$700,000,000

                                CREDIT AGREEMENT

                                      among


                              KEYSPAN CORPORATION,
                                  as Borrower,


                               The Several Lenders
                        from Time to Time Parties Hereto,


                                 CITIBANK, N.A,.
                              as Syndication Agent,


                             EUROPEAN AMERICAN BANK,
                             as Documentation Agent,





                                       and


                            THE CHASE MANHATTAN BANK,
                             as Administrative Agent


                          Dated as of October 30, 2000






                              CHASE SECURITIES INC,
                         Lead Arranger and Book Manager


<PAGE>








                                TABLE OF CONTENTS
                                -----------------
<TABLE>
<CAPTION>
                                                                                                               Page
                                                                                                               ----
<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...............................................................19
         ---      --------------------------------

         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......................................................................................24
         ----     ----------

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

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

Section 3         REPRESENTATIONS AND WARRANTIES.................................................................25
---------         ------------------------------

         3.1      Financial Condition............................................................................25
         ---      --------------------

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

         3.3      Corporate Existence; Compliance with Law.......................................................26
         ---      -----------------------------------------

         3.4      Corporate Power; Authorization; Enforceable Obligations........................................26
         ---      --------------------------------------------------------

         3.5      No Legal Bar...................................................................................26
         ---      -------------

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

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

         3.8      Ownership of Property; Liens...................................................................27
         ---      -----------------------------

         3.9      Intellectual Property..........................................................................27
         ---      ----------------------

         3.10     Taxes..........................................................................................27
         ----     ------

         3.11     Federal Regulations............................................................................27
         ----     --------------------

         3.12     Labor Matters..................................................................................27
         ----     --------------

         3.13     ERISA..........................................................................................28
         ----     ------

         3.14     Investment Company Act; Other Regulations......................................................28
         ----     ------------------------------------------

         3.15     Subsidiaries...................................................................................28
         ----     -------------

         3.16     Use of Proceeds................................................................................28
         ----     ----------------

         3.17     Environmental Matters..........................................................................28
         ----     ----------------------

         3.18     Accuracy of Information, etc...................................................................29
         ----     -----------------------------

Section 4         CONDITIONS PRECEDENT...........................................................................30
---------         --------------------

         4.1      Conditions to Closing Date.....................................................................30
         ---      ---------------------------

         4.2      Conditions to Initial Extension of Credit......................................................30
         ---      ------------------------------------------

         4.3      Conditions to Each Extension of Credit.........................................................31
         ---      ---------------------------------------

Section 5         AFFIRMATIVE COVENANTS..........................................................................31
---------         ---------------------

         5.1      Financial Statements...........................................................................31
         ---      ---------------------

         5.2      Certificates; Other Information................................................................32
         ---      --------------------------------

         5.3      Payment of Obligations.........................................................................32
         ---      -----------------------

         5.4      Maintenance of Existence; Compliance...........................................................32
         ---      -------------------------------------

         5.5      Maintenance of Property; Insurance.............................................................33
         ---      -----------------------------------

         5.6      Inspection of Property; Books and Records; Discussions.........................................33
         ---      -------------------------------------------------------

         5.7      Notices........................................................................................33
         ---      --------

         5.8      Environmental Laws.............................................................................34
         ---      -------------------

         5.9      Transaction with Affiliates....................................................................34
         ---      ----------------------------

Section 6         NEGATIVE COVENANTS.............................................................................34
---------         ------------------

         6.1      Financial Condition Covenant...................................................................34
         ---      -----------------------------

         6.2      Liens..........................................................................................34
         ---      ------

         6.3      Fundamental Changes............................................................................35
         ---      --------------------

         6.4      Disposition of Property........................................................................36
         ---      ------------------------

         6.5      Negative Pledge Clauses........................................................................36
         ---      ------------------------

         6.6      Limitation on Restrictions on Distributions from Subsidiaries..................................36
         ---      --------------------------------------------------------------

Section 7         EVENTS OF DEFAULT..............................................................................36
---------         -----------------

Section 8         THE ADMINISTRATIVE AGENT.......................................................................39
---------         ------------------------

         8.1      Appointment....................................................................................39
         ---      ------------

         8.2      Delegation of Duties...........................................................................39
         ---      ---------------------

         8.3      Exculpatory Provisions.........................................................................39
         ---      -----------------------

         8.4      Reliance by Administrative Agent...............................................................39
         ---      ---------------------------------

         8.5      Notice of Default..............................................................................40
         ---      ------------------

         8.6      Non-Reliance on Administrative Agent and Other Lenders.........................................40
         ---      -------------------------------------------------------

         8.7      Indemnification................................................................................41
         ---      ----------------

         8.8      Administrative Agent in Its Individual Capacity................................................41
         ---      ------------------------------------------------

         8.9      Successor Administrative Agent.................................................................41
         ---      -------------------------------

Section 9         MISCELLANEOUS..................................................................................42
---------         -------------

         9.1      Amendments and Waivers.........................................................................42
         ---      -----------------------

         9.2      Notices........................................................................................42
         ---      --------

         9.3      No Waiver; Cumulative Remedies.................................................................43
         ---      -------------------------------

         9.4      Survival of Representations and Warranties.....................................................43
         ---      -------------------------------------------

         9.5      Payment of Expenses and Taxes..................................................................43
         ---      ------------------------------

         9.6      Successors and Assigns; Participations and Assignments.........................................44
         ---      -------------------------------------------------------

         9.7      Adjustments; Set-off...........................................................................46
         ---      ---------------------

         9.8      Counterparts...................................................................................46
         ---      -------------

         9.9      Severability...................................................................................47
         ---      -------------

         9.10     Integration....................................................................................47
         ----     ------------

         9.11     GOVERNING LAW..................................................................................47
         ----     --------------

         9.12     Submission To Jurisdiction; Waivers............................................................47
         ----     ------------------------------------

         9.13     Acknowledgements...............................................................................48
         ----     -----------------

         9.14     Confidentiality................................................................................48
         ----     ----------------

         9.15     WAIVERS OF JURY TRIAL..........................................................................48
         ----     ----------------------
</TABLE>




<PAGE>






SCHEDULES:

1.1      Commitments
3.4      Consents, Authorizations, Filings and Notices
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 Richard A. Rapp, Jr.
D        Form of Exemption Certificate


<PAGE>







                  CREDIT AGREEMENT,  dated as of October 30, 2000, 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"),  CITIBANK,  N.A., as  syndication  agent,  EUROPEAN
AMERICAN  BANK,  as  Documentation  Agent,  and THE  CHASE  MANHATTAN  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.

