Exhibit 3.1

# COMMONWEALTH OF
PENNSYLVANIA 


DEPARTMENT OF STATE 


CORPORATION BUREAU

Articles of Amendment 
Domestic Business Corporation

|                    |                                                                                                                                        
|------------------- | ---------------------------------------------------------------------------------------------------------------------------------------
|                    | 8729 784 
 Line for Numbering                                                                                                          
|Entity Number145993 |                                                                                                                                        
|                    | Filed this ___ day of MAR 25, 1987.
Commonwealth of Pennsylvania
Department of State
/s/ Jane J. Haggerty
Secretary of the Commonwealth

In
compliance with the requirements of section 806 of the Business Corporation Law, act of
May 5, 1933 (P.L. 364) (15 P.S. § 1806), the undersigned corporation, desiring to
amend its Articles, does hereby certify that:

| | 1. | The name of the corporation is: Greater Keystone Investors, Inc.
| | -- | ----------------------------------------------------------------

| | 2. | The location of its registered office in this Commonwealth is (the Department of
          State is hereby authorized to correct the following statement to conform to the
          records of the Department):
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                     |           |              |      
|-------------------- | --------- | ------------ | -----
|1425 Hamilton Street | Allentown | Pennsylvania | 18101
|Number and Street    | City      | State        | Zip  

| | 3. | The statute by or under which it was incorporated is: Pennsylvania Business
          Corporation Law, Act of May 5, 1933, P.L. 364, as amended
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------

| | 4. | The date of its incorporation is: May 13, 1965
| | -- | ----------------------------------------------

| | 5. | (Check,
and if appropriate, complete one of the following):
| | -- | -----------------------------------------------------------

| | X The meeting of the shareholders of the corporation at which the
amendment was adopted was held at the time and place and pursuant to the kind and period
of notice herein stated.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Time:
 The 16th day of March, 1987
| | ----------------------------------

| | Place:
1425 Hamilton Street, Allentown, PA 18101
| | ------------------------------------------------

| | Kind
and period of notice: Letter to Shareholders dated March 6, 1987 setting forth the
actions to be taken at a SpecialMeeting of the Shareholders.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------

| | ____
The amendment was adopted by a consent in writing, setting forth the action so taken,
signed by all of the shareholders entitled to vote thereon and filed with the Secretary of
the corporation.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 6. | At
the time of the action of shareholders:
| | -- | ------------------------------------------

|(a) | The total number of shares outstanding was: 289,114 (b) The number of
          shares entitled to vote was: 289,114
|--- | --------------------------------------------------------------------------------------------------------------------

| | 7. | In
the action taken by the shareholders:
| | -- | ----------------------------------------

|(a) | The number of shares voted in favor of the amendment was: 253,700 (b)
          The number of shares voted against the amendment was: None
|--- | ------------------------------------------------------------------------------------------------------------------------------------------

| | 8. | The
amendment adopted by the shareholders, set forth in full, is as follows: [SEE ATTACHED
RIDER]
| | -- | -------------------------------------------------------------------------------------------------



---

IN TESTIMONY WHEREOF, the undersigned
corporation has caused these Articles of Amendment to be signed by a duly authorized
officer and its corporate seal, duly attested by another such officer, to be hereunto
affixed this 16thday of March 1987.

|                                                                  |                                                                              
|----------------------------------------------------------------- | -----------------------------------------------------------------------------
|Attest:               
/s/ Sandra A. Kotsch  
Assistant Secretary | GREATER KEYSTONE INVESTORS, INC.
By:      /s/ Irving Levit
Title:   President



---

# EXHIBIT A

RESTATED ARTICLES OF
INCORPORATION 

OF PENN TREATY AMERICAN
CORPORATION

FIRST:
The name of the Corporation is PENN TREATY AMERICAN CORPORATION.

SECOND:
The address of the registered office of the Corporation is 1425 Hamilton Street,
Allentown, Pennsylvania 18101.

| | THIRD:
The purpose or purposes of the corporation are: to purchase, acquire, hold, sell and
otherwise invest and deal in stocks, bonds, notes, choses in action and other
obligations; to operate as an insurance holding company under Section 337.6 of the
Pennsylvania Insurance Act; to acquire, buy, own, lease, let, improve, sell exchange and
deal in real estate and in personal property of every description; to act as agent or
broker for insurance companies in soliciting and receiving applications for insurance of
every description, in the collection of premiums, and in doing such other business as may
be delegated to agents or brokers by such companies, and to conduct a general insurance
agency and insurance brokerage business; and to do all things necessary, proper and
expedient in respect to any or all the foregoing purposes; and to have unlimited power to
engage in and do any lawful act concerning any or all lawful business for which
corporations may be incorporated under the Business Corporation Law, Act of May 5, 1933,
P.L. 364, as amended, under the provision of which act this corporation is incorporated.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The
shareholders of the Corporation shall not have preemptive rights.

FOURTH:
 The term of existence of the corporation is perpetual.

| | FIFTH:
The aggregate number of shares which the Corporation shall have the authority to issue is
10,000,000 shares of common stock, par value $.10 per share (Common Stock),
and 5,000,000 shares of preferred stock, par value $1.00 per share (Preferred Stock).
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
designations and the powers, preferences and rights, and the qualifications, limitations
or restrictions of the shares of each class of stock are as follows:
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------

# Common Stock

| | Subject
to all of the rights of the holders of Preferred Stock, and except as may be expressly
provided with respect to the Preferred Stock herein, by law or by the Board of Directors
pursuant to this Article Fifth, the holders of Common Stock shall have the exclusive
right to vote for the election of directors and on all other matters requiring
shareholder action, each share being entitled to one vote. Holders of Common Stock shall
not be entitled to cumulative voting and shall not have preemptive rights.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# Preferred Stock

| | The
shares of Preferred Stock may be divided into and issued from time to time in one or more
series as may be designated by the Board of Directors of the Corporation, each such
series to be distinctly titled and to consist of the number of shares designated by the
Board of Directors. All shares of any one series of Preferred Stock so designated by the
Board of Directors shall be alike in every particular, except that shares of any one
series issued at different times may differ as to the dates from which dividends thereon
(if any) shall accrue or be cumulative (or both). The designations, preferences,
qualifications, limitations, restrictions and special or relative rights (if any) of any
series of Preferred Stock may differ from those of any and all other series at any time
outstanding. The Board of Directors of the Corporation is hereby expressly vested with
authority to fix by resolution the designations, preferences, qualifications,
limitations, restrictions and special or relative rights (if any) of the Preferred Stock
and each series thereof which may be designated by the Board of Directors, including, but
without limiting the generality of the foregoing, the following:
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (1) | The
voting rights and powers (if any) of the Preferred Stock and each series
               thereof;
| | --- | ----------------------------------------------------------------------------------------------------



---

| | (2) | The
rates and times at which, and the terms and conditions on which, dividends
               (if any) on Preferred Stock, and each series thereof, will be paid, and
any                dividend preferences or rights of cumulation;
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | The
rights (if any) of holders of Preferred Stock, and each such series thereof,
               to convert the same into or exchange the same for, shares of other classes
(or                series of classes) of common stock of the Corporation and the terms
and                conditions for such conversion or exchange, including provisions for
adjustment                of conversion or exchange prices or rates in such events as the
Board of                Directors shall determine;
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (4) | The
redemption rights (if any) of the Corporation and of the holders of
               Preferred Stock and each series thereof, and the times at which, and the
terms                and conditions on which Preferred Stock and each series thereof may
be redeemed;                and
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (5) | The
rights and preferences (if any) of the holders of Preferred Stock, and each
               series thereof, upon the voluntary or involuntary dissolution, liquidation
or                winding up of the Corporation.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

SIXTH:

| | (a) | The
number of directors constituting the Board of Directors shall be nine (9) in
               number.
| | --- | -------------------------------------------------------------------------------------------------------

| | (b) | At
the annual election of directors to be held at the annual meeting of
               shareholders in 1987, the directors shall be divided into three (3)
classes, as                nearly equal in number as possible known as Class I, Class II
and Class III. The                initial directors of Class I shall serve until the 1988
annual meeting of                shareholders. At the 1988 annual meeting of
shareholders, the directors of Class                I shall be elected for a term of
three (3) years and shall thereafter be elected                every three (3) years for
three (3) year terms. The initial directors of Class                II shall serve until
the 1989 annual meeting of shareholders. At the 1989 annual                meeting of
shareholders, the directors of Class II shall be elected for a term                of
three (3) years and shall thereafter be elected every three (3) years for
               three (3) year terms. The initial directors of Class III shall serve until
1990.                At the annual meeting of shareholders, the directors of Class III
shall be                elected for a term of three (3) years and shall thereafter be
elected every                three (3) years for three (3) year terms. Each director
shall serve until his                successor has been elected and qualified even though
his term of office as                herein provided has otherwise expired, except in the
event of his earlier                resignation, removal or disqualification.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (c) | Advance
notice of nominations for the election of Directors, other than
               nominations by the Board of Directors or a Committee thereof, shall be
given in                the manner provided in the By-Laws.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (d) | Any
member of the Board of Directors may be removed for cause or only by the
               affirmative vote of the holders of 67% of the combined voting power of all
               shareholders who are entitled to vote for the election of directors,
voting                together as a single class. Proper cause shall be
determined by the                vote of not less than 67% of the entire Board of
Directors.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (e) | Any
director elected to fill a vacant position, however created, shall serve for
               the remainder of the term of the director he or she is replacing.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------

SEVENTH:

| | (a) | The
Board of Directors may, if it deems advisable, oppose a tender offer, or
               other offer for the Corporations securities, whether the offer is in
cash                or in the securities of a corporation or otherwise. When considering
whether to                oppose an offer, the Board of Directors may, but is not legally
obligated to,                consider any pertinent issue. By way of illustration but not
of limitation, the                Board of Directors may, but shall not be legally
obligated to, consider any or                all of the following:
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 1. | whether the offer is acceptable based on historical and present operating
               results or the financial condition of the Corporation and its subsidiaries, and
               their future prospects;
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 2. | whether a more favorable offer could be obtained for the Corporations, or
               its subsidiaries, securities or assets in the future;
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------

| | 3. | the social, economic or any other material impact which an acquisition of the
               Corporation, or substantially all of its assets, would have upon the employees,
               insureds and customers of the Corporation and its subsidiaries and the
               communities which they serve;
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4. | the reputation and business practices of the offeror and its management and
               affiliates as they would affect the employees, insureds and customers of the
               Corporation and its subsidiaries and the future value of the Corporations
               stock;
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



