeal or rescind any provision of these By-laws, or adopt new
by-laws.

                                      -22-<PAGE>
                                                                      APPENDIX C

                           CERTIFICATE OF DESIGNATION,
                             PREFERENCES AND RIGHTS

                                     OF THE

               10% SERIES G CUMULATIVE CONVERTIBLE PREFERRED STOCK

                                ($2.00 PAR VALUE)

                                       OF

                         AMERICAN REALTY INVESTORS, INC.

              Pursuant to Section 78.195, 78.1955 and 78.196 of the
                             Nevada Revised Statutes

         We, the undersigned, _____________________, President, and Robert A.
Waldman, Secretary, of American Realty Investors, Inc., a Nevada corporation
(the "Corporation"), pursuant to the provisions of Section 78.195, 78.1955 and
78.196 of the Nevada Revised Statutes, do hereby make this Certificate of
Designation, Preferences and Rights and do hereby state and certify that,
pursuant to the authority expressly vested in the Board of Directors of the
Corporation, as set forth in Article FOURTH of the Corporation's Restated
Articles of Incorporation, the Board of Directors, on ____________________
_____, 2002, unanimously adopted the following resolution creating a series of
its Preferred Stock, $2.00 par value, designated as "10% Series G Cumulative
Convertible Preferred Stock":

          RESOLVED, that the Board of Directors of the Corporation, pursuant to
the authority expressly vested in it by the Corporation's Restated Articles of
Incorporation, does hereby provide for the issuance of a series of the
authorized Preferred Stock, $2.00 par value, of the Corporation, and does hereby
fix and herein state the designation and amount thereof and the voting powers,
preferences and relative participating, optional and other special rights of the
shares of such series, and the qualifications, limitations or restrictions
thereon, as follows:

SECTION 1. Designation and Amount. The shares of such series shall be designated
as "10% Series G Cumulative Convertible Preferred Stock" (the "Series G
Preferred Stock") and each share of the Series G Preferred Stock shall have a
par value of $2.00 per share and a preference on liquidation as specified in
Section 6. The number of shares constituting the Series G Preferred Stock shall
be 4,022,000. Such number of shares may be increased or decreased by the Board
of Directors by filing articles of amendment as provided in the Nevada Revised
Statutes (the "NRS"); provided, that no decrease shall reduce the number of
shares of Series G Preferred Stock to a number less than the number of shares
then outstanding plus the number of shares reserved for issuance upon the
exercise of outstanding options, rights or warrants.

                                      C-1
<PAGE>

SECTION 2. Dividends and Distributions.

                  (a) The holders of shares of Series G Preferred Stock shall be
         entitled to receive, when, as, and if declared by the Board of
         Directors and to the extent permitted under the NRS, out of funds
         legally available for the purpose and in preference to and with
         priority over dividends upon all Junior Securities (as defined in
         Section 6), quarterly cumulative dividends payable in arrears in cash
         on the fifteenth day following the end of each calendar quarter (each
         such date being referred to herein as a "Quarterly Dividend Payment
         Date"), in an amount per share (rounded to the next highest cent) equal
         to 10% per annum of the Adjusted Liquidation Value, as determined
         immediately prior to the beginning of such calendar quarter assuming
         each year consists of 360 days and each quarter consists of 90 days.
         The term "Adjusted Liquidation Value" shall mean Liquidation Value (as
         defined in Section 6) plus all accrued and unpaid dividends through the
         applicable date.

                  (b) Dividends shall commence accruing cumulatively on
         outstanding shares of the Series G Preferred Stock from the date of the
         first issuance of Series G Preferred Stock to and including the date on
         which the Redemption Price (as defined in Section 9) of such shares is
         paid, whether or not there are profits, surplus or other funds of the
         Corporation legally available for the payment of such dividends.
         Dividends on the first Quarterly Dividend Payment Date shall accrue and
         shall be payable for a period of 45 days. Dividends payable on each
         Quarterly Dividend Payment Date shall be dividends accrued and unpaid
         through the last Business Day (as defined in Section 3(a)) of the
         immediately preceding calendar month. The Board of Directors may fix a
         record date for the determination of holders of shares of Series G
         Preferred Stock entitled to receive payment of a dividend or
         distribution declared thereon other than a quarterly dividend paid on
         the Quarterly Dividend Payment Date immediately after such dividend
         accrued; which record date shall be not more than 50 days prior to the
         date fixed for the payment thereof.

