B Y - L A W S


                                       of


                              PROGRESS ENERGY, INC.


                             Raleigh, North Carolina


                           (As Amended March 17, 2004)


<PAGE>



                                TABLE OF CONTENTS

                                    ARTICLE I
                            Meetings of Shareholders

Section 1.        Place of Meetings..........................................1
Section 2.        Annual Meetings............................................1
Section 3.        Special Meetings...........................................1
Section 4.        Notice of Meetings.........................................1
Section 5.        List of Shareholders.......................................2
Section 6.        Quorum; Proxies............................................2
Section 7.        Voting of Shares...........................................2
Section 8.        Inspectors.................................................2
Section 9.        Conduct of Meetings........................................3
Section 10.       Business Proposed by a Shareholder.........................3
Section 11.       Nominations by Shareholders................................4

                                   ARTICLE II
                       Directors and Meetings of Directors

Section 12.       Number and Election of Directors...........................5
Section 13.       Vacancies..................................................6
Section 14.       Meetings...................................................6
Section 15.       Telephone Meetings.........................................6
Section 16.       Actions Without Meetings...................................6
Section 17.       General Powers.............................................7
Section 18.       Committees.................................................7

                                   ARTICLE III
                                     Notices

Section 19.       Notice Requirements........................................8
Section 20.       Waiver of Notice...........................................9

                                   ARTICLE IV
              Officers, Their Authority, and Their Terms of Office

Section 21.       Officers of the Corporation................................9
Section 22.       Chief Executive Officer....................................9
Section 23.       Removal and Resignation of Officers.......................10
Section 24.       Bond......................................................10


                                      (i)
<PAGE>

                                    ARTICLE V
                                  Capital Stock

Section 25.       Certificated and Uncertificated Shares....................10
Section 26.       Stock Transfer Books and Transfer of Shares...............11
Section 27.       Holder of Record..........................................11
Section 28.       Record Date...............................................12
Section 29.       Lost, Destroyed or Mutilated Certificates.................12
Section 30.       Transfer Agent and Registrar; Regulations.................12

                                   ARTICLE VI
                                     General

Section 31.       Distributions.............................................13
Section 32.       Deeds, Bonds, and Contracts...............................13
Section 33.       Deposits..................................................13
Section 34.       Interpretation............................................13

                                   ARTICLE VII
                       Indemnity of Officers and Directors

Section 35.       Indemnification and Advancement of Expenses...............13

                                  ARTICLE VIII
                                Emergency By-Laws

Section 36.       Definitions...............................................15
Section 37.       Applicability.............................................15
Section 38.       Board of Directors........................................16
Section 39.       Appointment of Officers...................................16
Section 40.       Amendments................................................16


                                      (ii)
<PAGE>


                                  B Y - L A W S


                                       of


                              PROGRESS ENERGY, INC.


                             Raleigh, North Carolina


                            As Amended March 17, 2004




                                    ARTICLE I

                            Meetings of Shareholders

     Section 1. Place of Meetings.

     All  meetings  of  the   shareholders   of  Progress   Energy,   Inc.  (the
"Corporation"),  shall be held at such place, either within or without the State
of North  Carolina,  as may from time to time be fixed by the Board of Directors
of the Corporation (the "Board").

     Section 2. Annual Meetings.

     Beginning in the year 2000, the annual meeting of the  shareholders  of the
Corporation  shall be held 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, and at such place as stated
in the notice of the meeting as the Board of Directors may determine. The annual
meeting of shareholders for 1999 shall be held on the date and time specified by
the Board of Directors.

     Section 3. Special Meetings.

     Special  meetings of the  shareholders  of the Corporation 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  Corporation,  at such
time as may be stated in the call and notice.


<PAGE>

     Section 4. Notice of Meetings.

     Written notice of the time and place of every meeting of  shareholders  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
shareholder of record entitled to vote at such meeting,  and addressed to him at
his  address as it  appears on the  records  of the  Corporation,  with  postage
thereon prepaid. Notice may also be given by any other lawful means.

     Section 5. List of Shareholders.

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

     Section 6. Quorum; Proxies.

