B Y - L A W S

                                       of

                         CAROLINA POWER & LIGHT COMPANY

                             Raleigh, North Carolina


                           (As Amended July 12, 2000)

                            Meetings of Stockholders
                            ------------------------


         Section 1. The annual meeting of the stockholders of the Company shall
be held at the principal office of the Company, on the second Wednesday of May
in each year, if not a legal holiday, and if a legal holiday, then on the next
day not a legal holiday, at ten o'clock A.M., or at such other date, or hour, or
at such other place within or without the State of North Carolina as stated in
the notice of the meeting as the Board of Directors may determine.

         Section 2. Special meetings of the stockholders of the Company may be
held upon call by a majority of the Board of Directors or of the Executive
Committee, or by the Chairman of the Board, or by the President of the Company,
at the principal office of the Company or at such other place within or without
the State of North Carolina, and at such time, as may be stated in the call and
notice.

         Section 3. Written notice of the time and place of every meeting of
stockholders may be given, and shall be deemed to have been duly given, by
mailing the same at least ten, but not more than sixty, days prior to the
meeting, to each stockholder of record, entitled to vote at such meeting, and
addressed to him at his address as it appears on the records of the Company,
with postage thereon prepaid. Notice may also be given by any other lawful
means.

         Section 4. In accordance with Section 55-7-20 of the General Statutes
of North Carolina, the Company, or an officer having charge of the record of
stockholders of the Company, shall prepare a list of stockholders which shall be
available for inspection by stockholders, or their agents or attorneys.

         Section 5. The holders of a majority of the stock of the Company having
voting powers must be present in person or represented by proxy at each meeting
of the stockholders to constitute a quorum; absent such quorum, the meeting may
be adjourned by a majority of shares voting on a motion to adjourn. If such
adjournment is for less than thirty days, notice other than announcement at the
meeting need not be given. At any adjourned meeting at which a quorum shall be
present or represented, any business may be transacted which might have been
transacted at the original meeting.
<PAGE>

         Section 6. (a) When a quorum is present at any meeting, the vote of the
holders of a majority of the outstanding stock having voting power present in
person or represented by proxy shall decide any question brought before such
meeting, unless the question is one upon which by express provision of any
applicable statute or of the Charter a different vote is required, in which case
such express provision shall govern and control the decision of such question.

         Section 6. (b) To be properly brought before a meeting of shareholders,
business must be (i) specified in the notice of meeting (or any supplement
thereto) given by or at the direction of the Board of Directors, (ii) otherwise
properly brought before the meeting by or at the direction of the Board of
Directors or (iii) otherwise properly brought before an annual meeting by a
shareholder of the Company who was a shareholder of record at the time of the
giving of notice provided for in Section 3 of these By-Laws and who is entitled
to vote at the meeting. In addition to any other applicable requirements, for
business to be properly brought before an annual meeting by a shareholder, the
shareholder must give timely notice of the proposal in writing to the Secretary
of the Company. To be timely, a shareholder's notice must be received by the
Secretary of the Company at the principal executive offices of the Company not
later than the close of business on the 60th day prior to the first anniversary
of the immediately preceding year's annual meeting. In no event shall the public
announcement of an adjournment or postponement of an annual meeting or the fact
that an annual meeting is held after the anniversary of the preceding annual
meeting commence a new time period for the giving of a shareholder notice as
described above. A shareholder's notice shall set forth as to each matter the
shareholder proposes to bring before the meeting (i) a brief description of the
business desired to be brought before the annual meeting, including the complete
text of any resolutions to be presented at the annual meeting with respect to
such business, (ii) the reasons for conducting such business at the annual
meeting, (iii) the name and address of record of the shareholder and the
beneficial owner, if any, on whose behalf the proposal is made, (iv) the class
and number of shares of the Company which are owned by the shareholder and such
beneficial owner, (v) a representation that the shareholder is a holder of
record of shares of the Company entitled to vote at such meeting and intends to
appear in person or by proxy at the meeting to propose such business, and (vi)
any material interest of the shareholder and such beneficial owner in such
business.

         In the event that a shareholder attempts to bring business before a
meeting without complying with the procedures set forth in this Section 6(b),
such business shall not be transacted at such meeting. The Chairman of the Board
of Directors, or any other individual presiding over the meeting pursuant to
Section 8 of these By-Laws, shall have the power and duty to determine whether
any proposal to bring business before the meeting was made in accordance with
the procedures set forth in this Section 6(b), and, if any business is not
proposed in compliance with this Section, to declare that such defective
proposal shall be disregarded and that such proposed business shall not be
transacted at such meeting.