                  (c) So long as any shares of the Series G Preferred Stock are
         outstanding, the Corporation will not declare or pay any dividends on
         Junior Securities (other than dividends in respect of Common Stock
         payable in shares of Common Stock) or make, directly or indirectly, any
         other distribution of any sort in respect of Junior Securities, or any
         payment on account of the purchase or other acquisition of the Junior
         Securities, unless on the date of such declaration in the case of a
         dividend, or on such date of distribution or payment, in the case of
         such distribution or other payment (i) all accrued dividends on the
         Series G Preferred Stock for all past quarterly dividend periods in
         which dividends accrued have been paid in full and the full amount of
         accrued dividends for the then-current quarterly-yearly dividend
         periods have been paid or declared and a sum sufficient for the payment
         thereof set apart, and (ii) after giving effect to such payment of
         dividends, other distributions, purchase or redemption, the aggregate
         capital of the Corporation applicable to all capital stock of the
         Corporation then outstanding, plus the earned and capital surplus of
         the Corporation shall exceed the aggregate amount payable on
         involuntary dissolution, liquidation or winding up of the Corporation
         on all shares of the Preferred Stock and all stock ranking prior to or
         on a parity with the Series G Preferred Stock as to dividends or assets
         outstanding after the payment of such dividends, other distributions,
         purchase or redemption. Dividends shall not be paid (in full or in
         part) or declared or set apart for payment (in full or in part) on any
         series of Preferred Stock (including the Series G Preferred Stock) for
         any dividend period unless all

                                       C-2
<PAGE>

         dividends, in the case dividends are being paid in full on the Series G
         Preferred Stock, or a ratable portion of all dividends, in the case
         dividends are not being paid in full on the Series G Preferred Stock,
         have been or are, contemporaneously, paid or declared and set apart for
         payment on all outstanding Preferred Stock entitled thereto for each
         dividend period terminating on the same or earlier date.

SECTION 3. Conversion Rights.

                  (a) The Series G Preferred Stock may be converted at any time
         at the option of the holders thereof during a 75 day period commencing
         on the 15th day after the Corporation publicly files its first Form
         10-Q (the "10-Q Issuance") with the Securities Exchange Commission (the
         "SEC") following the consummation of the merger of Transcontinental
         Realty Acquisition Corporation, a wholly owned subsidiary of the
         Corporation, with and into Transcontinental Realty Investors, Inc. (the
         "Conversion Period"), in accordance with Section 3(d) at the Conversion
         Ratio (as defined in Section 3(b)) into fully paid and nonassessable
         Common Stock of the Corporation; provided, however, that on the earlier
         of (w) the commencement of any liquidation, dissolution or winding up
         of the Corporation by the filing with the Secretary of State of the
         State of Nevada or with a federal bankruptcy court, (x) the adoption by
         the stockholders of the Corporation of any resolution authorizing the
         commencement thereof, (y) the dividends on the Series G Preferred Stock
         have not been declared in the amount of the dividend preference as of
         the first Business Day of any calendar quarter, or if declared, have
         not been paid by the fifth Business Day of such quarter, or (z) the
         Corporation is acquired in a merger or similar transaction, the right
         of conversion shall be immediately accelerated for all shares of Series
         G Preferred Stock issued and then outstanding. Unless otherwise
         provided herein, the term "Business Day" shall mean any day other than
         a Saturday, a Sunday, or a day on which banking institutions in Dallas,
         Texas are authorized or obligated by law or executive order to remain
         closed.

                  (b) For purposes of this Section 3, the term "Conversion
         Ratio" shall be and mean 2.5 shares of Common Stock of the Corporation
         for each 1 share of Series G Preferred Stock. The Conversion Ratio
         shall not be subject to any adjustment as a result of the issuance of
         any additional shares of Common Stock of the Corporation for any
         purpose, except for stock splits (whether accomplished by stock
         dividend or otherwise).

                  (c) Upon any conversion, fractional shares of Common Stock
         shall not be issued but any fractions shall be adjusted by the delivery
         of one additional share of Common Stock in lieu of any cash. Any
         accrued but unpaid dividends shall be convertible into shares of Common
         Stock as provided in this Section 3. The Corporation shall pay all
         issue taxes, if any, incurred in respect to the issuance of Common
         Stock on conversion; provided, however, that the Corporation shall not
         be required to pay any transfer or other taxes incurred by reason of
         the issuance of such Common Stock in names other than those in which
         the Series G Preferred Stock surrendered for conversion may stand.