     Shares  entitled  to vote as a separate  voting  group may take action on a
matter at a meeting only if a quorum of that voting group exists.  A majority of
the votes  entitled to be cast on the matter by the voting group  constitutes  a
quorum of the voting group on that matter.  Once a share is represented  for any
purpose at a meeting, it is deemed present for quorum purposes for the remainder
of the meeting and for any  adjournment of that meeting unless a new record date
is or must be set for that adjourned meeting.  In the absence of a quorum at the
opening of any  meeting of  shareholders,  the  meeting  may be  adjourned  by a
majority of shares voting on a motion to adjourn.  Notice of  adjournment  other
than  announcement  at the meeting need not be given unless a new record date is
or must be set for that adjourned  meeting.  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.

     Section 7. Voting of Shares.

     (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 Articles of  Incorporation  a different  vote is required,  in
which case such express  provision shall govern and control the decision of such
question.

     (b) Unless otherwise  provided by law or the Articles of Incorporation,  at
every meeting of the shareholders each shareholder shall be entitled to one vote
in  person  or by proxy  for each  share of such  stock  held of  record by such
shareholder. Except where the transfer books of the Corporation have been closed
or a date  has  been  fixed  as a  record  date  for  the  determination  of its
shareholders  entitled to vote, no share of stock shall be voted at any election
for directors which has been transferred on the books of the Corporation  within
twenty days next preceding such election of directors.

                                       2
<PAGE>

     Section 8. Inspectors.

     The Board of  Directors  in advance  of any  meeting  of  shareholders  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  shareholders,  the chairman of the meeting may
appoint such inspectors or any inspector to act at that meeting.

     Section 9. Conduct of Meetings.

     Meetings of the shareholders  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 Corporation 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.  The  officer of the  Corporation  presiding  over the  meeting of
shareholders  shall  have all the  powers  and  authority  vested  in  presiding
officers by law or practice,  without  restriction,  as well as the authority to
conduct an orderly meeting and to impose reasonable limits on the amount of time
taken up in remarks by any one shareholder.

     Section 10. Business Proposed by a Shareholder.

     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
Corporation  who was a shareholder of record at the time of the giving of notice
provided  for in Section 4 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
Corporation.  To be timely,  a  shareholder's  notice  must be  received  by the
Secretary  of  the  Corporation  at  the  principal  executive  offices  of  the
Corporation  not later than the close of  business  on the 60th day prior to the
first anniversary of the immediately preceding year's annual meeting;  provided,
however,  that  with  respect  to the  annual  meeting  to be  held in  2000,  a
shareholder's notice must be received by the Secretary of the Corporation at the
principal  executive  offices of the Corporation no later than December 3, 1999.
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 Corporation  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 Corporation  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.

                                       3
<PAGE>

     In the event that a shareholder attempts to bring business before a meeting
without  complying  with the  procedures  set  forth in this  Section  10,  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 9 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  10,  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 11. Nominations by Shareholders.

     Subject to the rights of holders of any  securities or  obligations  of the
Corporation   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 Corporation at the principal  executive offices of the Corporation not later
than the close of  business  on the 120th  calendar  day  before the date of the
Company's  proxy  statement  released to  shareholders  in  connection  with the
previous year's annual meeting.  In no event shall the public announcement of an
adjournment or postponement of an 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 Corporation  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 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,  (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  Corporation  if so
elected. In the event that a shareholder attempts to nominate any person without
complying  with the  procedures  set forth in this Section 11, 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  9 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 11 and, if any
proposed  nomination is not in compliance  with this Section 11, to declare that
such defective proposal shall be disregarded.


                                       4
<PAGE>

                                   ARTICLE II

                       Directors and Meetings of Directors

     Section 12. Number and Election of Directors.

     (a) The  number  of  directors  of the  Corporation  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.

     (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 Corporation who are full-time employees of the Corporation 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  Corporation,  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 Corporation 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 73  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 73 during a term of
office  shall  resign  as of the  first  day of the  month so  following  unless
otherwise determined by the Board.

