Exhibit 4.1

                                                               EXECUTION VERSION



                                  $640,000,000

                                CREDIT AGREEMENT

                                      among


                              KEYSPAN CORPORATION,
                                  as Borrower,


                               The Several Lenders
                        from Time to Time Parties Hereto,



                               ABN AMRO BANK N.V.
                                       and
                                 Citibank, N.A.
                            as Co-Syndication Agents,


                              The Bank of New York
                                       and
                         The Royal Bank of Scotland plc,
                           as Co-Documentation Agents,


                                       and


                              JPMORGAN CHASE BANK,
                             as Administrative Agent


                            Dated as of June 30, 2004





                             J.P. MORGAN SECURITIES
                                     INC.,
                          Lead Arranger and Bookrunner


<PAGE>


                                TABLE OF CONTENTS
                                -----------------
<TABLE>

                                                                                                               Page
                                                                                                               ----

<CAPTION>


<S>              <C>                                                                                            <C>
Section 1         DEFINITIONS.....................................................................................1

         1.1      Defined Terms...................................................................................1

         1.2      Other Definitional Provisions..................................................................14

Section 2         AMOUNT AND TERMS OF COMMITMENTS................................................................15

         2.1      Commitments....................................................................................15

         2.2      Competitive Bid Procedure......................................................................15

         2.3      Procedure for Loan Borrowing...................................................................17

         2.4      Facility Fees, etc.............................................................................17

         2.5      Termination or Reduction of Commitments........................................................17

         2.6      Optional Prepayments...........................................................................18

         2.7      Conversion and Continuation Options............................................................18

         2.8      Limitations on Eurodollar Tranches.............................................................18

         2.9      Interest Rates and Payment Dates...............................................................18

         2.10     Computation of Interest and Fees...............................................................19

         2.11     Inability to Determine Interest Rate...........................................................19

         2.12     Pro Rata Treatment and Payments................................................................20

         2.13     Requirements of Law............................................................................21

         2.14     Taxes..........................................................................................22

         2.15     Indemnity......................................................................................23

         2.16     Change of Lending Office.......................................................................24

         2.17     Replacement of Lenders.........................................................................24

Section 3         REPRESENTATIONS AND WARRANTIES.................................................................24


                                       i

<PAGE>


         3.1      Financial Condition............................................................................24

         3.2      No Change......................................................................................25

         3.3      Corporate Existence; Compliance with Law.......................................................25

         3.4      Corporate Power; Authorization; Enforceable Obligations........................................25

         3.5      No Legal Bar...................................................................................25

         3.6      Litigation.....................................................................................26

         3.7      No Default.....................................................................................26

         3.8      Ownership of Property; Liens...................................................................26

         3.9      Intellectual Property..........................................................................26

         3.10     Taxes..........................................................................................26

         3.11     Federal Regulations............................................................................26

         3.12     Labor Matters..................................................................................26

         3.13     ERISA..........................................................................................27

         3.14     Investment Company Act; Other Regulations......................................................27

         3.15     Subsidiaries...................................................................................27

         3.16     Use of Proceeds................................................................................27

         3.17     Environmental Matters..........................................................................27

         3.18     Accuracy of Information, etc...................................................................28

Section 4         CONDITIONS PRECEDENT...........................................................................28

         4.1      Conditions to Closing Date.....................................................................28

         4.2      Conditions to Each Extension of Credit.........................................................29

Section 5         AFFIRMATIVE COVENANTS..........................................................................30

         5.1      Financial Statements...........................................................................30

         5.2      Certificates; Other Information................................................................30


                                       ii

<PAGE>


         5.3      Payment of Obligations.........................................................................31

         5.4      Maintenance of Existence; Compliance...........................................................31

         5.5      Maintenance of Property; Insurance.............................................................31

         5.6      Inspection of Property; Books and Records; Discussions.........................................31

         5.7      Notices........................................................................................31

         5.8      Environmental Laws.............................................................................32

         5.9      Transaction with Affiliates....................................................................32

Section 6         NEGATIVE COVENANTS.............................................................................32

         6.1      Financial Condition Covenant...................................................................32

         6.2      Liens..........................................................................................32

         6.3      Fundamental Changes............................................................................33

         6.4      Disposition of Property........................................................................34

         6.5      Negative Pledge Clauses........................................................................34

         6.6      Limitation on Restrictions on Distributions from Subsidiaries..................................34

Section 7         EVENTS OF DEFAULT..............................................................................35

Section 8         THE ADMINISTRATIVE AGENT.......................................................................37

         8.1      Appointment....................................................................................37

         8.2      Delegation of Duties...........................................................................37

         8.3      Exculpatory Provisions.........................................................................37

         8.4      Reliance by Administrative Agent...............................................................38

         8.5      Notice of Default..............................................................................38

         8.6      Non-Reliance on Administrative Agent and Other Lenders.........................................38

         8.7      Indemnification................................................................................39

         8.8      Administrative Agent in Its Individual Capacity................................................39


                                      iii

<PAGE>

         8.9      Successor Administrative Agent.................................................................39

Section 9         MISCELLANEOUS..................................................................................40

         9.1      Amendments and Waivers.........................................................................40

         9.2      Notices........................................................................................40

         9.3      No Waiver; Cumulative Remedies.................................................................41

         9.4      Survival of Representations and Warranties.....................................................41

         9.5      Payment of Expenses and Taxes..................................................................41

         9.6      Successors and Assigns; Participations and Assignments.........................................42

         9.7      Adjustments; Set-off...........................................................................44

         9.8      Counterparts...................................................................................44

         9.9      Severability...................................................................................44

         9.10     Integration....................................................................................44

         9.11     GOVERNING LAW..................................................................................45

         9.12     Submission To Jurisdiction; Waivers............................................................45

         9.13     Acknowledgements...............................................................................45

         9.14     Confidentiality................................................................................45

         9.15     WAIVERS OF JURY TRIAL..........................................................................46

         9.16     USA PATRIOT Act................................................................................46
</TABLE>


                                       iv

<PAGE>





SCHEDULES:

1.1      Commitments
3.4      Consents, Authorizations, Filings and Notices
3.6      Litigation
3.15     Subsidiaries
6.2(f)   Existing Liens
6.5      Existing Negative Pledge Clauses
6.6      Existing Limitations on Restrictions on Distributions from Subsidiaries

EXHIBITS:

A        Form of Closing Certificate
B        Form of Assignment and Acceptance
C        Form of Legal Opinion of John J. Bishar, Jr.
D        Form of Exemption Certificate












                                       i
<PAGE>


     CREDIT AGREEMENT,  dated as of June 30, 2004, among KEYSPAN CORPORATION,  a
New York  corporation  (the  "Borrower"),  the several banks and other financial
institutions  or  entities  from time to time  parties  to this  Agreement  (the
"Lenders"), ABN AMRO BANK N.V. and CITIBANK, N.A., as co-syndication agents, The
Bank of New York and The Royal Bank of Scotland plc, as co-documentation agents,
and JPMORGAN CHASE BANK, as administrative agent.

     The parties hereto hereby agree as follows:

                             Section 1 DEFINITIONS

     1.1  Defined  Terms.As  used in this  Agreement,  the terms  listed in this
Section 1.1 shall have the respective meanings set forth in this Section 1.1.

     "ABR": for any day, a rate per annum (rounded upwards, if necessary, to the
next 1/16 of 1%) equal to the  greatest  of (a) the Prime Rate in effect on such
day,  (b) the Base CD Rate in  effect  on such  day plus 1% and (c) the  Federal
Funds Effective Rate in effect on such day plus 1/2 of 1%. For purposes  hereof:
"Prime Rate" shall mean the rate of interest per annum  publicly  announced from
time to  time by the  Reference  Lender  as its  prime  rate  in  effect  at its
principal  office in New York City (the Prime Rate not being  intended to be the
lowest rate of  interest  charged by the  Reference  Lender in  connection  with
extensions  of credit to debtors);  "Base CD Rate" shall mean the sum of (a) the
product  of (i) the  Three-Month  Secondary  CD Rate  and (ii) a  fraction,  the
numerator  of which is one and the  denominator  of which is one  minus  the C/D
Reserve  Percentage and (b) the C/D Assessment Rate; and "Three-Month  Secondary
CD Rate" shall mean,  for any day,  the  secondary  market rate for  three-month
certificates of deposit reported as being in effect on such day (or, if such day
shall not be a  Business  Day,  the next  preceding  Business  Day) by the Board
through the public information telephone line of the Federal Reserve Bank of New
York (which rate will, under the current practices of the Board, be published in
Federal Reserve  Statistical  Release  H.15(519)  during the week following such
day),  or,  if such  rate  shall  not be so  reported  on such day or such  next
preceding  Business  Day, the average of the  secondary  market  quotations  for
three-month certificates of deposit of major money center banks in New York City
received at  approximately  10:00 A.M.,  New York City time, on such day (or, if
such day shall not be a Business Day, on the next preceding Business Day) by the
Reference  Lender  from three New York City  negotiable  certificate  of deposit
dealers of  recognized  standing  selected by it. Any change in the ABR due to a
change in the Prime Rate, the Three-Month Secondary CD Rate or the Federal Funds
Effective Rate shall be effective as of the opening of business on the effective
day of such change in the Prime Rate, the  Three-Month  Secondary CD Rate or the
Federal Funds Effective Rate, respectively.

     "Act": as defined in Section 9.16.

     "ABR Loans":  Loans the rate of interest  applicable to which is based upon
the ABR.

     "Administrative  Agent": JPMorgan Chase Bank, together with its affiliates,
as the  administrative  agent for the Lenders under this Agreement and the other
Loan Documents, together with any of its successors.

     "Affiliate":  as  to  any  Person,  any  other  Person  that,  directly  or
indirectly, is in control of, is controlled by, or is under common control with,
such Person.  For purposes of this  definition,  "control" of a Person means the
power, directly or indirectly,  either to (a) vote 10% or more of the securities
having  ordinary  voting  power  for  the  election  of  directors  (or  persons
performing  similar  functions)  of such  Person  or (b)  direct  or  cause  the
direction of the management and policies of such Person,  whether by contract or
otherwise.



                                       1
<PAGE>



     "Aggregate Exposure": with respect to any Lender at any time, the amount of
such  Lender's  Commitments  then in  effect  or, if the  Commitments  have been
terminated, the amount of such Lender's Loans then outstanding.

     "Aggregate  Exposure  Percentage":  with respect to any Lender at any time,
the ratio  (expressed as a percentage)  of such Lender's  Aggregate  Exposure at
such time to the Aggregate Exposure of all Lenders at such time.

     "Agreement":  this Credit Agreement, as amended,  supplemented or otherwise
modified from time to time.

     "Applicable  Margin":  for each Type of Loan,  the rate per annum set forth
under the relevant column heading below which  corresponds with the most current
rating of the  Borrower's  senior  unsecured  long-term  debt  issued by S&P and
Moody's, respectively; provided that, through the Termination Date, for each day
the aggregate  principal amount of the sum of (a) Loans  outstanding  under this
Agreement  and (b) Loans  (as such  term is  defined  in the  Three-Year  Credit
Agreement) outstanding under the Three-Year Credit Agreement is greater than the
amount equal to 33% of the sum of (x) the Total Commitments under this Agreement
and (y) the Total  Commitments (as such term is defined in the Three-Year Credit
Agreement)  outstanding under the Three-Year  Credit  Agreement,  the Applicable
Margin then in effect on all borrowings will be increased by 0.125% per annum.

=========================== ======================== ===========================

                               Applicable Margin          Applicable Margin
         Ratings             For Eurodollar Loans           for ABR Loans

=========================== ======================== ===========================

          A+/A1                     0.235%                      0.000%

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

           A/A2                     0.320%                      0.000%

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

          A-/A3                     0.400%                      0.000%

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

        BBB+/Baa1                   0.475%                      0.000%

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

         BBB/Baa2                   0.575%                      0.000%

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

        BBB-/Baa3                   0.800%                      0.000%

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

      < BBB-/Baa3                   1.075%                      0.075%
      -

=========================== ======================== ===========================


                                       2
<PAGE>


     Changes in the  Applicable  Margin  shall  become  effective on the date on
which S&P,  and/or  Moody's  changes the rating it has issued for the Borrower's
senior  unsecured  long-term debt. In the event of split ratings,  the higher of
such ratings shall apply.

     "Approved Fund":  with respect to any Lender that is a fund that invests in
commercial loans, any other fund that invests in commercial loans and is managed
or advised by the same  investment  advisor as such Lender or by an Affiliate of
such investment advisor.

     "Asset Sale": any Disposition of property or series of related Dispositions
of  property  that  yields  gross  proceeds  to  the  Borrower  or  any  of  its
Subsidiaries  (valued at the  initial  principal  amount  thereof in the case of
non-cash  proceeds  consisting of notes or other debt  securities  and valued at
fair  market  value  in the  case of  other  non-cash  proceeds)  in  excess  of
$50,000,000.

     "Assignee": as defined in Section 9.6(c).

     "Assignment and Acceptance": an Assignment and Acceptance, substantially in
the form of Exhibit B.

     "Assignor": as defined in Section 9.6(c).

     "Available  Commitment":  as to any Lender at any time,  an amount equal to
the excess, if any, of (a) such Lender's Commitment then in effect over (b) such
Lender's Loans then outstanding.

     "Benefitted Lender": as defined in Section 9.7(a).

     "Board": the Board of Governors of the Federal Reserve System of the United
States (or any successor).

     "Borrower": as defined in the preamble hereto.

     "Borrowing  Date":  any Business Day specified by the Borrower as a date on
which the Borrower requests the relevant Lenders to make Loans hereunder.

     "Business": as defined in Section 3.17(b).

     "Business  Day": a day other than a Saturday,  Sunday or other day on which
commercial  banks in New York City are  authorized  or required by law to close,
provided,  that with respect to notices and  determinations  in connection with,
and payments of principal and interest on,  Eurodollar Loans, such day is also a
day for  trading  by and  between  banks in  Dollar  deposits  in the  interbank
eurodollar market.

     "Capital  Lease  Obligations":  as to any Person,  the  obligations of such
Person to pay rent or other  amounts  under  any lease of (or other  arrangement
conveying the right to use) real or personal property, or a combination thereof,
which  obligations  are required to be  classified  and accounted for as capital
leases on a balance  sheet of such Person  under GAAP and,  for the  purposes of
this  Agreement,  the  amount  of such  obligations  at any  time  shall  be the
capitalized amount thereof at such time determined in accordance with GAAP.

     "Capital Stock":  any and all shares,  interests,  participations  or other
equivalents (however designated) of capital stock of a corporation,  any and all
equivalent  ownership  interests in a Person (other than a corporation)  and any
and all warrants, rights or options to purchase any of the foregoing.


                                       3
<PAGE>


     "Cash  Equivalents":  (a)  marketable  direct  obligations  issued  by,  or
unconditionally  guaranteed  by, the United  States  Government or issued by any
agency thereof and backed by the full faith and credit of the United States,  in
each  case  maturing  within  one  year  from  the  date  of  acquisition;   (b)
certificates  of deposit,  time deposits,  eurodollar time deposits or overnight
bank  deposits  having  maturities  of six  months  or  less  from  the  date of
acquisition  issued by any Lender or by any commercial  bank organized under the
laws of the United  States or any state  thereof  having  combined  capital  and
surplus of not less than  $500,000,000;  (c) commercial paper of an issuer rated
at least A-1 by S&P or P-1 by Moody's,  or carrying  an  equivalent  rating by a
nationally  recognized  rating agency,  if both of the two named rating agencies
cease  publishing  ratings of commercial paper issuers  generally,  and maturing
within six months from the date of  acquisition;  (d) repurchase  obligations of
any Lender or of any commercial bank  satisfying the  requirements of clause (b)
of this  definition,  having a term of not more than 30 days,  with  respect  to
securities   issued  or  fully  guaranteed  or  insured  by  the  United  States
government;  (e) securities with maturities of one year or less from the date of
acquisition  issued or fully guaranteed by any state,  commonwealth or territory
of the United States,  by any political  subdivision or taxing  authority of any
such  state,  commonwealth  or  territory  or by  any  foreign  government,  the
securities  of which  state,  commonwealth,  territory,  political  subdivision,
taxing authority or foreign government (as the case may be) are rated at least A
by S&P or A by Moody's;  (f)  securities  with  maturities of six months or less
from the date of acquisition  backed by standby  letters of credit issued by any
Lender or any commercial bank satisfying the  requirements of clause (b) of this
definition;  or (g) shares of money market  mutual or similar funds which invest
exclusively in assets  satisfying the requirements of clauses (a) through (f) of
this definition.

     "C/D Assessment  Rate":  for any day as applied to any ABR Loan, the annual
assessment  rate in effect on such day that is  payable  by a member of the Bank
Insurance Fund  maintained by the Federal  Deposit  Insurance  Corporation  (the
"FDIC") classified as well-capitalized and within supervisory subgroup "B" (or a
comparable successor  assessment risk  classification)  within the meaning of 12
C.F.R. ss. 327.4 (or any successor provision) to the FDIC (or any successor) for
the FDIC's  (or such  successor's)  insuring  time  deposits  at offices of such
institution in the United States.

     "C/D  Reserve  Percentage":  for any day as applied  to any ABR Loan,  that
percentage  (expressed  as a  decimal)  which  is in  effect  on  such  day,  as
prescribed by the Board,  for determining the maximum reserve  requirement for a
Depositary  Institution  (as defined in  Regulation  D of the Board as in effect
from time to time) in  respect  of new  non-personal  time  deposits  in Dollars
having a maturity of 30 days or more.

     "Closing  Date":  the date on which the  conditions  precedent set forth in
Section 4.1 shall have been satisfied, which date shall be June 30, 2004.

     "Code": the Internal Revenue Code of 1986, as amended from time to time.

     "Commitment":  as to any Lender,  the obligation of such Lender, if any, to
make Loans in an aggregate  principal  amount not to exceed the amount set forth
under the heading "Commitment" opposite such Lender's name on Schedule 1.1 or in
the  Assignment  and  Acceptance  pursuant to which such  Lender  became a party
hereto,  as the same may be  changed  from  time to time  pursuant  to the terms
hereof. The original amount of the Total Commitments is $640,000,000.

     "Commitment  Period": the period from and including the Closing Date to the
Termination Date.

     "Commonly Controlled Entity": an entity, whether or not incorporated,  that
is under common control with the Borrower  within the meaning of Section 4001 of
ERISA or is part of a group that  includes the Borrower and that is treated as a
single employer under Section 414 of the Code.


                                       4
<PAGE>


     "Competitive Loans": a loan made pursuant to Section 2.2.

     "Competitive Bid": means an offer by a Lender to make a Competitive Loan in
accordance with Section 2.2.

     "Competitive  Bid Rate":  means,  with respect to any Competitive  Bid, the
Margin  or  Fixed  Rate,  as  applicable,  offered  by the  Lender  making  such
Competitive Bid.

     "Competitive Bid Request":  means a request by the Borrower for Competitive
Bids in accordance with Section. 2.2.

     "Confidential   Information   Memorandum":   the  Confidential  Information
Memorandum dated May 2004 and furnished to the Lenders.

     "Consolidated  Capitalization":  at any date, the sum of  Consolidated  Net
Worth and Consolidated Indebtedness.

     "Consolidated Indebtedness":  at any date, all Indebtedness of the Borrower
and its  Subsidiaries  at such  date,  determined  on a  consolidated  basis  in
accordance with GAAP, as reflected on the balance sheet.

     "Consolidated  Net  Worth":  at  any  date,  all  amounts  that  would,  in
conformity  with  GAAP,  be  included  on a  consolidated  balance  sheet of the
Borrower and its Subsidiaries under stockholders' equity at such date.

     "Contractual  Obligation":  as to any Person, any provision of any security
issued by such Person or of any  agreement,  instrument or other  undertaking to
which such Person is a party or by which it or any of its property is bound.

     "Core Gas  Distribution  Business":  the distribution and sale at retail to
customers of natural gas in the New York City  boroughs of Brooklyn,  Queens and
Staten Island, the Long Island counties of Nassau and Suffolk,  in Massachusetts
and in New Hampshire,  as such business is conducted by KeySpan Energy  Delivery
New York,  KeySpan Energy  Delivery Long Island and KeySpan Energy  Delivery New
England on the Closing Date.

