LIMITED SUPPLEMENTAL BENEFITS PLAN FOR CERTAIN EMPLOYEES OF
                 ENTERPRISE DIVERSIFIED HOLDINGS INCORPORATED












                                                 Amended as of January 1, 1997


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                                TABLE OF CONTENTS

                                                                          PAGE
1.    Purpose..........................................................    1
2.    Definitions of Terms Used in the Plan ...........................    1
3.    Death Benefit....................................................    3
4.    Retirement Benefit...............................................    3
5.    Administration of Accounts ......................................    7
6.    Designations of Beneficiaries ...................................    8
7.    Limitation of Benefit ..........................................     10  
8.    Company May Make Certain Lump-sum Distributions.................     10
9.    Plan Does Not Constitute an Employment Agreement................     11
10.   Amendment or Termination of the Plan ...........................     11
11.   What Constitutes Notice.........................................     11
12.   Advance Disclaimer of Waiver ...................................     12
13.   Effect of Invalidity of Any Part of the Plan ...................     12
14.   Plan Binding on Any Successor ..................................     12
15.   Law Governing the Plan .........................................     12
16.   Miscellaneous ..................................................     12



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         LIMITED SUPPLEMENTAL BENEFITS PLAN FOR CERTAIN EMPLOYEES OF
                 ENTERPRISE DIVERSIFIED HOLDINGS INCORPORATED
1.    Purpose.
      The  purpose  of this Plan is to assist  the  Company  in  attracting  and
retaining a stable pool of key managerial talent and to encourage  long-term key
employee  commitment  to the  Company by  providing  selected  employees  of the
Company with  certain  limited  supplemental  death and  retirement  benefits as
defined herein.  The Plan is intended to provide such benefits to a select group
of management or highly  compensated  employees  within the meaning of ERlSA.
2. Definitions Of Terms Used In The Plan.
      As used in the Plan,  the  following  words  and  phrases  shall  have the
meanings indicated:
      (a) "Account" - Any account established pursuant to Paragraph 3(b) or 4(d)
of the Plan.
      (b)  "Assets"  - All  amounts  that have been  credited  to an  Employee's
Account in accordance with Paragraph 3(b), 4(d), or S(b) of the Plan.
      (c) "Beneficiary" - The  individual(s)  and/or  entity(ies)  designated in
writing by a Participant in the form attached to the Plan as Schedule A.
      (d)   "Code" - The Internal Revenue Code of 1986, as amended.
      (e)   "Company" - Enterprise  Diversified Holdings  Incorporated and its
Subsidiaries.
      (f)   "Compensation" -
            (i) for the purposes of  calculating  the Death Benefit  pursuant to
      Paragraph  3 of the Plan,  as to any  Participant,  Compensation  shall be
      equal to the annual rate of salary in effect at the date of death; and

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            (ii) for the purposes of calculating the Retirement Benefit pursuant
      to Paragraph 4 of the Plan, as to any Participant,  Compensation  shall be
      equal to the average of the total  remuneration  paid to such  Participant
      for  services  rendered  to the  Company  or any  of its  subsidiaries  or
      affiliates,   excluding  the  Company's,   or  any  such  subsidiary's  or
      affiliate's,  cost  for  any  public  or  private  employee  benefit  plan
      (including,  without limitation, the Long Term Incentive Compensation Plan
      of Enterprise),  but including all elective contributions that are made by
      the Company or any subsidiary or affiliate on behalf of Participant  which
      are not  includable in income under Code  Sections 125 or 401(k),  for the
      five years ending at the earlier of such  Participant's date of Retirement
      or the date he  attains  normal  retirement  age under the  Pension  Plan.
      Provided,  however,  that for the  purposes  of  Paragraph  4 of the Plan,
      Compensation  with respect to any Participant  shall not exceed the amount
      which is 130% of the average of annual base salary of the  Participant for
      the applicable  five-year  period.
      (g) "ERISA" - The Employee  Retirement
      Income Security Act of 1974, as  amended.
      (h)  "Participant"  --  Each  employee  of the  Company  or any one of its
subsidiaries  nominated by the Chief  Executive  Officer and  designated  by the
Board of Directors of the Company.  The Chief  Executive  Officer of the Company
shall  nominate  such select and key  employees of the Company or any one of its
subsidiaries  upon such terms as he shall deem appropriate due to the employee's
responsibilities  and opportunity to contribute  substantially  to the financial
and operating objectives of the Company or the subsidiary.
      (i) "Pension Plan" - The Pension Plan of Public  Service  Electric and Gas
Company.
      (j) "Plan" - The Limited Supplemental  Benefits Plan for Certain Employees
of Enterprise Diversified Holdings Incorporated.

