BY-LAWS OF

                                    QNB CORP.

                              AMENDED AND RESTATED

                              AS OF APRIL 21, 1987


ARTICLE I - OFFICES

     Section 1-1.  Registered  Office.  The registered office of the Corporation
shall be located within the Commonwealth of  Pennsylvania,  at such place as the
Board of Directors shall, from time to time, determine.

     Section 1-2. Other Offices.  The  Corporation may also have offices at such
other places within or without the  Common-wealth of Pennsylvania,  as the Board
of Directors may, from time to time, determine.


ARTICLE  II -  SHAREHOLDERS

     Section 2-1.  Place of  Shareholders'  Meetings.  Meetings of  shareholders
shall be held at such places within or without the  Commonwealth of Pennsylvania
as may be fixed by the Board of  Directors,  from time to time. If no such place
is fixed by the Board of Directors,  meetings of the shareholders  shall be held
at the registered office of the Corporation.

     Section  2-2.  Annual  Meeting.  A  meeting  of  the  share-holders  of the
Corporation shall be held in each calendar year,  commencing with the year 1984,
on such date and at such time as the Board of Directors may determine, or if the
Board of  Directors  fails on or before  February  15, to set a date and time, a
meeting  of  shareholders  shall be held on the third  Tuesday of March at 10:00
a.m.,  if not a legal  holiday,  and if such day is a legal  holiday,  then such
meeting shall be held on the next business day.

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     At such annual meeting, there shall be held an election of Directors.

     Unless the Board of Directors shall deem it advisable, financial reports of
the Corporation's  business need not be sent to the shareholders and need not be
presented  at  the  annual  meeting  except  as  otherwise  may be  required  by
applicable  law. If any report is deemed  advisable  by the Board of  Directors,
such  report  may  contain  such  information  as the Board of  Directors  shall
determine and need not be certified by a Certified Public  Accountant unless the
Board of Directors shall so direct.

     Section 2-3. Special Meetings.  Special meetings of the shareholders may be
called  at any  time:

          (a) By the President of the Corporation; or

          (b) By a majority of the Board of Directors; or

          (c) By  shareholders  entitled to cast at least one-fifth of the votes
     which all shareholders are entitled to cast at the meeting.

     Upon the  written  request  of any  person or  persons  entitled  to call a
special meeting, which request shall set forth the purpose for which the meeting
is  desired,  it  shall  be the  duty of the  Secretary  to fix the date of such
meeting  to be held at such  time,  not less than five nor more than  sixty days
after the receipt of such request,  as the Secretary may determine,  and to give
due notice thereof.  If the Secretary shall neglect or refuse to fix the date of
such meeting and to give notice  thereof  within five days after receipt of such
request, the person or persons calling the meeting may do so.

     Section 2-4. Notices of Shareholders' Meetings.  Written notice stating the
date, place and hour and, if required by law or these By-laws,  the purpose,  of
any meeting of the

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shareholders,  shall be given to each  shareholder of record entitled to vote at
the  meeting  at least ten days prior to the day named for the  meeting,  unless
otherwise required by law. Such notices may be given at the discretion of, or in
the name of, the Board of Directors,  President,  Vice  President,  Secretary or
Assistant Secretary.  When a meeting is adjourned,  it shall not be necessary to
give any notice of the adjourned  meeting or of the business to be transacted at
an adjourned  meeting,  other than by  announcement at the meeting at which such
adjournment is taken.

     Section  2-5.  Quorum  of and  Action  by  Shareholders.  Unless  otherwise
provided in the Articles of Incorporation,  the presence, in person or by proxy,
of  shareholders  entitled  to cast at least a majority  of the votes  which all
shareholders  are entitled to cast on the particular  matter shall  constitute a
quorum for the  purposes of  considering  such  matter,  and,  unless  otherwise
specifically  provided  by law,  the acts,  at a duly  organized  meeting of the
shareholders present in person or by proxy, entitled to cast at least a majority
of the votes which all  shareholders  present are entitled to cast, shall be the
acts of the shareholders.  The shareholders  present at a duly organized meeting
can continue to do business until adjournment, notwithstanding the withdrawal of
enough  shareholders  to leave  less  than a  quorum.  If a  meeting  cannot  be
organized  because a quorum  has not  attended,  those  present  may,  except as
otherwise  provided  by law,  adjourn the meeting to such time and place as they
may  determine,  but in the  case of any  meeting  called  for the  election  of
Directors,  those shareholders who attend the second of such adjourned meetings,
although  less than a quorum as fixed in this  Section,  or in the  Articles  of
Incorporation,  shall  nevertheless  constitute  a  quorum  for the  purpose  of
electing Directors.

