BYLAWS
                                       OF
                            ELECTRIC LIGHTWAVE, INC.
































As amended October 16, 1997; May 21, 1998, July 18, 2000

<PAGE>

                                     BYLAWS
                                       OF
                            ELECTRIC LIGHTWAVE, INC.

                                      TITLE



          1.  The  title  of  this  Corporation  is  ELECTRIC  LIGHTWAVE,   INC.
     ("Corporation").

                              LOCATION OF OFFICES

          2. The principal  office of the  Corporation  in Delaware  shall be in
     Wilmington   and  the  resident  agent  in  charge  thereof  shall  be  The
     Corporation Trust Company,  located in New Castle County at The Corporation
     Trust Center, 1209 Orange Street, Wilmington, DE 19801.

          The  Corporation  may also  have an office or  offices  at such  other
     places  within or without the State of  Delaware as the Board of  Directors
     may from time to time designate.

                                 CORPORATE SEAL

          3. The  corporate  seal shall be circular  in form and have  inscribed
     thereon the name of the Corporation,  the year of its incorporation  (1990)
     and the words "Incorporated Delaware".

                            MEETINGS OF STOCKHOLDERS

          4. All  meetings of  stockholders  shall be held at the offices of the
     Corporation  or such  other  place as shall be  designated  by the Board of
     Directors of the Corporation.

          Annual Meetings of stockholders  shall be held on a date and at a time
     designated  by the Board of  Directors of the  Corporation.  At each annual
     meeting the stockholders shall elect a Board of Directors, such election to
     be by majority of the stock present or represented  by proxy,  and entitled
     to vote at the meeting.

          Except as otherwise  provided by law, the Certificate of Incorporation
     or  these  Bylaws,   each  stockholder  shall,  at  every  meeting  of  the
     stockholders,  be  entitled to one vote for each share of stock held by him
     or her, in person or by written  proxy  signed by him or her,  but no proxy
     shall be voted on after one year from its date. Such right to vote shall be
     subject to the right of the Board of Directors to close the transfer  books
     or to fix a record date for voting stockholders as hereinafter provided.

          Special  meetings  of the  stockholders  may be  called  by the  Chief
     Executive  Officer and shall be called on the request in writing or by vote
     of a  majority  of the  Board of  Directors  or on  demand  in  writing  of
     stockholders  of record owning  twenty-five  percent (25%) in amount of the
     capital stock outstanding and entitled to vote.

<PAGE>

          Notice of each  meeting of  stockholders,  whether  annual or special,
     shall be mailed by the secretary to each  stockholder of record,  at his or
     her post office address as shown by the stock books of the Corporation,  at
     least  ten days  and not  more  than  sixty  days  prior to the date of the
     meeting.  If the  transfer  books are  closed or a record  date is fixed in
     connection with an annual meeting,  as permitted by Bylaw 19, the notice of
     the  meeting  shall be given to the  stockholders  of record as of the time
     said books are closed or record date is fixed,  but if the  transfer  books
     are not closed or a record date is not fixed, said notice shall be given to
     the stockholders of record at the time the notice is mailed.

          The holders of a majority  of the stock  outstanding  and  entitled to
     vote shall  constitute  a quorum,  but the holders of a smaller  amount may
     adjourn any meeting from time to time without further notice until a quorum
     is secured.

          At the annual  meeting of  stockholders,  only such business  shall be
     conducted as shall have been brought before the meeting (a) pursuant to the
     Corporation's notice of meeting, (b) by or at the direction of the Board of
     Directors or (c) by any stockholder of the Corporation who is a stockholder
     of record at the time of giving of the notice provided for below, who shall
     be entitled to vote at such  meeting and who complies  with the  procedures
     set forth below;  provided that any such business proposed by a stockholder
     is  otherwise   proper  for   consideration   under   applicable  law,  the
     Corporation's certificate of incorporation and these Bylaws.

          For business to be brought  before an annual meeting by a stockholder,
     the stockholder  must have given notice thereof in writing to the Secretary
     of the  Corporation,  delivered to or mailed and received at the  principal
     office of the  Corporation  no earlier than the January 1 and no later than
     the February 15 preceding the annual meeting. A stockholder's notice to the
     Secretary  shall set forth as to each  matter the  stockholder  proposes to
     bring before the meeting (a) a brief description of the business desired to
     be brought before the meeting and the reasons for conducting  such business
     at  the  meeting,  (b)  the  name  and  address,  as  they  appear  on  the
     Corporation's  books, of the stockholder  proposing such business,  and the
     name and  address of the  beneficial  owner,  if any,  on whose  behalf the
     proposal  is made,  (c) the class and  number of shares of the  Corporation
     which are owned  beneficially  and of record by such  stockholder of record
     and by the beneficial  owner, if any, on whose behalf the proposal is made,
     together with  documentary  support for any claim of beneficial  ownership,
     (d) any material  interest of such stockholder of record and the beneficial
     owner,  if any, on whose behalf the  proposal is made in such  business and
     (e) any  information,  in addition  to that  required  above,  which may be
     required from time to time by Regulation 14A of the Securities Exchange Act
     of 1934 with respect to security holder proposals.

          The  Chairman  of  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 whether such business
     is otherwise proper for consideration  (using as a non-exclusive  guideline
     the provisions of Rule 14a-8(c) under the Securities Exchange Act of 1934),
     and shall direct that any business not properly  brought before the meeting
     shall not be transacted.