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      (k)  "Retirement"  -  For  the  purposes  of  the  Plan,  Retirement  of a
Participant  shall  be  deemed  to have  occurred  upon the  termination  of the
Participant's  service with the Company or its  subsidiary  with the right to an
immediate  benefit  under  the  Pension  Plan.   Retirement  shall  not  include
termination of service with the right to a deferred pension.
      (l)  "Retirement  Plan" - Any  pension  plan  within the meaning of ERISA,
      excluding:
              (i)   the  Pension  Plan  and  all  defined   contribution   plans
                    maintained by the Company or any subsidiary,  except insofar
                    as  any  such   defined   contribution   plan  may   provide
                    supplementary benefits to the Pension Plan
              (ii)  this Plan
              (iii) all deferred  compensation  plans, tax credit employee stock
                    ownership   plans   and   thrift   plans,   and  all   other
                    profit-sharing  plans which are not the principal retirement
                    benefit of a plan sponsor, maintained by sponsors other than
                    the Company or one of its subsidiaries.
3.    Death Benefit.
      (a)  Amount  of  Benefit  - If a  Participant  dies  while  in the  active
employment of the Company or one of its subsidiaries,  the Company shall provide
a death benefit to such Participant's  Beneficiary in an amount equal to 150% of
the Participant's  Compensation,  adjusted to the nearest $1,000, or to the next
highest $1,000 if such Compensation is a multiple of $500 but not of $1,000.
      (b)  Establishment  of  Account - Upon the death of a  Participant  during
employment  with the  Company  or one of its  subsidiaries,  the  Company  shall
establish  an Account for the benefit of such  Participant's  Beneficiary.  Such
Account shall initially be credited with an amount equal to the benefit provided
under Paragraph 3(a) and shall be held and administered as provided in Paragraph
5 of the Plan.

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4. Retirement Benefit.
      (a) General - At  Retirement,  the Company shall provide each  Participant
with a retirement benefit calculated as provided in this Paragraph 4.
      (b)   Determination of Benefit --
            (i) The Participant's  Compensation shall be multiplied by an amount
      equal  to  one  one-hundredth  of  the  sum  of  (A)  the  number  of  the
      Participant's  years  of  credited  service  under  the  Pension  Plan  at
      Retirement,  (B) the number of any  additional  years of service credit to
      which the  Participant  may be entitled  from the Company,  the  Company's
      subsidiary,  or any other company,  more than fifty percent (50%) of which
      is owned by Public Service Enterprise Group  Incorporated,  if applicable,
      under any written  arrangement with the Company,  such subsidiary or other
      company,  and (C) 30; but, in no event, shall the multiple be greater than
      0.75.
            (ii) The amount determined under  subparagraph (i) of this Paragraph
      4(b) shall be reduced by the sum of (A) the amount the  Participant  would
      be  entitled  to at  Retirement  as an annual  pension  benefit  under the
      Pension Plan calculated as a single life annuity without reduction for any
      pre-retirement  survivor's  option  coverage  or any  reduction  for early
      retirement, (B) 100% of the amount of the unreduced annual Social Security
      benefit  to which the  Participant  would be  entitled  at age 65 (or such
      other age which may be established by the Social  Security  Administration
      from time to time as the earliest age at which a  Participant  may receive
      an unreduced  benefit  thereunder),  assuming that the  Participant has no
      earnings from the date of  Retirement to age 65 (or such other  applicable
      age),  or, if greater,  any  disability  benefit under Social  Security to
      which the Participant may be entitled, and (C) the aggregate of the annual
      benefits to which the  Participant is entitled under all Retirement  Plans

