Execution Copy                                                 Exhibit 10.1



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                          AMENDED AND RESTATED 364-DAY
                                CREDIT AGREEMENT

                                   DATED AS OF

                                 AUGUST 27, 2002

                                      AMONG

                            BLACK HILLS CORPORATION,
                                  as Borrower,

                    THE FINANCIAL INSTITUTIONS PARTY HERETO,
                                    as Banks,

                               ABN AMRO BANK N.V.,
                            as Administrative Agent,

                         UNION BANK OF CALIFORNIA, N.A.,
                              as Syndication Agent,

                                BANK OF MONTREAL,
                            as Co-Syndication Agent,

                        U.S. BANK, NATIONAL ASSOCIATION,
                             as Documentation Agent

                                       and

                            THE BANK OF NOVA SCOTIA,
                            as Co-Documentation Agent

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<PAGE>

<TABLE>
<CAPTION>
                                TABLE OF CONTENTS

              (This Table of Contents is not part of the Agreement)


                                                                                                                PAGE
SECTION 1         DEFINITIONS; INTERPRETATION.....................................................................1
<S>      <C>     <C>       <C>                                                                                    <C>
         Section 1.1       Definitions............................................................................1
         Section 1.2       Interpretation........................................................................13
SECTION 2         THE CREDITS....................................................................................13
         Section 2.1       The Revolving Loan Commitment.........................................................14
         Section 2.2       [Intentionally Omitted]...............................................................14
         Section 2.3       Applicable Interest Rates. (a) Base Rate Loans........................................14
         Section 2.4       Minimum Borrowing Amounts.............................................................16
         Section 2.5       Manner of Borrowing Loans and Designating Interest Rates Applicable to Loans 16.......16
         Section 2.6       Interest Periods......................................................................18
         Section 2.7       Maturity of Loans.....................................................................18
         Section 2.8       Prepayments...........................................................................18
         Section 2.9       Default Rate..........................................................................19
         Section 2.10      The Notes.............................................................................19
         Section 2.11      Funding Indemnity.....................................................................20
         Section 2.12      Commitments...........................................................................20
SECTION 3         FEES AND EXTENSIONS............................................................................21
         Section 3.1       Fees..................................................................................21
         Section 3.2       Extensions............................................................................22
SECTION 4         PLACE AND APPLICATION OF PAYMENTS..............................................................22
         Section 4.1       Place and Application of Payments.....................................................22
SECTION 5         REPRESENTATIONS AND WARRANTIES.................................................................23
         Section 5.1       Corporate Organization and Authority..................................................23
         Section 5.2       Subsidiaries..........................................................................23
         Section 5.3       Corporate Authority and Validity of Obligations.......................................23
         Section 5.4       Financial Statements..................................................................24
         Section 5.5       No Litigation; No Labor Controversies.................................................24
         Section 5.6       Taxes.................................................................................24
         Section 5.7       Approvals.............................................................................24
         Section 5.8       ERISA.................................................................................24
         Section 5.9       Government Regulation.................................................................25
         Section 5.10      Margin Stock; Use of Proceeds.........................................................25
         Section 5.11      Licenses and Authorizations; Compliance with Laws.....................................25
         Section 5.12      Ownership of Property; Liens..........................................................26
         Section 5.13      No Burdensome Restrictions; Compliance with Agreements................................26
         Section 5.14      Full Disclosure.......................................................................26
         Section 5.15      Solvency..............................................................................26
SECTION 6         CONDITIONS PRECEDENT...........................................................................26
         Section 6.1       Initial Credit Event..................................................................26
         Section 6.2       All Credit Events.....................................................................27
SECTION 7         COVENANTS......................................................................................28

                                                                               i
<PAGE>

         Section 7.1       Corporate Existence; Subsidiaries.....................................................28
         Section 7.2       Maintenance...........................................................................28
         Section 7.3       Taxes.................................................................................28
         Section 7.4       ERISA.................................................................................28
         Section 7.5       Insurance.............................................................................29
         Section 7.6       Financial Reports and Other Information...............................................29
         Section 7.7       Bank Inspection Rights................................................................31
         Section 7.8       Conduct of Business...................................................................31
         Section 7.9       Liens.................................................................................31
         Section 7.10      Use of Proceeds; Regulation U.........................................................33
         Section 7.11      Sales and Leasebacks..................................................................33
         Section 7.12      Mergers, Consolidations and Sales of Assets...........................................34
         Section 7.13      Use of Property and Facilities; Environmental and Health and Safety Laws..............35
         Section 7.14      Investments, Acquisitions, Loans, Advances and Guaranties.............................35
         Section 7.15      Restrictions on Indebtedness..........................................................37
         Section 7.16      Consolidated Net Worth................................................................39
         Section 7.17      Recourse Leverage Ratio...............................................................39
         Section 7.18      Fixed Charge Coverage Ratio...........................................................39
         Section 7.19      Dividends and Other Shareholder Distributions.........................................39
         Section 7.20      No Negative Pledge....................................................................39
         Section 7.21      Transactions with Affiliates..........................................................40
         Section 7.22      Compliance with Laws..................................................................40
         Section 7.23      Pari-Passu............................................................................40
         Section 7.24      Certain Subsidiaries..................................................................40
         Section 7.25      Ratings...............................................................................40
         Section 7.26      Liquidity Covenant....................................................................40
SECTION 8         EVENTS OF DEFAULT AND REMEDIES.................................................................40
         Section 8.1       Events of Default.....................................................................40
         Section 8.2       Non-Bankruptcy Defaults...............................................................42
         Section 8.3       Bankruptcy Defaults...................................................................43
         Section 8.4       [Intentionally Omitted]...............................................................43
         Section 8.5       Expenses..............................................................................43
SECTION 9         CHANGE IN CIRCUMSTANCES........................................................................43
         Section 9.1       Change of Law.........................................................................43
         Section 9.2       Unavailability of Deposits or Inability to Ascertain, or Inadequacy
                  of, LIBOR......................................................................................43
         Section 9.3       Increased Cost and Reduced Return.....................................................44
         Section 9.4       Lending Offices.......................................................................45
         Section 9.5       Discretion of Bank as to Manner of Funding............................................45
SECTION 10        THE AGENT......................................................................................46
         Section 10.1      Appointment and Authorization of Administrative Agent.................................46
         Section 10.2      Administrative Agent and its Affiliates...............................................46
         Section 10.3      Action by Administrative Agent........................................................46
         Section 10.4      Consultation with Experts.............................................................46
         Section 10.5      Liability of Administrative Agent; Credit Decision....................................47
         Section 10.6      Indemnity.............................................................................47
                                       ii
<PAGE>

         Section 10.7      Resignation of Administrative Agent and Successor Administrative Agent................47
SECTION 11        MISCELLANEOUS..................................................................................48
         Section 11.1      Withholding Taxes.....................................................................48
         Section 11.2      No Waiver of Rights...................................................................49
         Section 11.3      Non-Business Day......................................................................49
         Section 11.4      Documentary Taxes.....................................................................49
         Section 11.5      Survival of Representations...........................................................50
         Section 11.6      Survival of Indemnities...............................................................50
         Section 11.7      Set-Off...............................................................................50
         Section 11.8      Notices...............................................................................50
         Section 11.9      Counterparts..........................................................................52
         Section 11.10     Successors and Assigns................................................................52
         Section 11.11     Participants and Note Assignees.......................................................52
         Section 11.12     Assignment of Commitments by Banks....................................................52
         Section 11.13     Amendments............................................................................53
         Section 11.14     Headings..............................................................................54
         Section 11.15     Legal Fees, Other Costs and Indemnification...........................................54
         Section 11.16     Entire Agreement......................................................................54
         Section 11.17     Construction..........................................................................54
         Section 11.18     Governing Law.........................................................................54
         Section 11.19     SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL......................................54
         Section 11.20     Replacement of Bank...................................................................55
         Section 11.21     Confidentiality.......................................................................56
         Section 11.22     Rights and Liabilities of Documentation Agents and  Syndication Agents................56
         Section 11.23     Amendment and Restatement of Existing 364-Day Credit Agreement........................56
</TABLE>

                                      iii
<PAGE>

EXHIBITS

         A        -                 Form of Note
         B        -                 Form of Compliance Certificate

SCHEDULES

         SCHEDULE 1                 Pricing Grid
         SCHEDULE 4 Administrative Agent Notice and Payment Info SCHEDULE 5.2
         Schedule of Existing Subsidiaries SCHEDULE 5.5 Litigation and Labor
         Controversies SCHEDULE 5.11 Environmental Matters SCHEDULE 7.9 Existing
         Liens SCHEDULE 7.14 Existing Investments SCHEDULE 7.15(a) Marketing
         Subsidiary Indebtedness SCHEDULE 7.15(b) Existing Secured Indebtedness
         SCHEDULE 7.19 Restrictions on Distributions and Existing Negative
         Pledges

                                       iv

<PAGE>

                  AMENDED AND RESTATED 364-DAY CREDIT AGREEMENT

         AMENDED AND RESTATED 364-DAY CREDIT AGREEMENT, dated as of August 27,
2002 among Black Hills Corporation, a South Dakota corporation ("Borrower"), the
financial institutions from time to time party hereto (each a "Bank," and
collectively the "Banks"), U.S. Bank, National Association, and The Bank of Nova
Scotia, in their capacity as documentation agents for the Banks hereunder (in
such capacity, "Documentation Agents"), Union Bank of California, N.A., and Bank
of Montreal, in their capacity as syndication agents for the Banks hereunder (in
such capacity, "Syndication Agents") and ABN AMRO Bank N.V. in its capacity as
agent for the Banks hereunder (in such capacity, the "Administrative Agent").

                                WITNESSETH THAT:

         WHEREAS, the Borrower, ABN AMRO Bank N.V., in its capacity as
administrative agent and certain other financial institutions are party to that
certain 364-Day Credit Agreement dated as of August 28, 2001 (the "Existing
364-Day Credit Agreement"); and

         WHEREAS, the Borrower desires to amend and restate the Existing 364-Day
Credit Agreement in its entirety to be and to read as set forth herein and to
obtain the several commitments of the Banks to make available a revolving credit
for loans and letters of credit (the "Revolving Credit"), as described herein;
and

         WHEREAS, the Banks are willing to extend such commitments subject to
all of the terms and conditions hereof and on the basis of the representations
and warranties hereinafter set forth.

         NOW, THEREFORE, in consideration of the recitals set forth above and
for other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto hereby agree that the Existing 364-Day
Credit Agreement shall be amended and restated in its entirety as follows:

     SECTION 1 DEFINITIONS; INTERPRETATION.

     Section  1.1  Definitions.  The  following  terms when used herein have the
following meanings:

          "Adjusted Consolidated EBITDA" means, for any period, (A) Consolidated
EBITDA less (B) Restricted Earnings.

         "Adjusted LIBOR" is defined in Section 2.3(b) hereof.

         "Affiliate" means, as to any Person, any other Person which directly or
indirectly controls, or is under common control with, or is controlled by, such
Person. As used in this definition, "control" (including, with their correlative
meanings, "controlled by" and "under common control with") means possession,
directly or indirectly, of power to direct or cause the direction of management
or policies of a Person (whether through ownership of securities or partnership
or other ownership interests, by contract or otherwise), provided that, in any
event for purposes of this definition: (i) any Person which owns directly or
indirectly twenty percent (20%) or more of the securities having ordinary voting
power for the election of directors or


                                       1
<PAGE>

other  governing  body of a corporation  or twenty  percent (20%) or more of the
partnership or other  ownership  interests of any other Person will be deemed to
control such  corporation or other Person;  and (ii) each director and executive
officer of Borrower or any  Subsidiary of Borrower  shall be deemed an Affiliate
of Borrower and each of its Subsidiaries.

         "Administrative Agent" is defined in the first paragraph of this
Agreement and includes any successor Administrative Agent pursuant to Section
10.7 hereof.

         "Agreement" means this Credit Agreement, including all Exhibits and
Schedules hereto, as it may be amended, supplemented or otherwise modified from
time to time in accordance with the terms hereof.

         "Applicable Margin" means, at any time (i) with respect to Base Rate
Loans, the Base Rate Margin and (ii) with respect to Eurodollar Loans, the
Eurodollar Margin.

         "Applicable Telerate Page" is defined in Section 2.3(b) hereof.

         "Arrangers"  means,  collectively,  ABN AMRO Bank N.V.,  Union Bank of
California,  N.A.,  and U.S. Bank, National Association.

         "Authorized Representative" means those persons shown on the list of
officers provided by Borrower pursuant to Section 6.1(e) hereof, or on any
updated such list provided by Borrower to the Administrative Agent, or any
further or different officer of Borrower so named by any Authorized
Representative of Borrower in a written notice to the Administrative Agent.

         "Bank" and "Banks" are defined in the first paragraph of this
Agreement.

         "Base Rate" is defined in Section 2.3(a) hereof.

         "Base Rate Loan" means a Loan bearing interest prior to maturity at a
rate specified in Section 2.3(a) hereof.

         "Base Rate Margin" means the percentage set forth in Schedule 1 hereto
beside the then applicable Level.

         "BHP" means Black Hills Power, Inc., a South Dakota corporation.

         "Borrower" is defined in the first paragraph of this Agreement.

         "Borrowing" means the total of Loans of a single type advanced,
continued for an additional Interest Period, or converted from a different type
into such type by the Banks on a single date and for a single Interest Period.
Borrowings of Loans are made by and maintained ratably for each of the Banks
according to their Percentages. A Borrowing is "advanced" on the day Banks
advance funds comprising such Borrowing to Borrower, is "continued" on the date
a new Interest Period for the same type of Loans commences for such Borrowing
and is "converted" when such Borrowing is changed from one type of Loan to the
other, all as requested by Borrower pursuant to Section 2.5(a).

                                       2
<PAGE>

         "Business Day" means any day other than a Saturday or Sunday on which
Banks are not authorized or required to close in New York, New York, Chicago,
Illinois or Rapid City, South Dakota and, if the applicable Business Day relates
to the borrowing or payment of a Eurodollar Loan, on which banks are dealing in
U.S. Dollars in the interbank market in London, England.

         "Capital" means, as of any date of determination thereof, without
duplication, the sum of (A) Consolidated Net Worth plus (B) all Recourse
Indebtedness (provided that for purposes of clause (B) of this definition, to
the extent otherwise included, Indebtedness of Marketing Subsidiaries in an
aggregate amount not to exceed the Marketing Subsidiary Indebtedness Limit
incurred under Marketing Subsidiary Excluded Credit Facilities shall not be
deemed to be Recourse Indebtedness).

         "Capital Lease" means at any date any lease of Property which, in
accordance with GAAP, would be required to be capitalized on the balance sheet
of the lessee.

         "Capitalized Lease Obligations" means, for any Person, the amount of
such Person's liabilities under Capital Leases determined at any date in
accordance with GAAP.

         "Change of Control Event" means one or more of the following events:

               (a) less than a majority of the members of the Board of Directors
          of Borrower  shall be persons who either (i) were serving as directors
          on the Effective Date or (ii) were nominated as directors and approved
          by the  vote  of the  majority  of the  directors  who  are  directors
          referred to in clause (i) above or this clause (ii); or

               (b) the  stockholders  of  Borrower  shall  approve  any  plan or
          proposal for the liquidation or dissolution of Borrower; or

               (c) a Person or group of Persons  acting in concert  (other  than
          the  direct  or  indirect  beneficial  owners of the  Voting  Stock of
          Borrower as of the Effective  Date) shall,  as a result of a tender or
          exchange offer, open market purchases,  privately negotiated purchases
          or  otherwise,  have  become the direct or indirect  beneficial  owner
          (within the meaning of Rule 13d-3 under the Securities Exchange Act of
          1934,  as  amended  from  time to time) of  Voting  Stock of  Borrower
          representing  more than ten percent (10%) of the combined voting power
          of the outstanding  Voting Stock or other ownership  interests for the
          election of  directors  or shall have the right to elect a majority of
          the Board of Directors of Borrower; or

               (d) Except as permitted by Section 7.12,  Borrower  ceases at any
          time to own one hundred  percent  (100%) of the Voting Stock and other
          equity interest of any Material Subsidiary.

         "Code" means the Internal Revenue Code of 1986, as amended.

         "Commitment" and "Commitments" are defined in Section 2.1 hereof.

         "Compliance Certificate" means a certificate in the form of Exhibit B
hereto.


                                       3
<PAGE>

         "Consolidated Assets" means all assets which should be listed on the
consolidated balance sheet of Borrower and its Consolidated Subsidiaries, as
determined on a consolidated basis in accordance with GAAP.

         "Consolidated EBITDA" means, for any period, for Borrower and its
Consolidated Subsidiaries on a consolidated basis, (A) the sum of the amounts
for such period of (i) Consolidated Net Income, (ii) to the extent deducted in
arriving at Consolidated Net Income, net federal, state and local income taxes
in respect of such period, (iii) to the extent deducted in arriving at
Consolidated Net Income, Consolidated Interest Expense, (iv) to the extent
deducted in arriving at Consolidated Net Income, the amount charged for the
amortization of intangible assets, (v) to the extent deducted in arriving at
Consolidated Net Income, the amount charged for the depreciation of assets, and
(vi) to the extent deducted in arriving at Consolidated Net Income, losses on
sales of assets (excluding sales in the ordinary course of business) and other
extraordinary losses, less (B) the amount for such period of (i) to the extent
added in arriving at Consolidated Net Income, interest income arising from
traditional investment activities with banks, investments banks and other
financial institutions or relating to governmental or other marketable
securities, (ii) to the extent added in arriving at Consolidated Net Income,
gains on sales of assets (excluding sales in the ordinary course of business)
and other extraordinary gains, all as determined on a consolidated basis in
accordance with GAAP, (iii) any maintenance capital expenditures made by the
Borrower or its Consolidated Subsidiaries in such period, (iv) without
duplication, any payments made by a Consolidated Subsidiary constituting a
repayment of principal Indebtedness (other than (x) the Obligations and (y)
repayments of principal made with the proceeds of a refinancing of such
Indebtedness otherwise permitted pursuant to this Agreement) or with respect to
a reserve, and (v) without duplication, any other mandatory payment made by a
Consolidated Subsidiary in such period not included as an expense or loss in
calculating Consolidated Net Income.

         "Consolidated Fixed Charges" means, for any period and without
duplication the sum of (i) the aggregate amount of Consolidated Interest Expense
with respect to Recourse Indebtedness paid or scheduled to be paid for such
period, and (ii) the aggregate amount of all mandatory scheduled payments
(whether designated as payments or prepayments) and scheduled sinking fund
payments with respect to principal of any Recourse Indebtedness of the Borrower
or its Subsidiaries (including payments in the nature of principal under Capital
Leases).

         "Consolidated Interest Expense" means, with reference to any period of
the Borrower and its Subsidiaries, the sum of (i) all interest charges
(including capitalized interest, imputed interest charges with respect to
Capitalized Lease Obligations and all amortization of debt discount and expense
and other deferred financing charges) of the Borrower and its Subsidiaries on a
consolidated basis for such period determined in accordance with GAAP, other
than interest charges relating to Non-Recourse Indebtedness, (ii) all commitment
or other fees payable in respect of the issuance of standby letters of credit or
other credit facilities for the account of the Borrower or its Subsidiaries, and
(iii) net costs/expenses incurred by the Borrower and its Subsidiaries under
Derivative Arrangements.

         "Consolidated Net Income" means, for any period of the Borrower and its
Consolidated Subsidiaries, the amount for such period of consolidated net income
(or net loss) of the Borrower and its Consolidated Subsidiaries, as determined
on a consolidated basis in accordance with GAAP.

                                      4
<PAGE>

         "Consolidated Net Worth" means, as of any time the same is to be
determined, the total shareholders' equity (including capital stock, additional
paid-in-capital and retained earnings after deducting treasury stock, but
excluding (to the extent otherwise included in calculating shareholders'
equity), minority interests in Subsidiaries) which would appear on the
consolidated balance sheet of Borrower determined on a consolidated basis in
accordance with GAAP.

         "Consolidated Subsidiary" means, as to any Person, each subsidiary of
such Person (whether now existing or hereafter created or acquired) the
financial statements of which shall be (or should have been) consolidated, with
the financial statements of such Person in accordance with GAAP, including
principles of consolidation.

          "Contractual Obligation" means, as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or undertaking to
which such Person is a party or by which it or any of its Property is bound.

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

         "Credit Documents" means this Agreement, the Notes, the Fee Letter and
all other documents executed in connection herewith or therewith.

         "Credit Event" means any Borrowing.

         "Default" means any event or condition the occurrence of which would,
with the passage of time or the giving of notice, or both, constitute an Event
of Default.

         "Derivative Arrangement" means any agreement (including any master
agreement and any agreement, whether or not in writing, relating to any single
transaction) that is an interest rate swap agreement, basis swap, forward rate
agreement, commodity swap, commodity option, equity or equity index swap or
option, bond option, interest rate option, forward foreign exchange agreement,
rate cap, collar or floor agreement, future agreement, currency swap agreement,
cross-currency rate swap agreement, swaption, currency option, that relates to
fluctuations in raw material prices or utility or energy prices or other costs,
or any other similar agreement, including any option to enter into any of the
foregoing, or any combination of any of the foregoing. "Derivative Arrangements"
shall include all such agreements or arrangements made or entered into at any
time, or in effect at any time, whether or not related to a Loan.

         "Derivative Obligations" means, with respect to any Person, all
liabilities of such Person under any Derivative Arrangement (including but not
limited to obligations and liabilities arising in connection with or as a result
of early or premature termination of a Derivative Arrangement, whether or not
occurring as a result of a default thereunder), absolute or contingent, now or
hereafter existing or incurred or due or to become due.

         "Documentation Agents" is defined in the first paragraph of this
Agreement.

         "Effective Date" means August 27, 2002.

                                       5
<PAGE>

         "Environmental and Health Laws" means any and all federal, state, local
and foreign statutes, laws, regulations, ordinances, judgments, permits and
other governmental rules or restrictions relating to human health, safety
(including without limitation occupational safety and health standards), or the
environment or to emissions, discharges or releases of pollutants, contaminants,
hazardous or toxic substances, wastes or any other controlled or regulated
substance into the environment, including without limitation ambient air,
surface water, ground water or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants, hazardous or toxic substances, wastes or
any other controlled or regulated substance or the clean-up or other remediation
thereof.

         "ERISA" is defined in Section 5.8 hereof.

         "Eurodollar Loan" means a Loan bearing interest prior to its maturity
at the rate specified in Section 2.3(b) hereof.

         "Eurodollar Margin" means the percentage set forth in Schedule 1 hereto
beside the then applicable Level.

         "Eurodollar Reserve Percentage" is defined in Section 2.3(b) hereof.

         "Event of Default" means any of the events or circumstances specified
in Section 8.1 hereof.

         "Existing 364-Day Credit Agreement" is defined in the first Whereas
clause above.

         "Facility Fee Rate" means the percentage set forth in Schedule 1 hereto
beside the then applicable Level.

         "Federal Funds Rate" means, for any period, a fluctuating interest rate
per annum equal for each day during such period to:

               (a) the weighted average of the rates on overnight  federal funds
          transactions  with members of the United States Federal Reserve System
          arranged by federal funds  brokers,  as published for such day (or, if
          such day is not a Business Day, for the next  preceding  Business Day)
          by the United States Federal Reserve Bank of New York; or

               (b) if such  rate is not so  published  for  any day  which  is a
          Business  Day,  the  average  of the  quotations  for such day on such
          transactions  received by the Administrative  Agent from three federal
          funds brokers of recognized standing selected by it.

         "Fee Letter" means that certain letter among the Administrative Agent
and Borrower pertaining to fees to be paid by Borrower to the Administrative
Agent for its sole account and benefit.

         "Fixed Charge Coverage Ratio" means, for any period of four consecutive
quarters of the Borrower ending with the most recently completed such fiscal
quarter, the ratio of (A) Adjusted Consolidated EBITDA to (B) Consolidated Fixed
Charges for such period.

                                       6
<PAGE>


         "GAAP" means generally accepted accounting principles as in effect in
the United States from time to time, applied by Borrower and its Subsidiaries on
a basis consistent with the preparation of Borrower's financial statements
furnished to the Banks as described in Section 5.4 hereof.

         "Guarantee" means, in respect of any Person, any obligation, contingent
or otherwise, of such Person directly or indirectly guaranteeing any
Indebtedness or other obligations of another Person, including, without
limitation, by means of an agreement to purchase or pay (or advance or supply
funds for the purchase or payment of) such Indebtedness or to maintain financial
covenants, or to assure the payment of such Indebtedness by an agreement to make
payments in respect of goods or services regardless of whether delivered, or
otherwise, provided, that the term "Guarantee" shall not include endorsements
for deposit or collection in the ordinary course of business; and such term when
used as a verb shall have a correlative meaning.

         "Hazardous Material" means any substance or material which is hazardous
or toxic, and includes, without limitation, (a) asbestos, polychlorinated
biphenyls, dioxins and petroleum or its by-products or derivatives (including
crude oil or any fraction thereof) and (b) any other material or substance
classified or regulated as "hazardous" or "toxic" pursuant to any Environmental
and Health Law.

         "Immaterial Subsidiary" shall mean, any direct or indirect subsidiary
of Borrower (i) whose total assets (as determined in accordance with GAAP) do
not represent at least five percent (5%) of the total assets (as determined in
accordance with GAAP) of Borrower and its subsidiaries on a consolidated basis
or (ii) whose total revenues (as determined in accordance with GAAP) do not
represent at least five percent (5%) of the total revenues (as determined in
accordance with GAAP) of Borrower and its subsidiaries on a consolidated basis,
provided that no subsidiary shall be deemed an Immaterial Subsidiary to the
extent (a) the total assets of such subsidiary, when combined with the total
assets of other subsidiaries which are Immaterial Subsidiaries, represent at
least ten percent (10%) of the total assets (as determined in accordance with
GAAP) of Borrower and its subsidiaries on a consolidated basis or (ii) the total
revenues of such subsidiary, when combined with the total revenues of other
Immaterial Subsidiaries, (as determined in accordance with GAAP) represent at
least ten percent (10%) of the total revenues (as determined in accordance with
GAAP) of Borrower and its subsidiaries on a consolidated basis. As used in this
definition "subsidiary" shall mean any Person whose financial statements are
consolidated into the financial statements of Borrower in accordance with GAAP.

         "Indebtedness" means, as to any Person, without duplication: (i) all
obligations of such Person for borrowed money or evidenced by bonds, debentures,
notes or similar instruments; (ii) all obligations of such Person for the
deferred purchase price of property or services (other than in respect of trade
accounts payable arising in the ordinary course of business which are not
past-due); (iii) all Capitalized Lease Obligations of such Person; (iv) all
Indebtedness of others secured by a Lien on any properties, assets or revenues
of such Person (other than stock, partnership interests or other equity
interests of Borrower or any Subsidiary of Borrower in other entities) to the
extent of the lesser of the value of the property subject to such Lien or the
amount of such Indebtedness; (v) all Guarantees issued by such Person, provided
that Long-Term Guaranties shall not be deemed "Indebtedness" for purposes of
calculating Borrower's compliance with the financial covenants set forth in
Sections 7.16, 7.17 and 7.18 hereof; (vi) all obligations of such Person,
contingent or otherwise, in respect of any letters or credit (whether

                                       7
<PAGE>

commercial or standby) or bankers' acceptances, (vii) all Derivative Obligations
of such Person,  provided that for purposes of determining Borrower's compliance
with the  financial  covenants  set forth  herein,  only  Borrower's  Derivative
Obligations  under Derivative  Arrangements  which must be  marked-to-market  in
accordance with GAAP shall be included as  Indebtedness of Borrower,  and (viii)
all  obligations  of such  Person  under  synthetic  (and  similar  type)  lease
arrangements,   provided  that  for  purposes  of   calculating   such  Person's
Indebtedness  under such  synthetic (or similar type) lease  arrangements,  such
lease arrangement shall be treated as if it were a Capitalized Lease.

          "Interest Period" is defined in Section 2.6 hereof.

         "Investments" is defined in Section 7.14.

         "L/C Obligations" has the same meaning herein as in the 3-Year Credit
Agreement.

         "Lending Office" is defined in Section 9.4 hereof.

         "Level I Status" means Borrower's S&P Rating is A+ or higher and its
Moody's Rating is A1 or higher.

         "Level II Status" means Level I Status does not exist, but Borrower's
S&P Rating is A- or higher and its Moody's Rating is A3 or higher.

         "Level III Status" means neither Level I Status nor Level II Status
exists, but Borrower's S&P Rating is BBB+ or higher and its Moody's rating is
Baa1 or higher.

         "Level IV Status" means neither Level I Status, Level II Status, nor
Level III Status exists, but Borrower's S&P Rating is BBB or higher and its
Moody's rating is Baa2 or higher.

         "Level V Status" means neither Level I Status, Level II Status, Level
III Status, nor Level IV Status exists, but Borrower's S&P Rating is BBB- or
higher and its Moody's rating is Baa3 or higher.

         "Level VI Status" means none of Level I Status, Level II Status, Level
III Status, Level IV Status nor Level V Status exists.

         "LIBOR" is defined in Section 2.3(b) hereof.

         "LIBOR Loan Restriction Period" means the period commencing on and
including the fifth to last Business Day of any calendar year and ending on and
including the fifth Business Day of the immediately succeeding calendar year.

         "Lien" means any interest in Property securing an obligation owed to,
or a claim by, a Person other than the owner of the Property, whether such
interest is based on the common law, statute or contract, including, but not
limited to, the security interest or lien arising from a mortgage, encumbrance,
pledge, conditional sale, security agreement or trust receipt, or a lease,
consignment or bailment for security purposes. For the purposes of this
definition, a Person shall be deemed to be the owner of any Property which it
has acquired or holds subject to a conditional sale agreement, Capital Lease or
other arrangement pursuant to which title to the

                                       8
<PAGE>

Property  has been  retained  by or vested in some  other  Person  for  security
purposes, and such retention of title shall constitute a "Lien."