     (c)  Except for the  election  of the  initial  directors  whose  terms are
classified  pursuant to this By-Law,  the election of directors shall be held at
the annual meeting of shareholders.  The directors,  other than those who may be
elected under  circumstances  specified in the Articles of  Incorporation 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,  Class I,
Class II and Class III, as nearly equal in number as possible.  The directors of
Class I shall originally be elected for a term expiring at the annual meeting of
shareholders  of the  Corporation  to be held in 2002; the directors of Class II
shall  originally  be  elected  for a term  expiring  at the  annual  meeting of
shareholders  of the  Corporation to be held in 2000; and the directors of Class
III shall  originally  be elected for a term  expiring at the annual  meeting of
shareholders  of the Corporation to be held in 2001. The directors of each class
shall hold office until their  respective  successors are elected and qualified,
or until  their  earlier  resignation  or  removal.  At each  annual  meeting of
shareholders of the  Corporation  beginning in 2000, the successors to the class
of directors  whose term expires at such meeting shall be identified as being of
the same class of directors they succeed and shall be elected to hold office for
a term expiring at the third succeeding annual meeting of shareholders. When the
number of directors is changed, any newly-created  directorships or any decrease
in  directorships  shall be so  apportioned  among the  classes  by the Board of
Directors  as to make all  classes  as  nearly  equal  in  number  as  possible;
provided,  however, that no decrease in the number of directors shall shorten or
terminate the term of any incumbent director.

                                       5
<PAGE>

     Section 13. Vacancies.

     Subject  to  contrary  provisions  in  the  Articles  of  Incorporation  or
elsewhere  in these  By-Laws,  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 14. Meetings.

     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  Corporation,  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 Articles of Incorporation.

     Section 15. Telephone Meetings.

     Members of the Board or any committee may  participate  in a meeting of the
Board or such  committee  by means of a  conference  telephone or other means of
communications whereby all directors  participating may simultaneously hear each
other  during the  meeting,  and  participation  by such means shall  constitute
presence in person at such meeting.

     Section 16. Actions Without Meetings.

     Any action  that may be taken at a meeting  of the Board or of a  committee
may be taken  without  a meeting  if a consent  in  writing,  setting  forth the
action,  shall be  signed,  either  before or after such  action,  by all of the
directors  or all of the  members  of the  committee,  as the case may be.  Such
consent shall have the same force and effect as a unanimous vote.

                                       6
<PAGE>

     Section 17. General Powers.

     The business and affairs of the  Corporation  shall be managed by its Board
of Directors,  which may exercise all such powers of the  Corporation and do all
such  lawful  acts  and  things  which  are  not by law  or by the  Articles  of
Incorporation  directed or required to be exercised or done by the shareholders;
provided,  however,  that the officers of the Corporation  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 Corporation is engaged as
hereinafter  provided by the By-Laws or as may  hereafter  be  delegated  by the
Board of Directors.

     Section 18. Committees.

     (a) 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. Each committee may make rules for the conduct of its
business. A majority of the members of such committee shall constitute a quorum.

     (b) 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;
     -    Fill vacancies on the Board of Directors or on any of its Committees;
     -    Amend  the  Corporation's   Articles  of  Incorporation   pursuant  to
          N.C.G.S.ss.55-10-02;
     -    Adopt, amend or repeal the Corporation'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,  except that the Board
          of Directors may authorize a committee (or a senior executive  officer
          of the Corporation) to do so within limits specifically  prescribed by
          the Board of Directors.

     (c) 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 Chairman of the Executive Committee shall be appointed
by the Board of Directors from the membership of the Executive Committee.

                                       7
<PAGE>

                                   ARTICLE III

                                     Notices

     Section 19. Notice Requirements.

     (a)  Notice  may be  communicated:  in  person;  by  telephone,  telegraph,
teletype,  or  other  form of  wire  or  wireless  communication,  by  facsimile
transmission;  or by mail or private carrier.  If these forms of personal notice
are impracticable as to one or more persons,  notice may be communicated to such
persons  by  publishing  notice  in  a  newspaper  in  the  county  wherein  the
Corporation has its principal place of business in North Carolina,  or if it has
no principal place of business in North Carolina,  the county wherein it has its
registered office in North Carolina; or by radio,  television,  or other form of
public broadcast communication.