<PAGE>


                                    DIRECTORS


          5. The property and business of the  Corporation  shall be managed and
     controlled by its Board of Directors,  which shall consist of not less than
     three or more than nine  members.  The number of  Directors  shall be fixed
     from time to time, within the limits prescribed, by resolution of the Board
     of  Directors.  Vacancies  in the  Board  of  Directors  (except  vacancies
     resulting  from  the  removal  of  directors  by  stockholders),  including
     vacancies  in the Board of  Directors  resulting  from any  increase in the
     number of Directors,  may be filled by a majority of the Directors  then in
     office, though less than a quorum.

          Directors shall otherwise be elected by the stockholders at the annual
     meeting and shall hold  office  until the next  annual  election  and until
     their successors are elected and qualified. Except as otherwise provided by
     law, the Certificate of Incorporation or these Bylaws,  at all elections of
     Directors of this  Corporation  each  stockholder  shall be entitled to one
     vote for each share of stock  owned by him or her,  in person or by written
     proxy signed by him or her, and election  shall be by majority  vote of the
     stock present or  represented by proxy and entitled to vote at the meeting.
     The  stockholders  of this  Corporation  shall have no preemptive  right to
     subscribe  to any  issue of  shares  of stock  of this  Corporation  now or
     hereafter made.

          The  Board  of  Directors  shall  have  an  Executive  Committee.  The
     Executive  Committee of the Board shall consist of (3 three) members, to be
     appointed by and to serve at the pleasure of the Board. The Chairman of the
     Board shall be the Chairman of the Executive  Committee.  During  intervals
     between  meetings  of the  Board,  the  Committee  shall have the power and
     authority  of the Board of  Directors  of the  management  of the  business
     affairs and property of the Corporation.

          Nominations  of persons for  election to the Board of Directors of the
     Corporation  may be made by any  stockholder  of the  Corporation  who is a
     stockholder  of record at the time of giving  of the  notice  provided  for
     below,  who shall be entitled to vote for the  election of Directors at the
     meeting and who complies with the notice procedures set forth below.

          Nominations  by  stockholders  shall be made  pursuant  to  notice  in
     writing to the  Secretary  of the  Corporation,  delivered to or mailed and
     received at the  principal  office of the  Corporation  no earlier than the
     January 1 and no later than the February 15 preceding  the annual  meeting.
     Such  stockholder's  notice  shall set forth (a) as to each person whom the
     stockholder proposes to nominate for election as a Director all information
     relating to such person that is required to be disclosed  in  solicitations
     of proxies for election of  Directors,  or is otherwise  required,  in each
     case pursuant to Regulation 14A under the  Securities  Exchange Act of 1934
     (including  such  person's  written  consent  to being  named in the  proxy
     statement  as a nominee and to serve as a Director if  elected);  (b) as to
     the stockholder giving the notice; (i) the name and address, as they appear
     on the  Corporation's  books,  of such  stockholder  and (ii) the class and
     number of shares of the Corporation  which are  beneficially  owned by such
     stockholder  and also  which are owned of  record by such  stockholder  and
     (iii) documentary support for such claim of beneficial ownership; (c) as to
     the beneficial  owner,  if any, on whose behalf the nomination is made, (i)
     the name and address of such person, (ii) the class and number of shares of
     the  Corporation  which are  beneficially  owned by such  person  and (iii)
     documentary  support  for such claim of  beneficial  ownership;  and (d), a
     description of all arrangements or  understandings  between the stockholder
     giving notice,  the beneficial  owner and each nominee and any other person
     or persons (naming such person or persons) relating to the nomination to be
     made or resulting directorship.

          The Board of Directors or a Nominating  Committee  established  by the
     Board of Directors  shall  determine  whether a stockholder  nomination was
     made in accordance  with the procedures  prescribed  herein and whether the
     stockholder's  nominee  should be  recommended  as a member of the slate of
     nominees to be proposed at the annual  meeting,  and the Board of Directors
     or its  Nominating  Committee  may  disregard  any  nomination  not made in
     accordance  with  these  Bylaws.  The  Chairman  of the  meeting  shall not
     nominate for election to the Board of Directors any stockholder nominee who
     has been disregarded by the Board of Directors or its Nominating Committee.

                               POWERS OF DIRECTORS

          6. The  Board of  Directors  shall  have  all  such  powers  as may be
     exercised by the  Corporation,  subject to the  provisions of the statutes,
     the Certificate of Incorporation, and the Bylaws.

                              MEETINGS OF DIRECTORS

          7.  Meetings  of the Board of  Directors  shall be held at such  place
     within or without  the State of  Delaware as may from time to time be fixed
     by  resolution  of the Board of  Directors,  or as may be  specified by the
     Chief Executive Officer in the call of any meeting. Regular meetings of the
     Board of Directors  shall be held at such times as may from time to time be
     fixed by resolution  of the Board of Directors and special  meetings may be
     held at any time upon the call of two (2)  Directors,  the Chief  Executive
     Officer or the Chief  Operating  Officer,  by oral,  telegraphic or written
     notice  duly served or sent or mailed to each  Director  not less than five
     (5) days before such  meeting.  A meeting of the Board may be held  without
     notice  immediately  after the annual meeting of  stockholders  at the same
     place at which such  meeting is held.  Notice  need not be given of regular
     meetings  of the Board  held at times  fixed by  resolution  of the  Board.
     Meetings may be held at any time without  notice if all the  Directors  are
     present or if those not present waive notice of the meeting in writing.