         "Liquid Assets" means, as the date of any calculation thereof, the sum
of (i) the amount of unrestricted cash which the Borrower then has available,
plus (ii) the aggregate amount of then available (meaning the Borrower is
entitled to borrow such amounts pursuant to the applicable documentation) unused
capacity under the Borrower's senior unsecured credit facilities (including this
Agreement and the 3-Year Credit Agreement).

          "Loan" and "Loans" are defined in Section 2.1 hereof and includes a
Base Rate Loan or Eurodollar Loan, each of which is a "type" of Loan hereunder.

         "Long-Term Guarantee" means (i) any Guarantee issued by Borrower or its
Subsidiaries under which the holder or beneficiary of such Guarantee is not
permitted under any circumstance or contingency to make demand or exercise any
other remedies under such Guarantee prior to the Termination Date, as extended
from time to time in accordance with the terms hereof and (ii) any coal mining
reclamation bonds or contingent indemnity or reimbursement obligations with
respect to such reclamation bonds (so long as such reclamation bonds have not
been called upon).

         "Marketing  Subsidiary" means each of Black Hills Coal Network,  Inc.,
a South Dakota  corporation,  Black Hills Energy Resources,  Inc., a South
Dakota  corporation,  and Enserco Energy,  Inc., a South Dakota corporation,
and their respective subsidiaries.

         "Marketing Subsidiary Excluded Credit Facilities" means those certain
credit facilities of the Marketing Subsidiaries described on Schedule 7.15(a)
hereof, as such credit facilities are in effect on the Effective Date, provided
that such credit facilities shall cease to be Marketing Subsidiary Excluded
Credit Facilities to the extent availability thereunder is increased, any
substantive term thereof is materially modified, or such credit facility is
extended more than once in any fiscal year for a period of more than one year.
Any replacement credit facility of a Marketing Subsidiary Excluded Credit
Facility shall be deemed a Marketing Subsidiary Excluded Credit Facility only if
such replacement credit facility contains terms substantially the same as the
Marketing Subsidiary Excluded Credit Facility being replaced (including tenor)
or is approved in writing by the Required Banks.

         "Marketing Subsidiary Indebtedness Limit" means the sum of (i)
aggregate amount of credit availability (used or unused) under Marketing
Subsidiary Excluded Credit Facilities as of the Effective Date and (ii)
$25,000,000.

         "Material Adverse Effect" means a material adverse effect on (i) the
business, financial position or results of operations of Borrower or Borrower
and its Subsidiaries taken as a whole, (ii) the ability of Borrower to perform
its material obligations under the Credit Documents, (iii) the validity or
enforceability of the material obligations of Borrower under any Credit
Document, (iv) the rights and remedies of the Banks or the Administrative Agent
against Borrower; or (v) the timely payment of the principal of and interest on
the Loans or other amounts payable by Borrower hereunder, provided, that a
downgrade of Borrower's S&P Rating and/or Moody's Rating shall not, in and of
itself, be deemed a "Material Adverse Effect" for purposes of this Agreement.



                                       9
<PAGE>

         "Material  Subsidiaries"  means  BHP,  Black  Hills  Energy,  Inc., a
South  Dakota  corporation,  Wyodak Resources Development Corp., a Delaware
corporation,  Black Hills Energy Capital,  Inc., a Delaware corporation and
any other Subsidiary of Borrower which is not either an Immaterial Subsidiary
or a Project Finance Subsidiary.

         "Moody's Rating" means the rating assigned by Moody's Investors
Service, Inc. and any successor thereto that is a nationally recognized rating
agency to the outstanding senior unsecured non-credit enhanced long-term
indebtedness of a Person (or if neither Moody's Investors Service, Inc. nor any
such successor shall be in the business of rating long-term indebtedness, a
nationally recognized rating agency in the United States of America as mutually
agreed between the Required Banks and Borrower). Any reference in this Agreement
to any specific rating is a reference to such rating as currently defined by
Moody's Investors Service, Inc. (or such a successor) and shall be deemed to
refer to the equivalent rating if such rating system changes.

         "Non-Recourse Indebtedness" means, without duplication, all
Indebtedness of Borrower and its Consolidated Subsidiaries determined on a
consolidated basis in accordance with GAAP incurred in connection with project
financings (including project financings of existing assets the proceeds of
which are used to refinance such assets) as to which the holder of such
Indebtedness has recourse solely against the assets which were purchased or
refinanced with, or leased in connection with, such Indebtedness and not against
Borrower or a Consolidated Subsidiary of Borrower other than a Project Finance
Subsidiary or any of their other assets (whether directly, through a Guarantee
or otherwise), other than the pledge of the stock (or similar equity interest)
of the Project Finance Subsidiary which incurred such Indebtedness. For purposes
of clarification, any Indebtedness of a Project Finance Subsidiary which would
otherwise constitute Non-Recourse Indebtedness but for the issuance by the
Borrower or a Consolidated Subsidiary of the Borrower of a Guarantee or other
document which provides recourse with respect to such Indebtedness, such
Indebtedness shall for all purposes of this Agreement be deemed Non-Recourse
Indebtedness so long as (i) the Borrower's or such Consolidated Subsidiary's
obligations under such Guarantee or other document are treated for all purposes
as Recourse Indebtedness hereunder, (ii) such Recourse Indebtedness of the
Borrower or such Consolidated Subsidiary is unsecured and is otherwise permitted
by this Agreement, and (iii) such Recourse Indebtedness of the Borrower or such
Consolidated Subsidiary does not in the aggregate exceed $100,000,000 at any one
time outstanding.

         "Note" is defined in Section 2.10(a) hereof.

         "Obligations" means all fees payable hereunder, all obligations of
Borrower to pay principal or interest on Loans, fees, expenses, indemnities, and
all other payment obligations of Borrower arising under or in relation to any
Credit Document.

         "Percentage" means, for each Bank, the percentage of the Commitments
represented by such Bank's Commitment or, if the Commitments have been
terminated, the percentage held by such Bank of the aggregate principal amount
of all outstanding Obligations.

         "Permitted Derivative Obligations" means all Derivative Obligations as
to which the Derivative Arrangements giving rise to such Derivative Obligation
are entered into in the ordinary course of business to hedge interest rate risk,
currency risk, commodity price risk or the

                                       10
<PAGE>

production of Borrower or its  Subsidiaries  (and not for speculative  purposes)
and if such Derivative Obligation is an obligation of Borrower,  such Derivative
Obligation ranks no greater than pari passu to the Obligations.

         "Person" means an individual, partnership, corporation, limited
liability company, association, trust, unincorporated organization or any other
entity or organization, including a government or any agency or political
subdivision thereof.

         "Plan " means at any time an employee pension benefit plan covered by
Title IV of ERISA or subject to the minimum funding standards under Section 412
of the Code that is either (i) maintained by a member of the Controlled Group or
(ii) maintained pursuant to a collective bargaining agreement or any other
arrangement under which more than one employer makes contributions and to which
a member of the Controlled Group is then making or accruing an obligation to
make contributions or has within the preceding five plan years made
contributions.

         "PBGC" is defined in Section 5.8 hereof.

         "Project Finance Subsidiary" means any special purpose Subsidiary of
Borrower created to limit the recourse of the creditors of such Subsidiary and
as to which the creditors and other holders of Indebtedness of such Subsidiary
have recourse solely against the assets of such Subsidiary and not against
Borrower or any other Subsidiary of Borrower or any of their other assets
(whether directly, through a Guarantee or otherwise) other than (i) pursuant to
a Guarantee permitted hereunder and (ii) the stock of such special purpose
Subsidiary (or similar equity interest).

         "Property" means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible, whether now owned or
hereafter acquired.

         "Recourse Indebtedness" means, without duplication, all Indebtedness of
Borrower and its Consolidated Subsidiaries determined on a consolidated basis in
accordance with GAAP other than Non-Recourse Indebtedness.

         "Recourse Leverage Ratio" means, as of any time the same is to be
determined, the ratio of the amount of (A) Recourse Indebtedness outstanding at
such time (provided that for purposes of clause (A) of this definition, to the
extent otherwise included, Indebtedness of Marketing Subsidiaries in an
aggregate amount not to exceed the Marketing Subsidiary Indebtedness Limit
incurred under Marketing Subsidiary Excluded Credit Facilities shall not be
deemed to be Recourse Indebtedness) to (B) the amount of Capital at such time.

         "Required Banks" means, as of the date of determination thereof, any
Banks holding in the aggregate more than fifty percent (50%) of the Percentages,
provided, that at any time there are two (2) or less Banks, Required Banks shall
mean Banks holding one hundred percent (100%) of the Percentages.

         "Restricted Earnings" means, for any period, the amount of all
Consolidated Net Income earned by each of Borrower's Consolidated Subsidiaries
during such period which may not be distributed or dividended to Borrower due to
contractual or other restrictions on such distributions or dividends.

                                       11
<PAGE>

         "SEC" means the United States Securities and Exchange Commission.

         "Security" has the same meaning as in Section 2(l) of the Securities
Act of 1933, as amended.

         "S&P Rating" means the rating assigned by Standard & Poor's Ratings
Group, a division of The McGraw-Hill Companies, Inc. and any successor thereto
that is a nationally recognized rating agency to the outstanding senior
unsecured non-credit enhanced long-term indebtedness of a Person (or, if neither
such division nor any successor shall be in the business of rating long-term
indebtedness, a nationally recognized rating agency in the United States as
mutually agreed between the Required Banks and Borrower). Any reference in this
Agreement to any specific rating is a reference to such rating as currently
defined by Standard & Poor's Ratings Group, a division of The McGraw-Hill
Companies, Inc. (or such a successor) and shall be deemed to refer to the
equivalent rating if such rating system changes.

         "Solvent" means that (a) the fair value of a Person's assets is in
excess of the total amount of such Person's debts, as determined in accordance
with the United States Bankruptcy Code, and (b) the present fair saleable value
of a Person's assets is in excess of the amount that will be required to pay
such Person's debts as they become absolute and matured. As used in this
definition, the term "debts" includes any legal liability, whether matured or
unmatured, liquidated or unliquidated, absolute, fixed or contingent, as
determined in accordance with the United States Bankruptcy Code.

         "Subsidiary" means, as to Borrower, any corporation or other entity (i)
which is consolidated into the financial statements of such Borrower in
accordance with GAAP or (ii) of which more than fifty percent (50%) of the
outstanding stock or comparable equity interests having ordinary voting power
for the election of the Board of Directors of such corporation or similar
governing body in the case of a non-corporation (irrespective of whether or not,
at the time, stock or other equity interests of any other class or classes of
such corporation or other entity shall have or might have voting power by reason
of the happening of any contingency) is at the time directly or indirectly owned
by such Borrower or by one or more of its Subsidiaries.

         "Syndication Agents" is defined in the first paragraph of this
Agreement.

         "Telerate Service" means the Dow Jones Telerate Service.

         "Termination Date" means August 26, 2003, as extended from time to time
pursuant to Section 3.2.

         "3-Year Credit Agreement" means that certain 3-Year Credit Agreement
dated as of August 28, 2001 among Borrower, ABN AMRO Bank, N.V., in its capacity
as administrative agent for the Banks thereunder, U.S. Bank, National
Association, and The Bank of Nova Scotia, in their capacity as documentation
agents for the Banks thereunder, Union Bank of California, N.A., and Bank of
Montreal, in their capacity as syndication agents for the Banks thereunder and
the various financial institutions from time to time party thereto as Banks, as
amended from time to time.

                                       12
<PAGE>

         "3-Year Commitments" shall mean "Commitments", as such term is defined
in the 3-Year Day Credit Agreement.

         "3-Year Credit Documents" shall mean "Credit Documents", as such term
is defined in the 3-Year Credit Agreement.

         "3-Year Loans" shall mean "Loans", as such term is defined in the
3-Year Credit Agreement.

         "Total Commitments" shall mean the sum of the Commitments and the
3-Year Commitments.

         "Total Loans" shall mean the sum of the Loans and the 3-Year Loans.

         "Unfunded Vested Liabilities" means, with respect to any Plan at any
time, the amount (if any) by which (i) the present value of all vested
nonforfeitable accrued benefits under such Plan exceeds (ii) the fair market
value of all Plan assets allocable to such benefits, all determined as of the
then most recent valuation date for such Plan, but only to the extent that such
excess represents a potential liability of a member of the Controlled Group to
the PBGC or the Plan under Title IV of ERISA.

         "Utilization  Fee Rate" means the  percentage  set forth in Schedule 1
hereto  beside the then  applicable Level.

         "U.S.  Dollars" and "$" each means the lawful currency of the United
States of America.

         "Voting Stock" of any Person means capital stock of any class or
classes or other equity interests (however designated) having ordinary voting
power for the election of directors or similar governing body of such Person.

          "Welfare Plan" means a "welfare plan", as defined in Section 3(l) of
ERISA.

         "Wholly-Owned" when used in connection with any Subsidiary means a
Subsidiary of which all of the issued and outstanding shares of stock or other
equity interests (other than directors' qualifying shares as required by law)
shall be owned by Borrower and/or one or more of its Wholly-Owned Subsidiaries.

Section 1.2 Interpretation. The foregoing definitions shall be equally
applicable to both the singular and plural forms of the terms defined. All
references to times of day in this Agreement shall be references to New York,
New York time unless otherwise specifically provided. The word "including" means
including without limiting the generality of any description preceding such
term. Where the character or amount of any asset or liability or item of income
or expense is required to be determined or any consolidation or other accounting
computation is required to be made for the purposes of this Agreement, the same
shall be done in accordance with GAAP in effect on the Effective Date, to the
extent applicable, except where such principles are inconsistent with the
specific provisions of this Agreement.

SECTION 2         THE CREDITS.

                                       13
<PAGE>

     Section  2.1 The  Revolving  Loan  Commitment.  Subject  to the  terms  and
conditions hereof (including Sections 6.1 and 6.2), each Bank, by its acceptance
hereof,  severally  agrees to make a loan or loans  (individually  a "Loan"  and
collectively "Loans") to Borrower from time to time on a revolving basis in U.S.
Dollars in an aggregate  outstanding  amount up to the amount of its  commitment
set forth on the  applicable  signature  page hereof  (such  amount,  as reduced
pursuant to Section 2.12(a),  increased pursuant to Section 2.12(b),  or changed
as a result of one or more  assignments  under Section 11.12,  its  "Commitment"
and,  cumulatively for all the Banks, the "Commitments")  before the Termination
Date,  provided that the aggregate amount of Loans at any time outstanding shall
not exceed the Commitments in effect at such time. On the  Termination  Date the
Commitments shall terminate.  Each Borrowing of Loans shall be made ratably from
the Banks in proportion to their respective Percentages.  As provided in Section
2.5(a)  hereof,  Borrower may elect that each  Borrowing of Loans be either Base
Rate Loans or Eurodollar  Loans.  Loans may be repaid and the  principal  amount
thereof  reborrowed  before the Termination  Date,  subject to all the terms and
conditions  hereof.  Unless an earlier  maturity is provided for hereunder,  all
Loans  shall   mature  and  be  due  and  payable  on  the   Termination   Date.
Notwithstanding  anything is this Agreement to the contrary, no Eurodollar Loans
may be advanced during the LIBOR Loan Restriction Period.

     Section 2.2 [Intentionally Omitted]. (a)

     Section 2.3 Applicable  Interest Rates. (a) Base Rate Loans. Each Base Rate
Loan made or  maintained  by a Bank shall bear  interest  during  each  Interest
Period it is  outstanding  (computed  (x) at all times the Base Rate is based on
the rate  described in clause (i) of the definition  thereof,  on the basis of a
year of 365 or 366 days,  as  applicable,  and actual days elapsed or (y) at all
times  the  Base  Rate is  based on the rate  described  in  clause  (ii) of the
definition  thereof, on the basis of a year of 360 days and actual days elapsed)
on the unpaid  principal  amount  thereof  from the date such Loan is  advanced,
continued  or created  by  conversion  from a  Eurodollar  Loan  until  maturity
(whether by  acceleration  or otherwise) at a rate per annum equal to the sum of
the Applicable Margin plus the Base Rate from time to time in effect, payable on
the last day of its Interest Period and at maturity  (whether by acceleration or
otherwise).

         "Base Rate" means for any day the greater of:

          (i) the rate of interest  announced by ABN AMRO Bank N.V. from time to
     time as its prime rate,  or  equivalent,  for U.S.  Dollar loans within the
     United  States as in effect on such day,  with any  change in the Base Rate
     resulting  from a change in said prime rate to be  effective as of the date
     of the relevant change in said prime rate; and

          (ii) the sum of (x) the Federal Funds Rate, plus (y)1/2of 1% (0.50%).

     (b) Eurodollar  Loans.  Each  Eurodollar  Loan made or maintained by a Bank
shall bear interest during each Interest  Period it is outstanding  (computed on
the basis of a year of 360 days and actual days elapsed) on the unpaid principal
amount  thereof  from the date such Loan is advanced,  continued,  or created by
conversion  from a Base Rate Loan until  maturity  (whether by  acceleration  or
otherwise)  at a rate per annum equal to the sum of the  Applicable  Margin plus
the Adjusted LIBOR applicable for such Interest Period,  payable on the last day
of the Interest  Period and at maturity  (whether by acceleration or otherwise),
and, if the applicable  Interest

                                       14
<PAGE>


Period is longer than three months, on each day occurring every three months
after the commencement of such Interest Period.

         "Adjusted LIBOR" means, for any Borrowing of Eurodollar Loans, a rate
per annum determined in accordance with the following formula:

                     Adjusted LIBOR =               LIBOR
                                    -------------------------------------------
                                        1 - Eurodollar Reserve Percentage

         "LIBOR" means, for an Interest Period for a Borrowing of Eurodollar
Loans, (a) the LIBOR Index Rate for such Interest Period, if such rate is
available, and (b) if the LIBOR Index Rate cannot be determined, the
arithmetical average of the rates of interest per annum (rounded upwards, if
necessary, to the nearest one-sixteenth of one percent) at which deposits in
U.S. Dollars, in immediately available funds are offered to the Administrative
Agent at 11:00 a.m. (London, England time) two (2) Business Days before the
beginning of such Interest Period by major banks in the interbank eurodollar
market for delivery on the first day of and for a period equal to such Interest
Period in an amount equal or comparable to the principal amount of the
Eurodollar Loan scheduled to be made by each Lender as part of such Borrowing.

         "LIBOR Index Rate" means, for any Interest Period, the rate per annum
(rounded upwards, if necessary, to the next higher one-sixteenth of one percent)
for deposits in U.S. Dollars for delivery on the first day of and for a period
equal to such Interest Period in an amount equal or comparable to the principal
amount of the Eurodollar Loan scheduled to be made by each Lender as part of
such Borrowing, which appears on the Applicable Telerate Page as of 11:00 a.m.
(London, England time) on the day two (2) Business Days before the commencement
of such Interest Period.

         "Applicable Telerate Page" means the display page designated as "Page
3750" on the Telerate Service (or such other pages as may replace any such page
on that service or such other service as may be nominated by the British
Bankers' Association as the information vendor for the purpose of displaying
British Bankers' Association Interest Settlement Rates for deposits in U.S.
Dollars).

         "Eurodollar Reserve Percentage" means for an Borrowing of Eurodollar
Loans from any Bank, the daily average for the applicable Interest Period of the
actual effective rate, expressed as a decimal, at which reserves (including,
without limitation, any supplemental, marginal and emergency reserves) are
maintained by such Bank during such Interest Period pursuant to Regulation D of
the Board of Governors of the Federal Reserve System (or any successor) on
"eurocurrency liabilities", as defined in such Board's Regulation D (or in
respect of any other category of liabilities that includes deposits by reference
to which the interest rate on Eurodollar Loans is determined or any category of
extensions of credit or other assets that include loans by non-United States
offices of any Bank to United States residents), subject to any amendments of
such reserve requirement by such Board or its successor, taking into account any
transitional adjustments thereto. For purposes of this definition, the
Eurodollar Loans shall be deemed to be "eurocurrency liabilities" as defined in
Regulation D without benefit or credit for any prorations, exemptions or offsets
under Regulation D.

                                       15
<PAGE>


     (c) Rate  Determinations.  The  Administrative  Agent shall  determine each
interest rate  applicable to  Obligations,  and a  determination  thereof by the
Administrative  Agent  shall be  conclusive  and  binding  except in the case of
manifest error.

     Section 2.4 Minimum  Borrowing  Amounts.  Each Borrowing of Base Rate Loans
and  Eurodollar  Loans shall be in an amount not less than (i) if such Borrowing
is comprised of Borrowing of Base Rate Loans,  $1,000,000 and integral multiples
of  $500,000 in excess  thereof,  and (ii) if such  Borrowing  is  comprised  of
Borrowing of Eurodollar Loans,  $2,000,000 and integral  multiples of $1,000,000
in excess thereof.

     Section  2.5  Manner of  Borrowing  Loans and  Designating  Interest  Rates
Applicable to Loans.  (a) Notice to the  Administrative  Agent. (a) The Borrower
shall give notice to the  Administrative  Agent by no later than 12:00 noon (New
York  time)  (i) at least  three  (3)  Business  Days  before  the date on which
Borrower  requests the Banks to advance a Borrowing of Eurodollar Loans, or (ii)
on the date on which Borrower  requests the Banks to advance a Borrowing of Base
Rate Loans.  The Loans included in each Borrowing shall bear interest  initially
at the type of rate  specified  in such notice of a new  Borrowing.  Thereafter,
Borrower  may from time to time elect to change or continue the type of interest
rate  borne by each  Borrowing  or,  subject  to Section  2.4's  minimum  amount
requirement for each outstanding  Borrowing,  a portion thereof, as follows: (i)
if such Borrowing is of Eurodollar Loans, on the last day of the Interest Period
applicable  thereto,  Borrower  may  continue  part or all of such  Borrowing as
Eurodollar  Loans  for an  Interest  Period or  Interest  Periods  specified  by
Borrower or convert part or all of such Borrowing into Base Rate Loans, and (ii)
if such  Borrowing  is of Base Rate Loans,  on any  Business  Day,  Borrower may
convert  all or part of such  Borrowing  into  Eurodollar  Loans for an Interest
Period or Interest Periods  specified by Borrower.  Borrower shall give all such
notices requesting, the advance,  continuation,  or conversion of a Borrowing to
the  Administrative  Agent by  telephone  or  telecopy  (which  notice  shall be
irrevocable  once given and, if by  telephone,  shall be promptly  confirmed  in
writing).  Notices of the continuation of a Borrowing of Eurodollar Loans for an
additional Interest Period or of the conversion of part or all of a Borrowing of
Eurodollar  Loans into Base Rate  Loans or of Base Rate  Loans  into  Eurodollar
Loans must be given by no later  than 12:00 noon (New York time) at least  three
(3) Business Days before the date of the requested  continuation  or conversion.
All such  notices  concerning  the advance,  continuation,  or  conversion  of a
Borrowing  shall be  irrevocable  once given and shall  specify  the date of the
requested  advance,  continuation or conversion of a Borrowing (which shall be a
Business Day), the amount of the requested Borrowing to be advanced,  continued,
or  converted,  the type of Loans to comprise  such new,  continued or converted
Borrowing  and, if such  Borrowing is to be comprised of Eurodollar  Loans,  the
Interest Period  applicable  thereto.  Borrower  agrees that the  Administrative
Agent may rely on any such  telephonic or telecopy notice given by any person it
in good faith believes is an Authorized  Representative without the necessity of
independent  investigation,  and in the  event  any  such  notice  by  telephone
conflicts with any written confirmation,  such telephonic notice shall govern if
the  Administrative  Agent has acted in reliance  thereon.  There may be no more
than six different Interest Periods in effect at any one time, provided that for
purposes  of  determining  the number of  Interest  Periods in effect at any one
time,  all Base Rate  Loans  shall be  deemed to have one and the same  Interest
Period.

                                       16
<PAGE>

     (b)  Notice to the  Banks.  The  Administrative  Agent  shall  give  prompt
telephonic or telecopy notice to each Bank of any notice from Borrower  received
pursuant to Section 2.5(a) above. The Administrative  Agent shall give notice to
Borrower and each Bank by like means of the  interest  rate  applicable  to each
Borrowing of Eurodollar Loans.

     (c) Borrower'  Failure to Notify.  Any  outstanding  Borrowing of Base Rate
Loans shall,  subject to Section 6.2 hereof,  automatically  be continued for an
additional  Interest Period on the last day of its then current  Interest Period
unless Borrower has notified the Administrative Agent within the period required
by Section  2.5(a) that it intends to convert such Borrowing into a Borrowing of
Eurodollar Loans or notifies the Administrative Agent within the period required
by Section 2.8(a) that it intends to prepay such Borrowing. If Borrower fails to
give notice  pursuant to Section 2.5(a) above of the  continuation or conversion
of any outstanding  principal  amount of a Borrowing of Eurodollar  Loans before
the last day of its then current  Interest  Period within the period required by
Section 2.5(a) and has not notified the  Administrative  Agent within the period
required  by  Section  2.8(a)  that it intends to prepay  such  Borrowing,  such
Borrowing shall  automatically be converted into a Borrowing of Base Rate Loans,
subject to Section 6.2 hereof.  The  Administrative  Agent shall promptly notify
the Banks of Borrower's failure to so give a notice under Section 2.5(a).

     (d) Disbursement of Loans. Not later than 12:00 noon (New York time) on the
date of any requested  advance of a new Borrowing of Eurodollar  Loans,  and not
later than 2:00 p.m. (New York time) on the date of any  requested  advance of a
new Borrowing of Base Rate Loans,  subject to Section 6 hereof,  each Bank shall
make available its Loan comprising  part of such Borrowing in funds  immediately
available at the principal office of the  Administrative  Agent in New York, New
York.  The  Administrative  Agent shall make  available to Borrower Loans at the
Administrative  Agent's  principal  office in New York,  New York or such  other
office as the  Administrative  Agent has  previously  agreed in  writing to with
Borrower, in each case in the type of funds received by the Administrative Agent
from the Banks.

     (e)   Administrative   Agent   Reliance   on  Bank   Funding.   Unless  the
Administrative Agent shall have been notified by a Bank before the date on which
such  Bank is  scheduled  to make  payment  to the  Administrative  Agent of the
proceeds of a Loan (which notice shall be effective upon receipt) that such Bank
does not intend to make such payment,  the Administrative  Agent may assume that
such Bank has made such  payment  when due and the  Administrative  Agent may in
reliance upon such  assumption  (but shall not be required to) make available to
Borrower  the  proceeds of the Loan to be made by such Bank and, if any Bank has
not in fact made such payment to the  Administrative  Agent, such Bank shall, on
demand,  pay to the  Administrative  Agent the amount made available to Borrower
attributable to such Bank together with interest  thereon in respect of each day
during the period  commencing  on the date such  amount  was made  available  to
Borrower  and ending on (but  excluding)  the date such Bank pays such amount to
the  Administrative  Agent  at a rate per  annum  equal to (i) from the date the
related  payment  was  made by the  Administrative  Agent  to the  date  two (2)
Business  Days after  payment by such Bank is due  hereunder,  the Federal Funds
Rate for each such day and (ii) from the date two (2)  Business  Days  after the
date such payment is due from such Bank to the date such payment is made by such
Bank,  the Base Rate in effect for each such day. If such amount is not received
from such Bank by the  Administrative  Agent  immediately upon demand,  Borrower
will,  on demand,  repay to the  Administrative  Agent the  proceeds of the Loan


                                       17
<PAGE>


attributable to such Bank with interest thereon at a rate per annum equal to the
interest rate applicable to the relevant Loan.

Section 2.6 Interest Periods. As provided in Section 2.5(a) hereof, at the time
of each request of a Borrowing of Eurodollar Loans, Borrower shall select an
Interest Period applicable to such Loans from among the available options. The
term "Interest Period" means the period commencing on the date a Borrowing of
Loans is advanced, continued, or created by conversion and ending: (a) in the
case of Base Rate Loans, on the last Business Day of the calendar quarter in
which such Borrowing is advanced, continued, or created by conversion (or on the
last day of the following calendar quarter if such Loan is advanced, continued
or created by conversion on the last Business Day of a calendar quarter), and
(b) in the case of Eurodollar Loans, 1, 2, 3, or 6 months thereafter; provided,
however, that:

          (a) any  Interest  Period  for a  Borrowing  of Base Rate  Loans  that
     otherwise would end after the Termination Date shall end on the Termination
     Date;

          (b) for any Borrowing of Eurodollar Loans,  Borrower may not select an
     Interest  Period that extends  beyond either (i) the fifth to last Business
     Day of any calendar year or (ii) the Termination Date;

          (c) whenever the last day of any Interest  Period would otherwise be a
     day that is not a Business Day, the last day of such Interest  Period shall
     be extended to the next  succeeding  Business Day,  provided  that, if such
     extension would cause the last day of an Interest Period for a Borrowing of
     Eurodollar Loans to occur in the following  calendar month, the last day of
     such Interest Period shall be the immediately preceding Business Day; and

          (d) for purposes of determining an Interest  Period for a Borrowing of
     Eurodollar  Loans, a month means a period starting on one day in a calendar
     month and ending on the numerically  corresponding day in the next calendar
     month; provided, however, that if there is no numerically corresponding day
     in the  month  in which  such an  Interest  Period  is to end or if such an
     Interest Period begins on the last Business Day of a calendar  month,  then
     such  Interest  Period  shall end on the last  Business Day of the calendar
     month in which such Interest Period is to end.

     Section 2.7 Maturity of Loans.  Unless an earlier  maturity is provided for
hereunder  (whether by  acceleration or otherwise),  all Obligations  (including
principal and interest on all outstanding Loans) shall mature and become due and
payable by Borrower on the Termination Date.