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

          "Administrative  Agent":  The Chase Manhattan 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.

          "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,  Moody's and/or Fitch  respectively;  provided that for each
     day the aggregate principal amount of Loans outstanding is greater than the
     amount equal to 33% of the Total Commitments, 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/A2                     0.305%                        0.000%

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

        A-/A3                     0.425%                        0.000%

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

      BBB+/Baa1                   0.525%                        0.000%

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

       BBB/Baa2                   0.625%                        0.000%

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

      <BBB-/Baa3                  0.975%                        0.000%
      -

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

                  Changes in the Applicable Margin shall become effective on the
date on which S&P, Moody's and/or Fitch changes the rating it has issued for the
Borrower's  senior unsecured  long-term debt. In the event of split ratings,  if
all three  agencies  issue a rating and if the ratings  from two agencies are at
the same level and the rating  from the third  agency is at a lower  level,  the
higher  rating  shall  apply;  if the ratings  from two agencies are at the same
level and the  rating  from the third  agency  is at a higher  level,  the lower
rating shall apply;  if all three  ratings are at different  levels,  the rating
next  below the  highest  of the three  shall  apply;  if only two of such three
agencies issue a rating,  the lower of such ratings shall apply;  if only one of
such three agencies issues a rating, such rating 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.

          "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 Standard & Poor's Ratings Services
     ("S&P") or P-1 by Moody's Investors Service, Inc. ("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 is
     October 30, 2000.

          "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 $700,000,000.

          "Commitment  Period": the period from and including the Effective 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.

          "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 October 2000 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 Income": for any period, the consolidated net income
     (or  loss)  of  the  Borrower  and  its   Subsidiaries,   determined  on  a
     consolidated  basis in accordance  with GAAP;  provided that there shall be
     excluded  (a) the income (or  deficit) of any Person  accrued  prior to the
     date  it  becomes  a  Subsidiary  of the  Borrower  or is  merged  into  or
     consolidated with the Borrower or any of its  Subsidiaries,  (b) the income
     (or  deficit) of any Person  (other than a Subsidiary  of the  Borrower) in
     which the Borrower or any of its  Subsidiaries  has an ownership  interest,
     except to the  extent  that any such  income is  actually  received  by the
     Borrower  or  such   Subsidiary   in  the  form  of  dividends  or  similar
     distributions and (c) the  undistributed  earnings of any Subsidiary of the
     Borrower  to the extent that the  declaration  or payment of  dividends  or
     similar  distributions  by such  Subsidiary is not at the time permitted by
     the  terms  of any  Contractual  Obligation  (other  than  under  any  Loan
     Document) or Requirement of Law applicable to such Subsidiary.

          "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  Massachussets  and in New  Hampshire,  as such business is conducted by
     KeySpan  Energy  Delivery New York,  KeySpan  Energy  Delivery Long Island,
     Boston Gas,  Colonial  Gas,  Essex Gas and  EnergyNorth  Natural Gas on the
     Effective 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.

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

          "Effective Date": the date on which the conditions precedent set forth
     in Section  4.1 and Section  4.2 shall have been  satisfied,  which date is
     November 6, 2000.

          "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).

          "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
     November 8, 1999, among the Borrower, the several banks and other financial
     institutions or entities from time to time parties thereto, Citibank, N.A.,
     as syndication agent,  European American Bank, as Documentation  Agent, 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, Moody's and/or Fitch, respectively.

=========================== =========================
         Ratings                  Facility Fee
=========================== =========================
           A/A2                      0.070%
--------------------------- -------------------------
--------------------------- -------------------------
          A-/A3                      0.075%
--------------------------- -------------------------
--------------------------- -------------------------
        BBB+/Baa1                    0.100%
--------------------------- -------------------------
--------------------------- -------------------------
         BBB/Baa2                    0.125%
--------------------------- -------------------------
--------------------------- -------------------------
       <BBB-/Baa3                   0.150%
       -
=========================== =========================

                  Changes in the Facility Fee shall become effective on the date
on which S&P,  Moody's  and/or  Fitch  changes  the rating it has issued for the
Borrower's  senior unsecured  long-term debt. In the event of split ratings,  if
all three  agencies  issue a rating and if the ratings  from two agencies are at
the same level and the rating  from the third  agency is at a lower  level,  the
higher  rating  shall  apply;  if the ratings  from two agencies are at the same
level and the  rating  from the third  agency  is at a higher  level,  the lower
rating shall apply;  if all three  ratings are at different  levels,  the rating
next  below the  highest  of the three  shall  apply;  if only two of such three
agencies issue a rating,  the lower of such ratings shall apply;  if only one of
such three agencies issues a rating, such rating 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.

          "Final  Maturity Date":  the date that is the one year  anniversary of
     the Termination Date.

          "Fitch":  Fitch Investor  Services,  Inc. (or any successor  thereto).

          "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.

          "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.

          "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  Final  Maturity
     Date,  (h)  all  Guarantee   Obligations  of  such  Person  in  respect  of
     obligations  of the kind referred to in clauses (a) through (g) above,  (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,  and (j) for the purposes of Section 7(e) only, all obligations
     of such  Person in respect of Hedge  Agreements.  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) 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 360 days) 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).

          "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.

          "Morgan": Morgan Guaranty Trust Company of New York.

          "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-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.

          "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).

          "Reference Lender": The Chase Manhattan 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.

          "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 thereunder.

          "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 elect a majority of the board of  directors or other
     managers of such  corporation,  partnership or other entity are at the time
     owned (or, in the case of Eastern Enterprises, anticipated to be owned), or
     the  management  of which is (or,  in the case of Eastern  Enterprises,  is
     anticipated to be) 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.

