AMENDED AND RESTATED ARTICLES OF INCORPORATION
                                       OF
                           PENNSYLVANIA POWER COMPANY

                           (Effective March 15, 2002)


      FIRST:  The name of the  Corporation  is  PENNSYLVANIA  POWER COMPANY (the
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"Corporation").

      SECOND: The purposes for which the Corporation is incorporated shall be to
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engage in any or all lawful business for which  corporations may be incorporated
under the provisions of the act of the General  Assembly of the  Commonwealth of
Pennsylvania  entitled  "An Act  authorizing  the  merger and  consolidation  of
certain  corporations" enacted May 3, 1909, as amended, and under all amendments
and supplements  thereto,  or any revision or restatement thereof or any statute
enacted to take the place thereof,  including, but not limited to, the following
purposes:

            (1)  To  manufacture,  acquire  by  purchase,  lease  or  otherwise,
      transmit,  distribute,  sell and supply  electricity to public and private
      consumers for light, heat and power and any or all other uses.

            (2)  To  manufacture,  acquire  by  purchase,  lease  or  otherwise,
      transmit,  distribute,  sell and  supply  steam and hot water for heat and
      power and any or all other uses.

            (3)  To  manufacture,  acquire  by  purchase,  lease  or  otherwise,
      transmit,  distribute, sell and supply cold water and ice for cold storage
      and refrigerator purposes and any or all other uses.

            (4)  To  manufacture,  acquire  by  purchase,  lease  or  otherwise,
      transmit, distribute, sell and supply natural or artificial gas for light,
      heat and power and any or all other uses.

            (5) To  acquire,  own,  maintain,  operate and dispose of street and
      interurban railroads,  with all necessary or convenient  appurtenances and
      appliances incidental to the operation of street and interurban railroads,
      said  railroads  to be operated by electric or other  motive  power except
      steam or animal power, telegraph and telephone lines, and to acquire, own,
      maintain, operate and dispose of automobiles and busses with all necessary
      or convenient  appurtenances and appliances incidental to the operation of
      automobiles  and busses and to engage in the general  business of a common
      carrier upon its railroad or lines of railway, and telegraph and telephone
      lines, or with its automobiles and busses.


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            (6) To acquire and hold the  securities of electric  power and light
      and gas companies and other public utility  companies and companies owning
      the stocks or securities of public utility companies.

            (7) To acquire and hold the  securities of companies  engaged in the
      business of  operating or  supervising  the  operation  of public  utility
      companies and of companies  doing a general  construction,  engineering or
      contracting business with public utility or other companies.

            (8) To invest  and deal with the  monies of the  Corporation  in any
      manner,  and to acquire by  purchase,  by the  exchange  of stock or other
      securities of the Corporation,  by subscription or otherwise and to invest
      in, to hold for  investment or for any other purpose and to deal in and to
      use,  sell,  pledge or  otherwise  dispose of any  stocks,  bonds,  notes,
      debentures and other securities and obligations of any Government,  State,
      municipality  or corporation or  association or  partnership,  domestic or
      foreign  (including  without  prejudice to the generality of the foregoing
      the companies  described in paragraphs 6 and 7 above),  and while owner of
      any  such  stocks,  bonds,  notes,   debentures  or  other  securities  or
      obligations,  to  exercise  all  the  rights,  powers  and  privileges  of
      ownership,  including among other things the right to vote thereon for any
      and all purposes.

            (9) Either directly, or through subsidiary  companies,  to engage in
      the business of operating or  supervising  the  management or operation of
      public utility companies.

            (10) To aid in any  lawful  manner  by loan,  subsidy,  guaranty  or
      otherwise,  any company whose stocks,  bonds,  notes,  debentures or other
      securities or obligations are held or controlled directly or indirectly by
      the Corporation,  and to do any and all lawful acts or things necessary or
      advisable to protect,  preserve,  improve or enhance the value of any such
      stocks, bonds, notes, debentures or other securities or obligations.

            (11) To guarantee  and to assume the payment of any dividends on any
      shares of the capital  stock of any company in which the  Corporation  may
      either   directly  or  indirectly  have  an  interest  as  stockholder  or
      otherwise,  and to assume and to guarantee by endorsement or otherwise the
      payment of the  principal  of and the  interest  on bonds,  notes or other
      obligations created or to be created by any such company.

            (12) To acquire,  to develop,  to improve,  to sell,  to assign,  to
      transfer,  to convey,  to lease,  to sublease,  to pledge and to otherwise
      alienate  and  dispose  of and to  mortgage  or  otherwise  encumber  real
      property  situated in any part of the world and the  fixtures and personal
      property incident thereto or connected therewith.


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            (13) To develop and turn to account any land acquired by or in which
      the  Corporation  is  interested  and in  particular  by  laying  out  and
      preparing the same for building purposes, constructing, altering and fully
      equipping  buildings and by letting the same by building lease or building
      agreement  and by  advancing  money to and  entering  into  contracts  and
      arrangements of all kinds with builders, contractors, tenants and others.

            (14) To construct, improve and fully equip electric power generating
      works, stations and substations, transmission lines, steam heating plants,
      water works, gas works,  reservoirs,  roads and additions to or extensions
      or  betterments  of  any  and  all  of  the  same,  and  other  works  and
      conveniences  which  the  Corporation  may  deem  directly  or  indirectly
      conducive to these objects, and to sell, assign,  transfer,  convey, lease
      and/or sublease any of said stations,  substations,  works or conveniences
      to any other corporation or corporations,  association or associations, or
      individual or individuals  authorized to purchase or otherwise  acquire or
      lease the same.

            (15) To purchase,  to sell, to manufacture  and generally to deal in
      building  materials and goods,  wares and  merchandise and to carry on any
      other  lawful  trade or  business  incidental  to or  proper  or useful in
      connection with the purchase, sale, ownership,  construction and equipment
      of its property.

            (16) To  acquire,  to hold,  to own,  to  make,  to  dispose  of and
      generally to deal in grants,  concessions,  franchises,  rights of way and
      contracts  of every  kind  from or with  any  person,  firm,  association,
      corporation,  private,  public or municipal,  or body politic, and from or
      with the government or public  authorities of the United States, or of any
      State,  territory,  possession or dependency  thereof, or from or with the
      District of Columbia, or from or with any foreign government;  to cause to
      be  formed,  to  promote  and to aid in any  way in the  formation  of any
      corporation or association, domestic or foreign.

            (17) To make and  enter  into all  manner  and  kinds of  contracts,
      agreements and obligations for the purchasing,  acquiring, holding, using,
      dealing  in,  selling  or  otherwise  disposing  of any and all  kinds  of
      property, real and personal.

            (18) To borrow  money,  to issue bonds,  debentures,  notes or other
      obligations secured or unsecured of the Corporation; to secure the same by
      mortgage  or  mortgages  or deed or deeds of trust or pledge or other lien
      upon any or all of the property,  rights, privileges and franchises of the
      Corporation  wheresoever  situated,  acquired or to be acquired; to confer
      upon the holders of any debentures,  bonds,  notes or other obligations of
      the  Corporation  secured or unsecured  the right to convert the same into
      any class of stock of any series of the Corporation now or hereafter to be
      issued upon such terms as shall be fixed by the Board of Directors subject
      to the provisions  hereof;  to sell, to pledge and to otherwise dispose of


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      any  or  all   bonds,   debentures,   notes   or  other   obligations   of
      the Corporation; to purchase and  otherwise  to acquire  shares of its own
      capital stock and to hold, to sell, to assign,  to transfer and to reissue
      any or all of such shares; provided that the Corporation shall not use its
      funds or property for the purchase of its own shares of capital stock when
      such  use  would  cause  any  impairment  of  the  stated  capital  of the
      Corporation,  except as such  purchase  out of capital may be permitted by
      law,  and provided  further that shares of its own capital  stock owned by
      the Corporation shall not be voted upon directly or indirectly.