     Section 2.8  Prepayments.  (a) (a) Borrower may prepay  without  premium or
penalty and in whole or in part (but, if in part, then (i) in an amount not less
than $5,000,000 and integral multiples of $1,000,000 in excess thereof, and (ii)
in an amount such that the minimum amount  required for a Borrowing  pursuant to
Section 2.4 hereof remains  outstanding)  any Borrowing of Eurodollar Loans upon
three (3) Business Days' prior irrevocable  notice to the  Administrative  Agent
or, in the case of a Borrowing of Base Rate Loans,  irrevocable notice delivered
to the Administrative Agent no later than 12:00 noon (New York time) on the date
of prepayment, such prepayment to be made by the payment of the principal amount
to be prepaid and accrued

                                       18
<PAGE>

interest  thereon to the date fixed for  prepayment.  In the case of  Eurodollar
Loans,  any  amounts  owing  under  Section  2.11  hereof  as a  result  of such
prepayment  shall  be  paid   contemporaneously   with  such   prepayment.   The
Administrative  Agent  will  promptly  advise  each Bank of any such  prepayment
notice it  receives  from  Borrower.  Any  amount  paid or  prepaid  before  the
Termination Date may, subject to the terms and conditions of this Agreement,  be
borrowed, repaid and borrowed again.

     (b) If the aggregate amount of outstanding  Loans shall at any time for any
reason exceed the Commitments  then in effect,  Borrower shall,  immediately and
without  notice or demand,  pay the amount of such excess to the  Administrative
Agent for the ratable  benefit of the Banks as a prepayment of the Loans and, if
necessary,  a prefunding of Letters of Credit.  Immediately upon determining the
need to make any such prepayment Borrower shall notify the Administrative  Agent
of such required  prepayment.  Each such  prepayment  shall be  accompanied by a
payment of all  accrued and unpaid  interest  on the Loans  prepaid and shall be
subject to Section 2.11.

     Section 2.9 Default  Rate.  If any payment of  principal or interest on any
Loan,  or  payment of any other  Obligation,  is not made when due  (whether  by
acceleration or otherwise),  such principal,  interest or other Obligation shall
bear  interest  (computed  on the  basis of a year of 360 days and  actual  days
elapsed or, if based on the rate  described in clause (i) of the  definition  of
Base Rate,  on the basis of a year of 365 or 366 days,  as  applicable,  and the
actual  number of days elapsed) from the date such payment was due until paid in
full, payable on demand, at a rate per annum equal to:

          (a)  for  any  Obligation  other  than a  Eurodollar  Loan  (including
     principal  and  interest  relating  to Base  Rate  Loans  and  interest  on
     Eurodollar  Loans),  the sum of two percent (2%) plus the Applicable Margin
     plus the Base Rate from time to time in effect; and

          (b) for the principal of any  Eurodollar  Loan, the sum of two percent
     (2%)  plus the  rate of  interest  in  effect  thereon  at the time of such
     default  until  the end of the  Interest  Period  applicable  thereto  and,
     thereafter,  at a rate per annum equal to the sum of two percent  (2%) plus
     the Applicable Margin plus the Base Rate from time to time in effect.

     Section  2.10 The Notes.  (a) The Loans made to Borrower by each Bank shall
be evidenced by a single  promissory note of Borrower issued to such Bank in the
form of Exhibit A hereto.  Each such promissory note is hereinafter  referred to
as a "Note"  and  collectively  such  promissory  notes are  referred  to as the
"Notes."

     (a) Each Bank shall record on its books and records or on a schedule to its
Note the  amount of each Loan  advanced,  continued,  or  converted  by it,  all
payments of principal and interest and the  principal  balance from time to time
outstanding  thereon,  the type of such Loan, and, for any Eurodollar  Loan, the
Interest  Period and the interest rate applicable  thereto.  The record thereof,
whether  shown on such books and records of a Bank or on a schedule to any Note,
shall be prima facie evidence of the same; provided,  however,  that the failure
of any Bank to record any of the foregoing or any error in any such record shall
not limit or otherwise affect the obligation of Borrower to repay all Loans made
hereunder together with accrued interest thereon. At the request of any Bank and
upon such Bank  tendering to Borrower the Note to be

                                       19
<PAGE>


replaced,  Borrower  shall  furnish  a new  Note to such  Bank  to  replace  any
outstanding Note, and at such time the first notation appearing on a schedule on
the  reverse  side of, or attached  to, such Note shall set forth the  aggregate
unpaid principal amount of all Loans, if any, then outstanding thereon.

Section 2.11 Funding Indemnity. If any Bank shall incur any loss, cost or
expense (including, without limitation, any loss, cost or expense (excluding
loss of margin) incurred by reason of the liquidation or re-employment of
deposits or other funds acquired by such Bank to fund or maintain any Eurodollar
Loan or the relending or reinvesting of such deposits or amounts paid or prepaid
to such Bank) as a result of:

          (a) any payment (whether by acceleration or otherwise),  prepayment or
     conversion  of a  Eurodollar  Loan on a date other than the last day of its
     Interest Period,

          (b) any  failure  (because  of a  failure  to meet the  conditions  of
     Section 6 or  otherwise)  by Borrower  to borrow or  continue a  Eurodollar
     Loan,  or to convert a Base Rate Loan into a Eurodollar  Loan,  on the date
     specified  in a notice  given  pursuant  to Section  2.5(a) or  established
     pursuant to Section 2.5(c) hereof,

          (c) any  failure by  Borrower  to make any  payment or  prepayment  of
     principal  on any  Eurodollar  Loan when due  (whether by  acceleration  or
     otherwise), or

          (d) any  acceleration of the maturity of a Eurodollar Loan as a result
     of the occurrence of any Event of Default hereunder,  then, upon the demand
     of such Bank, Borrower shall pay to such Bank such amount as will reimburse
     such Bank for such loss,  cost or  expense.  If any Bank makes such a claim
     for  compensation,  it  shall  provide  to  Borrower,  with a  copy  to the
     Administrative  Agent,  a  certificate  executed by an officer of such Bank
     setting forth the amount of such loss, cost or expense in reasonable detail
     (including  an  explanation  of the basis for and the  computation  of such
     loss,  cost or  expense)  and the  amounts  shown  on such  certificate  if
     reasonably  calculated  shall be prima facie evidence of the amount of such
     loss, cost or expense.

     Section 2.12 Commitments. (a) Borrower shall have the right at any time and
from time to time,  upon five (5)  Business  Days' prior  written  notice to the
Administrative  Agent, to terminate the Commitments  without premium or penalty,
in whole or in part,  any  partial  termination  to be (i) in an amount not less
than $5,000,000 and integral multiples of $1,000,000 in excess thereof, and (ii)
allocated ratably among the Banks in proportion to their respective Percentages,
provided  that the  Commitments  may not be reduced  to an amount  less than the
amount of the Loans then outstanding. The Administrative Agent shall give prompt
notice to each Bank of any such  termination of Commitments.  Any termination of
Commitments pursuant to this Section 2.12 may not be reinstated.

          (b) The  Borrower and the  Administrative  Agent may from time to time
     add additional financial institutions as parties to this Agreement or, with
     the written  consent of an existing  Bank,  increase the Commitment of such
     existing  Bank (any such  financial  institution  or existing Bank which is
     increasing its commitment being referred to as an "Added Bank") pursuant to
     documentation satisfactory to the Borrower and the Administrative Agent and
     any such  Added  Bank  shall  for all  purposes  be  considered  a Bank for
     purposes of this Agreement and

                                       20
<PAGE>

     the  other  Credit  Documents  with a  Commitment  as  set  forth  in  such
     documentation.  Any such  Added Bank shall on the date it is deemed a party
     to this  Agreement  purchase  from the other Banks its  Percentage  (or the
     increase  in its  Percentage,  in the  case of an  Added  Bank  which is an
     existing Bank) of the Loans outstanding. Notwithstanding anything contained
     in  this  Section  2.12(b)  to  the  contrary,   the  aggregate  amount  of
     Commitments may not at any time exceed $300,000,000  without the consent of
     the Required Banks.


SECTION 3         FEES AND EXTENSIONS.

Section 3.1       Fees.

     (a) Facility Fee. From and after the Effective Date,  Borrower shall pay to
the Administrative Agent for the ratable account of the Banks in accordance with
their  Percentages  a facility  fee  accruing  at a rate per annum  equal to the
Facility Fee Rate on the average daily amount of the  Commitments  (whether used
or unused),  or if the Commitments have expired or terminated,  on the principal
amount of Loans then outstanding. Such facility fee is payable in arrears on the
last Business Day of each calendar  quarter and on the Termination  Date, and if
the Commitments  are terminated in whole prior to the Termination  Date, the fee
for the period to but not including the date of such  termination  shall be paid
in whole on the date of such termination.

     (b) [Intentionally Omitted].

     (c)  Utilization  Fee.  From and after the Effective  Date,  for any day on
which (i) the aggregate principal amount of Total Loans and L/C Obligations then
outstanding  exceeds thirty three percent (33%) of the Total Commitments then in
effect or (ii) the Commitments have been terminated by the Administrative  Agent
or the Lenders in  accordance  with this  Agreement,  Borrower  shall pay to the
Administrative  Agent for the ratable  account of the Banks in  accordance  with
their  Percentages a  utilization  fee accruing at a rate per annum equal to the
Utilization Fee Rate on the aggregate  amount of Total Loans and L/C Obligations
outstanding  on such date.  Such fee is payable in arrears on the last  Business
Day of each calendar quarter and on the Termination Date, and if the Commitments
are terminated in whole prior to the Termination Date, the fee for the period to
but not  including  the date of such  termination  shall be paid in whole on the
date of such  termination.  The utilization fee payable pursuant to this Section
3.2(c) shall be one and the same,  and not in addition to, the  utilization  fee
payable by the Borrower  under the 3-Year Credit  Agreement and shall be divided
among this  Agreement  and the  3-Year  Credit  Agreement  pro rata based on the
percentage  which the amount of Loans  outstanding  under this  Agreement on the
date such fee accrued  comprises of the aggregate  amount of Total Loans and L/C
Obligations outstanding on such date.

     (d) Arranger Fees. Borrower shall pay to the Arrangers for the sole account
of the  Arrangers  the fees agreed to between the  Arrangers and Borrower in the
Fee Letter or as otherwise agreed in writing among them.

     (e) Fee  Calculations.  All fees  payable  under  this  Agreement  shall be
payable  in U.S.  Dollars  and shall be  computed  on the basis of a year of 360
days, for the actual number of days elapsed. All determinations of the amount of
fees  owing  hereunder  (and  the  components  thereof)

                                       21
<PAGE>

shall be made by the  Administrative  Agent and shall be prima facie evidence of
the amount of such fee.

     Section  3.2  Extensions.   The  Borrower  may  request  that  each  Bank's
Commitment be renewed by providing notice of such requests to the Administrative
Agent  no  earlier  than 45 days  but no  later  than 30 days  prior to the then
existing  Termination Date (the "Existing  Termination Date") applicable to such
Banks.  If a Bank agrees,  in its individual and sole  discretion,  to renew its
Commitment,  such Bank (a "Renewing Bank") will notify the Administrative Agent,
in  writing,  of its  decision  to do so no  earlier  than 30 days  prior to the
Existing  Termination  Date  applicable  to such Bank (but in any event no later
than 20 days  prior  to the  Existing  Termination  Date).  If a Bank  does  not
affirmatively  notify  the Bank in  writing  of its  willingness  to  renew  its
Commitment  within such time period,  such Bank shall be deemed to have declined
the Borrower's  request.  Notwithstanding any provision of this Agreement to the
contrary,  any  notice by any Bank of its  willingness  to renew its  Commitment
shall be revocable by such Bank in its sole and absolute  discretion at any time
prior to the date which is 20 days prior to the related  Commitment  Termination
Date then in effect.  The  Administrative  Agent will  notify the  Borrower,  in
writing,  of each Bank's  decision  no later than 15 days prior to the  Existing
Termination  Date applicable to such Bank. The Renewing Banks'  Commitments will
be renewed  pursuant to an  amendment to this  Agreement  in form and  substance
satisfactory  to the Renewing  Banks,  provided  that (x) each  extension of the
Termination  Date pursuant to this Section 3.2 shall be for a period of 364 days
and (y) any such  extension  shall  only be  permitted  if more  than 50% of the
aggregate  Commitments as of the Termination Date then in effect are extended or
otherwise  committed  to by  Renewing  Banks  and any new  Banks.  Any Bank that
declines the Borrower's  request for a Commitment  renewal (a "Declining  Bank")
will have its Commitment  terminated on the Existing Termination Date applicable
to such Bank (without regard to any renewals by other Banks),  unless terminated
earlier in accordance with this  Agreement.  The Borrower will have the right to
accept  Commitments from Persons  acceptable to the  Administrative  Agent in an
amount up to the  amount of the  pre-termination  Commitments  of any  Declining
Banks,  provided that the Renewing  Banks will have the right to increase  their
Commitments  up to the amount of the  Declining  Banks'  Commitments  before the
Borrower will be permitted to substitute Persons for the Declining Banks.


     SECTION 4 PLACE AND APPLICATION OF PAYMENTS.

     Section 4.1 Place and Application of Payments. All payments of principal of
and  interest  on the  Loans,  and of all other  Obligations  and other  amounts
payable by  Borrower  under the Credit  Documents,  shall be made by Borrower in
U.S.  Dollars to the  Administrative  Agent by no later than 2:00 p.m. (New York
time) on the due date  thereof  at the  principal  office of the  Administrative
Agent in New York,  New York pursuant to the payment  instructions  set forth on
Part A of Schedule 4 hereof (or such other location in the, United States as the
Administrative Agent may designate to Borrower) for the benefit of the Person or
Persons entitled thereto.  Any payments received after such time shall be deemed
to have been received by the Administrative  Agent on the next Business Day. All
such payments  shall be made free and clear of, and without  deduction  for, any
set-off,  defense,  counterclaim,  levy,  or any other  deduction of any kind in
immediately  available funds at the place of payment. The Administrative  Agent,
will promptly  thereafter  cause to be  distributed  like funds  relating to the
payment of  principal  or interest on

                                       22
<PAGE>


Loans or  applicable  fees  ratably to the Banks and like funds  relating to the
payment of any other amount  payable to any Person to such Person,  in each case
to be applied in accordance with the terms of this Agreement.

     SECTION 5 REPRESENTATIONS AND WARRANTIES.

     The Borrower hereby  represents and warrants to each Bank as to itself and,
where the following representations and warranties apply to its Subsidiaries, as
to each Subsidiary of Borrower, as follows:

     Section  5.1  Corporate  Organization  and  Authority.   Borrower  is  duly
organized  and  existing in good  standing  under the laws of the state of South
Dakota; has all necessary corporate power to carry on its present business;  and
is duly licensed or qualified and in good standing in each jurisdiction in which
the nature of the business  transacted by it or the nature of the Property owned
or leased by it makes such licensing,  qualification or good standing  necessary
and in which the failure to be so licensed,  qualified or in good standing would
have a Material Adverse Effect.

     Section  5.2  Subsidiaries.  Schedule  5.2 (as  updated  from  time to time
pursuant to Section 7.1) hereto  identifies  each  Subsidiary  of Borrower,  the
jurisdiction of incorporation,  the percentage of issued and outstanding  shares
of each class of its capital  stock owned by the Borrower  and its  Subsidiaries
and, if such percentage is not one hundred percent (100%) (excluding  directors'
qualifying  shares as  required  by law),  a  description  of each  class of its
authorized  capital  stock and the  number of shares of each  class  issued  and
outstanding.  Each Subsidiary is duly incorporated and existing in good standing
as a corporation  under the laws of the jurisdiction of its  incorporation,  has
all  necessary  corporate  power to carry on its present  business,  and is duly
licensed or qualified  and in good  standing in each  jurisdiction  in which the
nature of the business  transacted by it or the nature of the Property  owned or
leased by it makes such  licensing or  qualification  necessary and in which the
failure to be so licensed or qualified would have a Material Adverse Effect. All
of the issued and outstanding  shares of capital stock of each Subsidiary  owned
directly or indirectly by Borrower are validly issued and  outstanding and fully
paid and  nonassessable  except as set forth on Schedule  5.2  hereto.  All such
shares  owned by Borrower  are owned  beneficially,  and of record,  free of any
Lien, except as permitted in Section 7.9.

     Section 5.3 Corporate  Authority and Validity of Obligations.  Borrower has
full right and  authority  to enter  into this  Agreement  and the other  Credit
Documents to which it is a party, to make the borrowings herein provided for, to
issue its Notes in  evidence  thereof,  to apply (and to have  applied)  for the
issuance of the Letters of Credit,  and to perform all of its obligations  under
the Credit Documents to which it is a party. Each Credit Document to which it is
a party has been  duly  authorized,  executed  and  delivered  by  Borrower  and
constitutes valid and binding obligations of Borrower  enforceable in accordance
with its terms,  except as such  enforceability  may be  limited by  bankruptcy,
insolvency,   reorganization,   moratorium   or  similar  laws   affecting   the
enforceability  of creditors'  rights  generally and by equitable  principles of
general  applicability  (regardless of whether such enforceability is considered
in a proceeding in equity or at law). No Credit Document, nor the performance or
observance  by Borrower of any of the matters or things  therein  provided  for,
contravenes any provision of law or any charter or by-law  provision of Borrower
or any  material  Contractual  Obligation  of or  affecting  Borrower  or any of


                                       23
<PAGE>

Borrower's  Properties  or results in or requires the creation or  imposition of
any Lien on any of the Properties or revenues of Borrower.

Section 5.4 Financial Statements. All financial statements heretofore delivered
to the Banks showing historical performance of Borrower for Borrower's fiscal
years ending on or before December 31, 2001, have been prepared in accordance
generally accepted accounting principles applied on a basis consistent, except
as otherwise noted therein, with that of the previous fiscal year. The unaudited
financial statements for the fiscal period ended June 30, 2002 have been
prepared in accordance generally accepted accounting principles applicable to
interim financial statements applied on a basis consistent, except as otherwise
noted therein, with the previous same fiscal period of Borrower in the prior
fiscal year (subject to normal year-end adjustments). Each of such financial
statements fairly presents on a consolidated basis the financial condition of
Borrower and its Subsidiaries as of the dates thereof and the results of
operations for the periods covered thereby. Borrower and its Subsidiaries have
no material contingent liabilities other than those disclosed in such financial
statements referred to in this Section 5.4 or in comments or footnotes thereto,
or in any report supplementary thereto, heretofore furnished to the Banks. Since
December 31, 2001, there has been no event or series of events which has
resulted in, or reasonably could be expected to result in, a Material Adverse
Effect.

     Section 5.5 No Litigation;  No Labor Controversies.(a)  Except as set forth
on Schedule 5.5, there is no litigation or governmental  proceeding  pending, or
to the knowledge of Borrower,  threatened, against Borrower or any Subsidiary of
Borrower  in which  there is a  reasonable  possibility  of an adverse  decision
which, if adversely determined,  could (individually or in the aggregate) have a
Material Adverse Effect.

     (b) Except as set forth on Schedule 5.5,  there are no labor  controversies
pending or, to the best knowledge of Borrower,  threatened  against  Borrower or
any Subsidiary of Borrower which could (individually or in the aggregate) have a
Material Adverse Effect.

     Section  5.6 Taxes.  Borrower  and its  Subsidiaries  have filed all United
States federal tax returns,  and all other foreign,  state,  local and other tax
returns,  required  to be filed and have paid all  taxes  due  pursuant  to such
returns or pursuant to any assessment  received by Borrower or any Subsidiary of
Borrower,  except such taxes,  if any, as are being  contested in good faith and
for which  adequate  reserves have been  provided.  No notices of tax liens have
been filed and no claims are being  asserted  concerning  any such taxes,  which
liens or claims are  material to the  financial  condition of Borrower or any of
its Subsidiaries  (individually or in the aggregate).  The charges, accruals and
reserves on the books of Borrower  and its  Subsidiaries  for any taxes or other
governmental charges are adequate and in conformance with GAAP.

     Section  5.7  Approvals.  No  authorization,  consent,  approval,  license,
exemption,  filing or registration  with any court or  governmental  department,
agency or  instrumentality,  nor any approval or consent of the  stockholders of
Borrower or any Subsidiary of Borrower or from any other Person, is necessary to
the valid  execution,  delivery or  performance by Borrower or any Subsidiary of
Borrower of any Credit Document to which it is a party.

     Section  5.8 ERISA.  With  respect to each  Plan,  Borrower  and each other
member of the Controlled  Group has fulfilled its obligations  under the minimum
funding  standards of and is

                                       24
<PAGE>

in  compliance  in all material  respects  with the Employee  Retirement  Income
Security  Act of 1974,  as  amended  ("ERISA"),  and with the Code to the extent
applicable  to it and has not  incurred  any  liability  to the Pension  Benefit
Guaranty  Corporation  ("PBGC")  or a Plan under  Title IV of ERISA other than a
liability to the PBGC for premiums under Section 4007 of ERISA. Neither Borrower
nor  any  Subsidiary  of  Borrower  has  any  contingent   liabilities  for  any
post-retirement  benefits  under  a  Welfare  Plan,  other  than  liability  for
continuation coverage described in Part 6 of Title I of ERISA.

     Section 5.9 Government  Regulation.  Neither Borrower nor any Subsidiary of
Borrower is an "investment company" within the meaning of the Investment Company
Act of 1940, as amended,  or a "registered  holding  company",  or a "Subsidiary
company" of a "registered  holding company",  or an "affiliate" of a "registered
holding company" or of a "Subsidiary company" of a "registered holding company",
within  the  meaning of the  Public  Utility  Holding  Company  Act of 1935,  as
amended.

     Section  5.10 Margin  Stock;  Use of  Proceeds.  Neither  Borrower  nor any
Subsidiary  of  Borrower  is  engaged  principally,  or as one  of  its  primary
activities, in the business of extending credit for the purpose of purchasing or
carrying  margin stock  ("margin  stock" to have the same  meaning  herein as in
Regulation  U of the Board of  Governors  of the Federal  Reserve  System).  The
proceeds of the Loans and Letters of Credit are to be used solely (i) to provide
liquidity  support  for  Borrower's  commercial  paper  program,  (ii)  to  fund
Borrower's  working capital needs, and (iii) for general  corporate  purposes of
Borrower.  Borrower  will not use the  proceeds  of any  Loan in a  manner  that
violates  any  provision  of  Regulation U or X of the Board of Governors of the
Federal Reserve System.

     Section 5.11 Licenses and  Authorizations;  Compliance  with Laws.  (a) (a)
Borrower and each of its  Subsidiaries has all necessary  licenses,  permits and
governmental  authorizations  to own and operate its  Properties and to carry on
its business as currently  conducted and contemplated.  Borrower and each of its
Subsidiaries is in compliance with all applicable laws, regulations,  ordinances
and orders of any governmental or judicial  authorities except for any such law,
regulation, ordinance or order which, the failure to comply therewith, could not
reasonably expected to have a Material Adverse Effect.

     (a) In the  ordinary  course  of its  business,  Borrower  and  each of its
Subsidiaries conduct an ongoing review of the effect of Environmental and Health
Laws on the  Properties  and all aspects of the business and  operations of such
Borrower and its  Subsidiaries  in the course of which such Borrower  identifies
and evaluates associated  liabilities and costs (including,  without limitation,
any  capital or  operating  expenditures  required  for  clean-up  or closure of
Properties currently or previously owned, any capital or operating  expenditures
required to achieve or maintain compliance with standards imposed by law and any
actual  or  potential  liabilities  to third  parties,  including  employees  or
governmental entities, and any related costs and expenses). On the basis of this
review, Borrower has reasonably concluded that Environmental and Health Laws are
unlikely to have any Material Adverse Effect.

     (b) Except as set forth on Schedule  5.11 (as amended  from time to time in
accordance with the provisions hereof),  neither the Borrower nor any Subsidiary
of Borrower  has given,  nor is it required to give,  nor has it  received,  any
notice, letter, citation, order, warning, complaint, inquiry, claim or demand to
or from any governmental entity or in connection with

                                       25
<PAGE>

any court  proceeding  which could  reasonably  have a Material  Adverse  Effect
claiming that:  (i) Borrower or any  Subsidiary of Borrower has violated,  or is
about to  violate,  any  Environmental  and  Health  Law;  (ii) there has been a
release, or there is a threat of release, of Hazardous Materials from Borrower's
or any of its Subsidiary's Property,  facilities,  equipment or vehicles;  (iii)
Borrower or any of its Subsidiary may be or is liable,  in whole or in part, for
the costs of cleaning up,  remediating  or  responding to a release of Hazardous
Materials;  or (iv) any of  Borrower's  or any of its  Subsidiary's  Property or
assets  are  subject  to a Lien in  favor  of any  governmental  entity  for any
liability,  costs or  damages,  under any  Environmental  and Health Law arising
from, or costs incurred by such governmental entity in response to, a release of
a Hazardous Materials.

     Section 5.12 Ownership of Property;  Liens. Borrower and each Subsidiary of
Borrower has good title to or valid  leasehold  interests  in all its  Property.
None of Borrower's or any Subsidiary's  Property is subject to any Lien,  except
as permitted in Section 7.9.

     Section  5.13  No  Burdensome  Restrictions;  Compliance  with  Agreements.
Neither  Borrower nor any  Subsidiary of Borrower is (a) party or subject to any
law,   regulation,   rule  or  order,  or  any  Contractual   Obligation,   that
(individually or in the aggregate)  materially  adversely  affects the business,
operations,  Property  or  financial  or other  condition  of  Borrower  and its
Subsidiaries  (individually  or in  the  aggregate)  or (b)  in  default  in the
performance,  observance or fulfillment of any of the obligations,  covenants or
conditions  contained  in any  agreement to which it is a party  (including  any
Contractual  Obligation),  which default could materially  adversely affects the
business,  operations,  Property or financial or other condition of Borrower and
its Subsidiaries (individually or in the aggregate).

     Section  5.14 Full  Disclosure.  All  information  heretofore  furnished by
Borrower  to  the  Administrative  Agent  or  any  Bank  for  purposes  of or in
connection with the Credit Documents or any transaction contemplated thereby is,
and all such information  hereafter  furnished by Borrower to the Administrative
Agent or any Bank will be, true and  accurate in all  material  respects and not
misleading.

     Section 5.15 Solvency. Borrower and each of its Subsidiaries,  individually
and on a consolidated basis, is Solvent.

     SECTION 6 CONDITIONS PRECEDENT.

     The  obligation of each Bank to effect a Borrowing  shall be subject to the
following conditions precedent:

     Section 6.1 Initial Credit Event.  Before or concurrently  with the initial
Credit Event:

          (a) The  Administrative  Agent shall have  received  for each Bank the
     favorable  written opinion of (i) Morgan,  Lewis & Bockius LLP,  counsel to
     Borrower, and (ii) General Counsel to the Borrower;

          (b) The Administrative  Agent shall have received for each Bank copies
     of Borrower's (i) Articles of  Incorporation,  together with all amendments
     and (ii) bylaws (or

                                       26
<PAGE>

     comparable  constituent  documents) and any amendments thereto,
     certified  in each  instance  by its  Secretary  or an  Assistant
     Secretary;

          (c) The Administrative  Agent shall have received for each Bank copies
     of resolutions of Borrower's  Board of Directors  authorizing the execution
     and  delivery  of  the  Credit   Documents  and  the  consummation  of  the
     transactions  contemplated thereby together with specimen signatures of the
     persons authorized to execute such documents on such Borrower's behalf, all
     certified in each instance by its Secretary or Assistant Secretary;

          (d) The  Administrative  Agent shall have  received for each Bank such
     Bank's duly executed  Note of Borrower  dated the date hereof and otherwise
     in compliance with the provisions of Section 2.10(a) hereof;

          (e) The Administrative  Agent shall have received for each Bank a duly
     executed  original  of (i) this  Agreement,  and (ii) a list of  Borrower's
     Authorized Representatives;

          (f) All legal  matters  incident to the  execution and delivery of the
     Credit Documents shall be satisfactory to the Banks;

          (g) The  Administrative  Agent  shall have  received  a duly  executed
     original of the Fee Letter;

          (h) The  Administrative  Agent  shall have  received  a duly  executed
     Compliance  Certificate  containing  financial  information  as of June 30,
     2002;

          (i) With the exception of the $75,000,000  First Mortgage Bonds issued
     by BHP, neither Borrower nor any of its Subsidiaries shall have, during the
     period from July 1, 2002 to the Effective Date, issued, incurred,  assumed,
     created,  become  liable  for,  contingently  or  otherwise,  any  material
     Indebtedness;

          (j) The Borrower  shall have provided a  certificate  stating that the
     conditions  set forth  precedent  set forth in this  Section  6.1 have been
     satisfied;

          (k) The Borrower shall have  converted,  continued or repaid each Loan
     previously  outstanding  so that the Effective  Date is the first day of an
     Interest Period for all outstanding Loans; and

          (l) The Borrower shall have paid to each Bank the applicable  fees for
     providing its Commitment under this Agreement; and

          (m) The Administrative  Agent shall have received such other documents
     and information as it may reasonably request.

     Section  6.2  All  Credit  Events.  As of the  time of  each  Credit  Event
hereunder:

          (a) The  Administrative  Agent shall have received the notice required
     by Section 2.5 hereof;

                                       27
<PAGE>

          (b) Each of the  representations and warranties set forth in Section 5
     hereof shall be and remain true and correct in all material  respects as of
     said time,  except  that if any such  representation  or  warranty  relates
     solely to an earlier date it need only remain true as of such date; and

          (c)  Borrower  shall be in full  compliance  with all of the terms and
     conditions  hereof,  and no Default or Event of Default shall have occurred
     and be continuing or would occur as a result of such Credit Event.