     "Default":  any of the events  specified  in Section 7,  whether or not any
requirement  for the  giving of  notice,  the lapse of time,  or both,  has been
satisfied.

     "Disposition":  with respect to any  property,  any sale,  lease,  sale and
leaseback,  assignment,  conveyance,  transfer  or  other  disposition  thereof,
including the sale of Capital Stock of any  Subsidiary  owned by the Borrower or
any of its  Subsidiaries.  The terms  "Dispose"  and  "Disposed  of" shall  have
correlative meanings.


                                       5
<PAGE>


     "Dollars" and "$": dollars in lawful currency of the United States.

     "Environmental  Laws":  any and  all  foreign,  Federal,  state,  local  or
municipal  laws,  rules,  orders,  regulations,   statutes,  ordinances,  codes,
decrees, requirements of any Governmental Authority or other Requirements of Law
(including  common  law)  regulating,  relating  to  or  imposing  liability  or
standards of conduct  concerning  protection of human health or the environment,
as now or may at any time hereafter be in effect.

     "ERISA":  the Employee  Retirement  Income Security Act of 1974, as amended
from time to time.

     "Eurocurrency Reserve Requirements": for any day as applied to a Eurodollar
Loan, the aggregate  (without  duplication) of the maximum rates (expressed as a
decimal  fraction)  of  reserve  requirements  in effect on such day  (including
basic,  supplemental,  marginal and emergency  reserves under any regulations of
the Board or other  Governmental  Authority  having  jurisdiction  with  respect
thereto) dealing with reserve  requirements  prescribed for eurocurrency funding
(currently  referred to as  "Eurocurrency  Liabilities"  in  Regulation D of the
Board) maintained by a member bank of the Federal Reserve System.

     "Eurodollar  Base  Rate":  with  respect to each day during  each  Interest
Period  pertaining to a Eurodollar  Loan,  the rate per annum  determined on the
basis of the rate for  deposits in Dollars for a period  equal to such  Interest
Period  commencing  on the first day of such Interest  Period  appearing on Page
3750 of the Telerate  screen as of 11:00 A.M.,  London time,  two Business  Days
prior to the beginning of such Interest Period. In the event that such rate does
not appear on Page 3750 of the Telerate  screen (or  otherwise on such  screen),
the  "Eurodollar  Base Rate"  shall be  determined  by  reference  to such other
comparable publicly available service for displaying  eurodollar rates as may be
selected by the Administrative Agent or, in the absence of such availability, by
reference  to the rate at which  the  Administrative  Agent  is  offered  Dollar
deposits at or about 11:00 A.M.,  New York City time, two Business Days prior to
the beginning of such Interest Period in the interbank  eurodollar  market where
its  eurodollar  and foreign  currency  and exchange  operations  are then being
conducted for delivery on the first day of such  Interest  Period for the number
of days comprised therein.

     "Eurodollar  Competitive  Loan":  a Competitive  Loan which bears  interest
based upon the Eurodollar Rate.

     "Eurodollar Loans": Loans the rate of interest applicable to which is based
upon the Eurodollar Rate.

     "Eurodollar  Rate":  with respect to each day during each  Interest  Period
pertaining  to a Eurodollar  Loan, a rate per annum  determined  for such day in
accordance with the following  formula (rounded upward to the nearest 1/100th of
1%):

                              Eurodollar Base Rate
                        ---------------------------------
                    1.00 - Eurocurrency Reserve Requirements

     "Eurodollar Tranche": the collective reference to Eurodollar Loans the then
current Interest Periods with respect to all of which begin on the same date and
end on the same later date (whether or not such Loans shall originally have been
made on the same day).


                                       6
<PAGE>


     "Event of Default": any of the events specified in Section 7, provided that
any requirement  for the giving of notice,  the lapse of time, or both, has been
satisfied.

     "Existing Credit  Agreement":  the credit  agreement,  dated as of June 27,
2003, among the Borrower, the several lenders from time to time parties thereto,
ABN AMRO BANK,  N.V., as  syndication  agents,  Bank One, NA and Wachovia  Bank,
National Association, as co-documentation agents, and the Administrative Agent.

     "Facility Fee Rate":  the rate per annum set forth below which  corresponds
with the most current rating of the Borrower's  senior unsecured  long-term debt
issued by S&P and Moody's, respectively.

=========================== =========================
         Ratings                  Facility Fee
=========================== =========================
          A+/A1                      0.065%
--------------------------- -------------------------
           A/A2                      0.080%
--------------------------- -------------------------
          A-/A3                      0.100%
--------------------------- -------------------------
        BBB+/Baa1                    0.150%
--------------------------- -------------------------
         BBB/Baa2                    0.175%
--------------------------- -------------------------
        BBB-/Baa3                    0.200%
--------------------------- -------------------------
       < BBB-/Baa3                   0.300%
       -
=========================== =========================

     Changes in the Facility Fee shall become effective on the date on which S&P
and/or  Moody's  changes  the  rating it has issued  for the  Borrower's  senior
unsecured  long-term  debt.  In the event of split  ratings,  the higher of such
ratings shall apply.

     "Federal Funds Effective  Rate":  for any day, the weighted  average of the
rates on  overnight  federal  funds  transactions  with  members of the  Federal
Reserve  System  arranged by federal  funds  brokers,  as  published on the next
succeeding  Business Day by the Federal  Reserve  Bank of New York,  or, if such
rate is not so published  for any day that is a Business Day, the average of the
quotations  for the day of such  transactions  received by the Reference  Lender
from three federal funds brokers of recognized standing selected by it.

     "Fixed  Rate":  with  respect  to a  Competitive  Loan,  the fixed  rate of
interest per annum specified by the Lender making such  Competitive  Loan in its
related Competitive Bid.

     "Fixed  Rate  Competitive  Loan":  Competitive  Loans  which bear a rate of
interest equal to the Fixed Rate.

     "Funding  Office":  the office of the  Administrative  Agent  specified  in
Section 9.2 or such other  office as may be  specified  from time to time by the
Administrative Agent as its funding office by written notice to the Borrower and
the Lenders.


                                       7
<PAGE>


     "GAAP": generally accepted accounting principles in the United States as in
effect from time to time, except that for purposes of Section 6.1, GAAP shall be
determined  on the basis of such  principles  in effect on the date  hereof  and
consistent  with  those  used in the  preparation  of the  most  recent  audited
financial statements delivered pursuant to Section 5.1(a). In the event that any
"Accounting  Change" (as defined below) shall occur and such change results in a
change in the method of calculation of financial  covenants,  standards or terms
in this Agreement, then the Borrower and the Administrative Agent agree to enter
into  negotiations  in order to amend such provisions of this Agreement so as to
equitably  reflect  such  Accounting  Changes  with the desired  result that the
criteria for  evaluating the Borrower's  financial  condition  shall be the same
after such Accounting  Changes as if such Accounting  Changes had not been made.
Until such time as such an amendment  shall have been  executed and delivered by
the Borrower,  the Administrative  Agent and the Required Lenders, all financial
covenants, standards and terms in this Agreement shall continue to be calculated
or  construed  as if  such  Accounting  Changes  had not  occurred.  "Accounting
Changes" refers to changes in accounting principles required by the promulgation
of any rule,  regulation,  pronouncement or opinion by the Financial  Accounting
Standards Board of the American Institute of Certified Public Accountants or, if
applicable, the SEC.

     "Governmental  Authority":  any  nation or  government,  any state or other
political   subdivision   thereof,  any  agency,   authority,   instrumentality,
regulatory  body,  court,  central  bank or other entity  exercising  executive,
legislative,  judicial,  taxing,  regulatory or  administrative  functions of or
pertaining  to  government,  any  securities  exchange  and any  self-regulatory
organization (including the National Association of Insurance Commissioners).

     "Guarantee  Obligation":  as to any Person (the "guaranteeing person"), any
obligation of (a) the guaranteeing  person or (b) another Person  (including any
bank  under  any  letter  of  credit)  to  induce  the  creation  of  which  the
guaranteeing  person has  issued a  reimbursement,  counterindemnity  or similar
obligation,   in  either  case  guaranteeing  or  in  effect   guaranteeing  any
Indebtedness, leases, dividends or other obligations (the "primary obligations")
of any other  third  Person  (the  "primary  obligor")  in any  manner,  whether
directly or  indirectly,  including any obligation of the  guaranteeing  person,
whether or not  contingent,  (i) to purchase any such primary  obligation or any
property  constituting direct or indirect security therefor,  (ii) to advance or
supply funds (1) for the purchase or payment of any such primary  obligation  or
(2) to maintain  working  capital or equity  capital of the  primary  obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (iii) to
purchase property,  securities or services primarily for the purpose of assuring
the owner of any such primary  obligation of the ability of the primary  obligor
to make payment of such primary  obligation or (iv)  otherwise to assure or hold
harmless  the  owner of any such  primary  obligation  against  loss in  respect
thereof; provided, however, that the term Guarantee Obligation shall not include
endorsements  of instruments for deposit or collection in the ordinary course of
business.  The amount of any  Guarantee  Obligation of any  guaranteeing  person
shall  be  deemed  to be the  lower of (a) an  amount  equal  to the  stated  or
determinable amount of the primary obligation in respect of which such Guarantee
Obligation is made and (b) the maximum amount for which such guaranteeing person
may be liable  pursuant to the terms of the instrument  embodying such Guarantee
Obligation, unless such primary obligation and the maximum amount for which such
guaranteeing person may be liable are not stated or determinable,  in which case
the amount of such  Guarantee  Obligation  shall be such  guaranteeing  person's
maximum reasonably anticipated liability in respect thereof as determined by the
Borrower in good faith.

     "Hedge  Agreements":  all interest rate swaps, caps or collar agreements or
similar  arrangements  dealing with interest rates or currency exchange rates or
the exchange of nominal interest obligations, either generally or under specific
contingencies.


                                       8
<PAGE>


     "Indebtedness":  of any Person at any date,  without  duplication,  (a) all
indebtedness  of such Person for borrowed  money,  (b) all  obligations  of such
Person for the  deferred  purchase  price of property  or  services  (other than
current  trade  payables  incurred  in the  ordinary  course  of  such  Person's
business),  (c) all  obligations  of such  Person  evidenced  by  notes,  bonds,
debentures or other similar instruments, (d) all indebtedness created or arising
under any conditional  sale or other title  retention  agreement with respect to
property  acquired by such Person  (even  though the rights and  remedies of the
seller or lender  under such  agreement  in the event of default  are limited to
repossession  or sale of such  property),  (e) all Capital Lease  Obligations of
such Person, (f) all obligations of such Person,  contingent or otherwise, as an
account  party under  acceptances,  letters of credit,  surety  bonds or similar
arrangements,  (g) the liquidation  value of all preferred Capital Stock of such
Person that is  redeemable  at the option of the holder  thereof or that has any
mandatory dividend,  redemption or other required payment that could be required
thereunder  prior to the date that is one year after the  Termination  Date, (h)
all Guarantee  Obligations  of such Person in respect of obligations of the kind
referred to in clauses (a) through (g) above (and,  in the case of the  Borrower
and its Subsidiaries, in addition, clause (k) below), (i) all obligations of the
kind  referred to in clauses (a) through (h) above  secured by (or for which the
holder of such obligation has an existing right,  contingent or otherwise, to be
secured by) any Lien on property  (including accounts and contract rights) owned
by such Person,  whether or not such Person has assumed or become liable for the
payment of such  obligation,  (j) for the  purposes  of Section  7(e) only,  all
obligations of such Person in respect of Hedge Agreements and (k) in the case of
the Borrower and its Subsidiaries,  (A) Synthetic Lease Obligations  relating to
the 2,200  megawatt  Ravenswood  facility  located  in New York City and (B) any
other  Synthetic  Lease   Obligations  of  the  Borrower  or  its   Subsidiaries
individually in excess of  $25,000,000;  provided that, for the purposes of this
Agreement,  20% of (i) the gross  proceeds of the  Borrower's  MEDS Equity Units
issuance  priced on April 30,  2002 and (ii) the gross  proceeds,  not to exceed
$500,000,000 in the aggregate, of additional  mandatorily-convertible securities
of the Borrower issued after the June 27, 2003 shall be considered  Indebtedness
of the Borrower  and the  remaining  80% of such  proceeds  shall be  considered
equity.  The  Indebtedness  of any Person shall include the  Indebtedness of any
other  entity  (including  any  partnership  in which  such  Person is a general
partner)  to the  extent  such  Person  is liable  therefor  as a result of such
Person's ownership interest in or other relationship with such entity, except to
the extent the terms of such Indebtedness  expressly provide that such Person is
not liable therefor.

     "Insolvency":  with respect to any  Multiemployer  Plan, the condition that
such Plan is insolvent within the meaning of Section 4245 of ERISA.

     "Insolvent": pertaining to a condition of Insolvency.

     "Intellectual Property": the collective reference to all rights, priorities
and privileges relating to intellectual  property,  whether arising under United
States,  multinational  or  foreign  laws or  otherwise,  including  copyrights,
copyright licenses,  patents, patent licenses,  trademarks,  trademark licenses,
technology,  know-how and  processes,  and all rights to sue at law or in equity
for any infringement or other impairment thereof, including the right to receive
all proceeds and damages therefrom.

     "Interest  Payment  Date":  (a) as to any ABR  Loan,  the  last day of each
March, June,  September and December to occur while such Loan is outstanding and
the final maturity date of such Loan,  (b) as to any  Eurodollar  Loan having an
Interest  Period of three months or less, the last day of such Interest  Period,
(c) as to any  Eurodollar  Loan  having an  Interest  Period  longer  than three
months,  each day that is three months, or a whole multiple  thereof,  after the
first day of such Interest  Period and the last day of such Interest  Period (d)


                                       9
<PAGE>


as to any  Eurodollar  Loan,  the date of any  repayment or  prepayment  made in
respect thereof and (e) as to any Fixed Rate Competitive Loan, the last Business
Day of the Interest Period  applicable to such Loan as specified and accepted in
the  applicable  Competitive  Bid  Request  and,  in the  case of a  Fixed  Rate
Competitive  Loan with an Interest Period of more than 90 days' duration (unless
otherwise  specified in the applicable  Competitive Bid Request),  each Business
Day  prior to the last  Business  Day of such  Interest  Period  that  occurs at
intervals of 90 days'  duration  after the first  Business Day of such  Interest
Period, and any other dates that are specified in the applicable Competitive Bid
Request as interest payment dates with respect to such borrowing.

     "Interest Period": (a) as to any Eurodollar Loan, (i) initially, the period
commencing on the borrowing or conversion date, as the case may be, with respect
to such Eurodollar Loan and ending one, two, three or six months thereafter,  as
selected by the Borrower in its notice of borrowing or notice of conversion,  as
the case may be, given with respect thereto;  and (ii)  thereafter,  each period
commencing on the last day of the next preceding  Interest Period  applicable to
such  Eurodollar  Loan and ending one, two, three or six months  thereafter,  as
selected by the Borrower by irrevocable notice to the  Administrative  Agent not
less than three Business Days prior to the last day of the then current Interest
Period with respect  thereto;  provided  that,  all of the foregoing  provisions
relating to Interest Periods are subject to the following:

          (A) if any Interest  Period would otherwise end on a day that is not a
     Business Day, such Interest Period shall be extended to the next succeeding
     Business  Day unless the  result of such  extension  would be to carry such
     Interest  Period into another  calendar  month in which event such Interest
     Period shall end on the immediately preceding Business Day;

          (B) the Borrower  may not select an Interest  Period that would extend
     beyond the Termination Date;

          (C) any  Interest  Period  that begins on the last  Business  Day of a
     calendar month (or on a day for which there is no numerically corresponding
     day in the calendar month at the end of such Interest  Period) shall end on
     the last Business Day of a calendar month; and

          (D) the Borrower shall select Interest  Periods so as not to require a
     payment or prepayment of any Eurodollar  Loan during an Interest Period for
     such Loan; and

          (b) with respect to any Fixed Rate Competitive Loan, the period (which
     shall not be less than 7 days or more than five  years)  commencing  on the
     date of such  borrowing and ending on the date  specified in the applicable
     Competitive  Bid Request;  provided  that (i) if any Interest  Period would
     otherwise end on a day that is not a Business  Day,  such  Interest  Period
     shall extend to the next succeeding  Business Day and (ii) the Borrower may
     not select an Interest  Period  that would  extend  beyond the  Termination
     Date.

     "Lenders": as defined in the preamble hereto.

     "Lien":   any  mortgage,   pledge,   hypothecation,   assignment,   deposit
arrangement,  encumbrance,  lien (statutory or other),  charge or other security
interest or any preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever  (including any conditional sale or
other title retention  agreement and any capital lease having  substantially the
same economic effect as any of the foregoing).


                                       10
<PAGE>


     "Loans": as defined in Section 2.1(a).

     "Loan Documents": this Agreement and the Notes.

     "Margin" means,  with respect to any Competitive Loan bearing interest at a
rate based on the Eurodollar Rate, the marginal rate of interest,  if any, to be
added  to or  subtracted  from  the  Eurodollar  Rate to  determine  the rate of
interest applicable to such Loan, as specified by the Lender making such Loan in
its related Competitive Bid.

     "Material  Adverse  Effect":  a material  adverse  effect on the  business,
property,  operations,  condition  (financial  or otherwise) or prospects of the
Borrower and its Subsidiaries taken as a whole or the validity or enforceability
of this  Agreement or any of the other Loan  Documents or the rights or remedies
of the Administrative Agent or the Lenders hereunder or thereunder.

     "Materials of Environmental  Concern": any gasoline or petroleum (including
crude oil or any  fraction  thereof) or petroleum  products or any  hazardous or
toxic substances,  materials or wastes, defined or regulated as such in or under
any  Environmental  Law,  including  asbestos,   polychlorinated  biphenyls  and
urea-formaldehyde insulation.

     "Multiemployer  Plan":  a Plan that is a  multiemployer  plan as defined in
Section 4001(a)(3) of ERISA.

     "Moody's": Moody's Investors Service, Inc. (or any successor thereto).

     "Net Cash  Proceeds":  (a) in connection  with any Asset Sale, the proceeds
thereof in the form of cash and Cash  Equivalents  (including  any such proceeds
received  by way  of  deferred  payment  of  principal  pursuant  to a  note  or
installment receivable or purchase price adjustment receivable or otherwise, but
only  as and  when  received)  of  such  Asset  Sale,  net of  attorneys'  fees,
accountants'  fees,  investment  banking fees, amounts required to be applied to
the repayment of Indebtedness secured by a Lien expressly permitted hereunder on
any asset that is the  subject of such Asset Sale and other  customary  fees and
expenses  actually  incurred in  connection  therewith  and net of taxes paid or
reasonably  estimated  to be  payable as a result  thereof  (after  taking  into
account  any  available   tax  credits  or   deductions   and  any  tax  sharing
arrangements)  and (b) in connection  with any sale of Capital  Stock,  the cash
proceeds  received from such sale, net of attorneys'  fees,  investment  banking
fees,  accountants'  fees,  underwriting  discounts  and  commissions  and other
customary fees and expenses actually incurred in connection therewith.

     "Non-Core  Assets":  Any assets of the Borrower or any of its  Subsidiaries
that are not material to the ongoing  operations of any of the Borrower's or its
Subsidiaries'  primary gas  distribution  or  electric  services  businesses  as
determined by the Borrower in its reasonable business judgment.

     "Non-Excluded Taxes": as defined in Section 2.14(a).

     "Non-U.S. Lender": as defined in Section 2.14(d).

     "Notes":  the collective reference to any promissory note evidencing Loans.


                                       11
<PAGE>


     "Obligations":  the unpaid principal of and interest on (including interest
accruing after the maturity of the Loans and interest  accruing after the filing
of  any  petition  in  bankruptcy,   or  the  commencement  of  any  insolvency,
reorganization  or like proceeding,  relating to the Borrower,  whether or not a
claim for post-filing or  post-petition  interest is allowed in such proceeding)
the Loans and all other  obligations  and  liabilities  of the  Borrower  to the
Administrative Agent or to any Lender,  whether direct or indirect,  absolute or
contingent,  due or to become due, or now existing or hereafter incurred,  which
may arise under, out of, or in connection  with, this Agreement,  any other Loan
Document or any other document made,  delivered or given in connection  herewith
or  therewith,  whether  on  account  of  principal,   interest,   reimbursement
obligations, fees, indemnities, costs, expenses (including all fees, charges and
disbursements of counsel to the  Administrative  Agent or to any Lender that are
required to be paid by the Borrower pursuant hereto) or otherwise.

