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                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549






                                    FORM 8-K
                                 CURRENT REPORT






     Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934






         DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) - MAY 29, 1998







                              MINNESOTA POWER, INC.

                    Formerly Minnesota Power & Light Company

                             A Minnesota Corporation
                           Commission File No. 1-3548
                   IRS Employer Identification No. 41-0418150
                             30 West Superior Street
                             Duluth, Minnesota 55802
                           Telephone - (218) 722-2641








                                                        
ITEM 5.  OTHER EVENTS.

Reference is made to the Annual Report on Form 10-K for the year ended  December
31, 1997 (1997 Form 10-K) of Minnesota Power,  Inc.,  formerly Minnesota Power &
Light Company,  (Minnesota  Power or Company) for background  information on the
following update. The cited reference is to the Company's 1997 Form 10-K.


Ref. Page 5 - Table - Status of Minnesota Power Purchased Power Contracts

On  May  29,  1998  Minnesota  Power  signed  a  new  power  purchase  agreement
(Agreement) with Square Butte Electric  Cooperative  (Square Butte). The term of
the  Agreement  is May 29,  1998  through  January 1, 2027.  It  supersedes  the
previous  agreement  entered into in 1977,  the initial term of which would have
expired in 2007. Under the Agreement,  the Company has purchased  entitlement to
capacity and energy  initially  equivalent to about 71 percent of Square Butte's
generating  capability of 455 megawatts.  Upon a two-year  advance notice to 
Square Butte and the Company, beginning in 2006 Minnkota Power Cooperative, 
Inc., operator of the Square Butte generating unit, has the option to reduce the
Company's  entitlement by approximately 5 percent annually, to a minimum of 50
percent. The Company's cost of power under the Agreement,  similar to the
previous agreement, is its pro rata share of Square Butte's costs based upon the
Company's  capacity entitlement in effect.  Consistent with the previous 
agreement, the Company will account  for the costs  under the  Agreement  as 
purchased  power  expense  for ratemaking  purposes.  Under the Agreement,  the 
Company is not  unconditionally obligated,  as it was under the previous  
agreement,  to pay to Square Butte all (with no proration) of Square  Butte's 
costs if not paid by Square Butte when due. The Company's payment obligation 
under the Agreement will be suspended if Square Butte fails to deliver any 
power, whether produced or purchased by Square Butte, for a period of one year. 
The Agreement was reached in  conjunction  with Square Butte's  (i)  buy-out of 
its  leveraged  lease  financing  arrangement  and (ii) simultaneous debt 
refinancing.


ITEM 7.  FINANCIAL STATEMENTS AND EXHIBITS.

      FINANCIAL STATEMENTS

             None



      EXHIBITS

             4(a)   -   Articles of Incorporation, as amended and restated as
                        of May 27, 1998

             4(b)   -   Bylaws, as amended effective May 27, 1998


                                      -1-




                                   SIGNATURES


Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.





                                                    Minnesota Power, Inc.
                                             -----------------------------------
                                                        (Registrant)            





June 3, 1998                                            D. G. Gartzke
                                             -----------------------------------
                                                        D. G. Gartzke
                                               Senior Vice President - Finance
                                                 and Chief Financial Officer


                                      -2-





                                      INDEX


      EXHIBITS

        4(a)  -    Articles of Incorporation, as amended and restated as
                   of May 27, 1998

        4(b)  -    Bylaws, as amended effective May 27, 1998






                            ARTICLES OF INCORPORATION
                                       OF
                              MINNESOTA POWER, INC.
                                       AS
                              AMENDED AND RESTATED
                               AS OF MAY 27, 1998

                                    ARTICLE I

        The name of this Corporation shall be MINNESOTA POWER, INC.

        This Corporation has general business  purposes and shall have unlimited
power to  engage  in and so do any  lawful  act  concerning  any and all  lawful
business.

        The  principal  place  for  the  transaction  of the  business  of  this
Corporation shall be at the City of Duluth, St. Louis County,  Minnesota and the
registered  office  address  of this  Corporation  is 30 West  Superior  Street,
Duluth, Minnesota 55802.

                                   ARTICLE II

        The time of the  commencement of this  Corporation  shall be January 29,
1906 and the period of its duration shall be perpetual.

                                   ARTICLE III

         1. The total  authorized  number of  shares  of  capital  stock of this
Corporation shall be 133,616,000 shares of which 116,000 shares of the par value
of $100 each shall be 5% Preferred  Stock,  1,000,000  shares  without par value
shall be Serial  Preferred  Stock,  2,500,000  shares without par value shall be
Serial  Preferred  Stock A and  130,000,000  shares  without  par value shall be
Common Stock.  Any of the aforesaid  shares may be issued and disposed of by the
Board of Directors at any time and from time to time,  to such  persons,  firms,
corporations or associations,  upon such terms and for such consideration as the
Board of Directors may, in its discretion,  determine,  except as may be limited
by law or by these Articles of Incorporation.

         2. (a) The Board of Directors is hereby authorized to issue at any time
and from time to time  such  number of  shares,  not to exceed in the  aggregate
1,000,000 shares, of one or more series of the Serial Preferred Stock, with such
dividend  rate or rates and  redemption  price or prices and bearing such series
designations  as may be fixed by the Board of Directors and stated and expressed
in the resolution or  resolutions  establishing  the  respective  series of such
stock,  the  authority  for  which is  hereby  expressly  vested in the Board of
Directors.

            (b) The Board of  Directors is hereby  authorized  to issue at any 
time and from time to time such number of shares, not to exceed in the aggregate
2,500,000  shares of one or more  series of the Serial  Preferred  Stock A, with
such dividend rate or rates, terms and conditions on which shares of such series
may be  redeemed  and the  redemption  price or prices,  preferential  amount or
amounts  payable  on shares of such  series  in the  event of the  voluntary  or
involuntary liquidation of the Corporation, terms and conditions on which shares
of such  series may be  converted,  if shares are issued with the  privilege  of
conversion,  and  sinking  fund or purchase  fund  provisions,  if any,  for the
redemption or purchase of shares and bearing such series  designations as may be
fixed by the Board of 

                                       1


Directors and stated and expressed in the resolution or resolutions establishing
the respective series of such stock, the authority for which is hereby expressly
vested in the Board of Directors.

            (c) The Serial  Preferred Stock and the Serial Preferred Stock A are
hereinafter sometimes referred to collectively as the "Serial Stocks".

         3. The 5% Preferred Stock and the Serial Stocks,  pari passu,  shall be
entitled, but only when and as declared by the Board of Directors,  out of funds
legally  available  for the payment of  dividends,  in  preference to the Common
Stock,  to  dividends at the rate of five per centum (5%) per annum as to the 5%
Preferred  Stock  and,  as to the  Serial  Stocks at the rate as to each  series
thereof fixed by resolution of the Board of Directors  establishing  such series
of Serial Stocks, respectively, payable, as to the 5% Preferred Stock, quarterly
on January 1, April 1, July 1 and October 1 of each year,  or  otherwise  as the
Board of Directors may  determine,  and payable,  as to any series of the Serial
Stocks, on such dates as the Board of Directors may determine prior to the issue
of any  shares of such  series,  to  shareholders  of  record as of a date,  not
exceeding  thirty  (30) days and not less  than ten (10)  days,  preceding  such
dividend  payment dates, to be fixed by the Board of Directors;  such dividends,
as to the 5%  Preferred  Stock,  to be  cumulative  from July 1, 1945,  and such
dividends,  as to each series of the Serial  Stocks,  to be cumulative  from the
first day of the  current  dividend  period  within  which such shares of Serial
Stocks are issued. Neither the holders of the 5% Preferred Stock nor the holders
of the Serial Stocks shall be entitled to receive any  dividends  thereon out of
profits other than dividends referred to in this paragraph.

         4. The 5% Preferred Stock and the Serial Stocks, pari passu, shall also
have a  preference  over the Common  Stock  upon any  voluntary  or  involuntary
liquidation,  dissolution  or  winding  up  of  the  Corporation,  or  upon  any
distribution of assets, other than profits, until there shall have been paid, by
dividends or distribution,  on the 5% Preferred Stock the full par value thereof
and five per centum (5%) per annum thereon from July 1, 1945, and on each series
of the  Serial  Preferred  Stock One  Hundred  Dollars  ($100) per share plus an
amount  equal to  dividends  upon the shares of such series at the rate or rates
fixed by the Board of  Directors  from the date or dates on which  dividends  on
such shares became cumulative and on each series of Serial Preferred Stock A, as
stated and expressed in the resolution or resolutions providing for the issue of
each such series  adopted by the Board of  Directors.  Neither the 5%  Preferred
Stock nor the Serial Preferred Stock shall receive any share in any voluntary or
involuntary  liquidation,  dissolution or winding up of this Corporation,  or in
any  distribution of assets in excess of the amounts stated in this paragraph or
in the case of the Serial  Preferred Stock A, in excess of the amounts stated in
the  resolution  or  resolutions  providing  for the  issue of  shares of Serial
Preferred Stock A.

