GUARANTY


        GUARANTY,  dated as of June 9,  1999  (this  "Guaranty"),  from  KEYSPAN
CORPORATION (d/b/a KeySpan Energy), a New York corporation (the "Guarantor"), in
favor of LIC FUNDING,  LIMITED PARTNERSHIP,  a Delaware limited partnership (the
"Lessor"), and its successors and assigns.

        WHEREAS,  the  Guarantor  wishes to induce  the  Lessor to enter  into a
certain  Lease (as defined  below) with a Subsidiary  (as defined  below) of the
Guarantor; and

        WHEREAS,  the Lessor is  unwilling  to enter  into the Lease  unless the
Guarantor enters into this Guaranty;

        NOW,  THEREFORE,  in order to induce the Lessor to enter into the Lease,
the Guarantor hereby agrees as follows:

                                    SECTION 1

                                 DEFINED TERMS;
                              RULES OF CONSTRUCTION

        1.1Definitions.  As used in this Guaranty, capitalized terms defined and
used  herein or in Exhibit A but not  otherwise  defined  herein or in Exhibit A
shall have the meanings set forth in the Lease.

     1.2Accounting  Terms. All accounting terms not specifically  defined herein
shall be construed in accordance with GAAP.

        1.3Use of Certain  Terms.  Unless the context of this Guaranty  requires
otherwise,  the plural includes the singular,  the singular includes the plural,
and "including" has the inclusive meaning of "including without limitation." The
words "hereof," "herein," "hereby,"  "hereunder" and other similar terms of this
Guaranty refer to this Guaranty as a whole and not exclusively to any particular
provision of this  Guaranty.  All pronouns and any  variations  thereof shall be
deemed to refer to  masculine,  feminine or neuter,  singular or plural,  as the
identity of the Person or Persons may require.

        1.4Headings and References. Section and other headings are for reference
only,  and shall not affect the  interpretation  or meaning of any  provision of
this Guaranty.  Unless  otherwise  provided,  references to Articles,  Sections,
Schedules  and  Exhibits  shall be  deemed  references  to  Articles,  Sections,
Schedules  and Exhibits of this  Guaranty.  References  to this Guaranty and any
other Operative Document include this Guaranty and the other Operative Documents
as the same may be modified, amended, restated or supplemented from time to time
pursuant to the provisions hereof or thereof.  A reference to any law shall mean
that law as it may be amended,  modified or supplemented  from time to time, and
any successor  law. A reference to a Person  includes the successors and assigns
of such Person,  but such  reference  shall not increase,  decrease or otherwise
modify in any way the  provisions in this Guaranty  governing the  assignment of
rights and  obligations  under or the binding  effect of any  provision  of this
Guaranty.

                                    SECTION 2

                                    GUARANTY

        2.1Guaranty.  Subject to the terms and conditions in this Guaranty,  the
Guarantor absolutely,  unconditionally and irrevocably  guarantees to the Lessor
and each Related Assignee that (i) all Payment Obligations will be promptly paid
in full as and when due in  accordance  with the terms  thereof  whether  at the
stated due date, by acceleration or otherwise, and (ii) the Lessee will duly and
punctually perform, comply with and observe all Covenant Obligations as and when
required in accordance with the terms thereof,  in each case,  without regard to
whether such  Obligation is direct or indirect,  absolute or contingent,  now or
hereafter  existing or owing,  voluntary or  involuntary,  created or arising by
contract,  operation of law or otherwise or incurred or payable  before or after
commencement  of any  proceedings  by or against the Lessee under any bankruptcy
law.

        If an event  permitting  the  exercise of remedies  under the  Operative
Documents  shall at any time have occurred and be continuing  and such exercise,
or any consequences thereof provided in the Operative  Documents,  shall at such
time be  prevented  by reason of the  pendency  against  the Lessee of a case or
proceeding  under a bankruptcy  or insolvency  law, the  Guarantor  agrees that,
solely  for  purposes  of this  Guaranty  and  its  obligations  hereunder,  the
Obligations and all other amounts payable under the Operative Documents shall be
deemed to have been  declared in default,  with all  attendant  consequences  as
provided in the Operative  Documents as if such  declaration  of default and the
consequences  thereof had been  accomplished in accordance with the terms of the
Operative  Documents,   and  the  Guarantor  shall  forthwith  pay  any  amounts
guaranteed hereunder, without further notice or demand.

        2.2Guaranty  Absolute.  This  Guaranty  is an  absolute,  unlimited  and
continuing  guaranty of  performance  and payment (and not of collection) of the
Obligations.  This Guaranty is in no way conditioned upon any attempt to collect
from the  Lessee or upon any other  event or  contingency,  and shall be binding
upon and  enforceable  against the  Guarantor  without  regard to the  validity,
regularity or enforceability  of any Operative  Document or the Notes, or of any
term thereof.

        The  obligations  of the Guarantor set forth herein  constitute the full
recourse obligations of the Guarantor  enforceable against it to the full extent
of all its assets and  properties,  notwithstanding  any  provision in the Lease
limiting  the  liability  of any  Person,  or any  agreement  by a trustee  or a
Noteholder  under a  Financing  Arrangement  to look for  payment  with  respect
thereto,  solely to certain  property and other  collateral  as described in the
Operative Documents. Without limiting the foregoing, it is agreed and understood
that (a) repeated and  successive  demands may be made and recoveries may be had
hereunder  as and when,  from time to time,  the Lessee shall be in default with
respect to the Obligations under the terms of the Lease, and (b) notwithstanding
the recovery  hereunder  for or in respect of any given  default with respect to
the  Obligations  by the Lessee under the Lease,  this Guaranty  shall remain in
full force and effect and shall apply to each and every subsequent  default with
respect to the Obligations.

        2.3Reinstatement.  In case any Operative Document shall be terminated as
a result of the rejection thereof by any trustee,  receiver or liquidating agent
of  the  Lessee  or  any  of  its  properties  in  any  bankruptcy,  insolvency,
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar proceeding,  the Guarantor's  obligations hereunder shall continue to
the same extent as if such  agreement  had not been so rejected.  The  Guarantor
agrees that this Guaranty shall  continue to be effective or be  reinstated,  as
the case may be, if at any time payment to the Lessor or any Related Assignee of
the  Obligations  or any part thereof is rescinded or must otherwise be returned
by the  Lessor or such  Related  Assignee  upon the  insolvency,  bankruptcy  or
reorganization of the Lessee, or otherwise, as though such payment to the Lessor
or such Related Assignee had not been made.

        2.4Enforcement.  The Guarantor shall pay all costs, expenses and damages
incurred (including  reasonable attorneys' fees and disbursements) in connection
with the enforcement of the Obligations to the extent that such costs,  expenses
and damages are not paid by the Lessee,  and in connection  with the enforcement
of the obligations of the Guarantor under this Guaranty.

        2.5Guaranty Not Subject to Setoff, etc. The obligations of the Guarantor
hereunder shall not be subject to any counterclaim, setoff, deduction or defense
(other than payment or  performance)  based upon any claim the  Guarantor or the
Lessee may have  against  the Lessor or any  Related  Assignee  or any claim the
Guarantor  may have  against the Lessee or any other  Person and shall remain in
full force and effect without regard to, and shall not be released,  discharged,
reduced or in any way  affected  by any  circumstance  or  condition  whatsoever
(whether or not the Guarantor  shall have any knowledge or notice thereof) which
might constitute a legal or equitable  discharge or defense  including,  but not
limited  to, (a) the  amending,  modifying,  supplementing  or  terminating  (by
operation  of  law or  otherwise),  expressly  or  impliedly,  of any  Operative
Document,   or  any  other  instrument  applicable  to  the  Lessee  or  to  its
Obligations,  or any part thereof;  (b) any failure on the part of the Lessee to
perform or comply with any term of any Operative  Document or any failure of any
other Person to perform or comply with any term of any Operative  Document;  (c)
any waiver, consent, change, extension, indulgence or other action or any action
or inaction  under or in respect of any  Operative  Document  or this  Guaranty,
whether or not the Lessor,  the Lessee or the  Guarantor has notice or knowledge
of  any  of the  foregoing;  (d)  any  bankruptcy,  insolvency,  reorganization,
arrangement,  readjustment,  composition, liquidation or similar proceeding with
respect  to the  Lessor,  the  Guarantor  or the  Lessee,  or  their  respective
properties or their creditors, or any action taken by any trustee or receiver or
by any  court  in any such  proceeding;  (e) any  furnishing  or  acceptance  of
additional security or any release of any security (and the Guarantor authorizes
the  Lessor  or each  Related  Assignee  to  furnish,  accept  or  release  said
security);  (f) any  limitation  on the liability or  Obligations  of the Lessee
under any  Operative  Document  (except as expressly  set forth  therein) or any
termination  (by operation of law or otherwise),  cancellation  (by operation of
law or otherwise), frustration or unenforceability,  in whole or in part, of any
Operative  Document or the Notes, or any term thereof;  (g) any lien,  charge or
encumbrance  on or  affecting  the  Guarantor's,  the  Lessor's or the  Lessee's
respective assets and properties; (h) any act, omission or breach on the part of
the Lessor or any Related  Assignee under any Operative  Document,  or any other
agreement  at any time  existing  between the Lessor and the Lessee or any other
law, governmental  regulation or other agreement applicable to the Lessor or any
Obligation;  (i) any claim as a result of any other  dealings  among the Lessor,
any Related  Assignee,  the  Guarantor,  any  Noteholder or any of them; (j) the
assignment or transfer of this Guaranty,  any Operative Document (whether or not
in accordance  with and subject to the terms thereof) or any other  agreement or
instrument  referred to in any Operative Document or applicable to the Lessee or
the Obligations by the Lessor to any other Person; (k) any change in the name of
the  Lessor,  any  Related  Assignee,  the Lessee or any other  Person;  (l) any
subleasing or further subleasing of the Facility or any other Parcel of Property
or Unit of Equipment or any part thereof, or any redelivery, repossession, sale,
transfer or other  disposition,  surrender or destruction of the Facility or any
other  Parcel of  Property or Unit of  Equipment  or any part  thereof;  (m) the
transfer, assignment, mortgaging or purported transfer, assignment or mortgaging
of all or any part of the interest of the Lessor, its successors or assigns,  or
the Lessee in the  Facility or any other Parcel of Property or Unit of Equipment
or any part  thereof or the failure to record a mortgage  on or with  respect to
all or any part of the Lessor's  interest in the Facility or any part thereof or
any other  Recordable  Document;  (n) any  failure of title with  respect to the
interest  of the  Lessor  or the  Lessee,  or their  respective  successors  and
assigns, in the Facility or any other Parcel of Property or Unit of Equipment or
any  part  thereof;  (o)  any  defect  in the  compliance  with  specifications,
condition,  design, operation or fitness for use of, or any damage to or loss or
destruction of, or any  interruption or cessation in the use of, the Facility or
any other  Parcel of Property or Unit of  Equipment  or any part  thereof by the
Lessee  or any  other  Person  for  any  reason  whatsoever  (including  without
limitation   any   governmental   prohibition  or   restriction,   condemnation,
requisition,  seizure  or any  other  act on the  part  of any  governmental  or
military  authority,  or any act of God or of the public enemy,  or any Event of
Loss),  and regardless of the duration  thereof (even though such duration would
otherwise  constitute a frustration of the Lease),  whether or not without fault
on the part of the Lessee or any other Person;  (p) any merger or  consolidation
of the Lessee or the  Guarantor  into or with any other  Person or any direct or
indirect  sale,  lease or  transfer  of any other  assets  of the  Lessee or the
Guarantor to any other Person;  (q) any change in the ownership of any shares of
capital  stock of the Guarantor or the Lessee  (including  any such change which
results in the Guarantor no longer owning  capital stock of the Lessee);  or (r)
any other event or circumstance  whatsoever (other than indefeasible payment and
performance in full of the Obligations).