     (b) Written notice is effective at the earliest of the following:

          (i)  When received;

          (ii) Five  days  after its  deposit  in the  United  States  mail,  as
               evidenced by the postmark or based on the affidavit of the person
               depositing the notice, if mailed with postage thereon prepaid and
               correctly addressed;

          (iii)On the date shown on the return  receipt,  if sent by  registered
               or certified  mail,  return  receipt  requested,  signed by or on
               behalf of the addressee.  Anyone accepting the mail at the stated
               address and signing the receipt shall be conclusively presumed to
               have acted on behalf of the addressee.

     (c) Oral notice is effective  when actually  communicated  to the person to
whom given.

     (d)  If  these  By-Laws   prescribe  notice   requirements  for  particular
circumstances, those requirements govern.

     (e) No notice need be given any  shareholder  or director  whose address is
outside of the United States and each shareholder  located outside of the United
States must provide to the Corporation a mailing address in the United States to
which notices from the Corporation may be addressed.  The Corporation  shall not
be obligated to recognize any such address (or change of address)  received less
than thirty days before the date on which the Corporation's  notice is sent. Any
notice given by telegram or cable shall be deemed to be given when  delivered to
and accepted for transmittal by an office of the transmitting corporation.

                                       8
<PAGE>

     Section 20. Waiver of Notice.

     Whenever  any  notice  is  required  to be given  under the  provisions  of
applicable  statutes or of the Articles of Incorporation 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.


                                   ARTICLE IV

              Officers, Their Authority, and Their Terms of Office

     Section 21. Officers of the Corporation.

     The Board of Directors  shall  annually at its first meeting held after the
annual meeting of shareholders, or as soon thereafter as may be practical, elect
the officers of the Corporation,  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 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 Corporation.

     Section 22. Chief Executive Officer.

     (a) The Board of Directors shall appoint the Chief Executive  Officer,  who
shall  be  either  the  Chairman,  the Vice  Chairman  or the  President  of the
Corporation. 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.

                                       9
<PAGE>

     (b) Unless otherwise provided by the Board of Directors,  the Corporation'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 Corporation, all acts and things deemed by him to be reasonably
necessary or desirable to direct,  handle,  and manage,  and in general carry on
the  Corporation's   business   transactions   authorized  by  its  Articles  of
Incorporation,  in  respect to all  matters  except  those  which by law must be
performed by the directors.

     Section 23. Removal and Resignation of Officers.

     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 the 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  Corporation.  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 24. Bond.

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


                                    ARTICLE V

                                  Capital Stock

     Section 25. Certificated and Uncertificated Shares.

     (a) The Board of Directors may authorize the issuance of some or all of the
shares of the  Corporation's  classes or series of capital stock without issuing
certificates   to  represent   such  shares.   If  shares  are   represented  by
certificates,  the certificates  shall be in such form as required by law and as
determined  by the  Board of  Directors.  Certificates  shall be  signed  by the
Chairman of the Board or the President  and by the  Secretary or Treasurer.  The
signatures of any such  officers upon a certificate  may be facsimiles or may be
engraved or printed or omitted if the certificate is countersigned by a transfer
agent,  or registered by a registrar,  other than the  Corporation  itself or an
employee of the Corporation.  If an officer who has signed or whose facsimile or
other  signature  has been placed upon a  certificate  ceases to hold the office
before  the  certificate  is  issued,  the  certificate  may  be  issued  by the
Corporation  with  the  same  effect  as if he held  the  office  on the date of
issuance.

                                       10
<PAGE>

     (b) All  certificates  for shares shall be  consecutively  numbered (within
class or series  designations,  if desired) or otherwise  identified and entered
into the stock transfer records of the Corporation.  When shares are represented
by certificates,  the Corporation shall issue and deliver to each shareholder to
whom such shares have been issued or transferred  certificates  representing the
shares owned of record by him.  Upon a transfer of  certificated  shares,  a new
certificate  shall be issued only upon  surrender of a certificate  representing
such shares for  cancellation,  subject to the  provisions for issuance of a new
certificate  set forth in  Section  26 of these  By-Laws.  When  shares  are not
represented by certificates, then within a reasonable time after the issuance or
transfer of such shares, the Corporation shall send the shareholder to whom such
shares have been issued or  transferred a written  statement of the  information
required by law to be on certificates.