          Members of the Board of  Directors  (or any  committees  thereof)  may
     participate in a meeting of the Board of Directors (or of such  committees)
     by means of  conference  telephone or other  communications  equipment  via
     which all persons  participating can hear each other. Such participation in
     the substantive discussion and determinations of a meeting shall constitute
     presence in person at such meeting.

          A majority of the Directors shall  constitute a quorum,  but a smaller
     number may adjourn any meeting  from time to time  without  further  notice
     until a quorum is secured.

                           OFFICERS OF THE CORPORATION

          8. The officers of the Corporation shall be a Chairman of the Board of
     Directors, a Vice Chairman of the Board of Directors,  a President,  one or
     more vice  presidents  (with such  duties and titles as may be  assigned to
     them), a secretary,  a treasurer,  one or more  assistant  vice  presidents
     (with such duties and titles as may be  assigned  to them),  and such other
     officers as may from time to time be chosen by the Board of Directors.

          The  officers  of  the  Corporation  shall  hold  office  until  their
     successors  are  elected  and  qualified.  If the office of any  officer or
     officers becomes vacant for any reason,  the vacancy shall be filled by the
     affirmative vote of a majority of the whole Board of Directors.

                             DUTIES OF THE CHAIRMAN

          9. The Chairman presides at all meetings of the Board of Directors and
     at all meetings of the shareholders.  It shall be his or her prerogative to
     see that all orders, resolutions, and policy determinations of the Board of
     Directors  are carried into effect.  He or she acts in a general  oversight
     and advisory capacity with respect to the affairs of the Corporation. He or
     she provides leadership to the Board in reviewing and deciding upon matters
     which constitute  major policies of the  Corporation,  what the Corporation
     does and the manner in which the Corporation business is conducted.  Any of
     such duties may be delegated by the Chairman to the Vice-Chairman.

                      DUTIES OF THE CHIEF EXECUTIVE OFFICER

          10. It shall be the duty of the Chief Executive  Officer to carry into
     effect all orders,  resolutions,  and policy determinations of the Board of
     Directors; to execute all contracts and agreements; to keep the seal of the
     Corporation;  and to sign and to affix the seal of the  Corporation  to any
     instrument  requiring  the  same,  which  seal  shall  be  attested  by the
     signature of the Secretary or Treasurer or Assistant Secretary or Assistant
     Treasurer.  He or she shall have the general  supervision  and direction of
     the other officers of the Corporation.

          He shall submit a report of the operations of the  Corporation for the
     year to the Directors at their meeting next preceding the annual meeting of
     the stockholders and to the stockholders at their annual meeting.

          He shall  have the  general  duties  and  powers  of  supervision  and
     management usually vested in the chief executive officer of a Corporation.

          The Chief Executive may also hold another office with the Corporation.
     Accordingly,  the  duties  and  responsibilities  of  the  position  may be
     assigned by the Board of Directors to any Corporation officer.

<PAGE>


                             DUTIES OF THE PRESIDENT


          11. Unless otherwise decided by the Board of Directors,  the President
     shall be the chief operating and administrative officer of the Corporation.
     It shall be his or her duty to see that all orders and policy determination
     conveyed by the Chairman are carried into effect.  He or she shall have the
     general  supervision and direction of the operations and  administration of
     the affairs of the Corporation and general supervision and direction of the
     other  officers and employees of the  Corporation  and shall see that their
     duties are properly performed.

                                 VICE PRESIDENT

          12.  The vice  president  or vice  presidents,  in the  order of their
     seniority,  shall be vested with all the powers and required to perform all
     the duties of the President in his or her absence or  disability  and shall
     perform such other duties as may be prescribed by the Board of Directors.

                             CHIEF EXECUTIVE PRO TEM

          13. In the absence or disability of the  Chairman,  Vice-Chairman  and
     President, the Board may appoint a chief executive pro tem.

                                    SECRETARY

          14. The secretary shall attend all meetings of the Corporation and the
     Board of  Directors.  He or she shall act as clerk thereof and shall record
     all of the proceedings of such meetings in a book kept for that purpose. He
     or she shall give proper notice of meetings of  stockholders  and Directors
     and shall  perform  such other duties as shall be assigned to him or her by
     the Chairman, Vice-Chairman, President or the Board of Directors.

                                    TREASURER

          15. The  treasurer  shall have custody of the funds and  securities of
     the Corporation  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.  He or she shall disburse the funds of the Corporation as may be
     ordered by the Board,  or  Chairman,  Vice-Chairman  or  President,  taking
     proper  vouchers for such  disbursements  and shall render to the Chairman,
     Vice Chairman,  President and  Directors,  whenever they may require it, an
     account of all his or her  transactions  as treasurer  and of the financial
     condition of the Corporation.


          He shall  keep an account of stock and  income  notes  registered  and
     transferred in such manner and subject to such  regulations as the Board of
     Directors may prescribe.