         5. For the purpose of this  (fifth)  paragraph  of this  Article III of
these  Articles:  (i) the term "Common  Stock  Equity" shall mean the sum of the
stated capital of the outstanding Common Stock,  premium on Common Stock and the
earned surplus and the capital and paid-in surplus of this Corporation,  whether
or not available for the payment of dividends on the Common Stock; (ii) the term
"total  capitalization"  shall mean the sum of the stated capital  applicable to
the outstanding stock of all classes of this Corporation, the earned surplus and
the capital and paid-in surplus of the Corporation, whether or not available for
the payment of dividends on the Common Stock of the Corporation,  any premium on
Capital Stock of the  Corporation  and the principal  amount of all  outstanding
debts of the Corporation  maturing more than twelve months after the date of the
determination  of the total  capitalization;  and (iii) the term  "dividends  on
Common Stock" shall embrace  dividends and  distributions on Common Stock (other
than dividends or distributions payable only in shares of Common Stock), and the
purchase or other acquisitions for value of any Common Stock of this Corporation
or other stock, if any, subordinate to its 5% Preferred Stock and Serial Stocks.
Subject  to the  rights of the  holders of the 5%  Preferred  Stock,  and Serial
Stocks and subordinate thereto (and subject and subordinate to the rights of any
class of stock hereafter  authorized),  the Common Stock alone shall receive all
dividends and shares in  liquidation,  dissolution,  winding up or  distribution
other than those to be paid on shares of 5% Preferred  Stock and Serial  Stocks,
as hereinbefore provided. So long as any shares of 5% Preferred Stock, or Serial
Stocks are outstanding,  this Corporation shall not declare or pay any dividends
on the Common Stock, except as follows:

             (1) If and so long as the  Common  Stock  Equity  at the end of the
calendar  month  immediately  preceding  the date on which a dividend  on Common
Stock is declared is, or as a result of such dividend  would  become,  less than
20% of total capitalization, the Corporation shall not declare such dividends in
an amount  which,  

                                       2


together  with all other  dividends  on Common  Stock  declared  within the year
ending with and including the date of such dividend declaration,  exceeds 50% of
the net income of the  Corporation  available  for dividends on the Common Stock
for the twelve full  calendar  months  immediately  preceding the month in which
such dividends are declared; and

             (2) If and so long as the  Common  Stock  Equity  at the end of the
calendar  month  immediately  preceding  the date on which a dividend  on Common
Stock is declared is, or as a result of such dividend  would  become,  less than
25% but not less than 20% of total  capitalization,  the  Corporation  shall not
declare  dividends on the Common  Stock in an amount  which,  together  with all
other  dividends  on Common  Stock  declared  within  the year  ending  with and
including the date of such dividend  declaration,  exceeds 75% of the net income
of the  Corporation  available  for dividends on the Common Stock for the twelve
full calendar months immediately preceding the month in which such dividends are
declared; and

             (3) At any time  when the  Common  Stock  Equity  is 25% or more of
total  capitalization the Corporation may not declare dividends on shares of the
Common  Stock  which would  reduce the Common  Stock  Equity  below 25% of total
capitalization,  except to the  extent  provided  in  subparagraphs  (1) and (2)
above.

         6. This Corporation,  by a majority vote of its Board of Directors, may
at any time  redeem  all of said 5%  Preferred  Stock  or may from  time to time
redeem any part  thereof,  by paying in cash a  redemption  price of $105.00 per
share,  if  redeemed  before  July 1, 1946;  $l04.50 per share if redeemed on or
after July 1, 1946 and before July 1, 1947;  $104.00 per share if redeemed on or
after July 1, 1947 and before July 1, 1948;  $103.50 per share if redeemed on or
after July 1, 1948 and before July 1, 1949;  $103.00 per share if redeemed on or
after July 1, 1949 and before July 1, 1950; and $102.50 per share if redeemed on
or after July 1, 1950, plus unpaid accumulated dividends, if any, to the date of
redemption.

         7. This Corporation,  by a majority vote of its Board of Directors, may
at any time redeem all of the Serial Preferred Stock or Serial Preferred Stock A
or may from time to time redeem any series or any part of any series thereof, by
paying in cash the  redemption  price or prices  fixed for the  series of Serial
Preferred  Stock or Serial  Preferred  Stock A to be redeemed by  resolution  or
resolutions  of the Board of Directors  establishing  such  series,  plus unpaid
accumulated dividends, if any, to the date of redemption.

         8. Notice of the  intention  of this  Corporation  to redeem all or any
part of the 5% Preferred Stock or all or any part of the Serial  Preferred Stock
or all or any  part of the  Serial  Preferred  Stock A shall be  mailed  30 days
before the date of redemption to each holder of record of preferred  stock to be
redeemed, at his post office address as shown by this Corporation's records; but
no failure to mail such notice nor any defect therein nor in the mailing thereof
shall affect the validity of the proceedings for the redemption of any shares of
preferred stock so to be redeemed. At any time after such notice has been mailed
as aforesaid,  this  Corporation may deposit the aggregate  redemption price (or
the portion thereof not already paid in the redemption of such preferred  stock)
with any bank or trust company in the City of New York, New York, or in the City
of Duluth,  Minnesota,  named in such notice, payable to the order of the record
holders  of the  preferred  stock  so to be  redeemed,  on the  endorsement,  if
required, and surrender of their certificates,  and thereupon said holders shall
cease to be  shareholders  with respect to said  shares,  and from and after the
making of such deposit,  said holders shall have no interest in or claim against
this  corporation  with  respect to said shares,  but shall be entitled  only to
receive the said moneys from said bank or trust company,  with interest, if any,
allowed  by such  bank or trust  company  on such  moneys  deposited  as in this
paragraph  provided,  on  endorsement,  if  required,  and  surrender  of  their
certificates as aforesaid.  Any moneys so deposited,  plus interest thereon,  if
any,  and  remaining  unclaimed  at the end of six years from the date fixed for
redemption,  if  thereafter  requested by  resolution of the Board of Directors,
shall be repaid to the  Corporation  and in the event of such  repayment  to the
Corporation  such  holders of record of the shares so redeemed as shall not have
made claim against such moneys prior to such repayment to the Corporation, shall
be deemed to be unsecured  creditors of the  Corporation  for an amount  without
interest  equivalent to the amount  deposited,  plus interest  thereon,  if any,
allowed by such bank or trust  company,  as above stated for the  redemption  of
such  shares and so paid to the  Corporation.  If less than all of the shares of
the 5%  Preferred  Stock or less  than all of the  shares  of any  series of the
Serial  Preferred  Stock are to be redeemed,  the shares to be redeemed shall be
selected by lot, in such manner as the Board of  Directors  of this  Corporation
shall  determine,  by an  independent  bank or trust  company

                                       3



selected for that purpose by the Board of Directors of this Corporation. If less
than all of the shares of any series of the Serial  Preferred  Stock A are to be
redeemed,  the shares to be redeemed  shall be selected by lot, pro rata,  or by
such  other  method,  and in such  manner  as the  Board  of  Directors  of this
Corporation  shall determine.  Nothing herein contained shall limit any right of
this  Corporation  to purchase or  otherwise  acquire any shares of 5% Preferred
Stock or Serial Preferred Stock or Serial Preferred Stock A.

         9. Except as  hereinafter  otherwise  provided,  every  shareholder  of
record or his legal  representative,  at the date fixed for the determination of
persons entitled to vote at the meeting of shareholders, or, if no date has been
fixed,  then at the date of the meeting shall be entitled at such meeting to one
vote for each share standing in his name on the books of the Corporation.  There
shall be no  cumulative  voting by any class,  series or shares of stock of this
Corporation.

         10. If and when dividends  payable on any of the preferred stocks shall
be in default in an amount  equal to four full  quarterly  payments  or more per
share,  and  thereafter  until all dividends on any of the  preferred  stocks in
default  shall  have  been  paid,  the  holders  of all of the then  outstanding
preferred  stocks,  voting as a class,  shall be entitled to elect the  smallest
number of  directors  necessary  to  constitute  a majority of the full Board of
Directors,  and the  holders of the Common  Stock,  voting as a class,  shall be
entitled to elect the remaining directors of the Corporation, anything herein or
in the  Bylaws  to  the  contrary  notwithstanding.  The  terms  of  office,  as
directors,  of all persons who may be directors of the  Corporation  at the time
shall terminate upon the election of a majority of the Board of Directors by the
holders of the preferred stocks,  except that if the holders of the Common Stock
shall not have elected the remaining  directors of the  Corporation,  then,  and
only in that event, the directors of the Corporation,  as constituted just prior
to the  election of a majority of the Board of  Directors  by the holders of the
preferred  stocks,  shall  elect the  remaining  directors  of the  Corporation.
Thereafter, while such default continues and the majority of directors are being
elected by the holders of the preferred stocks, the remaining directors, whether
elected by directors,  as aforesaid,  or whether  originally or later elected by
holders of the Common Stock, shall continue in office until their successors are
elected by holders of the Common Stock and qualify.