                  (d) Any conversion of Series G Preferred Stock into Common
         Stock shall be made by the surrender to the Corporation at its
         principal executive offices (which shall be deemed to be the address
         most recently provided to the SEC as its principal executive offices
         for so long as the Corporation is required to file reports with the
         SEC) or at the office of the

                                       C-3
<PAGE>

         transfer agent for such shares, of the certificate or certificates
         representing the Series G Preferred Stock to be converted, duly
         endorsed or assigned (unless such endorsement or assignment is waived
         by the Corporation), together with a written request for conversion.
         The Corporation shall either (i) issue, as of the date of receipt by
         the Corporation of such surrender, shares of Common Stock calculated as
         provided above and evidenced by a stock certificate delivered to the
         holder as soon as practicable after the date of such surrender or (ii)
         within two Business Days after the date of such surrender advise the
         holder of the Series G Preferred Stock that the Corporation is
         exercising its option to redeem the Series G Preferred Stock pursuant
         to this Section 3, in which case the Corporation shall have 30 days
         from the date of such surrender to pay the holder cash in an amount
         equal to the Redemption Price for each share of Series G Preferred
         Stock so redeemed. The date of surrender of any Series G Preferred
         Stock shall be the date of receipt by the Corporation or its agent of
         such surrender of Series G Preferred Stock.

                  (e) A number of authorized shares of Common Stock sufficient
         to provide for the conversion of the Series G Preferred Stock
         outstanding upon the basis hereinbefore provided shall at all times be
         reserved for such conversion. If the Corporation shall propose to issue
         securities or to make any change in its capital structure which would
         change the number of shares of Common Stock into which each share of
         Series G Preferred Stock shall be convertible as herein provided, the
         Corporation shall at the same time also make proper provision so that
         thereafter there shall be a sufficient number of shares of Common Stock
         authorized and reserved for conversion of the outstanding Series G
         Preferred Stock on the new basis.

                  (f) The term "Common Stock" shall mean stock of the class
         designated as Common Stock, par value $0.01 per share, of the
         Corporation on the date hereof or stock of any class or classes
         resulting from any reclassification or reclassifications thereof, the
         right of which to share in distributions of both earnings and assets is
         without limitation in the Restated Articles of Incorporation of the
         Corporation, as may be amended from time to time, as to any fixed
         amount or percentage and which are not subject to redemption; provided,
         that if at any time there shall be more than one such resulting class,
         the shares of each such class then issuable on conversion of the Series
         G Preferred Stock shall be substantially in the proportion which the
         total number of shares of stock of each such class resulting from all
         such reclassifications bears to the total number of shares of stock of
         all such classes resulting from all such reclassifications.

                  (g) In the case the Corporation shall propose at any time
         before all shares of the Series G Preferred Stock have been redeemed by
         or converted into Common Stock:

                  (i)      to pay any dividend on the Common Stock outstanding
                           payable in Common Stock or to make any other
                           distribution, other than cash dividends to the
                           holders of the Common Stock outstanding; or

                  (ii)     to offer for subscription to the holders of the
                           Common Stock outstanding any additional shares of any
                           class or any other rights or options;

                                       C-4
<PAGE>

                  (iii)    to effect any reclassification or recapitalization of
                           the Common stock outstanding involving a change in
                           the Common Stock, other than a subdivision or
                           combination of the Common Stock outstanding; or

                  (iv)     to merge or consolidate with or into any other
                           corporation, or to sell lease or convey all or
                           substantially all of its property or business, or to
                           liquidate, dissolve or wind up;

then, in each such case, the Corporation shall mail to the holders of record of
each of the shares of Series G Preferred Stock at their last known addresses as
shown on the Corporation's records a statement, signed by an officer of the
Corporation, with respect to the proposed action, such statement to be mailed at
least 30 days prior to the date of the taking of such action or the record date
for holders of the Common Stock for the purposes thereof, whichever is earlier.
If such statement relates to any proposed action referred to in clauses (iii) or
(iv) of this Section 3(g), it shall set forth such facts with respect thereto as
shall reasonably be necessary to inform the holders of the Series G Preferred
Stock as to the effect of such action upon the conversion of such holders.