     "Other Taxes":  any and all present or future stamp or documentary taxes or
any other excise or property  taxes,  charges or similar levies arising from any
payment made  hereunder or from the execution,  delivery or  enforcement  of, or
otherwise with respect to, this Agreement or any other Loan Document.

     "Participant": as defined in Section 9.6(b).

     "PBGC": the Pension Benefit Guaranty  Corporation  established  pursuant to
Subtitle A of Title IV of ERISA (or any successor).

     "Person":  an  individual,  partnership,   corporation,  limited  liability
company, business trust, joint stock company, trust, unincorporated association,
joint venture, Governmental Authority or other entity of whatever nature.

     "Plan":  at a particular time, any employee benefit plan that is covered by
ERISA and in respect of which the  Borrower or a Commonly  Controlled  Entity is
(or, if such plan were  terminated  at such time,  would under  Section  4069 of
ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA.

     "Properties": as defined in Section 3.17(a).

     "PUHCA": as defined in Section 3.14.

     "Reference Lender": JPMorgan Chase Bank.

     "Register": as defined in Section 9.6(d).

     "Regulation U": Regulation U of the Board as in effect from time to time.

     "Reorganization":  with respect to any  Multiemployer  Plan,  the condition
that such plan is in reorganization within the meaning of Section 4241 of ERISA.

     "Reportable  Event":  any of the  events  set forth in  Section  4043(b) of
ERISA,  other  than those  events as to which the  thirty  day notice  period is
waived under  subsections  .27,  .28,  .29,  .30,  .31,  .32, .34 or .35 of PBGC
Reg.ss.4043.

     "Required Lenders": at any time, the holders of more than 50% of the sum of
the Commitments then in effect,  provided that (i) for purposes of declaring the
Loans to be due and payable, and/or the Commitments to be terminated pursuant to
Section 7, and (ii) for all purposes after the Commitments have been terminated,
such term shall mean the holders of more than 50% of the Loans outstanding.


                                       12
<PAGE>


     "Requirement of Law": as to any Person,  the  Certificate of  Incorporation
and By-Laws or other  organizational or governing  documents of such Person, and
any law, treaty, rule or regulation or determination of an arbitrator or a court
or other Governmental Authority, in each case applicable to or binding upon such
Person or any of its  property or to which such Person or any of its property is
subject.

     "Responsible Officer": the chief executive officer,  president,  treasurer,
secretary or chief  financial  officer of the Borrower,  but in any event,  with
respect to financial  matters,  the treasurer or chief financial  officer of the
Borrower.

     "Revolving Facility": the Commitments and the Loans made hereunder.

     "Revolving Percentage":  as to any Lender at any time, the percentage which
such Lender's  Commitment then constitutes of the Total  Commitments (or, at any
time after the  Commitments  shall have expired or  terminated,  the  percentage
which the aggregate  principal  amount of such Lender's  Loans then  outstanding
constitutes of the aggregate principal amount of the Loans then outstanding.)

     "S&P":  Standard & Poor's Rating  Services,  a division of The  McGraw-Hill
Companies, Inc. (or any successor thereto).

     "SEC": the Securities and Exchange  Commission,  any successor  thereto and
any analogous Governmental Authority.

     "Significant  Subsidiary":  at any particular  time, any Subsidiary and any
other  Affiliate of the Borrower  which is engaged in the Core Gas  Distribution
Business.

     "Single  Employer Plan": any Plan that is covered by Title IV of ERISA, but
that is not a Multiemployer Plan.

     "Solvent": when used with respect to any Person, means that, as of any date
of  determination,  (a) the amount of the "present fair  saleable  value" of the
assets  of  such  Person  will,  as of  such  date,  exceed  the  amount  of all
"liabilities of such Person,  contingent or otherwise", as of such date, as such
quoted terms are determined in accordance with applicable federal and state laws
governing  determinations  of the  insolvency  of debtors,  (b) the present fair
saleable  value of the assets of such Person will,  as of such date,  be greater
than the amount that will be required to pay the liability of such Person on its
debts as such debts become absolute and matured,  (c) such Person will not have,
as of such date, an  unreasonably  small amount of capital with which to conduct
its business,  and (d) such Person will be able to pay its debts as they mature.
For purposes of this  definition,  (i) "debt" means liability on a "claim",  and
(ii)  "claim"  means any (x) right to  payment,  whether  or not such a right is
reduced to  judgment,  liquidated,  unliquidated,  fixed,  contingent,  matured,
unmatured,  disputed,  undisputed, legal, equitable, secured or unsecured or (y)
right to an equitable remedy for breach of performance if such breach gives rise
to a right to  payment,  whether  or not such  right to an  equitable  remedy is
reduced  to  judgment,  fixed,  contingent,   matured  or  unmatured,  disputed,
undisputed, secured or unsecured.

     "Subsidiary":  as  to  any  Person,  a  corporation,  partnership,  limited
liability  company or other entity of which  shares of stock or other  ownership
interests having ordinary voting power (other than stock or such other ownership
interests having such power only by reason of the happening of a contingency) to


                                       13
<PAGE>


elect  a  majority  of  the  board  of  directors  or  other  managers  of  such
corporation,  partnership  or  other  entity  are  at  the  time  owned,  or the
management of which is otherwise controlled,  directly or indirectly through one
or more intermediaries, or both, by such Person. Unless otherwise qualified, all
references to a "Subsidiary" or to  "Subsidiaries" in this Agreement shall refer
to a Subsidiary or Subsidiaries of the Borrower.

     "Synthetic Lease  Obligations":  as to any Person,  the obligations of such
Person to pay rent or other  amounts  under  any lease of (or other  arrangement
conveying the right to use) real or personal property, or a combination thereof,
so long as (i) such  obligations are not Capital Lease  Obligations and (ii) the
asset  subject  to such  lease is a  depreciable  asset of such  Person for U.S.
federal income tax purposes; for purposes of this Agreement,  the amount of such
obligations  at any time shall be determined by  calculating  the purchase price
that would be required to be paid by such Person if such Person were to exercise
its option to purchase such asset under such lease.

     "Termination Date": the five-year anniversary of the Closing Date.

     "Three-Year  Credit   Agreement":   the  three-year   $850,000,000   credit
agreement,  dated as of June 27, 2003, among the Borrower, the several banks and
other  financial  institutions  or entities  from time to time parties  thereto,
Citibank, N.A., as syndication agent, The Bank of New York and The Royal Bank of
Scotland plc, as  co-documentation  agents,  and the  Administrative  Agent,  as
amended supplemented or otherwise modified from time to time.

     "Total  Commitments":  at any time, the aggregate amount of the Commitments
then in effect.

     "Transferee": any Assignee or Participant.

     "Type": as to any Loan, its nature as an ABR Loan or a Eurodollar Loan.

     "United States": the United States of America.

     1.2 Other Definitional Provisions.  (a) Unless otherwise specified therein,
all terms defined in this Agreement shall have the defined meanings when used in
the other Loan Documents or any  certificate or other document made or delivered
pursuant hereto or thereto.

     (b) As used herein and in the other Loan Documents,  and any certificate or
other  document made or delivered  pursuant  hereto or thereto,  (i)  accounting
terms relating to the Borrower and its  Subsidiaries  not defined in Section 1.1
and  accounting  terms partly defined in Section 1.1, to the extent not defined,
shall have the  respective  meanings  given to them under  GAAP,  (ii) the words
"include",  "includes"  and  "including"  shall be deemed to be  followed by the
phrase "without  limitation",  (iii) the word "incur" shall be construed to mean
incur,  create,  issue,  assume,  become liable in respect of or suffer to exist
(and the words "incurred" and "incurrence" shall have correlative meanings), and
(iv) the  words  "asset"  and  "property"  shall be  construed  to have the same
meaning and effect and to refer to any and all  tangible and  intangible  assets
and properties,  including cash, Capital Stock, securities,  revenues, accounts,
leasehold interests and contract rights.

     (c) The words  "hereof",  "herein"  and  "hereunder"  and words of  similar
import when used in this Agreement  shall refer to this Agreement as a whole and
not to any particular  provision of this  Agreement,  and Section,  Schedule and
Exhibit references are to this Agreement unless otherwise specified.


                                       14
<PAGE>


     (d) The meanings given to terms defined herein shall be equally  applicable
to both the singular and plural forms of such terms.

                   Section 2 AMOUNT AND TERMS OF COMMITMENTS

     2.1  Commitments.  (a)  Subject to the terms and  conditions  hereof,  each
Lender severally agrees to make revolving credit loans ("Loans") to the Borrower
from time to time during the Commitment Period in an aggregate  principal amount
at any one time  outstanding  which does not exceed the amount of such  Lender's
Commitment. During the Commitment Period the Borrower may use the Commitments by
borrowing,  prepaying  the Loans in whole or in part,  and  reborrowing,  all in
accordance with the terms and conditions hereof. The Loans may from time to time
be  Eurodollar  Loans,  ABR Loans or  Competitive  Loans,  as  determined by the
Borrower and notified to the  Administrative  Agent in accordance  with Sections
2.3 and 2.7.

     (b) Any  Loans  outstanding  on the  Termination  Date will  mature  and be
payable on the Termination Date.

     2.2 Competitive Bid Procedure.  (a) Subject to the terms and conditions set
forth herein,  from time to time the Borrower may request  Competitive  Bids and
may (but shall not have any  obligation to) accept  Competitive  Bids and borrow
Competitive  Loans;  provided that while Competitive Loans are outstanding,  the
Available  Commitments  shall  be  reduced  by  the  aggregate  amount  of  such
Competitive  Loans. To request  Competitive  Bids, the Borrower shall notify the
Administrative  Agent of such request by telephone,  in the case of a Eurodollar
Loan, not later than 11:00 a.m.,  New York City time,  four Business Days before
the date of the proposed  borrowing  and, in the case of an ABR Loan,  not later
than 10:00 a.m.,  New York City time,  one  Business  Day before the date of the
proposed  borrowing;  provided  that the Borrower may submit up to (but not more
than) three  Competitive  Bid  Requests on the same day, but a  Competitive  Bid
Request  shall  not be made  within  five  Business  Days  after the date of any
previous  Competitive Bid Request,  unless any and all such previous Competitive
Bid Requests  shall have been  withdrawn  or all  Competitive  Bids  received in
response thereto rejected. Each such telephonic Competitive Bid Request shall be
confirmed promptly by hand delivery or telecopy to the Administrative Agent of a
written  Competitive Bid Request in a form approved by the Administrative  Agent
and signed by the Borrower.  Each such  telephonic and written  Competitive  Bid
Request shall specify the following information:

     (i)  the aggregate amount of the requested Loan;

     (ii) the date of such Loan, which shall be a Business Day;

     (iii)whether  such  Loan  is  to  be a  Eurodollar  Loan  or a  Fixed  Rate
          Competitive Loan;

     (iv) the  maturity  for such Loan,  which  shall  range from 7 days to five
          years (but not to extend past the Termination Date); and

     (v)  the Interest  Period,  if applicable,  for such Loan, which shall be a
          period contemplated by the definition of the term "Interest Period".


                                       15
<PAGE>


Promptly  following receipt of a Competitive Bid Request in accordance with this
Section,  the  Administrative  Agent  shall  notify the  Lenders of the  details
thereof by telecopy, inviting the Lenders to submit Competitive Bids.

     (b) Each Lender may (but shall not have any obligation to) make one or more
Competitive Bids to the Borrower in response to a Competitive Bid Request.  Each
Competitive  Bid by a Lender must be in a form  approved  by the  Administrative
Agent and must be received by the Administrative Agent by telecopy,  in the case
of a  Eurodollar  Loan,  not later  than 9:30 a.m.,  New York City  time,  three
Business Days before the proposed date of such Competitive Loan, and in the case
of an ABR Loan,  not later than 9:30 a.m.,  New York City time,  on the proposed
date  of  such   Competitive   Loan.   Competitive  Bids  that  do  not  conform
substantially to the form approved by the  Administrative  Agent may be rejected
by the  Administrative  Agent,  and the  Administrative  Agent shall  notify the
applicable Lender as promptly as practicable. Each Competitive Bid shall specify
(i) the principal amount (which shall be a minimum of $5,000,000 and an integral
multiple of $1,000,000  and which may equal the entire  principal  amount of the
Competitive  Loan  requested by the Borrower) of the  Competitive  Loan or Loans
that the Lender is willing to make,  (ii) the  Competitive  Bid Rate or Rates at
which  the  Lender  is  prepared  to make  such  Loan or Loans  (expressed  as a
percentage  rate per annum in the form of a decimal to no more than four decimal
places) and (iii) the Interest Period  applicable to each such Loan and the last
day thereof.

     (c) The Administrative Agent shall promptly notify the Borrower by telecopy
of the  Competitive  Bid  Rate  and  the  principal  amount  specified  in  each
Competitive  Bid and the  identity  of the  Lender  that  shall  have  made such
Competitive Bid.

     (d) Subject  only to the  provisions  of this  paragraph,  the Borrower may
accept  or  reject  any   Competitive   Bid.  The  Borrower   shall  notify  the
Administrative  Agent by telephone,  confirmed by telecopy in a form approved by
the Administrative Agent, whether and to what extent it has decided to accept or
reject each  Competitive  Bid, in the case of a Eurodollar  Loan, not later than
10:30 a.m., New York City time,  three Business Days before the proposed date of
the Competitive Loan, and in the case of an ABR Loan, not later than 10:30 a.m.,
New York City time, on the proposed date of the Competitive Loan;  provided that
(i) the  failure of the  Borrower  to give such  notice  shall be deemed to be a
rejection  of each  Competitive  Bid,  (ii)  the  Borrower  shall  not  accept a
Competitive  Bid  made at a  particular  Competitive  Bid  Rate if the  Borrower
rejects  a  Competitive  Bid made at a lower  Competitive  Bid  Rate,  (iii) the
aggregate  amount of the  Competitive  Bids  accepted by the Borrower  shall not
exceed the aggregate  amount of the requested  Competitive Loan specified in the
related  Competitive  Bid Request,  (iv) to the extent  necessary to comply with
clause  (iii)  above,  the  Borrower  may  accept  Competitive  Bids at the same
Competitive  Bid  Rate in  part,  which  acceptance,  in the  case  of  multiple
Competitive  Bids at such  Competitive  Bid  Rate,  shall  be made  pro  rata in
accordance with the amount of each such Competitive Bid, and (v) except pursuant
to clause (iv) above,  no  Competitive  Bid shall be accepted for a  Competitive
Loan unless such Competitive Loan is in a minimum principal amount of $5,000,000
and an integral  multiple of $1,000,000;  provided further that if a Competitive
Loan must be in an amount  less than  $5,000,000  because of the  provisions  of
clause (iv) above,  such  Competitive Loan may be for a minimum of $1,000,000 or
any integral  multiple  thereof,  and in calculating  the pro rata allocation of
acceptances of portions of multiple Competitive Bids at a particular Competitive
Bid Rate  pursuant  to clause  (iv) the  amounts  shall be rounded  to  integral
multiples of $1,000,000 in a manner  determined by the Borrower.  A notice given
by the Borrower pursuant to this paragraph shall be irrevocable.


                                       16
<PAGE>


     (e) The  Administrative  Agent shall promptly notify each bidding Lender by
telecopy  whether or not its  Competitive Bid has been accepted (and, if so, the
amount and  Competitive Bid Rate so accepted),  and each successful  bidder will
thereupon become bound,  subject to the terms and conditions hereof, to make the
Competitive Loan in respect of which its Competitive Bid has been accepted.

     (f) If the Administrative  Agent shall elect to submit a Competitive Bid in
its capacity as a Lender,  it shall submit such  Competitive Bid directly to the
Borrower  at least one  quarter  of an hour  earlier  than the time by which the
other   Lenders  are   required  to  submit  their   Competitive   Bids  to  the
Administrative Agent pursuant to paragraph (b) of this Section.

     2.3  Procedure  for Loan  Borrowing.  The  Borrower  may  borrow  under the
Commitments  during the Commitment Period on any Business Day, provided that the
Borrower shall give the  Administrative  Agent irrevocable  notice (which notice
must be received by the Administrative  Agent prior to 12:00 Noon, New York City
time, (a) three Business Days prior to the requested Borrowing Date, in the case
of Eurodollar  Loans,  or (b) one Business Day prior to the requested  Borrowing
Date, in the case of ABR Loans),  specifying (i) the amount and Type of Loans to
be  borrowed,  (ii)  the  requested  Borrowing  Date  and  (iii)  in the case of
Eurodollar  Loans,  the  respective  amounts  of each  such Type of Loan and the
respective  lengths of the initial Interest Period  therefor.  Any Loans made on
the  Closing  Date  shall  initially  be ABR  Loans.  Each  borrowing  under the
Commitments  shall  be in an  amount  equal  to (x) in the  case  of ABR  Loans,
$1,000,000  or a whole  multiple  thereof (or, if the then  aggregate  Available
Commitments are less than $1,000,000, such lesser amount) and (y) in the case of
Eurodollar  Loans,  $10,000,000  or a whole  multiple  of  $1,000,000  in excess
thereof.  Upon receipt of any such notice from the Borrower,  the Administrative
Agent  shall  promptly  notify each  Lender  thereof.  Each Lender will make the
amount of its pro rata share of each borrowing  available to the  Administrative
Agent for the account of the Borrower at the Funding Office prior to 12:00 Noon,
New York City time,  on the  Borrowing  Date  requested by the Borrower in funds
immediately  available to the Administrative  Agent. Such borrowing will then be
made available to the Borrower by the Administrative Agent crediting the account
of the  Borrower on the books of such office with the  aggregate  of the amounts
made available to the  Administrative  Agent by the Lenders and in like funds as
received by the Administrative Agent.

     2.4 Facility Fees, etc.(a) The Borrower agrees to pay to the Administrative
Agent for the  account  of each  Lender a facility  fee for the period  from and
including the Closing Date until all of the Obligations have been repaid and the
Commitments  have been  terminated,  computed  at the  Facility  Fee Rate on the
Revolving  Percentage  of such  Lender  of the  total  amount  of the  Revolving
Facility  (drawn or  undrawn),  payable  quarterly in arrears on the last day of
each March, June, September and December and on the Termination Date, commencing
on the first of such dates to occur after the date hereof.

     (b) The Borrower agrees to pay to the Administrative  Agent the fees in the
amounts and on the dates previously agreed to in writing by the Borrower and the
Administrative Agent.

     2.5  Termination or Reduction of  Commitments.  The Borrower shall have the
right,  upon not less than three  Business  Days'  notice to the  Administrative
Agent,  to terminate the Commitments or, from time to time, to reduce the amount
of  the  Commitments;   provided  that  no  such  termination  or  reduction  of
Commitments  shall be  permitted  if,  after  giving  effect  thereto and to any
prepayments  of the Loans made on the  effective  date  thereof,  the  aggregate
principal  amount of (i) the Loans  outstanding and (ii) any  Competitive  Loans
outstanding,  would exceed the Total Commitments. Any such reduction shall be in
an amount equal to  $1,000,000,  or a whole multiple  thereof,  and shall reduce
permanently the Commitments then in effect.  The  Administrative  Agent will, in
accordance with its usual practice,  notify the Lenders of each such termination
or reduction.


                                       17
<PAGE>


     2.6  Optional  Prepayments.  The  Borrower may at any time and from time to
time prepay the Loans,  in whole or in part,  without  premium or penalty,  upon
irrevocable notice delivered to the Administrative Agent at least three Business
Days prior thereto in the case of Eurodollar Loans and at least one Business Day
prior thereto in the case of ABR Loans,  which notice shall specify the date and
amount of prepayment  and whether the  prepayment is of Eurodollar  Loans or ABR
Loans; provided,  that if a Eurodollar Loan is prepaid on any day other than the
last day of the Interest Period applicable thereto,  the Borrower shall also pay
any amounts owing pursuant to Section 2.15. Upon receipt of any such notice, the
Administrative  Agent shall  promptly  notify each Lender  thereof.  If any such
notice is given, the amount specified in such notice shall be due and payable on
the date specified therein,  together with (except in the case of Loans that are
ABR  Loans)  accrued  interest  to such  date  on the  amount  prepaid.  Partial
prepayments of Loans shall be in an aggregate  principal amount of $1,000,000 or
a whole  multiple  thereof.  Competitive  Loans may not be prepaid  without  the
consent of the relevant Lender.