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     Section  2-6.  Voting.  At least  five days but not more than  thirty  days
before any meeting of  shareholders,  the officer or agent having  charge of the
transfer books of the Corporation shall make a complete list of the shareholders
entitled  to vote at such  meeting,  arranged  in  alphabetical  order  with the
address  of and the number of shares  held by each,  which list shall be kept on
file at the  registered  office  of the  Corporation  and  shall be  subject  to
inspection by any shareholder at any time during usual business hours. Such list
shall also be  produced  and kept open at the time and place of the  meeting and
shall be subject to the inspection of any  shareholder  during the whole time of
the meeting.

     At all shareholders' meetings, shareholders entitled to vote may attend and
vote either in person or by proxy. All proxies shall be in writing,  executed by
the shareholder or by his duly  authorized  attorney in fact, and shall be filed
with the Secretary of the Corporation. A proxy, unless coupled with an interest,
shall be revocable at will, notwithstanding any other agreement or any provision
in the  proxy  to the  contrary,  but the  revocation  of a proxy  shall  not be
effective  until the  notice  thereof  has been  given to the  Secretary  of the
Corporation. No unrevoked proxy shall be valid after eleven months from the date
of  execution,  unless a longer time is expressly  provided  therein;  but in no
event shall a proxy,  unless  coupled with an interest,  be voted on after three
years from the date of its execution.

     Except as otherwise specifically provided by law, all matters coming before
the meeting shall be determined by a vote of shares. Such vote shall be taken by
written  ballot,  and the Judge or Judges of Election or, if none, the Secretary
of the Meeting, shall tabulate and certify the results of such vote.

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     Section 2-7. Action by Unanimous Consent of Share-holders. Any action which
may be taken at a meeting of the  shareholders or a class of shareholders may be
taken  without a meeting if a consent or consents in writing,  setting forth the
action  so  taken,  shall be  signed  by all of the  shareholders  who  would be
entitled  to vote at a meeting  for such  purpose  and  shall be filed  with the
Secretary of the  Corporation.  Insertion in the minute book of the  Corporation
shall be deemed filing with the Secretary regardless of whether the Secretary or
some other authorized person has actual  possession of the minute book.  Written
consents by all of the shareholders executed pursuant to this Section 2-7 may be
executed in any number of counterparts  and shall be deemed  effective as of the
date set forth therein.


ARTICLE III - BOARD OF DIRECTORS

     Section  3-1.  Number and  Qualification.  The number of  Directors  of the
Corporation  shall be nine (9) and this number may be changed  only by receiving
the affirmative vote of (i) shareholders  entitled to cast at least seventy-five
percent (75%) of the votes which all  shareholders  are entitled to vote on such
change,  or (ii)  seventy-five  percent  (75%) of the Directors in office at the
time of voting.  Each  Director of the  Corporation  during the full term of his
directorship  must own a minimum of 200 shares of the authorized common stock of
the Corporation.

     Section  3-2.  Classes  of  Directors.  Except  for the  initial  Board  of
Directors named in Article XI of the  Corporation's  Articles of  Incorporation,
the Board of  Directors  shall be and is divided  into three  classes,  Class I,
Class II and Class III,  which shall be as nearly  equal in number as  possible.
Each Director  shall serve for a term ending on the date of third annual meeting
following  the annual  meeting at which such  Director  was  elected;  provided,
however, that each

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initial  Director  in Class I shall  hold  office  until the  annual  meeting of
stockholders in 1986; each initial  director in Class II shall hold office until
the annual meeting of  stockholder  in 1987; and each initial  Director in Class
III shall hold office until the annual meeting of stockholders in 1988.

     At each annual  meeting held after 1985,  the  Directors  chosen to succeed
those whose terms are expiring shall be identified as being of the same class as
the Directors  whom they succeed and shall be elected for a term expiring at the
third succeeding  annual meeting of stockholders or thereafter in each case when
their respective successors are elected and qualified.