SECTION 4. Voting Rights and Powers. The holders of the shares of Series G
Preferred Stock shall have only the following voting rights:

                  (a) Except as may otherwise be specifically required by law or
         otherwise provided herein, the holders of the shares of Series G
         Preferred Stock shall not have the right to vote such stock, directly
         or indirectly, at any meeting of the stockholders of the Corporation,
         and such shares of stock shall not be counted in determining the total
         number of outstanding shares to constitute a quorum at any meeting of
         stockholders;

                  (b) In the event that, under the circumstances, the holders of
         the Series G Preferred Stock are required by law to vote upon any
         matter, the approval of such series shall be deemed to have been
         obtained only upon the affirmative vote of the holders of a majority of
         the shares of the Series G Preferred Stock then outstanding;

                  (c) Except as set forth herein, or as otherwise provided by
         these Restated Articles of Incorporation or by law, holders of the
         Series G Preferred Stock shall have no special voting rights and their
         consent shall not be required for the taking of any corporate action;

                  (d) Notwithstanding anything herein to the contrary, if and
         whenever at any time or times all or any portion of the dividends on
         Series G Preferred Stock for any six quarterly dividends, whether or
         not consecutive, shall be in arrears and unpaid, then and in any such
         event, the number of directors constituting the Board of Directors
         shall be increased by two, and the holders of Series G Preferred Stock,
         voting separately as a class, shall be entitled at the next annual
         meeting of stockholders, or at a special meeting of holders of Series G
         Preferred Stock called as hereinafter provided, to elect two directors
         to fill such newly created directorships. Each holder shall be entitled
         to one vote in such election for each share of Series G Preferred Stock
         held. At such time as all arrearages in dividends on the Series G
         Preferred Stock shall have been paid in full and dividends thereon for
         the current quarterly period shall have been paid or declared and a sum
         sufficient for the payment thereof set aside, then (i) the voting
         rights of holders of Series G Preferred Stock described in this Section
         4(d) shall cease (subject always to revesting of such voting rights in
         the event of each and every similar future arrearages in quarterly
         dividends), (ii) the term of the directors then in office as a result
         of the voting rights described in

                                       C-5
<PAGE>

         this Section 4(d) shall terminate and (iii) the number of directors
         shall be reduced by the number of directors then in office elected
         pursuant to this Section 4(d). A vacancy in the class of directors
         elected pursuant to this Section 4(d) shall be filled by a director
         chosen by the remaining directors of the class, unless such vacancy is
         filled pursuant to the final sentence of Section 4(g);

                  (e) At any time when the voting right described in Section
         4(d) shall have vested and shall remain in the holders of Series G
         Preferred Stock, such voting right may be exercised initially either at
         a special meeting of holders of Series G Preferred Stock or at any
         annual or special stockholders' meeting called for the purpose of
         electing directors, but thereafter it shall be exercised only at annual
         stockholders' meetings. If such voting right shall not already have
         been initially exercised, the Secretary of the Corporation may, and
         upon the written request of the holders of record of at least 10% of
         the shares of Series G Preferred Stock then outstanding shall, call a
         special meeting of the holders of Series G Preferred Stock for the
         purpose of electing two directors pursuant to Section 4(d), and notice
         thereof shall be given to the holders of Series G Preferred Stock in
         the same manner as that required to be given to holders of the Common
         Stock for the annual meeting of stockholders. Such meeting shall be
         held at the earliest practicable date upon the notice required for
         special meetings of stockholders of the Corporation, or, if none, at a
         time and place designated by the Secretary of the Corporation;

