Document:

Exhibit 10.5
                                                                    ------------

Issued by:  David C. Benson, Vice President              Effective: June 1, 2001
Issued on: June 29, 2001

Allegheny Energy Supply Company, LLC
Electric Rate Schedule FERC No. 10

                              POWER SALES AGREEMENT

         THIS POWER SALES  AGREEMENT  ("Agreement"  or "PSA"),  made and entered
into as of June 1, 2001, by and between Allegheny Energy Supply Company,  LLC, a
Delaware limited liability  company,  hereinafter  referred to as "AE Supply" or
"Seller" and  Monongahela  Power  Company,  doing  business as Allegheny  Power,
hereinafter  referred  to as "AP" or  "Buyer"  (individually,  the  "Party"  and
collectively, the "Parties").

                                   WITNESSETH:

         WHEREAS,  AE Supply is an owner and  operator  of  electric  generating
facilities  and desires to sell such  electric  energy and  capacity  through an
agreement with AP; and

         WHEREAS,   AP  maintains  Default  Service   obligations  in  its  Ohio
franchised  service  territory  and  desires  to  purchase  electric  energy and
capacity through an agreement with AE Supply; and

         WHEREAS,  the rules and procedures governing the supply and consumption
of  generation-sourced  Ancillary Services in AP's franchised service territory,
in the context of this Agreement,  are contemplated as they exist on the date of
this Agreement; and

         WHEREAS,  the Parties  desire to set forth certain terms and conditions
between the Parties:

                                    ARTICLE 1
                                   DEFINITIONS

         In addition to terms defined elsewhere in this Agreement, the following
definitions shall apply hereunder:

         "AFFILIATE"  means with respect to any person,  any other person (other
than  an  individual)  that,  directly,  or  indirectly,  through  one  or  more
intermediaries,  controls, or is controlled by, or is under common control with,
such  person.  For purposes of the  foregoing  definition,  "control"  means the
direct or indirect  ownership of more than five percent (5%) of the  outstanding
capital stock or other equity interests having ordinary voting power.

         "ANCILLARY  SERVICES"  means those  services  necessary  to support the
transmission  of  capacity  and energy  from  source to load  while  maintaining
reliable  operation of the  transmission  system in accordance with Good Utility
Operating Practices.  As used herein,  Ancillary Services shall be as defined by
Order 888A issued by the Federal Energy Regulatory Commission (FERC) on March 4,
1997.

         "AVAILABLE  CAPACITY  RESOURCES"  means  megawatts of net capacity from
owned or contracted for generating facilities, or load (including pumped storage
hydroelectric   generation   in  the  pumping   mode)  subject  by  contract  to
interruption, or contingency assistance capacity made available by contract, all
of which are defined by and  accredited  pursuant to the  procedure set forth in
Schedule 4 of the PJM West Reliability Assurance Agreement.

         "BUSINESS  DAY" means any day on which Federal  Reserve member banks in
New York City are open for business.

         "COMPETITIVE  DEFAULT SUPPLIER" means an electric generation  supplier,
other than the electric

Issued by:  David C. Benson, Vice President              Effective: June 1, 2001
Issued on: June 29, 2001

<PAGE>

Allegheny Energy Supply Company, LLC
Electric Rate Schedule FERC No. 10

distribution company (AP) that provides Default Service to retail customers.

         "CONSUMPTION ENERGY IMBALANCE" means the difference between the Default
Service Schedule and the actual metered  consumption of the Default Service load
plus  applicable   transmission  and  distribution  losses,   according  to  the
Monongahela  Power Company  Certified  Supplier  Coordination  Tariff, as it may
change from time to time.

         "CONTROL  AREA" means an  electric  system or  combination  of electric
systems  to which a common  automatic  generation  control  scheme is applied in
accordance with Good Utility Operating Practices to:

            (1)  match, at all times, the power output of the generators  within
                 the  electric  system(s)  and  Power  purchased  from  entities
                 outside  the  electric  system(s),  with  the load  within  the
                 electric system(s);

            (2)  maintain scheduled interchange with other Control Areas;

            (3)  maintain  the  frequency  of  the  electric   system(s)  within
                 reasonable limits; and

            (4)  provide sufficient generating capacity to maintain spinning and
                 operating reserves.

         "CONTROL AREA OPERATOR" means an operator of a Control Area.

         "COSTS"  means,  with respect to the  Non-Defaulting  Party,  brokerage
fees,  commissions and other similar third-party  transaction costs and expenses
reasonably incurred by such Party either in terminating any arrangement pursuant
to which it has hedged its obligations or entering into new  arrangements due to
failure to deliver or receive  Power  hereunder,  determined  in a  commercially
reasonable manner;  and all reasonable  attorneys' fees and expenses incurred by
the Non-Defaulting  Party in connection with failure to deliver or receive Power
hereunder.

         "DEFAULT SERVICE" means AP's obligation to provide  generation  service
to all retail customers within its Ohio jurisdiction, according to statutory and
regulatory  requirements  as well as the  Settlement  less any  amounts  of such
obligation as AP may have  satisfied  through a selection of an alternate  Power
supplier  pursuant to that Settlement.  Any purchases by AP from alternate Power
suppliers  shall provide for: an  all-inclusive  package of products  having the
same service characteristics as provided by AE Supply and denoted as Power under
this Agreement  (specifically  including the AP obligation of Available Capacity
Resources  contained in the definition of Power); a constant  percentage of AP's
"around the clock"  Provider of Last Resort  obligations  during the term of the
purchase;  and a purchase  term of at least one fiscal or calendar  year or full
year multiples thereof, unless otherwise mutually agreed by the Parties. If such
purchases are made by AP, formal written notice of the contract  quantities must
be  provided  to AE  Supply at least 180 days (or a  mutually  agreeable  notice
period  less  than  180  days)  in  advance  of the  commencement  dates of such
purchases.

         "FINANCIAL  GAINS" means, with respect to any Party, an amount equal to
the present  value of the economic  benefit to it, if any  (exclusive of Costs),
resulting from the failure to deliver or receive Power hereunder,  determined in
a commercially reasonable manner.

         "FINANCIAL LOSSES" means, with respect to any Party, an amount equal to
the  present  value of the  economic  loss to it, if any  (exclusive  of Costs),
resulting from the failure to deliver or receive Power hereunder,  determined in
a commercially reasonable manner.

          "GOOD UTILITY  OPERATING  PRACTICE" (GUOP) means any of the applicable
practices, methods, standards, guides or acts:

            (a)  required by any  Governmental  Authority,  regional or national
                 reliability council,  including NERC, ECAR, or the successor of
                 any of them, or other applicable  regional  reliability council
                 for AP's Control Area whether or not the Party whose conduct is
                 at issue is a member thereof;

Issued by:  David C. Benson, Vice President              Effective: June 1, 2001
Issued on: June 29, 2001

<PAGE>

Allegheny Energy Supply Company, LLC
Electric Rate Schedule FERC No. 10

            (b)  otherwise  engaged in or approved by a  significant  portion of
                 the electric utility industry,  during the relevant time period
                 which in the exercise of reasonable  judgment,  in light of the
                 facts  known,  or that  should  have  been  known at the time a
                 decision was made,  could have been expected to accomplish  the
                 desired result in a manner  consistent with Applicable Laws and
                 Regulations, good business practices, generation, transmission,
                 and distribution reliability, safety, environmental protection,
                 economy, and expediency.

            (c)  such other acts or practices as are  reasonably  necessary  and
                 mutually  agreed  upon  to  maintain  the  reliability  of  the
                 Transmission System or of the Project.

            (d)  Good Utility  Practice is intended to be acceptable  practices,
                 methods,  or acts generally  accepted in the region, and is not
                 intended to be limited to the optimum  practices,  methods,  or
                 acts to the exclusion of all others.

         "INTEREST RATE" means, for any date, the lesser of (a) two percent (2%)
over the per annum rate of interest  equal to the prime lending rate as may from
time to time be published in THE WALL STREET  JOURNAL  under Money Rates on such
day (or if not  published on such day on the most recent  preceding day on which
published), and (b) the maximum rate permitted by applicable law.

         "NERC" means the North  American  Electric  Reliability  Council or any
successor organization thereto.

         "ON-PEAK"  means  Monday  through  Friday   (excluding  NERC  holidays)
hour-ending 0800 through hour-ending 2300 (5x16).

         "OFF-PEAK"  means  Monday  through  Friday   hour-ending  2400  through
hour-ending 0700 and including Saturday,  Sunday, and NERC holidays  hour-ending
0100 through 2400.

         "OPERATING   COMMITTEE"   means   the   standing   committee   of   one
representative each from Buyer and Seller as referenced in Article 9.

         "OPERATING  LEASE" means the Operating Lease  Agreement,  dated June 1,
2001, by and between Monongahela Power Company and Allegheny Energy Supply, LLC,
as it exists and as it may be renewed or amended, from time to time.

         "PJM WEST" shall mean the aggregate of the control areas, recognized by
the North American Electric Reliability Council or any successor thereto, of the
PJM West Transmission Owners.

         "PJM-WESTERN  HUB"  means the  aggregation  of  selected  busses at the
Western  interface  region  within the PJM Control  Area that  provides a common
point for commercial energy trading in the PJM Energy Market.

         "POWER" means  electric  capacity and energy of the type commonly known
as three-phase,  sixty-cycle,  alternating current together used to satisfy real
time load specifically  including any Available  Capacity Resources for which AP
is made  responsible by its Control Area after AP joins and is experiencing on a
real time basis the rules of a functioning Regional Transmission Organization or
RTO (RTO as defined by the Federal Energy Regulatory Commission).

         "POWER RESOURCES" means the sources of Power (including  identification
of the Control Area) with which Seller has made arrangements in order to provide
Power under this Agreement.  AE Supply may source Power under this Agreement, in
whole or in part,  at any time,  from any number of suppliers  in the  wholesale
generation  market,  provided  applicable  North American  Electric  Reliability
Council (NERC), East Central Area Reliability Council (ECAR), or other pertinent
regional and sub-regional rules are observed.

Issued by:  David C. Benson, Vice President              Effective: June 1, 2001
Issued on: June 29, 2001

<PAGE>

Allegheny Energy Supply Company, LLC
Electric Rate Schedule FERC No. 10

         "REGULATORY   APPROVALS"   means  all  applicable   state  and  federal
regulatory authorizations, consents, or approvals required for this Agreement.

         "SCHEDULE" or "SCHEDULING" means communicating with and confirming with
all Transmitting Utilities as well as between Buyer and Seller that a particular
amount  of  Power  is to  be  delivered  or  received  and  providing  all  such
information  and satisfying all such  requirements  as may be necessary to cause
such parties to recognize and confirm the delivery or receipt of the Power.  All
scheduling of services with  Transmitting  Utility(s)  shall be  accomplished in
compliance with the scheduling rules of those service providers.  Between Seller
and Buyer,  scheduling  day-ahead shall be accomplished no later than 11:30 EPT,
one (1) business day before delivery,  or scheduling hourly no later than twenty
(20) minutes  before the start of the intended  Power flow or as per other rules
as the Buyer and Seller may jointly agree to from time to time.

         "SETTLEMENT" means the settlement in Monongahela Power Company Case No.
00-02-EL-ETP.

         "SUPPLY  ENERGY  IMBALANCE"  means  the  difference  between  a Default
Service Schedule and associated  Schedule(s)  according to the Monongahela Power
Company Certified  Supplier  Coordination  Tariff, as it may change from time to
time.

         "TAXES"  means all ad valorem,  property,  occupation,  utility,  gross
receipts, sales, use, excise and other taxes or governmental charges,  licenses,
permits and assessments, other than taxes based on net income or net worth.

         "TRANSITION   PERIOD"  means  with  respect  to  AP's  Default  Service
obligation,  the period  beginning  12:01 am, January 1, 2001 through  midnight,
December 31, 2005.

         "TRANSMITTING  UTILITY"  means  the  utility  or  utilities  and  their
respective Control Area Operators and their successors,  transmitting Power that
is sold hereunder.

                                    ARTICLE 2
                               PRODUCT DESCRIPTION

2.1      SERVICE CHARACTERISTICS.  AE Supply will provide AP firm Power, through
         any  means  available  including  purchases,  in  amounts  equal to the
         Contract  Quantity as specified  in Section 2.2. The  provision of firm
         Power will be in amounts  adjusted  on a real time basis to  compensate
         for all losses and energy  imbalances  (whether Supply Energy Imbalance
         or Consumption  Energy Imbalance),  but shall specifically  exclude all
         other Ancillary Services.  The prices established in Section 7 shall be
         the total  compensation  for all services  contemplated in this Section
         2.1.

2.2      CONTRACT  QUANTITY.  AE Supply will be  responsible to meet all Default
         Service Schedules provided by AP that meet the notification  guidelines
         of the AP Control Area Operator and AE Supply. AE Supply may of its own
         accord  actually  modify the  Default  Service  Schedules  through  its
         dealings with the AP Control Area as long as it accepts the Consumption
         Energy Imbalance charge consequences of doing so.