          "Termination Date": September 20, 2001.

          "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.

          (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 Final Maturity 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 to 360 days
     (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".

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  10:30a.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  10:30a.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.

          (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  Effective  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 Final  Maturity  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.

     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.

          (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(a).

     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,  (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 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.

          (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 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.

     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  and,  to the extent
available,  unconsolidated  balance  sheets of the Borrower at December 31, 1998
and  December  31,  1999,  and  the  related  consolidated  and,  to the  extent
available,  unconsolidated  statements  of income and of cash flows for the nine
month  period  ended on December  31, 1998 and the fiscal year ended on December
31, 1999,  reported on by and  accompanied by an unqualified  report from Arthur
Andersen L.P.,  present fairly the  consolidated  and  unconsolidated  financial
condition  of  the  Borrower  as  at  such  date,  and  the   consolidated   and
unconsolidated results of its operations and its consolidated and unconsolidated
cash  flows  for  the  respective   fiscal  years  then  ended.   The  unaudited
consolidated and, to the extent available,  unconsolidated  balance sheet of the
Borrower as at June 30, 2000 and the related unaudited  consolidated and, to the
extent  available,  unconsolidated  statements  of income and cash flows for the
six-month  period  ended on such  date,  present  fairly  the  consolidated  and
unconsolidated  financial  condition  of the  Borrower as at such date,  and the
consolidated and  unconsolidated  results of its operations and its consolidated
cash flows for the six-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  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 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 July 1, 2000 to
and including the date hereof there has been no  Disposition  by the Borrower of
any material part of its business or property.

     3.2 No Change.  Since  December 31, 1999 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  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.

     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.

     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.

     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,  after the  completion of the  acquisition of
Eastern  Enterprises,  will be a registered  "holding  company" under the Public
Utility  Holding  Company  Act of  1935,  as  amended,  and will be  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)  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) 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
     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.

          (b) Financial Statements.  The Lenders shall have received (i) audited
     consolidated  and,  to  the  extent  available,   unconsolidated  financial
     statements  of the Borrower  for the nine month  period ended  December 31,
     1998 and for the 1999 fiscal year and (ii) unaudited  interim  consolidated
     and, to the extent available,  unconsolidated  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.

          (c) 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.

          (d) 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.

          (e) 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.

          (f) Legal Opinions.  The Administrative  Agent shall have received the
     executed  legal  opinion of Richard A. Rapp,  Jr., vice  president,  deputy
     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.

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

     4.2 Conditions to Initial Extension of Credit. The agreement of each Lender
to make the initial  extension of credit requested to be made by it hereunder is
subject to the  satisfaction,  prior to or concurrently  with the making of such
extension  of credit,  of the  conditions  contained  in Section  4.1 and of the
following condition precedent:

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

     4.3 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  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 4.3 have been satisfied.

                        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 90 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 Arthur  Andersen
     L.P.  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.

     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  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.  (a) Permit the ratio of  Consolidated
Indebtedness  to  Consolidated  Capitalization  as at the last day of any fiscal
quarter to exceed 0.65:1.0.

          (b) Permit the  Consolidated Net Worth at any time to be less than the
     sum of (i) 75% of  Consolidated  Net Worth as of the Closing Date until the
     Effective  Date,  (ii) 75% of pro  forma  Consolidated  Net Worth as of the
     Effective Date, (iii) 25% of positive quarterly Consolidated Net Income for
     each  fiscal  quarter  ending  after the  Closing  Date and (iv) 75% of the
     amount  by which  Consolidated  Net  Worth is  increased  by  reason of any
     issuance by the  Borrower of Capital  Stock  consummated  after the Closing
     Date.

     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;

          (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 the  acquisition of fixed or capital assets
     (including, without limitation,  Capital Lease Obligations),  provided that
     (i) such  Liens  shall be  created  substantially  simultaneously  with the
     acquisition  of such fixed or capital  assets and (ii) such Liens do not at
     any time  encumber  any property  other than the property  financed by such
     Indebtedness;

          (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; and

          (i) Liens not  otherwise  permitted by this Section 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.

     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:

          (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); and

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

          (b)  Permit any Asset  Sale,  other than any  permitted  under  clause
     6.4(a)  above,  except to the  extent  that 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 such Net Cash Proceeds.

     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 purchase money
Liens or Capital Lease  Obligations  otherwise  permitted hereby (in which case,
any  prohibition  or  limitation  shall  only be  effective  against  the assets
financed  thereby)  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.

                          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  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
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.

     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.

     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.

                            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) 403-2042

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

         with a copy to:                    The Chase Manhattan 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
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.  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,  except  to the  extent  that  such
     amendment, waiver or consent would reduce the principal of, or interest on,
     the Loans or any fees payable hereunder,  or postpone the date of the final
     maturity  of the  Loans,  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.

          (c) Any Lender (an "Assignor") may, in accordance with applicable law,
     at any time and from time to time 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  that occurs when an Event of Default  pursuant
     to Section 7(f) shall have occurred and be  continuing  with respect to the
     Borrower.

          (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 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.

     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.

     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.

                                  (End of Page)


<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:/s/ Michael J. Taunton
                                ----------------------
                                Name: Michael J. Taunton
                                Title: Vice President and Treasurer


                             THE CHASE MANHATTAN BANK, as Administrative Agent
                             and as a Lender

                             By:/s/ Peter J. D'Agostino
                                -----------------------
                                Name:  Peter J. D'Agostino
                                Title:  Vice President


                             CITIBANK N.A., as Syndication Agent and as a Lender


                              By:/s/ Sandip Sen
                                 ---------------
                                 Name:  Sandip Sen
                                 Title: Managing Director / Attorney-in-Fact


<PAGE>



                              EUROPEAN AMERICAN BANK, as Documentation Agent
                              and as a Lender


                              By:/s/ Frederic J. Hugue
                                 ---------------------
                                  Name:  Frederick J. Hugue
                                  Title: Group Vice President