     (c) If  uncertificated  shares are issued,  the Corporation shall send each
holder of such shares a written statement containing the information required by
law.

     (d) Transfer agents or registrars,  or both, for one or more classes of the
stock of the  Corporation  may be appointed by the Board of Directors and may be
required  to  countersign  certificates  representing  shares  of such  class or
classes.

     Section 26. Stock Transfer Books and Transfer of Shares.

     The Corporation or its designated transfer agent or other agent, shall keep
a book  or  set  of  books  to be  known  as the  stock  transfer  books  of the
Corporation,  containing the name of each  shareholder of record,  together with
such shareholder's  address and the number and class or series of shares held by
such  shareholder.  Shares of stock of the Corporation  shall be transferable on
the stock books of the  Corporation  by the holder in person or by his  attorney
thereunto  authorized  by power of  attorney  duly  executed  and filed with the
Secretary or the transfer agent, but, except as hereinafter provided in the case
of loss,  destruction or mutilation of certificates,  no transfer of stock shall
be entered until the previous certificate, if any, given for the same shall have
been surrendered and canceled. Transfer of shares of the Corporation represented
by  certificates  shall be made on the stock transfer  books of the  Corporation
only upon surrender of the  certificates for the shares sought to be transferred
by the  holder of record  thereof or by such  holder's  duly  authorized  agent,
transferee  or legal  representative,  who  shall  furnish  proper  evidence  of
authority to transfer with the Secretary of the  Corporation  or its  designated
transfer agent or other agent. All  certificates  surrendered for transfer shall
be canceled before new certificates for the transferred  shares shall be issued.
Except as  otherwise  provided by law,  no transfer of shares  shall be valid as
against the Corporation,  its shareholders or creditors,  for any purpose, until
it shall have been entered in the stock records of the  Corporation  by an entry
showing from and to whom transferred.

                                       11
<PAGE>

     Section 27. Holder of Record.

     Except as otherwise  required by the NCBCA,  the  Corporation may treat the
person  in  whose  name  shares  of  stock of the  Corporation  (whether  or not
represented by a  certificate)  stand of record on its books or the books of any
transfer  agent or other  agent  designated  by the  Board of  Directors  as the
absolute  owner of the  shares and the person  exclusively  entitled  to receive
notification and  distributions,  to vote, and otherwise to exercise the rights,
powers and privileges of ownership of such shares.  The  Corporation  may assume
that the  holder  of record  had full  competency,  capacity  and  authority  to
exercise all rights of ownership, irrespective of any knowledge or notice to the
contrary  or any  description  indicating  a  representative,  pledge  or  other
fiduciary  relation or any reference to any other instrument or to the rights of
any other person appearing upon the records of the Corporation or upon the share
certificate.

     Section 28. Record Date.

     For the  purpose of  determining  shareholders  entitled to notice of or to
vote at any meeting of shareholders or any adjournment  thereof,  or entitled to
receive  payment  of any  dividend,  or in  order  to  make a  determination  of
shareholders  for any other proper purpose,  the Board may fix in advance a date
as the record date for any such determination of shareholders,  such date in any
case to be not more than seventy days prior to the date on which the  particular
action,  requiring such  determination of shareholders,  is to be taken.  When a
determination  of  shareholders  entitled to vote at any meeting of shareholders
has been made as provided in this section, such determination shall apply to any
adjournment  thereof unless the Board fixes a new record date, which it shall do
if the  meeting is  adjourned  to a date more than 120 days after the date fixed
for the original meeting.

     Section 29. Lost, Destroyed or Mutilated Certificates.

     In case of loss,  destruction  or mutilation of any  certificate  of stock,
another  may be issued in its place  upon  proof of such  loss,  destruction  or
mutilation and upon the giving of a bond of indemnity to the Corporation in such
form and in such sum as the Board may direct,  provided  that a new  certificate
may be issued without  requiring any bond when, in the judgment of the Board, it
is proper so to do. The Board of  Directors  may  delegate to the  Corporation'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
Corporation  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 30. Transfer Agent and Registrar; Regulations.