        2.6Waiver.  The Guarantor  unconditionally  waives: (a) notice of any of
the  matters  referred  to in  Section 2 hereof;  (b) all  notices  which may be
required by statute,  rule of law or otherwise (except as expressly  required to
be given to the  Guarantor  by any  Operative  Document)  to preserve any rights
against the  Guarantor  hereunder,  including  notice of the  acceptance of this
Guaranty  by the  Lessor or any  Related  Assignee,  or the  creation,  renewal,
extension,  modification  or accrual of the  Obligations  or notice of any other
matters relating thereto, any presentment,  demand, notice of dishonor,  protest
or  nonpayment  of any  damages or other  amounts  payable  under any  Operative
Document; (c) any requirement for the enforcement,  assertion or exercise of any
right, remedy, power or privilege under or in respect of any Operative Document,
including  diligence in  collection or  protection  of or  realization  upon the
Obligations or any part thereof or any collateral therefor;  (d) any requirement
of  diligence;  (e) any  requirement  to mitigate the damages  resulting  from a
default or termination under any Operative Document,  except that this shall not
relieve the Lessor of any such  obligation;  (f) the  occurrence  of every other
condition  precedent  to which the  Guarantor  or the  Lessee may  otherwise  be
entitled,  except as provided in any  Operative  Document;  and (g) the right to
require the Lessor or any Related  Assignee to proceed against the Lessee or any
other Person liable on the  Obligations,  to proceed against or exhaust security
held from the Lessee or any other  Person,  or to pursue any other remedy in the
Lessor's or such Related  Assignee's power whatsoever,  and the Guarantor waives
the right to have the property of the Lessee first  applied to the  discharge of
the Obligations.

        The Lessor or any Related  Assignee may, at its  election,  exercise any
right or remedy it might have  against  the Lessee or any  security  held by the
Lessor or such Related Assignee,  including the right to foreclose upon any such
security by judicial or nonjudicial sale,  without affecting or impairing in any
way  the  liability  of  the  Guarantor  hereunder,  except  to the  extent  the
Obligations have been indefeasibly  paid or satisfied,  and the Guarantor waives
any  defense  arising  out of the  absence,  impairment  or loss of any right of
reimbursement,  contribution  or subrogation or any other right or remedy of the
Guarantor  against the Lessee or any such security,  whether resulting from such
election by the Lessor or such  Related  Assignee or  otherwise.  The  Guarantor
waives any defense  arising by reason of any  disability or other defense of the
Lessee,  or by  reason  of  the  cessation  from  any  cause  whatsoever  of the
liability,  either  in whole or in part,  of the  Lessee to the  Lessor  for the
Obligations.

        The Guarantor  understands  that the Lessor's or any Related  Assignee's
exercise of certain rights and remedies contained in the Operative Documents may
affect or eliminate the Guarantor's rights of subrogation against the Lessee and
that the  Guarantor  may therefore  incur  partially or totally  nonreimbursable
liability hereunder;  nevertheless, the Guarantor hereby authorizes and empowers
the Lessor, its successors,  endorsees and/or assignees  (including each Related
Assignee) to exercise in its or their sole discretion,  any rights and remedies,
or any combination  thereof,  which may then be available,  it being the purpose
and intent of the Guarantor that its  obligations  hereunder  shall be absolute,
independent and unconditional under any and all circumstances.

        The Guarantor assumes the  responsibility for being and keeping informed
of the financial condition of the Lessee and of all other circumstances  bearing
upon the risk of  nonpayment  of the  Obligations  and agrees  that  neither the
Lessor nor any Related  Assignee  shall have any duty to advise the Guarantor of
information  regarding  any  condition  or  circumstance  or any  change in such
condition or circumstance.  The Guarantor  acknowledges  that neither the Lessor
nor any Related Assignee has made any representation to the Guarantor concerning
the financial condition of the Lessee.

                                    SECTION 3

                           COVENANTS OF THE GUARANTOR

        3.1Affirmative Covenants. So long as any Operative Document is in effect
or the Lessee owes any amount thereunder, the Guarantor covenants as follows:

               3.1.1  Financial and Business  Information.  The  Guarantor  will
deliver or otherwise make available to the Lessor and each  Qualifying  Assignee
through  electronic  media (provided that the Guarantor shall give prior written
notice to each such Person of such availability and shall,  notwithstanding such
availability,  make timely  delivery to each such Person upon its request either
generally or from time to time):

               (a)Quarterly  Statements  -- within 60 days after the end of each
        quarterly fiscal period in each fiscal year of the Guarantor (other than
        the last quarterly fiscal period of each such fiscal year), copies of

                         (i) a  consolidated  balance sheet of the Guarantor and
                    its Subsidiaries as at the end of such quarter, and

                      (ii)  consolidated  statements of income and cash flows of
               the Guarantor and its Subsidiaries,  for such quarter and (in the
               case of the second  and third  quarters)  for the  portion of the
               fiscal year ending with such quarter,

setting forth in each case in comparative form the figures for the corresponding
periods in the  previous  fiscal year,  all in  reasonable  detail,  prepared in
accordance with GAAP applicable to quarterly financial statements generally, and
certified by a Senior Financial  Officer as fairly  presenting,  in all material
respects,  the financial  position of the companies  being reported on and their
results of operations and cash flows, subject to changes resulting from year-end
adjustments,  provided that delivery  within the time period  specified above of
copies of the Guarantor's  Quarterly  Report on Form 10-Q prepared in compliance
with the requirements therefor and filed with the SEC shall be deemed to satisfy
the  requirements  of this Section 3.1.1 if such Quarterly  Report also complies
with the requirements of clauses (i) and (ii) of this Section 3.1.1(a);

               (b)Annual  Statements  -- as soon as  available  and in any event
        within  120 days  after the end of each  fiscal  year of the  Guarantor,
        copies of

                         (i) a  consolidated  balance sheet of the Guarantor and
                    its Subsidiaries as at the end of such year, and

                      (ii)  consolidated   statements  of  income,   changes  in
               shareholders'  equity  and cash  flows of the  Guarantor  and its
               Subsidiaries for such year,

setting  forth in each case in  comparative  form the figures  for the  previous
fiscal year,  all in reasonable  detail,  prepared in accordance  with GAAP, and
accompanied  by  an  opinion  thereon  of  independent   public  accountants  of
recognized  national  standing,  which opinion  shall state that such  financial
statements present fairly, in all material  respects,  the financial position of
the companies being reported upon and their results of operations and cash flows
and have been prepared in conformity with GAAP, and that the examination of such
accountants  in  connection  with  such  financial  statements  has been made in
accordance  with  generally  accepted  auditing  standards,  and that such audit
provides a reasonable basis for such opinion in the circumstances, provided that
the delivery within the time period  specified  above of the Guarantor's  Annual
Report on Form 10-K for such fiscal year (together with the  Guarantor's  annual
report to  shareholders,  if any,  prepared  pursuant  to Rule  14a-3  under the
Exchange Act) prepared in accordance  with the  requirements  therefor and filed
with the SEC  shall be  deemed  to  satisfy  the  requirements  of this  Section
3.1.1(b) if such Annual Report also complies  with the  requirements  of clauses
(i) and (ii) of this Section 3.1.1(b);

