CONFORMED COPY

                                  $450,000,000

                           REVOLVING CREDIT AGREEMENT

                           dated as of October 7, 1997

                                      among

                               PECO ENERGY COMPANY

                                   as Borrower

                             THE BANKS NAMED HEREIN

                                    as Banks

                         CERTAIN BANKS SPECIFIED HEREIN

                                as Lead Managers

                         CERTAIN BANKS SPECIFIED HEREIN

                                  as Co-Agents

                      FIRST CHICAGO CAPITAL MARKETS, INC.,
                              MELLON BANK, N.A. and

                            CITICORP SECURITIES, INC.

                              as Syndication Agents

                     FIRST CHICAGO CAPITAL MARKETS, INC. and
                                MELLON BANK, N.A.

                                  as Arrangers

                       THE FIRST NATIONAL BANK OF CHICAGO

                             as Administrative Agent

                                       and

                                MELLON BANK, N.A.

                             as Documentation Agent


<PAGE>

                                TABLE OF CONTENTS

Section                                                                    Page

                                    ARTICLE I
                        DEFINITIONS AND ACCOUNTING TERMS

   1.01     Certain Defined Terms ..................................           1
   1.02     Computation of Time Periods ............................          11
   1.03     Accounting Principles ..................................          11

                                   ARTICLE II
                        AMOUNTS AND TERMS OF THE ADVANCES

   2.01      The Contract Advances ..................................         11
   2.02      Making the Contract Advances ...........................         11
   2.03      The Auction Advances ...................................         12
   2.04      Fees ...................................................         15
   2.05      Reduction of the Commitments ...........................         16
   2.06      Repayment of Contract Advances .........................         16
   2.07      Interest on Contract Advances ..........................         16
   2.08      Additional Interest on Contract Advances ...............         16
   2.09      Interest Rate Determination ............................         17
   2.10      Conversion of Contract Advances ........................         17
   2.11      Prepayments ............................................         18
   2.12      Increased Costs ........................................         18
   2.13      Illegality .............................................         19
   2.14      Payments and Computations ..............................         19
   2.15      Taxes ..................................................         20
   2.16      Sharing of Payments, Etc ...............................         22
   2.17      Extension of Termination Date ..........................         22
   2.18      Additional Lenders .....................................         23

                                   ARTICLE III
                              CONDITIONS OF LENDING

   3.01      Conditions Precedent to Initial Advances ................        25
   3.02      Conditions Precedent to Certain Contract Borrowings .....        26
   3.03      Conditions Precedent to Each Auction Borrowing ..........        26

                                   ARTICLE IV
                         REPRESENTATIONS AND WARRANTIES

   4.01      Representations and Warranties of the Borrower ..........        27

                                    ARTICLE V
                            COVENANTS OF THE BORROWER

   5.01      Affirmative Covenants ...................................        28
   5.02      Negative Covenants ......................................        30

                                       i
<PAGE>
Section                                                                    Page

                                   ARTICLE VI
                                EVENTS OF DEFAULT

   6.01      Events of Default .........................................      31

                                   ARTICLE VII
                                   THE AGENTS

   7.01      Authorization and Action ..................................      33
   7.02      Agents' Reliance, Etc .....................................      33
   7.03      Agents and Affiliates .....................................      34
   7.04      Lender Credit Decision ....................................      34
   7.05      Indemnification ...........................................      34
   7.06      Successor Administrative Agent ............................      35
   7.07      Syndication Agents, Co-Agents, Lead Managers and Arrangers.      35

                                  ARTICLE VIII

                                  MISCELLANEOUS

   8.01      Amendments, Etc.............................................     35
   8.02      Notices, Etc................................................     35
   8.03      No Waiver; Remedies.........................................     36
   8.04      Costs and Expenses; Indemnification.........................     36
   8.05      Right of Set-off............................................     37
   8.06      Binding Effect..............................................     37
   8.07      Assignments and Participations..............................     37
   8.08      Governing Law...............................................     39
   8.09      Consent to Jurisdiction.....................................     40
   8.10      Execution in Counterparts; Integration......................     40



Schedule I        List of Applicable Lending Offices

Exhibit A-1       Form of Contract Note

Exhibit A-2       Form of Auction Note

Exhibit B-1       Notice of a Contract Borrowing

Exhibit B-2       Notice of an Auction Borrowing

Exhibit C         Assignment and Acceptance

Exhibit D         Form of Opinion of Special Counsel for the Borrower

Exhibit E         Form of Opinion of Counsel to the Documentation Agent

Exhibit F         Form of Annual and Quarterly Compliance Certificate

Exhibit G         Form of Additional Lender Supplement

                                       ii
<PAGE>
                           REVOLVING CREDIT AGREEMENT

                           dated as of October 7, 1997

          PECO Energy Company, a Pennsylvania corporation (the "Borrower"),  the
banks  listed  on the  signature  pages  hereof  (the  "Banks"),  certain  Banks
specified  herein,  as lead  managers  hereunder  (in such  capacity,  the "Lead
Managers"),  certain Banks  specified  herein,  as co-agents  hereunder (in such
capacity, the "Co-Agents"),  First Chicago Capital Markets, Inc. ("First Chicago
Capital Markets"),  Mellon Bank, N.A. ("Mellon") and CitiCorp  Securities,  Inc.
("CitiCorp"),   as  syndication   agents   hereunder  (in  such  capacity,   the
"Syndication  Agents"),  First Chicago Capital Markets and Mellon,  as arrangers
hereunder  (in such  capacity,  the  "Arrangers"),  The First  National  Bank of
Chicago ("First Chicago"), as administrative agent for the Lenders hereunder (in
such capacity,  the "Administrative  Agent"), and Mellon, as documentation agent
for the Lenders hereunder (in such capacity, the "Documentation  Agent"), hereby
agree as follows:

                                    ARTICLE I

                        DEFINITIONS AND ACCOUNTING TERMS

          SECTION 1.01.  Certain Defined Terms. As used in this Agreement,  each
of the following  terms shall have the meaning set forth next to such term below
(each such  meaning to be equally  applicable  to both the  singular  and plural
forms of the term defined):

          "Additional Lender" has the meaning specified in Section 2.18.

          "Adjusted CD Rate" means, for any Interest Period for each Adjusted CD
     Rate Advance made as part of the same Contract Borrowing,  an interest rate
     per annum equal to the sum of:

          (a) the rate per annum  obtained by dividing  (i) the rate of interest
          determined  by the  Administrative  Agent to be the  average  (rounded
          upward to the nearest whole multiple of 1/100 of 1% per annum, if such
          average is not such a multiple) of the consensus  bid rate  determined
          by each of the Reference  Banks for the bid rates per annum,  at 10:00
          A.M.  (Chicago  time) (or as soon  thereafter as  practicable)  on the
          first day of such Interest Period,  of New York certificate of deposit
          dealers of recognized standing selected by such Reference Bank for the
          purchase at face value of  certificates  of deposit of such  Reference
          Bank  in an  amount  substantially  equal  to  such  Reference  Bank's
          Adjusted CD Rate Advance made as part of such  Contract  Borrowing and
          with a maturity  equal to such Interest  Period,  by (ii) a percentage
          equal to 100% minus the  Domestic  Rate  Reserve  Percentage  for such
          Interest Period, plus

          (b) the Assessment Rate for such Interest Period.

     The  Adjusted  CD Rate for the  Interest  Period for each  Adjusted CD Rate
     Advance made as part of the same Contract  Borrowing shall be determined by
     the Administrative  Agent on the basis of applicable rates furnished to and
     received by the Administrative  Agent from the Reference Banks on the first
     day of such Interest Period, subject, however, to the provisions of Section
     2.09.

          "Adjusted  CD  Rate  Advance"  means a  Contract  Advance  that  bears
     interest as provided in Section 2.07(b).

          "Administrative   Agent"  means  First  Chicago  in  its  capacity  as
     administrative  agent for the Lenders  pursuant to Article  VII, and not in
     its individual capacity as a Lender, and any successor Administrative Agent
     appointed pursuant to Article VII.
<PAGE>

          "Advance" means a Contract Advance or an Auction Advance.

          "Affiliate" means, as to any Person,  any other Person that,  directly
     or indirectly,  controls,  is controlled by or is under common control with
     such Person or is a director or officer of such Person.

          "Agents" means the Administrative  Agent, the Documentation Agent, the
     Syndication  Agents,  the  Arrangers,  the  Co-Agents  and  Lead  Managers,
     collectively.

          "Applicable  Commitment  Fee Rate" means (i) during any Level 1 Rating
     Period, 0.100% per annum, (ii) during any Level 2 Rating Period, 0.125% per
     annum,  (iii)  during any Level 3 Rating  Period,  0.150%  per annum,  (iv)
     during  any Level 4 Rating  Period,  0.1875%  per annum and (v)  during any
     Level 5 Rating Period, 0.300% per annum. The Applicable Commitment Fee Rate
     shall change when and as the Rating Period changes.

          "Applicable  Lending Office" means, with respect to each Lender,  such
     Lender's  Domestic Lending Office in the case of a Base Rate Advance,  such
     Lender's CD Lending Office in the case of an Adjusted CD Rate Advance,  and
     such Lender's  Eurodollar  Lending Office in the case of a Eurodollar  Rate
     Advance and, in the case of an Auction  Advance,  the office of such Lender
     notified  by such  Lender  to the  Administrative  Agent as its  Applicable
     Lending Office with respect to such Auction Advance.

          "Applicable  Margin" means,  on any date, for a Base Rate Advance,  an
     Adjusted CD Rate Advance or a Eurodollar  Rate  Advance,  the interest rate
     per annum set forth below in the column entitled "Base Rate",  "CD Rate" or
     "Eurodollar Rate", as appropriate, opposite the applicable Rating Period in
     effect on such date:

<TABLE>
<CAPTION>
       Rating Period                Base Rate                 CD Rate               Eurodollar Rate
      <S>                          <C>                     <C>                    <C>  
          Level 1                       0                      .400%                     .275%
          Level 2                       0                      .450%                     .325%
          Level 3                       0                      .500%                     .400%
          Level 4                       0                      .625%                     .500%
          Level 5                       0                      .875%                     .750%
</TABLE>

     The Applicable Margin  applicable to an outstanding  Contract Advance shall
     change when and as the Rating Period changes.

          "Arranger" means either of First Chicago Capital Markets or Mellon, in
     its capacity as Arranger, and not in its individual capacity as a Lender.

          "Assessment  Rate" for the Interest  Period for each  Adjusted CD Rate
     Advance made as part of the same Contract  Borrowing  means the  assessment
     rate per annum (rounded  upwards to the next higher multiple of 1/100 of 1%
     if the  rate  is not  such  a  multiple)  payable  to the  Federal  Deposit
     Insurance  Corporation (or any successor) by a member of the Bank Insurance
     Fund which is classified as adequately  capitalized and within  supervisory
     subgroup "A" (or a comparable  successor  assessment  risk  classification)
     within the meaning of 12 C.F.R.  ss.327.4(a)  (or any successor  provision)
     for the  insurance of time deposits at the offices of such  institution  in
     the United States,  as estimated by the  Administrative  Agent on the first
     day of such Interest Period.

                                       2

<PAGE>

          "Assignment and Acceptance" means an assignment and acceptance entered
     into  by  a  Lender  and  an  Eligible   Assignee,   and  accepted  by  the
     Administrative Agent, in substantially the form of Exhibit C hereto.

          "Auction Advance" means an advance by a Lender to the Borrower as part
     of an  Auction  Borrowing  resulting  from the  auction  bidding  procedure
     described in Section 2.03.

          "Auction  Borrowing"  means a  borrowing  consisting  of  simultaneous
     Auction  Advances  from each of the Lenders whose offer to make one or more
     Auction  Advances  as part of  such  borrowing  has  been  accepted  by the
     Borrower under the auction bidding procedure described in Section 2.03.

          "Auction Note" means a promissory note of the Borrower  payable to the
     order of any  Lender,  in  substantially  the form of Exhibit  A-2  hereto,
     evidencing the  indebtedness of the Borrower to such Lender  resulting from
     an Auction Advance made by such Lender.

          "Auction Reduction" has the meaning specified in Section 2.01.

          "Base Rate" means,  for any period,  a  fluctuating  interest rate per
     annum as shall be in effect from time to time which rate per annum shall at
     all times be equal to the higher of:

               (a) the rate of interest announced by First Chicago, from time to
          time, as its corporate base rate; and

               (b) the sum of 1/2 of 1% per annum plus the Federal Funds Rate in
          effect from time to time.

          "Base Rate Advance"  means a Contract  Advance that bears  interest as
     provided in Section 2.07(a).

          "Benchmark  Debt" means the Borrower's  senior secured  long-term debt
     or, in the event that the Borrower  has no senior  secured  long-term  debt
     rated by S&P (or by a generally  recognized successor to S&P) or by Moody's
     (or by a generally recognized successor to Moody's),  the Borrower's senior
     unsecured long-term debt.

          "Borrowing" means a Contract Borrowing or an Auction Borrowing.

          "Business Day" means a day of the year on which banks are not required
     or authorized to close in Philadelphia,  Pennsylvania, Chicago, Illinois or
     New York,  New York,  and, if the  applicable  Business  Day relates to any
     Eurodollar  Rate  Advances,  on which dealings are carried on in the London
     interbank market.

          "CD Lending Office" means,  with respect to any Lender,  the office of
     such Lender  specified  as its "CD  Lending  Office"  opposite  its name on
     Schedule I hereto or in the Assignment and Acceptance  pursuant to which it
     became a Lender (or, if no such office is specified,  its Domestic  Lending
     Office),  or such other  office of such Lender as such Lender may from time
     to time specify to the Borrower and the Administrative Agent.

          "Co-Agent"  means a Bank  identified as such on the signature pages to
     this  Agreement,  in its  capacity as Co-Agent,  and not in its  individual
     capacity as a Lender.

          "Code" means the Internal  Revenue Code of 1986,  and the  regulations
     promulgated  thereunder,  in each case as amended,  reformed  or  otherwise
     modified from time to time.

                                       3

<PAGE>

          "Commitment" has the meaning specified in Section 2.01.

          "Consolidated  Adjusted Total  Capitalization"  on any date shall mean
     the sum, without duplication, of the following with respect to the Borrower
     and its consolidated  Subsidiaries (exclusive, in each case, of Nonrecourse
     Transition Bond Debt, to the extent Nonrecourse  Transition Bond Debt would
     otherwise be included in such item):  (a) total  capitalization  as of such
     date, as determined in  accordance  with GAAP,  (b) the current  portion of
     liabilities  which as of such date would be  classified in whole or part as
     long-term  debt in  accordance  with  GAAP (it  being  understood  that the
     noncurrent   portion  of  such   liabilities   is  included  in  the  total
     capitalization  referred to in clause (a)),  (c) all  obligations as lessee
     which, in accordance  with GAAP, are capitalized as liabilities  (including
     the current portion thereof),  and (d) all other liabilities which would be
     classified as short-term debt in accordance with GAAP  (including,  without
     limitation,  all  liabilities  of the types  classified as "Notes  Payable,
     Bank" on the Borrower's audited balance sheet for December 31, 1996).

          "Consolidated  Adjusted  Total  Debt" on any date  shall mean the sum,
     without duplication,  of the following with respect to the Borrower and its
     consolidated   Subsidiaries  (exclusive,   in  each  case,  of  Nonrecourse
     Transition Bond Debt, to the extent Nonrecourse  Transition Bond Debt would
     otherwise be included in such item):  (a) all liabilities  which as of such
     date  would  be  classified  in  whole  or in  part  as  long-term  debt in
     accordance  with GAAP  (including  the current  portion  thereof),  (b) all
     obligations as lessee which,  in accordance  with GAAP, are  capitalized as
     liabilities  (including  the current  portion  thereof),  and (c) all other
     liabilities which would be classified as short-term debt in accordance with
     GAAP  (including,   without  limitation,   all  liabilities  of  the  types
     classified as "Notes Payable, Bank" on the Borrower's audited balance sheet
     for December 31, 1996).

          "Contract  Advance"  means an advance by a Lender to the  Borrower  as
     part of a Contract  Borrowing and refers to an Adjusted CD Rate Advance,  a
     Base Rate Advance or a Eurodollar  Rate  Advance,  each of which shall be a
     "Type" of Contract Advance.

          "Contract  Borrowing"  means a borrowing  consisting  of  simultaneous
     Contract  Advances  of the  same  Type  and,  if such  Borrowing  comprises
     Adjusted CD Rate  Advances or Eurodollar  Rate  Advances,  having  Interest
     Periods  of the same  duration,  made by each of the  Lenders  pursuant  to
     Section 2.01 or Converted pursuant to Section 2.10.

          "Contract Note" means a promissory note of the Borrower payable to the
     order of any  Lender,  in  substantially  the form of Exhibit  A-1  hereto,
     evidencing  the  aggregate  indebtedness  of the  Borrower  to such  Lender
     resulting from the Contract Advances made by such Lender.

          "Controlled  Group"  means  all  members  of  a  controlled  group  of
     corporations  and all trades or  businesses  (whether or not  incorporated)
     under common  control that,  together with the Borrower or any  Subsidiary,
     are  treated as a single  employer  under  Section  414(b) or 414(c) of the
     Code.

          "Convert", "Conversion" and "Converted" each refers to a conversion of
     Advances of one Type into  Advances of another  Type or the  selection of a
     new,  or the  renewal  of the same,  Interest  Period for  Eurodollar  Rate
     Advances or CD Rate Advances, as the case may be, pursuant to Section 2.10.

          "Debt" means (i)  indebtedness  for borrowed money,  (ii)  obligations
     evidenced by bonds,  debentures,  notes or other similar instrument,  (iii)
     obligations  to pay the  deferred  purchase  price of  property or services
     (other than trade  payables  incurred in the ordinary  course of business),
     (iv)  obligations  as  lessee  under  leases  that  shall  have been or are
     required to be, in accordance with GAAP,  recorded as capital  leases,  (v)
     obligations  (contingent  or  otherwise)  under  

                                       4

<PAGE>

     reimbursement or similar agreements with respect to the issuance of letters
     of credit  (other than  obligations  in respect of  documentary  letters of
     credit opened to provide for the payment of goods or services  purchased in
     the  ordinary  course of  business)  and (vi)  obligations  under direct or
     indirect   guaranties  in  respect  of,  and  obligations   (contingent  or
     otherwise)  to purchase or  otherwise  acquire,  or  otherwise  to assure a
     creditor against loss in respect of,  indebtedness or obligations of others
     of the kinds referred to in clauses (i) through (v) above.

          "Documentation  Agent" means  Mellon in its capacity as  documentation
     agent  pursuant to Article  VII,  and not in its  individual  capacity as a
     Lender.

          "Domestic  Lending  Office"  means,  with  respect to any Lender,  the
     office of such Lender  specified as its "Domestic  Lending Office" opposite
     its name on Schedule I hereto or in the Assignment and Acceptance  pursuant
     to which it became a Lender,  or such other  office of such  Lender as such
     Lender may from time to time specify to the Borrower and the Administrative
     Agent.

          "Domestic  Rate Reserve  Percentage"  for the Interest  Period for any
     Adjusted CD Rate Advance  means the reserve  percentage  applicable  on the
     first day of such  Interest  Period under  regulations  issued from time to
     time by the  Board of  Governors  of the  Federal  Reserve  System  (or any
     successor) for determining the maximum reserve requirement (including,  but
     not limited  to, any  emergency,  supplemental  or other  marginal  reserve
     requirement) with respect to liabilities  consisting of or including (among
     other  liabilities)  U.S. dollar  nonpersonal  time deposits of $100,000 or
     more in the United States with a maturity equal to such Interest Period.

          "Eligible  Assignee"  means (i) a commercial  bank organized under the
     laws of the United  States,  or any State thereof;  (ii) a commercial  bank
     organized  under the laws of any other country that is a member of the OECD
     or has  concluded  special  lending  arrangements  with  the  International
     Monetary Fund  associated  with its General  Arrangements  to Borrow,  or a
     political  subdivision  of any such  country,  provided  that  such bank is
     acting  through a branch or agency  located in the United  States;  (iii) a
     finance company,  insurance company or other financial  institution or fund
     (whether a corporation,  partnership or other entity) engaged  generally in
     making,  purchasing  or  otherwise  investing  in  commercial  loans in the
     ordinary  course of its  business;  or (iv) the central bank of any country
     that is a member of the OECD; provided,  however,  that (A) any such Person
     described  in  clause  (i),  (ii)  or  (iii)  above  shall  also  (x)  have
     outstanding  unsecured  long-term  debt that is rated BBB- or better by S&P
     and  Baa3  or  better  by  Moody's  (or an  equivalent  rating  by  another
     nationally  recognized  credit rating agency of similar  standing if either
     such  corporation  is  no  longer  in  the  business  of  rating  unsecured
     indebtedness of entities  engaged in such businesses) and (y) have combined
     capital and surplus (as  established in its most recent report of condition
     to its primary  regulator) of not less than $100,000,000 (or its equivalent
     in foreign currency), and (B) any Person described in clause (ii), (iii) or
     (iv) above shall, on the date on which it is to become a Lender  hereunder,
     be entitled to receive payments  hereunder without deduction or withholding
     of any United  States  Federal  income  taxes (as  contemplated  by Section
     2.15(e)).

          "Eligible  Successor"  means a Person which (i) is a corporation  duly
     incorporated,  validly  existing and in good standing under the laws of one
     of the states of the United  States or the  District of  Columbia,  (ii) is
     qualified  to do  business  in  Pennsylvania,  (iii)  as a  result  of  the
     contemplated  acquisition,  consolidation or merger, will succeed to all or
     substantially  all of the consolidated  business and assets of the Borrower
     and  its  Subsidiaries,   (iv)  upon  giving  effect  to  the  contemplated
     acquisition, consolidation or merger, will have all or substantially all of
     its  consolidated  business and assets  conducted and located in the United
     States and (v) is acceptable to the Majority Lenders as a credit matter.

                                       5

<PAGE>

          "ERISA" means the Employee  Retirement Income Security Act of 1974, as
     amended  from time to time,  and the  regulations  promulgated  and rulings
     issued thereunder, each as amended and modified from time to time.

          "Eurocurrency  Liabilities"  has the meaning  assigned to that term in
     Regulation D of the Board of Governors of the Federal Reserve System, as in
     effect from time to time.

          "Eurodollar  Lending  Office" means,  with respect to any Lender,  the
     office of such Lender specified as its "Eurodollar Lending Office" opposite
     its name on Schedule I hereto or in the Assignment and Acceptance  pursuant
     to which it  became a Lender  (or,  if no such  office  is  specified,  its
     Domestic  Lending  Office),  or such  other  office of such  Lender as such
     Lender may from time to time specify to the Borrower and the Administrative
     Agent.

          "Eurodollar  Rate" means,  for the Interest Period for each Eurodollar
     Rate Advance made as part of the same Contract Borrowing,  an interest rate
     per  annum  equal to the  average  (rounded  upward  to the  nearest  whole
     multiple of 1/16 of 1% per annum,  if such  average is not such a multiple)
     of the rate per annum at which deposits in U.S.  dollars are offered by the
     principal  office of each of the  Reference  Banks in London,  England,  to
     prime banks in the London  interbank market at 11:00 A.M. (London time) two
     Business  Days  before the first day of such  Interest  Period in an amount
     substantially  equal to such Reference Bank's  Eurodollar Rate Advance made
     as part of such Contract  Borrowing and for a period equal to such Interest
     Period.  The Eurodollar  Rate for the Interest  Period for each  Eurodollar
     Rate  Advance  made  as  part  of the  same  Contract  Borrowing  shall  be
     determined by the  Administrative  Agent on the basis of  applicable  rates
     furnished to and received by the  Administrative  Agent from the  Reference
     Banks two  Business  Days  before  the first day of such  Interest  Period,
     subject, however, to the provisions of Section 2.09.

          "Eurodollar Rate Advance" means a Contract Advance that bears interest
     as provided in Section 2.07(c).

          "Eurodollar  Rate Reserve  Percentage"  of any Lender for the Interest
     Period  for any  Eurodollar  Rate  Advance  means  the  reserve  percentage
     applicable during such Interest Period (or if more than one such percentage
     shall be so  applicable,  the daily average of such  percentages  for those
     days in such Interest Period during which any such  percentage  shall be so
     applicable)  under  regulations  issued  from  time to time by the Board of
     Governors of the Federal  Reserve System (or any successor) for determining
     the  maximum  reserve  requirement  (including,   without  limitation,  any
     emergency,  supplemental or other marginal  reserve  requirement)  for such
     Lender with respect to  liabilities  or assets  consisting  of or including
     Eurocurrency Liabilities having a term equal to such Interest Period.

          "Events of Default" has the meaning specified in Section 6.01.

          "Exchange Act" means the  Securities  Exchange Act of 1934, as amended
     and modified from time to time.

          "Federal  Funds Rate" means,  for any period,  a fluctuating  interest
     rate per  annum  equal for each day  during  such  period  to 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 for such day (or, if such day is not a Business Day, for the next
     preceding  Business  Day) by the Federal  Reserve Bank of New York,  or, if
     such rate is not so  published  for any day which is a  Business  Day,  the
     average of the quotations for such day on such transactions received by the
     Administrative  Agent  from  three  Federal  funds  brokers  of  recognized
     standing selected by it.

                                       6

<PAGE>

          "GAAP" shall have the meaning given that term in Section 1.03.

          "Interest  Period"  means,  for  each  Contract  Advance,  the  period
     commencing  on the  date  of  such  Contract  Advance  or the  date  of the
     Conversion of any Contract  Advance into such a Contract Advance and ending
     on the last day of the period  selected  by the  Borrower  pursuant  to the
     provisions below and, thereafter,  each subsequent period commencing on the
     last day of the  immediately  preceding  Interest  Period and ending on the
     last day of the period selected by the Borrower  pursuant to the provisions
     below. The duration of each such Interest Period shall be 30, 60, 90 or 180
     days in the case of an Adjusted CD Rate Advance, and 1, 2, 3 or 6 months in
     the case of a  Eurodollar  Rate  Advance,  in each case as the Borrower may
     select in accordance with Section 2.02 or 2.10; provided, however, that:

               (i) the  Borrower  may not select any  Interest  Period that ends
          after the Termination Date then in effect;

               (ii)  Interest  Periods  commencing on the same date for Contract
          Advances made as part of the same Contract  Borrowing  shall be of the
          same duration, and

               (iii)  whenever  the  last  day  of  any  Interest  Period  would
          otherwise  occur on a day other than a Business  Day,  the last day of
          such Interest Period shall be extended to occur on the next succeeding
          Business  Day,  provided,  in the case of any  Interest  Period  for a
          Eurodollar  Rate Advance,  that if such extension would cause the last
          day of such Interest  Period to occur in the next  following  calendar
          month,  the last day of such  Interest  Period shall occur on the next
          preceding Business Day.

          "Lead Manager" means a Bank  identified as such on the signature pages
     to  this  Agreement,  in its  capacity  as  Lead  Manager,  and  not in its
     individual capacity as a Lender.

          "Lenders"  means the Banks  listed on the  signature  pages hereof and
     each Eligible Assignee that shall become a party hereto pursuant to Section
     2.18 or 8.07.

          "Level 1 Rating  Period"  means any period  during which the Benchmark
     Debt  is  rated  A- or  higher  by S&P (or a  comparable  rating  from  any
     generally  recognized  successor  to S&P) or A3 or higher by Moody's  (or a
     comparable rating from any generally  recognized  successor to Moody's) (it
     being understood  that, for this purpose,  such ratings shall be subject to
     the Split Rating Adjustment).

          "Level 2 Rating  Period"  means any period which does not qualify as a
     Level 1 Rating  Period  during  which the  Benchmark  Debt is rated BBB+ or
     higher  by S&P  (or a  comparable  rating  from  any  generally  recognized
     successor to S&P) or Baa1 or higher by Moody's (or a comparable rating from
     any generally  recognized  successor to Moody's) (it being understood that,
     for this  purpose,  such  ratings  shall be  subject  to the  Split  Rating
     Adjustment).

          "Level 3 Rating  Period"  means any period which does not qualify as a
     Level 1 or Level 2 Rating Period  during which the Benchmark  Debt is rated
     BBB or higher by S&P (or a comparable rating from any generally  recognized
     successor to S&P) or Baa2 or higher by Moody's (or a comparable rating from
     any generally  recognized  successor to Moody's) (it being understood that,
     for this  purpose,  such  ratings  shall be  subject  to the  Split  Rating
     Adjustment).

