EXHIBIT 4(h)












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                          ELIZABETHTOWN WATER COMPANY

                                       TO

                         THE BANK OF NEW YORK, TRUSTEE


                                  -----------


                                   INDENTURE

                          Dated as of December 1, 1995


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



                           5.60% Debentures due 2025





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<PAGE>

                               TABLE OF CONTENTS/1
                                                                           Page


PARTIES...................................................................   1
RECITALS..................................................................   1
   Purpose of Indenture...................................................   1
   Form of Debenture......................................................   1
   Compliance with legal requirements.....................................   6


                                  ARTICLE ONE.

                                  Definitions.


SECTION 1.01.            Certain terms; other terms defined
          in Trust Indenture Act of 1939 or
          by reference therein in Securities
          Act of 1933, as amended, to have
          meanings therein assigned........................................  6
        Authority..........................................................  7
        Board of Directors.................................................  7
        Board Resolution...................................................  7
        Company............................................................  7
        Debenture or Debentures; "outstanding"
          with reference to Debentures.....................................  7
        Debentureholder....................................................  7
        Event of Default...................................................  8
        Indenture..........................................................  8
        Loan Agreement.....................................................  8
        Officers' Certificate..............................................  8
        Opinion of Counsel.................................................  8
        Person.............................................................  8
        Principal Corporate Trust Office of
          the Trustee......................................................  8
        Project............................................................  9
        Responsible Officer................................................  9
        Revenue Bonds......................................................  9
        Revenue Bond Indenture.............................................  9
        Revenue Bond Trustee...............................................  9
        Trustee............................................................  9
        Trust Indenture Act of 1939........................................  9
        Other defined terms................................................ 10


--------
/1       This Table of Contents does not constitute part of the Indenture and is
         not to have any bearing upon the  interpretation of any of its terms or
         provisions.

                                      -i-

<PAGE>
                                  ARTICLE TWO.

               Description, Execution and Exchange of Debentures.


SECTION 2.01.            Maturity of Debentures............................ 10
SECTION 2.02.            Form of Debentures................................ 10
SECTION 2.03.            Date of Debentures and denominations.............. 10
SECTION 2.04.            Execution and authentication of
          Debentures....................................................... 11
SECTION 2.05.            Exchange, registration and transfer
          of Debentures.................................................... 11
SECTION 2.06.            Mutilated, destroyed, lost or stolen
          Debentures....................................................... 12
SECTION 2.07.            Cancellation of surrendered
          Debentures....................................................... 13
SECTION 2.08.            Provisions of Indenture and
          Debentures for sole benefit of
          parties and Debentureholders..................................... 13
SECTION 2.09.            CUSIP Numbers..................................... 13


                                 ARTICLE THREE.

                              Issue of Debentures.


SECTION 3.01.            Amount, authentication and delivery
          of Debentures.................................................... 14


                                 ARTICLE FOUR.

                           Redemption of Debentures.


SECTION 4.01.            Redemption of Debentures.......................... 14
SECTION 4.02.            Redemption of part only of
          Debentures....................................................... 15
        Notice of intention to redeem...................................... 15
SECTION 4.03.            When called Debentures become due
          and payable...................................................... 15
SECTION 4.04.            When interest ceases on called
          Debentures....................................................... 15


                                 ARTICLE FIVE.

                      Particular Covenants of the Company.


SECTION 5.01.            Payment of principal of and interest
          on Debentures.................................................... 16


                                      -ii-

<PAGE>

SECTION 5.02.            Maintenance and designation of office
          or agency for registration of
          transfer, exchange and payment
          of Debentures.................................................... 16
SECTION 5.03.            Appointment to fill vacancy in office
          of Trustee  ..................................................... 17
SECTION 5.04.            Appointment of paying agent other
          than Trustee..................................................... 17
SECTION 5.05.            Company not to incur debt, with
          certain exceptions............................................... 18
        Definition of "Property Additions"................................. 19
SECTION 5.06.            Company covenants it will not mortgage,
          pledge or permit any other lien,
          with certain exceptions, upon any
          of its property now owned or here-
          after acquired without securing the
          Debentures....................................................... 21
        Covenants of the Company in the event
          of merger, consolidation or sale................................. 22
        Definition of "Excepted Property".................................. 24
SECTION 5.07.            Limitations on dividends.......................... 24
SECTION 5.08.            Special provision for retirement of
          Debentures....................................................... 24
SECTION 5.09.            Company to file Compliance Certificate
          with Trustee annually............................................ 26
SECTION 5.10.            Company to deliver documents...................... 26


                                  ARTICLE SIX.

                   Debentureholders' Lists and Reports by the
                            Company and the Trustee.

SECTION 6.01.            Company to furnish Trustee information
          as to names and addresses of
          Debentureholders................................................. 27
SECTION 6.02.             ................................................. 27
SECTION 6.03.             ................................................. 27
SECTION 6.04.             ................................................. 27


                                 ARTICLE SEVEN.

                  Remedies of the Trustee and Debentureholders
                              on Event of Default.


SECTION 7.01.            Events of Default defined......................... 27
        Acceleration of maturity upon
          Event of Default................................................. 28
        Waiver of default and rescission of
          declaration of maturity.......................................... 28

                                     -iii-

<PAGE>

SECTION 7.02.            Covenant of Company to pay to Trustee
          whole amount due on Debentures on
          default in payment of interest or
          principal........................................................ 29
        Trustee may remove judgment for whole
          amount due on Debentures on failure
          of Company to pay................................................ 30
        Filing of proof of claim by Trustee
          in bankruptcy, reorganization,
          receivership, or other judicial
          proceedings...................................................... 30
SECTION 7.03.            Application of moneys collected by
          Trustee.......................................................... 31
SECTION 7.04.            Limitation on suits by holders of
          Debentures....................................................... 32
SECTION 7.05.            Delay or omission in exercise of
          rights not waiver of default..................................... 33
SECTION 7.06.                   ........................................... 33
SECTION 7.07.                   ........................................... 33
SECTION 7.08.                   ........................................... 33


                                 ARTICLE EIGHT.

                            Concerning the Trustee.


SECTION 8.01.            Duties of Trustee prior to and after
          Event of Default................................................. 33
SECTION 8.02.            Except as otherwise provided in
          Section 8.01:.................................................... 33
        (a)              Trustee may rely on documents
                         believed genuine and properly
                         signed or presented............................... 33
        (b)              Sufficient evidence by certain
                         instruments provided for.......................... 34
        (c)              Trustee may act on Opinion of
                         Counsel........................................... 34
        (d)              Trustee may require indemnity from
                         Debentureholders.................................. 34
        (e)              Trustee not liable for actions in
                         good faith believed to be
                         authorized........................................ 34
        (f)              Investigation of facts by Trustee................. 34
        (g)              Trustee may act through agents.................... 34
        (h)              Trustee not required to risk own
                         funds............................................. 35
SECTION 8.03.            Trustee not liable for recitals in
          Indenture or in Debentures....................................... 35
        Trustee not accountable for use of
          Debentures or proceeds........................................... 35
SECTION 8.04.            Trustee, paying agent or Debenture
          registrar may own Debentures..................................... 35

                                      -iv-

<PAGE>

SECTION 8.05.            Moneys received by Trustee to be
          held in trust.................................................... 35
SECTION 8.06.            Trustee entitled to compensation,
          reimbursement and indemnity...................................... 35
        Obligations to Trustee to be secured
          by lien prior to Debentures...................................... 36
SECTION 8.07.            Right of Trustee to rely on Officers'
          Certificate where no other evidence
          specifically prescribed.......................................... 36
SECTION 8.08.            Calculation of percentages of
          securities....................................................... 36
SECTION 8.09.            Requirements for eligibility of
          Trustee.......................................................... 37
SECTION 8.10.            (a)    Resignation of Trustee..................... 37
        (b)              Removal of Trustee by Company or
                         by court on Debentureholder's
                         application....................................... 37
        (c)              Removal of Trustee by holders of
                         majority in principal amount of
                         Debentures........................................ 38
        (d)              Time when resignation or removal
                         of Trustee effective.............................. 38
SECTION 8.11.            Acceptance by successor to Trustee................ 38
SECTION 8.12.            Successor to Trustee by merger,
          consolidation or succession to
          business......................................................... 39
SECTION 8.13............................................................... 39


                                 ARTICLE NINE.

                        Concerning the Debentureholders.


SECTION 9.01.            Evidence of action by Debenture-
          holders.......................................................... 40
SECTION 9.02.            Proof of execution of instruments
          and holding of Debentures........................................ 40
SECTION 9.03.            Who may be deemed owners of
          Debentures....................................................... 40
SECTION 9.04.            Debentures owned by Company or
          controlled or controlling companies
          disregarded for certain purposes................................. 40
SECTION 9.05.            Action by Debentureholders bind
          future holders................................................... 41

                                      -v-

<PAGE>
                                  ARTICLE TEN.

                          Debentureholders' Meetings.


SECTION 10.01            Purposes for which meetings may be
          called........................................................... 41
SECTION 10.02.           Manner of calling meetings........................ 42
SECTION 10.03.           Call of meetings by Company or
          Debentureholders................................................. 42
SECTION 10.04.           Who may attend and vote at meetings............... 42
SECTION 10.05.           Regulations may be made by Trustee................ 42
SECTION 10.06.           Manner of voting at meetings and
          record to be kept................................................ 43
SECTION 10.07.           Exercise of rights of Trustee or
          Debentureholders may not be hindered
          or delayed by call of meeting of
          Debentureholders................................................. 44


                                ARTICLE ELEVEN.

                            Supplemental Indentures.


SECTION 11.01            Purposes for which supplemental
          indentures may be entered into with-
          out consent of Debentureholders.................................. 44
SECTION 11.02            Modification of Indenture with consent
          of holders of more than 50% in
          principal amount of Debentures................................... 45
SECTION 11.03.           Effect of supplemental indentures................. 46
SECTION 11.04.           Debentures may bear notation of
          changes.......................................................... 46
SECTION 11.05.           Opinion of Counsel................................ 46


                                ARTICLE TWELVE.

                        Consolidation, Merger and Sale.


SECTION 12.01.           Consolidation or merger of Company
          and sale or conveyances of property
          of Company permitted............................................. 46
        Assumption of obligations of Company
          by successor company or transferee............................... 47
SECTION 12.02.           Rights and duties of successor
          corporation...................................................... 47
        Appropriate changes may be made in
          phraseology and form of Debentures............................... 47
        Company may consolidate or merge into
          itself or acquire properties of
          other corporations............................................... 47

                                      -vi-

<PAGE>

SECTION 12.03.           Opinion of Counsel................................ 48


                               ARTICLE THIRTEEN.

                    Satisfaction and Discharge of Indenture;
                               Deposited Moneys.


SECTION 13.01.           Satisfaction and discharge of
          Indenture........................................................ 48
SECTION 13.02            Application by Trustee of funds
          deposited for payment of
          Debentures....................................................... 49
SECTION 13.03.           Repayment of moneys held by paying
          agent............................................................ 49
SECTION 13.04.           Payment of deposited money to
          Company after lapse of time...................................... 49


                               ARTICLE FOURTEEN.

                    Immunity of Incorporators, Stockholders,
                       Officers, Trustees and Directors.


SECTION 14.01.           Incorporators, stockholders, officers,
          trustees and directors of Company
          exempt from individual liability................................. 50


                                ARTICLE FIFTEEN.

                           Miscellaneous Provisions.


SECTION 15.01.           Successors and assigns of Company
          bound by Indenture............................................... 51
SECTION 15.02.           Acts of board, committee or officer
          of successor corporation valid................................... 51
SECTION 15.03.           Surrender of powers by Company.................... 51
SECTION 15.04.           Required notices or demands may be
          served by mail................................................... 51
SECTION 15.05.           Indenture and Debentures to be
          construed in accordance with laws
          of State of New York............................................. 51
SECTION 15.06.           Officers' Certificate and Opinion
          of Counsel to be furnished upon
          applications or demands by Company............................... 51
SECTION 15.07.           Payments due on Sundays or holidays............... 52
SECTION 15.08.           Provisions required by Trust
          Indenture Act of 1939 to control................................. 53
SECTION 15.09.           Effect of invalidity of provisions................ 53

                                     -vii-

<PAGE>

SECTION 15.10.           Indenture may be executed in counter-
          parts............................................................ 53

ACCEPTANCE OF TRUST........................................................ 54
TESTIMONIUM................................................................ 55

                                     -viii-

<PAGE>


                  INDENTURE, dated as of December 1, 1995, between ELIZABETHTOWN
WATER COMPANY,  a corporation duly organized and existing under and by virtue of
the  laws  of  the  State  of  New  Jersey  (hereinafter  sometimes  called  the
"Company"),  party  of the  first  part,  and THE BANK OF NEW  YORK,  a New York
banking corporation  (hereinafter sometimes called the "Trustee"),  party of the
second part.


                  WHEREAS, the Company is empowered to issue debentures
for any of the objects and purposes of the Company;


                  WHEREAS,  for its lawful corporate  purposes,  the Company has
duly authorized an issue of debentures  designated  5.60%  Debentures - due 2025
(hereinafter referred to as the "Debentures"),  in an aggregate principal amount
of $40,000,000, to be issued under and pursuant to the provisions hereof; and


                  WHEREAS,  the  Debentures  and the  Trustee's  certificate  of
authentication  to be borne by the  Debentures  are to be  substantially  in the
following forms, respectively:


                              [FORM OF DEBENTURE]
                                     [FACE]


$___________________                                         No. _______________


                          ELIZABETHTOWN WATER COMPANY

                           5.60% Debenture - due 2025


                  ELIZABETHTOWN  WATER COMPANY, a corporation duly organized and
existing  under the laws of the State of New Jersey  (herein  referred to as the
"Company"),    for    value    received,    hereby    promises    to    pay   to
______________________,  or registered  assigns, on December 1, 2025 or upon the
earlier  redemption  hereof  as  hereinafter  provided,  the  principal  sum  of
______________________  Dollars in such coin or currency of the United States of
America  as at the time of  payment  shall be legal  tender  for the  payment of
public and private debts, and to pay interest thereon at the

<PAGE>

rate per  annum  specified  in the  title  of this  Debenture,  in like  coin or
currency,  semi-annually on June 1 and December 1 in each year, until payment of
said  principal  sum has been made or duly  provided  for,  from the most recent
interest  payment  date to which  interest  has been paid or duly  provided  for
(unless the date hereof is the date to which interest on the Debentures has been
paid or duly  provided for in which case from the date of this  Debenture) or if
no interest has been paid or duly provided for on the  Debentures  from December
1, 1995.  Principal and interest shall be paid at the principal  corporate trust
office  of The Bank of New  York,  New  York,  New York or at the  office of the
Company,  Westfield,  New Jersey,  or at the duly designated  office of any duly
appointed alternate or successor paying agent.

                  Reference  is hereby  made to the further  provisions  of this
Debenture set forth on the reverse hereof, and such further provisions shall for
all purposes have the same effect as though fully set forth at this place.

                  This Debenture shall not be valid or become obligatory for any
purpose until the certificate of authentication hereon shall have been signed by
the Trustee under the Indenture.


                  IN WITNESS  WHEREOF,  ELIZABETHTOWN  WATER  COMPANY has caused
this Debenture to be signed in its corporate name by its President or one of its
Vice Presidents by his signature or a facsimile  thereof and by its Secretary or
one of its Assistant  Secretaries by his signature or a facsimile  thereof,  and
its corporate seal, or a facsimile thereof, to be impressed or imprinted hereon.

                                         ELIZABETHTOWN WATER COMPANY


                                         By___________________________
                                           President.
(Seal)



By___________________________
      Secretary.

                                      -2-

<PAGE>

               [FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]

Dated:  December __, 1995

                   This is one of the Debentures described in
                        the within-mentioned Indenture.


                                                           THE BANK OF NEW YORK,
                                                                     as Trustee,



                                         By___________________________
                                           Authorized Signatory.


                                   [REVERSE]

                          ELIZABETHTOWN WATER COMPANY

                           5.60% Debenture - due 2025


                  This Debenture is one of a duly authorized issue of Debentures
of  the  Company  (herein  referred  to as  the  "Debentures"),  limited  to the
aggregate  principal amount of $40,000,000,  except as otherwise provided in the
Indenture referred to below, all issued or to be issued under and pursuant to an
indenture dated as of December 1, 1995 (herein referred to as the  "Indenture"),
duly  executed  and  delivered  by the Company to The Bank of New York,  Trustee
(herein  referred to as the  "Trustee"),  to which  Indenture and all indentures
supplemental thereto reference is hereby made for a description of the rights of
the holders of the Debentures,  the rights, duties and immunities of the Trustee
and the rights and  obligations of the Company  thereunder.  The Debentures will
not be transferable except to a successor Revenue Bond Trustee.

                  In case an Event of  Default,  as  defined  in the  Indenture,
shall have occurred and be  continuing,  the principal of all of the  Debentures
may be declared, and upon such declaration shall become, due and payable, in the
manner, with the effect and subject to the conditions provided in the Indenture.

                  The Indenture contains  provisions  permitting the Company and
the Trustee,  with the consent of the holders of more than 50% in the  aggregate
principal amount of the Debentures at the time outstanding,  evidenced as in the
Indenture provided, to execute supplemental  indentures adding any provisions to
or changing in any manner or eliminating  any of the provisions of the Indenture
or of any indenture  supplemental  thereto or modifying in any manner the rights
and obligations of the holders

                                      -3-

<PAGE>

of  the  Debentures  and  of  the  Company;  provided,  however,  that  no  such
supplemental indenture shall (i) extend the fixed maturity of any Debenture,  or
reduce the principal  amount  thereof,  or reduce the rate or extend the time of
payment of interest thereon, without the consent of the holder of each Debenture
so affected, or (ii) reduce the aforesaid percentage of Debentures,  the holders
of which are required to consent to any such supplemental indenture, without the
consent of the holders of all Debentures then  outstanding.  It is also provided
in the Indenture that prior to any declaration of the maturity of the Debentures
the holders of a majority in the aggregate principal amount of the Debentures at
the time outstanding may on behalf of the holders of all of the Debentures waive
any past default under the Indenture and its  consequences,  except a default in
the payment of interest on or the principal of any of the  Debentures.  Any such
consent or waiver by the registered holder of this Debenture shall be conclusive
and  binding  upon such  holder and upon all future  holders  and owners of this
Debenture  and of any Debenture  issued in exchange  herefor or in place hereof,
irrespective  of whether or not any  notation of such  consent or waiver is made
upon this Debenture.

                  No reference  herein to the Indenture and no provision of this
Debenture  or of the  Indenture  shall  alter or impair  the  obligation  of the
Company,  which is  absolute  and  unconditional,  to pay the  principal  of and
interest on this Debenture at the time and place and at the rate and in the coin
or currency herein prescribed.

                  The Debentures are issuable as registered  Debentures  without
coupons, in denominations of $5,000 and any multiple thereof.  This Debenture is
transferable  in the manner  authorized  by law.  Upon due  presentment  of this
Debenture for  registration of transfer at the office or agency to be maintained
by the Company in the Borough of  Manhattan,  City and State of New York,  a new
Debenture or  Debentures,  of  authorized  denominations,  for a like  aggregate
principal amount,  will be issued to the transferee as provided,  and subject to
the limitations,  in the Indenture.  No service charge will be made for any such
registration  of  transfer,  but  the  Company  may  require  payment  of a  sum
sufficient to reimburse it for any tax or other governmental  charge that may be
imposed in relation  thereto.  This  Debenture  may in like manner be  exchanged
without  service  charge  for one or more new  Debentures  of  other  authorized
denominations  but of the same aggregate  principal  amount,  all subject to the
terms and conditions set forth in the Indenture.

                  As more fully  provided in the  Indenture,  the Debentures are
redeemable  at the option of the  Company in whole at any time,  or in part from
time to time,  prior to maturity on or after December 1, 2000, by the payment of
the  principal  amount  thereof  and  accrued  interest  to the date  fixed  for
redemption,  together  with a premium  equal to a  percentage  of the  principal
amount

                                      -4-

<PAGE>

thereof determined as set forth in the tabulation below under the
heading "Redemption Price".


                    Period
         (Both Dates Inclusive)                                Redemption Price
         ----------------------                                -----------------

December 1, 2005 to November 30, 2006..................................102%

December 1, 2006 to November 30, 2007 .................................101%

December 1, 2007 and thereafter........................................100%


                  The  Debentures  are subject to  mandatory  redemption  by the
Company at any time prior to maturity by payment of the principal amount thereof
to be redeemed and accrued  interest to the date fixed for redemption if, and to
the extent that, certain New Jersey Economic  Development  Authority 5.60% Water
Facilities Bonds (Elizabethtown Water Company Project -- 1995 Series) are called
for  redemption  at a price equal to the  principal  amount to be  redeemed  and
accrued interest to the date fixed for redemption. As more fully provided in the
Indenture,  the  Debentures  are also  redeemable as a whole or in part with the
proceeds of Released  Property,  at the  principal  amount  thereof plus accrued
interest to the date fixed for redemption.

                  The Indenture provides that under the circumstances  specified
therein funds or certain securities may be deposited with the Trustee in advance
of the maturity or redemption  date of any of the  Debentures,  in trust for the
payment or redemption of such Debentures,  and the interest due or to become due
thereon,  and that  thereupon all  obligations of the Company in respect of such
Debentures  shall  cease  and  be  discharged  and  the  holders  thereof  shall
thereafter be restricted exclusively to such funds or securities for any and all
other  claims  on  their  part  under  the  Indenture  or with  respect  to such
Debentures.

                  The Company,  the Trustee,  any paying agent and any Debenture
registrar may deem and treat the registered  holder hereof as the absolute owner
hereof (whether or not this Debenture shall be overdue and  notwithstanding  any
notice of ownership or writing  hereon) for the purpose of receiving  payment of
or on account of the principal  hereof and interest due hereon and for all other
purposes,  and neither the Company nor the Trustee nor any paying  agent nor any
Debenture registrar shall be affected by any notice to the contrary.  So long as
the Revenue Bond Trustee (as defined in the  Indenture)  is the sole  registered
holder of this  Debenture,  and has  specified  an account for such  payments in
writing to the  Company,  the  Trustee  and any paying  agent,  all  payments of
interest required hereunder shall be made by wire transfer.

                                      -5-

<PAGE>

                  No recourse  shall be had for the payment of the  principal of
or the interest on this Debenture,  or for any claim based hereon,  or otherwise
in respect  hereof,  or based on or in respect of the Indenture or any indenture
supplemental thereto, against any incorporator, stockholder, officer, trustee or
director, past, present or future, as such, of the Company or of any predecessor
or successor corporation, whether by virtue of any constitution, statute or rule
of law or  equity,  or by  the  enforcement  of any  assessment  or  penalty  or
otherwise, all such liability being, by the acceptance hereof and as part of the
consideration  for the issue  hereof,  expressly  waived and  released  by every
holder hereof, as more fully provided in the Indenture.

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


                  AND  WHEREAS,  all  acts  and  things  necessary  to make  the
Debentures,  when executed by the Company and authenticated and delivered by the
Trustee as in this Indenture provided,  the valid, binding and legal obligations
of the  Company,  and  to  constitute  these  presents  a  valid  indenture  and
agreement, have been done and performed, and the execution of this Indenture and
the issue hereunder of the Debentures have in all respects been duly authorized,
and the  Company,  in the  exercise  of the legal  right and power in it vested,
executes  this  Indenture and proposes to make,  execute,  issue and deliver the
Debentures;


                  NOW, THEREFORE, THIS INDENTURE WITNESSETH:

                  That in order to declare the terms and  conditions  upon which
the Debentures  are and are to be  authenticated,  issued and delivered,  and in
consideration of the premises,  of the purchase and acceptance of the Debentures
by the  holders  thereof  and of the sum of one  dollar  to it duly  paid by the
Trustee  at the  execution  of these  presents,  the  receipt  whereof is hereby
acknowledged,  the Company  covenants  and agrees with the Trustee for the equal
and  proportionate  benefit of the  respective  holders from time to time of the
Debentures, as follows:


                                  ARTICLE ONE.

                                  Definitions.


                  Section 1.01. The terms defined in this Section  (except as in
this  Indenture  otherwise  expressly  provided or unless the context  otherwise
requires) for all purposes of this  Indenture and of any indenture  supplemental
hereto shall have the respective  meanings specified in this Section.  All other
terms used in this  Indenture  which are defined in the Trust  Indenture  Act of
1939 or which are by  reference  in such act  defined in the  Securities  Act of
1933, as amended (except as herein otherwise

                                      -6-

<PAGE>

expressly  provided or unless the context  otherwise  requires),  shall have the
meanings  assigned  to  such  terms  in  said  Trust  Indenture  Act and in said
Securities Act as in force at the date of the execution of this Indenture.

                  "Authority"  shall  mean the New Jersey  Economic  Development
Authority.

                  "Board of Directors"  shall mean the Board of Directors of the
Company or any  committee  thereof duly  authorized by the Board of Directors to
act hereunder.

                  "Board  Resolution"  or "Resolution of the Board of Directors"
shall mean a copy of a  resolution  certified  by the  Secretary or an Assistant
Secretary of the Company to have been duly adopted by the Board of Directors and
to be in full force and effect on the date of such certification.

                  "Company" shall mean Elizabethtown Water Company, and, subject
to the  provisions  of Article  Twelve,  shall also include its  successors  and
assigns.

                  "Debenture"  or  "Debentures"  shall  mean  any  Debenture  or
Debentures,  as  the  case  may  be,  authenticated  and  delivered  under  this
Indenture.

                  The  term   "outstanding",   when  used  with   reference   to
Debentures,  shall,  subject  to the  provisions  of  Section  9.04 and  Article
Thirteen,  mean, as of any particular  time, all  Debentures  authenticated  and
delivered by the Trustee under this Indenture, except

                  (a)  Debentures   theretofore   canceled  by  the  Trustee  or
         delivered to the Trustee for cancellation;

                  (b)  Debentures  or  portions   thereof  for  the  payment  or
         redemption  of which  moneys in the  necessary  amount  shall have been
         deposited in trust with the Trustee,  provided that if such  Debentures
         or portions are to be redeemed prior to the maturity thereof, notice of
         such redemption  shall have been given as in Article Four provided,  or
         provision  satisfactory  to the Trustee shall have been made for giving
         such notice; and

                  (c) Debentures in lieu of or in  substitution  for which other
         Debentures shall have been  authenticated and delivered pursuant to the
         terms of Section  2.06,  unless  proof  satisfactory  to the Trustee is
         presented  that  any such  Debentures  are held by  holders  for  value
         without notice of any defense.

                  "Debentureholder",  "holder of Debentures", "holder", or other
similar  terms,  shall mean the  registered  holder of any  Debenture.  The term
"registered holder" shall mean the person or

                                      -7-

<PAGE>

persons in whose name or names a particular Debenture shall be registered on the
register kept for that purpose in accordance with the terms of this Indenture.

                  "Event of Default"  shall mean any event  specified in Section
7.01 continued for the period of time, if any, therein designated.

                  "Indenture" shall mean this instrument as originally executed,
or, if amended or supplemented, as so amended or supplemented.

                  "Loan  Agreement"  shall mean the Loan  Agreement  dated as of
December  1, 1989  between the Company and the  Authority  as  supplemented  and
amended by a First  Supplement to Loan Agreement  dated as of October 1, 1990, a
Second  Supplement  to Loan  Agreement  dated as of  August  1, 1991 and a Third
Supplement  to Loan  Agreement  dated as of December 1, 1995  relating to, among
other  things,  the  issuance  of  $10,000,000  principal  amount of 7.20% Water
Facilities  Bonds   (Elizabethtown   Water  Company  Project  --  1989  Series),
$15,000,000  principal  amount  of  7  1/2%  Water  Facilities  Refunding  Bonds
(Elizabethtown Water Company Project - - 1990 Series) and $10,500,000  principal
amount of 6.60% Water Facilities  Refunding Bonds  (Elizabethtown  Water Company
Project  - 1991  Series  A) and  $15,000,000  principal  amount  of 6.70%  Water
Facilities Refunding Bonds (Elizabethtown Water Company Project - 1991 Series B)
and $40,000,000  principal amount of 5.60% Water Facilities Bonds (Elizabethtown
Water Company Project - 1995 Series), or if further amended or supplemented,  as
so further amended or supplemented.

                  "Officers' Certificate" shall mean a certificate signed by the
President or a Vice President and by the Treasurer or an Assistant  Treasurer or
the Secretary or an Assistant  Secretary of the Company.  Each such  certificate
shall include the statements provided for in Section 15.06, if and to the extent
required by the provisions thereof.

                  "Opinion of Counsel"  shall mean an opinion in writing  signed
by legal  counsel who shall be  satisfactory  to the Trustee,  and who may be an
employee  of or counsel to the  Company.  Each such  opinion  shall  include the
statements  provided for in Section 15.06,  if and to the extent required by the
provisions thereof.

                  "Person" shall mean an individual,  partnership,  corporation,
association,  joint  venture,  trust or  unincorporated  association  and  shall
include a  government  or  political  subdivision  thereof and any  governmental
agency or public benefit corporation.

                  "Principal  Corporate  Trust  Office"  means the office of the
Trustee in New York, New York at which any particular  time its corporate  trust
business shall be principally  administered,  which office at the date hereof is
located at 101 Barclay Street,

                                      -8-

<PAGE>

21st  Floor,  New York,  New York  10286,  Attention:  Corporate  Trust  Trustee
Administration,  except that,  with respect to  presentation  of Securities  for
payment or  registration  of  transfers  and  exchanges  and the location of the
Security Registrar,  such term means the office or agency of the Trustee in said
city at which at any  particular  time its corporate  agency  business  shall be
conducted,  which at the date hereof is located at 101 Barclay Street, New York,
New York 10286, Attention: Corporate Trust Services Window.

                  "Project"  shall mean those certain  facilities of the Company
financed pursuant to the Loan Agreement and described therein.

                  "Responsible  Officer"  when used with  respect to the Trustee
shall mean the chairman or vice chairman of the board of directors, the chairman
of the executive committee,  the president,  any vice president,  the secretary,
the  treasurer,  any senior  trust  officer,  any trust  officer,  any second or
assistant vice president,  any assistant secretary, any assistant treasurer, any
assistant  cashier,  or any other  officer or  assistant  officer of the Trustee
customarily  performing  functions similar to those performed by the persons who
at the time shall be such officers, respectively, or to whom any corporate trust
matter  is  referred  because  of his  knowledge  of and  familiarity  with  the
particular subject.

                  "Revenue  Bonds"  shall  mean  the   Authority's   $40,000,000
principal amount of 5.60% Water Facilities  Refunding Bonds (Elizabethtown Water
Company Project -- 1995 Series).

                  "Revenue  Bond  Indenture"  shall mean the  Indenture of Trust
dated as of December 1, 1989 between the Authority and the Revenue Bond Trustee,
as supplemented and amended by a First Supplement to Indenture of Trust dated as
of October 1, 1990, a Second Supplement to Indenture of Trust dated as of August
1, 1991 and a Third  Supplement  to  Indenture  of Trust dated as of December 1,
1995,  pursuant to which the Revenue Bonds are issued,  or if further amended or
supplemented, as so further amended or supplemented.

                  "Revenue  Bond  Trustee"  shall  mean the  trustee  under  the
Revenue Bond Indenture for the time being, whether original or successor.

                  "Trustee"  shall mean the Trustee under this Indenture for the
time being, whether original or successor.

                  "Trust  Indenture Act of 1939",  subject to the  provisions of
Sections 11.01 and 11.02, shall mean the Trust Indenture Act of 1939 as in force
at the date of execution of this Indenture.

                                      -9-

<PAGE>

                  Certain other terms are defined in Articles Two,  Five,  Seven
and Eight.


                                  ARTICLE TWO.

               Description, Execution and Exchange of Debentures.


                  Section 2.01. The Debentures shall mature on December 1, 2025.

                  Section 2.02. The Debentures and the Trustee's  certificate of
authentication to be borne by the Debentures shall be substantially of the tenor
and  purport as in this  Indenture  above  recited,  and may have such  letters,
numbers  or other  marks of  identification  and such  legends  or  endorsements
printed,  lithographed or engraved  thereon as the Company may deem  appropriate
and as are not inconsistent with the provisions of this Indenture,  or as may be
required to comply  with any law or with any rule or  regulation  made  pursuant
thereto  or with any law or  regulation  of any  stock  exchange  on  which  the
Debentures may be listed, or to conform to usage.

                  Section 2.03. The  Debentures  shall be issuable as registered
Debentures without coupons in denominations of $5,000 and multiples thereof.

                  Each Debenture  shall be dated the date of its  authentication
and shall bear interest,  payable  semi-annually  on June and December 1 of each
year from the most recent interest  payment date to which interest has been paid
or duly  provided  for (unless the date of such  Debenture  is the date to which
interest on the  Debentures  has been paid or duly  provided  for, in which case
from the date of such  Debenture),  or,  if no  interest  has been  paid or duly
provided for on the Debentures, from December 1, 1995.

                  The persons in whose names  Debentures  are  registered at the
close of  business  on the record date with  respect to a  semi-annual  interest
payment date shall be entitled to receive the interest  payable on such interest
payment  date  notwithstanding  the  cancellation  of  any  Debenture  upon  any
registration of transfer or exchange thereof subsequent to such record and prior
to such interest payment date; provided,  however, that if and to the extent the
Company  shall  default in the  payment  of the  interest  due on such  interest
payment  date,  such  defaulted  interest  shall be paid to the persons in whose
names  the  Debentures  are  registered  at the  close  of  business  on the day
preceding the date such defaulted  interest is paid,  unless a record date shall
be fixed by the  Company for the  payment of such  defaulted  interest by notice
given by mail by or on behalf of the  Company to the holders of  Debentures  not
less than 15 days  preceding  such record  date,  which record date shall not be
more

                                      -10-

<PAGE>

than 15 days  before  the date for such  payment,  then to the  persons in whose
names  outstanding  Debentures  are  registered  on such record  date.  The term
"record date" as used with respect to a semi-annual  interest payment date shall
mean the close of business  on the May or November  15, as the case may be, next
preceding such interest  payment date, or if such May 15 or November 15 is not a
business  day, the business day next  preceding  such May 15 or November 15, the
term "business day" meaning for this purpose a day which in The City of New York
is not a day on which banking institutions are authorized by law to close.

                  Section 2.04. The Debentures  shall be signed on behalf of the
Company  by its  President  or a Vice  President,  and  by its  Secretary  or an
Assistant  Secretary,  and its corporate seal, or a facsimile thereof,  shall be
thereon  impressed  or  imprinted.  The  signature of any such  President,  Vice
President,  Secretary or Assistant  Secretary may be facsimile.  The Company may
use the  signature  or  facsimile  signature or any person who shall be any such
officer of the Company at the time of the execution of Debentures,  irrespective
of the date as of which the same  shall be  authenticated,  or of any person who
shall have been any such officer of the Company,  notwithstanding  the fact that
at the time the Debentures shall be authenticated  and delivered or disposed of,
he shall have ceased to be such officer of the Company.

                  The Company may deliver Debentures  executed by the Company to
the Trustee for  authentication.  The Trustee shall thereupon  authenticate  and
make available for delivery said Debentures to or upon the written orders of the
Company.   Only  such   Debentures  as  shall  bear  thereon  a  certificate  of
authentication  substantially in the form herein before recited, executed by the
Trustee,  shall be entitled to the  benefits  of this  Indenture  or be valid or
obligatory for any purpose.  Such  certificate by the Trustee upon any Debenture
executed by the Company  shall be  conclusive  evidence  that the  Debenture  so
authenticated has been duly  authenticated and delivered  hereunder and that the
holder is entitled to the benefits of this Indenture.

                  Section  2.05.  The Company shall keep at the office or agency
to be  maintained  by the  Company as  provided  in Section  5.02 a register  or
registers in which, subject to such reasonable  regulations as it may prescribe,
it will register all Debentures,  and upon due  presentment for  registration or
transfer of any  Debenture at such office or agency,  the Company  shall execute
and register and the Trustee shall  authenticate  and deliver in the name of the
transferee or  transferees a new  Debenture or Debentures  for a like  aggregate
principal amount of Debentures of any authorized denominations,  bearing numbers
not contemporaneously outstanding.

                  The several  authorized  denominations  of Debentures shall be
interchangeable in equal aggregate principal amounts.

                                      -11-

<PAGE>

Debentures to be exchanged  shall be  surrendered  at the office or agency to be
maintained  by the Company  for the purpose as provided in Section  5.02 and the
Company  shall  execute and  register  and the Trustee  shall  authenticate  and
deliver in exchange  therefor the  Debenture or  Debentures  which the Debenture
holder  making the exchange  shall be entitled to receive,  bearing  numbers not
contemporaneously outstanding.

                  All Debentures  presented or surrendered  for  registration of
transfer,  exchange,  redemption or payment shall (if so required by the Company
or the Trustee) be duly endorsed by, or be accompanied  by a written  instrument
or instruments of transfer in form  satisfactory  to the Company and the Trustee
duly  executed by, the  registered  holder or his attorney  duly  authorized  in
writing.

                  For any exchange or  registration  of transfer of  Debentures,
the  Company,  at its option,  may require  the payment of a sum  sufficient  to
reimburse  it for any tax or other  governmental  charge  that may be imposed in
relation thereto. No service shall be made for any such transaction.

                  The  Company  shall not be required  to make  registration  of
transfers or exchanges of Debentures for a period of fifteen days next preceding
any  selection of  Debentures  to be redeemed,  nor shall it be required to make
registration  of transfers  or exchange of any  Debentures  or portions  thereof
called or being called for redemption,  except,  in the case of any Debenture to
be redeemed in part only, the portion thereof not being redeemed.

                  Section 2.06. In case any Debenture shall become  mutilated or
be  destroyed,  lost or stolen,  the Company in its  discretion  may issue a new
Debenture of like tenor bearing a number not contemporaneously  outstanding,  in
exchange  and  substitution  for  the  mutilated  Debenture  or in  lieu  of and
substitution for the Debenture so destroyed,  lost or stolen.  In every case the
applicant  for a substituted  Debenture  shall furnish to the Company and to the
Trustee  such  security or  indemnity as may be required by them to save each of
them,  and, if  requested,  any paying  agents and  Debenture  registrars of the
Company,  harmless from all risk,  however remote,  and the applicant shall also
furnish to the Company and to the Trustee evidence to their  satisfaction of the
mutilation,  destruction,  loss or theft of the applicant's Debenture and of the
ownership thereof. The Trustee shall authenticate any such substituted Debenture
and deliver the same upon the written request or authorization of any officer of
the  Company.  Upon the issue of any  substituted  Debenture,  the  Company  may
require  the  payment  of a sum  sufficient  to  cover  any  stamp  tax or other
governmental charge that may be imposed incident thereto and any other expenses,
including counsel fees and expenses,  of the Company, the Trustee and any paying
agent or Debenture registrar,  connected therewith.  In case any Debenture which
has matured or is about to mature shall become mutilated or be destroyed, lost

                                      -12-

<PAGE>

or stolen,  the Company may, instead of issuing a substitute  Debenture,  pay or
authorize the payment of the same (without  surrender thereof except in the case
of a mutilated Debenture) if the applicant for such payment shall furnish to the
Company and to the Trustee such security or indemnity as may be required by them
to save each of them harmless,  and evidence to the  satisfaction of the Company
and the Trustee of the mutilation,  destruction, loss or theft of such Debenture
and of the ownership thereof.

                  Every  Debenture  issued  pursuant to the  provisions  of this
Section in  substitution  for any Debenture  which is destroyed,  lost or stolen
shall constitute an additional contractual obligation of the Company, whether or
not the destroyed,  lost or stolen  Debenture  shall be found at any time, or be
enforceable  by  anyone,  and  shall be  entitled  to all the  benefits  of this
Indenture  equally and  proportionately  with any and all other  Debentures duly
issued  hereunder.  All  Debentures  shall be held and  owned  upon the  express
condition  that the  foregoing  provisions  are  exclusive  with  respect to the
replacement or payment of mutilated,  destroyed,  lost or stolen  Debentures and
shall preclude any and all other rights or remedies,  notwithstanding any law or
statute  existing or  hereinafter  enacted to the  contrary  with respect to the
replacement  or payment of negotiable  instruments or other  securities  without
their surrender.

                  Section 2.07.  All Debentures  surrendered  for the purpose of
payment, redemption,  exchange or registration of transfer shall be delivered to
the Trustee and canceled by it, and no Debentures shall be issued in lieu of any
thereof  except as expressly  required or permitted by any of the  provisions of
this Indenture.  With the consent of the Company, the Trustee may, but shall not
be required to, destroy canceled Debentures and deliver a certificate thereof to
the Company. If the Company shall acquire any of the Debentures,  however,  such
acquisition   shall  not  operate  as  a  redemption  or   satisfaction  of  the
indebtedness  represented  by such  Debentures  unless  and  until  the same are
delivered to the Trustee, or surrendered to the Trustee, for cancellation.

                  Section 2.08.  Nothing in this Indenture or in the Debentures,
expressed or implied,  shall give or be construed to give to any person, firm or
corporation,  other than the parties  hereto and the holders of the  Debentures,
any legal or  equitable  right,  remedy  or claim  under or in  respect  of this
Indenture, or under any covenant,  condition or provision herein contained,  all
of the covenants, conditions and provisions herein being for the sole benefit of
the parties hereto and of the holders of the Debentures.

                  Section 2.09.  The Company in issuing the  Debentures  may use
"CUSIP"  numbers (if then  generally in use),  and, if so, the Trustee shall use
"CUSIP" numbers in notices of redemption as

                                      -13-

<PAGE>

a convenience to holders of Debentures;  provided that any such notice may state
that no  representation  is made as to the correctness of such numbers either as
printed on the Debentures or as contained in any notice of a redemption and that
reliance may be placed only on the other  identification  numbers printed on the
Debentures,  and any such  redemption  shall not be affected by any defect in or
omission of such numbers.


                                 ARTICLE THREE.

                              Issue of Debentures.


                  Section 3.01. Debentures not to exceed the aggregate principal
amount of  $40,000,000,  except as  provided  in  Section  2.06,  may,  upon the
execution of this Indenture or from time to time thereafter,  be executed by the
Company and delivered to the Trustee for  authentication,  and the Trustee shall
thereupon  authenticate and deliver said Debentures to or upon the written order
of the Company  signed by its President or a Vice President and by its Treasurer
or an Assistant  Treasurer or its Secretary or an Assistant  Secretary,  without
further action by the Company.  As a general matter, the Debentures issued under
this  Indenture  evidence  indebtedness  under  the Loan  Agreement  and are not
transferable except to a successor Revenue Bond Trustee.


                                 ARTICLE FOUR.

                           Redemption of Debentures.


                  Section 4.01. The Debentures are redeemable prior to maturity,
in accordance with the provisions of this Article Four, at the principal  amount
thereof and accrued  interest to the date fixed for redemption  (but if the date
fixed for  redemption  is a  semi-annual  interest  payment  date,  the interest
installment  payable  on such date  shall be paid to the  holder at the close of
business  on the record  date for such  interest  payment  date),  together,  in
certain  cases,  with a  premium,  all as set  forth  in the  form of  Debenture
provided for herein. The Trustee,  upon the request of the Company (evidenced by
a copy of a Board Resolution, delivered to the Trustee at least 60 days prior to
the redemption date) and  notification by the Revenue Bond Trustee,  signed by a
Vice President or Trust Officer (delivered to the Trustee at least 35 days prior
to the redemption  date), that an equal principal amount of Revenue Bonds are to
be redeemed and specifying the premium,  if any, to be paid on such  redemption,
shall, for and on behalf of and in the name of the Company,  mail or cause to be
mailed a notice of redemption with respect to the principal amount of Debentures
specified in such request.

                                      -14-

<PAGE>

                  Section  4.02.  In case of a redemption  of a part only of the
Debentures, the Trustee shall select the particular Debentures or parts thereof,
which shall be $5,000 or multiples thereof,  so to be redeemed according to such
method as the Trustee shall deem proper in its discretion.

                  Notice of redemption  to the holder of any Debenture  which is
to be  redeemed  in whole or in part  shall be  mailed  by or on  behalf  of the
Company,  not less than thirty days prior to the date fixed for  redemption,  to
him at his last address appearing upon the registry books.

                  Failure  duly to give such  notice by mailing to the holder of
any Debenture designated for redemption in whole or in part shall not affect the
validity of the proceedings for the redemption of any other Debenture.

                  The notice of  redemption  to each holder of  Debentures to be
redeemed shall specify the Debentures or parts thereof held by such holder to be
redeemed,  which  shall be  $5,000  or  multiples  thereof,  the date  fixed for
redemption,  the CUSIP numbers (if any) of such Debentures, the redemption price
at which  Debentures  are to be  redeemed  and the place  where  payment  of the
redemption price is to be made upon surrender of the Debentures, and shall state
that  interest  accrued  to the date  fixed for  redemption  will be paid in the
manner specified in said notice, that from said date interest thereon will cease
to accrue,  and,  in the case of any  Debenture  which is to be redeemed in part
only, that on and after the redemption date, upon surrender of such Debenture, a
new Debenture or Debentures of authorized  denominations in aggregate  principal
amount equal to the unremedied  portion of such  Debenture will be issued.  Such
notice  shall also state  that it is  subject to the  receipt of the  redemption
moneys by the  Trustee  prior to the date  fixed for  redemption,  and that such
notice,  and the Company's request to the Trustee to mail such notice,  shall be
of no effect unless such moneys are received prior to such date.

                  Section 4.03. Notice of redemption having been mailed, and the
Trustee having prior to the date fixed for redemption specified in the notice of
redemption  received for the purpose an amount in cash  sufficient to redeem all
of the Debentures  called for redemption,  the Debentures  called for redemption
shall become due and payable on such date fixed for redemption.

                  Section 4.04. On and after the date fixed for  redemption,  if
the moneys for the  redemption of the  Debentures to be redeemed shall have been
received by the  Trustee,  such  Debentures  shall cease to bear  interest.  All
moneys on deposit  with the  Trustee for the  redemption  of  Debentures  shall,
subject to the provisions of Section 13.04 hereof,  be held in trust for account
of the holders of the  Debentures so to be redeemed,  and shall be paid to them,
respectively, upon presentation and surrender of said Debentures.

                                      -15-

<PAGE>

                  If any Debenture of a denomination larger than $5,000 shall be
called for redemption in part only,  upon  presentation of any such Debenture so
called for redemption,  the payment with respect to said Debenture shall be made
and Debentures  for the unpaid balance of the principal  amount of the Debenture
so presented shall be authenticated  and delivered by the Trustee without charge
therefor to the holder thereof. On and after the date fixed for such redemption,
interest  shall be payable only on the portion of such  Debenture  not so called
for redemption and only such portion shall be deemed outstanding and continue to
be entitled to the benefits of this Indenture.

                  Anything  in  this   Indenture   contained   to  the  contrary
notwithstanding,  if the  giving of the  notice of  redemption  shall  have been
completed  as provided in Section  4.02,  or if  provision  satisfactory  to the
Trustee for the giving of such notice  shall have been made,  and if the Company
shall have  deposited in trust with the Trustee  funds  sufficient to redeem the
Debentures (or parts  thereof) to be redeemed on the date fixed for  redemption,
together  with  interest  accrued  to the date  fixed for  redemption,  then all
obligations  of the  Company in respect of such  Debentures  (or parts  thereof)
shall  cease and be  discharged  and the  holders  of such  Debentures  or parts
thereof)  shall  thereafter be restricted  exclusively to such funds for any and
all claims of whatsoever nature on their part under this Indenture or in respect
to such Debentures (or parts thereof).


                                 ARTICLE FIVE.

                      Particular Covenants of the Company.


                  The Company covenants as follows:

                  Section  5.01.  The Company  will duly and  punctually  pay or
cause to be paid the principal of and interest on each of the  Debentures at the
time and place and in the manner provided herein and in the Debentures.

                  Section  5.02.  As  long  as  any  of  the  Debentures  remain
outstanding,  the  Company  will  maintain  an office or  agency or  offices  or
agencies  in the  Borough of  Manhattan,  City and State of New York,  where the
Debentures may be presented for registration of transfer and exchange as in this
Indenture  provided,  and where  notices  and  demands to or upon the Company in
respect of the  Debentures  or of this  Indenture  may be served,  and where the
Debentures  may be presented  for payment.  Until  otherwise  designated  by the
Company in a notice to the  Trustee,  such office or agency for all of the above
purposes  shall be the  principal  corporate  trust office of the Trustee in the
Borough of Manhattan, City and State of New York.

                                      -16-

<PAGE>

                  Section 5.03. The Company, whenever necessary to avoid or fill
a vacancy in the office of  Trustee,  will  appoint,  in the manner  provided in
Section  8.10,  a  Trustee,  so that  there  shall  at all  times  be a  Trustee
hereunder.

                  Section 5.04.  (a) If the Company shall appoint a paying agent
other than the  Trustee,  it will cause such paying agent to execute and deliver
to the Trustee an  instrument  in which such agent shall agree with the Trustee,
subject to the provisions of this Section,

                  (1) that it will  hold all sums  held by it as such  agent for
         the payment of the  principal of,  premium,  if any, or interest on the
         Debentures (whether such sums have been paid to it by the Company or by
         any other  obligor on the  Debentures)  in trust for the benefit of the
         holders of the Debentures, or of the Trustee, as the case may be,

                  (2) that it will give the Trustee notice of any failure by the
         Company (or by any other obligor on the Debentures) to make any payment
         of the principal of or interest on the  Debentures  when the same shall
         be due and payable, and

                  (3) that at any time  during the  continuance  of any Event of
         Default upon the written request of the Trustee,  it will forthwith pay
         to the Trustee all sums so held by such paying agent.

                  (b) If the Company shall act as its own paying agent, it will,
on or before each due date of the principal of, premium, if any, or interest on,
the  Debentures,  set aside,  segregate and hold in trust for the benefit of the
holders of the Debentures,  a sum sufficient to pay such principal,  premium, if
any, or interest so becoming  due and payable and will notify the Trustee of any
failure (by it or any other obligor on the Debentures) to take such action.

                  (c) Whenever the Company shall have one or more paying agents,
it will,  prior  to each  due date of the  principal  of,  premium,  if any,  or
interest on, the Debentures, deposit with a paying agent a sum sufficient to pay
the  principal,  premium,  if any, or interest,  so becoming due, such sum to be
held in  trust  for the  benefit  of the  persons  entitled  to such  principal,
premium, if any, or interest,  and (unless such paying agent is the Trustee) the
Company will promptly notify the Trustee of its action or failure so to act.

                  (d) Anything in this Section to the contrary  notwithstanding,
the Company may, at any time,  for the purpose of obtaining a  satisfaction  and
discharge of this Indenture, or for any other reason, pay or cause to be paid to
the  Trustee  all sums held in trust by it, or any paying  agent  hereunder,  as
required

                                      -17-

<PAGE>

by this  Section,  such sums to be held by the  Trustee  upon the trusts  herein
contained.

                  (e) Anything in this Section to the contrary  notwithstanding,
the  agreement  to hold sums in trust as provided in this  Section is subject to
the provisions of Section 13.04 hereof.

                  Section  5.05.  The  Company  covenants  that,  so long as any
Debentures shall be outstanding under this Indenture, it will not create, assume
or incur, or in any other manner become directly or indirectly liable in respect
of, any  indebtedness,  in addition to its 7.20% Debentures due 2019, its 7-1/2%
Debentures  due 2020, its 6.60%  Debentures  due 2021, its 6.70%  Debentures due
2021,  its 8-3/4%  Debentures  due 2021,  its 8% Debentures due 2022, its 7-1/4%
Debentures due 2028 and the Debentures, except the following:

                  (a)  current  operating   liabilities  and  current  or  other
         obligations  (other than for borrowed  money)  incurred in the ordinary
         course of business;

                  (b) Current Indebtedness;

                  (c)   indebtedness   (in  addition  to  that  referred  to  in
         subdivisions  (a) and (b) above and (d) below) in an  aggregate  amount
         not in excess of $10,000,000 at any one time outstanding; and

                  (d)   indebtedness   (in  addition  to  that  referred  to  in
         subdivisions  (a),  (b) and (c)  above) in an  aggregate  amount not in
         excess of the sum of $20,000,000 plus 65% of the Amount of Net Property
         Additions at the time the Company  first  becomes  liable in respect of
         any such indebtedness.

                  The Company covenants that, so long as any Debentures shall be
outstanding under this Indenture, it will not create, assume or incur, or in any
manner become directly or indirectly  liable in respect of, any indebtedness (in
addition to its 7.20%  Debentures due 2019, its 7-1/2%  Debentures due 2020, its
6.60% Debentures due 2021, its 6.70% Debentures due 2021, its 8-3/4%  Debentures
due 2021,  its 8%  Debentures  due 2002,  its 7-1/4%  Debentures  due 2028,  the
Debentures and that referred to in subdivisions (a), (b) and (c) above),  unless
the Gross Income of the Company,  for a period of 12 consecutive calendar months
within the 15 calendar months immediately preceding the incurring by the Company
of such  indebtedness,  shall  have  been at least  equal to  twice  the  Annual
Interest Charges.

                  The term  "Current  Indebtedness"  as used  herein  shall mean
indebtedness  in an  aggregate  amount  not  in  excess  of  20%  of  the  total
capitalization  of the Company at the time and which is  expressed to be payable
on demand or to mature less than one year after the date of creation or issuance
thereof. The total

                                      -18-

<PAGE>

capitalization  of the Company  shall be deemed to consist of the sum of (i) the
principal amount of all outstanding  indebtedness of the Company  represented by
bonds, debentures,  notes or other evidences of indebtedness (other than Current
Indebtedness),  (ii) the aggregate of the par or stated value represented by all
issued and  outstanding  capital stock of all classes of the Company,  including
premiums  received on the issue of such capital stock,  and (iii) the surplus of
the Company, including earned, capital, paid-in and other surplus.

                  The term  "Amount of Net  Property  Additions"  as used herein
shall mean the balance,  if any,  remaining after deducting the Retirements from
the Amount of Property Additions, as of any particular time.

                  The term "Amount of Property  Additions"  as used herein shall
mean the Cost or,  if less,  the fair  value to the  Company  at the time of the
actual acquisition by the Company, of Property Additions.

                  The term  "Property  Additions"  as used herein shall mean all
tangible  property  owned by the  Company  and made,  constructed  or  otherwise
acquired by it subsequent to December 31, 1975,  which the Company is authorized
to  acquire,  own and  operate  and which is used or useful in the  business  of
impounding,  storing,  transmitting,  producing,  manufacturing,   transporting,
distribution   or  supplying   water  for  any  and  all   purposes.   Permanent
improvements,   extensions,   additions  or   replacements  in  the  process  or
construction  or  erection,  shall be included as Property  Additions  as of any
particular time,  insofar as actually  constructed or erected after December 31,
1975, and before such particular  time.  There shall not be included as Property
Additions (a) Excepted Property,  (b) going value or good will, as such, (c) any
item of  property  retired  the  retirement  of which has not been  credited  to
utility plant  account,  (d) any item of property  acquired to replace a similar
item of  property  whose  retirement  has not been  credited  to  utility  plant
account,  or any item of  property  whose cost has been  charged or is  properly
chargeable to repairs,  maintenance or other operating  expense account or whose
cost has been charged or is not properly chargeable to utility plant account, or
(e) any property not located in the State of New Jersey or in a State contiguous
thereto.

                  The term  "Retirements"  as used herein shall mean the Cost of
Fundable Property which, subsequent to December 31, 1975, shall have become worn
out or  permanently  unserviceable,  or shall have been lost,  sold,  destroyed,
abandoned,  surrendered on lapse of title, taken by eminent domain, purchased by
any  governmental  or public body pursuant to any right reserved to or vested in
it, or  otherwise  disposed  of by the Company or retired  from  service for any
reason, or shall have permanently ceased to be used or useful in the business of
the   Company.   Accounting   adjustments   of   utility   plant   accounts   or
reclassification of utility plant

                                      -19-

<PAGE>

accounts or  amortization  of any plant  account to comply with any order of any
regulatory  body and which do not represent or reflect the permanent  retirement
from a plant account  subsequent  to December 31, 1975 of any Fundable  Property
shall not be included in Retirements.

                  The term "Fundable Property" as used herein shall mean (a) all
property  owned by the Company on December  31, 1975  (except  such  property as
would not be included in Property  Additions if acquired  subsequent to December
31, 1975) and (b) Property Additions.

                  The term "Cost" as used herein,  when used with respect to any
particular  property,  shall mean the cost (or,  if not known,  estimated  cost)
thereof to the person first  devoting it to public  service,  without  deducting
therefrom   applicable  reserves  for  depreciation  and/or  retirements  and/or
depletion and/or  obsolescence.  In determining Cost in cases in which property,
part of which  constitutes  Fundable  Property and part does not, is or has been
acquired for a consideration  not divided between such parts, or, in cases where
the  consideration  given for property is not  allocated to the various items of
property  acquired,  the consideration may be allocated to the various parts and
items of property  acquired in any reasonable manner which is in accordance with
the  requirements  of any  systems  of  accounting  with  which the  Company  is
compelled  to  comply  by  any  provision  of  law,  or,  if  there  be no  such
requirements, in accordance with good accounting practice.

                  The term  "Gross  Income"  as used  herein  shall  mean  gross
operating  revenues  from all sources  (whether or not subject to refund)  after
deducting therefrom  operating expenses.  In computing gross operating revenues,
there shall be included net  non-operating  revenues,  if any (including  income
from securities, whether of subsidiaries or not), in an amount not more than 20%
of Gross  Income  after  deducting  therefrom  net  non-operating  revenues.  In
computing  operating  expenses,  there shall be included all operating expenses,
including  accruals  for taxes  (except  that taxes on  undistributed  earnings,
income and excess  profits and any like taxes  measured by income and charges in
lieu of any thereof  made  because of the  deferment  in payment of any such tax
shall be excluded from operating expenses, and any credit to income subsequently
made on account of any such prior charge shall be excluded from gross  operating
revenues),   rentals,   insurance,   actual  charges  for  current  repairs  and
maintenance  and  charges  to expense  or income to  provide  for  depreciation,
renewals,  replacements,  depletion or  retirement  of property and for property
loss (but excluding  interest,  charges deducted in computing net  non-operating
revenues  and charges to income for the  amortization  (i) of debt  discount and
expense and (ii) of utility plant account or amounts transferred therefrom).  If
any of the property  owned by the Company at the time any  computation  of Gross
Income is made  shall  have been  acquired  during or after any period for which
Gross Income is to be computed, the Gross

                                      -20-

<PAGE>

Income of such property (computed in the manner in this Section provided for the
computation of the Gross Income of the Company)  during such period or such part
of such period as shall have  preceded the  acquisition  thereof,  to the extent
that the same have not otherwise been included and can be  determined,  shall be
included in the Gross Income of the Company for all purposes of this  Indenture,
and the Gross Income which can be determined of any property  disposed of by the
Company  during or after such period shall not be treated as Gross Income of the
Company.

                  The term "Annual  Interest  Charges" as used herein shall mean
the interest requirements for twelve months upon all indebtedness of the Company
(including any  indebtedness,  whether or not created or assumed by the Company,
on which the Company  customarily pays interest charges or which is secured by a
lien on any property of the Company, but excluding (a) indebtedness  represented
by customers' deposits,  (b) current operating  liabilities and current or other
obligations  (other than for borrowed  money) incurred in the ordinary course of
business,  (c)  indebtedness  for the  purchase,  payment or redemption of which
money in the  necessary  amount  shall  have been  deposited  in trust,  and (d)
Current Indebtedness) to be outstanding upon the incurring by the Company of the
indebtedness in connection with which the computation is made.

                  Section  5.06.  The  Company  covenants  that,  so long as any
Debentures  shall be outstanding  under the  Indenture,  it will not at any time
mortgage or pledge, or permit any other lien (other than Excepted  Encumbrances)
to become a lien on, any property  owned by the Company just prior to such time,
to secure any other indebtedness, without making effective provision whereby the
Debentures shall (so long as any such other indebtedness shall be so secured) be
secured (along with any other indebtedness  similarly entitled to be equally and
ratably  secured) by a direct  lien (on all the  property,  other than  Excepted
Property, owned by the Company just prior to the time such other lien shall have
become a lien on any of the property of the Company)  prior to the lien or liens
securing  any and all such  other  indebtedness;  provided,  however,  that this
restriction shall not be applicable to nor prevent

                  (a) the  pledging by the Company of its assets as security for
         the payment of any tax,  assessment or other similar charge demanded of
         the Company by any governmental authority or public body so long as the
         Company in good faith  contests its  liability  to pay the same,  or as
         security to be deposited with any governmental authority or public body
         for any purpose at any time required by law or governmental  regulation
         as a condition  to the  transaction  of any business or the exercise of
         any privilege, license or right; or

                  (b) the  pledging by the Company of any assets for the purpose
         of securing a stay or discharge or for any other

                                      -21-

<PAGE>

         purpose in the course of any legal proceeding in which the Company is a
         party; or

                  (c) making good faith  deposits in  connection  with  tenders,
         contracts or leases to which the Company is a party.

                  The Company covenants that, so long as any Debentures shall be
outstanding  under this Indenture,  if, upon any  consolidation or merger of the
Company with or into any other  corporation,  or upon any sale or  conveyance of
all or substantially all of the property of the Company as an entirety,  or upon
any  acquisition  by  the  Company  of  the  property  of  another   corporation
substantially  as an entirety or upon any merger of any other  corporation  into
the Company,  any of the property  (other than Excepted  Property)  owned by the
Company just prior thereto,  would  thereupon  become subject to any lien (other
than Excepted Encumbrances),  the Company, prior to such consolidation,  merger,
sale,  conveyance  or  acquisition,  will take  appropriate  action  whereby the
Debentures  shall (so long as such  property  shall be  subject to such lien) be
secured (along with any other indebtedness  similarly entitled to be equally and
ratably secured) by a direct lien on such portion of the property of the Company
prior to all other liens,  other than Excepted  Encumbrances  and other than any
liens  existing  thereon  just  prior  to  such  consolidation,   merger,  sale,
conveyance or acquisition.

                  Any instrument creating a lien pursuant to the requirements of
this  Section  shall  contain  reasonable  and  customary   provisions  for  the
enforcement  of such lien and for the  release  of,  or  substitution  for,  the
property  subjected  to such lien.  Such  direct lien shall be  evidenced  by an
appropriate  instrument or instruments executed and delivered to the Trustee (or
to the extent legally  necessary,  to another  trustee as additional or separate
trustee).  The Trustee,  subject to the  provisions of Section 8.01 hereof,  may
receive an Opinion of Counsel as conclusive evidence that any such instrument is
in customary form and complies with the foregoing  provisions of this paragraph;
and the Trustee shall not be under any duty or  responsibility  to any holder of
any Debenture with respect to the form,  validity or  enforceability of any such
instrument which it may accept in reliance in good faith upon any such opinion.

                  If the  Company  shall fail to create a direct  lien to secure
the  Debentures,  as required by the foregoing  provisions  of this Section,  an
equitable lien shall exist to the same extent and on the same property as though
the Company had created such direct lien.

                  The term "Excepted  Encumbrances" as used herein shall mean as
of any particular time any of the following:

                      (i) liens for taxes,  assessments or governmental  charges
         not delinquent and liens for workmen's compensation

                                      -22-

<PAGE>

         awards and  similar  obligations  not  delinquent  and liens for taxes,
         assessments  or  governmental  charges  delinquent  but the validity of
         which is being  contested  at the time by the  Company in good faith by
         appropriate proceedings diligently conducted;

                      (ii) any liens securing  indebtedness  neither assumed nor
         guaranteed by the Company nor on which it  customarily  pays  interest,
         existing  in or  relating  to real  estate  acquired by the Company for
         transmission,  distribution or right-of-way  purposes, or in connection
         with its usual operations;

                      (iii)  easements  or  reservations  in any property of the
         Company  created  for the  purpose  of roads,  railroads,  railroadside
         tracks,  electric lines, pipe lines, sewers, water and gas transmission
         and  distribution  mains,  conduits,  water  rights of the State of New
         Jersey or others,  building and use  restrictions  and defects of title
         to, or leases of, any parts of the property of the Company which do not
         in the opinion of the Company's  counsel  materially  impair the use of
         the  property as an entirety in the  operation  of the  business of the
         Company;

                      (iv) undetermined  liens and charges incidental to current
         construction,   including  mechanics',  laborers',   materialmen's  and
         similar liens not delinquent;

                      (v) any  obligations  or duties  affecting the property of
         the Company to any municipality or public authority with respect to any
         franchise, grant, license, permit or certificate;

                      (vi) rights  reserved to or vested in any  municipality or
         public  authority to control or regulate any property of the Company or
         to use such property in a manner which does not  materially  impair the
         use of such  property  for the  purposes  for  which  it is held by the
         Company;

                      (vii)  judgments  in  course of  appeal  or  otherwise  in
         contest and secured by sufficient bond or security;

                      (viii) any  irregularities  in or deficiencies of title to
         any rights of way for mains or pipes  and/or  appurtenances  thereto or
         other  improvements  thereon  and to any real estate used or to be used
         primarily  for right of way  purposes,  provided that the Company shall
         have obtained from the apparent  owner of the lands or estates  covered
         by any such right of way an instrument purporting by its terms to grant
         the use thereof for the construction,  operation or maintenance of such
         main, pipe,  appurtenance or improvement for which the same are used or
         are to be used, or provided  that the Company has power,  under eminent
         domain  or  similar   statutes,   to  remove  such   irregularities  or
         deficiencies; or

                                      -23-

<PAGE>

                      (ix) any other lien on any  property  owned by the Company
         to secure any indebtedness so long as the aggregate principal amount of
         all such indebtedness is not in excess of $10,000,000.

                  The term  "Excepted  Property"  as used herein  shall mean (a)
cash, bonds,  stocks,  obligations and other  securities;  (b) choses in action,
accounts and bills receivable, judgments and other evidences of indebtedness and
contracts,  leases and operating  agreements;  (c) stock in trade,  merchandise,
equipment,  apparatus,  materials or supplies  manufactured  or acquired for the
purpose of sale and/or  resale in the usual course of business or  consumable in
the operation of any of the properties of the Company or held for the purpose of
repairing or replacing  (in whole or in part) any rolling  stock,  buses,  motor
coaches,  trucks,  automobiles or other vehicles or aircraft;  (d) timber,  gas,
oil,  minerals  (including  developed and  undeveloped  natural gas reserves and
natural gas in underground storage or otherwise),  mineral rights and royalties;
(e) materials or products generated, manufactured,  produced or purchased by the
Company for sale,  distribution  or use in the ordinary  course of its business;
(f) office furniture and equipment,  tools, rolling stock, buses, motor coaches,
trucks,  automobiles  and other  vehicles and  aircraft;  and (g) the  Company's
franchise to be a corporation.

                  Section  5.07.  The  Company  covenants  that,  so long as any
Debentures shall be outstanding under this Indenture, it will not declare or pay
any  dividends  or make any other  distribution  (except  dividends  payable  or
distributions  made in shares of capital  stock of the Company) on or in respect
of any of its Common Stock, or purchase or otherwise acquire for a consideration
any shares of its Common Stock (except out of the proceeds derived from the sale
of additional  shares of its Common Stock  subsequent to November 30, 1995),  if
the aggregate of such dividends and  distributions  and such  consideration  for
purchase or other  acquisition of shares of its Common Stock made by the Company
after  December 31, 1975 would  exceed the sum of (a) the earned  surplus of the
Company accumulated after December 31, 1975 and determined without any deduction
on account of such dividends, distributions or acquisitions and (b) $10,000,000.
The term  "consideration"  as used in this Section shall mean cash or fair value
if the  consideration  be other  than  cash.  Charges  to  earned  surplus  with
corresponding credits to utility plant acquisition adjustment account or utility
plant  adjustment  account  or any  similar  account or to any  reserve  for the
purpose of ultimately  disposing  thereof and any provisions for amortization of
any  amounts  included in utility  plant  acquisition  account or utility  plant
adjustment account or in any similar account shall be disregarded in determining
earned surplus accumulated after December 31, 1975.

                  Section  5.08.  The  Company  covenants  that,  so long as any
Debentures shall be outstanding under this Indenture, if the

                                      -24-

<PAGE>

Proceeds of Released  Property in any period of 12 consecutive  calendar  months
shall  amount to  $5,000,000  or more,  and if,  immediately  subsequent  to the
receipt  of such  $5,000,000  (or the  part  hereof  making  the  total  thereof
$5,000,000  or  more),  the  ratio  of the  aggregate  principal  amount  of all
outstanding indebtedness of the Company represented by bonds, debentures,  notes
or other evidences of indebtedness (other than Current  Indebtedness) to the net
book value of the Company's utility plant accounts exceeds 60%, then the Company
will use such Proceeds of Released Property to redeem Debentures or to redeem or
to redeem 7.20%  Debentures  due 2019 issued by the Company  (herein  called the
"7.20%  Debentures due 2019") or to redeem 7-1/2%  Debentures due 2020 issued by
the Company (herein called the "7-1/2%  Debentures due 2020") or to redeem 6.60%
Debentures due 2021 issued by the Company  (herein called the "6.60%  Debentures
due 2021") or to redeem 6.70%  Debentures due 2021 issued by the Company (herein
called the "6.70%  Debentures due 2021") or to redeem 8-3/4% Debentures due 2021
issued by the Company  (herein  called the "8-3/4%  Debentures  due 2021") or to
redeem 8%  Debentures  due 2022  issued by the  Company  (herein  called the "8%
Debentures  due 2022") or to redeem  7-1/4%  Debentures  due 2028  issued by the
Company  (herein  called the "7- 1/4%  Debentures  due 2028") or to redeem other
debentures   issued  by  the  Company  under   indentures   having  a  provision
substantially  similar to this Section  5.08  ("Subsequent  Debentures")  at the
earliest  practicable  date at a redemption  price equal to the principal amount
thereof plus accrued interest to the date of redemption; provided, however, that
the  Company  shall  not be  required  so to use any  part of such  Proceeds  of
Released  Property  as to which the  Company  shall  have  given to the  Trustee
(within 30 days after such  receipt) an Officers'  Certificate  stating that the
Company intends,  within a period of one year thereafter,  to apply such part to
the making,  constructing or otherwise acquiring of Property  Additions.  If any
such Officers'  Certificate  shall so state,  the Company  covenants so to apply
such part within such one year as stated in such  Officers'  Certificate  or, to
the extent that it does not so apply such part, to use such part within such one
year to redeem  Debentures or to redeem 7.20%  Debentures  due 2019 or to redeem
7-1/2%  Debentures due 2020 or to redeem 6.60%  Debentures due 2021 or to redeem
6.70%  Debentures due 2021 or to redeem 8-3/4%  Debentures due 2021 or to redeem
8%  Debentures  due 2022 or to redeem  7-1/4%  Debentures  due 2028 or to redeem
Subsequent Debentures.

                  In lieu of using any such  Proceeds of Released  Property  for
redemption as aforesaid, the Company may deliver to the Trustee for cancellation
Debentures  or may deliver for  cancellation  to the trustee under the indenture
pursuant to which the 7.20% Debentures due 2019 were issued 7.20% Debentures due
2019,  or may  deliver  for  cancellation  to the  trustee  under the  indenture
pursuant to which the 7 1/2%  Debentures due 2020 were issued 7-1/2%  Debentures
due 2020,  or may deliver for  cancellation  to the trustee  under the indenture
pursuant to which the 6.60% Debentures due 2021 were issued 6.60% Debentures due

                                      -25-

<PAGE>

2021,  or may  deliver  for  cancellation  to the  Trustee  under the  indenture
pursuant to which the 6.70% Debentures due 2021 were issued 6.70% Debentures due
2021,  or may  deliver  for  cancellation  to the  trustee  under the  indenture
pursuant to which the 8-3/4%  Debentures due 2021 were issued 8-3/4%  Debentures
due 2021,  or may deliver for  cancellation  to the trustee  under the indenture
pursuant to which the 8% Debentures due 2022 were issued 8% Debentures due 2022,
or may deliver for  cancellation to the trustee under the indenture  pursuant to
which the 7-1/4%  Debentures due 2028 were issued 7-1/4% Debentures due 2028, or
may deliver for  cancellation  to the trustee  under any  indenture  pursuant to
which any Subsequent Debentures were issued such Subsequent Debentures,  in each
case with all  unmatured  coupons,  if any,  appertaining  thereto,  theretofore
reacquired by the Company and not theretofore so delivered, and in any such case
the  obligation  of the Company to use such  Proceeds of Released  Property  for
redemption  shall be reduced to the extent of the aggregate  principal amount of
Debentures or the 7.20%  Debentures  due 2019 or 7 1/2%  Debentures  due 2020 or
6.60 Debentures due 2021 or 6.70%  Debentures due 2021 or 8-3/4%  Debentures due
2021 or 8%  Debentures  due 2022 or  7-1/4%  Debentures  due 2028 or  Subsequent
Debentures  so  delivered.  All  Debentures so delivered to the Trustee shall be
canceled by the Trustee.

                  The term "Proceeds of Released Property" as used herein and in
the Debentures shall mean the aggregate amount of the consideration  received or
to be received by the  Company on the actual  sale or other  actual  disposition
(subsequent  to the  execution of this  Indenture)  of any property  included in
utility plant accounts  (including  therein an amount  equivalent to any part of
such  consideration  consisting  of other than cash at the fair value thereof to
the Company at the time of such sale or other disposition, as determined in good
faith by the Board of  Directors  of the  Company,  and  excluding  therefrom an
amount equivalent to any consideration received or to be received by the Company
on the sale or other  disposition  of any property (i) which property shall have
become worn out or permanently  unserviceable  and the book value of which shall
have been credited to utility plant accounts upon the retirement thereof or (ii)
to the  extent  that the  consideration  so  received  or to be  received  shall
constitute  Property  Additions) after deducting from such amount, to the extent
paid or payable by the Company,  all expenses  and all taxes  (including  income
taxes, if any) upon or in respect of any such sale or other disposition.

                  Section 5.09.  The Company will deliver to the Trustee  within
120  days  after  the  end of each  fiscal  year of the  Company  the  Officers'
Certificate  required  by Section  314(a)(4)  of the Trust  Indenture  Act.  See
Section 314(a)(4) of the Trust Indenture Act.

                  Section 5.10. The Company will deliver to the Trustee true and
correct copies of the Loan Agreement and the Revenue

                                      -26-

<PAGE>

Bond Indenture as originally executed and all amendments or supplements thereto.


                                  ARTICLE SIX.

                     Debentureholders' Lists and Reports by
                          the Company and the Trustee.


                  Section  6.01.  The  Company  shall  deliver  to the  Trustee,
semi-annually,  not more than 15 days after each record  date,  the  information
required by Section  312(a) of the Trust  Indenture  Act. See Section 312 of the
Trust Indenture Act.

                  Section 6.02. See Section 312 of the Trust Indenture Act.

                  Section 6.03. See Section 314(a) of the Trust Indenture Act.

                  Section 6.04. On or before June 1 in each year, beginning June
1, 1996, so long as any Debentures are outstanding hereunder,  the Trustee shall
transmit by mail to the  Debentureholders  the report required by Section 313(a)
of the Trust Indenture Act, if such report is required.  See Trust Indenture Act
Sections 311(b) and 313.


                                 ARTICLE SEVEN.

                          Remedies of the Trustee and
                     Debentureholders on Event of Default.


                  Section 7.01.  In case one or more of the following  Events of
Default shall have occurred and be continuing, that is to say:

                  (a) default in the due and punctual payment of any installment
         of  interest  upon any of the  Debentures  as and  when the same  shall
         become due and payable, and continuance of such default for a period of
         thirty days; or

                  (b) default in the due and punctual  payment of the  principal
         of any of the  Debentures  as and when the same  shall  become  due and
         payable  either at  maturity,  by  declaration  as  authorized  by this
         Indenture, or otherwise; or

                  (c)  failure  on the part of the  Company  duly to  observe or
         perform any other of the  covenants,  conditions  or  agreements on the
         part of the Company in the  Debentures or in this  Indenture  contained
         for a period of sixty days after

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         the date on which written notice of such failure, requiring the same to
         be remedied, shall have been given to the Company by the Trustee, or to
         the Company and the Trustee by the holders of at least 25% in aggregate
         principal amount of the Debentures at the time outstanding; or

                  (d) a decree or order by a court  having  jurisdiction  in the
         premises  shall have been entered  adjudging  the Company a bankrupt or
         insolvent,  or  approving  a  petition  seeking  reorganization  of the
         Company  under  Title  11,  United  States  Code or any  other  similar
         applicable  Federal or State law,  and such  decree or order shall have
         continued  undischarged  and unstayed for a period of sixty days;  or a
         decree or order of a court having  jurisdiction in the premises for the
         appointment  of a receiver  or  liquidator  or trustee or  assignee  in
         bankruptcy or insolvency of the Company or of all or substantially  all
         of its property,  or for the winding up or  liquidation  of its affairs
         shall have been  entered,  and such decree or order shall have remained
         in force undischarged and unstayed for a period of sixty days; or

                  (e) the Company shall institute  proceedings to be adjudicated
         a voluntary  bankrupt,  or shall  consent to the filing of a bankruptcy
         proceeding  against  it, or shall file a petition  or answer or consent
         seeking  reorganization under Title 11, United States Code or any other
         similar applicable Federal or State law, or shall consent to the filing
         of any such petition, or shall consent to the appointment of a receiver
         or  liquidator or trustee or assignee in bankruptcy or insolvency of it
         or of all or  substantially  all of its  property,  or  shall  make  an
         assignment for the benefit of creditors,  or shall admit in writing its
         inability to pay its debts generally as they become due; or

                  (f) an event of default,  as defined in (i) any  indenture  or
         trust  agreement  securing or protecting any debt of the Company now or
         hereafter outstanding aggregating more than $10,000,000, or (ii) in the
         Revenue Bond  Indenture,  shall happen and be then  continuing and such
         debt shall be or become due and payable, prior to the date on which the
         same would otherwise become due and payable, provided that, in the case
         of clause (i),  such  acceleration  shall not be  rescinded or annulled
         within ten days after  written  notice  thereof to the Company from the
         Trustee or to the Company and the Trustee  from the holders of not less
         than  25% in  principal  amount  of  the  Debentures  then  outstanding
         hereunder;

then and in each and every such case, so long as such Event of Default shall not
have been  remedied,  unless  the  principal  of all the  Debentures  shall have
already  become due and  payable,  either the Trustee or the holders of not less
than 25% in  aggregate  principal  amount  of the  Debentures  then  outstanding
hereunder, by

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notice  in  writing  to  the  Company  (and  to  the  Trustee  if  given  by the
Debentureholders),  may  declare  the  principal  of  all  the  Debentures  then
outstanding to be due and payable immediately, and upon any such declaration the
same  shall  become  and shall be  immediately  due  payable,  anything  in this
Indenture or in the said Debentures  contained to the contrary  notwithstanding.
This provision,  however, is subject to the condition that if, at any time after
the principal of the Debentures shall have been so declared due and payable, but
before  the  Debentures  shall  have  become  due by their  terms and before any
judgment or decree for the payment of the monies due shall have been obtained or
entered as hereinafter provided, the Company shall pay or shall deposit with the
Trustee a sum  sufficient to pay all matured  installments  of interest upon all
the Debentures then outstanding and the principal of any and all Debentures then
outstanding  which shall have become due otherwise  than by  acceleration  (with
interest upon such principal and, to the extent that payment of such interest is
enforceable under applicable law, upon overdue installments of interest,  at the
rate per  annum  expressed  in the  Debentures  to the date of such  payment  or
deposit) and the amount  payable to the Trustee under Section 8.06,  and any and
all defaults  under the  Indenture,  other than the  nonpayment  of principal on
Debentures  then  outstanding  which shall not have  become due by their  terms,
shall have been  remedied  or  provisions  shall have been made  therefor to the
satisfaction  of the  Trustee  -- then and in every  such case the  holders of a
majority in aggregate  principal amount of the Debentures then  outstanding,  by
written  notice to the Company and to the  Trustee,  may waive all  defaults and
rescind and annul such declaration and its  consequences;  but no such waiver or
rescission and annulment shall extend to or shall affect any subsequent default,
or shall impair any right consequent thereon.

                  In case the Trustee shall have  proceeded to enforce any right
under  this  Indenture  and such  proceedings  shall have been  discontinued  or
abandoned  because of such  rescission  or  annulment or for any other reason or
shall have been determined adversely to the Trustee, then and in every such case
the Company  and the Trustee  shall be  restored  respectively  to their  former
positions  and rights  hereunder,  and all  rights,  remedies  and powers of the
Company and the Trustee shall  continue as though no such  proceedings  had been
taken,  subject  to any  applicable  order or  ruling  in a court  of  competent
jurisdiction.

                  Section 7.02.  The Company  covenants that (1) in case default
shall  be made in the  payment  of any  installment  of  interest  on any of the
Debentures,  as and when the same shall become due and payable, and such default
shall have  continued  for a period of thirty days, or (2) in case default shall
be made in the payment of the principal of any of the  Debentures  when the same
shall have become due and payable,  whether upon  maturity of the  Debentures or
upon  declaration  as  authorized by this  Indenture or otherwise -- then,  upon
demand of the Trustee,  the Company will pay to the Trustee,  for the benefit of
the holders

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of the Debentures then outstanding, the whole amount that then shall have become
due and payable on all such  Debentures  for principal or interest,  as the case
may be, with interest upon the overdue principal and (to the extent that payment
of such interest is enforceable under applicable law) upon overdue  installments
of interest at the rate per annum expressed in the Debentures;  and, in addition
thereto,  such  further  amount  as shall be  sufficient  to cover the costs and
expenses of  collection,  and the amount  payable to the Trustee  under  Section
8.06.

                  In case the Company  shall fail  forthwith to pay such amounts
upon such  demand,  the  Trustee,  in its own name and as  trustee of an express
trust, shall be entitled and empowered to institute any action or proceedings at
law or in  equity  for the  collection  of the sums so due and  unpaid,  and may
prosecute any such action or  proceeding  to judgment or final  decree,  and may
enforce any such  judgment or final decree  against the Company or other obligor
upon the  Debentures  and  collect  in the  manner  provided  and to the  extent
permitted  by law out of the  property of the Company or other  obligor upon the
Debentures wherever situated the monies adjudged or decreed to be payable.

                  The Trustee shall be entitled and empowered, either in its own
name or as trustee of an express trust, or as  attorney-in-fact  for the holders
of the Debentures,  or in any one or more of such capacities, to file such proof
of debt, amendment of proof of debt, claim, petition or other document as may be
necessary  or  advisable  in order to have the claims of the  Trustee and of the
holders  of the  Debentures  allowed  in any  equity  receivership,  insolvency,
bankruptcy,   liquidation,   readjustment,   reorganization  or  other  judicial
proceedings  relative to the Company or any other  obligor on the  Debentures or
their creditors,  or affecting their property. The Trustee is hereby irrevocably
appointed (and the successive respective holders of the Debentures by taking and
holding the same shall be conclusively  deemed to have so appointed the Trustee)
the  true  and  lawful   attorney-in-fact  of  the  respective  holders  of  the
Debentures,  with  authority  to make  and file in the  respective  names of the
holders of the  Debentures  or on behalf of the holders of the  Debentures  as a
class,  subject to  deduction  from any such claims of the amounts of any claims
filed by any of the  holders of the  Debentures  themselves,  any proof of debt,
amendment  of proof of  debt,  claim,  petition  or other  document  in any such
proceedings and to receive payment of any sums becoming distributable on account
thereof,  and to execute  any such  other  papers  and  documents  and to do and
perform  any and all such acts and things  for and on behalf of such  holders of
the Debentures as may be necessary or advisable in the opinion of the Trustee in
order to have the  respective  claims of the  Trustee  and of the holders of the
Debentures  against the Company or its property  allowed in any such proceeding,
and to receive payment of or on account of such claims; provided,  however, that
nothing contained in this Indenture shall be deemed to give to the Trustee any

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right to accept or consent to any plan of  reorganization or otherwise by action
of any character in any such  proceeding to waive or change in any way any right
of any Debentureholder.

                  All  rights of  action  and of  asserting  claims  under  this
Indenture,  or under  any of the  Debentures,  may be  enforced  by the  Trustee
without the possession of any of the  Debentures,  or the production  thereof on
any trial or other proceeding relative thereto,  and any such suit or proceeding
instituted  by the  Trustee  shall be  brought  in its own name as trustee of an
express trust,  and any recovery of judgment shall be for the ratable benefit of
the holders of the Debentures, subject to the provisions of this Indenture.

                  In case of an Event of Default  hereunder  the  Trustee may in
its  discretion  proceed to protect and enforce the rights  vested in it by this
Indenture by such  appropriate  judicial  proceedings  as the Trustee shall deem
most  effectual to protect and enforce any of such  rights,  either at law or in
equity or in bankruptcy or otherwise,  whether for the specific  enforcement  of
any covenant or agreement  contained in this Indenture or in aid of the exercise
of any power  granted  in this  Indenture,  or to  enforce  any  other  legal or
equitable right vested in the Trustee by this Indenture or by law.

                  Section 7.03. Any monies  collected by the Trustee pursuant to
Section  7.02,  shall be  applied in the order  following,  at the date or dates
fixed by the Trustee, upon presentation of the several Debentures,  and stamping
thereon the payment, if only partially paid, and upon surrender thereof if fully
paid:

                  First:  To the payment of costs and expenses of collection and
         of all amounts payable to the Trustee under Section 8.06;

                  Second:  In case the principal of the  outstanding  Debentures
         shall not have become due and be unpaid,  to the payment of interest on
         the  Debentures,  in the order of the maturity of the  installments  of
         such  interest,  with  interest  (so far as may be  lawful  and if such
         interest  has  been   collected  by  the  Trustee)   upon  the  overdue
         installments  of  interest  at the  rate  per  annum  expressed  in the
         Debentures,  such  payments to be made ratably to the persons  entitled
         thereto, without discrimination or preference;

                  Third:  In case the  principal of the  outstanding  Debentures
         shall have become due, by  declaration  as authorized by this Indenture
         or otherwise,  to the payment of the whole amount then owing and unpaid
         upon the  Debentures  for principal and interest,  with interest on the
         overdue principal and (so far as may be lawful and if such interest has
         been collected by the Trustee) upon overdue installments of interest at
         the rate per annum expressed in the

                                      -31-

<PAGE>

         Debentures;  and in case such monies  shall be  insufficient  to pay in
         full the whole  amount so due and unpaid upon the  Debentures,  then to
         the payment of such  principal  and  interest,  without  preference  or
         priority of principal over interest, or of interest over principal,  or
         of any installment of interest over any other  installment of interest,
         or of any Debenture over any other Debenture,  ratably to the aggregate
         of such principal and accrued and unpaid interest; and

                  Fourth:  To the  payment  of the  remainder,  if  any,  to the
         Company,  its  successors or assigns,  or to whomsoever may be lawfully
         entitled to receive the same,  or as a court of competent  jurisdiction
         may direct.

                  Section 7.04. Except as otherwise  expressly  provided in this
Section,  no  holder  of any  Debenture  shall  have any  right by  virtue or by
availing of any provision in this  Indenture or otherwise to institute any suit,
action or  proceeding  in equity or at law upon or under or with respect to this
Indenture,  for the  appointment of a receiver or trustee,  for the execution of
any trust or power hereof, or for any other remedy hereunder, unless such holder
previously  shall have given to the Trustee written notice of default and of the
continuance  thereof, as hereinbefore  provided,  and unless also the holders of
not  less  than  25%  in  aggregate  principal  amount  of the  Debentures  then
outstanding  shall have made written  request upon the Trustee either to proceed
to exercise the powers hereinbefore granted or to institute such action, suit or
proceeding in its own name as trustee hereunder and shall have offered or caused
the holders of the Revenue Bonds to have offered, to the Trustee such reasonable
indemnity as it may require  against the costs,  expenses and  liabilities to be
incurred therein or thereby,  and the Trustee within a reasonable time (which in
no event  shall be less than  sixty  days)  after its  receipt  of such  notice,
request and offer of  indemnity,  shall have failed to proceed to exercise  such
powers or to institute any such action, suit or proceeding;  it being understood
and intended,  and being  expressly  covenanted by the taker and holder of every
Debenture with every other taker and holder and the Trustee, that no one or more
holders of Debentures  shall have any right in any manner  whatever by virtue or
by availing of any provision of this  Indenture to affect,  disturb or prejudice
the rights of the holders of any other of such Debentures,  or to obtain or seek
to obtain  priority over or  preference to any other such holder,  or to enforce
any right under this Indenture, except in the manner herein provided and for the
equal,  ratable  and  common  benefit  of all  holders  of  Debentures.  For the
protection and  enforcement  of the  provisions of this Section,  each and every
Debentureholder and the Trustee shall be entitled to such relief as can be given
either at law or in equity.

                  Nothing herein contained shall, however,  affect or impair the
right, which is absolute and unconditional, of any

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Debentureholder  to receive and to institute  suit to enforce the payment of the
principal  of and interest on his  Debentures  at and after the  respective  due
dates  (including,  subject to the  provisions  of  Section  7.01,  maturity  by
declaration  pursuant to this  Indenture  or  otherwise)  of such  principal  or
interest,  or  the  obligation  of the  Company,  which  is  also  absolute  and
unconditional, to pay the principal of and interest on each of the Debentures to
the  respective  holders  thereof  at the  times and  places  in the  Debentures
expressed.

                  Section  7.05.  No delay or  omission of the Trustee or of any
holder of any of the Debentures to exercise any right or power accruing upon any
Event of Default  shall  impair any such right or power or shall be construed to
be a waiver of any such default or an acquiescence  therein; and, subject to the
provisions of Section  7.04,  every power and remedy given by this Article or by
law to the  Trustee or to the  Debentureholders  may be  exercised  from time to
time,  and as often  as shall be  deemed  expedient,  by the  Trustee  or by the
Debentureholders.

                  Section  7.06.  See Section  316(a)(1) of the Trust  Indenture
Act.

                  Section 7.07. See Section 315(b) of the Trust Indenture Act.

                  Section 7.08. See Section 315(e) of the Trust Indenture Act.


                                 ARTICLE EIGHT.

                            Concerning the Trustee.


                  Section  8.01.  See Trust  Indenture  Act,  including  Section
315(a), (b), (c) and (d) thereof.

                  Section 8.02. Except as otherwise provided in Section 8.01:

                  (a) The Trustee may rely and shall be  protected  in acting or
         refraining  from acting  upon any  resolution,  Officers'  Certificate,
         certificate  of  auditors,   or  any  other   certificate,   statement,
         instrument,   opinion,   report,  notice,   request,   consent,  order,
         appraisal,  bond,  debenture  or  other  paper or  document,  including
         without limitation  documents  delivered to it pursuant to Section 5.10
         (which  documents  the  Trustee  may rely on as not  being  amended  or
         supplemented  other than to the extent any  amendments  or  supplements
         have been  delivered  to it)  believed  by it to be genuine and to have
         been signed or presented by the proper party or parties;

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                  (b) Any  request,  direction,  order or demand of the  Company
         mentioned  herein  shall  be  sufficiently  evidenced  by an  Officers'
         Certificate  (unless  other  evidence  in  respect  thereof  be  herein
         specifically prescribed);  and any resolution of the Board of Directors
         may be  evidenced  to the Trustee by a copy  thereof  certified  by the
         Secretary or an Assistant Secretary of the Company;

                  (c) The Trustee may consult with counsel of its  selection and
         any Opinion of Counsel  shall be full and  complete  authorization  and
         protection  in respect of any action taken or suffered or omitted by it
         hereunder in good faith and in accordance with such Opinion of Counsel;

                  (d) The Trustee  shall be under no  obligation to exercise any
         of the trusts or powers vested in it by this  Indenture at the request,
         order or  direction  of any of the  Debentureholders,  pursuant  to the
         provisions  of this  Indenture,  unless  such  Debentureholders  or the
         holders  of the  Revenue  Bonds  shall  have  offered  to  the  Trustee
         reasonable  security  or  indemnity  against  the costs,  expenses  and
         liabilities which may be incurred therein or thereby;

                  (e) The Trustee shall not be personally  liable for any action
         taken  or  omitted  by  it  in  good  faith  and  believed  by it to be
         authorized or within the discretion or rights or powers  conferred upon
         it by this Indenture;

                  (f) Prior to the  occurrence of an Event of Default  hereunder
         and after the curing or waiving of all Events of  Default,  the Trustee
         shall not be bound to make any investigation  into the facts or matters
         stated in any resolution,  certificate, statement, instrument, opinion,
         report, notice, request,  consent, order, approval,  bond, debenture or
         other paper or  document  unless  requested  in writing so to do by the
         holders  of not  less  than  a  majority  in  principal  amount  of the
         Debentures then  outstanding;  provided,  however,  that if the payment
         within a  reasonable  time to the  Trustee  of the costs,  expenses  or
         liabilities  likely  to be  incurred  by  it  in  the  making  of  such
         investigation is, in the opinion of the Trustee, not reasonably assured
         to the  Trustee  by the  security  afforded  to it by the terms of this
         Indenture,  the Trustee may require  reasonable  indemnity against such
         expense or liability as a condition to so  proceeding.  The  reasonable
         expense of every such investigation shall be paid by the Company or, if
         paid by the Trustee, shall be repaid by the Company upon demand;

                  (g) The  Trustee  may  execute  any of the  trusts  or  powers
         hereunder  or perform  any duties  hereunder  either  directly or by or
         through  agents or attorneys and the Trustee  shall not be  responsible
         for any misconduct or

                                      -34-

<PAGE>

         negligence  on the  part  of any  agent  or  attorney  appointed  by it
         hereunder; and

                  (h) None of the provisions of this Indenture shall require the
         Trustee to expend or risk its own funds or otherwise incur any personal
         financial  liability in the performance of any of its duties hereunder,
         or in the  exercise  of any of its rights or  powers,  if it shall have
         reasonable  grounds  for  believing  that  repayment  of such  funds or
         adequate  indemnity  against such risk or  liability is not  reasonably
         assured to it.

                  Section  8.03.  The  recitals  contained  herein  and  in  the
Debentures  (other than the  certificate of  authentication  on the  Debentures)
shall be taken as the  statements  of the  Company,  and the Trustee  assumes no
responsibility   for  the   correctness  of  the  same.  The  Trustee  makes  no
representations  as to the validity or  sufficiency  of this Indenture or of the
Debentures.  The Trustee shall not be accountable  for the use or application by
the Company of any of the Debentures or of the proceeds of such  Debentures,  or
for the use or  application of any moneys paid over by the Trustee in accordance
with any  provision  of this  Indenture,  or for the use or  application  of any
moneys received by any paying agent.

                  Section 8.04. The Trustee or any paying agent or any Debenture
registrar,  in its  individual  or any other  capacity,  may become the owner or
pledgee of Debentures with the same rights it would have if it were not Trustee,
paying agent or Debenture registrar.

                  Section 8.05.  Subject to the provisions of Section 13.04, all
moneys received by the Trustee shall,  until used or applied as herein provided,
be held in trust for the purposes for which they were received,  but need not be
segregated  from other funds  except to the extent  required by law. The Trustee
shall be under no liability for interest on any moneys  received by it hereunder
except such as it may agree in writing with the Company to pay thereon.  So long
as no Event of Default  shall have  occurred  and be  continuing,  all  interest
allowed  on any such  moneys  shall be paid from  time to time upon the  written
order of the Company,  signed by its President, a Vice President,  its Treasurer
or an Assistant Treasurer.

                  Section 8.06.  The Company  covenants and agrees to pay to the
Trustee  from  time  to  time,  and the  Trustee  shall  be  entitled  to,  such
compensation  as the Company and the Trustee shall from time to time agree to in
writing  (which  shall not be limited by any  provision  of law in regard to the
compensation  of a trustee of an express trust) for all services  rendered by it
in  the  execution  of the  trusts  hereby  created  and  in  the  exercise  and
performance  of any of the powers and duties  hereunder of the Trustee,  and the
Company  will pay or reimburse  the Trustee upon its request for all  reasonable
expenses, disbursements and

                                      -35-

<PAGE>

advances  incurred  or  made  by  the  Trustee  in  accordance  with  any of the
provisions of this  Indenture  (including the  reasonable  compensation  and the
expenses and  disbursements  of its counsel and of all persons not  regularly in
its employ) except any such expense,  disbursement  or advance as may arise from
its negligence or bad faith. The Company also covenants to indemnify the Trustee
for,  and to hold  it  harmless  against,  any and  all  loss,  damage,  claims,
liability or expense incurred without negligence or bad faith on the part of the
Trustee,   and  arising  out  of  or  in  connection   with  the  acceptance  or
administration  of this trust,  including  the costs and  expenses of  defending
itself  against any claim of liability in the premises.  The  obligations of the
Company  under this Section to compensate  the Trustee,  to pay or reimburse the
Trustee for  expenses,  disbursements  and advances and to indemnify the Trustee
shall constitute additional indebtedness hereunder. Such additional indebtedness
shall be secured by a lien prior to that of the Debentures upon all property and
funds held or collected  by the Trustee as such,  except funds held in trust for
the benefit of the holders of particular Debentures.

                  Section  8.07.  Except as otherwise  provided in Section 8.01,
whenever in the administration of the trusts of this Indenture the Trustee shall
deem it necessary or desirable that a matter be proved or  established  prior to
taking or suffering or omitting any action hereunder,  such matter (unless other
evidence in respect thereof be herein specifically  prescribed) may be deemed to
be  conclusively  proved and established by an Officers'  Certificate,  and such
certificate shall be full warrant to the Trustee for any action taken,  suffered
or omitted by it under the provisions of this Indenture upon the faith thereof.

                  Section 8.08. See Section  310(b) of the Trust  Indenture Act.
In  addition,  excluded  from the  operation  of Section  310(b)(1) of the Trust
Indenture  Act are the  following:  the  Indenture  dated as of December 1, 1989
between the Company and Citibank, N.A., Trustee, pursuant to which the Company's
7.20% Debentures due 2019 are outstanding,  the Indenture dated as of October 1,
1990  between the Company and  Citibank,  N.A.,  Trustee,  pursuant to which the
Company's 7 1/2% Debentures due 2020 are outstanding,  the Indenture dated as of
August 1, 1991 between the Company and The Bank of New York,  Trustee,  pursuant
to which  the  Company's  6.60%  Debentures  due 2021 are  outstanding,  and the
Indenture  dated as of August 1, 1991  between  the  Company and The Bank of New
York,  Trustee,  pursuant to which the Company's 6.70.%  Debentures due 2021 are
outstanding,  the Indenture  dated as of October 1, 1991 between the Company and
The  Bank of New  York,  Trustee,  pursuant  to  which  the  Company's  8- 3/4.%
Debentures due 2021 are outstanding, the Indenture dated as of September 1, 1992
between  the Company  and The Bank of New York,  Trustee,  pursuant to which the
Company's 8% Debentures due 2022 are outstanding,  and the Indenture dated as of
November 1, 1993 between the Company and The Bank of New York, Trustee,

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<PAGE>

pursuant to which the Company's 7-1/4% Debentures due 2028 are outstanding.

                  Section 8.09.  The Trustee  hereunder  shall at all times be a
corporation  organized and doing business under the laws of the United States or
any State or Territory or of the District of Columbia authorized under such laws
to exercise corporate trust powers,  having a combined capital and surplus of at
least  $5,000,000,  subject to supervision  or  examination  by Federal,  State,
Territorial,  or District of Columbia authority.  If such corporation  publishes
reports of condition at least annually,  pursuant to law or to the  requirements
of the aforesaid  supervising or examining  authority,  then for the purposes of
this  Section,  the combined  capital and surplus of such  corporation  shall be
deemed to be its  combined  capital  and surplus as set forth in its most recent
report of condition so published. In case at any time the Trustee shall cease to
be eligible in accordance with the provisions of this Section, the Trustee shall
resign immediately in the manner and with the effect specified in Section 8.10.

                  Section  8.10.  (a) The Trustee,  or any  successor  hereafter
appointed,  may at any time  resign  and be  discharged  from the  trust  hereby
created by mailing  notice  thereof to the Company  and to the  Debentureholders
whose names and addresses appear in the information preserved at the time by the
Trustee in  accordance  with the  provisions  of Section  6.02(a)  hereof.  Upon
receiving  such notice of  resignation,  the Company  shall  promptly  appoint a
successor trustee by written instrument, in duplicate,  executed by order of the
Board  of  Directors  of the  Company,  one copy of  which  instrument  shall be
delivered to the resigning Trustee and one copy to the successor trustee.  If no
successor  trustee shall have been so appointed  and have  accepted  appointment
within  thirty  days  after  the  mailing  of such  notice of  resignation,  the
resigning  Trustee may  petition  any court of  competent  jurisdiction  for the
appointment of a successor trustee,  or any  Debentureholder who has been a bona
fide holder of a Debenture or Debentures for at least six months may, subject to
the  provisions of Section  7.08, on behalf of himself and all others  similarly
situated,  petition any such court for the  appointment of a successor  trustee.
Such court may  thereupon  after such notice,  if any, as it may deem proper and
prescribe, appoint a successor trustee.

                  (b) In case at any time any of the following shall occur--

                           (1)  the  Trustee  shall  fail  to  comply  with  the
         provisions of Section  310(b) of the Trust  Indenture Act after written
         request therefor by the Company or by any  Debentureholder who has been
         a bona  fide  holder  of a  Debenture  or  Debentures  for at least six
         months, or

                                      -37-

<PAGE>

                           (2)  the  Trustee  shall  cease  to  be  eligible  in
         accordance with the provisions of Section 8.09 and shall fail to resign
         after  written  request   therefor  by  the  Company  or  by  any  such
         Debentureholder, or

                           (3) the Trustee shall become incapable of acting,  or
         shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee
         or of its property shall be appointed, or any public officer shall take
         charge or control of the Trustee or of its  property or affairs for the
         purpose of rehabilitation, conservation or liquidation,

then,  in any such  case,  the  Company  may remove the  Trustee  and  appoint a
successor trustee by written instrument, in duplicate,  executed by order of the
Board  of  Directors  of the  Company,  one copy of  which  instrument  shall be
delivered to the Trustee so removed and one copy to the successor  trustee,  or,
subject to the  provisions of Section 7.08, any  Debentureholder  who has been a
bona fide holder of a Debenture  or  Debentures  for at least six months may, on
behalf of  himself  and all others  similarly  situated,  petition  any court of
competent  jurisdiction  for the removal of the Trustee and the appointment of a
successor trustee. Such court may thereupon after such notice, if any, as it may
deem proper and prescribe, remove the Trustee and appoint a successor trustee.

                  (c) The holders of a majority in aggregate principal amount of
the  Debentures at the time  outstanding  may at any time remove the Trustee and
appoint a successor trustee.

                  (d)  Any  resignation  or  removal  of  the  Trustee  and  any
appointment  of a successor  trustee  pursuant to any of the  provisions of this
Section shall become  effective upon  acceptance of appointment by the successor
trustee as provided in Section 8.11.

                  Section 8.11. Any successor  trustee  appointed as provided in
Section 8.10 shall  execute,  acknowledge  and deliver to the Company and to its
predecessor  trustee an instrument  accepting such  appointment  hereunder,  and
thereupon the  resignation  or removal of the  predecessor  trustee shall become
effective  and  such  successor  trustee,  without  any  further  act,  deed  or
conveyance,  shall become fully vested with all the rights,  powers,  duties and
obligations  of its  predecessor  hereunder,  with like effect as if  originally
named as trustee herein.  The predecessor  trustee shall,  nevertheless,  at the
written  request of the successor  trustee,  and upon payment of any amount then
due it pursuant to Section 8.06, pay over to the successor trustee all moneys at
the time held by it hereunder; and the Company and the predecessor trustee shall
execute and deliver such  instruments and do such other things as may reasonably
be required for more fully and certainly vesting and confirming in the successor
trustee all such rights, powers, duties and obligations.  Any Trustee ceasing to
act shall

                                      -38-

<PAGE>

nevertheless  retain a lien on all funds held or  collected  by such  Trustee to
secure any amount due it pursuant to Section 8.06.

                  No successor  trustee shall accept  appointment as provided in
this Section unless at the time of such acceptance such successor  trustee shall
be  qualified  under the  provisions  of  Section  8.08 and  eligible  under the
provisions of Section 8.09.

                  Upon  acceptance  of  appointment  by a  successor  trustee as
provided in this  Section,  the Company  shall mail notice of the  succession of
such trustee hereunder to all Debentureholders at their last addresses appearing
upon the register.  If the Company  fails to mail such notice in the  prescribed
manner  within 10 days after the  acceptance  of  appointment  by the  successor
trustee,  the  successor  trustee  shall  cause such  notice to be mailed at the
expense of the Company.

                  Section 8.12.  Any  corporation  into which the Trustee may be
merged or with which it may be consolidated,  or any corporation  resulting from
any  merger or  consolidation  to which  the  Trustee  shall be a party,  or any
corporation succeeding to the business of the Trustee, shall be the successor of
the Trustee  hereunder,  provided such corporation  shall be qualified under the
provisions  of Section 8.08 and eligible  under the  provisions of Section 8.09,
without the  execution  or filing of any paper or any further act on the part of
any of the parties hereto, anything herein to the contrary notwithstanding.

                  In  case at the  time  such  successor  to the  Trustee  shall
succeed to the trusts created by this Indenture any of the Debentures shall have
been  authenticated  but not  delivered,  any such  successor to the Trustee may
adopt the certificate of authentication of any predecessor  trustee, and deliver
such Debentures so authenticated; and in case at that time any of the Debentures
shall not have been authenticated, any successor to the Trustee may authenticate
such Debentures  either in the name of any predecessor  hereunder or in the name
of the successor trustee; and in all such cases such certificates shall have the
full force which it is anywhere in the Debentures or in this Indenture  provided
that the  certificate  of the Trustee shall have;  provided,  however,  that the
right to adopt the certificate of authentication  of any predecessor  trustee or
authenticate  Debentures in the name of any predecessor trustee shall apply only
to its successor or successors by merger, conversion or consolidation.

                  Section 8.13. See Section 311 of the Trust Indenture Act.

                                      -39-

<PAGE>

                                 ARTICLE NINE.

                        Concerning the Debentureholders.


                  Section 9.01.  Whenever in this  Indenture it is provided that
the holders of a  specified  percentage  in  aggregate  principal  amount of the
Debentures  may take any action  (including the making of any demand or request,
the giving of any notice,  consent or waiver or the taking of any other action),
the fact  that at the  time of  taking  any  such  action  the  holders  of such
specified  percentage have joined therein may be evidenced (a) by any instrument
or any number of instruments of similar tenor  executed by  Debentureholders  in
person or by attorney or proxy appointed in writing, or (b) by the record of the
holders of Debentures voting in favor thereof at any meeting of Debentureholders
duly called and held in accordance with the provisions of Article Ten, or (c) by
a combination of such  instrument or  instruments  and any such record of such a
meeting of Debentureholders.

                  Section 9.02. Subject to the provisions of Section 8.01, proof
of the execution of any instrument by a Debentureholder or his attorney or proxy
and  proof  of the  holding  by any  person  of any of the  Debentures  shall be
sufficient  for any purpose of this  Indenture if made in  accordance  with such
reasonable  rules and regulations as may be prescribed by the Trustee or in such
manner as shall be  satisfactory  to the Trustee.  The  ownership of  Debentures
shall be proved by the register of such  Debentures or by a  certificate  of the
Debenture registrar.

                  The record of any Debentureholders' meeting shall be proved in
the manner provided in Section 10.06.

                  Section 9.03. The Company,  the Trustee,  any paying agent and
any  Debenture  registrar  may deem  and  treat  the  person  in whose  name any
Debenture  shall be registered  upon the register as the absolute  owner of such
Debenture  (whether or not such Debenture  shall be overdue and  notwithstanding
any  notice of  ownership  or writing  thereon),  for the  purpose of  receiving
payment of or on account of the  principal of and interest and premium,  if any,
on such  Debenture and for all other  purposes,  and neither the Company nor the
Trustee nor any paying agent nor any  Debenture  registrar  shall be affected by
any notice to the  contrary.  All such  payments so made to any such  registered
holder, for the time being or upon his order, shall be valid, and, to the extent
of the sum or sums so paid, effectual to satisfy and discharge the liability for
moneys payable upon any such Debenture.

                  Section  9.04.  In  determining  whether  the  holders  of the
requisite  aggregate  principal  amount  of  Debentures  have  concurred  in any
direction, consent or waiver under this

                                      -40-

<PAGE>

Indenture, Debentures which are owned by the Company or any other obligor on the
Debentures or by any person directly or indirectly  controlling or controlled by
or under direct or indirect common control with the Company or any other obligor
on the Debentures  shall be disregarded and deemed not to be outstanding for the
purpose of any such  determination,  except that for the purpose of  determining
whether the Trustee shall be protected in relying on any such direction, consent
or waiver  only  Debentures  which the  Trustee  knows are so owned  shall be so
disregarded.  Debentures  so owned which have been  pledged in good faith may be
regarded as outstanding  for the purposes of this Section,  if the pledgee shall
establish to the  satisfaction  of the Trustee the pledgee's  right to vote such
Debentures  and  that  the  pledgee  is  not a  person  directly  or  indirectly
controlling or controlled by or under direct or indirect common control with the
Company or any such other  obligor.  In case of a dispute as to such right,  any
decision  by the  Trustee  taken  upon  the  advice  of  counsel  shall  be full
protection to the Trustee.

                  Section 9.05. Any demand, request,  waiver, consent or vote of
the holder of any Debenture shall be conclusive and binding upon such holder and
upon all future  holders  and  owners of such  Debenture,  and of any  Debenture
issued in exchange therefor or in place thereof,  irrespective of whether or not
any notation in regard thereto is made upon such Debenture.  Any action taken by
the holders of the majority or percentage in aggregate  principal  amount of the
Debentures  specified in this Indenture in connection  with such action shall be
conclusively  binding upon the  Company,  the Trustee and the holders of all the
Debentures.


                                  ARTICLE TEN.

                          Debentureholders' Meetings.


                  Section 10.01. A meeting of Debentureholders  may be called at
any time and from time to time  pursuant to the  provisions  of this Article Ten
for any of the following purposes:

                  (1) to give any notice to the Company or to the Trustee, or to
         give any directions to the Trustee, or to consent to the waiving of any
         default  hereunder  and its  consequences,  or to take any other action
         authorized  to be  taken  by  Debentureholders  pursuant  to any of the
         provisions of Article Seven;

                  (2) to remove the  Trustee  and  appoint a  successor  trustee
         pursuant to the provisions of Article Eight;

                  (3) to consent to the  execution of an indenture or indentures
         supplemental hereto pursuant to the provisions of Section 11.02; or

                                      -41-

<PAGE>

                  (4) to take any other action  authorized  to be taken by or on
         behalf of the holders of any specified  aggregate  principal  amount of
         the  Debentures  under  any  other  provision  of  this  Indenture,  or
         authorized or permitted by law.

                  Section  10.02.  The Trustee may at any time call a meeting of
Debentureholders  to take any action  specified in Section 10.01,  to be held at
such time and at such place in the Borough of  Manhattan,  City and State of New
York,  as  the  Trustee  shall  determine.   Notice  of  every  meeting  of  the
Debentureholders,  setting  forth the time and the place of such  meeting and in
general terms the action  proposed to be taken at such meeting,  shall be mailed
not less  than  fifteen  days  prior to the date  fixed for the  meeting  to the
Debentureholders  whose names and addresses appear in the information  preserved
at the time by the Trustee in accordance  with the provisions of Section 6.02(a)
hereof or obtained in accordance with the provisions of Section 6.01 hereof.

                  Any meeting of Debentureholders  shall be valid without notice
if the holders of all Debentures  then  outstanding  are present in person or by
proxy or if notice is waived  before or after the  meeting by the holders of all
Debentures outstanding, and if the Company and the Trustee are either present by
duly authorized  representatives  or have,  before or after the meeting,  waived
notice.

                  Section 10.03. In case at any time the Company,  pursuant to a
resolution of its Board of Directors or the holders of at least 20% in aggregate
principal amount of the Debentures then  outstanding,  shall request the Trustee
to call a meeting of  Debentureholders  to take any action  specified in Section
10.01, by written request setting forth in reasonable detail the action proposed
to be taken at the meeting  and the time and place in the Borough of  Manhattan,
City and State of New York,  for such meeting,  the Trustee shall mail notice of
such meeting as provided in Section  10.02 within  twenty days after  receipt of
such request.

                  Section  10.04.  To be  entitled  to  vote at any  meeting  of
Debentureholders a person shall (a) be a holder of one or more Debentures or (b)
be a person  appointed  by an  instrument  in writing as proxy for the holder or
holders of  Debentures by a holder of one or more  Debentures.  The only persons
who  shall  be   entitled   to  be  present  or  to  speak  at  any  meeting  of
Debentureholders shall be the persons entitled to vote at such meeting and their
counsel  and  any  representatives  of the  Trustee  and  its  counsel  and  any
representatives of the Company and its counsel.

                  Section  10.05.  Notwithstanding  any other  provision of this
Indenture,  the  Trustee  may make such  reasonable  regulations  as it may deem
advisable for any meeting of Debentureholders, in regard to proof of the holding
of Debentures and of the

                                      -42-

<PAGE>

appointment  of  proxies,  and  in  regard  to the  appointment  and  duties  of
inspectors of votes, the submission and examination of proxies, certificates and
other  evidence  of the right to vote,  and such other  matters  concerning  the
conduct of the meeting as it shall think fit.  Except as otherwise  permitted or
required by any such  regulations,  the holding of Debentures shall be proved in
the manner  specified in Section 9.02 and the  appointment of any proxy shall be
proved in the  manner  specified  in Section  9.02.  Pursuant  to the  foregoing
authority  the  Trustee  may  fix,  in  advance,  a date as a  record  date  for
determining  the  Debentureholders  entitled  to notice  of, or to vote at,  any
meeting,  such date to be not less than  fifteen nor more than  forty-five  days
prior to the date fixed for such meeting.

                  The Trustee  shall,  by an  instrument  in writing,  appoint a
temporary chairman of the meeting,  unless the meeting shall have been called by
request of the Company or  Debentureholders  as provided  in Section  10.03,  in
which case the Company or such  Debentureholders,  as the case may be,  shall in
like manner appoint a temporary  chairman.  A permanent chairman and a permanent
secretary  of the meeting  shall be elected by vote of the holders of a majority
in principal amount of the Debentures represented at the meeting and entitled to
vote.

                  Subject to the provisions of Section 9.04, at any meeting each
Debentureholder or proxy shall be entitled to one vote for each $1,000 principal
amount of Debentures,  provided,  however, that no vote shall be cast or counted
at any meeting in respect of any Debentures  challenged as not  outstanding  and
ruled by the chairman of the meeting to be not outstanding.  The chairman of the
meeting shall have no right to vote other than by virtue of  Debentures  held by
him or instruments in writing as aforesaid duly designating him as the person to
vote on behalf of other  Debentureholders.  Any meeting of Debentureholders duly
called  pursuant to the  provisions  of Section  10.02 or 10.03 may be adjourned
from time to time, and the meeting may be held as so adjourned  without  further
notice.

                  Section 10.06.  The vote upon any resolution  submitted to any
meeting  of  Debentureholders  shall be by  written  ballots  on which  shall be
subscribed   the   signatures   of  the  holders  of   Debentures  or  of  their
representatives  by proxy.  The permanent  chairman of the meeting shall appoint
two  inspectors  of votes,  who shall count all votes cast at the meeting for or
against any  resolution  and who shall make and file with the  secretary  of the
meeting  their  verified  written  reports in duplicate of all votes cast at the
meeting.   A  record  in  duplicate  of  the  proceedings  of  each  meeting  of
Debentureholders  shall be  prepared by the  secretary  of the meeting and there
shall be attached to said record the original reports of the inspectors of votes
on any vote by ballot taken thereat and  affidavits by one or more person having
knowledge  of the facts,  setting  forth a copy of the notice of the meeting and
showing  that said notice was mailed as provided  in Section  10.02.  The record
shall be signed and

                                      -43-

<PAGE>

verified by the  affidavits  of the  permanent  chairman  and  secretary  of the
meeting  and one of the  duplicates  shall be  delivered  to the Company and the
other to the Trustee to be preserved by the Trustee, the latter to have attached
thereto the ballots voted at the meeting.

                  Any record so signed and verified shall be conclusive evidence
of the matters therein stated.

                  Section 10.07.  Nothing in this Article Ten contained shall be
deemed or construed  to authorize or permit,  by reason of any call of a meeting
of  Debentureholders or any rights expressly or impliedly conferred hereunder to
make such call,  any  hindrance  or delay in the exercise of any right or rights
conferred upon or reserved to the Trustee or to the  Debentureholders  under any
of the provisions of this Indenture or of the Debentures.


                                ARTICLE ELEVEN.

                            Supplemental Indentures.


                  Section 11.01. The Company, when authorized by a resolution of
its  Board  of  Directors,  and  the  Trustee,  subject  to the  conditions  and
restrictions of this Indenture contained,  may from time to time and at any time
enter into an indenture or indentures  supplemental  hereto (which shall conform
to the provisions of the Trust  Indenture Act of 1939 as then in effect) for one
or more of the following purposes:

                  (a) to evidence the  succession of another  corporation to the
         Company, or successive successions, and the assumption by the successor
         corporation of the covenants, agreements and obligations of the Company
         pursuant to Article Twelve;

                  (b) to add to the covenants  and  agreements of the Company in
         this  Indenture   contained  such  further   covenants  and  agreements
         thereafter  to be observed,  and to surrender any right or power herein
         reserved to or conferred upon the Company; and

                  (c) to cure any  ambiguity  or to  correct or  supplement  any
         defective or inconsistent  provisions contained in this Indenture or in
         any supplemental indenture.

                  The Trustee is hereby  authorized  to join with the Company in
the execution of any supplemental indenture authorized or permitted by the terms
of  this  Indenture  and  to  make  any  further   appropriate   agreements  and
stipulations  which  may be  therein  contained,  but the  Trustee  shall not be
obligated to enter into any such supplemental indenture which affects the

                                      -44-

<PAGE>

Trustee's own rights, duties or immunities under this Indenture or otherwise.

                  Any  supplemental  indenture  authorized by the  provisions of
this Section may be executed by the Company and the Trustee  without the consent
of the holders of any of the Debentures at the time outstanding, notwithstanding
any of the provisions of Section 11.02.

                  Section  11.02.  With the  consent  (evidenced  as provided in
Section  9.01) of the holders (or persons  entitled to vote, or to give consents
respecting  the  same) of more  than 50% in  aggregate  principal  amount of the
Debentures at the time outstanding, the Company, when authorized by a resolution
of its Board of Directors, and the Trustee may from time to time and at any time
enter into an indenture or indentures  supplemental  hereto (which shall conform
to the provisions of the Trust  Indenture Act of 1939 as then in effect) for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the  provisions  of this  Indenture  or of any  supplemental  indenture or of
modifying  in any  manner  the  rights  and  obligations  of the  holders of the
Debentures  and of the Company;  provided,  however,  that no such  supplemental
indenture  shall (i) extend the fixed maturity of any  Debenture,  or reduce the
principal  amount  thereof,  or reduce the rate or extend the time of payment of
interest  thereon,  without  the  consent  of the  holder of each  Debenture  so
affected, or (ii) reduce the aforesaid percentage of Debentures,  the holders of
which are required to consent to any such  supplemental  indenture,  without the
consent of the holders of all Debentures then outstanding.

                  Upon the request of the  Company,  accompanied  by a copy of a
resolution of its Board of Directors  certified by the secretary or an assistant
secretary of the Company  authorizing  the  execution  of any such  supplemental
indenture,  and upon the filing  with the  Trustee of evidence of the consent of
Debentureholders  as  aforesaid,  the Trustee shall join with the Company in the
execution of such  supplemental  indenture  unless such  supplemental  indenture
affects the Trustee's own rights,  duties or immunities  under this Indenture or
otherwise,  in which case the  Trustee  may in its  discretion  but shall not be
obligated to enter into such supplemental indenture.

                  It  shall   not  be   necessary   for  the   consent   of  the
Debentureholders  under  this  Section  to approve  the  particular  form of any
proposed  supplemental  indenture,  but it shall be  sufficient  if such consent
shall approve the substance thereof.

                  Promptly after the execution by the Company and the Trustee of
any  supplemental  indenture  pursuant to the  provisions of this  Section,  the
Company  shall mail a notice,  setting  forth in general  terms the substance of
such supplemental  indenture,  to all  Debentureholders  at their last addresses
appearing upon the register.  Any failure of the Company to mail such notice, or
any

                                      -45-

<PAGE>

defect therein,  shall not, however, in any way impair or affect the validity of
any such supplemental indenture.

                  Section  11.03.   Upon  the  execution  of  any   supplemental
indenture  pursuant to the provisions of this Article,  this Indenture  shall be
and be deemed  to be  modified  and  amended  in  accordance  therewith  and the
respective  rights,  limitation of rights,  obligations,  duties and  immunities
under this  Indenture of the Trustee,  the Company and the holders of Debentures
shall thereafter be determined,  exercised and enforced hereunder subject in all
respects to such modifications and amendments,  and all the terms and conditions
of any such  supplemental  indenture  shall be and be  deemed  to be part of the
terms and conditions of this Indenture for any and all purposes.

                  Section 11.04.  Debentures  authenticated  and delivered after
the execution of any supplemental  indenture  pursuant to the provisions of this
Article,  or after any action taken at a  Debentureholders'  meeting pursuant to
Article  Ten,  may bear a notation  in form  approved  by the  Trustee as to any
matter provided for in such supplemental  indenture or as to any action taken at
any  such  meeting;  and,  in such  case,  suitable  notation  may be made  upon
outstanding  Debentures after proper  presentation and demand. If the Company or
the Trustee shall so determine, new Debentures so modified as to conform, in the
opinion  of the  Trustee  and the  Board of  Directors  of the  Company,  to any
modification of this Indenture contained in any such supplemental  indenture, or
to any  action  taken at any  such  meeting,  may be  prepared  by the  Company,
authenticated  by the Trustee and delivered in exchange for the Debentures  then
outstanding,  upon demand of, and without  cost to, the  holders  thereof,  upon
surrender of such Debentures.

                  Section  11.05.  The  Trustee,  subject to the  provisions  of
Section 8.01, may receive an Opinion of Counsel as conclusive  evidence that any
supplemental indenture executed pursuant to this Article Eleven is authorized or
permitted  by the  terms  of this  Indenture  and  that  it is not  inconsistent
therewith.


                                ARTICLE TWELVE.

                        Consolidation, Merger and Sale.


                  Section 12.01.  Nothing  contained in this Indenture or in any
of the Debentures shall prevent any  consolidation or merger of the Company with
or into any other  corporation or  corporations  (whether or not affiliated with
the Company),  or successive  consolidations  or mergers in which the Company or
its  successor or successors  shall be a party or parties,  or shall prevent any
sale or conveyance  (or  successive  sales or  conveyances)  of the property and
assets of the  Company (or of its  successor  or  successors)  as an entirety or
substantially as an

                                      -46-

<PAGE>

entirety,  to any other corporation (whether or not affiliated with the Company)
authorized  to acquire  the same;  provided,  however,  and the  Company  hereby
covenants  and  agrees  that,  upon  any  such  consolidation,  merger,  sale or
conveyance, the due and punctual payment of the principal of and interest on all
the Debentures,  according to their tenor, and the due and punctual  performance
and  observance of all the terms,  covenants and conditions of this Indenture to
be kept or performed by the Company,  shall be expressly  assumed,  by indenture
supplemental hereto, satisfactory in form to the Trustee, executed and delivered
to the Trustee by the corporation  formed by such  consolidation,  or into which
the  Company  shall have been  merged,  or by the  corporation  which shall have
acquired such  property and assets.  In the event of any such sale or conveyance
the  predecessor  Company may be dissolved,  wound up and liquidated at any time
thereafter.

                  Section 12.02. In case of any such consolidation, merger, sale
or  conveyance  and  upon  the  execution  by the  successor  corporation  of an
indenture  supplemental  hereto,  as provided in Section  12.01,  such successor
corporation  shall succeed to and be substituted for the Company,  with the same
effect as if it had been  named  herein as the  party of the  first  part.  Such
successor  corporation thereupon may issue either in its own name or in the name
of the Company,  with such suitable  reference,  if any, to such  consolidation,
merger, sale or conveyance as may be required by the Trustee,  any or all of the
Debentures  issuable  hereunder which  theretofore shall not have been issued by
the Company and  delivered to the Trustee;  and,  upon the written order of such
successor  corporation,  instead of the  Company,  and subject to all the terms,
conditions  and  limitations  in this  Indenture  prescribed,  the Trustee shall
authenticate  and shall deliver any Debentures  which previously shall have been
executed by the  Company and any  Debentures  which such  successor  corporation
thereafter  shall cause to be executed in accordance with the provisions of this
Indenture and delivered to the Trustee for that purpose.  All the  Debentures so
issued  shall in all  respects  have the same legal rank and benefit  under this
Indenture as the Debentures  theretofore or thereafter issued in accordance with
the terms of this Indenture as though all of such  Debentures had been issued at
the date of the execution hereof.

                  In case of any such consolidation,  merger, sale or conveyance
such changes in  phraseology  and form (but not in substance) may be made in the
Debentures thereafter to be issued as may be appropriate).

                  Nothing   contained  in  this  Indenture  or  in  any  of  the
Debentures  shall prevent the Company from  consolidating  with, or merging into
itself,  or acquiring  by purchase or otherwise  all or any part of the property
of, any other corporation (whether or not affiliated with the Company).

                                      -47-

<PAGE>

                  Section  12.03.  The  Trustee,  subject to the  provisions  of
Section 8.01, may receive an Opinion of Counsel as conclusive  evidence that any
such  consolidation,  merger,  sale  or  conveyance,  and any  such  assumption,
complies with the provisions of this Article.


                               ARTICLE THIRTEEN.

           Satisfaction and Discharge of Indenture; Deposited Moneys.


                  Section 13.01.  If:

                  (1) Either (i) the  Company  shall  deliver to the Trustee for
cancellation all Debentures  (other than Debentures deemed not to be outstanding
under  clause  (c)  of the  definition  thereof)  not  theretofore  canceled  or
delivered  to the  Trustee  for  cancellation,  or (ii) the  Company  shall have
deposited in trust with the Trustee cash  sufficient  to pay at maturity or upon
redemption  (after notice of redemption has been duly given or provided for) all
of the Debentures  (other than  Debentures  deemed not to be  outstanding  under
clause (c) of the definition  thereof) not theretofore  canceled or delivered to
the Trustee for cancellation, including principal, premium, if any, and interest
due or to become due to such date of maturity or  redemption  date,  as the case
may be, or (iii) the  Company  shall have  deposited  in trust with the  Trustee
direct  obligations  of the United  States or  obligations  the principal of and
interest on which are fully  guaranteed by the United States,  and which are not
subject to  prepayment,  redemption or call prior to their stated  maturity,  in
such amounts and  maturing at such times that the proceeds of said  obligations,
together  with the  income  that can be  predetermined  will  accrue  thereon by
reference  to the  terms  thereof  (without  consideration  of any  reinvestment
thereof),  to be received upon their respective  maturities and interest payment
dates will provide funds sufficient to pay the principal,  premium,  if any, and
interest due or to become due to the date of maturity or to the redemption date,
as the case may be, with respect to all of the Debentures (other than Debentures
deemed not to be  outstanding  under clause (c) of the  definition  thereof) not
theretofore canceled or delivered to the Trustee for cancellation, provided that
the Trustee shall have been irrevocably instructed to apply the proceeds of said
obligations to the payment of such principal,  premium and interest with respect
to such  Debentures,  or (iv) the Company shall have deposited in trust with the
Trustee any combination of cash or obligations referred to in (ii) and (iii),

                  (2) the  Company  shall pay or cause to be paid all other sums
payable with respect to the Debentures, and

                  (3) the Company  shall  deliver to the Trustee and the Revenue
Bond Trustee an Officers' Certificate and an Opinion of

                                      -48-

<PAGE>

Counsel, each stating that all conditions precedent herein provided for relating
to the satisfaction  and discharge of the entire  indebtedness on the Debentures
have been complied with, then

                  (a) this Indenture shall cease to be of further effect (except
         as otherwise  provided  herein) and on or after such  maturity  date or
         redemption date, as the case may be, the Trustee,  on demand of, and at
         the  expense  of,  the  Company,   shall  execute  proper   instruments
         acknowledging satisfaction and discharge of this Indenture; and

                  (b)  all   obligations  of  the  Company  in  respect  of  the
         Debentures  shall  cease  and be  discharged  and the  holders  of such
         Debentures shall thereafter be restricted exclusively to such funds for
         any and all  claims  of  whatever  nature  on  their  part  under  this
         Indenture or with respect to such Debentures;  provided, however, that,
         in no event  shall  the  Company  be  discharged  from (i) any  payment
         obligation in respect of Debentures  deemed not to be outstanding under
         clause (c) of the definition thereof if such obligations continue to be
         valid  obligations  under  applicable law, (ii) any  obligations  under
         Sections 2.05 and 2.06 (except that Debentures issued upon registration
         of transfer or exchange or in lieu of  mutilated,  lost,  destroyed  or
         stolen  Debentures shall not be deemed to be such obligations) or (iii)
         any  obligations  under Sections 6.01,  8.06,  13.02,  13.03 and 13.04;
         further  provided,  however,  that the  rights  and  privileges  of the
         Trustee under this Indenture shall survive any such discharge.

                  The Company  hereby  agrees to  reimburse  the Trustee for any
costs or expenses thereafter  reasonably and properly incurred by the Trustee in
connection  with this  Indenture  or the  Debentures,  and  without bad faith or
negligence.

                  Section 13.02.  All moneys deposited with the Trustee pursuant
to Section 13.01 shall be held in trust and applied by it to the payment, to the
holders of the particular Debentures for the payment or redemption of which such
moneys have been deposited  with the Trustee,  of all sums due and to become due
thereon for principal, premium, if any, and interest.

                  Section  13.03.  In  connection  with  the   satisfaction  and
discharge of this  Indenture  all moneys then held by any paying agent under the
provisions of this Indenture  shall,  upon demand of the Company or Trustee,  be
paid to the Trustee and  thereupon  such paying agent shall be released from all
further liability with respect to such moneys.

                  Section 13.04. In case the holder of any Debenture entitled to
payment hereunder at any time outstanding  hereunder shall not, within two years
after the maturity date of such  Debenture or the date fixed for the  redemption
of any such

                                      -49-

<PAGE>

Debenture,  claim the amount on deposit with the Trustee or other depositary for
the payment of such Debenture, the Trustee or other depositary shall pay over to
or upon the written order of the Company the amount so  deposited,  upon receipt
of a request  signed by the  President or a Vice  President of the Company,  and
thereupon  the Trustee or other  depositary  shall be released  from any and all
further  liability  with respect to the payment of such Debenture and the holder
of said  Debenture  shall be  entitled  (subject  to any  applicable  statute of
limitations)  to look  only to the  Company  as an  unsecured  creditor  for the
payment thereof.


                               ARTICLE FOURTEEN.

               Immunity of Incorporators, Stockholders, Officers,
                            Trustees and Directors.


                  Section  14.01.  No  recourse  under or upon  any  obligation,
covenant or agreement of this Indenture,  or of any Debenture,  or for any claim
based  thereon  or  otherwise  in  respect  thereof,  shall be had  against  any
incorporator,  stockholder, officer, trustee or director, as such, past, present
or future, of the Company or of any predecessor or successor corporation, either
directly through the Company or any such  predecessor or successor  corporation,
whether by virtue of any  constitution,  statute or rule of law or equity, or by
the  enforcement of any assessment or penalty or otherwise;  it being  expressly
understood that this Indenture and the obligations  issued  hereunder are solely
corporate obligations, and that no such personal liability whatever shall attach
to, or is or shall be incurred by, the  incorporators,  stockholders,  officers,
trustees  or  directors  of the  Company,  as  such,  or of any  predecessor  or
successor  corporation,  or  any  of  them,  because  of  the  creation  of  the
indebtedness  hereby  authorized,  or under  or by  reason  of the  obligations,
covenants or agreements  contained in this Indenture or in any of the Debentures
or implied  therefrom;  and that any and all such liability is hereby  expressly
waived and released by every holder of  Debentures  as a condition  of, and as a
consideration  for,  the  execution  of this  Indenture  and the  issue  of such
Debentures.

                                      -50-

<PAGE>

                                ARTICLE FIFTEEN.

                           Miscellaneous Provisions.


                  The provisions of the Trust  Indenture Act which impose duties
on  any  person  (including  provisions  automatically  deemed  included  in  an
indenture by the Trust  Indenture  Act unless the  indenture  provides that such
provisions are excluded which provision is hereby expressly  excluded other than
Section  316(a)(2)  of the Trust  Indenture  Act) are a part of and govern  this
Indenture.  If any provision  hereof limits,  qualifies or conflicts with any of
the duties imposed by operation of the Trust  Indenture Act, the Trust Indenture
Act shall control.

                  Section 15.01. All the covenants,  stipulations,  promises and
agreements in this Indenture contained by or in behalf of the Company shall bind
its successors and assigns, whether so expressed or not.

                  Section 15.02.  Any act or proceeding by any provision of this
Indenture authorized or required to be done or performed by any board, committee
or officer of the Company  shall and may be done and  performed  with like force
and effect by the like board, committee or officer of any corporation that shall
at the time be the lawful successor of the Company.

                  Section 15.03.  The Company by instruments in writing executed
by  authority  of its  Board of  Directors  and  delivered  to the  Trustee  may
surrender any of the powers  reserved to the Company and thereupon such power so
surrendered  shall  terminate  both as to the  Company  and as to any  successor
corporation.

                  Section 15.04.  Any notice or demand which by any provision of
this  Indenture is required or permitted to be given or served by the Trustee or
by the  holders of  Debentures  to or on the  Company  may be given or served by
being deposited  postage  prepaid in a post-office  letterbox  addressed  (until
another  address  is filed in  writing  by the  Company  with the  Trustee),  as
follows:  Elizabethtown Water Company, 600 South Avenue, Westfield NJ 07090. Any
notice,  election,  request  or  demand  by any  Debentureholder  to or upon the
Trustee  shall be  deemed  to have  been  sufficiently  given  or made,  for all
purposes,  if given  or made at the  principal  corporate  trust  office  of the
Trustee in the Borough of Manhattan, City and State of New York.

                  Section  15.05.  This  Indenture and each  Debenture  shall be
deemed to be a contract  made  under the laws of the State of New York,  and for
all purposes shall be construed in accordance with the laws of said state.

                  Section 15.06.  Upon any  application or demand by the Company
to the Trustee to take any action under any of the provisions of this Indenture,
the Company shall furnish to the

                                      -51-

<PAGE>

Trustee an Officers' Certificate stating that all conditions precedent,  if any,
provided  for in this  Indenture  relating  to the  proposed  action  have  been
complied  with and an  Opinion of Counsel  stating  that in the  opinion of such
counsel all such conditions precedent have been complied with.

                  Each certificate or opinion provided for in this Indenture and
delivered to the Trustee with respect to compliance with a condition or covenant
provided for in this  Indenture  shall  include (1) a statement  that the person
making such  certificate  or opinion has read such covenant or condition;  (2) a
brief statement as to the nature and scope of the  examination or  investigation
upon which the statements or opinions  contained in such  certificate or opinion
are based; (3) a statement that, in the opinion of such person, he has made such
examination  or  investigation  as is  necessary  to enable  him to  express  an
informed  opinion as to  whether  or not such  covenant  or  condition  has been
complied  with; and (4) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been complied with.

                  Any  certificate,  statement  or  opinion of an officer of the
Company  may  be  based,  in so far  as it  relates  to  legal  matters,  upon a
certificate  or opinion of or  representations  by counsel,  unless such officer
knows that the  certificate  or opinion or  representations  with respect to the
matters  upon  which  his  certificate,  statement  or  opinion  may be based as
aforesaid are erroneous,  or in the exercise of reasonable care should know that
the same are erroneous. Any certificate,  statement or opinion of counsel may be
based (in so far as it relates to factual  matters  information  with respect to
which is in the  possession of the Company) upon the  certificate,  statement or
opinion of or representations  by an officer or officers of the Company,  unless
such counsel knows that the certificate, statement or opinion or representations
with respect to the matters upon which his certificate, statement or opinion may
be based as  aforesaid  are  erroneous,  or in the exercise of  reasonable  care
should know that the same are erroneous.

                  Any  certificate,  statement  or  opinion of an officer of the
Company  or of  counsel  may be based,  in so far as it  relates  to  accounting
matters, upon a certificate or opinion of or representations by an accountant or
firm of  accountants  in the  employ of the  Company,  unless  such  officer  or
counsel,  as the  case  may  be,  knows  that  the  certificate  or  opinion  or
representations   with  respect  to  the  accounting   matters  upon  which  his
certificate, statement or opinion may be based as aforesaid are erroneous, or in
the exercise of reasonable care should know that the same are erroneous.

                  Section  15.07.  In any case  where  the date of  maturity  of
interest on or principal of the  Debentures or the date fixed for  redemption of
any  Debenture  shall be a Sunday or legal  holiday  or a date on which  banking
institutions in the city of

                                      -52-

<PAGE>

payment are authorized by law to close,  then payment of interest,  principal or
premium may be made on the next  succeeding  day not a Sunday or a legal holiday
or a date on which banking institutions in the city of payment are authorized by
law to close with the same force and effect as if made on the  nominal  date and
no interest shall accrue for the period after such nominal date.

                  Section 15.08. If and to the extent that any provision of this
Indenture limits, qualifies or conflicts with another provision included in this
Indenture  which is required to be included in this Indenture by any of Sections
310 to 317,  inclusive,  of the  Trust  Indenture  Act of  1939,  such  required
provision shall control.

                  Section  15.09.  In case  any  one or  more of the  provisions
contained in this Indenture or in the Debentures shall for any reason be held to
be invalid, illegal or unenforceable in any respect, such invalidity, illegality
or  unenforceability  shall not affect any other provisions of this Indenture or
of such Debentures, but this Indenture and such Debentures shall be construed as
if such invalid or illegal or  unenforceable  provision had never been contained
herein or therein.

                  Section 15.10. This Indenture may be executed in any number of
counterparts,  each of which shall be an original;  but such counterparts  shall
together constitute but one and the same instrument.

                  The Bank of New York,  the party of the  second  part,  hereby
accepts the trusts in this Indenture  declared and provided,  upon the terms and
conditions hereinabove set forth.

                                      -53-

<PAGE>

                  IN WITNESS WHEREOF,  Elizabethtown Water Company, the party of
the first part, has caused this Indenture to be signed in its corporate name and
acknowledged by its President, or one of its Vice Presidents,  and its corporate
seal to be affixed  hereunto,  duly  attested by its  Secretary  or an Assistant
Secretary;  and The Bank of New York,  the party of the second part,  has caused
this  Indenture  to be signed  and  acknowledged  by one of its  Assistant  Vice
Presidents,  and its corporate seal to be affixed hereunto, duly attested by one
of its Assistant Treasurers, all as of the day and year first above written.


                                         ELIZABETHTOWN WATER COMPANY,

(Seal)

                                         By /s/ Gail P. Brady
                                           ----------------------------
                                            Gail P. Brady
                                            Vice President

Attest:


/s/ Walter M. Braswell
---------------------------
Walter M. Braswell
Secretary

                                         THE BANK OF NEW YORK, as Trustee

(Seal)

                                         By /s/ Robert F. McIntyre
                                           --------------------------------
                                           Robert F. McIntyre
                                           Assistant Vice President
Attest:


/s/ Marie E. Trimboli
---------------------------
Marie E. Trimboli
Assistant Treasurer


                                      -54-

<PAGE>

STATE OF NEW JERSEY  )
                     ) ss.:
COUNTY OF UNION      )

                  On this 12th day of December, 1995, before me, the subscriber,
a Notary Public within and for the County of Union,  in the State of New Jersey,
personally appeared Gail P. Brady, to me personally known, who, being by me duly
sworn,  did say that she resides at 49 Howell Drive,  Verona New Jersey and is a
Vice President of Elizabethtown Water Company, one of the corporations described
in and which  executed the  foregoing  instrument;  that she knows the corporate
seal of the said corporation and that the seal affixed to said instrument is the
corporate  seal of said  corporation;  and that said  instrument  was signed and
sealed in behalf of said  corporation by authority of its Board of Directors and
that she  subscribed  her name  thereto by like  authority;  and said  Walter M.
Braswell  acknowledged  said  instrument  to be the  free  act and  deed of said
corporation.

                  My commission as Notary Public as aforesaid expires


                                         /s/ Brenda H. Willis
                                         -------------------------------
                                         Brenda H. Willis
                                         Notary Public of New Jersey
                                         My Commission Expires June 22, 1999


                                      -55-

<PAGE>

STATE OF NEW YORK )
                  ) ss.:
COUNTY OF NEW YORK)

                  On this 17th day of December, 1995, before me, the subscriber,
a Notary Public within and for the County of New York, in the State of New York,
personally appeared ROBERT F. McINTYRE, to me personally known, who, being by me
duly sworn, did say that he resides at 1108 Hudson Street,  Hoboken,  New Jersey
07080 and is an Assistant  Vice  President  of The Bank of New York,  one of the
corporations  described in and which executed the foregoing instrument;  that he
knows the corporate  seal of the said  corporation  and that the seal affixed to
said  instrument  is the  corporate  seal of said  corporation;  and  that  said
instrument  was signed and sealed in behalf of said  corporation by authority of
its  Board  of  Directors  and  that he  subscribed  his  name  thereto  by like
authority;  and said ROBERT F. McINTYRE  acknowledged  said instrument to be the
free act and deed of said corporation.

                  My commission as Notary Public as aforesaid expires


                                         /s/ Karen Katlan
                                         -------------------------------
                                         Karen Katlan
                                         Notary Public, State of New York
                                         No. 01KA4994374
                                         Qualified in New York County
                                         Commission Expires April 6, 1996
                                      -56-

<PAGE>