               (c)SEC  and  Other  Reports  --  promptly  upon  their   becoming
        available,  one copy of (i) each financial statement,  report, notice or
        proxy  statement  sent by the  Guarantor or any Material  Subsidiary  to
        public securities  holders generally and (ii) each regular,  periodic or
        current report and each registration  statement (without exhibits except
        as  expressly  requested  by such  Qualifying  Assignee  and other  than
        registration  statements  on Form S-8 or any successor  form),  and each
        final  prospectus and all  amendments  thereto filed by the Guarantor or
        any Material Subsidiary with the SEC;

               (d)Notice of Potential  Lease Default,  Lease Event of Default or
        Recording  Event -- promptly,  and in any event within five days after a
        Responsible  Officer's  becoming aware of the existence of any Potential
        Lease  Default,  Lease Event of Default or  Recording  Event,  a written
        notice  specifying  the nature and period of existence  thereof and what
        action the  Guarantor  or the Lessee is taking or  proposes to take with
        respect thereto;

               (e)ERISA  Matters -- promptly,  and in any event within five days
        after a Responsible Officer's becoming aware of any of the following,  a
        written notice setting forth the nature thereof and the action,  if any,
        that the Guarantor or an ERISA  Affiliate  proposes to take with respect
        thereto:

                      (i) with respect to any Plan,  any  reportable  event,  as
               defined  in  section   4043(b)  of  ERISA  and  the   regulations
               thereunder, for which notice thereof has not been waived pursuant
               to such regulations as in effect on the date hereof; or

                      (ii) the taking by the PBGC of steps to institute,  or the
               threatening by the PBGC of the institution of,  proceedings under
               section 4042 of ERISA for the  termination of, or the appointment
               of a trustee  to  administer,  any Plan,  or the  receipt  by the
               Guarantor or any ERISA Affiliate of a notice from a Multiemployer
               Plan that such action has been taken by the PBGC with  respect to
               such Multiemployer Plan; or

                      (iii) any  event,  transaction  or  condition  that  could
               result in the incurrence of any liability by the Guarantor or any
               ERISA Affiliate pursuant to Title I or IV of ERISA or the penalty
               or excise tax provisions of the Code relating to employee benefit
               plans,  or in the  imposition  of any Lien on any of the  rights,
               properties  or assets  of the  Guarantor  or any ERISA  Affiliate
               pursuant to Title I or IV of ERISA or such  penalty or excise tax
               provisions,  if such  liability or Lien,  taken together with any
               other such  liabilities or Liens then existing,  could reasonably
               be expected to have a Material Adverse Effect; and

               (f)Requested  Information  -- with  reasonable  promptness,  such
        other  data  and  information  relating  to  the  business,  operations,
        affairs, financial condition, assets or properties of the Guarantor, any
        of its Material Subsidiaries or the Lessee or relating to the ability of
        the  Guarantor  to perform its  obligations  under this  Guaranty or the
        Consent and  Agreement  (as defined in the Note  Purchase  Agreement) of
        Guarantor or the ability of the Lessee to perform its obligations  under
        the  Lease  as from  time to time  may be  reasonably  requested  by any
        Qualifying Assignee, acting through the Related Assignee.

               3.1.2 Officer's  Certificates.  Each set of financial  statements
delivered  to a  Qualifying  Assignee  pursuant  to Section  3.1.1(a) or Section
3.1.1(b)  hereof shall be  accompanied  by a certificate  of a Senior  Financial
Officer to the effect that such officer has  reviewed the relevant  terms hereof
and has made, or caused to be made,  under his or her  supervision,  a review of
the transactions and conditions of the Guarantor,  its Material Subsidiaries and
the Lessee from the beginning of the  quarterly or annual period  covered by the
statements  then being  furnished to the date of the  certificate  and that such
review  shall  not have  disclosed  the  existence  during  such  period  of any
condition or event that  constitutes a Potential  Lease Default,  Lease Event of
Default or Recording  Event or, if any such condition or event existed or exists
(including  without  limitation  any such event or condition  resulting from the
failure of the Guarantor,  any Material  Subsidiary or the Lessee to comply with
any  Environmental  Requirement),  specifying the nature and period of existence
thereof and what action the  Guarantor,  such Material  Subsidiary or the Lessee
shall have taken or proposes to take with respect thereto.

               3.1.3 Inspection.  The Guarantor shall permit the representatives
of each Qualifying Assignee:

               (a)No  Recording  Event or Lease Default -- if no Recording Event
        (other than a Recording Event described in clause (iv) of the definition
        thereof),  or Lease Event of Default then exists, at the expense of such
        Qualifying  Assignee and upon  reasonable  prior notice to the Guarantor
        and compliance  with the  Guarantor's  safety  procedures,  to visit the
        principal  executive  office of the  Guarantor,  to discuss the affairs,
        finances and accounts of the Guarantor,  its Material  Subsidiaries  and
        the Lessee with the Guarantor's  officers,  and (with the consent of the
        Guarantor,   which  consent  will  not  be  unreasonably  withheld)  its
        independent public accountants; and

               (b)Recording  Event  or Lease  Default  -- if a  Recording  Event
        (other than a Recording Event described in clause (iv) of the definition
        thereof),  or Lease Event of Default then exists,  at the expense of the
        Guarantor to visit and inspect any of the offices or  properties  of the
        Guarantor,  any Material  Subsidiary or the Lessee, to examine all their
        respective  books of account,  records,  reports and other papers (other
        than  information that the Guarantor is prohibited from disclosing under
        applicable laws), to make copies and extracts therefrom,  and to discuss
        their  respective  affairs,  finances and accounts with their respective
        officers and independent  public  accountants (and by this provision the
        Guarantor  authorizes said accountants to discuss the affairs,  finances
        and  accounts  of the  Guarantor,  its  Material  Subsidiaries  and  the
        Lessee), all at such times and as often as may be requested (and subject
        to the requirement  that each such  representative  sign the Guarantor's
        customary  confidentiality  agreement  with  respect to any  proprietary
        information  sought to be examined or discussed and compliance  with the
        Guarantor's or any Material Subsidiary's safety procedures).

               3.1.4  Compliance with Law.  Without limiting the requirements of
Section 2 of the Lease,  the Guarantor  will and will cause each of its Material
Subsidiaries and the Lessee to comply with all laws,  ordinances or governmental
rules  or  regulations  to which  each of them is  subject,  including,  without
limitation,  Environmental Requirements,  and will obtain and maintain in effect
all  licenses,   certificates,   permits,   franchises  and  other  governmental
authorizations  necessary to the ownership of their respective  properties or to
the conduct of their respective businesses, in each case to the extent necessary
to ensure that non-compliance  with such laws,  ordinances or governmental rules
or  regulations  or failures  to obtain or  maintain  in effect  such  licenses,
certificates,  permits,  franchises and other governmental  authorizations would
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

               3.1.5 Insurance.  Without limiting the requirements of Section 10
of  the  Lease,  the  Guarantor  will  and  will  cause  each  of  its  Material
Subsidiaries  to  maintain,  with  financially  sound  and  reputable  insurers,
insurance with respect to their  respective  properties  and businesses  against
such  casualties  and  contingencies,  of such types,  on such terms and in such
amounts (including  deductibles,  co-insurance and  self-insurance,  if adequate
reserves are  maintained  with  respect  thereto) as is customary in the case of
entities of established  reputations  engaged in the same or a similar  business
and similarly situated.

               3.1.6   Maintenance   of   Properties.   Without   limiting   the
requirements  of Section 9 of the Lease,  the Guarantor will and will cause each
of its Material Subsidiaries to maintain and keep, or cause to be maintained and
kept,  in  accordance  with  Prudent  Gas  Utility  Practice,  their  respective
properties in good repair, working order and condition (other than ordinary wear
and tear),  so that the  business  carried  on in  connection  therewith  may be
properly  conducted at all times,  provided  that this  Section  3.1.6 shall not
prevent  the  Guarantor  or  any  Material  Subsidiary  from  discontinuing  the
operation and the maintenance of any of its properties if such discontinuance is
desirable in the conduct of its business and the Guarantor  has  concluded  that
such discontinuance would not,  individually or in the aggregate,  reasonably be
expected to have a Material Adverse Effect.

               3.1.7 Payment of Taxes and Claims.  The  Guarantor  will and will
cause each of its Material  Subsidiaries  and the Lessee to file all tax returns
required  to be filed in any  jurisdiction  and to pay and  discharge  all taxes
shown to be due and payable on such  returns and all other  taxes,  assessments,
governmental  charges  or  levies  imposed  on them or any of their  properties,
assets,  income or  franchises,  to the extent such taxes and  assessments  have
become due and payable and before they have become delinquent and all claims for
which  sums have  become  due and  payable  that have or might  become a Lien on
properties or assets of the Guarantor or any Material  Subsidiary or the Lessee,
provided  that neither the Guarantor  nor any Material  Subsidiary  need pay any
such tax, assessment,  charge, levy or claim if (a) the amount, applicability or
validity thereof is contested by the Guarantor or such Material  Subsidiary on a
timely basis in good faith and in appropriate proceedings,  and the Guarantor or
a Material  Subsidiary has established  adequate reserves therefor in accordance
with GAAP on the books of the Guarantor or such  Material  Subsidiary or (b) the
nonpayment  of all such  taxes,  assessments,  charges,  levies or claims in the
aggregate would not reasonably be expected to have a Material Adverse Effect.