         Each request for a Credit Event shall be deemed to be a representation
and warranty by Borrower on the date of such Credit Event as to the facts
specified in paragraphs (b) and (c) of this Section 6.2.

          SECTION 7 COVENANTS.

     Borrower  covenants  and  agrees  that,  so  long  as any  Note  or Loan is
outstanding  hereunder,  or any Commitment is available to or in use by Borrower
hereunder,  except to the extent  compliance in any case is waived in writing by
the Required Banks:

     Section 7.1 Corporate  Existence;  Subsidiaries.  Borrower shall, and shall
cause  each  of  its  Subsidiaries  to,  preserve  and  maintain  its  corporate
existence,  subject to the provisions of Section 7.12 hereof.  Together with any
financial  statements  delivered pursuant to Section 7.6 hereof,  Borrower shall
deliver an  updated  Schedule  5.2 to  reflect  any  changes  from the  existing
Schedule 5.2.

     Section 7.2  Maintenance.  Borrower  will  maintain,  preserve and keep its
plants, Properties and equipment necessary to the proper conduct of its business
in  reasonably  good repair,  working  order and condition and will from time to
time make all reasonably necessary repairs,  renewals,  replacements,  additions
and  betterments  thereto  so that at all  times  such  plants,  Properties  and
equipment shall be reasonably preserved and maintained,  and Borrower will cause
each of its  Subsidiaries  to do so in respect of Property  owned or used by it;
provided,  however, that nothing in this Section 7.2 shall prevent Borrower or a
Subsidiary of Borrower from  discontinuing  the operation or  maintenance of any
such Properties if such  discontinuance is not  disadvantageous  to the Banks or
the holders of the Notes,  does not materially impair the operations of Borrower
or any Subsidiary of Borrower and is, in the judgment of Borrower,  desirable in
the conduct of its business or the business of its Subsidiaries.

     Section 7.3 Taxes.  Borrower  will duly pay and  discharge,  and will cause
each  of  its  Subsidiaries  duly  to  pay  and  discharge,  all  taxes,  rates,
assessments,  fees and  governmental  charges  upon or against it or against its
Properties, in each case before the same becomes delinquent and before penalties
accrue  thereon,  unless and to the extent that the same is being  contested  in
good faith by appropriate  proceedings and reserves in conformity with GAAP have
been provided therefor on the books of Borrower.

     Section 7.4 ERISA.  Borrower will, and will cause each of its  Subsidiaries
to, promptly pay and discharge all  obligations  and  liabilities  arising under
ERISA  of a  character  which if  unpaid  or  unperformed  might  result  in the
imposition  of a Lien against any of its  properties or assets and will promptly
notify the  Administrative  Agent of (i) the occurrence of any reportable

                                       28
<PAGE>

event (as defined in ERISA) affecting a Plan, other than any such event of which
the PBGC has waived notice by  regulation,  (ii) receipt of any notice from PBGC
of its intention to seek  termination  of any Plan or  appointment  of a trustee
therefor,  (iii)  its or any of its  Subsidiaries'  intention  to  terminate  or
withdraw from any Plan, and (iv) the occurrence of any event  affecting any Plan
which could result in the incurrence by Borrower or any of its  Subsidiaries  of
any  material  liability,  fine or  penalty,  or any  material  increase  in the
contingent   liability  of  Borrower  or  any  of  its  Subsidiaries  under  any
post-retirement  Welfare Plan benefit.  The  Administrative  Agent will promptly
distribute to each Bank any notice it receives  from  Borrower  pursuant to this
Section 7.4.

     Section 7.5  Insurance.  Borrower will insure,  and keep insured,  and will
cause  each of its  Subsidiaries  to  insure,  and keep  insured,  with good and
responsible  insurance  companies,  all  insurable  Property  owned  by  it of a
character  usually  insured by companies  similarly  situated and operating like
Property.  To the extent  usually  insured by companies  similarly  situated and
conducting similar businesses,  Borrower will also insure, and cause each of its
Subsidiaries to insure,  employers' and public and product  liability risks with
good and  responsible  insurance  companies.  Borrower will, upon request of any
Bank,  furnish to such Bank a summary setting forth the nature and extent of the
insurance maintained pursuant to this Section 7.5.

     Section 7.6  Financial  Reports and Other  Information.  (a) Borrower  will
maintain a system of accounting in accordance  with GAAP and will furnish to the
Banks and their  respective duly  authorized  representatives  such  information
respecting the business and financial condition of Borrower and its Subsidiaries
as any Bank may reasonably request;  and without any request, the Borrower shall
deliver  to the  Administrative  Agent in form and  detail  satisfactory  to the
Administrative   Agent,  with  copies  for  each  Bank  in  form  and  substance
satisfactory to them, each of the following:

          (i) within 120 days after the end of each fiscal year of  Borrower,  a
     copy of Borrower financial  statements for such fiscal year,  including the
     consolidated  balance sheet of Borrower and its  Subsidiaries for such year
     and the related  statements of income and statements of cash flow,  each as
     certified by independent public accountants of recognized national standing
     selected  by  Borrower  in  accordance  with GAAP  with  such  accountants'
     unqualified  opinion to the effect that the financial  statements have been
     prepared  in  accordance  with  GAAP and  present  fairly  in all  material
     respects in accordance  with GAAP the  consolidated  financial  position of
     Borrower and its  Subsidiaries  as of the close of such fiscal year and the
     results of their  operations  and cash flows for the fiscal year then ended
     and that an examination of such accounts in connection  with such financial
     statements  has been made in accordance  with generally  accepted  auditing
     standards and,  accordingly,  such  examination  included such tests of the
     accounting  records and such other auditing  procedures as were  considered
     necessary in the circumstances,  provided that if Borrower files its annual
     report on Form  10-K for the  applicable  annual  period,  and such  annual
     report contains the financial  statements and  accountants  certifications,
     opinions  and  statements  described  above,  the  Borrower may satisfy the
     requirements of this Section  7.6(a)(i) by delivering a copy of such annual
     report to each Bank.  Together  with such  information  the Borrower  shall
     provide to each Bank such consolidating information as may be necessary for
     the Banks to determine the Borrower's compliance with Section 7.17 hereof;

                                       29
<PAGE>

          (ii) within 60 days after the end of each of the first three quarterly
     fiscal  periods of Borrower,  a  consolidated  unaudited  balance  sheet of
     Borrower and its  Subsidiaries,  and the related  statements  of income and
     statements  of  cash  flow,  as of the  close  of such  period,  all of the
     foregoing prepared by Borrower in reasonable detail in accordance with GAAP
     and certified by Borrower's chief financial officer or corporate controller
     as fairly  presenting  the financial  condition as at the dates thereof and
     the results of operations for the periods covered thereby, provided that if
     Borrower files a Form 10-Q for the applicable  quarterly  period,  and such
     quarterly  report  contains the  financial  statements  and  certifications
     described  above, the Borrower may satisfy the requirements of this Section
     7.6(a)(ii)  by  delivering  a copy of such  quarterly  report to each Bank.
     Together with such information the Borrower shall provide to each Bank such
     consolidating  information  as may be necessary  for the Banks to determine
     the Borrower's compliance with Section 7.17 hereof;

          (iii) within the period provided in subsection (i) above,  the written
     statement  of the  accountants  who  certified  the  audit  report  thereby
     required  that in the course of their audit they have obtained no knowledge
     of any Default or Event of Default,  or, if such  accountants have obtained
     knowledge of any such Default or Event of Default,  they shall  disclose in
     such statement the nature and period of the existence thereof; and

          (iv) promptly after the sending or filing thereof, copies of all proxy
     statements,  financial  statements  and  reports  Borrower  or  any  of its
     Subsidiaries sends to their shareholders,  and copies of all other regular,
     periodic and special reports and all  registration  statements  Borrower or
     any of its Subsidiaries file with the SEC or any successor thereto, or with
     any national securities exchanges.

     (b) Each financial  statement furnished to the Banks pursuant to subsection
(i) or  (ii)  of  this  Section  7.6  shall  be  accompanied  by  (A) a  written
certificate signed by Borrower's chief financial officer or corporate controller
to the effect  that (i) no Default or Event of Default has  occurred  during the
period  covered by such  statements  or, if any such Default or Event of Default
has occurred during such period,  setting forth a description of such Default or
Event of Default and specifying the action,  if any, taken by Borrower to remedy
the same, (ii) the representations and warranties  contained in Section 5 hereof
are true and correct in all material respects as though made on the date of such
certificate (other than those made solely as of an earlier date, which need only
remain true as of such date), except as otherwise  described therein,  and (B) a
Compliance  Certificate  in the  form of  Exhibit  B hereto  showing  Borrower's
compliance  with the covenants set forth in Sections  7.9,  7.11,  7.12 and 7.14
through 7.19 hereof.

     (c) Borrower  will  promptly  (and in any event within three  Business Days
after  an  officer  of  Borrower  has  knowledge  thereof)  give  notice  to the
Administrative Agent and each Bank:

          (i) of the occurrence of any Default or Event of Default;

          (ii) any event or condition which could reasonably be expected to have
     a Material Adverse Effect;

                                       30
<PAGE>

          (iii)  of any  litigation  or  governmental  proceeding  of  the  type
     described in Section 5.5 hereof;

          (iv) of any  material  change  in the  information  set  forth  on the
     Schedules hereto; and

          (v) of the entering  into of any  Long-Term  Guaranties,  and Borrower
     shall  promptly  provide the  Administrative  Agent with a copy of any such
     Guarantee and any modification to such Guarantee.

     Section 7.7 Bank Inspection Rights.  For purposes of confirming  compliance
with the Credit  Documents or after the occurrence and during the continuance of
an Event of Default, upon reasonable notice from the Administrative Agent or the
Required  Banks,  Borrower will, at Borrower's  expense,  permit such Banks (and
such Persons as any Bank may  designate)  during normal  business hours to visit
and inspect, under Borrower's guidance, any of the Properties of Borrower or any
of its Subsidiaries,  to examine all of their books of account, records, reports
and other papers,  to make copies and extracts  therefrom,  and to discuss their
respective  affairs,  finances  and  accounts  with their  respective  officers,
employees and with their independent  public  accountants (and by this provision
Borrower authorizes such accountants to discuss with the Banks (and such Persons
as any  Bank may  designate)  the  finances  and  affairs  of  Borrower  and its
Subsidiaries)  all at such  reasonable  times and as often as may be  reasonably
requested;  provided,  however,  that except upon the  occurrence and during the
continuation  of any Default or Event of  Default,  not more than one such visit
and inspection may be conducted each calendar quarter.

     Section 7.8 Conduct of Business.  Neither  Borrower nor any  Subsidiary  of
Borrower will engage in any line of business  other than business  activities in
the field of (i) cogeneration and related thermal uses, (ii) energy  production,
(iii)  energy  development,  (iv) energy  recovery,  (v) utility  operation  and
management,  (vi) demand side management services,  (vii) energy trading, (viii)
management of investment  funds which invest in energy  related  businesses  and
investments in such funds, (ix) hedging but not speculative  activities relating
to any  of  the  foregoing  lines  of  business,  (x)  telecommunications,  (xi)
management  and  operating  services  related to any of the  foregoing  lines of
business,  and (xii) other  businesses not described in the foregoing so long as
the  Investments  and  expenses  made in such other  businesses  does not exceed
$20,000,000.

     Section  7.9  Liens.  Borrower  will not,  and will not  permit  any of its
Subsidiaries  to, create,  incur,  permit to exist or to be incurred any Lien of
any kind on any Property  owned by the Borrower or any  Subsidiary  of Borrower;
provided,  however,  that this  Section  7.9 shall  not apply to or  operate  to
prevent:

          (a) Liens  arising  by  operation  of law in respect  of  Property  of
     Borrower or any of its  Subsidiaries  which are  incurred  in the  ordinary
     course of business  which do not in the aggregate  materially  detract from
     the value of such  Property  or  materially  impair the use  thereof in the
     operation of the business of Borrower or any of its Subsidiaries;

          (b) Liens  securing  Non-Recourse  Indebtedness  of any  Subsidiary of
     Borrower,  provided  that any such Lien is  limited to the  Property  being
     financed  or

                                       31
<PAGE>

     refinanced  by such  Indebtedness  and the stock (or  similar equity
     interest)  of  the  Subsidiary  which  incurred  such  Non-Recourse
     Indebtedness;

          (c) Liens for taxes or  assessments  or other  government  charges  or
     levies on  Borrower  or any  Subsidiary  of  Borrower  or their  respective
     Properties   which  are  being  contested  in  good  faith  by  appropriate
     proceedings  and for  which  reserves  in  conformity  with  GAAP have been
     provided on the books of Borrower;  provided that the  aggregate  amount of
     liabilities (including interest and penalties,  if any) of Borrower and its
     Subsidiaries  secured by such Liens shall not exceed $20,000,000 at any one
     time outstanding;

          (d) Liens arising out of judgments or awards  against  Borrower or any
     Subsidiary  of Borrower,  or in  connection  with surety or appeal bonds in
     connection with bonding such judgments or awards,  the time for appeal from
     which or petition  for  rehearing  of which shall not have  expired or with
     respect to which such Borrower or such  Subsidiary  shall be prosecuting an
     appeal or  proceeding  for review,  and with respect to which it shall have
     obtained a stay of execution  pending such appeal or proceeding for review;
     provided that the aggregate amount of liabilities  (including  interest and
     penalties,  if any) of Borrower and its Subsidiaries  secured by such Liens
     shall not exceed $20,000,000 at any one time outstanding;

          (e) Survey exceptions or encumbrances,  easements or reservations,  or
     rights of others for  rights-of-way,  utilities and other similar purposes,
     or zoning or other  restrictions as to the use of real properties which are
     necessary for the conduct of the  activities of Borrower and any Subsidiary
     of  Borrower  or which  customarily  exist on  properties  of  corporations
     engaged in similar  activities  and similarly  situated and which do not in
     any event  materially  impair their use in the operation of the business of
     Borrower or any Subsidiary of Borrower;

          (f) Liens  existing  on the date  hereof  and listed on  Schedule  7.9
     hereto;

          (g) Liens securing (i) Indebtedness  evidencing the deferred  purchase
     price of newly acquired  property or incurred to finance the acquisition of
     personal  property  of  Borrower or a  Subsidiary  of Borrower  used in the
     ordinary  course of business of Borrower or a Subsidiary of Borrower,  (ii)
     Capitalized  Lease  Obligations,  and (iii)  the  performance  of  tenders,
     statutory  obligations,  bids, leases or other similar  obligations  (other
     than for borrowed money) entered into in the ordinary course of business or
     to secure obligations on performance bonds; provided, that such Liens shall
     only be permitted to the extent the aggregate  amount of  Indebtedness  and
     other  obligations  secured by all such Liens does not exceed five  percent
     (5%) of  Consolidated  Assets as reflected on the most recent balance sheet
     delivered by Borrower pursuant to Section 7.6;

          (h) Liens in favor of carriers,  warehousemen,  mechanics, materialmen
     and  landlords  granted in the ordinary  course of business for amounts not
     overdue  or  being  diligently  contested  in  good  faith  by  appropriate
     proceedings  and for which adequate  reserves in accordance with GAAP shall
     have been set aside on its books;

                                       32
<PAGE>


          (i) Liens incurred or deposits made in the ordinary course of business
     in connection with worker's  compensation,  unemployment insurance or other
     forms of governmental insurance or benefits;

          (j) Liens relating to synthetic  lease  arrangements  of Borrower or a
     Subsidiary  of  Borrower,  provided  that (i) such Lien is  limited  to the
     Property  being  leased,  and (ii) to the  extent  the  lessor or any other
     Person  has  recourse  to the  Borrower,  any  Subsidiary  or any of  their
     Property  (other than the  Property  being so leased),  through a Guarantee
     (including a residual guarantee) or otherwise, such Lien shall be permitted
     if Borrower  has  included  the  recourse  portion of such  obligations  as
     Indebtedness for all purposes (including  financial covenant  calculations)
     under the Credit Documents;

          (k) Liens on  assets  of the  Marketing  Subsidiaries  granted  in the
     ordinary  course of business  securing  the  reimbursement  obligations  of
     Marketing  Subsidiaries  with  respect to letters of credit and any working
     capital  facility of the  Marketing  Subsidiaries  so long as the holder of
     such reimbursement  obligation or provider of such working capital facility
     has no recourse against  Borrower or a Consolidated  Subsidiary of Borrower
     other than such Marketing  Subsidiary or any of their other assets (whether
     directly,  through a  Guarantee  or  otherwise)  other than  pursuant  to a
     Guarantee permitted pursuant to Section 7.15(f);

          (l)  Liens  securing  Indebtedness  issued  pursuant  to that  certain
     Restated  and Amended  Indenture  of Mortgage and Deed of Trust dated as of
     September 1, 1999 between Borrower and The Chase Manhattan Bank, as trustee
     (and any successor trustee thereunder); and

          (m) Any extension,  renewal or replacement (or successive  extensions,
     renewals or  replacements)  in whole or in part of any Lien  referred to in
     the foregoing  paragraphs (a) through (j),  inclusive,  provided,  however,
     that the principal amount of Indebtedness  secured thereby shall not exceed
     the  principal  amount  of  Indebtedness  so  secured  at the  time of such
     extension,  renewal or  replacement,  and that such  extension,  renewal or
     replacement  shall be limited to the Property which was subject to the Lien
     so extended, renewed or replaced.

provided, that the foregoing paragraphs shall not be deemed under any
circumstance to permit a Lien to exist on any capital stock or other equity
interests of the Material Subsidiaries.

     Section 7.10 Use of Proceeds; Regulation U. The proceeds of each Borrowing,
and the credit  provided by Letters of Credit,  will be used by Borrower  solely
(i) to provide liquidity support for Borrower's  commercial paper program,  (ii)
to fund  Borrower's  working  capital  needs,  and (iii) for  general  corporate
purposes of Borrower.  Borrower  will not use any part of the proceeds of any of
the Borrowings or of the Letters of Credit directly or indirectly to purchase or
carry any margin stock (as defined in Section  5.10 hereof) or to extend  credit
to others for the purpose of purchasing or carrying any such margin stock.

     Section 7.11 Sales and  Leasebacks.  Borrower  will not, nor will it permit
any of its Subsidiaries to, enter into any arrangement with any bank,  insurance
company or other lender or investor providing for the leasing by Borrower or any
Subsidiary  of Borrower of any  Property

                                       33
<PAGE>

theretofore  owned by it and which has been or is to be sold or  transferred  by
such  owner to such  lender or  investor  if the total  amount of rent and other
obligations of the Borrower and its Subsidiaries under such lease, when combined
with all rent and other  obligations of Borrower and its Subsidiaries  under all
such leases,  would exceed $30,000,000 in the aggregate,  provided that Borrower
and its Subsidiaries  may engage in synthetic lease  transactions so long as the
Borrower's or such Subsidiary's, as applicable, obligations under such synthetic
leases are  included  as  Indebtedness  for all  purposes  (including  financial
covenant calculations) under the Credit Documents.

     Section 7.12 Mergers, Consolidations and Sales of Assets.

          (a)  Borrower  will  not,  and will  not  permit  any of its  Material
     Subsidiaries  to,  (i)  consolidate  with or be a party to merger  with any
     other  Person  or  (ii)  sell,  lease  or  otherwise  dispose  of  all or a
     "substantial  part"  of  the  assets  of  Borrower  and  its  Subsidiaries;
     provided,  however,  that (w) the  foregoing  shall not  prohibit any sale,
     lease,  transfer or disposition to which the Required Banks have consented,
     such consent not to by unreasonably  withheld if (A) such  transaction does
     not  result in a  downgrade  of either  Borrower's  S&P  Rating or  Moody's
     Rating,   (B)  such  transaction  is  for  cash   consideration  (or  other
     consideration  acceptable to the Required Banks) in an amount not less than
     the fair market value of the applicable  assets,  and (C) such transaction,
     when combined with all other such  transactions,  would not have a Material
     Adverse Effect,  taken as a whole, (x) any Subsidiary of Borrower may merge
     or  consolidate  with or into or sell,  lease or otherwise  convey all or a
     substantial  part of its  assets to  Borrower  or any  Subsidiary  of which
     Borrower holds (directly or indirectly) at least the same percentage equity
     ownership;  provided  that in any such  merger or  consolidation  involving
     Borrower,  Borrower shall be the surviving or continuing  corporation,  (y)
     Borrower and its Subsidiaries may sell inventory,  reserves and electricity
     in the  ordinary  course of  business,  and (z)  Borrower  may enter into a
     merger with, or acquisition of all of, another Person so long as:

     (1)  Borrower is the surviving entity,

     (2)  unless  consented  to by  the  Required  Banks,  no  downgrade  in the
          Borrower's S&P Rating or Moody's Rating would occur as a result of the
          consummation of such a transaction,

     (3)  if such  transaction  is an  acquisition,  the Board of Directors  (or
          similar  governing  body) of the Person  being  acquired  has approved
          being so acquired,

     (4)  no Default or Event of Default would has occurred and is continuing at
          the time of, or would occur as a result of, such transaction.

     As used in this Section 7.12(a), a sale, lease,  transfer or disposition of
assets during any fiscal year shall be deemed to be of a  "substantial  part" of
the  consolidated  assets of Borrower and its Subsidiaries if the net book value
of such  assets,  when  added to the net book  value of all other  assets  sold,
leased,  transferred  or  disposed  of by  the  Borrower  and  its  Subsidiaries
(excluding  the  Marketing  Subsidiaries)  during  such  fiscal year (other than
inventory,  reserves and electricity in the ordinary course of business) exceeds
ten  percent  (10%)  of the  total  assets  of

                                       34
<PAGE>

Borrower and its Consolidated  Subsidiaries,  determined on a consolidated basis
as of the last day of the immediately preceding fiscal year.

          (b) Except as permitted pursuant to Section 7.14 hereof, Borrower will
     not  sell,  transfer  or  otherwise  dispose  of,  or  permit  any  of  its
     Subsidiaries to issue,  sell,  transfer or otherwise dispose of, any shares
     of stock of any class  (including  as "stock" for purposes of this Section,
     any warrants,  rights or options to purchase or otherwise  acquire stock or
     other  Securities  exchangeable  for  or  convertible  into  stock)  of any
     Subsidiary of Borrower,  except to Borrower or a Wholly-Owned Subsidiary of
     Borrower or except for the purpose of qualifying directors.

     Section 7.13 Use of Property and Facilities;  Environmental  and Health and
Safety Laws.

          (a) Borrower will, and will cause each of its  Subsidiaries to, comply
     in all material  respects with the  requirements of all  Environmental  and
     Health Laws  applicable  to or  pertaining  to the  Properties  or business
     operations of Borrower or any Subsidiary of Borrower.  Without limiting the
     foregoing,  Borrower will not, and will not permit any Person to, except in
     accordance  with applicable  law,  dispose of any Hazardous  Material into,
     onto or upon any real property  owned or operated by Borrower or any of its
     Subsidiaries.

          (b) Borrower will promptly provide the Banks with copies of any notice
     or other instrument of the type described in Section 5.11(b) hereof, and in
     no event later than five (5) Business  Days after an officer of Borrower or
     a Subsidiary of Borrower receives such notice or instrument.

     Section 7.14  Investments,  Acquisitions,  Loans,  Advances and Guaranties.
Borrower will not, nor will it permit any Subsidiary of Borrower to, directly or
indirectly,  make,  retain or have outstanding any investments  (whether through
purchase of stock or  obligations or otherwise) in, or loans or advances to, any
other Person,  or acquire all or any substantial  part of the assets or business
of any other  Person or division  thereof,  or be or become  liable as endorser,
guarantor,  surety or otherwise (such as liability as a general partner) for any
debt,  obligation  or  undertaking  of any other Person,  or otherwise  agree to
provide funds for payment of the obligations of another, or supply funds thereto
or invest  therein or otherwise  assure a creditor of another  against  loss, or
apply for or become liable to the issuer of a letter of credit which supports an
obligation  of another,  or  subordinate  any claim or demand it may have to the
claim  or  demand  of any  other  Person  (cumulatively,  all  of the  foregoing
"Investments"); provided, however, that the foregoing provisions shall not apply
to nor operate to prevent:

          (a) investments in direct  obligations of the United States of America
     or of any agency or  instrumentality  thereof whose obligations  constitute
     full faith and credit  obligations of the United States of America provided
     that any  such  obligation  matures  within  one  year  from the date it is
     acquired by Borrower or Subsidiary;

          (b)  investments  in commercial  paper rated P-1 by Moody's  Investors
     Services,  Inc. or A-1 by Standard & Poor's Corporation maturing within one
     year of its date of issuance;

                                       35
<PAGE>


          (c)  investments in  certificates of deposit issued by any Bank or any
     United States  commercial  bank having capital and surplus of not less than
     $200,000,000  maturing within one year from the date of issuance thereof or
     in banker's  acceptances endorsed by any Bank or other such commercial bank
     and maturing within six months of the date of acceptance;

          (d) investments in repurchase obligations with a term of not more than
     seven  (7)  days  for  underlying  securities  of the  types  described  in
     subsection (a) above entered into with any bank meeting the  qualifications
     specified in subsection  (c) above,  provided all such  agreements  require
     physical  delivery of the securities  securing such  repurchase  agreement,
     except those delivered through the Federal Reserve Book Entry System;

          (e)  investments in money market funds that invest  solely,  and which
     are  restricted  by  their  respective   charters  to  invest  solely,   in
     investments of the type described in the immediately  preceding subsections
     (a), (b), (c) and (d) above;

          (f)  ownership  of  stock,   obligations  or  securities  received  in
     settlement of debts (created in the ordinary  course of business)  owing to
     Borrower or any Subsidiary;

          (g)  endorsements  of  negotiable  instruments  for  collection in the
     ordinary course of business;

          (h) loans and advances to employees in the ordinary course of business
     for travel, relocation, and similar purposes;

          (i)  Investments (i) existing on the Effective Date in Subsidiaries of
     Borrower,  (ii) existing on the Effective  Date and  identified in Schedule
     7.14 hereof, or (iii) consisting of intercompany  loans permitted  pursuant
     to Section 7.15(e);

          (j) Investments  constituting (i) accounts  receivable  arising,  (ii)
     trade debt granted,  or (iii) deposits made in connection with the purchase
     price  of  goods  or  services,  in each  case in the  ordinary  course  of
     business;

          (k) Investments in Persons other than Marketing  Subsidiaries  engaged
     in lines of business related to the lines of business  described in Section
     7.8 so long as (i) both before and after giving  effect to such  Investment
     no Default of Event of Default shall have occurred and be continuing,  (ii)
     such  Investments  do not permit any  creditor of such  Person  recourse to
     Borrower or any other  Subsidiary of Borrower or any of their assets (other
     than the assets and/or the stock or similar equity interest of such Person)
     and  (iii) if such  Investments  are in  Persons  engaged  in the  lines of
     business  described in clause (xii) of Section 7.8,  such  Investments  and
     expenses in the  aggregate  do not exceed  $20,000,000  outstanding  at any
     time;

          (l)  Guaranties,  other  than  Long-Term  Guaranties,  so long as such
     Indebtedness is permitted pursuant to Section 7.15;

          (m) acquisitions permitted pursuant to Section 7.12(a);

                                       36
<PAGE>


          (n) Investments constituting Long-Term Guaranties other than Long-Term
     Guarantees of Indebtedness of the Marketing Subsidiaries;

          (o) (i) Investments in Marketing  Subsidiaries (other than Investments
     in Marketing  Subsidiaries  consisting  of Guaranties  of  Indebtedness  of
     Marketing  Subsidiaries) existing on August 28, 2001 and listed on Schedule
     7.14 and (ii)  Investments  consisting  of Guaranties  of  Indebtedness  of
     Marketing  Subsidiaries  in existence on the Effective Date and Investments
     in Marketing  Subsidiaries made after the Effective Date (including through
     Guaranties (including Long-Term Guaranties))  provided,  that the aggregate
     amount of Investments  permitted by this clause (ii) when combined with the
     amount  of  intercompany   Indebtedness  owing  by  Marketing  Subsidiaries
     permitted  pursuant  to  Section  7.15(e)(iii)  shall not in the  aggregate
     exceed  $10,000,000  outstanding at any time (it being  understood that any
     increase  in  the  value  of  any  such  Investment   attributable  to  the
     undistributed  net  earnings  of the  Marketing  Subsidiaries  shall not be
     deemed a violation of this Section 7.14(o)); and

          (p) Investments consisting of promissory notes issued in consideration
     for the sale by the Borrower or a Subsidiary  of a portion of the stock (or
     similar equity interests) of a Subsidiary where (i) such note is secured by
     the stock (or similar equity  interest)  sold, and (ii) one of the purposes
     of such sale is to ensure that such  Subsidiary  qualifies as a "qualifying
     facility"  under the Public  Utility  Regulatory  Policies Act of 1978,  as
     amended

     Any Investment which when made complies with the requirements of paragraphs
(a) through (e) may continue to be held  notwithstanding that such Investment if
made thereafter would not comply with such requirements;

     In determining the amount of investments, acquisitions, loans, advances and
guarantees permitted under this Section 7.14, investments and acquisitions shall
always be taken at the  original  cost  thereof  (regardless  of any  subsequent
appreciation or depreciation therein),  loans and advances shall be taken at the
principal amount thereof then remaining unpaid, and guarantees shall be taken at
the amount of obligations guaranteed thereby.