         Section 7. The Board of Directors in advance of any meeting of
stockholders may appoint two voting inspectors to act at any such meeting or
adjournment thereof. If they fail to make such appointment, or if their
appointees or any of them fail to appear at the meeting of stockholders, the
chairman of the meeting may appoint such inspectors or any inspector to act at
that meeting.

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<PAGE>

         Section 8. Meetings of the stockholders shall be presided over by the
Chairman of the Board of Directors, or, if he is not present, the President, or,
if the President is not present, a Vice President, or if neither of said
officers is present, by a chairman pro tem to be elected at the meeting. The
Secretary of the Company shall act as secretary of such meetings, if present,
but if not present, some person shall be appointed by the presiding officer to
act during the meeting.

         Section 9. Each holder of Preferred Stock and/or Common Stock shall at
every meeting of the stockholders be entitled to one vote in person or by proxy
for each share of such stock held by such stockholder. Except where the transfer
books of the Company have been closed or a date has been fixed as a record date
for the determination of its stockholders entitled to vote, no share of stock
shall be voted at any election for directors which has been transferred on the
books of the Company within twenty days next preceding such election of
directors.


                       Directors and Meetings of Directors
                       -----------------------------------

         Section 10. (a) The number of directors of the Company shall not be
less than eleven (11) nor more than fifteen (15). The authorized number of
directors, within the limits above specified, shall be determined by the
affirmative vote of a majority of the whole board given at any regular or
special meeting of the Board of Directors, provided that, the number of
directors shall not be reduced to a number less than the number of directors
then in office unless such reduction shall become effective only at and after
the next ensuing meeting of the shareholders for the election of directors. This
subsection (a) was adopted by the stockholders of the Company.

          (b) The directors shall appoint from among their number a Chairman,
who shall serve at the pleasure of the Board. Members of the Board of Directors
of the Company who are full-time employees of the Company shall retire from the
Board upon their retirement from employment or upon attaining the age of 65
years, whichever occurs first; provided, however, that the Chairman of the
Board, if then a full-time employee of the Company, shall be eligible to
continue as a member of the Board until the first Annual Meeting of Shareholders
occurring at least one year after retirement from employment or after attaining
the age of 65 years, whichever occurs first, if so requested to remain by the
Board. Those persons who are not employed full-time by the Company shall not be
eligible for election as a Director in any calendar year (or subsequent year) in
which he or she has reached or will reach the age of 71 years, unless requested
by the Chairman of the Board and approved on an annual basis by the full Board.
Otherwise, any Director who reaches the age of 71 during a term of office shall
resign as of the first day of the month so following unless otherwise determined
by the Board.

         (c) The election of directors shall be held at the annual meeting of
stockholders. The directors, other than those who may be elected under
circumstances specified in the Company's Restated Charter, as it may be amended,
by the holders of any class of stock having a preference over the Common Stock
as to dividends or in liquidation, shall be classified into three classes, as
nearly equal in number as possible. The initial terms of directors first elected
or re-elected by the stockholders on the date this amendment to the By-Laws is
adopted shall be for the following terms of office:

                                      -3-
<PAGE>

                    Class I:              One year
                    Class II:             Two years
                    Class III:            Three years

and until their successors shall be elected and shall qualify. Upon the
expiration of the initial term specified for each class of directors their
successors shall be elected for three-year terms or until such time as their
successors shall be elected and qualified. In the event of any increase or
decrease in the number of directors, the additional or eliminated directorships,
shall be classified or chosen so that all classes of directors shall remain or
become equal in number, as nearly as possible. This subsection (c) was adopted
by the stockholders of the Company.