          "Level 4 Rating  Period"  means any period which does not qualify as a
     Level 1, Level 2 or Level 3 Rating Period  during which the Benchmark  Debt
     is rated BBB- or higher by S&P (or a comparable  rating from any  generally
     recognized  successor to S&P) or Baa3 or higher by Moody's (or a comparable
     rating  from any  generally  recognized  successor  to  Moody's)  (it being
     understood  that,  for this  purpose,  such ratings shall be subject to the
     Split Rating Adjustment).

                                       7

<PAGE>

          "Level 5 Rating  Period"  means any period which does not qualify as a
     Level 1,  Level 2, Level 3 or Level 4 Rating  Period  (it being  understood
     that,  for this purpose,  such ratings shall be subject to the Split Rating
     Adjustment).

          "Lien" means any lien (statutory or other), mortgage, pledge, security
     interest or other charge or encumbrance,  or any other type of preferential
     arrangement  (including,  without  limitation,  the interest of a vendor or
     lessor  under  any  conditional  sale,  capitalized  lease or  other  title
     retention agreement).

          "Material  Adverse  Change" and "Material  Adverse Effect" each means,
     relative to any  occurrence,  fact or  circumstances  of whatsoever  nature
     (including,  without  limitation,  any  determination  in  any  litigation,
     arbitration or governmental  investigation  or proceeding),  any materially
     adverse  change  in,  or  materially   adverse  effect  on,  the  financial
     condition,   operations,  assets  or  business  of  the  Borrower  and  its
     consolidated Subsidiaries, taken as a whole.

          "Majority  Lenders" means, at any time prior to the Termination  Date,
     Lenders having at least 66-2/3% of the Commitments,  and, at any time on or
     after the Termination Date, Lenders having at least 66-2/3% of the Advances
     outstanding (provided that, for purposes hereof,  neither the Borrower, nor
     any of its  Affiliates,  if a Lender,  shall be included in (i) the Lenders
     having such amount of the  Commitments or the Advances or (ii)  determining
     the total amount of the Commitments or the Advances).

          "Moody's" means Moody's Investors Service, Inc.

          "Mortgage" means the First and Refunding Mortgage,  dated as of May 1,
     1923, between The Counties Gas & Electric Company (to which the Borrower is
     successor)  and  Fidelity  Trust  Company,  Trustee  (to which  First Union
     National Bank is successor),  as amended,  supplemented  or refinanced from
     time to time,  provided,  that no effect  shall be given to any  amendment,
     supplement  or  refinancing  after the date of this  Agreement  that  would
     broaden  the  definition  of  "excepted  encumbrances"  as  defined  in the
     Mortgage as constituted on the date of this Agreement.

          "Multiemployer  Plan" means a Plan maintained pursuant to a collective
     bargaining  agreement or any other arrangement to which the Borrower or any
     member of the  Controlled  Group is a party to which more than one employer
     is obligated to make contributions.

          "Non-Consenting Lender" has the meaning specified in Section 2.17(a).

          "Nonrecourse  Transition  Bond Debt" means  obligations  evidenced  by
     "transition bonds" (as defined in 66 Pa. Cons. Stat. Ann. ss. 2812(g) (West
     Supp.  1997), or any successor  provision of similar  import),  rated AA or
     higher by S&P (or a comparable rating from a generally recognized successor
     to  S&P)  or Aa2 or  higher  by  Moody's  (or a  comparable  rating  from a
     generally recognized  successor to Moody's),  representing a securitization
     of "intangible  transition property" (as defined in the foregoing statute),
     as to which  obligations  neither the  Borrower nor any  Subsidiary  of the
     Borrower  (other  than a  Special  Purpose  Subsidiary)  has any  direct or
     indirect  liability  (whether  as primary  obligor,  guarantor,  or surety,
     provider of collateral security,  put option, asset repurchase agreement or
     capital maintenance  agreement,  debt subordination  agreement,  or through
     other  right or  arrangement  of any nature  providing  direct or  indirect
     assurance of payment or performance of any such  obligations in whole or in
     part), except for liability to repurchase  "intangible transition property"
     conveyed to the securitization  vehicle, on terms and conditions  customary
     in receivables  securitizations,  in the event such "intangible  transition
     property"  violates  representations  and warranties of scope  customary in
     receivables securitizations. "Special Purpose Subsidiary" means a direct or
     indirect wholly-owned  corporate Subsidiary of the Borrower,  substantially
     all of the  assets  of  which  are  

                                       8

<PAGE>

     "intangible  transition  property" and proceeds thereof,  formed solely for
     the purpose of holding such assets and issuing such "transition bonds," and
     which   complies   with   the   requirements    customarily    imposed   on
     bankruptcy-remote corporations in receivables securitizations.

          "Note" means a Contract Note or an Auction Note.

          "Notice of a Contract  Borrowing" has the meaning specified in Section
     2.02(a).

          "Notice of an Auction  Borrowing" has the meaning specified in Section
     2.03(a).

          "OECD"   means  the   Organization   for  Economic   Cooperation   and
     Development.

          "Order  of  Registration"  has the  meaning  assigned  to that term in
     Section 3.01(a)(iii).

          "PBGC" means the Pension Benefit  Guaranty  Corporation and any entity
     succeeding to any or all of its functions under ERISA.

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

          "Plan" means an employee pension benefit plan that is covered by Title
     IV of ERISA or subject to the minimum  funding  standards under Section 412
     of the Code as to which the Borrower or any member of the Controlled  Group
     may have any liability.

          "PPUC" means the Pennsylvania Public Utility Commission.

          "Principal Subsidiary" means (i) each Utility Subsidiary and (ii) from
     and after the date on which the  aggregate  book value of the assets of the
     Subsidiaries  of the  Borrower  that are not Utility  Subsidiaries  exceeds
     $250,000,000, each such Subsidiary the assets of which exceeded $75,000,000
     in book value at any time during the preceding 24-month period.

          "Rating  Period"  means a  Level 1  Rating  Period,  a Level 2  Rating
     Period,  a Level 3  Rating  Period,  a Level 4 Rating  Period  or a Level 5
     Rating Period, as the case may be.

          "Reference Banks" means First Chicago, Mellon and Citibank, N.A.

          "Register" has the meaning specified in Section 8.07(c).

          "Reportable Event" means a reportable event as defined in Section 4043
     of ERISA and regulations  issued under such section with respect to a Plan,
     excluding,  however,  such events as to which the PBGC by regulation waived
     the  requirement of Section  4043(a) of ERISA that it be notified within 30
     days of the  occurrence of such event,  provided that a failure to meet the
     minimum  funding  standard  of Section  412 of the Code and  Section 302 of
     ERISA shall be a Reportable  Event  regardless  of the issuance of any such
     waivers  in  accordance  with  either  Section  4043(a) of ERISA or Section
     412(d) of the Code.

          "S&P"  means  Standard & Poor's  Ratings  Services,  a division of The
     McGraw-Hill Companies, Inc.

          "Securities  Certificate"  has the  meaning  assigned  to that term in
     Section 3.01(a)(iii).

          "Single  Employer Plan" means a Plan maintained by the Borrower or any
     member of the Controlled  Group for employees of the Borrower or any member
     of the Controlled Group.

                                       9

<PAGE>

          "Special Purpose  Subsidiary" has the meaning assigned to that term in
     the definition of "Nonrecourse Transition Bond Debt."

          "Split  Rating  Adjustment":   For  the  purpose  of  determining  the
     appropriate  Rating  Period,  the  rating of the  Benchmark  Debt  shall be
     subject to adjustment as follows.  In the event that the Benchmark  Debt is
     rated at  equivalent  rating levels or not more than one rating level apart
     by S&P (or any  generally  accepted  successor  to S&P) and Moody's (or any
     generally accepted  successor to Moody's),  then no adjustment shall apply.
     Otherwise,  the higher of the two ratings  shall be deemed to be reduced to
     the next lower rating level.  For this purpose,  (i)  determination  of the
     rating level shall take into  account "+" and "-"  modifiers to S&P ratings
     and numerical  modifiers to Moody's  ratings (so that, for example,  an S&P
     rating of A- shall be deemed  equivalent to a Moody's  rating of A3, an S&P
     rating of BBB+ shall be deemed  equivalent to a Moody's  rating of Baa1, an
     S&P rating of BBB shall be deemed  equivalent to a Moody's  rating of Baa2,
     an S&P rating of BBB-  shall be deemed  equivalent  to a Moody's  rating of
     Baa3,  and so on),  and  (ii) by way of  clarification,  in the  event  the
     Benchmark Debt is rated by only one of the two referenced  rating agencies,
     such rating shall be deemed to be reduced to the next lower rating level.

          "Subsidiary"  means,  with respect to any Person,  any  corporation or
     unincorporated  entity of which  more than 50% of the  outstanding  capital
     stock (or comparable  interest) having ordinary voting power  (irrespective
     of whether or not at the time capital stock,  or comparable  interests,  of
     any other  class or classes of such  corporation  or entity  shall or might
     have voting power upon the  occurrence of any  contingency)  is at the time
     directly or indirectly  owned by such Person  (whether  directly or through
     one or more other Subsidiaries).

          "Syndication Agent" means any of First Chicago Capital Markets, Mellon
     or  CitiCorp,  in  its  capacity  as  Syndication  Agent,  and  not  in its
     individual capacity as a Lender.

          "Termination  Date"  means the  earlier of (i) October 7, 2000 (or, if
     such date is not a Business Day, the next  preceding  Business Day) or such
     later date that may be established  pursuant to Section 2.17(a) or (ii) the
     date of termination in whole of the Commitments pursuant to Section 2.05 or
     Section 6.01.

          "364-Day   Credit   Agreement"   means  that  certain  364-Day  Credit
     Agreement, dated as of October 7, 1997, among the Borrower, the banks named
     therein,  certain banks  specified  therein,  as lead managers  thereunder,
     certain banks specified  therein,  as co-agents  thereunder,  First Chicago
     Capital Markets,  Mellon and CitiCorp,  as syndication  agents  thereunder,
     First Chicago Capital Markets and Mellon,  as arrangers  thereunder,  First
     Chicago, as administrative agent for the lenders thereunder, and Mellon, as
     documentation agent for the lenders thereunder, as the same may be amended,
     modified or supplemented from time to time.

          "Unfunded  Liabilities"  means, (i) in the case of any Single Employer
     Plan,  the  amount  (if  any) by which  the  present  value  of all  vested
     nonforfeitable  benefits  under such Plan  exceeds the fair market value of
     all Plan assets  allocable to such benefits,  all determined as of the then
     most  recent  evaluation  date for such  Plan,  and (ii) in the case of any
     Multiemployer Plan, the withdrawal  liability that would be incurred by the
     Controlled Group if all members of the Controlled Group completely withdrew
     from such Multiemployer Plan.

          "Utility  Subsidiary"  means each  Subsidiary  of the Borrower that is
     engaged  principally in the  generation,  transmission,  or distribution of
     electricity  or gas and is subject  to  regulation  as a public  utility by
     federal or state regulatory authorities.

          "Yield" means, for any Auction  Advance,  the effective rate per annum
     at which interest on such Auction Advance is payable, computed on the basis
     of a year of 360 days for the actual  

                                       10

<PAGE>

     number  of days  (including  the  first  day but  excluding  the last  day)
     occurring in the period for which such interest is payable.

          SECTION 1.02.  Computation  of Time Periods.  In this Agreement in the
computation of periods of time from a specified date to a later  specified date,
the word "from" means "from and  including"  and the words "to" and "until" each
means "to but excluding".

          SECTION 1.03. Accounting Principles. As used in this Agreement, "GAAP"
shall mean  generally  accepted  accounting  principles  in the  United  States,
applied  on a  basis  consistent  with  the  principles  used in  preparing  the
Borrower's audited consolidated financial statements as of December 31, 1996 and
for the fiscal year then ended. In this Agreement, except to the extent, if any,
otherwise  provided  herein,  all accounting and financial  terms shall have the
meanings ascribed to such terms by GAAP, and all computations and determinations
as to accounting and financial matters shall be made in accordance with GAAP. In
the event that the financial statements generally prepared by the Borrower apply
accounting  principles  other than GAAP,  the compliance  certificate  delivered
pursuant to Section  5.01(b)(iv)  accompanying  such financial  statements shall
include  information in reasonable detail reconciling such financial  statements
to GAAP to the extent relevant to the  calculations set forth in such compliance
certificate.

                                   ARTICLE II

                        AMOUNTS AND TERMS OF THE ADVANCES

          SECTION 2.01. The Contract Advances.  Each Lender severally agrees, on
the terms and conditions hereinafter set forth, to make Contract Advances to the
Borrower  from time to time on any  Business Day during the period from the date
hereof until (but excluding) the Termination  Date in an aggregate amount not to
exceed at any time  outstanding the amount set forth opposite such Lender's name
on the signature pages hereof or, if such Lender has entered into any Assignment
and Acceptance or Additional Lender Supplement, set forth for such Lender in the
Register maintained by the Administrative  Agent pursuant to Section 8.07(c), as
such  amount may be reduced  pursuant  to  Section  2.05 or 2.17 (such  Lender's
"Commitment");  provided,  that the aggregate  amount of the  Commitments of the
Lenders  shall be deemed  used from time to time to the extent of the  aggregate
amount of the  Auction  Advances  then  outstanding,  and such deemed use of the
aggregate  amount of the  Commitments  shall be applied to the  Lenders  ratably
according to their  respective  Commitments  (such  deemed use of the  aggregate
amount of the Commitments being an "Auction Reduction"). Each Contract Borrowing
shall  consist of Contract  Advances of the same Type made or  Converted  on the
same day by the Lenders ratably according to their respective Commitments.  Each
Contract Borrowing comprising Base Rate Advances shall be in an aggregate amount
not less than $5,000,000,  and each Contract  Borrowing  comprising  Adjusted CD
Rate Advances or Eurodollar  Rate Advances  shall be in an aggregate  amount not
less than  $10,000,000.  Within  the  limits of each  Lender's  Commitment,  the
Borrower  may from time to time  borrow,  prepay  pursuant  to Section  2.11 and
reborrow under this Section 2.01.

          SECTION  2.02.  Making  the  Contract  Advances.   (a)  Each  Contract
Borrowing (other than pursuant to a Conversion)  shall be made on notice,  given
not later than 10:00 A.M.  (Chicago time) on the third Business Day prior to the
date of any proposed Contract Borrowing comprising  Eurodollar Rate Advances, on
the second  Business  Day prior to the date of any proposed  Contract  Borrowing
comprising  Adjusted CD Rate  Advances and on the date of any proposed  Contract
Borrowing  comprising Base Rate Advances,  by the Borrower to the Administrative
Agent,  which shall give to each Lender prompt notice thereof.  Each such notice
of a Contract  Borrowing (a "Notice of a Contract  Borrowing")  shall be sent by
telecopier,  telex or cable,  confirmed immediately in writing, in substantially
the form of Exhibit B-1 hereto,  specifying  therein the  requested  (i) date of
such Contract Borrowing, (ii) Type of Contract Advances to be made in connection
with such Contract Borrowing, (iii) 

                                       11

<PAGE>

aggregate amount of such Contract Borrowing,  and (iv) in the case of a Contract
Borrowing  comprising  Adjusted CD Rate  Advances or Eurodollar  Rate  Advances,
initial Interest Period for the Contract  Advances to be made in connection with
such Contract Borrowing.  Each Lender shall, before 11:00 A.M. (Chicago time) on
the date of such  Contract  Borrowing,  make  available  for the  account of its
Applicable Lending Office to the Administrative Agent at its address referred to
in  Section  8.02,  in same day funds,  such  Lender's  ratable  portion of such
Contract Borrowing.  After the Administrative  Agent's receipt of such funds and
upon  fulfillment  of the  applicable  conditions  set forth in Article III, the
Administrative  Agent  will make such funds  available  to the  Borrower  at the
Administrative Agent's aforesaid address.

          (b) Each  Notice of a  Contract  Borrowing  shall be  irrevocable  and
binding on the Borrower.  In the case of any Contract Borrowing that the related
Notice  of a  Contract  Borrowing  specifies  is to  comprise  Adjusted  CD Rate
Advances or Eurodollar  Rate Advances,  the Borrower shall indemnify each Lender
against  any loss,  cost or expense  incurred  by such Lender as a result of any
failure to fulfill on or before the date  specified in such Notice of a Contract
Borrowing for such Contract  Borrowing the  applicable  conditions  set forth in
Article III, including,  without limitation,  any loss, cost or expense incurred
by reason of the liquidation or reemployment of deposits or other funds acquired
by such Lender to fund the Contract Advance to be made by such Lender as part of
such Contract Borrowing when such Contract Advance, as a result of such failure,
is not made on such date.

          (c) Unless the Administrative  Agent shall have received notice from a
Lender  prior to the date of any  Contract  Borrowing  that such Lender will not
make available to the Administrative Agent such Lender's ratable portion of such
Contract  Borrowing,  the  Administrative  Agent may assume that such Lender has
made such  portion  available  to the  Administrative  Agent on the date of such
Contract  Borrowing in accordance  with  subsection (a) of this Section 2.02 and
the Administrative  Agent may, in reliance upon such assumption,  make available
to the Borrower on such date a corresponding  amount.  If and to the extent that
such  Lender  shall  not have so made  such  ratable  portion  available  to the
Administrative  Agent, such Lender and the Borrower  severally agree to repay to
the Administrative  Agent forthwith on demand such corresponding amount together
with interest thereon,  for each day from the date such amount is made available
to the  Borrower  until  the date such  amount  is repaid to the  Administrative
Agent,  at (i) in the case of the Borrower,  the interest rate applicable at the
time to Contract  Advances made in connection  with such Contract  Borrowing and
(ii) in the case of such Lender,  the Federal  Funds Rate.  If such Lender shall
repay to the  Administrative  Agent such  corresponding  amount,  such amount so
repaid shall constitute such Lender's  Contract Advance as part of such Contract
Borrowing for purposes of this Agreement.

          (d) The failure of any Lender to make the Contract  Advance to be made
by it as part of any  Contract  Borrowing  shall not relieve any other Lender of
its obligation,  if any,  hereunder to make its Contract  Advance on the date of
such Contract  Borrowing,  but no Lender shall be responsible for the failure of
any other Lender to make the Contract Advance to be made by such other Lender on
the date of any Contract Borrowing.

          (e) Notwithstanding anything to the contrary contained herein, no more
than sixteen (16) Contract  Borrowings  comprising Adjusted CD Rate Advances and
Eurodollar Rate Advances may be outstanding at any time.

          SECTION 2.03. The Auction  Advances.  (a) Each Lender severally agrees
that the Borrower may request  Auction  Borrowings  under this Section 2.03 from
time to time on any  Business  Day during the period from the date hereof  until
the date occurring seven days prior to the  Termination  Date, in the manner set
forth below; provided that, following the making of each Auction Borrowing,  the
aggregate amount of the Advances then outstanding shall not exceed the aggregate
amount of the Commitments of the Lenders.

                                       12

<PAGE>

          (i) The Borrower may request an Auction Borrowing by delivering to the
     Administrative Agent by telecopier,  telex or cable,  confirmed immediately
     in  writing,  a notice of an  Auction  Borrowing  (a  "Notice of an Auction
     Borrowing"),  in substantially  the form of Exhibit B-2 hereto,  specifying
     the date and  aggregate  amount  of the  proposed  Auction  Borrowing,  the
     maturity date for  repayment of each Auction  Advance to be made as part of
     such Auction  Borrowing  (which  maturity  date may not be earlier than the
     date occurring seven days after the date of such Auction Borrowing or later
     than the  earlier to occur of (A) 270 days  after the date of such  Auction
     Borrowing and (B) the Termination Date), the interest payment date or dates
     relating  thereto (which shall occur at least every 90 days), and any other
     terms to be applicable to such Auction Borrowing,  not later than 9:00 A.M.
     (Chicago  time) at least one Business Day prior to the date of the proposed
     Auction Borrowing.  The Administrative  Agent shall in turn promptly notify
     each Lender of each  request for an Auction  Borrowing  received by it from
     the  Borrower by sending  such  Lender a copy of the  related  Notice of an
     Auction Borrowing.

          (ii) Each  Lender may, in its sole  discretion,  elect to  irrevocably
     offer to make one or more Auction  Advances to the Borrower as part of such
     proposed Auction Borrowing at a rate or rates of interest specified by such
     Lender in its sole discretion, by notifying the Administrative Agent (which
     shall  give  prompt  notice  thereof  to the  Borrower),  before  9:00 A.M.
     (Chicago  time)  on the  date of such  proposed  Auction  Borrowing  of the
     minimum amount and maximum amount of each Auction  Advance that such Lender
     would be willing to make as part of such proposed Auction  Borrowing (which
     amounts may,  subject to the proviso to the first  sentence of this Section
     2.03(a),  exceed such Lender's  Commitment),  the rate or rates of interest
     therefor, the interest period relating thereto and such Lender's Applicable
     Lending Office with respect to such Auction  Advance;  provided that if the
     Administrative  Agent  in its  capacity  as a  Lender  shall,  in its  sole
     discretion,  elect to make any such offer,  it shall notify the Borrower of
     such offer before 8:00 A.M.  (Chicago  time) on the date on which notice of
     such  election  is to be given  to the  Administrative  Agent by the  other
     Lenders.

          (iii) The Borrower shall, in turn, before 10:00 A.M. (Chicago time) on
     the date of such proposed Auction Borrowing, either

               (A) cancel such Auction  Borrowing  by giving the  Administrative
          Agent notice to that effect, or

               (B)  irrevocably  accept  one or more of the  offers  made by any
          Lender or  Lenders  pursuant  to  paragraph  (ii)  above,  in its sole
          discretion,  in an  aggregate  amount  not in excess of the  aggregate
          amount of the  proposed  Auction  Borrowing  requested in the relevant
          Notice of an Auction Borrowing, subject only to the provisions of this
          paragraph (iii), by giving notice to the  Administrative  Agent of the
          amount of each  Auction  Advance  (which  amount  shall be equal to or
          greater than the minimum amount, and equal to or less than the maximum
          amount, notified to the Borrower by the Administrative Agent on behalf
          of such Lender for such Auction  Advance  pursuant to  paragraph  (ii)
          above) to be made by each  Lender as part of such  Auction  Borrowing,
          and reject any remaining  offers made by Lenders pursuant to paragraph
          (ii) above by giving the  Administrative  Agent notice to that effect;
          provided,  however,  that (x) the  Borrower  shall not accept an offer
          made  pursuant to paragraph  (ii) above,  at any Yield if the Borrower
          shall have, or shall be deemed to have,  rejected any other offer made
          pursuant  to  paragraph  (ii)  above,  at a  lower  Yield,  (y) if the
          Borrower  declines  to  accept,  or is  otherwise  restricted  by  the
          provisions of this Agreement  from  accepting,  the maximum  aggregate
          principal  amount of  Auction  Borrowings  offered  at the same  Yield
          pursuant to paragraph (ii) above, 

                                       13

<PAGE>

          then the  Borrower  shall accept a pro rata portion of each offer made
          at such  Yield,  based  as  nearly  as  possible  on the  ratio of the
          aggregate  principal  amount  of such  offers  to be  accepted  by the
          Borrower to the maximum aggregate principal amount of such offers made
          pursuant  to  paragraph  (ii) above  (rounding  up or down to the next
          higher  or  lower  multiple  of  $1,000,000),  and (z) no  offer  made
          pursuant to paragraph (ii) above shall be accepted  unless the Auction
          Borrowing  in  respect  of such offer is in an  integral  multiple  of
          $1,000,000  and the  aggregate  amount of such offers  accepted by the
          Borrower is equal to at least $10,000,000.

     Any offer or offers made  pursuant to  paragraph  (ii) above not  expressly
     accepted or rejected by the  Borrower  in  accordance  with this  paragraph
     (iii) shall be deemed to have been rejected by the Borrower.

          (iv) If the  Borrower  notifies  the  Administrative  Agent  that such
     Auction  Borrowing is canceled  pursuant to clause (A) of  paragraph  (iii)
     above,  the  Administrative  Agent shall give prompt notice  thereof to the
     Lenders and such Auction Borrowing shall not be made.

          (v) If the  Borrower  accepts  one or more of the  offers  made by any
     Lender or Lenders  pursuant to clause (B) of  paragraph  (iii)  above,  the
     Administrative Agent shall in turn promptly notify (A) each Lender that has
     made an  offer  as  described  in  paragraph  (ii)  above,  of the date and
     aggregate amount of such Auction  Borrowing and whether or not any offer or
     offers  made by such  Lender  pursuant  to  paragraph  (ii) above have been
     accepted  by the  Borrower,  (B)  each  Lender  that is to make an  Auction
     Advance as part of such  Auction  Borrowing  of the amount of each  Auction
     Advance to be made by such Lender as part of such  Auction  Borrowing,  and
     (C) each Lender that is to make an Auction  Advance as part of such Auction
     Borrowing,  upon receipt,  that the Administrative Agent has received forms
     of documents  appearing to fulfill the  applicable  conditions set forth in
     Article III. Each Lender that is to make an Auction Advance as part of such
     Auction  Borrowing shall,  before 11:00 A.M.  (Chicago time) on the date of
     such  Auction   Borrowing   specified  in  the  notice  received  from  the
     Administrative  Agent  pursuant to clause (A) of the preceding  sentence or
     any  later  time when such  Lender  shall  have  received  notice  from the
     Administrative Agent pursuant to clause (C) of the preceding sentence, make
     available  for  the  account  of  its  Applicable  Lending  Office  to  the
     Administrative  Agent at its  address  referred  to in  Section  8.02  such
     Lender's  portion  of such  Auction  Borrowing,  in same  day  funds.  Upon
     fulfillment of the applicable conditions set forth in Article III and after
     receipt by the Administrative Agent of such funds, the Administrative Agent
     will  make such  funds  available  to the  Borrower  at the  Administrative
     Agent's  aforesaid  address.  Promptly  after each Auction  Borrowing,  the
     Administrative  Agent will  notify each Lender of the amount of the Auction
     Borrowing,  the consequent  Auction Reduction and the dates upon which such
     Auction Reduction commenced and will terminate.

          (b)  Each  Auction  Advance  shall  be  in an  amount  not  less  than
$1,000,000  or an  integral  multiple  of  $1,000,000  in  excess  thereof  and,
following  the  making  of each  Auction  Borrowing,  the  Borrower  shall be in
compliance with the limitation set forth in the proviso to the first sentence of
subsection (a) above.

          (c) Within the limits and on the  conditions set forth in this Section
2.03,  the Borrower may from time to time borrow under this Section 2.03,  repay
or prepay  pursuant to  subsection  (d) below,  and reborrow  under this Section
2.03;  provided,  that an  Auction  Borrowing  shall  not be made  within  three
Business Days of the date of any other Auction Borrowing.

                                       14

<PAGE>

          (d) The  Borrower  shall  repay to the  Administrative  Agent  for the
account of each Lender that has made an Auction Advance, or each other holder of
an Auction  Note, on the maturity  date of each Auction  Advance (such  maturity
date being that specified by the Borrower for repayment of such Auction  Advance
in the related Notice of an Auction Borrowing  delivered  pursuant to subsection
(a)(i) above and provided in the Auction Note evidencing such Auction  Advance),
the then unpaid  principal  amount of such Auction  Advance.  The Borrower shall
have no right to prepay any principal amount of any Auction Advance unless,  and
then only on the terms,  specified by the  Borrower for such Auction  Advance in
the related  Notice of an Auction  Borrowing  delivered  pursuant to  subsection
(a)(i) above and set forth in the Auction Note evidencing such Auction Advance.

          (e) The Borrower shall pay interest on the unpaid  principal amount of
each  Auction  Advance  from the date of such  Auction  Advance  to the date the
principal  amount of such  Auction  Advance  is  repaid in full,  at the rate of
interest for such Auction  Advance  specified by the Lender  making such Auction
Advance in its notice with  respect  thereto  delivered  pursuant to  subsection
(a)(ii) above,  payable on the interest  payment date or dates  specified by the
Borrower for such Auction Advance in the related Notice of an Auction  Borrowing
delivered  pursuant to subsection  (a)(i) above, as provided in the Auction Note
evidencing such Auction Advance.

          (f) The  indebtedness  of the  Borrower  resulting  from each  Auction
Advance made to the Borrower as part of an Auction  Borrowing shall be evidenced
by a separate  Auction Note of the  Borrower  payable to the order of the Lender
making such Auction Advance.

          (g) Upon payment in full of the  principal  amount of any Auction Note
and interest accrued  thereon,  the holder of such Auction Note shall cancel and
return such Auction Note to the Borrower.