2.3      FIRM POWER.  All deliveries  hereunder shall be deemed firm and a Party
         may only be excused from  delivering or receiving  Power  hereunder for
         reasons of Force  Majeure,  as defined in Section  13.1. In the event a
         Party fails to deliver or receive  Power  hereunder  for reasons  other
         than  Force  Majeure,  then  the  interrupting  Party  shall  have  the
         obligations set forth in Article 5.

Issued by:  David C. Benson, Vice President              Effective: June 1, 2001
Issued on: June 29, 2001

<PAGE>

Allegheny Energy Supply Company, LLC
Electric Rate Schedule FERC No. 10

2.4      ANCILLARY  SERVICES.  The  Buyer  shall be  responsible  for  Ancillary
         Services (other than those mentioned in 2.1 as being the responsibility
         of Seller).  Buyer may contract  with Seller  and/or  other  parties to
         supply all or part of the  Ancillary  Services  required to support its
         Default Service obligations. However, Buyer will make use of the supply
         of those  Ancillary  Services  provided  under  the  PURCHASE  AND SALE
         AGREEMENT FOR ANCILLARY  SERVICES BETWEEN ALLEGHENY POWER AND ALLEGHENY
         ENERGY  SUPPLY  COMPANY,  LLC  DATED  APRIL 26,  2000,  as long as that
         agreement  is still in effect  contemporaneously  with Buyer's need for
         Ancillary  Services  and  provided  that the prices for such  Ancillary
         Services are as specified in the agreement.

2.5      TRANSMISSION AND DISTRIBUTION  LOSSES.  Seller shall be responsible for
         any  transmission  losses and loss charges relating to the transmission
         of Power to the Delivery  Point(s) and shall make available  sufficient
         Power  at  the  Delivery   Point(s)  to  compensate   for  the  average
         distribution  losses  incurred  in  Buyer's  provision  of Power to the
         Default Service load.

                                    ARTICLE 3
                           SCHEDULING AND FORECASTING

3.1      DEFAULT  SERVICE  SCHEDULES.  Daily Default  Service  Schedules will be
         submitted  by AP to AE Supply by 11:30 EPT,  one (1) business day prior
         to delivery. Schedules shall be submitted to:

                      AE Supply 24-Hour Scheduling Desk:  212-449-4797
                      FAX:  212-449-6595
                      EMAIL: AEPLANNING@ALLEGHENYENERGY.COM

         or such other  phone and fax  numbers as shall be  provided  in writing
         from Seller to Buyer.

3.2      POWER  TRANSMISSION  AND  SCHEDULING.   Seller  shall  arrange  and  be
         responsible for transmission service to the Delivery Point(s) and shall
         Schedule  or  arrange  for  Scheduling  service  with its  Transmitting
         Utility,  in accordance with the practice of the Transmitting  Utility,
         to deliver the Power to the Delivery Point(s). Buyer's obligation shall
         be to arrange for  transmission  service  with the AP Control  Area and
         pertinent  transmission  service  provider  at and  from  the  Delivery
         Point(s).  Unless  provided sixty (60) prior days written notice to the
         contrary by Buyer,  AE Supply will act as agent for AP with  respect to
         scheduling the requisite amount of real-time transmission service at or
         from the Delivery Point(s) for Default Service with the AP Control Area
         and pertinent  transmission service provider or their successors deemed
         necessary by the Control Area or AE Supply.

3.3      DEFAULT SERVICE FORWARD FORECASTS.  AP will provide AE Supply a rolling
         twenty-four (24) month forecast of its anticipated Default Service load
         by the  first  business  day of each  month  prior to the  start of the
         rolling 24-month period. AP does not guarantee maximum or minimum load.
         AE Supply's  obligation is to provide the  real-time  amount of Default
         Service  Power  required  to  satisfy  the  Default  Service   Schedule
         irrespective of the amount  forecasted by AP. If any purchases are made
         by AP which would reduce the contract quantities, formal written notice
         must be  provided  to AE  Supply  at  least  180  days  (or a  mutually
         agreeable  notice  period  less  than  180  days)  in  advance  of  the
         commencement  dates  of  such  purchases,  and  any  reductions  in the
         contract  quantities  will be reflected in the Default  Service Forward
         Forecasts.

3.4      DEFAULT  SERVICE  7-DAY  FORECASTS.  Upon  request and ninety (90) days
         notice, AP will provide AE Supply a rolling

Issued by:  David C. Benson, Vice President              Effective: June 1, 2001
Issued on: June 29, 2001

<PAGE>

Allegheny Energy Supply Company, LLC
Electric Rate Schedule FERC No. 10

         seven-day  forecast of its anticipated  Default Service load by 10:00AM
         EPT each business day. AP will update the rolling seven-day forecast as
         soon  as new  information  becomes  available.  AP does  not  guarantee
         maximum or minimum load. AE Supply's  obligation is to provide the real
         time amount of Default  Service  Power  required to satisfy the Default
         Service load irrespective of the amount forecasted by AP.

                                    ARTICLE 4
                          SPECIAL TERMS AND CONDITIONS

4.1      WHOLESALE  ARBITRAGE.  This is a "services  provision"  product that is
         designed  and priced to provide the  flexibility  necessary  to serve a
         variable  retail load. The inherent  flexibility of this product is not
         intended to permit AP the ability to pursue arbitrage  opportunities in
         any power market. Such arbitrage activities are prohibited.

4.2      DEFAULT  SERVICE  LOAD  MANAGEMENT.  To minimize the risk to AE Supply,
     hereunder,  AP agrees to enforce  its  applicable  tariff  provisions  with
     customers  taking Power under  tariff,  enforce  contract  provisions  with
     customers  taking  Power  under  contract,   exercise   interruptible   and
     curtailable  contract  rights,  promote  the use of off-peak  load  riders,
     support  regulatory  initiatives  that would  result in a  decrease  in the
     Default  Service  obligation  or an  increase  in  the  Price  to  Compare,
     encourage customers to choose alternate  generation  suppliers and actively
     manage  Default  Service by among other things  avoiding  the  extension of
     retail  contracts  or  commitments  whenever it is possible for AP to do so
     through its unilateral  action. In addition,  as mutually  agreeable to the
     Parties,  AP shall undertake Utility Initiated  Programs ("UIPs") to reduce
     its Default Service Load during peak periods.  UIPs may include but are not
     limited to a generation  service buy-back  program.  The Parties will share
     the net energy price benefits of UIPs equally by ascertaining and splitting
     on a 50:50 basis the hourly difference  between the weight average price to
     be  charged  Buyer to  support  the load  that  otherwise  would  have been
     incurred  and the proxy price for real power  market  energy which shall be
     corresponding PJM Western Hub hourly posting. In calculating the price that
     Buyer would have been charged  otherwise  hourly to support the load, there
     will be an appropriate  apportionment to that load of any energy charged at
     other than PTC prices  during that period  according  to Section  7.1(c) of
     this  Agreement.  Any  capacity  commodity  benefits  (including  Available
     Capacity  Resources)  that may accrue from UIPs after AP becomes subject to
     the rules of an operating RTO will,  however,  be the exclusive property of
     AE Supply, during the term of this Agreement.

4.3      INTERRUPTIBLE AND CURTAILABLE  LOADS. AP may have special  arrangements
     with certain retail  customers that permit  interruption or curtailment for
     economic  reasons.  AE Supply will notify AP by 9:00 am, one  business  day
     prior to delivery of its desire to interrupt these customers. AP will reply
     to AE  Supply  no later  than  10:30 am  specifying  the  quantity  of load
     available for interruption according to applicable contract or tariff terms
     and  conditions.  AP shall  interrupt the quantity of load  requested by AE
     Supply for the duration  requested  by AE Supply,  up to the amount of load
     available for  interruption.  AP will provide  sufficient  documentation to
     verify the load interrupted.  Any capacity  commodity  benefits  (including
     Available     Capacity      Resources)     that     may     accrue     from
     Interruptible/Curtailable Loads after AP becomes subject to the rules of an
     operating RTO will, however, be the exclusive property of AE Supply, during
     the term of this Agreement.

4.4      PJM WEST OR RTO.  The  Parties  agree that the terms of this  Agreement
     shall be modified by the Operating Committee,  as required, to comport with
     the  operating  requirements  of PJM  West  or any  other  applicable  RTO.
     Further,  the Parties agree and maintain that any such modifications  shall
     be  accomplished  in a manner that  minimizes the material  effects on this
     Agreement.

4.5      PJM WEST OR RTO VOTING RIGHTS.  During the term of this Agreement,  the
     Operating  Committee  shall  determine  the  allocation,  between AP and AE
     Supply,  of any and all voting rights and  privileges  assigned to AP under
     any PJM West or other applicable RTO agreement.

Issued by:  David C. Benson, Vice President              Effective: June 1, 2001
Issued on: June 29, 2001

<PAGE>

Allegheny Energy Supply Company, LLC
Electric Rate Schedule FERC No. 10

4.6      SPECIAL  CONTRACTS.  The Parties  agree that AE Supply will support via
     this Agreement  AP's  obligation to provide  generation  service for Eramet
     under its current Electric Service Agreement,  at the unbundled  generation
     rate of $10.11/MWh plus the Fuel Component  (inclusive of losses),  through
     September  1,  2004,  unless  such  Electric  Service  Agreement  is sooner
     terminated.  The  Operating  Committee  shall oversee the  methodology  for
     calculating the Fuel Component, hereunder, assuring that the necessary data
     are available  and such  calculation  is performed in  accordance  with the
     agreements  that are in effect between AP and Eramet.  This provision shall
     survive  termination of this Agreement,  unless termination occurs pursuant
     to ss.8.2. The Parties also agree that if AP cannot or does not avoid under
     the  provisions of Section 4.2 above the  extension of the Eramet  Electric
     Service  Agreement  beyond its present  termination  date, then AE Supply's
     obligation to continue to supply Power for such Eramet load hereunder shall
     cease effective September 1, 2004.

                                    ARTICLE 5
                     INTERRUPTIONS OF DELIVERIES OR RECEIPTS

5.1      INTERRUPTIONS  OF FIRM  TRANSACTIONS.  With respect to the unauthorized
         failure  to  Schedule  and  deliver  or  receive  in  whole  or in part
         deliveries or receipts in accordance with this Agreement:

                  a.   For reasons other than Force Majeure,  if Seller fails to
                       Schedule for  delivery and actually  deliver the Contract
                       Quantity,  then  Seller  shall  incur any  penalties  and
                       charges  that may be  imposed  on Buyer by the AP Control
                       Area or its successor Control Area, or other organization
                       with the  authority to impose such charges or  penalties,
                       including   but  not   limited   to  the   aforementioned
                       Consumption  Energy  Imbalance  charge and Supply  Energy
                       Imbalance  charge that may result from such failure.  For
                       reasons other than Force  Majeure,  if Buyer fails to use
                       its best efforts to facilitate  Seller's  submittal of an
                       accurate  Schedule for receipt of the  Contract  Quantity
                       (while Seller is acting as Buyer's  scheduling  agent) or
                       Buyer fails to use its best efforts to submit an accurate
                       Schedule  (should Buyer decide to schedule itself or hire
                       another party to do so for it), Buyer shall pay Seller an
                       amount  for  each  unit of such  deficiency  equal to the
                       difference  between (i) the price at which Seller is able
                       to sell comparable  supplies of Power using  commercially
                       reasonable efforts or, absent a sale, the market price at
                       the   PJM-Western   Hub  or  such  other   market   proxy
                       established  within the PJM West  region as  commercially
                       appropriate  at the time Seller  learns of the failure to
                       Schedule for receipt of the Contract  Quantity,  in whole
                       or in part,  at which  Seller is or would be able to sell
                       comparable supplies of Power at a commercially reasonable
                       price,  and  (ii)  the  applicable   Contract  Price  (as
                       adjusted   to   reflect    reasonable    differences   in
                       transmission  costs,  if any).  Evidence of Buyer's  best
                       efforts  to  schedule  properly  shall be its  continuous
                       production   and  timely   provision  of  load  forecasts
                       according to  standards  that would be  acceptable  under
                       GUOP   standards  and  to  include   proper   netting  of
                       Competitive  Default Supplier load from Schedules set. In
                       no event shall  amounts  paid by Buyer or Seller  include
                       any self-styled  penalties,  ratcheted demands or similar
                       charges.  The Parties  agree  further that such  payments
                       will become due and payable  hereunder in accordance with
                       the provisions of Article 10 for Buyer's  non-performance
                       and in  the  case  of  Seller's  non-performance,  within
                       twenty (20) days after the month in which  Seller  failed
                       to so perform or twenty (20) days after  Seller  receives
                       Buyer's  notice  of said  non-performance,  whichever  is
                       later.    The   aggrieved   Party   shall   provide   the
                       non-performing  Party a demand for payment  setting forth
                       the basis and  calculation of the amount  demanded,  such
                       demand to be sent in accordance with Section 18.3.

