BIONX IMPLANTS, INC.
                (formerly BIONX IMPLANTS MERGER SUBSIDIARY, INC.)


                                    * * * * *

                                     BYLAWS


                                    ARTICLE I

                                     OFFICES

          Section 1. The registered  office shall be in such location within the
Commonwealth  of  Pennsylvania  as shall be designated  from time to time by the
corporation's board of directors.

          Section 2. The  corporation may also have offices at such other places
both  within  and  without  the  Commonwealth  of  Pennsylvania  as the board of
directors may from time to time determine or the business of the corporation may
require.

                                   ARTICLE II
                            MEETINGS OF SHAREHOLDERS

          Section  1. All  meetings  of the  shareholders  for the  election  of
directors shall be held in the City of Malvern, Commonwealth of Pennsylvania, at
such  place as may be fixed from time to time by the board of  directors,  or at
such other place either within or without the  Commonwealth  of  Pennsylvania as
shall be  designated  from time to time by the board of directors  and stated in
the notice of the meeting. Meetings of shareholders for any other purpose may be
held at such time and place, within or without the Commonwealth of Pennsylvania,
as shall be stated in the notice of the meeting or in a duly executed  waiver of
notice thereof.

          Section  2.  Annual  meetings  of  shareholders  shall  be held on the
thirtieth day of March if not a legal holiday,  and if a legal holiday,  then on
the next  secular day  following,  at 1 P.M.,  or at such other date and time as

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shall be  designated  from time to time by the board of directors  and stated in
the notice of the meeting, at which they shall elect by a plurality vote a board
of directors, and transact such other business as may properly be brought before
the meeting.

          Section 3.  Written  notice of the annual  meeting  stating the place,
date and hour of the meeting shall be given to each shareholder entitled to vote
at such  meeting  not less than ten nor more than sixty days  before the date of
the meeting.

          Section  4. The  officer  who has  charge of the  stock  ledger of the
corporation  shall  prepare and make,  at least ten days before every meeting of
shareholders,  a  complete  list  of the  shareholders  entitled  to vote at the
meeting,  arranged  in  alphabetical  order,  and  showing  the  address of each
shareholder and the number of shares registered in the name of each shareholder.
Such list shall be open to the examination of any  shareholder,  for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days  prior to the  meeting,  either at a place  within  the city  where the
meeting  is to be held,  which  place  shall be  specified  in the notice of the
meeting, or, if not so specified,  at the place where the meeting is to be held.
The list shall also be  produced  and kept at the time and place of the  meeting
during the whole time thereof,  and may be inspected by any  shareholder  who is
present.

          Section 5. Special  meetings of the  shareholders,  for any purpose or
purposes,  unless  otherwise  prescribed  by  statute  or  by  the  articles  of
incorporation,  may be called  by the  chairman  of the  board,  if any,  or the
president and shall be called by the chairman of the board, if any, president or
secretary  at the request in writing of a majority of the board of  directors or
at the request in writing of shareholders  owning a majority of the voting power
of all outstanding shares of the corporation's  voting stock, voting as a single
class. Such request shall state the purpose or purposes of the proposed meeting.

          Section 6. Written notice of a special meeting stating the place, date
and hour of the meeting  and the  purpose or  purposes  for which the meeting is
called,  shall be given not less than ten nor more than  sixty  days  before the
date of the meeting, to each shareholder entitled to vote at such meeting.

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          Section 7. Business  transacted at any special meeting of shareholders
shall be limited to the purposes stated in the notice of meeting.

