As filed with the Securities and Exchange Commission on
                                                           Registration No. 333-
================================================================================
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   ----------

                                    FORM S-4
                             REGISTRATION STATEMENT
                                      Under
                           THE SECURITIES ACT OF 1933

                                   ----------

                                 PSEG Power LLC
             (Exact name of registrant as specified in its charter)

          Delaware                          4911                   22-3663480
(State or other jurisdiction    (Primary Standard Industrial    (I.R.S. Employer
    of incorporation or          Classification Code Number)     Identification
       organization)                                                 Number)

                                   ----------

                               PSEG Fossil LLC
           (Exact name of registrant as specified in its charter)

          Delaware                          4911                   22-3663481
(State or other jurisdiction    (Primary Standard Industrial    (I.R.S. Employer
    of incorporation or          Classification Code Number)     Identification
       organization)                                                 Number)

                                   ----------

                              PSEG Nuclear LLC
           (Exact name of registrant as specified in its charter)

          Delaware                          4911                   22-3663482
(State or other jurisdiction    (Primary Standard Industrial    (I.R.S. Employer
    of incorporation or          Classification Code Number)     Identification
       organization)                                                 Number)

                                   ----------

                      PSEG Energy Resources & Trade LLC
           (Exact name of registrant as specified in its charter)

          Delaware                          6221                   22-3663483
(State or other jurisdiction    (Primary Standard Industrial    (I.R.S. Employer
    of incorporation or          Classification Code Number)     Identification
       organization)                                                 Number)

                                   ----------

                                80 Park Plaza-T25
                            Newark, New Jersey 07102
                                 (973) 430-7000
                               http://www.pseg.com
   (Address, including zip code and telephone number, including area code, of
                   Registrants' principal executive offices)

                                   ----------

                                Thomas M. O'Flynn
              Executive Vice President and Chief Financial Officer
                                 PSEG Power LLC
                                80 Park Plaza-T4B
                            Newark, New Jersey 07102
                                 (973) 430-7000
       (Name, address, including zip code and telephone number, including
                        area code, of agent for service)

                                   ----------

                                   Copies to:
                             James T. Foran, Esquire
                            Associate General Counsel
                  Public Service Enterprise Group Incorporated
                                80 Park Plaza-T5B
                                  P.O. Box 1171
                          Newark, New Jersey 07101-1171
                                 (973) 430-7000

                                   ----------

<PAGE>

      Approximate  date of commencement of proposed sale to the public:  As soon
as practicable after this registration statement becomes effective.

      If any of the securities  being  registered on this Form are to be offered
in connection  with the  formation of a holding  company and there is compliance
with General Instruction G, check the following box. |_|

      If this Form is filed to register  additional  securities  for an offering
pursuant to Rule 462 (b) under the  Securities  Act,  please check the following
box and list the Securities  Act  registration  statement  number of the earlier
effective registration statement for the same offering. |_|

      If this Form is a post-effective  amendment filed pursuant to Rule 462 (c)
under the Securities Act, please check the following box and list the Securities
Act registration number of the earlier effective  registration statement for the
same offering. |_|

                         CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
=============================================================================================================
                                                                Proposed         Proposed
                                                                 Maximum         Maximum
              Title of Each                      Amount         Offering         Aggregate        Amount of
           Class of Securities                    to be         Price Per        Offering        Registration
            to be Registered                   Registered         Unit             Price            Fee (1)
-------------------------------------------------------------------------------------------------------------
<C>                                           <C>                 <C>          <C>                  <C>
6.95% Senior Notes due 2012 ...............   $600,000,000        100%         $600,000,000         $55,200
-------------------------------------------------------------------------------------------------------------
Guarantees of 6.95% Senior Notes
  due 2012 ................................        (2)             (2)               (2)              (2)
=============================================================================================================
</TABLE>

(1)   The registration fee has been calculated  pursuant to Rule 457(f)(2) under
      the  Securities  Act.  The  proposed  maximum  aggregate   offering  price
      represents  the  total  value of the  bonds  being  exchanged  under  this
      registration statement.

(2)   No additional  consideration will be paid for the Guarantees.  Pursuant to
      Rule  457(n)  under the  Securities  Act,  no  separate  fee is payable in
      respect of the Guarantees.

      The Registrants  hereby amend this registration  statement on such date or
dates as may be  necessary  to delay its  effective  date until the  Registrants
shall file a further amendment which specifically  states that this registration
statement shall thereafter  become effective in accordance with Section 8 (a) of
the Securities  Act of 1933 or until this  registration  statement  shall become
effective on such date as the Commission, acting pursuant to said Section 8 (a),
may determine.

================================================================================

<PAGE>

The  information in this  prospectus is not complete and may be changed.  We may
not sell  these  securities  until the  registration  statement  filed  with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to  sell  these  securities  and it is not  soliciting  an  offer  to buy  these
securities in any state where the offer or sale is not permitted.