Issued by:  David C. Benson, Vice President              Effective: June 1, 2001
Issued on: June 29, 2001

<PAGE>

Allegheny Energy Supply Company, LLC
Electric Rate Schedule FERC No. 10

                  b.   Both Parties hereby  stipulate that the damages set forth
                       in Section  5.1(a) above are  reasonable  in light of the
                       anticipated  harm and the  difficulty  of  estimation  or
                       calculation  of  actual  damages  and each  Party  hereby
                       waives   the  right  to  contest   such   damages  as  an
                       unreasonable penalty.

                  c.   In the event  either  Buyer or Seller fails to pay to the
                       other Party any  undisputed  amounts in  accordance  with
                       Section 5.1(a) above when due, the aggrieved  Party shall
                       have the  right to (i)  suspend  performance  until  such
                       amounts plus  interest  calculated  at the Interest  Rate
                       have been paid, and/or (ii) exercise any remedy available
                       at law or in equity to  enforce  payment  of such  amount
                       plus interest calculated at the Interest Rate.

                                    ARTICLE 6
                   DELIVERY POINTS AND RELIABILITY GUIDELINES

6.1      DELIVERY POINT(S).  AE Supply will deliver firm Power to AP into the AP
         Control Area at any AP transmission interconnection(s) and/or generator
         step-up  transformer(s)  interconnections  within AP. AE Supply, at its
         sole  discretion,  may schedule the delivery of firm Power to AP in any
         combination of MW amounts and at any combination of delivery points, to
         satisfy the total Power supply requirements under this Agreement.

6.2      RELIABILITY  GUIDELINES.  Each Party  agrees to adhere to Good  Utility
         Operating Practice and specifically adhere to the applicable  operating
         policies,  criteria  and/or  guidelines  of the NERC,  the Control Area
         Operator and any regional or subregional requirements.

                                    ARTICLE 7
                                 PRICE AND TITLE

7.1      PRICE. The Contract Price for Power supplied  hereunder by Seller shall
         be determined for the categories of Power as follows:

                  a.   For all  Power  delivered  in any  calendar  year  during
                       Off-Peak periods,  the applicable Contract Price shall be
                       the  weighted  average of all Shopping  Credits,  by rate
                       classification, and including retail special (non-tariff)
                       contracts  customers,  including,  but not  limited  to a
                       Shopping  Credit equal to the unbundled  generation  rate
                       for  the  Eramet   contract   provided   in  Section  4.6
                       (collectively  "PTC").  With  respect to  Buyer's  retail
                       tariff customers,  the PTC shall be equal to the Shopping
                       Credits established by the Public Utilities Commission of
                       Ohio in the Settlement.  All PTCs shall be less Ancillary
                       Services until such time as AP is subject to the rules of
                       a  functioning  RTO  (including  any  separately   traded
                       capacity  products such as Available  Capacity  Resources
                       whether they are strictly  called  Ancillary  Services or
                       not). Once AP is subject to the rules of an RTO on a real
                       time basis, AP will provide all revenues it collects from
                       its Default Service  customers for Ancillary  Services to
                       AE Supply  as part of the PTC  calculation  and/or  cause
                       that  revenue  to flow  to AE  Supply  under  a  separate
                       agreement, provided that AE Supply is actually performing
                       as supplier of those Ancillary services.  In exchange for
                       the payment of Ancillary  Services  revenues to AE Supply
                       hereunder  (if there is any), AE Supply shall provide the
                       quantity  of  Ancillary  Services  needed by the  Default
                       Service customers that provide the revenue stream that AE

Issued by:  David C. Benson, Vice President              Effective: June 1, 2001
Issued on: June 29, 2001

<PAGE>

Allegheny Energy Supply Company, LLC
Electric Rate Schedule FERC No. 10

                       Supply   actually   receives  from  AP   (otherwise   the
                       provisions  of  any  separate   agreement  for  Ancillary
                       Services shall prevail).

         The Parties  agree that should AP be permitted to increase the rates it
         charges some or all of its  customers  specifically  for the purpose of
         recovering the market expense for Available  Capacity  Resources or any
         other  generation  services,  AP  shall  pay  any  additional  revenues
         collected  specifically  for  Available  Capacity  Resources  or  other
         generation  services  market  expenses  to AE  Supply  if AE  Supply is
         supplying them. Notwithstanding anything herein, should AP be permitted
         to increase the rates it charges its customers  such that AP recognizes
         no income benefits,  now or in the future, from such increase, AP shall
         retain and accrue such  additional  revenues for the future  benefit of
         its customers;  provided  however,  the Contract Price shall be no less
         than the PTCs for each calendar year established in the Settlement,  by
         customer  class,  plus any  additional  revenues  (per  MWh) that AP is
         permitted to collect  specifically  for Available  Capacity  Resources,
         Ancillary Services or other generation services market expenses,  where
         AE Supply is the supplier.

         The methodology  used to develop a weighted average PTC at any point in
         time is as provided in Section 7.1.d below.

                  b.   For a fixed  amount of Power  delivered  in any  calendar
                       year  during  On-Peak  periods  (called  the "Base  Level
                       On-Peak Power"),  the applicable  Contract Price shall be
                       the  weighted  average  of all  PTCs  pertaining  to that
                       calendar  year as  explained in 7.1.a.  above.  The fixed
                       amounts of Base  Level  On-Peak  Power for each  calendar
                       year are as follows:

                       Year         MWhS
                       ----      ---------
                       2001       800,000
                       2002       600,000
                       2003       300,000
                       2004       200,000
                       2005       100,000

              If the  actual  amount of  calendar  year  Power  consumed  during
              On-Peak  periods is less than or equal to the pertinent Base Level
              On-Peak Power,  the Contract Price  pertinent to all of said Power
              shall be the PTC.

                  a.   For all Power  delivered  during  On-Peak  periods during
                       each calendar  year beyond the Base Level On-Peak  Power,
                       the applicable  Contract  Price shall be at  market-based
                       rates, within a range bounded by: 1) that calendar year's
                       weighted  average  PTC;  and 2) the  straight  arithmetic
                       average of the forward  on-peak firm power  calendar year
                       prices  posted by Energy  Argus (or  equivalent  publicly
                       available forward market price publication) prospectively
                       for that calendar year for the  PJM-Western  Hub, or such
                       other hub or market  proxy as deemed  appropriate  by the
                       Operating Committee, provided any such hub is established
                       and maintained by the PJM Office of  Interconnection  and
                       is commercially recognized in the marketplace for trading
                       within the PJM West  region,  on each  Monday in the four
                       (4) consecutive  weeks beginning in November prior to the
                       start of the calendar year ("Posted  Price  Average",  or
                       PPA). Should a price not be published on each Monday, the
                       most recent  published price prior to that Monday will be
                       used.  In the event that the PPA for any calendar year is
                       greater than the PTC, the Operating Committee may, at its
                       discretion,  establish  the  Contract  Price  within this
                       range.

Issued by:  David C. Benson, Vice President              Effective: June 1, 2001
Issued on: June 29, 2001

<PAGE>

Allegheny Energy Supply Company, LLC
Electric Rate Schedule FERC No. 10

                  b.   Weighted  average  PTCs for each  calendar  year shall be
                       calculated by weighting the PTC, by rate  classification,
                       and  including  retail  special  (non-tariff)   contracts
                       customers  by the  amount of MWhs  consumed  by each rate
                       class  relative to the total MWhs consumed by all Default
                       Service  customers in that calendar year. With respect to
                       Buyer's retail tariff  customers,  the PTC shall be equal
                       to  the  Shopping   Credit   established  by  the  Public
                       Utilities  Commission  of  Ohio  as per  the  Settlement.
                       Prospective  weighted  average PTCs will be calculated so
                       that  concurrent,  real-time  billing  can occur  between
                       Seller  and  Buyer.   Unless  the   Operating   Committee
                       determines otherwise,  the prospective calendar year PTCs
                       shall be as follows:

                                  Year             PTC/ MWh
                                  ----             ---------
                                  2001              $24.24
                                  2002              $24.24
                                  2003              $24.24
                                  2004 Q1-Q3        $23.95
                                  2004 Q4           $32.93
                                  2005              $32.93

              It  shall  be  the  Operating  Committee's  responsibility  to set
              real-time weighted average PTC's each calendar year and at various
              times intra-year,  if necessary,  with the intention of minimizing
              year-end  billing  adjustments.  If intra-year PTC adjustments are
              made,  then  the  actions  specified  in  Section  7.1.c  shall be
              repeated  from  that  adjustment  date  forward.   Payments  made,
              hereunder,  shall be net of any payments  made under the Operating
              Lease for the same period.

7.2      TITLE TRANSFER.  Title to,  possession of, and risk of loss (except for
         electrical system distribution  losses) of Power Scheduled and received
         or  delivered  hereunder  shall  transfer  from  Seller to Buyer at the
         Delivery  Point(s).  Seller  warrants  title  to  the  Power  sold  and
         delivered hereunder and the right of Seller to sell such Power.

                                    ARTICLE 8
                                TERM OF AGREEMENT

8.1      TERM.  Subject to the other  provisions of this Agreement,  the term of
         this  Agreement  shall commence June 1, 2001 and shall remain in effect
         through the Transition Period, except as provided under ss.4.6.

8.2      TERMINATION.  In the event of an  attempted  hostile  takeover of AP as
     determined by the Board of Directors of AP, AP shall  provide  notice to AE
     Supply of such attempted hostile takeover.  Should said takeover attempt be
     successful  and not be approved by the board of  directors of AP, AE Supply
     may terminate this Agreement upon ninety (90) days' written  notice,  which
     notice  shall be  provided  within  thirty  (30) days after the  successful
     completion of said hostile takeover.

Issued by:  David C. Benson, Vice President              Effective: June 1, 2001
Issued on: June 29, 2001

<PAGE>

Allegheny Energy Supply Company, LLC
Electric Rate Schedule FERC No. 10

                                    ARTICLE 9
                               OPERATING COMMITTEE

9.1      OPERATING   COMMITTEE.   An  Operating  Committee   consisting  of  one
         representative  each from Buyer and  Seller  shall be  established  for
         purposes of administering this Agreement.  The representatives shall be
         indicated  by the  Parties  to one  another in writing on the first day
         that this Agreement  becomes  effective and each time thereafter that a
         Party wishes to make a change in  representation.  Each  representative
         shall be an officer of the source organization empowered to commit that
         organization to decisions made by the Committee. Affirmative actions of
         the  Operating  Committee  can be taken only upon the agreement of both
         Buyer's  and  Seller's  representatives.  The  duties of the  Operating
         Committee  shall  include,  but are not  limited to,  rendering  needed
         decisions that otherwise might require some form of alternative dispute
         resolution,  proposing  amendments  to this  Agreement  as  required to
         accommodate  RTO or other  requirements  as set  forth in  section  4.4
         herein,  acquiring  necessary data, making calculations and determining
         values as required to implement the provisions of Article 7, overseeing
         the calculation of the Fuel Component according to ss.4.6 and any other
         items necessary to the proper administration of this Agreement.

                                   ARTICLE 10
                               BILLING AND PAYMENT

10.1     PAYMENTS AND STATEMENTS. Each Monday or next subsequent business day if
         Monday is a Banking or Company  holiday,  for the  preceding  seven-day
         period Sunday  through  Saturday AE Supply shall notify AP via email of
         the  amount to be  prepaid  based on the  transactions  Scheduled  or a
         reasonable estimate for the pertinent period ("Prepayments").  AP shall
         pay the  requested  prepaid  amount  within  twenty-four  (24) hours of
         notification.  On or before the  eighth  working  day of each  calendar
         month,  AE  Supply  shall  calculate  the  amount  due for  the  actual
         deliveries  to AP for the previous  calendar  month.  That amount shall
         then be  reconciled  with the total  prepaid  amounts  received from AP
         during the previous  calendar  month.  Any payment or credit due as the
         result of such reconciliation shall be made by the end of the twentieth
         (20th) calendar day of the month.  Payment shall be made to the account
         designated by Seller in Section 18.3 by wire transfer.

10.2     PAST DUE AMOUNTS. Any undisputed amounts, other than Prepayments,  both
         principal  and  interest,  not  paid by the due date  shall  be  deemed
         delinquent  and will accrue  interest  calculated at the Interest Rate,
         such interest to be calculated  daily from the due date to the date the
         unpaid amount is paid in full.