     The Corporation  may, if and whenever the Board of Directors so determines,
maintain in the State of North Carolina or any other state of the United States,
one or more transfer  offices or agencies and also one or more registry  offices
which offices and agencies may establish  rules and  regulations  for the issue,
transfer and registration of  certificates.  No certificates for shares of stock
of the Corporation in respect of which a transfer agent and registrar shall have
been designated  shall be valid unless  countersigned by such transfer agent and
registered  by such  registrar.  The  Board  of  Directors  may also  make  such
additional rules and regulations as it may deem expedient  concerning the issue,
transfer and  registration  of shares  represented  by  certificates  and shares
without certificates.

                                       12
<PAGE>

                                   ARTICLE VI

                                     General

     Section 31. Distributions.

     Subject to the  provisions of the  applicable  statutes and the Articles of
Incorporation  of the  Corporation,  dividends,  either cash or stock,  upon the
capital  stock of the  Corporation  may be declared by the Board of Directors at
any meeting thereof.

     Section 32. Deeds, Bonds, and Contracts.

     Deeds,  bonds,  notes,  mortgages and contracts of the  Corporation  may be
executed on behalf of the Corporation by the President,  a Senior Executive Vice
President,  an Executive Vice 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 Corporation may be affixed to deeds, bonds,
notes,  mortgages,  contracts or stock certificates by an appropriate officer of
the Corporation by impression thereon, or, by order of an appropriate officer of
the  Corporation,  a facsimile of said seal may be affixed thereto by engraving,
printing, lithograph or other method.

     Section 33. Deposits.

     The  monies  of the  Corporation  shall  be  deposited  in the  name of the
Corporation in such bank or banks or trust Corporation 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 34. Interpretation.

     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.


                                       13
<PAGE>

                                   ARTICLE VII

                       Indemnity of Officers and Directors

     Section 35. Indemnification and Advancement of Expenses.

     (a) The  Corporation  shall  reimburse  or indemnify  any past,  present or
future officer or director of the Corporation  for and against such  liabilities
and expenses as are authorized by Sections 55-8-54, 55-8-55, 55-8-56 and 55-8-57
of the  General  Statutes  of North  Carolina.  Persons  serving as  officers or
directors of the  Corporation  or serving in any such capacity at the request of
the Corporation in any other Corporation,  partnership,  joint venture, trust or
other  enterprise shall be provided  reimbursement  and  indemnification  by the
Corporation  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  Corporation,  or (2) at the request of the Corporation as an
officer or 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  Corporation 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
Corporation or on behalf of the Corporation 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 judgment,  money decree,  fine,  penalty or settlement  for
which  he may  have  become  liable  in any  such  action,  suit or  proceeding;
provided,  however,  that the Corporation 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 Corporation.

     (c) No past,  present or future  director or officer of the Corporation (or
his heirs, executors, and administrators) shall be liable for any act, omission,
step or  conduct  taken or had in good  faith  that  (whether  by  condition  or
otherwise)  is required,  authorized  or approved by any order or orders  issued
pursuant to: the Public Utility  Holding  Company Act of 1935; the Federal Power
Act; or any state statute  regulating  the  Corporation or its  subsidiaries  by
reason of their being public utility companies or subsidiaries of public utility
holding companies; or any amendments to the foregoing laws. If this provision is
found by a court not to  constitute  a valid  defense to any claim  against such
director or officer,  each  director and officer (and his heirs,  executors  and
administrators)  shall be reimbursed for, or indemnified  against,  all expenses
and  liabilities  received by him in connection  with, or arising from, any such
action, suit or proceeding based on any act, omission, step or conduct described
above. Such expenses and liabilities include, but are not limited to, judgments,
court costs and attorneys'  fees. The foregoing rights shall not be exclusive of
other  rights to which any  director or officer may  otherwise  be entitled  and
shall be  available  whether or not the  director or officer  continues  to be a
director or officer at the time of incurring such expenses and liabilities.