            (19) To acquire,  to hold, to use, to sell, to assign,  to lease, to
      mortgage and  otherwise to dispose of letters  patent of the United States
      or of any other country, patents, patent rights, copyrights,  licenses and
      privileges, inventions,  improvements and processes, trade marks and trade
      names  or  pending  applications  therefore,  relating  to  or  useful  in
      connection with any business of the Corporation or of any other company or
      association  in which the  Corporation  may have an  interest  directly or
      indirectly as a stockholder or otherwise.

            (20) To deal in stocks and  securities  either as an agent or broker
      or underwriter, or otherwise; to make advances or loans upon the pledge of
      securities to be bought,  sold or otherwise dealt in, or without security,
      so far as may be permitted by law.

            (21)  To  have  and to  exercise  all the  powers  now or  hereafter
      conferred  by  the  laws  of  the   Commonwealth  of   Pennsylvania   upon
      corporations  organized  under the laws  under  which the  Corporation  is
      organized  and  any and  all  laws  amendatory  thereof  and  supplemental
      thereto.

            (22) To conduct business in the Commonwealth of Pennsylvania,  other
      States,  the District of  Columbia,  the  territories  and colonies of the
      United  States and in foreign  countries,  and to have one or more offices
      out  of  the  Commonwealth  of  Pennsylvania,   as  well  as  within  said
      Commonwealth, and to hold, purchase, mortgage and convey real and personal
      property out of the  Commonwealth  of  Pennsylvania as well as within said
      Commonwealth.

            (23)  Generally to carry on and undertake any other lawful  business
      of the  same  general  nature,  which  may from  time to time  seem to the
      directors of the Corporation  capable of being conveniently  carried on in
      connection with the above objects, or calculated directly or indirectly to
      render  valuable  or  enhance  the  value  of  any  of  the  Corporation's
      properties, privileges or rights.

            (24) Generally to perform any and all acts connected  with,  arising
      from or  incidental  to the business to be carried on by the  Corporation,
      and to do all acts necessary and proper for the purposes of its business.

      The foregoing  clauses shall be construed both as objects and powers;  and
it is hereby  expressly  provided  that the  foregoing  enumeration  of specific
powers  shall not be held to limit or  restrict  in any  manner  the  objects or


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powers  of  the  Corporation,  and  that  the  Corporation  shall  possess  such
incidental   powers  as  are   reasonably   necessary  or  convenient   for  the
accomplishment of any of the objects or powers enumerated above, either alone or
in association with other corporations,  associations,  firms or individuals, to
the same  extent and as fully as  individuals  might or could do as  principals,
agents, contractors or otherwise.

      THIRD:  The registered office for the Corporation in this Commonwealth is:
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                           Pennsylvania Power Company
                               c/o C T Corporation
                     3 Gateway Center, Pittsburgh, PA 15222

      FOURTH:  The duration of the Corporation shall be perpetual.
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      FIFTH: The number of shares of the capital stock of the Corporation  shall
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be seven million, seven hundred thousand (7,700,000),  of which one million, two
hundred  thousand  (1,200,000)  are to have a par value of One  Hundred  Dollars
($100) per share and six million,  five hundred thousand (6,500,000) are to have
a par value of Thirty  Dollars  ($30) per share,  divided into one million,  two
hundred thousand  (1,200,000)  shares of Preferred Stock with a par value of One
Hundred  Dollars  ($100)  per  share  and six  million,  five  hundred  thousand
(6,500,000)  shares of Common Stock with a par value of Thirty Dollars ($30) per
share.

      Unless four quarterly  dividends  payable on the  Corporation's  Preferred
Stock of any series shall be in default, in whole or in part (and in such event,
unless all  defaults in the payment of  dividends on the stock of the holders of
the  Corporation's  Preferred  Stock  shall  have been  cured)  the  numbers  of
authorized shares of the  Corporation's  Preferred Stock of the par value of One
Hundred  Dollars  ($100) per share may be increased  from time to time solely by
the  affirmative  vote in favor thereof of the holders of at least a majority of
the shares of the Corporation's Common Stock at the time outstanding.

      SIXTH: The designations,  terms, relative rights, privileges,  limitation,
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preferences and voting powers,  or prohibitions,  restrictions or qualifications
of the voting and other rights and power of the shares of the Preferred Stock of
the Corporation, and of the Common Stock of the Corporation shall be as follows:


Preferred Stock

      Section 1. Division into and Issuance of Series of Preferred Stock
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      The  shares of the  Preferred  Stock  may be  divided  into and  issued in
series.  Each series shall be designated so as to distinguish the shares thereof
from the  shares of all other  series  and all  shares of the  Preferred  Stock,
irrespective of series,  shall be identical except as to the following  relative
rights and preferences in respect of any or all of which there may be variations


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between  different  series and, to the extent that series are not established in
or by these resolutions and to the extent that variations in the relative rights
and preferences as between series are not fixed and determined  therein,  series
may be established and, prior to the issuance of any shares of such series,  the
following  relative  rights  and  preferences  of  the  shares  thereof  may  be
determined,  by  the  Board  of  Directors  or by  the  stockholders,  as may be
permitted by the laws of the Commonwealth of Pennsylvania then applicable:

      (a) The rate of dividend and the dividend payment dates;

      (b) The price at which shares may be  redeemed,  such price to be not less
than $100 nor more than $115 per share,  plus  accrued  dividends to the date of
redemption;

      (c) The amount  payable upon shares in event of  involuntary  liquidation,
which  amount shall not be less than $100 per share or more than $115 per share,
plus accrued dividends;

      (d) The amount  payable  upon  shares in event of  voluntary  liquidation,
which  amount shall not be less than $100 per share or more than $115 per share,
plus accrued dividends;

      (e) The terms and conditions, if any, on which shares of such series shall
be by their terms convertible into or exchangeable for shares of any other class
or kind  of  stock  of the  Corporation  over  which  the  Preferred  Stock  has
preference as to payment of dividends and as to assets;

      (f) The sinking fund requirements,  if any, for the purchase or redemption
of shares of such series,  which  requirements  shall not permit the purchase or
redemption  of shares of such  series  while the  Corporation  is subject to the
Public Utility Holding Company Act of 1935 if the Corporation is in arrears with
respect to dividends on any series of Preferred Stock,  unless approval for such
purchase or redemption has been obtained under that Act.

      The  stockholders  of the  Corporation  by resolution  duly adopted by the
holders of a majority of the shares  entitled to vote at a meeting held for such
purpose,  or, if permitted by the laws of the Commonwealth of Pennsylvania  then
applicable,  the Board of Directors,  may authorize the issue and sale of any or
all of the  authorized and unissued  shares of Preferred  Stock as shares of any
series of Preferred Stock already duly established or which shall be established
in accordance herewith.