                  (f) At any meeting held for the purpose of electing directors
         at which the holders of Series G Preferred Stock shall have the right
         to elect directors as provided in Section 4(d), the presence in person
         or by proxy of the holders of at least 35% of the then outstanding
         shares of Series G Preferred Stock shall be required and be sufficient
         to constitute a quorum of Series G Preferred Stock for the election of
         directors by Series G Preferred Stock, and the vote of the holders of a
         majority of such shares so present in person or by proxy at any such
         meeting at which there shall be such a quorum shall be required and be
         sufficient to elect the members of the Board of Directors which the
         holders of the Series G Preferred Stock are entitled to elect as
         hereinabove provided. At any such meeting or adjournment thereof, (i)
         the absence of a quorum of the holders of Series G Preferred Stock
         shall not prevent the election of directors other than the directors to
         be elected by the holders of Series G Preferred Stock and (ii) in the
         case of holders of Series G Preferred Stock entitled to vote for the
         election of directors, a majority of the holders present in person or
         by proxy of such class, if constituting less than a quorum as
         hereinabove provided, shall have the power to adjourn the meeting for
         the election of the directors that the holders of such class are
         entitled to elect, from time to time until a quorum shall be present,
         and notice of such adjourned meeting need not be given unless otherwise
         required by law, provided that nothing herein shall affect the conduct
         of the meeting with respect to stockholders of any other class;

                  (g) Any director who shall have been elected or appointed
         pursuant to Section 4(d) shall hold office for a term expiring (subject
         to the earlier termination of the default in quarterly dividends) at
         the next annual meeting of stockholders, and during such term may be
         removed at any time, either with or without cause, only by the
         affirmative vote of the holders of record of a majority of the shares
         of Series G Preferred Stock then outstanding at a

                                       C-6
<PAGE>

         special meeting of such stockholders called for such purpose. Any
         vacancy created by such removal may also be filled at such meeting; and

                  (h) So long as any shares of Series G Preferred Stock remain
         outstanding, the Corporation shall not, without the vote or written
         consent of the holders of record of two-thirds of the outstanding
         shares of Series G Preferred Stock, amend its articles of
         incorporation, including this Certificate of Designation, Preferences
         and Rights of this Series G Preferred Stock, or bylaws if such
         amendment would materially alter or change the existing terms of the
         Series G Preferred Stock.

SECTION 5. Reacquired Shares. Any shares of Series G Preferred Stock purchased
or otherwise acquired by the Corporation in any manner whatsoever shall be
permanently retired and canceled promptly after the acquisition thereof. All
such shares shall upon their cancellation become authorized but unissued shares
of Preferred Stock and may be reissued as part of a new series of Preferred
Stock subject to the conditions and restrictions on issuance set forth herein or
in any certificates of designations creating a series of Preferred Stock or any
similar stock or as otherwise required by law.

SECTION 6. Liquidation, Dissolution or Winding Up. Upon any liquidation,
dissolution or winding up of the Corporation, and after paying and providing for
the payment of all creditors of the Corporation, the holders of shares of the
Series G Preferred Stock then outstanding shall be entitled, before any
distribution or payment is made upon any "Junior Securities" (defined to be and
mean the Common Stock and any other equity security of any kind which the
Corporation at any time has issued, issues or is authorized to issue if the
Series G Preferred Stock has priority over such securities as to dividends or
upon liquidation, dissolution or winding up), to receive a liquidation
preference in an amount in cash equal to $20.00 per share less any dividend
declared and paid after January 2, 2002 and prior to the issuance of shares of
the Series H Preferred Stock with respect to shares of the common stock, $0.01
par value, of Transcontinental Realty Investors, Inc. plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not declared,
to the date of such payment (the "Liquidation Value"), whether such liquidation
is voluntary or involuntary and the holders of the Series G Preferred Stock
shall not be entitled to any other or further Corporation, the net assets
available for distribution shall be insufficient to permit payment to the
holders of all outstanding shares of all series of Preferred Stock of the amount
to which they respectively shall be entitled, then the assets of the Corporation
to be distributed to such holders will be distributed ratably among them based
upon the amounts payable on the shares of each such series of Preferred Stock in
the event of voluntary or involuntary liquidation, dissolution or winding up, as
the case may be, in proportion to the full preferential amounts, together with
any and all arrearages to which they are respectively entitled. Upon any such
liquidation, dissolution or winding up of the Corporation, after the holders of
Preferred Stock have been paid in full the amounts to which they are entitled,
the remaining assets of the Corporation may be distributed to holders of Junior
Securities, including Common Stock, of the Corporation. The Corporation will
mail written notice of such liquidation, dissolution or winding up, not less
than 20 nor more than 50 days prior to the payment date stated therein, to each
record holder of Series G Preferred Stock. Neither the consolidation nor merger
of the Corporation into or with any other corporation or corporations, nor the
sale or transfer by the Corporation of all or any part of its assets, nor a
reduction in the capital stock of the Corporation, nor the purchase or
redemption by the Corporation of any shares

                                       C-7
<PAGE>

of its Preferred Stock or Common Stock or any other class of its stock will be
deemed to be a liquidation, dissolution or winding up of the Corporation within
the meaning of this Section 6.