          Section  8. The  presence,  in  person or by  proxy,  of  shareholders
entitled  to cast at least a  majority  of the votes that all  shareholders  are
entitled to cast on a  particular  matter to be acted upon at the meeting  shall
constitute a quorum for the purposes of consideration  and action on the matter.
Any  regular or special  meeting  may be  adjourned  for such period and to such
place as the  shareholders  present and entitled to vote shall  direct,  but any
meeting at which directors are to be elected shall be adjourned only from day to
day,  or for  such  longer  periods  not  exceeding  fifteen  days  each  as the
shareholders present and entitled to vote shall direct, until the directors have
been elected.  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 adjourn the meeting to such
time and place as they may determine.  Notwithstanding the foregoing,  (i) those
shareholders  entitled  to vote who  attend a meeting of  shareholders  at which
directors  are to be elected that has been  previously  adjourned  for lack of a
quorum, although less than a quorum as fixed in this section, shall nevertheless
constitute  a quorum  for the  purpose  of  electing  directors  and (ii)  those
shareholders  entitled  to vote who  attend a meeting  that has been  previously
adjourned for one or more periods  aggregating  at least fifteen days because of
an absence of a quorum,  although  less than a quorum as fixed in this  section,
shall nevertheless constitute a quorum for the purpose of acting upon any matter
set  forth  in the  notice  of the  meeting  if the  notice  states  that  those
shareholders who attend the adjourned  meeting shall  nevertheless  constitute a
quorum for the purpose of acting upon the matter.

          Section 9. When a quorum is present  at any  meeting,  the vote of the
holders of a majority  of the stock  having  voting  power  present in person or
represented  by proxy shall decide any  question  brought  before such  meeting,
unless the question is one upon which by express provision of the statutes or of

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

          Section 10. Unless otherwise provided in the articles of incorporation
each  shareholder  shall at every meeting of the shareholders be entitled to one
vote in person or by proxy for each share of the  capital  stock  having  voting
power held by such shareholder, but no proxy shall be voted on after three years
from its date, unless the proxy provides for a longer period.

          Section  11.  At  any  annual  or  special  meeting  of  shareholders,
proposals by  shareholders  and persons  nominated  for election as directors by
shareholders  shall be considered only if advance notice thereof has been timely
given as provided herein and such proposals or nominations are otherwise  proper
for  consideration  under applicable law and the articles of  incorporation  and
bylaws  of the  corporation.  Notice  of any  proposal  to be  presented  by any
shareholder or of the name of any person to be nominated by any  shareholder for
election as a director of the corporation at any meeting of  shareholders  shall
be delivered to the  secretary of the  corporation  at its  principal  executive
office not less than 60 nor more than 90 days prior to the date of the  meeting;
provided,  however,  that if the date of the meeting is first publicly announced
or disclosed (in a public filing,  in a press release  reported by the Dow Jones
News  Service,   Associated  Press  or  comparable  national  news  service,  or
otherwise)  less than 70 days  prior to the date of the  meeting,  such  advance
notice  shall be given  not more  than  ten  days  after  such  date is first so
announced or  disclosed.  Public  notice shall be deemed to have been given more
than 70 days in  advance of the annual  meeting  if the  corporation  shall have
previously disclosed,  in these bylaws or otherwise,  that the annual meeting in
each  year is to be held on a  determinable  date,  unless  and  until the Board

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determines to hold the meeting on a different  date. Any  shareholder  who gives
notice of any such proposal shall deliver  therewith the text of the proposal to
be presented and a brief written  statement of the reasons why such  shareholder
favors the proposal and setting forth such shareholder's  name and address,  the
number  and  class of all  shares  of each  class  of  stock of the  corporation
beneficially  owned  by such  shareholder  and  any  material  interest  of such
shareholder  in the  proposal  (other than as a  shareholder).  Any  shareholder
desiring to nominate  any person for  election as a director of the  corporation
shall deliver with such notice a statement in writing  setting forth the name of
the person to be nominated,  the number and class of all shares of each class of
stock of the  corporation  beneficially  owned by such person,  the  information
regarding  such person  required by  paragraphs  (a), (e) and (f) of Item 401 of
Regulation  S-K  adopted  by the  Securities  and  Exchange  Commission  (or the
corresponding   provisions  of  any  regulation   subsequently  adopted  by  the
Securities and Exchange Commission applicable to the corporation), such person's
signed  consent to serve as a  director  of the  corporation  if  elected,  such
shareholder's  name and  address  and the number and class of all shares of each
class of stock of the corporation  beneficially  owned by such  shareholder.  As
used herein,  shares "beneficially owned" shall mean all shares as to which such
person,  together with such person's  affiliates  and  associates (as defined in
Rule  12b-2  under  the  Securities  Exchange  Act of  1934),  may be  deemed to
beneficially own pursuant to Rules 13d-3 and 13d-5 under the Securities Exchange
Act of 1934  ("Exchange  Act"),  as well as all shares as to which such  person,
together with such person's  affiliates and associates,  has the right to become
the  beneficial  owner pursuant to any agreement or  understanding,  or upon the
exercise of  warrants,  options or rights to convert or exchange  (whether  such
rights are  exercisable  immediately  or only  after the  passage of time or the
occurrence of conditions).  The person presiding at the meeting,  in addition to
making any other  determinations  that may be  appropriate to the conduct of the
meeting,  shall  determine  whether  such  notice  has been duly given and shall
direct that proposals and nominees not be considered if such notice has not been
given.  Nothing  in this  section  shall be  deemed  to  affect  any  rights  of
shareholders  to request  inclusion  of  proposals  in the  corporation's  proxy
statement  pursuant to Rule 14a-8 of the Exchange Act.  Notwithstanding  Article
VIII of these bylaws or any  provision of the articles of  incorporation  or the
fact  that a  lesser  percentage  may be  specified  by  Pennsylvania  law,  the
affirmative  vote of the holders of at least  seventy-five  percent (75%) of the
votes  which  all the  shareholders  would  be  entitled  to cast at any  annual