               3.1.8 Corporate  Existence,  etc.  Subject to Section 3.2.1,  the
Guarantor  will at all times  preserve  and keep in full  force and  effect  its
corporate  existence.  Subject to Section 3.2.1, the Guarantor will at all times
preserve  and keep in full force and effect the  corporate  existence of each of
its Material Subsidiaries and all rights and franchises of the Guarantor and its
Material  Subsidiaries unless, in the good faith judgment of the Guarantor,  the
termination  of or failure to  preserve  and keep in full force and effect  such
corporate  existence,  right or  franchise  would  not,  individually  or in the
aggregate, have a Material Adverse Effect.

        3.2Negative Covenants. So long as any Operative Document is in effect or
the Lessee owes any amount  thereunder,  the  Guarantor  will not,  and will not
permit any Material Subsidiary to:

               3.2.1 Mergers.  Etc.  Directly or indirectly merge or consolidate
with or into, or convey, transfer, lease or otherwise dispose of (whether in one
transaction  or in a series of  transactions)  all or  substantially  all of its
assets (whether now owned or hereafter acquired) to, any Person, except that:

               (a)any  Material  Subsidiary  may  merge or  consolidate  with or
        dispose  of  assets  to  or  acquire  assets  from  any  other  Material
        Subsidiary; and

               (b)any Material  Subsidiary may merge into or consolidate with or
        transfer  assets to the  Guarantor,  and the  Guarantor  or any Material
        Subsidiary may merge or consolidate with or transfer assets to any other
        Person;

provided  that in each case,  immediately  after giving effect  thereto,  (x) no
Event of  Default  shall  occur and be  continuing,  (y) in any case of any such
merger,  consolidation  or  transfer of assets to which the  Guarantor  is not a
party, a Subsidiary of the Guarantor shall be the continuing or surviving Person
or  transferee  of  such  assets,  and  (z) in any  case  of  any  such  merger,
consolidation  or transfer of assets to which the  Guarantor is a party,  (A) if
the Guarantor is the continuing or surviving Person,  (I) the Guarantor shall be
rated at least Baa3 by Moody's Investors Service, Inc. (or any successor agency)
and at least  BBB- by  Standard  & Poor's  Ratings  Services  (or any  successor
agency), (II) the Guarantor shall have, on a pro forma basis, a Consolidated Net
Worth at least  equivalent  to its  Consolidated  Net  Worth  immediately  prior
thereto and (III) the Guarantor  shall continue to own and operate,  directly or
indirectly,  the Core Gas Distribution  Business, or (B) if the Guarantor is not
the  continuing  or  surviving  Person nor the Person who  acquires by transfer,
lease or otherwise all or substantially all of the assets of the Guarantor,  (I)
the  continuing  or surviving  Person or  transferee  shall  continue to own and
operate,  directly or indirectly,  the Core Gas Distribution Business,  (II) the
continuing  or surviving  Person or  transferee  shall be rated at least Baa3 by
Moody's Investors  Service,  Inc. (or any successor agency) and at least BBB- by
Standard  &  Poor's  Ratings  Services  (or any  successor  agency),  (III)  the
continuing or surviving Person or transferee shall have, on a pro forma basis, a
Consolidated Net Worth at least  equivalent to the Guarantor's  Consolidated Net
Worth  immediately  prior thereto,  (IV) the  continuing or surviving  Person or
transferee  shall assume,  by execution and delivery of  instruments  reasonably
satisfactory  to the Lessor and each Related  Assignee,  the  obligations of the
Guarantor  under this  Guaranty and shall become  successor to the Guarantor for
purposes of this  Guaranty,  but the  Guarantor  shall not thereby be  released,
without  the  consent  of the  Lessor  and each  Qualifying  Assignee,  from its
obligations  under this Guaranty and (V) the  continuing or surviving  Person or
transferee  shall deliver to the Lessor and each Qualifying  Assignee an opinion
of counsel of such  continuing or surviving  Person or  transferee,  in form and
substance reasonably  satisfactory to the Lessor and each Related Assignee, with
respect to the  enforceability  of this  Guaranty  against  such  continuing  or
surviving Person or transferee.

               3.2.2 Sales, Etc. of Assets.  Sell, lease,  transfer or otherwise
dispose  of, or permit any  Material  Subsidiary  to sell,  lease,  transfer  or
otherwise dispose of (other than in connection with a transaction  authorized by
Section 3.2.1) any substantial  part of its assets;  provided that the foregoing
shall not prohibit any sale, lease,  transfer or disposition which (i) would not
materially  impair the ability of the Guarantor to perform its obligations under
this Guaranty and (ii) together with all other such sales, leases,  transfers or
dispositions,  could not  reasonably  be  expected  to have a  Material  Adverse
Effect.  Notwithstanding anything to the contrary contained in this Guaranty and
without  limiting  the  generality  of the  foregoing,  the  Guarantor  (or  any
successor  formed by a consolidation or merger with, or the transferee of all or
substantially all of the assets of, the Guarantor  permitted under Section 3.2.1
hereof) shall at all times continue to own and operate,  directly or indirectly,
the Core Gas Distribution Business.

                                    SECTION 4

                         REPRESENTATIONS AND WARRANTIES

        The  Guarantor  represents  and  warrants to the Lessor and each Related
Assignee (effective as of the Effective Date for the Facility) that:

        4.1Organization;  Power and  Authority.  The  Guarantor is a corporation
duly  organized,  validly  existing and in good  standing  under the laws of the
State of New York, and is duly qualified as a foreign corporation and is in good
standing in each  jurisdiction in which such  qualification  is required by law,
other than those  jurisdictions as to which the failure to be so qualified or in
good  standing  would  not,  individually  or in the  aggregate,  reasonably  be
expected to have a Material  Adverse  Effect.  The  Guarantor has full power and
authority to own or hold under lease the  properties  it purports to own or hold
under lease,  to transact  the business it transacts  and to execute and deliver
and perform the provisions of this Guaranty.

        4.2Authorization,  etc.  This  Guaranty has been duly  authorized by all
necessary  corporate and  shareholder  action on the part of the Guarantor,  and
this Guaranty constitutes a legal, valid and binding obligation of the Guarantor
enforceable  against the Guarantor in accordance with its terms,  except as such
enforceability  may  be  limited  by  (a)  applicable  bankruptcy,   insolvency,
reorganization,  moratorium or other similar laws  affecting the  enforcement of
creditors' rights generally and (b) general  principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).

        4.3Disclosure.  The Private Placement  Memorandum dated April 1999 (such
Private Placement  Memorandum  together with any financial  statements  attached
thereto,  the "Memorandum"),  relating to the transactions  contemplated  hereby
fairly describes,  in all material respects,  the business and properties of the
Guarantor and its Material Subsidiaries.  None of this Guaranty, the Memorandum,
and the financial statements listed in Schedule 4.5 to this Guaranty, taken as a
whole,  contains any untrue  statement of a material  fact or omits to state any
material fact necessary to make the  statements  therein not misleading in light
of the  circumstances  under which they were made.  Except as  disclosed  in the
Memorandum  or in the  financial  statements  listed  in  Schedule  4.5 to  this
Guaranty,  since  December 31, 1998,  there has been no change in the  financial
condition,  operations,  business or properties of the Guarantor or any Material
Subsidiary  except  changes  that  individually  or in the  aggregate  would not
reasonably be expected to have a Material Adverse Effect.

        4.4Organization  and  Ownership  of  Shares  of  Material  Subsidiaries.
Schedule 4.4 to this Guaranty  contains  (except as noted therein)  complete and
correct  lists  of (i) the  Material  Subsidiaries,  showing,  as to  each  such
Material  Subsidiary,   the  correct  name  thereof,  the  jurisdiction  of  its
organization, and the percentage of shares of each class of its capital stock or
similar  equity  interests  outstanding  owned by the  Guarantor  and each other
Subsidiary  of the  Guarantor  and (ii) the  Guarantor's  directors  and  senior
officers.

        All of the  outstanding  shares  of  capital  stock  or  similar  equity
interests of each  Material  Subsidiary  shown in Schedule 4.4 as being owned by
the Guarantor and its Subsidiaries have been validly issued,  are fully paid and
nonassessable  and are owned by the  Guarantor  or another  Subsidiary  free and
clear of any Lien (except as otherwise disclosed in Schedule 4.4).

        Each  Material  Subsidiary  is a  corporation  duly  organized,  validly
existing  and  in  good  standing  under  the  laws  of  its   jurisdiction   of
organization,  and is duly  qualified  as a foreign  corporation  and is in good
standing in each  jurisdiction in which such  qualification  is required by law,
other than those  jurisdictions as to which the failure to be so qualified or in
good  standing  would  not,  individually  or in the  aggregate,  reasonably  be
expected to have a Material  Adverse Effect.  Each such Material  Subsidiary has
the  corporate  or other  power and  authority  to own or hold  under  lease the
properties  it purports to own or hold under lease and to transact  the business
it transacts and proposes to transact.

        No Material  Subsidiary is a party to or otherwise  subject to any legal
restriction or any agreement (other than this Guaranty, the agreements listed on
Schedule 4.4 and  customary  limitations  imposed by corporate  law statutes and
applicable  regulatory  requirements)  restricting  the ability of such Material
Subsidiary   to  pay  dividends  out  of  profits  or  make  any  other  similar
distributions of profits to the Guarantor or any of its  Subsidiaries  that owns
outstanding shares of capital stock of such Material Subsidiary.