      Section 2.  General Provisions for Preferred Stock
      --------------------------------------------------

      The  following   provisions   shall  apply  to  all  the  Preferred  Stock
irrespective of series:


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      (A) The holders of the Preferred Stock of each series shall be entitled to
receive  dividends,  payable when and as declared by the Board of Directors,  on
such dates and at such rates as shall be determined for the  respective  series,
from the first day of the current  dividend period within which such stock shall
have been originally issued, before any dividends shall be declared or paid upon
or set apart for the Common Stock or any other kind of stock of the  Corporation
not having preference over the Preferred Stock as to payment of dividends.  Such
dividends  shall be  cumulative  so that if for any  dividend  period or periods
dividends  shall not have been paid or declared  and set apart for payment  upon
all  outstanding  Preferred  Stock at the rates  determined  for the  respective
series,  the  deficiency  shall be fully  paid,  or  declared  and set apart for
payment, before any dividends shall be declared or paid upon the Common Stock or
any other class or kind of stock of the Corporation  not having  preference over
the Preferred Stock as to payment of dividends.  Dividends shall not be declared
and set apart for payment,  or paid, on the  Preferred  Stock of any one series,
for any dividend  period,  unless  dividends have been or are  contemporaneously
declared and set apart for payment or paid on the Preferred  Stock of all series
for all dividend periods terminating on the same or an earlier date.

      (B) When full  cumulative  dividends as aforesaid upon the Preferred Stock
of all series then outstanding for all past dividend periods and for the current
dividend periods shall have been paid or declared and set apart for payment, the
Board of Directors may declare  dividends on the Common Stock or any other class
or kind of stock over which such Preferred  Stock has a preference as to payment
of dividends,  and no holders of any series of the Preferred Stock as such shall
be entitled to share therein; provided,  however, the declaration and payment of
such dividends shall be subject to the  restrictions  set forth in the following
provisions of this Paragraph (B):

            (1) No dividends  (other than dividends paid in stock over which the
      Preferred Stock has preference as to payment of dividends and as to assets
      or dividends paid in cash or property, if presently thereafter there shall
      be paid to the  Corporation  in cash or property  an amount  equal to such
      dividends,  for shares of, or as a capital  contribution  with respect to,
      such stock over which the Preferred  Stock has such  preference)  shall be
      paid or any other  distribution  of assets made,  by purchase of shares or
      otherwise,  on  Common  Stock or on any  other  junior  stock,  as  herein
      defined,  except out of accumulated  surplus available for distribution to
      stock  over  which the  Preferred  Stock has  preference  as to payment of
      dividends and as to assets, earned subsequent to November 30, 1945, or if,
      at the time of  declaration  thereof  or the  making of such  distribution
      there  shall not remain to the  credit of earned  surplus  account  (after
      deducting  therefrom the amount of such dividends and  distributions),  an
      amount  at least  equal  to two and  one-half  (2-1/2)  times  the  annual
      dividend  requirements  on all then  outstanding  shares of the  Preferred
      Stock and of all other  classes or kinds of stock over which the Preferred
      Stock does not have  preference  as to the payment of dividends  and as to
      assets; and

            (2) The Corporation  shall not, unless authorized by the affirmative
      vote of the  holders of at least  66-2/3%  of the shares of the  Preferred



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      Stock at the time  outstanding,  pay any junior stock dividend,  as herein
      defined  (other than a dividend  paid in shares of junior  stock and other
      than  dividends  paid in cash if  simultaneously  therewith or immediately
      thereafter  there shall be paid to the  Corporation  for shares of or as a
      capital  contribution with respect to junior stock cash in an amount equal
      to such dividend), in contravention of the following provisions:

                  (a) If and so long  as the  junior  stock  equity,  as  herein
            defined, at the end of the calendar month immediately  preceding the
            date on which a dividend  on junior  stock is  declared  is, or as a
            result  of such  dividend  would  become,  less  than  20% of  total
            capitalization, as herein defined, the Corporation shall not declare
            such dividends in an amount which, together with all other dividends
            on junior stock paid within the year ending with and  including  the
            date on which  such  dividend  is  payable,  exceeds  50% of the net
            income of the  Corporation  available  for dividends on junior stock
            for the  twelve  full  calendar  months  immediately  preceding  the
            calendar  month in which such  dividends are declared,  except in an
            amount not  exceeding  the  aggregate  of  dividends on junior stock
            which under the restrictions set forth above in this subdivision (a)
            could have been, and have not been declared; and

                  (b) If and so long as the  junior  stock  equity at the end of
            the  calendar  month  immediately  preceding  the  date  on  which a
            dividend  on  junior  stock is  declared  is, or as a result of such
            dividend would become,  less than 25% but not less than 20% of total
            capitalization,  the  Corporation  shall not  declare  dividends  on
            junior stock in an amount which,  together with all other  dividends
            on junior stock paid within the year ending with and  including  the
            date on which  such  dividend  is  payable,  exceeds  75% of the net
            income of the  Corporation  available  for dividends on junior stock
            for the  twelve  full  calendar  months  immediately  preceding  the
            calendar  month in which such  dividends are declared,  except in an
            amount not  exceeding  the  aggregate  of  dividends on junior stock
            which under the  restrictions set forth above in subdivision (a) and
            in this  subdivision  (b)  could  have  been,  and  have  not  been,
            declared.

      As used in this Paragraph (B) "junior stock  dividend"  means any dividend
or  distribution  of assets in respect of shares of any stock (in this Paragraph
(B) and in Paragraph (F)(3) called "junior stock") of the Corporation over which
the  Preferred  Stock has  preference  as to  dividends  or as to assets and any
purchase or other acquisition of shares of such junior stock.

      As used in  this  Paragraph  (B) and in  Paragraph  (F)(3)  "junior  stock
equity"  shall  mean the  aggregate  of the par  value  of,  or  stated  capital
represented  by, the  outstanding  shares of junior stock,  all earned  surplus,
capital or paid-in surplus, and any premiums on the junior stock then carried on
the books of the Corporation, less


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            (i)  the  excess,  if  any,  of  the  aggregate  amount  payable  on
      involuntary  liquidation of the Corporation upon all outstanding shares of
      stock of the  Corporation  of all classes other than junior stock over the
      sum of (x) the  aggregate  par or stated  value of such shares and (y) any
      premiums thereon;

            (ii) any amounts on the books of the Corporation known, or estimated
      if not known,  to  represent  the excess,  if any, or recorded  value over
      original cost of used or useful utility plant; and

            (iii)  any  intangible  items  set  forth on the  asset  side of the
      balance sheet of the  Corporation as the result of accounting  convention,
      such as unamortized debt discount and expense;

provided, however, that no deductions shall be required to be made in respect of
items  referred to in  subdivisions  (ii) and (iii) above in cases in which such
items are being  amortized or are provided  for, or are being  provided  for, by
reserves.

      As used in this  Paragraph  (B)  "total  capitalization"  shall  mean  the
aggregate of

            (i) the  principal  amount of all  outstanding  indebtedness  of the
      Corporation  maturing  more  than  twelve  months  after the date of issue
      thereof; and

            (ii)  the par  value  or  stated  capital  represented  by,  and any
      premiums  carried  on the books of the  Corporation  in  respect  of,  the
      outstanding shares of all classes of the capital stock of the Corporation,
      earned surplus, and capital or paid-in surplus,  less any amounts required
      to be deducted  pursuant to subdivisions (ii) and (iii) of the immediately
      preceding paragraph in the determination of junior stock equity.