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election of directors or class of directors shall be required to amend,  repeal,
or adopt any provision inconsistent with this section.

                                   ARTICLE III

                                    DIRECTORS

          Section 1. The number of directors  which shall  constitute  the whole
board  shall be not less than five nor more than nine.  Within the limits  above
specified,  the number of directors  shall be  determined  by  resolution of the
board of directors or by the shareholders at the annual meeting.  Directors need
not be  shareholders.

          Section 2.  Vacancies and newly created  directorships  resulting from
any increase in the  authorized  number of directors may be filled by a majority
of the  directors  then in  office,  though  less  than a  quorum,  or by a sole
remaining director, and the directors so chosen shall hold office until the next
annual  election and until their  successors are duly elected and shall qualify,
unless sooner displaced.  If there are no directors in office,  then an election
of directors may be held in the manner provided by statute.

          Section  3. The  business  of the  corporation  shall be managed by or
under the direction of its board of directors which may exercise all such powers
of the  corporation and do all such lawful acts and things as are not by statute
or by the articles of  incorporation  or by these bylaws directed or required to
be exercised or done by the shareholders.

                       MEETINGS OF THE BOARD OF DIRECTORS

          Section  4.  The  board  of  directors  of the  corporation  may  hold
meetings, both regular and special, either within or without the Commonwealth of
Pennsylvania.  The board of directors  shall meet no less  frequently  than once
during each calendar quarter.

          Section 5. The first  meeting of each newly elected board of directors
shall be held immediately after the annual meeting and no notice of such meeting
shall be necessary to the newly elected directors in order legally to constitute
the meeting,  provided a quorum shall be present. In the event of the failure of

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the  shareholders  to fix the time or place of such  first  meeting of the newly
elected board of directors, or in the event such meeting is not held at the time
and place so fixed by the shareholders, the meeting may be held at such time and
place as shall  be  specified  in a notice  given as  hereinafter  provided  for
special  meetings  of the  board of  directors,  or as shall be  specified  in a
written waiver signed by all of the directors.

          Section 6.  Regular  meetings  of the board of  directors  may be held
without  notice  at such  time and at such  place as shall  from time to time be
determined by the board.

          Section 7. Special meetings of the board may be called by the chairman
of the board,  if any, or the president on three days' notice to each  director,
either personally or by mail or by telegram; special meetings shall be called by
the chairman of the board,  if any, or the president or secretary in like manner
and on like  notice on the  written  request of two  directors  unless the board
consists of only one director, in which case special meetings shall be called by
the chairman of the board,  if any, or the president or secretary in like manner
and on like notice on the written request of the sole director.

          Section 8. At all  meetings of the board a majority  of the  directors
shall  constitute  a quorum for the  transaction  of  business  and the act of a
majority  of the  directors  present at any  meeting at which  there is a quorum
shall  be  the  act  of the  board  of  directors,  except  as may be  otherwise
specifically  provided  by statute or by the  articles  of  incorporation.  If a
quorum  shall not be  present  at any  meeting  of the board of  directors,  the
directors  present  thereat may adjourn the meeting  from time to time,  without
notice other than announcement at the meeting, until a quorum shall be present.