<PAGE>




                              THE BANK OF NEW YORK, as Co-Agent and as a Lender


                              By: /s/ John Watt
                                 --------------
                              Name:  John Watt
                              Title: Vice President


<PAGE>



                              THE BANK OF NOVA SCOTIA, as Co-Agent and as a
                              Lender


                              By: /s/ Todd S. Meller
                                 -------------------
                              Name:  Todd S. Meller
                              Title:  Managing Director


<PAGE>



                              BANK ONE, NA (MAIN OFFICE -CHICAGO), as Co-Agent
                              and as a Lender


                              By: /s/ Jane A. Bek
                                  ---------------
                              Name:  Jane A. Bek
                              Title:  Vice President


<PAGE>



                              BARCLAYS BANK PLC, as Co-Agent and as a Lender


                              By: /s/ Douglas Bernegger
                                  ---------------------
                              Name:  Douglas Bernegger
                              Title:  Director


<PAGE>



                              THE DAI-ICHI KANGYO BANK, LTD., as Co-Agent and as
                              a Lender


                              By: /s/ Azlan S. Ahmad
                                  ------------------
                              Name:  Azlan S. Ahmad
                              Title: Assistant Vice President


<PAGE>




                              FLEET NATIONAL BANK, as Co-Agent and as a Lender


                              By: /s/ Michael M. Pauli
                                  --------------------
                              Name:  Michael M. Pauli
                              Title:


<PAGE>



                              THE INDUSTRIAL BANK OF JAPAN, LIMITED, as Co-Agent
                              and as a Lender


                              By: /s/ Takuya Honjo
                                  ----------------
                                  Name:  Takuya Honjo
                                  Title: Deputy General Manager


<PAGE>



                              MELLON BANK, N.A., as Co-Agent and as a Lender


                              By: /s/ Mark W. Rogers
                                  ------------------
                              Name:  Mark W. Rogers
                              Title: Vice President


<PAGE>



                              THE ROYAL BANK OF SCOTLAND PLC, as Co-Agent and as
                              a Lender


                              By: /s/ Lee Morse
                                  -------------
                              Name:  Lee Morse
                              Title:  Vice President


<PAGE>



                              ABN AMRO BANK N.V., as a Lender


                              By: /s/ William R. Hale
                                  -------------------
                              Name:  William R. Hale
                              Title: Senior Vice President


                              By: /s/ Gregory Babaya
                                  ------------------
                              Name:  Gregory Babaya
                              Title: Assistant Vice President



<PAGE>



                              BANK HAPOALIM B.M., as a Lender


                              By: /s/ James P. Surless
                                  --------------------
                              Name:  James P. Surless
                              Title: Vice President


                              By: /s/ Laura Anne Raffa
                                  --------------------
                              Name:  Laura Anne Raffa
                              Title: First Vice President and Corporate Manager




<PAGE>



                              BANK OF AMERICA, N.A. , as a Lender


                              By: /s/ Andrew M. Hensley
                                  ---------------------
                              Name:  Andrew M. Hensley
                              Title: Associate


<PAGE>




                              CREDIT LYONNAIS NEW YORK BRANCH, as a Lender


                              By: /s/ Philippe Soustra
                                  --------------------
                              Name:  Philippe Soustra
                              Title: Senior Vice President


<PAGE>



                              PNC BANK, NATIONAL ASSOCIATION, as a Lender


                              By: /s/ Mark W. Rutherford
                                  ----------------------
                              Name:  Mark W. Rutherford
                              Title: Senior Vice President


<PAGE>



                              ROYAL BANK OF CANADA, as a Lender


                              By: /s/ N.G. Millar
                                  ---------------
                              Name:  N.G. Millar
                              Title: Senior Manager


<PAGE>



                              UNION BANK OF CALIFORNIA, N.A. , as a Lender


                              By: /s/ Grant K. Ahearn
                                  -------------------
                              Name:  Grant K. Ahearn
                              Title: SVP


<PAGE>




                               WESTDEUTSCHE LANDESBANK GIROZENTRALE, NEW YORK
                               BRANCH, as a Lender


                               By: /s/ Duncan M. Robertson
                                   -----------------------
                               Name:  Duncan M. Robertson
                               Title: Director

                               By: /s/ Anthony Alessandro
                                   ----------------------
                               Name:  Anthony Alessandro
                               Title: Manager





<PAGE>
<TABLE>
<CAPTION>
                                                                                                    Schedule 1.1
                                                             COMMITMENTS

-------------------------------------------------------------- ---------------------------------------------------
<S>                                                                             <C>
LENDER                                                                           COMMITMENT
-------------------------------------------------------------- ---------------------------------------------------
-------------------------------------------------------------- ---------------------------------------------------

THE CHASE MANHATTAN BANK                                                          $55,000,000
-------------------------------------------------------------- ---------------------------------------------------
-------------------------------------------------------------- ---------------------------------------------------

CITIBANK, NA                                                                      $55,000,000
-------------------------------------------------------------- ---------------------------------------------------
-------------------------------------------------------------- ---------------------------------------------------

THE BANK OF NEW YORK                                                              $45,000,000
-------------------------------------------------------------- ---------------------------------------------------
-------------------------------------------------------------- ---------------------------------------------------

THE BANK OF NOVA SCOTIA                                                           $45,000,000
-------------------------------------------------------------- ---------------------------------------------------
-------------------------------------------------------------- ---------------------------------------------------

BANK ONE, NA                                                                      $45,000,000
-------------------------------------------------------------- ---------------------------------------------------
-------------------------------------------------------------- ---------------------------------------------------

BARCLAYS BANK PLC                                                                 $45,000,000
-------------------------------------------------------------- ---------------------------------------------------
-------------------------------------------------------------- ---------------------------------------------------

FLEET NATIONAL BANK                                                               $45,000,000
-------------------------------------------------------------- ---------------------------------------------------
-------------------------------------------------------------- ---------------------------------------------------

MELLON BANK, N.A.                                                                 $45,000,000
-------------------------------------------------------------- ---------------------------------------------------
-------------------------------------------------------------- ---------------------------------------------------