     Section 7.15  Restrictions on Indebtedness.  Borrower will not, nor will it
permit any  Subsidiary  of Borrower to, issue,  incur,  assume,  create,  become
liable for,  contingently or otherwise,  or have  outstanding any  Indebtedness;
provided,  however, that the foregoing provisions shall not restrict nor operate
to prevent the following Indebtedness, so long as the incurrence and maintenance
of such Indebtedness  would not cause the Borrower to be in violation of Section
7.17 hereof if  compliance  with such  covenant were measured on the date of the
incurrence of such Indebtedness:

          (a) the Obligations;

          (b) Non-Recourse Indebtedness of any Project Finance Subsidiary;

          (c) so long as the Borrower  would be in compliance  with Section 7.17
     hereof  (calculated  as of the date of,  and after  giving  affect  to, the
     incurrence  of  such   Indebtedness),   secured   Indebtedness   (excluding
     Indebtedness of the type described in (e),


                                       37
<PAGE>

     (f),  and (g) below but  including  the pledge of stock or  similar  equity
     interest of any Project  Finance  Subsidiary or any  Subsidiary  which is a
     special  purpose  entity  whose sole purpose is to own the stock or similar
     equity interest of a Project Finance  Subsidiary) (A) set forth on Schedule
     7.15(b) hereto,  and (B) (i) of BHP, (ii) evidencing the deferred  purchase
     price of newly acquired  property or incurred to finance the acquisition of
     personal  property of the Borrower or a Subsidiary  of the Borrower used in
     the  ordinary  course of business  of the  Borrower  or  Subsidiary,  (iii)
     constituting Capitalized Lease Obligations or with respect to synthetic (or
     similar type) lease  arrangements,  or (iv) incurred in connection with the
     performance  of  tenders,  statutory  obligations,  bids,  leases  or other
     similar  obligations  (other than for borrowed  money)  entered into in the
     ordinary course of business or to secure  obligations on performance bonds;
     provided,  that the  aggregate  amount of  Indebtedness  permitted  by this
     clause  (B) at any time  outstanding  shall not  exceed 5% of  Consolidated
     Assets as  reflected  on the most recent  balance  sheet  delivered  by the
     Borrower  pursuant to Section 7.6,  provided that Borrower  shall  promptly
     provide  the  Administrative   Agent  with  a  copy  of  any  documentation
     evidencing such  Indebtedness in excess of $25,000,000 and any modification
     to such Indebtedness;

          (d) so long as the Borrower  would be in compliance  with Section 7.17
     hereof  (calculated  as of the date of,  and after  giving  affect  to, the
     incurrence   of   such   Indebtedness),   other   Indebtedness   (excluding
     Indebtedness  of the type  described  in (e),  (f), and (g) below) which is
     unsecured and either junior in right of payment to the  Obligations or pari
     passu  to the  Obligations  or is  equally  and  ratably  secured  with the
     Obligations,   provided   that   Borrower   shall   promptly   provide  the
     Administrative  Agent  with a copy  of any  documentation  evidencing  such
     Indebtedness  in  excess  of  $25,000,000  and  any  modification  to  such
     Indebtedness;

          (e) intercompany  loans (i) from (x) Subsidiary to Borrower so long as
     such  loans  are  subordinated  to  the  Obligations  on  terms  reasonably
     satisfactory to the Administrative  Agent, and (y) Borrower to a Subsidiary
     of  Borrower,  (ii)  among  Wholly-Owned  Subsidiaries,  and  (iii)  from a
     Subsidiary of Borrower to a Marketing Subsidiary,  so long as the aggregate
     amount of such loans from time to time owing by the Marketing  Subsidiaries
     does not exceed the difference  between (I) $10,000,000,  less (II) the sum
     of (A) the aggregate amount of Guaranties  outstanding  pursuant to Section
     7.15(f), and (B) the aggregate amount of other Investments then made in the
     Marketing Subsidiaries pursuant to Section 7.14(o)(ii) (it being understood
     that to the extent such limit is exceeded solely as a result of an increase
     in the value of any such Investment  attributable to the  undistributed net
     earnings of the Marketing Subsidiaries,  it shall not be deemed a violation
     of this Section 7.15(e));

          (f)  Indebtedness  consisting of Guaranties of the Indebtedness of the
     Marketing Subsidiaries (including Long-Term Guaranties), provided that such
     Indebtedness  shall only be permitted to the extent the aggregate amount of
     such Indebtedness, when added to the sum of (i) the aggregate amount of all
     intercompany loans made to the Marketing  Subsidiaries  pursuant to Section
     7.15(e),  plus (ii) the aggregate  amount of all other  Investments made in
     Marketing  Subsidiaries  pursuant to Section  7.14(o)(ii),  does not exceed
     $10,000,000 (it being  understood that to the extent such limit is exceeded
     solely  as a result  of an  increase  in the  value of any such

                                       38
<PAGE>


     Investment  attributable to the undistributed net earnings of the Marketing
     Subsidiaries,  it shall not be deemed a violation of this Section  7.15(f))
     provided,  further that Borrower shall promptly provide the  Administrative
     Agent  with a copy  of any  such  Guarantee  and any  modification  to such
     Guarantee;

          (g)  Indebtedness  of  the  Marketing   Subsidiaries  under  Marketing
     Subsidiary  Excluded Credit Facilities in an aggregate amount not to exceed
     the Marketing Subsidiary Indebtedness Limit;

          (h) Permitted Derivative Obligations; and

          (i)  Indebtedness   pursuant  to  Long-Term   Guaranties  (other  than
     Long-Term Guaranties of Indebtedness of Marketing Subsidiaries).

     Indebtedness  shall only be permitted under (e), (f), (h), and (i) above to
the  extent  such  Indebtedness  will  have  a  priority  of  payment  with  the
Obligations which is no greater than pari passu.

     Section  7.16  Consolidated  Net  Worth.  Borrower  will at the end of each
fiscal quarter maintain Consolidated Net Worth in an amount of not less than the
sum  of  (i)  $425,000,000  and  (ii)  fifty  percent  (50%)  of  the  aggregate
Consolidated Net Income, if positive, for the period beginning April 1, 2002 and
ending on the last day of such fiscal quarter.

     Section 7.17 Recourse  Leverage Ratio.  Borrower will not at the end of any
fiscal quarter permit the Recourse Leverage Ratio to exceed 0.65 to 1.00.

     Section 7.18 Fixed Charge  Coverage  Ratio.  Borrower will maintain a Fixed
Charge  Coverage Ratio of not less than  1.50:1.00,  as determined at the end of
each fiscal quarter.

     Section  7.19  Dividends  and  Other  Shareholder  Distributions.  (a)  (a)
Borrower  shall not (i) declare or pay any dividends or make a  distribution  of
any kind (including by redemption or purchase) on or relating to its outstanding
capital  stock,  or (ii) repay  (directly,  through  sinking  fund  payments  or
otherwise) any Indebtedness or other obligations  owing to a shareholder  unless
in either  circumstance  no Default or Event of Default exists prior to or would
result after giving effect to such action.

     (b) Except (i) as set forth on Schedule  7.19 and (ii) in  connection  with
Non-Recourse  Indebtedness of a Project Finance  Subsidiary,  Borrower will not,
and will not permit any of its Subsidiaries, directly or indirectly to create or
otherwise  cause  or  suffer  to  exist  or  become   effective  any  consensual
encumbrance or restriction of any kind on the ability of any such Subsidiary to:
(1) pay  dividends or make any other  distribution  on any of such  Subsidiary's
capital  stock owned by  Borrower or any  Subsidiary  of  Borrower;  (2) pay any
Indebtedness  owed to  Borrower  or any  other  Subsidiary;  (3)  make  loans or
advances  to  Borrower  or any  other  Subsidiary;  or (4)  transfer  any of its
property or assets to Borrower or any other Subsidiary.

     Section 7.20 No Negative  Pledge.  Except (i) as set forth on Schedule 7.19
and (ii) in  connection  with  Non-Recourse  Indebtedness  of a Project  Finance
Subsidiary,  the Borrower will not, and will not permit any of its  Subsidiaries
(other than Project Finance Subsidiaries),  directly

                                       39
<PAGE>


or  indirectly  to enter  into or assume any  agreement  (other  than  customary
non-assignment   and  no  sub-letting   provisions  in  leases  consistent  with
Borrower's  past practices and the Credit  Documents and, solely with respect to
the asset so financed,  Capitalized  Leases,  to the extent such Indebtedness is
permitted  herein)  prohibiting  the creation or assumption of any Lien upon its
properties or assets, whether now owned or hereafter acquired.

     Section 7.21 Transactions with Affiliates.  Borrower will not, and will not
permit any of its  Subsidiaries  to,  enter  into or be a party to any  material
transaction  or  arrangement  with any  Affiliate  of such  Person  (other  than
Borrower),  including without limitation, the purchase from, sale to or exchange
of Property with, any merger or consolidation  with or into, or the rendering of
any  service by or for,  any  Affiliate,  except in the  ordinary  course of and
pursuant to the  reasonable  requirements  of  Borrower's  or such  Subsidiary's
business and upon terms no less  favorable to such  Borrower or such  Subsidiary
than could be obtained in a similar transaction involving a third-party.

     Section  7.22  Compliance  with  Laws.  Without  limiting  any of the other
covenants of Borrower in this Section 7, Borrower  will,  and will cause each of
its Subsidiaries to, conduct its business,  and otherwise be, in compliance with
all applicable laws,  regulations,  ordinances and orders of any governmental or
judicial  authorities;   provided,   however,  that  neither  Borrower  nor  any
Subsidiary  of  Borrower  shall  be  required  to  comply  with  any  such  law,
regulation,  ordinance  or order if the  failure to comply  therewith  could not
reasonably be expected to have a Material Adverse Effect.

     Section 7.23  Pari-Passu.  Borrower will at all times cause the Obligations
to rank at least pari  passu with all other  senior  unsecured  Indebtedness  of
Borrower.

     Section 7.24 Certain Subsidiaries. Unless pursuant to Indebtedness which is
authorized  pursuant to this Agreement,  Borrower will not, and the Subsidiaries
of Borrower will not, permit any creditor of a Marketing Subsidiary or a Project
Finance  Subsidiary  to have  recourse  to any  Borrower  or any  Subsidiary  of
Borrower  or any of their  assets  (other  than (i) the stock or similar  equity
interest  of the  applicable  Subsidiary  and (ii) with  respect to a  Permitted
Derivative  Obligation) other than recourse under Guaranties  permitted pursuant
to Sections 7.15(f) and (i).

     Section  7.25  Ratings.  Borrower  will at all times this  Agreement  is in
effect  maintain a S&P  Rating  and a Moody's  Rating (or if one or both of such
ratings are unavailable,  rating(s) from such other  recognized  national rating
agency or  agencies as may be  acceptable  to the  Administrative  Agent and the
Required Banks).

     Section 7.26 Liquidity Covenant.  Borrower will, as of the last day of each
fiscal quarter  commencing  with the fiscal  quarter  ending  December 31, 2002,
maintain Liquid Assets of at least $30,000,000.

     SECTION 8 EVENTS OF DEFAULT AND REMEDIES.

     Section  8.1  Events of  Default.  Any one or more of the  following  shall
constitute an Event of Default:

                                       40
<PAGE>

          (a) (i)  default in the payment  when due of any fees,  interest or of
     any other  Obligation  not  covered by clause  (ii) below and such  payment
     default  continues  for three (3) days or (ii)  default in the payment when
     due of the principal amount of any Loan;

          (b)  default  by  Borrower  or any  Subsidiary  in the  observance  or
     performance  of any  covenant  set forth in Section  7.1,  Section  7.6(c),
     Section 7.9 through 7.12,  Sections 7.14 through 7.21,  7.23, 7.24 and 7.25
     hereof;

          (c)  default  by  Borrower  or any  Subsidiary  in the  observance  or
     performance  of any  provision  hereof or of any other Credit  Document not
     mentioned  in (a) or (b) above,  which is not remedied  within  thirty (30)
     days after  notice  thereof  shall have been given to the  Borrower  by the
     Administrative Agent;

          (d) (i) failure to pay when due Indebtedness in an aggregate principal
     amount of (x)  $10,000,000 or more of Borrower or any Material  Subsidiary,
     or (ii) default  shall occur under one or more  indentures,  agreements  or
     other  instruments  under which any  Indebtedness of Borrower or any of its
     Material Subsidiary in an aggregate principal amount of $10,000,000 or more
     may be issued or created and such  default  shall  continue for a period of
     time sufficient to permit the holder or beneficiary of such Indebtedness or
     a trustee  therefor to cause the  acceleration  of the maturity of any such
     Indebtedness or any mandatory unscheduled  prepayment,  purchase or funding
     thereof,  or (iii) a default shall occur under the US Bank Credit Agreement
     or the Wells Fargo Credit Agreement;

          (e) any  representation or warranty made herein or in any other Credit
     Document by Borrower or any Subsidiary of Borrower,  or in any statement or
     certificate  furnished  pursuant  hereto or  pursuant  to any other  Credit
     Document by Borrower or any Subsidiary of Borrower,  or in connection  with
     any Credit  Document,  proves untrue in any material respect as of the date
     of the issuance or making, or deemed making or issuance, thereof;

          (f)  Borrower  or any  Material  Subsidiary  shall (i) fail to pay its
     debts generally as they become due or admit in writing its inability to pay
     its debts  generally as they become due,  (ii) make an  assignment  for the
     benefit of creditors,  (iii) apply for, seek,  consent to, or acquiesce in,
     the appointment of a receiver,  custodian, trustee, examiner, liquidator or
     similar  official  for it or any  substantial  part of its  Property,  (iv)
     institute any  proceeding  seeking to have entered  against it an order for
     relief under the United States  Bankruptcy Code, as amended,  to adjudicate
     it   insolvent,   or  seeking   dissolution,   winding   up,   liquidation,
     reorganization,  arrangement,  adjustment or composition of it or its debts
     under any law  relating to  bankruptcy,  insolvency  or  reorganization  or
     relief of debtors or fail to file an answer or other  pleading  denying the
     material  allegations  of  any  such  proceeding  filed  against  it or any
     analogous  action is taken  under  any other  applicable  law  relating  to
     bankruptcy  or  insolvency,  (v) take  any  corporate  action  (such as the
     passage by its board of directors of a resolution)  in  furtherance  of any
     matter  described in parts (i)-(iv)  above, or (vi) fail to contest in good
     faith any appointment or proceeding described in Section 8.1(g) hereof;

          (g) a custodian,  receiver,  trustee, examiner,  liquidator or similar
     official shall be appointed for Borrower or any Material Subsidiary, or any
     substantial  part of any of

                                       41
<PAGE>
     their Property,  or a proceeding  described in Section  8.1(f)(iv) shall be
     instituted   against  Borrower  or  any  Material   Subsidiary,   and  such
     appointment continues undischarged or such proceeding continues undismissed
     or unstayed for a period of sixty (60) days;

          (h) Borrower or any Material  Subsidiary shall fail within thirty (30)
     days to pay,  bond or  otherwise  discharge  any  judgment or order for the
     payment of money in excess of $10,000,000, which is not stayed on appeal or
     otherwise  being  appropriately  contested  in good faith in a manner  that
     stays execution thereon;

          (i) Borrower or any other member of the Controlled Group shall fail to
     pay when due an amount or amounts which it shall have become liable, to pay
     to the PBGC or to a Plan  under  Title IV of ERISA;  or notice of intent to
     terminate a Plan or Plans having aggregate  Unfunded Vested  Liabilities in
     excess of  $10,000,000  (collectively,  a "Material  Plan")  shall be filed
     under Title IV of ERISA by Borrower  or any  Subsidiary  of Borrower or any
     other  member  of the  Controlled  Group,  any  plan  administrator  or any
     combination of the foregoing; or the PBGC shall institute proceedings under
     Title IV of ERISA to  terminate  or to cause a trustee to be  appointed  to
     administer  any Material  Plan or a  proceeding  shall be  instituted  by a
     fiduciary of any Material Plan against  Borrower or any other member of the
     Controlled  Group to enforce  Section 515 or  4219(c)(5)  of ERISA and such
     proceeding   shall  not  have  been  dismissed   within  thirty  (30)  days
     thereafter; or a condition shall exist by reason of which the PBGC would be
     entitled to obtain a decree  adjudicating  that any  Material  Plan must be
     terminated;

          (j)  Borrower or any  Subsidiary  of Borrower or any Person  acting on
     behalf of Borrower,  a Subsidiary or any governmental  authority challenges
     the  validity  of  any  Credit   Document  or  Borrower's  or  one  of  its
     Subsidiary's  obligations thereunder or any Credit Document ceases to be in
     full force and effect or is  modified  other  than in  accordance  with the
     terms thereof and hereof;

          (k) a Change of Control Event shall have occurred; or

          (l) Borrower  shall for any reason  cease to be wholly  liable for the
     full amount of the Obligations.

     Section 8.2 Non-Bankruptcy  Defaults.  When any Event of Default other than
those described in subsections (f) or (g) of Section 8.1 hereof has occurred and
is continuing,  the  Administrative  Agent shall, if so directed by the Required
Banks,  by written notice to Borrower:  (a) terminate the remaining  Commitments
and all other  obligations  of the Banks  hereunder  on the date  stated in such
notice (which may be the date thereof); and (b) declare the principal of and the
accrued  interest on all  outstanding  Notes to be forthwith due and payable and
thereupon all outstanding Notes,  including both principal and interest thereon,
and all other  Obligations,  shall be and  become  immediately  due and  payable
together  with all other  amounts  payable  under the Credit  Documents  without
further demand,  presentment,  protest or notice of any kind. The Administrative
Agent,  after  giving  notice to  Borrower  pursuant  to Section  8.1(c) or this
Section 8.2,  shall also promptly send a copy of such notice to the other Banks,
but the failure to do so shall not impair or annul the effect of such notice.

                                       42
<PAGE>

     Section 8.3  Bankruptcy  Defaults.  When any Event of Default  described in
subsections  (f) or (g) of Section 8.1 hereof has  occurred  and is  continuing,
then all outstanding Notes,  including both interest and principal thereon,  and
all other Obligations shall immediately become due and payable together with all
other amounts payable under the Credit Documents  without  presentment,  demand,
protest or notice of any kind,  the  obligation  of the Banks to extend  further
credit  pursuant to any of the terms  hereof  shall  immediately  terminate  and
Borrower shall immediately pay to the Administrative  Agent,  subject to Section
8.4, the full amount then available for drawing,  under all outstanding  Letters
of Credit,  Borrower  acknowledging  that the Banks  would not have an  adequate
remedy at law for  failure  by  Borrower  to honor any such  demand and that the
Banks,  and the  Administrative  Agent on their behalf,  shall have the right to
require  Borrower to specifically  perform such  undertaking  whether or not any
draws or other  demands for  payment  have been made under any of the Letters of
Credit.

     Section 8.4 [Intentionally Omitted](a).

     Section 8.5 Expenses.  Borrower agrees to pay to the  Administrative  Agent
and each Bank, and any other holder of any Note outstanding hereunder, all costs
and expenses  incurred or paid by the  Administrative  Agent or such Bank or any
such holder,  including  attorneys' fees  (including  allocable fees of in-house
counsel) and court costs,  in connection with (i) any amendment or waiver to the
Credit Documents requested by Borrower,  (ii) any Default or Event of Default by
Borrower hereunder, or (iii) the enforcement of any of the Credit Documents.

     SECTION 9 CHANGE IN CIRCUMSTANCES.

     Section 9.1 Change of Law.  Notwithstanding  any other  provisions  of this
Agreement  or any Note,  if at any time  after  the date  hereof  any  change in
applicable law or regulation or in the interpretation  thereof makes it unlawful
for any Bank to make or continue to maintain  Eurodollar Loans or to perform its
obligations as contemplated hereby, such Bank shall promptly give notice thereof
to Borrower and such Bank's  obligations  to make or maintain  Eurodollar  Loans
under this Agreement  shall  terminate  until it is no longer  unlawful for such
Bank to make or maintain  Eurodollar Loans.  Borrower shall prepay on demand the
outstanding  principal amount of any such affected  Eurodollar  Loans,  together
with all interest accrued thereon at a rate per annum equal to the interest rate
applicable  to such  Loan;  provided,  however,  subject to all of the terms and
conditions  of this  Agreement,  Borrower may then elect to borrow the principal
amount of the  affected  Eurodollar  Loans  from such Bank by means of Base Rate
Loans from such Bank,  which  Base Rate Loans  shall not be made  ratably by the
Banks but only from such affected Bank.

     Section 9.2  Unavailability  of  Deposits or  Inability  to  Ascertain,  or
Inadequacy of, LIBOR. If on or prior to the first day of any Interest Period for
any Borrowing of Eurodollar Loans:

          (a) the Administrative  Agent determines that deposits in U.S. Dollars
     (in the  applicable  amounts)  are not being  offered to major banks in the
     eurodollar  interbank market for such Interest Period, or that by reason of
     circumstances  affecting  the  interbank  eurodollar  market  adequate  and
     reasonable means do not exist for ascertaining the applicable LIBOR, or


                                       43
<PAGE>

          (b) Banks having more than 33% percent  (33)% or more of the aggregate
     amount  of  the  Commitments   reasonably   determine  and  so  advise  the
     Administrative   Agent  that  LIBOR  as   reasonably   determined   by  the
     Administrative  Agent will not  adequately  and fairly  reflect the cost to
     such Banks or Bank of  funding  their or its  Eurodollar  Loans or Loan for
     such Interest Period,

then the Administrative Agent shall forthwith give notice thereof to Borrower
and the Banks, whereupon until the Administrative Agent notifies Borrower that
the circumstances giving rise to such suspension no longer exist, the
obligations of the Banks or of the relevant Bank to make Eurodollar Loans shall
be suspended.

     Section 9.3 Increased Cost and Reduced Return.

          (a) If, on or after the date hereof,  the  adoption of any  applicable
     law,  rule or  regulation,  or any  change  therein,  or any  change in the
     interpretation  or  administration  thereof by any governmental  authority,
     central  bank or  comparable  agency  charged  with the  interpretation  or
     administration  thereof,  or compliance by any Bank (or its Lending Office)
     with any request or directive  (whether or not having the force of law but,
     if not having the force of law,  compliance  with which is customary in the
     relevant  jurisdiction)  of any such authority,  central bank or comparable
     agency:

          (i) shall subject any Bank (or its Lending Office) to any tax, duty or
     other  charge  with  respect  to its  Eurodollar  Loans,  its  Notes or its
     obligation to make Eurodollar  Loans, or shall change the basis of taxation
     of  payments  to any Bank (or its Lending  Office) of the  principal  of or
     interest  on its  Eurodollar  Loans or any other  amounts  due  under  this
     Agreement  in respect of its  Eurodollar  Loans or its  obligation  to make
     Eurodollar  Loans (except for changes in the rate of tax on the overall net
     income  or  profits  of such  Bank or its  Lending  Office  imposed  by the
     jurisdiction  in which such Bank or its lending office is  incorporated  in
     which such Bank's principal executive office or Lending Office is located);
     or

          (ii) shall  impose,  modify or deem  applicable  any reserve,  special
     deposit or similar requirement  (including,  without  limitation,  any such
     requirement  imposed  by the  Board of  Governors  of the  Federal  Reserve
     System,  but  excluding  with  respect  to any  Eurodollar  Loans  any such
     requirement  included  in  an  applicable  Eurodollar  Reserve  Percentage)
     against assets of,  deposits with or for the account of, or credit extended
     by, any Bank (or its  Lending  Office) or shall  impose on any Bank (or its
     Lending Office) or on the interbank  market any other  condition  affecting
     its  Eurodollar  Loans,  its Notes,  or its  obligation to make  Eurodollar
     Loans;

and the result of any of the foregoing is to increase the cost to such Bank (or
its Lending Office) of making or maintaining any Eurodollar Loan or to reduce
the amount of any sum received or receivable by such Bank (or its Lending
Office) under this Agreement or under its Notes with respect thereto, by an
amount deemed by such Bank to be material, then, within fifteen (15) days after
demand by such Bank (with a copy to the Administrative Agent), Borrower shall be
obligated to pay to such Bank such additional amount or amounts as will
compensate such Bank for such increased cost or reduction. In the event any law,
rule, regulation or interpretation described above is revoked, declared invalid
or inapplicable or is otherwise rescinded, and as a

                                       44
<PAGE>

result  thereof  a Bank is  determined  to be  entitled  to a  refund  from  the
applicable  authority for any amount or amounts which were paid or reimbursed by
Borrower to such Bank  hereunder,  such Bank shall refund such amount or amounts
to Borrower without interest.

     (b) If, after the date hereof, any Bank or the  Administrative  Agent shall
have  determined  that the adoption of any  applicable  law,  rule or regulation
regarding  capital  adequacy,   or  any  change  therein   (including,   without
limitation, any revision in the Final Risk-Based Capital Guidelines of the Board
of Governors of the Federal Reserve System (12 CFR Part 208,  Appendix A; 12 CFR
Part 225,  Appendix A) or of the Office of the  Comptroller  of the Currency (12
CFR Part 3, Appendix A), or in any other  applicable  capital  rules  heretofore
adopted  and  issued  by  any  governmental  authority),  or any  change  in the
interpretation or administration thereof by any governmental authority,  central
bank or comparable  agency  charged with the  interpretation  or  administration
thereof,  or compliance by any Bank (or its Lending  Office) with any request or
directive  regarding  capital  adequacy  (whether or not having the force of law
but, if not having the force of law,  compliance  with which is customary in the
applicable  jurisdiction)  of any such  authority,  central  bank or  comparable
agency,  has or would  have the  effect of  reducing  the rate of return on such
Bank's capital, or on the capital of any corporation controlling such Bank, as a
consequence of its  obligations  hereunder to a level below that which such Bank
could have achieved but for such  adoption,  change or  compliance  (taking into
consideration  such Bank's  policies  with  respect to capital  adequacy)  by an
amount  deemed by such  Bank to be  material,  then  from  time to time,  within
fifteen (15) days after  demand by such Bank (with a copy to the  Administrative
Agent),  Borrower  shall pay to such Bank such  additional  amount or amounts as
will compensate such Bank for such reduction.

     (c) Each Bank that determines to seek  compensation  under this Section 9.3
shall notify Borrower and the  Administrative  Agent of the  circumstances  that
entitle  the Bank to such  compensation  pursuant  to this  Section 9.3 and will
designate a different  Lending  Office if such  designation  will avoid the need
for,  or reduce the  amount  of,  such  compensation  and will not,  in the sole
judgment of such Bank, be otherwise  disadvantageous to such Bank. A certificate
of any Bank claiming  compensation  under this Section 9.3 and setting forth the
additional  amount or amounts to be paid to it  hereunder  submitted to Borrower
and the  Administrative  Agent by such Bank in good faith  shall be prima  facie
evidence of the amount of such  compensation.  In determining such amount,  such
Bank may use any reasonable averaging and attribution methods.

     Section 9.4 Lending  Offices.  Each Bank may, at its option,  elect to make
its  Loans  hereunder  at the  branch,  office  or  affiliate  specified  on the
appropriate  signature  page  hereof or in the  assignment  agreement  which any
assignee  bank  executes  pursuant  to  Section  11.12  hereof  (each a "Lending
Office")  for each  type of Loan  available  hereunder  or at such  other of its
branches,  offices or affiliates as it may from time to time elect and designate
in a written notice to Borrower and the  Administrative  Agent,  so long as such
election does not increase  costs or other  amounts  payable by Borrower to such
Bank hereunder.

     Section 9.5 Discretion of Bank as to Manner of Funding. Notwithstanding any
other  provision  of this  Agreement,  each Bank shall be  entitled  to fund and
maintain  its funding of all or any part of its Loans in any manner it sees fit,
it being  understood,  however,  that for the  purposes  of this  Agreement  all
determinations  hereunder  shall be made as if each Bank had actually funded and
maintained  each  Eurodollar  Loan  through  the  purchase  of  deposits  in the

                                       45
<PAGE>



eurodollar  interbank  market  having a maturity  corresponding  to such  Loan's
Interest  Period and bearing an interest  rate equal to LIBOR for such  Interest
Period.

     SECTION 10 THE AGENT.

     Section 10.1 Appointment and  Authorization of  Administrative  Agent. Each
Bank hereby  appoints ABN AMRO Bank N.V. as the  Administrative  Agent under the
Credit  Documents and hereby  authorizes the  Administrative  Agent to take such
action as  Administrative  Agent on its behalf and to exercise such powers under
the Credit Documents as are delegated to the  Administrative  Agent by the terms
thereof,  together with such powers as are reasonably  incidental  thereto.  The
Administrative  Agent  shall  have no duties or  responsibilities  except  those
expressly set forth in this  Agreement and the Credit  Documents.  The duties of
the  Administrative  Agent shall be mechanical and administrative in nature; the
Administrative  Agent  shall not have by reason of this  Agreement  or any other
Credit  Document a fiduciary  relationship in respect of any Bank, the holder of
any Note or any other Person;  and nothing in this Agreement or any other Credit
Document,  expressed  or implied,  is intended to or shall be so construed as to
impose  upon  the  Administrative  Agent  any  obligations  in  respect  of this
Agreement or any other Credit  Document  except as expressly set forth herein or
therein.

     Section 10.2  Administrative  Agent and its Affiliates.  The Administrative
Agent shall have the same rights and powers under this  Agreement  and the other
Credit  Documents as any other Bank and may exercise or refrain from  exercising
the same as though it were not the Administrative  Agent, and the Administrative
Agent and its affiliates may accept  deposits from, lend money to, and generally
engage in any kind of business  with Borrower or any Affiliate of Borrower as if
it were not the Administrative Agent under the Credit Documents.