10.3     DISPUTES  AND  ADJUSTMENTS  OF  INVOICES.  A Party may,  in good faith,
         dispute  the  correctness  of any invoice or  adjustment  to an invoice
         rendered  under this Agreement or adjust any invoice for any arithmetic
         or  computational  error  within  six (6)  months  from the date of the
         invoice.  If Buyer, in good faith,  disputes any part of any statement,
         Buyer shall provide a written  explanation of the basis for the dispute
         and pay the portion of such  statement  conceded to be correct no later
         than the due date as calculated in accordance with Section 10.1. If any
         amount disputed by Buyer,  other than Prepayments,  is determined to be
         due to Seller,  it shall be paid by Buyer within two (2) Business  Days
         of  such  determination,  together  with  interest  calculated  at  the
         Interest  Rate from the original due date until the date paid. If Buyer
         fails to pay  amounts  due to Seller  in a timely  manner,  other  than
         Prepayments,  Seller may suspend  performance  pending  receipt of full
         payment  (and shall  have no  further  duty to the Buyer as a result of
         such action).

10.4     AUDIT.  Each  Party or third  party  representative  of a Party has the
         right,  at its sole expense and during normal working hours, to examine
         the records of the other Party to the extent  reasonably  necessary  to
         verify accuracy of any statement,  charge or computation  made pursuant
         to the provisions of this Agreement.  If any such  examination  reveals
         any  inaccuracy in any  statement,  the necessary  adjustments  in such
         statement  and the payments  thereof  shall be made  promptly and shall
         bear interest calculated at the Interest Rate from the date

Issued by:  David C. Benson, Vice President              Effective: June 1, 2001
Issued on: June 29, 2001

<PAGE>

Allegheny Energy Supply Company, LLC
Electric Rate Schedule FERC No. 10

         overpayment or  underpayment  was made until paid;  provided,  however,
         that no  adjustment  for any  statement  or payment will be made unless
         objections  to the  accuracy  thereof  were made  prior to the lapse of
         twelve (12) months  from the  rendition  thereof,  and  thereafter  any
         objection shall be deemed waived.

10.5     RECORDS.  Each Party  shall keep such  records as may be  necessary  to
         afford the other a clear history of all deliveries of Power hereunder.

10.6     RECORDING.  Each Party  acknowledges  and agrees that either  Party may
         create a tape or  electronic  recording  of  conversations  between the
         Parties to this  Agreement,  with proper  audible notice as required by
         law,  that may be  submitted  in evidence in any  proceeding  or action
         relating to this Agreement.

                                   ARTICLE 11
                                 INDEMNIFICATION

11.1     SELLER'S INDEMNIFICATION. Seller hereby agrees to indemnify, defend and
         hold  harmless  Buyer,  its  agents,  servants,  affiliates,  officers,
         directors,  employees  and  representatives,   (collectively,  "Buyer's
         Indemnitees")  of each,  from and against  any and all losses,  claims,
         damages  or   liabilities  to  third  parties   (including   reasonable
         attorneys' fees actually  incurred and including,  without  limitation,
         penalties or fines  imposed by government  authorities)  arising out of
         the  fraud,  gross  negligence  or the  willful  misconduct  of  Seller
         relating to Power  delivered  under this Agreement until such Power has
         been  delivered to Buyer at the Delivery  Point(s)  including,  without
         limitation,  the loss or claims for loss or damage to property,  except
         to the extent caused by the fraud, negligence or the willful misconduct
         or breach of obligation under this Agreement of the Buyer's Indemnitees
         and provided  that Seller shall be promptly  notified in writing of any
         such claim or suit brought  against any such Buyer's  Indemnitees.  The
         foregoing  notwithstanding,  Seller's  obligations under this Agreement
         towards any  Buyer's  Indemnitees  are  conditioned  upon such  Buyer's
         Indemnitees providing such cooperation as Seller may reasonably request
         in  connection  with its  defense  or  settlement  of the claim or suit
         against such Buyer's Indemnitees.

11.2     BUYER'S INDEMNIFICATION.  Buyer hereby agrees to indemnify,  defend and
         hold harmless  Seller,  its agents,  servants,  affiliates,  directors,
         employees, and representatives,  (collectively, "Seller's Indemnitees")
         of each,  from and  against  any and all  losses,  claims,  damages  or
         liabilities  to third parties  (including  reasonable  attorneys'  fees
         actually incurred and including, without limitation, penalties or fines
         imposed by  government  authorities)  arising  out of the fraud,  gross
         negligence,  or willful misconduct of Buyer relating to Power delivered
         under this  Agreement  after such Power has been  delivered to Buyer at
         the Delivery Point(s) including, without limitation, the loss or claims
         for loss or damage to  property,  except  to the  extent  caused by the
         fraud,  negligence  or the willful  misconduct  or breach of obligation
         under this  Agreement of the  Seller's  Indemnitees  and provided  that
         Buyer shall be promptly  notified in writing of any such claims or suit
         brought   against  any  such   Seller's   Indemnitees.   The  foregoing
         notwithstanding,  Buyer's  obligations under this Agreement towards any
         Seller's   Indemnitees  are  conditioned   upon  Seller's   Indemnitees
         providing  such   cooperation  as  Buyer  may  reasonably   request  in
         connection  with its defense or settlement of the claim or suit against
         such Seller's Indemnitees.

                                   ARTICLE 12
                            ASSIGNMENT AND SUCCESSION

12.1     ASSIGNMENT AND SUCCESSION. Neither Party shall assign this Agreement or
         its rights  hereunder  without the prior

Issued by:  David C. Benson, Vice President              Effective: June 1, 2001
Issued on: June 29, 2001

<PAGE>

Allegheny Energy Supply Company, LLC
Electric Rate Schedule FERC No. 10

         written  consent of the other Party,  provided,  however,  either Party
         may,  without  the consent of the other  Party (and  without  relieving
         itself from liability hereunder),  (i) transfer, sell, pledge, encumber
         or assign this Agreement or the accounts,  revenues or proceeds  hereof
         in connection with any financing or other financial arrangements;  (ii)
         transfer or assign this  Agreement  to an affiliate of such Party which
         affiliate's  creditworthiness  is equal to or higher  than that of such
         Party;  (iii)  except as provided  in Section  8.2 hereof,  transfer or
         assign  this  Agreement  to any person or entity  succeeding  to all or
         substantially  all of the  Party's  assets  provided  that Party has at
         least a S&P rating of BBB- or Baa3 from  Moody's (or their  equivalents
         should  those  agencies  change their  rating  designations).  Upon any
         assignment  made in compliance  with this Section 12.1,  this Agreement
         shall inure to and be binding  upon the  successors  and assigns of the
         assigning  Party.  References  to any Party named herein shall  include
         such Party's successors and assigns.

                                   ARTICLE 13
                    LIMITATION OF LIABILITY AND FORCE MAJEURE

13.1     FORCE MAJEURE. To the extent either Party is prevented by Force Majeure
         from carrying out, in whole or in part, its  obligations  hereunder and
         such Party (the  Claiming  Party) gives notice and details of the Force
         Majeure to the other Party as soon as  practicable,  then the  Claiming
         Party shall be excused from the performance of its  obligations  (other
         than the  obligation  to make  payments  then due or becoming  due with
         respect  to  performance  prior to the Force  Majeure).  The term Force
         Majeure shall mean an event or  circumstance  which  prevents one Party
         from performing its obligations hereunder,  which event or circumstance
         was not anticipated,  which is not within the reasonable  control of or
         the result of the  negligence of the Claiming  Party and which,  by the
         exercise of due diligence  the Claiming  Party is unable to overcome or
         avoid or cause to be avoided.  Force  Majeure shall not be based on (i)
         the loss of Buyer's markets; (ii) Buyer's inability economically to use
         or resell the Power purchased  hereunder;  (iii) the loss or failure of
         Seller's  supply;  or (iv) Seller's ability to sell the Power at a more
         advantageous  price.  Neither  Party may raise a claim of Force Majeure
         based in whole or in part on  interruption  by a  Transmitting  Utility
         unless  (i) such  Party has  contracted  for firm  transmission  with a
         Transmitting  Utility for  transmission of the Power to be delivered to
         or received at the Delivery  Point(s) and (ii) such interruption is due
         to Force  Majeure or similar  term as  defined  under the  Transmitting
         Utility's tariff.

13.2     LIMITATION OF LIABILITY.  THE PARTIES CONFIRM THAT THE EXPRESS REMEDIES
         AND  MEASURES  OF  DAMAGES  PROVIDED  IN  THIS  AGREEMENT  SATISFY  THE
         ESSENTIAL  PURPOSES  HEREOF.  FOR BREACH OF ANY  PROVISION FOR WHICH AN
         EXPRESS  REMEDY OR MEASURE OF DAMAGES IS PROVIDED,  SUCH EXPRESS REMEDY
         OR MEASURE  OF  DAMAGES  SHALL BE THE SOLE AND  EXCLUSIVE  REMEDY,  THE
         OBLIGOR'S LIABILITY SHALL BE LIMITED AS SET FORTH IN SUCH PROVISION AND
         ALL OTHER  REMEDIES  OR DAMAGES AT LAW OR IN EQUITY ARE  WAIVED.  IF NO
         REMEDY OR  MEASURE  OF DAMAGES  IS  EXPRESSLY  PROVIDED  HEREIN OR IN A
         TRANSACTION,  THE OBLIGOR'S LIABILITY SHALL BE LIMITED TO DIRECT ACTUAL
         DAMAGES  ONLY,  SUCH  DIRECT  ACTUAL  DAMAGES  SHALL  BE THE  SOLE  AND
         EXCLUSIVE  REMEDY AND ALL OTHER REMEDIES OR DAMAGES AT LAW OR IN EQUITY
         ARE WAIVED.  UNLESS EXPRESSLY  HEREIN PROVIDED,  NEITHER PARTY SHALL BE
         LIABLE FOR CONSEQUENTIAL,  INCIDENTAL,  PUNITIVE, EXEMPLARY OR INDIRECT
         DAMAGES,  LOST  PROFITS  OR OTHER  BUSINESS  INTERRUPTION  DAMAGES,  BY
         STATUTE,  IN  TORT  OR  CONTRACT,  UNDER  ANY  INDEMNITY  PROVISION  OR
         OTHERWISE.  IT IS THE INTENT OF THE PARTIES THAT THE LIMITATIONS HEREIN
         IMPOSED ON REMEDIES AND THE MEASURE OF DAMAGES BE WITHOUT REGARD TO THE
         CAUSE OR CAUSES RELATED THERETO, INCLUDING THE NEGLIGENCE OF ANY PARTY,
         WHETHER SUCH  NEGLIGENCE  BE SOLE,  JOINT OR  CONCURRENT,  OR ACTIVE OR
         PASSIVE.  TO THE EXTENT ANY DAMAGES  REQUIRED TO BE PAID  HEREUNDER ARE
         LIQUIDATED,  THE PARTIES  ACKNOWLEDGE THAT THE DAMAGES ARE DIFFICULT OR
         IMPOSSIBLE TO DETERMINE AND THE DAMAGES CALCULATED HEREUNDER CONSTITUTE
         A REASONABLE APPROXIMATION OF THE HARM OR LOSS.

Issued by:  David C. Benson, Vice President              Effective: June 1, 2001
Issued on: June 29, 2001

<PAGE>

Allegheny Energy Supply Company, LLC
Electric Rate Schedule FERC No. 10

                                   ARTICLE 14
                                      TAXES

14.1     COOPERATION.  Each Party shall use reasonable  efforts to implement the
         provisions of and to administer  this Agreement in accordance  with the
         intent of the Parties to minimize  Taxes,  so long as neither  Party is
         materially adversely affected by such efforts.

14.2     TAXES.  Seller shall pay or cause to be paid all taxes,  fees,  levies,
         penalties,  license or charges  imposed by any  governmental  authority
         ("Taxes") on or with respect to the Power arising prior to the Delivery
         Point(s).  Buyer  shall  pay or cause  to be paid all  Taxes on or with
         respect  to  Power  at and from the  Delivery  Point(s)  other  than ad
         valorem, franchise or income taxes which are related to the sale of the
         Power and are,  therefore,  the  responsibility  of the Seller.  In the
         event  Seller is  required by law or  regulation  to remit or pay Taxes
         which  are  Buyer's  responsibility  hereunder,  Buyer  shall  promptly
         reimburse  Seller  for  such  Taxes.  If Buyer  is  required  by law or
         regulation  to remit or pay  Taxes  that  are  Seller's  responsibility
         hereunder,  Buyer may deduct the amount of any such Taxes from the sums
         due to Seller hereunder. Nothing shall obligate or cause a Party to pay
         or be liable to pay any taxes for which it is exempt under the law.