          He shall give the  Corporation  a bond,  if  required  by the Board of
     Directors,  in such sum and in form and with security  satisfactory  to the
     Board of Directors for the faithful performance of the duties of his or her
     office and the restoration to the Corporation, in case of his or her death,
     resignation,  or removal from office, of all books, papers, vouchers, money
     and other property of whatever kind in his or her possession,  belonging to
     the Corporation.  He or she shall perform such other duties as the Board of
     Directors may from time to time prescribe or require.

                       DUTIES OF OFFICERS MAY BE DELEGATED

          16.  In  case of the  absence  or  disability  of any  officer  of the
     Corporation or for any other reason deemed  sufficient by a majority of the
     Board,  the Board of Directors  may delegate his or her powers or duties to
     any  other  officer  or to any  Director  for the time  being.  The  duties
     relating to the  execution of contracts and  agreements  and the signing of
     instruments  and affixing the seal of the Corporation and other matters may
     be delegated to any officer, from time to time, as the Board shall see fit.

                              CERTIFICATES OF STOCK

          17.   Certificates   of  stock  shall  be  signed  by  the   Chairman,
     Vice-Chairman,  President  or a vice  president  and either the  treasurer,
     assistant treasurer,  secretary or assistant secretary. If a certificate of
     stock be lost or  destroyed,  another may be issued in its stead upon proof
     of such  loss or  destruction  and the  giving  of a  satisfactory  bond of
     indemnity, in an amount sufficient to indemnify the Corporation against any
     claim.

                                TRANSFER OF STOCK
          18. All transfers of stock of the  Corporation  shall be made upon its
     books  upon  presentation  of the  certificate  or  certificates  therefor,
     properly  endorsed  by the  holder of the shares in person or by his or her
     lawfully constituted representative, and upon surrender of such certificate
     or certificates of stock for cancellation.

                            CLOSING OF TRANSFER BOOKS

          19.  The Board of  Directors  shall  have the power to close the stock
     transfer  books of the  Corporation  for a period not exceeding  sixty days
     preceding  the date for any meeting of  stockholders  or for payment of any
     dividend or for the allotment of rights or when any change or conversion or
     exchange  of capital  stock  shall go into  effect,  or for a period of not
     exceeding   sixty  days  in  connection   with  obtaining  the  consent  of
     stockholders for any purpose. In lieu of so closing the books, the Board of
     Directors may fix in advance a date, not exceeding sixty days preceding the
     said above mentioned  dates, as a record date for the  determination of the
     stockholders  entitled to notice of or to vote at any such meeting, and any
     adjournment  thereof, or entitled to dividends or other rights hereinbefore
     mentioned, or to give such consent.

                             STOCKHOLDERS OF RECORD

          20. The Corporation shall be entitled to treat the holder of record of
     any share or shares of stock as the holder in fact thereof and  accordingly
     shall not be bound to recognize any equitable or other claim to or interest
     in such share on the part of any other person  whether or not it shall have
     express or other notice thereof,  save as expressly provided by the laws of
     Delaware.

                                   FISCAL YEAR

          21. The fiscal year of the Corporation shall begin on the first day in
     January in each year.

                                    DIVIDENDS

          22.  Dividends,  to the extent not  restricted  by  provisions  of the
     Corporation's  Certificate of Incorporation or by subsisting  agreements of
     the  Corporation,  may be  declared by the Board of  Directors  and paid in
     cash, in property,  or in shares of the capital stock of the Corporation to
     the extent  permitted by law, out of net assets in excess of its capital or
     out of its net  profits,  provided  there  shall  be no  impairment  of the
     capital of the Corporation  represented by its issued and outstanding stock
     of all classes having a preference upon the distribution of assets.

                                BOOKS AND RECORDS

          23. The books,  accounts,  and records of the  Corporation may be kept
     within or  without  the State of  Delaware,  at such place or places as may
     from  time to time be  designated  by the  Bylaws or by  resolution  of the
     Directors.

                                     NOTICES

          24. Notice  required to be given under the  provisions of these Bylaws
     to any  Director,  officer or  stockholder  shall not be  construed to mean
     personal  notice,  but may be given in writing by depositing  the same in a
     post  office or letter  box,  in a  postpaid  sealed or  unsealed  wrapper,
     addressed  to such  stockholder,  officer or  Director  at such  address as
     appears on the books of the Corporation, and such notice shall be deemed to
     be given at the time when the same shall be thus mailed.  In computing  the
     number of days notice required for any meeting, the day on which the notice
     shall be deposited in the mail or sent by telegraph shall be excluded.

                                WAIVER OF NOTICE

          25. Any stockholder,  officer, or Director may waive in writing, or by
     telegraph,  any notice  required to be given under  these  Bylaws,  whether
     before or after the time stated therein.