     2.7 Conversion and  Continuation  Options.  (a) The Borrower may elect from
time  to  time  to  convert   Eurodollar  Loans  to  ABR  Loans  by  giving  the
Administrative  Agent at least two Business  Days' prior  irrevocable  notice of
such election, provided that any such conversion of Eurodollar Loans may only be
made on the last day of an Interest  Period with respect  thereto.  The Borrower
may elect from time to time to convert ABR Loans to  Eurodollar  Loans by giving
the Administrative  Agent at least three Business Days' prior irrevocable notice
of such election (which notice shall specify the length of the initial  Interest
Period  therefor),  provided that no ABR Loan may be converted into a Eurodollar
Loan  when  any  Event  of  Default  has  occurred  and is  continuing  and  the
Administrative  Agent or the Required  Lenders have  determined  in its or their
sole discretion not to permit such conversions.  Upon receipt of any such notice
the Administrative Agent shall promptly notify each relevant Lender thereof.

     (b) Any Eurodollar Loan may be continued as such upon the expiration of the
then  current  Interest  Period  with  respect  thereto by the  Borrower  giving
irrevocable  notice  to  the  Administrative   Agent,  in  accordance  with  the
applicable provisions of the term "Interest Period" set forth in Section 1.1, of
the length of the next Interest Period to be applicable to such Loans,  provided
that no  Eurodollar  Loan may be continued as such when any Event of Default has
occurred  and is  continuing  and the  Administrative  Agent has or the Required
Lenders  have  determined  in its or their sole  discretion  not to permit  such
continuations,  and provided,  further,  that if the Borrower shall fail to give
any required notice as described above in this paragraph or if such continuation
is  not  permitted  pursuant  to the  preceding  proviso  such  Loans  shall  be
automatically  converted  to ABR  Loans on the last  day of such  then  expiring
Interest Period. Upon receipt of any such notice the Administrative  Agent shall
promptly notify each relevant Lender thereof.

     2.8  Limitations on Eurodollar  Tranches.  Notwithstanding  anything to the
contrary in this Agreement,  all borrowings,  conversions and  continuations  of
Eurodollar  Loans  hereunder and all  selections of Interest  Periods  hereunder
shall be in such amounts and be made  pursuant to such  elections  so that,  (a)
after giving effect thereto,  the aggregate  principal  amount of the Eurodollar
Loans comprising each Eurodollar Tranche shall be equal to $5,000,000 or a whole
multiple of  $1,000,000  in excess  thereof and (b) no more than ten  Eurodollar
Tranches shall be outstanding at any one time.

     2.9 Interest Rates and Payment Dates.  (a) Each  Eurodollar Loan shall bear
interest for each day during each Interest Period with respect thereto at a rate
per  annum  equal  to the  Eurodollar  Rate  determined  for  such  day plus the
Applicable Margin.

     (b) Each ABR Loan shall bear  interest at a rate per annum equal to the ABR
plus the Applicable Margin.


                                       18
<PAGE>


     (c) Each  Competitive  Loan  shall bear  interest  in  accordance  with the
applicable Competitive Bid Rate.

     (d) (i) If all or a portion of the  principal  amount of any Loan shall not
be paid when due (whether at the stated maturity, by acceleration or otherwise),
such overdue  amount  shall bear  interest at a rate per annum equal to the rate
that would otherwise be applicable thereto pursuant to the foregoing  provisions
of this Section plus 2%, and (ii) if all or a portion of any interest payable on
any Loan or any facility fee or other amount payable hereunder shall not be paid
when due (whether at the stated  maturity,  by acceleration or otherwise),  such
overdue  amount  shall bear  interest at a rate per annum equal to the rate then
applicable  to ABR Loans plus 2%, in each case,  with respect to clauses (i) and
(ii) above, from the date of such non-payment until such amount is paid in full.

     (e) Interest  shall be payable in arrears on each  Interest  Payment  Date,
provided that interest  accruing pursuant to paragraph (d) of this Section shall
be payable from time to time on demand.

     2.10  Computation  of Interest  and Fees.  (a)  Interest  and fees  payable
pursuant  hereto  shall be  calculated  on the basis of a  360-day  year for the
actual days elapsed, except that, with respect to ABR Loans the rate of interest
on which is  calculated  on the basis of the Prime Rate,  the  interest  thereon
shall be  calculated  on the basis of a 365- (or  366-,  as the case may be) day
year for the actual  days  elapsed.  The  Administrative  Agent shall as soon as
practicable  notify the Borrower and the relevant Lenders of each  determination
of a Eurodollar Rate. Any change in the interest rate on a Loan resulting from a
change  in  the  ABR or  the  Eurocurrency  Reserve  Requirements  shall  become
effective as of the opening of business on the day on which such change  becomes
effective.  The  Administrative  Agent shall as soon as  practicable  notify the
Borrower and the relevant  Lenders of the effective  date and the amount of each
such change in interest rate.

     (b) Each  determination  of an interest  rate by the  Administrative  Agent
pursuant to any provision of this  Agreement  shall be conclusive and binding on
the   Borrower  and  the  Lenders  in  the  absence  of  manifest   error.   The
Administrative  Agent  shall,  at the  request of the  Borrower,  deliver to the
Borrower a statement showing the quotations used by the Administrative  Agent in
determining any interest rate pursuant to Section 2.9.

     2.11 Inability to Determine Interest Rate. If prior to the first day of any
Interest Period:

     (a) the  Administrative  Agent shall have determined  (which  determination
shall  be  conclusive  and  binding  upon  the  Borrower)  that,  by  reason  of
circumstances  affecting the relevant  market,  adequate and reasonable means do
not exist for ascertaining the Eurodollar Rate for such Interest Period, or that
such Eurodollar rate is not available; or

     (b) the  Administrative  Agent shall have received notice from the Required
Lenders (or, in the case of a Eurodollar  Competitive  Loan,  the Lender that is
required  to make  such  Loan)  that the  Eurodollar  Rate  determined  or to be
determined  for such Interest  Period will not adequately and fairly reflect the
cost to such Lenders or Lender, as the case may be (as conclusively certified by
such  Lenders,  or Lender as the case may be) of  making  or  maintaining  their
affected Loans during such Interest Period, the Administrative  Agent shall give
telecopy or telephonic  notice thereof to the Borrower and the relevant  Lenders
as soon as  practicable  thereafter.  If such notice is given (w) any Eurodollar
Loans  requested  to be made on the first day of such  Interest  Period shall be
made as ABR Loans,  (x) any Loans that were to have been  converted on the first
day of such Interest Period to Eurodollar Loans shall be continued as ABR Loans,


                                       19
<PAGE>


(y) any outstanding Eurodollar Loans shall be converted,  on the last day of the
then-current  Interest Period,  to ABR Loans and (z) any request by the Borrower
for a Eurodollar  Competitive  Loan shall be ineffective.  Until such notice has
been withdrawn by the Administrative Agent, no further Eurodollar Loans shall be
made or  continued  as such,  nor shall the  Borrower  have the right to convert
Loans to Eurodollar Loans.

     2.12 Pro Rata  Treatment and Payments.  (a) Each  borrowing by the Borrower
from the  Lenders  hereunder,  each  payment by the  Borrower  on account of any
facility fee and any reduction of the  Commitments  of the Lenders shall be made
pro rata according to the respective Revolving Percentage as the case may be, of
the relevant Lenders.

     (b) Each payment  (including each prepayment) by the Borrower on account of
principal of and  interest on the Loans shall be made pro rata  according to the
respective outstanding principal amounts of the Loans then held by the Lenders.

     (c)  All  payments  (including  prepayments)  to be  made  by the  Borrower
hereunder,  whether on account of principal,  interest, fees or otherwise, shall
be made without  setoff or  counterclaim  and shall be made prior to 12:00 Noon,
New York City time, on the due date thereof to the Administrative Agent, for the
account of the Lenders,  at the Funding  Office,  in Dollars and in  immediately
available funds. The Administrative  Agent shall distribute such payments to the
Lenders  promptly  upon  receipt  in like  funds  as  received.  If any  payment
hereunder (other than payments on the Eurodollar  Loans) becomes due and payable
on a day other than a Business  Day,  such payment shall be extended to the next
succeeding  Business  Day. If any payment on a  Eurodollar  Loan becomes due and
payable  on a day other than a  Business  Day,  the  maturity  thereof  shall be
extended to the next succeeding Business Day unless the result of such extension
would be to extend such payment into another calendar month, in which event such
payment shall be made on the immediately  preceding Business Day. In the case of
any  extension  of any  payment  of  principal  pursuant  to the  preceding  two
sentences,  interest thereon shall be payable at the then applicable rate during
such extension.

     (d) Unless the Administrative  Agent shall have been notified in writing by
any Lender  prior to a borrowing  that such Lender will not make the amount that
would  constitute  its share of such borrowing  available to the  Administrative
Agent,  the  Administrative  Agent may assume  that such  Lender is making  such
amount available to the Administrative  Agent, and the Administrative Agent may,
in reliance upon such assumption, make available to the Borrower a corresponding
amount. If such amount is not made available to the Administrative  Agent by the
required  time on the  Borrowing  Date  therefor,  such Lender  shall pay to the
Administrative  Agent,  on demand,  such amount with interest  thereon at a rate
equal to the daily  average  Federal Funds  Effective  Rate for the period until
such Lender makes such amount immediately available to the Administrative Agent.
A certificate of the  Administrative  Agent submitted to any Lender with respect
to any amounts owing under this paragraph  shall be conclusive in the absence of
manifest  error.  If such Lender's share of such borrowing is not made available
to the  Administrative  Agent by such Lender within three  Business Days of such
Borrowing Date, the Administrative  Agent shall also be entitled to recover such
amount with interest  thereon at the rate per annum  applicable to ABR Loans, on
demand, from the Borrower.

     (e) Unless the Administrative  Agent shall have been notified in writing by
the  Borrower  prior to the date of any payment  being made  hereunder  that the
Borrower  will  not  make  such  payment  to  the   Administrative   Agent,  the
Administrative  Agent may assume that the Borrower is making such  payment,  and
the  Administrative  Agent may, but shall not be required  to, in reliance  upon
such assumption,  make available to the Lenders their respective pro rata shares


                                       20
<PAGE>


of a  corresponding  amount.  If such payment is not made to the  Administrative
Agent by the Borrower  within three  Business  Days of such required  date,  the
Administrative  Agent shall be entitled to recover,  on demand, from each Lender
to which any amount which was made available pursuant to the preceding sentence,
such  amount  with  interest  thereon  at the rate per annum  equal to the daily
average Federal Funds  Effective  Rate.  Nothing herein shall be deemed to limit
the rights of the Administrative Agent or any Lender against the Borrower.

     2.13  Requirements  of Law.  (a) If the  adoption  of or any  change in any
Requirement of Law or in the interpretation or application thereof or compliance
by any Lender with any request or directive  (whether or not having the force of
law) from any central bank or other  Governmental  Authority made  subsequent to
the date hereof:

          (i) shall  subject any Lender to any tax of any kind  whatsoever  with
     respect to this Agreement or any Eurodollar  Loan made by it, or change the
     basis of taxation of payments to such Lender in respect thereof (except for
     Non-Excluded  Taxes  covered by Section 2.14 and changes in the rate of tax
     on the overall net income of such Lender);

          (ii) shall  impose,  modify or hold  applicable  any reserve,  special
     deposit,  compulsory  loan or similar  requirement  against assets held by,
     deposits or other liabilities in or for the account of, advances,  loans or
     other  extensions of credit by, or any other  acquisition  of funds by, any
     office of such Lender that is not otherwise  included in the  determination
     of the Eurodollar Rate hereunder; or

          (iii) shall impose on such Lender any other condition;

and the result of any of the  foregoing  is to increase the cost to such Lender,
by an amount that such Lender deems to be material, of making,  converting into,
continuing or maintaining  Eurodollar  Loans, or to reduce any amount receivable
hereunder  in respect  thereof,  then,  in any such  case,  the  Borrower  shall
promptly pay such Lender,  upon its demand,  any additional amounts necessary to
compensate such Lender for such increased cost or reduced amount receivable.  If
any Lender  becomes  entitled to claim any additional  amounts  pursuant to this
paragraph,   it  shall  promptly  notify  the  Borrower  (with  a  copy  to  the
Administrative Agent) of the event by reason of which it has become so entitled.

     (b) If any Lender shall have  determined that the adoption of or any change
in any Requirement of Law regarding capital adequacy or in the interpretation or
application thereof or compliance by such Lender or any corporation  controlling
such Lender with any request or directive regarding capital adequacy (whether or
not having the force of law) from any Governmental  Authority made subsequent to
the date  hereof  shall have the effect of  reducing  the rate of return on such
Lender's  or such  corporation's  capital as a  consequence  of its  obligations
hereunder to a level below that which such Lender or such corporation could have
achieved but for such adoption,  change or compliance (taking into consideration
such Lender's or such  corporation's  policies with respect to capital adequacy)
by an amount deemed by such Lender to be material, then from time to time, after
submission  by such Lender to the  Borrower  (with a copy to the  Administrative
Agent) of a written request therefor, the Borrower shall pay to such Lender such
additional  amount or amounts as will compensate such Lender for such reduction;
provided that the Borrower shall not be required to compensate a Lender pursuant
to this  paragraph  for any amounts  incurred  more than six months prior to the
date that such Lender notifies the Borrower of such Lender's  intention to claim
compensation  therefor;  and provided further that, if the circumstances  giving
rise to such claim have a retroactive  effect,  then such six-month period shall
be extended to include the period of such retroactive effect.


                                       21
<PAGE>


     (c)  Notwithstanding  the foregoing  provisions  of this Section,  a Lender
shall not be entitled to compensation pursuant to this Section in respect of any
Competitive  Loan if the Requirement of Law that would  otherwise  entitle it to
such compensation  shall have been publicly announced prior to submission of the
Competitive Bid pursuant to which such Loan was made.

     (d) A certificate as to any  additional  amounts  payable  pursuant to this
Section   submitted  by  any  Lender  to  the  Borrower  (with  a  copy  to  the
Administrative  Agent) shall be conclusive in the absence of manifest error. The
obligations  of  the  Borrower  pursuant  to  this  Section  shall  survive  the
termination of this Agreement and the payment of the Loans and all other amounts
payable hereunder.

     2.14 Taxes.  (a) All  payments  made by the Borrower  under this  Agreement
shall be made free and clear of, and without  deduction or withholding for or on
account of, any present or future income, stamp or other taxes, levies, imposts,
duties,  charges,  fees,  deductions or withholdings,  now or hereafter imposed,
levied, collected, withheld or assessed by any Governmental Authority, excluding
net income  taxes and  franchise  taxes  (imposed  in lieu of net income  taxes)
imposed  on the  Administrative  Agent or any Lender as a result of a present or
former  connection  between  the  Administrative  Agent or such  Lender  and the
jurisdiction of the  Governmental  Authority  imposing such tax or any political
subdivision  or  taxing  authority  thereof  or  therein  (other  than  any such
connection  arising solely from the  Administrative  Agent or such Lender having
executed, delivered or performed its obligations or received a payment under, or
enforced,  this Agreement or any other Loan Document).  If any such non-excluded
taxes,  levies,  imposts,  duties,  charges,  fees,  deductions or  withholdings
("Non-Excluded  Taxes") or Other  Taxes are  required  to be  withheld  from any
amounts payable to the Administrative Agent or any Lender hereunder, the amounts
so payable to the Administrative  Agent or such Lender shall be increased to the
extent  necessary  to yield to the  Administrative  Agent or such Lender  (after
payment of all  Non-Excluded  Taxes and Other Taxes)  interest or any such other
amounts  payable  hereunder  at the rates or in the  amounts  specified  in this
Agreement,  provided,  however,  that the  Borrower  shall  not be  required  to
increase any such amounts payable to any Lender with respect to any Non-Excluded
Taxes (i) that are  attributable  to such  Lender's  failure to comply  with the
requirements  of  paragraph  (d) or (e) of this  Section or (ii) that are United
States  withholding  taxes imposed on amounts payable to such Lender at the time
the Lender  becomes a party to this  Agreement,  except to the extent  that such
Lender's assignor (if any) was entitled,  at the time of assignment,  to receive
additional  amounts from the Borrower  with respect to such  Non-Excluded  Taxes
pursuant to this paragraph.

     (b) In  addition,  the  Borrower  shall pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.

     (c)  Whenever  any  Non-Excluded  Taxes or Other  Taxes are  payable by the
Borrower,  as promptly as possible  thereafter  the  Borrower  shall send to the
Administrative  Agent for its own  account or for the  account  of the  relevant
Lender,  as the case may be, a certified  copy of an original  official  receipt
received by the Borrower showing payment  thereof.  If the Borrower fails to pay
any  Non-Excluded  Taxes  or Other  Taxes  when  due to the  appropriate  taxing
authority or fails to remit to the Administrative Agent the required receipts or
other  required   documentary   evidence,   the  Borrower  shall  indemnify  the
Administrative  Agent and the Lenders  for any  incremental  taxes,  interest or
penalties that may become payable by the Administrative Agent or any Lender as a
result of any such failure.

     (d) Each  Lender (or  Transferee)  that is not a citizen or resident of the
United States of America, a corporation,  partnership or other entity created or
organized  in or  under  the  laws  of the  United  States  of  America  (or any
jurisdiction  thereof), or any estate or trust that is subject to federal income
taxation  regardless  of the source of its income (a  "Non-U.S.  Lender")  shall


                                       22
<PAGE>


deliver to the  Borrower  and the  Administrative  Agent  (or,  in the case of a
Participant,  to the Lender from which the related participation shall have been
purchased)  two copies of either U.S.  Internal  Revenue  Service Form W-8BEN or
Form W-8ECI,  or, in the case of a Non-U.S.  Lender claiming exemption from U.S.
federal  withholding tax under Section 871(h) or 881(c) of the Code with respect
to payments of "portfolio  interest",  a statement  substantially in the form of
Exhibit D and a Form W-8BEN,  or any subsequent  versions  thereof or successors
thereto,  properly completed and duly executed by such Non-U.S.  Lender claiming
complete  exemption from, or a reduced rate of, U.S. federal  withholding tax on
all payments by the Borrower under this Agreement and the other Loan  Documents.
Such forms shall be delivered by each  Non-U.S.  Lender on or before the date it
becomes a party to this  Agreement  (or, in the case of any  Participant,  on or
before  the date such  Participant  purchases  the  related  participation).  In
addition,  each  Non-U.S.  Lender  shall  deliver such forms  promptly  upon the
obsolescence  or  invalidity of any form  previously  delivered by such Non-U.S.
Lender.  Each Non-U.S.  Lender shall promptly notify the Borrower at any time it
determines  that  it is no  longer  in a  position  to  provide  any  previously
delivered  certificate  to the  Borrower  (or any  other  form of  certification
adopted by the U.S. taxing  authorities for such purpose).  Notwithstanding  any
other  provision of this paragraph,  a Non-U.S.  Lender shall not be required to
deliver any form pursuant to this  paragraph  that such  Non-U.S.  Lender is not
legally able to deliver.

     (e) A Lender that is entitled to an exemption from or reduction of non-U.S.
withholding  tax under the law of the  jurisdiction  in which  the  Borrower  is
located,  or any treaty to which such  jurisdiction is a party,  with respect to
payments under this Agreement  shall deliver to the Borrower (with a copy to the
Administrative  Agent),  at the time or times  prescribed by  applicable  law or
reasonably  requested by the  Borrower,  such  properly  completed  and executed
documentation  prescribed by  applicable  law as will permit such payments to be
made without  withholding  or at a reduced  rate,  provided  that such Lender is
legally entitled to complete, execute and deliver such documentation and in such
Lender's judgment such completion,  execution or submission would not materially
prejudice the legal position of such Lender.

     (f) The  agreements in this Section shall survive the  termination  of this
Agreement and the payment of the Loans and all other amounts payable hereunder.