                                   ARTICLE 15
                           DEFAULT AND RESPONSIBILITY

15.1     EVENTS OF DEFAULT.  An event of default  shall mean,  with respect to a
         Party ("Defaulting Party") the occurrence of any of the following:

            (a)  the failure to make,  when due, any undisputed  payment,  other
                 than  Prepayments,  required pursuant to this Agreement if such
                 failure is not  remedied  within five (5)  Business  Days after
                 written notice;

            (b)  any  representation or warranty made by a Party herein shall be
                 false or misleading in any material  respect when made; and

            (c)  the failure to perform any material  covenant or obligation set
                 forth in the  Agreement  (except to the extent  constituting  a
                 separate event of default and except for a Party's  obligations
                 to deliver or receive the Power, the exclusive remedy for which
                 is provided in Section 5.1) if such failure  shall not be cured
                 within five (5) Business Days after written notice.

15.2     REMEDIES.  If an event of  default  shall  have  occurred  and shall be
         continuing,  the Non-Defaulting Party may, in its sole discretion,  (i)
         designate a day, no earlier than the day such notice is  effective  and
         no later than twenty (20) days after such  notice is  effective,  as an
         early  termination  date ("Early  Termination  Date") to liquidate  and
         terminate  this  Agreement  between the Parties,  and (ii) withhold any
         payments  due  to  the  Defaulting  Party  under  this  Agreement.  The
         Non-Defaulting  Party shall  calculate,  in a  commercially  reasonable
         manner,  a Settlement  Amount as of the Early  Termination Date (or, to
         the extent that in the reasonable opinion of the  Non-Defaulting  Party
         portions of this Agreement are commercially  impracticable to liquidate
         and terminate or may not be liquidated and terminated  under applicable
         law on the Early  Termination Date, as soon thereafter as is reasonably
         practicable).

15.3     NET OUT OF SETTLEMENT AMOUNTS. The Non-Defaulting Party shall aggregate
         all  Settlement  Amounts  into a single net amount  ("Net  Amount") and
         notify the  Defaulting  Party of the Net Amount  owed or owing.  If the
         Non-Defaulting  Party's aggregate Financial Losses and Costs exceed its
         aggregate  Financial Gains, the Defaulting Party shall within three (3)
         Business  Days of  receipt  of such  notice,  pay the Net Amount to the
         Non-Defaulting  Party, which Net Amount shall bear interest  calculated
         at the Interest Rate from the Early Termination Date until paid. If the
         Non-Defaulting  Party's aggregate  Financial Gains exceed its Financial
         Losses and Costs,  if

Issued by:  David C. Benson, Vice President              Effective: June 1, 2001
Issued on: June 29, 2001

<PAGE>
Allegheny Energy Supply Company, LLC
Electric Rate Schedule FERC No. 10

         any,  resulting  from the event of default,  the  Non-Defaulting  Party
         shall pay the Net Amount to the Defaulting  Party on the next regularly
         scheduled payment date.

15.4     DISPUTES WITH RESPECT TO NET AMOUNT.  If the Defaulting  Party disputes
         the Non-Defaulting  Party's  calculation of the Net Amount, in whole or
         in part,  the Defaulting  Party shall,  within two (2) Business Days of
         receipt of the  Non-Defaulting  Party's  calculation of the Net Amount,
         provide to the Non-Defaulting  Party a detailed written  explanation of
         the basis for such dispute;  provided,  however, that if the Net Amount
         is due from the  Defaulting  Party,  the  Defaulting  Party shall first
         transfer  collateral  satisfactory  to the  Non-Defaulting  Party in an
         amount  equal  to the Net  Amount  to an  escrow  account  to an  agent
         acceptable to both Parties.

15.5     SUSPENSION OF PERFORMANCE.  Notwithstanding any other provision of this
         Agreement,  after the  occurrence of (i) an event of default so long as
         the event of  default is  continuing  and has not been cured or (ii) an
         event  which,  with  notice  or the  passage  of  time or  both,  would
         constitute an event of default, the Non-Defaulting  Party, upon written
         notice  to the  Defaulting  Party,  shall  have the  right  to  suspend
         performance hereunder and to exercise any remedy available at law or in
         equity, except as provided in Article 16.

                                   ARTICLE 16
                                   ARBITRATION

16.1     COMPULSORY BINDING  ARBITRATION.  All disputes of every kind and nature
         between the Parties arising out of or in connection with this Agreement
         shall be submitted to binding  arbitration  pursuant to the  Commercial
         Arbitration Rules of the American Arbitration  Association (as the same
         may be  amended  from  time to time,  the "AAA  Rules").  If and to the
         extent that the provisions of this Agreement are inconsistent  with the
         AAA  Rules,  the  provisions  of this  Agreement  shall  control in any
         arbitration proceeding.

16.2     DEMAND FOR ARBITRATION. Either party may make demand for arbitration in
         writing to the other  party,  setting  forth the nature of the dispute,
         the amount  involved,  if any, the remedies  sought and the name of the
         arbitrator appointed by the party demanding arbitration. Copies of such
         notice shall also be given to the American  Arbitration  Association as
         required by the AAA Rules.

16.3     ARBITRATORS.Within ten (10) days after any demand for arbitration under
         Section 16.2, the other party shall name its arbitrator,  or in default
         thereof,  such arbitrator shall be named forthwith  pursuant to the AAA
         Rules.  The two  arbitrators so selected shall name a third  arbitrator
         within seven (7) days after selection of the second arbitrator from the
         National Panel of Arbitrators of the American  Arbitration  Association
         or, in the absence of such  agreement on a third  arbitrator by the two
         arbitrators  so  appointed,  a  third  arbitrator  shall  be  appointed
         pursuant to the AAA Rules. At least one of the three  arbitrators named
         or appointed under this Section shall be an attorney-at-law.

16.4     RULES FOR  ARBITRATION.  The Federal  Rules of Civil  Procedure and the
         Federal  Rules  of  Evidence  shall  apply  to all  proceedings  of any
         arbitration hereunder, including discovery proceedings.  Depositions in
         advance of the hearing  shall be  permitted  for  purposes of preparing
         testimony,  but shall be  limited in number so as to avoid any delay in
         achieving  the time  periods  for  decisions  required  hereunder.  All
         questions relating to discovery and disclosure shall be referred to one
         of the  arbitrators,  who  shall  be  chosen  for such  purpose  by the
         arbitrators   and  shall  be  an   attorney-at-law;   and  his  or  her
         determination shall be final.

16.5     HEARING AND AWARD. The arbitration hearing shall be held in Pittsburgh,
         Pennsylvania,  and shall  commence not later than forty (40) days after
         the date of the original  demand under Section  16.2.  The award of the
         arbitrators  shall be made not later  than  thirty  (30) days after the
         date of closing of the hearing,  or if oral  hearings have been waived,
         after the date of  transmitting  the final  statements and proof to the
         arbitrators;  provided,  however,  that in no event  shall any award be
         made later than eighty (80) days after the date of the original  demand
         for arbitration under Section 16.2.

16.6     ARBITRATOR'S  AUTHORITY.  In the event the arbitrators find a breach of
         the terms and  conditions  of this  Agreement  to have  occurred and be
         continuing,  the arbitrators  shall have express authority to order (i)
         specific performance; and (ii) the payment of damages to compensate the
         non-breaching  party  for  any  loss;   provided,   in  the  event  the
         arbitrators  find either  Party's  actions to be in breach of the terms
         and conditions of this Agreement, that Party shall promptly comply with
         the  arbitrators'  decision  and  order  (including  in the  event  the
         arbitrators  order  specific  performance,  correcting any action taken
         during such proceeding  inconsistent  with the arbitrator's  decision).
         Any payment of damages ordered by the  arbitrators  shall bear interest
         at the  Interest  Rate  from  the  date as of which  such  damages  are
         calculated  to the date on which the party  entitled  thereto  receives
         payment thereof in full.

Issued by:  David C. Benson, Vice President              Effective: June 1, 2001
Issued on: June 29, 2001

<PAGE>

Allegheny Energy Supply Company, LLC
Electric Rate Schedule FERC No. 10

16.7     PERFORMANCE  DURING  ARBITRATION  PROCEEDINGS.  During the  pendency of
         arbitration under this Article,  (a) Buyer and Seller shall continue to
         perform their respective obligations  hereunder,  without setoff during
         the pendency of such  arbitration  of any amount so  disputed,  and (b)
         neither Buyer nor Seller shall  exercise any other  remedies  hereunder
         arising by virtue of the matters in dispute.

                                   ARTICLE 17
                       CREDIT AND COLLATERAL REQUIREMENTS

17.1     FINANCIAL  INFORMATION.  If requested by a Party, the other Party shall
         deliver (i) within one hundred and twenty (120) days  following the end
         of each fiscal  year,  a copy of such  Party's or such  Party's  parent
         company's  annual  report  containing  audited  consolidated  financial
         statements  for such fiscal year and (ii) within  sixty (60) days after
         the end of each of its first three fiscal quarters of each fiscal year,
         a  copy  of  such  Party's   quarterly  report   containing   unaudited
         consolidated financial statements for such fiscal quarter. In all cases
         the  statements  shall be for the most  recent  accounting  period  and
         prepared in accordance with generally accepted accounting principles or
         such other principles then in effect,  provided,  however,  that should
         any  such  statements  not  be  available  timely  due  to a  delay  in
         preparation  or  certification,  such  delay  shall  not be an event of
         default  so long as such  Party  diligently  pursues  the  preparation,
         certification and delivery of the statements.

17.2     CREDIT  ASSURANCES.  If a Party  ("Requesting  Party") has commercially
         reasonable  grounds to believe that the other Party's  creditworthiness
         or  performance  under this  Agreement has become  unsatisfactory,  the
         Requesting  Party will  provide  the other  Party with  written  notice
         requesting  collateral  in the form of cash,  letter of credit or other
         security  acceptable  to  Requesting  Party  in  an  amount  reasonably
         determined  by the  Requesting  Party.  Upon receipt of such notice the
         other Party shall have three (3) Business  Days to remedy the situation
         by providing  such  collateral  to the  Requesting  Party as reasonably
         determined by the Requesting  Party.  In the event that the other Party
         fails to provide such collateral or guarantee or other credit assurance
         acceptable  to the  Requesting  Party within three (3) Business Days of
         receipt of notice,  then the Requesting  Party may suspend  receipts or
         deliveries hereunder.

17.3     GRANT OF SECURITY  INTEREST  AND  REMEDIES.  To secure its  obligations
         under this  Agreement and to the extent either or both Parties  deliver
         collateral  hereunder,  each Party  hereby  grants to the other Party a
         present and continuing  security  interest in and lien on (and right of
         setoff  against),  and  assignment  of all  cash  collateral  and  cash
         equivalent  collateral and any and all proceeds resulting  therefrom or
         the  liquidation  thereof,  whether now or hereafter held by, on behalf
         of, or for the benefit of, such other  Party,  and each Party agrees to
         take such  action as the other  Party  reasonably  requires in order to
         perfect the other Party's first priority security interest in, and lien
         on (and  right of  setoff  against),  such  collateral  and any and all
         proceeds resulting therefrom or from the liquidation  thereof.  Upon or
         any time  after the  occurrence  or deemed  occurrence  and  during the
         continuation of an event of default or an Early  Termination  Date, the
         Non-Defaulting  Party  may do any  one or more  of the  following:  (i)
         exercise  any of such  rights  and  remedies  of a secured  party  with
         respect to all collateral, including any such rights and remedies under
         law then in effect;  (ii) exercise its rights of setoff against any and
         all  property  of  the  Defaulting  Party  in  the  possession  of  the
         Non-Defaulting Party or its agent; (iii) draw on any outstanding letter
         of credit issued for its benefit;  and (iv)  liquidate  all  collateral
         then held by or for the  benefit of the  secured  Party  (free from any
         claim  or right  of any  nature  whatsoever  of the  Defaulting  Party,
         including  any  equity  or  right  of  purchase  or  redemption  by the
         Defaulting Party).

Issued by:  David C. Benson, Vice President              Effective: June 1, 2001
Issued on: June 29, 2001

<PAGE>

Allegheny Energy Supply Company, LLC
Electric Rate Schedule FERC No. 10

                                   ARTICLE 18
                                  MISCELLANEOUS

18.1     REPRESENTATIONS  AND WARRANTIES.  As of the date and year first written
         above, each Party represents and warrants to the other Party that:

            (a)  it is duly  organized,  validly  existing and in good  standing
                 under the laws of the jurisdiction of its formation;

            (b)  it  has  all  regulatory  authorizations  necessary  for  it to
                 legally perform its obligations under this Agreement;

            (c)  the execution,  delivery and  performance of this Agreement are
                 within its powers,  have been duly  authorized by all necessary
                 action and do not  violate any of the terms and  conditions  in
                 its governing  documents,  any contracts to which it is a party
                 or any law, rule,  regulation  order or the like  applicable to
                 it;

            (d)  this  Agreement and other  documents  executed and delivered in
                 accordance with this Agreement constitute its legally valid and
                 binding  obligations  enforceable against it in accordance with
                 their terms.