        4.5Financial  Statements.  The Guarantor has delivered to the Lessor and
each Note  Purchaser  copies of the  consolidated  financial  statements  of the
Guarantor  listed  on  Schedule  4.5 to this  Guaranty.  All of  such  financial
statements  (including  in each case the  related  schedules  and notes)  fairly
present in all material  respects  the  consolidated  financial  position of the
Guarantor and its  Subsidiaries  as of the  respective  dates  specified in such
Schedule 4.5 and the consolidated results of their operations and cash flows for
the  respective  periods so specified and have been prepared in accordance  with
GAAP consistently applied throughout the periods involved except as set forth in
the notes thereto (subject, in the case of any interim financial statements,  to
normal year-end adjustments).

        4.6Compliance with Laws, Other Instruments, etc. The execution, delivery
and  performance  by the  Guarantor of this  Guaranty  will not (a)  contravene,
result  in any  breach  of, or  constitute  a  default  under,  or result in the
creation of any Lien in respect of any  property of the  Guarantor or any of its
Subsidiaries  under, any indenture,  mortgage,  deed of trust, loan, purchase or
credit agreement,  lease,  corporate  charter or by-laws,  or any other Material
agreement or  instrument to which the  Guarantor or any of its  Subsidiaries  is
bound or by  which  the  Guarantor  or any of its  Subsidiaries  or any of their
respective properties may be bound or affected, (b) conflict with or result in a
breach of any of the terms,  conditions or  provisions  of any order,  judgment,
decree or ruling of any court,  arbitrator or Governmental  Authority applicable
to the Guarantor or any of its  Subsidiaries or (c) violate any provision of any
statute or other rule or regulation of any Governmental  Authority applicable to
the Guarantor or any of its Subsidiaries.

        4.7Governmental   Authorizations,   etc.   No   consent,   approval   or
authorization of, or registration,  filing or declaration with, any Governmental
Authority is required in connection with the execution,  delivery or performance
by the Guarantor of this Guaranty.

        4.8Litigation; Observance of Agreements, Statutes and Orders. (a) Except
as disclosed in Schedule 4.8(a) to this Guaranty, there are no actions, suits or
proceedings pending or, to the knowledge of the Guarantor, threatened against or
affecting  the  Guarantor  or any of its  Subsidiaries  or any  property  of the
Guarantor or any of its  Subsidiaries  in any court or before any  arbitrator of
any kind or before or by any Governmental Authority that, individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect.

        (b) Except as disclosed in Schedule 4.8(b) to this Guaranty, neither the
Guarantor  nor any of its  Subsidiaries  is in  default  under  any  term of any
agreement or instrument  to which it is a party or by which it is bound,  or any
order,  judgment,  decree or ruling of any  court,  arbitrator  or  Governmental
Authority applicable to it, or is in violation of any applicable law, ordinance,
rule or regulation (including without limitation Environmental  Requirements) of
any Governmental Authority,  which default or violation,  individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect.

        4.9Taxes.  The Guarantor and its Subsidiaries have filed all tax returns
that are  required  to have been  filed in any  jurisdiction,  and have paid all
taxes  shown to be due and  payable  on such  returns  and all  other  taxes and
assessments levied upon them or their properties,  assets, income or franchises,
to the extent such taxes and assessments  have become due and payable and before
they have become delinquent, except for any taxes and assessments (a) the amount
of which is not  individually  or in the  aggregate  Material or (b) the amount,
applicability or validity of which is currently being contested in good faith by
appropriate  proceedings  and with respect to which the  Guarantor or any of its
Subsidiaries,  as  the  case  may  be,  has  established  adequate  reserves  in
accordance with GAAP.

        4.10  Title  to  Property;   Leases.  The  Guarantor  and  its  Material
Subsidiaries have good and sufficient title to their respective  properties that
individually  or in the aggregate are  Material,  including all such  properties
reflected in the most recent audited  balance sheet described in Schedule 4.5 to
this  Guaranty  or  purported  to have been  acquired  by the  Guarantor  or any
Material  Subsidiary  after the date of such  balance  sheet  (except as sold or
otherwise  disposed of in the ordinary  course of  business).  The Lease and all
other leases that  individually  or in the  aggregate are Material are valid and
subsisting and are in full force and effect in all material respects.

        4.11  Licenses,  Permits,  Y2K,  etc.  Except as  disclosed  in Schedule
4.11(a) to this Guaranty:

                      (i) the  Guarantor  and its Material  Subsidiaries  own or
               possess  all  licenses,  permits,   franchises,   authorizations,
               patents,   proprietary  software,   copyrights,   service  marks,
               trademarks and trade names, or rights thereto,  that individually
               or in the aggregate are Material, without known conflict with the
               rights of others;

                      (ii) to the best knowledge of the Guarantor, no product of
               the  Guarantor  or  any  Material  Subsidiary  infringes  in  any
               Material   respect   on   any   license,    permit,    franchise,
               authorization,  patent, proprietary software,  copyright, service
               mark,  trademark,  trade name or other  right  owned by any other
               Person; and

                      (iii) to the best knowledge of the Guarantor,  there is no
               Material violation by any Person of any right of the Guarantor or
               any of its  Material  Subsidiaries  with  respect to any  patent,
               proprietary software,  copyright,  service mark, trademark, trade
               name or other right owned or used by the  Guarantor or any of its
               Material Subsidiaries.

               (a)The  Guarantor and its  Subsidiaries are in the process of (i)
        reviewing and assessing all areas within their respective businesses and
        operations  (including  those  affected  by  information  received  from
        suppliers and vendors) that would reasonably be expected to be adversely
        affected by the Year 2000 Problem,  (ii) developing a plan and timetable
        for addressing the Year 2000 Problem on a timely basis,  and (iii) where
        a plan is substantially  complete,  implementing that plan substantially
        in accordance with that  timetable.  The Guarantor  reasonably  believes
        that  all  of  its  computer  applications  that  are  Material  to  the
        businesses and operations of the Guarantor and its Subsidiaries  will on
        a timely  basis be Year  2000  Compliant,  except to the  extent  that a
        failure to do so would not  reasonably  be  expected  to have a Material
        Adverse  Effect.  The  Guarantor  has asked  its  Material  vendors  and
        suppliers  about  their  plans  for  and  progress  in  identifying  and
        addressing  problems that their  computer  systems may face in correctly
        processing  date  information  related to the Year 2000  Problem  and is
        developing contingency plans for any essential vendors and suppliers who
        fail to give the  Guarantor  sufficient  credible  information  of their
        readiness  as  it  affects  the  Guarantor's  ability  to be  Year  2000
        Compliant.  As  used  in this  Section  4.11(b),  the  term  "Year  2000
        Compliant"  means all computer  applications  of the Guarantor  that are
        Material to the  businesses  and  operations  of the  Guarantor  and its
        Subsidiaries  will  on a  timely  basis  be  able  to  perform  properly
        date-sensitive  functions  involving  all dates on and after  January 1,
        2000;  and the term "Year  2000  Problem"  means the risk that  computer
        applications  used by the  Guarantor or any of its  Subsidiaries  may be
        unable  to  recognize  and  perform  properly  date-sensitive  functions
        involving certain dates on and after January 1, 2000.

        4.12 Compliance  with ERISA.  (a) The Guarantor and each ERISA Affiliate
have operated and administered  each Plan in compliance with all applicable laws
except for such instances of noncompliance as have not resulted in and would not
reasonably  be  expected  to result in a Material  Adverse  Effect.  Neither the
Guarantor nor any ERISA Affiliate has incurred any liability pursuant to Title I
or IV of ERISA or the penalty or excise tax  provisions  of the Code relating to
employee  benefit  plans  (as  defined  in  section 3 of  ERISA),  and no event,
transaction  or  condition  has  occurred  or exists  that would  reasonably  be
expected to result in the  incurrence of any such  liability by the Guarantor or
any ERISA  Affiliate,  or in the  imposition  of any Lien on any of the  rights,
properties  or assets of the  Guarantor or any ERISA  Affiliate,  in either case
pursuant to Title I or IV of ERISA or to such  penalty or excise tax  provisions
or to Section  401(a)(29)  or 412 of the Code,  other than such  liabilities  or
Liens as would not, individually or in the aggregate, be Material.

        (b) The present value of the aggregate benefit liabilities under each of
the Plans  (other  than  Multiemployer  Plans),  determined  on the basis of the
actuarial  assumptions specified for funding purposes in such Plan's most recent
actuarial  valuation  report,  did not exceed the aggregate current value of the
assets of such Plan  allocable to such benefit  liabilities.  The term  "benefit
liabilities"  has the meaning  specified  in section 4001 of ERISA and the terms
"current value" and "present  value" have the meaning  specified in section 3 of
ERISA.

        (c) The Guarantor and its ERISA Affiliates have not incurred  withdrawal
liabilities  (and are not subject to contingent  withdrawal  liabilities)  under
section  4201  or  4204  of  ERISA  in  respect  of  Multiemployer   Plans  that
individually or in the aggregate are Material.

        (d) The expected postretirement benefit obligation (determined as of the
last day of the  Guarantor's  most recently ended fiscal year in accordance with
Financial  Accounting  Standards  Board  Statement  No. 106,  without  regard to
liabilities  attributable to continuation  coverage mandated by section 4980B of
the Code) of the  Guarantor and its  Subsidiaries  is reflected in the financial
statements  listed in Schedule 4.5 to this Guaranty as of the  respective  dates
thereof.