THE ROYAL BANK OF SCOTLAND PLC                                                    $45,000,000
-------------------------------------------------------------- ---------------------------------------------------
-------------------------------------------------------------- ---------------------------------------------------

THE INDUSTRIAL BANK OF JAPAN, LIMITED/                                            $45,000,000
THE DAI-ICHI KANGYO BANK, LTD.
-------------------------------------------------------------- ---------------------------------------------------
-------------------------------------------------------------- ---------------------------------------------------

ABN AMRO BANK, N.V.                                                               $27,500,000
-------------------------------------------------------------- ---------------------------------------------------
-------------------------------------------------------------- ---------------------------------------------------

EUROPEAN AMERICAN BANK                                                            $27,500,000
-------------------------------------------------------------- ---------------------------------------------------
-------------------------------------------------------------- ---------------------------------------------------

BANK OF AMERICA, N.A.                                                             $25,000,000
-------------------------------------------------------------- ---------------------------------------------------
-------------------------------------------------------------- ---------------------------------------------------

BANK HAPOALIM B.M.                                                                $25,000,000
-------------------------------------------------------------- ---------------------------------------------------
-------------------------------------------------------------- ---------------------------------------------------

CREDIT LYONNAIS                                                                   $25,000,000
-------------------------------------------------------------- ---------------------------------------------------
-------------------------------------------------------------- ---------------------------------------------------

PNC BANK, NATIONAL ASSOCIATION                                                    $25,000,000
-------------------------------------------------------------- ---------------------------------------------------
-------------------------------------------------------------- ---------------------------------------------------

ROYAL BANK OF CANADA                                                              $25,000,000
-------------------------------------------------------------- ---------------------------------------------------
-------------------------------------------------------------- ---------------------------------------------------

UNION BANK OF CALIFORNIA, N.A                                                     $25,000,000
-------------------------------------------------------------- ---------------------------------------------------
-------------------------------------------------------------- ---------------------------------------------------

WESTDEUTSCHE LANDESBANK GIROZENTRALE                                              $25,000,000
-------------------------------------------------------------- ---------------------------------------------------
-------------------------------------------------------------- ---------------------------------------------------

TOTAL                                                                             $700,000,000
-------------------------------------------------------------- ---------------------------------------------------
</TABLE>

<PAGE>



                                                                    Schedule 3.4
                  Consents, Authorizations, Filings and Notices
                  ---------------------------------------------


Except the Order of the Securities Exchange Commission required under the Public
Utility  Holding  Company Act of 1935,  as amended,  which Order is not required
until the consummation of the acquisition of Eastern Enterprises.




<PAGE>



                                                                   Schedule 3.15
                            Significant Subsidiaries
                            ------------------------


The  Brooklyn  Union  Gas  Company  d/b/a  KeySpan  Energy  Delivery  New  York,
incorporated in New York State, 100% ownership

KeySpan  Gas  East  Corporation  d/b/a  KeySpan  Energy  Delivery  Long  Island,
incorporated in New York State, 100% ownership

And in addition to the above,  as of the date of consummation of the acquisition
of Eastern Enterprises:

Boston Gas Company, incorporated in the State of Massachusetts, 100% ownership

Colonial Gas Company, incorporated in the State of Massachusetts, 100% ownership

Essex Gas Company, incorporated in the State of Massachusetts, 100% ownership

EnergyNorth  Natural  Gas  Incorporated,   incorporated  in  the  State  of  New
Hampshire, 100% ownership


<PAGE>



                                                                Schedule 6.02(f)
<TABLE>
                                 Existing Liens



<CAPTION>


                                                                                                   Shelf
                                          Interest              Maturity           Balance        Capacity
        Issue as of 9/01/00                 Rate                  Date              ($000)         ($000)
--------------------------------------------------------------------------------------------------------------
<S>                                    <C>                   <C>                        <C>           <C>
Colonial Gas Company

               First Mortgage Bonds
                          Series CH         8.80%                 2022                   25,000

               First Mortgage MTN'S
                              MTA-1     6.44% / 7.38%          2005 / 2025               10,000
                              MTA-2     6.08% / 6.90%          2005 / 2025               10,000
                              MTA-3         6.94%                 2026                   10,000
                              MTA-5         6.88%                 2008                   10,000
                              MTA-6         6.81%                 2027                   15,000
                              MTA-7         6.38%                 2008                   10,000
                                                                               -----------------
                                                               Subtotal For MTA          65,000

                              MTB-1     6.34% / 7.12%          2008 / 2028               20,000
                              MTB-2         5.50%                 2003                   10,000
                                                                               -----------------
                                                               Subtotal For MTB          30,000        75,000

Total Colonial Gas Company                                                              165,000

Essex County Gas Company
               First Mortgage Bonds
                               1996         7.28%                 2016                   10,000
                               1990        10.10%                 2001                    8,000

             Total Essex County Gas                                                      18,000

EnergyNorth Natural Gas, Inc.
                     Mortgage Bonds
                   4th Supplemental         8.44%                 2009                    3,000
                   2nd Supplemental         9.70%                 2019                    7,000
                   3rd Supplemental         9.75%                 2020                   10,000
                   6th Supplemental         7.40%                 2027                   21,872

Total EnergyNorth Natural Gas, Inc.                                                      41,872

Midland Enterprises
          First Ship Mortgage Bonds         6.25%                 2008                   69,088

First Ship Mortgage Medium Term Notes
                                              8.10%              4/10/02                  3,000
                                              9.73%             12/15/05                 10,000
                                              9.75%              12/5/05                  3,000
                                              9.13%              8/15/06                 10,000
                                              9.70%              6/20/07                  5,000
                                              8.20%              4/10/07                 10,000
                                              9.60%              8/6/10                   5,000
                                              9.85%              7/19/10                 10,000
                                              8.70%              4/9/12                  12,000
                       Deposited Monies                                                   (737)

Total Midland Enterprises                                                               136,351


EnergyNorth Realty, Inc.
                  Mortgage NotesPayable       8.00%              2/1/08                     761


KeySpan Ravenswood Inc.
                                              Master Lease
                                                 Agreement              6/18/04         425,000

                                                                               -----------------
Grand Total                                                                             786,984
                                                                               =================
</TABLE>

Assets pledged in connection  with the Senior Credit  Agreement  between KeySpan
Energy Development Corporation and Bank of Montreal, dated October 13, 2000.