18.2     GOVERNING  LAW. This Agreement and the rights and duties of the Parties
         hereunder shall be governed by and construed, enforced and performed in
         accordance  with the  laws of the  State of  Ohio,  without  regard  to
         principles of conflicts of law.

18.3     NOTICES. Any notice, request, demand, statement or payment provided for
         in this  Agreement  shall be  confirmed  in writing,  unless  otherwise
         noted, and shall be made as specified below;  provided,  however,  that
         notices of interruption and  communications  to Transmitting  Utilities
         may be provided  verbally,  effective  immediately  and,  upon request,
         confirmed in writing. A notice sent by facsimile  transmission shall be
         deemed  received by the close of the  Business Day on which such notice
         was  transmitted  or such earlier time as is confirmed by the receiving
         Party unless it confirms a prior verbal communication in which case any
         such notice shall be deemed received on the day sent.

                           Party:                AE Supply Company, LLC
                           Account Name:         AE Supply Company
                           Bank:                 PNC Bank
                           ABA #:                043000096
                           Account #:            1008969371
                           Invoices:
                                                 AE Supply Company LLC
                                                 4350 Northern Pike
                                                 Monroeville, PA  15146-2841
                                                 ATTN: Maureen Miller

                           Party:                Allegheny Power
                           Account Name:         Monongahela Power Company
                           Bank:                 Mellon Bank
                           ABA#:                 043000261
                           Account#:             19107
                           Invoices:
                                                 Monongahela Power Company
                                                 800 Cabin Hill Drive
                                                 Greensburg, PA 15601
                                                 ATTN: Marianne Tonini

Issued by:  David C. Benson, Vice President              Effective: June 1, 2001
Issued on: June 29, 2001

<PAGE>

Allegheny Energy Supply Company, LLC
Electric Rate Schedule FERC No. 10

         Or to such  other  address  as Buyer or Seller  shall from time to time
         designate by letter properly addressed.

18.4     ENTIRETY.  This Agreement  constitutes the entire agreement between the
         Parties  hereto.  There are no prior or  contemporaneous  agreements or
         representations  affecting  the same  subject  matter  other than those
         herein  expressed.  Except for those matters which,  in accordance with
         this  Agreement,   may  be  resolved  by  the  Parties  and  documented
         electronically, it is further agreed that no amendment, modification or
         change herein shall be enforceable, except as specifically provided for
         in this  Agreement,  unless  produced in writing  and  executed by both
         Parties.

18.5     NON-WAIVER.  No  waiver  by  either  party  hereto  of any  one or more
         defaults by the other in the  performance  of any of the  provisions of
         this  Agreement  shall be construed as a waiver of any other default or
         defaults whether of a like kind or different nature.

18.6     SEVERABILITY. Except as otherwise stated herein, any provision, article
         or  section  declared  or  rendered  unlawful  by a  court  of  law  or
         regulatory  agency  with  jurisdiction  over  the  Parties,  or  deemed
         unlawful  because of statutory  change,  will not otherwise  affect the
         lawful obligations that arise under this Agreement.

18.7     HEADINGS. The headings used for the Articles herein are for convenience
         and  reference  purposes only and shall in no way affect the meaning or
         interpretation of the provisions of this Agreement.

18.8     CONFIDENTIALITY.  Neither Party shall  disclose the terms or conditions
         of this  Agreement to a third party (other than the Party's  employees,
         lenders, counsel, accountants, or advisors who have a need to know such
         information and have agreed to keep such terms confidential)  except in
         order to comply with any applicable law or regulation, or any exchange,
         Control Area or other regional or sub-regional requirements.

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement in duplicate
originals effective as of the day and year first written above.

Issued by:  David C. Benson, Vice President              Effective: June 1, 2001
Issued on: June 29, 2001

<PAGE>

Allegheny Energy Supply Company, LLC
Electric Rate Schedule FERC No. 10

MONONGAHELA POWER COMPANY                 ALLEGHENY ENERGY SUPPLY COMPANY, LLC
D/B/A ALLEGHENY POWER

By:   /s/ Ron Magnuson                    By:   /s/ David C. Benson
      --------------------------------          --------------------------------

Name:  Ron Magnuson                       Name:  David C. Benson
      --------------------------------          --------------------------------

Title:  Vice President                    Title:  Vice President
      --------------------------------          --------------------------------

Date:                                     Date:
      --------------------------------          --------------------------------

Issued by:  David C. Benson, Vice President              Effective: June 1, 2001
Issued on: June 29, 2001<PAGE>

                                                                 Exhibit 4.30

               CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
                                       OF
               15% SERIES F CUMULATIVE CONVERTIBLE PREFERRED STOCK
                                       OF
                     AMERICAN TELESOURCE INTERNATIONAL, INC.

         Pursuant to Section 151 of the General Corporation Law of the State of
Delaware, American TeleSource International, Inc., a corporation organized and
existing under the General Corporation Law of the State of Delaware (the
"Corporation"), hereby certifies that the Board of Directors of the Corporation
on March 15, 2001 adopted resolutions by unanimous written consent adopting this
Certificate of Designation, Preferences and Rights designating a new class of
its preferred stock called the 15% Series F Cumulative Convertible Preferred
Stock, having the terms set forth herein, and that the Corporation has caused
this Certificate of Designation, Preferences and Rights to be executed by a duly
authorized officer as of the 21st day of March, 2001.

               15% Series F Cumulative Convertible Preferred Stock

                                    ARTICLE 1
                                   Definitions

         The terms defined in this Article whenever used in this Certificate of
Designation have the following respective meanings:

         (a)   "Affiliate" has the meaning ascribed to such term in Rule 12b-2
under the Securities Exchange Act of 1934, as amended.

         (b)   "AMEX" means the American Stock Exchange, Inc.

         (c)   "Business Day" means a day other than Saturday, Sunday or any day
on which banks located in the State of New York are authorized or obligated to
close.

         (d)   "Capital Shares" means the Common Shares and any other shares of
any other class or series of capital stock, whether now or hereafter authorized
and however designated, which have the right to participate in the distribution
of earnings and assets (upon dissolution, liquidation or winding-up) of the
Corporation.

         (e)   "Closing Date" means the Issue Date.

         (f)   "Common Shares" or "Common Stock" means shares of common stock,
par value $0.001 per share, of the Corporation.

         (g)   "Common Stock Issued at Conversion" when used with reference to
the securities issuable upon conversion of the Series F Preferred Stock, means
all Common Shares now or hereafter Outstanding and securities of any other class
or series into which the Series F Preferred Stock hereafter shall have been
changed or substituted, whether now or hereafter created and however designated.

         (h)   "Conversion Date" means any day on which all or any portion of
shares of the Series F Preferred Stock is converted in accordance with the
provisions hereof.

         (i)   "Conversion Notice" has the meaning set forth in Section 6.2.

         (j)   "Conversion Price" means on any date of determination the
applicable price for the conversion of shares of Series F Preferred Stock into
Common Shares on such day as set forth in Section 6.1.

<PAGE>

         (k)   "Corporation" means American TeleSource International, Inc., a
Delaware corporation, and any successor or resulting corporation by way of
merger, consolidation or otherwise.

         (l)   "Current Market Price" means on any date of determination the
last sale price of a Common Share on such day as reported on the AMEX; provided,
if such security is not listed or admitted to trading on the AMEX, as reported
on the principal national security exchange or quotation system on which such
security is quoted or listed or admitted to trading, or, if not quoted or listed
or admitted to trading on any national securities exchange or quotation system,
the closing bid price of such security on the over-the-counter market on the day
in question as reported by Bloomberg LP, or a similar generally accepted
reporting service, as the case may be, for such day. If the Current Market Price
cannot be calculated for such security on any such date in the manner provided
above, the Current Market Price shall be the fair market value as determined by
the Board of Directors acting in good faith.

         (m)   "Holder" means any Person or Persons who is the holder of record
of the Series F Preferred Stock as shown in the Corporation's stock transfer
records.

         (n)   "Issue Date" has the meaning set forth in Section 6.1.

         (o)   "Market Disruption Event" means any event that results in a
material suspension or limitation of trading of the Common Shares on the AMEX or
the principal securities exchange on which the Common Shares are traded.

         (p)   "Market Price" per Common Share, on any date of determination,
means the arithmetic mean of the average closing prices of the Common Shares as
reported on the AMEX for the five (5) Trading Days immediately preceding such
date of determination; provided, if such security is not listed or admitted to
trading on the AMEX, as reported on the principal national security exchange or
quotation system on which such security is quoted or listed or admitted to
trading, or, if not quoted or listed or admitted to trading on any national
securities exchange or quotation system, the closing bid price of such security
on the over-the-counter market on the day in question as reported by Bloomberg
LP, or a similar generally accepted reporting service, as the case may be, for
the five (5) Trading Days immediately preceding such date of determination. If
the Market Price cannot be calculated for such security on any such
determination date in the manner provided above, the Market Price shall be the
fair market value as determined by the Board of Directors acting in good faith.

         (q)   "Outstanding" when used with reference to Common Shares or
Capital Shares (collectively, "Shares"), means, on any date of determination,
all issued and outstanding Shares, and includes all such Shares issuable in
respect of outstanding scrip or any certificates representing fractional
interests in such Shares; provided, however, that any such Shares directly or
indirectly owned or held by or for the account of the Corporation or any
Subsidiary of the Corporation shall not be deemed "Outstanding" for purposes
hereof.

         (r)   "Person" means an individual, a corporation, a partnership, an
association, a limited liability company, an unincorporated business
organization, a trust or other entity or organization, and any government or
political subdivision or any agency or instrumentality thereof.

         (s)   "SEC" means the United States Securities and Exchange Commission.

         (t)   "Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the SEC thereunder, all as in effect at the
time.

         (u)   "Securities Purchase Agreement" means that certain Securities
Purchase Agreement dated as of March 21, 2001 between the Corporation and the
Buyers named therein, including any amendments or supplements thereto.

                                       2

<PAGE>

         (v)   "Series F Preferred Shares" or "Series F Preferred Stock" means
the shares of 15% Series F Cumulative Convertible Preferred Stock of the
Corporation or such other convertible Preferred Stock exchanged therefor.

         (w)   "Stated Value" has the meaning set forth in Article 2.

         (x)   "Subsidiary" means any entity of which securities or other
ownership interests having ordinary voting power to elect a majority of the
board of directors or other persons performing similar functions are owned
directly or indirectly by the Corporation.

         (y)   "Trading Day" means any day on which purchases and sales of
securities authorized for quotation on the AMEX (or if the Common Stock is not
listed on the AMEX, then on the principal national securities exchange or
quotation system on which the Common Stock is listed or admitted to trading) are
reported thereon and on which no Market Disruption Event has occurred.

         All references to "cash" or "$" herein means currency of the United
States of America.

                                       3

<PAGE>

                                    ARTICLE 2
                             Designation And Amount

         The designation of this series, which consists of 40,000 shares of
Preferred Stock, is 15% Series F Cumulative Convertible Preferred Stock (the
"Series F Preferred Stock") and the stated value shall be $100.00 per share (the
"Stated Value").

                                    ARTICLE 3
                                      Rank

         The Series F Preferred Stock shall rank (i) prior to the Common Stock;
(ii) prior to any class or series of capital stock of the Corporation hereafter
created other than "Pari Passu Securities" (collectively, with the Common Stock,
"Junior Securities"); (iii) pari passu with the Corporation's 10% Series A
                            ----------
Cumulative Convertible Preferred Stock, 6% Series B Cumulative Convertible
Preferred Stock, 6% Series C Cumulative Convertible Preferred Stock, 6% Series D
Cumulative Convertible Preferred Stock and 6% Series E Cumulative Convertible
Preferred Stock and any class or series of capital stock of the Corporation
hereafter created specifically ranking on parity with the Series F Preferred
Stock ("Pari Passu Securities"); and (iv) junior to any class or series of
capital stock of the Corporation hereafter created (with the consent of the
holders of the Series F Preferred Stock in accordance with Article 8 hereof)
specifically ranking, by its terms, senior to the Series F Preferred Stock
("Senior Securities"), in each case as to distribution of assets upon
liquidation, dissolution or winding up of the Corporation, whether voluntary or
involuntary.

                                    ARTICLE 4
                                    Dividends

         (a)   (i)   The Holder shall be entitled to receive, when, as and if
declared by the Board of Directors, out of funds legally available for the
payment of dividends, dividends (subject to Article 4(a)(ii) hereof) at the rate
of fifteen percent (15%) per annum (computed on the basis of a 360-day year)
(the "Dividend Rate") on the Stated Value of each share of Series F Preferred
Stock on and as of the most recent Dividend Payment Due Date (as defined below)
with respect to each Dividend Period (as defined below). Dividends on the Series
F Preferred Stock shall be cumulative from the date of issue, whether or not
declared for any reason, including if such declaration is prohibited under any
outstanding indebtedness or borrowings of the Corporation or any of its
Subsidiaries, or any other contractual provision binding on the Corporation or
any of its Subsidiaries, and whether or not there shall be funds legally
available for the payment thereof.