SECTION 7. Ranking. The Series G Preferred Stock shall rank on a parity as to
dividends and upon liquidation, dissolution or winding up with all other shares
of Preferred Stock issued by the Corporation; provided, however, that the
Corporation shall not issue any shares of Preferred Stock of any series which
are superior to the Series G Preferred Stock as to dividends or rights upon
liquidation, dissolution or winding up of the Corporation as long as any shares
of the Series G Preferred Stock are issued and outstanding, without the prior
written consent of the holders of a majority of such shares of Series G
Preferred Stock then outstanding voting separately as a class.

SECTION 8. Redemption at the Option of the Holder. The shares of Series G
Preferred Stock shall not be redeemable at the option of a holder of Series G
Preferred Stock.

SECTION 9. Redemption at the Option of the Corporation.

                  (a) The Corporation shall have the right to redeem all or a
         portion of the Series G Preferred Stock issued and outstanding at any
         time and from time to time commencing 45 days after the 10-Q Issuance;
         provided, however, the Corporation must provide notice of redemption in
         accordance with Section 9(b) and the Corporation may not issue such
         notice until the 45th day after the 10-Q Issuance. The redemption price
         of the Series G Preferred Stock shall be an amount per share equal to
         the Liquidation Value (the "Redemption Price").

                  (b) Except as otherwise set forth herein, the Corporation may
         redeem all or a portion of any holder's shares of Series G Preferred
         Stock by giving such holder not less than 45 days nor more than 60 days
         notice thereof prior to the date on which the Corporation desires such
         shares to be redeemed, which date shall be a Business Day (the
         "Redemption Date"). Such notice shall be written and shall be hand
         delivered or mailed, postage prepaid, to the holder (the "Redemption
         Notice"). If mailed, such notice shall be deemed to be delivered when
         deposited in the United States Mail, postage prepaid, addressed to the
         holder of shares of Series G Preferred Stock at his address as it
         appears on the stock transfer records of the Corporation. The
         Redemption Notice shall state:

                  (i)      the total number of shares of Series G Preferred
                           Stock held by such holder;

                  (ii)     the total number of shares of the holder's Series G
                           Preferred Stock that the Corporation intends to
                           redeem;

                  (iii)    the Redemption Date and the Redemption Price; and

                  (iv)     the place at which the holder(s) may obtain payment
                           of the applicable Redemption Price upon surrender of
                           the share certificate(s).

                  (c) If fewer than all of the Series G Preferred Stock at any
         time outstanding shall be called for redemption, such shares shall be
         redeemed pro rata, by lot drawn or other manner deemed fair in the sole
         discretion of the Board of Directors to redeem one or more such shares
         without redeeming all such shares of Series G Preferred Stock. If such