        (e) The  execution  and delivery of this  Guaranty  will not involve any
transaction  that is subject to the  prohibitions  of section 406 of ERISA or in
connection   with   which  a  tax  could  be   imposed   pursuant   to   Section
4975(c)(1)(A)-(D)  of the Code. The representation by the Guarantor in the first
sentence of this  Section  4.12(e) is made in  reliance  upon and subject to the
accuracy of the  representations  of the Note  Purchasers  in Section 2.2 of the
Note Purchase  Agreement as to the sources of the funds used to pay the purchase
price of the Notes to be purchased by them thereunder.

        4.13 Offering of the Notes and this Guaranty, Etc. Neither the Guarantor
nor anyone  authorized  to act on its behalf has  offered  this  Guaranty or the
Notes or any similar  securities  for sale to, or solicited any offer to buy any
of the same from, or otherwise approached or negotiated in respect thereof with,
any  Person  other  than  the  Note  Purchasers  and not  more  than  110  other
institutional  investors (all such other investors being "accredited  investors"
as defined under Rule 501(a) of the Securities  Act).  Neither the Guarantor nor
anyone  authorized to act on its behalf has taken, or will take, any action that
would  subject the  execution  and delivery of this  Guaranty or the issuance or
sale  of  the  Notes  to  the  registration  requirements  of  Section  5 of the
Securities Act.

        4.14 Existing Indebtedness.  Neither the Guarantor nor any Subsidiary is
in default,  and no waiver of default is currently in effect,  in the payment of
any  principal  or  interest  on any  Indebtedness  of  the  Guarantor  or  such
Subsidiary and no event or condition  exists with respect to any Indebtedness of
the Guarantor or any  Subsidiary  that would permit one or more Persons to cause
such  Indebtedness to become due and payable before its stated maturity,  except
in each case for any default,  event or condition  which  individually or in the
aggregate would not reasonably be expected to have a Material Adverse Effect.

                                    SECTION 5

                                  MISCELLANEOUS

        5.1Payments.  Each payment by the Guarantor under this Guaranty shall be
made in  immediately  available  funds to or on the  order of the  Lessor or any
Related  Assignee,  as  the  case  may  be,  in  each  case  without  setoff  or
counterclaim;  provided  that,  no such payment  shall be deemed a waiver of any
rights the Guarantor may have against the Lessor or the Lessee.
        5.2Parties.  This Guaranty  shall inure to the benefit of the Lessor and
each Related  Assignee  (including the Noteholders) and its and their respective
successors,  assigns or transferees, and shall be binding upon the Guarantor and
its  successors  and assigns.  The  Guarantor may not delegate any of its duties
under this  Guaranty  without the prior  written  consent of the Lessor and each
Related Assignee or except as otherwise  permitted by Section 3.2.1. Upon notice
to the Guarantor,  the Lessor and its  successors,  assigns and  transferees may
assign its or their rights and benefits under this Guaranty to (a) any financial
institutions  providing  financing to the Lessor in connection with the Lease or
any trustee for such financial institutions, and (b) any purchaser or transferee
of all or a  substantial  portion of the rights and  interests of the Lessor and
its  successors,  assigns or transferees in and to the Facility or any Parcel of
Property or Unit of Equipment.  The Guarantor  acknowledges receipt of notice of
such  assignment  to The Bank of New York, as trustee,  in  connection  with the
Lessor's financing of the Facility.

        5.3Notices.  All  notices,  offers,  acceptances,   approvals,  waivers,
requests,  demands and other communications hereunder shall be in writing, shall
be addressed as provided  below and shall be considered as properly given (a) if
delivered in person,  (b) if sent by express courier service  (including Federal
Express,  Emery,  DHL,  Airborne  Express,  and other similar  express  delivery
services),  (c) in  the  event  overnight  delivery  services  are  not  readily
available, if mailed through the United States Postal Service,  postage prepaid,
registered  or  certified  with  return  receipt  requested,  or (d) if  sent by
telecopy and confirmed;  provided, that in the case of a notice by telecopy, the
sender  shall in  addition  confirm  such  notice by writing  sent in the manner
specified in clauses  (a), (b) or (c) of this Section 5.3. All notices  shall be
effective upon receipt by the addressee;  provided,  however, that if any notice
is  tendered  to an  addressee  and the  delivery  thereof  is  refused  by such
addressee,  such notice shall be effective upon such tender. For the purposes of
notice,  the  addresses of the parties  shall be as set forth  below;  provided,
however,  that any party  shall have the right to change its  address for notice
hereunder to any other  location by giving written notice to the other party and
the Related  Assignee in the manner set forth herein.  The initial  addresses of
the parties hereto are as follows:

               If to the Lessor:

                      LIC Funding, Limited Partnership
                      c/o LIC Capital, Inc.,
                         as General Partner
                      c/o ML Leasing Equipment Corp.
                      World Financial Center
                      North Tower
                      250 Vesey Street
                      New York, New York 10281

                      Attention: Jean M. Tomaselli
                      Telecopier: (212) 449-2854
                      Telephone:  (212) 449-7925

               With a copy to:

                      ML Leasing Equipment Corp.
                      Controller's Office
                      World Financial Center
                      South Tower - 14th Floor
                      225 Liberty Street
                      New York, New York  10080

                      Attention: Kira Toone
                      Telecopier: (212) 236-7584
                      Telephone:  (212) 236-7203

               If to the Guarantor:

                      KeySpan Corporation
                      One MetroTech Center
                      Brooklyn, New York  11201

                      Attention:  General Counsel
                      Telecopier: (718) 403-1000
                      Telephone: (718) 696-7139

        5.4Remedies.  The  Guarantor  stipulates  that  the  remedies  at law in
respect of any default or threatened default by the Guarantor in the performance
of or compliance  with any of the terms of this Guaranty are not and will not be
adequate,  and that any of such terms may be  specifically  enforced by a decree
for specific performance or by an injunction against violation of any such terms
or otherwise.

        5.5Right  to Deal  with the  Lessee.  At any time and from time to time,
without terminating, affecting or impairing the validity of this Guaranty or the
obligations of the Guarantor  hereunder,  the Lessor or any Related Assignee may
deal with the Lessee in the same manner and as fully and as if this Guaranty did
not  exist and shall be  entitled,  among  other  things,  to grant the  Lessee,
without  notice  or demand  and  without  affecting  the  Guarantor's  liability
hereunder,  such extension or extensions of time to perform, renew,  compromise,
accelerate or otherwise  change the time for payment of or otherwise  change the
terms of payment or any part thereof contained in or arising under any Operative
Document, or to waive any Obligation of the Lessee to perform any act or acts as
the Lessor or any Related Assignee may deem advisable.

        5.6Subrogation.  The Guarantor will not exercise any rights which it may
acquire by way of  subrogation  hereunder,  by any  payment  made  hereunder  or
otherwise,  until all of the Obligations have been  indefeasibly paid in full in
cash and  performed  in full.  If any amount  shall be paid to the  Guarantor on
account of such subrogation rights at any time when all of the Obligations shall
not have been paid in full in cash,  such amount  shall be held in trust for the
benefit of the Lessor and the trustee under any Financing  Arrangement and shall
forthwith  be paid as provided in Section 5.1 hereof to be credited  and applied
upon the Obligations, whether matured or unmatured, in accordance with the terms
of the  Operative  Documents.  If (a) the  Guarantor  shall make  payment to the
Lessor or any successor, assignee or transferee of the Lessor of all or any part
of the  Obligations and (b) all the  Obligations  shall be indefeasibly  paid in
full in cash,  the Lessor or any such  successor,  assignee or transferee of the
Lessor will, at the Guarantor's request and expense,  execute and deliver to the
Guarantor appropriate documents,  without recourse as set forth in Section 31 of
the Lease,  and without  representation  or warranty,  necessary to evidence the
transfer by  subrogation  to the  Guarantor  of an  interest in the  Obligations
resulting from such payment by the Guarantor.

        5.7Survival of Representations,  Warranties,  etc. All  representations,
warranties,   covenants  and  agreements   made  herein  and  in  statements  or
certificates  delivered  pursuant  hereto  shall  survive any  investigation  or
inspection made by or on behalf of the Lessor or any Related Assignee (including
any Noteholder) and shall continue in full force and effect, notwithstanding any
termination or  unenforceability of the Lease or any other Operative Document or
the Notes,  until all of the  obligations  of the Guarantor  under this Guaranty
shall be fully performed in accordance with the terms hereof,  including without
limitation the payment and performance in full of all Obligations.

        5.8GOVERNING  LAW; WAIVER OF JURY TRIAL. THIS GUARANTY SHALL BE GOVERNED
BY, AND CONSTRUED IN  ACCORDANCE  WITH,  THE LAWS OF THE STATE OF NEW YORK.  THE
GUARANTOR EXPRESSLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,  PROCEEDING
OR COUNTERCLAIM  RELATED TO THIS GUARANTY OR ANY OTHER OPERATIVE  DOCUMENT.  THE
GUARANTOR  ACKNOWLEDGES  THAT THE  PROVISIONS  OF THIS  SECTION  5.8  HAVE  BEEN
BARGAINED  FOR AND THAT  THE  GUARANTOR  HAS  BEEN  REPRESENTED  BY  COUNSEL  IN
CONNECTION THEREWITH.