      (C) Upon any  dissolution,  liquidation or winding up of the  Corporation,
whether voluntary or involuntary, the holders of Preferred Stock of each series,
without any  preference of the shares of any series of Preferred  Stock over the
shares of any other series of Preferred Stock,  shall be entitled to receive out
of the assets of the Corporation,  whether capital, surplus or other, before any
distribution  of the assets to be  distributed  shall be made to the  holders of
Common Stock or of any other class or kind of stock not having  preference as to
assets over the  Preferred  Stock,  the amount  determined  to be payable on the
shares of such series in the event of voluntary or involuntary  liquidation,  as
the case may be. In case the assets shall not be  sufficient  to pay in full the
amounts  determined  to be payable on all the shares of  Preferred  Stock in the
event of  voluntary  or  involuntary  liquidation,  as the case may be, then the
assets  available for such payment shall be distributed to the extent  available
as follows:  first, to the payment, pro rata, of $100 per share on each share of
Preferred Stock  outstanding  irrespective of series;  second, to the payment of
the  accrued  dividends  on such  shares,  such  payment  to be made pro rata in
accordance with the amount of accrued  dividends on each such share; and, third,
to the payment of any amounts in excess of $100 per share plus accrued dividends
which  shall  have been determined  to be payable on the shares of any series in


<PAGE>


the event of  voluntary  or  involuntary  liquidation,  as the case may be, such
payment  also to be made pro rata in  accordance  with the  amounts,  if any, so
payable on each such share.  After payment to the holders of the Preferred Stock
of the full preferential amounts  hereinbefore  provided for, the holders of the
Preferred  Stock as such  shall  have no right or claim to any of the  remaining
assets of the  Corporation,  either upon any distribution of such assets or upon
dissolution,  liquidation  or  winding  up,  and  the  remaining  assets  to  be
distributed,  if any, upon a  distribution  of such assets or upon  dissolution,
liquidation  or winding up, may be  distributed  among the holders of the Common
Stock or of any other class or kind of stock over which the Preferred  Stock has
preference  as to  assets.  Without  limiting  the right of the  Corporation  to
distribute  its assets or to dissolve,  liquidate or wind up in connection  with
any  sale,  merger  or  consolidation,  the  sale  of all  the  property  of the
Corporation to, or the merger or  consolidation of the Corporation into or with,
any other  Corporation  shall not be deemed to be a distribution  of assets or a
dissolution, liquidation or winding up for the purposes of this Paragraph (C).

      (D) At the  option  of the  Board of  Directors  of the  Corporation,  the
Corporation  may  redeem  any  series  of  Preferred  Stock   determined  to  be
redeemable,  and each said series may be redeemed as a whole or in part,  at any
time at the redemption price determined for such series; provided, however, that
not less than  thirty nor more than sixty  days  previous  to the date fixed for
redemption a notice of the time and place  thereof shall be given to the holders
of record of the Preferred  Stock so to be redeemed by mail or  publication,  in
such  manner  as may be  prescribed  by the  By-Laws  of the  Corporation  or by
resolution of the Board of Directors,  provided that such resolution shall in no
way conflict with the By-Laws;  and, provided,  further,  that, in every case of
redemption  of less  than all of the  outstanding  shares  of any one  series of
Preferred Stock, the shares of such series to be redeemed shall be chosen by lot
in such manner as may be prescribed by resolution of the Board of Directors.  At
any time after notice of redemption  has been given in the manner  prescribed by
the By-Laws of the Corporation or by resolution of the Board of Directors to the
holders of stock so to be redeemed,  the Corporation  may deposit,  or may cause
its nominee to deposit,  the aggregate  redemption price with some bank or trust
company in the Borough of Manhattan, The City of New York, named in such notice,
payable  on the date  fixed  for  redemption  as  aforesaid  and in the  amounts
aforesaid  to the  respective  orders  of the  holders  of the  shares  so to be
redeemed, on endorsement to the Corporation or its nominee, or otherwise, as may
be required,  and upon surrender of the certificates  for such shares.  Upon the
deposit of said money as  aforesaid,  or, if no such deposit is made,  upon said
redemption  date  (unless  the  Corporation  defaults  in making  payment of the
redemption  price as set forth in such  notice),  such holders shall cease to be
stockholders with respect to said shares,  and from and after the making of said
deposit,  or,  if no such  deposit  is made,  after  the  redemption  date  (the
Corporation  not having  defaulted in making payment of the redemption  price as
set forth in such  notice),  the said holders shall have no interest in or claim
against the Corporation,  or its nominee, with respect to said shares, but shall
be  entitled  only to receive  said moneys on the date fixed for  redemption  as
aforesaid from said bank or trust company,  or, if no such deposit is made, from
the Corporation,  without interest thereon, upon endorsement,  if required,  and
surrender of the certificates as aforesaid.


<PAGE>


      If  such  deposit  shall  be  made  by a  nominee  of the  Corporation  as
aforesaid,  the previous  holders of the shares for the redemption of which such
deposit shall have been made shall, upon such deposit,  cease to have any rights
or interest in said shares except as set forth in the foregoing  paragraph,  and
such  nominee  shall,  upon such  deposit,  become the owner of the shares  with
respect to which such deposit was made and  certificates  of stock may be issued
to such nominee in evidence of such ownership.

      In case the holder of any such Preferred Stock shall not, within six years
after  said  deposit,  claim  the  amount  deposited  as  above  stated  for the
redemption thereof, the Depositary shall upon demand pay over to the Corporation
such amounts so deposited and the  Depositary  shall  thereupon be relieved from
all  responsibility to the holder thereof.  No interest on such deposit shall be
payable to any such holder.

      Nothing herein contained shall limit any legal right of the Corporation to
purchase  any shares of the  Preferred  Stock;  provided,  however,  that if the
Corporation be in default with respect to any quarterly dividend on any share of
the  Preferred  Stock,  it shall not acquire any shares of the  Preferred  Stock
(except by redemption of all shares of the Preferred  Stock) unless  approval is
obtained under the Public Utility Holding Company Act of 1935.

      (E) So long as any  shares of the  Preferred  Stock are  outstanding,  the
Corporation  shall not,  without the  affirmative  vote in favor  thereof of the
holders  of at  least  66-2/3%  of the  shares  of  Preferred  Stock at the time
outstanding,  create or authorize any shares of any class of shares preferred as
to dividends or as to assets over the Preferred Stock or issue any shares of any
such prior  ranking  stock more than twelve months after the date of such a vote
of the Preferred  Stock, or change any of the rights and preferences of the then
outstanding  Preferred  Stock so as to affect  adversely  the  holders  thereof;
provided,  however, that nothing in this Paragraph (E) contained shall authorize
any such  creation  or change  by the vote of the  holders  of a less  number of
shares of Preferred  Stock, or of any other class of stock, or of all classes of
stock,  than  is  required  for  such  creation  or  change  by the  laws of the
Commonwealth of Pennsylvania at the time applicable thereto.

      (F) So long as any  shares of the  Preferred  Stock are  outstanding,  the
Corporation  shall not,  without the  affirmative  vote in favor  thereof of the
holders of at least a  majority  of the  shares of  Preferred  Stock at the time
outstanding,

            (1)  merge or  consolidate  with or into any  other  Corporation  or
      Corporations or sell or otherwise  dispose of all or substantially  all of
      its assets unless such merger,  consolidation,  sale or other disposition,
      or the issuance or assumption of securities in the  effectuation  thereof,
      shall have been ordered,  approved or permitted by a regulatory  authority
      of the  Commonwealth of Pennsylvania  having  jurisdiction in the premises
      and shall have been ordered or approved under the Public  Utility  Holding
      Company Act of 1935; provided, however, that nothing in this Paragraph (F)



<PAGE>


      (1)  contained  shall  authorize any such merger,  consolidation,  sale or
      other disposition by the vote of the holders of a less number of shares of
      the Preferred  Stock, or of any other class of stock, or of all classes of
      stock, than is required for any such merger, consolidation,  sale or other
      disposition by the laws of the  Commonwealth  of  Pennsylvania at the time
      applicable  thereto;  and provided,  further,  that the provisions of this
      Paragraph  (F) (1) shall not apply to a purchase or other  acquisition  by
      the  Corporation  of  franchises or assets of another  Corporation  in any
      manner which does not involve a merger or consolidation;