     2.15  Indemnity.  The Borrower  agrees to indemnify each Lender and to hold
each Lender  harmless  from any loss or expense  that such Lender may sustain or
incur as a consequence  of (a) default by the Borrower in making a borrowing of,
conversion into or continuation of Eurodollar Loans after the Borrower has given
a  notice  requesting  the  same  in  accordance  with  the  provisions  of this
Agreement, (b) default by the Borrower in making any prepayment of or conversion
from  Eurodollar  Loans  after  the  Borrower  has  given a  notice  thereof  in
accordance with the provisions of this Agreement, (c) the making of a prepayment
of Eurodollar Loans on a day that is not the last day of an Interest Period with
respect  thereto or (d) the making of a prepayment of a Competitive  Loan.  Such
indemnification  may include an amount  equal to the excess,  if any, of (i) the
amount of interest  that would have accrued on the amount so prepaid,  or not so
borrowed,  converted  or  continued,  for  the  period  from  the  date  of such
prepayment or of such failure to borrow,  convert or continue to the last day of
such  Interest  Period  (or,  in the case of a failure  to  borrow,  convert  or
continue,  the  Interest  Period that would have  commenced  on the date of such
failure) in each case at the applicable rate of interest for such Loans provided
for herein (excluding,  however, the Applicable Margin included therein, if any)
over (ii) the amount of interest (as reasonably  determined by such Lender) that
would have  accrued to such  Lender on such  amount by  placing  such  amount on
deposit for a comparable  period with leading banks in the interbank  eurodollar
market.  A  certificate  as to any  amounts  payable  pursuant  to this  Section
submitted to the Borrower by any Lender  shall be  conclusive  in the absence of
manifest  error.  This covenant shall survive the  termination of this Agreement
and the payment of the Loans and all other amounts payable hereunder.


                                       23
<PAGE>


     2.16 Change of Lending Office. Each Lender agrees that, upon the occurrence
of any event  giving  rise to the  operation  of Section  2.13 or  2.14(a)  with
respect to such Lender,  it will, if requested by the Borrower,  use  reasonable
efforts (subject to overall policy  considerations  of such Lender) to designate
another  lending  office for any Loans affected by such event with the object of
avoiding the consequences of such event; provided, that such designation is made
on terms that,  in the sole  judgment of such Lender,  cause such Lender and its
lending office(s) to suffer no economic, legal or regulatory  disadvantage,  and
provided,  further, that nothing in this Section shall affect or postpone any of
the  obligations of any Borrower or the rights of any Lender pursuant to Section
2.13 or 2.14(a).

     2.17 Replacement of Lenders. The Borrower shall be permitted to replace any
Lender that (a) requests  reimbursement  for amounts  owing  pursuant to Section
2.13 or 2.14(a) or (b) defaults in its obligation to make Loans hereunder,  with
a replacement financial institution; provided that (i) such replacement does not
conflict  with any  Requirement  of Law,  (ii) no Event of  Default  shall  have
occurred and be continuing at the time of such  replacement,  (iii) prior to any
such  replacement,  such Lender shall have taken no action under Section 2.16 so
as to eliminate  the  continued  need for payment of amounts  owing  pursuant to
Section  2.13 or  2.14(a),  (iv) the  replacement  financial  institution  shall
purchase,  at par, all Loans and other amounts owing to such replaced  Lender on
or prior to the date of  replacement,  (v) the Borrower  shall be liable to such
replaced  Lender  under  Section  2.15  if any  Eurodollar  Loan  or  Eurodollar
Competitive  Loan owing to such replaced Lender shall be purchased other than on
the last day of the  Interest  Period  relating  thereto,  (vi) the  replacement
financial institution, if not already a Lender, shall be reasonably satisfactory
to the  Administrative  Agent,  (vii) the replaced  Lender shall be obligated to
make such replacement in accordance with the provisions of Section 9.6 (provided
that the Borrower shall be obligated to pay the  registration and processing fee
referred  to  therein),  (viii)  until  such time as such  replacement  shall be
consummated,  the Borrower  shall pay all  additional  amounts (if any) required
pursuant  to  Section  2.13 or  2.14(a),  as the case may be,  and (ix) any such
replacement  shall not be deemed to be a waiver of any rights that the Borrower,
the  Administrative  Agent or any other  Lender  shall have against the replaced
Lender.

                    Section 3 REPRESENTATIONS AND WARRANTIES

     To induce  the  Administrative  Agent and the  Lenders  to enter  into this
Agreement and to make the Loans the Borrower  hereby  represents and warrants to
the Administrative Agent and each Lender that:

     3.1  Financial  Condition.  The audited  consolidated  balance sheet of the
Borrower at December 31, 2003, and the related consolidated statements of income
and of cash flows for the fiscal year ended on December 31, 2003, reported on by
and  accompanied  by an  unqualified  report from, in respect of the fiscal year
ending  on  December  31,  2003,   Deloitte  Touche,  LLP,  present  fairly  the
consolidated  financial  condition  of the  Borrower  as at such  date,  and the
consolidated  results of its operations and its consolidated  cash flows for the
respective fiscal years then ended. The unaudited  consolidated balance sheet of
the  Borrower  as at March  31,  2004  and the  related  unaudited  consolidated
statements  of income and cash flows for the  three-month  period  ended on such
date, present fairly the consolidated  financial condition of the Borrower as at
such date, and the  consolidated  results of its operations and its consolidated
cash flows for the  three-month  period then ended  (subject to normal  year-end
audit  adjustments).  All  such  financial  statements,  including  the  related
schedules and notes thereto,  have been prepared in accordance with GAAP applied


                                       24
<PAGE>


consistently  throughout  the  periods  involved  (except  as  approved  by  the
aforementioned firm of accountants and disclosed therein).  The Borrower and its
Subsidiaries  do  not  have  any  material  Guarantee  Obligations,   contingent
liabilities and  liabilities for taxes, or any long-term  leases (other than the
Facility  Lease  Agreement,  dated as of March 25, 2004,  between SE  Ravenswood
Trust and KeySpan  Ravenswood LLC) or unusual forward or long-term  commitments,
including any interest rate or foreign currency swap or exchange  transaction or
other  obligation in respect of derivatives,  that are not reflected in the most
recent  financial  statements  referred to in this paragraph,  except  Guarantee
Obligations of Indebtedness  of the Borrower  and/or any of its  Subsidiaries so
long as the Indebtedness in respect of which such Guarantee Obligations arise is
reflected in such financial statements.  During the period from April 1, 2004 to
and including the date hereof there has been no  Disposition  by the Borrower of
any  material  part of its business or property,  except the  disposition  of an
approximately  39%  interest  in  KeySpan  Energy  Canada  Partnership  and  the
disposition of an approximately 32% interest in The Houston Exploration Company.

     3.2 No Change.  Since  December 31, 2003 there has been no  development  or
event that has had or could  reasonably  be expected to have a Material  Adverse
Effect.

     3.3 Corporate Existence;  Compliance with Law. Each of the Borrower and its
Significant  Subsidiaries  (a) is duly organized,  validly  existing and in good
standing under the laws of the  jurisdiction  of its  organization,  (b) has the
corporate  power and  authority,  and the legal  right,  to own and  operate its
property,  to lease the  property  it  operates  as lessee  and to  conduct  the
business in which it is currently  engaged,  (c) is duly  qualified as a foreign
corporation and in good standing under the laws of each  jurisdiction  where its
ownership,  lease or  operation  of  property  or the  conduct  of its  business
requires such  qualification  and (d) is in compliance with all  Requirements of
Law except to the extent that the failure to comply  therewith could not, in the
aggregate, reasonably be expected to have a Material Adverse Effect.

     3.4 Corporate Power; Authorization;  Enforceable Obligations.  The Borrower
has the corporate power and authority, and the legal right, to make, deliver and
perform the Loan Documents and to borrow  hereunder.  The Borrower has taken all
necessary corporate action to authorize the execution,  delivery and performance
of the  Loan  Documents  and to  authorize  the  borrowings  on  the  terms  and
conditions  of this  Agreement.  No consent or  authorization  of,  filing with,
notice to or other act by or in respect of, any  Governmental  Authority  or any
other Person is required in connection with the borrowings hereunder or with the
execution, delivery,  performance,  validity or enforceability of this Agreement
or any of the Loan  Documents,  except  consents,  authorizations,  filings  and
notices described in Schedule 3.4, which consents,  authorizations,  filings and
notices have been  obtained or made and are in full force and effect.  Each Loan
Document has been duly executed and  delivered on behalf of the  Borrower.  This
Agreement  constitutes,  and  each  other  Loan  Document  upon  execution  will
constitute,  a legal, valid and binding obligation of the Borrower,  enforceable
against the Borrower in accordance with its terms,  except as enforceability may
be limited by applicable bankruptcy, insolvency,  reorganization,  moratorium or
similar laws  affecting the  enforcement of creditors'  rights  generally and by
general equitable  principles  (whether  enforcement is sought by proceedings in
equity or at law).

     3.5 No Legal Bar. The execution, delivery and performance of this Agreement
and the  other  Loan  Documents,  the  borrowings  hereunder  and the use of the
proceeds  thereof  will  not  violate  any  Requirement  of Law or any  material
Contractual  Obligation of the Borrower or any of its  Subsidiaries and will not
result in, or require,  the creation or  imposition  of any Lien on any of their
respective properties or revenues pursuant to any Requirement of Law or any such
Contractual  Obligation.   No  Requirement  of  Law  or  Contractual  Obligation
applicable  to the  Borrower  or any of its  Subsidiaries  could  reasonably  be
expected to have a Material Adverse Effect.


                                       25
<PAGE>


     3.6 Litigation. No litigation, investigation or proceeding of or before any
arbitrator  or  Governmental  Authority  is pending or, to the  knowledge of the
Borrower,  threatened by or against the Borrower or any of its  Subsidiaries  or
against any of their  respective  properties or revenues (a) with respect to any
of the Loan Documents or any of the transactions contemplated hereby or thereby,
or (b) that could  reasonably  be  expected  to have a Material  Adverse  Effect
(except as set forth on Schedule 3.6).

     3.7 No Default.  Neither the  Borrower  nor any of its  Subsidiaries  is in
default  under or with  respect  to any of its  Contractual  Obligations  in any
respect that could reasonably be expected to have a Material Adverse Effect.  No
Default or Event of Default has occurred and is continuing.

     3.8 Ownership of Property; Liens. Each of the Borrower and its Subsidiaries
has title in fee  simple  to, or a valid  leasehold  interest  in,  all its real
property,  and good title to, or a valid  leasehold  interest  in, all its other
property,  except to the extent  failure to have such title could not reasonably
be  expected to have a Material  Adverse  Effect,  and none of such  property is
subject to any Lien except as permitted by Section 6.2.

     3.9 Intellectual  Property. The Borrower and each of its Subsidiaries owns,
or is licensed to use, all  Intellectual  Property  necessary for the conduct of
its business as currently  conducted,  except to the extent failure to have such
ownership or license could not reasonably be expected to have a Material Adverse
Effect.  No  material  claim has been  asserted  and is  pending  by any  Person
challenging or questioning the use of any Intellectual  Property or the validity
or  effectiveness of any  Intellectual  Property,  except to the extent any such
claim could not reasonably be expected to have a Material  Adverse  Effect,  nor
does  the  Borrower  know of any  valid  basis  for any such  claim.  The use of
Intellectual  Property by the Borrower and its Subsidiaries does not infringe on
the rights of any Person in any material respect,  except to the extent any such
infringement could not reasonably be expected to have a Material Adverse Effect.

     3.10 Taxes.  Each of the Borrower and each of its Subsidiaries has filed or
caused to be filed all  Federal,  state and other  material tax returns that are
required  to be filed and has paid all taxes shown to be due and payable on said
returns or on any  assessments  made  against it or any of its  property and all
other taxes,  fees or other charges  imposed on it or any of its property by any
Governmental  Authority  (other  than any the  amount  or  validity  of that are
currently  being  contested in good faith by  appropriate  proceedings  and with
respect to which  reserves  in  conformity  with GAAP have been  provided on the
books of the Borrower or its Subsidiaries,  as the case may be); no material tax
Lien has been filed, and, to the knowledge of the Borrower, no material claim is
being asserted, with respect to any such tax, fee or other charge.

     3.11 Federal Regulations. No part of the proceeds of any Loans will be used
for "buying" or "carrying" any "margin stock" within the respective  meanings of
each  of the  quoted  terms  under  Regulation  U as now and  from  time to time
hereafter  in effect or for any purpose  that  violates  the  provisions  of the
Regulations of the Board.

     3.12 Labor Matters.  Except as, in the  aggregate,  could not reasonably be
expected to have a Material  Adverse  Effect:  (a) there are no strikes or other
labor disputes  against the Borrower or any of its  Subsidiaries  pending or, to
the knowledge of the Borrower,  threatened; (b) hours worked by and payment made
to employees of the Borrower and its Subsidiaries  have not been in violation of
the Fair Labor Standards Act or any other applicable  Requirement of Law dealing
with such  matters;  and (c) all  payments  due from the  Borrower or any of its
Subsidiaries on account of employee health and welfare  insurance have been paid
or  accrued  as a  liability  on the  books  of  the  Borrower  or the  relevant
Subsidiary.


                                       26
<PAGE>


     3.13  ERISA.  Neither  a  Reportable  Event  nor  an  "accumulated  funding
deficiency"  (within  the  meaning of Section  412 of the Code or Section 302 of
ERISA) has occurred during the five-year  period prior to the date on which this
representation  is made or deemed made with  respect to any Plan,  and each Plan
has complied in all material  respects with the  applicable  provisions of ERISA
and the Code. No termination of a Single Employer Plan which could reasonably be
expected to result in a Material  Adverse  Effect has  occurred,  and no Lien in
favor  of the PBGC or a Plan has  arisen,  during  such  five-year  period.  The
present value of all accrued  benefits under each Single Employer Plan (based on
those  assumptions  used to fund  such  Plans)  did not,  as of the last  annual
valuation date prior to the date on which this  representation is made or deemed
made,  exceed the value of the  assets of such Plan  allocable  to such  accrued
benefits by a material amount.  Neither the Borrower nor any Commonly Controlled
Entity has had a complete or partial withdrawal from any Multiemployer Plan that
has resulted or could  reasonably be expected to result in a material  liability
under ERISA, and neither the Borrower nor any Commonly  Controlled  Entity would
become subject to any material liability under ERISA if the Borrower or any such
Commonly  Controlled  Entity were to withdraw  completely from all Multiemployer
Plans as of the  valuation  date most closely  preceding  the date on which this
representation  is  made  or  deemed  made.  No  such  Multiemployer  Plan is in
Reorganization or Insolvent.

     3.14 Investment  Company Act; Other  Regulations.  Neither the Borrower nor
any  of  its  Subsidiaries  is  (i)  an  "investment   company",  or  a  company
"controlled"  by an "investment  company",  within the meaning of the Investment
Company Act of 1940.  The Borrower is a registered  "holding  company" under the
Public Utility Holding Company Act of 1935, as amended ("PUHCA"), and is subject
to regulation by the  Securities and Exchange  Commission.  Neither the Borrower
nor any of its  Subsidiaries  is subject to regulation  under any Requirement of
Law (other than  Regulation X of the Board and PUHCA) that limits its ability to
incur Indebtedness.

     3.15 Subsidiaries.  Except as disclosed to the Administrative  Agent by the
Borrower in writing from time to time after the Closing Date,  (a) Schedule 3.15
sets  forth  the name and  jurisdiction  of  incorporation  of each  Significant
Subsidiary  and, as to each such  Subsidiary,  the  percentage  of each class of
Capital  Stock  owned  by  the  Borrower  and  (b)  there  are  no   outstanding
subscriptions,   options,   warrants,  calls,  rights  or  other  agreements  or
commitments  (other than stock  options  granted to employees  or directors  and
directors'  qualifying  shares and the  Borrower's  MEDS Equity  Units  issuance
priced on April 30,  2002) of any nature  relating to any  Capital  Stock of the
Borrower or any Significant Subsidiary, except as created by the Loan Documents.

     3.16 Use of  Proceeds.  The proceeds of the Loans shall be used for general
corporate  purposes  (including  commercial  paper  back-up  liquidity)  of  the
Borrower and its Subsidiaries in the ordinary course of business.

     3.17  Environmental  Matters.  Except  as,  in  the  aggregate,  could  not
reasonably be expected to have a Material Adverse Effect:

          (a) the  facilities  or  properties  owned,  leased or operated by the
     Borrower and any of its Subsidiaries (the "Properties") do not contain, and
     have not previously  contained,  any Materials of Environmental  Concern in
     amounts  or  concentrations  or  under  circumstances  that  constitute  or
     constituted  a violation  of, or could give rise to  liability  under,  any
     Environmental Law;

          (b) neither the Borrower nor any of its  Subsidiaries  has received or
     is aware of any notice of  violation,  alleged  violation,  non-compliance,
     liability  or  potential  liability  regarding   environmental  matters  or
     compliance with  Environmental Laws with regard to any of the Properties or


                                       27
<PAGE>


     the  business  operated  by the  Borrower or any of its  Subsidiaries  (the
     "Business"), nor does the Borrower have knowledge or reason to believe that
     any such notice will be received or is being threatened;

          (c) Materials of  Environmental  Concern have not been  transported or
     disposed of from the  Properties  in  violation  of, or in a manner or to a
     location that could give rise to liability  under, any  Environmental  Law,
     nor have any Materials of  Environmental  Concern been generated,  treated,
     stored or disposed of at, on or under any of the  Properties  in  violation
     of, or in a manner that could give rise to liability  under, any applicable
     Environmental Law;

          (d) no judicial proceeding or governmental or administrative action is
     pending  or,  to the  knowledge  of the  Borrower,  threatened,  under  any
     Environmental  Law to which the  Borrower or any  Subsidiary  is or will be
     named as a party with respect to the  Properties or the  Business,  nor are
     there any consent decrees or other decrees, consent orders,  administrative
     orders or other orders, or other  administrative  or judicial  requirements
     outstanding  under any  Environmental Law with respect to the Properties or
     the Business;

          (e) there has been no release or threat of  release  of  Materials  of
     Environmental Concern at or from the Properties, or arising from or related
     to the operations of the Borrower or any Subsidiary in connection  with the
     Properties or otherwise in connection with the Business, in violation of or
     in  amounts  or in a  manner  that  could  give  rise  to  liability  under
     Environmental Laws;

          (f)  the  Properties  and  all  operations  at the  Properties  are in
     compliance,  and have in the last five years been in  compliance,  with all
     applicable  Environmental  Laws, and there is no contamination at, under or
     about the Properties or violation of any  Environmental Law with respect to
     the Properties or the Business; and

          (g) neither the Borrower nor any of its  Subsidiaries  has assumed any
     liability of any other Person under Environmental Laws.

     3.18 Accuracy of Information, etc. No statement or information contained in
this Agreement,  the Notes, the Confidential Information Memorandum or any other
document,  certificate or statement furnished by or on behalf of the Borrower to
the Administrative  Agent or the Lenders,  or any of them, for use in connection
with the transactions  contemplated by this Agreement,  contained as of the date
such  statement,  information,  document or certificate was so furnished (or, in
the  case of the  Confidential  Information  Memorandum,  as of the date of this
Agreement),  any  untrue  statement  of a  material  fact or  omitted to state a
material fact necessary to make the statements  contained  herein or therein not
misleading.  There is no fact known to the  Borrower  that could  reasonably  be
expected to have a Material Adverse Effect that has not been expressly disclosed
herein,  in the Confidential  Information  Memorandum or in any other documents,
certificates  and  statements  furnished  to the  Administrative  Agent  and the
Lenders for use in connection with the transactions contemplated hereby.

                         Section 4 CONDITIONS PRECEDENT

     4.1  Conditions  to Closing  Date.  The Closing Date shall be the date upon
which the following conditions precedent shall have been fulfilled:

          (a) Credit  Agreement.  The  Administrative  Agent shall have received
     this Agreement,  executed and delivered by the  Administrative  Agent,  the
     Borrower and each Person listed on Schedule 1.1.


                                       28
<PAGE>


          (b)  Termination of Existing  Credit  Agreement.  The Existing  Credit
     Agreement shall have been terminated and all amounts owed thereunder  shall
     have been paid.