<PAGE>




                                                                   Schedule 6.05
                        Existing Negative Pledge Clauses



Assets pledged pursuant to Colonial Gas Company's Fuel Inventory Trust.

Assets pledged pursuant to EnergyNorth Natural Gas Inc.'s Fuel Inventory Trust.

Assets secured in connection with the following series of Colonial Gas Company's
First Mortgage Bonds:

                            8.80% Series CH due 2022

Assets secured in connection with the following series of Colonial Gas Company's
First Mortgage Medium Term Notes:
                           6.44% / 7.38% Series MTA-1 due 2005 / 2025
                           6.08% / 6.90% Series MTA-2 due 2005 / 2025
                           6.94% Series MTA-3 due 2026
                           6.88% Series MTA-5 due 2008
                           6.81% Series MTA-6 due 2027
                           6.38% Series MTA-7 due 2008
                           6.34% / 7.12% Series MTB-1 due 2008 / 2028
                           5.50% Series MTB-2 due 2003

Assets secured in connection with the following series of Essex County Gas
Company's First Mortgage Bonds:
                           7.28% Series 1996 due 2016
                           10.10% Series 1990 due 2001

Assets secured in connection with the following series of EnergyNorth Natural
Gas, Inc. Mortgage Bonds:

                     8.44% Series 4th Supplemental due 2009
                     9.70% Series 2nd Supplemental due 2019
                     9.75% Series 3rd Supplemental due 2020
                     7.40% Series 6th Supplemental due 2027

Assets secured in connection  with the following  series of Midland  Enterprises
First Ship Mortgage Bonds:

                              6.25% Series due 2008

Assets secured in connection  with the following  series of Midland  Enterprises
First Ship Mortgage Medium Term Notes:
                         8.10% Series due April 10, 2002
                         9.73% Series due December 15, 2005
                         9.75% Series due December 5, 2005
                         9.13% Series due August 15, 2006
                         9.70% Series due June 20, 2007
                         8.20% Series due April 10, 2007
                         9.60% Series due August 6, 2010
                         9.85% Series due July 19, 2010
                         8.70% Series due April 9, 2012




Assets secured in connection with the EnergyNorth  Realty Inc. 8% Mortgage Notes
Payable due February 1, 2008.

Security  provision  set forth in Letter of  Credit  Agreement  between  Toronto
Dominion Inc. and KeySpan Generation LLC dated December 30, 1997, as amended.

Insurance Agreement dated October 27, 1999, between Ambac Assurance  Corporation
and KeySpan Generation LLC with respect to $41,125,000 Pollution Control Revenue
Bonds (KeySpan Generation LLC Project 1999 Series A).

Provision  set forth in the Loan  Agreement  between VGS Propane,  LLC and Fleet
Bank - NH and Capital  Contribution  Agreement  between Northern New England Gas
Corporation,  EnergyNorth  Propane , Inc. VGS  Propane,  LLC and Fleet Bank - NH
between dated March 16, 1998.

Provisions  set forth in the Credit  Agreement  among  KeySpan  Corporation  and
several  lenders,  with Chase  Manhattan  Bank as  administrative  agent,  dated
September 22. 2000.

Provisions  set forth in the proposed  Bridge  Credit  Agreement  among  KeySpan
Corporation and several lenders,  with Morgan Guaranty Trust Company of New York
as administrative agent and Chase Manhattan Bank as syndication agent.

Assets pledged in connection  with the Senior Credit  Agreement  between KeySpan
Energy Development Corporation and Bank of Montreal dated October 13, 2000.

Provisions  set forth in the Credit  Agreement  among  KeySpan  Corporation  and
several  lenders,  with Chase  Manhattan  Bank as  administrative  agent,  dated
November 8, 1999, with proposed renewal in November 2000.



<PAGE>



                                                                    Schedule 6.6

                      Existing Limitations on Restrictions
                       on Distributions from Subsidiaries
                       ----------------------------------



Limitations  set forth in the Public  Service  Commission  Order dated April 14,
1998.

Limitations set forth in the New Hampshire Public Utility Commission Order dated
May 8, 2000.



<PAGE>





                                    EXHIBIT A
                             TO THE CREDIT AGREEMENT


                                     FORM OF
                               CLOSING CERTIFICATE


                  I, the undersigned,  [President/Vice President/Chief Financial
Officer] of KEYSPAN CORPORATION,  a corporation organized and existing under the
laws of the State of New York (the  "Borrower"),  do hereby certify on behalf of
the Borrower that:

                  1.  This  Certificate  is  furnished  pursuant  to the  Credit
Agreement, dated as of October 30, 2000, among the Borrower, the Lenders parties
thereto,  Citibank  N.A.,  as  Syndication  Agent,  European  American  Bank, as
Documentation Agent, and The Chase Manhattan Bank, as Administrative Agent (such
Credit  Agreement,  as in effect on the date of this  Certificate,  being herein
called the "Credit  Agreement").  Unless otherwise  defined herein,  capitalized
terms used in this  Certificate  shall have the meanings set forth in the Credit
Agreement.

                  2. The following  named  individuals  are elected or appointed
officers of the  Borrower,  and each holds the office of the  Borrower set forth
opposite  his or her name and has held  such  office  since  __________________,
____1. The signature written opposite the name and title of each such officer is
his or her genuine signature.

     Name2                   Office                    Signature

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

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

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


------------------
1    Insert a date prior to the time of any corporate  action  relating to the
     Loan Documents or related documentation.

2    Include  name,  office and  signature  of each  officer who will sign the
     Credit  Agreement  and any Note,  including  the  officer who will sign the
     certification at the end of this Certificate or related documentation.