                                       C-8
<PAGE>

         Redemption Notice shall have been so mailed, on or before the
         Redemption Date the Corporation may provide for payment of a sum
         sufficient to redeem the applicable number of shares of Series G
         Preferred Stock called for redemption either by (i) setting aside the
         sum required to be paid as the Redemption Price by the Corporation,
         separate and apart from its other funds, in trust for the account of
         the holder(s) of the shares of Series G Preferred Stock to be redeemed
         or (ii) depositing such sum in a bank or trust company (either located
         in the state where the principal executive office of the Corporation is
         maintained, such bank or trust company having a combined surplus of at
         least $20,000,000 according to its latest statement of condition, or
         such other bank or trust company as may be permitted hereby or by law)
         as a trust fund, with irrevocable instructions and authority to the
         bank or trust company to give or complete the notice of redemption and
         to pay, on or after the Redemption Date, the applicable Redemption
         Price on surrender of certificates evidencing the share(s) of Series G
         Preferred Stock so called for redemption and, in either event, from and
         after the Redemption Date (v) the share(s) of Series G Preferred Stock
         shall be deemed to be redeemed, (w) such setting aside or deposit shall
         be deemed to constitute full payment for such share(s), (x) such
         share(s) so redeemed shall no longer be deemed to be outstanding, (y)
         the holder(s) thereof shall cease to be stockholder of the Corporation
         with respect to such share(s), and (z) such holder(s) shall have no
         rights with respect thereto except the right to receive their
         proportionate share of the funds set aside pursuant hereto or deposited
         upon surrender of their respective certificates. Any interest on the
         funds so deposited shall be paid to the Corporation. Any and all such
         redemption deposits shall be irrevocable except to the following
         extent: any funds so deposited which shall not be required for the
         redemption of any shares of Series G Preferred Stock because of any
         prior sale or purchase by the Corporation other than through the
         redemption process, subsequent to the date of deposit but prior to the
         Redemption Date, shall be repaid to the Corporation forthwith and any
         balance of the funds so deposited and unclaimed by the holder(s) of any
         shares of Series G Preferred Stock entitled thereto at the expiration
         of one calendar year from the Redemption Date shall be repaid to the
         Corporation upon its request or demand therefore, and after any such
         repayment of the holder(s) of the share(s) so called for redemption
         shall look only to the Corporation for payment of the Redemption Price
         thereof. In addition to the redemption under this Section 9, the
         Corporation may redeem or repurchase shares of the Series G Preferred
         Stock from any holder(s) thereof who consents in writing to any such
         consented redemption. All shares of Series G Preferred Stock redeemed
         shall be canceled and retired and no shares shall be issued in place
         thereof, but such shares shall be restored to the status of authorized
         but unissued shares of Preferred Stock.

                  (d) On or before the Redemption Date, the holder who shall
         redeem such Series G Preferred Stock hereunder shall surrender the
         certificate or certificates representing such shares to the Corporation
         by mail, courier or personal delivery at the Corporation's principal
         executive office or other location so designated in the Redemption
         Notice, and upon the Redemption Date the Redemption Price shall be
         payable to the order of the person whose name appears on such
         certificate or certificates as the owner thereof, and each surrendered
         certificate shall be canceled and retired. In the event fewer than all
         of the shares represented by such certificates are redeemed, a new
         certificate shall be issued representing the unredeemed shares.

                                       C-9
<PAGE>

                  (e) If the Redemption Notice is not withdrawn prior to one
         Business Day before the Redemption Date, and if on or prior to the
         Redemption Date the Redemption Price is either paid or made available
         for payment, then notwithstanding that the certificates evidencing any
         of the shares of the Series G Preferred Stock so called for redemption
         have not been surrendered, (i) all rights with respect to such shares
         shall forthwith after the Redemption Date cease and terminate, to the
         full extent permitted by applicable law, except only the right of the
         holders to receive the Redemption Price without interest upon surrender
         of their certificates therefore, and (ii) to the full extent permitted
         by applicable law, such shares shall no longer be deemed outstanding
         for any purpose.

SECTION 10. Sinking Fund. The Corporation shall not be required to maintain any
so-called "sinking fund" for the retirement on any basis of the Series G
Preferred Stock.

SECTION 11. Fractional Shares. Except as otherwise set forth herein, the Series
G Preferred Stock may be issued in fractions of a share which shall entitle the
holder, in proportion to such holder's fractional shares, to exercise voting
rights, receive dividends, participate in distributions and to have the benefit
of all other rights of holders of shares of Series G Preferred Stock.

SECTION 12. Notice. Any notice or request made to the Corporation in connection
with the Series G Preferred Stock shall be given, and shall conclusively be
deemed to have been given and received three Business Days following deposit
thereof in writing, in the U.S. mails, certified mail, return receipt requested,
duly stamped and addressed to the Corporation, to the attention of its General
Counsel, at its principal executive offices (which shall be deemed by the
address most recently provided to the SEC at its principal executive offices for
so long as the Corporation is required t file reports with the SEC).

                               * * * * * * * * * *

         IN WITNESS WHEREOF, said American Realty Investors, Inc. has caused
this Certificate of Designation, Preferences and Rights of 10% Series G
Cumulative Convertible Preferred Stock to be duly executed by its President and
attested to by its Secretary this ______ day of ______________, 2002.

                                       AMERICAN REALTY INVESTORS, INC.

                                       By:
                                          --------------------------------------
                                       Printed Name:
                                       Title: President
ATTEST:

-----------------------------------
Printed Name: Robert A. Waldman
Title:  Secretary

                                      C-10

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