---

| | 5. | the value of the securities (if any) which the offeror is offering in exchange
               for the securities or assets of the Corporation, or its subsidiaries, based on
               an analysis of the worth of the Corporation, or of its subsidiaries, as compared
               to the offeror corporation or other entity whose securities are being offered;
               and
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 6. | any antitrust or other legal or regulatory issues that are raised by the offer.
| | -- | -------------------------------------------------------------------------------

|(b) | If the Board of Directors determines that an offer should be rejected, it may
          take any lawful action to accomplish its purposes, including, but not limited
          to, any or all of the following: advising shareholders not to accept the offer;
          commencing litigation against the offeror; filing complaints with governmental
          and regulatory authorities; acquiring the Corporations securities; selling
          or otherwise issuing authorized shares of Preferred Stock with such
          designations, preferences, qualifications, limitations, restrictions, and/or
          special rights as the Board of Directors deems appropriate; selling or otherwise
          issuing authorized but unissued securities or treasury stock or granting options
          with respect thereto; acquiring a company to create an antitrust or other
          regulatory problem for the offeror; and obtaining a more favorable offer from
          another individual or entity.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

EIGHTH: The following actions of the
Corporation shall not be authorized without the prior approval of the shareholders
entitled to vote at least 67% of the shares which all shareholders are entitled to vote on
the particular action:

| | 1. | to amend or repeal any provision of or add any provision to, the
               Corporations Articles of Incorporation; provided, however, nothing herein
               contained shall restrict or limit in any way the power of the Board of
               Directors, by a majority vote of those voting, to make, alter and repeal any
               provision of the By-laws except as expressly provided therein;
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 2. | to merge, consolidate or otherwise combine the Corporation with or into any
               other corporation, except into or with a wholly owned subsidiary:
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3. | to exchange shares of the Corporations Common Stock in such a manner that
               a corporation, person or entity acquires the issues or outstanding shares of
               Common Stock of the Corporation pursuant to a vote of shareholders;
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4. | to sell, lease, convey, encumber or otherwise dispose of all or substantially
               all of the property or business of the Corporation;
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------

| | 5. | to dissolve or to liquidate, in whole or in part, the Corporation; and
| | -- | ----------------------------------------------------------------------

| | 6. | to enter into any transaction similar to, or having similar effect as, any of
               the foregoing transactions.
| | -- | ------------------------------------------------------------------------------------------------------------------------

NINTH: Prevention Of
Greenmail. Any direct or indirect purchase or other acquisition by the
Corporation of any shares of its stock of any class from any Shareholder who is the
beneficial owner, directly or indirectly, of 20% or more of the class of shares to be
acquired (Interested Shareholder) who has beneficially owned such securities
for less than two years prior to the date of such purchase or any agreement in respect
thereof shall, except as hereinafter expressly provided, require the affirmative vote of
the holders of at least a majority of the voting power of the then outstanding shares of
capital stock of the Corporation entitled to vote generally in the election of directors,
excluding shares beneficially owned by such Interested Security-holder, voting together as
a single class. Such affirmative vote shall be required notwithstanding the fact that no
vote may be required, or that a lesser percentage may be specified, by law or any
agreement with any national securities exchange, or otherwise, but no such affirmative
vote shall be required with respect to any purchase or other acquisition of securities
made as part of a tender or exchange offer by the Corporation to purchase securities of
the same class made on the same terms of all holders of such securities and complying with
the applicable requirements of the Securities Exchange Act of 1934 and the rules and
regulations thereunder (or any subsequent provisions replacing such Act, rules or
regulations).

---

# COMMONWEALTH OF
PENNSYLVANIA

# DEPARTMENT OF STATE

# CORPORATION BUREAU

Statement of Correction
 Domestic Corporation and Foreign Corporation

`8975 411
                                                          Line for Numbering

Entity Number
145993-011                                           Filed this ___ day of OCT 27 1989.
                                                     Commonwealth of Pennsylvania
                                                     Department of State
                                                     /s/ Christopher A. Lewis
                                                     Acting Secretary of the Commonwealth`

In
compliance with the requirements of 15 Pa. S. § 138 (relating to statement of
correction) the undersigned domestic corporation or foreign corporation, desiring to
correct an inaccurate record of corporate action or correct defective or erroneous
execution of a document, does hereby certify that:

| | 1. | The name of the corporation is: Penn Treaty American Corporation.
| | -- | -----------------------------------------------------------------

| | 2. | The location of its registered office in this Commonwealth is (the Department of
          State is hereby authorized to correct the following statement to conform to the
          records of the Department):
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3. | The statute by or under which it was incorporated is: Pennsylvania Business
          Corporation Law, Act of May 5, 1933, P.L. 364, as amended
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------

| | 4. | The inaccuracy or defect, which appears in Department of State Form
          BCL-806 filed March 25, 1987 and recorded in Roll 87.29
          Film 784 et seq., is:
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | See
attached Exhibit A, Restated Articles of Incorporation of Penn Treaty American
Corporation, with correction marked in Article SIXTH, paragraph (d).
| | -------------------------------------------------------------------------------------------------------------------------------------------------------

5.       
          (Check one of the following):

| | X The portion of the document requiring correction in corrected form is
set forth in Exhibit A, attached hereto and made a part hereof.
| | ---------------------------------------------------------------------------------------------------------------------------------------

____
The original document to which this certificate relates shall be deemed reexecuted.

____ The
original document to which this certificate relates shall be deemed stricken from the
records of the Department.

IN TESTIMONY WHEREOF, the undersigned
corporation has caused this certificate to be signed by a duly authorized officer and its
corporate seal, duly attested by another such officer, to be hereunto affixed this
20thdate of October 1989.

`Attest:                                                       PENN TREATY AMERICAN CORP.
/s/ Domenic P. Stangherlin                           By:      /s/ Irving Levit
Secretary                                                     Title:   President`

---

# EXHIBIT A

RESTATED ARTICLES OF
INCORPORATION

OF

PENN TREATY AMERICAN
CORPORATION

FIRST:
The name of the Corporation is PENN TREATY AMERICAN CORPORATION.

SECOND:
The address of the registered office of the Corporation is 1425 Hamilton Street,
Allentown, Pennsylvania 18101.

| | THIRD:
The purpose or purposes of the corporation are: to purchase, acquire, hold, sell and
otherwise invest and deal in stocks, bonds, notes, choses in action and other obligations;
to operate as an insurance holding company under Section 337.6 of the Pennsylvania
Insurance Act; to acquire, buy, own, lease, let, improve, sell exchange and deal in real
estate and in personal property of every description; to act as agent or broker for
insurance companies in soliciting and receiving applications for insurance of every
description, in the collection of premiums, and in doing such other business as may be
delegated to agents or brokers by such companies, and to conduct a general insurance
agency and insurance brokerage business; and to do all things necessary, proper and
expedient in respect to any or all the foregoing purposes; and to have unlimited power to
engage in and do any lawful act concerning any or all lawful business for which
corporations may be incorporated under the Business Corporation Law, Act of May 5, 1933,
P.L. 364, as amended, under the provision of which act this corporation is incorporated.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The
shareholders of the Corporation shall not have preemptive rights.

| | FIFTH:
The aggregate number of shares which the Corporation shall have the authority to issue is
10,000,000 shares of common stock, par value $.10 per share (Common Stock),
and 5,000,000 shares of preferred stock, par value $1.00 per share (Preferred
Stock).
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
designations and the powers, preferences and rights, and the qualifications, limitations
or restrictions of the shares of each class of stock are as follows:
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------

# Common Stock

| | Subject
to all of the rights of the holders of Preferred Stock, and except as may be expressly
provided with respect to the Preferred Stock herein, by law or by the Board of Directors
pursuant to this Article Fifth, the holders of Common Stock shall have the exclusive right
to vote for the election of directors and on all other matters requiring shareholder
action, each share being entitled to one vote. Holders of Common Stock shall not be
entitled to cumulative voting and shall not have preemptive rights.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# Preferred Stock

| | The
shares of Preferred Stock may be divided into and issued from time to time in one or more
series as may be designated by the Board of Directors of the Corporation, each such series
to be distinctly titled and to consist of the number of shares designated by the Board of
Directors. All shares of any one series of Preferred Stock so designated by the Board of
Directors shall be alike in every particular, except that shares of any one series issued
at different times may differ as to the dates from which dividends thereon (if any) shall
accrue or be cumulative (or both). The designations, preferences, qualifications,
limitations, restrictions and special or relative rights (if any) of any series of
Preferred Stock may differ from those of any and all other series at any time outstanding.
The Board of Directors of the Corporation is hereby expressly vested with authority to fix
by resolution the designations, preferences, qualifications, limitations, restrictions and
special or relative rights (if any) of the Preferred Stock and each series thereof which
may be designated by the Board of Directors, including, but without limiting the
generality of the foregoing, the following:
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(1) | The voting rights and powers (if any) of the Preferred Stock and each series
          thereof;
|--- | -----------------------------------------------------------------------------------------------

|(2) | The rates and times at which, and the terms and conditions on which, dividends
          (if any) on Preferred Stock, and each series thereof, will be paid, and any
          dividend preferences or rights of cumulation;
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | The rights (if any) of holders of Preferred Stock, and each such series
          thereof, to convert the same into or exchange the same for, shares of other
          classes (or series of classes) of common stock of the Corporation and the terms
          and conditions for such conversion or exchange, including provisions for
          adjustment of conversion or exchange prices or rates in such events as the Board
          of Directors shall determine;
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | The redemption rights (if any) of the Corporation and of the holders of
          Preferred Stock and each series thereof, and the times at which, and the terms
          and conditions on which Preferred Stock and each series thereof may be redeemed;
          and
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | The rights and preferences (if any) of the holders of Preferred Stock, and each
          series thereof, upon the voluntary or involuntary dissolution, liquidation or
          winding up of the Corporation.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

(a)       
          The number of directors constituting the Board of Directors shall be nine (9) in
          number.