          SECTION  2.04.   Fees.   (a)  The  Borrower   agrees  to  pay  to  the
Administrative  Agent for the  account of each  Lender a  commitment  fee on the
average daily unused portion of such Lender's Commitment (after giving effect to
any Auction  Reduction)  from the date hereof in the case of each Bank, and from
the effective  date specified in the Assignment and Acceptance or the Additional
Lender Supplement pursuant to which it became a Lender in the case of each other
Lender, until the Termination Date, and, in the case of the termination in whole
of a Lender's  Commitment  pursuant  to Section  2.05 or 2.17,  the date of such
termination, payable on the last day of each March, June, September and December
during  such  period,  and on the  Termination  Date,  and,  in the  case of the
termination in whole of a Lender's  Commitment pursuant to Section 2.05 or 2.17,
the  date of such  termination,  at a  percentage  rate per  annum  equal to the
Applicable Commitment Fee Rate in effect from time to time, changing when and as
the Applicable Commitment Fee Rate changes.

          (b) The  Borrower  agrees to pay to the  Administrative  Agent for the
account of each Lender an auction  facility fee on the average  daily  aggregate
principal amount of such Lender's  Auction  Reduction during the period from the
date hereof in the case of each Bank,  and from the effective  date specified in
the Assignment  and Acceptance  pursuant to which it became a Lender in the case
of each  other  Lender,  until the  Termination  Date,  and,  in the case of the
termination in whole of a Lender's  Commitment pursuant to Section 2.05 or 2.17,
the date of such  termination,  payable  on the last  day of each  March,  June,
September and December during such period,  and on the Termination Date, and, in
the case of the  termination  in  whole of a  Lender's  Commitment  pursuant  to
Section 2.05 or 2.17,  the date of such  termination,  at a percentage  rate per
annum equal to the  Applicable  Commitment Fee Rate in effect from time to time,
changing when and as the Applicable Commitment Fee Rate changes.

          (c) The Borrower agrees to pay to the Documentation  Agent for its own
account a closing  fee as agreed to in  writing  between  the  Borrower  and the
Documentation Agent, payable upon the execution and delivery of this Agreement.

                                       15

<PAGE>

          (d) The Borrower agrees to pay to the Administrative Agent for its own
account a closing  fee,  an  auction  administration  fee and an  Administrative
Agent's  administration  fee,  each payable in such amounts and on such dates as
may be agreed to in  writing  from time to time  between  the  Borrower  and the
Administrative Agent.

          SECTION 2.05.  Reduction of the  Commitments.  The Borrower shall have
the right, upon at least two Business Days' notice to the Administrative  Agent,
to  terminate  in whole or reduce  ratably  in part the unused  portions  of the
respective  Commitments of the Lenders;  provided,  that the aggregate amount of
the  Commitments  of the Lenders  shall not be reduced to an amount that is less
than the  aggregate  principal  amount of the  Advances  then  outstanding;  and
provided,  further, that each partial reduction shall be in the aggregate amount
of $1,000,000 or an integral multiple thereof.

          SECTION 2.06. Repayment of Contract Advances. The Borrower shall repay
the principal  amount of each Contract Advance made by each Lender in accordance
with the Contract Note to the order of such Lender.

          SECTION 2.07.  Interest on Contract  Advances.  The Borrower shall pay
interest on the unpaid  principal  amount of each Contract  Advance made by each
Lender from the date of such Contract  Advance until such principal amount shall
be paid in full, at the following rates per annum:

          (a) Base  Rate  Advances.  If such  Contract  Advance  is a Base  Rate
Advance,  a rate per annum  equal at all  times to the Base Rate in effect  from
time to time, payable quarterly on the last day of each March,  June,  September
and December during such periods and on the date such Base Rate Advance shall be
Converted or paid in full.

          (b) Adjusted CD Rate Advances. If such Contract Advance is an Adjusted
CD Rate Advance,  a rate per annum equal at all times during the Interest Period
for such  Contract  Advance to the sum of the Adjusted CD Rate for such Interest
Period plus the Applicable  Margin for such Adjusted CD Rate in effect from time
to time,  payable on the last day of the  Interest  Period for such  Adjusted CD
Rate Advance (or, if the Interest  Period for such Advance is 180 days,  accrued
interest  shall be  payable  on the 90th day and the 180th day of such  Interest
Period)  or, if earlier,  on the date such  Adjusted  CD Rate  Advance  shall be
Converted or paid in full.

          (c)  Eurodollar  Rate  Advances.  Subject  to  Section  2.08,  if such
Contract  Advance is a Eurodollar  Rate  Advance,  a rate per annum equal at all
times during the  Interest  Period for such  Contract  Advance to the sum of the
Eurodollar  Rate for such Interest  Period plus the  Applicable  Margin for such
Eurodollar Rate Advance in effect from time to time,  payable on the last day of
the Interest Period for such Eurodollar Rate Advance (or, if the Interest Period
for such  Advance is six months,  accrued  interest  shall be payable on the day
that is three  months  and on the day  that is six  months  from  the date  such
Advance was made) or, if earlier, on the date such Eurodollar Rate Advance shall
be Converted or paid in full.

          SECTION 2.08.  Additional Interest on Contract Advances.  The Borrower
shall  pay to each  Lender,  so long as such  Lender  shall  be  required  under
regulations of the Board of Governors of the Federal  Reserve System to maintain
reserves  with  respect to  liabilities  or assets  consisting  of or  including
Eurocurrency Liabilities,  additional interest on the unpaid principal amount of
each  Eurodollar  Rate  Advance of such Lender,  from the date of such  Contract
Advance until such principal amount is paid in full or Converted, at an interest
rate per annum equal at all times to the remainder  obtained by subtracting  (i)
the Eurodollar Rate for the Interest Period for such Contract  Advance from (ii)
the rate obtained by dividing such Eurodollar Rate by a percentage equal to 100%
minus the  Eurodollar  Rate Reserve  Percentage of such Lender for such Interest
Period,  payable on each date on which  interest  is  payable  on such  Contract
Advance;  provided,  that no Lender shall be entitled to demand such  additional
interest  more than 90 days  following  the last day of the  Interest  Period in
respect  of which  such  demand is made;  provided  further,  however,  that the
foregoing  proviso  shall in no way limit  the right of any  

                                       16

<PAGE>

Lender to demand or receive  such  additional  interest  to the extent that such
additional  interest  relates  to the  retroactive  application  of the  reserve
requirements  described  above if such  demand is made  within 90 days after the
implementation  of  such  retroactive  reserve  requirements.   Such  additional
interest shall be determined by such Lender and notified to the Borrower through
the Administrative Agent, and such determination shall be conclusive and binding
for all purposes, absent manifest error.

          SECTION 2.09.  Interest Rate  Determination.  (a) Each  Reference Bank
agrees to furnish to the Administrative Agent timely information for the purpose
of determining each Adjusted CD Rate or Eurodollar  Rate, as applicable.  If any
one of the  Reference  Banks shall not furnish  such timely  information  to the
Administrative  Agent for the purpose of determining any such interest rate, the
Administrative  Agent shall  determine such interest rate on the basis of timely
information furnished by the remaining Reference Banks.

          (b) The Administrative  Agent shall give prompt notice to the Borrower
and the Lenders of the applicable interest rate determined by the Administrative
Agent for purposes of Section  2.07(a),  (b) or (c), and the applicable rate, if
any,  furnished  by each  Reference  Bank for the  purpose  of  determining  the
applicable interest rate under Section 2.07(b) or (c).

          (c) If fewer than two Reference  Banks furnish  timely  information to
the  Administrative  Agent for determining the Adjusted CD Rate for any Adjusted
CD Rate Advances, or the Eurodollar Rate for any Eurodollar Rate Advances,

               (i) the Administrative  Agent shall forthwith notify the Borrower
          and the Lenders that the interest rate cannot be  determined  for such
          Adjusted CD Rate Advances or Eurodollar Rate Advances, as the case may
          be,

               (ii) each such Advance will automatically, on the last day of the
          then  existing  Interest  Period  therefor,  Convert  into a Base Rate
          Advance (or if such Advance is then a Base Rate Advance, will continue
          as a Base Rate Advance), and

               (iii)  the  obligation  of the  Lenders  to make,  or to  Convert
          Contract  Advances into,  Adjusted CD Rate Advances or Eurodollar Rate
          Advances,   as  the  case  may  be,  shall  be  suspended   until  the
          Administrative  Agent shall  notify the  Borrower and the Lenders that
          the circumstances causing such suspension no longer exist.

          (d) If, with respect to any  Eurodollar  Rate  Advances,  the Majority
Lenders  notify  the  Administrative  Agent  that  the  Eurodollar  Rate for any
Interest  Period for such Advances will not adequately  reflect the cost to such
Majority Lenders of making,  funding or maintaining their respective  Eurodollar
Rate Advances for such Interest Period, the Administrative Agent shall forthwith
so notify the Borrower and the Lenders, whereupon

               (i) each Eurodollar Rate Advance will automatically,  on the last
          day of the then existing  Interest Period therefor  (unless prepaid or
          Converted to any Type of Advance other than a Eurodollar  Rate Advance
          prior to such date), Convert into a Base Rate Advance, and

               (ii)  the  obligation  of the  Lenders  to  make,  or to  Convert
          Contract  Advances into,  Eurodollar  Rate Advances shall be suspended
          until the  Administrative  Agent  shall  notify the  Borrower  and the
          Lenders  that the  circumstances  causing  such  suspension  no longer
          exist.

          SECTION 2.10.  Conversion of Contract  Advances.  (a)  Voluntary.  The
Borrower may on any Business Day, upon notice given to the Administrative  Agent
not later than 10:00 A.M.  (Chicago time) on the third Business Day prior to the
date of any  proposed  Conversion  into  Eurodollar  Rate  

                                       17

<PAGE>

Advances,  the second Business Day prior to the date of any proposed  Conversion
into Adjusted CD Rate Advances and on the date of any proposed  Conversion  into
Base Rate  Advances,  and subject to the  provisions  of Sections 2.09 and 2.13,
Convert  all  Contract  Advances  of one Type made in  connection  with the same
Contract  Borrowing  into  Advances of another  Type or Types or Advances of the
same Type having the same or a new Interest Period; provided,  however, that any
Conversion  of  Adjusted CD Rate  Advances  or  Eurodollar  Rate  Advances  into
Advances  of another  Type or  Advances  of the same Type having the same or new
Interest  Periods  shall be made on,  and only on,  the last day of an  Interest
Period for such Adjusted CD Rate Advances or Eurodollar  Rate  Advances,  unless
the Borrower  shall also  reimburse the Lenders in respect  thereof  pursuant to
Section 8.04(b) on the date of such Conversion. Each such notice of a Conversion
shall,  within the restrictions  specified  above,  specify (i) the date of such
Conversion,  (ii) the  Contract  Advances  to be  Converted,  and  (iii) if such
Conversion is into, or with respect to,  Adjusted CD Rate Advances or Eurodollar
Rate  Advances,  the  duration  of the  Interest  Period for each such  Contract
Advance.

          (b)  Automatic.  If the Borrower  shall fail to select the Type of any
Contract  Advance  or the  duration  of any  Interest  Period  for any  Contract
Borrowing  comprising  Adjusted CD Rate Advances or Eurodollar  Rate Advances in
accordance with the provisions  contained in the definition of "Interest Period"
in Section 1.01 and Section 2.10(a),  the Administrative Agent will forthwith so
notify the Borrower and the Lenders and such Advances will automatically, on the
last day of the then existing  Interest Period therefor,  Convert into Base Rate
Advances.

          SECTION  2.11.  Prepayments.  The  Borrower  may,  upon at  least  two
Business  Days' notice (or same day notice in the case of any prepayment of Base
Rate  Advances)  to the  Administrative  Agent  stating  the  proposed  date and
aggregate  principal  amount of the prepayment,  and if such notice is given the
Borrower shall, prepay the outstanding principal amounts of the Advances made as
part of the same Contract  Borrowing in whole or ratably in part,  together with
accrued interest to the date of such prepayment on the principal amount prepaid;
provided,  however,  that (i) each partial  prepayment  shall be in an aggregate
principal  amount not less than  $10,000,000  (or  $5,000,000 in the case of any
prepayment of Base Rate Advances) and (ii) in the case of any such prepayment of
an  Adjusted  CD Advance or  Eurodollar  Rate  Advance,  the  Borrower  shall be
obligated  to  reimburse  the  Lenders in respect  thereof  pursuant  to Section
8.04(b) on the date of such prepayment.

          SECTION 2.12. Increased Costs. (a) If on or after (x) the date of this
Agreement,  in the case of any  Contract  Advance  or any  obligation  to make a
Contract Advance,  or (y) the date a Lender offers to make such Auction Advance,
in the  case  of any  Auction  Advance,  any  Lender  determines  that  (i)  the
introduction  of or any change  (other than any change by way of  imposition  or
increase of reserve  requirements,  in the case of  Adjusted  CD Rate  Advances,
included in the Domestic Rate Reserve  Percentage  or, in the case of Eurodollar
Rate Advances,  included in the Eurodollar Rate Reserve Percentage) in or in the
interpretation  of any  law or  regulation  or  (ii)  the  compliance  with  any
guideline  or request  from any  central  bank or other  governmental  authority
(whether or not having the force of law) shall  increase the cost to such Lender
of agreeing to make or making,  funding or maintaining Adjusted CD Rate Advances
or Eurodollar  Rate Advances,  then the Borrower  shall from time to time,  upon
demand by such Lender (with a copy of such demand to the Administrative  Agent),
pay to the  Administrative  Agent  for the  account  of such  Lender  additional
amounts  (without  duplication of any amount  payable  pursuant to Section 2.15)
sufficient to compensate such Lender for such increased cost; provided,  that no
Lender shall be entitled to demand such compensation more than 90 days following
the last day of the  Interest  Period in respect  of which such  demand is made;
provided further,  however, that the foregoing proviso shall in no way limit the
right of any Lender to demand or receive  such  compensation  to the extent that
such compensation relates to the retroactive application of any law, regulation,
guideline  or request  described  in clause (i) or (ii) above if such  demand is
made  within  90  days  after  the   implementation  of  such  retroactive  law,
interpretation,  guideline or request.  A  certificate  as to the amount of such
increased cost,  submitted to the Borrower and the Administrative  Agent by such
Lender, shall be conclusive and binding for all purposes, absent manifest error.

                                       18

<PAGE>

          (b) If any Lender  determines  that, after the date of this Agreement,
compliance  with any law or  regulation  or any  guideline  or request  from any
central bank or other governmental authority (whether or not having the force of
law)  affects or would  affect the amount of capital  required or expected to be
maintained by such Lender or any  corporation  controlling  such Lender and that
the amount of such capital is  increased by or based upon the  existence of such
Lender's  commitment to lend hereunder and other commitments of this type or the
Advances made by such Lender,  then,  upon demand by such Lender (with a copy of
such demand to the Administrative  Agent), the Borrower shall immediately pay to
the  Administrative  Agent for the account of such Lender,  from time to time as
specified by such Lender,  additional  amounts  sufficient  to  compensate  such
Lender or such  corporation  in the light of such  circumstances,  to the extent
that such Lender  determines  such  increase in capital to be  allocable  to the
existence of such Lender's  commitment to lend hereunder or the Advances made by
such  Lender;  provided,  that no  Lender  shall  be  entitled  to  demand  such
compensation  more than one year  following the payment to or for the account of
such Lender of all other  amounts  payable  hereunder and under any Note held by
such Lender and the termination of such Lender's  Commitment;  provided further,
however,  that the  foregoing  proviso  shall in no way  limit  the right of any
Lender  to  demand  or  receive  such  compensation  to  the  extent  that  such
compensation  relates to the  retroactive  application  of any law,  regulation,
guideline  or request  described  above if such  demand is made  within one year
after the implementation of such retroactive law,  interpretation,  guideline or
request.  A  certificate  as to such  amounts  submitted to the Borrower and the
Administrative  Agent by such Lender shall be  conclusive  and binding,  for all
purposes, absent manifest error.

          (c) Any Lender  claiming  compensation  pursuant to this  Section 2.12
shall use its best efforts  (consistent  with its internal  policy and legal and
regulatory  restrictions) to change the  jurisdiction of its Applicable  Lending
Office if the making of such a change  would  avoid the need for,  or reduce the
amount of, any such  compensation  that may thereafter  accrue and would not, in
the reasonable  judgment of such Lender,  be otherwise  disadvantageous  to such
Lender.

          SECTION 2.13. Illegality.  Notwithstanding any other provision of this
Agreement,  if any  Lender  shall  notify  the  Administrative  Agent  that  the
introduction  of or  any  change  in or in  the  interpretation  of  any  law or
regulation  makes  it  unlawful,  or any  central  bank  or  other  governmental
authority asserts that it is unlawful, for such Lender or its Eurodollar Lending
Office to perform its obligations  hereunder to make Eurodollar Rate Advances or
to fund or maintain  Eurodollar Rate Advances  hereunder,  (i) the obligation of
such Lender to make,  or to Convert  Contract  Advances  into,  Eurodollar  Rate
Advances shall be suspended (subject to the following  paragraph of this Section
2.13) until the  Administrative  Agent shall notify the Borrower and the Lenders
that the  circumstances  causing  such  suspension  no longer exist and (ii) all
Eurodollar Rate Advances of such Lender then outstanding  shall, on the last day
of then  applicable  Interest  Period (or such earlier date as such Lender shall
designate  upon not less than five  Business  Days prior  written  notice to the
Administrative Agent), be automatically Converted into Base Rate Advances.

          If the obligation of any Lender to make,  fund or maintain  Eurodollar
Rate  Advances has been  suspended  pursuant to the preceding  paragraph,  then,
unless and until the  Administrative  Agent shall  notify the  Borrower  and the
Lenders that the  circumstances  causing such suspension no longer exist (i) all
Contract Advances that would otherwise be made by such Lender as Eurodollar Rate
Advances shall instead be made as Base Rate Advances and (ii) to the extent that
Eurodollar  Rate  Advances  of such Lender  have been  Converted  into Base Rate
Advances  pursuant  to the  preceding  paragraph  or made  instead  as Base Rate
Advances  pursuant to the preceding  clause (i), all payments and prepayments of
principal  that would  have  otherwise  been  applied  to such  Eurodollar  Rate
Advances of such Lender shall be applied  instead to such Base Rate  Advances of
such Lender.

          SECTION 2.14.  Payments and Computations.  (a) The Borrower shall make
each payment  hereunder  and under the Notes not later than 10:00 A.M.  (Chicago
time) on the day when due in U.S.  dollars  to the  Administrative  Agent at its
address referred to in Section 8.02 in same day funds. The Administrative  Agent
will promptly  thereafter  cause to be  distributed  like funds  relating to the
payment of principal or interest or commitment and auction facility fees ratably
(other than amounts payable pursuant to Section 2.02(c), 2.03, 2.08, 2.12, 2.15,
2.17(a)  or  8.04(b))  to the  Lenders  for  the  account  of  their  respective
Applicable Lending Offices,  and like funds relating to the payment 

                                       19

<PAGE>

of any other amount  payable to any Lender to such Lender for the account of its
Applicable  Lending  Office,  in each case to be applied in accordance  with the
terms of this Agreement. Upon its acceptance of an Assignment and Acceptance and
recording  of the  information  contained  therein in the  Register  pursuant to
Section 8.07(d),  from and after the effective date specified in such Assignment
and Acceptance,  the Administrative  Agent shall make all payments hereunder and
under the Notes in  respect  of the  interest  assigned  thereby  to the  Lender
assignee  thereunder,  and the parties to such  Assignment and Acceptance  shall
make all  appropriate  adjustments  in such  payments for periods  prior to such
effective date directly between themselves.

          (b) The Borrower hereby  authorizes each Lender,  if and to the extent
payment  owed to such  Lender is not made when due  hereunder  or under any Note
held by such  Lender,  to  charge  from time to time  against  any or all of the
Borrower's accounts with such Lender any amount so due.

          (c) All  computations of interest based on the Base Rate shall be made
by the  Administrative  Agent on the basis of a year of 365 or 366 days,  as the
case may be, and all computations of interest based on the Adjusted CD Rate, the
Eurodollar  Rate or the  Federal  Funds  Rate and of  commitment  fees,  auction
facility  fees and  interest  payable on Auction  Advances  shall be made by the
Administrative  Agent, and all computations of interest pursuant to Section 2.08
shall be made by a Lender,  on the basis of a year of 360 days, in each case for
the actual number of days  (including  the first day but excluding the last day)
occurring in the period for which such interest or commitment  fees are payable.
Each determination by the Administrative Agent (or, in the case of Section 2.08,
by a Lender) of an interest rate  hereunder  shall be conclusive and binding for
all purposes, absent manifest error.

          (d) Whenever any payment  hereunder or under the Notes shall be stated
to be due on a day other than a Business  Day, such payment shall be made on the
next  succeeding  Business Day, and such extension of time shall in such case be
included in the  computation  of payment of interest or  commitment  fee, as the
case may be;  provided,  however,  if such  extension  would  cause  payment  of
interest on or  principal  of  Eurodollar  Rate  Advances to be made in the next
following  calendar  month,  such  payment  shall be made on the next  preceding
Business Day.

          (e) Unless the  Administrative  Agent shall have received  notice from
the  Borrower  prior to the  date on which  any  payment  is due to the  Lenders
hereunder   that  the  Borrower  will  not  make  such  payment  in  full,   the
Administrative  Agent may assume that the Borrower has made such payment in full
to the Administrative  Agent on such date and the  Administrative  Agent may, in
reliance upon such  assumption,  cause to be  distributed to each Lender on such
due date an  amount  equal to the  amount  then due such  Lender.  If and to the
extent  that the  Borrower  shall not have so made such  payment  in full to the
Administrative  Agent,  each  Lender  shall  repay to the  Administrative  Agent
forthwith  on demand  such  amount  distributed  to such  Lender  together  with
interest thereon,  for each day from the date such amount is distributed to such
Lender  until the date such  Lender  repays  such  amount to the  Administrative
Agent, at the Federal Funds Rate.

          (f)  Notwithstanding  anything to the contrary  contained herein,  any
amount payable by the Borrower hereunder or under any Note that is not paid when
due (whether at stated  maturity,  by acceleration  or otherwise)  shall (to the
fullest extent permitted by law) bear interest from the date when due until paid
in full at a rate per annum equal at all times to the Base Rate plus 2%, payable
upon demand.

          SECTION  2.15.  Taxes.  (a)  Any  and  all  payments  by the  Borrower
hereunder or under the Contract Notes shall be made, in accordance  with Section
2.14, free and clear of and without  deduction for any and all present or future
taxes, levies, imposts, deductions, charges or withholdings, and all liabilities
with  respect  thereto,   excluding,   in  the  case  of  each  Lender  and  the
Administrative 

                                       20

<PAGE>

Agent,  taxes imposed on its income,  and franchise  taxes imposed on it, by the
jurisdiction under the laws of which such Lender or the Administrative Agent (as
the case may be) is organized or any political  subdivision  thereof and, in the
case of each Lender, taxes imposed on its income, and franchise taxes imposed on
it,  by the  jurisdiction  of such  Lender's  Applicable  Lending  Office or any
political  subdivision  thereof (all such non-excluded taxes,  levies,  imposts,
deductions,  charges, withholdings and liabilities being hereinafter referred to
as "Taxes").  If the Borrower  shall be required by law to deduct any Taxes from
or in respect of any sum  payable  hereunder  or under any Note to any Lender or
the  Administrative  Agent,  (i) the sum payable  shall be  increased  as may be
necessary  so that after making all required  deductions  (including  deductions
applicable  to  additional  sums payable under this Section 2.15) such Lender or
the  Administrative  Agent (as the case may be)  receives an amount equal to the
sum it would have received had no such  deductions  been made, (ii) the Borrower
shall make such  deductions  and (iii) the  Borrower  shall pay the full  amount
deducted to the relevant  taxation  authority or other  authority in  accordance
with applicable law.

          (b) In  addition,  the  Borrower  agrees to pay any  present or future
stamp or  documentary  taxes or any other excise or property  taxes,  charges or
similar  levies  to  the  extent   arising  from  the  execution,   delivery  or
registration of this Agreement or the Contract Notes (hereinafter referred to as
"Other Taxes").

          (c) No Lender may claim or demand payment or  reimbursement in respect
of any Taxes or Other Taxes pursuant to this Section 2.15 if such Taxes or Other
Taxes,  as the case may be,  were  imposed  solely as the result of a  voluntary
change in the location of the jurisdiction of such Lender's  Applicable  Lending
Office.

          (d) The Borrower  will  indemnify  each Lender and the  Administrative
Agent  for  the  full  amount  of  Taxes  or  Other  Taxes  (including,  without
limitation,  any Taxes or Other  Taxes  imposed by any  jurisdiction  on amounts
payable under this Section 2.15) paid by such Lender or the Administrative Agent
(as the  case  may be) and any  liability  (including  penalties,  interest  and
expenses) arising  therefrom or with respect thereto,  whether or not such Taxes
or Other Taxes were correctly or legally asserted. This indemnification shall be
made  within 30 days from the date such Lender or the  Administrative  Agent (as
the case may be) makes written demand therefor.

          (e)  Prior to the date of the  initial  Borrowing  in the case of each
Bank,  and on the date of the  Assignment  and  Acceptance or Additional  Lender
Supplement  pursuant  to which it  became  a  Lender  in the case of each  other
Lender, and from time to time thereafter within 30 days from the date of request
if requested by the Borrower or the Administrative  Agent, each Lender organized
under the laws of a  jurisdiction  outside the United  States shall  provide the
Administrative  Agent and the Borrower with the forms prescribed by the Internal
Revenue Service of the United States  certifying that such Lender is exempt from
United States  withholding taxes with respect to all payments to be made to such
Lender  hereunder and under the Notes. If for any reason during the term of this
Agreement,  any Lender  becomes  unable to submit the forms referred to above or
the information or  representations  contained therein are no longer accurate in
any material respect,  such Lender shall notify the Administrative Agent and the
Borrower in writing to that effect.  Unless the Borrower and the  Administrative
Agent have received forms or other  documents  satisfactory  to them  indicating
that  payments  hereunder  or under any Note are not  subject  to United  States
withholding tax, the Borrower or the  Administrative  Agent shall withhold taxes
from such payments at the  applicable  statutory rate in the case of payments to
or for any Lender organized under the laws of a jurisdiction  outside the United
States  and no Lender  may claim or demand  payment  or  reimbursement  for such
withheld taxes pursuant to this Section 2.15.

          (f) Any Lender  claiming any additional  amounts  payable  pursuant to
this  Section  2.15 shall use its best  efforts  (consistent  with its  internal
policy and legal and regulatory  restrictions) to change the jurisdiction of its
Applicable  Lending  Office if the making of such a change  would avoid the need
for, or reduce the amount of, any such  additional  amounts which may thereafter
accrue and would not, in the  reasonable  judgment of such Lender,  be otherwise
disadvantageous to such Lender.

                                       21

<PAGE>

          (g) If  the  Borrower  makes  any  additional  payment  to any  Lender
pursuant to this Section  2.15 in respect of any Taxes or Other Taxes,  and such
Lender determines that it has received (i) a refund of such Taxes or Other Taxes
or (ii) a credit  against or relief or  remission  for,  or a  reduction  in the
amount  of,  any tax or other  governmental  charge  attributable  solely to any
deduction  or credit for any Taxes or Other  Taxes with  respect to which it has
received payments under this Section 2.15, such Lender shall, to the extent that
it can do so without prejudice to the retention of such refund,  credit, relief,
remission or  reduction,  pay to the  Borrower  such amount as such Lender shall
have determined to be attributable to the deduction or withholding of such Taxes
or Other Taxes.  If, within one year after the payment of any such amount to the
Borrower,  such  Lender  determines  that it was not  entitled  to such  refund,
credit,  relief,  remission  or reduction to the full extent of any payment made
pursuant to the first sentence of this Section 2.15(g),  the Borrower shall upon
notice and demand of such Lender promptly repay the amount of such  overpayment.
Any determination  made by such Lender pursuant to this Section 2.15(g) shall in
the absence of bad faith or manifest  error be  conclusive,  and nothing in this
Section  2.15(g)  shall be  construed  as  requiring  any Lender to conduct  its
business  or to arrange or alter in any  respect  its tax or  financial  affairs
(except as required by Section 2.15(f)) so that it is entitled to receive such a
refund,  credit or  reduction  or as allowing any person to inspect any records,
including tax returns, of any Lender.