          Section  9.   Unless   otherwise   restricted   by  the   articles  of
incorporation  or these bylaws,  any action required or permitted to be taken at
any meeting of the board of directors or of any  committee  thereof may be taken
without a meeting, if all members of the board or committee, as the case may be,
consent  thereto in  writing,  and the  writing or  writings  are filed with the
minutes of proceedings of the board or committee.

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          Section  10.   Unless   otherwise   restricted   by  the  articles  of
incorporation  or  these  bylaws,  members  of the  board of  directors,  or any
committee designated by the board of directors,  may participate in a meeting of
the board of directors,  or any committee,  by means of conference  telephone or
similar communications  equipment by means of which all persons participating in
the meeting  can hear each  other,  and such  participation  in a meeting  shall
constitute presence in person at the meeting.

                             COMMITTEES OF DIRECTORS

          Section  11. The board of  directors  may, by  resolution  passed by a
majority of the whole board, designate one or more committees, each committee to
consist  of one or more of the  directors  of the  corporation.  The  board  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.

          Any such  committee,  to the extent  provided in the resolution of the
board of directors,  shall have and may exercise all the powers and authority of
the board of  directors  in the  management  of the  business and affairs of the
corporation,  and may authorize the seal of the corporation to be affixed to all
papers which may require it,  subject only to the  limitations on the powers and
authority of board committees set forth under  Pennsylvania  law. Such committee
or committees  shall have such name or names as may be  determined  from time to
time by resolution adopted by the board of directors.

          Section 12. Each committee  shall keep regular minutes of its meetings
and report the same to the board of directors when required.

                            COMPENSATION OF DIRECTORS

          Section  13.   Unless   otherwise   restricted   by  the  articles  of
incorporation  or these bylaws,  the board of directors shall have the authority
to fix the compensation of directors.  The directors may be paid their expenses,
if any, of  attendance at each meeting of the board of directors and may be paid
a fixed sum for attendance at each meeting of the board of directors or a stated
salary as director. No such payment shall preclude any director from serving the

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corporation in any other capacity and receiving compensation  therefor.  Members
of special or standing committees may be allowed like compensation for attending
committee meetings.

                              REMOVAL OF DIRECTORS

          Section  14.   Unless   otherwise   restricted   by  the  articles  of
incorporation  or by-law,  any director,  class of the board of directors or the
entire board of directors may be removed,  with or without cause, by the holders
of a majority of shares entitled to vote at an election of directors.

                                   ARTICLE IV
                                     NOTICES

          Section 1. Whenever,  under the provisions of  Pennsylvania  law or of
the articles of incorporation or of these bylaws, notice is required to be given
to any  director or  shareholder,  it shall not be  construed  to mean  personal
notice,  but such notice may be given in  writing,  by mail,  addressed  to such
director  or  shareholder,  at his  address as it appears on the  records of the
corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be  deposited  in the United  States mail.
Notice to directors may also be given by telegram.

          Section 2.  Whenever  any  notice is  required  to be given  under the
provisions of Pennsylvania  law or of the articles of  incorporation or of these
bylaws, a waiver thereof in writing, signed by the person or persons entitled to
said notice,  whether before or after the time stated  therein,  shall be deemed
equivalent thereto.

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                                    ARTICLE V
                                    OFFICERS

          Section  1. The  officers  of the  corporation  shall be chosen by the
board of directors and shall be a president, a vice-president, a secretary and a
treasurer.  The board of  directors  may also  choose a  chairman  of the board,
additional vice-presidents,  and one or more assistant secretaries and assistant
treasurers.  Any number of offices  may be held by the same  person,  unless the
articles of incorporation or these bylaws otherwise provide.

          Section  2. The board of  directors  at its first  meeting  after each
annual  meeting  of  shareholders   shall  choose  a  president,   one  or  more
vice-presidents, a secretary and a treasurer.

          Section 3. The board of directors may appoint such other  officers and
agents as it shall deem  necessary  who shall hold their  offices for such terms
and shall  exercise  such powers and perform such duties as shall be  determined
from time to time by the board.