        5.9Severability. If any term of this Guaranty or any application thereof
shall be invalid or unenforceable,  the remainder of this Guaranty and any other
application  of such  term  shall  not be  affected  thereby.  Any  term of this
Guaranty may be amended,  modified,  waived, discharged or terminated only by an
instrument in writing  signed by the  Guarantor and Lessor,  and consented to by
the trustee under any Financing Arrangement.

        5.10  Counterparts.  This  Guaranty  may be  executed  in any  number of
counterparts,  each of which  shall be an  original,  but all of which  together
shall constitute one instrument.

        5.11 No Merger.  There shall be no merger of this Guaranty and the Lease
by reason of the fact that the same  person,  firm or  entity  is,  directly  or
indirectly,  the Guarantor and a lessee under the Lease or acquires or holds the
leasehold estate created by the Lease or any part of such leasehold estate.

        5.12 No Solicitation  of  Noteholders.  Neither the Guarantor nor any of
its  Subsidiaries  will make any  solicitation  or  request of the  Lessor,  the
Related Assignee or any Noteholder for or with respect to any proposed waiver or
amendment of any of the  provisions of this Guaranty or any of the other Finance
Documents (as defined in the Note Purchase Agreement) unless the Lessor and each
Noteholder  shall be informed thereof by the Guarantor and shall be afforded the
opportunity of considering  the same and shall be supplied by the Guarantor with
sufficient  information  to enable it to make an informed  decision with respect
thereto.  Neither the Guarantor nor any of its  Subsidiaries  will,  directly or
indirectly,  pay  or  cause  to be  paid  any  remuneration,  whether  by way of
supplemental or additional interest, fees or otherwise, or grant any security to
the Lessor or any  Noteholder  as  consideration  for, as an inducement to or in
connection  with the  Lessor  or such  Noteholder  entering  into any  waiver or
amendment of any of the  provisions of this Guaranty or any of the other Finance
Documents  unless  such   remuneration  is  concurrently  paid  or  security  is
concurrently  granted,  on the same  terms,  to the  Lessor  and  ratably to the
holders of all of the Notes then outstanding.



<PAGE>



               IN WITNESS WHEREOF,  the undersigned have caused this Guaranty to
be executed and delivered as of the day and year first above written.

                                            KEYSPAN CORPORATION
                                              (d/b/a KeySpan Energy),
                                              as Guarantor


                                            By:___________________________
                                                Name:
                                                Title:


Acknowledged and Agreed:

LIC FUNDING, LIMITED PARTNERSHIP

By:     LIC Capital, Inc.,
        its General Partner


By: ____________________________
        Name:
        Title:

<PAGE>



                                              A-5
343675-v14  0064428-0045

343675-v14  0064428-0045

                                    EXHIBIT A

                                  DEFINED TERMS



        "COVENANT OBLIGATIONS" means all obligations, covenants and undertakings
of  the  Lessee  contained  in  the  Operative  Documents,  other  than  Payment
Obligations.

        "ERISA" means the Employee  Retirement  Income  Security Act of 1974, as
amended from time to time, and the rules and regulations  promulgated thereunder
from time to time in effect.

        "ERISA   AFFILIATE"  means  any  trade  or  business   (whether  or  not
incorporated)  that is treated as a single employer  together with the Guarantor
under Section 414 of the Code.

        "EVENT OF DEFAULT" means any of the following events shall occur and be
continuing:

               (a) The  Guarantor  shall  fail to pay any  amount due under this
        Guaranty when the same becomes due and payable; or

               (b) Any  representation or warranty made by the Guarantor in this
        Guaranty or by the Guarantor (or any of its officers) in connection with
        this  Guaranty  or any  Financing  Arrangement  shall prove to have been
        incorrect in any material respect when made; or

               (c) The Guarantor  shall fail to perform or observe (i) any term,
        covenant or  agreement  contained  in Section  3.1.1,  Section  3.1.5 or
        Section  3.2 of this  Guaranty,  or (ii) any  other  term,  covenant  or
        agreement  contained  in this  Guaranty on its part to be  performed  or
        observed if the failure to perform or observe such other term,  covenant
        or agreement shall remain  unremedied for thirty (30) days after written
        notice  thereof  shall have been given to the Guarantor by the Lessor or
        any Related Assignee; provided, that if such default is of a nature that
        is not capable of being cured within such thirty (30) day period and the
        Guarantor  shall have  diligently  commenced  curing  such  default  and
        proceeds diligently and in good faith thereafter to complete curing such
        default,  such thirty  (30) day period  shall be extended to ninety (90)
        days; or

               (d) The entry of a decree or order for  relief in  respect of the
        Guarantor or a Material Subsidiary by a court having jurisdiction in the
        premises in an involuntary  case under the Federal  bankruptcy  laws, as
        now or hereafter  constituted,  or any other applicable Federal or state
        bankruptcy,  insolvency  or other similar law, or appointing a receiver,
        liquidator,   assignee,  custodian,  trustee,  sequestrator  or  similar
        official of the Guarantor or a Material Subsidiary or of any substantial
        part  of  the  respective  property  of  the  Guarantor  or  a  Material
        Subsidiary,  or ordering the winding up or liquidation of the affairs of
        the Guarantor or a Material Subsidiary,  and the continuance of any such
        decree  or order  unstayed  and in  effect  for a period  of sixty  (60)
        consecutive days; or

               (e) The suspension or discontinuance  of the business  operations
        of the  Guarantor  or a Material  Subsidiary,  the  insolvency  (however
        evidenced) of the Guarantor or a Material Subsidiary or the admission by
        the Guarantor or a Material  Subsidiary of insolvency or bankruptcy,  or
        the  commencement  by  the  Guarantor  or  a  Material  Subsidiary  of a
        voluntary  case under the Federal  bankruptcy  laws, as now or hereafter
        constituted,  or any  other  applicable  Federal  or  state  bankruptcy,
        insolvency  or other  similar law, or the consent by the  Guarantor or a
        Material  Subsidiary  to the  appointment  of or taking  possession by a
        receiver,  liquidator,  assignee,  custodian,  trustee,  sequestrator or
        other similar  official of the Guarantor or a Material  Subsidiary or of
        any  substantial  part of the respective  property of the Guarantor or a
        Material  Subsidiary,  or the  making  by the  Guarantor  or a  Material
        Subsidiary of an assignment for the benefit of creditors, or the failure
        of the Guarantor or a Material Subsidiary  generally to pay its debts as
        such  debts  become  due,  or the  taking  of  corporate  action  by the
        Guarantor or a Material Subsidiary in furtherance of any such action; or

               (f) A  default  or event of  default,  the  effect of which is to
        permit the holder or holders of any  Indebtedness  of the Guarantor or a
        Material  Subsidiary  in excess of  $5,000,000  in the  aggregate,  or a
        trustee  or agent on behalf of such  holder or  holders,  to cause  such
        Indebtedness to become due prior to its stated maturity, shall occur and
        be continuing  under the  provisions of any agreement  pursuant to which
        such  Indebtedness  was  created  or  any  instrument   evidencing  such
        Indebtedness,  or any  obligation  of the  Guarantor  or  such  Material
        Subsidiary  for the  payment  of such  Indebtedness  shall  become or be
        declared to be due and payable  prior to its stated  maturity,  or shall
        not be paid  when due  (after  giving  effect  to any  applicable  grace
        period); or

               (g) Any final non-appealable judgment for the payment of money in
        excess of $5,000,000  shall be rendered  against the Guarantor or any of
        its Material Subsidiaries by any court of competent jurisdiction and the
        same shall remain  undischarged  for a period of thirty (30) consecutive
        days during which  execution of such judgment or judgments  shall not be
        effectively stayed.

        "EXCHANGE  ACT" means the  Securities  Exchange Act of 1934,  as amended
from time to time.

        "INDEMNIFICATION  OBLIGATIONS"  means any amount or  amounts  due to any
Indemnified Person from the Lessee pursuant to Section 11 of the Lease.

        "LEASE" means the Lease  Agreement  dated as of June 9, 1999 between LIC
Funding,  Limited  Partnership,  as Lessor,  and  KeySpan-Ravenswood,  Inc.,  as
Lessee,  as the  same  may be  amended  or  supplemented  from  time  to time in
accordance with its terms and the terms of the Collateral Indenture.

        "LEASE EVENT OF DEFAULT" means an Event of Default under the Lease.

        "MATERIAL"  means  material  in relation  to the  business,  operations,
affairs,  financial  condition,  assets or  properties  of the Guarantor and its
Subsidiaries taken as a whole.

        "MATERIAL  ADVERSE  EFFECT" means a material  adverse  effect on (a) the
business, operations,  affairs, financial condition, assets or properties of the
Guarantor  and its  Subsidiaries  taken as a whole,  or (b) the  ability  of the
Lessee to  perform  its  obligations  under  the  Lease or any  other  Operative
Document to which it is a party,  or (c) the ability of the Guarantor to perform
its obligations  under this Guaranty,  or (d) the validity or  enforceability of
this Guaranty or any other Operative Document.

     "MATERIAL SUBSIDIARY" means "Material Subsidiary" as defined in the Lease.

        "MULTIEMPLOYER  PLAN" means any Plan that is a "multiemployer  plan" (as
such term is defined in section 4001(a)(3) of ERISA).

        "NOTE"  means any of the  6.91%  Senior  Notes  due 2009,  issued by the
Lessor pursuant to the Note Purchase Agreement.

        "NOTEHOLDER"  means the Person in whose name a Note is  registered  from
time to time.