         (d) Subject to the rights of holders of any securities or obligations
of the Company conferring special rights regarding election of directors,
nominations for the election of directors shall be made by the Board of
Directors or by any shareholder entitled to vote in elections of directors;
provided however, that any shareholder entitled to vote in the election of
directors may nominate one or more persons for election as directors only at an
annual meeting and if written notice of such shareholder's intent to make such
nomination or nominations has been received, either by personal delivery or by
United States registered or certified mail, postage prepaid, by the Secretary of
the Company at the principal executive offices of the Company not later than the
close of business on the 60th day prior to the first anniversary of the
immediately preceding year's annual meeting. In no event shall the public
announcement of an adjournment or postponement of an annual meeting or the fact
that an annual meeting is held after the anniversary of the preceding annual
meeting commence a new time period for the giving of a shareholder's notice as
described above. Each notice shall set forth (i) the name and address of record
of the shareholder who intends to make the nomination, the beneficial owner, if
any, on whose behalf the nomination is made and of the person or persons to be
nominated, (ii) the class and number of shares of the Company that are owned by
the shareholder and such beneficial owner, (iii) a representation that the
shareholder is a holder of record of shares of the Company 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, (iv) a description of
all arrangements, understandings or relationships between the shareholder 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
shareholder, and (v) such other information regarding each nominee proposed by
such shareholder as would be required to be disclosed in solicitations of
proxies for election of directors in an election contest, or is otherwise
required to be disclosed, pursuant to the proxy rules of the Securities and
Exchange Commission, had the nominee been nominated, or intended to be
nominated, by the Board of Directors, and shall include a consent signed by each
such nominee to serve as a director of the Company if so elected. In the event
that a shareholder attempts to nominate any person without complying with the
procedures set forth in this Section 10.(d), such person shall not be nominated
and shall not stand for election at such meeting. The Chairman of the Board of
Directors, or any other individual presiding over the meeting pursuant to
Section 8 of these By-Laws, shall have the power and duty to determine whether a
nomination proposed to be brought before the meeting was made in accordance with
the procedures set forth in this Section 10.(d) and, if any proposed nomination
is not in compliance with this Section 10.(d), to declare that such defective
proposal shall be disregarded.

                                      -4-
<PAGE>

         Section 11. In case of any vacancy in the number of directors through
death, resignation, disqualification, increase in the number of directors or
other cause, the remaining directors present at the meeting, by affirmative vote
of a majority thereof, though less than a quorum, may elect a successor to hold
office until the next shareholders' meeting at which directors are elected and
until the election of his successor.

         Section 12. Regular meetings of the Board of Directors shall be held at
times fixed by resolution of the Board, and special meetings may be held upon
the written call of the Executive Committee, or by the Chairman of the Board, or
by the President or by any two directors; and the Secretary or officer
performing his duties shall give reasonable notice of all meetings of directors;
provided, that a meeting may be held without notice immediately after the annual
election, and notice need not be given of regular meetings held at times fixed
by resolution of the Board. Meetings may be held at any time without notice if
all the directors are present, or if those not present waive notice either
before or after the meeting. All regular and special meetings shall be held at
the principal offices of the Company, provided that the Board, from time to
time, may order that any meeting be held elsewhere within or without the State
of North Carolina. A majority of the whole Board of Directors shall constitute a
quorum, and the act of a majority of the directors present at a meeting at which
a quorum is present shall be the act of the Board of Directors, unless a greater
proportion is required by the Charter.

         Section 13. The business and affairs of the Company shall be managed by
its Board of Directors, which may exercise all such powers of the Company and do
all such lawful acts and things which are not by law or by the Charter directed
or required to be exercised or done by the stockholders; provided, however, that
the officers of the Company shall, without prior action of the Board of
Directors, perform all acts and things incidental to the usual and ordinary
course of the business in which the Company is engaged as hereinafter provided
by the By-Laws or as may hereafter be delegated by the Board of Directors. A
majority of the Board of Directors may create one or more Committees and appoint
other members of the Board of Directors to serve on such Committees. Each such
Committee shall have two or more members, who serve at the pleasure of the Board
of Directors. Any such Committee may exercise authority over any matters except
those matters described in Section 55-8-25(e) of the General Statutes of North
Carolina.

         Section 14. A majority of the whole Board of Directors, present at any
meeting held after their election in each year, may appoint an Executive
Committee, to consist of three or more directors, which Committee shall have and
may exercise, during the intervals between meetings of the Board, by a majority
vote of those present at a meeting, all the powers vested in the Board, except
the following matters as more fully described in Section 55-8-25(e) of the
General Statutes of North Carolina:

         - Authorize distributions;
         - Approve or propose to shareholders action that is by law required to
           be approved by the shareholders;

                                      -5-
<PAGE>


         - Fill vacancies on the Board of Directors or on any of its Committees;
         - Amend the Company's Articles of Incorporation pursuant to N.C.G.S.
           s.55-10-102;
         - Adopt, amend or repeal the Company's By-Laws;
         - Approve a plan of merger not requiring shareholder approval;
         - Authorize or approve reacquisition of shares, except according to a
           formula or method prescribed by the Board of Directors; or
         - Authorize or approve the issuance or sale or contract for sale of
           shares, or determine the designation and relative rights,
           preferences, and limitations of a class or series of shares.