          Section 4. The salaries of all officers and agents of the  corporation
shall be fixed by the board of directors;  provided,  however,  if the board has
established a compensation  committee,  no increase in salary of the officers of
the corporation shall occur unless such increase is approved by such committee.

          Section 5. The  officers of the  corporation  shall hold office  until
their successors are chosen and qualify. Any officer elected or appointed by the
board of  directors  may be  removed  at any time by the  affirmative  vote of a
majority of the board of directors.  Any vacancy  occurring in any office of the
corporation shall be filled by the board of directors.

                            THE CHAIRMAN OF THE BOARD

          Section 6. If the board of  directors  elects a chairman of the board,
such person  shall  preside at all  meetings of the board and at all meetings of
shareholders.

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                                  THE PRESIDENT

          Section 7. The president shall be the chief  executive  officer of the
corporation,  shall preside at all meetings of the shareholders and the board of
directors  if there is no chairman of the board,  shall have  general and active
management of the business of the  corporation and shall see that all orders and
resolutions of the board of directors are carried into effect.

          Section 8. The  president  shall  execute  bonds,  mortgages and other
contracts  requiring a seal,  under the seal of the  corporation,  except  where
required or  permitted  by law to be  otherwise  signed and  executed and except
where the signing and  execution  thereof  shall be  expressly  delegated by the
board of directors to some other officer or agent of the corporation.

                               THE VICE-PRESIDENTS

          Section  9. In the  absence  of the  president  or in the event of the
president's  inability  or refusal to act, the  vice-president  (or in the event
there  be  more  than  one  vice-president,  the  vice-presidents  in the  order
designated by the directors,  or in the absence of any designation,  then in the
order of their election) shall perform the duties of the president,  and when so
acting, shall have all the powers of and be subject to all the restrictions upon
the president. The vice-presidents shall perform such other duties and have such
other powers as the board of directors may from time to time prescribe.

                     THE SECRETARY AND ASSISTANT SECRETARY

          Section 10. The  secretary  shall  attend all meetings of the board of
directors and all meetings of the shareholders and record all the proceedings of
the  meetings of the  corporation  and of the board of directors in a book to be
kept for that purpose and shall perform like duties for the standing  committees
when  required.  The secretary  shall give, or cause to be given,  notice of all
meetings of the shareholders and special meetings of the board of directors, and
shall  perform such other duties as may be  prescribed by the board of directors
or president,  under whose  supervision  the  secretary  shall be. The secretary
shall have custody of the corporate seal of the  corporation  and the secretary,

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or an  assistant  secretary,  shall  have  authority  to  affix  the same to any
instrument  requiring  it  and  when  so  affixed,  it may  be  attested  by the
secretary's signature or by the signature of such assistant secretary. The board
of directors  may give general  authority to any other officer to affix the seal
of the  corporation  and to attest the  affixing  by such  officer's  signature.

          Section 11. The assistant secretary, or if there be more than one, the
assistant  secretaries in the order  determined by the board of directors (or if
there be no such  determination,  then in the order of their election) shall, in
the absence of the  secretary  or in the event of the  secretary's  inability or
refusal to act,  perform the duties and exercise the powers of the secretary and
shall  perform  such other  duties  and have such  other  powers as the board of
directors may from time to time prescribe.

                     THE TREASURER AND ASSISTANT TREASURERS

          Section  12. The  treasurer  shall have the  custody of the  corporate
funds and securities  and shall keep full and accurate  accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all moneys
and other valuable  effects in the name and to the credit of the  corporation in
such depositories as may be designated by the board of directors.

          Section 13. The treasurer  shall disburse the funds of the corporation
as may be ordered by the board of  directors,  taking  proper  vouchers for such
disbursements,  and shall render to the president and the board of directors, at
its regular meetings,  or when the board of directors so requires, an account of
all  transactions  undertaken  by such officer as treasurer and of the financial
condition of the corporation.

          Section 14. If required by the board of directors, the treasurer shall
give the corporation a bond (which shall be renewed every six years) in such sum
and with  such  surety  or  sureties  as shall be  satisfactory  to the board of
directors for the faithful  performance of the duties of the treasurer's  office
and for the restoration to the  corporation,  in case of the treasurer's  death,

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resignation,  retirement or removal from office, of all books, papers, vouchers,
money and other property of whatever kind in the treasurer's possession or under
the treasurer's control belonging to the corporation.