                               INDEMNIFICATION OF
                             DIRECTORS AND OFFICERS

          26.  (a)  Right of  Indemnification.  The  Corporation  shall,  to the
     fullest extent permitted by applicable law as then in effect, indemnify any
     person (the  "indemnitee") who was or is involved in any manner (including,
     without limitation,  as a party or a witness) or was or is threatened to be
     made so involved in any  threatened,  pending or  completed  investigation,
     claim, action, suit or proceeding, whether civil, criminal,  administrative
     or investigative (including,  without limitation,  any action or proceeding
     by or in the right of the  Corporation to procure a judgement in its favor)
     (a  "Proceeding") by reason of the fact that he or she is or was a director
     or officer of the  Corporation,  or is or was serving at the request of the
     Corporation  as a  director  or officer  of  another  Corporation,  or of a
     partnership,  joint venture, trust or other enterprise (including,  without
     limitation, service with respect to any employee benefit plan), whether the
     basis of any such  Proceeding is alleged action in an official  capacity as
     director or officer or in any other capacity while serving as a director or
     officer,  against all  expenses,  liability  and loss  (including,  without
     limitation,  attorneys'  fees,  judgments,  fines,  ERISA  excise  taxes or
     penalties,  and  amounts  paid or to be paid in  settlement)  actually  and
     reasonably incurred by him or her in connection with such Proceeding.  Such
     indemnification  shall  continue  as to a  person  who has  ceased  to be a
     director  or officer  and shall  inure to the  benefit of his or her heirs,
     executors,   administrators  and  legal   representatives.   The  right  to
     indemnification  conferred in this Bylaw shall include the right to receive
     payment of any expenses  incurred by the indemnitee in connection with such
     Proceeding  in  advance  of  the  final   disposition  of  the  Proceeding,
     consistent  with   applicable  law  as  then  in  effect.   All  rights  to
     indemnification   conferred  in  this  Bylaw,   including   rights  to  the
     advancement  of  expenses  and  the   evidentiary,   procedural  and  other
     provisions of this Bylaw,  shall be contract rights with the same effect as
     if embodied in a separate written  agreement for each indemnitee,  executed
     and delivered by the Corporation and such indemnitee.  The Corporation may,
     by action of its Board of Directors, provide indemnification for employees,
     agents,  attorneys and representatives of the Corporation with the same, or
     with more or less,  scope and extent as herein  provided  for  officers and
     directors.  No amendment to the Restated  Certificate of  Incorporation  or
     amendment  or  repeal  of this  Bylaw  purporting  to have  the  effect  of
     modifying  or  repealing  any of the  provisions  of this Bylaw in a manner
     adverse to the  indemnitee  shall abridge or adversely  affect any right to
     indemnification  or other  similar  rights and benefits with respect to any
     acts or omissions  occurring prior to such amendment or repeal.  This Bylaw
     shall be  applicable  to all  Proceedings,  whether  arising  from  acts or
     omissions  occurring before or after the adoption of this Bylaw. The phrase
     "this Bylaw" shall refer to Bylaws 26 and 27. For all purposes,  except the
     corporate  procedure  required for amendment of Bylaws 26 and 27, Bylaws 26
     and 27 shall be considered as one Bylaw.

          (b) ByLaw Not Exclusive.  The right of indemnification,  including the
     right to receive  payment in advance of  expenses,  conferred in this Bylaw
     shall not be  exclusive  of any other  rights to which any  person  seeking
     indemnification  may  otherwise  be  entitled  under any  provision  of the
     Restated  Certificate  of  Incorporation,   Bylaw,  agreement,   applicable
     corporate law and statute, vote of disinterested  directors or stockholders
     or  otherwise.  The  indemnitee  is free to proceed under any or all of the
     rights or procedures available to him or her.

          (c) Burden of Proof. In any determination,  review of a determination,
     action,   arbitration,  or  other  proceeding  relating  to  the  right  to
     indemnification  conferred in this Bylaw,  the  Corporation  shall have the
     burden of proof that the  indemnitee has not met any standard of conduct or
     belief which may be required by applicable  law to be applied in connection
     with a  determination  that the indemnitee is not entitled to indemnity and
     also the burden of proof on any of the issues  which may be  material  to a
     determination  that the  indemnitee  is not  entitled  to  indemnification.
     Neither  a failure  to make  such a  determination  of  entitlement  nor an
     adverse determination of entitlement to indemnity shall be a defense of the
     Corporation  in an action or proceeding  brought by the indemnitee or by or
     on behalf of the  Corporation  relating  to  indemnification  or create any
     presumption that the indemnitee has not met any such standard of conduct or
     belief or is otherwise not entitled to indemnity. If successful in whole or
     in part in such an action or proceeding,  the indemnitee  shall be entitled
     to be further  indemnified by the Corporation for the expenses actually and
     reasonably  incurred  by him  or her in  connection  with  such  action  or
     proceeding.

          (d) Advancement of Expenses. All reasonable expenses incurred by or on
     behalf of indemnitee in connection  with any  Proceeding  shall be advanced
     from time to time to the indemnitee by the  Corporation  promptly after the
     receipt by the  Corporation of a statement  from the indemnitee  requesting
     such  advance,  whether  prior  to  or  after  final  disposition  of  such
     Proceeding.

          (e) Insurance, Contracts and Funding. The Corporation may purchase and
     maintain  insurance to protect  itself and any person who is, or may become
     an officer, director,  employee, agent, attorney, trustee or representative
     (any of the foregoing  being herein referred to as a  "Representative")  of
     the Corporation or, at the request of the Corporation,  a Representative of
     another  corporation  or entity,  against any  expenses,  liability or loss
     asserted  against him or her or incurred by him or her in  connection  with
     any Proceeding in any such capacity, or arising out of his or her status as
     such,  whether or not the Corporation would have the power to indemnify him
     or her against such expense, liability or loss under the provisions of this
     Bylaw or  otherwise.  The  Corporation  may enter into  contracts  with any
     Representative  of the  Corporation,  or any person  serving as such at the
     request  of  the  Corporation  for  another   corporation  or  entity,   in
     furtherance of the provisions of this Bylaw. Such contracts shall be deemed
     specifically approved and authorized by the stockholders of the Corporation
     and not subject to invalidity by reason of any  interested  directors.  The
     Corporation may create a trust fund, grant a security interest or use other
     means  (including,  without  limitation,  a letter of credit) to ensure the
     payment of such amounts as may be necessary  to effect  indemnification  of
     any person entitled thereto.