A majority of the whole Board of Directors present at any meeting shall have the
power at any time to change the membership of such Committee and to fill
vacancies in it. The Executive Committee may make rules for the conduct of its
business. A majority of the members of said Committee shall constitute a quorum.
The Chairman of the Executive Committee shall be appointed by the Board of
Directors from the membership of the Executive Committee.

                                     Notices
                                     -------

         Section 15. Notices to directors or stockholders shall be in writing
and given personally or by mail to the directors and by mail to the stockholders
at their addresses appearing on the books of the Company; provided, however,
that no notice need be given any stockholder or director whose address is
outside of the United States. Notice by mail shall be deemed to be given at the
time when the same shall be mailed. Notice to directors may also be given
verbally, or by telegram, or cable, and any such notice shall be deemed to be
given when delivered to and accepted for transmittal by an office of the
transmitting company.

         Section 16. Whenever any notice is required to be given under the
provisions of applicable statutes or of the Charter or of these By-Laws, a
waiver thereof in writing, signed by the person or persons entitled to said
notice, whether before or after the time stated therein, shall be deemed
equivalent to the giving of such notice in apt time.

              Officers, Their Authority, and Their Terms of Office
              ----------------------------------------------------

        Section 17. The Board of Directors shall annually at its first meeting
held after the Annual Meeting of Stockholders, or as soon thereafter as may be
practical, elect the officers of the Company, who shall consist of a President,
one or more Senior Executive Vice Presidents and Executive Vice Presidents, two
or more Senior Vice Presidents, three or more Vice Presidents, a Secretary, a
Treasurer, a Controller and such other officers or assistant officers and agents
as may be appointed by the Board of Directors. At other times, the Board of
Directors or any Committee to which it delegates the authority to do so may
elect officers to fill any new office or a vacancy in any office occurring by
virtue of the incumbent's death, resignation, removal or otherwise at any duly
convened meeting of the Board or of the Committee. The officer shall serve for
the period specified or until a successor is chosen. From time to time the Board
of Directors may also elect a Vice Chairman who shall have such duties as
described herein and as may from time to time be directed. Any two offices may
be held by the same person, but no officer may act in more than one capacity
where

                                      -6-
<PAGE>

action of two or more officers is required. The Vice Chairman, if any, of the
Board of Directors shall be chosen from among the Directors, but the other
officers need not be Directors of the Company

         Section 18. The Board of Directors shall appoint the Chief Executive
Officer who shall be either the Chairman, the Vice Chairman or the President of
the Company. In the event the Chief Executive Officer is unavailable at the time
for needed action, or in other circumstances as directed by the Chief Executive
Officer, then the Chairman, the Vice Chairman, if any, or the President if there
is no Vice Chairman, who is not then serving as Chief Executive Officer, shall
be the next officer in line of authority to perform the duties of Chief
Executive Officer. If the Chairman, the Vice Chairman and the President should
be unavailable at the time for needed action, or in other circumstances as
directed by the Chief Executive Officer, then the next officer in line of
authority to perform the duties of the Chief Executive Officer shall be a Senior
Executive Vice President or Executive Vice President as designated by the Chief
Executive Officer.

          Section 19. Any officer may be reassigned duties by appropriate
members of Senior Management at any time. Any officer may be removed from office
at any time by the Board of Directors, or by any Committee to which it delegates
the authority to remove officers from office, without prejudice to the rights of
the officer removed under an employment agreement in writing previously duly
authorized by the Board of Directors or an Executive Committee of the Board of
Directors. Any officer may resign at any time by giving written notice to the
Board of Directors, the President or any other officer of the Company. Such
resignation shall take effect at the time specified therein, and, unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective.

         Section 20. The Board of Directors or the Chief Executive Officer of
the Company may require the Treasurer and any other officer, employee or agent
of the Company to give bond, in such sum and with such surety or sureties as
either shall determine, for the faithful discharge of their duties.