        For the purposes of this (tenth)  paragraph of this Article III of these
Articles,  every shareholder of record, or his legal  representative,  of Serial
Preferred Stock A shall be entitled to one vote, for each share, standing in his
name on the books of the Corporation,  with a liquidation  preference of $100 as
established in a resolution or  resolutions of the Board of Directors  providing
for the issue of shares of each series and each share of Serial  Preferred Stock
A with a  liquidation  preference  of less  than  $100  shall  be  afforded  its
proportional, fractional vote.

       For  purposes of this  (tenth)  paragraph,  there shall be no  cumulative
voting by any class, series or shares of stock of this Corporation.

       11. If and when all  dividends  then in default on the  preferred  stocks
then  outstanding  shall be paid (and such dividends  shall be declared and paid
out of any funds legally available therefore as soon as reasonably practicable),
the holders of the preferred  stocks shall be divested of any special right with
respect to the election of directors  and the voting power of the holders of the
preferred  stocks and the holders of the Common Stock shall revert to the status
existing before the first dividend payment date on which dividends on any of the
preferred  stocks  were  not  paid in  full;  but  always  subject  to the  same
provisions  for vesting  such  special  rights in the  holders of the  preferred
stocks in case of further like default or defaults on  dividends  thereon.  Upon
the termination of any such special voting right upon payment of all accumulated
and  defaulted  dividends on the  preferred  stocks,  the terms of office of all
persons who may have been elected  directors of the  Corporation  by vote of the
holders of the preferred  stocks,  as a class,  pursuant to such special  voting
right shall forthwith terminate,  and the resulting vacancies shall be filled by
a vote of the majority of the remaining directors.

         12. In case of any vacancy in the office of a director  occurring among
the directors elected by the holders of the preferred stocks, voting as a class,
the  remaining  directors  elected by the holders of the  preferred  stocks,  by
affirmative vote of a majority thereof,  or the remaining director so elected if
there be but one,  may elect a successor  or  successors  to hold office for the
unexpired  terms of the  director or  directors  whose place or places  shall be
vacant.  Likewise in case of any  vacancy in the office of a director  occurring
among the  directors  not elected by the holders of the  preferred  stocks,  the
remaining  directors  not elected by the  holders of the  preferred

                                       4


stocks, by affirmative vote of a majority thereof,  or the remaining director so
elected if there be but one, may elect a successor or  successors to hold office
for the unexpired term of the director or directors  whose place or places shall
be vacant.

         13.  Whenever  the right  shall  have  accrued  to the  holders  of the
preferred  stocks to elect  directors,  voting as a class,  then upon request in
writing signed by any holder of preferred  stock entitled to vote,  delivered by
registered mail or in person to the president, a vice president or secretary, it
shall be the duty of such  officer  forthwith to cause notice to be given to the
shareholders  entitled  to vote  of a  meeting  to be held at such  time as such
officer may fix, not less than ten nor more than sixty days after the receipt of
such  request,  for  the  purpose  of  elected  directors.  At all  meetings  of
shareholders held for the purpose of electing  directors during such time as the
holders of the preferred stocks shall have the special right, voting as a class,
to elect  directors,  the  presence  in person or by proxy of the  holders  of a
majority of the  outstanding  Common  Stock shall be  required to  constitute  a
quorum of such class for the election of  directors,  and the presence in person
or by proxy of the holders of a majority  of the  outstanding  preferred  stocks
shall be  required  to  constitute  a quorum  of the  preferred  stocks  for the
election of directors;  provided,  however,  that the absence of a quorum of the
holders of Common Stock or of preferred stocks shall not prevent the election at
any such  meeting or  adjournment  thereof of  directors  by such other class or
classes if the  necessary  quorum of the holders of stock of such other class or
classes  is present  in person or by proxy at such  meeting  or any  adjournment
thereof;  and provided  further that in the event a quorum of the holders of the
Common Stock is present but a quorum of the holders of the  preferred  stocks is
not present,  then the election of the  directors  elected by the holders of the
Common  Stock shall not become  effective  and the  directors  so elected by the
holders of the Common Stock shall not assume their  offices and duties until the
holders of the preferred stocks,  with a quorum present,  shall have elected the
directors they shall be entitled to elect; and provided further,  however,  that
in the  absence of a quorum of the  holders  of either  the Common  Stock or the
preferred stocks, a majority of the holders of the stock of the class or classes
who are present in person or by proxy  shall have power to adjourn the  election
of the  directors  to be  elected  by such  class or  classes  from time to time
without notice other than announcement at the meeting until the requisite amount
of holders of such class or classes shall be present in person or by proxy,  but
such adjournment  shall not be made to a date beyond the date for the mailing of
notice of the next annual meeting of the  Corporation or special meeting in lieu
thereof.

         For the purpose of  determining  a quorum of the preferred  stocks,  as
required by this  (thirteenth)  paragraph of this Article III of these Articles,
each share of Serial  Preferred  Stock A with a  liquidation  preference of $100
shall be counted as a whole share;  and each share of Serial  Preferred  Stock A
with  a  liquidation  preference  of  less  than  $100  shall  be  counted  as a
proportional, fractional share.

         For the  purpose of any vote of the  preferred  stocks,  as required by
this (thirteenth) paragraph of this Article III of these Articles, each share of
outstanding Serial Preferred Stock A shall be entitled to the same vote provided
for in the tenth paragraph of this Article III of these Articles.

         14. So long as any  shares of the 5%  Preferred  Stock or any shares of
any series of the Serial  Preferred  Stock or the Serial  Preferred  Stock A are
outstanding,  the Corporation shall not, without the consent (given by vote at a
meeting  called for that  purpose) of the holders of at least  two-thirds of the
total number of shares then  outstanding of each class of preferred  stock to be
affected:

             (a) Create or  authorize  any new stock  ranking  prior to, or on a
parity with, the 5% Preferred Stock or the Serial  Preferred Stock or the Serial
Preferred Stock A as to dividends,  in liquidation,  dissolution,  winding up or
distribution, or create or authorize any security convertible into shares of any
such stock; or

             (b) Amend,  alter, change or repeal any of the express terms of the
5% Preferred Stock or the Serial Preferred Stock or the Serial Preferred Stock A
then outstanding in a manner  substantially  prejudicial to the holders thereof;
or

             (c) Amend,  alter, change or repeal any of the express terms of the
Serial  Preferred  Stock A then  outstanding so as to materially  alter any such
express terms.

                                       5


         15. So long as any  shares of the 5%  Preferred  Stock or any shares of
any series of the Serial  Preferred  Stock or the Serial  Preferred  Stock A are
outstanding,  the Corporation shall not, without the consent (given by vote at a
meeting  called for that  purpose)  of the  holders  of a majority  of the total
number of shares of the preferred stocks then outstanding:

             (a)  Merge or  consolidate  with or into any other  corporation  or
corporations,  unless such merger or consolidation, or the exchange, issuance or
assumption of all securities to be issued or assumed in connection with any such
merger or consolidation,  shall have been ordered, approved, or permitted by the
Securities  and Exchange  Commission  under the provisions of the Public Utility
Holding Company Act of 1935 or by any successor  commission or other  regulatory
authority of the United States of America having jurisdiction over the exchange,
issuance or assumption of  securities in connection  with such merger;  provided
that the  provisions  of this  clause (a) shall not apply to a purchase or other
acquisition by the Corporation of franchises or assets of another corporation in
any manner which does not involve a merger or consolidation; or

             (b)  Create or assume  any  unsecured  notes,  debentures  or other
securities representing unsecured indebtedness maturing more than one year after
the date of their creation or assumption (1) unless and until the  Corporation's
net  earnings  available  for the  payment of  interest,  for a period of twelve
consecutive  calendar  months  ending  not more than three  months  prior to the
beginning of the calendar months in which such indebtedness  shall be created or
assumed,  shall  have been at least  twice the  annual  interest  charges on all
outstanding   bonds,   notes,   debentures  or  other  securities   representing
indebtedness created or assumed by the Corporation and payable one or more years
from the date of such creation or assumption,  including the interest charges on
the indebtedness so to be created or assumed;  provided that the requirements of
this paragraph (b) shall not apply to indebtedness  created or assumed to refund
by  payment,   replacement,   retirement,   acquisition,   purchase,   exchange,
redemption,  surrender  or  otherwise  any  bonds,  notes,  debentures  or other
securities representing  indebtedness  outstanding at any time and maturing more
than  one year  after  the  date of  creation  or  assumption  of such  refunded
indebtedness,  or, (2) in the event  after the  creation or  assumption  of such
notes,  debentures  or  other  securities  representing  unsecured  indebtedness
maturing more than one year after the date of their creation or assumption,  and
the application of the proceeds thereof,  the principal amount of all securities
representing  indebtedness  maturing  more than one year after the date of their
creation  or  assumption,   but  excluding  any  secured   indebtedness  of  the
Corporation, shall thereupon in the aggregate exceed 25% of the sum of