     Section 10.3 Action by Administrative  Agent. If the  Administrative  Agent
receives  from  Borrower  a written  notice of an Event of Default  pursuant  to
Section 7.6(c)(i) hereof, the  Administrative  Agent shall promptly give each of
the Banks written notice thereof.  The obligations of the  Administrative  Agent
under the Credit  Documents are only those expressly set forth therein.  Without
limiting the generality of the foregoing,  the Administrative Agent shall not be
required to take any action  hereunder  with  respect to any Default or Event of
Default,  except as  expressly  provided in  Sections  8.2 and 8.3. In no event,
however,  shall  the  Administrative  Agent be  required  to take any  action in
violation of applicable law or of any provision of any Credit Document,  and the
Administrative  Agent  shall in all  cases  be fully  justified  in  failing  or
refusing to act hereunder or under any other Credit  Document unless it shall be
first  indemnified to its reasonable  satisfaction  by the Banks against any and
all costs,  expense,  and  liability  which may be  incurred  by it by reason of
taking or continuing to take any such action. The Administrative  Agent shall be
entitled to assume that no Default or Event of Default exists unless notified to
the  contrary  in  writing  by a Bank or  Borrower.  In all cases in which  this
Agreement and the other Credit Documents do not require the Administrative Agent
to take certain actions,  the  Administrative  Agent shall be fully justified in
using its  discretion  in failing to take or in taking any action  hereunder and
thereunder.

     Section  10.4  Consultation  with  Experts.  The  Administrative  Agent may
consult with legal counsel,  independent  public  accountants  and other experts
selected  by it and shall not be liable  for any  action  taken or omitted to be
taken  by it in good  faith  in  accordance  with the  advice  of such  counsel,
accountants or experts.

                                       46
<PAGE>

     Section 10.5 Liability of Administrative  Agent;  Credit Decision.  Neither
the  Administrative  Agent  nor  any  of its  directors,  officers,  agents,  or
employees  shall be liable for any action taken or not taken by it in connection
with the Credit Documents (i) with the consent or at the request of the Required
Banks or (ii) in the absence of its own gross negligence or willful  misconduct.
Neither the Administrative Agent nor any of its directors,  officers,  agents or
employees shall be responsible  for or have any duty to ascertain,  inquire into
or verify (i) any statement,  warranty or representation made in connection with
this  Agreement,  any  other  Credit  Document  or any  Credit  Event;  (ii) the
performance  or  observance of any of the covenants or agreements of Borrower or
any other party  contained  herein or in any other  Credit  Document;  (iii) the
satisfaction  of any  condition  specified  in  Section  6  hereof;  or (iv) the
validity, effectiveness,  genuineness, enforceability,  perfection, value, worth
or  collectibility  hereof  or of any  other  Credit  Document  or of any  other
documents or writing  furnished in connection with any Credit Document;  and the
Administrative  Agent  makes no  representation  of any kind or  character  with
respect to any such matter mentioned in this sentence.  The Administrative Agent
may execute any of its duties  under any of the Credit  Documents  by or through
employees,  agents,  and  attorneys-in-fact  and shall not be  answerable to the
Banks,  Borrower,  or any other Person for the default or misconduct of any such
agents or  attorneys-in-fact  selected with reasonable care. The  Administrative
Agent  shall not incur any  liability  by acting in  reliance  upon any  notice,
consent,  certificate,  other  document or statement  (whether  written or oral)
believed by it to be genuine or to be sent by the proper  party or  parties.  In
particular and without limiting any of the foregoing,  the Administrative  Agent
shall have no  responsibility  for  confirming  the  accuracy of any  Compliance
Certificate  or other  document  or  instrument  received by it under the Credit
Documents.  The  Administrative  Agent  may  treat  the payee of any Note as the
holder  thereof until written  notice of transfer shall have been filed with the
Administrative   Agent  signed  by  such  payee  in  form  satisfactory  to  the
Administrative  Agent.  Each Bank  acknowledges  that it has  independently  and
without reliance on the  Administrative  Agent or any other Bank, and based upon
such information, investigations and inquiries as it deems appropriate, made its
own credit  analysis and decision to extend credit to Borrower in the manner set
forth in the Credit  Documents.  It shall be the  responsibility of each Bank to
keep  itself  informed  as to the  creditworthiness  of  Borrower  and any other
relevant  Person,  and the  Administrative  Agent shall have no liability to any
Bank with respect thereto.

     Section 10.6 Indemnity.  The Banks shall ratably,  in accordance with their
respective  Percentages,  indemnify and hold the  Administrative  Agent, and its
directors,  officers,  employees,  agents and representatives  harmless from and
against any liabilities,  losses,  costs or expenses  suffered or incurred by it
under any Credit  Document or in connection with the  transactions  contemplated
thereby,  regardless  of when  asserted  or  arising,  except to the  extent the
Administrative  Agent is promptly reimbursed for the same by Borrower and except
to the  extent  that any event  giving  rise to a claim was  caused by the gross
negligence or willful  misconduct of the party  seeking to be  indemnified.  The
obligations  of the Banks under this Section 10.6 shall survive  termination  of
this Agreement.

     Section   10.7   Resignation   of   Administrative   Agent  and   Successor
Administrative  Agent. The Administrative Agent may resign at any time by giving
written notice thereof to the Banks and Borrower.  Upon any such  resignation of
the  Administrative  Agent, the Required Banks shall have the right to appoint a
successor  Administrative  Agent with the consent of  Borrower.  If no successor
Administrative  Agent shall have been so appointed by the  Required  Banks,  and
shall

                                       47
<PAGE>

have  accepted  such  appointment,  within  thirty (30) days after the  retiring
Administrative  Agent's  giving  of  notice of  resignation,  then the  retiring
Administrative   Agent  may,  on  behalf  of  the  Banks,  appoint  a  successor
Administrative  Agent,  which shall be any Bank hereunder or any commercial bank
organized under the laws of the United States of America or of any State thereof
and having a combined  capital  and surplus of at least  $200,000,000.  Upon the
acceptance  of its  appointment  as the  Administrative  Agent  hereunder,  such
successor Administrative Agent shall thereupon succeed to and become vested with
all the rights and duties of the retiring or removed  Administrative Agent under
the Credit Documents,  and the retiring Administrative Agent shall be discharged
from its duties and obligations  thereunder.  After any retiring  Administrative
Agent's  resignation  hereunder as Administrative  Agent, the provisions of this
Section 10 and all  protective  provisions of the other Credit  Documents  shall
inure to its benefit as to any actions  taken or omitted to be taken by it while
it was Administrative Agent.

     SECTION 11 MISCELLANEOUS.

     Section 11.1 Withholding Taxes.

          (a) Payments Free of Withholding.  Subject to Section 11.1 (b) hereof,
     each payment by Borrower under this Agreement or the other Credit Documents
     shall be made  without  withholding  for or on  account  of any  present or
     future taxes (other than overall net income taxes on the recipient). If any
     such withholding is so required,  Borrower shall make the withholding,  pay
     the  amount  withheld  to the  appropriate  governmental  authority  before
     penalties attach thereto or interest accrues thereon and forthwith pay such
     additional  amount  as may be  necessary  to  ensure  that  the net  amount
     actually received by each Bank and the Administrative  Agent free and clear
     of such taxes (including such taxes on such additional  amount) is equal to
     the amount which that Bank or the Administrative Agent (as the case may be)
     would  have   received  had  such   withholding   not  been  made.  If  the
     Administrative  Agent or any Bank pays any  amount in  respect  of any such
     taxes,  penalties or interest  Borrower shall reimburse the  Administrative
     Agent or that Bank for that payment on demand in the currency in which such
     payment was made.  If Borrower  pay any such taxes,  penalties or interest,
     they  shall  deliver  official  tax  receipts  evidencing  that  payment or
     certified  copies  thereof  to the  Bank or  Administrative  Agent on whose
     account such withholding was made (with a copy to the Administrative  Agent
     if not the  recipient of the original) on or before the thirtieth day after
     payment. If any Bank or the Administrative Agent determines it has received
     or been granted a credit  against or relief or remission  for, or repayment
     of, any taxes paid or  payable  by it  because of any taxes,  penalties  or
     interest paid by Borrower and evidenced by such a tax receipt, such Bank or
     Administrative Agent shall, to the extent it can do so without prejudice to
     the retention of the amount of such credit, relief, remission or repayment,
     pay to Borrower such amount as such Bank or Administrative Agent determines
     is  attributable to such deduction or withholding and which will leave such
     Bank or  Administrative  Agent  (after such  payment) in no better or worse
     position  than it would have been in if Borrower  had not been  required to
     make  such  deduction  or  withholding.  Nothing  in this  Agreement  shall
     interfere  with the  right of each  Bank  and the  Administrative  Agent to
     arrange its tax affairs in whatever  manner it thinks fit nor  obligate any
     Bank or the  Administrative  Agent to disclose any information  relating to
     its tax affairs or any computations in connection with such taxes.

                                       48
<PAGE>

          (b) U.S.  Withholding Tax  Exemptions.  Each Bank that is not a United
     States person (as such term is defined in Section  7701(a)(30) of the Code)
     shall submit to Borrower and the Administrative Agent on or before the date
     of the initial Borrowing  hereunder two duly completed and signed copies of
     either Form W8BEN  (relating  to such Bank and  entitling  it to a complete
     exemption from withholding  under the Code on all amounts to be received by
     such Bank,  including fees, pursuant to the Credit Documents and the Loans)
     or Form  W8ECI  (relating  to all  amounts  to be  received  by such  Bank,
     including  fees,  pursuant  to the Credit  Documents  and the Loans) of the
     United States Internal Revenue  Service.  Thereafter and from time to time,
     each Bank  shall  submit to  Borrower  and the  Administrative  Agent  such
     additional  duly  completed  and signed  copies of one or the other of such
     Forms (or such successor forms as shall be adopted from time to time by the
     relevant  United  States  taxing  authorities)  as may be (i)  requested by
     Borrower in a written notice, directly or through the Administrative Agent,
     to such Bank and (ii)  required  under then  current  United  States law or
     regulations to avoid or reduce United States  withholding taxes on payments
     in respect of all  amounts to be  received  by such Bank,  including  fees,
     pursuant to the Credit Documents or the Loans.

          (c) Inability of Bank to Submit Forms.  If any Bank  determines,  as a
     result of any change in applicable  law,  regulation  or treaty,  or in any
     official application or interpretation thereof, that it is unable to submit
     to Borrower or Administrative  Agent any form or certificate that such Bank
     is obligated to submit  pursuant to subsection  (b) of this Section 11.1 or
     that  such  Bank is  required  to  withdraw  or  cancel  any  such  form or
     certificate  previously submitted or any such form or certificate otherwise
     becomes ineffective or inaccurate, such Bank shall promptly notify Borrower
     and Administrative Agent of such fact and the Bank shall to that extent not
     be obligated to provide any such form or  certificate  and will be entitled
     to withdraw or cancel any affected form or certificate, as applicable.

     Section  11.2 No Waiver of  Rights.  No delay or failure on the part of the
Administrative  Agent or any Bank or on the part of the holder or holders of any
Note in the  exercise  of any power or right  under any  Credit  Document  shall
operate as a waiver thereof,  nor as an  acquiescence in any default,  nor shall
any single or partial exercise thereof preclude any other or further exercise of
any  other  power  or  right,  and the  rights  and  remedies  hereunder  of the
Administrative  Agent,  the Banks and the  holder  or  holders  of any Notes are
cumulative  to, and not exclusive  of, any rights or remedies  which any of them
would otherwise have.

     Section 11.3  Non-Business  Day. If any payment of principal or interest on
any Loan or of any  other  Obligation  shall  fall  due on a day  which is not a
Business Day, interest or fees (as applicable) at the rate, if any, such Loan or
other Obligation bears for the period prior to maturity shall continue to accrue
on such  Obligation  from the stated due date thereof to and  including the next
succeeding Business Day, on which the same shall be payable.

     Section  11.4  Documentary  Taxes.  Borrower  agrees  that it will  pay any
documentary,  stamp or similar taxes payable in respect to any Credit  Document,
including  interest  and  penalties,  in the event any such taxes are  assessed,
irrespective  of when such  assessment  is made and whether or not any credit is
then in use or available hereunder.

                                       49
<PAGE>

     Section  11.5  Survival  of   Representations.   All   representations  and
warranties  made herein or in  certificates  given pursuant hereto shall survive
the execution and delivery of this Agreement and the other Credit Documents, and
shall  continue  in full force and effect  with  respect to the date as of which
they were made as long as any credit is in use or available hereunder.

     Section  11.6  Survival  of  Indemnities.  All  indemnities  and all  other
provisions  relative  to  reimbursement  to the Banks of amounts  sufficient  to
protect  the yield of the Banks with  respect to the Loans,  including,  but not
limited to,  Section 2.11,  Section 9.3 and Section 11.15 hereof,  shall survive
the termination of this Agreement and the other Credit Documents and the payment
of the Loans and all other Obligations.

     Section  11.7  Set-Off.  (a) (a) In addition to any rights now or hereafter
granted  under  applicable  law and not by way of limitation of any such rights,
upon the  occurrence  of any Event of  Default,  each  Bank and each  subsequent
holder of any Note is hereby  authorized by Borrower at any time or from time to
time,  without notice to Borrower or to any other Person,  any such notice being
hereby expressly  waived, to set off and to appropriate and to apply any and all
deposits  (general or  special,  including,  but not  limited  to,  Indebtedness
evidenced by  certificates  of deposit,  whether  matured or  unmatured,  and in
whatever  currency  denominated) and any other  Indebtedness at any time held or
owing by that Bank or that subsequent holder to or for the credit or the account
of Borrower,  whether or not matured,  against and on account of the obligations
and  liabilities  of Borrower to that Bank or that  subsequent  holder under the
Credit  Documents,  including,  but not  limited to, all claims of any nature or
description arising out of or connected with the Credit Documents,  irrespective
of whether or not (a) that Bank or that  subsequent  holder  shall have made any
demand  hereunder or (b) the  principal of or the interest on the Loans or Notes
and other  amounts due hereunder  shall have become due and payable  pursuant to
Section 8 and although said obligations and liabilities,  or any of them, may be
contingent or unmatured.

     (b) Each Bank agrees with each other Bank a party  hereto that if such Bank
shall  receive  and retain any  payment,  whether by set-off or  application  of
deposit  balances  or  otherwise,  on any of the Loans in excess of its  ratable
share of payments on all such obligations  then  outstanding to the Banks,  then
such Bank shall purchase for cash at face value, but without  recourse,  ratably
from each of the other  Banks  such  amount of the Loans held by each such other
Banks (or  interest  therein) as shall be  necessary to cause such Bank to share
such excess payment ratably with all the other Banks; provided, however, that if
any such  purchase  is made by any  Bank,  and if such  excess  payment  or part
thereof is thereafter recovered from such purchasing Bank, the related purchases
from the other Banks shall be rescinded  ratably and the purchase price restored
as to the portion of such excess payment so recovered, but without interest.

     Section 11.8 Notices.  Except as otherwise  specified  herein,  all notices
under the Credit  Documents  shall be in writing  (including  facsimile or other
electronic communication) and shall be given to a party hereunder at its address
or facsimile number set forth below or such other address or facsimile number as
such  party may  hereafter  specify  by notice to the  Administrative  Agent and
Borrower, given by courier, by United States certified or registered mail, or by
other  telecommunication  device  capable of  creating a written  record of such
notice and its receipt. Notices under the Credit Documents to the Banks shall be
addressed to their  respective  addresses,  facsimile  or telephone  numbers set
forth on the signature  pages hereof or in the

                                       50
<PAGE>

assignment  agreement which any assignee bank executes pursuant to Section 11.12
hereof, and to Borrower and to the Administrative Agent to:

                  If to Borrower:

                  Black Hills Corporation
                  625 9th Street
                  Rapid City, South Dakota 57709
                  Attention: Garner M. Anderson
                  Facsimile:  605.721.2597
                  Telephone: 605.721.2311

                  with copies to:

                  Black Hills Corporation
                  625 9th Street
                  Rapid City, South Dakota 57709
                  Attention: Mark T. Thies
                  Facsimile:  605.721.2599
                  Telephone: 605.721.2331

                  Black Hills Corporation
                  1075 Noel Avenue
                  Wheeling, Illinois 60090
                  Attention: Richard T. Ashbeck
                  Facsimile:  847.459.4140
                  Telephone: 847.465.3033

                  If to the Administrative Agent:

                  Notices shall be sent to the applicable address set forth on
                  Part B of Schedule 4 hereto.

                  With copies of all such notices to:

                  ABN AMRO Bank N.V.
                  135 South LaSalle Street
                  Suite 710
                  Chicago, Illinois 60603
                  Attention: David B.  Bryant/Saad Qais
                  Facsimile: 312.904.1466
                  Telephone: 312.904.2799 (Mr. Bryant)
                             312.904.6473 (Mr. Qais)


     Each such notice,  request or other communication shall be effective (i) if
given by facsimile,  when such facsimile is transmitted to the facsimile  number
specified  in  this


                                       51
<PAGE>

Section 11.8 or on the signature  pages hereof and a confirmation  of receipt of
such facsimile has been received by the sender,  (ii) if given by courier,  when
delivered,  (iii) if given by mail, three business days after such communication
is deposited in the mail, registered with return receipt requested, addressed as
aforesaid or (iv) if given by any other means,  when  delivered at the addresses
specified  in this Section  11.8;  provided  that any notice  given  pursuant to
Section 2 hereof shall be effective only upon receipt.

     Section 11.9 Counterparts.  This Agreement may be executed in any number of
counterpart   signature  pages,  and  by  the  different  parties  on  different
counterparts,  each of which when  executed  shall be deemed an original but all
such counterparts taken together shall constitute one and the same instrument.

     Section 11.10 Successors and Assigns.  This Agreement shall be binding upon
Borrower and its successors and assigns,  and shall inure to the benefit of each
of the Banks and the  benefit  of their  permitted  respective  successors,  and
assigns,  including any subsequent  holder of any Note.  Borrower may not assign
any of its  rights or  obligations  under any  Credit  Document  unless (i) such
assignation  occurs in connection with a merger or acquisition by Borrower which
is otherwise  permitted  under the terms of this  Agreement and the  appropriate
Credit  Document,  if  applicable  and (ii)  Borrower  obtains the prior written
consent  of all of the  Banks,  which  consent  shall be in form  and  substance
satisfactory to Administrative Agent.

     Section 11.11  Participants  and Note  Assignees.  Each Bank shall have the
right at its own cost to grant  participations  (to be  evidenced by one or more
agreements or certificates of participation) in the Loans made, Commitments held
and/or  participations  in Letters of Credit,  by such Bank at any time and from
time to time,  and to assign its rights under such Loans or the Note  evidencing
such Loans to a federal reserve bank; provided that (i) no such participation or
assignment  shall  relieve  any  Bank  of  any  of its  obligations  under  this
Agreement, (ii) no such assignee or participant shall have any rights under this
Agreement except as provided in this Section 11.11, and (iii) the Administrative
Agent  shall  have  no  obligation  or  responsibility  to such  participant  or
assignee,  except  that  nothing  herein is  intended to affect the rights of an
assignee  of a Note to  enforce  the Note  assigned.  Any party to which  such a
participation  or assignment has been granted shall have the benefits of Section
2.11 and Section 9.3,  but shall not be entitled to receive any greater  payment
under either such Section than the Bank granting such  participation  would have
been  entitled  to  receive  in  connection  with the  rights  transferred.  Any
agreement  pursuant  to which any Bank may grant such a  participating  interest
shall provide that such Bank shall retain the sole right and  responsibility  to
enforce the obligations of Borrower  hereunder,  including,  without limitation,
the right to approve any amendment,  modification  or waiver of any provision of
this Agreement; provided that such participation agreement may provide that such
Bank will not agree to any  modification,  amendment or waiver of this Agreement
that would (A) increase any  Commitment of such Bank if such increase would also
increase the  participant's  obligations,  (B) forgive any amount of or postpone
the date for payment of any  principal  of or interest on any Loan or of any fee
payable  hereunder in which such  participant  has an interest or (C) reduce the
stated rate at which interest or fees in which such  participant has an interest
accrue hereunder.

     Section 11.12 Assignment of Commitments by Banks.  Each Bank shall have the
right at any time,  with the  written  consent of  Administrative  Agent,  which
consent shall not be  unreasonably  withheld,  and, prior to the occurrence of a
Default  or  Event  of  Default,  Borrower,

                                       52
<PAGE>

to assign all or any part of its Commitment  (including  the same  percentage of
its Note and  outstanding  Loanst,  and provided that the same percentage of its
commitment  and loans  outstanding  under the 3-Year  Credit  Agreement are also
assigned) to one or more other Persons;  provided that such  assignment is in an
amount of at least $5,000,000 or the entire Commitment of such Bank, and if such
assignment is not for such Bank's entire  Commitment then such Bank's Commitment
after giving effect to such assignment  shall not be less than  $5,000,000;  and
provided  further that  neither the consent of Borrower  nor the  Administrative
Agent shall be required for any Bank to assign all or part of its  Commitment to
any  Affiliate  of the  assigning  Bank so long as the same  percentage  of such
Bank's  commitment  under the 3-Year Credit  Agreement are also assigned to such
Affiliate.  Each such  assignment  shall set forth  the  assignees  address  for
notices to be given under  Section  11.8  hereof  hereunder  and its  designated
Lending  Office  pursuant  to  Section  9.4  hereof.  Upon any such  assignment,
delivery  to the  Administrative  Agent of an executed  copy of such  assignment
agreement and the forms referred to in Section 11.1 hereof,  if applicable,  and
the  payment  of a  $3,500  recordation  fee to the  Administrative  Agent,  the
assignee shall become a Bank hereunder, all Loans,  participations in Letters of
Credit and the  Commitment  it thereby  holds shall be governed by all the terms
and  conditions  hereof and the Bank  granting  such  assignment  shall have its
Commitment,  and its obligations and rights in connection therewith,  reduced by
the amount of such assignment.

     Section  11.13  Amendments.  Any  provision of the Credit  Documents may be
amended or waived if, but only if, such amendment or waiver is in writing and is
signed by (a) Borrower,  (b) the Required Banks, and (c) if the rights or duties
of the  Administrative  Agent are affected thereby,  the  Administrative  Agent;
provided that:

          (i) no amendment or waiver  pursuant to this Section.  11.13 shall (A)
     increase, decrease or extend any Commitment of any Bank without the consent
     of such Bank or (B)  reduce the  amount of or  postpone  any fixed date for
     payment of any  principal of or interest on any Loan or of any fee or other
     Obligation payable hereunder without the consent of each Bank; and

          (ii) no  amendment  or waiver  pursuant to this  Section  11.13 shall,
     unless signed by each Bank, change this Section 11.13, or the definition of
     Required  Banks,  or affect the number of Banks required to take any action
     under the Credit Documents.

     Anything in this Agreement to the contrary notwithstanding,  if at any time
when the  conditions  precedent  set  forth in  Section  6.2  hereof to any Loan
hereunder are satisfied,  any Bank shall fail to fulfill its obligations to make
such Loan (any such Bank, a "Defaulting Bank") then, for so long as such failure
shall continue,  the Defaulting Bank shall (unless Borrower,  the Administrative
Agent and the Required Banks  (determined  as if the Defaulting  Bank were not a
Bank hereunder)  shall otherwise  consent in writing) be deemed for all purposes
related to amendments,  modifications,  waivers or consents under this Agreement
(other than  amendments or waivers  referred to in clause (i) and (ii) above) to
have no Loans or  Commitments  and shall not be treated as a Bank hereunder when
performing  the   computation  of  the  Required   Banks.   To  the  extent  the
Administrative Agent receives any payments or other amounts for the account of a
Defaulting  Bank such Defaulting Bank shall be deemed to have requested that the
Administrative Agent use such payment or other amount to fulfill its obligations
to make such Loan.

                                       53
<PAGE>

     Section 11.14  Headings.  Section  headings used in this  Agreement are for
reference only and shall not affect the construction of this Agreement.

     Section 11.15 Legal Fees, Other Costs and Indemnification.  Borrower agrees
to pay all reasonable costs and expenses of the Arrangers in connection with the
preparation and negotiation of the Credit  Documents  (including past and future
reasonable  out-of-pocket  expenses incurred by the Arrangers in connection with
the  syndication  of  the  transaction),   including  without  limitation,   the
reasonable  fees and  disbursements  of counsel to the Arrangers,  in connection
with the preparation and execution of the Credit  Documents,  and any amendment,
waiver or consent related hereto,  whether or not the transactions  contemplated
herein are  consummated.  Borrower  further  agrees to indemnify  each Bank, the
Administrative  Agent,  and their  respective  directors,  agents,  officers and
employees,   against  all  losses,  claims,   damages,   penalties,   judgments,
liabilities  and  expenses  (including,  without  limitation,  all  expenses  of
litigation or preparation  therefor,  whether or not the indemnified Person is a
party  thereto)  which any of them may incur or reasonably pay arising out of or
relating to any Credit Document  (including any relating to a  misrepresentation
by Borrower under any Credit Document) or any of the  transactions  contemplated
thereby or the direct or indirect  application  or proposed  application  of the
proceeds of any Loan,  other than those which arise from the gross negligence or
willful misconduct of the party claiming indemnification.  Borrower, upon demand
by any of the  Administrative  Agentor a Bank at any time,  shall  reimburse the
Administrative  Agent  or Bank  for  any  reasonable  legal  or  other  expenses
(including  allocable  fees  and  expenses  of  in-house  counsel)  incurred  in
connection with  investigating or defending  against any of the foregoing except
if the same is directly due to the gross negligence or willful misconduct of the
party to be indemnified,  provided that with respect to legal costs and expenses
incurred in connection with the enforcement of the Banks rights hereunder or any
work-out or similar situation, Borrower shall only be obligated to pay the legal
fees of the Administrative Agent and not of any other Bank.

     Section 11.16 Entire Agreement.  The Credit Documents constitute the entire
understanding  of the parties thereto with respect to the subject matter thereof
and any prior or  contemporaneous  agreements,  whether  written  or oral,  with
respect thereto are superseded thereby.

     Section 11.17  Construction.  The parties hereto acknowledge and agree that
neither this  Agreement nor the other Credit  Documents  shall be construed more
favorably  in favor of one than the other  based upon which  party  drafted  the
same, it being acknowledged that all parties hereto contributed substantially to
the negotiation of this Agreement and the other Credit Documents.

     Section 11.18 Governing Law. This Agreement and the other Credit Documents,
and the  rights  and  duties  of the  parties  hereto,  shall be  construed  and
determined in accordance with the internal laws of the State of New York.

     Section 11.19  SUBMISSION TO JURISDICTION;  WAIVER OF JURY TRIAL.  BORROWER
HEREBY SUBMITS TO THE  NONEXCLUSIVE  JURISDICTION  OF THE UNITED STATES DISTRICT
COURT FOR THE  SOUTHERN  DISTRICT  OF NEW YORK AND OF ANY NEW YORK  STATE  COURT
SITTING IN THE CITY OF NEW YORK FOR  PURPOSES OF ALL LEGAL  PROCEEDINGS  ARISING
OUT OF

                                       54
<PAGE>

OR RELATING TO THIS AGREEMENT,  THE OTHER CREDIT  DOCUMENTS OR THE  TRANSACTIONS
CONTEMPLATED  HEREBY OR THEREBY.  BORROWER  IRREVOCABLY  WAIVES,  TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM
THAT  ANY  SUCH  PROCEEDING  BROUGHT  IN SUCH A COURT  HAS  BEEN  BROUGHT  IN AN
INCONVENIENT  FORUM.  BORROWER  HEREBY  IRREVOCABLY  WAIVES ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY LEGAL  PROCEEDING  ARISING OUT OF OR RELATING TO ANY CREDIT
DOCUMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY.

     Section  11.20  Replacement  of  Bank.  Each  Bank  agrees  that,  upon the
occurrence of any event set forth in Sections 9.1, 9.3 and 11.1,  such Bank will
use  reasonable  efforts  to book and  maintain  its Loans  through a  different
Lending  Office or to transfer its Loans to an Affiliate  with the  objective of
avoiding  or  minimizing  the  consequences  of such event;  provided  that such
booking or transfer is not otherwise  disadvantageous to such Bank as determined
by such Bank in its sole and absolute discretion. If any Bank has demanded to be
paid additional  amounts pursuant to Sections 9.1, 9.3 and 11.1, and the payment
of such  additional  amounts are, and are likely to continue to be, more onerous
in the  reasonable  judgment of Borrower  than with  respect to the other Banks,
then  Borrower  shall  have the  right at any time when no  Default  or Event of
Default  shall have  occurred and be  continuing  to seek one or more  financial
institutions  which are not Affiliates of Borrower (each, a "Replacement  Bank")
to purchase with the written consent of the Administrative  Agent (which consent
shall not be (x) required if such proposed  Replacement  Bank is already a Bank,
or an  Affiliate  of a  Bank,  or (y)  unreasonably  delayed  or  withheld)  the
outstanding  Loans and  Commitments of such Bank (the "Affected  Bank"),  and if
Borrower locate a Replacement Bank, the Affected Bank shall, upon

          i.   prior written notice to the Administrative Agent,

          ii.  (i) payment to the  Affected  Bank of the  purchase  price agreed
               between it and the Replacement  Bank (or, failing such agreement,
               a  purchase  price in the  amount  of the  outstanding  principal
               amount of the Affected Bank's Loans and accrued  interest thereon
               to the date of payment) by the Replacement Bank plus (ii) payment
               by Borrower of all Obligations (other than principal and interest
               with respect to Loans) then due to the  Affected  Bank or accrued
               for its account hereunder or under any other Loan Document,

          iii. satisfaction of the provisions set forth in Section 11.12, and

          iv.  payment by Borrower to the Affected  Bank and the  Administrative
               Agent of all reasonable out-of-pocket expenses in connection with
               such  assignment and assumption  (including the  recordation  fee
               described in Section 11.12),

assign and delegate all its rights and obligations under this Agreement and any
other Credit Document to which it is a party (including its outstanding Loans)
to the Replacement Bank (such assignment to be made without recourse,
representation or warranty), and the Replacement Bank

                                       55
<PAGE>

shall assume such rights and  obligations,  whereupon the Replacement Bank shall
in accordance with Section 11.12 become a party to each Credit Document to which
the Affected Bank is a party and shall have the rights and obligations of a Bank
thereunder  and the  Affected  Bank  shall  be  released  from  its  obligations
hereunder and each other Credit  Document to the extent of such  assignment  and
delegation.

     Section 11.21 Confidentiality. The Administrative Agent and the Banks shall
hold all non-public  information  provided to them by Borrower pursuant to or in
connection with this Agreement in accordance with their customary procedures for
handling confidential information of this nature, but may make disclosure to any
of their examiners, regulators,  Affiliates, outside auditors, counsel and other
professional  advisors in  connection  with this  Agreement  or any other Credit
Document  or as  reasonably  required  by any  potential  bona fide  transferee,
participant or assignee,  or in connection with the exercise of remedies under a
Credit Document,  or to any direct or indirect contractual  counterparty in swap
agreements or such contractual  counterparty's  professional advisor (so long as
such  contractual  counterparty  or  professional  advisor  to such  contractual
counterparty  agrees to be bound by the provisions of this Section 11.21), or to
any  nationally  recognized  rating agency that requires  access to  information
about a Bank's  investment  portfolio in  connection  with  ratings  issued with
respect  to  such  Bank,  or  as  requested  by  any   governmental   agency  or
representative  thereof or pursuant to legal process;  provided,  however,  that
unless   specifically   prohibited  by  applicable  law  or  court  order,   the
Administrative  Agent and each Bank shall use  reasonable  efforts  to  promptly
notify  Borrower of any  request by any  governmental  agency or  representative
thereof  (other than any such request in connection  with an  examination of the
financial   condition  of  the  Administrative   Agent  or  such  Bank  by  such
governmental  agency) for  disclosure of any such  non-public  information  and,
where  practicable,  prior to disclosure of such information.  Prior to any such
disclosure  pursuant to this Section 11.21,  the  Administrative  Agent and each
Bank shall  require  any such bona fide  transferee,  participant  and  assignee
receiving a disclosure of non-public  information  to agree,  for the benefit of
Borrower,  in writing to be bound by this  Section  11.21;  and to require  such
Person to require any other Person to whom such Person discloses such non-public
information to be similarly bound by this Section 11.21.

     Section  11.22  Rights  and   Liabilities  of   Documentation   Agents  and
Syndication Agents. Neither Documentation Agents nor Syndication Agents have any
special rights,  powers,  obligations,  liabilities,  responsibilities or duties
under this  Agreement  as a result of acting in the  capacity  of  Documentation
Agents or Syndication Agents, as applicable, other than those applicable to them
in their capacity as Banks hereunder.  Without  limiting the foregoing,  neither
Documentation  Agents nor  Syndication  Agents shall have or be deemed to have a
fiduciary   relationship  with  any  Bank.  Each  Bank  hereby  makes  the  same
acknowledgments  and undertakings  with respect to Documentation  Agents and the
Syndication Agents as it makes with respect to the Administrative  Agent and any
directors, officers, agents and employees of the Administrative Agent in Section
10.5.

     Section  11.23  Amendment  and  Restatement  of  Existing   364-Day  Credit
Agreement.  This  Agreement  amends and  restates the  Existing  364-Day  Credit
Agreement  in its  entirety.  From and  after  the  date  hereof  any  financial
institution  that was a "Bank" under the Existing  364-Day Credit  Agreement but
which is not a party to this Agreement shall have no obligation to make

                                       56
<PAGE>

loans to the Borrower either under the Existing 364-Day Credit  Agreement,  this
Agreement or any other Credit Document.


                 - Remainder of Page Intentionally Left Blank -
                            [Signature Page Follows]


                                       57
<PAGE>

         In Witness Whereof, the parties hereto have caused this Agreement to be
duly executed and delivered in New York, New York by their duly authorized
officers as of the day and year first above written.



                                         BLACK HILLS CORPORATION, a
                                         South Dakota corporation

                                         By:      _____________________________
                                         Name:    _____________________________
                                         Title:   _____________________________




                                       58
<PAGE>




Commitment: $[___________]             ABN AMRO BANK N.V., in its individual
                                       capacity as a Bank and as Administrative
                                       Agent

                                       By:      _____________________________
                                       Name:    David B. Bryant
                                       Title:   Senior Vice President &
                                                Managing Director

                                       By:      _____________________________
                                       Name:    _____________________________
                                       Title:   _____________________________

Address for notices:
         ABN AMRO Bank N.V.
         135 South LaSalle Street
         Suite 710
         Chicago, Illinois 60603
         Attention: David B. Bryant/Saad Qais
         Facsimile:  312.904.1466
         Telephone:  312.904.2799 (Mr. Bryant)
                     312.904.6473 (Mr. Qais)

With copy to:

         ABN AMRO Bank N.V.
         208 South LaSalle Street
         Suite 1500
         Chicago, Illinois 60604-1003
         Attention: Ken Keck
         Facsimile: (312) 992-5111
         Telephone: (312) 992-5134

Lending Offices:              Same as above

Base Rate Loans:              Same as above

Eurocurrency Loans:           Same as above


                                       59
<PAGE>


Commitment: $[__________]                UNION BANK OF CALIFORNIA, N.A.


                                         By:      _____________________________
                                         Name:    Robert J. Cole
                                         Title:   Vice President

Address for notices:

1980 Saturn St.
Monterey Park, CA 91754

Attention:  Ruby Gonzales
Phone:  (323) 720-7055
Fax:    (323) 724-6198

Lending Offices:

445 South Figueroa St., 15th Floor
Los Angeles, CA 90071

Attention:  Bryan Read


Base Rate Loans:

Same as address for notices.


Eurocurrency Loans:

Same as address for notices.


                                       60
<PAGE>



Commitment: $[___________]            U.S. BANK, NATIONAL
                                      ASSOCIATION, in its individual capacity
                                      as a Bank and as Documentation Agent

                                      By:      _____________________________
                                      Name:    Sandra Vollmer
                                      Title:   Senior Lender

Address for notices:

         U.S. Bank, National Association
         701 St. Joseph Street
         Rapid City, South Dakota 57701
         Attention: Ms. Sandra Vollmer
         Facsimile:   605.394.5500
         Telephone:  605.394.2019

Lending Offices:              Same as above

Base Rate Loans:              Same as above

Eurocurrency Loans:           Same as above



                                       61
<PAGE>



Commitment: $[____________]              BANK OF MONTREAL


                                         By:      _____________________________
                                         Name:    Ian M. Plester
                                         Title:   Director

Address for notices:

115 South LaSalle St.
Floor: 111-17W
Chicago, Illinois 60603
Attention: Client Services
Phone:  (312) 750 3771
Fax:    (312) 750 6061

Lending Offices:



Base Rate Loans:

115 South LaSalle St.
Floor: 111-17W
Chicago, Illinois 60603


Eurocurrency Loans:

115 South LaSalle St.
Floor: 111-17W
Chicago, Illinois 60603



                                       62
<PAGE>



Commitment: $[____________]          THE BANK OF NOVA SCOTIA


                                     By:      _____________________________
                                     Name:    F.C.H. Ashby
                                     Title:   Senior Manager Loan Operations

Address for notices:

600 Peachtree Street, N.E.
Suite 2700
Atlanta, Georgia 30308
Attention: Demetria January
Phone:  (404) 877-1578
Fax:    (404) 888-8998

Lending Offices:



Base Rate Loans:

Same As Above



Eurocurrency Loans:

Same As Above


                                       63
<PAGE>



Comitment: $[____________]            CIBC INC., as a Lender


                                      By:      _____________________________
                                      Name:    M. Sanjeeva Senanayake
                                      Title:   Executive Director
                                               CIBC World Markets Corp. As Agent

Address for notices:

CIBC Inc.
425 Lexington Avenue
New York, NY 10017
Attention:        Sanjeeva Senanayake
Phone:            (212) 856-3595
Fax:              (212) 885-4911


Lending Offices:


Base Rate Loans:

CIBC Inc.
2727 Paces Ferry Road, Suite 1200
Atlanta, GA 30339
Attention: Miriam McCart
Facsimile No.: (770) 319-4950


Eurocurrency Loans:

CIBC Inc.
2727 Paces Ferry Road, Suite 1200
Atlanta, GA 30339
Attention:   Miriam McCart
Facsimile No.: (770) 319-4950



                                       64
<PAGE>



Commitment: $[____________]              COBANK, ACB


                                         By:      _____________________________
                                         Name:    Cathleen Reed
                                         Title:   Assistant Vice President

Address for notices:

5500 S. Quebec St.
Greenwood Village, CO 80111
Attention: Cathleen Reed
Phone:  303-740-4101
Fax:    303-224-2590


Lending Offices:
5500 S. Quebec St.
Greenwood Village, CO 80111


Base Rate Loans:
5500 S. Quebec St.
Greenwood Village, CO 80111


Eurocurrency Loans:
5500 S. Quebec St.
Greenwood Village, CO 80111


                                       65
<PAGE>



Commitment: $[___________]              WELLS FARGO BANK, N.A.


                                        By:      _____________________________
                                        Name:    Thomas M. Foncannon
                                        Title:   Senior Vice President

Address for notices:

         Wells Fargo Bank, N.A.
         Energy Department
         MAC C7301-046
         1740 Broadway
         Denver, CO 80274
         Attention: Thomas M. Foncannon
         Phone:  303.863.5017
         Fax:    303.863.5196


Lending Offices:  Same as above

Base Rate Loans:  Same as above

Eurocurrency Loans:        Same as above


                                       66
<PAGE>



Commitment: $[___________]               THE DAI-ICHI KANGYO BANK, LTD.


                                         By:      _____________________________
                                         Name:    Nobuyasu Fukatsu
                                         Title:   General Manager

Address for notices:

10 South Wacker Drive, Suite 2600
Chicago, IL 60606

Attention: J. Richard Cummings
Phone:  312-715-6386
Fax:    312-876-2011


Lending Offices:


Base Rate Loans:

Loan Operations Department
1 World Trade Center, Suite 4911
New York, NY 10048-0487


Eurocurrency Loans:

Loan Operations Department
1 World Trade Center, Suite 4911
New York, NY 10048-0487


                                       67
<PAGE>



Commitment: $[___________]          THE FUJI BANK, LIMITED


                                    By:      _____________________________
                                    Name:    Peter L. Chinnic
                                    Title:   Senior Vice President & Group Head

Address for notices:

Suite 2000
225 W. Wacker Drive
Chicago, IL 60606
Attention:  Takeyuki Kuroki
Phone:  (312) 621-0534
Fax:    (312) 621-3386


Lending Offices:

Two World Trade Center
New York, NY 10048
Attention: Tina Catapana
Phone: (212) 898-2069
Fax:   (212) 775-1460


Base Rate Loans:

Two World Trade Center
New York, NY 10048
Attention: Tina Catapana
Phone: (212) 898-2069
Fax:   (212) 775-1460


Eurocurrency Loans:

Two World Trade Center
New York, NY 10048
Attention: Tina Catapana
Phone: (212) 898-2069
Fax:   (212) 775-1460


                                       68
<PAGE>



Commitment: $[_____________]             NATIONAL CITY BANK OF
                                         MICHIGAN/ILLINOIS


                                         By:      _____________________________
                                         Name:    Mark R. Long
                                         Title:   Senior Vice President

Address for notices:

National City Bank of Michigan/Illinois
2021 Spring Road, Suite 600
Oak Brook, IL 60523
Attention:        Donna Benson
Phone:            630-954-3189
Fax:              630-954-5570


Lending Offices:

National City Bank of Michigan/Illinois
2021 Spring Road, Suite 600
Oak Brook, IL 60523


Base Rate Loans:

National City Bank of Michigan/Illinois
2021 Spring Road, Suite 600
Oak Brook, IL 60523


Eurocurrency Loans:

National City Bank of Michigan/Illinois
2021 Spring Road, Suite 600
Oak Brook, IL 60523


                                       69
<PAGE>



Commitment: $[______________]         NORDEUTSCHE LANDESBANK
                                      GIROZENTRALE NEW YORK/
                                      CAYMAN ISLANDS BRANCH


                                      By:      _____________________________
                                      Name:    Stephanie Finnen
                                      Title:   Vice President

                                      By:      _____________________________
                                      Name:    Joseph Haas
                                      Title:   Vice President

Address for notices:

Norddeutsche Landesbank Girozentrale
1114 Avenue of the Americas, 37th Floor
New York, NY 10036
Attention: Stephanie Finnen
Phone:        212-812-6806
Fax:          212-812-6860


Lending Offices:


Base Rate Loans:

Norddeutsche Landesbank Girozentrale
1114 Avenue of the Americas, 37th Floor
New York, NY 10036
Attention: Andrea Johann
Phone:        212-812-6830
Fax:          212-812-6930


Eurocurrency Loans:

Norddeutsche Landesbank Girozentrale
1114 Avenue of the Americas, 37th Floor
New York, NY 10036
Attention: Andrea Johann
Phone:        212-812-6830
Fax:          212-812-6930



                                       70
<PAGE>

                                    EXHIBIT A

                                  364-DAY NOTE


                                                             August [__], 2002

         FOR VALUE RECEIVED, the undersigned, Black Hills Corporation, a South
Dakota corporation ("Borrower"), promises to pay to the order of
[_________________] (the "Bank") on the Termination Date of the hereinafter
defined Credit Agreement, at the principal office of ABN AMRO Bank N.V., in New
York, New York, in accordance with Section 4.1 of the Credit Agreement (as
hereafter defined), the aggregate unpaid principal amount of all Loans made by
the Bank to Borrower pursuant to the Credit Agreement, together with interest on
the principal amount of each Loan from time to time outstanding hereunder at the
rates, and payable in the manner and on the dates, specified in the Credit
Agreement.

         The Bank shall record on its books or records or on a schedule attached
to this Note, which is a part hereof, each Loan made by it pursuant to the
Credit Agreement, together with all payments of principal and interest and the
principal balances from time to time outstanding hereon, whether the Loan is a
Base Rate Loan or a Eurodollar Loan, and the interest rate and Interest Period
applicable thereto, provided that prior to the transfer of this Note all such
amounts shall be recorded on a schedule attached to this Note. The record
thereof, whether shown on such books or records or on a schedule to this Note,
shall be shall be prima facie evidence of the same; provided, however, that the
failure of the Bank to record any of the foregoing or any error in any such
record shall not limit or otherwise affect the obligation of Borrower to repay
all Loans made to it pursuant to the Credit Agreement together with accrued
interest thereon.

         This Note is one of the Notes referred to in the Amended and Restated
364-Day Credit Agreement dated as of August 27, 2002, among Borrower, ABN AMRO
Bank N.V., as Administrative Agent, U.S. Bank, National Association and The Bank
of Nova Scotiaas Documentation Agents, Union Bank of California, N.A. and Bank
of Montreal, as Syndication Agents and the financial institutions party thereto
(the "Credit Agreement"), and this Note and the holder hereof are entitled to
all the benefits provided for thereby or referred to therein, to which Credit
Agreement reference is hereby made for a statement thereof. All defined terms
used in this Note, except terms otherwise defined herein, shall have the same
meaning as in the Credit Agreement. This Note shall be governed by and construed
in accordance with the internal laws of the State of New York.

         Prepayments may be made hereon and this Note may be declared due prior
to the expressed maturity hereof, all in the events, on the terms and in the
manner as provided for in the Credit Agreement.

                 - Remainder of Page Intentionally Left Blank -
                            [Signature Page Follows]


                                       71
<PAGE>

         The Borrower hereby waives demand, presentment, protest or notice of
any kind hereunder.



                        BLACK HILLS CORPORATION, a
                        South Dakota corporation

                        By:      _____________________________
                        Name:    _____________________________
                        Title:   _____________________________




                                       72
<PAGE>

                                    EXHIBIT B

                             COMPLIANCE CERTIFICATE



         This Compliance Certificate is furnished to ABN AMRO Bank N.V., as
Administrative Agent pursuant to the Amended and Restated 364-Day Credit
Agreement dated as of August 27, 2002, among Black Hills Corporation, a South
Dakota corporation ("Borrower"), ABN AMRO Bank N.V., as Administrative Agent,
U.S. Bank, National Association and The Bank of Nova Scotia, as Documentation
Agents, Union Bank of California, N.A., and Bank of Montreal, as Syndication
Agents and the financial institutions party thereto (the "Credit Agreement").
Unless otherwise defined herein, the terms used in this Compliance Certificate
have the meanings ascribed thereto in the Credit Agreement.

         THE UNDERSIGNED HEREBY CERTIFIES THAT:

          1. I am the duly elected or appointed ___________________of Borrower;

          2. I have reviewed the terms of the Credit  Agreement and I have made,
     or have caused to be made under my  supervision,  a detailed  review of the
     transactions  and  conditions of Borrower and its  Subsidiaries  during the
     accounting period covered by the attached financial statements;

          3. The examinations  described in paragraph 2 did not disclose,  and I
     have no  knowledge  of,  the  existence  of any  condition  or event  which
     constitutes  a Default or an Event of  Default  during or at the end of the
     accounting period covered by the attached financial statements or as of the
     date of this Certificate, except as set forth below; and

          4.  Schedule  1  attached   hereto  sets  forth   financial  data  and
     computations  evidencing  compliance  with certain  covenants of the Credit
     Agreement,  all of which  data and  computations  are  true,  complete  and
     correct.  All  computations  are made in  accordance  with the terms of the
     Credit Agreement.

     Described below are the exceptions,  if any, to paragraph 3 by listing,  in
detail,  the nature of the  condition or event,  the period  during which it has
existed and the action which Borrower has taken, is taking,  or proposes to take
with respect to each such condition or event:

_______________________________________________________________________________
_______________________________________________________________________________


     The foregoing  certifications,  together with the computations set forth in
Schedule 1 hereto and the financial  statements  delivered with this Certificate
in support  hereof,  are made and delivered this  ___________day  of __________,
200_.

                                            ___________________________________


                                       73
<PAGE>

                      SCHEDULE 1 TO COMPLIANCE CERTIFICATE

                  Compliance Calculations for Credit Agreement

                       CALCULATION AS OF ________ __,200_

<TABLE>
<CAPTION>

------------------------------------------------------------------ --------------------- ---------------------------
A.       Liens (Sec. 7.9(c), (d), and (g))
------------------------------------------------------------------ --------------------- ---------------------------
------------------------------------------------------------------ --------------------- ---------------------------
<S>     <C>       <C>                                              <C>                   <C>

         1.       Liens securing taxes or assessments or other     _____________________ (Answer should be yes)
                  government charges or levies equal to or less
                  than $20,000,000 (Section 7.9(c))
------------------------------------------------------------------ --------------------- ---------------------------
------------------------------------------------------------------ --------------------- ---------------------------
         2.       Liens securing judgments or awards or surety     _____________________ (Answer should be yes)
                  or appeal bonds issued in connection therewith
                  equal to or less than $20,000,000 (Section
                  7.9(d))
------------------------------------------------------------------ --------------------- ---------------------------
------------------------------------------------------------------ --------------------- ---------------------------
         3.       Is the aggregate amount of Indebtedness and      _____________________ (Answer should be yes)
                  other obligations consisting of (i) the
                  deferred purchase price of newly acquired
                  property or incurred to finance the
                  acquisition of personal property of Borrower
                  used in the ordinary course of business of
                  such Borrower, (ii) Capitalized Lease
                  Obligations, and (iii) the performance of
                  tenders, statutory obligations, bids, leases
                  or other similar obligations (other than for
                  borrowed money) entered into in the ordinary
                  course of business or to secure obligations on
                  performance bonds which is secured by Liens
                  equal to or less than 5% of Consolidated
                  Assets as reflected on the most recent balance
                  sheet delivered by Borrower (Section 7.9(g)).
------------------------------------------------------------------ --------------------- ---------------------------
------------------------------------------------------------------ --------------------- ---------------------------
B.       Sale and Leasebacks (Section 7.11)
------------------------------------------------------------------ --------------------- ---------------------------
------------------------------------------------------------------ --------------------- ---------------------------
         1.       Aggregate obligations under all Sale and         $____________________ (Line B1 not to exceed
                  Leasebacks arrangements (other than synthetic                          $30,000,000)
                  lease transactions excluded by Section 7.11)
------------------------------------------------------------------ --------------------- ---------------------------
------------------------------------------------------------------ --------------------- ---------------------------
C.       Sale of Assets (Section 7.12)
------------------------------------------------------------------ --------------------- ---------------------------
------------------------------------------------------------------ --------------------- ---------------------------
         1.       Net book value of assets (other than             $____________________ (Line C1 not to exceed
                  inventory, reserves and electricity in the                             10% of total consolidated
                  ordinary course of business) sold during this                          assets)
                  fiscal year
------------------------------------------------------------------ --------------------- ---------------------------

                                       74
<PAGE>


------------------------------------------------------------------ --------------------- ---------------------------
D.       Permitted Investments (Section 7.14)
------------------------------------------------------------------ --------------------- ---------------------------
------------------------------------------------------------------ --------------------- ---------------------------
         1.       Aggregate amount of Investments in Marketing     $____________________
                  Subsidiaries made after the August 28, 2001
                  (Section 7.14(o)(ii))
------------------------------------------------------------------ --------------------- ---------------------------
------------------------------------------------------------------ --------------------- ---------------------------
         2.       Investments consisting of Guaranties of          $____________________
                  Indebtedness of Marketing Subsidiaries
                  existing on the Effective Date
------------------------------------------------------------------ --------------------- ---------------------------
------------------------------------------------------------------ --------------------- ---------------------------
         3.       Intercompany loans permitted pursuant to         $____________________ Line E3
                  Section 7.15(e)(iii) owing by Marketing
                  Subsidiaries (Line E3)
------------------------------------------------------------------ --------------------- ---------------------------
------------------------------------------------------------------ --------------------- ---------------------------
         4.       Sum of Lines D1, D2 and D3                       $____________________
------------------------------------------------------------------ --------------------- ---------------------------
------------------------------------------------------------------ --------------------- ---------------------------
         5.       Is Line D4 equal to or less than $10,000,000?    _____________________ (Answer should be yes)
------------------------------------------------------------------ --------------------- ---------------------------
------------------------------------------------------------------ --------------------- ---------------------------
         6.       Aggregate amount of Investments in Persons       $____________________ (Line D6 not to exceed
                  engaged in the lines of business described in                          $20,000,000)
                  clause (xii) of Section 7.8 (Section 7.14(k))
------------------------------------------------------------------ --------------------- ---------------------------
------------------------------------------------------------------ --------------------- ---------------------------
E.       Permitted Indebtedness (Section 7.15)
------------------------------------------------------------------ --------------------- ---------------------------
------------------------------------------------------------------ --------------------- ---------------------------
         1.       Secured Indebtedness except as set forth on      $____________________ (Line E1 not to exceed 5%
                  Schedule 7.15(b): (i) of BHP (ii) evidencing                           of Consolidated Assets)
                  the deferred purchase price of newly acquired property or
                  incurred to finance the acquisition of personal property of
                  Borrower or a Subsidiary used in the ordinary course of
                  business of the Borrower of a Subsidiary, (iii) constituting
                  Capitalized Lease Obligations or with respect to synthetic (or
                  similar type) lease transactions, or (iv) incurred in
                  connection with the performance of tenders, statutory
                  obligations, bids, leases or other similar obligations (other
                  than for borrowed money) entered into in the ordinary course
                  of business or to secure obligations on performance bonds
                  (Section 7.15(c))
------------------------------------------------------------------ --------------------- ---------------------------
------------------------------------------------------------------ --------------------- ---------------------------
         2.       Intercompany loans owing by Borrower (Section    $____________________ (Must be subordinated to
                  7.15(e)(i)(x))                                                         Obligations)
------------------------------------------------------------------ --------------------- ---------------------------

                                       75
<PAGE>

------------------------------------------------------------------ --------------------- ---------------------------
         3.       Intercompany Indebtedness owing by Marketing     $____________________ (Line E3 not to exceed
                  Subsidiaries to Subsidiaries (Section                                  the difference between
                  7.15(e)(iii))                                                          (i) $10,000,000 less (ii)
                                                                                         the sum of  Lines E4 and
                                                                                         D1)
------------------------------------------------------------------ --------------------- ---------------------------
------------------------------------------------------------------ --------------------- ---------------------------
         4.       Indebtedness consisting of Guarantees            $____________________ (Line E4 not to exceed
                  (including Long-Term Guaranties) of Marketing                          the difference between
                  Subsidiary Indebtedness  (Section 7.15(f))                             (i) $10,000,000 less (ii)
                                                                                         the sum of Lines E3 and
                                                                                         D1)
------------------------------------------------------------------ --------------------- ---------------------------
------------------------------------------------------------------ --------------------- ---------------------------
         5.       Indebtedness of Marketing Subsidiaries under     $____________________ (Line E5 not to exceed
                  Marketing Subsidiary Excluded Credit                                   Marketing Subsidiary
                  Facilities (Section 7.15(g))                                           Indebtedness Limit)
------------------------------------------------------------------ --------------------- ---------------------------
------------------------------------------------------------------ --------------------- ---------------------------
F.       Consolidated Net Worth (Section 7.16)
------------------------------------------------------------------ --------------------- ---------------------------
------------------------------------------------------------------ --------------------- ---------------------------
         1.       Consolidated Net Worth                           $____________________
------------------------------------------------------------------ --------------------- ---------------------------
------------------------------------------------------------------ --------------------- ---------------------------
         2.       50% of aggregate Consolidated Net Income, if     $____________________
                  positive, from and including April 1, 2002
------------------------------------------------------------------ --------------------- ---------------------------
------------------------------------------------------------------ --------------------- ---------------------------
         3.       Does Line F1 exceed sum of (i) $425,000,000      _____________________ (Answer should be yes)
                  plus (ii) line F2
------------------------------------------------------------------ --------------------- ---------------------------
------------------------------------------------------------------ --------------------- ---------------------------
G.       Recourse Leverage Ratio (Section 7.17)
------------------------------------------------------------------ --------------------- ---------------------------
------------------------------------------------------------------ --------------------- ---------------------------
         1.       consolidated Indebtedness                        $____________________
------------------------------------------------------------------ --------------------- ---------------------------
------------------------------------------------------------------ --------------------- ---------------------------
         2.       Non-Recourse Indebtedness                        $____________________
------------------------------------------------------------------ --------------------- ---------------------------
------------------------------------------------------------------ --------------------- ---------------------------
         3.       Recourse Indebtedness (Line G1 minus Line G2)    $____________________
------------------------------------------------------------------ --------------------- ---------------------------
------------------------------------------------------------------ --------------------- ---------------------------
         4.       Indebtedness of Marketing Subsidiaries under     $____________________ (Not to exceed Marketing
                  Marketing Subsidiary Excluded Credit                                   Subsidiary Indebtedness
                  Facilities (Line E5)                                                   Limit)
------------------------------------------------------------------ --------------------- ---------------------------
------------------------------------------------------------------ --------------------- ---------------------------
         5.       Consolidated Net Worth                           $____________________
------------------------------------------------------------------ --------------------- ---------------------------
------------------------------------------------------------------ --------------------- ---------------------------
         6.       Capital (Line G3 minus Line G4 plus Line G5)     $____________________
------------------------------------------------------------------ --------------------- ---------------------------
------------------------------------------------------------------ --------------------- ---------------------------
         7.       Recourse Leverage Ratio                          _________ :1.00       (ratio of (A) difference
                                                                                         between (x) Line G3 minus
                                                                                         (y) Line G4 to (B) Line
                                                                                         G6 not to exceed 0.65 to
                                                                                         1.00)
------------------------------------------------------------------ --------------------- ---------------------------
------------------------------------------------------------------ --------------------- ---------------------------
H.       Fixed Charge Coverage Ratio (Section 7.18)
------------------------------------------------------------------ --------------------- ---------------------------

                                       76
<PAGE>


------------------------------------------------------------------ --------------------- ---------------------------
         1.       Consolidated Net Income for past four fiscal     $____________________
                  quarters
------------------------------------------------------------------ --------------------- ---------------------------
------------------------------------------------------------------ --------------------- ---------------------------
         2.       Income taxes for past four fiscal quarters (to   $____________________
                  the extent subtracted in calculating H1)
------------------------------------------------------------------ --------------------- ---------------------------
------------------------------------------------------------------ --------------------- ---------------------------
         3.       Consolidated Interest Expense for past four      $____________________ Insert amount from Line
                  fiscal quarters (to the extent subtracted in                           H18
                  calculating H1)
------------------------------------------------------------------ --------------------- ---------------------------
------------------------------------------------------------------ --------------------- ---------------------------
         4.       Amortization expense for intangible assets       $____________________
                  for past four fiscal quarters (to the extent
                  subtracted in calculating H1)
------------------------------------------------------------------ --------------------- ---------------------------
------------------------------------------------------------------ --------------------- ---------------------------
         5.       Depreciation expense for past four fiscal
                  quarters (to the extent subtracted in
                  calculating H1)
------------------------------------------------------------------ --------------------- ---------------------------
------------------------------------------------------------------ --------------------- ---------------------------
         6.       Losses on sales of assets (excluding sales in    $____________________
                  the ordinary course of business) and other
                  extraordinary losses for past four fiscal
                  quarters (to the extent subtracted in
                  calculating H1)
------------------------------------------------------------------ --------------------- ---------------------------
------------------------------------------------------------------ --------------------- ---------------------------
         7.       Interest income for past four fiscal quarters    $____________________
                  arising from traditional investment
                  activities with banks, investment banks
                  and other financial institutions or relating
                  to governmental or other marketable securities
                  (to the extent added in calculating H1)
------------------------------------------------------------------ --------------------- ---------------------------
------------------------------------------------------------------ --------------------- ---------------------------
         8.       Gains on sales of assets (excluding sales in     $____________________
                  the ordinary course of business) and other
                  extraordinary gains for past four fiscal
                  quarters (to the extent added in calculating
                  H1)
------------------------------------------------------------------ --------------------- ---------------------------
------------------------------------------------------------------ --------------------- ---------------------------
         9.       Capital Expenditures for past four fiscal        $____________________
                  quarters
------------------------------------------------------------------ --------------------- ---------------------------
------------------------------------------------------------------ --------------------- ---------------------------
         10.      Without duplication, any payments made by a
                  Consolidated Subsidiary constituting a
                  repayment of principal Indebtedness (other
                  than (x) the Obligations and (y) repayments of
                  principal made with the proceeds of a            $____________________
                  refinancing of such Indebtedness otherwise
                  permitted pursuant to this Agreement) or with
                  respect to a reserve, and
------------------------------------------------------------------ --------------------- ---------------------------