         Section 21. Unless otherwise provided by the Board of Directors, the
Company's Chief Executive Officer is vested with full power, authority, and the
duty, to perform in person, and by delegation of authority to subordinate
officers and employees of the Company, all acts and things deemed by him to be
reasonably necessary or desirable to direct, handle, and manage, and in general
carry on the Company's business transactions authorized by its Charter, in
respect to all matters except those which by law must be performed by the
Directors, including but not limited to the following: (a) constructing and
contracting for the construction of generating plants authorized by the
Directors; (b) operating and maintaining generating plants and appurtenant
works; (c) constructing, maintaining, and operating substations, lines and all
other facilities, appurtenant to the transmission, distribution and delivery of
electricity; (d) acquiring by direct purchase, gift, exchange, or by
condemnation, all rights of way, easements, lands, and estates in lands, flowage
and water rights; (e) acquiring, maintaining and disposing of tools, machinery,
appliances, materials, vehicles, and other appurtenant facilities; (f)
employing, and fixing compensation of, Company personnel (except that the
compensation of the Chief Executive Officer and the other Company employees who
are members of the Board shall be fixed by the Board of Directors) in compliance
with any procedures established by the Board; (g) borrowing money from time to
time for terms not exceeding

                                      -7-
<PAGE>
three years, and in connection therewith pledging the credit of the Company and
executing unsecured loan agreements, promissory notes, and other desirable
instruments evidencing obligations to the lender; (h) fixing the rates and
conditions of service and dealing with regulatory bodies in respect thereto, and
promoting the use of electricity by means of sales representatives, advertising
and otherwise; (i) collecting and keeping accounts of all monies due the Company
and making and preserving records of the Company's properties and accounts and
fiscal affairs; and (j) possessing, preserving, and protecting all property,
assets, and interests of the Company and instituting, prosecuting, intervening
in, and defending actions and proceedings in any court or before any
administrative agency or tribunal affecting the Company's interests and welfare.

                              Certificates of Stock
                              ---------------------

         Section 22. Every holder of stock in the Company shall be entitled to
have a certificate or certificates certifying the number of fully paid shares
owned by him in the Company which shall be in form consistent with law and with
the Charter of the Company and as shall be approved by the Board of Directors.
The stock certificates shall be signed by: 1) either the Chairman of the Board
of Directors or the President, and 2) either the Secretary or Treasurer. Such
signatures may be facsimile or other similar method.

         Section 23. All transfers of stock of the Company shall be made upon
its books by authority of the holder of the shares or of his legal
representative, and before a new certificate is issued the old certificate shall
be surrendered for cancellation, provided that in case any certificate is lost,
stolen or destroyed, a new certificate therefor may be issued pursuant to the
provisions of Section 24 hereof.

         Section 24. No certificate of shares of stock of the Company shall be
issued in place of any certificate alleged to have been lost or stolen or
destroyed, except upon the approval of the Board of Directors who may require
delivery to the Company of a bond in such sum as it may direct and subject to
its approval as indemnity against any claim in respect to such lost or stolen or
destroyed certificate; provided that the Board of Directors may delegate to the
Company's Transfer Agent and Registrar authority to issue and register,
respectively, from time to time without further action or approval of the Board
of Directors, new certificates of stock to replace certificates reported lost,
stolen or destroyed upon receipt of an affidavit of loss and bond of indemnity
in form and amount and with corporate surety satisfactory to them in each
instance protecting the Company and them against loss. Such legal evidence of
such loss or theft or destruction shall be furnished to the Board of Directors
as may be required by them.

         Section 25. The Board of Directors shall have power and authority to
make all such rules and regulations as it may deem expedient concerning the
issue, transfer, conversion and registration of certificates for shares of the
capital stock of the Company, not inconsistent with the laws of North Carolina,
the Charter of the Company and these By-Laws. The Board of Directors is
authorized to appoint one or more transfer agents and registrars for the capital
stock of the Company.

         Section 26. The Board of Directors shall have power to close the stock
transfer books or in lieu thereof to fix record dates as authorized by law.

                                      -8-
<PAGE>

                                     General
                                     -------

         Section 27. Subject to the provisions of the applicable statutes and
the Charter of the Company, dividends, either cash or stock, upon the capital
stock of the Company may be declared by the Board of Directors at any meeting
thereof.

         Section 28. Deeds, bonds, notes, mortgages and contracts of the Company
may be executed on behalf of the Company by the President, or a Vice President,
or any one of such other persons as shall from time to time be authorized by the
Board of Directors, and when necessary or appropriate may be attested or
countersigned by the Secretary or an Assistant Secretary, or the Treasurer or an
Assistant Treasurer. The corporate seal of the Company may be affixed to deeds,
bonds, notes, mortgages, contracts or stock certificates by an appropriate
officer of the Company by impression thereon, or, by order of an appropriate
officer of the Company, a facsimile of said seal may be affixed thereto by
engraving, printing, lithograph or other method.