          (f)  Severability;   Statutory   Alternative.   If  any  provision  or
     provisions  of  this  Bylaw  shall  be  held  to  be  invalid,  illegal  or
     unenforceable  for any reason  whatsoever  (i) the  validity,  legality and
     enforceability  of all of the remaining  provisions of this Bylaw shall not
     in any way be affected or impaired thereby;  and (ii) to the fullest extent
     possible,  the remaining  provisions of this Bylaw shall be construed so as
     to give effect to the intent  manifested  by the  provision  held  invalid,
     illegal or  unenforceable.  In the event that the indemnitee  elects, as an
     alternative to the procedures specified in this Bylaw, to follow one of the
     procedures authorized by applicable corporate law or statute to enforce his
     or her right to indemnification  and notifies the Corporation of his or her
     election,  the Corporation agrees to follow the procedure so elected by the
     indemnitee.  If, in accordance  with the  preceding  sentence the procedure
     therefor  contemplated herein or the procedure elected by the indemnitee in
     any specific  circumstances  (or such election by the indemnitee)  shall be
     invalid or ineffective in bringing about a valid and binding  determination
     of the  entitlement of the indemnitee to  indemnification,  the most nearly
     comparable  procedure  authorized  by  applicable  corporate law or statute
     shall be followed by the Corporation and the indemnitee.
<PAGE>


                           INDEMNIFICATION PROCEDURES;
                            PRESUMPTIONS AND REMEDIES
          27. In furtherance, but not in limitation, of the foregoing provisions
     of this Bylaw,  the following  procedures,  presumptions and remedies shall
     apply  with   respect  to   advancement   of  expenses  and  the  right  to
     indemnification under this Bylaw:

          (a)  Advancement  of Expenses.  The  advancement or  reimbursement  of
     expenses to an  indemnitee  provided in paragraph  (d) of Bylaw 26 shall be
     made  within 20 days  after the  receipt  by the  Corporation  of a request
     therefor from the indemnitee.  Such request shall  reasonably  evidence the
     expenses  incurred  or about  to be  incurred  by the  indemnitee  and,  if
     required  by  law  at  the  time  of  such  advance,  shall  include  or be
     accompanied  by an  undertaking  by or on behalf of the indemnitee to repay
     the  amounts  advanced  if it  should  ultimately  be  determined  that the
     indemnitee is not entitled to be indemnified against such expenses.


          (b) Procedure for Determination of Entitlement to Indemnification.

               (i)  To  obtain  indemnification  (except  with  respect  to  the
          advancement  of  expenses),  an  indemnitee  shall submit to the Chief
          Executive  Officer or Secretary of the Corporation a written  request,
          including  such   documentation   and  information  as  is  reasonably
          available  to the  indemnitee  and  reasonably  necessary to determine
          whether   and  to  what   extent  the   indemnitee   is   entitled  to
          indemnification (the "Supporting Documentation"). The Secretary of the
          Corporation  shall  promptly  advise the Board of Directors in writing
          that the indemnitee has requested  indemnification.  The determination
          of the indemnitee's  entitlement to indemnification  shall be made not
          later than 60 days after  receipt by the  Corporation  of the  written
          request and Supporting Documentation.


               (ii) The  indemnitee's  entitlement to  indemnification  shall be
          determined in one of the following ways: (A) by a majority vote of the
          Disinterested  Directors (as  hereinafter  defined)  (which term shall
          mean the  Disinterested  Director,  if there  is only  one);  (B) by a
          written opinion of the Independent Counsel (as hereinafter defined) if
          (x) a majority of the Disinterested Directors so directs; (y) there is
          no Disinterested  Director, or (z) a Change of Control (as hereinafter
          defined)  shall have occurred and the  indemnitee so requests in which
          case the Disinterested  Directors shall be deemed to have so directed;
          (C) by the  stockholders of the Corporation (but only if a majority of
          the Disinterested  Directors  determines that the issue of entitlement
          to  indemnification  should be submitted to the stockholders for their
          determination); or (D) as provided in paragraph (c) of Bylaw 27.

               (iii)  In  the  event  the   determination   of   entitlement  to
          indemnification  is to be  made by  Independent  Counsel  pursuant  to
          clause  (ii)  of  paragraph  (b)  of  Bylaw  27,  a  majority  of  the
          Disinterested Directors shall select the Independent Counsel, but only
          an  Independent  Counsel to which the  indemnitee  does not reasonably
          object;  provided,  however,  that if a Change of  Control  shall have
          occurred,  the indemnitee shall select such Independent  Counsel,  but
          only an  Independent  Counsel to which the Board of Directors does not
          reasonably object.