            (2)  issue  any  unsecured  notes,  debentures  or other  securities
      representing  unsecured   indebtedness,   or  assume  any  such  unsecured
      securities,   for  purposes   other  than  the  refunding  of  outstanding
      securities  theretofore  issued  or  assumed  by  the  Corporation  or the
      redemption or other  retirement of all  outstanding  shares of one or more
      series of the Preferred  Stock or of any class or kind of stock over which
      the  Preferred  Stock does not have  preference  as to dividends and as to
      assets,  if,  immediately  after  such  issue  or  assumption,  the  total
      principal  amount of all unsecured  notes,  debentures or other securities
      representing  unsecured  indebtedness issued or assumed by the Corporation
      and then outstanding  (including unsecured securities then to be issued or
      assumed)  would  exceed 10% of the  aggregate  of (i) the total  principal
      amount of all bonds or other securities  representing secured indebtedness
      issued or assumed by the  Corporation  and then to be outstanding and (ii)
      the aggregate,  at the time of such issue or assumption,  of the par value
      of,  or stated  capital  represented  by,  the  outstanding  shares of all
      classes of stock and of the surplus of the  Corporation  (paid-in,  earned
      and other, if any); or

            (3) issue,  sell or otherwise  dispose of any additional  shares, or
      any reacquired  shares,  of Preferred Stock or of any other class of stock
      over which the  outstanding  shares of the  Preferred  Stock does not have
      preference as to dividends and as to assets, unless

                        (i) the net income of the Corporation  available for the
            payment of  dividends  for a period of twelve  consecutive  calendar
            months within the fifteen calendar months immediately  preceding the
            issuance, sale or disposition of such stock (including,  in any case
            in which such stock is to be issued,  sold or otherwise  disposed of
            in connection with the  acquisition of new property,  the net income
            of the property to be so acquired, computed on the same basis as the
            net  income  of  the  Corporation   available  for  the  payment  of
            dividends)  is at least equal to two and one-half  (2-1/2) times the
            annual dividend  requirements of all outstanding shares of Preferred
            Stock and of all classes or kinds of stock over which the  Preferred
            Stock does not have  preference  as to  dividends  and as to assets,
            including the shares proposed to be issued;

                        (ii)  in  a  case  in  which  such  issuance,   sale  or
            disposition  is for any purpose other than to refinance an equal par


<PAGE>


            amount or stated value of  Preferred  Stock or of any other class of
            stock over which the Preferred  Stock does not have preference as to
            dividends  and as to  assets,  the gross  income of the  Corporation
            (after  all taxes  including  taxes  based on  income),  for  twelve
            consecutive  calendar  months  within a period of  fifteen  calendar
            months  immediately  preceding  the calendar  month of such issuance
            (including,  in any case in which  such  stock  is to be  issued  in
            connection with the acquisition of new property, the gross income of
            the  property to be so  acquired,  computed on the same basis as the
            gross  income of the  Corporation)  is equal to at least 1-1/2 times
            the aggregate of the annual interest  charges on indebtedness of the
            Corporation which will be outstanding immediately after the issuance
            of such shares and the annual dividend requirements on all Preferred
            Stock  (including  dividend  requirements on any class of stock over
            which the shares to be issued do not have preference as to dividends
            and as to assets),  which will be outstanding  immediately after the
            issuance of such shares;

                        (iii)  in  a  case  in  which  such  issuance,  sale  or
            disposition  is for any purpose other than to refinance an equal par
            amount or stated value of  Preferred  Stock or of any other class of
            stock over which the Preferred  Stock does not have preference as to
            dividends and as to assets, the aggregate of the junior stock equity
            as  defined  in  Paragraph  (B) is at least  equal to the  aggregate
            amount payable in connection with an involuntary  liquidation of the
            Corporation  with respect to all shares of the  Preferred  Stock and
            all shares of any class of stock,  if any,  over which the Preferred
            Stock does not have  preference  as to  dividends  and as to assets,
            which will be  outstanding  immediately  after the  issuance of such
            shares; and

                        (iv) in the case of Preferred Stock, if the total number
            of shares thereof  thereafter  issued and  outstanding  would exceed
            50,000,  or in the case of any other  class of stock  over which the
            outstanding  shares of the Preferred  Stock does not have preference
            as to dividends  and as to assets,  in any event,  prior  thereto or
            simultaneously  therewith, the total par value of, or stated capital
            represented  by, shares of stock over which the Preferred  Stock has
            preference  as  to  dividends  and  as to  assets  shall  have  been
            increased  over  $4,500,000  by an amount at least  equal to $75 for
            each  share so to be issued of  Preferred  Stock in excess of 50,000
            shares or of any  class or kind of stock  over  which the  Preferred
            Stock does not have preference as to dividends and as to assets.

            If for the purposes of meeting the  requirements  of clause (iii) of
      this  Paragraph (F) (3) above,  it shall have been  necessary to take into
      consideration any earned surplus of the Corporation, the Corporation shall
      not thereafter pay any dividends on or make any  distributions  in respect
      of, or purchase or otherwise acquire for value, junior stock as defined in
      Paragraph (B) which would result in reducing the junior stock equity to an


<PAGE>


      amount  less than the amount  payable on  involuntary  liquidation  of the
      Corporation  with respect to all shares of Preferred  Stock and all shares
      of any  class  of stock  over  which  the  Preferred  Stock  does not have
      preference as to dividends and as to assets, at the time outstanding.

            If,  during the period as of which gross income is to be  determined
      for the purposes of this Paragraph (F)(3), the amount, if any, required to
      be  expended  by the  Corporation  for  property  additions  pursuant to a
      maintenance and replacement requirement or similar replacement and renewal
      requirement  established  under its  mortgage  indenture  shall exceed the
      amount  deducted in the  determination  of such gross income on account of
      depreciation  and  amortization  of  electric  or  gas  plant  acquisition
      adjustments,  such excess shall also be deducted in determining such gross
      income.

      (G) The term "accrued dividends" shall be deemed to mean in respect of any
share of the Preferred Stock of any series, as of any given date, the amount, if
any, by which the product of the rate of dividend per annum, determined upon the
shares of such series, multiplied by the number of years and any fractional part
of a year which shall have elapsed  from the date after which  dividends on such
stock became cumulative to such given date, exceeds the total dividends actually
paid on such  stock  and the  dividends  declared  and set  apart  for  payment.
Accumulations of dividends shall not bear interest.

      The term  "outstanding",  whenever  used herein with  respect to shares of
Preferred  Stock or of any other class or kind of stock which are by their terms
redeemable,  or with respect to bonds or other evidences of indebtedness,  shall
not include any such shares or bonds or  evidences  of  indebtedness  which have
been called for redemption in accordance with the provisions applicable thereto,
of which call for  redemption  notice  shall  have been  given or  appropriately
provided for, as required by such provisions,  and for the redemption of which a
sum of money  sufficient to pay the amount payable on such redemption shall have
been deposited by the Corporation  with a bank or trust company,  irrevocably in
trust for such purpose,  or any bonds or other evidences of indebtedness for the
payment of which at maturity provision has been made in a similar manner.

      The term "net  income of the  Corporation  available  for the  payment  of
dividends" shall mean the balance remaining after deducting from the total gross
earnings of the  Corporation  from all sources the following:  (a) all operating
expenses  and  taxes,  including  charges to income  for  general  taxes and for
federal income and excess profits taxes, for retirement or depreciation  reserve
and for  amortization  or other  disposition of amounts,  if any,  classified as
amounts  in excess of  original  cost of  utility  plant,  and (b) all  interest
charges  and  other  income   deductions,   including   charges  to  income  for
amortization of debt discount, premium and expense. For the purpose of computing
such net income of the Corporation available for the payment of dividends, there
shall not be deducted  any  provision  made on the books of the  Corporation  or
otherwise for the amortization of Preferred Stock premium, discount,  commission
and expense.


<PAGE>


      Section 3.  Established Series of Preferred Stock
      --------------------------------------------------

      Without any limitation of the foregoing  provisions for the  establishment
of shares of Preferred  Stock as shares of various  series of  Preferred,  there
have been and hereby are  established  and  confirmed  the  following  series of
Preferred Stock, namely: the 4.25% Preferred Stock, consisting of 41,049 shares;
the 4.24%  Preferred  Stock,  consisting of 40,000 shares;  the 4.64%  Preferred
Stock,  consisting of 60,000 shares,  the 7.75% Preferred  Stock,  consisting of
250,000 shares and the 7.625% Preferred Stock, consisting of 150,000 shares.

      a.  4.25% Preferred Stock

      The relative  rights and preferences of the shares of said 4.25% Preferred
Stock in those  respects in which the shares thereof may vary from the shares of
other series of the Preferred Stock shall be as follows:

      Section (i) Dividend Rights The rate of dividends shall be 4.25% per annum
and the dividend payment dates shall be the first days of February,  May, August
and November in each year.

      Section (ii)  Redemption  Rights The price at which shares may be redeemed
shall be  $107.50  per share if  redeemed  prior to January 1, 1954 and $105 per
share if redeemed on or after said date,  plus accrued  dividends in either case
to the date of redemption.

      Section (iii)  Liquidation Rights

            (a) The amount payable in event of involuntary  liquidation shall be
      $100 per share, plus accrued dividends;.

            (b) The amount  payable in event of voluntary  liquidation  shall be
      $105 per share, plus accrued dividends.

      Section (iv) Conversion  Rights The shares of such series shall not be, by
their terms, convertible or exchangeable.


      b.  4.24% Preferred Stock

      The relative  rights and preferences of the shares of said 4.24% Preferred
Stock in those  respects in which the shares thereof may vary from the shares of
other series of Preferred Stock shall be as follows:

      Section (i) Dividend Rights The rate of dividends shall be 4.24% per annum
and the dividend payment dates shall be the first days of March, June, September
and December in each year.


<PAGE>


      Section (ii)  Redemption  Rights The price at which shares may be redeemed
shall be $105.125 per share if redeemed on or before March 1, 1956,  $104.125 if
redeemed  after March 1, 1956 and on or before  March 1, 1961,  and  $103.125 if
redeemed after March 1, 1961, plus accrued  dividends in any case to the date of
redemption.

      Section (iii)  Liquidation Rights

            (a) The amount  payable in event of  involuntary  liquidation  shall
      be $100 per share, plus accrued dividends;

            (b) The amount  payable in event of voluntary  liquidation  shall be
      the redemption price in effect at the date of such liquidation.

      Section (iv) Conversion  Rights The shares of such series shall not be, by
their terms, convertible or exchangeable.


      c.  4.64% Preferred Stock

      The relative  rights and preferences of the shares of said 4.64% Preferred
Stock in those  respects in which the shares thereof may vary from the shares of
other series of Preferred Stock shall be as follows:

      Section (i) Dividend Rights The rate of dividends shall be 4.64% per annum
and the dividend payment dates shall be the first days of March, June, September
and December in each year.

      Section (ii)  Redemption  Rights The price at which shares may be redeemed
shall be $106.62 per share if  redeemed  on or before  June 1, 1963,  $105.40 if
redeemed  after June 1, 1963 and on or before June 1, 1968,  $104.19 if redeemed
after June 1, 1968 and on or before June 1, 1973,  and $102.98 if redeemed after
June 1, 1973, plus accrued dividends in any case to the date of redemption.

      Section (iii)  Liquidation Rights

            (a) The amount payable in event of involuntary  liquidation shall be
      $100 per share, plus accrued dividends;

            (b) The amount  payable in event of voluntary  liquidation  shall be
      the redemption price in effect at the date of such liquidation.

      Section (iv) Conversion  Rights The shares of such series shall not be, by
their terms, convertible or exchangeable.


<PAGE>


      d.  7.75% Preferred Stock

      The relative  rights and preferences of the shares of said 7.75% Preferred
Stock in those  respects in which the shares thereof may vary from the shares of
other series of Preferred Stock shall be as follows:

            Section (i) Dividend  Rights The rate of dividend shall be 7.75% per
      annum, when and as declared by the Board of Directors,  and subject to the
      applicable  provisions of the Business  Corporation  Law, and the dividend
      payment dates shall be the first days of January, April, July, and October
      in each year.

            Section  (ii)  Redemption  Rights No  shares of the 7.75%  Preferred
      Stock shall be redeemable  on or before July 1, 2003.  After July 1, 2003,
      the price at which  shares may be  optionally  redeemed  shall be $100 per
      share plus an amount equal to the accumulated and unpaid  dividends to the
      date set for redemption.

            Section (iii)  Liquidation Rights

                  (a) The amount payable in the event of involuntary liquidation
            shall be $100 per share, plus accrued dividends;

                  (b) The amount  payable in the event of voluntary  liquidation
            shall be $100 per share, plus accrued dividends.

            Section  (iv)  Conversion  Rights The shares  shall not be, by their
      terms, convertible or exchangeable.

            Section (v) Sinking Fund Requirements There shall not be any sinking
      fund  requirements  for the purchase or redemption of the 7.75%  Preferred
      Stock.

      e.  7.625% Preferred Stock

      The relative rights and preferences of the shares of said 7.625% Preferred
Stock in those  respects in which the shares thereof may vary from the shares of
other series of Preferred Stock shall be as follows:

            Section (i) Dividend Rights The rate of dividend shall be 7.625% per
      annum, when and as declared by the Board of Directors,  and subject to the
      applicable  provisions of the Business  Corporation  Law, and the dividend
      payment dates shall be the first days of January, April, July, and October
      in each year; provided, however, that with respect to the dividend payable
      on January 1, 1993,  the first day of the dividend  period with respect to
      which such dividend is paid shall be the first day of the actual  issuance
      of the 7.625% Preferred Stock.


<PAGE>


            Section  (ii)  Redemption  Rights  The price at which  shares may be
      optionally redeemed shall be as follows:

              If Redemption is Made
               During the 12-Month
           Period Beginning October 1                     Redemption
                   In the Year                          Price Per Share
           --------------------------                   ---------------

                       1997.............................    $107.63
                       1998.............................     106.86
                       1999.............................     106.10
                       2000.............................     105.34
                       2001.............................     104.58
                       2002.............................     103.81
                       2003.............................     103.05
                       2004.............................     102.29
                       2005.............................     101.52
                       2006.............................     100.76
                       2007 and thereafter..............     100.00,

      plus accrued  dividends in each case to the date of redemption;  provided,
      however,  that no share of the 7.625%  Preferred Stock shall be redeemable
      prior to October 1, 1997.

            Any shares of 7.625%  Preferred  Stock so redeemed  may be given the
      status of  authorized  but unissued  shares of Preferred  Stock and may be
      reissued as shares of  Preferred  Stock,  but none of such shares shall be
      reissued as shares of 7.625% Preferred Stock, nor shall any of such shares
      be credited in satisfaction of the obligations of the Company set forth in
      subsection  (v) hereof.  No shares of Preferred  Stock (in addition to the
      150,000 shares thereof initially proposed to be issued) shall be issued as
      shares of 7.625% Preferred Stock.