     "NOTE PURCHASER" has the meaning specified in the Note Purchase Agreement.

        "NOTE PURCHASE AGREEMENT" means, collectively, the several Note Purchase
Agreements, each dated as of June 9, 1999, between the Lessor and the purchasers
named in Schedule I thereto, as the same may be amended,  restated,  modified or
supplemented from time to time.

         "OBLIGATIONS" means Payment Obligations and Covenant Obligations,
individually and collectively.

        "OFFICER'S  CERTIFICATE"  means  a  certificate  of a  Senior  Financial
Officer or of any other officer of the Guarantor whose  responsibilities  extend
to the subject matter of such certificate.

        "OPERATIVE  DOCUMENTS" means this Guaranty,  the Lease, any Consent, the
Facility  Support  Agreement,   the  SNDA  (as  defined  in  the  Note  Purchase
Agreement),  the Landlord's Consent (as defined in the Note Purchase Agreement),
the Site Lease, each Ground Lease, and each agreement, certificate or instrument
delivered  by the  Guarantor  or the Lessee  pursuant to the terms of any of the
foregoing.

        "PAYMENT   OBLIGATIONS"  means  all  amounts  stated  in  the  Operative
Documents to be payable by the Lessee, including without limitation (but without
duplication), amounts in respect of (i)(A) an Event of Loss, Event of Default or
Event of Lease  Termination  (as each such term is defined in the Lease) and (B)
any other termination or expiration of the Lease,  including without limitation,
a  termination  of the Lease or purchase of the Facility or a Parcel of Property
or Unit of Equipment,  as the case may be,  pursuant to the terms of Section 12,
Section 13, Section 14, Section 15, Section 16 and Section 29 of the Lease; (ii)
Basic  Rent,  Additional  Rent,  Acquisition  Cost  and  Debt  Yield-Maintenance
Premium;  (iii) a Recording Event under Section 8(i) of the Lease;  and (iv) all
amounts  of  Indemnification  Obligations,  in each  case,  notwithstanding  any
rejection  of the  Lease by the  Lessee  or a trustee  in any  Federal  or state
bankruptcy,  insolvency or other similar proceeding and any limit imposed in any
such  proceeding or by statute or other  applicable  law on the amounts  payable
under the Lease by the Lessee.

        "PBGC" means the Pension Benefit  Guaranty  Corporation  referred to and
defined in ERISA or any successor thereto.

        "PERSON"  means an  individual,  partnership,  corporation  (including a
business  trust),  joint  stock  company,   trust,  limited  liability  company,
unincorporated  association,  joint venture or other entity,  or a government or
any political subdivision or agency thereof.

        "PLAN" means an "employee  benefit  plan" (as defined in section 3(3) of
ERISA) that is or,  within the preceding  five years,  has been  established  or
maintained,  or to which  contributions are or, within the preceding five years,
have been made or required to be made, by the  Guarantor or any ERISA  Affiliate
or with  respect  to which the  Guarantor  or any ERISA  Affiliate  may have any
liability.

        "POTENTIAL  DEFAULT"  means any event  that,  with the giving of notice,
lapse of time or both, would constitute an Event of Default.

        "POTENTIAL LEASE DEFAULT" means a Potential Default under the Lease.

        "PROPERTY"or  "PROPERTIES" means, unless otherwise specifically limited,
real or  personal  property  of any  kind,  tangible  or  intangible,  choate or
inchoate.

        "PRUDENT GAS UTILITY  PRACTICE" means, as the context may require,  at a
particular  time any of the  practices,  methods  and acts  (including,  without
limitation,  methods or acts  engaged in or approved  by at least a  substantial
portion of the gas utility  industry prior thereto)  which, in the exercise of a
Material  Subsidiary's  reasonable  judgment  in  light  of the  facts  and  the
characteristics  of the property of such Material  Subsidiary  known at the time
the decision was made, would have been expected to accomplish the desired result
at the lowest  reasonable cost consistent with reliability,  safety,  expedition
and good customer  relations.  "Prudent Gas Utility Practice" is not intended to
be limited to the  optimum  practice,  method or act,  to the  exclusion  of all
others, but rather to be a spectrum of reasonable and prudent practices, methods
or acts.

        "QUALIFYING   ASSIGNEE"  means  each  (a)  Noteholder  or  other  Person
originally  providing  credit  support to the  Lessor  pursuant  to a  Financing
Arrangement (together with the Affiliates of such Noteholder or other Person and
any  collateral  trustee or agent for any thereof),  and (b)  transferee of such
Noteholder  or other  Person  which holds at least 1% (or in the case of Section
3.1.1  (a)  through  (e),  0.5%)  of  the  total  unpaid   principal  amount  of
indebtedness under such Financing Arrangement.

        "RESPONSIBLE  OFFICER" means any Senior Financial  Officer and any other
officer of the  Guarantor  with  responsibility  for the  administration  of the
relevant portion of this Guaranty.

        "SECURITIES  ACT" means the Securities Act of 1933, as amended from time
to time.

        "SENIOR FINANCIAL OFFICER" means the chief financial officer,  principal
accounting  officer,  treasurer,  assistant  treasurer  or  comptroller  of  the
Guarantor.

        "SUBSIDIARY"  means, as to any Person,  any corporation,  association or
other  business  entity in which such Person or one or more of its  Subsidiaries
owns more than 50% of the voting stock or other equity interest of such Person .
Unless the context otherwise  clearly requires,  any reference to a "Subsidiary"
is a reference to a Subsidiary of the Guarantor.



<PAGE>



2
343675-v14  0064428-0045


343675-v14  0064428-0045
                                  SCHEDULE 4.4

             ORGANIZATION AND OWNERSHIP OF SHARES OF MATERIAL SUBSIDIARIES

Material Subsidiaries

Brooklyn Union Gas Company, a New York corporation, is a wholly owned subsidiary
of KeySpan Energy Corp. (a wholly owned subsidiary of the Guarantor).

KeySpan Gas East  Corporation  d/b/a Brooklyn  Union of Long Island,  a New York
corporation, is a wholly owned subsidiary of the Guarantor.

Guarantor's Directors

Robert B. Catell
Lilyan H. Affinito
George Bugliarello
Howard R. Curd
Richard N. Daniel
Donald H. Elliot
Alan H. Fishman
James R. Jones
Stephen W. McKessy
Edward D. Miller
Basil A. Paterson
James Q. Riordan
Frederic V. Salerno
Vincent Tese

Guarantor's Executive Officers

Robert B. Catell - Chief Executive Officer
Anthony J. DiBrita - Senior Vice President of Gas Operations
Lawrence S. Dryer - Vice President of Internal Audit
Robert J. Fani - Senior Vice President of Gas Marketing and Sales
William K. Feraudo - Senior Vice President
Ronald S. Jendras - Vice President, Controller and Chief Accounting Officer
Frederick M. Lowther - General Counsel
David J. Manning - Senior Vice President of Corporate Affairs
Craig G. Matthews - President and Chief Operating Officer
H. Neil Nichols - Senior Vice President
Anthony  Nozzolillo - Senior Vice President of the Company's  Electric  Business
Unit
Wallace P. Parker, Jr. - Senior Vice President of Human Resources
David L. Phillips - Senior Vice President of Strategic Planning & Corporate
Development
Lenore F. Puleo - Senior Vice President of Customer Relations
Cheryl Smith - Senior Vice President and Chief Information Officer
Michael J. Taunton - Vice President of Investor Relations
Robert R. Wieczorek - Vice President, Secretary and Treasurer
Steven L. Zelkowitz - Senior Vice President and Deputy General Counsel




Restrictions on Payment of Dividends

There are no agreements  restricting  the ability of any Material  Subsidiary to
pay dividends out of profits or make any other similar  distributions of profits
to the  Guarantor or any of its  Subsidiaries  that owns  outstanding  shares of
capital  stock of any Material  Subsidiary,  except as set forth in the reports,
schedules, forms, statements and other documents filed by the Guarantor with the
Securities and Exchange Commission,  and publicly available prior to the date of
this Guaranty.





<PAGE>



                                  SCHEDULE 4.5

                              FINANCIAL STATEMENTS

Copies of the Guarantor's  audited financial  statements dated December 31, 1998
and the unaudited financial statements dated March 31, 1999 are attached hereto.



<PAGE>



                                  SCHEDULE 4.8

                                   LITIGATION

None, except as set forth in the statements under the captions "Item 1. Business
Environmental  Matters,"  "Item 3.  Legal  Proceedings,"  "Item 7.  Management's
Discussion  and  Analysis  of  Financial  Condition  and  Results of  Operations
Environmental" and "Note 8. Contractual  Obligations,  Financial Instruments and
Contingencies"  of the Annual Report of the  Guarantor or any  Subsidiary of the
Guarantor for the year ended  December 31, 1998 on Form 10-K and the  statements
under  the  captions  "Note 6.  Environmental  Matters"  of  "Item 1.  Financial
Statements,"  "Item  2.  Management's   Discussion  and  Analysis  of  Financial
Condition  and  Results  of  Operations  --  Environmental"  and "Item 1.  Legal
Proceedings"  of  Part  II of  the  Quarterly  Report  of the  Guarantor  or any
Subsidiary  of the  Guarantor  for the quarter ended March 31, 1999 on Form 10-Q
filed with the Securities and Exchange Commission,  and publicly available prior
to the date of this Guaranty.


<PAGE>



                                  SCHEDULE 4.11

                             LICENSES, PERMITS, Y2K



                                      NONE