| | (b) | At the annual election of directors to be held at the annual meeting of
               shareholders in 1987, the directors shall be divided into three (3) classes, as
               nearly equal in number as possible known as Class I, Class II and Class III. The
               initial directors of Class I shall serve until the 1988 annual meeting of
               shareholders. At the 1988 annual meeting of shareholders, the directors of Class
               I shall be elected for a term of three (3) years and shall thereafter be elected
               every three (3) years for three (3) year terms. The initial directors of Class
               II shall serve until the 1989 annual meeting of shareholders. At the 1989 annual
               meeting of shareholders, the directors of Class II shall be elected for a term
               of three (3) years and shall thereafter be elected every three (3) years for
               three (3) year terms. The initial directors of Class III shall serve until 1990.
               At the annual meeting of shareholders, the directors of Class III shall be
               elected for a term of three (3) years and shall thereafter be elected every
               three (3) years for three (3) year terms. Each director shall serve until his
               successor has been elected and qualified even though his term of office as
               herein provided has otherwise expired, except in the event of his earlier
               resignation, removal or disqualification.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (c) | Advance notice of nominations for the election of Directors, other than
               nominations by the Board of Directors or a Committee thereof, shall be given in
               the manner provided in the By-Laws.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (d) | Any member of the Board of Directors may be removed for cause
                only by the affirmative vote of the holders of 67% of
               the combined voting power of all shareholders who are entitled to vote for the
               election of directors, voting together as a single class. Proper
               cause shall be determined by the vote of not less than 67% of the
               entire Board of Directors.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (e) | Any director elected to fill a vacant position, however created, shall serve for
               the remainder of the term of the director he or she is replacing.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------

|(a) | The Board of Directors may, if it deems advisable, oppose a tender offer, or
          other offer for the Corporations securities, whether the offer is in cash
          or in the securities of a corporation or otherwise. When considering whether to
          oppose an offer, the Board of Directors may, but is not legally obligated to,
          consider any pertinent issue. By way of illustration but not of limitation, the
          Board of Directors may, but shall not be legally obligated to, consider any or
          all of the following:
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 1. | whether the offer is acceptable based on historical and present operating
               results or the financial condition of the Corporation and its subsidiaries, and
               their future prospects;
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 2. | whether a more favorable offer could be obtained for the Corporations, or
               its subsidiaries, securities or assets in the future;
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------

| | 3. | the social, economic or any other material impact which an acquisition of the
               Corporation, or substantially all of its assets, would have upon the employees,
               insureds and customers of the Corporation and its subsidiaries and the
               communities which they serve;
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4. | the reputation and business practices of the offeror and its management and
               affiliates as they would affect the employees, insureds and customers of the
               Corporation and its subsidiaries and the future value of the Corporations
               stock;
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 5. | the value of the securities (if any) which the offeror is offering in exchange
               for the securities or assets of the Corporation, or its subsidiaries, based on
               an analysis of the worth of the Corporation, or of its subsidiaries, as compared
               to the offeror corporation or other entity whose securities are being offered;
               and
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 6. | any antitrust or other legal or regulatory issues that are raised by the offer.
| | -- | -------------------------------------------------------------------------------

|(b) | If the Board of Directors determines that an offer should be rejected, it may
          take any lawful action to accomplish its purposes, including, but not limited
          to, any or all of the following: advising shareholders not to accept the offer;
          commencing litigation against the offeror; filing complaints with governmental
          and regulatory authorities; acquiring the Corporations securities; selling
          or otherwise issuing authorized shares of Preferred Stock with such
          designations, preferences, qualifications, limitations, restrictions, and/or
          special rights as the Board of Directors deems appropriate; selling or otherwise
          issuing authorized but unissued securities or treasury stock or granting options
          with respect thereto; acquiring a company to create an antitrust or other
          regulatory problem for the offeror; and obtaining a more favorable offer from
          another individual or entity.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

EIGHTH: The following actions of the
Corporation shall not be authorized without the prior approval of the shareholders
entitled to vote at least 67% of the shares which all shareholders are entitled to vote on
the particular action:

| | 1. | to amend or repeal any provision of or add any provision to, the
               Corporations Articles of Incorporation; provided, however, nothing herein
               contained shall restrict or limit in any way the power of the Board of
               Directors, by a majority vote of those voting, to make, alter and repeal any
               provision of the By-laws except as expressly provided therein;
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 2. | to merge, consolidate or otherwise combine the Corporation with or into any
               other corporation, except into or with a wholly owned subsidiary:
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3. | to exchange shares of the Corporations Common Stock in such a manner that
               a corporation, person or entity acquires the issues or outstanding shares of
               Common Stock of the Corporation pursuant to a vote of shareholders;
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4. | to sell, lease, convey, encumber or otherwise dispose of all or substantially
               all of the property or business of the Corporation;
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------

| | 5. | to dissolve or to liquidate, in whole or in part, the Corporation; and
| | -- | ----------------------------------------------------------------------

| | 6. | to enter into any transaction similar to, or having similar effect as, any of
               the foregoing transactions.
| | -- | ------------------------------------------------------------------------------------------------------------------------

NINTH: Prevention Of
Greenmail. Any direct or indirect purchase or other acquisition by the
Corporation of any shares of its stock of any class from any Shareholder who is the
beneficial owner, directly or indirectly, of 20% or more of the class of shares to be
acquired (Interested Shareholder) who has beneficially owned such securities
for less than two years prior to the date of such purchase or any agreement in respect
thereof shall, except as hereinafter expressly provided, require the affirmative vote of
the holders of at least a majority of the voting power of the then outstanding shares of
capital stock of the Corporation entitled to vote generally in the election of directors,
excluding shares beneficially owned by such Interested Security-holder, voting together as
a single class. Such affirmative vote shall be required notwithstanding the fact that no
vote may be required, or that a lesser percentage may be specified, by law or any
agreement with any national securities exchange, or otherwise, but no such affirmative
vote shall be required with respect to any purchase or other acquisition of securities
made as part of a tender or exchange offer by the Corporation to purchase securities of
the same class made on the same terms of all holders of such securities and complying with
the applicable requirements of the Securities Exchange Act of 1934 and the rules and
regulations thereunder (or any subsequent provisions replacing such Act, rules or
regulations).

---

# COMMONWEALTH OF
PENNSYLVANIA

# DEPARTMENT OF STATE

# CORPORATION BUREAU

Statement of Change of
Registered Office  Domestic Business Corporation

`8978 809
                                                          Line for Numbering

Entity Number
145993-012                                           Filed this ___ day of NOV 17 1989.
                                                     Commonwealth of Pennsylvania
                                                     Department of State
                                                     /s/ Christopher A. Lewis
                                                     Acting Secretary of the Commonwealth`

| | 1. | The name of the corporation is: Penn Treaty American Corporation.
| | -- | -----------------------------------------------------------------

| | 2. | The address of its present registered office in this Commonwealth is (the
          Department of State is hereby authorized to correct the following statement to
          conform to the records of the Department):
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

3.    
          The address to which the registered office in this Commonwealth is to be changed
          is:

| | 4. | Such change was authorized by resolution duly adopted by at least a majority of
          the members of the board of directors of the corporation.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------

IN TESTIMONY WHEREOF, the undersigned
corporation has caused this statement to be signed by a duly authorized officer and its
corporate seal, duly attested by another such officer, to be hereunto affixed this ____
date of _________, 19__ [date was left blank on form filed with the
Department].

`Attest:                                                       PENN TREATY AMERICAN CORPORATION
/s/ Domenic P. Stangherlin                           By:      /s/ Irving Levit
Secretary                                                     Title:   President`

---

`Microfilm Number   9709-541                          Filed with the Department of State on  JAN 28 1997

Entity Number    145993                              /s/ ________________________________________
                                                          Secretary of the Commonwealth`

# ARTICLES OF AMENDMENT
 DOMESTIC BUSINESS CORPORATION

In
compliance with the requirements of 15 Pa.C.S. § 1915 (relating to articles of
amendment), the undersigned business corporation, desiring to amend its Articles, hereby
states that:

| | 1. | The name of the corporation is: Penn Treaty American Corporation.
| | -- | -----------------------------------------------------------------

| | 2. | The (a) address of the corporations current registered office in this
               Commonwealth or (b) name of its commercial registered officer provider and the
               county of venue is (the Department is hereby authorized to correct the following
               information to conform to the records of the Department):
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | a. | 3440 Lehigh StreetAllentown PA 18103
               Lehigh Number and Street City State Zip County
| | -- | --------------------------------------------------------------------------------------------------

| | For
a corporation represented by a commercial registered office provider, the county in (b)
shall be deemed the county in which the corporation is located for venue and official
publication purposes.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3. | The statute by or under which it was incorporated is: Pennsylvania Business
          Corporation Law, Act of May 5, 1933, P.L. 364, as amended.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------

| | 4. | The date of its incorporation is: May 13, 1965.
| | -- | -----------------------------------------------

| | 5. | (Check, and if appropriate complete, one of the following):
| | -- | -----------------------------------------------------------

| | X The amendment shall be effective upon filing these Articles of Amendment
in the Department of State. ____ The amendment shall be effective on: ______________ at
___________.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

6.    
          (Check one of the following):

| | XThe amendment was adopted by the shareholders (or members) pursuant to 15
Pa.C.S. § 1914(a) and (b). ___ The amendment was adopted by the board of directors
pursuant to 15 Pa.C.S. § 1914(c).
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

7.    
          (Check, and if appropriate complete, one of the following):

XThe amendment adopted by the corporation, set forth in full, is as follows:

The first
paragraph of Article FIFTH shall be amended and restated in its entirety as follows:

| | The
aggregate number of shares which the Corporation shall have the authority to issue is
25,000,000 shares of common stock, par value $.10 per share (Common
Stock), and 5,000,000 shares of preferred stock, par value $1.00 per share
(Preferred Stock).
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The amendment adopted by the corporation is set forth in full in Exhibit A
attached hereto and made a part hereof.

8.       
          (Check if the amendment restates the Articles):

___
The restated Articles of Incorporation supersede the original Articles and all amendments
thereto.

IN
TESTIMONY WHEREOF, the undersigned corporation has caused these Articles of Amendment to
be signed by a duly authorized officer thereof this 27
thday of January, 1997.