            Section (iii)  Liquidation Rights

                  (a) The amount payable in the event of involuntary liquidation
            shall be $100 per share, plus accrued dividends;

                  (b) The amount  payable in the event of voluntary  liquidation
            shall be the  optional  redemption  price for the date on which such
            liquidation occurs.

            Section  (iv)  Conversion  Rights The shares  shall not be, by their
      terms, convertible or exchangeable.

            Section (v)  Sinking Fund Requirements


<PAGE>


                  (a) On  October  1,  2002  and on each  October  1  thereafter
            through  and  including  October 1, 2007 (a  `Sinking  Fund  Payment
            Date'),  the  Corporation,  subject to the applicable  provisions of
            Pennsylvania  law,  shall  redeem,  at a redemption  price per share
            equal to $100 plus accrued  dividends to the date of redemption (the
            `Sinking Fund Redemption  Price'), as and for a sinking fund for the
            7.625%  Preferred Stock, in each year prior to 2007, 7,500 shares of
            the 7.625%  Preferred Stock and, in 2007, the remaining  outstanding
            shares  of the  7.625%  Preferred  Stock,  provided  that if, on any
            Sinking Fund Payment Date, the number of  outstanding  shares of the
            7.625% Preferred Stock shall be less than 7,500,  then the number of
            shares to be  redeemed as and for the sinking  fund  created  hereby
            shall be equal to such  number of  outstanding  shares of the 7.625%
            Preferred  Stock.  The  obligation of the  Corporation  to make such
            sinking fund redemptions shall be cumulative,  so that all shares of
            the  7.625%  Preferred  Stock  previously  required  to be  redeemed
            pursuant to this subsection (v)(a) on a certain Sinking Fund Payment
            Date but not  redeemed  on such date shall be added to the number of
            shares  of the  7.625%  Preferred  Stock  otherwise  required  to be
            redeemed on the next succeeding  Sinking Fund Payment Date and shall
            also be redeemed on such date, subject to the applicable  provisions
            of Pennsylvania law. The Corporation shall redeem the full number of
            shares of 7.625%  Preferred  Stock  required  to be  redeemed  by it
            pursuant to this  subsection  (v)(a) in each  calendar  year and all
            prior calendar years before dividends (other than dividends  payable
            in Common Stock) shall be paid or any other  distribution  of assets
            made (by purchase of shares or otherwise), in such calendar year, on
            Common  Stock or any other stock of the  Corporation  over which the
            7.625% Preferred Stock has preference as to the payment of dividends
            or as to assets.

                  (b) No  redemption,  acquisition  or  purchase  of  any  stock
            ranking  equally with or junior to the 7.625%  Preferred Stock shall
            occur  during any period  when the  mandatory  redemption  of shares
            described in  paragraph  (a) of this  subsection  (a) is in arrears,
            except for  payments  of arrears  through  redemptions  of shares of
            classes of  Preferred  Stock and of any kind of stock over which the
            Preferred  Stock  does  not have  preference  as to the  payment  of
            dividends and as to assets which the  Corporation  is then obligated
            to redeem or purchase.

                  (c)  If  on  any  Sinking  Fund  Payment  Date  funds  legally
            available  therefor are  insufficient  to permit the  Corporation to
            redeem  the full  number  of shares  of  7.625%  Preferred  Stock so
            required to be redeemed on such date, the Corporation shall apply to
            such  redemption  the  proportion of such funds which bears the same
            ratio to the amount  required for the  redemption of the full number
            of such shares  required to be redeemed on such Sinking Fund Payment
            Date as the total  amount of such  funds  bears to the total  amount



<PAGE>


            required for the purchase or redemption of all shares of all classes
            of Preferred Stock and of any kind of stock over which the Preferred
            Stock does not have preference as to the payment of dividends and as
            to  assets  which the  Corporation  is then  obligated  to redeem or
            purchase.


Common Stock

      There shall be a class of stock of the Corporation designated Common Stock
and each share of Common Stock shall be equal to every other share of said stock
in every respect.


Voting Powers

      At all  elections  of  directors  of  the  Corporation,  and on all  other
matters,  except on matters in respect of which the laws of the  Commonwealth of
Pennsylvania  shall provide that all  stockholders  shall have the right to vote
irrespective  of  whether  such  right  has  been  relinquished  by any of  such
stockholders and except as otherwise herein provided,  the holders of the Common
Stock shall have the exclusive right to vote; provided,  however, that, whenever
and as often as four quarterly  dividends  payable on the Preferred Stock of any
series shall be in default,  in whole or in part,  the holders of the  Preferred
Stock shall have the exclusive right,  voting separately and as a class, to vote
for and to elect the  smallest  number of  directors  which shall  constitute  a
majority of the then authorized number of directors of the Corporation,  and, in
all matters  other than the  election of  directors,  each holder of one or more
shares of  Preferred  Stock shall be entitled to one vote for each such share or
stock held by him. In the event of default entitling the Preferred Stock to vote
as aforesaid,  the holders of the Common Stock shall have the  exclusive  right,
voting  separately and as a class,  to vote for and to elect the greatest number
of directors which shall constitute a minority of the then authorized  number of
directors  of the  Corporation,  and, in all matters  other than the election of
directors,  each  holder of Common  Stock shall be entitled to one vote for each
such  share of stock  held by him.  The  voting  rights  of the  holders  of the
Preferred  Stock,  however,  shall  cease when all  defaults  in the  payment of
dividends  on their  stock shall have been cured,  and such  dividends  shall be
declared and paid out of any funds legally available therefor as soon as, in the
judgment of the Board of  Directors,  is  reasonably  practicable.  The terms of
office of all persons who may be directors of the  Corporation  at the time when
the right to elect a majority of the  directors  shall  accrue to the holders of
the Preferred  Stock, as herein  provided,  shall terminate upon the election of
their  successors  at a meeting  of the  stockholders  of the  Corporation  then
entitled to vote.  Such  meeting  shall be held at any time after the accrual of
such  voting  power upon notice  similar to that  provided in the By-Laws of the
Corporation  for a meeting of the  stockholders at the request in writing of the
holders  of not less than 10% of the  number  of shares of the then  outstanding
Preferred  Stock entitled to vote addressed to the Secretary of the  Corporation
at its  principal  business  office.  Any  vacancy  in the  Board  of  Directors
occurring during any period that the Preferred Stock shall have  representatives


<PAGE>


on the Board  shall be  filled by a  majority  vote of the  remaining  directors
representing the class of stock theretofore  represented by the director causing
the vacancy.  Upon the termination of such exclusive right of the holders of the
Preferred  Stock to elect a majority of the  directors of the  Corporation,  the
terms of office of all the directors of the Corporation shall terminate upon the
election of their successors at a meeting of the stockholders of the Corporation
then  entitled  to  vote.  Such  meeting  shall be held at any  time  after  the
termination  of such  exclusive  right of the holders of the Preferred  Stock to
elect a majority of the  directors  upon notice  similar to that provided in the
By-Laws of the Corporation  for a meeting of the  stockholders at the request in
writing of the  holders of not less than 10% of the number of shares of the then
outstanding  Common Stock  addressed to the Secretary of the  Corporation at its
principal business office.