                  (i)  the principal amount of secured indebtedness of the 
                  Corporation, plus

                  (ii) the amount of Capital Stock of the  Corporation as stated
                  on its books of account, plus

                  (iii) the amount of the surplus of the  Corporation  as stated
                  on its books of account; or

           (c)  Issue,  sell or  otherwise  dispose  of any  shares  of the then
authorized  but  unissued 5% Preferred  Stock or the Serial  Stocks or any other
stock ranking on a parity with or having a priority over said  preferred  stocks
in respect to dividends or of payments in liquidation (including reissued shares
of said preferred  stocks or such other stock) (1) unless for a period of twelve
consecutive  calendar  months  ending  not more than three  months  prior to the
beginning  of the calendar  month in which any such shares shall be issued,  the
Corporation's  net  earnings  available  for the  payment of  interest  for said
period, shall have been at least one and one half (1 1/2) times the sum of

                  (i) the  interest  charges  for one year on all bonds,  notes,
                  debentures or other securities representing indebtedness which
                  shall then be outstanding (including any indebtedness proposed
                  to be created  in  connection  with the  issue,  sale or other
                  disposition of such shares, but not including any indebtedness
                  proposed to be retired in connection with such issue,  sale or
                  other  disposition or indebtedness  held by or for the account
                  of the Corporation); and

                  (ii) an amount equal to all annual  dividend  requirements  on
                  all  outstanding  shares of the 5%  Preferred  Stock,  and the
                  Serial Stocks and all other stock, if any, ranking on a parity
                  with or having priority over said preferred  stocks in respect
                  of  dividends  or of payments in  liquidation,  

                                       6


                  including  the shares proposed to be issued, but not including
                  any  shares proposed to  be retired in  connection with such 
                  issue,  sale or other disposition;

or (2) if such issue,  sale or disposition  would bring the aggregate of the par
value of the 5% Preferred  Stock and the stated  value of the Serial  Stocks and
the par or  stated  value of any  stock  ranking  on a parity  with or  having a
priority  over said  preferred  stocks in respect of dividends or of payments in
liquidation to an amount in excess of the sum of

                  (i) the  aggregate  of the par  value of all then  outstanding
                  stock  having a par  value  and  which is  junior  to the said
                  preferred stocks plus the aggregate of the stated value of all
                  then  outstanding  stock without par value and which is junior
                  to the said preferred stocks; and

                  (ii) the amount of the Corporation's surplus as then stated on
                  the Corporation's books.

         16. No holder of any stock in this Corporation shall be entitled to any
preemptive right to purchase any stock or other securities of this Corporation.

         17. The consideration received by the Corporation from the issuance and
sale of any additional shares of Common Stock without par value shall be entered
in the capital stock account of the Corporation. The foregoing provision of this
paragraph  shall not be changed  unless  the  holders of record of not less than
two-thirds (2/3) of the number of shares of Common Stock then outstanding  shall
consent  thereto in writing or by voting  therefor  in person or by proxy at the
meeting of shareholders at which any such change is considered.

         18. In order to  acquire  funds with  which to make any  redemption  of
stock herein  authorized,  this  Corporation  may, subject to the limitations or
requirements herein provided,  issue and sell Common Stock or preferred stock or
any class then  authorized  but  unissued,  bonds,  notes or other  evidences of
indebtedness,  convertible  or not into Common Stock or stock of any other class
then authorized but unissued.

                                   ARTICLE IV

         There shall be no limitation on the amount of indebtedness or liability
to which this Corporation shall at any time be subject.

                                    ARTICLE V

         The names and places of residence of the persons  holding office as the
duly elected  Directors of this  corporation at the time of this  restatement of
its Articles of Incorporation are as follows:

        Kathleen A. Brekken                Cannon Falls, Minnesota
        Merrill K. Cragun                  Brainerd, Minnesota
        Dennis E. Evans                    Minneapolis, Minnesota
        Peter J. Johnson                   Virginia, Minnesota
        George L. Mayer                    Essex, Connecticut
        Paula F. McQueen                   Punta Gorda, Florida
        Jack I. Rajala                     Grand Rapids, Minnesota
        Edwin L. Russell                   Duluth, Minnesota
        Arend J. Sandbulte                 Duluth, Minnesota
        Nick Smith                         Duluth, Minnesota
        Bruce W. Stender                   Duluth, Minnesota
        Donald C. Wegmiller                Maple Grove, Minnesota

                                       7



                                   ARTICLE VI

         Subject to the provisions of Article III hereof,  (1) the management of
this  Corporation  shall be vested in a Board of Directors,  the number of which
shall be fixed from time to time exclusively by the Board of Directors  pursuant
to a resolution adopted by affirmative vote of the majority of the Disinterested
Directors,  as defined in Article VII,  but the number of Directors  shall be no
less than nine (9) and no greater than fifteen (15),  but no decrease shall have
the effect of shortening the term of any incumbent Director.  Directors shall be
elected  annually by the  stockholders  by ballot by a majority  vote of all the
outstanding  stock  entitled to vote, to hold office until their  successors are
elected and qualify;  (2) subject to any rights then existing by applicable  law
with respect to cumulative voting, the stockholders at any meeting by a majority
vote of all the outstanding stock entitled to vote, at an election of directors,
may remove any director  and fill the vacancy;  (3) subject to the rights of the
holders of any class or series of the then outstanding  shares of voting capital
stock  of this  Corporation,  newly  created  directorships  resulting  from any
increase in the authorized  number of Directors or any vacancies in the Board of
Directors  resulting  from  death,  resignation,  retirement,  disqualification,
removal from office or other cause may be filled only by the  shareholders or by
the  affirmative  vote of a  majority  of the  Disinterested  Directors  then in
office, although less than a quorum.  Directors so elected shall hold office for
a term  expiring at the time of the next annual  election  of  Directors  by the
stockholders and until their successors are duly elected and qualify.

         The annual  meeting of the  stockholders  of this  Corporation  for the
election of directors and the  transaction of such other  corporate  business as
may properly come before such meeting shall be held at a time and place anywhere
within or without the State of  Minnesota as may be  designated  by the Board of
Directors on the second Tuesday of May in each year after the year 1923,  unless
such day is a legal  holiday,  in which case such  meeting  shall be held on the
next day thereafter which is not a legal holiday or a Sunday.

         The  Board  of  Directors,  as soon as may be  after  the  election  of
directors  in each  year,  shall  elect one of their  number  President  of this
Corporation and shall also elect one or more Vice Presidents,  a Secretary and a
Treasurer  and shall from time to time appoint  such other  officers as they may
deem  proper.  The same  person may hold more than one office,  except  those of
President and Vice President.

        The Board of  Directors  may,  by  unanimous  affirmative  action of the
entire  Board,  designate two or more of their number to constitute an Executive
Committee which, to the extent determined by unanimous affirmative action of the
entire  Board,  shall  have  and  exercise  the  authority  of the  Board in the
management  of the  business  of the  Corporation,  except the power to fill the
vacancies  in the  Board  and the  power to  change  the  membership  of or fill
vacancies in said Committee.  Any such Executive Committee shall act only in the
interval between meetings of the Board, and shall be subject at all times to the
control and direction of the Board.  By unanimous vote, the Board shall have the
power  at any  time to  change  the  membership  of such  Committee  and to fill
vacancies in it. The Executive  Committee may make such rules for the conduct of
its business and may appoint such chairman and  committees  and assistants as it
may deem necessary. A majority of the members of said committee shall constitute
a quorum.

        The  stockholders may alter or amend the Bylaws of this Corporation by a
majority vote of all the outstanding stock of this Corporation  entitled to vote
given at any meeting  duly held as  provided in the Bylaws,  the notice of which
includes notice of the proposed alteration or amendment.  The Board of Directors
may also alter or amend the Bylaws at any time by affirmative vote of a majority
of the  Board of  Directors  given at a duly  convened  meeting  of the Board of
Directors,  the notice of which  includes  notice of the proposed  alteration or
amendment,  subject to the power of the  stockholders  to change or repeal  such
Bylaws;  provided that the Board of Directors  shall not make or alter any Bylaw
fixing their  number,  qualifications,  classifications,  or term of office,  or
changing  the  number  of  shares   required  to   constitute  a  quorum  for  a
stockholders' meeting.