                                       77
<PAGE>


------------------------------------------------------------------ --------------------- ---------------------------
         11.       Without duplication, any other mandatory
                  payment made by a Consolidated Subsidiary in
                  such period not included as an expense or loss   $____________________
                  in calculating Consolidated Net Income
------------------------------------------------------------------ --------------------- ---------------------------
------------------------------------------------------------------ --------------------- ---------------------------
         12.      Consolidated EBITDA (sum of Lines H1, H2, H3,    $____________________
                  H4, H5 and H6 less sum of Lines H7, H8, H9,
                  H10 and H11)
------------------------------------------------------------------ --------------------- ---------------------------
------------------------------------------------------------------ --------------------- ---------------------------
         13.      Restricted Earnings for the past four fiscal     $____________________
                  quarters
------------------------------------------------------------------ --------------------- ---------------------------
------------------------------------------------------------------ --------------------- ---------------------------
         14.      Adjusted Consolidated EBITDA (Line H12 minus     $____________________
                  Line H13)
------------------------------------------------------------------ --------------------- ---------------------------
------------------------------------------------------------------ --------------------- ---------------------------
         15.      All interest charges (including capitalized      $____________________
                  interest, imputed interest charges with
                  respect to Capitalized Lease Obligations and
                  all amortization of debt discount and expense
                  and other deferred financing charges) of the
                  Borrower and its Subsidiaries on a
                  consolidated basis for such period determined
                  in accordance with GAAP, other than interest
                  charges relating to Non-Recourse Indebtedness
------------------------------------------------------------------ --------------------- ---------------------------
------------------------------------------------------------------ --------------------- ---------------------------
         16.      All commitment or other fees payable in          $____________________
                  respect of the issuance of standby letters of
                  credit or other credit facilities for the
                  account of the Borrower or its Subsidiaries
------------------------------------------------------------------ --------------------- ---------------------------
------------------------------------------------------------------ --------------------- ---------------------------
         17.      Net costs/expenses incurred by the Borrower      $____________________
                  and its Subsidiaries under Derivative
                  Arrangements
------------------------------------------------------------------ --------------------- ---------------------------
------------------------------------------------------------------ --------------------- ---------------------------
         18.      Consolidated Interest Expense (Sum of Lines      $____________________
                  H15, H16 and H17)
------------------------------------------------------------------ --------------------- ---------------------------
------------------------------------------------------------------ --------------------- ---------------------------
         19.      The aggregate amount of all mandatory            $____________________
                  scheduled payments (whether designated as
                  payments or prepayments) and scheduled sinking
                  fund payments with respect to principal of any
                  Recourse Indebtedness of the Borrower or its
                  Subsidiaries (including payments in the nature
                  of principal under Capital Leases) for the
                  last 4 quarters
------------------------------------------------------------------ --------------------- ---------------------------
------------------------------------------------------------------ --------------------- ---------------------------
         20.      Consolidated Fixed Charges (Sum of Lines H18     $____________________
                  and H19)
------------------------------------------------------------------ --------------------- ---------------------------

                                       78
<PAGE>

------------------------------------------------------------------ --------------------- ---------------------------
         21.      Fixed Charge Coverage Ratio (ratio of Lines      _________1.00        (ratio must not be less
                  H14 to (ii) Line H20)                                                  than 1.50 to 1.00)
------------------------------------------------------------------ --------------------- ---------------------------
------------------------------------------------------------------ --------------------- ---------------------------
I.       Liquidity Covenant (Section 7.26)
------------------------------------------------------------------ --------------------- ---------------------------
------------------------------------------------------------------ --------------------- ---------------------------
         1.       Unrestricted cash at Borrower                    $____________________
------------------------------------------------------------------ --------------------- ---------------------------
------------------------------------------------------------------ --------------------- ---------------------------
         2.       Unused availability of senior unsecured credit   $____________________
                  facilities available to Borrower
------------------------------------------------------------------ --------------------- ---------------------------
------------------------------------------------------------------ --------------------- ---------------------------
         3.       Liquid Assets (Line I1 plus Line I2)             $___________________  (amount must exceed
                                                                                         $30,000,000)
------------------------------------------------------------------ --------------------- ---------------------------
</TABLE>


                                       79
<PAGE>

                                   SCHEDULE 1

                                  PRICING GRID

<TABLE>
<CAPTION>
------------------ ------------------- ------------ ------------------- -------------------
  If the Level      The Facility Fee       The        The Eurodollar      The Base Rate
    Status Is           Rate is:       Utilization      Margin is:          Margin is:
                                        Fee Rate
                                           is:
------------------ ------------------- ------------ ------------------- -------------------
------------------ ------------------- ------------ ------------------- -------------------
<S>                <C>                 <C>          <C>                  <C>
Level I Status     0.080%              0.100%       0.420%                    0.000%
------------------ ------------------- ------------ ------------------- -------------------
------------------ ------------------- ------------ ------------------- -------------------
Level II Status    0.100%              0.125%       0.500%                    0.000%
------------------ ------------------- ------------ ------------------- -------------------
------------------ ------------------- ------------ ------------------- -------------------
Level III Status   0.125%              0.150%       0.625%                    0.000%
------------------ ------------------- ------------ ------------------- -------------------
Level IV Status    0.150%              0.200%       0.725%                    0.000%
------------------ ------------------- ------------ ------------------- -------------------
------------------ ------------------- ------------ ------------------- -------------------
Level V Status     0.200%              0.250%       0.800%                    0.000%
------------------ ------------------- ------------ ------------------- -------------------
------------------ ------------------- ------------ ------------------- -------------------
Level VI Status    0.600%              0.500%       1.400%                    0.400%
------------------ ------------------- ------------ ------------------- -------------------
</TABLE>


         Each change in a rating shall be effective as of the date it is
announced by the applicable rating agency.

         In the event that the Moody's Rating and the S&P Rating fall in
consecutive Levels, the rating falling in the lower Level (with Level I being
the highest Level and Level VI being the lowest Level) shall govern for purposes
of determining the applicable pricing pursuant to the above pricing grid. In the
event that the Moody's Rating and the S&P Rating fall in non-consecutive Levels,
the Level immediately above the Level in which the lower rating falls (with
Level I being the highest Level and Level VI being the lowest Level) shall
govern for purposes of determining the applicable pricing pursuant to the above
pricing grid.


                                       80
<PAGE>

                                   SCHEDULE 4
              ADMINISTRATIVE AGENT'S NOTICE AND PAYMENT INFORMATION

                                Part A - Payments

Loan Repayments, Interest, Fees:

                  ABN AMRO Bank N.V.
                  New York, NY
                  ABA # 026009580
                  F/O ABN AMRO Bank, N.V.
                  Chicago Branch CPU
                  Account # 650-001-1789-41
                  Reference:  Agency Services  Black Hills Corporation


                                Part B - Notices

Notices related to commitments, covenants or extensions of expiry/termination
dates:

                  ABN AMRO Bank N.V.
                  208 South LaSalle Street, Suite 1500
                  Chicago, IL  60604-1003
                  Attn: Agency Services
                  E-Mail:   beata.konopko@abnamro.com
                  FAX:     (312)-992-5157

                  ABN AMRO Bank N.V.
                  208 South LaSalle Street, Suite 1500
                  Chicago, IL  60604-1003
                  Attn: Credit Administration
                  E-Mail: kenneth.keck@abnamro.com
                  FAX:     312-992-5111

                  ABN AMRO Bank N.V.
                  135 South LaSalle Street, Suite 710
                  Chicago, Illinois 60603
                  Attn: Thomas Sterr
                  E-Mail: thomas.sterr@abnamro.com
                  FAX: (312)-904-6387

Notices related to Loans, Letters of Credit and Fees:

                  ABN AMRO Bank N.V.
                  208 South LaSalle Street, Suite 1500
                  Chicago, IL  60604-1003
                  Attn: Agency Services


                                       81
<PAGE>

                  E-Mail:   beata.konopko@abnamro.com
                  FAX:     312-992-5157

Address for all Required Executed Documentation and Financial Information:

                  ABN AMRO Bank N.V.
                  208 South LaSalle Street, Suite 1500
                  Chicago, IL  60604-1003
                  Attn: Credit Administration
                  E-Mail: kenneth.keck@abnamro.com
                  FAX:     312-992-5111



                                       82
<PAGE>

                                  SCHEDULE 5.2

                      BLACK HILLS CORPORATION SUBSIDIARIES
<TABLE>
<CAPTION>

                    Subsidiary Name                State of Origin          BHC's        Description of Subsidiary's
                                                                          Ownership       Authorized Capital Stock, if
                                                                                              not wholly owned
<S>     <C>                                     <C>                    <C>                           <C>

1        Acquisition Partners, L.P.             New York               100%                          N/A
2.       Adirondack Hydro Development           Delaware               100%                          N/A
         Corporation
3.       Adirondack Hydro-Fourth Branch, LLC    New York               100%                          N/A
4.       Adirondack Operating Services, LLC     New York               100%                          N/A
5.       Black Hills Berkshire, LLC             Delaware               100%                          N/A
6.       Black Hills Capital Development, Inc.  Illinois               100%                          N/A
7.       Black Hills Colorado, LLC              Delaware               100%                          N/A
8.       Black Hills Energy Capital, Inc.       Delaware               100%                          N/A
9.       Black Hills Energy Pipeline, LLC       Delaware               100%                          N/A
10.      Black Hills Energy Resources, Inc.     South Dakota           100%                          N/A
11.      Black Hills Energy Terminal, LLC       South Dakota           100%                          N/A
12.      Black Hills Energy, Inc.               South Dakota           100%                          N/A
13.      Black Hills Exploration and            Wyoming                100%                          N/A
         Production, Inc.
14.      Black Hills Fiber Systems, Inc.        South Dakota           100%                          N/A
15.      Black Hills Fibercom, LLC              South Dakota           51%              Black Hills Fibercom, LLC
                                                                                        has a single class of units
                                                                                        of membership of which 41
                                                                                        units are issued and
                                                                                        outstanding.  Black Hills
                                                                                        Fiber Systems, Inc. holds 21
                                                                                        units.
16.      Black Hills Fountain Valley, LLC       Delaware               100%                          N/A
17.      Black Hills Generation, Inc.           Wyoming                100%                          N/A

18.      Black Hills Harbor, LLC                Delaware               83.3%            Black Hills Harbor, LLC has

                                       83
<PAGE>

                                                                                        a single class of units of
                                                                                        membership.  100 units of
                                                                                        which are currently issued
                                                                                        and outstanding. Black
                                                                                        Hills Corporation indirectly
                                                                                        holds interests in 83.3% of
                                                                                        the units.
19.      Black Hills High Desert, Inc.          Delaware               100%                          N/A
20.      Black Hills Idaho Operations, LLC      Delaware               100%                          N/A
21.      Black Hills Independent Power Fund,    Texas                  100%                          N/A
         Inc.
22.      Black Hills Kilgore Energy Pipeline,   Delaware               100%                          N/A
         LLC
23.      Black Hills Kilgore Pipeline, Inc.     Delaware               100%                          N/A
24.      Black Hills Kilgore Pipeline           Texas                  100%                          N/A
         Company, L.P.
25.      Black Hills Long Beach, Inc.           Delaware               100%                          N/A
26.      Black Hills Millennium Pipeline, Inc.  South Dakota           100%                          N/A
27.      Black Hills Millennium Terminal, Inc.  South Dakota           100%                          N/A
28.      Black Hills Nevada Operations, LLC     Delaware               100%                          N/A
29.      Black Hills Nevada Real Estate         Delaware               100%                          N/A
         Holdings, LLC
30.      Black Hills Nevada, LLC                Delaware               100%                          N/A
31.      Black Hills North America, Inc.        Delaware               100%                          N/A
32.      Black Hills Operating Company, LLC     Delaware               100%
33.      Black Hills Ontario, LLC               Delaware               50%              Black Hills Ontario, LLC has
                                                                                        a single class of units of
                                                                                        membership, of which 100
                                                                                        units are issued and
                                                                                        outstanding.
34.      Black Hills Power, Inc.                South Dakota           100%                          N/A
35.      Black Hills Southwest, LLC             Delaware               100%                          N/A
36       Black Hills Valmont Colorado, Inc.     Delaware               100%                          N/A
37.      DAKSOFT, Inc.                          South Dakota           100%                          N/A

38.      Desert Arc I, LLC                      Delaware               50%              Desert Arc I, LLC has a
                                                                                        single class of units of
                                                                                        membership, of which

                                       84
<PAGE>
                                                                                        Black Hills Corporation
                                                                                        indirectly holds 50%.

39.      Desert Arc II, LLC                     Delaware               50%              Desert Arc II, LLC has a
                                                                                        single class of unites of
                                                                                        membership, of which
                                                                                        Black Hills Corporation
                                                                                        indirectly holds 50%.
40.      EIF Investors, Inc.                    Delaware               100%                          N/A
41.      E-Next A Equipment Leasing Company,    Delaware               100%                          N/A
         LLC
42.      Enserco Energy, Inc.                   South Dakota           100%                          N/A
43.      Fountain Valley Power, L.L.C.          Delaware               100%                          N/A
44.      Harbor Cogeneration Company            California             83.3%            Harbor Cogeneration Company
                                                                                        is a California general
                                                                                        partnership.  Black Hills
                                                                                        Corporation has an indirect
                                                                                        ownership interest of 83.3%
45.      Hudson Falls, LLC                      New York               100%                          N/A
46.      ICPM, Inc.                             Illinois               100%                          N/A
47.      Indeck Auburndale, LLC                 Delaware               100%                          N/A
48.      Indeck Gordonsville, LLC               Delaware               100%                          N/A
49.      Indeck North American Power Fund, LP   Delaware               81.9%            Indeck North American Power
                                                                                        Fund, L.P. is a limited.
                                                                                        Black Hills Corporation
                                                                                        holds direct and indirect
                                                                                        general and limited
                                                                                        partnership interests
                                                                                        totaling up to 81.9%.
50.      Indeck Hills North American Power      Delaware               85.7%            Indeck North American Power
         Partners, LP                                                                   Partners, LP is a limited.
                                                                                        Black Hills Corporation
                                                                                        holds direct and indirect
                                                                                        general and limited
                                                                                        partnership interests
                                                                                        totaling up to 85.7%

51.      Indeck Pepperell Power Associates,     Delaware               82.9%            Indeck Pepperell Power
         Inc.                                                                           Associates, Inc. has a
                                                                                        single class of stock
                                                                                        with 100 shares issued
                                                                                        and outstanding.  Black
                                       85
<PAGE>

                                                                                        Hills Corporation
                                                                                        indirectly owns 82.9%
                                                                                        of the capital stock of
                                                                                        Indeck Pepperell, by
                                                                                        and through its interests
                                                                                        in Indeck North
                                                                                        American Power Fund,
                                                                                        L.P.

52.      Landrica Development Company           South Dakota           100%                          N/A
53.      Las Vegas Cogeneration Energy          Delaware               100%                          N/A
         Financing, LLC
54.      Las Vegas Cogeneration II, LLC         Delaware               100%                          N/A
55.      Las Vegas Cogeneration Limited         Nevada                 50%              Las Vegas Cogeneration
         Partnership                                                                    Limited Partnership has an
                                                                                        85% general partnership
                                                                                        interest, of which Black
                                                                                        Hills Corporation indirectly
                                                                                        owns 50%, and a 15% limited
                                                                                        partnership interest, of
                                                                                        which Black Hills
                                                                                        Corporation indirectly owns
                                                                                        50%.
56.      Middle Falls Corporation               New York               100%                          N/A
57.      Middle Falls II, LLC                   New York               100%                          N/A
58.      Middle Falls Limited Partnership       New York               50%              Middle Falls Limited
                                                                                        Partnership has a 2%
                                                                                        general partnership
                                                                                        interest, of which Black
                                                                                        Hills Corporation
                                                                                        indirectly holds 1%, and
                                                                                        a 98% limited
                                                                                        partnership interest, of
                                                                                        which Black Hills
                                                                                        Corporation indirectly
                                                                                        holds 49%


59.      Middle Falls Partners, LLC             New York               50%              Middle Falls Partners,
                                                                                        LLC has a single class
                                                                                        of units of membership,
                                                                                        of which Black Hills
                                                                                        Corporation indirectly

                                       86
<PAGE>

                                                                                        holds 50%.
60.      Millennium Pipeline Company, L.P.      Texas                  100%
61.      Millennium Terminal Company, L.P.      Texas                  100%
62.      NHP, L.P.                              New York               100%                          N/A
63.      North American Funding, L.L.C.         Delaware               100%                          N/A
64.      Northern Electric Power Company, L.P.  New York               37%              Northern Electric Power
                                                                                        Company, L.P. has a
                                                                                        99% limited partnership
                                                                                        interest, of which Black
                                                                                        Hills Corporation
                                                                                        indirectly owns 36.5%
                                                                                        and a 1% general
                                                                                        partnership interest, of
                                                                                        which Black Hills
                                                                                        Corporation indirectly
                                                                                        owns 0.5%.
65.      NYSD Limited Partnership               New York               100%                          N/A
66.      NYSD Partners, LLC                     New York               100%                          N/A
67.      Sissonville Corporation                New York               100%                          N/A
68.      Sissonville II, LLC                    New York               100%                          N/A
69.      Sissonville Limited Partnership        New York               100%                          N/A
70.      Sissonville Partners, LLC              New York               100%                          N/A
71.      South Glens Falls, L.P.                New York               30.2%            South Glens Falls, L.P.
                                                                                        has a 99% limited
                                                                                        partnership interest, of
                                                                                        which Black Hills
                                                                                        Corporation indirectly
                                                                                        owns 29.7% and a 1%
                                                                                        general partnership
                                                                                        interest, of which Black
                                                                                        Hills Corporation
                                                                                        indirectly owns 0.5%.
72.      South Glens Falls, LLC                 New York               100%                          N/A
73.      State Dam Corporation                  New York               100%                          N/A
74.      State Dam II, LLC                      New York               100%                          N/A


75.      Sunco, Ltd., a limited liability       Nevada                 100%                          N/A
         company
76.      VariFuel, LLC                          South Dakota           100%                          N/A
77.      Warrensburg Corporation                New York               100%                          N/A
78.      Warrensburg Hydro Power Limited        New York               100%                          N/A
         Partnership

                                       87
<PAGE>


79.      Warrensburg II Corporation             New York               100%                          N/A
80.      Wyodak Resources Development Corp.     Delaware               100%                          N/A
</TABLE>


                                       88
<PAGE>


                                  SCHEDULE 5.5

                       LITIGATION AND LABOR CONTROVERSIES

Black Hills Harbor, LLC - City of Long Beach

         In June of 2000, the City of Long Beach, a municipal corporation in the
State of California, acting for the Port of Long Beach ("City"), brought an
action against Black Hills Harbor, LLC (formerly known as Indeck Harbor, LLC)
("Fund"), alleging breaches of a partnership interest purchase agreement dated
as of January 1, 1995 ("Agreement"), relating to the amount and timing of
certain contingent payments, if any, due the City resulting in claims by the
City in excess of $9 million. The court ordered that the disputes raised in
litigation must be resolved by arbitration in accordance with the terms of the
Agreement. Representatives of the City and the Fund engaged in mediation to
attempt to resolve the disputes involving a transportation tax for natural gas
delivered to a power facility located in Long Beach and owned by the Fund.
Because the parties were unable to reach resolution of the dispute, they have
pursued arbitration.

Grizzly Gulch Fire

         On June 29, 2002, a forest fire began near Deadwood, South Dakota.
Before being contained more than eight days later, the fire consumed over 10,000
acres of public and private land, mostly consisting of rugged forested areas.
The fire destroyed 7 homes, and approximately 15 outbuildings. There are no
reported personal injuries at this time. In addition, the fire burned to the
edge of the City of Deadwood, forcing the evacuation of the City of Deadwood,
and an adjacent City of Lead, South Dakota. These communities are active in the
tourist and gaming industries. Individuals were ordered to leave their homes and
motels, and businesses were closed for a short period of time. On July 16, 2002,
the State of South Dakota announced the results of its investigation of the
cause and origin of the fire. The State concluded that the fire was caused by
tree encroachment into and contact with a transmission line owned and maintained
by Black Hills Power, Inc.

         Black Hills Power is in the process of completing its own investigation
of the fire, and will request access to the materials that form the basis for
the State's conclusions. This investigation is not complete. Depending on the
outcome of this process, it is possible that claims will be made against Black
Hills Power for damages allegedly caused by the fire, for fire suppression costs
and costs of remediation of burned areas, for individual and business losses
relating to injury to personal and real property, and lost income. No civil
action or regulatory proceeding is pending at this time.


                                       89
<PAGE>

                                  SCHEDULE 5.11

                              ENVIRONMENTAL MATTERS

                                      None.



                                       90
<PAGE>



                                  SCHEDULE 7.9

                                 EXISTING LIENS

1.   Enserco  Energy  Inc.  has  granted a security  interest in favor of Fortis
     Capital  Corp.,  with respect to Enserco  Energy Inc.'s  personal  property
     assets  to  secure  the  $135,000,000  credit  facility  referred  to in on
     Schedule 7.15.

2.   Black Hills Energy Resources, Inc. has granted a security interest in favor
     of Fortis  Capital  Corp.,  with respect to Black Hills  Energy  Resources,
     Inc.'s personal  property assets to secure the $25,000,000  credit facility
     referred to on Schedule 7.15.

3.   Black Hills Power, Inc. Indenture of Mortgage and Deed of Trust has a first
     mortgage lien on  substantially  all of the properties used in the electric
     utility business excluding "Excepted  Property." Excepted property includes
     all cash and securities;  all contracts,  leases and other agreements;  all
     permits, licenses,  franchises and rights granted by governmental entities;
     all movable  equipment and parts including  motor vehicles;  all materials,
     supplies  and  merchandise  offered  for  sale in the  ordinary  course  of
     business,  fuel and other  consumables;  all  office  furniture  and office
     equipment,  communications  equipment and computer equipment; all minerals,
     crops and timber harvested or extracted from land; all leasehold interests;
     and all property not used in the electric utility business.

4.   Black Hills  Exploration and Production has granted  security  interests in
     various  certificates  of  deposits  for oil & gas  leases  and  operations
     totaling less than $150,000 in aggregate.

5.   Wyodak  Resources  Development  Corp. has granted a security  interest in a
     certificate  of  deposit  in the  amount  of  $397,000  to  securitize  its
     self-insurance permit for black lung liability.

                                       91
<PAGE>

                                  Schedule 7.14
                              Existing Investments

1.   Landrica  Development  Company holds 700,000  registered  and  unrestricted
     shares of the common stock of KFx, Inc. and 1,300,000  warrants to purchase
     a single  share of the  common  stock of KFx at $3.48 at any time  prior to
     April 30, 2005.

2.   Landrica  Development  Company holds a $450,000 equity  investment in Phase
     Technology, LLC.

3.   Landrica  Development  Company holds a $50,000 equity investment in Genesis
     Equity Fund, LLC.

4.   Black Hills Corporation  holds  investments in life insurance  policies and
     nonqualified deferred compensation plans in the amount of $2,363,000.

5.   Black Hills Power,  Inc. holds  investments in life insurance  policies and
     nonqualified deferred compensation plans in the amount of $2,586,000.

6.   Wyodak  Resources  Development  Corp.  holds  investments in life insurance
     policies in the amount of $451,000.

7.   Black Hills  Exploration  and  Production,  Inc. holds  investments in life
     insurance policies in the amount of $72,000.

8.   Black Hills FiberCom,  LLC holds investments in life insurance  policies in
     the amount of $108,000.

9.   Daksoft, Inc. holds investments in life insurance policies in the amount of
     $149,000.

10.  Black Hills Energy  Capital,  Inc. has an equity  investment in Black Hills
     Idaho Operations, LLC in the amount of $2,968,000.

11.  Black Hills Energy Capital,  Inc. has an equity  investment in EIF Funds in
     the amount of $9,888,000.

12.  Black Hills Energy  Capital,  Inc. holds other various notes  receivable in
     the aggregate amount of $1,676,000

13.  Black Hills Fiber Systems,  Inc. holds a convertible  debenture note in the
     amount of $40,000,000 due from Black Hills FiberCom, LLC.


                                       92
<PAGE>

                                  SCHEDULE 7.15
                             PERMITTED INDEBTEDNESS
<TABLE>
<CAPTION>

(A) Indebtedness of Marketing Subsidiaries
<S>                   <C>                                                                                <C>
1.                    Enserco Energy Inc. Credit Facility with Fortis Capital Corp.                      $135,000,000
2.                    Black Hills Energy Resources, Inc. Credit Facility with Fortis Capital              $25,000,000
                      Corp. (In addition there is a $12,500,000 overdraft line).
(B) Other Indebtedness
1.                    Black Hills Power, Inc./Black Hills Generation, Inc. Note Payable to                   $992,909
                      Bear Paw Energy, LLC.
2.                    Credit Agreement between Black Hills Colorado, LLC, the Bank Nova                  $135,000,000
                      Scotia, and various other banks.
3.                    Black Hills Corporation First Mortgage Bonds.                                      $187,835,904
4.                    Black Hills Power, Inc. Pollution Control Revenue Bonds.                            $24,500,000
5.                    Black Hills Power, Inc. Environmental Improvement Revenue Bonds                      $2,855,000
                      (Floating Rate).
6.                    Wyodak Resources Development Corp. reclamation bond obligations                     $21,644,000
                      relating to its mining permits.
7.                    Landrica Development Company reclamation bond obligation relating to                 $3,794,997
                      its mining permits.
8.                    Black Hills Exploration and Production, Inc. miscellaneous performance                 $500,000
                      bonds and letters of credit relating to oil and gas well leases and
                      operations.
9.                    Black Hills Corporation and Black Hills Nevada, LLC bridge loan                     $50,000,000
                      secured by the Las Vegas Cogen II facility.
10.                   Term loan and letter of credit facility between Black Hills Fountain               $164,471,218
                      Valley, LLC, Fountain Valley Power, LLC, and E-Next A Equipment
                      Leasing Company, LLC and various banks (including Union Bank of
                      California as agent bank).
11.                   Northern Electric Power Co. L.P. project financing term loan secured                $66,878,240
                      by the Hudson Falls generating plant.
12.                   South Glens Falls LP project financing term loan secured by the South               $22,878,498
                      Glens Falls generating plant.
13.                   Black Hills Corporation guarantee of lease payments on the Wygen 1                 $140,000,000
                      facility.
14.                   Black Hills Corporation guarantee in favor of Cheyenne Light, Fuel and               $5,000,000
                      Power in connection with performance of the Wygen 1 Power Purchase
                      Agreement.
15.                   Black Hills Corporation guarantee in favor of Cheyenne Light, Fuel and              $10,000,000
                      Power in connection with performance of Black Hills Generation under
                      the Gillette Turbine Power Purchase Agreement.

                                       93
<PAGE>

16.                   Black Hills Corporation guarantee in favor of Las Vegas Cogen II                       $749,970
                      interconnection agreement with Nevada Power Company.
17.                   Black Hills Corporation completion guarantee in favor of Bank of Nova              All payments
                      Scotia in connection with expanded Colorado facilities.
18.                   Black Hills Corporation guarantee in favor of UBS AG in connection                   $3,000,000
                      with Enserco Energy, Inc.'s Derivative, Power and Gas Agreements with
                      UBS AG.
19.                   Black Hills Corporation guarantee in favor of Koch Exploration                       $4,500,000
                      Company, LLC in connection with Enserco Energy, Inc. agreements with
                      Koch Exploration Company, LLC.
</TABLE>

All indebtedness balances are as of June 30, 2002 (except for inclusion of
additional $75,000,000 on First Mortgage Bonds issued August 8, 2002).


                                       94
<PAGE>

                                  SCHEDULE 7.19

           RESTRICTIONS ON DISTRIBUTIONS AND EXISTING NEGATIVE PLEDGES


1.   Enserco  Energy  Inc.  has  granted a security  interest in favor of Fortis
     Capital  Corp.,  with respect to Enserco  Energy Inc.'s  personal  property
     assets  to  secure  the  $135,000,000  credit  facility  referred  to in on
     Schedule 7.15.

2.   Black Hills Energy Resources, Inc. has granted a security interest in favor
     of Fortis  Capital  Corp.,  with respect to Black Hills  Energy  Resources,
     Inc.'s personal  property assets to secure the $25,000,000  credit facility
     referred to on Schedule 7.15.

3.   Black Hills Power, Inc.  Indenture of Mortgage and Deed of Trust contains a
     provision  which  prohibits  the payment of dividends  should the Company's
     retained  earnings amount not meet certain  minimal  levels.  Currently the
     Company is required to maintain a retained  earnings  level of greater than
     $318,000 for dividend payments to be allowed under the indenture.

4.   Substantially  all of Black Hills Energy  Capital,  Inc.'s project  finance
     subsidiaries'   nonrecourse  debt  contain   restrictions   which  prohibit
     distributions unless certain financial covenants limits are met.

Dividends on Black Hills Corporation's preferred stock must be paid or declared
and set apart for payment before any dividends may be paid or declared and set
apart for payment on the Company's common stock. The Company's preferred stock
is cumulative.

                                       95
<PAGE>