`PENN TREATY AMERICAN CORPORATION

                                                     BY:    /s/ A. J. Carden ____________________

                                                     TITLE: Executive Vice President`

---

`Microfilm Number ___200142- 1366                     Filed with the Department of State on  JUN 01, 2001

Entity Number    145993                              /s/ Kim Pizzingrilli
                                                          Secretary of the Commonwealth`

# ARTICLES OF AMENDMENT
 DOMESTIC BUSINESS CORPORATION

DSCB:15-1915 (Rev 90)

In
compliance with the requirements of 15 Pa.C.S. § 1915 (relating to articles of
amendment), the undersigned business corporation, desiring to amend its Articles, hereby
states that:

| | 1. | The name of the corporation is: Penn Treaty American Corporation.
| | -- | -----------------------------------------------------------------

| | 2. | The (a) address of this corporations current registered office in this
               Commonwealth or (b) name of its commercial registered officer provider and the
               county of venue is (the Department is hereby authorized to correct the following
               information to conform to the records of the Department):
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | c. | 3440 Lehigh StreetAllentown PA 18103
               Lehigh Number and Street City State Zip County
| | -- | --------------------------------------------------------------------------------------------------

For a corporation represented by a
commercial office provider, the county in (b) shall be deemed the county in which the
corporation is located for venue and official publication purposes.

| | 3. | The statute by or under which it was incorporated is: Pennsylvania Business
          Corporation Law, Act of May 5, 1933, P.L. 364, as amended.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------

| | 4. | The date of its incorporation is: May 13, 1965.
| | -- | -----------------------------------------------

| | 5. | (Check, and if appropriate complete, one of the following):
| | -- | -----------------------------------------------------------

| | X The amendment shall be effective upon filing these Articles of Amendment
in the Department of State. ____ The amendment shall be effective on: ______________ at
___________.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

6.    
          (Check one of the following):

| | XThe amendment was adopted by the shareholders (or members) pursuant to 15
Pa.C.S. § 1914(a) and (b). ___ The amendment was adopted by the board of directors
pursuant to 15 Pa.C.S. § 1914(c).
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

7.    
          (Check, and if appropriate complete, one of the following):

XThe amendment adopted by the corporation, set forth in full, is as follows:

The first
paragraph of Article FIFTH shall be amended and restated in its entirely [sic] as follows:

| | Fifth:
The aggregate number of shares which the Corporation shall have the authority to issue is
40,000,000 shares of common stock, par value $.10 per share (Common
Stock), and 5,000,000 shares of preferred stock, par value $1.00 per share
(Preferred Stock).
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The amendment adopted by the corporation is set forth in full in Exhibit A
attached hereto and made a part hereof.

8.       
          (Check if the amendment restates the Articles):

___
The restated Articles of Incorporation supersede the original Articles and all amendments
thereto.

IN
TESTIMONY WHEREOF, the undersigned corporation has caused these Articles of Amendment to
be signed by a duly authorized officer thereof this 30thday of May,
2001.

`PENN TREATY AMERICAN CORPORATION

                                                     BY:    /s/ A. J. Carden ____________________

                                                     TITLE:    Executive Vice President`

---

Microfilm Number
2002011-553

# PENNSYLVANIA
DEPARTMENT OF STATE

# CORPORATION BUREAU

Statement with Respect
to Shares  Domestic Business Corporation

(15 Pa.C.S. § 1522)

`Entity Number
145993

Name:    ESQUIRE ASSIST                     Document will be returned to the name and
         COUNTER PICKUP                     address you enter to the left.


                                                     Filed in the Department of State on FEB 14 2002

                                                     _/s/ _____________________________
                                                     Acting Secretary of the Commonwealth`

In
compliance with the requirements of 15 Pa.C.S. § 1522(b) (relating to statement with
respect to shares), the undersigned corporation, desiring to state the designation and
voting rights, preferences, limitations and special rights, if any, of a class or series
of its shares, hereby states that:

1.    
          The name of the corporation is: Penn Treaty American Corporation

2.    
          Check and complete one of the following:

| | The resolution amending the Articles under 15 Pa.C.S. § 1522(b)
(relating to divisions and determinations by the board), set forth in full, is as follows:
_____________________________
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | X The resolution amending the Articles under 15 Pa.C.S. § 1522(b) is
set forth in full in Exhibit A attached hereto and made a part hereof.
| | -------------------------------------------------------------------------------------------------------------------------------------------

| | 3. | The aggregate number of shares of such class or series established and
          designated by (a) such resolution, (b) all prior statements, if any, filed under
          15 Pa.C.S. § 1522 or corresponding provisions of prior law with respect
          thereto, and (c) any other provision of the Articles is 5,000,000 shares.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4. | The resolution was adopted by the Board of Directors or an authorized committee
          thereon on: February 12, 2002.
| | -- | ------------------------------------------------------------------------------------------------------------------------

| | 5. | Check, and if appropriate complete, one of the following:
| | -- | ---------------------------------------------------------

IN TESTIMONY WHEREOF, the undersigned
corporation has caused this statement to be signed by a duly authorized officer thereof
this 14th day of February 2002.

`PENN TREATY AMERICAN CORPORATION
                                                              By:      /s/ Jane M. Bagley
                                                              Title:   Assistant Secretary and Corporate Counsel`

---

# EXHIBIT A

# RESOLUTION

# OF THE BOARD OF
DIRECTORS OF

# PENN TREATY AMERICAN
CORPORATION

RESOLVED, that, pursuant to the
authority expressly vested in the Board of Directors of the Company by Article Fifth of
the Companys Articles, the Board of Directors hereby fixes and determines the
designations, preferences, qualifications, limitations, restrictions and special or
relative rights of 5,000,000 shares of its Preferred Stock, par value $1.00 per share, by
establishing and designating the Series A-1 Convertible Preferred Stock, Series A-2
Convertible Preferred Stock, Series A-3 Convertible Preferred Stock and Series A-4
Convertible Preferred Stock as more fully set forth on Exhibit I attached hereto.

---

EXHIBIT 1

SERIES A-1 CONVERTIBLE
PREFERRED STOCK, 


SERIES A-2 CONVERTIBLE PREFERRED
STOCK, 


SERIES A-3 CONVERTIBLE
PREFERRED STOCK, AND 


SERIES A-4 CONVERTIBLE PREFERRED
STOCK

OF

PENN TREATY AMERICAN
CORPORATION.

Of
the 5,000,000 shares of Preferred Stock which Penn Treaty American Corporation, a
Pennsylvania corporation (the Corporation) has the authority to issue, 806,968
shares are designated Series A-1 Convertible Preferred Stock, 459,238 shares
are designated Series A-2 Convertible Preferred Stock, 371,444 shares are
designated Series A-3 Convertible Preferred Stock and 3,362,350 shares are
designated Series A-4 Convertible Preferred Stock.

The
following is a statement of the designations, preferences, limitations and relative rights
in respect of the shares of Series A-1 Convertible Preferred Stock (Series A-1
Preferred Stock), Series A-2 Convertible Preferred Stock (Series A-2 Preferred
Stock), Series A-3 Convertible Preferred Stock (Series A-3 Preferred
Stock) and Series A-4 Convertible Preferred Stock (Series A-4 Preferred
Stock and, collectively with the Series A-1 Preferred Stock, Series A-2 Preferred
Stock and Series A-3 Preferred Stock, the Preferred Stock) of the Corporation:

Except
as provided in Sections 1, 4 and 6 hereof, the Series A-1 Preferred Stock, the Series A-2
Preferred Stock, the Series A-3 Preferred Stock and the Series A-4 Preferred Stock are
identical in all respects as a class of capital stock and possess the same designations,
limitations and rights.

1.       
          Definitions. As used herein, the following terms have the respective meanings
          set forth below:

Additional
Shares of Common Stock shall mean all shares of Common Stock issued by the
Corporation after the date hereof, other than Conversion Shares.

Affiliate
shall mean any entity controlling, controlled by or under common control with another
entity. For purposes of this definition, control shall have the meaning
presently specified for that word in Rule 405 promulgated by the SEC under the Securities
Act.

Appraised
Value shall mean, in respect of any share of Common Stock on any date herein
specified, the fair market value of such share of Common Stock (determined without giving
effect to any discount for (i) a minority interest, or (ii) any lack of transferability or
liquidity), as determined by an investment banking firm of nationally recognized standing
selected by the Corporation and acceptable to the Majority Holders, on the basis of a sale
between a willing seller and buyer, neither acting under any compulsion. If the investment
banking firm selected by the Corporation is not acceptable to the Majority Holders and the
Corporation and the Majority Holders cannot agree on a mutually acceptable investment
banking firm, then the Majority Holders and the Corporation shall each choose one such
investment banking firm and the respective chosen firms shall agree on another investment
banking firm which shall make the determination. The Corporation shall retain, at its sole
cost, such investment banking firm or firms as may be necessary for the determination of
Appraised Value.

Business
Day shall mean any day that is not a Saturday or Sunday or a day on which banks are
required or permitted to be closed in the State of New York.

Common
Stock shall mean (except where the context otherwise indicates) the Common Stock,
par value $.10 per share, of the Corporation as constituted on the date hereof, and any
capital stock into which such Common Stock may thereafter be changed, and shall also
include (i) capital stock of the Corporation of any other class (regardless of how
denominated) issued to the holders of shares of Common Stock upon any reclassification
thereof which is also not preferred as to dividends or assets over any other class of
stock of the Corporation and which is not subject to redemption and (ii) shares of common
stock of any successor or acquiring corporation received by or distributed to the holders
of Common Stock of the Corporation in the circumstances contemplated by Section 6(d)(v).

Corporation
shall have the meaning set forth in the preamble.

Conversion
Shares shall mean the shares of Common Stock issued or issuable upon conversion of
shares of Preferred Stock.

Convertible
Securities shall mean evidences of indebtedness, shares of stock or other securities
which are convertible into or exchangeable for, with or without payment of additional
consideration in cash or property, Additional Shares of Common Stock, either immediately
or upon the occurrence of a specified date or event, but shall not include the Preferred
Stock or the Warrants.