                                       14
<PAGE>

     (d) The Board of  Directors  shall take all actions as may be  necessary or
appropriate to authorize the Corporation to pay all amounts  required under this
Section 35 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 Corporation.

     (e) Any person who serves or has served in any of the aforesaid  capacities
for or on behalf of the Corporation  shall be deemed to be doing or 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.  No amendment to or repeal of any provision of this
Section 35 shall  impair any right of a director or officer  based on service in
such capacity up to the effective time of such amendment or repeal.

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

     (g) The  provisions  of this  Section  shall  not  limit  the  power of the
Corporation to agree to indemnify its directors,  officers, employees or agents,
by contract or resolution to the fullest extent allowed by applicable law.


                                  ARTICLE VIII

                                Emergency By-Laws

     Section 36. Definitions.

     As used in these Emergency By-Laws.

     (a) the term  "period of  emergency"  shall mean any period  during which a
quorum of the Board  cannot  readily be assembled  because of some  catastrophic
event.

     (b) the term  "incapacitated"  shall mean that the  individual to whom such
term is applied  shall not have been  determined to be dead but shall be missing
or unable to discharge the responsibilities of his office; and

     (c) the term "senior  officer"  shall mean the  Chairman of the Board,  the
Chief Executive  Officer,  the President,  any Senior  Executive Vice President,
Executive  Vice  President,   Senior  Vice  President  or  Vice  President,  the
Treasurer,  the Controller and the Secretary,  and any other person who may have
been so designated by the Board before the emergency.

     Section 37. Applicability.

     These Emergency By-Laws,  as from time to time amended,  shall be operative
only during any period of emergency.  To the extent not inconsistent  with these
Emergency  By-Laws,  all  provisions of the regular  By-Laws of the  Corporation
shall remain in effect during any period of emergency.

                                       15
<PAGE>

     No officer,  director or employee shall be liable for actions taken in good
faith in accordance with these Emergency By-Laws.

     Section 38. Board of Directors.

     (a) A meeting of the Board may be called by any director or senior  officer
of the  Corporation.  Notice of any  meeting  of the Board need be given only to
such of the  directors  as it may be  feasible  to reach at the time and by such
means as may be feasible at the time,  including  publication or radio, and at a
time less than  twenty-four  hours before the meeting if deemed necessary by the
person giving notice.

     (b) At any  meeting of the  Board,  three  directors  in  attendance  shall
constitute a quorum. Any act of a majority of the directors present at a meeting
at which a quorum shall be present  shall be the act of the Board.  If less than
three directors  should be present at a meeting of the Board, any senior officer
of the  Corporation  in attendance at such meeting shall serve as a director for
such  meeting,  selected  in order of rank and  within the same rank in order of
seniority.

     (c) In  addition  to the Board's  powers  under the regular  By-Laws of the
Corporation to fill  vacancies on the Board,  the Board may elect any individual
as a director  to replace any  director  who may be  incapacitated  and to serve
until the latter  ceases to be  incapacitated  or until the  termination  of the
period of emergency,  whichever  first occurs.  In  considering  officers of the
Corporation  for election to the Board,  the rank and  seniority  of  individual
officers shall not be pertinent.

     (d) The Board, during as well as before any such emergency,  may change the
principal  office or designate  several  alternative  offices or  authorize  the
officers to do so.

     Section 39. Appointment of Officers.

     In  addition  to the  Board's  powers  under  the  regular  By-Laws  of the
Corporation  with respect to the  election of officers,  the Board may elect any
individual as an officer to replace any officer who may be incapacitated  and to
serve until the latter ceases to be incapacitated.

     Section 40. Amendments.

     These  Emergency  By-Laws  shall be  subject to repeal or change by further
action of the Board of Directors or by action of the  shareholders,  except that
no such repeal or change shall modify the provisions of the second  paragraph of
Section 37 with regard to action or inaction prior to the time of such repeal or
change.  Any such amendment of these  Emergency  By-Laws may make any further or
different provision that may be practical and necessary for the circumstances of
the emergency.

                                       16