      At all  meetings  of the  stockholders  held for the  purpose of  electing
directors during such times as the holders of the Preferred Stock shall have the
exclusive  right to elect a majority of the  directors of the  Corporation,  the
presence in person or by proxy of the  holders of a majority of the  outstanding
shares of Common  Stock shall be required to  constitute  a quorum of such class
for the  election of  directors,  and the  presence in person or by proxy of the
holders of a majority  of the  outstanding  shares of  Preferred  Stock shall be
required  to  constitute  a quorum of such  class  for  election  of  directors;
provided,  however,  that the  absence  of a quorum of the  holders  of stock of
either class shall not prevent the election at any such meeting,  or adjournment
thereof,  of directors by the other class if the necessary quorum of the holders
of stock of such  class is present  in person or by proxy at such  meeting;  and
provided,  further,  that, in the absence of a quorum of the holders of stock of
either  class,  a majority  of those  holders  of such stock who are  present in
person  or by proxy  shall  have the  power to  adjourn  the  election  of those
directors  to be elected by that class from time to time without  notice,  other
than announcement at the meeting, until the requisite amount of holders of stock
of such class  shall be present in person or by proxy.  For the  purposes of the
foregoing provisions,  the Preferred Stock of all series shall be deemed to be a
single class.

      At all elections of directors of the  Corporation,  each  stockholder  may
cast the whole number of his votes for one  candidate  for whom he may vote,  or
distribute them among two or more such candidates as he may prefer.


Miscellaneous Provisions

      The  holders of the  Preferred  Stock shall have no  preemptive  rights to
subscribe to any  additional  shares of the capital stock of the  Corporation of
any kind, or any rights to exchange shares issued for shares to be issued;  but,
before  issuing  or  disposing  of any  shares  of  Common  Stock or any  bonds,
debentures,  or other  obligations or rights or options,  which are  convertible
into or  exchangeable  for or which entitle the holder or owner to subscribe for
or purchase any shares of Common  Stock,  the Board of Directors  shall offer to
the holders of the Common Stock at the time outstanding, and the holders thereof
shall be entitled to purchase or subscribe for the shares of Common Stock or the
bonds,  debentures,  or other  obligations  or  rights  or  options,  which  are


<PAGE>


convertible  into or exchangeable  for such stock or which entitle the holder or
owner  thereof to  subscribe  for or purchase  such  stock,  upon terms not less
favorable to the purchaser (without  deduction of such reasonable  compensation,
allowance or discount for the sale,  underwriting or purchase  thereof as may be
fixed by the Board of  Directors)  than  those on which  the Board of  Directors
issue and dispose of such stock,  bonds,  debentures,  obligations  or rights to
other than such holders of Common Stock.

      The Corporation may issue and dispose of any of its authorized  shares for
such consideration as may be fixed by the Board of Directors subject to the laws
of the Commonwealth of Pennsylvania then applicable.

      Subject  to  any  applicable   limitations   contained  in  the  foregoing
Paragraphs  (B),  (C),  (D),  and (F)(3) of Section 2  (General  Provisions  for
Preferred Stock) of this ARTICLE SIXTH, , the Corporation may from time to time,
out  of its  net  profits  or  surplus  earnings,  purchase  any  of  its  stock
outstanding  at such  prices  as may be fixed  by its  Board  of  Directors  and
accepted by the holders of the stock  purchased  but such price shall not exceed
the then applicable redemption price, if any, of the stock purchased.


      Seventh:  Section 1. Directors and Officers as Fiduciaries.
      -------   ------------------------------------------------

      A director  or  officer  of the  Corporation  shall  stand in a  fiduciary
relation to the Corporation and shall perform his or her duties as a director or
officer,  including  his or her duties as a member of any committee of the board
upon which he or she may serve,  in good faith, in a manner he or she reasonably
believes to be in the best  interests  of the  Corporation,  and with such care,
including  reasonable  inquiry,  skill and  diligence,  as a person of  ordinary
prudence would use under similar circumstances. In performing his or her duties,
a director or officer  shall be  entitled to rely in good faith on  information,
opinions,  reports  or  statements,  including  financial  statements  and other
financial  data,  in each case  prepared or presented by one or more officers or
employees of the Corporation whom the director or officer reasonably believes to
be reliable and competent with respect to the matters presented, counsel, public
accountants  or other  persons  as to  matters  that  the  director  or  officer
reasonably  believes to be within the professional or expert  competence of such
person,  or a committee  of the Board of  Directors  upon which the  director or
officer does not serve,  duly  designated in accordance  with law, as to matters
within  its  designated  authority,  which  committee  the  director  or officer
reasonably  believes to merit  confidence.  A director  or officer  shall not be
considered to be acting in good faith if he or she has knowledge  concerning the
matter in  question  that would  cause his or her  reliance  to be  unwarranted.
Absent breach of fiduciary  duty,  lack of good faith or  self-dealing,  actions
taken as a director  or officer of the  Corporation  or any  failure to take any
action shall be presumed to be in the best interests of the Corporation.



<PAGE>


      Section 2.  Personal Liability of Directors.
      -------------------------------------------

      A director of the Corporation shall not be personally liable, as such, for
monetary damages (including,  without limitation,  any judgment,  amount paid in
settlement,  penalty,  punitive  damages or  expense  of any nature  (including,
without limitation, attorneys' fees and disbursements)) for any action taken, or
any failure to take any action,  unless the  director  has breached or failed to
perform the duties of his or her office under these  Articles of  Incorporation,
the By-Laws or applicable provisions of law and the breach or failure to perform
constitutes self-dealing, willful misconduct or recklessness.

      Section 3.  Personal Liability of Officers.
      ------------------------------------------

      An officer of the Corporation shall not be personally  liable, as such, to
the Corporation or its  shareholders for monetary  damages  (including,  without
limitation,  any judgment, amount paid in settlement,  penalty, punitive damages
or expense of any nature  (including,  without  limitation,  attorneys' fees and
disbursements)) for any action taken, or any failure to take any action,  unless
the  officer  has  breached or failed to perform the duties of his or her office
under these Articles of Incorporation,  the By-Laws or applicable  provisions of
law and the  breach or  failure to  perform  constitutes  self-dealing,  willful
misconduct or recklessness.

      Section 4.  Interpretation of Article.
      -------------------------------------

The  provisions  of Sections 2 and 3 of this Seventh  Article shall not apply to
the responsibility or liability of a director or officer,  as such,  pursuant to
any  criminal  statute or for the payment of taxes  pursuant to local,  state or
Federal law. The provisions of this Seventh  Article have been adopted  pursuant
to the authority of section  204A(10) of the Pennsylvania  Business  Corporation
Law,  as amended,  and under all  amendments  and  supplements  thereto,  or any
revision  or  restatement  thereof  or any  statute  enacted  to take the  place
thereof,  shall be deemed to be a contract  with each director or officer of the
Corporation who serves as such at any time while this article is in effect,  and
each  person who serves as a director or officer of the  Corporation  while this
article  is in  effect  shall  be  deemed  to be  doing  so in  reliance  on the
provisions of this article and such provisions are cumulative of and shall be in
addition to and independent of any and all other  limitations on the liabilities
of  directors  or  officers  of  the   Corporation,   as  such,   or  rights  of
indemnification  by the  Corporation  to  which a  director  or  officer  of the
Corporation may be entitled,  whether such  limitations or rights arise under or
are created by any statute, rule of law, by-law, agreement, vote of shareholders
or  disinterested  directors  or  otherwise.  No  amendment to or repeal of this
Seventh  Article  nor  the  adoption  of any  provision  of  these  Articles  of
Corporation inconsistent with this article, shall apply to or have any effect on
the liability or alleged liability of any director or officer of the Corporation
for or with  respect  to any  acts or  omissions  of such  director  or  officer
occurring  prior  to such  amendment,  repeal  or  adoption  of an  inconsistent
provision.  In any action,  suit or proceeding  involving the application of the
provisions of this Seventh Article,  the party or parties  challenging the right
of a director or officer to the benefits of this  article  shall have the burden
of proof.