Fair
Market Value shall mean, as of any date, the value of a share of Common Stock
determined as follows:

(i)       
          if such stock is publicly traded and is then listed on a national securities
          market or exchange, its closing price on the date of determination on the
          principal national securities exchange on which the stock is listed or admitted
          to trading as reported in The Wall Street Journal;

(ii)       
          if such stock is then quoted on the Nasdaq National Market, its closing price on
          the Nasdaq National Market on the date of determination as reported in The Wall
          Street Journal;

(iii)       
          if such stock is publicly traded but is not listed or admitted to trading on a
          national securities exchange nor quoted on the Nasdaq National Market, the
          average of the closing bid and asked prices on the date of determination as
          reported by The Wall Street Journal (or, if not so reported, as otherwise
          reported by any newspaper or other source as the Board of Directors of the
          Corporation may determine in good faith); or

(iv)       
          if none of the foregoing is applicable, the Appraised Value.

Liquidation
Preference shall mean an amount equal to $12.00 per share with respect to the Series
A-1 Preferred Stock, $24.00 per share with respect to the Series A-2 Preferred Stock,
$36.00 per share with respect to the Series A-3 Preferred Stock and $6.00 per share with
respect to the Series A-4 Preferred Stock (subject to equitable adjustment for any stock
dividend, stock split, combination, reorganization, recapitalization, reclassification or
other similar event affecting the Preferred Stock).

Majority
Holders shall mean the holders of Warrant Securities exercisable for, convertible
into or representing, as the case may be, as of the date of any such determination, in
excess of fifty percent (50%) of the aggregate number of shares of Common Stock
theretofore obtained or thereafter obtainable through the exercise or conversion of
Warrant Securities.

Other
Property shall have the meaning set forth in Section 6(d)(v).

Permitted
Issuances shall mean the (a) the issuance of stock options to employees of the
Corporation or any Subsidiary of the Corporation pursuant to a stock option plan approved
by the stockholders of the Corporation authorizing the issuance of not more than two
million (2,000,000) shares of Common Stock, or (b) issuance of shares of Common Stock upon
(i) conversion of the Preferred Stock, or (ii) exercise of the stock options referred to
in clause (a) of this definition.

Person
shall mean any individual, corporation, sole proprietorship, partnership (general or
limited), limited liability company, joint venture, trust, association, institution, or
other legal entity or organization.

Series
shall mean the Series A-1 Preferred Stock, Series A-2 Preferred Stock, Series A-3
Preferred Stock or Series A-4 Preferred Stock, as applicable.

Significant
Subsidiary shall mean a subsidiary of the Corporation which would constitute a
significant subsidiary within the meaning of Rule 1-02 of Regulation S-X
promulgated by the United States Securities and Exchange Commission as in effect on the
date of filing hereof.

Stated
Value shall mean an amount equal to $12.00 for each share of Series A-1 Preferred
Stock, $24.00 for each share of Series A-2 Preferred Stock, $36.00 for each share of
Series A-3 Preferred Stock and $6.00 for each share of Series A-4 Preferred Stock (subject
to equitable adjustment for any stock dividend, stock split, combination, reorganization,
recapitalization, reclassification or other similar event affecting the Preferred Stock.

Warrants
shall mean the Warrants to purchase shares of Preferred Stock issued on or about the date
of filing of this statement and all warrants issued upon transfer, division or combination
of, or in substitution for, such Warrants.

Warrant
Securities shall mean the Warrants, the Preferred Stock and the Conversion Shares,
collectively.

2.       
          Dividends. If the Board of Directors of the Corporation declares a dividend
          payable upon the then outstanding shares of Common Stock (other than a stock
          dividend on the Common Stock distributed solely in the form of additional shares
          of Common Stock), the holders of the Preferred Stock shall be entitled to the
          amount of dividends per share of Preferred Stock as would be declared payable on
          the largest number of whole and fractional shares of Common Stock into which
          each share of Preferred Stock held by each holder thereof could be converted
          pursuant to the provisions of Section 6 hereof, such number determined as of the
          record date for the determination of holders of Common Stock entitled to receive
          such dividend and without regard to any restrictions on issuance of or payment
          of dividends on fractional shares.

3.       
          Voting Rights. Except as otherwise provided herein or by law, the holders of
          Preferred Stock shall have no right to vote in any election of directors or on
          any other matter.

4.       
          Rights of Liquidation.

(a)       
          General. In the event of any liquidation, dissolution or winding up of the
          Corporation, whether voluntary or involuntary, or in the event of its
          insolvency, before any distribution or payment is made to any holders of Common
          Stock or any other class or series of capital stock of the Corporation
          designated to be junior to the Preferred Stock in liquidation preference, and
          subject to the liquidation rights and preferences of any class or series of
          preferred stock designated in the future to be senior to, or on a parity with,
          the Preferred Stock with respect to liquidation preference, the holders of each
          share of Preferred Stock shall be entitled to be paid first out of the assets of
          the Corporation available for distribution to holders of the Corporations
          capital stock of all classes, whether such assets are capital, surplus or
          earnings, the greater of (i) the Liquidation Preference, or (ii) such amount per
          share of Preferred Stock as would have been payable had each share of Preferred
          Stock which is convertible into Common Stock been so converted immediately prior
          to such liquidation, dissolution or winding up.

(b)       
          Distributions Pro Rata. If the assets of the Corporation available for
          distribution to the holders of the Preferred Stock shall not be sufficient to
          make in full the payments required by Section 4(a) hereof, such assets shall be
          distributed ratably among the holders of the Preferred Stock based upon the
          aggregate Liquidation Preferences of the shares of Preferred Stock held by each
          such holder.

(c)       
          Treatment of Certain Transactions. A merger or consolidation of the Corporation
          with or into another corporation or other entity, any other corporate
          reorganization in which the shareholders of the Corporation immediately prior to
          such merger, consolidation or reorganization own less than fifty percent (50%)
          of the Corporations voting power immediately after such merger,
          consolidation or reorganization, any transaction or series of transactions in
          which in excess of fifty percent (50%) of the Corporations voting power is
          transferred, or any sale, transfer or other disposition of all or substantially
          all of the property, assets or business of the Corporation shall, at the option
          of holders representing a majority of the Series A-1 Preferred Stock, Series A-2
          Preferred Stock, Series A-3 Preferred Stock and Series A-4 Preferred Stock be
          deemed a Liquidation with respect to such Series of Preferred Stock. The
          provisions of this Section 4(c) shall not apply to (i) any reorganization,
          merger or consolidation involving only a change in the state of incorporation of
          the Corporation, or (ii) a merger of the Corporation with or into a wholly-owned
          subsidiary of the Corporation that is incorporated in the United States of
          America.

5.       
          Actions Requiring the Consent of the Holders of the Preferred Stock. The consent
          of the holders of at least sixty-six and two-thirds percent (66-2/3%) of the
          shares of each of the Series A-1 Preferred Stock, Series A-2 Preferred Stock,
          Series A-3 Preferred Stock and Series A-4 Preferred Stock at the time
          outstanding, given in person or by proxy, either in writing without a meeting or
          by vote at a meeting called for such purpose, acting as a separate class, shall
          be necessary for effecting or validating any of the following transactions:

(a)       
          Any amendment, alteration or waiver of any provision of the Corporations
          Articles or By-laws (including any filing of a statement with respect to shares)
          which adversely affects any of the rights, preferences or privileges of any of
          the holders of the applicable Series in a manner disproportionate to the rights,
          preferences or privileges of other holders of the Corporations securities;

(b)       
          Any increase or decrease (other than by conversion) in the authorized number of
          shares of Common Stock or Preferred Stock;

(c)       
          Any authorization, designation or issuance, whether by reclassification or
          otherwise, of any new class or series of stock or any other securities
          convertible into equity securities of the Corporation ranking on a parity with
          or senior to the Preferred Stock in right of redemption, liquidation preference,
          voting or dividends or any increase in the authorized or designated number of
          any such new class or series;

(d)       
          Any redemption or repurchase of Common Stock (except for acquisitions of Common
          Stock by the Corporation pursuant to agreements which permit the Corporation to
          repurchase such shares upon termination of services to the Corporation or in
          exercise of the Corporations right of first refusal upon a proposed
          transfer);

(e)       
          Any change in the authorized number of directors of the Corporation;

(f)       
          Any liquidation or dissolution of the Corporation;

(g)       
          Any merger or consolidation of the Corporation or a Significant Subsidiary with
          or into another corporation or other entity or any other corporate
          reorganization in which the shareholders of the Corporation immediately prior to
          such merger, consolidation or reorganization own less than fifty percent (50%)
          of the Corporations voting power immediately after such merger,
          consolidation or reorganization, or any transaction or

     series of transactions in which in excess of fifty percent (50%) of the Corporation's voting power is
transferred;

(h)       
          Any sale, transfer or other disposition of all or substantially all of the
          property, assets or business of the Corporation; and

(i)       
          Any sale, transfer or other disposition of all or substantially all of the stock
          or assets of any Significant Subsidiary of the Corporation.

6.       
          Conversion.

(a)       
          Right To Convert. A holder of record of any share or shares of Preferred Stock,
          other than Centre Strategic Investment Holdings, a Bermuda corporation, or any
          Affiliate thereof, shall have the right at any time, at such holders
          option, to convert, without the payment of any additional consideration, each
          share of Preferred Stock held by such holder into that number of fully paid and
          nonassessable shares of Common Stock as is determined by dividing (i) the Stated
          Value for such share of Preferred Stock by (ii) the applicable Conversion Value
          (as defined in Section 6(d) hereof) then in effect for the Preferred Stock. In
          the event that any Preferred Stock is held by Centre Strategic Investment
          Holdings, a Bermuda corporation, or any Affiliate thereof, such holder shall
          have no right to convert the shares of Preferred Stock so held.

(b)       
          Mechanics of Conversion. If the holder of shares of Preferred Stock desires to
          exercise such right of conversion, such holder must give written notice to the
          Corporation (the Conversion Notice) of the election by such holder
          to convert a stated number of shares of Preferred Stock (the Conversion
          Shares) into shares of Common Stock on the date specified in the
          Conversion Notice (which date shall not be earlier than three business days
          after the date on which the Corporation receives the Conversion Notice (the
          Conversion Date)), and by surrender of the certificate or
          certificates representing such Conversion Shares. The Conversion Notice shall
          also contain a statement of the name or names (with addresses) in which the
          certificate or certificates for Common Stock shall be issued. Promptly after the
          Conversion Date, receipt of the Conversion Notice and the surrender of the
          Conversion Shares, the Corporation shall issue and deliver, or cause to be
          delivered, to the holder of the Conversion Shares or such holders nominee
          or nominees, a certificate or certificates for the number of shares of Common
          Stock issuable upon the conversion of such Conversion Shares. Such conversion
          shall be deemed to have been effected as of the close of business on the
          Conversion Date, and the person or persons entitled to receive the shares of
          Common Stock issuable upon conversion shall be treated for all purposes as the
          holder or holders of record of such shares of Common Stock as of the close of
          business on such date.