               (ii)  Each dividend shall be payable in equal quarterly amounts
on each March 31, June 30, September 30 and December 31 of each year or, if any
such date is not a business day, on the next succeeding business day (each, a
"Dividend Payment Due Date"), commencing June 30, 2001, to the holders of record
of shares of the Series F Preferred Stock, as they appear on the stock records
of the Corporation at the close of business on any record date, not more than 60
days or less than 10 days preceding the payment dates thereof, as shall be fixed
by the Board of Directors. For the purposes hereof, "Dividend Period" means the
period commencing on and including April 1, 2001 through June 30, 2001 and
thereafter each quarterly period commencing on the day after the immediately
preceding Dividend Payment Due Date and ending on and including the immediately
subsequent Dividend Payment Due Date. Accrued and unpaid dividends for any past
Dividend Period may be declared and paid at any time, without reference to any
Dividend Payment Due Date, to holders of record on such date, not more than 15
days preceding the payment date thereof, as may be fixed by the Board of
Directors.

               (iii) All dividends shall be paid through the issuance of duly
and validly authorized and issued, fully paid and non-assessable shares of the
Common Stock valued at the Conversion Price in effect as of the Dividend Payment
Due Date.

                                       4

<PAGE>

         (b)   The Holder shall not be entitled to any dividends in excess of
the cumulative dividends, as herein provided, on the Series F Preferred Stock.
Except as provided in this Article 4, no interest, or sum of money in lieu of
interest, shall be payable in respect of any dividend payment or payments on the
Series F Preferred Stock that may be in arrears.

         (c)   So long as any shares of the Series F Preferred Stock are
outstanding, no dividends, except as described in the next succeeding sentence,
shall be declared or paid or set apart for payment on Pari Passu Securities for
any period unless full cumulative dividends required to be paid in shares of the
Common Stock have been or contemporaneously are declared and paid or declared
and a sum sufficient for the payment thereof set apart for such payment on the
Series F Preferred Stock for all Dividend Periods terminating on or prior to the
date of payment of the dividend on such class or series of Pari Passu
Securities. When dividends are not paid in full or a sum sufficient for such
payment is not set apart, as aforesaid, all dividends declared upon shares of
the Series F Preferred Stock and all dividends declared upon any other class or
series of Pari Passu Securities shall be declared ratably in proportion to the
respective amounts of dividends accumulated and unpaid on the Series F Preferred
Stock and accumulated and unpaid on such Pari Passu Securities.

         (d)   So long as any shares of the Series F Preferred Stock are
outstanding, no dividends shall be declared or paid or set apart for payment or
other distribution declared or made upon Junior Securities, nor shall any Junior
Securities be redeemed, purchased or otherwise acquired (other than a
redemption, purchase or other acquisition of shares of Common Stock made for
purposes of an employee incentive or benefit plan (including a stock option
plan) of the Corporation or any subsidiary or any cashless exercise of
warrants), (all such dividends, distributions, redemptions or purchases being
hereinafter referred to as a "Junior Securities Distribution") for any
consideration (or any moneys be paid to or made available for a sinking fund for
the redemption of any shares of any such stock) by the Corporation, directly or
indirectly, unless in each case (i) the full cumulative dividends required to be
paid in shares of the Common Stock on all outstanding shares of the Series F
Preferred Stock and in such form as may be required on any other Pari Passu
Securities shall have been paid or set apart for payment for all past Dividend
Periods with respect to the Series F Preferred Stock and all past dividend
periods with respect to such Pari Passu Securities, and (ii) sufficient funds or
shares of the Common Stock, as the case may be, shall have been paid or set
apart for the payment of the dividend for the current Dividend Period with
respect to the Series F Preferred Stock and the current dividend period with
respect to such Pari Passu Securities.

                                    ARTICLE 5
                             Liquidation Preference

         (a)   If the Corporation shall commence a voluntary case under the
Federal bankruptcy laws or any other applicable Federal or state bankruptcy,
insolvency or similar law, or consent to the entry of an order for relief in an
involuntary case under any law or to the appointment of a receiver, liquidator,
assignee, custodian, trustee, sequestrator (or other similar official) of the
Corporation or of any substantial part of its property, or make an assignment
for the benefit of its creditors, or admit in writing its inability to pay its
debts generally as they become due, or if a decree or order for relief in
respect of the Corporation shall be entered by a court having jurisdiction in
the premises in an involuntary case under the Federal bankruptcy laws or any
other applicable Federal or state bankruptcy, insolvency or similar law
resulting in the appointment of a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or other similar official) of the Corporation or of any
substantial part of its property, or ordering the winding up or liquidation of
its affairs, and any such decree or order shall be unstayed and in effect for a
period of 30 consecutive days and, on account of any such event, the Corporation
shall liquidate, dissolve or wind up, or if the Corporation shall otherwise
liquidate, dissolve or wind up (each such event being considered a "Liquidation
Event"), no distribution shall be made to the holders of any shares of Common
Stock or Junior Securities of the Corporation upon liquidation, dissolution or
winding-up unless prior thereto, the holders of shares of Series F Preferred
Stock, subject to this Article 5, shall have received the Liquidation Preference
(as defined in Article 5(b)) with respect to each share. If upon the occurrence
of a Liquidation Event, the assets and funds legally available for distribution
among the holders of the Series F Preferred Stock and holders of Pari Passu
Securities shall be insufficient to permit the payment to such holders of the
preferential amounts payable thereon, then the entire

                                       5

<PAGE>

assets and funds of the Corporation legally available for distribution to the
Series F Preferred Stock and the Pari Passu Securities shall be distributed
ratably among such shares in proportion to the ratio that the liquidation
preference payable on each such share bears to the aggregate liquidation
preference payable on all such shares.

         (b)   For purposes hereof, the "Liquidation Preference" with respect to
a share of the Series F Preferred Stock shall mean an amount equal to the sum of
(i) the Stated Value thereof plus (ii) the aggregate of all accrued and unpaid
dividends on such share of Series F Preferred Stock until the most recent
Dividend Payment Due Date; provided that, in the event of an actual liquidation,
dissolution or winding up of the Corporation, the amount referred to in clause
(ii) above shall be calculated by including accrued and unpaid dividends to the
actual date of such liquidation, dissolution or winding up, rather than the
Dividend Payment Due Date referred to above.

                                    ARTICLE 6
                   Conversion of Preferred Stock; Redemption

Section 6.1    Conversion; Conversion Price.
               ----------------------------

         (a)   At the option of the Holder, the shares of Series F Preferred
Stock may be converted, either in whole or in part (in whole shares of Series F
Preferred Stock), into Common Shares (calculated as to each such conversion to
the nearest 1/100th of a share of Common Stock), at any time, and from time to
time following the date of the First Closing (as defined in the Securities
Purchase Agreement) (the "Issue Date") at the following Conversion Price per
share of Common Stock: (i) during the period beginning on the Issue Date and
ending on the first anniversary of the Issue Date (the "First Anniversary"), the
Conversion Price shall equal $0.54; (ii) during the period from and after the
First Anniversary and ending on the second anniversary of the Issue Date (the
"Second Anniversary"), the Conversion Price shall equal the Market Price on the
First Anniversary; and (iii) at all times from and after the Second Anniversary,
the Conversion Price shall equal the Market Price on the Second Anniversary. The
amount of accrued and unpaid dividends as of the Conversion Date shall be paid
in Common Stock valued at the Market Price on the Conversion Date.

         (b)   The number of shares of Common Stock due upon conversion of
Series F Preferred Stock shall be (i) the number of shares of Series F Preferred
Stock to be converted, multiplied by (ii) the Stated Value and divided by (iii)
the applicable Conversion Price. Notwithstanding any other provision herein, the
Conversion Price shall not be less than the par value of the Common Stock.

         (c)   If the number of shares of Common Stock outstanding at any time
after the date hereof is increased by a stock dividend payable in shares of
Common Stock or by a subdivision or split-up of shares of Common Stock, then, on
the date such payment is made or such change is effective, the Conversion Price
shall be appropriately decreased so that the number of shares of Common Stock
issuable on conversion of any shares of Convertible Preferred Stock shall be
increased in proportion to such increase of outstanding shares of Common Stock.

         (d)   If the number of shares of Common Stock outstanding at any time
after the date hereof is decreased by a combination or reverse split of the
outstanding shares of Common Stock, then, on the effective date of such
combination or reverse split, the Conversion Price shall be appropriately
increased so that the number of shares of Common Stock issuable on conversion of
any shares of Convertible Preferred Stock shall be decreased in proportion to
such decrease in outstanding shares of Common Stock.

Section 6.2    Exercise of Conversion Privilege.
               --------------------------------

         (a)   Conversion of the Series F Preferred Stock may be exercised, in
whole or in part, by the Holder by telecopying to the Corporation an executed
and completed notice of conversion in form and substance satisfactory to the
Corporation (the "Conversion Notice"). Each date on which a Conversion Notice is
telecopied to the Corporation in accordance with the provisions of this Section
6.2 shall constitute a Conversion Date. The Corporation shall convert the Series
F Preferred Stock and issue the Common Stock Issued at Conversion to be

                                       6

<PAGE>

issued upon conversion thereof, and all voting and other rights associated with
the beneficial ownership of such Common Stock Issued at Conversion to be issued
upon conversion thereof shall vest with the Holder, effective as of the
Conversion Date. The Conversion Notice also shall state the name or names (with
addresses) of the Persons who are to become the holders of the Common Stock
Issued at Conversion in connection with such conversion. The Holder shall
deliver the shares of Series F Preferred Stock to the Corporation within 30 days
following the date on which the telecopied Conversion Notice has been
transmitted to the Corporation. Upon surrender for conversion, the Series F
Preferred Stock shall be accompanied by a proper assignment thereof to the
Corporation or be endorsed in blank. As promptly as practicable after the
receipt of the Conversion Notice as aforesaid, but in any event not more than
five (5) Business Days after the Corporation's receipt of such Conversion Notice
and the Series F Preferred Stock being converted, the Corporation shall (i)
issue the Common Stock Issued at Conversion in accordance with the provisions of
this Article 6, (ii) cause to be mailed for delivery by overnight courier to the
Holder a certificate or certificate(s) representing the number of Common Shares
to which the Holder is entitled by virtue of such conversion and (iii) remit, in
immediately available funds, payment as provided in Section 6.3 in respect of
any fraction of a Common Share issuable upon such conversion and payment in the
amount of accrued and unpaid dividends as of the Conversion Date. Such
conversion shall be deemed to have been effected on the Conversion Date, and the
rights of the Holder of the Series F Preferred Stock, as such, shall cease and
the Person or Persons in whose name or names the Common Stock Issued at
Conversion shall be issuable shall be deemed to have become the holder or
holders of record of the Common Shares represented thereby and all voting and
other rights associated with the beneficial ownership of such Common Shares
shall at such time vest with such Person or Persons. The Conversion Notice shall
constitute a contract between the Holder and the Corporation, whereby the Holder
shall be deemed to subscribe for the number of Common Shares which it will be
entitled to receive upon such conversion and, in payment and satisfaction of
such subscription (and for any cash adjustment to which it is entitled pursuant
to Section 6.4), to surrender the Series F Preferred Stock and to release the
Corporation from all liability thereon. No cash payment aggregating less than
$1.00 shall be required to be given unless specifically requested by the Holder.

     (b)     If, at any time (i) the Corporation challenges, disputes or denies
the right of the Holder hereof to effect the conversion of the Series F
Preferred Stock into Common Shares or otherwise dishonors or rejects any
Conversion Notice delivered in accordance with this Section 6.2 or (ii) any
third party who is not and has never been an Affiliate of the Holder commences
any lawsuit or proceeding or otherwise asserts any claim before any court or
public or governmental authority which seeks to challenge, deny, enjoin, limit,
modify, delay or dispute the right of the Holder hereof to effect the conversion
of the Series F Preferred Stock into Common Shares, then the Holder shall have
the right, by written notice to the Corporation, to require the Corporation to
promptly redeem, to the extent permitted by law, the Series F Preferred Stock
for cash at a redemption price equal to 100% of the Stated Value thereof
together with all accrued and unpaid dividends thereon (the "Mandatory Purchase
Amount"). Under any of the circumstances set forth above, the Corporation shall
be responsible for the payment of all costs and expenses of the Holder,
including reasonable legal fees and expenses, as and when incurred in disputing
any such action or pursuing its rights hereunder (in addition to any other
rights of the Holder).