          (c)  Presumptions  and  Effect  of  Certain  Proceedings.   Except  as
     otherwise  expressly  provided  in this  Bylaw,  the  indemnitee  shall  be
     presumed to be entitled to indemnification upon submission of a request for
     indemnification together with the Supporting Documentation,  and thereafter
     in  any  determination  or  review  of  any   determination,   and  in  any
     arbitration,  proceeding or  adjudication  the  Corporation  shall have the
     burden  of proof to  overcome  that  presumption  in  reaching  a  contrary
     determination.  In any  event,  if the person or  persons  empowered  under
     clause  (ii) of  paragraph  (b) of Bylaw  27 to  determine  entitlement  to
     indemnification  shall  not have  been  appointed  or shall not have made a
     determination  within  60 days  after  receipt  by the  Corporation  of the
     request therefor together with the Supporting Documentation, the indemnitee
     shall be deemed to be  entitled to  indemnification.  In either  case,  the
     indemnitee  shall  be  entitled  to such  indemnification,  unless  (i) the
     indemnitee  misrepresented  or failed to disclose a material fact in making
     the request for indemnification or in the Supporting  Documentation or (ii)
     such  indemnification  is  prohibited  by law,  as  finally  determined  by
     adjudication.  The termination of any Proceeding, or of any claim, issue or
     matter therein,  by judgment,  order,  settlement or conviction,  or upon a
     plea of nolo contendre or its equivalent,  shall not, of itself,  adversely
     affect  the  right of the  indemnitee  to  indemnification  or  create  any
     presumption  with respect to any standard of conduct or belief or any other
     matter which might form a basis for a determination  that the indemnitee is
     not   entitled   to   indemnification.   With   regard   to  the  right  to
     indemnification for expenses,  (i) if and to the extent that the indemnitee
     has been successful on the merits or otherwise in any  Proceeding,  or (ii)
     if a Proceeding was terminated  without a determination of liability on the
     part of the indemnitee  with respect to any claim,  issue or matter therein
     or without  any  payments in  settlement  or  compromise  being made by the
     indemnitee with respect to a claim,  issue or matter  therein,  or (iii) if
     and to the extent that the  indemnitee  was not a party to the  Proceeding,
     the  indemnitee  shall be deemed to be entitled to  indemnification,  which
     entitlement shall not be defeated or diminished by any determination  which
     may be made pursuant to clauses (A), (B) or (C) of clause (ii) of paragraph
     (b) of  Bylaw  27.  The  indemnitee  shall  be  presumptively  entitled  to
     indemnification  in all respects for any act,  omission or conduct taken or
     occurring which (whether by condition or otherwise) is required, authorized
     or  approved  by any order  issued or other  action  by any  commission  or
     governmental  body  pursuant  to  any  federal  statute  or  state  statute
     regulating  the  Corporation  or any of its  subsidiaries  by reason of its
     status as a public  utility or public  utility  holding  Corporation  or by
     reason of its  activities  as such.  To the extent  permitted  by law,  the
     presumption  shall be  conclusive  on all  parties  with  respect  to acts,
     omissions or conduct of the indemnitee if he or she acted in good faith and
     in a manner he or she  reasonably  believed  to be in or not opposed to the
     best interests of the Corporation or its subsidiary. No presumption adverse
     to an  indemnitee  shall be drawn  with  respect  to any act,  omission  or
     conduct of the  indemnitee if he or she acted in good faith and in a manner
     he or she reasonably believed to be in or not opposed to the best interests
     of the Corporation or its subsidiary  taken or occurring in the absence of,
     or  inconsistent  with,  any order  issued or action by any  commission  or
     governmental body.

         (d) Remedies of Indemnitee.

               (i) In the  event  that  a  determination  is  made  pursuant  to
          paragraph  (b) of Bylaw  27 that the  indemnitee  is not  entitled  to
          indemnification under this Bylaw, (A) the indemnitee shall be entitled
          to  seek  an   adjudication   of  his  or  her   entitlement  to  such
          indemnification  in an  appropriate  court of the State of Delaware or
          any  other  court of  competent  jurisdiction;  (B) any such  judicial
          proceeding shall be de novo and the indemnitee shall not be prejudiced
          by reason of such adverse determination;  and (C) in any such judicial
          proceeding  the  Corporation  shall  have the burden of proof that the
          indemnitee is not entitled to indemnification under this Bylaw.

               (ii) If a  determination  shall  have been made or deemed to have
          been made,  pursuant  to  paragraphs  (b) or (c) of Bylaw 27, that the
          indemnitee is entitled to  indemnification,  the Corporation  shall be
          obligated to pay the amounts constituting such indemnification  within
          five days  after  such  determination  has been made or deemed to have
          been  made and  shall  be  conclusively  bound by such  determination,
          unless  (A) the  indemnitee  misrepresented  or failed to  disclose  a
          material  fact in making the  request  for  indemnification  or in the
          Supporting  Documentation or (B) such indemnification is prohibited by
          law,  in either case as finally  determined  by  adjudication.  In the
          event that (x)  advancement  of  expenses  is not  timely  made by the
          Corporation  pursuant to this Bylaw or (y) payment of  indemnification
          is not made within five days after a  determination  of entitlement to
          indemnification  has been made or deemed to have been made pursuant to
          paragraphs (b) or (c) of Bylaw 27, the indemnitee shall be entitled to
          seek judicial  enforcement of the Corporation's  obligations to pay to
          the  indemnitee  such  advancement  of  expense  of   indemnification.
          Notwithstanding the foregoing, the Corporation may bring an action, in
          an  appropriate  court in the State of  Delaware or any other court of
          competent  jurisdiction,  contesting  the right of the  indemnitee  to
          receive   indemnification   hereunder  due  to  the  occurrence  of  a
          circumstance  described  in  subclause  (A) of  this  clause  (ii)  of
          paragraph (d) of Bylaw 27 or a  prohibition  of law (both of which are
          herein  referred  to as a  "Disqualifying  Circumstance.  In any  such
          enforcement   action  or  other  proceeding  whether  brought  by  the
          indemnitee  or  the  Corporation,  indemnitee  shall  be  entitled  to
          indemnification unless the Corporation can satisfy the burden or proof
          that  indemnification  is  prohibited  by  reason  of a  Disqualifying
          Circumstance.