                                       8



                                   ARTICLE VII

         1. For the purposes of this Article VII:

             (a) "Affiliate" or "Associate"  shall have the respective  meanings
given those terms in Rule 12b-2 of the General Rules and  Regulations  under the
Securities Exchange Act of 1934, as in effect on March 1, 1986.

             (b) A person shall be deemed the  "Beneficial  Owner" of any Voting
Shares (as hereinafter defined):

                  (i)  which such person or any of its Affiliates or Associates
                  beneficially  owns,  directly  or indirectly; or

                  (ii) which such person or any of its  Affiliates or Associates
                  has  (A)  the  right  to  acquire   (whether   such  right  is
                  exercisable  immediately  or only  after the  passage of time)
                  pursuant to any  agreement,  arrangement or  understanding  or
                  upon the  exercise  of  conversion  rights,  exchange  rights,
                  warrants or options,  or  otherwise,  or (B) the right to vote
                  pursuant to any agreement, arrangement or understanding; or

                  (iii) which are beneficially owned, directly or indirectly, by
                  any  other  person  with  which  such  person  or  any  of its
                  Affiliates or Associates  has any  agreement,  arrangement  or
                  understanding for the purpose of acquiring, holding, voting or
                  disposing of any Voting Shares.


             (c)  "Business  Combination"  shall mean any  transaction  which is
referred to in any one or more of the following clauses (i) through (v):

                  (i) any merger or  consolidation  of this  Corporation  or any
                  Subsidiary  (as  hereinafter  defined)  with or  into  (A) any
                  Interested  Shareholder  (as  hereinafter  defined) or (B) any
                  other  corporation  or other person or entity  (whether or not
                  itself an  Interested  Shareholder)  which  is, or after  such
                  merger  or  consolidation   would  be,  an  Affiliate  of  any
                  Interested Shareholder;

                  (ii) any sale, lease, exchange,  mortgage, pledge, transfer or
                  other   disposition   (in  one  transaction  or  a  series  of
                  transactions)  to or with any  Interested  Shareholder  or any
                  Affiliate of any Interested  Shareholder of any assets of this
                  Corporation or any Subsidiary  having an aggregate fair market
                  value of $5,000,000 or more;

                  (iii) the  issuance  or transfer  by this  Corporation  or any
                  Subsidiary (in one transaction or a series of transactions) of
                  any securities of this Corporation or any Subsidiary having an
                  aggregate  fair  market  value  of  $5,000,000  or more to any
                  Interested  Shareholder  or any  Affiliate  of any  Interested
                  Shareholder;

                  (iv) the adoption of any plan or proposal for the  liquidation
                  or dissolution of this Corporation proposed by or on behalf of
                  any Interested  Shareholder or any Affiliate of any Interested
                  Shareholder; or

                  (v) any reclassification of securities  (including any reverse
                  stock split) or recapitalization  of this Corporation,  or any
                  reorganization,  merger or  consolidation  of this Corporation
                  with any of its Subsidiaries or any other transaction (whether
                  or not  with or  into or  otherwise  involving  an  Interested
                  Shareholder) which has the effect, directly or indirectly,  of
                  increasing the proportionate  share of the outstanding  shares
                  of any  class of  equity  or  convertible  securities  of this
                  Corporation or any Subsidiary  which is directly or indirectly
                  owned by any  Interested  Shareholder  or any Affiliate of any
                  Interested Shareholder.

                                       9


             (d) "Disinterested  Director" shall mean any member of the Board of
Directors  of  this  Corporation  who  is  not  affiliated  with  an  Interested
Shareholder  and who either was a member of the Board of Directors  prior to the
Determination Date (as hereinafter defined) or was recommended for election by a
majority of the Disinterested  Directors in office at the time such director was
nominated for election.

             (e) "Interested Shareholder" shall mean any person (other than this
Corporation,  any Subsidiary,  or any pension, savings or other employee benefit
plan for the benefit of employees of this Corporation and/or any Subsidiary) who
or which:

                  (i) is the Beneficial Owner,  directly or indirectly,  of more
                  than 10 percent of the voting power of the outstanding  Voting
                  Shares (as hereinafter defined);

                  (ii) is an  Affiliate  of  this  Corporation  and at any  time
                  within the three-year period  immediately prior to the date in
                  question was the Beneficial Owner, directly or indirectly,  of
                  10 percent or more of the voting power of the then outstanding
                  Voting Shares; or

                  (iii) is an  assignee  of or has  otherwise  succeeded  to any
                  Voting  Shares  which were at any time  within the  three-year
                  period immediately prior to the date in question  beneficially
                  owned by any  Interested  Shareholder,  if such  assignment or
                  succession  shall have occurred in the course of a transaction
                  or series of  transactions  not  involving  a public  offering
                  within the meaning of the Securities Act of 1933.

             (f) "Other  consideration to be received" shall include,  but shall
not be limited  to,  Voting  Shares of this  Corporation  retained by its Public
Holders (as hereinafter defined) in the event of a Business Combination in which
this Corporation is the surviving corporation.

             (g) The  number of Voting  Shares  deemed to be  outstanding  shall
include shares deemed owned through  application  of  subparagraph I (b) of this
Article  VII but  shall  not  include  any other  shares  which may be  issuable
pursuant to any  agreement,  arrangement or  understanding,  or upon exercise of
conversion rights, warrants or options, or otherwise.

             (h) A "person" shall mean any individual, firm, partnership, trust,
corporation or other entity.

             (i) "Subsidiary"  shall mean any corporation of which a majority of
any class of equity security (as defined in Rule 3a11-1 of the General Rules and
Regulations under the Securities  Exchange Act of 1934, as in effect on March 1,
1986) is owned, directly or indirectly, by this Corporation;  provided, however,
that for  purposes of the  definition  of  Interested  Shareholder  set forth in
subparagraph 1 (e) of this Article VII, the term "Subsidiary"  shall mean only a
corporation  of which a majority  of each class of equity  securities  is owned,
directly or indirectly, by this Corporation.

             (j) "Voting Shares" shall mean all of the then  outstanding  shares
of voting capital stock of this Corporation.

         2. In addition  to any  affirmative  vote  required by law or under any
other provision of these Articles, and except as expressly provided in paragraph
3 of this  Article VII, any  Business  Combination  shall  require that each and
every condition  specified in the following  subparagraphs (a) through (j) shall
have first been satisfied:

             (a) Such Business  Combination  shall have received the affirmative
vote of the holders of not less than 75 percent of the Voting Shares present and
entitled to vote, voting together as a single class. Such affirmative vote shall
be required  notwithstanding the fact that no vote may be required, or that some
lesser percentage may be specified, by law or in any agreement with any national
securities exchange, or otherwise.

                                       10



             (b) The ratio of:

                  (i) the aggregate amount of the cash and the fair market value
                  of other  consideration to be received per share by holders of
                  Common Stock of this Corporation in such Business Combination,
                  to

                  (ii) the market price of the Common Stock immediately prior to
                  the announcement of such Business Combination,

                  is at least as great as the ratio of:

                        (x) the  highest per share  price  (including  brokerage
                        commissions,  transfer  taxes  and  soliciting  dealers'
                        fees) which such  Interested  Shareholder  or any of its
                        Affiliates  has  paid for any  shares  of  Common  Stock
                        acquired by it within the three-year period prior to the
                        Business Combination, to

                        (y) the  market  price of the Common  Stock  immediately
                        prior  to the  initial  acquisition  by such  Interested
                        Shareholder  or  any  of its  Affiliates  of any  Common
                        Stock.

             (c) The  aggregate  amount of the cash and the fair market value as
of the date of the consummation of the Business  Combination of consideration to
be received per share by holders of Common Stock in such Business Combination:

                  (i) is not less than the highest  per share  price  (including
                  brokerage commissions,  transfer taxes and soliciting dealers'
                  fees)  paid  by  such  Interested  Shareholder  or  any of its
                  Affiliates  in acquiring  any of its holdings of Common Stock,
                  and

                  (ii) is not less than the  earnings  per share of Common Stock
                  for the four  full  consecutive  fiscal  quarters  immediately
                  preceding  the record date for  solicitation  of votes on such
                  Business  Combination  multiplied  by the then  price/earnings
                  multiple   (if  any)  of  such   Interested   Shareholder   as
                  customarily  computed and reported in the financial  community
                  (provided that this  subparagraph (ii) shall not be applicable
                  if such Interested  Shareholder does not then have outstanding
                  common stock which is publicly traded in the United States).