         Section 29. The monies of the Company shall be deposited in the name of
the Company in such bank or banks or trust company or trust companies as the
Treasurer, with approval of the Chief Executive Officer, shall from time to time
select, and shall be drawn out only by checks or other orders signed by persons
designated by resolution by the Board of Directors.

         Section 30. As and when used in any of the foregoing By-Laws the words
"stockholder" and "stockholders" shall be deemed and held to be synonymous with
the words "shareholder" and "shareholders", and the word "stock" shall be deemed
and held to be synonymous with the words "share" or "shares", respectively, as
used in Chapter 55 of the General Statutes of North Carolina.

                              Amendment of By-Laws
                              --------------------


         Section 31. The Board of Directors shall have power from time to time
to adopt, amend, alter, add to, and repeal By-Laws for the Company by
affirmative vote of a majority of the directors then holding office, provided,
however, that the By-Laws may not be amended by the Board of Directors to
require more than a majority of the voting shares for a quorum at a
stockholder's meeting, or more than a majority vote at such meeting, except
where higher percentages are required by law. Any By-Laws so made or any
provisions thereof may be altered or repealed by vote of the holders of a
majority of the total number of shares of the Company then issued and
outstanding and entitled to vote thereon at any annual stockholders' meeting.
Additionally, any By-Law adopted, amended or repealed by the stockholders may
not be readopted, amended or repealed by the Board of Directors unless the
Charter or a By-Law adopted by the stockholders authorizes the Board of
Directors to adopt, amend or repeal that particular By-Law or the By-Laws
generally.

                       Indemnity of Officers and Directors
                       -----------------------------------

         Section 32. (a) The Company shall reimburse or indemnify any past,
present or future officer or director of the Company for and against such
liabilities and expenses as are authorized by (1) a resolution adopted by the
Company's stockholders at a special meeting held on December 31, 1943, which is
made a part hereof as though incorporated herein, or (2) by Sections 55-8-54,
55-8-55, 55-

                                      -9-
<PAGE>

8-56 and 55-8-57 of the General Statutes of North Carolina. Persons serving as
officers or directors of the Company or serving in any such capacity at the
request of the Company in any other corporation, partnership, joint venture,
trust or other enterprise shall be provided reimbursement and indemnification by
the Company to the maximum extent allowed hereunder or under applicable law,
including without limitation Sections 55-8-54, 55-8-55, 55-8-56 and 55-8-57 of
the General Statutes of North Carolina.

         (b) In addition to the reimbursement and indemnification provisions set
forth above, any person who at any time serves or has served (1) as an officer
or director of the Company, or (2) at the request of the Company as an officer
of director (or in any position of similar authority, by whatever title known)
of any other corporation, partnership, joint venture, trust or other enterprise,
or (3) as an individual trustee or administrator under any employee benefit
plan, shall have a right to be indemnified by the Company to the fullest extent
permitted by law against (i) all reasonable expenses, including attorney's fees,
actually and necessarily incurred by him in connection with any pending,
threatened or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, and whether or not brought by the Company or on
behalf of the Company in a derivative action, seeking to hold him liable by
reason of or arising out of his status as such or his activities in any of the
foregoing capacities, and (ii) payments made by him in satisfaction of any
judgement, money decree, fine, penalty or settlement for which he may have
become liable in any such action, suit or proceeding; provided, however, that
the Company shall not indemnify any person against liability or litigation
expense he may incur on account of his activities which were at the time taken
known or believed by him to be clearly in conflict with the best interests of
the Company.

         (c) The Board of Directors shall take all action as may be necessary or
appropriate to authorize the Company to pay all amounts required under these
Sections 32(a),(b) and (c) of the By-Laws including, without limitation and to
the extent deemed to be appropriate, necessary, or required by law (1) making a
good faith evaluation of the manner in which the claimant for indemnity acted
and of the reasonable amount of indemnity due such individual, or (2) making
advances of costs and expenses, or (3) giving notice to, or obtaining approval
by, the shareholders of the Company.

         (d) Any person who serves or has served in any of the aforesaid
capacities for or on behalf of the Company shall be deemed to be doing or to
have done so in reliance upon, and as consideration for, the rights of
reimbursement and indemnification provided for herein. Such rights of
reimbursement and indemnification shall inure to the benefit of the legal
representatives of such individuals, shall include amounts paid in settlement
and shall not be exclusive of any other rights to which such individuals shall
be entitled apart from the provisions of this Section.

         (e) The Company may, in its sole discretion, wholly or partially
indemnify and advance expenses to any employee or agent of the Company to the
same extent as provided herein for officers and directors.

                                      -10-