(c)       
          Common Stock Reserved. The Corporation shall at all times reserve and keep
          available out of its authorized but unissued Common Stock, solely for issuance
          upon the conversion of shares of Preferred Stock as herein provided, such number
          of shares of Common Stock as shall from time to time be issuable upon the
          conversion of all of the shares of Preferred Stock at the time outstanding, free
          from preemptive rights or any other rights of persons other than the respective
          holders of the Preferred Stock (taking into account the adjustments provided
          herein) and take all action that may be necessary or appropriate (including
          without limitation exercising its best efforts to obtain shareholder approval)
          to increase the authorized number of shares of Common Stock if necessary to
          permit such conversion.

(d)       
          Conversion Value; Adjustments. The initial Conversion Value shall be $4.00 for
          the Series A-1 Preferred Stock, $8.00 for the Series A-2 Preferred Stock, $12.00
          for the Series A-3 Preferred Stock and $2.00 for the Series A-4 Preferred Stock.
          The Conversion Value is subject to adjustment in each case, in accordance with
          the provisions in this Section 6(d). Such respective Conversion Values in effect
          from time to time, as adjusted pursuant to this Section 6(d), are referred to
          herein as the Conversion Value for the Series A-1 Preferred Stock,
          the Series A-2 Preferred Stock, the Series A-3 Preferred Stock or the Series A-4
          Preferred Stock, as applicable. All of the remaining provisions of this Section
          6(d) shall apply separately to the respective Conversion Values for each of the
          Series A-1 Preferred Stock, the Series A-2 Preferred Stock, the Series A-3
          Preferred Stock and the Series A-4 Preferred Stock in effect from time to time.

(i)       
          Stock Dividends, Subdivisions and Combinations. If at any time the Corporation
          shall:

(1)       
          take a record of the holders of Common Stock for the purpose of entitling them
          to receive a dividend payable in, or other distribution of, Additional Shares of
          Common Stock,

(2)       
          subdivide its outstanding shares of Common Stock into a larger number of shares
          of Common Stock, or

(3)       
          combine its outstanding shares of Common Stock into a smaller number of shares
          of Common Stock,

then (A) the number of shares of
Common Stock into which each share of Preferred Stock is convertible immediately after the
occurrence of any such event shall be adjusted to equal the number of shares of Common
Stock which a record holder of the same number of shares of Common Stock for which such
share of Preferred Stock is convertible immediately prior to the occurrence of such event
would own or be entitled to receive after the happening of such event, and (B) the
Conversion Value for each such share of Preferred Stock shall be adjusted to equal (I) the
then Conversion Value for such share of Preferred Stock multiplied by the number of
Conversion Shares into which such share of Preferred Stock is convertible immediately
prior to the adjustment, divided by (II) the number of Conversion Shares for which such
share of Preferred Stock is convertible immediately after such adjustment.

(ii)       
          Certain Other Distributions. If at any time the Corporation shall take a record
          of the holders of Common Stock for the purpose of entitling them to receive any
          dividend or other distribution of:

(1)       
          any evidences of its indebtedness, any shares of its stock or any other
          securities or property (other than cash dividends legally payable out of
          earnings or earned surplus or Additional Shares of Common Stock); or

(2)       
          any warrants or other rights to subscribe for or purchase any evidences of its
          indebtedness, any shares of its stock or any other securities or property of any
          nature whatsoever (other than cash dividends legally payable out of earnings or
          earned surplus or Additional Shares of Common Stock),

then (A) the number of shares of
Common Stock into which each share of Preferred Stock is convertible shall be adjusted to
equal the product of the number of shares of Common Stock into which each such share of
Preferred Stock is convertible immediately prior to such adjustment by a fraction (I) the
numerator of which shall be the Fair Market Value per share of Common Stock at the date of
taking such record, and (II) the denominator of which shall be (x) such Fair Market Value
per share of Common Stock, minus (y) the amount allocable to one share of Common Stock of
the fair value (as determined in good faith by the Board of Directors of the Corporation
and supported by an opinion from an investment banking firm of recognized national
standing acceptable to the Majority Holders) of any and all such evidences of
indebtedness, shares of stock, other securities or property or warrants or other
subscription or purchase rights so distributable, and (B) the Conversion Value of each
share of Preferred Stock shall be adjusted to equal (I) the then Conversion Value
multiplied by the number of shares of Common Stock into which such share of Preferred
Stock is convertible immediately prior to the adjustment divided by (II) the number of
shares of Common Stock into which such share of Preferred Stock is convertible immediately
after such adjustment. A reclassification of the Common Stock (other than a change in par
value, or from par value to no par value) into shares of Common Stock and shares of any
other class of stock shall be deemed a distribution by the Corporation to the holders of
its Common Stock of such shares of such other class of stock within the meaning of this
Section 6(d)(ii) and, if the outstanding shares of Common Stock shall be changed into a
larger or smaller number of shares of Common Stock as a part of such reclassification,
such change shall be deemed a subdivision or combination, as the case may be, of the
outstanding shares of Common Stock within the meaning of Section 6(d)(i).

(iii)       
          Issuance of Additional Shares of Common Stock.

(1)       
          If at any time prior to the Commutation Date, as such term is defined in that
          certain Reinsurance Agreement among Centre Solutions (Bermuda) Limited and the
          operating subsidiaries of the Corporation, Penn Treaty Network America Insurance
          Company and American Network Insurance Company, with an effective date of
          December 31, 2001, the Corporation shall issue or sell any Additional Shares of
          Common Stock, other than Permitted Issuances, at a price per share less than the
          greater of (A) the Conversion Value then in effect and (B) the Fair Market Value
          of a share of Common Stock into which a share of Preferred Stock is then
          convertible, then the Conversion Value shall be reduced to a price equal to the
          lower of

(x)       
          a price determined by dividing (I) an amount equal to the sum of (1) the number
          of shares of Common Stock outstanding immediately prior to such issuance or sale
          multiplied by the then Conversion Value, plus (2) the aggregate consideration
          received by the Corporation upon such issuance or sale, by (II) the total number
          of shares of Common Stock outstanding immediately after such issuance or sale,
          and

(y)       
          a price determined by multiplying the Conversion Value then in effect by a
          fraction, the numerator of which is (I) the sum of (1) the number of shares of
          Common Stock outstanding immediately prior to such issue or sale multiplied by
          the Fair Market Value immediately prior to such issue or sale plus (2) the
          aggregate consideration, if any, received by the Company upon such issue or
          sale, divided by (II) the total number of shares of Common Stock outstanding
          immediately after such issue or sale, and the denominator of which shall be the
          Fair Market Value immediately prior to such issuance or sale.

(2)       
          The provisions of Section 6(d)(iii)(1) shall not apply to any issuance of
          Additional Shares of Common Stock for which an adjustment is provided under
          Section 6(d)(i) or (ii). No adjustment of the Warrant Price shall be made under
          Section 6(d)(iii) upon the issuance of any Additional Shares of Common Stock
          which are issued pursuant to the exercise of any warrants, options or other
          subscription or purchase rights or pursuant to the exercise of any conversion or
          exchange rights in any Convertible Securities, if any such adjustment shall
          previously have been made upon the issuance of such warrants, options or other
          rights or upon the issuance of such Convertible Securities (or upon the issuance
          of any warrant or other rights therefor) pursuant to Section 6(d)(iv).

(iv)       
          Issuance of Convertible Securities, Warrants or Other Rights. If at any time the
          Corporation shall take a record of the holders of its Common Stock for the
          purpose of entitling them to receive a distribution of, or shall in any manner
          (whether directly or by assumption in a merger in which the Corporation is the
          surviving corporation) issue or sell, any Convertible Securities, warrants or
          other rights to subscribe for or purchase any Additional Shares of Common Stock
          or any Convertible Securities, other than Permitted Issuances, whether or not
          the rights to exchange or convert thereunder are immediately exercisable, if the
          consideration per share of Common Stock receivable upon exercise of such
          warrants or other rights or upon conversion or exchange of such Convertible
          Securities shall be less than the greater of the Conversion Value in effect
          immediately prior to the time of such issue or sale or the Fair Market Value
          immediately prior to such issue or sale, then the Conversion Value shall be
          adjusted as provided in Section 6(d)(iii) on the basis that (i) the maximum
          number of Additional Shares of Common Stock issuable pursuant to all such
          warrants or other rights or necessary to effect the conversion or exchange of
          all such Convertible Securities shall be deemed to have been issued and
          outstanding, (ii) the price per share of such Additional Shares of Common Stock
          shall be deemed to be the lowest possible price per share at which such
          Additional Shares of Common Stock are available to such holders, and (iii) the
          Corporation shall have received all of the consideration payable therefor as of
          the date of the actual issuance of such warrants or other rights or such
Convertible
Securities. No further adjustments of the Conversion Value shall be made upon the actual
issue of such Common Stock or of such Convertible Securities upon exercise of such
warrants or other rights or upon the actual issue of such Common Stock upon such
conversion or exchange of such Convertible Securities, provided that, where no such
adjustment has been made at the time of issuance, an adjustment shall be made at the time
of the conversion of any such Convertible Securities or at the time of the exercise of any
such warrants or other rights if such an adjustment is required by Section 6(d)(iii).