          (c) Financial Statements.  The Lenders shall have received (i) audited
     consolidated financial statements of the Borrower for the fiscal year ended
     December  31,  2003  and  (ii)  unaudited  interim  consolidated  financial
     statements of the Borrower for each  quarterly  period ended  subsequent to
     the date of the latest applicable  financial  statements delivered pursuant
     to clause (i) of this paragraph as to which such  financial  statements are
     available,  and such  financial  statements  shall not,  in the  reasonable
     judgment  of the  Lenders,  reflect  any  material  adverse  change  in the
     consolidated  financial  condition  of the  Borrower,  as  reflected in the
     financial   statements  or  projections   contained  in  the   Confidential
     Information Memorandum.

          (d) Approvals. All governmental and third party approvals necessary in
     connection  with  the  continuing   operations  of  the  Borrower  and  its
     Subsidiaries  and the  transactions  contemplated  hereby  shall  have been
     obtained and be in full force and effect.

          (e) Fees. The Lenders and the Administrative Agent shall have received
     all fees required to be paid, and all expenses for which invoices have been
     presented (including the reasonable fees and expenses of legal counsel), on
     or before the Closing Date.

          (f) Closing Certificate. The Administrative Agent shall have received,
     with a counterpart  for each Lender,  a certificate of the Borrower,  dated
     the Closing Date,  substantially in the form of Exhibit A, with appropriate
     insertions and attachments.

          (g) Legal Opinions.  The Administrative  Agent shall have received the
     executed  legal  opinion of John J.  Bishar,  Jr.,  Senior Vice  President,
     General  Counsel  and  Secretary  of the  Borrower  and  its  Subsidiaries,
     substantially in the form of Exhibit C. Such legal opinion shall cover such
     other matters incident to the  transactions  contemplated by this Agreement
     as the Administrative Agent may reasonably require.

          (h) Reaffirmation of Commercial Paper Ratings. The Borrower shall have
     maintained the rating of its  commercial  paper of at least A2 from S&P and
     P2 from Moody's.

     4.2 Conditions to Each Extension of Credit.The  agreement of each Lender to
make any extension of credit  requested to be made by it on any date  (including
its initial extension of credit) is subject to the satisfaction of the following
conditions precedent:

          (a)  Representations  and Warranties.  Each of the representations and
     warranties  made by the  Borrower in or pursuant to this  Agreement  (other
     than the representations and warranties  contained in Sections 3.2, 3.6 and
     3.17) shall be true and correct on and as of such date as if made on and as
     of such date.

          (b) No Default. No Default or Event of Default shall have occurred and
     be  continuing  on such date or after giving  effect to the  extensions  of
     credit requested to be made on such date.

     Each borrowing by the Borrower  hereunder shall constitute a representation
and warranty by the Borrower as of the date of such extension of credit that the
conditions contained in this Section 4.2 have been satisfied.


                                       29
<PAGE>


                        Section 5 AFFIRMATIVE COVENANTS

     The Borrower  hereby  agrees  that,  so long as the  Commitments  remain in
effect or any Loan or other amount is owing to any Lender or the  Administrative
Agent hereunder, the Borrower shall and shall cause each of its Subsidiaries to:

     5.1  Financial  Statements.  Furnish to the  Administrative  Agent and each
Lender:

     (a) as soon as available, but in any event within 120 days after the end of
each fiscal year of the  Borrower,  a copy of the audited  consolidated  balance
sheet of the Borrower and its  consolidated  Subsidiaries  as at the end of such
fiscal year and the related  audited  consolidated  statements  of income and of
cash flows for such fiscal year,  setting forth in each case in comparative form
the figures for the previous fiscal year,  reported on without a "going concern"
or like qualification or exception, or qualification arising out of the scope of
the  audit,  by  Deloitte  Touche,  LLP or other  independent  certified  public
accountants of nationally recognized standing; and

     (b) as soon as available, but in any event not later than 60 days after the
end of each of the first  three  quarterly  periods of each  fiscal  year of the
Borrower,  the  unaudited  consolidated  balance  sheet of the  Borrower and its
consolidated  Subsidiaries  as at the  end  of  such  quarter  and  the  related
unaudited  consolidated  statements of income and of cash flows for such quarter
and the portion of the fiscal  year  through  the end of such  quarter,  setting
forth in each  case in  comparative  form the  figures  for the  previous  year,
certified  by a  Responsible  Officer  as being  fairly  stated in all  material
respects (subject to normal year-end audit adjustments).

All such  financial  statements  shall be complete  and correct in all  material
respects and shall be prepared in reasonable  detail and in accordance with GAAP
applied  consistently  throughout the periods  reflected  therein and with prior
periods (except as approved by such accountants or officer,  as the case may be,
and disclosed therein).

     5.2 Certificates;  Other Information.  Furnish to the Administrative  Agent
and each Lender (or, in the case of clause (c), to the relevant Lender):

     (a) concurrently with the delivery of any financial  statements pursuant to
Section 5.1, (i) a  certificate  of a Responsible  Officer  stating that, to the
best of such Responsible  Officer's  knowledge,  the Borrower during such period
has  observed  or  performed  all of its  covenants  and other  agreements,  and
satisfied every condition, contained in this Agreement to be observed, performed
or satisfied by it, and that such Responsible  Officer has obtained no knowledge
of any Default or Event of Default except as specified in such  certificate  and
(ii) in the case of  quarterly  or annual  financial  statements,  a  compliance
certificate   containing  all   information  and   calculations   necessary  for
determining  compliance  with the  provisions  of Section 6.1 of this  Agreement
referred  to therein as of the last day of the fiscal  quarter or fiscal year of
the Borrower, as the case may be;

     (b)  within  five days  after the same are  sent,  copies of all  financial
statements  and reports that the  Borrower  sends to the holders of any class of
its debt securities or public equity  securities and, within five days after the
same are filed, copies of all financial statements and reports that the Borrower
may make to, or file with, the SEC; and

     (c) promptly, such additional financial and other information as any Lender
may from time to time reasonably request.


                                       30
<PAGE>


     5.3 Payment of  Obligations.  Pay,  discharge  or  otherwise  satisfy at or
before  maturity or before they become  delinquent,  as the case may be, all its
material obligations of whatever nature, except where (i) the amount or validity
thereof is currently  being  contested in good faith by appropriate  proceedings
and reserves in conformity  with GAAP with respect thereto have been provided on
the books of the  Borrower or its  Subsidiaries,  as the case may be or (ii) the
failure to do so could not  reasonably  be expected  to have a Material  Adverse
Effect.

     5.4 Maintenance of Existence;  Compliance.  (a) In the case of the Borrower
and each of its Significant  Subsidiaries,  (i) preserve, renew and keep in full
force and effect its corporate  existence and (ii) take all reasonable action to
maintain all rights,  privileges  and  franchises  necessary or desirable in the
normal conduct of its business,  except, in each case, as otherwise permitted by
Section  5.4 and except,  in the case of clause  (ii) above,  to the extent that
failure to do so could not  reasonably  be expected  to have a Material  Adverse
Effect; and (b) comply with all Contractual  Obligations and Requirements of Law
except  to the  extent  that  failure  to comply  therewith  could  not,  in the
aggregate, reasonably be expected to have a Material Adverse Effect.

     5.5  Maintenance of Property;  Insurance.  (a) Keep all property useful and
necessary in its business in good working order and condition, ordinary wear and
tear excepted and (b) maintain with  financially  sound and reputable  insurance
companies  insurance on all its property in at least such amounts and against at
least  such risks  (but  including,  in any  event,  public  liability,  product
liability and business  interruption) as are usually insured against in the same
general area by companies engaged in the same or a similar business.

     5.6 Inspection of Property; Books and Records; Discussions. (a) Keep proper
books of  records  and  account  in which  full,  true and  correct  entries  in
conformity  with GAAP and all  Requirements of Law shall be made of all dealings
and  transactions  in relation to its  business  and  activities  and (b) permit
representatives  of any Lender to visit and  inspect any of its  properties  and
examine and make  abstracts  from any of its books and records at any reasonable
time and as often as may  reasonably  be desired  and to discuss  the  business,
operations, properties and financial and other condition of the Borrower and its
Subsidiaries  with officers and  employees of the Borrower and its  Subsidiaries
and with its independent certified public accountants.

     5.7  Notices.  Promptly  give notice to the  Administrative  Agent and each
Lender of:

     (a) the occurrence of any Default or Event of Default;

     (b) any (i) default or event of default under any Contractual Obligation of
the Borrower or any of its  Subsidiaries or (ii)  litigation,  investigation  or
proceeding  that may  exist  at any  time  between  the  Borrower  or any of its
Subsidiaries and any Governmental Authority,  that, in either case, if not cured
or if adversely determined,  as the case may be, could reasonably be expected to
have a Material Adverse Effect;

     (c) any  litigation  or  proceeding  affecting  the  Borrower or any of its
Subsidiaries in which the amount involved is $25,000,000 or more and not covered
by insurance or in which injunctive or similar relief is sought;

     (d) the  following  events,  as soon as possible and in any event within 30
days after the Borrower knows or has reason to know thereof:  (i) the occurrence
of any Reportable Event with respect to any Plan, a failure to make any required
contribution  to a Plan, the creation of any Lien in favor of the PBGC or a Plan


                                       31
<PAGE>


or any withdrawal from, or the termination, Reorganization or Insolvency of, any
Multiemployer  Plan or (ii) the  institution of proceedings or the taking of any
other action by the PBGC or the Borrower or any  Commonly  Controlled  Entity or
any Multiemployer  Plan with respect to the withdrawal from, or the termination,
Reorganization or Insolvency of, any Plan; and

     (e) any  development or event that has had or could  reasonably be expected
to have a Material Adverse Effect.

Each notice  pursuant to this Section 5.7 shall be accompanied by a statement of
a  Responsible  Officer  setting  forth  details of the  occurrence  referred to
therein and stating what action the Borrower or the relevant Subsidiary proposes
to take with respect thereto.

     5.8  Environmental  Laws.  (a) Comply in all material  respects  with,  and
ensure  compliance in all material  respects by all tenants and  subtenants,  if
any,  with,  all  applicable  Environmental  Laws,  and obtain and comply in all
material respects with and maintain,  and ensure that all tenants and subtenants
obtain  and  comply in all  material  respects  with and  maintain,  any and all
licenses,  approvals,  notifications,   registrations  or  permits  required  by
applicable Environmental Laws.

     (b) Conduct and complete all investigations, studies, sampling and testing,
and all remedial,  removal and other actions required under  Environmental  Laws
and  promptly  comply  in all  material  respects  with all  lawful  orders  and
directives of all Governmental Authorities regarding Environmental Laws.

     5.9 Transaction with Affiliates. Enter into any transaction,  including any
purchase,  sale, lease or exchange of property,  the rendering of any service or
the payment of any  management,  advisory or similar fees,  with any  Affiliates
(other than the Borrower)  upon fair and  reasonable  terms no less favorable to
the Borrower or such  Subsidiary,  as the case may be, than it would obtain in a
comparable  arm's  length  transaction  with a Person that is not an  Affiliate,
subject to any requirement under the Public Utility Holding Company Act of 1935,
as amended.

                          Section 6 NEGATIVE COVENANTS

     The Borrower  hereby  agrees  that,  so long as the  Commitments  remain in
effect or any Loan or other amount is owing to any Lender or the  Administrative
Agent  hereunder,  the  Borrower  shall  not,  and shall not  permit  any of its
Subsidiaries to, directly or indirectly:

     6.1  Financial  Condition  Covenant.   Permit  the  ratio  of  Consolidated
Indebtedness  to  Consolidated  Capitalization  as at the last day of any fiscal
quarter to exceed  (a) from the  Closing  Date to the end of the fiscal  quarter
ended March 31, 2006, 0.64:1.00 and (b) thereafter, 0.62:1.00.

     6.2 Liens.  Create,  incur,  assume or suffer to exist any Lien upon any of
its property, whether now owned or hereafter acquired, except for:

     (a) Liens for taxes not yet due or that are being  contested  in good faith
by appropriate proceedings, provided that adequate reserves with respect thereto
are maintained on the books of the Borrower or its Subsidiaries, as the case may
be, in conformity with GAAP;


                                       32
<PAGE>


     (b) carriers', warehousemen's,  mechanics',  materialmen's,  repairmen's or
other like Liens arising in the ordinary course of business that are not overdue
for a period of more than 30 days or that are being  contested  in good faith by
appropriate proceedings;

     (c)  pledges  or  deposits  in  connection   with  workers'   compensation,
unemployment insurance and other social security legislation;

     (d) deposits to secure the performance of bids, trade contracts (other than
for borrowed money),  leases,  statutory  obligations,  surety and appeal bonds,
performance  bonds  and  other  obligations  of a like  nature  incurred  in the
ordinary course of business;

     (e) easements,  rights-of-way,  restrictions and other similar encumbrances
incurred in the ordinary  course of business  that,  in the  aggregate,  are not
substantial  in amount and that do not in any case  materially  detract from the
value of the property subject thereto or materially  interfere with the ordinary
conduct of the business of the Borrower or any of its Subsidiaries;

     (f)  Liens in  existence  on the date  hereof  listed on  Schedule  6.2(f),
securing Indebtedness outstanding on the date hereof, provided that no such Lien
is spread to cover any  additional  property after the Closing Date and that the
amount of Indebtedness secured thereby is not increased;

     (g) Liens  securing  Indebtedness  of the Borrower or any other  Subsidiary
incurred to finance or refinance the acquisition, construction or improvement of
fixed  or  capital  assets  (including,   without   limitation,   Capital  Lease
Obligations),  provided  that (i) such Liens shall be created (A)  substantially
simultaneously  with the  acquisition  of such  fixed or  capital  assets or (B)
subsequent  thereto to the extent securing financing that replaces or refinances
the  previous  funding  or  financing  for  such  acquisition,  construction  or
improvement, (ii) such Liens do not at any time encumber any property other than
the  property  financed  by such  Indebtedness  and (iii) the  aggregate  amount
secured by any such Liens is in customary  proportion to the value of the assets
subject to such lien, as reasonably determined in good faith by the Borrower;

     (h) any interest or title of a lessor  under any lease  entered into by the
Borrower or any other  Subsidiary  in the  ordinary  course of its  business and
covering only the assets so leased;

     (i) Liens not otherwise  permitted by this Section so long as such Liens do
not arise  under the  agreements  referred to in clause (j) below and so long as
neither  (i) the  aggregate  outstanding  principal  amount  of the  obligations
secured  thereby nor (ii) the aggregate fair market value  (determined as of the
date such Lien is incurred)  of the assets  subject  thereto  exceeds (as to the
Borrower and all Subsidiaries) $25,000,000 at any one time; and

     (j) Liens arising  under hedging and similar  agreements so long as neither
(i) the  aggregate  outstanding  principal  amount  of the  obligations  secured
thereby nor (ii) the aggregate fair market value (determined as of the date such
Lien is incurred) of the assets subject  thereto exceeds (as to the Borrower and
all Subsidiaries) $75,000,000 at any one time.

     6.3  Fundamental  Changes.  In the case of the Borrower and any Significant
Subsidiary, enter into any merger, consolidation or amalgamation,  or liquidate,
wind up or  dissolve  itself (or  suffer any  liquidation  or  dissolution),  or
Dispose of, all or substantially all of its property or business, except that:


                                       33
<PAGE>


     (a) any  Subsidiary of the Borrower may be merged or  consolidated  with or
into the Borrower or a Significant Subsidiary of the Borrower (provided that the
Borrower, the Significant Subsidiary or another Significant  Subsidiary,  as the
case may be, shall be the continuing or surviving corporation);

     (b) any Significant Subsidiary of the Borrower may Dispose of any or all of
its assets (upon voluntary liquidation or otherwise) to the Borrower; and

     (c) any Disposition permitted under Section 6.4.

     6.4  Disposition  of Property.  (a) Dispose of any of the Borrower's or any
Significant Subsidiaries' property, whether now owned or hereafter acquired, or,
in the case of any  Significant  Subsidiary,  issue or sell any  shares  of such
Significant Subsidiary's Capital Stock to any Person, except:

          (i)  the  Disposition of obsolete or worn out property in the ordinary
               course of business;

          (ii) the sale of inventory in the ordinary course of business;

          (iii) Dispositions permitted by Section 6.3(b);

          (iv) the sale or  issuance  of any  Significant  Subsidiary's  Capital
               Stock to the Borrower or any other Significant Subsidiary; and

          (v)  Dispositions of Non-Core Assets; and

     (b) Permit any Asset Sale,  other than any  permitted  under clause  6.4(a)
above,  provided  that the Borrower may permit any Asset Sale to the extent that
if  the  ratio  of  Consolidated  Indebtedness  to  Consolidated  Capitalization
(calculated on a pro forma basis to give effect to such Asset Sale) exceeds 0.55
to 1.00, then the Net Cash Proceeds  thereof  received by the Borrower or any of
its Subsidiaries  shall be applied on the date of receipt thereof (or as soon as
reasonably  possible) to reduce Consolidated  Indebtedness by an amount equal to
the lesser of (i) such Net Cash  Proceeds  and (ii) the amount  required to make
the ratio of Consolidated Indebtedness to Consolidated  Capitalization less than
or equal to 0.55 to 1.00.  Notwithstanding the foregoing,  except as provided in
Section  6.3(b) above,  the Borrower  shall not, and shall not permit any of its
Subsidiaries  to,  directly or indirectly,  in one transaction or in a series of
transactions, dispose of all or substantially all of its assets.

     6.5  Negative  Pledge  Clauses.  Enter  into or  suffer  to exist or become
effective any agreement  that prohibits or limits the ability of the Borrower or
any of its  Subsidiaries  to create,  incur,  assume or suffer to exist any Lien
upon any of its property or revenues,  whether now owned or hereafter  acquired,
other than (a) this Agreement,  (b) any agreements governing any Liens otherwise
permitted  hereby (in which case, any  prohibition  or limitation  shall only be
effective  against the assets subject thereto) and (c) any agreements  listed on
Schedule  6.5  and any  extensions,  renewals  or  replacements  thereof  having
substantially similar provisions with respect thereto.

     6.6 Limitation on Restrictions on Distributions from  Subsidiaries.  Create
or  otherwise  cause or  permit  to exist or  become  effective  any  consensual
encumbrance  or consensual  restriction  on the ability of any Subsidiary to pay
dividends or make any other  distribution  on its Capital Stock,  other than any
encumbrance  or  restriction  pursuant to an  agreement in effect on the Closing
Date as set forth on Schedule 6.6, or imposed by any Governmental Authority.


                                       34
<PAGE>


                          Section 7 EVENTS OF DEFAULT

          If any of the following events shall occur and be continuing:

     (a) the  Borrower  shall fail to pay any  principal of any Loan when due in
accordance with the terms hereof; or the Borrower shall fail to pay any interest
on any Loan,  or any other  amount  payable  hereunder  or under any other  Loan
Document,  within five days after any such interest or other amount  becomes due
in accordance with the terms hereof; or

     (b) any  representation  or warranty  made or deemed  made by the  Borrower
herein or that is contained in any  certificate,  document or financial or other
statement furnished by it at any time under or in connection with this Agreement
shall prove to have been inaccurate in any material respect on or as of the date
made or deemed made; or

     (c) the Borrower  shall  default in the  observance or  performance  of any
agreement  contained in clause (i) or (ii) of Section 5.4(a),  Section 5.7(a) or
Section 6 of this Agreement; or

     (d) the Borrower  shall  default in the  observance or  performance  of any
other  agreement  contained in this Agreement or any other Loan Document  (other
than as  provided in  paragraphs  (a)  through  (c) of this  Section),  and such
default shall  continue  unremedied  for a period of 30 days after notice to the
Borrower from the Administrative Agent or any Lender; or

     (e) the Borrower or any of its Subsidiaries shall (i) default in making any
payment  of  any  principal  of  any   Indebtedness   (including  any  Guarantee
Obligation,  but excluding the Loans) on the scheduled or original due date with
respect  thereto;  or (ii)  default in making any payment of any interest on any
such Indebtedness beyond the period of grace, if any, provided in the instrument
or agreement under which such Indebtedness was created;  or (iii) default in the
observance or  performance of any other  agreement or condition  relating to any
such  Indebtedness  or contained  in any  instrument  or  agreement  evidencing,
securing or relating thereto, or any other event shall occur or condition exist,
the effect of such default or other event or condition is to cause, or to permit
the holder or beneficiary of such  Indebtedness (or a trustee or agent on behalf
of such holder or beneficiary) to cause,  with the giving of notice if required,
such  Indebtedness to become due prior to its stated maturity or (in the case of
any such  Indebtedness  constituting a Guarantee  Obligation) to become payable;
provided,  that a default,  event or condition  described in clause (i), (ii) or
(iii) of this paragraph (e) shall not at any time constitute an Event of Default
unless,  at such time,  one or more  defaults,  events or conditions of the type
described  in  clauses  (i),  (ii) and (iii) of this  paragraph  (e) shall  have
occurred  and  be  continuing  with  respect  to  Indebtedness  the  outstanding
principal amount of which exceeds in the aggregate $25,000,000; or

     (f) (i) the Borrower,  any of its Significant  Subsidiaries or, should such
commencement  have or reasonably be expected to have a Material  Adverse Effect,
any of its other  Subsidiaries,  shall  commence any case,  proceeding  or other
action (A) under any  existing  or future law of any  jurisdiction,  domestic or
foreign,  relating  to  bankruptcy,  insolvency,  reorganization  or  relief  of
debtors,  seeking to have an order for  relief  entered  with  respect to it, or
seeking to  adjudicate  it bankrupt  or  insolvent,  or seeking  reorganization,
arrangement,  adjustment, winding-up, liquidation,  dissolution,  composition or
other relief with respect to it or its debts,  or (B) seeking  appointment  of a
receiver,  trustee,  custodian,  conservator or other similar official for it or
for all or any  substantial  part of its  assets,  or the  Borrower,  any of its
Significant  Subsidiaries  or,  should  such  assignment  have or be  reasonably


                                       35
<PAGE>


expected to have a Material Adverse Effect, any of its other Subsidiaries, shall
make a general assignment for the benefit of its creditors;  or (ii) there shall
be commenced  against the Borrower,  any of its  Significant  Subsidiaries,  or,
should  such  commencement  have or be  reasonably  expected  to have a Material
Adverse Effect,  any of its other  Subsidiaries,  any case,  proceeding or other
action of a nature referred to in clause (i) above that (A) results in the entry
of an order for relief or any such  adjudication  or  appointment or (B) remains
undismissed,  undischarged  or unbonded for a period of 60 days;  or (iii) there
shall be commenced  against the Borrower,  any of its Significant  Subsidiaries,
or, should such commencement  have or be reasonably  expected to have a Material
Adverse Effect,  any of its other  Subsidiaries,  any case,  proceeding or other
action  seeking  issuance of a warrant of  attachment,  execution,  distraint or
similar process  against all or any substantial  part of its assets that results
in the entry of an order for any such relief  that shall not have been  vacated,
discharged,  or stayed or bonded  pending  appeal  within 60 days from the entry
thereof; or (iv) the Borrower, any of its Significant  Subsidiaries,  or, should
any such  action  have or be  reasonably  expected  to have a  Material  Adverse
Effect, any of its other Subsidiaries,  shall take any action in furtherance of,
or indicating its consent to, approval of, or  acquiescence  in, any of the acts
set forth in clause (i), (ii), or (iii) above;  or (v) the Borrower,  any of its
Significant  Subsidiaries,  or, should any such failure or inability  have or be
reasonably  expected  to  have a  Material  Adverse  Effect,  any  of its  other
Subsidiaries,  shall  generally  not,  or shall be unable to, or shall  admit in
writing its inability to, pay its debts as they become due; or

     (g) (i) any Person shall engage in any "prohibited transaction" (as defined
in Section 406 of ERISA or Section 4975 of the Code)  involving  any Plan,  (ii)
any  "accumulated  funding  deficiency"  (as  defined in Section  302 of ERISA),
whether or not waived, shall exist with respect to any Plan or any Lien in favor
of the PBGC or a Plan shall arise on the assets of the  Borrower or any Commonly
Controlled  Entity,  (iii) a  Reportable  Event shall occur with  respect to, or
proceedings  shall commence to have a trustee  appointed,  or a trustee shall be
appointed,  to administer  or to  terminate,  any Single  Employer  Plan,  which
Reportable  Event or commencement of proceedings or appointment of a trustee is,
in the  reasonable  opinion  of the  Required  Lenders,  likely to result in the
termination  of such Plan for  purposes  of Title IV of ERISA,  (iv) any  Single
Employer  Plan  shall  terminate  for  purposes  of Title IV of  ERISA,  (v) the
Borrower or any Commonly  Controlled Entity shall, or in the reasonable  opinion
of the Required  Lenders is likely to, incur any liability in connection  with a
withdrawal from, or the Insolvency or Reorganization of, a Multiemployer Plan or
(vi) any other event or  condition  shall occur or exist with respect to a Plan;
and in each case in clauses (i) through  (vi)  above,  such event or  condition,
together with all other such events or conditions,  if any,  could,  in the sole
judgment  of the  Required  Lenders,  reasonably  be expected to have a Material
Adverse Effect; or

     (h) one or more judgments or decrees shall be entered  against the Borrower
or any of its  Subsidiaries  involving in the aggregate a liability (not paid or
fully  covered by  insurance  as to which the  relevant  insurance  company  has
acknowledged coverage) of $25,000,000 or more, and all such judgments or decrees
shall not have been vacated, discharged,  stayed or bonded pending appeal within
30 days from the entry thereof; or

     (i) any  "person" or "group" (as such terms are used in Sections  13(d) and
14(d) of the Securities  Exchange Act of 1934, as amended (the "Exchange  Act"))
shall  become,  or obtain  rights  (whether  by means or  warrants,  options  or
otherwise) to become,  the  "beneficial  owner" (as defined in Rules 13(d)-3 and
13(d)-5 under the Exchange Act), directly or indirectly, of more than 20% of the
outstanding common stock of the Borrower;

then, and in any such event, (A) if such event is an Event of Default  specified
in clause  (i) or (ii) of  paragraph  (f) above with  respect  to the  Borrower,
automatically  the  Commitments  shall  immediately   terminate  and  the  Loans
hereunder (with accrued interest thereon) and all other amounts owing under this
Agreement and the other Loan Documents shall immediately become due and payable,
and (B) if such  event is any  other  Event of  Default,  either  or both of the


                                       36
<PAGE>


following  actions may be taken:  (i) with the consent of the Required  Lenders,
the Administrative  Agent may, or upon the request of the Required Lenders,  the
Administrative Agent shall, by notice to the Borrower declare the Commitments to
be terminated forthwith,  whereupon the Commitments shall immediately terminate;
and (ii) with the consent of the Required Lenders, the Administrative Agent may,
or upon the request of the Required Lenders,  the Administrative Agent shall, by
notice to the  Borrower,  declare the Loans  hereunder  (with  accrued  interest
thereon) and all other  amounts  owing under this  Agreement  and the other Loan
Documents to be due and payable forthwith,  whereupon the same shall immediately
become due and payable.  Except as  expressly  provided  above in this  Section,
presentment,  demand,  protest  and all  other  notices  of any kind are  hereby
expressly waived by the Borrower.

                       Section 8 THE ADMINISTRATIVE AGENT

     8.1 Appointment. Each Lender hereby irrevocably designates and appoints the
Administrative  Agent as the agent of such Lender under this  Agreement  and the
other  Loan  Documents,   and  each  such  Lender  irrevocably   authorizes  the
Administrative  Agent, in such capacity, to take such action on its behalf under
the  provisions of this  Agreement and the other Loan  Documents and to exercise
such  powers  and  perform  such  duties  as  are  expressly  delegated  to  the
Administrative  Agent  by the  terms  of  this  Agreement  and  the  other  Loan
Documents, together with such other powers as are reasonably incidental thereto.
Notwithstanding  any provision to the contrary elsewhere in this Agreement,  the
Administrative Agent shall not have any duties or responsibilities, except those
expressly set forth herein, or any fiduciary  relationship with any Lender,  and
no  implied  covenants,  functions,  responsibilities,  duties,  obligations  or
liabilities  shall be read into this  Agreement  or any other Loan  Document  or
otherwise exist against the Administrative Agent.

     8.2 Delegation of Duties. The  Administrative  Agent may execute any of its
duties under this Agreement and the other Loan Documents by or through agents or
attorneys-in-fact  and shall be  entitled  to advice of counsel  concerning  all
matters  pertaining  to such  duties.  The  Administrative  Agent  shall  not be
responsible for the negligence or misconduct of any agents or attorneys  in-fact
selected by it with reasonable care.

     8.3 Exculpatory Provisions. Neither the Administrative Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or affiliates shall be
(i) liable for any  action  lawfully  taken or omitted to be taken by it or such
Person under or in  connection  with this  Agreement or any other Loan  Document
(except  to the  extent  that any of the  foregoing  are  found  by a final  and
nonappealable  decision of a court of competent  jurisdiction  to have  resulted
from its or such Person's own gross  negligence or willful  misconduct)  or (ii)
responsible  in any manner to any of the Lenders for any  recitals,  statements,
representations  or  warranties  made by the  Borrower  or any  officer  thereof
contained in this  Agreement or any other Loan  Document or in any  certificate,
report,  statement or other document referred to or provided for in, or received
by the  Administrative  Agent under or in connection with, this Agreement or any
other Loan  Document  or for the value,  validity,  effectiveness,  genuineness,
enforceability  or  sufficiency  of this Agreement or any other Loan Document or
for any  failure  of the  Borrower  to  perform  its  obligations  hereunder  or
thereunder.  The  Administrative  Agent shall not be under any obligation to any
Lender to ascertain or to inquire as to the  observance or performance of any of
the agreements  contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of the Borrower.


                                       37
<PAGE>


     8.4 Reliance by  Administrative  Agent. The  Administrative  Agent shall be
entitled to rely, and shall be fully protected in relying,  upon any instrument,
writing, resolution, notice, consent, certificate,  affidavit, letter, telecopy,
telex or teletype  message,  statement,  order or other document or conversation
believed by it to be genuine and correct and to have been  signed,  sent or made
by the proper Person or Persons and upon advice and  statements of legal counsel
(including counsel to the Borrower),  independent  accountants and other experts
selected by the  Administrative  Agent.  The  Administrative  Agent may deem and
treat the  payee of any Note as the  owner  thereof  for all  purposes  unless a
written  notice of assignment,  negotiation or transfer  thereof shall have been
filed with the  Administrative  Agent. The  Administrative  Agent shall be fully
justified in failing or refusing to take any action under this  Agreement or any
other Loan Document  unless it shall first receive such advice or concurrence of
the Required Lenders (or, if so specified by this Agreement,  all Lenders) as it
deems  appropriate or it shall first be indemnified to its  satisfaction  by the
Lenders  against any and all liability and expense that may be incurred by it by
reason of taking or continuing to take any such action. The Administrative Agent
shall in all cases be fully  protected in acting,  or in refraining from acting,
under this Agreement and the other Loan  Documents in accordance  with a request
of the Required  Lenders (or, if so specified by this  Agreement,  all Lenders),
and such request and any action taken or failure to act pursuant  thereto  shall
be binding upon all the Lenders and all future holders of the Loans.

     8.5 Notice of Default. The Administrative Agent shall not be deemed to have
knowledge  or  notice  of the  occurrence  of any  Default  or Event of  Default
hereunder unless the  Administrative  Agent has received notice from a Lender or
the Borrower  referring to this  Agreement,  describing such Default or Event of
Default and stating that such notice is a "notice of default". In the event that
the Administrative  Agent receives such a notice, the Administrative Agent shall
give notice  thereof to the Lenders.  The  Administrative  Agent shall take such
action with respect to such  Default or Event of Default as shall be  reasonably
directed by the Required  Lenders (or, if so  specified by this  Agreement,  all
Lenders);  provided  that unless and until the  Administrative  Agent shall have
received  such  directions,  the  Administrative  Agent  may (but  shall  not be
obligated to) take such action, or refrain from taking such action, with respect
to such  Default  or Event of Default  as it shall  deem  advisable  in the best
interests of the Lenders.

     8.6  Non-Reliance on  Administrative  Agent and Other Lenders.  Each Lender
expressly  acknowledges  that  neither the  Administrative  Agent nor any of its
officers,  directors,  employees,  agents,  attorneys-in-fact or affiliates have
made  any   representations  or  warranties  to  it  and  that  no  act  by  the
Administrative  Agent hereinafter taken,  including any review of the affairs of
the Borrower or any affiliate of the Borrower, shall be deemed to constitute any
representation  or warranty  by the  Administrative  Agent to any  Lender.  Each
Lender  represents to the  Administrative  Agent that it has,  independently and
without reliance upon the Administrative Agent or any other Lender, and based on
such  documents  and  information  as it has  deemed  appropriate,  made its own
appraisal  of  and  investigation  into  the  business,  operations,   property,
financial  and other  condition  and  creditworthiness  of the  Borrower and its
affiliates and made its own decision to make its Loans  hereunder and enter into
this  Agreement.  Each Lender also represents  that it will,  independently  and
without reliance upon the Administrative Agent or any other Lender, and based on
such  documents  and  information  as it shall  deem  appropriate  at the  time,
continue to make its own credit analysis,  appraisals and decisions in taking or
not taking action under this Agreement and the other Loan Documents, and to make
such  investigation  as it deems  necessary to inform itself as to the business,
operations,  property, financial and other condition and creditworthiness of the
Borrower and its  affiliates.  Except for notices,  reports and other  documents
expressly  required to be furnished to the Lenders by the  Administrative  Agent
hereunder, the Administrative Agent shall not have any duty or responsibility to
provide any Lender with any credit or other information concerning the business,
operations,   property,   condition  (financial  or  otherwise),   prospects  or
creditworthiness  of the Borrower or any affiliate of the Borrower that may come
into  the  possession  of the  Administrative  Agent  or  any  of its  officers,
directors, employees, agents, attorneys-in-fact or affiliates.


                                       38
<PAGE>


     8.7  Indemnification.  The Lenders  agree to indemnify  the  Administrative
Agent in its capacity as such (to the extent not  reimbursed by the Borrower and
without limiting the obligation of the Borrower to do so), ratably  according to
their respective  Aggregate Exposure  Percentages in effect on the date on which
indemnification  is sought under this Section (or, if  indemnification is sought
after the date upon which the  Commitments  shall have  terminated and the Loans
shall have been paid in full, ratably in accordance with such Aggregate Exposure
Percentages  immediately  prior  to such  date),  from and  against  any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs,  expenses or  disbursements  of any kind  whatsoever that may at any time
(whether before or after the payment of the Loans) be imposed on, incurred by or
asserted against the Administrative  Agent in any way relating to or arising out
of, the  Commitments,  this  Agreement,  any of the other Loan  Documents or any
documents  contemplated by or referred to herein or therein or the  transactions
contemplated   hereby  or  thereby  or  any  action  taken  or  omitted  by  the
Administrative Agent under or in connection with any of the foregoing;  provided
that  no  Lender  shall  be  liable  for  the  payment  of any  portion  of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs,  expenses or  disbursements  that are found by a final and  nonappealable
decision  of a court  of  competent  jurisdiction  to  have  resulted  from  the
Administrative Agent's gross negligence or willful misconduct. The agreements in
this  Section  shall  survive  the  payment  of the Loans and all other  amounts
payable hereunder.

     8.8  Administrative  Agent in Its Individual  Capacity.  The Administrative
Agent and its affiliates  may make loans to, accept  deposits from and generally
engage in any kind of business  with the  Borrower as though the  Administrative
Agent was not the  Administrative  Agent.  With  respect  to its  Loans  made or
renewed by it, the  Administrative  Agent  shall have the same rights and powers
under this Agreement and the other Loan Documents as any Lender and may exercise
the same as though it were not the Administrative  Agent, and the terms "Lender"
and "Lenders" shall include the Administrative Agent in its individual capacity.

     8.9 Successor  Administrative Agent. The Administrative Agent may resign as
Administrative  Agent upon 30 days' notice to the Lenders and the  Borrower.  If
the  Administrative  Agent  shall  resign as  Administrative  Agent  under  this
Agreement,  then the  Required  Lenders  shall  appoint from among the Lenders a
successor agent for the Lenders, which successor agent shall (unless an Event of
Default  under  Section 7(a) or Section 7(f) with respect to the Borrower  shall
have occurred and be continuing)  be subject to approval by the Borrower  (which
approval  shall  not  be  unreasonably  withheld  or  delayed),  whereupon  such
successor  agent  shall  succeed  to  the  rights,  powers  and  duties  of  the
Administrative  Agent,  and the term  "Administrative  Agent"  shall  mean  such
successor  agent effective upon such  appointment  and approval,  and the former
Administrative  Agent's rights,  powers and duties as Administrative Agent shall
be  terminated,  without  any other or  further  act or deed on the part of such
former  Administrative  Agent or any of the  parties  to this  Agreement  or any
holders  of the  Loans.  If no  successor  agent  has  accepted  appointment  as
Administrative  Agent  by  the  date  that  is  30  days  following  a  retiring
Administrative  Agent's  notice  of  resignation,  the  retiring  Administrative
Agent's  resignation  shall  nevertheless  thereupon  become  effective  and the
Lenders shall assume and perform all of the duties of the  Administrative  Agent
hereunder  until such time, if any, as the Required  Lenders appoint a successor
agent  as  provided  for  above.  After  any  retiring   Administrative  Agent's
resignation  as  Administrative  Agent,  the  provisions of this Section 8 shall
inure to its benefit as to any actions  taken or omitted to be taken by it while
it was Administrative Agent under this Agreement and the other Loan Documents.


                                       39
<PAGE>


                            Section 9 MISCELLANEOUS

     9.1  Amendments  and  Waivers.  Neither  this  Agreement,  any  other  Loan
Document,  nor any terms  hereof or  thereof  may be  amended,  supplemented  or
modified  except in  accordance  with the  provisions  of this  Section 9.1. The
Required  Lenders and the  Borrower  may,  or,  with the written  consent of the
Required Lenders,  the  Administrative  Agent and the Borrower may, from time to
time, (a) enter into written amendments, supplements or modifications hereto for
the purpose of adding any provisions to this Agreement or changing in any manner
the rights of the Lenders or of the  Borrower  hereunder  or (b) waive,  on such
terms and conditions as the Required Lenders or the Administrative Agent, as the
case may be, may specify in such  instrument,  any of the  requirements  of this
Agreement  or any  Default or Event of Default and its  consequences;  provided,
however,  that no such waiver and no such amendment,  supplement or modification
shall (i) eliminate or reduce any voting rights under this Section 9.1,  forgive
the principal amount or extend the final scheduled date of maturity of any Loan,
reduce the stated rate of any  interest or fee payable  hereunder  or extend the
scheduled  date of any payment  thereof,  or  increase  the amount or extend the
expiration date of any Lender's Commitments, in each case without the consent of
each Lender directly affected thereby;  (ii) reduce any percentage  specified in
the definition of Required Lenders, consent to the assignment or transfer by the
Borrower of any of its rights and obligations under this Agreement and the other
Loan  Documents,  in each case without the consent of all Lenders;  (iii) amend,
modify  or  waive  any  provision  of  Section  8  without  the  consent  of the
Administrative  Agent.  Any such waiver and any such  amendment,  supplement  or
modification  shall  apply  equally to each of the  Lenders and shall be binding
upon the Borrower,  the Lenders, the Administrative Agent and all future holders
of the Loans.  In the case of any  waiver,  the  Borrower,  the  Lenders and the
Administrative  Agent  shall be  restored to their  former  position  and rights
hereunder  and under the  other  Loan  Documents,  and any  Default  or Event of
Default  waived  shall be  deemed to be cured  and not  continuing;  but no such
waiver shall extend to any  subsequent or other Default or Event of Default,  or
impair any right consequent thereon.

     9.2 Notices.  All notices,  requests and demands to or upon the  respective
parties hereto to be effective shall be in writing (including by telecopy), and,
unless otherwise  expressly  provided herein,  shall be deemed to have been duly
given or made when  delivered,  or three Business Days after being  deposited in
the mail,  postage prepaid,  or, in the case of telecopy notice,  when received,
addressed as follows in the case of the Borrower and the  Administrative  Agent,
and  as  set  forth  in  an  administrative   questionnaire   delivered  to  the
Administrative Agent in the case of the Lenders, or to such other address as may
be hereafter notified by the respective parties hereto:

    The Borrower:               KeySpan Corporation
                                One MetroTech Center
                                Brooklyn, New York 11201
                                Attention:  Treasurer
                                Telecopy: (718) 246-9798

   The Administrative Agent:    JPMorgan Chase Bank
                                Brooklyn Middle Market Bank Group
                                Four MetroTech Center
                                Brooklyn, New York 11245
                                Attention: Peter D'Agostino
                                Telecopy: (718) 242-3837


                                       40
<PAGE>


  with a copy to:               JPMorgan Chase Bank
                                Agency Bank Services
                                One Chase Manhattan Plaza
                                New York, New York
                                Telecopy: (212) 552-7400

provided that any notice,  request or demand to or upon the Administrative Agent
or the Lenders shall not be effective until received.

     9.3 No Waiver;  Cumulative Remedies. No failure to exercise and no delay in
exercising,  on the part of the  Administrative  Agent or any Lender, any right,
remedy,  power or privilege  hereunder or under the other Loan  Documents  shall
operate as a waiver  thereof;  nor shall any single or partial  exercise  of any
right,  remedy,  power or  privilege  hereunder  preclude  any other or  further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights,  remedies,  powers and privileges herein provided are cumulative and
not exclusive of any rights, remedies, powers and privileges provided by law.

     9.4 Survival of Representations  and Warranties.  All  representations  and
warranties  made  hereunder  and  in  any  document,  certificate  or  statement
delivered pursuant hereto or in connection  herewith shall survive the execution
and delivery of this Agreement and the making of the Loans and other  extensions
of credit hereunder.

     9.5  Payment of  Expenses  and  Taxes.  The  Borrower  agrees (a) to pay or
reimburse the Administrative  Agent for all its reasonable  out-of-pocket  costs
and  expenses  incurred in  connection  with the  development,  preparation  and
execution of, and any amendment,  supplement or modification  to, this Agreement
and the other Loan  Documents  and any other  documents  prepared in  connection
herewith  or  therewith,   and  the  consummation  and   administration  of  the
transactions contemplated hereby and thereby,  including the reasonable fees and
disbursements  of counsel to the  Administrative  Agent and filing and recording
fees and expenses, with statements with respect to the foregoing to be submitted
to the Borrower  prior to the Closing Date (in the case of amounts to be paid on
the Closing Date) and from time to time  thereafter on a quarterly basis or such
other periodic basis as the Administrative Agent shall deem appropriate,  (b) to
pay or reimburse each Lender and the Administrative  Agent for all its costs and
expenses  incurred in connection  with the  enforcement or  preservation  of any
rights  under  this  Agreement,  the other  Loan  Documents  and any such  other
documents,  including  the fees and  disbursements  of  counsel  (including  the
allocated  fees and expenses of in-house  counsel) to each Lender and of counsel
to the Administrative Agent, (c) to pay, indemnify, and hold each Lender and the
Administrative  Agent  harmless  from, any and all recording and filing fees and
any and all liabilities  with respect to, or resulting from any delay in paying,
stamp,  excise and other taxes,  if any, that may be payable or determined to be
payable in connection  with the execution  and delivery of, or  consummation  or
administration  of any of the  transactions  contemplated  by, or any amendment,
supplement or modification  of, or any waiver or consent under or in respect of,
this Agreement,  the other Loan Documents and any such other documents,  and (d)
to pay, indemnify,  and hold each Lender and the Administrative  Agent and their
respective officers,  directors,  employees,  affiliates, agents and controlling
persons  (each,  an  "Indemnitee")  harmless  from and against any and all other
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs,  expenses or disbursements of any kind or nature  whatsoever with respect
to the execution, delivery, enforcement,  performance and administration of this
Agreement, the other Loan Documents and any such other documents,  including any
of the  foregoing  relating to the use of proceeds of the Loans or the violation
of,  noncompliance  with or liability under, any Environmental Law applicable to
the operations of the Borrower any of its  Subsidiaries or any of the Properties


                                       41
<PAGE>


and the reasonable fees and expenses of legal counsel in connection with claims,
actions or  proceedings  by any  Indemnitee  against the Borrower under any Loan
Document (all the foregoing in this clause (d),  collectively,  the "Indemnified
Liabilities"), provided, that the Borrower shall have no obligation hereunder to
any  Indemnitee  with  respect to  Indemnified  Liabilities  to the extent  such
Indemnified  Liabilities  are found by a final and  nonappealable  decision of a
court of competent  jurisdiction  to have resulted from the gross  negligence or
willful  misconduct of such Indemnitee.  Without limiting the foregoing,  and to
the extent permitted by applicable law, the Borrower agrees not to assert and to
cause its Subsidiaries not to assert,  and hereby waives and agrees to cause its
Subsidiaries  to so waive,  all rights for  contribution  or any other rights of
recovery with respect to all claims,  demands,  penalties,  fines,  liabilities,
settlements,  damages,  costs and expenses of whatever kind or nature,  under or
related  to  Environmental  Laws,  that any of them  might  have by  statute  or
otherwise  against any Indemnitee.  All amounts due under this Section 9.5 shall
be payable  promptly  after  written  demand  therefor.  The  agreements in this
Section 9.5 shall survive  repayment of the Loans and all other amounts  payable
hereunder.

     9.6  Successors  and  Assigns;   Participations  and  Assignments.(a)  This
Agreement  shall be binding upon and inure to the benefit of the  Borrower,  the
Lenders,  the  Administrative  Agent,  all future holders of the Loans and their
respective  successors  and assigns,  except that the Borrower may not assign or
transfer any of its rights or obligations under this Agreement without the prior
written consent of each Lender.

     (b) Any Lender may, without the consent of the Borrower, in accordance with
applicable law, at any time sell to one or more banks, financial institutions or
other entities (each, a "Participant") participating interests in any Loan owing
to such Lender,  any  Commitments  of such Lender or any other  interest of such
Lender  hereunder and under the other Loan Documents;  any Lender selling such a
participating  interest shall notify the Borrower of such sale promptly upon the
completion thereof. In the event of any such sale by a Lender of a participating
interest to a Participant, such Lender's obligations under this Agreement to the
other parties to this Agreement shall remain unchanged, such Lender shall remain
solely  responsible  for the performance  thereof,  such Lender shall remain the
holder of any such Loan for all purposes under this Agreement and the other Loan
Documents,  and the Borrower and the Administrative Agent shall continue to deal
solely and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and the other Loan Documents. In no event shall
any  Participant  under any such  participation  have any right to  approve  any
amendment or waiver of any provision of any Loan Document, or any consent to any
departure by the Borrower therefrom,  provided, that any agreement or instrument
pursuant  to which a Lender  sells such a  participation  to a  Participant  may
provide  that such  Lender will not,  without  the consent of such  Participant,
agree to any  amendment,  waiver or consent which would reduce the principal of,
or interest  on, the Loans or any fees payable  hereunder,  postpone the date of
the final  maturity of the Loans or postpone any payment of  principal,  in each
case to the extent subject to such  participation.  The Borrower  agrees that if
amounts  outstanding  under this  Agreement and the Loans are due or unpaid,  or
shall  have  been  declared  or  shall  have  become  due and  payable  upon the
occurrence of an Event of Default, each Participant shall, to the maximum extent
permitted by applicable law, be deemed to have the right of setoff in respect of
its  participating  interest in amounts  owing under this  Agreement to the same
extent as if the amount of its participating  interest were owing directly to it
as  a  Lender  under  this   Agreement,   provided  that,  in  purchasing   such
participating interest, such Participant shall be deemed to have agreed to share
with the Lenders the proceeds  thereof as provided in Section 9.7(a) as fully as
if it were a Lender  hereunder.  The Borrower also agrees that each  Participant
shall be entitled to the benefits of Sections  2.13,  2.14 and 2.15 with respect
to its  participation in the Commitments and the Loans  outstanding from time to
time as if it was a Lender;  provided  that, in the case of Section  2.14,  such
Participant  shall have  complied  with the  requirements  of said  Section  and
provided,  further, that no Participant shall be entitled to receive any greater
amount  pursuant to any such Section than the transferor  Lender would have been
entitled to receive in respect of the amount of the participation transferred by
such transferor Lender to such Participant had no such transfer occurred.


                                       42
<PAGE>


     (c) Any Lender (an  "Assignor")  may, in accordance with applicable law, at
any time and from  time to time with the  consent  of the  Administrative  Agent
(which shall not be unreasonably  withheld or delayed) assign to any Lender, any
affiliate  of any  Lender  or any  Approved  Fund or,  with the  consent  of the
Borrower  and the  Administrative  Agent  (which,  in each  case,  shall  not be
unreasonably  withheld or delayed), to an additional bank, financial institution
or other entity (an  "Assignee")  all or,  except in the case of an  outstanding
Competitive  Loan,  any part of its rights or  obligations  under this Agreement
pursuant  to an  Assignment  and  Acceptance,  executed by such  Assignee,  such
Assignor  and any other  Person  whose  consent  is  required  pursuant  to this
paragraph,  and delivered to the  Administrative  Agent for its  acceptance  and
recording  in the  Register;  provided  that no such  assignment  to an Assignee
(other than any Lender,  any affiliate of any Lender or any Approved Fund) shall
be in an aggregate  principal amount of less than $1,000,000  (other than in the
case of an  assignment  of all of a Lender's  interests  under this  Agreement),
unless  otherwise  agreed by the  Borrower  and the  Administrative  Agent.  For
purposes  of  the  proviso  contained  in the  preceding  sentence,  the  amount
described  therein shall be aggregated in respect of each Lender and its related
Approved Funds, if any. Upon such execution, delivery, acceptance and recording,
from and after the effective  date  determined  pursuant to such  Assignment and
Acceptance,  (x) the  Assignee  thereunder  shall be a party  hereto and, to the
extent  provided  in  such  Assignment  and  Acceptance,  have  the  rights  and
obligations  of a Lender  hereunder with  Commitments  and/or Loans as set forth
therein,  and (y) the Assignor  thereunder shall, to the extent provided in such
Assignment and Acceptance, be released from its obligations under this Agreement
(and, in the case of an Assignment and Acceptance  covering all of an Assignor's
rights and obligations  under this Agreement,  such Assignor shall cease to be a
party hereto). Notwithstanding any provision of this Section 9.6, the consent of
the  Borrower  shall not be  required  for any  assignment  occurring  after the
occurrence and during the continuance of a Default or Event of Default.

     (d) The Administrative Agent shall, on behalf of the Borrower,  maintain at
its address  referred to in Section 9.2 a copy of each Assignment and Acceptance
delivered to it and a register (the "Register") for the recordation of the names
and addresses of the Lenders and the Commitments of, and the principal amount of
the Loans owing to, each Lender from time to time.  The entries in the  Register
shall be conclusive,  in the absence of manifest  error,  and the Borrower,  the
Administrative  Agent and the  Lenders  shall  treat each  Person  whose name is
recorded in the Register as the owner of the Loans and any Notes  evidencing the
Loans recorded therein for all purposes of this Agreement. Any assignment of any
Loan,  whether  or not  evidenced  by a  Note,  shall  be  effective  only  upon
appropriate  entries with respect  thereto  being made in the Register (and each
Note shall expressly so provide). Any assignment or transfer of all or part of a
Loan evidenced by a Note shall be registered on the Register only upon surrender
for  registration  of assignment or transfer of the Note  evidencing  such Loan,
accompanied by a duly executed  Assignment and Acceptance,  and thereupon one or
more new Notes shall be issued to the designated Assignee.

     (e) Upon  its  receipt  of an  Assignment  and  Acceptance  executed  by an
Assignor,  an Assignee and any other Person whose consent is required by Section
9.6(c),  together with payment to the Administrative Agent of a registration and
processing fee of $3,500,  the  Administrative  Agent shall (i) promptly  accept
such Assignment and Acceptance and (ii) record the information contained therein
in the Register on the effective date determined pursuant thereto.

     (f) For avoidance of doubt, the parties to this Agreement  acknowledge that
the  provisions of this Section 9.6  concerning  assignments  of Loans and Notes
relate only to absolute  assignments  and that such  provisions  do not prohibit


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<PAGE>


assignments creating security interests, including any pledge or assignment by a
Lender  of any  Loan or Note to any  Federal  Reserve  Bank in  accordance  with
applicable law.

     (g) The Borrower,  upon receipt of written notice from the relevant Lender,
agrees to issue Notes to any Lender  requiring Notes to facilitate  transactions
of the type described in paragraph (f) above.

     9.7  Adjustments;  Set-off.  (a) Except to the extent  that this  Agreement
expressly  provides for payments to be allocated to a particular  Lender, if any
Lender (a  "Benefitted  Lender")  shall,  at any time  after the Loans and other
amounts payable hereunder shall  immediately  become due and payable pursuant to
Section 7,  receive  any payment of all or part of the  Obligations  owing to it
(whether  voluntarily  or  involuntarily,  by  set-off,  pursuant  to  events or
proceedings  of the nature  referred to in Section  7(f),  or  otherwise),  in a
greater proportion than any such payment to any other Lender, if any, in respect
of the  Obligations  owing to such other Lender,  such  Benefitted  Lender shall
purchase  for cash  from the  other  Lenders a  participating  interest  in such
portion  of the  Obligations  owing  to each  such  other  Lender,  as  shall be
necessary to cause such  Benefitted  Lender to share the excess payment  ratably
with each of the Lenders; provided,  however, that if all or any portion of such
excess  payment  is  thereafter  recovered  from such  Benefitted  Lender,  such
purchase shall be rescinded,  and the purchase price returned,  to the extent of
such recovery, but without interest.

     (b) In addition to any rights and remedies of the Lenders  provided by law,
each Lender shall have the right, without prior notice to the Borrower, any such
notice  being  expressly  waived by the  Borrower  to the  extent  permitted  by
applicable  law,  upon any  amount  becoming  due and  payable  by the  Borrower
hereunder (whether at the stated maturity, by acceleration or otherwise), to set
off and appropriate and apply against such amount any and all deposits  (general
or special,  time or demand,  provisional  or final),  in any currency,  and any
other credits,  indebtedness  or claims,  in any currency,  in each case whether
direct or indirect,  absolute or contingent,  matured or unmatured,  at any time
held or owing by such  Lender  or any  branch or  agency  thereof  to or for the
credit or the account of the  Borrower,  as the case may be. Each Lender  agrees
promptly  to notify the  Borrower  and the  Administrative  Agent after any such
setoff and  application  made by such Lender,  provided that the failure to give
such notice shall not affect the validity of such setoff and application.

     9.8  Counterparts.  This  Agreement  may be  executed by one or more of the
parties to this  Agreement  on any number of separate  counterparts,  and all of
said counterparts  taken together shall be deemed to constitute one and the same
instrument.  Delivery  of an  executed  signature  page  of  this  Agreement  by
facsimile  transmission  shall be effective  as delivery of a manually  executed
counterpart  hereof.  A set of the  copies of this  Agreement  signed by all the
parties shall be lodged with the Borrower and the Administrative Agent.

     9.9  Severability.  Any provision of this  Agreement  that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability  without  invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render  unenforceable such provision in any
other jurisdiction.

     9.10 Integration. This Agreement and the other Loan Documents represent the
agreement of the Borrower, the Administrative Agent and the Lenders with respect
to  the  subject  matter  hereof,  and  there  are  no  promises,  undertakings,
representations or warranties by the Administrative Agent or any Lender relative
to subject matter hereof not expressly set forth or referred to herein or in the
other Loan Documents.


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<PAGE>


     9.11 GOVERNING  LAW. THIS  AGREEMENT AND THE RIGHTS AND  OBLIGATIONS OF THE
PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

     9.12 Submission To Jurisdiction;  Waivers.  The Borrower hereby irrevocably
and unconditionally:

     (a) submits for itself and its property in any legal  action or  proceeding
relating to this Agreement and the other Loan Documents,  or for recognition and
enforcement of any judgment in respect  thereof,  to the  non-exclusive  general
jurisdiction  of the  courts of the State of New York,  the courts of the United
States for the  Southern  District of New York,  and  appellate  courts from any
thereof;

     (b)  consents  that any such  action or  proceeding  may be brought in such
courts and waives any objection  that it may now or hereafter  have to the venue
of any such  action  or  proceeding  in any such  court or that  such  action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;

     (c) agrees that service of process in any such action or proceeding  may be
effected  by mailing a copy  thereof by  registered  or  certified  mail (or any
substantially  similar form of mail),  postage prepaid, to the Borrower,  as the
case may be at its address set forth in Section 9.2 or at such other  address of
which the Administrative Agent shall have been notified pursuant thereto;

     (d) agrees that nothing  herein shall affect the right to effect service of
process in any other manner  permitted by law or shall limit the right to sue in
any other jurisdiction; and

     (e) waives,  to the maximum  extent not prohibited by law, any right it may
have to claim or recover in any legal action or  proceeding  referred to in this
Section any special, exemplary, punitive or consequential damages.

9.13     Acknowledgements.  The Borrower hereby acknowledges that:

     (a) it has been  advised  by  counsel  in the  negotiation,  execution  and
delivery of this Agreement and the other Loan Documents;

     (b)  neither  the  Administrative  Agent nor any Lender  has any  fiduciary
relationship  with or duty to the Borrower  arising out of or in connection with
this Agreement or any of the other Loan Documents,  and the relationship between
the Administrative Agent and the Lenders, on one hand, and the Borrower,  on the
other hand,  in  connection  herewith or  therewith is solely that of debtor and
creditor; and

     (c) no joint  venture is created  hereby or by the other Loan  Documents or
otherwise  exists by virtue of the  transactions  contemplated  hereby among the
Lenders or among the Borrower and the Lenders.


                                       45
<PAGE>


     9.14  Confidentiality.  Each of the  Administrative  Agent and each  Lender
agrees to keep  confidential  all non-public  information  provided to it by the
Borrower  pursuant  to this  Agreement  that is  designated  by the  Borrower as
confidential;  provided  that nothing  herein shall  prevent the  Administrative
Agent  or  any  Lender  from   disclosing  any  such   information  (a)  to  the
Administrative  Agent,  any other  Lender,  any  affiliate  of any Lender or any
Approved Fund, (b) to any  Transferee or prospective  Transferee  that agrees to
comply with the  provisions of this Section,  (c) to its  employees,  directors,
agents,  attorneys,  accountants and other professional advisors or those of any
of its affiliates, (d) upon the request or demand of any Governmental Authority,
(e) in response to any order of any court or other Governmental  Authority or as
may otherwise be required  pursuant to any  Requirement of Law, (f) if requested
or required to do so in connection  with any  litigation or similar  proceeding,
(g)  that  has been  publicly  disclosed,  (h) to the  National  Association  of
Insurance Commissioners or any similar organization or any nationally recognized
rating agency that requires  access to information  about a Lender's  investment
portfolio in connection with ratings issued with respect to such Lender,  or (i)
in connection with the exercise of any remedy  hereunder or under any other Loan
Document.

     9.15 WAIVERS OF JURY TRIAL. THE BORROWER,  THE ADMINISTRATIVE AGENT AND THE
LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY  WAIVE TRIAL BY JURY IN ANY LEGAL
ACTION OR PROCEEDING  RELATING TO THIS  AGREEMENT OR ANY OTHER LOAN DOCUMENT AND
FOR ANY COUNTERCLAIM THEREIN.

     9.16 USA PATRIOT  Act.  Each  Lender  hereby  notifies  the  Borrower  that
pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56
(signed  into law October  26,  2001))  (the  "Act"),  it is required to obtain,
verify and record  information that identifies the Borrower,  which  information
includes the name and address of the Borrower  and other  information  that will
allow such Lender to identify the Borrower in accordance with the Act.

                                  (End of Page)









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<PAGE>





     IN WITNESS  WHEREOF,  the parties  hereto have caused this  Agreement to be
duly executed and delivered by their proper and duly  authorized  officers as of
the day and year first above written.


                                    KEYSPAN CORPORATION


                                    By:
                                       ----------------------------------------
                                       Name:
                                       Title:


                                    JPMORGAN CHASE BANK, as Administrative Agent
                                    and as a Lender

                                    By:
                                       ----------------------------------------
                                       Name:
                                       Title:











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