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      as of the date the Participant is employed by the Company or the Company's
      subsidiary,   such  Social  Security   Benefits  and  benefits  under  all
      Retirement  Plans to be  calculated as single life  annuities  without any
      reductions,  under rules,  procedures  and  equivalents  determined by the
      Company. To determine the amounts referred to under (B) and (C) above, the
      Participant  shall file a declaration of all such amounts with the Company
      in such form as the  Company  may  require  from time to time.  No benefit
      shall be paid  under the Plan until such a  declaration,  in  satisfactory
      form,  shall be filed  with the  Company.  If a  Participant  is granted a
      disability  Social Security  benefit,  he shall notify the Company thereof
      within 30 days thereof,  and the  Participant's  retirement  benefit under
      this Plan shall be adjusted accordingly.  The Company shall be entitled to
      rely on such  statements in making  payment,  and if any such statement is
      incorrect  or  is  not  furnished,   the  Company  shall  be  entitled  to
      reimbursement  from  the  Participant,  the  Beneficiary  or  their  legal
      representatives  for any  overpayment  and may  reduce or  suspend  future
      payments to recover any such  overpayment.  In the event it is established
      to the satisfaction of the Company, in its sole discretion,  that any such
      statement  was  intentionally   false  or  omitted,   the  Participant  or
      Beneficiary  shall be entitled to no further  payments under the Plan, and
      the Company shall be entitled to recover any payments made hereunder.
  (c) Forms of Benefit -- The annual amount determined under paragraph (b) o
this Paragraph 4 shall be paid in one of the following forms:
            (i)   a single life annuity in monthly  installments  equal to one
      twelfth of such annual amount;
            (ii) a joint and survivor annuity in monthly installments based upon
      such annual amount and calculated in accordance  with any  post-retirement
      survivorship option available under the Pension Plan;
            (iii)  a  10-year   certain   level   payment   annuity  in  monthly
      installments which is the actuarial  equivalent to the single life annuity
      under (i), as determined by the actuary for the Pension Plan  according to
      mortality  assumptions used for the Pension Plan on the basis of a current
      interest rate assumption determined from time to time by the Company; or
            (iv) a 10-year certain increasing payment annuity paid in accordance
      with  Paragraph  S(c) of the Plan based upon the lump-sum  amount which is
      the  actuarial  equivalent  to the  single  life  annuity  under  (i),  as
      determined  by the actuary for the Pension  Plan  according  to  mortality
      assumptions  used for the  Pension  Plan on the basis of a current  market
      rate interest assumption  determined from time to time by the Company. The
      Company in its sole discretion shall determine the form of benefit payment
      for each Participant.

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      (d)  Establishment  of Account - If payment is made under either Paragraph
4(c)(iii) or 4(c)(iv) of the Plan, upon Retirement,  the Company shall establish
an Account for the benefit of the Participant and any Beneficiary.  Such Account
shall  initially be credited  with an amount equal to the amount of the lump-sum
payment  determined under Paragraph  4(c)(iii) or 4(c)(iv),  as applicable,  and
shall be administered as provided in Paragraph 5 of the Plan.
      (e) Disability  Retirement - If a Participant retires for disability under
the Pension Plan, payment of the Participant's  retirement benefit and any joint
and survivor  benefit under  Paragraph  4(c)(ii) of the Plan shall be subject to
the same  conditions  as the  disability  pension  under the  Pension  Plan.
5.Administration Of Accounts.
      (a) General - Accounts shall be  established  under the Plan only pursuant
to  Paragraphs  3(b) and 4(d) hereof.  All  Accounts  shall be  administered  in
accordance with the provisions of this Paragraph 5.
      (b)  Interest  on  Assets  in  the  Account  - The  Assets  credited  to a
Participant's  Account shall accrue interest at a market rate of interest as may
be determined from time to time by the Company.
      (c) Timing of the  Distribution(s)  - A Participant or  Beneficiary  shall
receive the  distribution  of the  Participant's  Account in the form of monthly
distributions over a ten-year period commencing in the month following the month
of the  Participant's  death in the case of a death benefit,  or over a ten-year
period commencing in the month of the Participant's  Retirement in the case of a
retirement  benefit.  The  amount of each  installment  shall be  determined  by
dividing the then unpaid balance in the Participant's Account, including accrued
and unpaid interest, by the number of installments remaining to be paid.
      (d) Request for Change in  Distribution  - A  Participant,  Beneficiary or
legal representative may request a change in the timing,  frequency or amount of
payments made from a Participant's  Account by filing a written request therefor
with the Company.  The Company may, in its sole  discretion,  grant such request
only if the  Company  determines  that an  emergency  beyond the  control of the
Participant,  Beneficiary or legal  representative  exists and which would cause
such Participant,  Beneficiary or legal representative severe financial hardship
if the payment of such  benefits were not approved.  Any such  distribution  for
hardship  shall be  limited  to the amount  needed to meet such  emergency.  The
Company shall inform the Participant, Beneficiary or legal representative of its
decision  within  sixty  (60)  days  of  receipt  of  the  written  request.  
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6. Designation Of Beneficiaries.
      (a) General - To designate an individual(s)  and/or entity(ies) to receive
the benefits of the Plan with respect to a Participant,  such  Participant  must
file a  written  designation  in the form of  Schedule  A to the  Plan  with the
Company.  Subject to the  restrictions  of this  Paragraph 6, a Participant  may
change such designation by filing a subsequent written designation.
      (b) Death Benefit - By designation on Section 1 of a Schedule A filed with
the Company,  a Participant  may name an  individual(s)  and/or  entity(ies)  to
receive a death  benefit  under  Paragraph  3 of the Plan with  respect  to such
Participant.  A Participant  may change such  designation by filing a subsequent
notification in the form of Schedule A.
      (c)  Retirement Benefits -
      (i)   Single Life Annuity. If a Participant's retirement benefit under the
            Plan is paid as a single life annuity under Paragraph 4(c)(i) of the
            Plan, there shall be no Beneficiary with respect to such benefit and
            all retirement benefits shall cease upon the Participant's death.
      (ii)  Joint and Survivor Annuity. If a Participant's  retirement benefit
            under  Paragraph  4(c)(ii)  of  the  Plan  and  the  Participant's
            pension  under  the  Pension  Plan  are  both  paid as  joint  and
            survivor  annuities,  any survivor annuity under the Plan shall be
            paid  to the  same  beneficiary  entitled  to any  post-retirement
            survivorship  benefit under the Pension Plan. If the Participant's
            pension  under the Pension Plan is paid as a single life  annuity,
            any  survivor  annuity paid under  Paragraph  4(c)(ii) of the Plan
            shall  be paid  to the  Beneficiary  designated  in  Section  2 of
            Schedule  A to  the  Plan.  If a  Beneficiary  designated  by  the
            Participant  under Paragraph  4(c)(ii) of the Plan predeceases the
            Participant  within  five  years  from the  date of  Participant's
            Retirement,  the Participant's  retirement  benefit hereunder will
            automatically   revert  and  return  to  a  single  life   annuity
            commencing  the  first  day of the  month  following  the month in
            which  the  designated   Beneficiary   died.  If,   however,   the
            Beneficiary  predeceases  the  Participant  more than  five  years
            after   Participant's   Retirement,   the  Participant's   reduced
            retirement  benefit shall continue during his life and no survivor
            benefit shall be paid.  The election of such  Beneficiary  must be
            made prior to Retirement and may not be changed thereafter.
      (iii) 10-Year Certain Annuities. If a Participant's  Retirement benefit is
            paid as a 10-year  certain  level payment  annuity  under  Paragraph
            4(c)(iii)  of the  Plan,  or a 10 year  certain  increasing  payment
            annuity under  Paragraph  4(c)(iv) of the Plan,  the  Beneficiary or
            Beneficiaries  with respect to such benefit shall be as specified in
            Section 1 of the most resent Schedule A filed with the Company.
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      (d)  Designation  by Last  Remaining  Beneficiary - After a  Participant's
death,  if there is only  one  remaining  Beneficiary  with  respect  to a death
benefit  under  Paragraph  3 of the  Plan  or a l  year  certain  annuity  under
Paragraph  4(c)(iii) or 4(c)(iv) of the Plan, such Beneficiary shall be entitled
to designate in writing to the Company an individual to be paid any remainder of
such  benefit  under the Plan at such  Beneficiary's  death.  If no such further
designation is made, such remainder shall be paid to such Beneficiary's  estate.
In the event of such  Beneficiary's  death,  and  regardless of whether any such
further  designation  has been  made,  the  Company in its sole  discretion  may
require any such remainder to be paid as a lump sum.
7. Limitation Of Benefits.
      (a) The Plan shall be  unfunded  with  respect to all  benefits to be paid
hereunder In addition, and without limitation, the Company shall not be required
to segregate  any amounts  credited to any Account,  which shall be  established
merely as an accounting  convenience;  title to and beneficial  ownership of any
Assets credited to any Account shall at all times remain in the Company,  and no
Participant,  Beneficiary  or  legal  representative  shall  have  any  interest
whatsoever in any specific assets of the Company.
      (b) The payment of any death or survivorship benefit under this Plan shall
be contingent upon such evidence of death as may be required by the Company.
      (c) If the Company  should  terminate  the Plan  pursuant to  Paragraph 10
hereof,  the  Company's  obligation  to pay any  benefits  under the Plan  shall
likewise  terminate;  provided,  however,  that, except as otherwise provided in
said  Paragraph  10, the Company may not  terminate the Plan with respect to any
Participant subsequent to that Participant's Retirement or death.
8.    Company May Make Certain Lump-Sum Distributions.
      The  Company   reserves  the  right  to  make  a  lump-sum   distribution,
notwithstanding any other provision of the Plan, if the total benefit payable to
a  Participant,  Beneficiary or legal  representative  is $20,000 or less at any
time.
9. Plan Does Not Constitute An Employment Agreement.
      The Plan shall not  constitute a contract for the continued  employment of
any  Participant  by the  Company.  The Company  reserves  the right to modify a
Participant's  Compensation  at any time and from  time to time as it  considers
appropriate and to terminate any Participant's  employment for any reason at any
time notwithstanding the Plan.
10. Amendment Or Termination Of The Plan.
      The Board of Directors of the Company may, in its sole discretion,  amend,
modify  or  terminate  the Plan at any  time,  provided,  however,  that no such
amendment,   modification  or  termination  shall  deprive  any  Participant  or
Beneficiary  of  a  previously   acquired  right  unless  such   Participant  or
Beneficiary or his legal  representative  shall consent to such change. No right
to a death benefit under the Plan shall accrue until a  Participant's  death and
no right to a retirement benefit shall accrue until a Participant's  Retirement.
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11. What Constitutes Notice.
      Any notice to a  Participant,  a Beneficiary  or any legal  representative
hereunder shall be given in writing,  by personal  delivery,  overnight  express
service or by United States mail,  postage  prepaid,  addressed to such person's
last known address. Any notice to the Company hereunder (including the filing of
Schedule A) shall be given by  delivering  it in person or by overnight  express
service,  or depositing it in the United States mail,  postage  prepaid,  to the
Secretary,  Enterprise  Diversified Holdings  Incorporated,  80 Park Plaza, T4B,
P.O. Box 1171, Newark, New Jersey, 07101.
12.   Advance Disclaimer Of Waiver.
      Failure by the Company or the  Committee to insist upon strict  compliance
with any of the terms,  covenants  or  conditions  hereof  shall not be deemed a
waiver  of any such  term,  covenant  or  condition,  nor  shall  any  waiver or
relinquishment  of any  right or  power  hereunder  at any one or more  times be
deemed a waiver or  relinquishment  of any such right or power at any other time
or times.
13. Effect Of Invalidity Of Any Part Of The Plan.  The  invalidity or
unenforceability  of any provision hereof shall in no way affect the validity or
enforceability  of any other  provision  of the Plan.
14.  Plan  Binding  On An Successor.
      Except as otherwise  provided herein,  the Plan shall inure to the benefit
of and be binding upon the Company,  its successors  and assigns,  including but
not limited to any corporation which may acquire all or substantially all of the
Company's  assets  and  business  or with  or  into  which  the  Company  may be
consolidated or merged. 15. Law Governing The Plan.
      Except to the extent federal law applies,  the Plan shall be governed by
the laws of the State of New Jersey  without  giving  effect to  principles of
conflicts of law.
16.   Miscellaneous.
      (a)   The masculine pronoun shall mean the feminine wherever appropriate.
      (b) The  headings  are for  convenience  only.  In the event of a conflict
      between the headings of a paragraph and its contents,  the contents  shall
      control.