(v)       
          Reorganization, Reclassification, Merger, Consolidation or Disposition of
          Assets. In case the Corporation shall reorganize its capital, reclassify its
          capital stock, consolidate or merge with or into another corporation (where the
          Corporation is not the surviving corporation), or sell, transfer or otherwise
          dispose of all or substantially all its property, assets or business to another
          Person and, pursuant to the terms of such reorganization, reclassification,
          merger, consolidation or disposition of assets, shares of common stock of the
          successor or acquiring corporation, or any cash, shares of stock or other
          securities or property of any nature whatsoever (including warrants or other
          subscription or purchase rights) in addition to or in lieu of common stock of
          the successor or acquiring Person (Other Property), are to be
          received by or distributed to the holders of Common Stock of the Corporation,
          then each holder of Preferred Stock shall have the right thereafter to receive,
          upon conversion of the Preferred Stock, the number of shares of common stock of
          the successor or acquiring corporation and Other Property receivable upon or as
          a result of such reorganization, reclassification, merger, consolidation or
          disposition of assets by a holder of the number of shares of Common Stock into
          which a share of Preferred Stock is convertible immediately prior to such event.
          In case of any such reorganization, reclassification, merger, consolidation or
          disposition of assets, the successor or acquiring Person shall expressly assume
          the due and punctual observance and performance of each and every covenant and
          condition of the terms of the Preferred Stock to be performed and observed by
          the Corporation and all the obligations and liabilities hereunder, subject to
          such modifications as may be deemed appropriate (as determined by resolution of
          the Board of Directors of the Corporation) in order to provide for adjustments
          of shares of the Common Stock into which the Preferred Stock is convertible
          which shall be as nearly equivalent as practicable to the adjustments provided
          for in this Section 6(d). The foregoing provisions of this Section 6(d)(v) shall
          similarly apply to successive reorganizations, reclassifications, mergers,
          consolidations or disposition of assets.

(vi)       
          Other Action Affecting Common Stock. In case at any time or from time to time
          the Corporation shall take any action in respect of its Common Stock, other than
          the payment of cash dividends legally payable out of earnings or earned surplus
          or any other action described in this Section 6(d), then the number of shares of
          Common Stock or other stock into which a share of Preferred Stock is convertible
          and/or the Conversion Value shall be adjusted in such manner as may be equitable
          in the circumstances.

(vii)       
          Computation of Consideration. To the extent that any Additional Shares of Common
          Stock or any Convertible Securities or any warrants or other rights to subscribe
          for or purchase any Additional Shares of Common Stock or any Convertible
          Securities shall be issued for cash consideration, the consideration received by
          the Corporation therefor shall be the amount of the cash received by the
          Corporation therefor, or, if such Additional Shares of Common Stock or
          Convertible Securities are offered by the Corporation for subscription, the
          subscription price, or, if such Additional Shares of Common Stock or Convertible
          Securities are sold to underwriters or dealers for public offering without a
          subscription offering, the initial public offering price (in any such case
          subtracting any amounts paid or receivable for accrued interest or accrued
          dividends, but not subtracting any compensation, discounts or expenses paid or
          incurred by the Corporation for and in the underwriting of, or otherwise in
          connection with, the issuance thereof). To the extent that such issuance shall
          be for a consideration other than cash, or in case any Additional Shares of
          Common Stock or any Convertible Securities or any warrants or other rights to
          subscribe for or purchase such Additional Shares of Common Stock or Convertible
          Securities shall be issued in connection with any merger in which the
          Corporation issues any securities, then the amount of such consideration shall
          be deemed to be the fair value of such consideration at the time of such
          issuance as determined in good faith by the Board of Directors of the
          Corporation or, if so requested by the Majority Holders, by a nationally
          recognized independent financial expert selected by the Majority Holders. The
          consideration for any Additional Shares of Common Stock issuable pursuant to any
          warrants or other rights to subscribe for or purchase the same shall be the
          consideration, if any, received by the Corporation for issuing such warrants or
          other rights plus the additional consideration payable to the Corporation upon
          exercise of such warrants or other rights. The consideration for any Additional
          Shares of Common Stock issuable pursuant to the terms of any Convertible
          Securities shall be the consideration received by the Corporation for issuing
          warrants or other rights to subscribe for or purchase such Convertible
          Securities, plus the consideration paid or payable to the Corporation in respect
          of the subscription for or purchase of such Convertible Securities, plus the
          additional consideration, if any, payable to the Corporation upon the exercise
          of the right of conversion or exchange contained in such Convertible Securities.
          In case of the issuance at any time of any Additional Shares of Common Stock or
          Convertible Securities in payment or satisfaction of any dividends upon any
          class of stock other than Common Stock, the Corporation shall be deemed to have
          received for such Additional Shares of Common Stock or Convertible Securities a
          consideration equal to the amount of such dividend so paid or satisfied.

(viii)       
          Readjustment of Conversion Value. Upon the expiration of the right to convert,
          exchange or exercise any Convertible Securities or any warrant or other right,
          the issuance of which effected an adjustment in the Conversion Value, if any
          such Convertible Securities or any warrant or other right shall not have been
          converted, exercised or exchanged, the number of shares of Common Stock deemed
          to be issued and outstanding by reason of the fact that they were issuable upon
          such conversion, exchange or exercise shall no longer be computed as set forth
          above, and the Conversion Value shall forthwith be readjusted and thereafter be
          the price which it would have been (but reflecting any other adjustments in the
          Conversion Value made pursuant to the provisions of this Section 6(d) after the
          issuance of such Convertible Securities, warrants or other rights) had the
          adjustment of the Conversion Value been made in accordance with the issuance or
          sale of the number of Additional Shares of Common actually issued upon
          conversion, exchange or issuance of such Convertible Securities, warrants or
          other rights and thereupon only the number of Additional Shares of Common
          actually so issued shall be deemed to have been issued and only the
          consideration actually received by the Corporation shall be deemed to have been
          received by the Corporation.

(ix)       
          Other Provisions. For the purposes of this Section 6(d), the following
          provisions shall also be applicable:

(1)       
          All calculations under this Section 6(d) shall be made to the nearest cent or
          the nearest 1/100th of a share, as the case may be.

(2)       
          No adjustment in the Conversion Value shall be made if such adjustment would
          result in a change in the Conversion Value of less than $.01, provided that any
          such adjustments not made shall be carried forward and taken into account at the
          time of any subsequent adjustment in the Conversion Value.

(3)       
          The number of shares of Common Stock at any time outstanding shall not include
          any shares thereof then directly or indirectly owned or held by or for the
          account of the Corporation or any Subsidiary.

(4)       
          Whenever the Board of Directors of the Corporation shall be required to make any
          determination under this Section 6(d), such determination may be challenged in
          good faith by a majority of the holders of the shares of any Series, and any
          dispute shall be resolved by an investment banking firm of recognized national
          standing selected by the Corporation and acceptable to such holders.

(x)       
          Construction with the Warrants. The provisions of this Section 6(d) shall be
          construed with due regard for the fact that the Preferred Stock is issuable upon
          the exercise of the Warrants, which contain adjustment provisions similar to
          this Section 6(d). Such provisions and the provisions of Section 6(d) shall be
          construed so that an event giving rise to an adjustment under the terms of the
          Warrants and the Preferred Stock shall result in an adjustment under either the
          terms of the Warrants or the terms of the Preferred Stock, but in no event shall
          an adjustment arising out of the same event be made with respect to a specific
          share of Preferred Stock and the share of Preferred Stock issuable upon the
          exercise of the Warrant related thereto.

(e)       
          Notices to Holders of Preferred Stock.

(i)       
          Notice of Adjustments. Whenever the Conversion Value or the number of shares of
          Common Stock into which a share of Preferred Stock is convertible shall be
          adjusted pursuant to Section 6(d), the Corporation shall forthwith prepare a
          certificate to be executed by the chief financial officer of the Corporation
          setting forth, in reasonable detail, the event requiring the adjustment and the
          method by which such adjustment was calculated, specifying the number of shares
          of Common Stock into which a share of Preferred Stock is convertible and (if
          such adjustment was made pursuant to Section 6(d)(v) or (vi)) describing the
          number and kind of any other shares of stock or Other Property into which a
          share of Preferred Stock is convertible, and any change in the purchase price or
          prices thereof, after giving effect to such adjustment or change. The
          Corporation shall promptly cause a signed copy of such certificate to be
          delivered to each Holder in accordance with Section 9. The Corporation shall
          keep at its principal office copies of all such certificates and cause the same
          to be available for inspection at said office during normal business hours by
          any holder of Preferred Stock or any prospective purchaser of Preferred Stock
          designated by a holder thereof.

(ii)       
          Notice of Certain Corporate Action. In case the Corporation shall propose to (A)
          pay any dividend payable in stock of any class to the holders of its Common
          Stock or to make any other distribution to the holders of its Common Stock, (B)
          offer to the holders of its Common Stock rights to subscribe for or to purchase
          any Convertible Securities or Additional Shares of Common Stock or shares of
          stock of any class or any other securities, rights or options, (C) effect any
          reclassification of its Common Stock (other than a reclassification involving
          only the subdivision or combination of outstanding shares of Common Stock), (D)
          effect any capital reorganization or recapitalization, (E) effect any
          consolidation, merger or sale, transfer or other disposition of all or
          substantially all its property, assets or business, or (F) effect the
          liquidation, dissolution or winding up of the Corporation, then in each such
          case, the Corporation shall give to each holder of Preferred Stock, in
          accordance with Section 9, a notice of such proposed action, which shall specify
          the date on which a record is to be taken for the purposes of such stock
          dividend, distribution or rights, or the date on which such reclassification,
          reorganization, recapitalization, consolidation, merger, sale, transfer,
          disposition, liquidation, dissolution or winding up is to take place and the
          date of participation therein by the holders of Common Stock, if any such date
          is to be fixed, as well as the record date for any vote on any such action and
          shall also set forth such facts with respect thereto as shall be reasonably
          necessary to indicate the effect of such action on the Common Stock and the
          number and kind of any other shares of stock into which the Preferred Stock may
          become convertible, after giving effect to any adjustment which will be required
          as a result of such action. Such notice shall be so given in the case of any
          action covered by clause (A) or (B) above at least twenty (20) days prior to the
          record date for determining holders of the Common Stock for purposes of such
          action and, in the case of any other such action, at least twenty (20) days
          prior to the date of the taking of such proposed action or the date of
          participation therein by the holders of Common Stock, whichever shall be
          earlier.

7.       
          No Impairment. The Corporation shall not by any action including, without
          limitation, amending its certificate of incorporation or through any
          reorganization, transfer of assets, consolidation, merger, dissolution, issue or
          sale of securities or any other voluntary action, avoid or seek to avoid the
          observance or performance of any of the terms of the Preferred Stock, but will
          at all times in good faith carry out of all such terms and take all such actions
          as may be necessary or appropriate to protect the rights of holders of Preferred
          Stock against impairment.