          (h) Without  prejudice to the  survival of any other  agreement of the
Borrower or any Lender hereunder, the agreements and obligations of the Borrower
and the Lenders contained in this Section 2.15 shall survive the payment in full
of  principal  and interest  hereunder  and under the Notes;  provided,  that no
Lender shall be entitled to demand any payment under this Section 2.15 more than
one year following the payment to or for the account of such Lender of all other
amounts  payable  hereunder  and  under  any Note  held by such  Lender  and the
termination of such Lender's  Commitment;  provided further,  however,  that the
foregoing  proviso  shall in no way limit  the right of any  Lender to demand or
receive  any payment  under this  Section  2.15 to the extent that such  payment
relates  to the  retroactive  application  of any  Taxes or Other  Taxes if such
demand is made within one year after the  implementation  of such Taxes or Other
Taxes.

          SECTION 2.16. Sharing of Payments, Etc. If any Lender shall obtain any
payment (whether  voluntary,  involuntary,  through the exercise of any right of
set-off,  or  otherwise)  on account of the Contract  Advances made by it (other
than  pursuant to Section  2.02(c),  2.08,  2.12,  2.15,  2.17(a) or 8.04(b)) in
excess of its  ratable  share of payments  on account of the  Contract  Advances
obtained by all the Lenders, such Lender shall forthwith purchase from the other
Lenders such  participations  in the Contract  Advances made by them as shall be
necessary to cause such  purchasing  Lender to share the excess payment  ratably
with each of them, provided,  however, that if all or any portion of such excess
payment is thereafter  recovered from such purchasing Lender, such purchase from
each Lender  shall be rescinded  and such Lender  shall repay to the  purchasing
Lender the purchase price to the extent of such recovery together with an amount
equal to such  Lender's  ratable share  (according to the  proportion of (i) the
amount of such Lender's required repayment to (ii) the total amount so recovered
from the  purchasing  Lender) of any interest or other amount paid or payable by
the purchasing Lender in respect of the total amount so recovered.  The Borrower
agrees  that any  Lender so  purchasing  a  participation  from  another  Lender
pursuant  to this  Section  2.16 may, to the fullest  extent  permitted  by law,
exercise all its rights of payment (including the right of set-off) with respect
to such participation as fully as if such Lender were the direct creditor of the
Borrower in the amount of such participation.

          SECTION  2.17.   Extension  of   Termination   Date.  (a)  Unless  the
Termination Date shall have occurred,  the Borrower may request the Lenders,  by
written  notice to the  Administrative  Agent not more than 90 days and not less
than 60 days  prior  to the then  effective  Termination  Date,  to  consent  to
extension of the  Termination  Date to the date which is one year after the then
effective  Termination  Date (or, if such date is not a Business  Day,  the next
preceding  Business Day). Each Lender shall, in its sole  discretion,  determine
whether to consent to such request and shall notify the Administrative  Agent of
its  determination  not more than 45 days and not less than 30 days prior to the
then-effective  Termination  Date. Any Lender which fails to give such notice to
the Administrative  Agent shall be deemed to have 

                                       22

<PAGE>

not  consented to such request.  If any Lender shall not have  consented to such
request 30 days prior to the then effective  Termination Date (such Lender being
referred to herein as a "Non-Consenting Lender"), the Administrative Agent shall
promptly so notify the  Borrower  and the other  Lenders,  whereupon  each other
Lender  may,  not more than 30 days and not less than 25 days  prior to the then
effective  Termination  Date,  revoke any consent to such  extension  previously
given by such Lender (in which case such Lender shall be deemed a Non-Consenting
Lender).  If such request shall have been  consented to by the Majority  Lenders
(as  determined  after giving effect to the  replacement  of any  Non-Consenting
Lender pursuant to Section 8.07(h)),  the Administrative  Agent shall notify the
Borrower and the Lenders in writing of such consent,  and such  extension  shall
become effective upon the delivery by the Borrower to the  Administrative  Agent
and each Lender,  on or prior to the  then-effective  Termination Date, of (i) a
certificate of a duly authorized officer of the Borrower, dated such date, as to
the accuracy, both before and after giving effect to such proposed extension, of
the  representations  and  warranties  set forth in  Section  4.01 and as to the
absence, both before and after giving effect to such proposed extension,  of any
Event of Default or event that with the giving of notice or the  passage of time
or both would  constitute  an Event of  Default,  (ii)  certified  copies of all
corporate and  governmental  approvals,  if any,  required to be obtained by the
Borrower in  connection  with such  proposed  extension  and (iii) an opinion of
counsel to the Borrower (who shall be satisfactory to the Administrative  Agent)
as to the matters set forth in Exhibit D, upon giving effect to the extension of
the  Termination  Date,  and such  other  matters  as any  Lender,  through  the
Administrative  Agent,  may  reasonably  request,  all  of the  foregoing  to be
satisfactory in form and substance to the Administrative  Agent. In the event of
any  such   extension  of  the   Termination   Date,   the  Commitment  of  each
Non-Consenting  Lender that has not been  replaced  pursuant to Section  8.07(h)
shall be terminated in whole as of such former  Termination  Date, the aggregate
principal amount of all Advances made by such  Non-Consenting  Lender,  together
with accrued and unpaid interest, commitment fees and auction facility fees, and
all other amounts payable hereunder to or for the account of such Non-Consenting
Lender shall be due and payable on such former  Termination  Date, and upon such
reduction and payment of such amounts such Non-Consenting  Lender shall cease to
be a party to this Agreement.

          (b) Upon the  effectiveness  of any extension of the Termination  Date
pursuant to subsection (a) above,  each reference in Section 4.01(e) and Exhibit
D to (i) the year-end financial statements of the Borrower,  (ii) December 31 of
any year,  (iii) the quarter-end  financial  statements of the Borrower and (iv)
the last day of any fiscal quarter  (other than December 31) of any year,  shall
be  deemed  to be  amended  to be  references  to  (A)  the  year-end  financial
statements of the Borrower included in the Borrower's Annual Report on Form 10-K
most recently  delivered to the Lenders  pursuant to Section  5.01(b)(iii),  (B)
December  31 of the year of the  financial  statements  described  in clause (A)
above, (C) the fiscal quarter-end  financial statements of the Borrower included
in the Borrower's  Quarterly Report on Form 10-Q most recently  delivered to the
Lenders  pursuant  to  Section  5.01(b)(ii)  and (D) the last day of the  fiscal
quarter of the financial statements described in clause (C) above, respectively.

          SECTION 2.18.  Additional  Lenders.  (a) For a period of 60 days after
extension of a Termination Date pursuant to Section 2.17(a) that has resulted in
a reduction  of the  aggregate  Commitments  of the  Lenders,  the  Borrower may
request that one or more additional banks or other Persons (each, an "Additional
Lender") become party to this Agreement as Lenders and that the aggregate amount
of the  Commitments  of the  Lenders be  increased  to reflect  the  Commitments
allocated  to  each  such  Additional  Lender;   provided,  that  the  aggregate
Commitments of the Lenders after giving effect so such increase shall not exceed
the  aggregate  Commitments  of the  Lenders  immediately  prior to such  former
Termination  Date.  Addition of an Additional Lender shall be made only with the
written  consent  of  the  Administrative  Agent  (which  consent  shall  not be
unreasonably  withheld or delayed) and with the written  consent of the Borrower
(which  consent  may be granted or withheld in its  absolute  discretion).  Each
Additional  Lender must be an Eligible  Assignee and, without the consent of the
Administrative Agent, the initial Commitment of each Additional Lender shall not
be less than $5,000,000.

                                       23

<PAGE>

          (b)  Addition  of an  Additional  Lender  shall  be  effected  by  the
Additional Lender executing and delivering to the Administrative  Agent, for its
acceptance  and recording in the Register,  a duly completed  Additional  Lender
Supplement in substantially the form of Exhibit G attached hereto.  The Borrower
shall execute and deliver to the  Administrative  Agent for  transmittal to such
Additional  Lender a Contract  Note in  substantially  the form of  Exhibit  A-1
attached  hereto in the  amount of the  Commitment  of such  Additional  Lender.
Acceptance by the Administrative Agent of an Additional Lender is subject to the
conditions that the Administrative Agent shall have received, with a counterpart
for each Lender, (i) a certificate of a duly authorized officer of the Borrower,
dated  the  effective  date  of such  Additional  Lender  Supplement,  as to the
accuracy,  both before and after giving effect to such proposed addition, of the
representations  and warranties set forth in Section 4.01 and as to the absence,
both before and after giving effect to such proposed extension,  of any Event of
Default or event  that with the giving of notice or the  passage of time or both
would constitute an Event of Default, (ii) certified copies of all corporate and
governmental  approvals,  if any,  required to be  obtained  by the  Borrower in
connection  with such  proposed  addition,  (iii) an  opinion  of counsel to the
Borrower  (who  shall be  satisfactory  to the  Administrative  Agent) as to the
matters set forth in Exhibit D (appropriately  modified to include,  in addition
to the other matters set forth therein,  such Additional  Lender  Supplement and
the new  Contract  Note),  and such other  matters as any  Lender,  through  the
Administrative  Agent, may reasonably request,  and (iv) such other certificates
and documents as the  Administrative  Agent may reasonably  request,  all of the
foregoing to be satisfactory in form and substance to the Administrative  Agent.
Upon execution and delivery of the Additional Lender  Supplement,  acceptance by
the  Administrative  Agent and  recording  in the  Register,  from and after the
effective date specified in such Additional Lender  Supplement,  such Additional
Lender  shall be a party  hereto  and  shall,  to the  extent of the  Commitment
specified in such Additional Lender Supplement,  have the rights and obligations
of a Lender hereunder.

          (c) If, at the time an  Additional  Lender is to become  party to this
Agreement,  the continuing Lenders have any outstanding Contract Advances,  such
Additional Lender shall offer to purchase from each continuing Lender, effective
as of the date such Additional Lender becomes party to this Agreement, a portion
of each continuing Lender's  outstanding  Contract Advances,  in such amounts as
will have the result that,  immediately  after giving effect to such  Additional
Lender  becoming  party to this  Agreement  and to such  purchases,  each Lender
(including  the  Additional  Lender)  shall  share in the  outstanding  Contract
Advances in the same proportion as their respective Commitments.  The Additional
Lender  shall  offer in  writing  to  purchase  the  requisite  portion  of each
continuing  Lender's  outstanding  Contract  Advances,  at a price  equal to the
outstanding  principal  amount thereof together with accrued and unpaid interest
thereon to the date of purchase,  and a continuing Lender shall not unreasonably
decline to accept such offer.  Each such  purchase  shall be made in  accordance
with Section 8.07 (with the related Assignment and Acceptance modified,  mutatis
mutandis,  to reflect that such purchase is not a purchase of any portion of the
Commitment of the continuing Lender). Such purchases shall not be subject to the
provisions  of  clause  (ii) of  Section  8.07(a),  and the  Borrower  shall  be
responsible  for all amounts  payable to the  Administrative  Agent  pursuant to
clause (iv) of Section 8.07(a). The Borrower shall pay to each continuing Lender
on demand any amount that would be payable to such continuing Lender pursuant to
Section  8.04(b) (which for this purpose shall be applied as if such  assignment
were a prepayment of the Contract Advances assigned by such continuing  Lender),
and shall reimburse each continuing Lender on demand for all reasonable fees and
expenses  (including  reasonable fees and expenses of counsel) incurred by it in
connection with such assignment.

                                       24

<PAGE>

                                   ARTICLE III

                              CONDITIONS OF LENDING

          SECTION 3.01. Conditions Precedent to Initial Advances. The obligation
of each Lender to make its initial Advance is subject to the satisfaction, prior
to or  concurrently  with,  the making of such initial  Advance,  of each of the
following conditions precedent:

          (a) Documents and Other  Agreements.  The  Administrative  Agent shall
have received on or before the day of the initial Borrowing the following,  each
dated the same date, in form and substance  satisfactory  to the  Administrative
Agent and (except for the Notes) with one copy for each Lender:

               (i)  The  Contract  Notes  payable  to the  order  of each of the
          Lenders, respectively;

               (ii)  Certified  copies  of  the  resolutions  of  the  Board  of
          Directors of the Borrower  approving the transactions  contemplated by
          this Agreement and the Notes,  and of all documents  evidencing  other
          necessary  corporate  action with  respect to this  Agreement  and the
          Notes;

               (iii) A certificate of the Secretary or an Assistant Secretary of
          the  Borrower  certifying  (A) the  names and true  signatures  of the
          officers of the Borrower  authorized  to sign this  Agreement  and the
          Notes and the other  documents  to be  delivered  hereunder;  (B) that
          attached thereto are true and correct copies of the Restated  Articles
          of  Incorporation  and the  By-laws of the  Borrower,  in each case in
          effect  on such  date;  and (C)  that  attached  thereto  are true and
          correct copies of all governmental and regulatory  authorizations  and
          approvals required for the due execution,  delivery and performance of
          this  Agreement  and the Notes,  including,  without  limitation,  the
          Securities  Certificate  filed  with  the  PPUC by the  Borrower  (the
          "Securities  Certificate") and the Order of Registration issued by the
          PPUC   registering   the   Securities   Certificate   (the  "Order  of
          Registration");

               (iv) Copies of the  financial  statements  referred to in Section
          4.01(e);

               (v) A certificate  signed by either the chief financial  officer,
          principal accounting officer or treasurer of the Borrower stating that
          (A) the representations  and warranties  contained in Section 4.01 are
          correct on and as of the date of such  certificate  as though  made on
          and as of such date and (B) no event has occurred and is continuing on
          the date of such  certificate  that constitutes an Event of Default or
          would  constitute  an Event of Default  but for the  requirement  that
          notice be given or time elapse or both;

               (vi) A favorable  opinion of Ballard  Spahr  Andrews & Ingersoll,
          special counsel for the Borrower, substantially in the form of Exhibit
          D hereto; and

               (vii) A  favorable  opinion  of Reed  Smith  Shaw &  McClay  LLP,
          counsel  for the  Documentation  Agent,  substantially  in the form of
          Exhibit E hereto.

          (b) Termination of Prior Credit  Facility.  The  Administrative  Agent
shall have received  evidence of (i) the payment in full of all  obligations  of
the Borrower under the $400,000,000 Credit Agreement, dated as of June 26, 1995,
among the Borrower, the banks named therein,  Citibank,  N.A., as administrative
agent, and The First National Bank of Chicago, as documentation  agent, and (ii)
the termination of the "Commitments" under such agreement.

                                       25

<PAGE>

          SECTION 3.02. Conditions Precedent to Certain Contract Borrowings. The
obligation  of each  Lender to make a Contract  Advance on the  occasion of each
Contract  Borrowing  (including  the  initial  Contract  Borrowing)  that  would
increase the aggregate amount of Contract Advances  outstanding shall be subject
to the further conditions  precedent that on the date of such Contract Borrowing
the following statements shall be true, and each of the giving of the applicable
Notice  of a  Contract  Borrowing  and the  acceptance  by the  Borrower  of the
proceeds of such  Contract  Borrowing  shall  constitute  a  representation  and
warranty  by the  Borrower  that on the  date of such  Contract  Borrowing  such
statements are true:

               (A) The representations and warranties  contained in Section 4.01
          are correct on and as of the date of such Borrowing,  before and after
          giving effect to such Borrowing and to the application of the proceeds
          therefrom, as though made on and as of such date; and

               (B) No event has occurred and is continuing, or would result from
          such Borrowing or from the application of the proceeds therefrom, that
          constitutes  an  Event of  Default  or  would  constitute  an Event of
          Default but for the requirement that notice be given or time elapse or
          both (it being understood for clarification  that (i) without limiting
          the foregoing,  it is a condition of this clause (B) that the Borrower
          shall be in compliance with Section  5.01(a)(iv),  Section 5.02(a) and
          Section  5.02(c)  upon giving  effect to such  Borrowing  and (ii) the
          conditions  of  this  clause  (B)  shall  apply  whether  or  not  the
          respective Commitments of the Lenders have been terminated pursuant to
          Section 6.01).

          SECTION  3.03.  Conditions  Precedent to Each Auction  Borrowing.  The
obligation of each Lender that is to make an Auction  Advance on the occasion of
an Auction  Borrowing  (including  the initial  Auction  Borrowing) to make such
Auction  Advance as part of such Auction  Borrowing is subject to the conditions
precedent  that (i) the  Administrative  Agent shall have  received  the written
confirmatory  Notice of an Auction  Borrowing with respect  thereto,  (ii) on or
before the date of such Auction Borrowing,  but prior to such Auction Borrowing,
the  Administrative  Agent shall have  received an Auction  Note  payable to the
order of such Lender for each of the Auction  Advances to be made by such Lender
as part of such Auction Borrowing,  in a principal amount equal to the principal
amount of the Auction  Advance to be  evidenced  thereby and  otherwise  on such
terms as were agreed to for such  Auction  Advance in  accordance  with  Section
2.03, and (iii) except as otherwise  waived in accordance  with Section 8.01, on
the date of such Auction  Borrowing the following  statements shall be true, and
each of the  giving of the  applicable  Notice of an Auction  Borrowing  and the
acceptance  by the  Borrower of the  proceeds of such  Auction  Borrowing  shall
constitute a  representation  and  warranty by the Borrower  that on the date of
such Auction Borrowing such statements are true:

               (A) The representations and warranties  contained in Section 4.01
          are correct on and as of the date of such Borrowing,  before and after
          giving effect to such Borrowing and to the application of the proceeds
          therefrom, as though made on and as of such date, and

               (B) No event has occurred and is continuing, or would result from
          such  Borrowing or from the  application  of the  proceeds  therefrom,
          which  constitutes  an Event of Default or which would  constitute  an
          Event of Default but for the requirement  that notice be given or time
          elapse or both (it being understood for clarification that (i) without
          limiting the foregoing,  it is a condition of this clause (B) that the
          Borrower  shall be in  compliance  with Section  5.01(a)(iv),  Section
          5.02(a) and Section  5.02(c) upon giving effect to such  Borrowing and
          (ii) the  conditions of this clause (B) shall apply whether or not the
          respective Commitments of the Lenders have been terminated pursuant to
          Section 6.01).

                                       26
<PAGE>

                                   ARTICLE IV
                         REPRESENTATIONS AND WARRANTIES

          SECTION 4.01.  Representations  and  Warranties  of the Borrower.  The
Borrower represents and warrants as follows:

          (a) The Borrower is a corporation duly organized. validly existing and
in good standing under the laws of the Commonwealth of Pennsylvania.

          (b) The  execution,  delivery and  performance by the Borrower of this
Agreement and the Notes are within the Borrower's  corporate  powers,  have been
duly  authorized  by all  necessary  corporate  action,  and do not and will not
contravene (i) the Borrower's  Restated  Articles of  Incorporation  or By-laws,
(ii) applicable law or (iii) any contractual or legal restriction  binding on or
affecting the Borrower or its properties.

          (c) No  authorization or approval or other action by, and no notice to
or filing with, any  governmental  authority or regulatory  body is required for
the due execution, delivery and performance by the Borrower of this Agreement or
the Notes  except for the filing of the  Securities  Certificate  with,  and the
final  approval  of, and the Order of  Registration  issued by, the PPUC,  which
filing has been duly made and which  final  approval  and Order of  Registration
have been duly obtained;  such Order of Registration is in full force and effect
and is final; and on and after the date of the initial Borrowing hereunder,  the
action of the PPUC  registering  the Securities  Certificate  shall no longer be
subject to appeal.

          (d) This Agreement is, and the Notes when delivered hereunder will be,
legal,  valid and binding  obligations of the Borrower  enforceable  against the
Borrower in accordance with their respective terms, except as the enforceability
thereof  may be limited  by  equitable  principles  or  bankruptcy,  insolvency,
reorganization,   moratorium  or  similar  laws  affecting  the  enforcement  of
creditors' rights generally.

          (e)  The   consolidated   balance   sheet  of  the  Borrower  and  its
Subsidiaries  as at December 31, 1996, and the related  statements of income and
retained earnings and of cash flows of the Borrower and its Subsidiaries for the
fiscal  year then  ended,  certified  by  Coopers & Lybrand,  and the  unaudited
consolidated  balance sheet of the Borrower and its  Subsidiaries as at June 30,
1997 and the related  unaudited  statements of income for the  six-month  period
then ended,  copies of which have been furnished to each Lender,  fairly present
in all  material  respects  (subject,  in the case of such  balance  sheets  and
statements   of  income  for  the  period  ended  June  30,  1997,  to  year-end
adjustments)  the  consolidated  financial  condition  of the  Borrower  and its
Subsidiaries as at such dates and the consolidated  results of the operations of
the Borrower and its  Subsidiaries  for the periods ended on such dates,  all in
accordance  with GAAP, and since  December 31, 1996,  there has been no Material
Adverse Change.

          (f) Except as disclosed in the Borrower's Annual, Quarterly or Current
Reports, each as filed with the Securities and Exchange Commission and delivered
to the  Lenders  (including  reports  filed prior to the date of  execution  and
delivery of this  Agreement  and reports  delivered  to the Lenders  pursuant to
Section  5.01(b)),  there is no pending or threatened  action,  investigation or
proceeding  affecting the Borrower or any of its Subsidiaries  before any court,
governmental  agency or arbitrator  that may reasonably be anticipated to have a
Material Adverse Effect.  There is no pending or threatened action or proceeding
against the Borrower or its  Subsidiaries  that purports to affect the legality,
validity, binding effect or enforceability of this Agreement or any Note.

          (g) No proceeds of any Advance  have been or will be used  directly or
indirectly in connection with the acquisition of in excess of 5% of any class of
equity securities that is registered  

                                       27

<PAGE>

pursuant to Section 12 of the  Exchange  Act or any  transaction  subject to the
requirements of Section 13 or 14 of the Exchange Act.

          (h) The Borrower is not engaged in the  business of  extending  credit
for the purpose of  purchasing  or carrying  margin stock (within the meaning of
Regulation U issued by the Board of Governors  of the Federal  Reserve  System),
and no  proceeds  of any  Advance  will be used to  purchase or carry any margin
stock or to extend  credit to others for the purpose of  purchasing  or carrying
any margin  stock.  Not more than 25% of the value of the assets of the Borrower
and its Principal Subsidiaries is represented by margin stock.

          (i) The  Borrower  (i) is exempt  from the  provisions  of the  Public
Utility  Holding  Company Act of 1935,  as amended,  other than Section  9(a)(2)
thereof,  pursuant to Section  3(a)(2)  thereof,  and (ii) is not an "investment
company" or a company "controlled" by an "investment company" within the meaning
of the Investment Company Act of 1940, as amended.

          (j) During the twelve  consecutive  month  period prior to the date of
the  execution  and  delivery  of this  Agreement  and  prior to the date of any
Borrowing under this Agreement,  no steps have been taken to terminate any Plan,
and no  contribution  failure by the  Borrower  or any member of the  Controlled
Group has  occurred  with respect to any Plan.  No condition  exists or event or
transaction has occurred with respect to any Plan  (including any  Multiemployer
Plan) which might result in the  incurrence by the Borrower or any member of the
Controlled Group of any material liability, fine or penalty.

                                    ARTICLE V

                            COVENANTS OF THE BORROWER

          SECTION 5.01. Affirmative Covenants. So long as any Note or any amount
payable by the Borrower  hereunder  shall remain unpaid or any Lender shall have
any Commitment hereunder (except with respect to subsection (a)(iv), which shall
be  applicable  only as of the date  hereof and at any time that any  Advance is
outstanding hereunder),  the Borrower will, and, in the case of Section 5.01(a),
will cause its  Principal  Subsidiaries  to,  unless the Majority  Lenders shall
otherwise consent in writing:

          (a)  Keep  Books;  Corporate  Existence;  Maintenance  of  Properties;
Compliance with Laws; Insurance; Taxes.

               (i) keep proper  books of record and account,  all in  accordance
          with generally accepted accounting principles;

               (ii) subject to Section 5.02(b),  preserve and keep in full force
          and effect its existence;

               (iii)  maintain and preserve all of its  properties  (except such
          properties  the failure of which to  maintain  or  preserve  would not
          have,  individually  or in the aggregate,  a Material  Adverse Effect)
          which  are used or  useful  in the  conduct  of its  business  in good
          working order and condition, ordinary wear and tear excepted;

               (iv) comply in all material respects with the requirements of all
          applicable laws, rules, regulations and orders (including those of any
          governmental  authority  and including  with respect to  environmental
          matters)  to the extent the failure to so comply,  individually  or in
          the  aggregate,  would  have  either a  Material  Adverse  Effect or a
          material  adverse effect on the ability of the Borrower to perform its
          obligations under this Agreement and the Notes;

                                       28

<PAGE>

               (v) maintain  insurance with responsible and reputable  insurance
          companies or associations, or self-insure, as the case may be, in each
          case in such amounts and covering such  contingencies,  casualties and
          risks  as  is  customarily  carried  by  or  self-insured  against  by
          companies engaged in similar  businesses and owning similar properties
          in the same  general  areas in which the  Borrower  and its  Principal
          Subsidiaries operate;

               (vi) at any  reasonable  time and from time to time,  pursuant to
          prior notice  delivered  to the  Borrower,  permit any Lender,  or any
          agents or  representatives  of any  thereof,  to examine  and, at such
          Lender's  expense,  make copies of, and abstracts from the records and
          books of account of, and visit the properties of, the Borrower and any
          of its Principal Subsidiaries and to discuss the affairs, finances and
          accounts of the Borrower and any of its Subsidiaries with any of their
          respective officers;  provided, that any non-public information (which
          has been  identified as such by the Borrower)  obtained by any Lender,
          or any of their respective agents or representatives  pursuant to this
          subsection  (vi)  shall  be  treated  confidentially  by such  Person;
          provided,  further,  that such Person may disclose such information to
          any other party to this Agreement, its examiners,  affiliates, outside
          auditors,  counsel or other  professional  advisors in connection with
          the  Agreement or if otherwise  required to do so by law or regulatory
          process; and

               (vii) use the  proceeds of the  Advances  for  general  corporate
          purposes  (including,  without  limitation,  the  refinancing  of  its
          commercial  paper,  the  repayment of  outstanding  Advances,  and the
          making of acquisitions) but in no event for any purpose which would be
          contrary to clause (g) or clause (h) of Section 4.01.

          (b) Reporting Requirements. Furnish to the Lenders:

               (i) as soon as possible,  and in any event within 5 Business Days
          after the  occurrence  of each Event of  Default or each event  which,
          with the giving of notice or lapse of time, or both,  would constitute
          an Event of  Default,  continuing  on the  date of such  statement,  a
          statement  of an  authorized  officer of the  Borrower  setting  forth
          details of such  Event of  Default  or event and the action  which the
          Borrower proposes to take with respect thereto;

               (ii) as soon as  available  and in any event within 60 days after
          the end of each of the first three quarters of each fiscal year of the
          Borrower, a copy of the Borrower's Quarterly Report on Form 10-Q filed
          with the  Securities  and  Exchange  Commission  with  respect to such
          quarter,  together with a certificate of an authorized  officer of the
          Borrower stating that no Event of Default, or event which, with notice
          or lapse of time or both,  would  constitute an Event of Default,  has
          occurred and is  continuing  or, if any Event of Default or such event
          has occurred and is  continuing,  a statement as to the nature thereof
          and the  action  which the  Borrower  proposes  to take  with  respect
          thereto;

               (iii) as soon as available and in any event within 105 days after
          the end of each fiscal year of the Borrower,  a copy of the Borrower's
          Annual  Report on Form 10-K filed  with the  Securities  and  Exchange
          Commission  with  respect  to  such  fiscal  year,   together  with  a
          certificate of an authorized  officer of the Borrower  stating that no
          Event of  Default,  or event  which,  with  notice of lapse of time or
          both,  would  constitute  an Event of  Default,  has  occurred  and is
          continuing  or, if any Event of Default or such event has occurred and
          is  continuing,  a statement  as to the nature  thereof and the action
          which the Borrower proposes to take with respect thereto;

                                       29

<PAGE>

               (iv)  concurrently  with the delivery of the annual and quarterly
          reports  referred  to in  Sections  5.01(b)(ii)  and  5.01(b)(iii),  a
          compliance  certificate in substantially the form set forth in Exhibit
          F, duly completed and signed by the Chief Financial Officer, Treasurer
          or an Assistant Treasurer of the Borrower;

               (v) except as otherwise  provided in  subsections  (ii) and (iii)
          above,  promptly  after the sending or filing  thereof,  copies of all
          reports that the Borrower  sends to any of its security  holders,  and
          copies of all  Reports on Form  10-K,  10-Q or 8-K,  and  registration
          statements  and   prospectuses   that  the  Borrower  or  any  of  its
          Subsidiaries files with the Securities and Exchange  Commission or any
          national  securities  exchange  (except  to the  extent  that any such
          registration statement or prospectus relates solely to the issuance of
          securities pursuant to employee or dividend  reinvestment plans of the
          Borrower or such Subsidiary);

               (vi) promptly upon becoming aware of the institution of any steps
          by the  Borrower or any other  Person to  terminate  any Plan,  or the
          failure to make a required contribution to any Plan if such failure is
          sufficient  to give rise to a lien under section  302(f) of ERISA,  or
          the taking of any action with  respect to a Plan which could result in
          the requirement  that the Borrower furnish a bond or other security to
          the PBGC or such Plan, or the  occurrence of any event with respect to
          any Plan,  which could result in the incurrence by the Borrower or any
          member of the  Controlled  Group of any  material  liability,  fine or
          penalty; and

               (vii)   such  other   information   respecting   the   condition,
          operations,  business or  prospects,  financial or  otherwise,  of the
          Borrower  or any of  its  Subsidiaries  as  any  Lender,  through  the
          Administrative Agent, may from time to time reasonably request.

          SECTION 5.02.  Negative  Covenants.  So long as any Note or any amount
payable by the Borrower  hereunder  shall remain unpaid or any Lender shall have
any Commitment  hereunder (except with respect to subsection (a), which shall be
applicable only as of the date hereof and at any time any Advance is outstanding
hereunder),  the Borrower will not,  without the written consent of the Majority
Lenders:

          (a) Limitation on Liens. Create,  incur, assume or suffer to exist, or
permit any of its Principal  Subsidiaries to create,  incur, assume or suffer to
exist,  any Lien on its  respective  property,  revenues or assets,  whether now
owned or hereafter acquired except (i) Liens upon or in any property acquired by
the Borrower or any of its  Principal  Subsidiaries  in the  ordinary  course of
business  to  secure  the  purchase  price of such  property  or to  secure  any
obligation  incurred solely for the purpose of financing the acquisition of such
property,  (ii) Liens  existing on such property at the time of its  acquisition
(other than any such Lien created in contemplation  of such  acquisition  unless
permitted by the preceding  clause (i)),  (iii) Liens granted under the Mortgage
and "excepted  encumbrances"  as defined in the Mortgage,  (iv) Liens granted in
connection  with any financing  arrangement  for the purchase of nuclear fuel or
the financing of pollution control facilities, limited to the fuel or facilities
so  purchased  or  acquired,  (v) Liens  arising  in  connection  with  sales or
transfers of, or financing secured by, accounts receivable or related contracts,
(vi) Liens securing the Borrower's notes collateralized solely by mortgage bonds
of the Borrower  issued under the terms of the Mortgage,  (vii) Liens arising in
connection with sale and leaseback transactions,  but only to the extent (x) the
proceeds  received by the Borrower or such Principal  Subsidiary  from such sale
shall  immediately be applied to retire  mortgage  bonds of the Borrower  issued
under the terms of the Mortgage,  or (y) the aggregate  purchase price of assets
sold  pursuant to such sale and leaseback  transactions  where such proceeds are
not so  applied  shall not  exceed  $1,000,000,000,  (viii)  Liens  granted by a
Special Purpose  Subsidiary to secure  Nonrecourse  Transition Bond Debt of such
Special  Purpose  Subsidiary,  and (ix)  Liens,  other than those  described  in
clauses (i) through (viii) of this subsection  granted by the Borrower or any of
its Principal  Subsidiaries in 

                                       30

<PAGE>

the ordinary course of business  securing Debt of the Borrower and its Principal
Subsidiaries in an amount not to exceed  $50,000,000 in the aggregate at any one
time outstanding.

          (b) Mergers and Consolidations;  Disposition of Assets.  Merge with or
into or consolidate with or into, or sell, assign, lease or otherwise dispose of
(whether in one transaction or in a series of transactions) all or substantially
all of its assets  (whether  now owned or  hereafter  acquired) to any Person or
permit any  Principal  Subsidiary  to do so, except that (i) the Borrower or any
Principal  Subsidiary  may merge with or into or  consolidate  with or  transfer
assets to any other  Principal  Subsidiary,  (ii) any Principal  Subsidiary  may
merge with or into or  consolidate  with or transfer  assets to the Borrower and
(iii) the Borrower may merge with or into or consolidate with or transfer assets
to any other  Person;  provided in each case,  immediately  thereafter in giving
effect  thereto,  no Event of Default or event  that  would,  with the giving of
notice or the passage of time or both  constitute an Event of Default shall have
occurred and be continuing and (A) in the case of any such merger, consolidation
or transfer of assets to which the Borrower is a party,  either (x) the Borrower
shall be the surviving  corporation or (y) the surviving corporation shall be an
Eligible Successor and shall have assumed all of the obligations of the Borrower
under this Agreement and the Notes pursuant to a written  instrument in form and
substance satisfactory to the Administrative Agent and (B) subject to clause (A)
above,  in the case of any such  merger  to which a  Principal  Subsidiary  is a
party, a Principal Subsidiary shall be the surviving corporation.

          (c) Financial  Covenant.  Permit  Consolidated  Adjusted Total Debt to
exceed 65% of Consolidated Adjusted Total Capitalization at any time.

          (d) Continuation of Businesses.

               (i) Generation  Business.  (A) Cease to own (through the Borrower
          or wholly-owned  Subsidiaries) the business of generating electricity,
          or (B) reduce the net installed electric  generating  capacity (summer
          rating) of the electricity  generation  business owned by the Borrower
          and its wholly-owned  Subsidiaries  taken as a whole to less than 7821
          Megawatts.

               (ii) Distribution,  Transmission and Gas Businesses. Cease to own
          (directly by the Borrower,  and not through Subsidiaries) the business
          of distributing electricity to end-users, the business of transmitting
          electricity,  or  the  businesses  of  transmitting  and  distributing
          natural gas, each substantially as conducted by the Borrower as of the
          date of this Agreement (and the Borrower  warrants that as of the date
          of this Agreement  substantially  all of such businesses  conducted by
          the Borrower on a consolidated basis, and the assets relating thereto,
          are  operated  and  owned by the  Borrower  directly  and not  through
          Subsidiaries).

                                   ARTICLE VI

                                EVENTS OF DEFAULT

          SECTION  6.01.  Events  of  Default.  If any of the  following  events
("Events of Default") shall occur and be continuing:

          (a) The Borrower  shall fail to pay any  principal of any Advance when
the same  becomes  due and  payable,  or  interest  thereon or any other  amount
payable  under this  Agreement or any of the Notes within  three  Business  Days
after the same becomes due and payable; or

                                       31

<PAGE>

          (b) Any  representation  or warranty made by the Borrower herein or by
the Borrower (or any of its  officers)  pursuant to the terms of this  Agreement
shall prove to have been  incorrect or misleading  in any material  respect when
made; or

          (c) The  Borrower  shall  fail to  perform  or  observe  (i) any term,
covenant or agreement contained in Section 5.02, Section 5.01(a)(vii) or Section
5.01(b)(i),  or (ii) any other term,  covenant or  agreement  contained  in this
Agreement  on its part to be  performed or observed if the failure to perform or
observe such other term,  covenant or agreement  shall remain  unremedied for 30
days after written  notice  thereof shall have been given to the Borrower by the
Administrative Agent (which notice shall be given by the Administrative Agent at
the written request of any Lender); or

          (d) The  Borrower or any  Principal  Subsidiary  shall fail to pay any
principal  of or  premium  or  interest  on any Debt  that is  outstanding  in a
principal  amount in excess of  $50,000,000 in the aggregate (but excluding Debt
evidenced by the Notes and Nonrecourse  Transition Bond Debt) of the Borrower or
such  Principal  Subsidiary  (as the case may be) when the same  becomes due and
payable  (whether by  scheduled  maturity,  required  prepayment,  acceleration,
demand or otherwise), and such failure shall continue after the applicable grace
period, if any, specified in the agreement or instrument  relating to such Debt;
or any other event shall occur or condition  shall exist under any  agreement or
instrument  relating to any such Debt and shall  continue  after the  applicable
grace period, if any,  specified in such agreement or instrument,  if the effect
of such event or condition is to accelerate,  or to permit the  acceleration of,
the  maturity  of such Debt;  or any such Debt shall be  declared  to be due and
payable, or required to be prepaid (other than by a regularly scheduled required
prepayment),  prior to the stated maturity thereof,  other than any acceleration
of any Debt  secured by  equipment  leases or fuel  leases of the  Borrower or a
Principal  Subsidiary  as a result of the  occurrence  of any event  requiring a
prepayment  (whether or not characterized as such) thereunder,  which prepayment
will not result in a Material Adverse Change; or

          (e) The  Borrower or any  Principal  Subsidiary  (other than a Special
Purpose  Subsidiary) shall generally not pay its debts as such debts become due,
or shall admit in writing its  inability  to pay its debts  generally,  or shall
make a general assignment for the benefit of creditors;  or any proceeding shall
be instituted by or against the Borrower or any Principal Subsidiary (other than
a Special Purpose  Subsidiary) seeking to adjudicate it a bankrupt or insolvent,
or seeking liquidation,  winding up,  reorganization,  arrangement,  adjustment,
protection,  relief, or composition of it or its debts under any law relating to
bankruptcy,  insolvency or reorganization  or relief of debtors,  or seeking the
entry  of an  order  for  relief  or the  appointment  of a  receiver,  trustee,
custodian or other similar  official for it or for any  substantial  part of its
property and, in the case of any such proceeding  instituted against it (but not
instituted by it), either such proceeding  shall remain  undismissed or unstayed
for a  period  of 60  days,  or any of the  actions  sought  in such  proceeding
(including, without limitation, the entry of an order for relief against, or the
appointment of a receiver,  trustee, custodian or other similar official for, it
or for any  substantial  part of its property,)  shall occur; or the Borrower or
any Principal  Subsidiary  (other than a Special Purpose  Subsidiary) shall take
any corporate  action to authorize or to consent to any of the actions set forth
above in this subsection (e); or

          (f) One or more  judgments  or orders  for the  payment of money in an
aggregate amount exceeding  $50,000,000  (excluding any such judgments or orders
which are fully covered by insurance,  subject to any customary deductible,  and
under which the applicable insurance carrier has acknowledged such full coverage
in writing) shall be rendered  against the Borrower or any Principal  Subsidiary
and either (i) enforcement proceedings shall have been commenced by any creditor
upon such judgment or order or (ii) there shall be any period of 30  consecutive
days during which a stay of enforcement of such judgment or order,  by reason of
a pending appeal or otherwise, shall not be in effect; or

          (g) (i) any Reportable  Event that the Majority  Lenders  determine in
good faith might  constitute  grounds for the termination of any Plan or for the
appointment  by the  appropriate  United 

                                       32

<PAGE>

States  District Court of a trustee to administer a Plan shall have occurred and
be continuing 30 days after written  notice to such effect shall have been given
to  the  Borrower  by the  Administrative  Agent  or  (ii)  any  Plan  shall  be
terminated,  or (iii) a Trustee  shall be  appointed  by an  appropriate  United
States  District Court to administer  any Plan or (iv) the PBGC shall  institute
proceedings  to  terminate  any Plan or to appoint a trustee to  administer  any
Plan;  provided,  however that on the date of any event described in clauses (i)
through (iv) above the Unfunded Liabilities of such Plan exceed $20,000,000; or

          (h) any  "Event of  Default"  shall  occur  under the  364-Day  Credit
Agreement;  

then, and in any such event, the Administrative  Agent (i) shall at the request,
or may with the consent,  of the Majority  Lenders,  by notice to the  Borrower,
declare the respective  Commitments  of the Lenders to be terminated,  whereupon
the same shall forthwith  terminate,  and (ii) shall at the request, or may with
the consent,  of the Majority  Lenders,  by notice to the Borrower,  declare the
principal amount outstanding under the Notes, all interest thereon and all other
amounts payable under this Agreement to be forthwith due and payable,  whereupon
the principal amount outstanding under the Notes, all such interest and all such
amounts  shall become and be forthwith  due and  payable,  without  presentment,
demand, protest or further notice of any kind, all of which are hereby expressly
waived by the  Borrower;  provided,  however,  that in the event of an actual or
deemed  entry of an  order  for  relief  with  respect  to the  Borrower  or any
Principal  Subsidiary  under the Federal  Bankruptcy Code, (A) the obligation of
each Lender to make  Advances  shall  automatically  be  terminated  and (B) the
principal  amount  outstanding  under the Notes,  all such interest and all such
amounts shall automatically become and be due and payable,  without presentment,
demand,  protest  or any notice of any kind,  all of which are hereby  expressly
waived by the Borrower.

                                   ARTICLE VII

                                   THE AGENTS

          SECTION 7.01.  Authorization  and Action.  Each Lender hereby appoints
and authorizes the  Administrative  Agent to take such action as  administrative
agent on its behalf and to exercise  such  powers  under this  Agreement  as are
delegated to the  Administrative  Agent by the terms hereof,  together with such
powers as are reasonably  incidental  thereto.  Each Lender hereby  appoints and
authorizes  the  Documentation  Agent to prepare this Agreement and the Contract
Notes on behalf of the  Lenders,  provided,  that it is  hereby  understood  and
agreed  that the  Documentation  Agent  shall not have any  responsibilities  or
obligations hereunder subsequent to the execution and delivery of this Agreement
by and among the  Borrower,  the Banks,  and the  Agents.  As to any matters not
expressly  provided  for  by  this  Agreement  (including,  without  limitation,
enforcement or collection of the Notes), the  Administrative  Agent shall not be
required to exercise any discretion or take any action, but shall be required to
act or to refrain  from  acting  (and shall be fully  protected  in so acting or
refraining from acting) upon the instructions of the Majority Lenders,  and such
instructions  shall be  binding  upon all  Lenders  and all  holders  of  Notes;
provided,  however,  that the Administrative Agent shall not be required to take
any action which exposes the Administrative Agent to personal liability or which
is contrary to this Agreement or applicable law. The Administrative Agent agrees
to give to each Lender  prompt notice of each notice given to it by the Borrower
pursuant to the terms of this Agreement.

          SECTION 7.02. Agents' Reliance,  Etc. Neither the Administrative Agent
nor the  Documentation  Agent nor any of their respective  directors,  officers,
agents or employees  shall be liable for any action taken or omitted to be taken
by it or them  under or in  connection  with this  Agreement,  except for its or
their respective own gross negligence or willful misconduct.  Without limitation
of the generality of the foregoing:  (i) the Administrative  Agent may treat the
payee of any Note as the holder thereof until the Administrative  Agent receives
and accepts an Assignment and Acceptance entered into by the Lender which is the
payee of such Note,  as assignor,  and an Eligible  Assignee,  as  assignee,  as
provided in Section 8.07; (ii) the  Administrative  Agent and the  Documentation
Agent each may consult 

                                       33

<PAGE>

with legal counsel  (including  counsel for the  Borrower),  independent  public
accountants  and other  experts  selected  by it and shall not be liable for any
action taken or omitted to be taken in good faith by it in  accordance  with the
advice of such counsel, accountants or experts; (iii) neither the Administrative
Agent nor the  Documentation  Agent makes any warranty or  representation to any
Lender and shall not be responsible to any Lender for any statements, warranties
or representations  (whether written or oral) made in or in connection with this
Agreement;  (iv) neither the  Administrative  Agent nor the Documentation  Agent
shall  have  any  duty to  ascertain  or to  inquire  as to the  performance  or
observance of any of the terms, covenants or conditions of this Agreement on the
part of the  Borrower  or to  inspect  the  property  (including  the  books and
records)  of  the  Borrower;  (v)  neither  the  Administrative  Agent  nor  the
Documentation  Agent shall be  responsible  to any Lender for the due execution,
legality, validity,  enforceability,  genuineness,  sufficiency or value of this
Agreement or any other instrument or document  furnished  pursuant  hereto;  and
(vi) neither the  Administrative  Agent nor the Documentation  Agent shall incur
any liability  under or in respect of this  Agreement by acting upon any notice,
consent, certificate or other instrument or writing (which may be by telecopier,
telegram, cable or telex) believed by it to be genuine and signed or sent by the
proper party or parties.

          SECTION 7.03. Agents and Affiliates.  With respect to their respective
Commitments,  their  respective  Advances and their  respective  Notes,  each of
Mellon  and First  Chicago  shall have the same  rights  and  powers  under this
Agreement as any other Lender and may exercise the same as though it were not an
Agent;  and the term "Lender" or "Lenders"  shall,  unless  otherwise  expressly
indicated,  include  Mellon  and First  Chicago in their  respective  individual
capacities.  Mellon,  First Chicago and their  respective  affiliates may accept
deposits from, lend money to, act as trustee under  indentures of, and generally
engage in any kind of business with, the Borrower,  any of its  subsidiaries and
any Person who may do business  with or own  securities  of the  Borrower or any
such subsidiary,  all as if First Chicago was not the  Administrative  Agent and
Mellon was not the Documentation Agent, as the case may be, and without any duty
to account therefor to the Lenders.

          SECTION 7.04. Lender Credit Decision. Each Lender acknowledges that it
has,  independently  and without  reliance upon the  Administrative  Agent,  the
Documentation  Agent or any other Lender and based on the  financial  statements
referred to in Section  4.01(e) and such other  documents and  information as it
has deemed appropriate,  made its own credit analysis and decision to enter into
this Agreement.  Each Lender also acknowledges  that it will,  independently and
without reliance upon the Administrative Agent or the Documentation 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 this Agreement.

          SECTION  7.05.  Indemnification.  The Lenders  agree to indemnify  the
Administrative Agent, the Documentation Agent and the Syndication Agents (to the
extent not  reimbursed by the  Borrower),  ratably  according to the  respective
principal  amounts of the Contract Notes then held by each of the Lenders (or if
no  Contract  Notes  are at  the  time  outstanding,  ratably  according  to the
respective  amounts  of  their  Commitments),  from  and  against  any  and  all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs,  expenses or disbursements of any kind or nature  whatsoever which may be
imposed on, incurred by, or asserted  against any such Agent in any way relating
to or arising out of this  Agreement  or any action taken or omitted by any such
Agent  under this  Agreement,  provided  that no Lender  shall be liable for any
portion of such liabilities,  obligations,  losses, damages, penalties, actions,
judgments,  suits, costs, expenses or disbursements  resulting from such Agent's
gross  negligence or willful  misconduct.  Without  limitation of the foregoing,
each Lender  agrees to reimburse  each such Agent  promptly  upon demand for its
ratable share of any out-of-pocket  expenses (including reasonable counsel fees)
incurred by such Agent in connection with the preparation,  execution, delivery,
administration,   modification,   amendment  or  enforcement   (whether  through
negotiations,  legal proceedings or otherwise) of, or legal advice in respect of
rights or  responsibilities  under,  this  Agreement,  to the  extent  that such
expenses  are  reimbursable  by the  Borrower  but for which  such  Agent is not
reimbursed by the Borrower.

                                       34
<PAGE>

          SECTION 7.06. Successor Administrative Agent. The Administrative Agent
may resign at any time by giving  written  notice thereof to the Lenders and the
Borrower  and may be removed at any time with or without  cause by the  Majority
Lenders.  Upon any such resignation or removal,  the Majority Lenders shall have
the  right  to  appoint  a  successor  Administrative  Agent.  If  no  successor
Administrative  Agent shall have been so appointed by the Majority Lenders,  and
shall  have  accepted  such  appointment,  within  30 days  after  the  retiring
Administrative  Agent's giving of notice of resignation or the Majority Lenders'
removal of the retiring  Administrative Agent, then the retiring  Administrative
Agent may, on behalf of the Lenders,  appoint a successor  Administrative Agent,
which  shall  be a  commercial  bank  described  in  clause  (i) or  (ii) of the
definition of "Eligible  Assignee" and having a combined  capital and surplus of
at least $150,000,000.  Upon the acceptance of any appointment as Administrative
Agent   hereunder  by  a  successor   Administrative   Agent,   such   successor
Administrative  Agent shall thereupon  succeed to and become vested with all the
rights, powers,  privileges and duties of the retiring Administrative Agent, and
the  retiring  Administrative  Agent  shall be  discharged  from its  duties and
obligations  under this  Agreement.  After any retiring  Administrative  Agent's
resignation or removal hereunder as Administrative Agent, the provisions of this
Article VII 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.
Notwithstanding  the foregoing,  if no Event of Default,  and no event that with
the giving of notice or the passage of time, or both,  would constitute an Event
of  Default,   shall  have  occurred  and  be  continuing,   then  no  successor
Administrative  Agent shall be  appointed  under this  Section  7.06 without the
prior written  consent of the Borrower,  which consent shall not be unreasonably
withheld or delayed.

          SECTION  7.07.  Syndication  Agents,   Co-Agents,  Lead  Managers  and
Arrangers.  The titles  "Syndication  Agent,"  "Co-Agent,"  "Lead  Manager"  and
"Arranger" are purely honorific,  and the Syndication  Agents,  Co-Agents,  Lead
Managers  and  Arrangers  shall  have  no  duties  or  responsibilities  in such
capacities.

                                  ARTICLE VIII

                                  MISCELLANEOUS

          SECTION 8.01. Amendments, Etc. No amendment or waiver of any provision
of this  Agreement or the Contract  Notes,  nor consent to any  departure by the
Borrower therefrom,  shall in any event be effective unless the same shall be in
writing  and signed by the  Majority  Lenders,  and then such  waiver or consent
shall be effective  only in the specific  instance and for the specific  purpose
for which given; provided,  however, that no amendment, waiver or consent shall,
unless in writing and signed by all the  Lenders  (other than any Lender that is
the Borrower or an  Affiliate of the  Borrower),  do any of the  following:  (a)
waive any of the conditions  specified in Section 3.01 or 3.02, (b) increase the
Commitments of the Lenders or subject the Lenders to any additional obligations,
(c) reduce the principal  of, or interest on, the Contract  Notes or any fees or
other amounts payable hereunder,  (d) postpone any date fixed for any payment of
principal  of, or interest on, the Contract  Notes or any fees or other  amounts
payable  hereunder,  (e)  change the  percentage  of the  Commitments  or of the
aggregate  unpaid  principal  amount of the  Contract  Notes,  or the  number of
Lenders,  that  shall be  required  for the  Lenders  or any of them to take any
action hereunder,  or (f) amend this Section 8.01;  provided,  further,  that in
connection with any Auction Borrowing, any waiver of the conditions specified in
clause  (iii) of  Section  3.03  relating  to the  representation  set  forth in
paragraph  (A) of Section  3.03 shall be  effective  if in writing and signed by
each Lender that is to make an Auction  Advance in connection  with such Auction
Borrowing;  and provided,  further, that no amendment,  waiver or consent shall,
unless in writing and signed by the  Administrative  Agent or the  Documentation
Agent (as the case may be), in addition  to the Lenders  required  above to take
such  action,  affect  the rights or duties of the  Administrative  Agent or the
Documentation Agent (as the case may be) under this Agreement or any Note.

          SECTION  8.02.  Notices,  Etc.  All notices  and other  communications
provided for hereunder shall be in writing (including  telecopier,  telegraphic,
telex or cable  communication)  and 

                                       35

<PAGE>

mailed,  telecopied,  telegraphed,  telexed,  cabled  or  delivered,  if to  the
Borrower,  at its  address at 2301  Market  Street,  Philadelphia,  Pennsylvania
19101, Attention:  Vice President-Finance and Treasurer,  S21-1, Telecopy: (215)
841-5743;  if to any Bank, at its Domestic Lending Office specified opposite its
name on  Schedule I hereto;  if to any other  Lender,  at its  Domestic  Lending
Office  specified  in  the  Assignment  and  Acceptance  or  Additional   Lender
Supplement  pursuant to which it became a Lender;  and if to the  Administrative
Agent,  at its address at One First National  Plaza,  Mail Suite 0634,  1FPN-10,
Chicago,  Illinois 60670,  Attention:  Ms.  Gwendolyn  Watson,  Telecopy:  (312)
732-4840 or, as to each party,  at such other  address as shall be designated by
such  party in a written  notice  to the other  parties.  All such  notices  and
communications shall, when mailed, telecopied,  telegraphed,  telexed or cabled,
be effective when deposited in the mails, telecopied, delivered to the telegraph
company,  confirmed  by telex  answerback  or  delivered  to the cable  company,
respectively, except that notices and communications to the Administrative Agent
pursuant  to  Article II or VII shall not be  effective  until  received  by the
Administrative Agent.

          SECTION  8.03.  No  Waiver;  Remedies.  No  failure on the part of any
Lender or the Administrative Agent to exercise, and no delay in exercising,  any
right hereunder or under any Note shall operate as a waiver  thereof;  nor shall
any single or partial  exercise of any such right  preclude any other or further
exercise  thereof  or the  exercise  of any other  right.  The  remedies  herein
provided are cumulative and not exclusive of any remedies provided by law.

          SECTION 8.04.  Costs and Expenses;  Indemnification.  (a) The Borrower
agrees to pay on demand all costs and  expenses  incurred by the  Administrative
Agent,  the  Documentation  Agent,  the Syndication  Agents and the Arrangers in
connection   with  the   preparation,   execution,   delivery,   administration,
syndication,  modification  and amendment of this  Agreement,  the Notes and the
other documents to be delivered hereunder,  including,  without limitation,  the
reasonable  fees,  internal  charges  and  out-of-pocket   expenses  of  counsel
(including,  without limitation,  in-house counsel) for such Agents with respect
thereto  and with  respect to advising  the such  Agents as to their  respective
rights and responsibilities under this Agreement. The Borrower further agrees to
pay on demand all costs and expenses,  if any  (including,  without  limitation,
counsel fees and expenses of outside counsel and of internal counsel),  incurred
by  the  Administrative  Agent,  the  Documentation  Agent  and  any  Lender  in
connection with the collection and enforcement  (whether  through  negotiations,
legal  proceedings  or  otherwise)  of this  Agreement,  the Notes and the other
documents to be delivered hereunder,  including, without limitation,  reasonable
counsel fees and expenses in  connection  with the  enforcement  of rights under
this Section 8.04(a).

          (b) If any payment of principal of, or Conversion  of, any Adjusted CD
Rate  Advance or  Eurodollar  Rate Advance is made other than on the last day of
the  Interest  Period  for such  Contract  Advance,  as a result of a payment or
Conversion  pursuant to Section 2.10 or 2.13 or  acceleration of the maturity of
the Notes pursuant to Section 6.01 or for any other reason,  the Borrower shall,
upon  demand by any  Lender  (with a copy of such  demand to the  Administrative
Agent),  pay to the  Administrative  Agent for the  account  of such  Lender any
amounts required to compensate such Lender for any additional  losses,  costs or
expenses  which  it  may  reasonably  incur  as a  result  of  such  payment  or
Conversion, including, without limitation, any loss, cost or expense incurred by
reason of the liquidation or reemployment of deposits or other funds acquired by
any Lender to fund or maintain such Contract Advance.

          (c) The Borrower hereby agrees to indemnify and hold each Lender, each
Agent and each of their respective Affiliates, officers, directors and employees
(each,  an "Indemnified  Person")  harmless from and against any and all claims,
damages, losses, liabilities, costs or expenses (including reasonable attorney's
fees and expenses, whether or not such Indemnified Person is named as a party to
any  proceeding or is otherwise  subjected to judicial or legal process  arising
from any such  proceeding)  that any of them may pay or incur  arising out of or
relating to this Agreement, the Notes or the transactions  contemplated thereby,
or the use by the  Borrower or any of its  subsidiaries  of the  proceeds of any
Advance,  provided that the Borrower shall not be liable for any portion of such
claims,  damages,  

                                       36

<PAGE>

losses, liabilities,  costs or expenses resulting from such Indemnified Person's
gross negligence or willful  misconduct.  The Borrower's  obligations under this
Section  8.04(c) shall survive the repayment of all amounts owing to the Lenders
and  the  Administrative  Agent  under  this  Agreement  and the  Notes  and the
termination of the Commitments. If and to the extent that the obligations of the
Borrower  under this  Section  8.04(c) are  unenforceable  for any  reason,  the
Borrower agrees to make the maximum contribution to the payment and satisfaction
thereof which is permissible under applicable law.

          SECTION 8.05. Right of Set-off. Upon (i) the occurrence and during the
continuance  of any Event of Default  and (ii) the making of the  request or the
granting  of  the  consent   specified  by  Section   6.01  to   authorize   the
Administrative  Agent to  declare  the Notes  due and  payable  pursuant  to the
provisions  of Section  6.01,  each Lender is hereby  authorized at any time and
from time to time, to the fullest extent  permitted by law, to set off and apply
any and all deposits (general or special, time or demand,  provisional or final)
at any time held and other  indebtedness  at any time owing by such Lender to or
for  the  credit  or the  account  of the  Borrower  against  any and all of the
obligations  of the Borrower now or hereafter  existing under this Agreement and
any Note held by such  Lender,  whether or not such  Lender  shall have made any
demand under this  Agreement or such Note and although such  obligations  may be
unmatured.  Each Lender  agrees  promptly to notify the Borrower  after any such
set-off and application  made by such Lender,  provided that the failure to give
such notice shall not affect the validity of such set-off and  application.  The
rights of each Lender  under this  Section  8.05 are in addition to other rights
and remedies (including,  without limitation, other rights of set-off) that such
Lender may have.

          SECTION 8.06.  Binding Effect.  This Agreement shall become  effective
when it shall have been  executed  by the  Borrower  and the Agents and when the
Administrative  Agent  shall have been  notified by each Bank that such Bank has
executed it and thereafter shall be binding upon and inure to the benefit of the
Borrower,  the  Agents  and each  Lender  and their  respective  successors  and
assigns,  except that the Borrower shall not have the right to assign its rights
hereunder  or any  interest  herein  without  the prior  written  consent of the
Lenders.

          SECTION 8.07.  Assignments  and  Participations.  (a) Each Lender may,
with the prior  written  consent of the  Borrower and the  Administrative  Agent
(neither of which consents shall be  unreasonably  withheld or delayed),  and if
demanded by the Borrower  pursuant to subsection  (h) hereof shall to the extent
required by such  subsection  (h), assign to one or more banks or other entities
all or a portion of its rights and obligations under this Agreement  (including,
without  limitation,  all or a portion of its Commitment,  the Contract Advances
owing to it and the Contract Note or Notes held by it); provided,  however, that
(i) each such assignment shall be of a constant,  and not a varying,  percentage
of all of the assigning  Lender's  rights and  obligations  under this Agreement
(other  than any  Auction  Advances  or Auction  Notes),  (ii) the amount of the
Commitment  of the  assigning  Lender  being  assigned  pursuant  to  each  such
assignment  (determined as of the date of the  Assignment  and  Acceptance  with
respect to such  assignment)  shall in no event be less than  $5,000,000  or, if
less,  the entire amount of such Lender's  Commitment,  and shall be an integral
multiple of  $1,000,000  or such  Lender's  entire  Commitment,  (iii) each such
assignment shall be to an Eligible  Assignee,  and (iv) the parties to each such
assignment  shall  execute  and  deliver to the  Administrative  Agent,  for its
acceptance and recording in the Register, an Assignment and Acceptance, together
with any Contract Note or Notes subject to such  assignment and a processing and
recordation  fee of $3,500 (which shall be payable by one or more of the parties
to the  Assignment  and  Acceptance,  and not by the Borrower,  and shall not be
payable if the  assignee  is a Bank,  any  Affiliate  of any Bank or the Federal
Reserve Bank). Upon such execution, delivery, acceptance and recording, from and
after the effective date specified in each  Assignment and  Acceptance,  (x) the
assignee  thereunder  shall be a party hereto and, to the extent that rights and
obligations  hereunder have been assigned to it pursuant to such  Assignment and
Acceptance,  have the rights and  obligations of a Lender  hereunder and (y) the
Lender  assignor  thereunder  shall,  to the extent that rights and  obligations
hereunder have been assigned by it pursuant to such  Assignment and  Acceptance,
relinquish its rights and be released from its obligations  under this Agreement
(and, in the case of an Assignment and Acceptance  covering all or the remaining
portion of an assigning  Lender's rights and  obligations  under this Agreement,
such  Lender  shall  cease  to  be a  party  hereto).  

                                       37
<PAGE>
Notwithstanding  anything contained in this Section 8.07(a) to the contrary, (A)
the consent of the Borrower and the  Administrative  Agent shall not be required
with respect to any  assignment  by any Lender to an Affiliate of such Lender or
to another Lender and (B) any Lender may at any time, without the consent of the
Borrower or the  Administrative  Agent,  and without any  requirement to have an
Assignment and Acceptance  executed,  assign all or any part of its rights under
this  Agreement  and its Notes to a Federal  Reserve  Bank,  provided  that such
assignment  does not release the transferor  Lender from any of its  obligations
hereunder.

          (b) By executing  and  delivering an Assignment  and  Acceptance,  the
Lender assignor thereunder and the assignee thereunder confirm to and agree with
each other and the other parties  hereto as follows:  (i) other than as provided
in such Assignment and Acceptance, such assigning Lender makes no representation
or  warranty  and  assumes no  responsibility  with  respect to any  statements,
warranties or  representations  made in or in connection  with this Agreement or
the execution, legality, validity, enforceability,  genuineness,  sufficiency or
value of this Agreement or any other instrument or document  furnished  pursuant
hereto;  (ii) such  assigning  Lender  makes no  representation  or warranty and
assumes  no  responsibility  with  respect  to the  financial  condition  of the
Borrower  or  the  performance  or  observance  by  the  Borrower  of any of its
obligations  under this Agreement or any other instrument or document  furnished
pursuant  hereto;  (iii) such  assignee  confirms that it has received a copy of
this Agreement,  together with copies of the financial statements referred to in
Section  4.01(e)  and such  other  documents  and  information  as it has deemed
appropriate  to make its own credit  analysis  and  decision  to enter into such
Assignment and Acceptance;  (iv) such assignee will,  independently  and without
reliance  upon  the  Administrative  Agent  or  the  Documentation  Agent,  such
assigning Lender 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 this Agreement; (v) such assignee
confirms  that it is an  Eligible  Assignee;  (vi) such  assignee  appoints  and
authorizes the  Administrative  Agent to take such action as agent on its behalf
and to  exercise  such  powers  under this  Agreement  as are  delegated  to the
Administrative  Agent by the terms  hereof,  together  with  such  powers as are
reasonably  incidental  thereto;  and (vii) such  assignee  agrees  that it will
perform in accordance with their terms all of the obligations which by the terms
of this Agreement are required to be performed by it as a Lender.

          (c) The Administrative Agent shall maintain at its address referred to
in Section 8.02 a copy of each  Assignment and  Acceptance  and each  Additional
Lender  Supplement  delivered  to and  accepted  by it and a  register  for  the
recordation of the names and addresses of the Lenders and the Commitment of, and
principal  amount of the  Contract  Advances  owing to, each Lender from time to
time (the  "Register").  The entries in the  Register  shall be  conclusive  and
binding  for  all  purposes,  absent  manifest  error,  and  the  Borrower,  the
Administrative  Agent  and the  Lenders  may treat  each  Person  whose  name is
recorded  in the  Register  as a  Lender  hereunder  for  all  purposes  of this
Agreement. The Register shall be available for inspection by the Borrower or any
Lender  at any  reasonable  time and from  time to time  upon  reasonable  prior
notice.

          (d) Upon its receipt of an Assignment  and  Acceptance  executed by an
assigning Lender and an assignee  representing that it is an Eligible  Assignee,
together  with  any  Contract  Note or Notes  subject  to such  assignment,  the
Administrative Agent shall, if such Assignment and Acceptance has been completed
and is in substantially the form of Exhibit C hereto, (i) accept such Assignment
and Acceptance,  (ii) record the information  contained  therein in the Register
and (iii) give prompt notice thereof to the Borrower.  Within five Business Days
after its  receipt of such  notice,  the  Borrower,  at its own  expense,  shall
execute and deliver to the Administrative  Agent in exchange for the surrendered
Contract  Note  or  Notes a new  Contract  Note to the  order  of such  Eligible
Assignee  in an amount  equal to the  Commitment  assumed by it pursuant to such
Assignment and Acceptance and, if the assigning Lender has retained a Commitment
hereunder, a new Contract Note to the order of the assigning Lender in an amount
equal to the  Commitment  retained by it  hereunder.  Such new Contract  Note or
Notes shall be in an aggregate principal amount equal to the aggregate principal
amount of such surrendered  Contract Note or Notes, shall be dated the effective
date of such Assignment and Acceptance and shall  otherwise be in  substantially
the form of Exhibit A-1 hereto.

                                       38

<PAGE>

          (e) Each  Lender  may  assign to one or more  Eligible  Assignees  any
Auction Note or Notes held by it.

          (f) Each Lender may sell  participations to one or more banks or other
entities  (each,  a  "Participant")  in or to all or a portion of its rights and
obligations  under  this  Agreement  (including,  without  limitation,  all or a
portion of its  Commitment,  the Advances owing to it and the Note or Notes held
by it);  provided,  however,  that  (i) such  Lender's  obligations  under  this
Agreement  (including,  without  limitation,  its  Commitment  to  the  Borrower
hereunder)  shall  remain  unchanged,  (ii)  such  Lender  shall  remain  solely
responsible to the other parties hereto for the performance of such obligations,
(iii) such Lender  shall  remain the holder of any such Note for all purposes of
this  Agreement,  (iv) the  Borrower,  the  Administrative  Agent  and the other
Lenders  shall  continue  to deal  solely  and  directly  with  such  Lender  in
connection with such Lender's  rights and  obligations  under this Agreement and
(v) such Lender shall  retain the sole right to approve,  without the consent of
any Participant, any amendment,  modification or waiver of any provision of this
Agreement  or the  Note or  Notes  held by such  Lender,  other  than  any  such
amendment,  modification  or waiver with respect to any Advance or Commitment in
which such Participant has an interest that forgives principal, interest or fees
or reduces the interest rate or fees payable with respect to any such Advance or
Commitment,  postpones  any date fixed for any  regularly  scheduled  payment of
principal of, or interest or fees on, any such Advance or  Commitment,  releases
any  guarantor  of any such  Advance  or  releases  any  substantial  portion of
collateral, if any, securing any such Advance.

          (g) Any Lender may, in connection with any assignment or participation
or proposed assignment or participation  pursuant to this Section 8.07, disclose
to the  assignee  or  participant  or  proposed  assignee  or  participant,  any
information relating to the Borrower furnished to such Lender by or on behalf of
the  Borrower;  provided  that,  prior to any such  disclosure,  the assignee or
participant  or proposed  assignee or  participant  shall agree to preserve  the
confidentiality  of  any  confidential  information  relating  to  the  Borrower
received  by it from such  Lender  (subject to  customary  exceptions  regarding
regulatory requirements, compliance with legal process and other requirements of
law).

          (h) If (i) any Lender  shall make  demand for  payment  under  Section
2.12(a), 2.12(b) or 2.15, or (ii) shall deliver any notice to the Administrative
Agent   pursuant  to  Section  2.13  resulting  in  the  suspension  of  certain
obligations  of the Lenders with respect to  Eurodollar  Rate  Advances or (iii)
shall fail to consent to, or shall  revoke its consent to, the  extension of any
Termination  Date  pursuant to Section 2.17 or (iv) shall fail to consent to, or
shall revoke its consent to, any extension of the "Termination Date" (as defined
in the 364-Day Credit  Agreement)  requested by the Borrower pursuant to Section
2.17 of the 364-Day Credit Agreement as originally constituted (or any successor
provision  of similar  import),  then (in the case of clause (i)) within 60 days
after such demand (if, but only if, such payment demanded under Section 2.12(a),
2.12(b) or 2.15 has been made by the Borrower),  or (in the case of clause (ii))
within 60 days after such notice (if such suspension is still in effect), or (in
the case of  clauses  (iii)  and (iv)) no later  than 10 days  prior to the then
effective  Termination  Date,  as the case may be, the  Borrower may demand that
such Lender assign in accordance  with this Section 8.07 to one or more Eligible
Assignees   designated  by  the  Borrower  and  reasonably   acceptable  to  the
Administrative Agent all (but not less than all) of such Lender's Commitment and
the  Advances  owing to it within  the next  succeeding  30 days (in the case of
clause (i) or clause (ii)), or within the next succeeding 5 days (in the case of
clauses  (iii)  and  (iv)) . If any such  Eligible  Assignee  designated  by the
Borrower shall fail to consummate  such  assignment on terms  acceptable to such
Lender,  or if the Borrower  shall fail to designate any such Eligible  Assignee
for all of such Lender's Commitment or Advances, then such Lender may (but shall
not be required to) assign such  Commitment  and Advances to any other  Eligible
Assignee in accordance with this Section 8.07 during such period.

          SECTION 8.08.  Governing  Law.  THIS  AGREEMENT AND THE NOTES SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE  WITH, THE LAWS OF THE  COMMONWEALTH OF
PENNSYLVANIA.

                                       39

<PAGE>

          SECTION 8.09. Consent to Jurisdiction. THE BORROWER HEREBY IRREVOCABLY
SUBMITS TO THE  NON-EXCLUSIVE  JURISDICTION OF THE COURTS OF THE COMMONWEALTH OF
PENNSYLVANIA AND ANY UNITED STATES DISTRICT COURT SITTING IN THE COMMONWEALTH OF
PENNSYLVANIA  IN ANY ACTION OR  PROCEEDING  ARISING  OUT OF OR  RELATING TO THIS
AGREEMENT  OR THE NOTES AND THE  BORROWER  HEREBY  IRREVOCABLY  AGREES  THAT ALL
CLAIMS IN RESPECT OF SUCH ACTION OR  PROCEEDING  MAY BE HEARD AND  DETERMINED IN
ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE
AS TO THE VENUE OF ANY SUCH SUIT,  ACTION OR PROCEEDING  BROUGHT IN SUCH A COURT
OR THAT SUCH COURT IS AN  INCONVENIENT  FORUM.  NOTHING  HEREIN  SHALL LIMIT THE
RIGHT OF THE ADMINISTRATIVE AGENT OR ANY LENDER TO BRING PROCEEDINGS AGAINST THE
BORROWER IN THE COURTS OF ANY OTHER JURISDICTION.

          SECTION 8.10. Execution in Counterparts;  Integration.  This Agreement
may be executed in any number of counterparts and by different parties hereto in
separate  counterparts,  each of which when so executed shall be deemed to be an
original  and all of which  taken  together  shall  constitute  one and the same
agreement.  This Agreement  constitutes the entire  agreement and  understanding
among the parties hereto and supersedes all prior and contemporaneous agreements
and understandings, oral or written, relating to the subject matter hereof.

                [Remainder of the page intentionally left blank]

                                       40
<PAGE>


          IN WITNESS  WHEREOF,  the parties hereto have caused this Agreement to
be executed by their respective  officers  thereunto duly authorized,  as of the
date first above written.

[SEAL]                            PECO ENERGY COMPANY

/s/Todd D. Cutler                 By /s/J. B. Mitchell
Todd D. Cutler                    Name:  J. B. Mitchell
Assistant Secretary               Title:  Vice President - Finance and Treasurer

                                  MELLON BANK, N.A.,
                                  as Documentation Agent, Arranger and 
                                  Syndication Agent

                                  By /s/Mary Ellen Usher
                                  Name:  Mary Ellen Usher
                                  Title:  Vice President

                                  THE FIRST NATIONAL BANK OF CHICAGO,
                                  as Administrative Agent
 
                                  By /s/Kenneth J. Bauer
                                  Name:  Kenneth J. Bauer
                                  Title:  Authorized Agent

                                  FIRST CHICAGO CAPITAL MARKETS, INC.,
                                  as Arranger and Syndication Agent

                                  By /s/Kenneth J. Bauer
                                  Name:  Kenneth J. Bauer
                                  Title:  Vice President/Senior Banker

                                  CITICORP SECURITIES, INC.,
                                  as Syndication Agent

                                  By /s/Anita J. Brickell
                                  Name:  Anita J. Brickell
                                  Title:  Vice President

This is a signature page to the Revolving Credit Agreement,  dated as of October
7, 1997,  among PECO Energy Company,  as Borrower,  the banks named therein,  as
Banks,  certain  Banks  specified  therein,  as  Lead  Managers,  certain  Banks
specified  therein,  as Co-Agents,  First Chicago Capital Markets,  Inc., Mellon
Bank, N.A. and CitiCorp  Securities,  Inc., as Syndication Agents, First Chicago
Capital Markets,  Inc. and Mellon Bank,  N.A., as Arrangers,  The First National
Bank  of  Chicago,   as   Administrative   Agent,  and  Mellon  Bank,  N.A.,  as
Documentation Agent.

                                       41
<PAGE>


                                    THE BANKS

Commitment

$37,500,000

                                          THE FIRST NATIONAL BANK OF CHICAGO, as
                                          Administrative Agent and as Bank

                                          By /s/Kenneth J. Bauer
                                          Name:  Kenneth J. Bauer
                                          Title:  Authorized Agent

This is a signature page to the Revolving Credit Agreement,  dated as of October
7, 1997,  among PECO Energy Company,  as Borrower,  the banks named therein,  as
Banks,  certain  Banks  specified  therein,  as  Lead  Managers,  certain  Banks
specified  therein,  as Co-Agents,  First Chicago Capital Markets,  Inc., Mellon
Bank, N.A. and CitiCorp  Securities,  Inc., as Syndication Agents, First Chicago
Capital Markets,  Inc. and Mellon Bank,  N.A., as Arrangers,  The First National
Bank  of  Chicago,   as   Administrative   Agent,  and  Mellon  Bank,  N.A.,  as
Documentation Agent.

                                       42
<PAGE>


Commitment

$37,500,000

                                                        CITIBANK, N.A., as Bank

                                                        By /s/Anita J. Brickell
                                                        Name:  Anita J. Brickell
                                                        Title:  Attorney-in-Fact

This is a signature page to the Revolving Credit Agreement,  dated as of October
7, 1997,  among PECO Energy Company,  as Borrower,  the banks named therein,  as
Banks,  certain  Banks  specified  therein,  as  Lead  Managers,  certain  Banks
specified  therein,  as Co-Agents,  First Chicago Capital Markets,  Inc., Mellon
Bank, N.A. and CitiCorp  Securities,  Inc., as Syndication Agents, First Chicago
Capital Markets,  Inc. and Mellon Bank,  N.A., as Arrangers,  The First National
Bank  of  Chicago,   as   Administrative   Agent,  and  Mellon  Bank,  N.A.,  as
Documentation Agent.

                                       43
<PAGE>


Commitment

$37,500,000

                                      MELLON BANK, N.A., as Documentation Agent,
                                      as Syndication Agent, as Arranger and as
                                      Bank

                                      By /s/Mary Ellen Usher
                                      Name:  Mary Ellen Usher
                                      Title:  Vice President

This is a signature page to the Revolving Credit Agreement,  dated as of October
7, 1997,  among PECO Energy Company,  as Borrower,  the banks named therein,  as
Banks,  certain  Banks  specified  therein,  as  Lead  Managers,  certain  Banks
specified  therein,  as Co-Agents,  First Chicago Capital Markets,  Inc., Mellon
Bank, N.A. and CitiCorp  Securities,  Inc., as Syndication Agents, First Chicago
Capital Markets,  Inc. and Mellon Bank,  N.A., as Arrangers,  The First National
Bank  of  Chicago,   as   Administrative   Agent,  and  Mellon  Bank,  N.A.,  as
Documentation Agent.

                                       44
<PAGE>


Commitment

$25,000,000

                                        THE BANK OF NEW YORK, as Co-Agent and as
                                        Bank

                                        By /s/John N. Watt
                                        Name:  John N. Watt
                                        Title:   Vice President

This is a signature page to the Revolving Credit Agreement,  dated as of October
7, 1997,  among PECO Energy Company,  as Borrower,  the banks named therein,  as
Banks,  certain  Banks  specified  therein,  as  Lead  Managers,  certain  Banks
specified  therein,  as Co-Agents,  First Chicago Capital Markets,  Inc., Mellon
Bank, N.A. and CitiCorp  Securities,  Inc., as Syndication Agents, First Chicago
Capital Markets,  Inc. and Mellon Bank,  N.A., as Arrangers,  The First National
Bank  of  Chicago,   as   Administrative   Agent,  and  Mellon  Bank,  N.A.,  as
Documentation Agent.

                                       45
<PAGE>


Commitment

$25,000,000

                                       THE CHASE MANHATTAN BANK, as Co-Agent and
                                       as Bank

                                       By /s/Paul V. Farrell
                                       Name:  Paul V. Farrell
                                       Title:  Vice President

This is a signature page to the Revolving Credit Agreement,  dated as of October
7, 1997,  among PECO Energy Company,  as Borrower,  the banks named therein,  as
Banks,  certain  Banks  specified  therein,  as  Lead  Managers,  certain  Banks
specified  therein,  as Co-Agents,  First Chicago Capital Markets,  Inc., Mellon
Bank, N.A. and CitiCorp  Securities,  Inc., as Syndication Agents, First Chicago
Capital Markets,  Inc. and Mellon Bank,  N.A., as Arrangers,  The First National
Bank  of  Chicago,   as   Administrative   Agent,  and  Mellon  Bank,  N.A.,  as
Documentation Agent.

                                       46
<PAGE>


Commitment

$25,000,000

                                       CORESTATES BANK, N.A., as Co-Agent and as
                                       Bank

                                       By /s/Anthony D. Braxton
                                       Name:  Anthony D. Braxton
                                       Title:  Vice President

This is a signature page to the Revolving Credit Agreement,  dated as of October
7, 1997,  among PECO Energy Company,  as Borrower,  the banks named therein,  as
Banks,  certain  Banks  specified  therein,  as  Lead  Managers,  certain  Banks
specified  therein,  as Co-Agents,  First Chicago Capital Markets,  Inc., Mellon
Bank, N.A. and CitiCorp  Securities,  Inc., as Syndication Agents, First Chicago
Capital Markets,  Inc. and Mellon Bank,  N.A., as Arrangers,  The First National
Bank  of  Chicago,   as   Administrative   Agent,  and  Mellon  Bank,  N.A.,  as
Documentation Agent.

                                       47
<PAGE>


Commitment

$25,000,000

                                      FIRST UNION NATIONAL BANK, as Co-Agent and
                                      as Bank

                                      By /s/Michael J. Kolosowsky
                                      Name:  Michael J. Kolosowsky
                                      Title:  Vice President

This is a signature page to the Revolving Credit Agreement,  dated as of October
7, 1997,  among PECO Energy Company,  as Borrower,  the banks named therein,  as
Banks,  certain  Banks  specified  therein,  as  Lead  Managers,  certain  Banks
specified  therein,  as Co-Agents,  First Chicago Capital Markets,  Inc., Mellon
Bank, N.A. and CitiCorp  Securities,  Inc., as Syndication Agents, First Chicago
Capital Markets,  Inc. and Mellon Bank,  N.A., as Arrangers,  The First National
Bank  of  Chicago,   as   Administrative   Agent,  and  Mellon  Bank,  N.A.,  as
Documentation Agent.

                                       48
<PAGE>


Commitment

$25,000,000

                                       THE TOKAI BANK, LIMITED, NEW YORK BRANCH,
                                       as Co-Agent and as Bank

                                       By /s/Kaoru Oda
                                       Name:  Kaoru Oda
                                       Title:  Assistant General Manager

This is a signature page to the Revolving Credit Agreement,  dated as of October
7, 1997,  among PECO Energy Company,  as Borrower,  the banks named therein,  as
Banks,  certain  Banks  specified  therein,  as  Lead  Managers,  certain  Banks
specified  therein,  as Co-Agents,  First Chicago Capital Markets,  Inc., Mellon
Bank, N.A. and CitiCorp  Securities,  Inc., as Syndication Agents, First Chicago
Capital Markets,  Inc. and Mellon Bank,  N.A., as Arrangers,  The First National
Bank  of  Chicago,   as   Administrative   Agent,  and  Mellon  Bank,  N.A.,  as
Documentation Agent.

                                       49
<PAGE>


Commitment

$25,000,000

                                           TORONTO DOMINION (NEW YORK), INC., as
                                           Co-Agent and as Bank

                                           By /s/Jorge A. Garcia
                                           Name:  Jorge A. Garcia
                                           Title:  Vice President

This is a signature page to the Revolving Credit Agreement,  dated as of October
7, 1997,  among PECO Energy Company,  as Borrower,  the banks named therein,  as
Banks,  certain  Banks  specified  therein,  as  Lead  Managers,  certain  Banks
specified  therein,  as Co-Agents,  First Chicago Capital Markets,  Inc., Mellon
Bank, N.A. and CitiCorp  Securities,  Inc., as Syndication Agents, First Chicago
Capital Markets,  Inc. and Mellon Bank,  N.A., as Arrangers,  The First National
Bank  of  Chicago,   as   Administrative   Agent,  and  Mellon  Bank,  N.A.,  as
Documentation Agent.

                                       50
<PAGE>


Commitment

$25,000,000

                                              UNION BANK OF CALIFORNIA, N.A., as
                                              Co-Agent and as Bank

                                              By /s/Karyssa M. Britton
                                              Name:  Karyssa M. Britton
                                              Title:  Vice President

This is a signature page to the Revolving Credit Agreement,  dated as of October
7, 1997,  among PECO Energy Company,  as Borrower,  the banks named therein,  as
Banks,  certain  Banks  specified  therein,  as  Lead  Managers,  certain  Banks
specified  therein,  as Co-Agents,  First Chicago Capital Markets,  Inc., Mellon
Bank, N.A. and CitiCorp  Securities,  Inc., as Syndication Agents, First Chicago
Capital Markets,  Inc. and Mellon Bank,  N.A., as Arrangers,  The First National
Bank  of  Chicago,   as   Administrative   Agent,  and  Mellon  Bank,  N.A.,  as
Documentation Agent.

                                       51
<PAGE>


Commitment

$17,500,000

                                         THE FUJI BANK, LIMITED, as Lead Manager
                                         and as Bank

                                         By /s/Raymond Ventura
                                         Name:  Raymond Ventura
                                         Title:  Vice President & Manager

This is a signature page to the Revolving Credit Agreement,  dated as of October
7, 1997,  among PECO Energy Company,  as Borrower,  the banks named therein,  as
Banks,  certain  Banks  specified  therein,  as  Lead  Managers,  certain  Banks
specified  therein,  as Co-Agents,  First Chicago Capital Markets,  Inc., Mellon
Bank, N.A. and CitiCorp  Securities,  Inc., as Syndication Agents, First Chicago
Capital Markets,  Inc. and Mellon Bank,  N.A., as Arrangers,  The First National
Bank  of  Chicago,   as   Administrative   Agent,  and  Mellon  Bank,  N.A.,  as
Documentation Agent.

                                       52
<PAGE>


Commitment

$17,500,000

                                            THE INDUSTRIAL BANK OF JAPAN TRUST
                                            COMPANY, as Lead Manager and as Bank

                                            By /s/John V. Veltri
                                            Name:  John V. Veltri
                                            Title:  Deputy General Manager

This is a signature page to the Revolving Credit Agreement,  dated as of October
7, 1997,  among PECO Energy Company,  as Borrower,  the banks named therein,  as
Banks,  certain  Banks  specified  therein,  as  Lead  Managers,  certain  Banks
specified  therein,  as Co-Agents,  First Chicago Capital Markets,  Inc., Mellon
Bank, N.A. and CitiCorp  Securities,  Inc., as Syndication Agents, First Chicago
Capital Markets,  Inc. and Mellon Bank,  N.A., as Arrangers,  The First National
Bank  of  Chicago,   as   Administrative   Agent,  and  Mellon  Bank,  N.A.,  as
Documentation Agent.

                                       53
<PAGE>


Commitment

$17,500,000

                                      MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
                                      as Lead Manager and as Bank

                                      By /s/Philip S. Detjens
                                      Name:  Philip S. Detjens
                                      Title:  Vice President

This is a signature page to the Revolving Credit Agreement,  dated as of October
7, 1997,  among PECO Energy Company,  as Borrower,  the banks named therein,  as
Banks,  certain  Banks  specified  therein,  as  Lead  Managers,  certain  Banks
specified  therein,  as Co-Agents,  First Chicago Capital Markets,  Inc., Mellon
Bank, N.A. and CitiCorp  Securities,  Inc., as Syndication Agents, First Chicago
Capital Markets,  Inc. and Mellon Bank,  N.A., as Arrangers,  The First National
Bank  of  Chicago,   as   Administrative   Agent,  and  Mellon  Bank,  N.A.,  as
Documentation Agent.

                                       54
<PAGE>


Commitment

$17,500,000

                                        SUMMIT BANK, as Lead Manager and as Bank

                                        By /s/Bruce A. Gray
                                        Name:  Bruce A. Gray
                                        Title:  Vice President, Large Corporate
                                                Bank, Summit Bank

This is a signature page to the Revolving Credit Agreement,  dated as of October
7, 1997,  among PECO Energy Company,  as Borrower,  the banks named therein,  as
Banks,  certain  Banks  specified  therein,  as  Lead  Managers,  certain  Banks
specified  therein,  as Co-Agents,  First Chicago Capital Markets,  Inc., Mellon
Bank, N.A. and CitiCorp  Securities,  Inc., as Syndication Agents, First Chicago
Capital Markets,  Inc. and Mellon Bank,  N.A., as Arrangers,  The First National
Bank  of  Chicago,   as   Administrative   Agent,  and  Mellon  Bank,  N.A.,  as
Documentation Agent.

                                       55
<PAGE>


Commitment

$12,500,000

                                                       BANK OF MONTREAL, as Bank

                                                       By /s/John L. Smith
                                                       Name:  John L. Smith
                                                       Title:  Director

This is a signature page to the Revolving Credit Agreement,  dated as of October
7, 1997,  among PECO Energy Company,  as Borrower,  the banks named therein,  as
Banks,  certain  Banks  specified  therein,  as  Lead  Managers,  certain  Banks
specified  therein,  as Co-Agents,  First Chicago Capital Markets,  Inc., Mellon
Bank, N.A. and CitiCorp  Securities,  Inc., as Syndication Agents, First Chicago
Capital Markets,  Inc. and Mellon Bank,  N.A., as Arrangers,  The First National
Bank  of  Chicago,   as   Administrative   Agent,  and  Mellon  Bank,  N.A.,  as
Documentation Agent.

                                       56
<PAGE>


Commitment

$12,500,000

                                                  BANKERS TRUST COMPANY, as Bank

                                                  By /s/Marcus M. Tarkington
                                                  Name:  Marcus M. Tarkington
                                                  Title:  Vice President

This is a signature page to the Revolving Credit Agreement,  dated as of October
7, 1997,  among PECO Energy Company,  as Borrower,  the banks named therein,  as
Banks,  certain  Banks  specified  therein,  as  Lead  Managers,  certain  Banks
specified  therein,  as Co-Agents,  First Chicago Capital Markets,  Inc., Mellon
Bank, N.A. and CitiCorp  Securities,  Inc., as Syndication Agents, First Chicago
Capital Markets,  Inc. and Mellon Bank,  N.A., as Arrangers,  The First National
Bank  of  Chicago,   as   Administrative   Agent,  and  Mellon  Bank,  N.A.,  as
Documentation Agent.

                                       57
<PAGE>


Commitment

$12,500,000

                                      DEUTSCHE BANK AG, NEW YORK BRANCH, as Bank

                                      By /s/Gabrielle C. Upton
                                      Name:  Gabrielle C. Upton
                                      Title:  Assistant Vice President

                                      DEUTSCHE BANK AG, CAYMAN ISLAND BRANCH, as
                                      Bank

                                      By /s/Joel D. Makowsky
                                      Name:  Joel D. Makowsky
                                      Title:  Assistant Vice President

This is a signature page to the Revolving Credit Agreement,  dated as of October
7, 1997,  among PECO Energy Company,  as Borrower,  the banks named therein,  as
Banks,  certain  Banks  specified  therein,  as  Lead  Managers,  certain  Banks
specified  therein,  as Co-Agents,  First Chicago Capital Markets,  Inc., Mellon
Bank, N.A. and CitiCorp  Securities,  Inc., as Syndication Agents, First Chicago
Capital Markets,  Inc. and Mellon Bank,  N.A., as Arrangers,  The First National
Bank  of  Chicago,   as   Administrative   Agent,  and  Mellon  Bank,  N.A.,  as
Documentation Agent.

                                       58
<PAGE>


Commitment

$12,500,000

                                     THE LONG-TERM CREDIT BANK OF JAPAN, as Bank

                                     By /s/Hiroshi Kitada
                                     Name:  Hiroshi Kitada
                                     Title:  Deputy General Manager

This is a signature page to the Revolving Credit Agreement,  dated as of October
7, 1997,  among PECO Energy Company,  as Borrower,  the banks named therein,  as
Banks,  certain  Banks  specified  therein,  as  Lead  Managers,  certain  Banks
specified  therein,  as Co-Agents,  First Chicago Capital Markets,  Inc., Mellon
Bank, N.A. and CitiCorp  Securities,  Inc., as Syndication Agents, First Chicago
Capital Markets,  Inc. and Mellon Bank,  N.A., as Arrangers,  The First National
Bank  of  Chicago,   as   Administrative   Agent,  and  Mellon  Bank,  N.A.,  as
Documentation Agent.

                                       59
<PAGE>


Commitment

$12,500,000

                                     THE TOYO TRUST & BANKING CO., LTD., as Bank

                                     By /s/Takashi Mikumo
                                     Name:  Takashi Mikumo
                                     Title:  Vice President

This is a signature page to the Revolving Credit Agreement,  dated as of October
7, 1997,  among PECO Energy Company,  as Borrower,  the banks named therein,  as
Banks,  certain  Banks  specified  therein,  as  Lead  Managers,  certain  Banks
specified  therein,  as Co-Agents,  First Chicago Capital Markets,  Inc., Mellon
Bank, N.A. and CitiCorp  Securities,  Inc., as Syndication Agents, First Chicago
Capital Markets,  Inc. and Mellon Bank,  N.A., as Arrangers,  The First National
Bank  of  Chicago,   as   Administrative   Agent,  and  Mellon  Bank,  N.A.,  as
Documentation Agent.

                                       60
<PAGE>


Commitment

$12,500,000

                                             UNION BANK OF SWITZERLAND, NEW YORK
                                             BRANCH, as Bank

                                             By /s/Paul R. Morrison
                                             Name:  Paul R. Morrison
                                             Title:  Director

                                             UNION BANK OF SWITZERLAND, NEW YORK
                                             BRANCH, as Bank

                                             By /s/Andrew N. Taylor

                                             Name:  Andrew N. Taylor
                                             Title:  Assistant Vice President

This is a signature page to the Revolving Credit Agreement,  dated as of October
7, 1997,  among PECO Energy Company,  as Borrower,  the banks named therein,  as
Banks,  certain  Banks  specified  therein,  as  Lead  Managers,  certain  Banks
specified  therein,  as Co-Agents,  First Chicago Capital Markets,  Inc., Mellon
Bank, N.A. and CitiCorp  Securities,  Inc., as Syndication Agents, First Chicago
Capital Markets,  Inc. and Mellon Bank,  N.A., as Arrangers,  The First National
Bank  of  Chicago,   as   Administrative   Agent,  and  Mellon  Bank,  N.A.,  as
Documentation Agent.

                                       61
<PAGE>


Commitment

$10,000,000

                                            BANK HAPOALIM B.M., as Bank

                                            By /s/Carl Kopfinger
                                            Name:  Carl Kopfinger
                                            Title:  Vice President

                                            By /s/Jonathan Kulka
                                            Name:  Jonathan Kulka
                                            Title: First Vice President & Branch
                                                   Manager

This is a signature page to the Revolving Credit Agreement,  dated as of October
7, 1997,  among PECO Energy Company,  as Borrower,  the banks named therein,  as
Banks,  certain  Banks  specified  therein,  as  Lead  Managers,  certain  Banks
specified  therein,  as Co-Agents,  First Chicago Capital Markets,  Inc., Mellon
Bank, N.A. and CitiCorp  Securities,  Inc., as Syndication Agents, First Chicago
Capital Markets,  Inc. and Mellon Bank,  N.A., as Arrangers,  The First National
Bank  of  Chicago,   as   Administrative   Agent,  and  Mellon  Bank,  N.A.,  as
Documentation Agent.

                                       62
<PAGE>


Commitment

$7,500,000

                                      ABU DHABI INTERNATIONAL BANK INC., as Bank

                                      By /s/David J. Young
                                      Name:  David J. Young
                                      Title:  Assistant Vice President

                                      By /s/Nagy S. Kolta
                                      Name:  Nagy S. Kolta
                                      Title:  Senior Vice President

This is a signature page to the Revolving Credit Agreement,  dated as of October
7, 1997,  among PECO Energy Company,  as Borrower,  the banks named therein,  as
Banks,  certain  Banks  specified  therein,  as  Lead  Managers,  certain  Banks
specified  therein,  as Co-Agents,  First Chicago Capital Markets,  Inc., Mellon
Bank, N.A. and CitiCorp  Securities,  Inc., as Syndication Agents, First Chicago
Capital Markets,  Inc. and Mellon Bank,  N.A., as Arrangers,  The First National
Bank  of  Chicago,   as   Administrative   Agent,  and  Mellon  Bank,  N.A.,  as
Documentation Agent.

                                       63
<PAGE>

                                   SCHEDULE I

Revolving  Credit  Agreement,  dated as of October 7,  1997,  among PECO  Energy
Company, as Borrower, the banks named therein, as Banks, certain Banks specified
therein, as Lead Managers,  certain Banks specified therein, as Co-Agents, First
Chicago Capital Markets, Inc. , Mellon Bank, N.A. and CitiCorp Securities, Inc.,
as Syndication  Agents,  First Chicago  Capital  Markets,  Inc. and Mellon Bank,
N.A., as Arrangers, The First National Bank of Chicago, as Administrative Agent,
and Mellon Bank, N.A., as Documentation Agent.

<TABLE>
<CAPTION>
                                       Domestic                                        CD Lending                     Eurodollar
    Name of Bank                       Lending Office                                    Office                     Lending Office
<S>                                   <C>                                       <C>                                <C> 
    Union Bank of                      Energy Capital Services                            same                           same
    California, N.A.                   445 S. Figueroa Street

                                       20th Floor
                                       Los Angeles, CA  90071
                                       Attn:  Yolande C. Hollis
                                       Phone:   (213) 236-6199
                                       Fax:       (213) 236-4096

    Abu Dhabi International Bank Inc.  1020 19th Street, N.W.                             same                           same
                                       Suite 500

                                       Washington, DC  20036
                                       Attn:  Robert Ford
                                       Phone:   (202) 842-7903
                                       Fax:       (202) 842-7955

    CoreStates Bank, N.A.              1339 Chestnut Street                               same                           same
                                       FC 1-8-11-28
                                       Philadelphia, PA  19107
                                       Attn:  Mary Lockhart
                                       Phone:  (215) 786-4313
                                       Fax:      (215) 786-7721

    Deutsche Bank A.G., New York       31 West 52nd Street                                same                           same
    Branch and/or Cayman Islands       New York, NY  10019
    Branch                             Attn:  Jo Curcio

                                       Phone:  (212) 469-4103
                                       Fax:      (212) 469-4139

    First Union National Bank          One First Union Center                             same                           same
                                       301 South College Street

                                       Charlotte, NC  28288-0735
                                       Attn:  Dana Maloney
                                       Phone:  (704) 383-0296
                                       Fax:      (704) 383-6670

    The Chase Manhattan Bank           One Chase Manhattan Plaza                          same                           same
                                       New York, NY  10081
                                       Attn:  Lynette Lang
                                       Phone:  (212) 552-7692
                                       Fax:      (212) 552-5777
<PAGE>
                                       Domestic                                        CD Lending                     Eurodollar
    Name of Bank                       Lending Office                                    Office                     Lending Office

    Mellon Bank, N.A.                  Three Mellon Bank Center Room 2303                 same                           same
                                       (Loan Administration)
                                       Pittsburgh, PA  15259-0003
                                       Attn:  Cathy Capp
                                       Phone:  (412) 234-1870
                                       Fax:      (412) 236-2027, 2028

    The Industrial Bank of Japan       1251 Avenue of the Americas                        same                           same
    Trust Company                      New York, NY  10020-1104

                                       Attn:  Atsushi Kawai
                                       Credit Administration
                                       Phone: (212) 282-4060
                                       Fax:     (212) 282-4480

    The Toronto-Dominion Bank          909 Fannin, Suite 1700                  TDSI (USA), Inc.                          same
                                       Houston, TX  77010                      31 West 52nd Street
                                       Attn:  Jorge A. Garcia                  21st Floor
                                       Manager-Credit Administration           New York, NY  10019-6101
                                       Phone: (713) 653-8242                   Attn:  Senior Dealer
                                       Fax:     (713) 951-9921                 Phone: (212) 468-0400
                                                                               Fax:     (212) 974-5283

    Bank Hapoalim B.M.                 Commercial Loan & Documentation                    same                           same
                                       1515 Market Street, Suite 200

                                       Philadelphia, PA  19102
                                       Attn:  Sheila D. Joe
                                       Phone:  (215) 665-2228
                                       Fax:      (215) 665-2217

    The Tokai Bank, Limited, New       55 East 52nd Street, 11th Floor                    same                           same
    York Branch                        New York, NY  10055

                                       Attn:  Eva Cordova
                                       Phone:  (212) 339-1145
                                       Fax:      (212) 754-2171

    Union Bank of Switzerland          New York Branch                                    same                           same
                                       299 Park Avenue

                                       New York, NY  10171
                                       Attn:  Mike Peterson
                                       Loan Servicing Group
                                       Phone:  (212) 821-3230
                                       Fax:      (212) 821-3259

    The Long-Term Credit Bank of       One Liberty Plaza                                  same                           same
    Japan                              New York, NY  10006

                                       Attn:  Robert Pacitici
                                       Phone:  (212) 335-4801
                                       Fax:      (212) 608-3452
                                       2
<PAGE>
                                       Domestic                                        CD Lending                     Eurodollar
    Name of Bank                       Lending Office                                    Office                     Lending Office

    The Toyo Trust & Banking Co.,      666 Fifth Avenue, 33rd Floor                       same                           same
    Ltd.                               New York, NY  10103
                                       Attn:  Debra Wylie
                                       Phone:  (212) 307-3400, ext.287
                                       Fax:      (212) 977-5611

    The Fuji Bank, Limited             Two World Trade Center                             same                           same
                                       New York, NY  10048
                                       Attn:  Gemma Dizon
                                       Phone:  (212) 898-2069
                                       Fax:      (212) 488-8216

    Bank of Montreal                   115 South LaSalle Street                           same                           same
                                       Chicago, IL  60603
                                       Attn:  John Paseka

                                       Phone:  (312) 750-3771
                                       Fax:      (312) 750-4345

    Summit Bank                        750 Walnut Avenue, 3rd Floor                       same                           same
                                       Cranford, NJ  07016
                                       Attn:  Carolyn Swiss

                                       Phone:  (201) 229-5288
                                       Fax:      (201) 641-4462

    The Bank of New York               One Wall Street, 19th Floor                        same                           same
                                       Energy Industries Division

                                       New York, NY  10286
                                       Attn:  Theresa A. Foran
                                       Phone:  (212) 635-7921
                                       Fax:      (212) 635-7923

    First National Bank of Chicago     One First National Plaza                           same                           same
                                       Mail Suite 0634, 1FNP-10

                                       Chicago, IL 60670
                                       Attn:  Gwendolyn Watson
                                       Phone:  (312) 732-4509
                                       Fax:      (312) 732-4840

    Bankers Trust Company              130 Liberty Street                                 same                           same
                                       New York, NY  10006
                                       Attn:  Joe Regan

                                       Phone:  (212) 250-4169
                                       Fax:      (212) 250-7351

                                       3
<PAGE>
                                       Domestic                                        CD Lending                  Eurodollar
    Name of Bank                       Lending Office                                    Office                  Lending Office

    Morgan Guaranty and Trust          60 Wall Street                                     same            Nassau Bahamas Office
    Company of New York                New York, NY  10260-0060                                           c/o J.P. Morgan Services,
                                       Attn:  Sandra Doherty                                              Inc.
                                       Credit Administrator                                               Loan Operations, 3rd Floor
                                       Phone:  (302) 634-8122                                             500 Stanton Christiana Rd.
                                       Fax:      (302) 634-1092                                           Newark, DE  19713
                                                                                                          Attn:  Allison Hollis
                                                                                                          Loan Department
                                                                                                          Phone:  (302) 634-4671
                                                                                                          Fax:      (302) 634-1094

    Citibank, N.A.                     399 Park Avenue                                    same                          same
                                       4th Floor, Zone 22
                                       New York, New York 10021
                                       Attn: Kate Bohen
                                       Phone:  (302) 894-6120
                                       Fax:      (302) 894-6077
</TABLE>

                                       4
<PAGE>

                                   EXHIBIT A-1

                              FORM OF CONTRACT NOTE

$____________________                                    Dated:  October 7, 1997


          FOR  VALUE  RECEIVED,   the  undersigned,   PECO  Energy  Company,   a
Pennsylvania  corporation (the "Borrower"),  HEREBY PROMISES TO PAY to the order
of (the  "Lender") for the account of its  Applicable  Lending Office (such term
and other capitalized terms herein being used as defined in the Credit Agreement
referred to below) on the Termination  Date the principal sum of U.S.$[amount of
the Lender's  Commitment in figures] or, if less, the aggregate principal amount
of the  Contract  Advances  made by the Lender to the  Borrower  pursuant to the
Credit Agreement outstanding on the Termination Date.

          The Borrower  promises to pay interest on the unpaid  principal amount
of each  Contract  Advance  from the date of such  Contract  Advance  until such
principal  amount is paid in full, at such interest  rates,  and payable at such
times, as are specified in the Credit Agreement.

          Both  principal and interest are payable in lawful money of the United
States of America  to The First  National  Bank of  Chicago,  as  Administrative
Agent, at One First National Plaza, Chicago,  Illinois 60670, in same day funds.
Each Contract Advance made by the Lender to the Borrower  pursuant to the Credit
Agreement,  and all  payments  made on account of  principal  thereof,  shall be
recorded by the Lender and, prior to any transfer  hereof,  endorsed on the grid
attached hereto which is part of this Promissory Note.

          This  Promissory Note is one of the Contract Notes referred to in, and
is entitled to the  benefits of, the  Revolving  Credit  Agreement,  dated as of
October 7,  1997,  among PECO  Energy  Company,  as  Borrower,  the banks  named
therein, as Banks,  certain Banks specified therein,  as Lead Managers,  certain
Banks specified  therein,  as Co-Agents,  First Chicago Capital  Markets,  Inc.,
Mellon Bank, N.A. and CitiCorp  Securities,  Inc., as Syndication Agents,  First
Chicago Capital  Markets,  Inc. and Mellon Bank,  N.A., as Arrangers,  The First
National Bank of Chicago,  as  Administrative  Agent,  and Mellon Bank, N.A., as
Documentation Agent (as amended, modified or supplemented from time to time, the
"Credit Agreement").  The Credit Agreement, among other things, (i) provides for
the making of Contract  Advances by the Lender to the Borrower from time to time
in an aggregate  amount not to exceed at any time  outstanding  the U.S.  dollar
amount first above mentioned,  the  indebtedness of the Borrower  resulting from
each such Contract  Advance being  evidenced by this  Promissory  Note, and (ii)
contains  provisions for  acceleration of the maturity hereof upon the happening
of certain stated events and also for prepayments on account of principal hereof
prior to the maturity hereof upon the terms and conditions therein specified.

          The Borrower hereby waives presentment,  demand, protest and notice of
any kind.  No  failure  to  exercise,  and no delay in  exercising,  any  rights
hereunder  on the part of the holder  hereof  shall  operate as a waiver of such
rights.


<PAGE>


          THIS PROMISSORY NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA.

                               PECO ENERGY COMPANY

                               By
                                       Name:
                                       Title:


<PAGE>

                 ADVANCES, MATURITIES, AND PAYMENTS OF PRINCIPAL
<TABLE>
<CAPTION>
                                                                               Amount of
                                        Maturity            Principal          Unpaid
                     Amount of          of                  Paid or            Principal          Notation
Date                 Advance            Advance             Prepaid            Balance            Made By
<S>                 <C>                 <C>                 <C>               <C>              <C>
</TABLE>


<PAGE>

                                   EXHIBIT A-2

                              FORM OF AUCTION NOTE

$_________________________                             Dated: _________, 19___



          FOR  VALUE  RECEIVED,   the  undersigned,   PECO  Energy  Company,   a
Pennsylvania  corporation (the "Borrower"),  HEREBY PROMISES TO PAY to the order
of (the "Lender") for the account of its  Applicable  Lending Office (as defined
in the Credit  Agreement  referred to below),  on , 19 , the principal amount of
Dollars ($ ).

          The Borrower  promises to pay interest on the unpaid  principal amount
hereof from the date hereof until such principal  amount is paid in full, at the
interest rate and payable on the interest payment date or dates provided below:

          Interest Rate: % per annum  (calculated on the basis of a year of days
          for the actual number of days elapsed).

          Interest Payment Date or Dates:

          Both  principal and interest are payable in lawful money of the United
States of  America  to or the  account  of the Lender at the office of The First
National Bank of Chicago, as Administrative  Agent, at One First National Plaza,
Chicago,  Illinois 60670,  in same day funds,  free and clear of and without any
deduction,  with respect to the payee named  above,  for any and all present and
future  taxes,  deductions,  charges or  withholdings  (other than United States
withholding taxes, if applicable), and all liabilities with respect thereto.

          This  Promissory  Note is one of the Auction Notes referred to in, and
is entitled to the  benefits of, the  Revolving  Credit  Agreement,  dated as of
October 7,  1997,  among PECO  Energy  Company,  as  Borrower,  the banks  named
therein, as Banks,  certain Banks specified therein,  as Lead Managers,  certain
Banks specified  therein,  as Co-Agents,  First Chicago Capital  Markets,  Inc.,
Mellon Bank, N.A. and CitiCorp  Securities,  Inc., as Syndication Agents,  First
Chicago Capital  Markets,  Inc. and Mellon Bank,  N.A., as Arrangers,  The First
National Bank of Chicago,  as  Administrative  Agent,  and Mellon Bank, N.A., as
Documentation Agent (as amended, modified or supplemented from time to time, the
"Credit  Agreement").   The  Credit  Agreement,  among  other  things,  contains
provisions for acceleration of the maturity hereof upon the happening of certain
stated events.

          The Borrower hereby waives presentment,  demand, protest and notice of
any kind.  No  failure  to  exercise,  and no delay in  exercising,  any  rights
hereunder  on the part of the holder  hereof  shall  operate as a waiver of such
rights.
<PAGE>

          THIS PROMISSORY NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA.

                               PECO ENERGY COMPANY

                               By
                                     Name:
                                     Title:

                                       2
<PAGE>


                                   EXHIBIT B-1

                         NOTICE OF A CONTRACT BORROWING

The First  National  Bank of Chicago,  as  Administrative  Agent for the Lenders
parties to the Credit Agreement referred to below

One First National Plaza
Chicago, Illinois 60670

                                                  [Date]

                  Attention:            Utilities Department
                                        North American Finance Group

Ladies and Gentlemen:

          The undersigned,  PECO Energy Company,  refers to the Revolving Credit
Agreement,  dated as of October 7, 1997, among PECO Energy Company, as Borrower,
the banks named therein,  as Banks,  certain Banks  specified  therein,  as Lead
Managers,  certain Banks specified therein, as Co-Agents,  First Chicago Capital
Markets,  Inc., Mellon Bank, N.A. and CitiCorp Securities,  Inc., as Syndication
Agents, First Chicago Capital Markets, Inc. and Mellon Bank, N.A., as Arrangers,
The First National Bank of Chicago,  as  Administrative  Agent, and Mellon Bank,
N.A., as Documentation Agent (as amended,  modified or supplemented from time to
time,  the  "Credit  Agreement"),  and  hereby  gives you  notice,  irrevocably,
pursuant to Section 2.02 of the Credit  Agreement  that the  undersigned  hereby
requests a Contract Borrowing under the Credit Agreement, and in that connection
sets forth  below the  information  relating  to such  Contract  Borrowing  (the
"Proposed  Contract  Borrowing")  as required  by Section  2.02(a) of the Credit
Agreement:

               (i) The Business Day of the Proposed Contract Borrowing is , 19 .

               (ii) The Type of Contract  Advances to be made in connection with
          the Proposed  Contract  Borrowing is [Adjusted CD Rate Advances] [Base
          Rate Advances] [Eurodollar Rate Advances].

               (iii) The aggregate amount of the Proposed Contract  Borrowing is
          $________________.

               (iv) The Interest  Period for each Contract  Advance made as part
          of the Proposed Contract Borrowing is [ days] [ month[s]].

          The  undersigned  hereby  certifies that the following  statements are
true on the date hereof,  and will be true on the date of the Proposed  Contract
Borrowing:

               (A) the representations and warranties  contained in Section 4.01
          are correct,  before and after giving effect to the Proposed  Contract
          Borrowing and to the application of the proceeds therefrom,  as though
          made on and as of such date; and

               (B) no event has occurred and is continuing, or would result from
          such  Proposed  Contract  Borrowing  or from  the  application  of the
          proceeds therefrom, that


<PAGE>


          constitutes  an  Event of  Default  or  would  constitute  an Event of
          Default but for the requirement that notice be given or time elapse or
          both.

                                Very truly yours,

                                PECO ENERGY COMPANY

                                By
                                       Name:
                                       Title:

                                       2
<PAGE>

                                   EXHIBIT B-2

                         NOTICE OF AN AUCTION BORROWING

The First National Bank of Chicago,  as  Administrative  Agent,  for the Lenders
parties to the Credit Agreement referred to below

One First National Plaza
Chicago, Illinois 60670

                                                   [Date]

                  Attention:            Utilities Department
                                        North American Finance Group

Ladies and Gentlemen:

          The undersigned,  PECO Energy Company,  refers to the Revolving Credit
Agreement,  dated as of October 7, 1997, among PECO Energy Company, as Borrower,
the banks named therein,  as Banks,  certain Banks  specified  therein,  as Lead
Managers,  certain Banks specified therein, as Co-Agents,  First Chicago Capital
Markets,  Inc., Mellon Bank, N.A. and CitiCorp Securities,  Inc., as Syndication
Agents, First Chicago Capital Markets, Inc. and Mellon Bank, N.A., as Arrangers,
The First National Bank of Chicago,  as  Administrative  Agent, and Mellon Bank,
N.A., as Documentation Agent (as amended,  modified or supplemented from time to
time, the "Credit  Agreement"),  and hereby gives you notice pursuant to Section
2.03 of the Credit  Agreement that the  undersigned  hereby  requests an Auction
Borrowing  under the Credit  Agreement,  and in that  connection  sets forth the
terms on which such Auction  Borrowing  (the  "Proposed  Auction  Borrowing") is
requested to be made:

                  (A)      Date of Auction Borrowing        ______
                  (B)      Amount of Auction Borrowing      ______
                  (C)      Maturity Date                    ______
                  (D)      Interest Payment Date(s)         ______
                  (E)      ______                           ______
                  (F)      ______                           ______

          The  undersigned  hereby  certifies that the following  statements are
true on the date hereof,  and will be true on the date of the  Proposed  Auction
Borrowing:

               (a) the representations and warranties  contained in Section 4.01
          are correct,  before and after giving  effect to the Proposed  Auction
          Borrowing and to the application of the proceeds therefrom,  as though
          made on and as of such date:

               (b) no event has occurred and is continuing, or would result from
          the Proposed Auction Borrowing or from the application of the proceeds
          therefrom,  which  constitutes an Event of Default or would constitute
          an Event of Default  but for the  requirement  that notice be given or
          time elapse or both; and
<PAGE>

               (c) the aggregate  amount of the Proposed  Auction  Borrowing and
          all  other  Borrowings  to be made on the same day  under  the  Credit
          Agreement is within the aggregate amount of the unused  Commitments of
          the Lenders.

          The undersigned hereby confirms that the Proposed Auction Borrowing is
to be made available to it in accordance  with Section  2.03(a)(v) of the Credit
Agreement.

                               Very truly yours,

                               PECO ENERGY COMPANY

                               By
                                      Name:
                                      Title:

                                       2
<PAGE>

                                    EXHIBIT C

                            ASSIGNMENT AND ACCEPTANCE

                            Dated ___________, 19___

          Reference  is made to the  Revolving  Credit  Agreement,  dated  as of
October 7,  1997,  among PECO  Energy  Company,  as  Borrower,  the banks  named
therein, as Banks,  certain Banks specified therein,  as Lead Managers,  certain
Banks specified  therein,  as Co-Agents,  First Chicago Capital  Markets,  Inc.,
Mellon Bank, N.A. and CitiCorp  Securities,  Inc., as Syndication Agents,  First
Chicago Capital  Markets,  Inc. and Mellon Bank,  N.A., as Arrangers,  The First
National Bank of Chicago,  as  Administrative  Agent,  and Mellon Bank, N.A., as
Documentation Agent (as amended, modified or supplemented from time to time, the
"Credit Agreement").  Terms defined in the Credit Agreement are used herein with
the same meaning.

          _________________    (the   "Assignor")   and   _______________   (the
"Assignee") agree as follows:

          1. The  Assignor  hereby  sells and assigns to the  Assignee,  and the
Assignee hereby purchases and assumes from the Assignor, that interest in and to
all of the Assignor's  rights and obligations  under the Credit  Agreement as of
the date hereof  (other than in respect of Auction  Advances and Auction  Notes)
which  represents  the  percentage  interest  specified  on  Schedule  1 of  all
outstanding  rights and obligations  under the Credit  Agreement  (other than in
aspect of Auction Advances and Auction Notes),  including,  without  limitation,
such interest in the Assignor's  Commitment,  the Contract Advances owing to the
Assignor, and the Contract Note[s] held by the Assignor.  After giving effect to
such  sale and  assignment,  the  Assignee's  Commitment  and the  amount of the
Contract  Advances  owing to the  Assignee  will be as set forth in Section 2 of
Schedule 1.

          2. The Assignor (i)  represents  and warrants that it is the legal and
beneficial  owner of the interest  being  assigned by it hereunder and that such
interest is free and clear of any adverse claim; (ii) 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 the execution, legality, validity, enforceability,  genuineness,  sufficiency
or value of the Credit Agreement or any other  instrument or document  furnished
pursuant  thereto;  (iii) makes no  representation  or  warranty  and assumes no
responsibility  with respect to the  financial  condition of the Borrower or the
performance  or observance by the Borrower of any of its  obligations  under the
Credit Agreement or any other instrument or document furnished pursuant thereto;
and (iv)  attaches  the  Contract  Note[s]  referred to in paragraph 1 above and
requests that the Administrative  Agent exchange such Contract Note[s] for a new
Contract  Note  payable to the order of the  Assignee in an amount  equal to the
Commitment assumed by the Assignee pursuant hereto or new Contract Notes payable
to the order of the Assignee in an amount equal to the Commitment assumed by the
Assignee  pursuant  hereto and the Assignor in an amount equal to the Commitment
retained by the Assignor under the Credit  Agreement,  respectively as specified
on Schedule 1 hereto.

          3. The Assignee (i) confirms that it has received a copy of the Credit
Agreement,  together  with  copies of the  financial  statements  referred to in
Section 4.01 thereof and such other  documents and  information as it has deemed
appropriate  to make its own credit  analysis  and  decision  to enter into this
Assignment and Acceptance;  (ii) agrees that it will,  independently and without
reliance upon the Administrative Agent, the Documentation Agent, the Assignor 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;  (iii)  confirms  that it is an
Eligible Assignee; (iv) appoints and authorizes the Administrative Agent to take
such action as agent on its behalf and to exercise  such powers under the Credit
Agreement as are  delegated to the  



<PAGE>

Administrative  Agent by the terms  thereof,  together  with such  powers as are
reasonably  incidental  thereto;  (v) agrees that it will perform in  accordance
with  their  terms  all of the  obligations  which by the  terms  of the  Credit
Agreement  are  required  to be  performed  by it as a Lender;  (vi) none of the
consideration used to make the purchase being made by the Assignee hereunder are
"plan  assets"  as defined  under  ERISA and the  rights  and  interests  of the
Assignee in and under the Credit Agreement will not be "plan assets" under ERISA
[and] (vii)  specifies as its CD Lending  Office,  Domestic  Lending Office (and
address for notices) and Eurodollar Lending Office the offices set forth beneath
its name on the signature pages hereof [and (viii) attaches the forms prescribed
by the  Internal  Revenue  Service of the United  States  certifying  that it is
exempt from United States  withholding  taxes with respect to all payments to be
made to the Assignee under the Credit Agreement and the Notes].(1)

          4.  Following the execution of this  Assignment  and Acceptance by the
Assignor and the Assignee,  it will be delivered to the Administrative Agent for
acceptance and recording by the Administrative Agent. The effective date of this
Assignment  and  Acceptance  shall  be the  date of  acceptance  thereof  by the
Administrative  Agent,  unless  otherwise  specified  on  Schedule 1 hereto (the
"Effective Date").

          5. Upon such acceptance and recording by the Administrative  Agent, as
of the Effective Date, (i) 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 (ii) 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.

          6. Upon such  acceptance  and recording by the  Administrative  Agent,
from and after the  Effective  Date,  the  Administrative  Agent  shall make all
payments  under the Credit  Agreement  and the Contract  Notes in respect of the
interest  assigned  hereby  (including,  without  limitation,  all  payments  of
principal,  interest and commitment fees with respect  thereto) to the Assignee.
The Assignor and Assignee  shall make all  appropriate  adjustments  in payments
under the Credit  Agreement  and the  Contract  Notes for  periods  prior to the
Effective Date directly between themselves.

          7. THIS ASSIGNMENT AND ACCEPTANCE  SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA.

______________
(1)  If the Assignee is organized  under the laws of a jurisdiction  outside the
     United States.
<PAGE>


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

                               [NAME OF ASSIGNOR]

                                By
                                      Name:
                                      Title:

                               [NAME OF ASSIGNEE]

                                By
                                      Name:
                                      Title:

                               CD Lending Office:
                                    [Address]

                               Domestic Lending
                               Office (and address
                               for notices):
                                    [Address]

                               Eurodollar Lending Office:
                                    [Address]

Consented to this ____________ day
of __________________, 19___

PECO ENERGY COMPANY

By
      Name:
      Title:

Consented to and Accepted this ______________ day
of  ___________________, 19___

[NAME OF ADMINISTRATIVE AGENT]

By
     Name:
     Title:

                                       3
<PAGE>

                                   Schedule 1

                                       to

                            Assignment and Acceptance

                           Dated ______________, 19___

Section 1.

          Percentage Interest:                                   ___%

Section 2.

          Assignee's Commitment:                                 $_____

          Aggregate Outstanding Principal
            Amount of Contract Advances
            owing to the Assignee:                               $_____

          A Contract Note payable to the
            order of the Assignee

                                             Dated: _________, 19___

                                             Principal amount: $______

          A Contract Note payable to the
            order of the Assignor

                                             Dated: __________, 19___

                                             Principal amount: $______

Section 3.
     
Effective Date(2):                           _____________, 19___

________________
(2)  This  date  should  be no  earlier  than  the  date  of  acceptance  by the
     Administrative Agent.
<PAGE>

                                    EXHIBIT D

                        FORM OF OPINION OF BALLARD SPAHR
                               ANDREWS & INGERSOLL

                                                         ________________, 19___

To each of the Banks, the Administrative Agent,
the Documentation Agent, the Syndication Agents,
the Arrangers, the Co-Agents and the Lead Managers
party to the Revolving Credit Agreement, dated as
of October 7, 1997, among PECO Energy Company, as
Borrower, the banks named therein, as Banks,
certain Banks specified therein, as Lead Managers,
certain Banks specified therein, as Co-Agents,
First Chicago Capital Markets, Inc., Mellon Bank,
N.A. and CitiCorp Securities, Inc., as Syndication
Agents, First Chicago Capital Markets, Inc. and
Mellon Bank, N.A., as Arrangers, The First
National Bank of Chicago, as Administrative Agent,
and Mellon Bank, N.A., as Documentation Agent

          Re: PECO Energy Company

  Ladies and Gentlemen:

          This opinion is furnished  to you pursuant to Section  3.01(a)(vi)  of
the Revolving Credit  Agreement,  dated as of October 7, 1997, among PECO Energy
Company, as Borrower, the banks named therein, as Banks, certain Banks specified
therein, as Lead Managers,  certain Banks specified therein, as Co-Agents, First
Chicago Capital Markets, Inc., Mellon Bank, N.A. and CitiCorp Securities,  Inc.,
as Syndication  Agents,  First Chicago  Capital  Markets,  Inc. and Mellon Bank,
N.A., as Arrangers, The First National Bank of Chicago, as Administrative Agent,
and  Mellon  Bank,  N.A.,  as  Documentation  Agent  (as  amended,  modified  or
supplemented  from  time to time,  the  "Credit  Agreement").  Unless  otherwise
specified,  terms  defined in the Credit  Agreement  are used  herein as therein
defined.

          We have acted as special  counsel for the Borrower in connection  with
the  preparation,  execution  and  delivery  of the  Credit  Agreement.  In that
capacity we have examined the following:

               (i) The Credit Agreement,  the Contract Notes and the form of the
          Auction Notes to be delivered in connection with Auction Borrowings;

               (ii) The documents  furnished by the Borrower pursuant to Section
          3.01 of the Credit Agreement;

               (iii) The Amended and Restated  Articles of  Incorporation of the
          Borrower and all amendments thereto (the "Charter");

               (iv) The by-laws of the Borrower and all amendments  thereto (the
          "By-laws"); and
<PAGE>

               (v) A certificate  of the Secretary of State of the  Commonwealth
          of Pennsylvania,  dated , 19 , attesting to the continued  subsistence
          of the Borrower in Pennsylvania.

          We have  also  examined  the  originals,  or copies  certified  to our
satisfaction,  of such other corporate records of the Borrower,  certificates of
public  officials and of officers of the Borrower,  and agreements,  instruments
and  documents,  as we  have  deemed  necessary  as a  basis  for  the  opinions
hereinafter  expressed.  We have assumed the legal  capacity and  competence  of
natural  persons,  the  genuineness of all signatures,  the  authenticity of all
documents  submitted to us as originals and the conformity to original documents
of documents  submitted to us as certified,  conformed or photostatic copies. We
have  assumed that the Agents and the Banks have duly  executed  and  delivered,
with all necessary  power and authority  (corporate and  otherwise),  the Credit
Agreement.  We have further assumed that the Auction Notes, when delivered under
the Credit Agreement, will be duly executed by the Borrower.

          When an  opinion or  confirmation  is given to our  knowledge  or with
reference  to  matters  of which we are  aware or which are known to us, or with
another similar qualification, the relevant knowledge or awareness is limited to
the actual  knowledge  or  awareness  of the lawyer who is the  current  primary
contact  for the  Borrower  and the  individual  lawyers  in this  firm who have
participated  in the  specific  transaction  to which this  opinion  relates and
without any special or additional  investigation  undertaken for the purposes of
this opinion,  except as otherwise  noted  herein.  Based upon the foregoing and
subject to the exceptions,  limitations and  qualifications set forth herein, we
are of the following opinion:

               1. The Borrower is a corporation  duly  incorporated  and validly
          subsisting under the laws of the Commonwealth of Pennsylvania.

               2. The execution, delivery and performance by the Borrower of the
          Credit  Agreement  and the Notes are within the  Borrower's  corporate
          powers,  have been duly authorized by all necessary  corporate action,
          do not  contravene  (i) the  Charter or the By-laws or (ii) any law of
          the United  States or the  Commonwealth  of  Pennsylvania  (including,
          without limitation, any order, rule or regulation of the PPUC or (iii)
          to the best of our knowledge, any agreement or instrument to which the
          Borrower  is a party or by which it is bound,  and do not result in or
          require the creation of any lien, security interest or other charge or
          encumbrance upon or with respect to any of its properties.

               3. No  authorization,  approval or other action by, and no notice
          to or filing with, any  governmental  authority or regulatory  body of
          the United States or the  Commonwealth of Pennsylvania is required for
          the due  execution,  delivery and  performance  by the Borrower of the
          Credit  Agreement or the Notes except for the filing of the Securities
          Certificate  with,  and  the  final  approval  of,  and the  Order  of
          Registration  issued by, the PPUC, which filing has been duly made and
          which  final  approval  and  Order  of  Registration  have  been  duly
          obtained;  such Order of  Registration is in full force and effect and
          is  final;  and the  action  of the PPUC  registering  the  Securities
          Certificate is no longer subject to appeal.

               4. The Credit  Agreement  and the  Contract  Notes have been duly
          executed and delivered by the Borrower,  and the Credit  Agreement and
          the  Contract  Notes are,  and the Auction  Notes,  when  executed and
          delivered  hereunder will be, the legal, valid and binding obligations
          of the Borrower  enforceable  against the Borrower in accordance  with
          their respective terms.

               5. The Borrower (i) is exempt from the  provisions  of the Public
          Utility  Holding  Company Act of 1935, as amended,  other than Section
          9(a)(2) thereof,  pursuant 

                                       2

<PAGE>

          to Section 3(a)(2) thereof, and (ii) is not an "investment company" or
          a company  "controlled" by an "investment  company" within the meaning
          of the Investment Company Act of 1940, as amended.

               6. We confirm to you that to our knowledge, after inquiry of each
          lawyer who is the current  primary contact for the Borrower or who has
          devoted  substantive  attention  to matters on behalf of the  Borrower
          during the preceding twelve months and who is still currently employed
          by or a member of this firm,  except as  disclosed  in the  Borrower's
          Annual  Report on Form 10-K for the year ended  December  31, 1996 and
          the  Borrower's  Quarterly  Report on Form 10-Q for the quarter  ended
          June 30, 1997, no litigation or governmental  proceeding is pending or
          threatened  in writing  against the  Borrower  (i) with respect to the
          Credit  Agreement  or the  Notes,  or (ii)  which is  likely to have a
          material  adverse  effect  upon  the  financial  condition,  business,
          properties or prospects of the Borrower and its subsidiaries  taken as
          a whole.

          We  draw  to  your  attention  the  existence  of  the  following  two
Pennsylvania  statutes in  connection  with the fact that the Contract  Advances
bear floating rates of interest:

               (i) Section 911 of the  Pennsylvania  "Crime Code," 18 Pa. C.S.A.
          ss.911, enacted by the Act of December 6, 1972, P.L. 1482. Section 911
          of the  Crime  Code  bears  a  close  resemblance  to  certain  of the
          provisions   of  the   Federal   Racketeer   Influenced   and  Corrupt
          Organizations Act of 1970, 18 U.S.C.  ss.ss.1961-1968,  commonly known
          as RICO,  and is referred to  hereinafter  as the  "Pennsylvania  RICO
          Act." The Pennsylvania RICO Act provides,  among other things, that it
          is a  criminal  offense,  punishable  as a felony,  to "use or invest,
          directly or indirectly  ... in the  acquisition of any interest in, or
          the   establishment  or  operation  of,  any  enterprise"  any  income
          collected in full or partial satisfaction of a loan made "at a rate of
          interest exceeding 25% per annum... ."

               (ii) The Act of December  29,  1982,  P.L.  1671,  18 Pa.  C.S.A.
          ss.4806.1 et seq.  (superseded volume) (the "Criminal Usury Statute").
          The Criminal Usury Statute provides,  among other things, that it is a
          criminal  offense,  punishable as a felony,  to engage in,  "charging,
          taking or receiving  any money ... on the loan ... of any money ... at
          a rate exceeding thirty-six percent per annum... ."

          The Criminal Usury Statute may have been  repealed,  but the manner in
which the repeal was enacted leaves the matter subject to uncertainty.

          Both the  Pennsylvania  RICO Act and the Criminal Usury Statute appear
to be  intended  by the  legislature  to  apply  only to  racketeering  and loan
sharking type  activities,  and not to the type of commercial  loan  transaction
evidenced by the Loan Document.  Nevertheless,  in view of the plain language of
the  Pennsylvania  courts,  we cannot say that the ultimate  resolution  of this
issue is free from doubt.

          The  foregoing  opinions  are  subject  to the  following  exceptions,
limitations and qualifications:

               (a)  Our   opinion  is  subject  to  the  effect  of   applicable
          bankruptcy,   insolvency,   reorganization,   moratorium,   fraudulent
          conveyance,  fraudulent transfer or similar laws affecting  creditors'
          rights and remedies generally, general principles of equity, including
          without  limitation,  concepts of  materiality,  reasonableness,  good
          faith and fair dealing  (regardless of whether such  enforceability is
          considered in a proceeding in equity or at law);  and  limitations  on
          enforceability  of  rights  to  indemnification  by  federal  or state
          securities laws or regulations or by public policy.

                                       3

<PAGE>

               (b) We express no opinion as to the  application or  requirements
          of the  Pennsylvania  Securities  Act or federal or state  securities,
          patent,  trademark,   copyright,  antitrust  and  unfair  competition,
          pension or employee benefit, labor, environmental health and safety or
          tax laws in respect of the transactions contemplated by or referred to
          in the Credit Agreement.

               (c) We express no opinion as to the validity or enforceability of
          any  provision of the Credit  Agreement or the Notes which (i) permits
          the  Lenders  to  increase  the  rate  of  interest  in the  event  of
          delinquency  or  default  if such  increase  would be deemed a penalty
          under  applicable law; (ii) purports to be a waiver by Borrower of any
          right or benefit  except to the extent  permitted by  applicable  law;
          (iii)  purports  to  require  that  waivers  must be in writing to the
          extent that an oral  agreement or implied  agreement by trade practice
          or course of conduct  modifying  provisions of the Credit Agreement or
          the Notes has been made;  or (iv) purports to exculpate any party from
          its own negligent acts.

          We express no opinion as to the law of any jurisdiction other than the
law of the  Commonwealth  of  Pennsylvania  and the  federal  law of the  United
States.

          The foregoing  opinion is solely for your benefit in  connection  with
the  consummation  of the  transaction  described  herein and may not be used or
relied upon by you or any other Person without our express  written  consent for
any other purpose other than (i) any Eligible  Assignee that may become a Lender
under the  Credit  Agreement  after the date  hereof  and (ii) Reed Smith Shaw &
McClay  LLP,  which  may rely upon  this  opinion  in  rendering  their  opinion
furnished  pursuant to Article III of the Credit  Agreement.  The opinions given
herein  are as of the date  hereof,  and we  assume no  obligation  to update or
supplement  this opinion to reflect facts or  circumstances  which may hereafter
come to our attention or any changes in laws which may hereafter occur.

                                          Very truly yours,

                                          BALLARD SPAHR
                                            ANDREWS & INGERSOLL

                                       4
<PAGE>

                                    EXHIBIT E

                 FORM OF OPINION OF REED SMITH SHAW & McCLAY LLP

                                                          _______________, 19___

To each of the Banks, the Administrative Agent,
the Documentation Agent, the Syndication Agents,
the Arrangers, the Co-Agents and the Lead Managers
party to the Revolving Credit Agreement, dated as
of October 7, 1997, among PECO Energy Company, as
Borrower, the banks named therein, as Banks,
certain Banks specified therein, as Lead Managers,
certain Banks specified therein, as Co-Agents,
First Chicago Capital Markets, Inc., Mellon Bank,
N.A. and CitiCorp Securities, Inc., as Syndication
Agents, First Chicago Capital Markets, Inc. and
Mellon Bank, N.A., as Arrangers, The First
National Bank of Chicago, as Administrative Agent,
and Mellon Bank, N.A., as Documentation Agent

          Re: PECO Energy Company

  Ladies and Gentlemen:

          We have acted as counsel to Mellon  Bank,  N.A.,  individually  and as
Documentation Agent, in connection with the preparation,  execution and delivery
of the  Revolving  Credit  Agreement,  dated as of October  7, 1997,  among PECO
Energy Company, as Borrower,  the banks named therein,  as Banks,  certain Banks
specified  therein,  as Lead  Managers,  certain  Banks  specified  therein,  as
Co-Agents,  First Chicago Capital Markets,  Inc., Mellon Bank, N.A. and CitiCorp
Securities, Inc., as Syndication Agents, First Chicago Capital Markets, Inc. and
Mellon  Bank,  N.A.,  as  Arrangers,  The First  National  Bank of  Chicago,  as
Administrative Agent, and Mellon Bank, N.A., as Documentation Agent (as amended,
modified or  supplemented  from time to time,  the "Credit  Agreement").  We are
delivering  this  opinion  pursuant  to  Section   3.01(a)(vii)  of  the  Credit
Agreement.  Unless  otherwise  defined  herein,  terms  defined  in  the  Credit
Agreement are used herein as therein defined.

          In that  connection,  we have examined (i)  counterparts of the Credit
Agreement,  executed by the Borrower,  the Banks, the Administrative  Agent, the
Documentation  Agent, the Syndication  Agents, the Arrangers,  the Co-Agents and
the Lead Managers, (ii) the Contract Notes, executed by the Borrower,  (iii) the
form of the Auction  Notes to be delivered by the  Borrower in  connection  with
Auction  Borrowings  and (iv) the other  documents  listed on  Exhibit A hereto,
including  the  opinion of Ballard  Spahr  Andrews &  Ingersoll,  counsel to the
Borrower (the  "Opinion"),  furnished to the  Administrative  Agent  pursuant to
Section 3.01(a) of the Credit Agreement.

          In our examination of the documents referred to above, we have assumed
the  authenticity  of all  such  documents  submitted  to us as  originals,  the
genuineness of all signatures,  the due authority of the parties  executing such
documents and the conformity to the originals of all such documents submitted to
us as copies. We have also assumed that the Banks, the Administrative Agent, the
Documentation  Agent, the Syndication  Agents, the Arrangers,  the Co-Agents and
the Lead Managers have duly executed and delivered, with all necessary power and
authority  (corporate and  otherwise),  the Credit  Agreement.  As to matters of
fact, we have relied solely upon the documents we have examined.
<PAGE>

          Based upon the  foregoing,  we are of the opinion that,  while we have
not  independently  considered the matters  covered by the Opinion to the extent
necessary to enable us to express the conclusions  stated  therein,  each of the
Opinion  and the other  documents  listed in Exhibit A hereto are  substantially
responsive to the  corresponding  requirements  set forth in Section 3.01 of the
Credit Agreement pursuant to which the same have been delivered.

          Please note that Richard H. Glanton,  Esquire, a partner in this firm,
is a director of PECO Energy  Company.  We have  rendered and continue to render
legal services to PECO Energy Company.

          The foregoing opinion is solely for your benefit and may not be relied
upon by any other  Person  other than any Person that may become a lender  under
the Credit Agreement after the date hereof.

                                            Very truly yours,

KCK:TEW:ARN

                                       2
<PAGE>


                                    EXHIBIT F

               FORM OF ANNUAL AND QUARTERLY COMPLIANCE CERTIFICATE

                                                    ______________________, 19__

          Pursuant to the  Revolving  Credit  Agreement,  dated as of October 7,
1997, among PECO Energy Company, as Borrower, the banks named therein, as Banks,
certain Banks  specified  therein,  as Lead  Managers,  certain Banks  specified
therein,  as Co-Agents,  First Chicago Capital Markets,  Inc., Mellon Bank, N.A.
and CitiCorp  Securities,  Inc., as Syndication  Agents,  First Chicago  Capital
Markets,  Inc. and Mellon Bank,  N.A., as Arrangers,  The First National Bank of
Chicago, as Administrative  Agent, and Mellon Bank, N.A., as Documentation Agent
(as  amended,   modified  or  supplemented   from  time  to  time,  the  "Credit
Agreement"),  the  undersigned,  being  ______________________  of the Borrower,
hereby certifies on behalf of the Borrower as follows:

          1. Delivered herewith are the financial  statements  prepared pursuant
to Section 5.01(b)(ii) and Section 5.01(b)(iii) of the Credit Agreement, for the
fiscal ________ ended  ___________,  19__. All such financial  statements comply
with the applicable requirements of the Credit Agreement.

          2. Schedule I hereto sets forth in reasonable  detail the  information
and  calculations  necessary  to establish  compliance  with the  provisions  of
Section  5.02(c) of the  Credit  Agreement  as of the end of the  fiscal  period
referred to in paragraph 1 above.

          3. (Check one and only one:)

          No Event of  Default,  or event  which with notice or lapse of time or
both would  constitute  an Event of Default,  has occurred and is  continuing or
exists.

          An Event of  Default,  or event  which with notice or lapse of time or
both would  constitute  an Event of Default,  has occurred and is  continuing or
exists, and the document(s) attached hereto as Schedule II specify in detail the
nature and period of  existence  of such Event of Default or such other event as
well as any and all actions with respect  thereto  taken or  contemplated  to be
taken by the Borrower.

          4. The undersigned has personally  reviewed the Credit Agreement,  and
this certificate was based on an examination made by or under the supervision of
the undersigned sufficient to assure that this certificate is accurate.

          5.  Capitalized  terms  used in  this  certificate  and not  otherwise
defined shall have the meanings given in the Credit Agreement.

                               PECO ENERGY COMPANY

                               By 
                               Name:
                               Title:

Date:


<PAGE>



                                    EXHIBIT G

                      FORM OF ADDITIONAL LENDER SUPPLEMENT

     THIS SUPPLEMENT, dated as of ____________, 19_____, by the undersigned.

                                    Recitals:

          A. This  Supplement is being executed and delivered in accordance with
Section 2.18 of the  Revolving  Credit  Agreement,  dated as of October 7, 1997,
among PECO Energy  Company,  as  Borrower,  the banks named  therein,  as Banks,
certain Banks  specified  therein,  as Lead  Managers,  certain Banks  specified
therein,  as Co-Agents,  First Chicago Capital Markets,  Inc., Mellon Bank, N.A.
and CitiCorp  Securities,  Inc., as Syndication  Agents,  First Chicago  Capital
Markets,  Inc. and Mellon Bank,  N.A., as Arrangers,  The First National Bank of
Chicago, as Administrative  Agent, and Mellon Bank, N.A., as Documentation Agent
(as  amended,   modified  or  supplemented   from  time  to  time,  the  "Credit
Agreement").  Capitalized terms used herein without definition have the meanings
specified in the Credit Agreement.

          B. The  undersigned  wishes  to  become a Lender  party to the  Credit
Agreement, as an Additional Lender.

          NOW, THEREFORE, the undersigned, intending to be legally bound, hereby
agrees as follows:

          1. The  undersigned  hereby  becomes party to the Credit  Agreement as
Lender  thereunder,  and shall be subject to and bound by all of the  provisions
thereof.

          2. The Commitment of the undersigned shall be $_____________.

          3. The  undersigned  (i)  confirms  that it has received a copy of the
Credit Agreement,  together with copies of the financial  statements referred to
in Section  4.01  thereof and such other  documents  and  information  as it has
deemed  appropriate  to make its own credit  analysis and decision to enter into
this Additional Lender Supplement;  (ii) agrees that it will,  independently and
without reliance upon the Administrative  Agent, the Documentation  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;  (iii)  confirms  that it is an
Eligible Assignee; (iv) appoints and authorizes the Administrative Agent to take
such action as agent on its behalf and to exercise  such powers under the Credit
Agreement as are  delegated to the  Administrative  Agent by the terms  thereof,
together with such powers as are reasonably  incidental thereto; (v) agrees that
it will perform in accordance with their terms all of the  obligations  which by
the terms of the  Credit  Agreement  are  required  to be  performed  by it as a
Lender;  (vi) none of the consideration  used to make the purchase being made by
the  undersigned  hereunder  are "plan  assets" as defined  under  ERISA and the
rights and interests of the  undersigned in and under the Credit  Agreement will
not be "plan assets" under ERISA [and] (vii) specifies as its CD Lending Office,
Domestic Lending Office (and address for notices) and Eurodollar  Lending Office
the offices set forth beneath its name on the signature pages hereof [and (viii)
attaches  the forms  prescribed  by the Internal  Revenue  Service of the United
States  certifying that it 



<PAGE>

is exempt from United States  withholding  taxes with respect to all payments to
be made to the undersigned under the Credit Agreement and the Notes].(3)

          4. This  Supplement  shall be  effective  upon the date of  acceptance
thereof  by the  Administrative  Agent,  unless  otherwise  specified  under the
undersigned's name signature below.

          5. THIS  SUPPLEMENT  SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA.

          IN WITNESS  WHEREOF,  the undersigned has caused this Supplement to be
executed  and  delivered  by a duly  authorized  officer on the date first above
written.

                                        [NAME OF ADDITIONAL LENDER]

                                        By:________________________
                                        Name:______________________
                                        Title:_______________________

                                        CD Lending Office:  [Address]

                                        Domestic Lending Office (and
                                        address for notices):  [Address]

                                        Eurodollar Lending Office:  [Address]

                                        Effective Date(4): ______________, 19___

CONSENTED TO:

[NAME OF ADMINISTRATIVE AGENT]

By:
Name:
Title:

CONSENTED TO:

PECO ENERGY COMPANY

By:
Name:
Title:

_________________
(3)  If the  undersigned is organized  under the laws of a jurisdiction  outside
     the United States.

(4)  This  date  should  be no  earlier  than  the  date  of  acceptance  by the
     Administrative Agent.