     (c)     The Holder shall be entitled to exercise its conversion privilege
notwithstanding the commencement of any case under 11 U.S.C.(S)101 et seq. (the
"Bankruptcy Code"). In the event the Corporation is a debtor under the
Bankruptcy Code, the Corporation hereby waives to the fullest extent permitted
any rights to relief it may have under 11 U.S.C.(S)362 in respect of the
Holder's conversion privilege. The Corporation hereby waives to the fullest
extent permitted any rights to relief it may have under 11 U.S.C. (S)362 in
respect of the conversion of the Series F Preferred Stock. The Corporation
agrees, without cost or expense to the Holder, to take or consent to any and all
action necessary to effectuate relief under 11 U.S.C.(S)362.

Section 6.3  Fractional Shares.
             -----------------

     No fractional Common Shares or scrip representing fractional Common Shares
shall be issued upon conversion of the Series F Preferred Stock. Instead of any
fractional Common Shares which otherwise would be issuable upon conversion of
the Series F Preferred Stock, the Corporation shall pay a cash adjustment in
respect of

                                       7

<PAGE>

such fraction in an amount equal to the same fraction times the Market Price per
Common Share. No cash payment of less than $1.00 shall be required to be given
unless specifically requested by the Holder.

Section 6.4 Reclassification, Consolidation, Merger or Mandatory Share Exchange.
            -------------------------------------------------------------------

         At any time while the Series F Preferred Stock remains outstanding and
any shares thereof have not been converted, in case of any reclassification or
change of Outstanding Common Shares issuable upon conversion of the Series F
Preferred Stock (other than a change in par value, or from par value to no par
value per share, or from no par value per share to par value or as a result of a
subdivision or combination of outstanding securities issuable upon conversion of
the Series F Preferred Stock) or in case of any consolidation, merger or
mandatory share exchange of the Corporation with or into another corporation
(other than a merger or mandatory share exchange with another corporation in
which the Corporation is a continuing corporation and which does not result in
any reclassification or change, other than a change in par value, or from par
value to no par value per share, or from no par value per share to par value, or
as a result of a subdivision or combination of Outstanding Common Shares upon
conversion of the Series F Preferred Stock), or in the case of any sale or
transfer to another corporation of the property of the Corporation as an
entirety or substantially as an entirety, the Corporation will not effect any
such action unless the Corporation, or such successor, resulting or purchasing
corporation, as the case may be, shall, without benefit of any additional
consideration therefor, issue a new preferred stock providing that the Holder
shall have the right to convert such new preferred stock (upon terms and
conditions not less favorable to the Holder than those in effect pursuant to the
Series F Preferred Stock) and to receive upon such exercise, in lieu of each
Common Share theretofore issuable upon conversion of the Series F Preferred
Stock, the kind and amount of shares of stock, other securities, money or
property receivable upon such reclassification, change, consolidation, merger,
mandatory share exchange, sale or transfer by the holder of one Common Share
issuable upon conversion of the Series F Preferred Stock had the Series F
Preferred Stock been converted immediately prior to such reclassification,
change, consolidation, merger, mandatory share exchange or sale or transfer. The
provisions of this Section 6.4 shall similarly apply to successive
reclassifications, changes, consolidations, mergers, mandatory share exchanges
and sales and transfers.

Section 6.5 Optional Redemption and Optional Conversion.
            -------------------------------------------

         At any time from and after the First Anniversary to the extent
permitted by law, the Corporation, upon notice delivered to the Holder as
provided in Section 6.6, may redeem all (but not less than all) of the then
outstanding shares of the Series F Preferred Stock (but only with respect to
such shares as to which the Holder has not theretofore furnished a Conversion
Notice in compliance with Section 6.2), at 100% of the Stated Value, together
with all accrued and unpaid dividends thereon to the date of redemption (the
"Redemption Date"); provided, however, that the Corporation may only redeem the
Series F Preferred Stock under this Section 6.6 if for any period of 20
consecutive Trading Days ending at any time prior to the Redemption Date, the
Current Market Price on each outstanding Trading Day is greater than or equal to
200% of the Conversion Price in effect on each such Trading Day. Except as set
forth in this Section 6.5, the Corporation shall not have the right to prepay or
redeem the Series F Preferred Stock.

Section 6.6 Notice of Redemption.
            --------------------

         Notice of redemption pursuant to Section 6.5 shall be provided by the
Corporation to the Holder in writing (by registered mail or overnight courier at
the Holder's last address appearing in the Corporation's security registry) not
less than 10 nor more than 15 days prior to the Redemption Date, which notice
shall specify the Redemption Date and refer to Section 6.6 (including a
statement of the Market Price per Common Share) and this Section 6.6.

                                       8

<PAGE>

Section 6.7   Surrender of Preferred Stock.
              ----------------------------

         Upon any redemption of the Series F Preferred Stock pursuant to Section
6.5, the Holder shall either deliver the Series F Preferred Stock by hand to the
Corporation at its principal executive offices or surrender the same to the
Corporation at such address by express courier. Payment of the optional
Redemption Price specified in Section 6.5 shall be made by the Corporation to
the Holder against receipt of the Series F Preferred Stock (as provided in this
Section 6.7) by wire transfer of immediately available funds to such account(s)
as the Holder shall specify to the Corporation. If payment of such redemption
price is not made in full by the later of the delivery of the shares of Series F
Preferred Stock or the Redemption Date, the Holder shall again have the right to
convert the Series F Preferred Stock as provided in Article 6 hereof.

Section 6.8   No Sinking Fund. No sinking fund shall be created for the
              ---------------
redemption or purchase of shares of the Series F Preferred Stock

                                    ARTICLE 7
                                  Voting Rights

         The holders of the Series F Preferred Stock have no voting power,
except as otherwise provided by the General Corporation Law of the State of
Delaware ("DGCL"), in this Article 7, and in Article 8 below.

         Notwithstanding the above, the Corporation shall provide each Holder of
Series F Preferred Stock with prior notification of any meeting of the
shareholders (and copies of proxy materials and other information sent to
shareholders). In the event of any taking by the Corporation of a record of its
shareholders for the purpose of determining shareholders who are entitled to
receive payment of any dividend or other distribution, any right to subscribe
for, purchase or otherwise acquire (including by way of merger, consolidation or
recapitalization) any share of any class or any other securities or property, or
to receive any other right, or for the purpose of determining shareholders who
are entitled to vote in connection with any proposed liquidation, dissolution or
winding up of the Corporation, the Corporation shall mail a notice to each
Holder, at least 30 days prior to the consummation of the transaction or event,
whichever is earlier), of the date on which any such action is to be taken for
the purpose of such dividend, distribution, right or other event, and a brief
statement regarding, the amount and character of such dividend, distribution,
right or other event to the extent known at such time.

         To the extent that under the DGCL the vote of the Holders of the Series
F Preferred Stock, voting separately as a class or series as applicable, is
required to authorize a given action of the Corporation, the affirmative vote or
consent of the Holders of at least a majority of the outstanding shares of
Series F Preferred Stock represented at a duly held meeting at which a quorum is
present or by written consent of a majority of the outstanding shares of Series
F Preferred Stock (except as otherwise may be required under the DGCL) shall
constitute the approval of such action by the class. To the extent that under
the DGCL holders of the Series F Preferred Stock are entitled to vote on a
matter with holders of Common Stock, voting together as one class, each share of
Series F Preferred Stock shall be entitled to a number of votes equal to the
number of shares of Common Stock into which it is then convertible using the
record date for the taking of such vote of shareholders as the date as of which
the Conversion Price is calculated. Holders of the Series F Preferred Stock
shall be entitled to notice of all shareholder meetings or written consents (and
copies of proxy materials and other information sent to shareholders) with
respect to which they would be entitled to vote, which notice would be provided
pursuant to the Corporation's bylaws and the DGCL.

         Except as otherwise required by applicable law, subject to receipt of
the approval of the Holders of the Series F Preferred Stock as required herein,
the Corporation may alter or change the rights, preferences or privileges of the
Series F Preferred Stock without the approval of any other class or series of
capital stock of the Corporation.

                                    ARTICLE 8
                              Protective Provisions

                                        9

<PAGE>

         So long as shares of Series F Preferred Stock are outstanding, the
Corporation shall not, without first obtaining the approval (by vote or written
consent, as provided by the DGCL) of the Holders of at least a majority of the
then outstanding shares of Series F Preferred Stock:

         (a)  alter or change the rights, preferences or privileges of the
Series F Preferred Stock;

         (b)  create any Senior Securities or alter or change the rights,
preferences or privileges of any Senior Securities so as to affect adversely the
Series F Preferred Stock;

         (c)  increase the authorized number of shares of Series F Preferred
Stock; or

         (d)  do any act or thing not authorized or contemplated by this
Certificate of Designation which would result in taxation of the holders of
shares of the Series F Preferred Stock under Section 305 of the Internal Revenue
Code of 1986, as amended (or any comparable provision of the Internal Revenue
Code as hereafter from time to time amended).

              In the event Holders of least a majority of the then outstanding
shares of Series F Preferred Stock give their approval to allow the Corporation
to alter or change the rights, preferences or privileges of the shares of Series
F Preferred Stock, pursuant to subsection (a) above, so as to affect the Series
F Preferred Stock, then the Corporation will deliver notice of such approved
change to the Holders of the Series F Preferred Stock that did not approve such
alteration or change (the "Dissenting Holders") and the Dissenting Holders shall
have the right for a period of 30 days to convert pursuant to the terms of this
Certificate of Designation as they exist prior to such alteration or change or
continue to hold their shares of Series F Preferred Stock.

                                    ARTICLE 9
                                  Miscellaneous

Section 9.1   Loss, Theft, Destruction of Preferred Stock Certificates.
              --------------------------------------------------------

         Upon receipt of evidence satisfactory to the Corporation of the loss,
theft, destruction or mutilation of shares of Series F Preferred Stock and, in
the case of any such loss, theft or destruction, upon receipt of indemnity or
security reasonably satisfactory to the Corporation, or, in the case of any such
mutilation, upon surrender and cancellation of the Series F Preferred Stock, the
Corporation shall make, issue and deliver, in lieu of such lost, stolen,
destroyed or mutilated shares of Series F Preferred Stock, new shares of Series
F Preferred Stock of like tenor. The Series F Preferred Stock shall be held and
owned upon the express condition that the provisions of this Section 9.1 are
exclusive with respect to the replacement of mutilated, destroyed, lost or
stolen shares of Series F Preferred Stock and shall preclude any and all other
rights and remedies notwithstanding any law or statute existing or hereafter
enacted to the contrary with respect to the replacement of negotiable
instruments or other securities without the surrender thereof.

Section 9.2   Who Deemed Absolute Owner.
              -------------------------

         The Corporation may deem the Person in whose name the Series F
Preferred Stock shall be registered upon the registry books of the Corporation
to be, and may treat it as, the absolute owner of the Series F Preferred Stock
for the purpose of receiving payment of dividends on the Series F Preferred
Stock, for the conversion of the Series F Preferred Stock and for all other
purposes, and the Corporation shall not be affected by any notice to the
contrary. All such payments and such conversion shall be valid and effectual to
satisfy and discharge the liability upon the Series F Preferred Stock to the
extent of the sum or sums so paid or the conversion so made.

Section 9.3   Register.
              --------

                                       10

<PAGE>

         The Corporation shall keep at its principal office a register in which
the Corporation shall provide for the registration of the Series F Preferred
Stock. Upon any transfer of the Series F Preferred Stock in accordance with the
provisions hereof, the Corporation shall register such transfer on the Series F
Preferred Stock register.

         The Corporation may deem the person in whose name the Series F
Preferred Stock shall be registered upon the registry books of the Corporation
to be, and may treat it as, the absolute owner of the Series F Preferred Stock
for the purpose of receiving payment of dividends on the Series F Preferred
Stock, for the conversion of the Series F Preferred Stock and for all other
purposes, and the Corporation shall not be affected by any notice to the
contrary. All such payments and such conversions shall be valid and effective to
satisfy and discharge the liability upon the Series F Preferred Stock to the
extent of the sum or sums so paid or the conversion or conversions so made.

Section 9.4    Withholding.
               -----------

         To the extent required by applicable law, the Corporation may withhold
amounts for or on account of any taxes imposed or levied by or on behalf of any
taxing authority in the United States having jurisdiction over the Corporation
from any payments made pursuant to the Series F Preferred Stock.

Section 9.5    Headings.
               --------

         The headings of the Articles and Sections of this Certificate of
Designation are inserted for convenience only and do not constitute a part of
this Certificate of Designation.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       11

<PAGE>

         IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Designation, Preferences and Rights to be signed by its duly authorized officers
on March 21, 2001.

                                    AMERICAN TELESOURCE INTERNATIONAL, INC.

                                    By: /s/ H. Douglas Saathoff
                                        -----------------------
                                        H. Douglas Saathoff, Chief Financial
                                        Officer,
                                        Senior Executive Vice President and
                                        Treasurer

                                    By: /s/ Raymond G. Romero
                                        ---------------------
                                        Raymond G. Romero, Vice President,
                                        General Counsel and Corporate Secretary

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