8.       
          Fractional Shares. The Corporation shall not be required to issue or cause to be
          issued fractional shares of Common Stock on the conversion of Preferred Stock.
          The number of full Conversion Shares which shall be issuable upon the conversion
          of any shares of Preferred Stock shall be computed on the basis of the aggregate
          number of Conversion Shares purchasable on conversion of the shares of Preferred
          Stock so presented. If any fraction of a Conversion Share would, except for the
          provisions of this Section 8, be issuable on the conversion of the Preferred
          Stock, the Corporation shall, at its option, (a) pay an amount in cash equal to
          the Conversion Value multiplied by such fraction or (b) round the number of
          Conversion Shares issuable up to the next whole number of such shares.

9.       
          Notices. Any and all notices or other communications or deliveries hereunder
          shall be in writing and shall be deemed given and effective on the earliest of
          (i) the date of transmission, if such notice or communication is delivered via
          facsimile at the facsimile telephone number specified in this Section with
          respect to notices to the Corporation, or the facsimile number of a holder of
          Preferred Stock set forth in the records of the Corporation with respect to
          notices to such holder, prior to 4:30 p.m. (Eastern time) on a Business Day,
          (ii) the Business Day after the date of transmission, if such notice or
          communication is delivered via facsimile at the facsimile telephone number
          specified in this Section with respect to notices to the Corporation, or the
          facsimile number of a holder of Preferred Stock set forth in the records of the
          Corporation with respect to notices to such holder, later than 4:30 p.m.
          (Eastern time), (iii) the Business Day following the date of mailing, if sent by
          nationally recognized overnight courier service to the delivery address
          specified in this Section with respect to notices to the Corporation, or the
          delivery address of a holder of Preferred Stock set forth in the records of the
          Corporation with respect to notices to such holder, or (iv) upon actual receipt
          by the party to whom such notice is required to be given. The address for such
          communications to the Corporation shall be 3440 Lehigh Street, Allentown,
          Pennsylvania 18103-7001, Attn: Jane Bagley, facsimile number (610) 965-0668.



---

Microfilm Number
2003023-146

# PENNSYLVANIA
DEPARTMENT OF STATE

# CORPORATION BUREAU

Articles of Amendment
 Domestic Corporation

(15 Pa.C.S.)

`Entity Number                                 X   Business Corporation (ss.1915)
145993                                      ___ Nonprofit Corporation (ss.5915)

Name:    Penn Treaty American Corporation   Document will be returned to the name and
         ATTN: Linda G. Carraghan, Esq.     address you enter to the left.
         3440 Lehigh Street
         Allentown, PA 18103
                                                     Filed in the Department of State on MAR 31 2003

                                                     __/s/_________________________
                                                     Acting Secretary of the Commonwealth`

In
compliance with the requirements of the applicable provisions (relating to articles of
amendment), the undersigned, desiring to amend its articles, hereby states that:

| | 1. | The name of the corporation is: Penn Treaty American Corporation
| | -- | ----------------------------------------------------------------

| | 2. | The (a) address of this corporations current registered office in this
          Commonwealth or (b) name of its commercial registered officer provider and the
          county of venue is (the Department is hereby authorized to correct the following
          information to conform to the records of the Department):
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | a. | Number and Street City State Zip County 3440 Lehigh Street
          Allentown PA 18103 Lehigh
| | -- | ----------------------------------------------------------------------------------------------

| | b. | Name of Commercial Registered Officer Provider: N/A
| | -- | ---------------------------------------------------

| | 3. | The statute by or under which it was incorporated: Pennsylvania Business
          Corporation Law, Act of May 5, 1933, P.L. 364, as amended
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------

| | 4. | The date of its incorporation: May 13, 1965
| | -- | -------------------------------------------

5.       
          Check, and if appropriate complete, one of the following:

| | X The amendment shall be effective upon filing these Articles of Amendment
in the Department of State. ____ The amendment shall be effective on: ______________ at
___________.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

6.       
          Check one of the following:

| | XThe amendment was adopted by the shareholders or members pursuant to 15 Pa.C.S.
§ 1914(a) and (b) or §5914(a). ___ The amendment was adopted by the board of
directors pursuant to 15 Pa.C.S. § 1914(c) or § 5914(b).
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

7.       
          Check, and if appropriate, complete one of the following:

| | ___
The amendment adopted by the corporation, set forth in full, is as follows:
______________________ XThe amendment adopted by the corporation is set
forth in full in Exhibit A attached hereto and made a part hereof.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

8.       
          Check if the amendment restates the Articles:

___
The restated Articles of Incorporation supercede the original articles and all amendments
thereto.

---

IN TESTIMONY WHEREOF, the undersigned
corporation has caused these Articles of Amendment to be signed by a duly authorized
officer thereof this 28thday of March, 2003.

`PENN TREATY AMERICAN COPORATION
                                            By:      /s/ Michael F. Grill
                                            Title:   Vice President & Treasurer`

---

# EXHIBIT A

The first paragraph of Article FIFTH
of the Restated Articles of Incorporation, as amended, shall be amended and restated so
that such first paragraph of such Article FIFTH shall be and read in its entirety as
follows:

| | FIFTH:
The aggregate number of shares which the Corporation shall have authority to issue is
150,000,000 shares of common stock, par value $.10 per share (Common Stock);
and 5,000,000 shares of preferred stock, par value $1.00 per share (Preferred
Stock).
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



---

# PENNSYLVANIA
DEPARTMENT OF STATE

# CORPORATION BUREAU

Articles of Amendment
 Domestic Corporation

(15 Pa.C.S.)

`Entity Number                                 X   Business Corporation (ss.1915)
145993                                      ___ Nonprofit Corporation (ss.5915)

Name:    Penn Treaty American Corporation   Document will be returned to the name and
         ATTN: Linda G. Carraghan, Esq.     address you enter to the left.
         3440 Lehigh Street
         Allentown, PA 18103
                                                     Filed in the Department of State on JUL 08 2005

                                                     /s/ Pedro A. Cortes
                                            Secretary of the Commonwealth`

In
compliance with the requirements of the applicable provisions (relating to articles of
amendment), the undersigned, desiring to amend its articles, hereby states that:

| | 1. | The name of the corporation is: Penn Treaty American Corporation
| | -- | ----------------------------------------------------------------

| | 2. | The (a) address of this corporations current registered office in this
                    Commonwealth or (b) name of its commercial registered officer provider and the
                    county of venue is (the Department is hereby authorized to correct the following
                    information to conform to the records of the Department):
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

`a.       Number and Street          City             State    Zip      County
                  3440 Lehigh Street        Allentown         PA       18103    Lehigh`

| | b. | Name of Commercial Registered Officer Provider: N/A
| | -- | ---------------------------------------------------

| | 3. | The statute by or under which it was incorporated: Pennsylvania Business
                    Corporation Law, Act of May 5, 1933, P.L. 364, as amended
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4. | The date of its incorporation: May 13, 1965
| | -- | -------------------------------------------

5.       
          Check, and if appropriate complete, one of the following:

X The amendment shall be effective upon filing these Articles of Amendment
in the Department of

State.

6.       
          Check one of the following:

| | XThe amendment was adopted by the shareholders or members pursuant to 15 Pa.C.S.
§ 1914(a) and (b) or §5914(a). ___ The amendment was adopted by the board of
directors pursuant to 15 Pa.C.S. § 1914(c) or § 5914(b).
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

7.       
          Check, and if appropriate, complete one of the following:

| | ___
The amendment adopted by the corporation, set forth in full, is as follows:
______________________ XThe amendment adopted by the corporation is set
forth in full in Exhibit A attached hereto and made a part hereof.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

8.       
          Check if the amendment restates the Articles:

___
The restated Articles of Incorporation supersede the original articles and all amendments
thereto.

---

IN TESTIMONY WHEREOF, the undersigned
corporation has caused these Articles of Amendment to be signed by a duly authorized
officer thereof this 7thday of July, 2005.

`PENN TREATY AMERICAN CORPORATION
                                            By:      /s/ William W. Hunt
                                            Title:   President & Chief Executive Officer`

---

# EXHIBIT A

# Amendment to Restated
and Amended Articles of Incorporation, as amended

The first paragraph of Article FIFTH
of the Restated Articles of Incorporation, as amended, shall be amended and restated to
read in its entirety as follows:

FIFTH: The aggregate number of
shares which the Corporation shall have authority to issue is 37,500,000 shares of common
stock, par value $.10 per share (Common Stock); and 1,250,000 shares of
preferred stock, par value $1.00 per share (Preferred Stock).

Upon the effectiveness of these
Articles of Amendment pursuant to the Pennsylvania Business Corporation Law (the
Effective Time), every four shares of Common Stock of the Corporation issued
and outstanding immediately prior to the Effective Time (the Old Common Stock)
will be automatically reclassified as and converted into one share of Common Stock of the
Corporation (the New Common Stock).

Notwithstanding the immediately
preceding sentence, no fractional shares of New Common Stock shall be issued to the
holders of record of Old Common Stock in connection with the foregoing reclassification of
shares of Old Common Stock. In lieu thereof, the aggregate of all fractional shares
otherwise issuable to the holders of record of Old Common Stock shall be issued to the
Corporations transfer agent, as agent, for the accounts of all holders of record of
Old Common Stock otherwise entitled to have a fraction of a share of New Common Stock
issued to them. The sale of all of the shares representing fractional interests will be
effected by that agent as soon as practicable after the Effective Time on the basis of
prevailing market prices of the New Common Stock on the New York Stock Exchange at the
time of the sale. After such sale and upon the surrender of the stockholders stock
certificates, the transfer agent will pay to such holders of record their pro rata share
of the net proceeds derived from the sale of the shares representing fractional interests.

Each stock certificate that,
immediately prior to the Effective Time, represented shares of Old Common Stock shall,
from and after the Effective Time, automatically and without the necessity of presenting
the same for exchange, represent that number of whole shares of New Common Stock into
which the shares of Old Common Stock represented by such certificate shall have been
reclassified (as well as the right to receive cash in lieu of any fractional shares of New
Common Stock as set forth above); provided, however, that each holder of record of a
certificate that represented shares of Old Common Stock shall receive, upon surrender of
such certificate, a new certificate representing the number of whole shares of New Common
Stock into which the shares of Old Common Stock represented by such certificate shall have
been reclassified, as well as any cash in lieu of fractional shares of New Common Stock to
which such holder may be entitled pursuant to the immediately preceding paragraph.