Subject to completion dated August 8, 2002

PRELIMINARY PROSPECTUS

PSEG Power LLC
80 Park Plaza, P.O. Box 1170
Newark, NJ 07101-1170
(973) 430-7000

                                  $600,000,000

                                [LOGO] PSEG
                                       Power LLC

                                Offer to Exchange

                           6.95% Senior Notes Due 2012
               Which have been registered under the Securities Act

                           For Any and All Outstanding
                           6.95% Senior Notes Due 2012
                        Which have not been so registered

                           TERMS OF THE EXCHANGE OFFER

      o     The exchange  offer  expires at 5:00 p.m.,  Eastern Time, on , 2002,
            unless extended by us in our sole discretion,  subject to applicable
            law.

      o     The terms of the exchange notes are  substantially  identical to the
            original notes,  except that the exchange notes are registered under
            the Securities Act and the transfer  restrictions  and  registration
            rights applicable to the original notes do not apply to the exchange
            notes.

      o     The  exchange  notes,  like the  original  notes,  will be fully and
            unconditionally  guaranteed by PSEG Fossil LLC, PSEG Nuclear LLC and
            PSEG Energy  Resources & Trade LLC on a joint and several basis. The
            guarantees will rank equally in right of payment to all existing and
            future senior unsecured indebtedness of the guarantors.

      o     All  original  notes  that  are  validly  tendered  and not  validly
            withdrawn will be exchanged.

      o     Tenders  of  original  notes may be  withdrawn  at any time prior to
            expiration of the exchange offer.

      o     We do not intend to apply for listing of the  exchange  notes on any
            securities  exchange  or to  arrange  for them to be  quoted  on any
            quotation system.

      o     The exchange offer is subject to customary conditions, including the
            condition that the exchange offer not violate  applicable law or any
            applicable  interpretation  of  the  staff  of  the  Securities  and
            Exchange Commission.

      o     We will not receive any proceeds from the exchange offer.

      o     You will not incur any material federal income tax consequences from
            your participation in the exchange offer.

      Please see "Risk Factors" beginning on page 14 for a discussion of factors
you should consider in connection with the exchange offer.

      Neither the  Securities and Exchange  Commission nor any state  securities
commission  has approved or  disapproved  of the exchange notes or determined if
this prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.

                  The date of this prospectus is       , 2002.

<PAGE>

                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----

Where to Find More Information ............................................    2
Incorporation of Certain Documents by Reference ...........................    3
Prospectus Summary ........................................................    4
Risk Factors ..............................................................   14
Forward-Looking Statements ................................................   21
Use of Proceeds ...........................................................   21
Capitalization ............................................................   22
The Exchange Offer ........................................................   23
Description of the Exchange Notes .........................................   31
Federal Income Tax Considerations .........................................   50
Plan of Distribution ......................................................   52
Legal Opinions ............................................................   53
Experts ...................................................................   53

      When we refer to the term "note" or "notes",  we are referring to both the
original notes and the exchange notes to be issued in the exchange  offer.  When
we refer to "holders" of the notes,  we are  referring to those  persons who are
the registered  holders of notes on the books of the registrar  appointed  under
the  indenture.  Unless the  context  otherwise  indicates,  all  references  to
"Power,"  "we," "us" or "our"  herein  mean PSEG  Power LLC, a Delaware  limited
liability  company,  and its  consolidated  subsidiaries.  (For periods prior to
August 21, 2000,  " Power,"  "we," "us" or "our" also  includes  the  generation
business of Public Service Electric and Gas Company.)

      No  dealer,  salesperson  or  other  person  is  authorized  to  give  any
information or to represent anything not contained in this prospectus.  You must
not rely on any unauthorized information or representations.  This prospectus is
an offer to exchange only the notes offered by this  prospectus,  but only under
circumstances and in jurisdictions  where it is lawful to do so. The information
contained in this prospectus is current only as of its date.

                     NOTICE TO NEW HAMPSHIRE RESIDENTS ONLY

      NEITHER THE FACT THAT A  REGISTRATION  STATEMENT OR AN  APPLICATION  FOR A
LICENSE HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE REVISED STATUTES
ANNOTATED,  1955,  AS AMENDED  ("RSA"),  WITH THE STATE OF NEW HAMPSHIRE NOR THE
FACT THAT A SECURITY IS  EFFECTIVELY  REGISTERED  OR A PERSON IS LICENSED IN THE
STATE OF NEW  HAMPSHIRE  CONSTITUTES  A FINDING BY THE SECRETARY OF STATE OF THE
STATE OF NEW HAMPSHIRE  THAT ANY DOCUMENT FILED UNDER RSA CHAPTER 421-B IS TRUE,
COMPLETE  AND NOT  MISLEADING.  NEITHER  ANY  SUCH  FACT  NOR THE  FACT  THAT AN
EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR A  TRANSACTION  MEANS THAT
THE  SECRETARY OF STATE HAS PASSED IN ANY WAY UPON THE MERITS OR  QUALIFICATIONS
OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY OR TRANSACTION. IT
IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER
OR CLIENT ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH.

                         WHERE TO FIND MORE INFORMATION

      We file annual,  quarterly and current reports, proxy statements and other
information with the Securities and Exchange  Commission  ("SEC").  You may read
and copy any document  that we file at the Public  Reference  Room of the SEC at
450 Fifth Street, N.W., Washington,  D.C. 20549. Information on the operation of
the Public Reference Room may be obtained by calling the SEC at  1-800-SEC-0330.
You may also  obtain  our  filings  on the  Internet  at the SEC's  home page at
http://www.sec.gov.


                                       2
<PAGE>

      This prospectus is part of a registration statement on Form S-4 filed with
the SEC under the Securities Act of 1933, as amended. It does not contain all of
the  information  that is  important  to you.  You should read the  registration
statement for further information with respect to the securities, the guarantors
and us. Statements contained in this prospectus concerning the provisions of any
document filed as an exhibit to the  registration  statement or otherwise  filed
with the SEC highlight selected  information,  and in each instance reference is
made to the copy of the full document as filed with the SEC.