             (d) If and to the extent applicable, the ratio of:

                  (i) the aggregate amount of the cash and the fair market value
                  of other  consideration to be received per share by holders of
                  the 5% Preferred  Stock,  the Serial  Stocks or any other then
                  outstanding  preferred  stock  of  this  Corporation  in  such
                  Business Combination, to

                  (ii) the market  price of the 5% Preferred  Stock,  the Serial
                  Stocks or any other then  outstanding  preferred stock of this
                  Corporation,  immediately  prior to the  announcement  of such
                  Business Combination,

                  is at least as great as the ratio of:

                        (x) the  highest per share  price  (including  brokerage
                        commissions,  transfer  taxes  and  soliciting  dealers'
                        fees) which such  Interested  Shareholder  or any of its
                        Affiliates  has paid for any shares of the 5%  Preferred
                        Stock,  the Serial Stocks or any other then  outstanding
                        preferred  stock  of this  Corporation,  acquired  by it
                        within  the  three-year  period  prior  to the  Business
                        Combination, to

                        (y) the  market  price of the 5%  Preferred  Stock,  the
                        Serial  Stocks or any other then  outstanding  preferred
                        stock  of this  Corporation,  immediately  prior  to the
                        initial  acquisition by 

                                       11


                        such  Interested  Shareholder or any of its Affiliates 
                        of any of, the 5% Preferred Stock, the  Serial Stocks or
                        any other  then  outstanding preferred stock of this 
                        Corporation.

             (e) The  aggregate  amount of the cash and the fair market value of
other  consideration  to be  received  per  share by  holders  of each of the 5%
Preferred Stock, the Serial Stocks or any other then outstanding preferred stock
of this  Corporation  in such Business  Combination is not less than the highest
per share price (including brokerage commissions,  transfer taxes and soliciting
dealers' fees) paid by such  Interested  Shareholder or any of its Affiliates in
acquiring  any of its holdings of the 5% Preferred  Stock,  the Serial Stocks or
any other then outstanding preferred stock of this Corporation.

             (f) If and to the extent  applicable,  the aggregate amount of cash
and the fair market  value of other  consideration  to be received  per share by
holders of each of the 5% Preferred  Stock,  the Serial Stocks or any other then
outstanding  preferred stock of this Corporation in such Business Combination is
not less than the highest  preferential amount per share to which the holders of
the 5% Preferred  Stock,  the Serial  Stocks or other class of then  outstanding
preferred  stock would be  entitled  to receive in the event of a  voluntary  or
involuntary liquidation, dissolution or winding up of this Corporation occurring
on the date of the Business Combination.

             (g) The  consideration  to be received by holders of any particular
class of outstanding Voting Shares in such Business  Combination shall be in the
same  form  and of the same  kind as the  consideration  paid by the  Interested
Shareholder in acquiring the shares of such class of Voting Shares already owned
by it. If the  Interested  Shareholder  has paid for any class of Voting  Shares
with varying forms of  consideration,  the form of  consideration to be received
for such class of Voting Shares shall be either cash or the form used to acquire
the largest number of shares of such class of Voting Shares previously  acquired
by it.

             (h) After the date on which the  Interested  Shareholder  became an
Interested  Shareholder (the "Determination Date") and prior to the consummation
of such Business Combination:

                  (i) the  Interested  Shareholder  shall  have  taken  steps to
                  ensure that this Corporation's  Board of Directors included at
                  all times representation by Disinterested Director(s) at least
                  proportionate  to the ratio that the Voting  Shares which from
                  time to time  are  owned  by  persons  who are not  Interested
                  Shareholders  ("Public  Holders")  bear to all  Voting  Shares
                  outstanding  at such  respective  times (with a  Disinterested
                  Director to occupy any resulting fractional board position);

                  (ii) except as  approved  by a majority  of the  Disinterested
                  Directors, there shall have been no failure to declare and pay
                  at the regular date  therefore  any full  quarterly  dividends
                  (whether or not  cumulative)  on the  outstanding 5% Preferred
                  Stock,  the Serial Stocks and any other  preferred  stock then
                  outstanding;

                  (iii)  there  shall have been (A) no  reduction  in the annual
                  rate  of  dividends  paid  on  the  Common  Stock  (except  as
                  necessary  to reflect any  subdivision  of the Common  Stock),
                  except  as  approved  by  a  majority  of  the   Disinterested
                  Directors,  and  (B)  an  increase  in  such  annual  rate  of
                  dividends  as   necessary  to  reflect  any   reclassification
                  (including   any  reverse  stock   split),   recapitalization,
                  reorganization or any similar transaction which has the effect
                  of  reducing  the number of  outstanding  shares of the Common
                  Stock,  unless the failure so to increase  such annual rate is
                  approved by a majority of the Disinterested Directors; and

                  (iv) such  Interested  Shareholder  shall not have  become the
                  Beneficial  Owner of any additional  Voting  Shares,  directly
                  from  this  Corporation  or  otherwise,  except as part of the
                  transaction  which  results  in  such  Interested  Shareholder
                  becoming an Interested Shareholder.

             (i) After the Determination Date, the Interested  Shareholder shall
not have received the benefit, directly or indirectly (except proportionately as
a shareholder), of any loans, advances,  guarantees,  pledges or other financial
assistance  or any tax  credits or other tax  advantages  provided by or through
this  Corporation,  nor  shall  the  Interested  Shareholder  have  caused  this
Corporation  to make any major change in this  Corporation's  business or 

                                       12


equity capital structure,  without approval  by a majority of the Disinterested
Directors,  whether  in  anticipation  of or in  connection  with such  Business
Combination, or otherwise.

             (j) A  proxy  or  information  statement  describing  the  proposed
Business Combination in accordance with the then applicable  requirements of the
Securities Exchange Act of 1934 and the rules and regulations thereunder (or any
subsequent  provisions replacing such Act, rules or regulations) shall be mailed
to all Public Holders of this Corporation at least 30 days prior to the proposed
consummation  of  such  Business  Combination  (whether  or not  such  proxy  or
information  statement  is  required  to be  mailed  pursuant  to  such  Act  or
subsequent provisions). Such proxy or information statement shall contain at the
front thereof,  in a prominent place, any recommendations as to the advisability
(or  inadvisability)  of  the  Business   Combination  which  the  Disinterested
Directors,  or any of  them,  may have  furnished  in  writing  and,  if  deemed
advisable  by a  majority  of  the  Disinterested  Directors,  an  opinion  of a
reputable  investment  banking  firm as to the fairness (or lack of fairness) of
the terms of such  Business  Combination,  from the point of view of the  Public
Holders of any Voting Shares (such  investment  banking firm to be selected by a
majority of the Disinterested Directors, to be furnished with all information it
reasonably  requests,  and to be paid a  reasonable  fee for its  services  upon
receipt by this Corporation of such opinion).

        3. The  provisions  of  paragraph  2 of this  Article  VII  shall not be
applicable to any particular Business Combination, and such Business Combination
shall require only such  affirmative  vote of the shareholders as is required by
law or any other provision of these Articles if such Business  Combination shall
have been approved by a majority of the  Disinterested  Directors then in office
even though less than a quorum.

        4. A majority of the  Disinterested  Directors  shall have the power and
duty to  interpret  all of the terms and  provisions  of this Article VII and to
determine,  on the basis of information  known to them, among other things,  (a)
whether a person is an Interested  Shareholder;  (b) the number of Voting Shares
beneficially  owned by any  person;  (c)  whether  a person is an  Affiliate  or
Associate  of another;  (d) whether a person has an  agreement,  arrangement  or
understanding  with another as to any matters  referred to in subparagraph 1 (b)
of this  Article  VII;  (e)  whether  the  assets  which are the  subject of any
Business  Combination,  or the  securities to be issued or  transferred  by this
Corporation  or any  Subsidiary in any Business  Combination,  have an aggregate
fair market value of $5,000,000 or more;  and (f) whether all of the  applicable
conditions set forth in paragraph 2 of this Article VII have been satisfied with
respect to any Business Combination.

         5. Nothing  contained in this Article VII shall be construed to relieve
any Interested Shareholder from any fiduciary obligation imposed by law.

                                  ARTICLE VIII

        Notwithstanding  any other provisions of these Articles or the Bylaws of
this Corporation (and  notwithstanding  the fact that a lesser percentage may be
specified  by law,  these  Articles  or the  Bylaws  of this  Corporation),  the
affirmative  vote of the  holders of at least 75  percent  of the Voting  Shares
present  and  entitled to vote,  voting  together  as a single  class,  shall be
required  to amend,  alter or repeal,  or to adopt any  provisions  inconsistent
with,   Article  VII  and   paragraph  1  of  Article  VI  of  the  Articles  of
Incorporation,  and paragraph 1 of Section 9 of the Bylaws;  provided,  however,
that this Article VIII shall not apply to, and such 75 percent vote shall not be
required  for,  any   amendment,   alteration  or  repeal   recommended  to  the
shareholders by a majority of the Disinterested Directors, as defined in Article
VII, then in office.

                                   ARTICLE IX

        No  director  of this  Corporation  shall be  personally  liable to this
Corporation  or its  stockholders  for monetary  damages for breach of fiduciary
duty by that  director as a director;  provided,  however,  that this Article IX
shall not eliminate or limit the liability of a director:  (a) for any breach of
the director's duty of loyalty to this Corporation or its stockholders;  (b) for
acts or omissions not in good faith or that involve intentional  misconduct or a
knowing  violation  of law; (c) under  Minnesota  Statutes  Section  302A.559 or
80A.23;  (d) for any  transaction  from which the  director  derived an improper
personal  benefit;  or (e) for any act or omission  occurring  prior to the date
when this 

                                       13


Article IX becomes effective. If, after the stockholders approve this provision,
the Minnesota  Business  Corporation  Act,  Minnesota  Statutes Chapter 302A, is
amended to  authorize  corporate  action  further  eliminating  or limiting  the
personal  liability  of  directors,  then the  liability  of a director  of this
Corporation  shall  be  deemed  eliminated  or  limited  to the  fullest  extent
permitted by the Minnesota Business Corporation Act, as so amended. No amendment
to or  repeal  of this  Article  IX shall  apply to or have  any  affect  on the
liability or alleged  liability of any director of this  Corporation for or with
respect  to any  acts or  omissions  of such  director  occurring  prior to that
amendment or repeal.





                                       14









                     ---------------------------------------


                                    BYLAWS OF

                              MINNESOTA POWER, INC.

                        As Amended Effective May 27, 1998


                     ---------------------------------------



















                                               As Amended Effective May 27, 1998



                                    BYLAWS OF
                              MINNESOTA POWER, INC.

         Section 1. The annual meeting of the  shareholders of this  Corporation
for the  election  of  Directors  and the  transaction  of such other  corporate
business as may properly  come before such  meeting  shall be held at a time and
place anywhere  within or without the State of Minnesota as may be designated by
the Board of Directors on the second  Tuesday of May in each year after the year
1923,  unless such day is a legal  holiday,  in which case such meeting shall be
held on the next day thereafter which is not a legal holiday or a Sunday.

         Section 2. Special meetings of the shareholders of this Corporation may
be called for any purpose or purposes at any time by the  Chairman of the Board,
by the President,  by the Board of Directors or any two or more members thereof,
the Executive Committee,  or, in the manner hereinafter provided, by one or more
shareholders  as  permitted  under  Minnesota  law.  The  place of such  special
meetings  shall be at the  registered  office  of this  Corporation  in  Duluth,
Minnesota, or at such other place in Duluth as the Directors may determine.

         Upon request in writing,  by registered  mail or delivered in person to
the Chairman of the Board, the President, a Vice-President or Secretary,  by any
person or persons  entitled to call a meeting of  shareholders,  it shall be the
duty of such officer  forthwith to cause notice to be given to the  shareholders
entitled  to vote of a meeting to be held at such time as such  officer may fix,
not less than ninety (90) days after the receipt of such request. If such notice
shall not be given within sixty (60) days after  delivery or the date of mailing
of such request,  the person or 

                                       2

                                               As Amended Effective May 27, 1998


persons requesting the meeting may fix the time of meeting and give notice in 
the manner hereinafter provided.

         Notice of special  meetings  shall  state the time,  place and  purpose
thereof.

         Section 3. Notice of every meeting of  shareholders  shall be mailed by
the Secretary or the officer or other person performing the Secretary's  duties,
not more  than  sixty  (60)  days and not less  than ten (10)  days  before  the
meeting,  to each  shareholder  of record  entitled to vote,  at his or her post
office address as shown by this Corporation's records;  provided,  however, that
if a shareholder waives notice thereof before, at, or after the meeting,  notice
of the meeting to such shareholder is unnecessary.  It shall not be necessary to
publish notice of any meeting of shareholders.

         Section  4. The  presence  in  person or by proxy of the  holders  of a
majority of the shares entitled to vote at any meeting shall constitute a quorum
for the transaction of business.  In the absence of a quorum, any meeting may be
adjourned from time to time.

         Section 5. Meetings of the  shareholders  shall be presided over by the
Chairman of the Board, if there be a Chairman of the Board present, otherwise by
the President,  or, if the President is not present, by a Vice-President,  or if
neither the  President  nor a  Vice-President  is  present,  by a Chairman to be
elected at the meeting. The Secretary of this Corporation shall act as Secretary
of such meetings, if present.

         Section 6. Subject to the  provisions of Article III of the Articles of
Incorporation as amended, each shareholder entitled to vote shall be entitled to
one vote for each share of voting stock held by the shareholder 

                                       3


                                               As Amended Effective May 27, 1998


and may  vote and  otherwise  act in  person  or by  proxy  at each  meeting  of
shareholders.

         Section 7. Any  unissued  stock of this  Corporation,  not or hereafter
authorized,  may be issued and disposed of by the Board of Directors at any time
and from time to time, to such persons,  firms,  corporations  or  associations,
upon such terms and for such consideration as the Board of Directors may, in its
discretion,  determine,  except as may be limited by law or by the  Articles  of
Incorporation of this  Corporation.  Certificates of stock shall be of such form
and  device  as the Board of  Directors  may  elect,  and shall be signed by the
Chairman of the Board or the President or a Vice-President  and the Treasurer or
an  Assistant  Treasurer  or the  Secretary  or an  Assistant  Secretary of this
Corporation,  but when a certificate  is signed by a Transfer Agent or Registrar
the signature of any such corporate officer and the corporate seal, if any, upon
such certificate may be facsimiles, engraved or printed.

         Section  8. The  stock of this  Corporation  shall be  transferable  or
assignable  on the  books of this  Corporation  by the  holders  in person or by
attorney on surrender of the certificates  therefor.  The Board of Directors may
appoint one or more transfer  agents and  registrars of the stock.  The Board of
Directors  may fix a time not  exceeding  sixty  (60) days and not less than ten
(10) days preceding the date of any meeting of  shareholders  as the record date
for the  determination of the shareholders  entitled to notice of and to vote at
such meeting,  and in such case only shareholders of record on the date so fixed
or their  legal  representatives  shall be  entitled to notice of and to vote at
such  meeting,  notwithstanding  any  transfer of any shares on the books of the
Corporation after any record date so fixed. The Board of Directors may 

                                       4

                                               As Amended Effective May 27, 1998


close the books of the Corporation  against  transfer of shares during the whole
or any part of such period.

         Section 9. Subject to the  provisions of Article III of the Articles of
Incorporation of this Corporation,  (1) the management of this Corporation shall
be vested in a Board of Directors,  the number of which shall be fixed from time
to time exclusively by the Board of Directors  pursuant to a resolution  adopted
by affirmative vote of the majority of the Disinterested  Directors,  as defined
in Article VII of the  Articles of  Incorporation,  but the number of  Directors
shall be no less than nine (9) and no greater than fifteen (15), but no decrease
shall  have  the  effect  of  shortening  the  term of any  incumbent  Director.
Directors shall be elected  annually by the shareholders by ballot by a majority
of all the  outstanding  stock  entitled  to vote,  to hold  office  until their
successors  are elected and qualify;  (2) subject to any rights then existing by
applicable  law with  respect to  cumulative  voting,  the  shareholders  at any
meeting by a majority vote of all the outstanding  stock entitled to vote, at an
election of Directors, may remove any Director and fill the vacancy; (3) subject
to the  rights of the  holders  of any  class or series of the then  outstanding
shares of voting capital stock of this Corporation,  newly created directorships
resulting  from  an  increase  in the  authorized  number  of  Directors  or any
vacancies  in  the  Board  of  Directors  resulting  from  death,   resignation,
retirement,  disqualification,  removal from office or other cause may be filled
only  by the  shareholders  or by the  affirmative  vote  of a  majority  of the
Disinterested Directors then in office,  although less than a quorum.  Directors
so elected  shall hold office for a term expiring at the time of the next annual
election of Directors by the  shareholders  and until their  successors are duly
elected and qualify.

                                       5

                                               As Amended Effective May 27, 1998


         The Board of  Directors,  as soon as may be after the  election in each
year,  shall elect from their number a Chairman of the Board and shall elect one
of their number  President of the  Corporation,  one of whom shall be designated
the Chief Executive Officer of the Corporation, and shall also elect one or more
Vice-President,  a Secretary  and  Treasurer and shall from time to time appoint
such other officers as they may deem proper.  The same person may hold more than
one office, except those of President and Vice-President. The Board of Directors
also may designate,  from time to time,  former Directors of this Corporation as
Directors  Emeritus,  in recognition of their long and faithful  service to this
Corporation.  Directors  Emeritus  shall have no duties or  responsibilities  in
connection with the management of the Corporation.

         The  officers  of the  Corporation  shall have such  powers and duties,
except as  modified by the Board of  Directors,  as  generally  pertain to their
offices respectively, as well as such powers and duties as from time to time may
be conferred upon them by the Board of Directors.

         The Board of  Directors  may, by  unanimous  affirmative  action of the
entire  Board,  designate two or more of their number to constitute an Executive
Committee which, to the extent determined by unanimous affirmative action of the
entire  Board,  shall  have  and  exercise  the  authority  of the  Board in the
management  of the  business  of the  Corporation,  except  the  power  to  fill
vacancies  in the  Board  and the  power to  change  the  membership  of or fill
vacancies in said Committee.  Any such Executive Committee shall act only in the
interval  between  meetings  of the Board,  and shall be subject at all times to
control and direction of the Board.  By unanimous vote, the Board shall have the
power  at any  time to  change  the  membership  of such  Committee  and to fill
vacancies in it. The Executive  Committee may make such rules for the 

                                       6

                                               As Amended Effective May 27, 1998


conduct of its  business  and may  appoint  such  Chairman  and  committees  and
assistants as it may deem necessary. A majority of the members of said Committee
shall constitute a quorum.

         Section  10.  Meetings of the Board of  Directors  shall be held at the
times  fixed by  resolution  of the Board,  or upon call of the  Chairman of the
Board, the President, or a Vice-President,  or any two Directors.  The Secretary
or  officer  performing  his or her duties  shall  give two days'  notice of all
meetings  of  Directors,  provided  that a meeting  may be held  without  notice
immediately  after the annual election,  and notice need not be given of regular
meetings held at times fixed by resolution of the Board. Meetings may be held at
any time without  notice if all of the  Directors  are present,  or if those not
present waive notice,  either before or after the meeting.  Notice by mailing to
the usual  business or residence  address of the Director not less than the time
above specified before the meeting shall be sufficient.  A majority of the Board
shall  constitute a quorum.  Less than such a quorum shall have power to adjourn
any meeting from time to time without notice.

         Section 11. Any and all officers of this Corporation may be required at
any time to give bonds for the  faithful  discharge of their duties in such sum,
or sums, and with such sureties, as the Board of Directors may determine.

         Section 12. The term of office of all officers  shall be until the next
election of  Directors  and until  their  respective  successors  are chosen and
qualify,  but any officer may be removed from office at any time by the Board of
Directors,  unless  otherwise  agreed by agreement in writing duly authorized by
the Board of Directors; and no agreement for the employment of any officer for a
longer period than one year shall be so authorized.

                                       7

                                               As Amended Effective May 27, 1998


         Section 13. The officers of this Corporation shall have such powers and
duties as  generally  pertain to their  offices,  respectively,  as well as such
powers and duties as from time to time shall be conferred upon them by the Board
of Directors or the Executive Committee.

         In case any officer of the  Corporation who shall have signed any bonds
or certificates of stock heretofore or hereafter  issued by the Corporation,  or
attested the seal  thereon,  or whose  facsimile  signature  appears on any bond
coupon or stock  certificates  shall cease to be such officer of the Corporation
before  the bonds or stock  certificates  so signed  or sealed  shall  have been
authenticated,   delivered   or  issued,   such  bonds  or  stock   certificates
nevertheless may be  authenticated,  delivered or issued with the same force and
effect as though the person or persons who had signed same or attested  the seal
thereon, or whose facsimile signature appears thereon, had not ceased to be such
officer of the Corporation.

         The  Corporation  shall  reimburse or indemnify each present and future
Director and officer of the  Corporation  (and his or her heirs,  executors  and
administrators) for or against all expenses reasonably incurred by such Director
or officer in connection  with or arising out of any action,  suit or proceeding
in which such  Director  or officer may be involved by reason of being or having
been  a  Director  or  officer  of the  Corporation.  Such  indemnification  for
reasonable  expenses is to be to the fullest  extent  permitted by the Minnesota
Business  Corporation Act,  Minnesota Statutes Chapter 302A. By affirmative vote
of the Board of  Directors  or with  written  approval of the Chairman and Chief
Executive Officer,  such  indemnification  may be extended to include agents and
employees  who are not Directors or officers of the  Corporation,  but who would
otherwise  be  indemnified  for acts and  omissions  under  Chapter

                                       8

                                               As Amended Effective May 27, 1998


302A of the Minnesota  Business  Corporation Act, if such agent or employee were
an officer of the Corporation.

         Reasonable  expenses may include  reimbursement  of attorneys' fees and
disbursements,  including  those  incurred  by a person  in  connection  with an
appearance as a witness.

         Upon written  request to the  Corporation  and approval by the Chairman
and Chief Executive Officer,  an agent or employee for whom  indemnification has
been  extended,  or an officer or Director may receive an advance for reasonable
expenses if such agent,  employee,  officer or Director is made or threatened to
be made a party to a proceeding involving a matter for which  indemnification is
believed to be available under Minnesota Statutes Chapter 302A.

         The  foregoing  rights  shall not be exclusive of other rights to which
any Director or officer may otherwise be entitled and shall be available whether
or not the Director or officer continues to be a Director or officer at the time
of incurring such expenses and liabilities.

         Section 14. A Director of this Corporation shall not be disqualified by
his or her office from dealing or contracting with this  Corporation,  either as
vendor,  purchaser or otherwise,  nor shall any  transaction or contract of this
Corporation be void or voidable by reason of the fact that any Director,  or any
firm of which any Director is a member, or any corporation of which any Director
is a shareholder or director,  is in any way  interested in such  transaction or
contract,  provided that such transaction or contract is or shall be authorized,
ratified or  approved  either (1) by vote of a majority of a quorum of the Board
of Directors or of the Executive Committee, without counting in such majority of
quorum any Director so interested, or being a member of a firm so interested, or

                                       9

                                               As Amended Effective May 27, 1998


shareholder or a director of a corporation  so  interested,  or (2) by vote at a
shareholders' meeting of the holders of a majority of all the outstanding shares
of the stock of this  Corporation  entitled to vote, or by a writing or writings
signed by a  majority  of such  holders,  nor shall  any  Director  be liable to
account to this  Corporation  for any profit  realized by the  Director  from or
through any transaction or contract of this Corporation, authorized, ratified or
approved as aforesaid,  by reason of the fact that the Director,  or any firm of
which the Director is a member,  or any  corporation  of which the Director is a
shareholder  or  director,  was  interested  in such  transaction  or  contract;
provided however,  that this Corporation shall not lend any of its assets to any
of its officers or Directors,  nor to any of its shareholders on the security of
its own shares.  Nothing  herein  contained  shall  create any  liability in the
events above described or prevent the authorization, ratification or approval of
such contracts or transactions in any other manner provided by law.

         Section  15.  The Board of  Directors  is  authorized  to  select  such
depository  or  depositories  as they  shall  deem  proper for the funds of this
Corporation.  All checks and drafts against such deposited funds shall be signed
by persons to be specified by the Chairman of the Board,  by the  President or a
Vice-President of the Corporation with the concurrence of its Treasurer.

         Section 16. The Board of Directors  shall have power to  authorize  the
payment of  compensation  to the  Directors  for  services to this  Corporation,
including  fees for  attendance  at meetings of the Board of  Directors,  and to
determine the amount of such compensation and fees.

         Section 17. The  corporate  seal of this  Corporation  shall be in such
form as the Board of Directors shall prescribe.

                                       10

                                               As Amended Effective May 27, 1998


         Section  18.  The  shareholders  may alter or amend  these  Bylaws by a
majority vote of all the outstanding stock of this Corporation  entitled to vote
at any meeting duly held as above provided,  the notice of which includes notice
of the proposed  alteration or amendment.  The Board of Directors may also alter
or amend these Bylaws at any time by affirmative vote of a majority of the Board
of Directors  given at a duly convened  meeting of the Board of  Directors,  the
notice of which includes notice of the proposed alteration or amendment, subject
to the power of the shareholders to change or repeal such Bylaws;  provided that
the Board of Directors  shall not make or alter any Bylaws  fixing their number,
qualifications,  classifications,  or term of office,  or changing the number of
shares required to constitute a quorum for a shareholders' meeting.


- --------------------------------------------------------------------------------


         The  undersigned,  SECRETARY  OF  MINNESOTA  POWER,  INC.,  does hereby
certify  that the  foregoing  is a correct  and  complete  copy of the Bylaws of
MINNESOTA POWER, INC. effective as of May 27, 1998.




                                                   Philip R. Halverson
                                                 -------------------------
                                                        Secretary


                                       11