<PAGE>

                  3.  Attached  hereto as Exhibit A is a  certified  copy of the
Certificate  of  Incorporation  of the  Borrower,  as filed in the Office of the
Secretary  of  State  of the  State  of New  York on  __________________,  ____,
together with all amendments thereto adopted through the date hereof.

     4.  Attached  hereto as Exhibit B is a true and correct copy of the By-Laws
of the  Borrower  which were duly  adopted,  are in full force and effect on the
date hereof, and have been in effect since ------------------, ----.

                  5. Attached  hereto as Exhibit C is a true and correct copy of
resolutions  which were duly adopted on  ________,  ____ [by  unanimous  written
consent of the Board of Directors of the Borrower] [by a meeting of the Board of
Directors of the Borrower at which a quorum was present and acting  throughout],
and said  resolutions  have not been rescinded,  amended or modified.  Except as
attached  hereto as Exhibit C, no resolutions  have been adopted by the Board of
Directors of the Borrower which deal with the execution, delivery or performance
of the Loan Documents.

                  6. On the date  hereof,  all of the  conditions  set  forth in
Section 4.1 of the Credit  Agreement have been satisfied or waived in accordance
with the Credit Agreement.

                  7. On the date hereof, the  representations  and warranties of
the  Borrower  set forth in the Credit  Agreement  are true and correct with the
same effect as though such  representations  and warranties had been made on and
as of the date hereof.

                  8. On the date  hereof,  no Default  or Event of  Default  has
occurred and is  continuing  or would result from any  Borrowing to occur on the
date hereof or the application of the proceeds thereof, as applicable.

               9. There is no proceeding  for the  dissolution or liquidation of
          the Borrower or threatening its existence.


                  IN WITNESS  WHEREOF,  I have hereunto set my hand this ___ day
of October, 2000.


                                               KEYSPAN CORPORATION

                                               By:___________________________
                                                  Name:
                                                  Title:


<PAGE>



I, the undersigned,  [Secretary/Assistant  Secretary] of KEYSPAN CORPORATION, do
hereby certify that:

                  1. [Name of Person  making above  certifications]  is the duly
elected and  qualified  [President/Vice  President/Chief  Financial  Officer] of
Keyspan Corporation and the signature above is his genuine signature.

                  2. The  certifications  made by [name of Person  making  above
certifications] in Items 2, 3, 4, 5, 6, 7, 8 and 9 above are true and correct.


                  IN WITNESS WHEREOF, I have hereunto set my hand this __ day of
October, 2000.



                                               KEYSPAN CORPORATION

                                               By:___________________________
                                                  Name:
                                                  Title:



<PAGE>






                                    EXHIBIT B
                             TO THE CREDIT AGREEMENT


                                     FORM OF
                            ASSIGNMENT AND ACCEPTANCE


                  Reference is made to the Credit Agreement, dated as of October
30, 2000 (as amended,  supplemented or otherwise modified from time to time, the
"Credit  Agreement"),  among Keyspan  Corporation (the "Borrower"),  the Lenders
parties thereto, Citibank N.A., as Syndication Agent, European American Bank, as
Documentation  Agent, and The Chase Manhattan Bank, as Administrative  Agent (in
such capacity,  the  "Administrative  Agent").  Unless otherwise defined herein,
terms  defined in the Credit  Agreement  and used herein shall have the meanings
given to them in the Credit Agreement.

                  The Assignor  identified on Schedule l hereto (the "Assignor")
and the  Assignee  identified  on  Schedule l hereto (the  "Assignee")  agree as
follows:

(a) The Assignor hereby  irrevocably  sells and assigns to the Assignee  without
recourse to the  Assignor,  and the Assignee  hereby  irrevocably  purchases and
assumes from the Assignor without recourse to the Assignor,  as of the Effective
Date (as  defined  below),  the  interest  described  in  Schedule 1 hereto (the
"Assigned  Interest") in and to the Assignor's  rights and obligations under the
Credit  Agreement with respect to the Facility (the "Assigned  Facility") as set
forth on  Schedule  1 hereto in a  principal  amount as set forth on  Schedule 1
hereto.


(b) The  Assignor  (a)  makes no  representation  or  warranty  and  assumes  no
responsibility  with respect to any  statements,  warranties or  representations
made in or in  connection  with the  Credit  Agreement  or with  respect  to the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of the Credit  Agreement,  any other Loan  Document or any other  instrument  or
document  furnished  pursuant  thereto,  other  than that the  Assignor  has not
created any adverse claim upon the interest  being  assigned by it hereunder and
that such  interest is free and clear of any such  adverse  claim;  (b) makes no
representation  or warranty  and assumes no  responsibility  with respect to the
financial  condition  of the  Borrower,  any of its  Subsidiaries  or any  other
obligor  or  the  performance  or  observance  by  the  Borrower,   any  of  its
Subsidiaries or any other obligor of any of their respective  obligations  under
the Credit  Agreement  or any other Loan  Document  or any other  instrument  or
document furnished pursuant hereto or thereto; and (c) attaches any Note(s) held
by it evidencing the Assigned Facility and (i) requests that the  Administrative
Agent,  upon request by the  Assignee,  exchange the attached  Note(s) for a new
Note or Notes  payable to the Assignee and (ii) if the Assignor has retained any
interest  in the  Assigned  Facility,  requests  that the  Administrative  Agent
exchange the attached  Note(s) for a new Note or Notes  payable to the Assignor,
in each case in amounts  which  reflect  the  assignment  being made hereby (and
after giving effect to any other  assignments which have become effective on the
Effective Date).