               (iii) The  Corporation  shall be precluded  from asserting in any
          judicial proceeding  commenced pursuant to this paragraph (d) that the
          procedures and  presumptions of this Bylaw are not valid,  binding and
          enforceable  and shall  stipulate in any such court or before any such
          arbitrator or  arbitrators  that the  Corporation  is bound by all the
          provisions of this Bylaw.

               (iv) In the event that the  indemnitee,  pursuant  to this Bylaw,
          seeks  a  judicial  adjudication  of his or her  rights  under,  or to
          recover damages for breach of, this Bylaw, or is otherwise involved in
          any adjudication with respect to his or her right to  indemnification,
          the indemnitee shall be entitled to recover from the Corporation,  and
          shall be indemnified by the Corporation against, any expenses actually
          and reasonably  incurred by him or her if the  indemnitee  prevails in
          such judicial adjudication. If it shall be determined in such judicial
          adjudication  that the  indemnitee is entitled to receive part but not
          all of the  indemnification  or  advancement of expenses  sought,  the
          expenses  incurred by the indemnitee in connection  with such judicial
          adjudication shall be prorated accordingly.

               (e) Definitions. For purposes of indemnification under this Bylaw
          or otherwise:

               (i)  "Change  in  Control"  means  a  change  in  control  of the
          Corporation  of a nature  that would be  required  to be  reported  in
          response to  Schedule  14A of  Regulation  14A  promulgated  under the
          Securities  Exchange  Act of  1934  (the  "Act"),  whether  or not the
          Corporation  is then subject to such reporting  requirement;  provided
          that, without limitation,  such a change in control shall be deemed to
          have  occurred if (A) any  "person"  (as such term is used in Sections
          13(d) and 14(d) of the Act) other than Citizens Utilities  Corporation
          is or becomes the  "beneficial  owner" (as defined in Rule 13d-3 under
          the Act),  directly or  indirectly,  of securities of the  Corporation
          representing  20 percent or more of the  combined  voting power of the
          Corporation's  then outstanding  securities without the prior approval
          of at least  two-thirds  of the members of the Board of  Directors  in
          office immediately prior to such acquisition; (B) the Corporation is a
          party  to  a   merger,   consolidation,   sale  of   assets  or  other
          reorganization, or a proxy contest, as a consequence of which, members
          of the  Board  of  Directors  in  office  immediately  prior  to  such
          transaction or event  constitute  less than a majority of the Board of
          Directors  thereafter;  or (C) during  any  period of two  consecutive
          years, individuals who at the beginning of such period constituted the
          Board of Directors  (including for this purpose any new Director whose
          election or nomination for election by the Corporation's  stockholders
          was approved by a vote of at least  two-thirds of the  Directors  then
          still in office who were  Directors  at the  beginning of such period)
          cease for any reason to constitute at least a majority of the Board of
          Directors.

               (ii) "Disinterested Director" means a Director of the Corporation
          who is not or was not a material party to the Proceeding in respect of
          which indemnification is sought by the indemnitee.

               (iii) "Independent Counsel" means a law firm or a member of a law
          firm that neither  presently  is, nor in the past five years has been,
          retained to represent  (A) the  Corporation  or the  indemnitee in any
          manner or (B) any other party to the Proceeding giving rise to a claim
          for indemnification  under this Bylaw.  Notwithstanding the foregoing,
          the term "Independent Counsel" shall not include any person who, under
          the applicable standards of professional conduct then prevailing under
          the law of the State of Delaware, would have a conflict of interest in
          representing  either the Corporation or the indemnitee in an action to
          determine the indemnitee's rights under this Bylaw.

          (f)  Acts  of   Disinterested   Directors.   Disinterested   Directors
     considering  or acting on any  indemnification  matter  under this Bylaw or
     under  governing  corporate law or otherwise may consider or take action as
     the Board of  Directors  or may  consider or take action as a committee  or
     individually  or  otherwise.  In the  event  that  Disinterested  Directors
     consider or take action as the Board of  Directors,  one-third of the total
     number of Directors in office shall constitute a quorum.

                              AMENDMENTS OF BYLAWS

          28.  These  Bylaws may be amended or altered by the vote of a majority
     of the whole Board of Directors at any meeting provided that notice of such
     proposed  amendment  shall  have  been  given  in the  notice  given to the
     Directors  of such  meeting.  Such  authority  in the Board of Directors is
     subject to the power of the  stockholders to change or repeal any Bylaws by
     a majority vote of the  stockholders  present and represented at any annual
     meeting  or at any  special  meeting  called for such  purpose,  and Bylaws
     adopted by the  stockholders  (other than Bylaw 27) shall not be  repeated,
     altered or amended by the Board of Directors.