     If, at any  meeting  of  shareholders,  due to a vacancy or  vacancies,  or
otherwise,  Directors  of more than one class are to be  elected,  each class of
Directors to be elected at the meeting shall be elected in a separate election.

     Section 3-3.  Place of Meeting.  Meetings of the Board of Directors  may be
held at such place within the  Commonwealth  of  Pennsylvania  or elsewhere as a
majority of the  Directors may from time to time appoint or as may be designated
in the notice calling the meeting.

     Section 3-4. Regular Meetings.  A regular meeting of the Board of Directors
shall be held annually, immediately following the annual meeting of shareholders
at the place  where such  meeting of the  shareholders  is held or at such other
place, date and hour as a majority of the newly elected Directors may designate.
At such meeting the Board of Directors shall elect officers of the  Corporation.
In addition to such regular meeting, the Board of Directors shall have the power
to fix by resolution the place,  date and hour of other regular  meetings of the
Board.

     Section  3-5.  Participation  in  Meetings  by  Conference  Telephone.  Any
Director  may  participate  in any meeting of the Board of  Directors  or of any
committee (provided he is otherwise entitled to participate), be counted for the
purpose of determining quorum  thereof and

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exercise  all  rights  and  privileges  to which he  might be  entitled  were he
personally  in  attendance,  including the right to vote, by means of conference
telephone  or other  similar  communications  equipment  by  means of which  all
persons on the meeting can hear each other.

     Section  3-7.  Notices  of  Meeting  of Board  of  Directors.

          (a) Regular  Meetings.  No notice shall be required to be given of any
     regular  meeting,  unless  the same is held at other than the time or place
     for holding such meetings as fixed in accordance  with Section 3-4 of these
     By-Laws,  in which  event one days'  notice  shall be given of the time and
     place of such meeting.

          (b) Special Meetings.  Written notice stating the date, place and hour
     of any special  meeting of the Board of  Directors  shall be given at least
     one day prior to the date named for the meeting.

     Section  3-8.  Quorum.  A  majority  of the  Directors  in office  shall be
necessary to constitute a quorum for the  trans-action  of business,  and unless
otherwise  provided in the Articles of  Incorporation  or in these By-Laws,  the
acts of a majority  of the  Directors  present at a meeting at which a quorum is
present shall be  considered as the acts of the Board of Directors.  If there is
not a quorum present at a duly convened  meeting of the Board of Directors,  the
majority of these present may adjourn the meeting from time to time and place to
place.

     Section 3-9.  Informal  Action by the Board of Directors.  Any action which
may be taken at a meeting of the  Directors,  or of the members of any committee
of the  Board of  Directors,  may be taken  without a  meeting  if a consent  or
consents in writing,  setting forth the action so taken,  shall be signed by all
of the Directors,  or members of the committee, as the case may be, and shall be
filed with the Secretary of the Corporation. Insertion in the minute book of

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the Corporation shall be deemed fining with the Secretary  regardless of whether
the  Secretary  or some other  authorized  person has actual  possession  of the
minute  book.  Written  consents by all of the  Directors  or the members of any
committee of the Board of Directors executed pursuant to this Section 3-9 may be
executed in any number of counterparts  and shall be deemed  effective as of the
date set forth therein.

     Section 3-10. Powers.

          (a) General  Powers.  The Board of Directors  shall have all the power
     and authority  granted by law to the Board,  including all powers necessary
     or  appropriate  to the  management  of the  business  and  affairs  of the
     Corporation.

          (b) Specific Powers.  Without limiting the general powers conferred by
     the last  preceding  clause and the powers  conferred  by the  Articles and
     these By-laws of the Corporation,  it is hereby expressly declared that the
     Board of Directors shall have the following powers:

               (1) To confer upon any officer or officers of the Corporation the
          power to  choose,  remove or  suspend  assistant  officers,  agents or
          servants.

               (2) To appoint any person, firm or corporation to accept and hold
          in trust for the Corporation any property belonging to the Corporation
          or in which it is interested,  and to authorize any such person,  firm
          or  corporation  to execute any  documents and perform any duties that
          may be requisite in relation to any such trust.

               (3) To  appoint a person or  persons  to vote  shares of  another
          corporation held and owned by the Corporation.

               (4) By  resolution  adopted by a majority  of the whole  Board of
          Directors,  to designate  one or more  committees,  each  committee to
          consist of two or more of the

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          Directors  of the  Corporation.  To the  extent  provided  in any such
          resolution,  and to the  extent  permitted  by  law,  a  committee  so
          designated  shall have and may exercise the  authority of the Board of
          Directors  in  the  management  of the  business  and  affairs  of the
          Corporation.  The  Board  of  Directors  may  designate  one  or  more
          Directors as alternate  members of any committee,  who may replace any
          absent or  disqualified  member at any  meeting of the  committee.  If
          specifically  granted  this  power  by the  Board  in  its  resolution
          establishing the committee,  in the absence or disqualification of any
          member and all  designated  alternates of such committee or committees
          or if the whole Board of Directors  has failed to designate  alternate
          members,  the member or members thereof present at any meeting and not
          disqualified  from  voting,  whether  or not he or they  constitute  a
          quorum, may unanimously appoint another Director to act at the meeting
          in the place of any such absent or disqualified member.

               (5)  To  fix  the  place,   time  and   purpose  of  meetings  of
          shareholders.

               (6) To fix the  compensation  of Directors and officers for their
          services.

     Section 3-11.  Vacancies.  Vacancies in the Board of  Directors,  including
vacancies  resulting from an increase in the number of Directors,  may be filled
by a majority of the  remaining  members of the Board of  Directors  though less
than a  quorum,  and each  person  so  elected  shall be a  Director  until  his
successor is duly elected by the shareholders, who may make such election at the
next annual meeting of the  shareholders  or at any special  meeting duly called
for that purpose and held prior  thereto,  or until his earlier  resignation  or
removal.

     In the  event of any  increase  or  decrease  in the  authorized  number of
directors, (i) each Director then serving as such shall nevertheless continue as
a  Director  of the class of which he is a member  until the  expiration  of his
current term, or his prior death, retirement, resignation,

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or removal, and (ii) the newly created or eliminated directorship resulting from
such increase or decrease shall be  apportioned by the Board of Directors  among
the three classes of Directors so as to maintain such classes as nearly equal as
possible.

ARTICLE  IV  -  OFFICERS

     Section 4-1. Election and Office. The Corporation shall have a President, a
Secretary and a Treasurer  who shall be elected by the Board of  Directors.  The
Board of Directors may elect as  additional  officers a Chairman of the Board of
Di-rectors,  one or more  Vice-Presidents,  and one or more  other  officers  or
assistant officers. Any number of offices may be held by the same person.

     Section 4-2. Term. The officers and assistant  officers shall each serve at
the pleasure of the Board of Directors and until the annual meeting of the Board
of Directors  following the next annual meeting of  shareholders  unless removed
from office by the Board of Directors during their respective tenures.

     Section  4-3.  Powers  and  Duties  of  the  President.   Unless  otherwise
determined by the Board of Directors,  the President shall have the usual duties
of an  executive  officer  with general  supervision  over and  direction of the
affairs of the  Corporation.  In the exercise of these duties and subject to the
limitations of the laws of the Commonwealth of Pennsylvania,  these By-laws, and
the actions of the Board of Directors,  he may appoint,  suspend,  and discharge
employees,  agents and assistant officers,  fix the compensation of all officers
and assistant  officers,  shall preside at all meetings of the  shareholders  at
which he shall be  present,  and,  unless  there is a  Chairman  of the Board of
Directors, shall preside at all meetings of the Board of Directors. He

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shall also do and perform such other duties as from time to time may be assigned
to him by the Board of Directors.

     Unless otherwise determined by the Board of Directors,  the President shall
have full power and authority on behalf of the  Corporation to attend and to act
and to vote at any meeting of the  shareholders  of any corporation in which the
Corporation  may hold stock,  and, at any such  meeting,  shall  possess and may
exercise  any and all the rights and powers  incident to the  ownership  of such
stock and which, as the owner thereof,  the Corporation might have possessed and
exercised.

     Section  4-4.  Powers  and  Duties  of  the  Secretary.   Unless  otherwise
determined by the Board of Directors, the Secretary shall be responsible for the
keeping of the minutes of all meetings of the Board of  Directors,  shareholders
and all committees,  in books provided for that purpose,  and for the giving and
serving  of all  notices  for the  Corporation.  He  shall  have  charge  of the
corporate seal, the  certificate  books,  transfer books and stock ledgers,  and
such  other  books and papers as the Board of  Directors  may  direct.  He shall
perform all other  duties  ordinarily  incident to the office of  Secretary  and
shall have such other powers and perform such other duties as may be assigned to
him by the Board of Directors.

     Section  4-5.  Powers  and  Duties  of  the  Treasurer.   Unless  otherwise
determined by the Board of Directors, the Treasurer shall have charge of all the
funds and  securities  of the  Corporation  which may come into his hands.  When
necessary or proper,  unless otherwise determined by the Board of Directors,  he
shall endorse for collection on behalf of the  Corporation  checks,  notes,  and
other  obligations,  and shall deposit the same to the credit of the Corporation
in such banks or  depositories as the Board of Directors may designate and shall
sign all receipts and

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vouchers for payments made to the Corporation.  He shall sign all checks made by
the Corporation,  except when the Board of Directors shall otherwise  direct. He
shall be  responsible  for the regular entry in books of the  Corporation  to be
kept for such  purpose,  full and accurate  account of all funds and  securities
received and paid by him on account of the Corporation. Whenever required by the
Board of Directors,  he shall render a statement of the  financial  condition of
the  Corporation.  He shall have such other powers and shall  perform such other
duties as may be assigned to him from time to time by the Board of Directors. He
shall give such bond,  if any,  for the  faithful  performance  of his duties as
shall be required by the Board of  Directors  and any such bond shall  remain in
the custody of the President.

     Section 4-6.  Powers and Duties of the Chairman of the Board of  Directors.
Unless otherwise determined by the Board of Directors, the Chairman of the Board
of Directors,  if any, shall preside at all meetings of Directors. He shall have
such other powers and perform  such further  duties as may be assigned to him by
the Board of Directors.

     Section 4-7. Powers and Duties of Vice-Presidents  and Assistant  Officers.
Unless otherwise  determined by the Board of Directors,  each Vice-President and
each  assistant  officer  shall have the powers  and  perform  the duties of his
respective  superior officer.  Vice-Presidents and assistant officers shall have
such rank as may be designated by the Board of Directors. Vice-Presidents may be
designated as having  responsibility  for a specific  area of the  Corporation's
affairs,  in which  event such  Vice-President  shall be  superior  to the other
Vice-Presidents  in relation to matters within his area. The President  shall be
the superior officer of the  Vice-Presidents.  The Treasurer and Secretary shall
be the superior officers of the Assistant Treasurers and Assistant  Secretaries,
respectively.

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     Section 4-8.  Delegation of Office. The Board of Directors may delegate the
powers or duties of any office of the  Corporation to any other person from time
to time.

     Section 4-9. Vacancies. The Board of Directors shall have the power to fill
any vacancies in any office occurring from whatever reason.

ARTICLE V - CAPITAL STOCK

     Section 5-1. Share Certificates. Every share certificate shall be signed by
the  Chairman  of  the  Board  or the  President  or  Vice-President  and by the
Treasurer, Assistant Treasurer, Secretary or Assistant Secretary and sealed with
the corporate  seal,  which may be a facsimile,  engraved or printed,  but where
such  certificate is signed by a transfer agent or a register,  the signature of
any  corporate  officer upon such  certificate  may be a facsimile,  engraved or
printed.

     Section  5-2.  Transfer of Shares.  Transfer of shares shall be made on the
books of the  Corporation  only upon  surrender of the share  certificate,  duly
endorsed or with duly  executed  stock powers  attached and  otherwise in proper
form for  transfer,  which  certificate  shall be  cancelled  at the time of the
transfer.

     Section 5-3.  Determination  of Shareholders of Record and Closing Transfer
Books.  The Board of Directors may fix a time, nor more than fifty days prior to
the date of any  meeting of  shareholders,  or the date fixed for the payment of
any dividend or  distribution,  or the date for the allotment of rights,  or the
date when any change or conversion or exchange of shares will be made or go into
effect, as a record date for the  determination of the shareholders  entitled to
notice of or to vote at any such meeting,  or entitled to receive payment of any
such dividend or distribution, or to receive any such allotment of rights, or to
exercise  the rights in respect to any such  change,  conversion  or exchange of
shares or otherwise. In such case, only such shareholders

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as shall be  shareholders  of record on the date so fixed  shall be  entitled to
notice of or to vote at such meeting, or to receive payment of such dividend, or
to receive such allotment of rights, or to exercise such rights, as the case may
be,  notwithstanding  any transfer of any shares on the books of the Corporation
after any record date fixed as  aforesaid.  The Board of Directors may close the
books of the  Corporation  against  transfers of shares  during the whole or any
part of such period, and in such case written or printed notice thereof shall be
mailed at least ten day before the closing thereof to each shareholder of record
at the address appearing on the records of the Corporation or supplied by him to
the Corporation for the purpose of notice. While the stock transfer books of the
Corporation  are closed,  no transfer of shares shall be made thereon.  Unless a
record  date is  fixed  by the  Board  of  Directors  for the  determination  of
shareholders entitled to receive notice of, or vote at, a shareholders' meeting,
transferees  of shares  which are  transferred  on the books of the  Corporation
within ten days  preceding the date of such meet shall not be entitled to notice
of or to vote at such meeting. The Corporation may treat the registered owner of
each  share of stock as the  person  exclusively  entitled  to vote,  to receive
notifications  and  otherwise to exercise all the rights and powers of the owner
thereof.

     Section 5-4. Lost Share Certificates.  Unless waived in whole or in part by
the Board of Directors,  any person requesting the issuance of a new certificate
in lieu of an alleged lost, destroyed,  mislaid or wrongfully taken certificate,

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shall  (1) give to the  Corporation  his bond or  indemnity  with an  acceptable
surety; and (2) satisfy such other reasonable  requirements as may be imposed by
the  Corporation.  Thereupon  a new  share  certificate  shall be  issued to the
registered owner or his assigns in lieu of the alleged lost, destroyed,  mislaid
or wrongfully taken certificate, provided that the request therefor and issuance
thereof have been made before the  Corporation  has notice that such shares have
been acquired by a bona fide purchaser.

ARTICLE VI - NOTICES;  COMPUTING  TIME PERIODS

     Section  6-1.  Contents  of  Notice.  Whenever  any  notice of a meeting is
required to be given pursuant to these By-laws or the Articles of  Incorporation
or otherwise,  the notice shall  specify the place,  day and hour of the meeting
and,  in the case of a  special  meeting  of  shareholders  or  where  otherwise
required by law,  the general  nature of the business to be  transacted  at such
meeting.

     Section 6-2.  Method of Notice.  All notices  shall be given to each person
entitled  thereto,  either  personally or by sending a copy thereof  through the
mail or by telegraph,  charges prepaid, to his address appearing on the books of
the Corporation, or supplied by him to the Corporation for the purpose of notice
in the case of a notice to shareholders. If notice is sent by mail or telegraph,
it shall be  deemed to have  been  given to the  person  entitled  thereto  when
deposited  in  the  United  States  Mail  or  with  the  telegraph   office  for
transmission;  if notice is published in a newspaper, it shall be deemed to have
been given to all the persons  addressed  therein on the day that such notice is
published.

     Section 6-3.  Computing  Time Periods.  In computing the number of days for
purposes  of these  By-laws,  all days shall be  counted,  including  Saturdays,
Sundays or holidays; provided, however, that if the final day of any time period
falls on a Saturday, Sunday or holiday, then the final day shall be deemed to be
the next day which is not a Saturday, Sunday or holiday. In computing the number
of days for the purpose of giving notice of any meeting, the date upon which the
notice is given shall be counted  but the day set for the  meeting  shall not be
counted.

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Notice given twenty-four hours before the time set for a meeting shall be deemed
one day's notice.

ARTICLE  VII   INDEMNIFICATION

     Section 7-1.  Mandatory  Indemnification  of Directors  and  Officers.  The
Corporation shall indemnify, to the fullest extent now or hereafter permitted by
law, each director or officer (including each former director or officer) of the
Corporation who was or is made a party to or a witness in or is threatened to be
made a party to or a witness in any  threatened,  pending or  completed  action,
suit or proceeding, whether civil, criminal, administrative or investigative, by
reason  of  the  fact  that  he is or was an  authorized  representative  of the
Corporation, against all expenses (including attorneys' fees and disbursements),
judgments,  fines  (including  excise taxes and  penalties)  and amounts paid in
settlement  actually  and  reasonably  incurred by him in  connection  with such
action, suit or proceeding.

     Section 7-2.  Mandatory  Advancement of Expenses to Directors and Officers.
The Corporation shall pay expenses (including attorneys' fees and disbursements)
incurred by a director or officer of the Corporation  referred to in Section 7-1
hereof in defending  or appearing as a witness in any civil or criminal  action,
suit or  proceeding  described  in  Section  7-1  hereof in advance of the final
disposition of such action,  suit or proceeding.  The expenses  incurred by such
director  or officer  shall be paid by the  Corporation  in advance of the final
disposition  of  such  action,  suit  or  proceeding  only  upon  receipt  of an
undertaking  by or on behalf of such  director  or officer to repay all  amounts
advanced if it shall  ultimately be  determinated  that he is not entitled to be
indemnified by the Corporation.

                                     - 16 -
<PAGE>

     Section 7-3. Permissive  Indemnification  and Advancement of Expenses.  The
Corporation  may, as  determined  by the Board of  Directors  from time to time,
indemnify to the fullest  extent now or  hereafter  permitted by law, any person
who was or is a party to or a witness in or is  threatened to be made a party to
or a witness  in, or is  otherwise  involved  in,  any  threatened,  pending  or
completed action, suit or proceedings,  whether civil, criminal,  administrative
or  investigative,  by  reason  of the  fact  that  he is or  was an  authorized
representative  of the Corporation,  both as to action in his official  capacity
and as to action in another  capacity  while  holding  such office or  position,
against all expenses (including  attorneys' fees and disbursements),  judgments,
fines  (including  excise taxes and  penalties),  and amounts paid in settlement
actually and reasonably  incurred by him in connection with such action, suit or
proceedings.  The Corporation  may, as determined by the Board of Directors from
time to  time,  pay  expenses  incurred  by any such  person  by  reason  of his
participation  in an action,  suit or proceeding  referred to in this Section in
advance of the final disposition of such action, suit or proceeding upon receipt
of an  undertaking  by or on behalf of such  person to repay  such  amount if it
shall  ultimately be determined that he is not entitled to be indemnified by the
Corporation.

     Section 7-4. Scope of Indemnification.  Indemnification  under this Article
is provided  pursuant to Section 8365 of the Pennsylvania  Directors'  Liability
Act (or any  successor  provision or  statute),  and this Article is intended to
provide  indemnification  in accordance  with its terms whether the  Corporation
would have the power to so indemnify  under any other  provisions  of law except
such Act and whether or not the indemnified  liability  arises or arose from any
threatened,  pending or completed  action by or in the right of the Corporation;
indemnification  under this Article shall not be made by the  Corporation in any
case where the alleged act or failure to act

                                     - 17 -

<PAGE>

giving rise to the claim for  indemnification  is  expressly  prohibited  by the
Pennsylvania  Directors'  Liability Act or any successor statute as in effect at
the time of such alleged action or failure to take action.

     Section 7-5. Insurance;  Funding to Meet Indemnification  Obligations.  The
Corporation shall have the power to purchase and maintain insurance on behalf of
any authorized  representative of the Corporation against any liability asserted
against  him and  incurred  by him in any such  capacity,  or arising out of his
status as such, whether or not the Corporation would have the power to indemnify
him against such liability. The Board of Directors,  without further approval of
the  shareholders,  shall  have the  power to  borrow  money  on  behalf  of the
Corporation,  including the power to pledge the assets of the Corporation,  from
time to  time  to  discharge  the  Corporation's  obligations  with  respect  to
indemnification  and the  advancement  and  reimbursement  of expenses,  and the
purchase and  maintenance  of  insurance on behalf of each  director and officer
against any liability  asserted  against or incurred by such director or officer
in any capacity.

     Section 7-6.  Miscellaneous.  Each director and officer of the  Corporation
shall be  deemed  to act in such  capacity  in  reliance  upon  such  rights  of
indemnification and advancement of expenses as are provided in this Article. The
rights of  indemnification  and advancement of expenses provided by this Article
shall not be deemed  exclusive of any other  rights to which any person  seeking
indemnification  or advancement of expenses may be entitled under any agreement,
vote of shareholders or disinterested directors,  statute or otherwise,  both as
to action  in such  person's  official  capacity  and as to  action  in  another
capacity  while  holding  such office or  position,  and shall  continue as to a
person who has ceased to be an authorized  representative of the Corporation and
shall inure to the benefit of the heirs, executors and administrators of such

                                     - 18 -
<PAGE>

person.  Any repeal or modification  of this Article by the  shareholders or the
Board of Directors of the  Corporation  shall not adversely  affect any right or
protection  existing  at the time of such  repeal or  modification  to which any
person may be entitled under this Article.

     Section 7-7.  Definition  of  Corporation.  For  purposes of this  Article,
references  to "the  Corporation"  shall  include,  in addition to the resulting
corporation,  any  constituent  corporation  (including  any  constituent of the
constituent)  absorbed  in a  consolidation  or merger  which,  if its  separate
existence  had  continued,  would have had power and  authority to indemnify its
authorized  representatives  so  that  any  person  who is or was an  authorized
representative of such constituent  corporation shall stand in the same position
under this Article with respect to the resulting or surviving  corporation as he
would  have  with  respect  to  such  constituent  corporation  if its  separate
existence had continued.

     Section 7-8. Definition of Authorized  Representative.  For the purposes of
this  Article,  the term  "authorized  representative"  shall  mean a  director,
officer,  employee  or  agent of the  Corporation  or of any  subsidiary  of the
Corporation, or a trustee, custodian,  administrator,  committeeman or fiduciary
of any employee benefit plan established and maintained by the Corporation or by
any  subsidiary of the  Corporation,  or a person serving  another  corporation,
partnership,  joint venture,  trust or other  enterprise in any of the foregoing
capacities at the request of the Corporation.

ARTICLE VIII - FISCAL YEAR

     Section 8-1. The Board of Directors  shall have the power by  resolution to
fix the fiscal year of the Corporation.  If the Board of Directors shall fail to
do so, the President shall fix the fiscal year.

                                     - 19 -

<PAGE>


  ARTICLE IX - AMENDMENTS

     Section 9-1. The shareholders entitled to vote thereon shall have the power
to alter, amend, or repeal these By-laws,  by the vote of shareholders  entitled
to cast at least a majority of the votes which all  shareholders are entitled to
cast thereon,  at any regular or special meeting,  duly convened after notice to
the shareholders of such purpose,  provided however that Sections 3-1 and 3-2 of
Article  III and this  Section  9-1 of these  By-laws may be amended or repealed
only by a vote of shareholders entitled to cast at least two-thirds of the votes
which all shareholders are entitled to cast at a special meeting called for that
purpose. The Board of Directors,  by a majority vote of those voting, shall have
the power to alter,  amend, and repeal these By-laws,  at any regular or special
meeting duly convened after notice of such purpose,  subject always to the power
of the shareholders to further alter, amend or repeal these By-laws.


ARTICLE X - INTERPRETATION OF BY-LAWS

     Section  10-1.  All words,  terms and  provisions of these By-laws shall be
interpreted  and defined by and in  accordance  with the  Pennsylvania  Business
Corporation Law, as amended, and as amended from time to time hereafter.


ARTICLE XI - DIRECTOR LIABILITY

     Section 11-1. Director's Personal Liability.  A director of the Corporation
shall not be personally liable for monetary damages for any action taken, or any
failure to take any action,  provided  however,  that this  provision  shall not
eliminate  or  limit  the  liability  of a  director  to the  extent  that  such
elimination   or  limitation  of  liability  is  expressly   prohibited  by  the
Pennsylvania  Directors'  Liability  Act as in effect at the time of the alleged
action or failure to take action by such director.

                                     - 20 -

<PAGE>


     Section 11-2.  Preservation  of Right.  Any repeal or  modification of this
Article by the  shareholders of the Corporation  shall not adversely  affect any
right or protection existing at the time of such repeal or modification to which
any director or former  director may be entitled under this Article.  The rights
conferred by this Article  shall  continue as to any person who has ceased to be
director  of the  corporation  and  shall  inure  to the  benefit  of the  heir,
executors and administrators of such persons.