<PAGE>



(c) The Assignee (a)  represents  and warrants that it is legally  authorized to
enter into this Assignment and  Acceptance;  (b) confirms that it has received a
copy of the Credit Agreement,  together with copies of the financial  statements
most recently delivered pursuant to Section 5.1 thereof and such other financial
information,  documents and information as it has deemed appropriate to make its
own credit  analysis and decision to enter into this  Assignment and Acceptance;
(c) agrees that it will,  independently  and without reliance upon the Assignor,
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 decisions in taking or not taking action under the Credit Agreement,  the
other Loan  Documents or any other  instrument  or document  furnished  pursuant
hereto or thereto;  (d) appoints and authorizes the Administrative Agent to take
such  action as agent on its behalf and to exercise  such powers and  discretion
under the Credit Agreement,  the other Loan Documents or any other instrument or
document   furnished  pursuant  hereto  or  thereto  as  are  delegated  to  the
Administrative  Agent by the terms  thereof,  together  with such  powers as are
incidental  thereto;  and (e) agrees that it will be bound by the  provisions of
the  Credit  Agreement  and will  perform in  accordance  with its terms all the
obligations  which by the  terms of the  Credit  Agreement  are  required  to be
performed by it as a Lender  including,  if it is organized  under the laws of a
jurisdiction  outside  the United  States,  its  obligation  pursuant to Section
2.14(d) of the Credit Agreement.


(d) The effective date of this Assignment and Acceptance  shall be the Effective
Date of  Assignment  described  in  Schedule 1 hereto  (the  "Effective  Date").
Following the execution of this Assignment and Acceptance,  it will be delivered
to  the  Administrative  Agent  for  acceptance  by  it  and  recording  by  the
Administrative  Agent  pursuant  to the Credit  Agreement,  effective  as of the
Effective   Date  (which  shall  not,   unless   otherwise   agreed  to  by  the
Administrative  Agent, be earlier than five Business Days after the date of such
acceptance and recording by the Administrative Agent).


(e) Upon such  acceptance and recording,  from and after the Effective Date, the
Administrative Agent shall make all payments in respect of the Assigned Interest
(including  payments  of  principal,  interest,  fees and other  amounts) to the
Assignor  for  amounts  which  have  accrued  to the  Effective  Date and to the
Assignee for amounts which have accrued  subsequent to the Effective  Date.  The
Assignor and the Assignee shall make all appropriate  adjustments in payments by
the Administrative Agent for periods prior to the Effective Date or with respect
to the making of this assignment directly between themselves.


(f) From and after the Effective  Date, (a) the Assignee shall be a party to the
Credit  Agreement and, to the extent provided in this Assignment and Acceptance,
have the rights and obligations of a Lender  thereunder and under the other Loan
Documents  and shall be bound by the  provisions  thereof  and (b) the  Assignor
shall, to the extent provided in this Assignment and Acceptance,  relinquish its
rights and be released from its obligations under the Credit Agreement.


(g) This  Assignment  and  Acceptance  shall be  governed  by and  construed  in
accordance with the laws of the State of New York.


                  IN WITNESS  WHEREOF,  the  parties  hereto  have  caused  this
Assignment  and  Acceptance to be executed as of the date first above written by
their respective duly authorized officers on Schedule 1 hereto.


<PAGE>





                                   Schedule 1
                          to Assignment and Acceptance


Name of Assignor: _______________________

Name of Assignee: _______________________

Effective Date of Assignment: _________________

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

         Principal Amount Assigned             Commitment Percentage Assigned 3


               $______________                              _______%



------------------------------                     ----------------------------
[Name of Assignee]                                    [Name of Assignor]



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



Accepted:                                                 Consented To:

THE CHASE MANHATTAN BANK,                                 KEYSPAN CORPORATION 4
as Administrative Agent



By:                                                       By:
Title:                                                    Title:



----------
3/ Calculate the Commitment  Percentage  that is assigned to at least 15 decimal
places and show as a percentage of the aggregate commitments of all Lenders.

4/ The Borrower's  consent should be obtained only if required by Section 9.6(c)
of the Credit - Agreement.


<PAGE>




                                    EXHIBIT D
                             TO THE CREDIT AGREEMENT



                          FORM OF EXEMPTION CERTIFICATE

                  Reference is made to that certain Credit Agreement dated as of
October 30, 2000 (as the same may be amended, supplemented or otherwise modified
from time to time,  the "Credit  Agreement"),  among  KEYSPAN  CORPORATION  (the
"Borrower"),  the Lenders parties thereto,  Citibank N.A., as Syndication Agent,
European American Bank, as Documentation Agent, and The Chase Manhattan Bank, as
Administrative Agent (the "Administrative Agent"). Capitalized terms used herein
that are not  defined  herein  shall have the  meanings  ascribed to them in the
Credit  Agreement.  [Name of Non-U.S.  Person] (the  "Lender") is providing this
certificate  pursuant  to Section  2.14(d) of the Credit  Agreement.  The Lender
hereby represents and warrants that:

                  1. The Lender is the sole record and  beneficial  owner of the
Note(s) in respect of which it is providing this certificate and it shall remain
the sole  beneficial  owner of the Note(s) at all times  during  which it is the
record holder of such Note.

                  2.  The  Lender  is  not a  "bank"  for  purposes  of  Section
881(c)(3)(A) of the Internal  Revenue Code of 1986, as amended (the "Code").  In
this regard, the Lender represents and warrants that:

                    (a) the Lender is not subject to  regulatory  or other legal
               requirements as a bank in any jurisdiction; and

                    (b) the Lender has not been  treated as a bank for  purposes
               of any tax,  securities law or other filing or submission made to
               any  governmental  authority,  any  application  made to a rating
               agency or  qualification  for any exemption from tax,  securities
               law or other legal requirements.

                  3. The Lender meets all of the requirements under Code Section
871(a) or 881(c) to be eligible for a complete  exemption  from  withholding  of
taxes on interest  payments  made to it under the Credit  Agreement  (i.e.,  the
Borrower  will not be required to withhold  any amounts  under U.S. tax law with
respect to such interest payments),  including without limitation that it is not
a  10-percent  shareholder  (within the meaning of Section  871(h)(3)(B)  of the
Code) of the Borrower and is not a controlled foreign corporation related to the
Borrower (within the meaning of Section 864(d)(4) of the Code).

                  4. The  Lender  shall  promptly  notify the  Borrower  and the
Administrative  Agent if any of the  representations  and warranties made herein
are no longer true and correct.


<PAGE>




     IN WITNESS  WHEREOF,  the undersigned has duly executed this certificate as
of the __day of_____________, _________.

                                                [NAME OF LENDER]


                                                By:____________________________
                                                   Name:
                                                   Title: