CREDIT AGREEMENT

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                                                                     Exhibit 4-2

                     $225,000,000 REVOLVING CREDIT FACILITY

                                CREDIT AGREEMENT

                                  BY AND AMONG

                          NEW JERSEY NATURAL GAS COMPANY

                                       AND

                             THE BANKS PARTY HERETO

                                       AND

                         PNC BANK, NATIONAL ASSOCIATION,
                              AS ADMINISTRATIVE AGENT

                                       AND

                           JPMORGAN CHASE BANK NA AND
                              FLEET NATIONAL BANK,
                              AS SYNDICATION AGENTS

                                        AND

                   BANK OF TOKYO-MITSUBISHI TRUST COMPANY AND
                          CITICORP NORTH AMERICA, INC.,
                             AS DOCUMENTATION AGENTS

                                       AND

                            PNC CAPITAL MARKETS, INC.,
                                AS LEAD ARRANGER

                          DATED AS OF DECEMBER 16, 2004

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                                TABLE OF CONTENTS

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1. CERTAIN DEFINITIONS................................................................................................      1
   1.1         Certain Definitions.....................................................................................      1
   1.2         Construction............................................................................................     22
              1.2.1. Number; Inclusion................................................................................     22
              1.2.2. Determination....................................................................................     22
              1.2.3. Agent's Discretion and Consent...................................................................     22
              1.2.4. Documents Taken as a Whole.......................................................................     22
              1.2.5. Headings.........................................................................................     22
              1.2.6. Implied References to this Agreement.............................................................     23
              1.2.7. Persons..........................................................................................     23
              1.2.8. Modifications to Documents.......................................................................     23
              1.2.9. From, To and Through.............................................................................     23
              1.2.10.Shall; Will......................................................................................     23
   1.3         Accounting Principles...................................................................................     23

2. REVOLVING CREDIT AND SWING LOAN FACILITIES.........................................................................     24
   2.1         Commitments.............................................................................................     24
              2.1.1. Revolving Credit Loans...........................................................................     24
              2.1.2. Swing Loan Commitment............................................................................     24
   2.2         Nature of Banks' Obligations with Respect to Revolving Credit Loans.....................................     24
   2.3         Certain Fees............................................................................................     25
   2.4         Revolving Credit Loan Requests..........................................................................     25
   2.5         Swing Loan Requests.....................................................................................     26
   2.6         Making Revolving Credit Loans and Swing Loans...........................................................     26
              2.6.1. Making Revolving Credit Loans....................................................................     26
              2.6.2. Making Swing Loans...............................................................................     27
   2.7         Swing Loan Note.........................................................................................     27
   2.8         Use of Proceeds.........................................................................................     27
   2.9         Letter of Credit Subfacility............................................................................     27
              2.9.1. Issuance of Letters of Credit....................................................................     27
              2.9.2. Letter of Credit Fees............................................................................     28
              2.9.3. Disbursements, Reimbursement.....................................................................     28
              2.9.4. Repayment of Participation Advances..............................................................      29
              2.9.5. Documentation....................................................................................     30
              2.9.6. Determinations to Honor Drawing Requests.........................................................     30
               2.9.7. Nature of Participation and Reimbursement Obligations............................................     30
              2.9.8. Indemnity........................................................................................     32
               2.9.9. Liability for Acts and Omissions.................................................................     32
   2.10        Borrowings to Repay Swing Loans.........................................................................     34
   2.11         Right to Increase Commitments...........................................................................     34
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                               TABLE OF CONTENTS

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3. INTENTIONALLY OMITTED..............................................................................................     35

4. INTEREST RATES.....................................................................................................     35
   4.1         Interest Rate Options...................................................................................     35
              4.1.1. Revolving Credit Interest Rate Options...........................................................     35
              4.1.2. Rate Quotations..................................................................................     35
              4.1.3. Change in Fees or Interest Rates.................................................................     36
   4.2         Interest Periods........................................................................................     36
              4.2.1. Amount of Borrowing Tranche......................................................................     36
              4.2.2. Renewals.........................................................................................     36
   4.3         Interest After Default..................................................................................     37
              4.3.1. Letter of Credit Fees, Interest Rate.............................................................     37
              4.3.2. Other Obligations........F.......................................................................     37
              4.3.3. Acknowledgment...................................................................................     37
   4.4         Euro-Rate Unascertainable; Illegality; Increased Costs; Deposits Not Available..........................     37
              4.4.1. Unascertainable..................................................................................     37
              4.4.2. Illegality; Increased Costs; Deposits Not Available..............................................     38
              4.4.3. Agent's and Bank's Rights........................................................................     38
   4.5         Selection of Interest Rate Options......................................................................     39

5. PAYMENTS...........................................................................................................     39
   5.1         Payments................................................................................................     39
   5.2         Pro Rata Treatment of Banks.............................................................................     39
   5.3         Interest Payment Dates..................................................................................     40
   F5.4         Prepayments............................................................................................     40
              5.4.1. Voluntary Prepayments............................................................................     40
              5.4.2. Replacement of a Bank............................................................................     41
              5.4.3. Change of Lending Office.........................................................................     42
   5.5         Voluntary Commitment Reductions.........................................................................     42
   5.6         Additional Compensation in Certain Circumstances........................................................     42
              5.6.1. Increased Costs or Reduced Return Resulting From Taxes, Reserves,
                     Capital Adequacy Requirements, Expenses, Etc.....................................................     42
              5.6.2. Indemnity........................................................................................     43
   5.7         Interbank Market Presumption............................................................................     44
   5.8         Taxes...................................................................................................     44
              5.8.1. No Deductions....................................................................................     44
              5.8.2. Stamp Taxes......................................................................................     44
              5.8.3. Indemnification for Taxes Paid by a Bank.........................................................     45
              5.8.4. Certificate......................................................................................     45
              5.8.5. Survival.........................................................................................     45
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   5.9          Notes..................................................................................................     45
   5.10        Settlement Date Procedures..............................................................................     45

6. REPRESENTATIONS AND WARRANTIES.....................................................................................     46
   6.1         Representations and Warranties..........................................................................     46
              6.1.1. Organization and Qualification...................................................................     46
              6.1.2. Subsidiaries.....................................................................................     46
              6.1.3. Power and Authority..............................................................................     47
              6.1.4. Validity and Binding Effect......................................................................     47
              6.1.5. No Conflict......................................................................................     47
              6.1.6. Litigation.......................................................................................     47
              6.1.7. Title to Properties..............................................................................     48
              6.1.8. Financial Statements.............................................................................     48
              6.1.9. Use of Proceeds; Margin Stock; Section 20 Subsidiaries...........................................     48
              6.1.10.Full Disclosure..................................................................................     49
              6.1.11.Taxes............................................................................................     49
              6.1.12.Consents and Approvals...........................................................................     49
              6.1.13.No Event of Default; Compliance With Instruments.................................................     50
              6.1.14.Patents, Trademarks, Copyrights, Licenses, Etc...................................................     50
              6.1.15.Insurance........................................................................................     50
              6.1.16.Compliance With Laws.............................................................................     50
              6.1.17.Material Contracts; Burdensome Restrictions......................................................     51
              6.1.18.Investment Companies; Regulated Entities.........................................................     51
              6.1.19.Plans and Benefit Arrangements...................................................................     51
              6.1.20.Employment Matters...............................................................................     52
              6.1.21.Environmental Matters............................................................................      52
              6.1.22.Senior Debt Status...............................................................................     53
              6.1.23.Hedging Contract Policies........................................................................     53
               6.1.24.Permitted Related Business Opportunities.........................................................     53
              6.1.25.Anti-Terrorism Laws; Executive Order No. 13224...................................................     53
   6.2         Continuation of Representations.........................................................................     54

7. CONDITIONS OF LENDING AND ISSUANCE OF LETTERS OF CREDIT............................................................     54
   7.1          First Loans and Letters of Credit.......................................................................     54
              7.1.1. Officer's Certificate............................................................................     54
              7.1.2. Secretary's Certificate..........................................................................     54
              7.1.3. Opinion of Counsel...............................................................................     55
              7.1.4. Legal Details....................................................................................     55
              7.1.5. Payment of Fees..................................................................................     55
              7.1.6. Consents.........................................................................................     56
              7.1.7. Officer's Certificate Regarding MACs.............................................................     56
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              7.1.8. No Violation of Laws.............................................................................     56
              7.1.9. No Actions or Proceedings........................................................................     56
              7.1.10. Hedging Contract Policies.......................................................................     56
              7.1.11. Termination of Commitments and Repayment of Outstanding Indebtedness............................     56
   7.2         Each Additional Loan or Letter of Credit................................................................     56

8. COVENANTS..........................................................................................................     57
   8.1         Affirmative Covenants...................................................................................     57
              8.1.1. Preservation of Existence, Etc...................................................................     57
              8.1.2. Payment of Liabilities, Including Taxes, Etc.....................................................     57
              8.1.3. Maintenance of Insurance.........................................................................     58
              8.1.4. Maintenance of Properties and Leases.............................................................     58
              8.1.5. Maintenance of Patents, Trademarks, Etc..........................................................     58
              8.1.6. Visitation Rights................................................................................     58
              8.1.7. Keeping of Records and Books of Account..........................................................     59
              8.1.8. Plans and Benefit Arrangements...................................................................     59
              8.1.9. Compliance With Laws.............................................................................     59
              8.1.10. Use of Proceeds.................................................................................     59
              8.1.11. Hedging Contract Policies.......................................................................     60
   8.2         Negative Covenants......................................................................................     60
              8.2.1. Indebtedness.....................................................................................     60
              8.2.2. Liens............................................................................................     61
              8.2.3. Guaranties.......................................................................................     62
              8.2.4. Loans and Investments............................................................................     62
              8.2.5. Liquidations, Mergers, Consolidations, Acquisitions..............................................     63
              8.2.6. Dispositions of Assets or Subsidiaries...........................................................     64
              8.2.7. Affiliate Transactions...........................................................................     64
              8.2.8. Subsidiaries, Partnerships and Joint Ventures....................................................     65
              8.2.9. Continuation of or Change in Business............................................................     65
              8.2.10.Plans and Benefit Arrangements...................................................................     65
              8.2.11. Fiscal Year.....................................................................................     65
              8.2.12. Maximum Leverage Ratio..........................................................................     66
               8.2.13. Minimum Interest Coverage Ratio.................................................................     66
              8.2.14. No Limitation on Dividends and Distributions by Borrower or its Subsidiaries....................     66
               8.2.15. Payment of Dividends; Redemptions...............................................................     66
              8.2.16. No Modification of Hedging Contract Policies....................................................     66
              8.2.17. Off-Balance Sheet Financing.....................................................................     67
              8.2.18. Amendments to NJNG Note Agreement...............................................................     67
              8.2.19. No Violation of Anti-Terrorism Laws.............................................................     67
   8.3         Reporting Requirements..................................................................................     68
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              8.3.1. Quarterly Financial Statements...................................................................     68
              8.3.2. Annual Financial Statements......................................................................     68
              8.3.3. Certificate of the Borrower......................................................................     69
              8.3.4. Notice of Default................................................................................     69
              8.3.5. Notice of Litigation.............................................................................     69
              8.3.6. Notice of Change in Debt Rating..................................................................     70
              8.3.7. Sale of Assets...................................................................................     70
              8.3.8. Budgets, Forecasts, Other Reports and Information................................................     70
              8.3.9. Notices Regarding Plans and Benefit Arrangements.................................................     70

9. DEFAULT............................................................................................................     72
   9.1         Events of Default.......................................................................................     72
              9.1.1. Payments Under Loan Documents....................................................................     72
              9.1.2. Breach of Warranty...............................................................................     72
              9.1.3. Breach of Negative Covenants or Visitation Rights................................................     72
              9.1.4. Breach of Other Covenants........................................................................     72
              9.1.5. Defaults in Other Agreements or Indebtedness.....................................................     73
              9.1.6. Final Judgments or Orders........................................................................     73
              9.1.7. Loan Document Unenforceable......................................................................     73
              9.1.8. Uninsured Losses; Proceedings Against Assets.....................................................     74
              9.1.9. Notice of Lien or Assessment.....................................................................     74
              9.1.10. Insolvency......................................................................................     74
              9.1.11. Events Relating to Plans and Benefit Arrangements...............................................     74
              9.1.12. Cessation of Business...........................................................................     75
              9.1.13. Change of Control...............................................................................     75
              9.1.14. Involuntary Proceedings.........................................................................     75
              9.1.15. Voluntary Proceedings...........................................................................     75
   9.2         Consequences of Event of Default........................................................................     76
              9.2.1. Events of Default Other Than Bankruptcy, Insolvency or Reorganization Proceedings................     76
              9.2.2. Bankruptcy, Insolvency or Reorganization Proceedings.............................................     76
              9.2.3. Set-off..........................................................................................     77
              9.2.4. Suits, Actions, Proceedings......................................................................      77
              9.2.5. Application of Proceeds; Collateral Sharing......................................................     77
              9.2.6. Other Rights and Remedies........................................................................     78

10. THE AGENT.........................................................................................................     78
    10.1       Appointment.............................................................................................     78
    10.2       Delegation of Duties....................................................................................     79
    10.3       Nature of Duties; Independent Credit Investigation......................................................     79
    10.4        Actions in Discretion of Agent; Instructions From the Banks.............................................     80
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    10.5   Reimbursement and Indemnification of Agent by the Borrower..................................................     80
    10.6   Exculpatory Provisions; Limitation of Liability.............................................................     81
    10.7   Reimbursement and Indemnification of Agent by Banks.........................................................     81
    10.8   Reliance by Agent...........................................................................................     82
    10.9   Notice of Default...........................................................................................     82
    10.10 Notices.....................................................................................................     82
    10.11 Banks in Their Individual Capacities; Agents in Its Individual Capacity.....................................     83
    10.12 Holders of Notes............................................................................................     83
    10.13 Equalization of Banks.......................................................................................     83
    10.14 Successor Agent.............................................................................................     84
    10.15 Agent's Fee.................................................................................................     84
    10.16 Availability of Funds.......................................................................................     84
    10.17 Calculations................................................................................................     85
    10.18 Beneficiaries...............................................................................................     85
    10.19 No Reliance on Agent's Customer Identification Program......................................................     85

11. MISCELLANEOUS.....................................................................................................     86
    11.1   Modifications, Amendments or Waivers........................................................................     86
          11.1.1. Increase of Revolving Credit Commitments; Extension of Expiration Date..............................     86
          11.1.2. Release of Collateral or Guarantor..................................................................     86
          11.1.3. Miscellaneous.......................................................................................     87
    11.2   No Implied Waivers; Cumulative Remedies; Writing Required...................................................     87
    11.3   Reimbursement and Indemnification of Banks by the Borrower; Taxes...........................................     87
    11.4   Holidays....................................................................................................     88
    11.5   Funding by Branch, Subsidiary or Affiliate..................................................................     89
          11.5.1. Notional Funding....................................................................................     89
          11.5.2. Actual Funding......................................................................................     89
    11.6   Notices; Lending Offices....................................................................................     89
    11.7   Severability................................................................................................     90
    11.8   Governing Law...............................................................................................     90
    11.9   Prior Understanding.........................................................................................     91
    11.10 Duration; Survival..........................................................................................     91
    11.11 Successors and Assigns; Joinder of a Bank...................................................................     91
    11.12 Confidentiality.............................................................................................     93
          11.12.1. General............................................................................................     93
          11.12.2. Sharing Information With Affiliates of the Banks...................................................     93
    11.13 Counterparts................................................................................................     93
    11.14 Agent's or Bank's Consent...................................................................................     94
    11.15 Exceptions..................................................................................................     94
    11.16 WAIVER OF JURY TRIAL........................................................................................     94
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   11.17 JURISDICTION & VENUE.........................................................................................     94
   11.18 Certifications From Banks and Participants...................................................................     95
         11.18.1. Tax Withholding.....................................................................................     95
         11.18.2. USA Patriot Act.....................................................................................     96
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                         LIST OF SCHEDULES AND EXHIBITS

SCHEDULES

SCHEDULE 1.1(A)             -         PRICING GRID

SCHEDULE 1.1(B)             -         COMMITMENTS OF BANKS AND ADDRESSES FOR
                                    NOTICES

SCHEDULE 1.1(P)             -         PERMITTED LIENS

SCHEDULE 2.9.1              -         EXISTING LETTERS OF CREDIT

SCHEDULE 6.1.2              -         SUBSIDIARIES

SCHEDULE 6.1.12             -         CONSENTS AND APPROVALS

SCHEDULE 6.1.23             -         HEDGING CONTRACT POLICIES

SCHEDULE 6.1.24                      PERMITTED BUSINESS OPPORTUNITIES

SCHEDULE 8.2.1              -         EXISTING INDEBTEDNESS

EXHIBITS

EXHIBIT 1.1(A)              -         ASSIGNMENT AND ASSUMPTION AGREEMENT

EXHIBIT 1.1(B)              -         BANK JOINDER

EXHIBIT 1.1(R)              -         REVOLVING CREDIT NOTE

EXHIBIT 1.1(S)              -         SWING LOAN NOTE

EXHIBIT 2.4                 -         LOAN REQUEST

EXHIBIT 2.5                 -         SWING LOAN REQUEST

EXHIBIT 5.5                 -         COMMITMENT REDUCTION NOTICE

EXHIBIT 7.1.3(A)            -         OPINION OF COUNSEL

EXHIBIT 7.1.3(B)            -         OPINION OF IN-HOUSE COUNSEL

EXHIBIT 8.2.5               -         ACQUISITION COMPLIANCE CERTIFICATE

EXHIBIT 8.3.3               -         COMPLIANCE CERTIFICATE

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                                CREDIT AGREEMENT

      THIS CREDIT AGREEMENT is dated as of December 16, 2004 and is made by and
among NEW JERSEY NATURAL GAS COMPANY, a New Jersey corporation (the "Borrower"),
the BANKS (as hereinafter defined), JPMORGAN CHASE BANK NA and FLEET NATIONAL
BANK, each in its capacity as a syndication agent, BANK OF TOKYO-MITSUBISHI
TRUST COMPANY and CITICORP NORTH AMERICA, INC., each in its capacity as a
documentation agent, and PNC BANK, NATIONAL ASSOCIATION, in its capacity as
administrative agent for the Banks under this Agreement (hereinafter referred to
in such capacity as the "Agent").

                                   WITNESSETH:

      WHEREAS, the Borrower has requested the Banks to provide a revolving
credit facility to the Borrower in an aggregate principal amount not to exceed
$225,000,000; and

      WHEREAS, the revolving credit facility shall be used for refinancing
existing indebtedness and general corporate purposes of the Borrower; and

      WHEREAS, the Banks are willing to provide such credit upon the terms and
conditions hereinafter set forth;

      NOW, THEREFORE, the parties hereto, in consideration of their mutual
covenants and agreements hereinafter set forth and intending to be legally bound
hereby, covenant and agree as follows:

                             1. CERTAIN DEFINITIONS

            1.1    Certain Definitions.

            In addition to words and terms defined elsewhere in this Agreement,
the following words and terms shall have the following meanings, respectively,
unless the context hereof clearly requires otherwise:

                  Acquired Person shall mean a Person or business acquired by
the Borrower or any Subsidiary of the Borrower in a transaction which is a
Permitted Acquisition.

                  Acquisition Compliance Certificate shall have the meaning
assigned to that term in Section 8.2.5.

                  Additional Bank shall have the meaning assigned to that term
in Section 11.11(iv).

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                  Affiliate as to any Person shall mean any other Person (i)
which directly or indirectly controls, is controlled by, or is under common
control with such Person, (ii) which beneficially owns or holds 10% or more of
any class of the voting or other equity interests of such Person, or (iii) 10%
or more of any class of voting interests or other equity interests of which is
beneficially owned or held, directly or indirectly, by such Person. Control, as
used in this definition, shall mean the possession, directly or indirectly, of
the power to direct or cause the direction of the management or policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise, including the power to elect a majority of the directors or trustees
of a corporation or trust, as the case may be.

                  Agent shall mean PNC Bank, National Association, and its
successors and assigns.

                  Agent's Fee shall have the meaning assigned to that term in
Section 10.15.

                  Agent's Letter shall have the meaning assigned to that term in
Section 10.15.

                  Agreement shall mean this Credit Agreement, as the same may be
supplemented or amended from time to time, including all schedules and exhibits.

                  Anti-Terrorism Laws shall mean any Laws relating to terrorism
or money laundering, including Executive Order No. 13224, the USA Patriot Act,
the Laws comprising or implementing the Bank Secrecy Act, and the Laws
administered by the United States Treasury Department's Office of Foreign Asset
Control (as any of the foregoing Laws may from time to time be amended, renewed,
extended, or replaced).

                  Applicable Facility Fee Rate shall mean the percentage rate
per annum at the indicated level of Debt Rating in the pricing grid on Schedule
1.1(A) below the heading "Facility Fee." The Applicable Facility Fee Rate shall
be computed in accordance with the parameters set forth on Schedule 1.1(A).

                  Applicable Letter of Credit Fee Rate shall mean the percentage
rate per annum at the indicated level of Debt Rating in the pricing grid on
Schedule 1.1(A) below the heading "Letter of Credit Fee." The Applicable Letter
of Credit Fee Rate shall be computed in accordance with the parameters set forth
on Schedule 1.1(A).

                  Applicable Margin shall mean, as applicable:

                  (A)    the percentage spread to be added to Base Rate under the
Base Rate Option at the indicated level of Debt Rating in the pricing grid on
Schedule 1.1(A) below the heading "Base Rate Spread," or

                  (B) the percentage spread to be added to Euro-Rate under the
Euro-Rate Option at the indicated level of Debt Rating in the pricing grid on
Schedule 1.1(A) below the heading "Euro-Rate Spread."

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                  The Applicable Margin shall be computed in accordance with the
parameters set forth on Schedule 1.1(A).

                   Approved Fund shall mean, with respect to any Bank, any Person
(other than a natural person) that is engaged in making, purchasing, holding or
investing in bank loans and similar extensions of credit in the ordinary course
of its business and that is administered by such Bank, an Affiliate of such Bank
or an entity or an Affiliate of an entity that administers or manages such Bank.

                  Assignment and Assumption Agreement shall mean an Assignment
and Assumption Agreement by and among a Purchasing Bank, a Transferor Bank and
the Agent, as Agent and on behalf of the remaining Banks, substantially in the
form of Exhibit 1.1(A).

                  Authorized Officer shall mean those individuals, designated by
written notice to the Agent from the Borrower, authorized to execute notices,
reports and other documents on behalf of the Borrower required hereunder. The
Borrower may amend such list of individuals from time to time by giving written
notice of such amendment to the Agent.

                   Bank Joinder shall mean a Bank Joinder substantially in the
form of Exhibit 1.1(B).

                  Bank Provided Interest Rate Hedge shall mean an Interest Rate
Hedge which is provided by any Bank and that meets the following requirements:
such Interest Rate Hedge (i) is documented in a standard International Swap
Dealer Association Agreement, (ii) provides for the method of calculating the
reimbursable amount of the provider's credit exposure in a reasonable and
customary manner, and (iii) is entered into for hedging (rather than
speculative) purposes. The liabilities of the Borrower to the provider of any
Bank-Provided Interest Rate Hedge shall be "Obligations" hereunder and otherwise
treated as Obligations for the purposes of each of the other Loan Documents.

                  Banks shall mean the financial institutions named on Schedule
1.1(B) and their respective successors and assigns as permitted hereunder, each
of which is referred to herein as a Bank.

                  Base Rate shall mean the greater of (i) the interest rate per
annum announced from time to time by the Agent at its Principal Office as its
then prime rate, which rate may not be the lowest rate then being charged
commercial borrowers by the Agent, or (ii) the Federal Funds Open Rate plus 1/2%
per annum.

                  Base Rate Option shall mean the option of the Borrower to have
Revolving Credit Loans bear interest at the rate and under the terms and
conditions set forth in Section 4.1.1(i).

                  Benefit Arrangement shall mean at any time an "employee
benefit plan," within the meaning of Section 3(3) of ERISA, which is neither a
Plan nor a Multiemployer Plan

                                       3
<PAGE>

and which is maintained, sponsored or otherwise contributed to by any member of
the ERISA Group.

                  Blocked Person shall have the meaning assigned to such term in

Subsection 6.1.25.

                  Borrower shall mean New Jersey Natural Gas Company, a
corporation organized and existing under the laws of the State of New Jersey.

                  Borrowing Date shall mean, with respect to any Loan, the date
for the making thereof or the renewal or conversion thereof at or to the same or
a different Interest Rate Option, which shall be a Business Day.

                  Borrowing Tranche shall mean specified portions of Loans
outstanding as follows: (i) any Loans to which a Euro-Rate Option applies which
become subject to the same Interest Rate Option under the same Loan Request by
the Borrower and which have the same Interest Period shall constitute one
Borrowing Tranche, and (ii) all Loans to which a Base Rate Option applies shall
constitute one Borrowing Tranche.

                  Business Day shall mean any day other than a Saturday or
Sunday or a legal holiday on which commercial banks are authorized or required
to be closed for business in Pittsburgh, Pennsylvania and if the applicable
Business Day relates to any Loan to which the Euro-Rate Option applies, such day
must also be a day on which dealings are carried on in the London interbank
market.

                  Closing Date shall mean the Business Day on which the first
Loan shall be made, which shall be December 16, 2004. The closing shall take
place on the Closing Date at such time and place as the parties agree.

                  Commercial Letter of Credit shall mean any letter of credit
which is issued in respect of the purchase of goods or services by the Borrower
in the ordinary course of its business.

                   Commitment shall mean as to any Bank its Revolving Credit
Commitment and, in the case of the Agent, its Swing Loan Commitment, and
Commitments shall mean the aggregate of the Revolving Credit Commitments and
Swing Loan Commitment of all of the Banks.

                   Compliance Certificate shall have the meaning assigned to such
term in Section 8.3.3.

                  Consideration shall mean with respect to any Permitted
Acquisition, the aggregate of (i) the cash paid by the Borrower,
directly or indirectly, to the seller in connection therewith, (ii) the
Indebtedness incurred or assumed by the Borrower, whether in favor of the seller
or otherwise and whether fixed or contingent, (iii) any Guaranty given or
incurred by the

                                        4
<PAGE>

Borrower in connection therewith, and (iv) any other consideration given or
obligation incurred by the Borrower in connection therewith.

                  Consolidated Income from Operations for any period of
determination shall mean (i) the sum of net income (provided that there shall be
excluded from net income: (a) any extraordinary items of gain or loss
(including, without limitation, those items created by mandated changes in
accounting treatment), and (b) any gain or loss of any Person accounted for on
the equity method except to the extent of cash distributions received by the
Borrower or any Subsidiary of the Borrower during the period of determination
with respect to any gain of any Person accounted for on the equity method),
depreciation, amortization, other non-cash charges to net income, interest
expense and income tax expense minus (ii) non-cash credits to net income, in
each case of the Borrower and its Subsidiaries for such period determined and
consolidated in accordance with GAAP.

                  Consolidated Interest Expense for any period of determination
shall mean interest expense for such period of the
Borrower and its Subsidiaries determined on a consolidated basis in accordance
with GAAP.

                  Consolidated Shareholders' Equity shall mean as of any date of
determination the sum of the amounts under the headings "Common Shareholders'
Equity" and "Preferred Shareholders' Equity" on the balance sheet, prepared in
accordance with GAAP, for the Borrower and its Subsidiaries on a consolidated
basis as of such date of determination.

                  Consolidated Total Capitalization shall mean as of any date of
determination the sum of (i) Consolidated Total Indebtedness, plus (ii)
Consolidated Shareholders' Equity.

                  Consolidated Total Indebtedness shall mean as of any date of
determination total Indebtedness, without duplication, of the Borrower and its
Subsidiaries.

                  Contamination shall mean the presence or release or threat of
release of Regulated Substances in, on, under or emanating to or from the
Property, which pursuant to Environmental Laws requires notification or
reporting to an Official Body, or which pursuant to Environmental Laws requires
the performance of a Remedial Action or which otherwise constitutes a violation
of Environmental Laws.

                  Debt Rating shall mean the rating of the Borrower's senior
secured long-term debt by each of Standard & Poor's and Moody's.

                  Dollar, Dollars, U.S. Dollars and the symbol $ shall mean
lawful money of the United States of America.

                  Drawing Date shall have the meaning assigned to that term in
Section 2.9.3.2.

                                       5
<PAGE>

                   Environmental Complaint shall mean any (i) notice of
non-compliance or violation, citation or order relating in any way to any
Environmental Law, Environmental Permit, Contamination or Regulated Substance;
(ii) civil, criminal, administrative or regulatory investigation instituted by
an Official Body relating in any way to any Environmental Law, Environmental
Permit, Contamination or Regulated Substance; (iii) administrative, regulatory
or judicial action, suit, claim or proceeding instituted by any Person or
Official Body or any other written notice of liability or potential liability
from any Person or Official Body, in either instance, relating to or setting
forth allegations or a cause of action for personal injury (including but not
limited to death), property damage, natural resource damage, contribution or
indemnity for the costs associated with the performance of Remedial Actions,
direct recovery for the costs associated with the performance of Remedial
Actions, liens or encumbrances attached to or recorded or levied against
property for the costs associated with the performance of Remedial Actions,
civil or administrative penalties, criminal fines or penalties or declaratory or
equitable relief arising under any Environmental Laws; or (iv) subpoena, request
for information or other written notice or demand of any type issued by an
Official Body pursuant to any Environmental Laws.

                  Environmental Laws shall mean all federal, state, local and
foreign Laws (including, but not limited to, the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. Sections 9601 et seq., the
Resource Conservation and Recovery Act, 42 U.S.C. Section   6901 et seq., the
Hazardous Materials Transportation Act, 49 U.S.C. Section 1801 et seq., the
Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq., the Federal Water
Pollution Control Act, 33 U.S.C. Sections 1251 et seq., the Federal Safe
Drinking Water Act, 42 U.S.C. Sections 300f-300j, the Federal Air Pollution
Control Act, 42 U.S.C. Section 7401 et seq., the Oil Pollution Act, 33 U.S.C.
Section 2701 et seq., the Federal Insecticide, Fungicide and Rodenticide Act, 7
U.S.C. Sections 136 to 136y, the Occupational Safety and Health Act, 29 U.S.C.
Section 651 et seq., each as amended, and any regulations promulgated or any
equivalent state or local Law, and any amendments thereto) and any consent
decrees, consent orders, consent agreements, settlement agreements, judgments,
orders, directives, policies or programs issued by or entered into with an
Official Body pertaining or relating to: (i) pollution or pollution control;
(ii) protection of human health from exposure to Regulated Substances; (iii)
protection of the environment and/or natural resources; (iv) protection of
employee safety in the workplace and protection of employees from exposure to
Regulated Substances in the workplace (but excluding workers compensation and
wage and hour Laws); (v) the presence, use, management, generation, manufacture,
processing, extraction, treatment, recycling, refining, reclamation, labeling,
sale, transport, storage, collection, distribution, disposal or release or
threat of release of Regulated Substances; (vi) the presence of Contamination;
(vii) the protection of endangered or threatened species; and (viii) the
protection of Environmentally Sensitive Areas.

                  Environmental Permits shall mean all permits, licenses, bonds
or other forms of financial assurances, consents, registrations, identification
numbers, approvals or authorizations required under Environmental Laws (i) to
own, occupy or maintain the Property; (ii) for the operations and business
activities of the Borrower and any of its Subsidiaries; or (iii) for the
performance of a Remedial Action.

                                        6
<PAGE>

                  Environmental Records shall mean all notices, reports,
records, plans, applications, forms or other filings relating or pertaining to
the Property, Contamination, the performance of a Remedial Action and the
operations and business activities of the Borrower and any of its Subsidiaries
which pursuant to Environmental Laws, Environmental Permits or at the request or
direction of an Official Body either must be submitted to an Official Body or
which otherwise must be maintained.

                  Environmentally Sensitive Area shall mean (i) any wetland as
defined by applicable Environmental Laws; (ii) any area designated as a coastal
zone pursuant to applicable Laws, including Environmental Laws; (iii) any area
of historic or archeological significance or scenic area as defined or
designated by applicable Laws, including Environmental Laws; (iv) habitats of
endangered species or threatened species as designated by applicable Laws,
including Environmental Laws; or (v) a floodplain or other flood hazard area as
defined pursuant to any applicable Laws.

                  ERISA shall mean the Employee Retirement Income Security Act
of 1974, as the same may be amended or supplemented from time to time, and any
successor statute of similar import, and the rules and regulations thereunder,
as from time to time in effect.

                  ERISA Group shall mean, at any time, the Borrower and all
members of a controlled group of corporations and all trades or businesses
(whether or not incorporated) under common control and all other entities which,
together with the Borrower, are treated as a single employer under Section 414
of the Internal Revenue Code.

                  Euro-Rate shall mean, with respect to the Loans comprising any
Borrowing Tranche to which the Euro-Rate Option applies for any Interest Period,
the interest rate per annum determined by the Agent by dividing (the resulting
quotient rounded upwards, if necessary to the nearest 1/100th of 1% per annum)
(i) the rate of interest determined by the Agent in accordance with its usual
procedures (which determination shall be conclusive, absent manifest error) to
be the average of the London interbank offered rates for U.S. Dollars quoted by
the British Bankers' Association as set forth on Moneyline Telerate (or
appropriate successor or, if the British Bankers' Association or its successor
ceases to provide such quotes, a comparable replacement determined by the Agent)
display page 3750 (or such other display page on the Moneyline Telerate service
as may replace display page 3750), two (2) Business Days prior to the first day
of such Interest Period for an amount comparable to such Borrowing Tranche and
having a Borrowing Date and a maturity comparable to such Interest Period by
(ii) a number equal to 1.00 minus the Euro-Rate Reserve Percentage. The
Euro-Rate may also be expressed by the following formula:

                                       7
<PAGE>

                    Average of London interbank offered rates quoted
                    by BBA or appropriate successor as shown on
       Euro-Rate   = Moneyline Telerate Service display page 3750
                    ------------------------------------------------
                    1.00 - Euro-Rate Reserve Percentage

                  The Euro-Rate shall be adjusted with respect to any Loan to
which the Euro-Rate Option applies that is outstanding on the effective date of
any change in the Euro-Rate Reserve Percentage as of such effective date. The
Agent shall give prompt notice to the Borrower of the Euro-Rate as determined or
adjusted in accordance herewith, which determination shall be conclusive absent
manifest error.

                  Euro-Rate Option shall mean the option of the Borrower to have
Revolving Credit Loans bear interest at the rate and under the terms and
conditions set forth in Section 4.1.1(ii).

                  Euro-Rate Reserve Percentage shall mean as of any day the
maximum percentage in effect on such day as prescribed by the Board of Governors
of the Federal Reserve System (or any successor) for determining the reserve
requirements (including supplemental, marginal and emergency reserve
requirements) with respect to eurocurrency funding (currently referred to as
"Eurocurrency Liabilities").

                  Event of Default shall mean any of the events described in
Section 9.1 and referred to therein as an "Event of Default."

                  Executive Order No. 13224 shall mean the Executive Order No.
13224 on Terrorist Financing, effective September 24, 2001, as the same has
been, or shall hereafter be, renewed, extended, amended or replaced.

                  Existing Credit Facility shall mean that certain Credit
Agreement among the Borrower, the banks party thereto, Bank of Tokyo-Mitsubishi
Trust Company and JPMorgan Chase Bank NA, previously known as JPMorgan Chase
Bank, each in its capacity as a syndication agent, Fleet National Bank and
SunTrust Bank, each in its capacity as a documentation agent, and PNC Bank,
National Association, in its capacity as administrative agent for the Banks,
dated December 23, 2002 (as amended by that certain First Amendment, dated
August 13, 2003, that certain Second Amendment and Consent, dated December 19,
2003, that certain Third Amendment, dated July 12, 2004, and that certain Fourth
Amendment, dated August 31, 2004).

                  Existing Letters of Credit shall have the meaning assigned to
that term in Section 2.9.1.

                  Expiration Date shall mean, with respect to the Revolving
Credit Commitments, December 16, 2009.

                  Facility Fees collectively and Facility Fee separately shall
have the meaning given to such terms in Section 2.3.1.

                                       8
<PAGE>

                  Facility Usage Fees collectively and Facility Usage Fee
separately shall have the meaning given to such terms in Section 2.3.2.

                  Federal Funds Open Rate for any day shall mean the rate per
annum (based on a year of 360 days and actual days elapsed) determined by the
Agent in accordance with its usual procedures (which determination shall be
conclusive absent manifest error) to be the "Open" rate for federal funds
transactions as of the opening of business for federal funds transactions among
members of the Federal Reserve System arranged by federal funds brokers on such
day, as quoted by Garvin Guybutler, any successor entity thereto, or any other
broker selected by the Agent, as set forth on the applicable Telerate display
page; provided, however, that if such day is not a Business Day, the Federal
Funds Open Rate for such day shall be the "Open" rate on the immediately
preceding Business Day, or if no such rate shall be quoted by a federal funds
broker at such time, such other rate as determined by the Agent in accordance
with its usual procedures.

                  GAAP shall mean generally accepted accounting principles as
are in effect in the United States from time to time, subject to the provisions
of Section 1.3, and applied on a consistent basis both as to classification of
items and amounts.

                  Governmental Acts shall have the meaning assigned to that term
in Section 2.9.8.

                  Guaranty of any Person shall mean any obligation of such
Person guaranteeing or in effect guaranteeing any liability or obligation of any
other Person in any manner, whether directly or indirectly, including any
agreement to indemnify or hold harmless any other Person, any performance bond
or other suretyship arrangement and any other form of assurance against loss,
except endorsement of negotiable or other instruments for deposit or collection
in the ordinary course of business.

                  Hedging Contract Policies shall mean the written internal
policies and procedures with respect to hedging or trading of gas contracts or
other commodity, hedging contracts of any kind, or any derivatives or other
similar financial instruments of the Parent and its Subsidiaries, as in effect
on the date of this Agreement and as hereafter amended in accordance with
Section 8.2.16, a copy of which has been delivered to the Agent and each Bank.

                  Hedging Transaction shall mean any transaction entered into by
the Borrower or any of its Subsidiaries in accordance with the Hedging Contract
Policies.

                  Historical Statements shall have the meaning assigned to that
term in Section 6.1.8(i).

                  Hybrid Security shall mean any of the following: (i)
beneficial interests issued by a trust which constitutes a Subsidiary of the
Borrower, substantially all of the assets of which trust are unsecured
Indebtedness of the Borrower or any Subsidiary of the Borrower or proceeds
thereof, and all payments of which Indebtedness are required to be, and are,
distributed

                                        9
<PAGE>

to the holders of beneficial interests in such trust promptly after receipt by
such trust, or (ii) any shares of capital stock or other equity interest that,
other than solely at the option of the issuer thereof, by their terms (or by the
terms of any security into which they are convertible or exchangeable) are, or
upon the happening of an event or the passage of time would be, required to be
redeemed or repurchased, in whole or in part, or have, or upon the happening of
an event or the passage of time would have, a redemption or similar payment.

                  Inactive Subsidiary shall mean, at any time, any Subsidiary of
any Person, which Subsidiary (i) does not conduct any business or have
operations, and (ii) does not have total assets with a net book value, as of any
date of determination, in excess of $100,000.

                  Indebtedness shall mean, as to any Person at any time, any and
all indebtedness, obligations or liabilities (whether matured or unmatured,
liquidated or unliquidated, direct or indirect, absolute or contingent, or joint
or several) of such Person for or in respect of: (i) borrowed money, (ii)
amounts raised under or liabilities in respect of any note purchase or
acceptance credit facility, (iii) reimbursement obligations (contingent or
otherwise) under any letter of credit, currency swap agreement, interest rate
swap, cap, collar or floor agreement or other interest rate or currency exchange
rate management device, (iv) any other transaction (including forward sale or
purchase agreements, capitalized leases and conditional sales agreements) having
the commercial effect of a borrowing of money entered into by such Person to
finance its operations or capital requirements (but not including trade payables
and accrued expenses incurred in the ordinary course of business which are not
represented by a promissory note or other evidence of indebtedness and which are
not more than thirty (30) days past due), (v) any Hedging Transaction, to the
extent that any indebtedness, obligations or liabilities of such Person in
respect thereof constitutes "indebtedness" as determined in accordance with
GAAP, (vi) any Guaranty of any Hedging Transaction described in the immediately
preceding clause (v), (vii) any Guaranty of Indebtedness for borrowed money,
(viii) any Hybrid Security described in clause (i) of the definition of Hybrid
Security, or (ix) the mandatory repayment obligation of the issuer of any Hybrid
Security described in clause (ii) of the definition of Hybrid Security.

                  Ineligible Security shall mean any security which may not be
underwritten or dealt in by member banks of the Federal Reserve System under
Section 16 of the Banking Act of 1933 (12 U.S.C. Section 24, Seventh), as
amended.

                  Insolvency Proceeding shall mean, with respect to any Person,
(a) a case, action or proceeding with respect to such Person (i) before any
court or any other Official Body under any bankruptcy, insolvency,
reorganization or other similar Law now or hereafter in effect, or (ii) for the
appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator, conservator (or similar official) of such Person or otherwise
relating to the liquidation, dissolution, winding-up or relief of such Person,
or (b) any general assignment for the benefit of creditors, composition,
marshaling of assets for creditors, or other, similar arrangement in respect of
such Person's creditors generally or any substantial portion of its creditors;
undertaken under any Law.

                                       10
<PAGE>

                  Interest Period shall mean the period of time selected by the
Borrower in connection with (and to apply to) any election permitted hereunder
by the Borrower to have Revolving Credit Loans bear interest under the Euro-Rate
Option. Subject to the last sentence of this definition, such period shall be
one, two, three or six Months, and solely with approval of the Agent a shorter
period. Such Interest Period shall commence on the effective date of such
Interest Rate Option, which shall be (i) the Borrowing Date if the Borrower is
requesting new Loans, or (ii) the date of renewal of or conversion to the
Euro-Rate Option if the Borrower is renewing or converting to the Euro-Rate
Option applicable to outstanding Loans. Notwithstanding the second sentence
hereof: (A) any Interest Period which would otherwise end on a date which is not
a Business Day shall be extended to the next succeeding Business Day unless such
Business Day falls in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day, and (B) the Borrower shall
not select, convert to or renew an Interest Period for any portion of the Loans
that would end after the Expiration Date.

                  IRH Provider shall have the meaning assigned to such term in
Section 9.2.5.2 [Collateral Sharing].

                  Interest Rate Hedge shall mean an interest rate exchange,
collar, cap, swap, adjustable strike cap, adjustable strike corridor or similar
agreements entered into by the Borrower or its Subsidiaries in order to provide
protection to, or minimize the impact upon, the Borrower and/or its Subsidiaries
of increasing floating rates of interest applicable to Indebtedness.

                  Interest Rate Option shall mean any Euro-Rate Option or Base
Rate Option.

                  Internal Revenue Code shall mean the Internal Revenue Code of
1986, as the same may be amended or supplemented from time to time, and any
successor statute of similar import, and the rules and regulations thereunder,
as from time to time in effect.

                  Investment shall have the meaning assigned to that term in
Section 8.2.4.

                  Labor Contracts shall mean all employment agreements,
employment contracts, collective bargaining agreements and other agreements
among the Borrower or any Subsidiary of the Borrower and its employees.

                  Law shall mean any law (including common law), constitution,
statute, treaty, regulation, rule, ordinance, opinion, release, ruling, order,
injunction, writ, decree, bond, judgment, authorization or approval, lien or
award of or settlement agreement with any Official Body.

                  Letter of Credit shall have the meaning assigned to that term
in Section 2.9.1.

                  Letter of Credit Borrowing shall have the meaning assigned to
such term in Section 2.9.3.4.

                                       11
<PAGE>

            Letter of Credit Fee shall have the meaning assigned to that term in
Section 2.9.2.

            Letters of Credit Outstanding shall mean at any time the sum of (i)
the aggregate undrawn face amount of outstanding Letters of Credit and (ii) the
aggregate amount of all unpaid and outstanding Reimbursement Obligations and
Letter of Credit Borrowings.

            Lien shall mean any mortgage, deed of trust, pledge, lien, security
interest, charge or other encumbrance or security arrangement of any nature
whatsoever, whether voluntarily or involuntarily given, including any
conditional sale or title retention arrangement, and any assignment, deposit
arrangement or lease intended as, or having the effect of, security and any
filed financing statement or other notice of any of the foregoing (whether or
not a lien or other encumbrance is created or exists at the time of the filing).

            LLC Interests shall have the meaning given to such term in Section
6.1.2.

            Loan Documents shall mean this Agreement, the Agent's Letter, the
Notes (if any), and any other instruments, certificates or documents delivered
or contemplated to be delivered hereunder or thereunder or in connection
herewith or therewith, as the same may be supplemented or amended from time to
time in accordance herewith or therewith, and Loan Document shall mean any of
the Loan Documents.

            Loan Request shall mean a request for a Revolving Credit Loan or a
request to select, convert to or renew a Base Rate Option or Euro-Rate Option
with respect to an outstanding Revolving Credit Loan in accordance with Sections
2.4, 2.5, 4.1 and 4.2.

            Loans shall mean collectively and Loan shall mean separately all
Revolving Credit Loans and Swing Loans or any Revolving Credit Loan or Swing
Loan.

            Material Adverse Change shall mean any set of circumstances or
events which (a) has or could reasonably be expected to have any material
adverse effect whatsoever upon the validity or enforceability of this Agreement
or any other Loan Document, (b) is or could reasonably be expected to be
material and adverse to the business, properties, assets, financial condition,
results of operations or prospects of the Borrower, (c) impairs materially or
could reasonably be expected to impair materially the ability of the Borrower to
duly and punctually pay the Indebtedness or otherwise perform the obligations in
accordance with the Loan Documents, or (d) impairs materially or could
reasonably be expected to impair materially the ability of the Agent or any of
the Banks, to the extent permitted, to enforce their legal remedies pursuant to
this Agreement or any other Loan Document.

            Month, with respect to an Interest Period under the Euro-Rate
Option, shall mean the interval between the days in consecutive calendar months
numerically corresponding to the first day of such Interest Period. If any
Euro-Rate Interest Period begins on a day of a calendar month for which there is
no numerically corresponding day in the month in

                                       12
<PAGE>

which such Interest Period is to end, the final month of such Interest Period
shall be deemed to end on the last Business Day of such final month.

            Moody's shall mean Moody's Investors Service, Inc. and its
successors.

            Mortgage Indenture shall mean that certain Indenture of Mortgage and
Deed of Trust dated April 1, 1952 from the Borrower to BNY Midwest Trust
Company, as successor to Harris Trust and Savings Bank, Trustee, as heretofore
and hereafter amended, modified and supplemented.

            Multiemployer Plan shall mean any employee benefit plan which is a
"multiemployer plan" within the meaning of Section 4001(a)(3) of ERISA and to
which the Borrower or any member of the ERISA Group is then making or accruing
an obligation to make contributions or, within the preceding five Plan years,
has made or had an obligation to make such contributions.

            Multiple Employer Plan shall mean a Plan which has two or more
contributing sponsors (including the Borrower or any member of the ERISA Group)
at least two of whom are not under common control, as such a plan is described
in Sections 4063 and 4064 of ERISA.

            Net Cash Proceeds shall mean, with respect to any issuance of debt
or a Hybrid Security, an amount equal to the cash proceeds received by the
Borrower or any of its Subsidiaries from or in respect of such transaction
(including, when received: (i) any cash proceeds received as income or other
deferred cash proceeds, or (ii) cash proceeds of any non-cash proceeds of such
transaction), less all investment banking fees, discounts and commissions, legal
fees, consulting fees, accountants' fees, underwriting discounts and commissions
and other customary and reasonable fees and expenses actually incurred in
connection therewith.

            NJNG Note Agreement shall mean the Note Agreement, dated March 15,
2004, as the same may be supplemented, amended, or modified from time to time as
permitted by Section 8.2.18 [Amendments to NJNG Note Agreement] hereof.

             NJNG Notes shall mean the unsecured Indebtedness issued by the
Borrower pursuant to the NJNG Note Agreement.

            Notes shall mean the Revolving Credit Notes and Swing Loan Note, if
any.

            Notices shall have the meaning assigned to that term in Section
11.6.

            Obligations shall mean any obligation or liability of the Borrower
to the Agent or any of the Banks, howsoever created, arising or evidenced,
whether direct or indirect, absolute or contingent, now or hereafter existing,
or due or to become due, under or in connection with this Agreement, any Notes,
the Letters of Credit, the Agent's Letter or any other Loan Document.
Obligations shall include the liabilities to any Bank under any Bank-Provided

                                        13
<PAGE>

Interest Rate Hedge but shall not include the liabilities to other Persons under
any other Interest Rate Hedge.

            Official Body shall mean any national, federal, state, local or
other government or political subdivision or any agency, authority, board,
bureau, central bank, commission, department or instrumentality of either, or
any court, tribunal, grand jury or arbitrator, in each case whether foreign or
domestic.

            Parent shall mean New Jersey Resources Corporation, a corporation
organized and existing under the laws of the State of New Jersey, of which
Borrower is a wholly owned Subsidiary.

            Participation Advance shall mean, with respect to any Bank, such
Bank's payment in respect of its participation in a Letter of Credit Borrowing
according to its Ratable Share pursuant to Section 2.9.3.4.

            Partnership Interests shall have the meaning given to such term in
Section 6.1.2.

            PBGC shall mean the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA or any successor.

            Permitted Acquisitions shall have the meaning assigned to such term
in Section 8.2.5 [Liquidations, Mergers, Consolidations, Acquisitions].

            Permitted Investments shall mean:

            (i) direct obligations of the United States of America or any agency
or instrumentality thereof or obligations backed by the full faith and credit of
the United States of America maturing in twelve (12) months or less from the
date of acquisition;

            (ii) repurchase agreements having a duration of not more than sixty
(60) days that are collateralized by full faith and credit obligations of the
United States Government or obligations guaranteed by the United States
Government and its agencies;

            (iii) interests in investment companies registered under the
Investment Company Act of 1940, as amended (or in a separate portfolio of such
an investment company), that invest primarily in full faith and credit
obligations of the United States Government or obligations guaranteed by the
United States Government and its agencies and repurchase agreements
collateralized by such obligations;

            (iv) time deposits with any office located in the United States of
the Banks or any other bank or trust company which is organized under the laws
of the United States and has combined capital, surplus and undivided profits of
not less than $500,000,000 or with any bank which is organized other than under
the laws of the United States (y) the commercial paper of which is rated at
least A-1 by Standard & Poor's and P-1 by Moody's (or, if such

                                       14
<PAGE>

commercial paper is rated only by Standard & Poor's, at least A-1 by Standard &
Poor's, or if such commercial paper is rated only by Moody's, at least P-1 by
Moody's) or (z) the long term senior debt of which is rated at least AA by
Standard & Poor's and Aa2 by Moody's (or, if such debt is rated only by Standard
& Poor's, at least AA by Standard & Poor's, or if such debt is rated only by
Moody's, at least Aa2 by Moody's);

            (v) commercial paper having a maturity of not more than one year
from the date of such investment and rated at least A-1 by Standard & Poor's and
P-1 by Moody's (or, if such commercial paper is rated only by Standard & Poor's,
at least A-1 by Standard & Poor's or, if such commercial paper is rated only by
Moody's, at least P-1 by Moody's);

            (vi) instruments held for collection in the ordinary course of
business;

            (vii) any equity or debt securities or other form of debt instrument
obtained in settlement of debts previously contracted; and

            (viii) any Investment arising out of a Permitted Related Business
Opportunity.

            Permitted Liens shall mean:

            (i) Liens for taxes, assessments, or similar charges, incurred in
the ordinary course of business and which are not yet due and payable;

            (ii) Pledges or deposits made in the ordinary course of business to
secure payment of workmen's compensation, or to participate in any fund in
connection with workmen's compensation, unemployment insurance, old-age pensions
or other social security programs;

            (iii) Liens of mechanics, materialmen, warehousemen, carriers, or
other like Liens, securing obligations incurred in the ordinary course of
business that are not yet due and payable and Liens of landlords securing
obligations to pay lease payments that are not yet due and payable or in
default;

            (iv) Any Lien arising out of judgments or awards but only to the
extent that the creation of any such Lien shall not be an event or condition
which, with or without notice or lapse of time or both, would cause Borrower to
be in violation of Section 9.1.6;

            (v) Security interests in favor of lessors of personal property,
which property is the subject of a true lease;

            (vi) Good-faith pledges or deposits made in the ordinary course of
business to secure performance of bids, tenders, contracts (other than for the
repayment of borrowed money) or leases, not in excess of the aggregate amount
due thereunder, or to secure statutory obligations, or surety, appeal,
indemnity, performance or other similar bonds required in the ordinary course of
business;

                                       15
<PAGE>

            (vii) Encumbrances consisting of zoning restrictions, easements,
rights-of-way or other restrictions on the use of real property and minor
defects to title to real property, none of which materially impairs the use of
such property or the value thereof;

            (viii) Liens on property leased by the Borrower or any Subsidiary of
the Borrower securing obligations of the Borrower or such Subsidiary to the
lessor under such leases, so long as to the extent the payments or other amounts
due and owing under any such lease constitute Indebtedness, such Indebtedness is
permitted under Section 8.2.1;

            (ix) Any Lien existing on the date of this Agreement and described
on Schedule 1.1(P), provided, that, to the extent any such Lien secures
Indebtedness permitted by Section 8.2.1(ii), such Lien may continue to secure
any renewals or extensions of such Indebtedness permitted by Section 8.2.1(ii)
so long as (i) the principal amount of the Indebtedness secured by any such Lien
is not hereafter increased and (ii) no additional assets become subject to such
Lien;

            (x) Liens on assets of the Borrower existing on the Closing Date
(other than on any "Excepted Property" of the Borrower, as "Excepted Property"
is defined in the Mortgage Indenture on the Closing Date), which Liens secure
outstanding Indebtedness as of the Closing Date under the Mortgage Indenture and
thereafter Liens on assets of the Borrower (other than on any "Excepted
Property") which additional Liens secure outstanding Indebtedness as of the
Closing Date under the Mortgage Indenture and any additional Indebtedness which
is issued in accordance with Article Two of the Mortgage Indenture and is
otherwise permitted by Section 8.2.1(iii);

            (xi) Purchase Money Security Interests, provided, that the aggregate
amount of loans and deferred payments secured by such Purchase Money Security
Interests shall not exceed $20,000,000 (excluding for the purpose of this
computation any loans or deferred payments secured by Liens described on
Schedule 1.1(P));

            (xii) Liens on any property or asset of an Acquired Person so long
as: (a) such Liens secure Indebtedness of the Acquired Person and such
Indebtedness and such Liens on property or assets of the Acquired Person existed
prior to the consummation of the Permitted Acquisition and were not created in
contemplation of or in connection with such acquisition, (b) such Liens apply
solely to the assets of the Acquired Person and do not apply to any asset of the
Borrower or any Subsidiary of the Borrower, and (c) after giving effect to such
Permitted Acquisition and all other Permitted Acquisitions made by the Borrower
and any Subsidiary of the Borrower from and after the Closing Date, the
aggregate outstanding amount of all Indebtedness secured by Liens permitted by
this clause (xii) shall not exceed $75,000,000; and

            (xiii) The following, (A) if the validity or amount thereof is being
contested in good faith by appropriate and lawful proceedings diligently
conducted so long as levy and execution thereon have been stayed and continue to
be stayed or (B) if a final judgment is entered and such judgment is discharged
within thirty (30) days of entry, and could not be reasonably expected to result
in a Material Adverse Change:

                                       16
<PAGE>

                  (1) Claims or Liens for taxes, assessments or charges due and
      payable and subject to interest or penalty, provided that the Borrower or
      any of its Subsidiaries, as applicable, maintains such reserves or other
      appropriate provisions as shall be required by GAAP and pays all such
      taxes, assessments or charges forthwith upon the commencement of
      proceedings to foreclose any such Lien;

                  (2) Claims, Liens or encumbrances upon, and defects of title
      to, real or personal property, including any attachment of personal or
      real property or other legal process prior to adjudication of a dispute on
      the merits; or

                  (3) Claims or Liens of mechanics, materialmen, warehousemen,
      carriers, or other statutory nonconsensual Liens.

            Permitted Related Business Opportunity shall mean any transaction
with another Person (other than any Inactive Subsidiary of Parent) involving
business activities or assets reasonably related or complementary to the
business of the Borrower and its Subsidiaries as conducted on the Closing Date
or as may be conducted pursuant to Section 8.2.9, including, without limitation,
the management and marketing of storage, capacity and transportation of gas and
other forms of energy, the generation, transmission or storage of gas and other
forms of energy, or the access to gas and energy transmission lines, and
business initiatives for the conservation and efficiency of gas and energy.

            Permitted Transferee shall mean, as of any date of determination,
any of the following with respect to any then current officer or director of the
Parent: (i) such Person's spouse, lineal descendants or lineal descendant's of
such Person's spouse, (ii) any charitable corporation or trust established by
such officer or director or by any Person described in the immediately preceding
clause (i), (iii) any trust (or in the case of a minor, a custodial account
under a Uniform Gifts or Transfers to Minors Act) of which the beneficiary or
beneficiaries are one or more Persons described in the immediately preceding
clauses (i) or (ii), or (iv) any executor or administrator upon the death of
such officer or director or the death of any Person described in the immediately
preceding clauses (i) or (ii).

            Person shall mean any individual, corporation, partnership, limited
liability company, association, joint-stock company, trust, unincorporated
organization, joint venture, government or political subdivision or agency
thereof, or any other entity.

            Plan shall mean at any time an employee pension benefit plan
(including a Multiple Employer Plan, but not a Multiemployer Plan) which is
covered by Title IV of ERISA or is subject to the minimum funding standards
under Section 412 of the Internal Revenue Code and either (i) is maintained by
any member of the ERISA Group for employees of any member of the ERISA Group or
(ii) has at any time within the preceding five years been maintained by any
entity which was at such time a member of the ERISA Group for employees of any
entity which was at such time a member of the ERISA Group.

                                       17
<PAGE>

            PNC Bank shall mean PNC Bank, National Association, its successors
and assigns.

            Potential Default shall mean any event or condition which with
notice, passage of time, or both, would constitute an Event of Default.

            Principal Office shall mean the main banking office of the Agent in
Pittsburgh, Pennsylvania.

            Prohibited Transaction shall mean any prohibited transaction as
defined in Section 4975 of the Internal Revenue Code or Section 406 of ERISA for
which neither an individual nor a class exemption has been issued by the United
States Department of Labor.

            Property shall mean all real property, both owned and leased, of the
Borrower or any Subsidiary of the Borrower.

            Purchase Money Security Interest shall mean Liens upon tangible
personal property securing loans to the Borrower or any Subsidiary of the
Borrower or deferred payments by the Borrower or such Subsidiary for the
purchase of such tangible personal property.

            Purchasing Bank shall mean a Bank which becomes a party to this
Agreement by executing an Assignment and Assumption Agreement.

            Ratable Share shall mean the proportion that a Bank's Commitment
(excluding its Swing Loan Commitment) bears to the Commitments (excluding the
Swing Loan Commitment) of all of the Banks.

            Regulated Entity shall mean any Person which is subject under Law to
any of the laws, rules or regulations respecting the financial, organizational
or rate regulation of electric companies, public utilities, or public utility
holding companies.

            Regulated Substances shall mean, without limitation, any substance,
material or waste, regardless of its form or nature, defined under Environmental
Laws as a "hazardous substance," "pollutant," "pollution," "contaminant,"
"hazardous or toxic substance," "extremely hazardous substance," "toxic
chemical," "toxic substance," "toxic waste," "hazardous waste," "special
handling waste," "industrial waste," "residual waste," "solid waste," "municipal
waste," "mixed waste," "infectious waste," "chemotherapeutic waste," "medical
waste," or "regulated substance", or any other substance, material or waste,
regardless of its form or nature, which is regulated, controlled or governed by
Environmental Laws due to its radioactive, ignitable, corrosive, reactive,
explosive, toxic, carcinogenic or infectious properties or nature or any other
material, substance or waste, regardless of its form or nature, which otherwise
is regulated, controlled or governed by Environmental Laws, including without
limitation, petroleum and petroleum products (including crude oil and any
fractions thereof), natural gas, synthetic gas and any mixtures thereof,
asbestos, urea formaldehyde, polychlorinated biphenlys, mercury, radon and
radioactive materials.

                                       18
<PAGE>

            Regulation U shall mean Regulation U, T, G, or X as promulgated by
the Board of Governors of the Federal Reserve System, as amended from time to
time.

            Reimbursement Obligation shall have the meaning assigned to such
term in Section 2.9.3.2.

            Remedial Action shall mean any investigation, identification,
characterization, delineation, cleanup, removal, remediation, containment,
control or abatement of or other response actions to Regulated Substances and
any closure or post-closure measures associated therewith.

            Reportable Event shall mean a reportable event described in Section
4043 of ERISA and regulations thereunder with respect to a Plan or Multiemployer
Plan.

            Required Banks shall mean

            (A) if there are no Loans, Reimbursement Obligations or Letter of
Credit Borrowings outstanding, Required Banks shall mean Banks whose Commitments
(excluding the Swing Loan Commitments) aggregate at least 51% of the Commitments
of all of the Banks, or

            (B) if there are Loans, Reimbursement Obligations, or Letter of
Credit Borrowings outstanding, Required Banks shall mean:

                  (i) prior to a termination of the Commitments hereunder
pursuant to Section 9.2.1 or 9.2.2, any Bank or group of Banks if the sum of the
Loans (excluding the Swing Loans), Reimbursement Obligations and Letter of
Credit Borrowings of such Banks then outstanding aggregates at least 51% of the
total principal amount of all of the Loans (excluding the Swing Loans),
Reimbursement Obligations and Letter of Credit Borrowings then outstanding.

                   (ii) after a termination of the Commitments hereunder pursuant
to Section 9.2.1 or 9.2.2, any Bank or group of Banks if the sum of the Loans,
Reimbursement Obligations and Letter of Credit Borrowings of such Banks then
outstanding aggregates at least 51% of the total principal amount of all of the
Loans, Reimbursement Obligations and Letter of Credit Borrowings then
outstanding.

Reimbursement Obligations and Letter of Credit Borrowings shall be deemed, for
purposes of this definition, to be in favor of the Agent and not a participating
Bank if such Bank has not made its Participation Advance in respect thereof and
shall be deemed to be in favor of such Bank to the extent of its Participation
Advance if it has made its Participation Advance in respect thereof.

            Required Share shall have the meaning assigned to such term in
Section 5.10.

                                       19
<PAGE>

            Revolving Credit Commitment shall mean, as to any Bank at any time,
the amount initially set forth opposite its name on Schedule 1.1(B) in the
column labeled "Amount of Commitment for Revolving Credit Loans," and thereafter
as determined by the Agent after giving effect to each applicable Bank Joinder
and Assignment and Assumption Agreement executed by such Bank and delivered to
the Agent, and Revolving Credit Commitments shall mean the aggregate Revolving
Credit Commitments of all of the Banks.

            Revolving Credit Loans shall mean collectively and Revolving Credit
Loan shall mean separately all Revolving Credit Loans or any Revolving Credit
Loan made by the Banks or one of the Banks to the Borrower pursuant to Section
2.1.1 or 2.9.3.

            Revolving Credit Note shall mean any Revolving Credit Note of the
Borrower in the form of Exhibit 1.1(R) issued by the Borrower at the request of
a Bank pursuant to Section 5.9 evidencing the Revolving Credit Loans to such
Bank, together with all amendments, extensions, renewals, replacements,
refinancings or refundings thereof in whole or in part.

            Revolving Facility Usage shall mean at any time the sum of the
Revolving Credit Loans outstanding, the Swing Loans outstanding and the Letters
of Credit Outstanding.

            SEC shall mean the Securities and Exchange Commission or any
governmental agencies substituted therefor.

            SEC Filings shall mean the Parent's Form 10-K, filed with the SEC
for the fiscal year ended September 30, 2004 and Forms 10-Q, the first filed
with the SEC for the fiscal quarter ended December 31, 2003, the second filed
with SEC for the fiscal quarter ended March 31, 2004 and the third filed with
the SEC for the fiscal quarter ended June 30, 2004.

            Section 20 Subsidiary shall mean the Subsidiary of the bank holding
company controlling any Bank, which Subsidiary has been granted authority by the
Federal Reserve Board to underwrite and deal in certain Ineligible Securities.

            Settlement Date shall mean the 7th day of each week (if such day is
a Business Day and if not, the next succeeding Business Day) and any other
Business Day on which the Agent elects to effect settlement pursuant to Section
5.10.

            Significant Subsidiary shall mean, any Subsidiary of the Borrower
which at any time (i) has gross revenues equal to or in excess of five percent
(5%) of the gross revenues of the Borrower and its Subsidiaries on a
consolidated basis, or (ii) has total assets equal to or in excess of five
percent (5%) of the total assets of the Borrower and its Subsidiaries on a
consolidated basis, in either case, as determined and consolidated in accordance
with GAAP.

            Solvent shall mean, with respect to any Person on a particular date,
that on such date (i) such Person is able to realize upon its assets and pay its
debts and other liabilities as they mature in the normal course of business, and
(ii) such Person has not incurred debts or liabilities beyond such Person's
ability to pay as such debts and liabilities mature.

                                       20
<PAGE>

            Standard & Poor's shall mean Standard & Poor's Ratings Services, a
division of The McGraw-Hill Companies, Inc., and its successors.

            Standby Letter of Credit shall mean a Letter of Credit issued to
support obligations of the Borrower, contingent or otherwise, which finances the
working capital and business needs of the Borrower incurred in the ordinary
course of its business, but excluding any Letter of Credit under which the
stated amount of such Letter of Credit increases automatically over time.

            Subsidiary of any Person at any time shall mean (i) any corporation
or trust of which 50% or more (by number of shares or number of votes) of the
outstanding capital stock or shares of beneficial interest normally entitled to
vote for the election of one or more directors or trustees (regardless of any
contingency which does or may suspend or dilute the voting rights) is at such
time owned directly or indirectly by such Person or one or more of such Person's
Subsidiaries, (ii) any partnership of which such Person is a general partner or
of which 50% or more of the partnership interests is at the time directly or
indirectly owned by such Person or one or more of such Person's Subsidiaries,
(iii) any limited liability company of which such Person is a member or of which
50% or more of the limited liability company interests is at the time directly
or indirectly owned by such Person or one or more of such Person's Subsidiaries
or (iv) any corporation, trust, partnership, limited liability company or other
entity which is controlled or capable of being controlled by such Person or one
or more of such Person's Subsidiaries.

            Subsidiary Shares shall have the meaning assigned to that term in
Section 6.1.2.

            Swing Loan Commitment shall mean PNC Bank's commitment to make Swing
Loans to the Borrower pursuant to Section 2.1.2 hereof in an aggregate principal
amount up to $35,000,000.

            Swing Loan Interest Rate shall mean as to each Swing Loan the rate
of interest quoted by PNC Bank applicable thereto and accepted by the Borrower
with respect to such Swing Loan.

            Swing Loan Note shall mean the Swing Loan Note of the Borrower in
the form of Exhibit 1.1(S) evidencing the Swing Loans, together with all
amendments, extensions, renewals, replacements, refinancings or refundings
thereof in whole or in part.

            Swing Loan Request shall mean a request for Swing Loans made in
accordance with Section 2.5 hereof.

            Swing Loans shall mean collectively and Swing Loan shall mean
separately all Swing Loans or any Swing Loan made by PNC Bank to the Borrower
pursuant to Section 2.1.2 hereof.

                                       21
<PAGE>

            Transferor Bank shall mean the selling Bank pursuant to an
Assignment and Assumption Agreement.

            USA Patriot Act shall mean the Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of
2001, Public Law 107-56, as the same has been, or shall hereafter be, renewed,
extended, amended or replaced.

      1.2 Construction.
                       
      Unless the context of this Agreement otherwise clearly requires, the
following rules of construction shall apply to this Agreement and each of the
other Loan Documents:

            1.2.1. Number; Inclusion.

                  references to the plural include the singular, the plural, the
part and the whole; "or" has the inclusive meaning represented by the phrase
"and/or" and "including" has the meaning represented by the phrase "including
without limitation";

            1.2.2. Determination.

                  references to "determination" of or by the Agent or the Banks
shall be deemed to include good-faith estimates by the Agent or the Banks (in
the case of quantitative determinations) and good-faith beliefs by the Agent or
the Banks (in the case of qualitative determinations) and such determination
shall be conclusive absent manifest error;

            1.2.3. Agent's Discretion and Consent.

                  whenever the Agent or the Banks are granted the right herein
to act in its or their sole discretion or to grant or withhold consent such
right shall be exercised in good faith;

            1.2.4. Documents Taken as a Whole.

                  the words "hereof," "herein," "hereunder," "hereto" and
similar terms in this Agreement or any other Loan Document refer to this
Agreement or such other Loan Document as a whole and not to any particular
provision of this Agreement or such other Loan Document;

            1.2.5. Headings.

                  the section and other headings contained in this Agreement or
such other Loan Document and the Table of Contents (if any), preceding this
Agreement or such other Loan Document are for reference purposes only and shall
not control or affect the construction of this Agreement or such other Loan
Document or the interpretation thereof in any respect;

                                       22
<PAGE>

            1.2.6. Implied References to this Agreement.

                  article, section, subsection, clause, schedule and exhibit
references are to this Agreement or other Loan Document, as the case may be,
unless otherwise specified;

            1.2.7. Persons.

                  reference to any Person includes such Person's successors and
assigns but, if applicable, only if such successors and assigns are permitted by
this Agreement or such other Loan Document, as the case may be, and reference to
a Person in a particular capacity excludes such Person in any other capacity;

            1.2.8. Modifications to Documents.

                  reference to any agreement (including this Agreement and any
other Loan Document together with the schedules and exhibits hereto or thereto),
document or instrument means such agreement, document or instrument as amended,
modified, replaced, substituted for, superseded or restated;

            1.2.9. From, To and Through.

                  relative to the determination of any period of time, "from"
means "from and including," "to" means "to but excluding," and "through" means
"through and including"; and

            1.2.10. Shall; Will.

                  references to "shall" and "will" are intended to have the same
meaning.

      1.3 Accounting Principles.

      Except as otherwise provided in this Agreement, all computations and
determinations as to accounting or financial matters and all financial
statements to be delivered pursuant to this Agreement shall be made and prepared
in accordance with GAAP (including principles of consolidation where
appropriate), and all accounting or financial terms shall have the meanings
ascribed to such terms by GAAP; provided, however, that all accounting terms
used in Section 8.2 [Negative Covenants] (and all defined terms used in the
definition of any accounting term used in Section 8.2) shall have the meaning
given to such terms (and defined terms) under GAAP as in effect on the date
hereof applied on a basis consistent with those used in preparing the Annual
Statements referred to in Section 6.1.8(i) [Historical Statements]. In the event
of any change after the date hereof in GAAP, and if such change would result in
the inability to determine compliance with the financial covenants set forth in
Section 8.2 based upon the Borrower's regularly prepared financial statements by
reason of the preceding sentence, then the parties hereto agree to endeavor, in
good faith, to agree upon an amendment to this Agreement that would adjust such
financial covenants in a manner that would not affect the

                                       23
<PAGE>

substance thereof, but would allow compliance therewith to be determined in
accordance with the Borrower's financial statements at that time.

      2. REVOLVING CREDIT AND SWING LOAN FACILITIES

      2.1 Commitments.

            2.1.1. Revolving Credit Loans.

                  Subject to the terms and conditions hereof and relying upon
the representations and warranties herein set forth, each Bank severally agrees
to make Revolving Credit Loans to the Borrower at any time or from time to time
on or after the date hereof to the Expiration Date, provided that, after giving
effect to each such Revolving Credit Loan the aggregate amount of Revolving
Credit Loans from such Bank shall not exceed such Bank's Revolving Credit
Commitment minus such Bank's Ratable Share of the amount of Letters of Credit
Outstanding; and provided further that the Revolving Facility Usage at any time
shall not exceed the Revolving Credit Commitments of all the Banks. Within such
limits of time and amount and subject to the other provisions of this Agreement,
the Borrower may borrow, repay and reborrow pursuant to this Section 2.1.1. The
outstanding principal amount of all Revolving Credit Loans, together with
accrued interest thereon, shall be due and payable on the Expiration Date.

            2.1.2. Swing Loan Commitment.

                  Subject to the terms and conditions hereof and relying upon
the representations and warranties herein set forth, PNC Bank agrees to make
Swing Loans to the Borrower at any time or from time to time after the date
hereof to, but not including, the Expiration Date, in an aggregate principal
amount of up to but not in excess of the Swing Loan Commitment, provided that
the Revolving Facility Usage at any time shall not exceed the Revolving Credit
Commitments of all the Banks. Within such limits of time and amount and subject
to the other provisions of this Agreement, the Borrower may borrow, repay and
reborrow pursuant to this Section 2.1.2. The outstanding principal amount of all
Swing Loans, together with accrued interest thereon, shall be due and payable on
the earlier of the Settlement Date applicable thereto or the Expiration Date.

      2.2 Nature of Banks' Obligations with Respect to Revolving Credit Loans.

      Each Bank shall be obligated to participate in each request for Revolving
Credit Loans pursuant to Section 2.4 [Revolving Credit Loan Requests] in
accordance with its Ratable Share. The aggregate amount of each Bank's Revolving
Credit Loans outstanding hereunder to the Borrower at any time shall never
exceed its Revolving Credit Commitment minus its Ratable Share of the amount of
Letters of Credit Outstanding. The obligations of each Bank hereunder are
several. The failure of any Bank to perform its obligations hereunder shall not
affect the Obligations of the Borrower to any other party nor shall any other
party be liable for the failure of

                                       24
<PAGE>

such Bank to perform its obligations hereunder. The Banks shall have no
obligation to make Revolving Credit Loans hereunder on or after the Expiration
Date.

      2.3 Certain Fees.

            2.3.1 Facility Fees.

                  Accruing from the date hereof until the Expiration Date, the
Borrower agrees to pay to the Agent for the account of each Bank, as
consideration for such Bank's Revolving Credit Commitment hereunder, a
nonrefundable facility fee (the "Facility Fee") equal to the Applicable Facility
Fee Rate (computed on the basis of a year of 360 days and actual days elapsed)
on the average daily amount of such Bank's Revolving Credit Commitment as the
same may be constituted from time to time. All Facility Fees shall be payable
quarterly in arrears on the first day of each January, April, July and October
after the date hereof and on the Expiration Date or upon acceleration of the
Loans.

            2.3.2 Facility Usage Fees.

                  During the period commencing on the date hereof until the
Expiration Date, the Borrower agrees to pay to the Agent for the account of each
Bank, a nonrefundable fee (the "Facility Usage Fee") for each day when Revolving
Facility Usage exceeds thirty-three and one-third percent (33-1/3%) of the
Revolving Credit Commitments in an amount equal to the sum of (i) 0.125% per
annum (computed on the basis of a year of 360 days and actual days elapsed)
computed on the amount of the Revolving Credit Loans outstanding on such day
plus (ii) 0.125% per annum (computed on the basis of a year of 360 days and
actual days elapsed) computed on the amount of the Letters of Credit Outstanding
on such day, and with respect to PNC Bank only, plus (iii) 0.125% per annum
(computed on the basis of a year of 360 days and actual days elapsed) computed
on the amount of the Swing Loans outstanding on such day, provided, however,
that any Facility Usage Fee paid with respect to clause (ii) above, shall be
paid to the Agent for the account of the Agent and not a participating Bank if
such Bank has not made its Participation Advance in respect of any Reimbursement
Obligations or Letter of Credit Borrowings. The Facility Usage Fee shall be
payable quarterly in arrears on the first day of each January, April, July, and
October after the date hereof and on the Expiration Date or upon acceleration of
the Loans.

      2.4 Revolving Credit Loan Requests.

      Except as otherwise provided herein, the Borrower may from time to time
prior to the Expiration Date request the Banks to make Revolving Credit Loans or
renew or convert the Interest Rate Option applicable to existing Revolving
Credit Loans pursuant to Section 4.2 [Interest Periods], by delivering to the
Agent, not later than 10:00 a.m., Pittsburgh time, (i) three (3) Business Days
prior to the proposed Borrowing Date with respect to the making of Revolving
Credit Loans to which the Euro-Rate Option applies or the date of conversion to
or the renewal of the Euro-Rate Option for any such Loans; and (ii) one (1)
Business Day prior to either the proposed Borrowing Date with respect to the
making of a Revolving Credit Loan to which the

                                       25
<PAGE>

Base Rate Option applies or the last day of the preceding Interest Period with
respect to the conversion to the Base Rate Option for any Loan, of a duly
completed Loan Request therefor substantially in the form of Exhibit 2.4 or a
Loan Request by telephone immediately confirmed in writing by letter, facsimile
or telex in the form of such Exhibit, it being understood that the Agent may
rely on the authority of any individual making such a telephonic request without
the necessity of receipt of such written confirmation. Each Loan Request shall
be irrevocable and shall specify (i) the proposed Borrowing Date; (ii) the
aggregate amount of the proposed Revolving Credit Loans comprising each
Borrowing Tranche, the amount of which shall be in integral multiples of
$1,000,000 and not less than $3,000,000 for each Borrowing Tranche to which the
Euro-Rate Option applies and not less than the lesser of $1,000,000 and in
integral multiples of $100,000 or the maximum amount available for Borrowing
Tranches to which the Base Rate Option applies; (iii) whether the Euro-Rate
Option or Base Rate Option shall apply to the proposed Loans comprising the
applicable Borrowing Tranche; and (iv) in the case of a Borrowing Tranche to
which the Euro-Rate Option applies, an appropriate Interest Period for the Loans
comprising such Borrowing Tranche.

      2.5 Swing Loan Requests.

                  Except as otherwise provided herein, the Borrower may from
time to time prior to the Expiration Date request PNC Bank to make a Swing Loan
by delivery to PNC Bank, not later than 12:00 noon Pittsburgh time, on the
proposed Borrowing Date of a duly completed request therefor substantially in
the form of Exhibit 2.5. hereto or a request by telephone immediately confirmed
in writing by letter, facsimile or telex, it being understood that PNC Bank may
rely on the authority of any individual making such a telephonic request without
the necessity of receipt of such written confirmation. Each Swing Loan Request
shall be irrevocable and shall specify (i) the proposed Borrowing Date, (ii) the
term of the proposed Swing Loan, which shall be no less than one day and no
longer than seven (7) days, and (iii) the principal amount of such Swing Loan,
which shall not be less than $250,000 and shall be an integral multiple of
$100,000.

      2.6 Making Revolving Credit Loans and Swing Loans.

            2.6.1. Making Revolving Credit Loans.

                  The Agent shall, promptly after receipt by it of a Loan
Request for or with respect to Revolving Credit Loans pursuant to Section 2.4
[Revolving Credit Loan Requests], notify the Banks with Revolving Credit
Commitments of its receipt of such Loan Request specifying: (i) the proposed
Borrowing Date and the time and method of disbursement of the Revolving Credit
Loans requested thereby; (ii) the amount and type of each such Revolving Credit
Loan and the applicable Interest Period (if any); and (iii) the apportionment
among the Banks of such Revolving Credit Loans as determined by the Agent in
accordance with Section 2.2 [Nature of Banks' Obligations]. Each Bank shall
remit the principal amount of each Revolving Credit Loan to the Agent such that
the Agent is able to, and the Agent shall, to the extent the Banks have made
funds available to it for such purpose and subject to Section 7.2

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[Each Additional Loan or Letter of Credit], fund such Revolving Credit Loans to
the Borrower in U.S. Dollars and immediately available funds at the Principal
Office prior to 2:00 p.m., Pittsburgh time, on the applicable Borrowing Date,
provided that if any Bank fails to remit such funds to the Agent in a timely
manner, the Agent may elect in its sole discretion to fund with its own funds
the Revolving Credit Loans of such Bank on such Borrowing Date, and such Bank
shall be subject to the repayment obligation in Section 10.16 [Availability of
Funds].

             2.6.2. Making Swing Loans.

                  So long as PNC Bank elects to make Swing Loans, PNC Bank
shall, after receipt by it of a Swing Loan Request pursuant to Section 2.5 fund
such Swing Loan to the Borrower in U.S. Dollars and immediately available funds
at the Principal Office prior to 2:00 p.m. Pittsburgh time on the Borrowing
Date. Each Swing Loan shall bear interest at the Swing Loan Interest Rate
applicable thereto.

      2.7 Swing Loan Note.
                          
                  The obligation of the Borrower to repay the unpaid principal
amount of the Swing Loans made to it by PNC Bank together with interest thereon
shall be evidenced by a demand promissory note of the Borrower dated the Closing
Date in substantially the form attached hereto as Exhibit 1.1(S) payable to the
order of PNC Bank in a face amount equal to the Swing Loan Commitment.

      2.8 Use of Proceeds.
                          
      The proceeds of the Loans shall be used by the Borrower for general
corporate purposes of the Borrower, including without limitation, to support the
issuance by the Borrower of short term notes in the commercial paper market, and
in accordance with Section 8.1.10 [Use of Proceeds].

      2.9 Letter of Credit Subfacility.

             2.9.1. Issuance of Letters of Credit.

                  Borrower may request the issuance of a letter of credit (each
a "Letter of Credit") on behalf of itself by delivering to the Agent a completed
application and agreement for letters of credit in such form as the Agent may
specify from time to time by no later than 10:00 a.m., Pittsburgh time, at least
five (5) Business Days, or such shorter period as may be agreed to by the Agent,
in advance of the proposed date of issuance. Each Letter of Credit shall be a
Standby Letter of Credit (and may not be a Commercial Letter of Credit). Subject
to the terms and conditions hereof and in reliance on the agreements of the
other Banks set forth in this Section 2.9, the Agent or any of the Agent's
Affiliates will issue a Letter of Credit provided that each Letter of Credit
shall (A) have a maximum maturity of twelve (12) months from the date of
issuance, and (B) in no event expire later than ten (10) Business Days prior to
the Expiration Date and providing that in no event shall (i) the amount of
Letters of Credit Outstanding exceed, at any one time, $75,000,000 or (ii) the
Revolving Facility Usage exceed, at

                                       27
<PAGE>

any one time, the Revolving Credit Commitments. Schedule 2.9.1 sets forth
letters of credit issued by PNC Bank, National Association, as administrative
agent, under the Existing Credit Facility, which are outstanding as of the
Closing Date (the "Existing Letters of Credit"). It is expressly agreed that the
Existing Letters of Credit are Letters of Credit under this Agreement.

            2.9.2. Letter of Credit Fees.

                  The Borrower shall pay (i) to the Agent for the ratable
account of the Banks a fee (the "Letter of Credit Fee") equal to the Applicable
Letter of Credit Fee Rate then in effect (computed on the basis of a year of 360
days and actual days elapsed) per annum, and (ii) to the Agent for its own
account a fronting fee equal to 0.125% per annum (computed on the basis of a
year of 360 days and actual days elapsed), which fees shall be computed on the
daily average amount of Letters of Credit Outstanding and shall be payable
quarterly in arrears commencing with the first Business Day of each January,
April, July and October following issuance of each Letter of Credit and on the
Expiration Date. The Borrower shall also pay to the Agent for the Agent's sole
account the Agent's then in effect customary fees and administrative expenses
payable with respect to the Letters of Credit as the Agent may generally charge
or incur from time to time in connection with the issuance, maintenance,
modification (if any), assignment or transfer (if any), negotiation, and
administration of Letters of Credit.

            2.9.3. Disbursements, Reimbursement.

                         2.9.3.1 Immediately upon the issuance of each Letter of
Credit, each Bank shall be deemed to, and hereby irrevocably and unconditionally
agrees to, purchase from the Agent a participation in such Letter of Credit and
each drawing thereunder in an amount equal to such Bank's Ratable Share of the
maximum amount available to be drawn under such Letter of Credit and the amount
of such drawing, respectively.

                        2.9.3.2 In the event of any request for a drawing under
a Letter of Credit by the beneficiary or transferee thereof, the Agent will
promptly notify the Borrower. Provided that it shall have received such notice,
the Borrower shall reimburse (such obligation to reimburse the Agent shall
sometimes be referred to as a "Reimbursement Obligation") the Agent prior to
12:00 noon, Pittsburgh time on each date that an amount is paid by the Agent
under any Letter of Credit (each such date, an "Drawing Date") in an amount
equal to the amount so paid by the Agent. In the event the Borrower fails to
reimburse the Agent for the full amount of any drawing under any Letter of
Credit by 12:00 noon, Pittsburgh time, on the Drawing Date, the Agent will
promptly notify each Bank thereof, and the Borrower shall be deemed to have
requested that Revolving Credit Loans be made by the Banks under the Base Rate
Option to be disbursed on the Drawing Date under such Letter of Credit, subject
to the amount of the unutilized portion of the Revolving Credit Commitment and
subject to the conditions set forth in Section 7.2 [Each Additional Loan] other
than any notice requirements. Any notice given by the Agent pursuant to this
Section 2.9.3.2 may be oral if immediately confirmed in writing; provided that
the lack of such an immediate confirmation shall not affect the conclusiveness
or binding effect of such notice.

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<PAGE>

                        2.9.3.3 Each Bank shall upon any notice pursuant to
Section 2.9.3.2 make available to the Agent an amount in immediately available
funds equal to its Ratable Share of the amount of the drawing, whereupon the
participating Banks shall (subject to Section 2.9.3.4) each be deemed to have
made a Revolving Credit Loan under the Base Rate Option to the Borrower in that
amount. If any Bank so notified fails to make available to the Agent for the
account of the Agent the amount of such Bank's Ratable Share of such amount by
no later than 2:00 p.m., Pittsburgh time on the Drawing Date, then interest
shall accrue on such Bank's obligation to make such payment, from the Drawing
Date to the date on which such Bank makes such payment (i) at a rate per annum
equal to the Federal Funds Open Rate during the first three (3) days following
the Drawing Date and (ii) at a rate per annum equal to the rate applicable to
Loans under the Base Rate Option on and after the fourth (4th) day following the
Drawing Date. The Agent will promptly give notice of the occurrence of the
Drawing Date, but failure of the Agent to give any such notice on the Drawing
Date or in sufficient time to enable any Bank to effect such payment on such
date shall not relieve such Bank from its obligation under this Section 2.9.3.3,
provided, however, interest shall not accrue on any Bank's obligation to make a
payment under this Section 2.9.3.3, until such Bank has received notice of the
Drawing Date from the Agent.

                        2.9.3.4 With respect to any unreimbursed drawing that is
not converted into Revolving Credit Loans under the Base Rate Option to the
Borrower in whole or in part as contemplated by Section 2.9.3.2, because of the
Borrower's failure to satisfy the conditions set forth in Section 7.2 [Each
Additional Loan] other than any notice requirements or for any other reason, the
Borrower shall be deemed to have incurred from the Agent a borrowing (each a
"Letter of Credit Borrowing") in the amount of such drawing. Such Letter of
Credit Borrowing shall be due and payable on demand (together with interest) and
shall bear interest at the rate per annum applicable to the Revolving Credit
Loans under the Base Rate Option. Each Bank's payment to the Agent pursuant to
Section 2.9.3.3 shall be deemed to be a payment in respect of its participation
in such Letter of Credit Borrowing and shall constitute a "Participation
Advance" from such Bank in satisfaction of its participation obligation under
this Section 2.9.3.

            2.9.4. Repayment of Participation Advances.

                        2.9.4.1 Upon (and only upon) receipt by the Agent for
its account of immediately available funds from the Borrower (i) in
reimbursement of any payment made by the Agent under the Letter of Credit with
respect to which any Bank has made a Participation Advance to the Agent, or (ii)
in payment of interest on such a payment made by the Agent under such a Letter
of Credit, the Agent will pay to each Bank, in the same funds as those received
by the Agent, the amount of such Bank's Ratable Share of such funds, except the
Agent shall retain the amount of the Ratable Share of such funds of any Bank
that did not make a Participation Advance in respect of such payment by Agent.

                        2.9.4.2 If the Agent is required at any time to return
to the Borrower, or to a trustee, receiver, liquidator, custodian, or any
official in any Insolvency Proceeding, any portion of the payments made by the
Borrower to the Agent pursuant to Section 2.9.4.1 in reimbursement of a payment
made under the Letter of Credit or interest or fee

                                       29
<PAGE>

thereon, each Bank shall, on demand of the Agent, forthwith return to the Agent
the amount of its Ratable Share of any amounts so returned by the Agent plus
interest thereon from the date such demand is made to the date such amounts are
returned by such Bank to the Agent, at a rate per annum equal to the Federal
Funds Open Rate in effect from time to time.

            2.9.5. Documentation.

                  The Borrower agrees to be bound by the terms of the Agent's
application and agreement for letters of credit and the Agent's written
regulations and customary practices relating to letters of credit, though such
interpretation may be different from the Borrower's own. In the event of a
conflict between such application or agreement and this Agreement, this
Agreement shall govern. It is understood and agreed that, except in the case of
gross negligence or willful misconduct, the Agent shall not be liable for any
error and/or mistakes, whether of omission or commission, in following the
Borrower's written instructions or those contained in the Letters of Credit or
any modifications, amendments or supplements thereto, provided that the Borrower
agrees that all instructions provided to the Agent by the Borrower with respect
to any Letter of Credit shall be provided in writing.

            2.9.6. Determinations to Honor Drawing Requests.

                  In determining whether to honor any request for drawing under
any Letter of Credit by the beneficiary thereof, the Agent shall be responsible
only to determine that the documents and certificates required to be delivered
under such Letter of Credit have been delivered and that they comply on their
face with the requirements of such Letter of Credit.

            2.9.7. Nature of Participation and Reimbursement Obligations.

                  Each Bank's obligation in accordance with this Agreement to
make the Revolving Credit Loans or Participation Advances, as contemplated by
Section 2.9.3, as a result of a drawing under a Letter of Credit, and the
Obligations of the Borrower to reimburse the Agent upon a draw under a Letter of
Credit, shall be absolute, unconditional and irrevocable, and shall be performed
strictly in accordance with the terms of this Section 2.9 under all
circumstances, including the following circumstances:

                        (i) any set-off, counterclaim, recoupment, defense or
other right which such Bank may have against the Agent or any of its Affiliates,
the Borrower or any other Person for any reason whatsoever;

                         (ii) the failure of the Borrower or any other Person to
comply, in connection with a Letter of Credit Borrowing, with the conditions
applicable to Revolving Credit Loans set forth in Section 2.1.1 [Revolving
Credit Loans], 2.4 [Revolving Credit Loan Requests], 2.6 [Making Revolving
Credit Loans and Swing Loans] or 7.2 [Each Additional Loan or Letter of Credit]
or as otherwise set forth in this Agreement for the making of a Revolving Credit
Loan, it being acknowledged that such conditions are not required for the

                                       30
<PAGE>

making of a Letter of Credit Borrowing and the obligation of the Banks to make
Participation Advances under Section 2.9.3;

                        (iii) any lack of validity or enforceability of any
Letter of Credit;

                        (iv) any claim of breach of warranty that might be made
by the Borrower or any Bank against any beneficiary of a Letter of Credit, or
the existence of any claim, set-off, recoupment, counterclaim, crossclaim,
defense or other right which the Borrower or any Bank may have at any time
against a beneficiary, successor beneficiary any transferee or assignee of any
Letter of Credit or the proceeds thereof (or any Persons for whom any such
transferee may be acting), the Agent or its Affiliates or any Bank or any other
Person or, whether in connection with this Agreement, the transactions
contemplated herein or any unrelated transaction (including any underlying
transaction between the Borrower or any Subsidiaries of the Borrower and the
beneficiary for which any Letter of Credit was procured);

                        (v) the lack of power or authority of any signer of (or
any defect in or forgery of any signature or endorsement on) or the form of or
lack of validity, sufficiency, accuracy, enforceability or genuineness of any
draft, demand, instrument, certificate or other document presented under or in
connection with any Letter of Credit, or any fraud or alleged fraud in
connection with any Letter of Credit, or the transport of any property or
provisions of services relating to a Letter of Credit, in each case even if the
Agent or any of the Agent's Affiliates has been notified thereof;

                        (vi) payment by the Agent or any of its Affiliates under
any Letter of Credit against presentation of a demand, draft or certificate or
other document which does not comply with the terms of such Letter of Credit;

                        (vii) the solvency of, or any acts of omissions by, any
beneficiary of any Letter of Credit, or any other Person having a role in any
transaction or obligation relating to a Letter of Credit, or the existence,
nature, quality, quantity, condition, value or other characteristic of any
property or services relating to a Letter of Credit;

                        (viii) any failure by the Agent or any of Agent's
Affiliates to issue any Letter of Credit in the form requested by the Borrower,
unless the Agent has received written notice from the Borrower of such failure
within three (3) Business Days after the Agent shall have furnished the Borrower
a copy of such Letter of Credit and such error is material and no drawing has
been made thereon prior to receipt of such notice;

                        (ix) any adverse change in the business, operations,
properties, assets, condition (financial or otherwise) or prospects of the
Borrower or any Subsidiaries of the Borrower;

                        (x) any breach of this Agreement or any other Loan
Document by any party thereto;

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<PAGE>
                        (xi) the occurrence or continuance of an Insolvency
Proceeding with respect to the Borrower;

                        (xii) the fact that an Event of Default or a Potential
Default shall have occurred and be continuing;

                        (xiii) the fact that the Expiration Date shall have
passed or this Agreement or the Commitments hereunder shall have been
terminated; and

                        (xiv) any other circumstance or happening whatsoever,
whether or not similar to any of the foregoing.

Notwithstanding the foregoing, no Bank shall be required to make a Revolving
Credit Advance or a Participation Advance in excess of its Revolving Credit
Commitment minus its Ratable Share of any Letters of Credit Outstanding.

            2.9.8. Indemnity.

                   In addition to amounts payable as provided in Section 10.5
[Reimbursement and Indemnification of Agent by the Borrower], the Borrower
hereby agrees to protect, indemnify, pay and save harmless the Agent and any of
Agent's Affiliates that has issued a Letter of Credit from and against any and
all claims, demands, liabilities, damages, taxes, penalties, interest,
judgments, losses, costs, charges and expenses (including reasonable fees,
expenses and disbursements of counsel and allocated costs of internal counsel)
which the Agent or any of Agent's Affiliates may incur or be subject to as a
consequence of the issuance of any Letter of Credit, other than as a result of
(A) the gross negligence or willful misconduct of the Agent as determined by a
final judgment of a court of competent jurisdiction or (B) the wrongful dishonor
by the Agent or any of Agent's Affiliates of a proper demand for payment made
under any Letter of Credit, except if such dishonor resulted from any act or
omission, whether rightful or wrongful, of any present or future de jure or de
facto government or governmental authority (all such acts or omissions herein
called "Governmental Acts").

             2.9.9. Liability for Acts and Omissions.

                   As between the Borrower and the Agent, or the Agent's
Affiliates, the Borrower assumes all risks of the acts and omissions of, or
misuse of the Letters of Credit by, the respective beneficiaries of such Letters
of Credit. In furtherance and not in limitation of the foregoing, the Agent
shall not be responsible for any of the following including any losses or
damages to the Borrower or other Person or property relating therefrom: (i) the
form, validity, sufficiency, accuracy, genuineness or legal effect of any
document submitted by any party in connection with the application for an
issuance of any such Letter of Credit, even if it should in fact prove to be in
any or all respects invalid, insufficient, inaccurate, fraudulent or forged
(even if the Agent or the Agent's Affiliates shall have been notified thereof);
(ii) the validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any such Letter of Credit or the rights or
benefits thereunder or proceeds thereof, in whole or in part,

                                       32
<PAGE>

which may prove to be invalid or ineffective for any reason; (iii) the failure
of the beneficiary of any such Letter of Credit, or any other party to which
such Letter of Credit may be transferred, to comply fully with any conditions
required in order to draw upon such Letter of Credit or any other claim of the
Borrower against any beneficiary of such Letter of Credit, or any such
transferee, or any dispute between or among the Borrower and any beneficiary of
any Letter of Credit or any such transferee; (iv) errors, omissions,
interruptions or delays in transmission or delivery of any messages, by mail,
cable, telegraph, telex or otherwise, whether or not they be in cipher; (v)
errors in interpretation of technical terms; (vi) any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under any such Letter of Credit or of the proceeds thereof; (vii) the
misapplication by the beneficiary of any such Letter of Credit of the proceeds
of any drawing under such Letter of Credit; or (viii) any consequences arising
from causes beyond the control of the Agent or the Agent's Affiliates, as
applicable, including any Governmental Acts, and none of the above shall affect
or impair, or prevent the vesting of, any of the Agent's or the Agent's
Affiliates rights or powers hereunder. Nothing in the preceding sentence shall
relieve the Agent from liability for the Agent's gross negligence or willful
misconduct in connection with actions or omissions described in such clauses (i)
through (viii) of such sentence. In no event shall the Agent or the Agent's
Affiliates be liable to the Borrower for any indirect, consequential,
incidental, punitive, exemplary or special damages or expenses (including
without limitation attorneys' fees), or for any damages resulting from any
change in the value of any property relating to a Letter of Credit.

                  Without limiting the generality of the foregoing, the Agent
and each of its Affiliates (i) may rely on any oral or other communication
believed in good faith by the Agent or such Affiliate to have been authorized or
given by or on behalf of the applicant for a Letter of Credit, (ii) may honor
any presentation if the documents presented appear on their face substantially
to comply with the terms and conditions of the relevant Letter of Credit; (iii)
may honor a previously dishonored presentation under a Letter of Credit, whether
such dishonor was pursuant to a court order, to settle or compromise any claim
of wrongful dishonor, or otherwise, and shall be entitled to reimbursement to
the same extent as if such presentation had initially been honored, together
with any interest paid by the Agent or its Affiliate; (iv) may honor any drawing
that is payable upon presentation of a statement advising negotiation or
payment, upon receipt of such statement (even if such statement indicates that a
draft or other document is being delivered separately), and shall not be liable
for any failure of any such draft or other document to arrive, or to conform in
any way with the relevant Letter of Credit; (v) may pay any paying or
negotiating bank claiming that it rightfully honored under the laws or practices
of the place where such bank is located; and (vi) may settle or adjust any claim
or demand made on the Agent or its Affiliate in any way related to any order
issued at the applicant's request to an air carrier, a letter of guarantee or of
indemnity issued to a carrier or any similar document (each an "Order") and
honor any drawing in connection with any Letter of Credit that is the subject to
such Order, notwithstanding that any drafts or other documents presented in
connection with such Letter of Credit fail to conform in any way with such
Letter of Credit.

                  In furtherance and extension and not in limitation of the
specific provisions set forth above, any action taken or omitted by the Agent or
the Agent's Affiliates under or in connection with the Letters of Credit issued
by it or any documents and certificates

                                       33
<PAGE>

delivered thereunder, if taken or omitted in good faith, shall not put the Agent
or the Agent's Affiliates under any resulting liability to the Borrower or any
Bank.

      2.10   Borrowings to Repay Swing Loans.

      PNC Bank may, at its option, exercisable at any time for any reason
whatsoever, demand repayment of the Swing Loans, and each Bank shall make a
Revolving Credit Loan in an amount equal to such Bank's Ratable Share of the
aggregate principal amount of the outstanding Swing Loans, plus, if PNC Bank so
requests, accrued interest thereon, provided that no Bank shall be obligated in
any event to make Revolving Credit Loans in excess of its Revolving Credit
Commitment minus such Bank's Ratable Share of the amount of the Letters of
Credit Outstanding.