          Section 15. The  assistant  treasurer,  or if there shall be more than
one, the assistant  treasurers in the order determined by the board of directors
(or if  there be no such  determination,  then in the  order of their  election)
shall,  in the  absence  of the  treasurer  or in the  event of the  treasurer's
inability  or refusal to act,  perform the duties and exercise the powers of the
treasurer  and shall perform such other duties and have such other powers as the
board of directors may from time to time prescribe.

                                   ARTICLE VI
                             CERTIFICATES FOR SHARES

          Section  1. The  shares of the  corporation  shall be  represented  by
certificates. Certificates shall be signed by, or in the name of the corporation
by, the chairman or vice-chairman of the board of directors, or the president or
a  vice-president,  and by  the  treasurer  or an  assistant  treasurer,  or the
secretary or an assistant secretary of the corporation.

          If the corporation shall be authorized to issue more than one class of
stock or more than one series of any class,  the  powers,  designations,  voting
rights,  preferences  and  relative,  participating,  optional or other  special
rights  of each  class  of  stock  or  series  thereof  and the  qualifications,
limitations or restrictions of such  preferences  and/or rights,  so far as they
have been  determined,  shall be set forth in full or  summarized on the face or
back of the  certificate  which the  corporation  shall issue to represent  such
class or  series of stock,  provided  that,  except  as  otherwise  provided  by
Pennsylvania law, in lieu of the foregoing requirements,  there may be set forth
on the face or back of the  certificate  which the  corporation  shall  issue to
represent such class or series of stock, a statement that the  corporation  will
furnish  without  charge to each  shareholder  who so requests a full or summary

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statement of such powers, designations, voting rights, preferences and relative,
participating, optional or other special rights of each class of stock or series
thereof and the qualifications,  limitations or restrictions of such preferences
and/or  rights.

          Within  a   reasonable   time  after  the   issuance  or  transfer  of
uncertificated stock, the corporation shall send to the registered owner thereof
a written notice  containing the information  required to be set forth or stated
on certificates pursuant to Pennsylvania law or a statement that the corporation
will  furnish  without  charge to each  shareholder  who so requests the powers,
designations,  preferences and relative participating, optional or other special
rights  of each  class  of  stock  or  series  thereof  and the  qualifications,
limitations or restrictions of such preferences and/or rights.

          Section  2.  Any of or all  the  signatures  on a  certificate  may be
facsimile.  In case any officer,  transfer  agent or registrar who has signed or
whose facsimile  signature has been placed upon a certificate  shall have ceased
to be such  officer,  transfer  agent or registrar  before such  certificate  is
issued,  it may be issued  by the  corporation  with the same  effect as if such
person were such officer, transfer agent or registrar at the date of issue.

                                LOST CERTIFICATES

          Section  3. The board of  directors  may direct a new  certificate  or
certificates or  uncertificated  shares to be issued in place of any certificate
or certificates theretofore issued by the corporation alleged to have been lost,
stolen or destroyed,  upon the making of an affidavit of that fact by the person
claiming  the  certificate  of stock  to be  lost,  stolen  or  destroyed.  When
authorizing  such issue of a new certificate or  certificates or  uncertificated
shares,  the  board of  directors  may,  in its  discretion  and as a  condition
precedent to the  issuance  thereof,  require the owner of such lost,  stolen or
destroyed certificate or certificates, or his legal representative, to advertise
the same in such manner as it shall  require  and/or to give the  corporation  a
bond in such sum as it may  direct as  indemnity  against  any claim that may be
made against the  corporation  with respect to the  certificate  alleged to have
been lost, stolen or destroyed.

<PAGE>

                                TRANSFER OF STOCK

          Section 4. Upon surrender to the  corporation or the transfer agent of
the  corporation  of a certificate  for shares duly endorsed or  accompanied  by
proper evidence of succession,  assignment or authority to transfer, it shall be
the duty of the  corporation to issue a new  certificate to the person  entitled
thereto,  cancel the old certificate and record the transaction  upon its books.
Upon  receipt  of proper  transfer  instructions  from the  registered  owner of
uncertificated shares, such uncertificated shares shall be canceled and issuance
of new equivalent  uncertificated shares or certificated shares shall be made to
the person entitled thereto and the transaction shall be recorded upon the books
of the corporation.

                               FIXING RECORD DATE

          Section  5.  In  order  that  the   corporation   may   determine  the
shareholders  entitled to notice of or to vote at any meeting of shareholders or
any adjournment  thereof,  or entitled to receive payment of any distribution or
allotment  of any rights,  or entitled to exercise  any rights in respect of any
change,  conversion  or exchange of stock or for the purpose of any other lawful
action,  the board of directors may fix, in advance,  a record date, which shall
not be more than ninety nor less than ten days before the date of such  meeting,
nor more  than  sixty  days  prior  to any  other  action.  A  determination  of
shareholders  of  record  entitled  to  notice  of or to  vote at a  meeting  of
shareholders shall apply to any adjournment of the meeting;  provided,  however,
that the board of directors may fix a new record date for the adjourned meeting.

                             REGISTERED SHAREHOLDERS

          Section  6.  The  corporation  shall  be  entitled  to  recognize  the
exclusive  right of a person  registered  on its books as the owner of shares to
receive  dividends,  and to  vote as such  owner,  and  shall  not be  bound  to
recognize any equitable or other claim to or interest in such share or shares on

<PAGE>

the part of any other  person,  whether  or not it shall  have  express or other
notice thereof, except as otherwise provided by the laws of Pennsylvania.

                                   ARTICLE VII
                               GENERAL PROVISIONS
                                  DISTRIBUTIONS

          Section 1. The board of directors, to the extent permitted by law, may
authorize and the corporation may make distributions.  Distributions may be paid
in cash,  in  property,  or in  shares  of the  capital  stock,  subject  to the
provisions of the articles of incorporation.

          Section 2. Before payment of any distribution,  there may be set aside
out of any funds of the corporation available for distributions such sum or sums
as the directors from time to time, in their absolute  discretion,  think proper
as a reserve or reserves to meet contingencies, or for equalizing distributions,
or for repairing or  maintaining  any property of the  corporation,  or for such
other  purpose as the  directors  shall think  conducive  to the interest of the
corporation,  and the  directors  may modify or abolish any such  reserve in the
manner in which it was created.

                                ANNUAL STATEMENT

          Section  3. The  board  of  directors  shall  present  at each  annual
meeting,  and at any special meeting of the shareholders when called for by vote
of the shareholders, a full and clear statement of the business and condition of
the corporation.

                                     CHECKS

          Section  4.  All  checks  or  demands  for  money  and  notes  of  the
corporation  shall be signed by such officer or officers or such other person or
persons as the board of directors may from time to time designate.

<PAGE>

                                   FISCAL YEAR

          Section  5.  The  fiscal  year of the  corporation  shall  be fixed by
resolution of the board of directors.

                                      SEAL

          Section 6. The corporate seal shall have inscribed thereon the name of
the  corporation,  the year of its  organization  and the words "Corporate Seal,
Pennsylvania".  The seal may be used by causing it or a facsimile  thereof to be
impressed or affixed or reproduced or otherwise.

                                  ARTICLE VIII

                                AMENDMENTS

          These bylaws may be altered,  amended or repealed or new bylaws may be
adopted  by (i) a  majority  of the votes  cast at a duly  organized  meeting of
shareholders  or (ii) with  respect  to those  matters  that are not by  statute
committed  expressly  to the  shareholders,  by the  vote of a  majority  of the
directors of the corporation present and voting at any duly organized meeting of
directors.  In the case of a meeting of  shareholders,  written  notice shall be
given to each  shareholder  that the  purpose,  or one of the  purposes,  of the
meeting is to consider the  adoption,  amendment or repeal of the bylaws,  and a
copy of the  proposed  amendment  or a summary  of the  changes  to be  effected
thereby  shall be included  in, or enclosed  with,  the notice.  No  alteration,
amendment  or  repeal  of  these  bylaws  that  limits  indemnification  rights,
increases  the  liability of directors or changes the manner or vote required to
make  such  alteration,  amendment  or  repeal,  shall  be  made  except  by the
affirmative vote of the shareholders entitled to cast at least a majority of the
votes which all shareholders are entitled to cast thereon.