                 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

      The SEC allows us to "incorporate by reference"  information  that we file
with it,  which  means  that we can  disclose  important  information  to you by
referring you to those documents.  The information  incorporated by reference or
deemed  incorporated by reference is an important part of this  prospectus,  and
information  that we file  later  with the SEC will be deemed  to  automatically
update and supersede this incorporated information.  We incorporate by reference
the  documents  listed  below  and any  future  filings  made with the SEC under
Sections 13(a),  13(c), 14, or 15(d) of the Securities  Exchange Act of 1934, as
amended,  prior to the  termination  of any  particular  offering of  securities
hereunder.

      o     Our Annual Report on Form 10-K for the year ended December 31, 2001,
            File No. 000-49614;

      o     Our Amended  Quarterly  Report on Form 10-Q/A for the quarter  ended
            March 31, 2002, File No. 000-49614;

      o     Our Amended Current Report on Form 8-K/A dated July 29, 2002; and

      o     Our  Quarterly  Report on Form 10-Q for the  quarter  ended June 30,
            2002, File No. 000-49614.

      You can get a free copy of any of the documents  incorporated by reference
by making an oral or written request directed to:

                                 J. Brian Smith
                          Director, Investor Relations
                            PSEG Services Corporation
                            80 Park Plaza, 6th Floor
                                Newark, NJ 07102
                            Telephone (973) 430-6564

      You should  rely only on the  information  contained  or  incorporated  by
reference or deemed to be incorporated by reference in this prospectus.  We have
not  authorized  anyone  else  to  provide  you  with  different  or  additional
information.  You should not rely on any other  information or  representations.
Our affairs may change after this  prospectus has been  distributed.  You should
not assume that the  information  in this  prospectus is accurate as of any date
other than its date of issuance or the dates otherwise disclosed herein.


                                       3
<PAGE>

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

                               PROSPECTUS SUMMARY

      The  following  information  is  qualified  in its  entirety  by the  more
detailed  information  and  financial  statements  appearing  elsewhere  in this
prospectus.

                          Summary of the Exchange Offer

The Exchange Offer ...................  We are offering to exchange an aggregate
                                        of  $600  million  principal  amount  of
                                        6.95%  Senior  Notes  due  2012 for $600
                                        million  of   original   notes  of  like
                                        series.   The  original   notes  may  be
                                        exchanged only in minimum  denominations
                                        of   $1,000   and   integral   multiples
                                        thereof.

Issuance of the Original Notes .......  The original  notes were issued and sold
                                        on June 7,  2002  in a  transaction  not
                                        requiring    registration    under   the
                                        Securities Act.

Registration Rights ..................  At  the  time  we  issued  the  original
                                        notes,  we entered  into a  registration
                                        rights  agreement  which obligates us to
                                        make this exchange offer.

Required Representations .............  In order to  participate in the exchange
                                        offer, you will be required to make some
                                        representations    in   a   letter    of
                                        transmittal, including that:

                                        o   you are not affiliated with us,

                                        o   you  are  not  a  broker-dealer  who
                                            bought your original  notes directly
                                            from us,

                                        o   you will acquire the exchange  notes
                                            in the ordinary  course of business,
                                            and

                                        o   you have not agreed  with  anyone to
                                            distribute the exchange notes.

                                        If   you   are  a   broker-dealer   that
                                        purchased  original  notes  for your own
                                        account  as  part  of  market-making  or
                                        trading activities, you may represent to
                                        us that you have not  agreed  with us or
                                        our   affiliates   to   distribute   the
                                        exchange   notes.   If  you  make   this
                                        representation,  you  need  not make the
                                        last representation provided for above.

Resale of the Exchange Notes .........  We are  making  the  exchange  offer  in
                                        reliance on the position of the staff of
                                        the Division of  Corporation  Finance of
                                        the   SEC   as    defined   in   certain
                                        interpretive  letters  issued  to  third
                                        parties   in  other   transactions.   We
                                        believe that the exchange notes acquired
                                        in this  exchange  offer  may be  freely
                                        traded  without   compliance   with  the
                                        provisions  of the  Securities  Act that
                                        call for  registration and delivery of a
                                        prospectus,  except as  described in the
                                        following paragraph.

                                        The   exchange   notes  will  be  freely
                                        tradable  only if the  holders  meet the
                                        conditions   described  under  "Required
                                        Representations"  above.  If  you  are a
                                        broker-dealer  that  purchased  original
                                        notes  for your own  account  as part of
                                        market-making or trading activities, you
                                        must deliver a prospectus  when you sell
                                        exchange  notes.  We have  agreed in the
                                        registration  rights agreement  relating
                                        to the  original  notes to allow  you to
                                        use this  prospectus  for  this  purpose
                                        during  the  90-day   period   following
                                        completion   of  the   exchange   offer,
                                        subject   to  our   right   under   some
                                        circumstances  to  restrict  your use of
                                        this prospectus. See "The Exchange Offer
                                        -- Resales of Exchange Notes".

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


                                       4
<PAGE>

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

                                        Broker-dealers   who  acquired  original
                                        notes  directly  from us may not rely on
                                        the  staff's  interpretations  and  must
                                        comply   with   the   registration   and
                                        prospectus delivery  requirements of the
                                        Securities Act, including being named as
                                        a selling security  holder,  in order to
                                        resell   the   original   notes  or  the
                                        exchange notes.

Accrued Interest on the
  Original Notes .....................  The exchange notes will bear interest at
                                        an annual  rate of 6.95%.  Any  interest
                                        that has accrued on the  original  notes
                                        before their  exchange in this  exchange
                                        offer will be  payable  on the  exchange
                                        notes on the first interest payment date
                                        after the  conclusion  of this  exchange
                                        offer.

Procedures for Exchanging
  Notes ..............................  The procedures  for exchanging  original
                                        notes  involve  notifying  the  exchange
                                        agent before the expiration  date of the
                                        exchange  offer of your  intention to do
                                        so. The procedures  for properly  making
                                        notification   are   described  in  this
                                        prospectus   under  the   heading   "The
                                        Exchange   Offer   --   Procedures   for
                                        Tendering Original Notes".

Expiration Date ......................  5:00  p.m.,  Eastern  Time,  on ,  2002,
                                        unless the exchange offer is extended.

Exchange Date ........................  We will notify the exchange agent of the
                                        date of acceptance of the original notes
                                        for exchange.

Withdrawal Rights ....................  If you tender  your  original  notes for
                                        exchange  in  this  exchange  offer  and
                                        later wish to withdraw  them, you may do
                                        so at any time before 5:00 p.m., Eastern
                                        Time,  on the day  this  exchange  offer
                                        expires.

Acceptance of Original
  Notes and Delivery of
  Exchange Notes .....................  We will accept any  original  notes that
                                        are   properly   tendered  for  exchange
                                        before 5:00 p.m.,  Eastern  Time, on the
                                        day this  exchange  offer  expires.  The
                                        exchange   notes   will   be   delivered
                                        promptly   after   expiration   of  this
                                        exchange offer.

Tax Consequences .....................  You will not incur any material  federal
                                        income   tax   consequences   from  your
                                        participation in this exchange offer.

Use of Proceeds ......................  We will not  receive  any cash  proceeds
                                        from this exchange offer.

Exchange Agent .......................  The Bank of New York is  serving  as the
                                        exchange   agent.    Its   address   and
                                        telephone  number are  provided  in this
                                        prospectus   under  the   heading   "The
                                        Exchange Offer-- Exchange Agent".

Effect on Holders of
  Original Notes .....................  Any    original    notes   that   remain
                                        outstanding  after this  exchange  offer
                                        will   continue   to   be   subject   to
                                        restrictions  on their  transfer.  After
                                        this exchange offer, holders of original
                                        notes will not (with limited exceptions)
                                        have  any  further   rights   under  the
                                        registration   rights   agreement.   Any
                                        market for  original  notes that are not
                                        exchanged could be adversely affected by
                                        the consummation of this exchange offer.


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


                                       5
<PAGE>

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

                         Summary of the Exchange Notes

      This exchange offer applies to $600 million aggregate  principal amount of
the original notes. The terms of the exchange notes will be essentially the same
as the original notes,  except that the exchange notes will not contain language
restricting  their transfer and holders of the exchange notes generally will not
be  entitled  to  further  registration  rights  under the  registration  rights
agreement.  The exchange  notes issued in the exchange  offer will  evidence the
same debt as the outstanding  original notes, which they will replace,  and both
the original  notes and the exchange  notes are governed by the same  indenture.
The exchange notes, like the original notes,  will be fully and  unconditionally
guaranteed  by our three  principal  operating  subsidiaries,  PSEG  Fossil  LLC
("Fossil"),  PSEG Nuclear LLC ("Nuclear") and PSEG Energy  Resources & Trade LLC
("ER&T"),  on a joint and several  basis.  The  guarantees  will rank equally in
right of payment to all existing and future senior unsecured indebtedness of the
guarantors.

Issuer ...............................  PSEG Power LLC

Securities Offered ...................  $600  million of 6.95%  Senior Notes due
                                        2012  which have been  registered  under
                                        the Securities Act.

Interest Payment Dates ...............  June  1 and  December  1 of  each  year,
                                        beginning December 1, 2002.

Maturity                                June 1, 2012.

Optional Redemption ..................  We may redeem any or all of the exchange
                                        notes  at any  time at a price  equal to
                                        the  sum of (i)  100%  of the  principal
                                        amount  of  the  exchange   notes  being
                                        redeemed,  (ii) a make whole premium and
                                        (iii) unpaid interest  accrued up to and
                                        including  the   applicable   redemption
                                        date. See  "Description  of the Exchange
                                        Notes-- Optional Redemption".

Ranking ..............................  The exchange notes:

                                        o   will   be   our   senior   unsecured
                                            obligations,

                                        o   will  rank  equally  with all of our
                                            senior unsecured indebtedness and

                                        o   will rank senior to our subordinated
                                            unsecured indebtedness.

                                        As   of   June   30,   2002,    we   had
                                        approximately     $1.9     billion    of
                                        indebtedness   outstanding   that  ranks
                                        equally with the exchange notes.

Guarantees ...........................  The  exchange  notes  will be fully  and
                                        unconditionally  guaranteed  by  Fossil,
                                        Nuclear  and ER&T on a joint and several
                                        basis.  The guarantees will rank equally
                                        in right of payment to all  existing and
                                        future senior unsecured  indebtedness of
                                        the   guarantors.   We  have   issued  a
                                        guarantee  of the  obligations  of ER&T,
                                        which  guarantee is  subordinate  to the
                                        exchange notes.

Ratings ..............................  The  exchange  notes have been  assigned
                                        ratings of "Baa1" by  Moody's  Investors
                                        Service, Inc., "BBB+" by Fitch, Inc. and
                                        "BBB"  by  Standard  &  Poor's   Ratings
                                        Services.

                                        A    security    rating    is    not   a
                                        recommendation  to  buy,  sell  or  hold
                                        securities   and  may  be   subject   to
                                        revision  or  withdrawal  at any time by
                                        the assigning rating agency. Each rating
                                        should be evaluated independently of any
                                        other rating.

Sinking Fund .........................  None.

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


                                       6
<PAGE>

Certain Covenants ....................  The  indenture  under which the original
                                        notes were,  and the exchange notes will
                                        be,    issued     contains     covenants
                                        restricting us and the  above-referenced
                                        restricted subsidiaries. These covenants
                                        limit our  ability,  and the  ability of
                                        our  restricted  subsidiaries  to, among
                                        other things:

                                        o   in  the   case  of  our   restricted
                                            subsidiaries,      incur     certain
                                            indebtedness;

                                        o   create liens;

                                        o   in  the   case  of  our   restricted
                                            subsidiaries,  create  or  permit to
                                            exist     dividend     or    payment
                                            restrictions with respect to us;

                                        o   sell assets; and

                                        o   engage      in      mergers      and
                                            consolidations.

                                        In addition,  the  indenture  contains a
                                        covenant requiring one of our restricted
                                        subsidiaries,   ER&T,  to  pay  periodic
                                        dividends or  distributions to us of the
                                        excess   cash  not   required   for  its
                                        business   operations.   Each  of  these
                                        covenants  is  subject  to a  number  of
                                        important qualifications and exceptions.
                                        See "Description of the Exchange Notes--
                                        Selected Indenture Covenants."

Book-Entry Form ......................  The exchange  notes will be  represented
                                        by one or more permanent global exchange
                                        notes in fully  registered  form without
                                        interest  coupons,  deposited  with  The
                                        Bank  of  New   York  as   trustee,   as
                                        custodian  for,  and  registered  in the
                                        name of, a  nominee  of DTC,  except  in
                                        certain limited circumstances  described
                                        in this prospectus.

Risk Factors .........................  An  investment  in  the  exchange  notes
                                        involves  certain risks  relating to our
                                        business, prospects, financial condition
                                        and results of operations  and the terms
                                        of the exchange  notes.  These risks are
                                        described in "Risk Factors."

                                 PSEG Power LLC

      We are one of the largest  independent  electric  generating and wholesale
energy marketing and trading  companies in the United States.  Through our three
principal direct  wholly-owned  operating  subsidiaries -- Nuclear,  Fossil, and
ER&T -- we generate and market  electricity,  capacity,  ancillary  services and
natural gas products on a wholesale basis.

      We are one of four wholly-owned  subsidiaries of Public Service Enterprise
Group Incorporated  ("PSEG"),  an exempt public utility holding company.  PSEG's
other three  subsidiaries are Public Service Electric and Gas Company ("PSE&G"),
PSEG Energy Holdings Inc. and PSEG Services Corporation.

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


                                       7
<PAGE>

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

                           -------------------------
                           Public Service Enterprise
                               Group Incorporated
                                     (PSEG)
                           -------------------------
                                       |
         -----------------------------------------------------------
         |                 |                |                      |
------------------  --------------  -----------------  -------------------------
 Public Service     PSEG Power LLC    PSEG Energy      PSEG Services Corporation
Electic and Gas         (Power)       Holdings Inc.            (Services)
   Company                          (Energy Holdings)
------------------  --------------  -----------------  -------------------------
                           |
          |------------------------------------
          |                |                  |
 ----------------  ---------------  ---------------------
 PSEG Nuclear LLC  PSEG Fossil LLC  PSEG Energy Resources
     (Nuclear)         (Fossil)          & Trade LLC
                                           (ER&T)
 ----------------  ---------------  ---------------------

      We  were   established   to  acquire,   own  and   operate  the   electric
generation-related  business of our affiliate,  PSE&G. This transfer occurred in
August 2000.

      Our generation  portfolio consists of 12,033 megawatts ("MW") of installed
capacity, which is diversified by fuel source, technology and market segment. Of
this  total,  approximately  11,653 MW are located  within the  Pennsylvania-New
Jersey-Maryland  Power Pool (the "PJM"). The portfolio's  diversity represents a
balance that helps to mitigate risks  associated with fuel price  volatility and
market demand cycles. We are currently constructing projects which will increase
capacity by over 2,950 MW, net of planned  retirements and we are under contract
to purchase an additional 1,019 MW in Connecticut. See "Recent Developments".

                         PSEG Power's Installed Capacity

   [The following table was depicted as a Pie Chart in the printed material.]

  Market Segments                 Fuel                      Technology
-------------------        -------------------        -----------------------

Load-Following  39%        Nuclear         28%        Nuclear             28%
Peaking         26%        Pumped Storage   2%        Pumped Storage       2%
Base Load       35%        Coal            17%        Combustion Turbine  25%
                           Gas             40%        Steam               33%
                           Oil             13%        Combined Cycle      12%

      We derive  our  revenues  and cash  flows  principally  from our  electric
generation business, energy trading and related activities. Our generation asset
operations are integrated with our wholesale energy, fuel supply, energy trading
and risk  management  expertise.  The  generation  segment of our business earns
revenues by selling energy on a wholesale basis under contract to our affiliate,
PSE&G,  and to other power marketers and load serving entities  ("LSE"),  and by
bidding  energy,  capacity and  ancillary  services  into the  wholesale  energy
market.  The energy trading segment of our business  derives revenues by trading
energy, capacity, fixed transmission rights, fuel and emission allowances in the
spot, forward and futures markets.

      Our target  market,  which is  referred  to herein as the "Super  Region,"
extends  from  Maine  to the  Carolinas  and  the  Atlantic  Coast  to  Indiana,
encompassing  approximately  37% of the nation's power  consumption.  We are the
largest  power  supplier in our  primary  market,  the PJM,  which is one of the
nation's largest and most well-developed energy markets.

      As an Exempt  Wholesale  Generator  ("EWG"),  we do not directly serve any
retail  customers  and  use  our  generation  facilities   exclusively  for  the
production of electricity for sale at the wholesale  level. We have entered into
one-year  contracts  commencing on August 1, 2002 with various direct bidders in
the New Jersey basic generation service ("BGS") Auction,  which were approved by
the New Jersey Board of Public  Utilities  ("BPU") on February  15,  2002.  As a
result of this auction process, we surpassed our objective of securing contracts
on more than 75% of our generation capacity.

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


                                       8
<PAGE>

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

      On May 1, 2002, PSE&G's gas supply,  interstate  pipeline capacity and gas
storage  contracts  were  transferred  to us.  We  will,  under  a  requirements
contract,  provide  gas  supply to PSE&G to serve its basic gas  supply  service
("BGSS") through April 1, 2004.

      The energy trading  segment of our business  derives its revenues and cash
flows principally from trading energy, capacity, fixed transmission rights, fuel
and emission  allowances in the spot,  forward and futures  markets.  The energy
trading  segment  also  derives  revenues  and  cash  flows  through   financial
transactions,  including swaps, options and futures in the energy markets.  ER&T
is a fully integrated  energy marketing and trading  organization that is active
in the long-term and spot wholesale  energy  markets.  ER&T purchases all of the
capacity and energy  produced by Fossil and Nuclear.  In conjunction  with these
purchases,  ER&T uses  commodity  and  financial  instruments  designed to cover
estimated  commitments under our power supply  contracts.  ER&T also markets and
trades electricity,  capacity,  ancillary services and natural gas products on a
wholesale basis throughout the Super Region.

      ER&T's  principal  objectives are to sell and deliver  physical power from
Power's   generating   assets,   reduce  earnings   volatility  through  hedging
activities,  procure  low cost fuel and natural  gas  supplies,  and produce net
earnings from trading  energy-related  products around Power's  physical assets.
ER&T does not engage in the practice of simultaneous  trading for the purpose of
increasing trading volume or revenue.  Consistent with its business  objectives,
ER&T's  incentive  compensation  programs  are based on net earnings and overall
team performance, not on volume or gross revenues.

                                 [MAP ARTWORK]

      We mark to market energy trading  contracts with gains and losses included
in earnings.  The vast majority of these  contracts  have terms of less than one
year and are valued using market exchange  prices and broker quotes.  The energy
trading business provides the opportunity for greater returns on our assets. Our
trading business  utilizes a conservative  risk management  strategy to minimize
exposure to long-term and short-term market risk.

      We have substantial commitments as part of our growth strategy and ongoing
construction  programs.  We expect that the majority of our capital requirements
over the next five years will be satisfied by internally  generated funds,  with
the balance to be provided by the issuance of debt by us or at the project level
and equity contributions from PSEG. For the year ended December 31, 2001, we had
net plant additions of $1.5 billion.

      Our forecasted  construction  and investment  expenditures  in millions of
dollars for the next five years are as follows:

              2002        2003        2004        2005       2006
             ------      ------      ------      ------     ------
             $ 960       $ 700       $ 340       $ 250      $ 230

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


                                       9
<PAGE>

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

      The  expenditures  in 2001 and  projected  expenditures  are primarily for
developing the  Lawrenceburg,  Indiana  station (1,150 MW), the Waterford,  Ohio
station (850 MW) and the  Bethlehem,  New York  station (750 MW) and  increasing
capacity to the Bergen (546 MW),  Linden (1,218 MW) and Kearny (175 MW) stations
in New Jersey.  Our  agreement  with  federal and state  governments  to restore
alleged  non-compliance  with New Source Review  ("NSR")  regulations  (which is
estimated to cost $337 million over the next ten years) and other  environmental
related costs are also included in the  forecasts.  The NSR agreement is subject
to public comment and judicial approval, as to which no assurance can be given.

      Our capital  needs will be dictated by our strategy to continue to develop
as a profitable, growth-oriented supplier in the wholesale power market. We will
size  our   portfolio  of  generation   assets  to  take   advantage  of  market
opportunities,  while seeking to increase our value and manage  commodity  price
risk through our wholesale energy trading activity.

      Factors affecting actual  expenditures and investments,  including ongoing
construction  programs,  include:  availability of capital,  suitable investment
opportunities,  prices of energy and supply in markets in which we  participate,
economic and political trends, revised load forecasts, business strategies, site
changes,  cost escalations  under  construction  contracts,  and requirements of
regulatory authorities and laws.

Competitive Strengths

      We  believe  that we are  well  positioned  to build  upon our  successful
history and existing asset base to remain one of the largest and one of the most
competitive  independent  electric generating and wholesale energy marketing and
trading  companies in the United States.  Our competitive  strengths include the
following:

      o     We  have  one  of  the  largest  and  most  diversified  unregulated
            generating portfolios in PJM and the eastern United States:

            o     our generation  assets represent a diversified mix in terms of
                  fuel  type,  technology  and  energy  market  segments,  which
                  reduces  our risk  associated  with market  demand  cycles and
                  allows  us to  participate  in each  segment  of the  dispatch
                  curve;

            o     our assets are  strategically  located near  concentrations of
                  customers, allowing us to capture higher revenues during times
                  of transmission constraints; and

            o     our base load coal and nuclear assets continue to achieve high
                  capacity factors,  while our  load-following and peaking units
                  have high equivalent availability.

      o     We have a wholesale  marketing and trading  function  which is fully
            integrated with our generation assets,  fuel procurement and trading
            activities.   Our  risk  management,   wholesale   marketing,   fuel
            procurement  and energy  trading  skills  allow us to  optimize  our
            portfolio of generation and natural gas assets by:

            o     taking  advantage of and profiting  from  regional  supply and
                  demand patterns;

            o     giving us the  ability to  opportunistically  trade and source
                  fuel for our generation assets from various locations;

            o     helping us identify  attractive  opportunities  for  expanding
                  generation  capacity  through  acquisitions,   development  or
                  contractual arrangements;

            o     hedging and protecting  the value of our generation  assets by
                  hedging     risks,and     marketing    and    entering    into
                  customer-specific transactions; and

            o     taking advantage of natural gas pipeline and storage contracts
                  in supplying gas to service PSE&G, and other parties.

      o     We possess extensive  experience within PJM and surrounding regions,
            which  provides us with  in-depth  knowledge  and insight  about the
            market's   generation   assets,   market   rules  and   transmission
            constraints.

      o     We  have  a  management  team  of  seasoned   individuals  who  have
            long-standing   experience  with  our  generation   assets,   market
            conditions, labor relations, business development, commodity trading
            and risk management.

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


                                       10
<PAGE>

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

      o     We utilize a conservative  risk management  strategy to minimize our
            market and counterparty credit risks, which has been instrumental in
            our   ability  to  manage  risk  while   consistently   growing  the
            profitability of our trading operations:

            o     our corporate risk management  committee provides oversight of
                  the entire  process and reports  directly to the PSEG Board of
                  Directors;

            o     we have a corporate risk management  group  independent of our
                  trading operations that reports to the Chief Financial Officer
                  of PSEG and  provides  independent  risk  oversight of trading
                  activity and monitors,  measures and  aggregates the financial
                  risk activities of all trading operations;

            o     we  monitor  the  value-at-risk  associated  with our  forward
                  positions, including our generation and sales obligations on a
                  weekly  basis,  and we mark our positions to market and stress
                  test our portfolio on a daily basis; and

            o     more than 95% of our  trading  counterparties  are  investment
                  grade entities and we continue to monitor emerging issues that
                  may impact our counterparty credit risk.

      o     We are a committed environmental leader:

            o     we led the  industry as an advocate  for an  integrated  power
                  plant emissions  strategy that would coordinate  reductions of
                  nitrogen oxides, sulfur dioxide, mercury and carbon dioxide;

            o     we   implemented   the   largest   privately-funded   wetlands
                  restoration program in the United States;

            o     we  achieved a  voluntary  80%  reduction  in  nitrogen  oxide
                  emissions at our New Jersey facilities; and

            o     we were cited by the United  States  Environmental  Protection
                  Agency  ("EPA") for our efforts to reduce solid and  hazardous
                  wastes.

Business Strategy

      Our  objective  is to  continue to  profitably  build our  generating  and
wholesale energy marketing and trading company based upon our successful formula
of integrating  generation  asset  operations  with our wholesale  energy,  fuel
supply, trading and risk management expertise. To implement our strategy we plan
to:

      o     Maximize  the value of our  existing  generation  assets  based upon
            their location, low cost and fuel diversity.  More specifically,  we
            plan to:

            o     provide for long-term power supply  contracts  associated with
                  about 75% of our generation portfolio's capacity;

            o     benefit from the  advantageous  location of generation  assets
                  near the load centers - therefore  allowing us to benefit from
                  the impacts of transmission; and

            o     exploit  the  value of owning  generation  assets  across  the
                  entire  market  spectrum  -  base  load,   load-following  and
                  peaking.

      o     Continue  the  strong  integration  between  the  operation  of  our
            generation  assets,  fuel procurement,  trading and risk management.
            More specifically, we plan to:

            o     continue to  optimize  the value of our  generation  assets by
                  coordinating  their  dispatch  with  our fuel  management  and
                  electricity and natural gas trading operations; and

            o     continue  to  maintain  a  strong  risk  management  structure
                  through the use of best practices in risk management oversight
                  for both market and credit risk.

      o     Profitably  expand  our  generation  asset base  across the  eastern
            United  States  --  focusing  both  within  the  PJM  region  and in
            adjoining regions.

      o     Maintain our commitment to the  environment -- both by improving the
            environmental  performance of our generation  assets and by taking a
            leadership position for a uniform set of stringent,  but achievable,
            air pollution standards for all United States power plants.

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


                                       11
<PAGE>

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

                               Recent Developments

      In June  2002,  Fossil  announced  that  it had  entered  into a  purchase
agreement  with Wisvest Corp.,  a  wholly-owned  subsidiary of Wisconsin  Energy
Corporation,  pursuant to which Fossil has agreed to acquire Wisvest-Connecticut
LLC,  the  owner  of two  fossil  fueled  electric  generating  facilities,  the
Bridgeport  Harbor Station and the New Haven Harbor  Station,  for $220 million,
plus up to $20 million for various  expenditures  made prior to closing plus the
book value of inventory and fuel at the  facilities at the time of closing.  The
closing of this  transaction is subject to receipt of all applicable  regulatory
approvals.

      The Bridgeport  Harbor Station is a three-unit coal- and oil-fired station
with a total  of 553 MW of  capacity  located  on the west  shore of  Bridgeport
Harbor in  Bridgeport,  Connecticut.  The New Haven Harbor Station is a one-unit
466 MW oil- and natural gas-fired station located on the east shore of New Haven
Harbor in New Haven Connecticut.

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


                                       12
<PAGE>

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

                             SELECTED FINANCIAL DATA

      The following table sets forth our summary selected consolidated financial
data.  The data as of December 31, 2001 and 2000,  and for the three years ended
December  31,  2001 have been  derived  from our  audited  financial  statements
incorporated  by reference  herein.  The data as of December 31, 1999,  1998 and
1997,  and for the two years ended  December  31, 1998 has been derived from our
audited financial  statements not incorporated  herein.  The data as of June 30,
2002, and for the six months ended June 30, 2002 and 2001 have been derived from
our unaudited financial statements  incorporated by reference herein and, in the
opinion of management, include all adjustments necessary for a fair presentation
of our  financial  position and results of  operations  for these  periods.  The
information  set forth below  should be read in  conjunction  with  Management's
Discussion  and  Analysis  of  Financial  Condition  and  Results of  Operations
("MD&A") and the Consolidated  Financial  Statements and  accompanying  Notes to
Consolidated  Financial  Statements  found in our Annual Report on Form 10-K for
the year ended  December 31, 2001 and our Quarterly  Report on Form 10-Q for the
quarter  ended June 30, 2002.  Data related to periods prior to August 2000 have
been  derived  from  PSE&G's  financial   statements  and  are  not  necessarily
indicative of the financial  condition,  results of operations or net cash flows
that  would  have  existed  had  PSE&G's  generation-related  business  been  an
independent company during those periods.

<TABLE>
<CAPTION>
                                                    For the Six Months
                                                      Ended June 30,
                                                    ------------------                 For the Years Ended December 31,
                                                        (unaudited)        --------------------------------------------------------
                                                     2002       2001        2001        2000        1999         1998        1997
                                                    -------    -------     -------     -------     -------      -------     -------
Income Statement Data                                  (in millions)                            (in millions)
<S>                                                 <C>        <C>         <C>         <C>         <C>          <C>         <C>
Operating Revenue(1) ..........................     $ 1,253    $ 1,237     $ 2,458     $ 2,280     $ 2,694      $ 2,574     $ 2,552
Operating Expenses(1) .........................         853        800       1,671       1,568       1,763        1,940       1,925
                                                    -------    -------     -------     -------     -------      -------     -------
Operating Income ..............................         400        437         787         712         931          634         627
Interest Expense ..............................          56         89         143         198         112          216         223
Income Taxes ..................................         141        140         250         208         291          156         101
Income Before Extraordinary
 Item .........................................         203        206         394         313         516          237         195
Extraordinary Item(2) .........................          --         --          --          --      (3,204)          --          --
                                                    -------    -------     -------     -------     -------      -------     -------
Net Income (Loss) .............................         203        206         394         313      (2,688)         237         195
Earnings (Loss) Available to PSEG .............     $   203    $   206     $   394     $   313     $(2,691)     $   232     $   186
</TABLE>

<TABLE>
<CAPTION>
                                                                As of
                                                               June 30,
                                                            -------------                     As of December 31,
                                                             (unaudited)   --------------------------------------------------------
                                                                2002        2001         2000        1999        1998         1997
                                                            -------------  -------     -------     -------     -------      -------
Balance Sheet Data                                          (in millions)                       (in millions)
<S>                                                            <C>         <C>         <C>         <C>         <C>          <C>
Assets ........................................                $ 6,515     $ 5,503     $ 4,530     $ 3,301     $ 8,045      $ 8,183
Current Liabilities ...........................                    963         830       1,470       1,038         762          984
Noncurrent Liabilities ........................                  1,182       1,128       1,006         991       2,096        2,075
Long-Term Debt ................................                $ 3,314     $ 2,685     $ 2,786     $     0           0            0
Capitalization(3) .............................                $ 4,370     $ 3,709     $ 2,054     $ 1,272     $ 5,187      $ 5,124
</TABLE>

<TABLE>
<CAPTION>
                                                    For the Six Months
                                                      Ended June 30,
                                                    ------------------                 For the Years Ended December 31,
                                                        (unaudited)        --------------------------------------------------------
                                                     2002       2001        2001        2000        1999         1998        1997
                                                    -------    -------     -------     -------     -------      -------     -------
                                                       (in millions)                            (in millions)
Other Data
<S>                                                 <C>        <C>         <C>         <C>         <C>          <C>          <C>
EBITDA(4) .....................................     $   450    $   490     $   882     $   855     $ 1,155      $ 1,015      $  905
Capital Expenditures ..........................     $   496    $   763     $ 1,525     $   493     $    95      $   272      $  175
Ratio of Earnings to
  Fixed Charges ...............................        4.01x      3.78x       3.73x       3.39x       7.09x        2.51x       2.07x
</TABLE>

----------
(1)   Operating Revenue and Operating Expenses have been reclassified to conform
      with the net presentation of energy trading revenues and costs required by
      EITF 02-3.

(2)   Effective  April 1, 1999, we  discontinued  the application of SFAS 71 and
      recorded an  extraordinary  charge.  The  extraordinary  charge  consisted
      primarily of a write-down of our nuclear and fossil generation stations.

(3)   Includes Note Payable--  Affiliated  Company in the year 2000 and Accounts
      Payable-- due to Affiliates for 2001.

(4)   Earnings  before   Interest,   Taxes,   Depreciation   and   Amortization.
      Information  concerning  EBITDA  is  presented  here not as a  measure  of
      operating  results,  rather as a measure of ability  to service  debt.  In
      addition,  EBITDA may not be  comparable to similarly  titled  measures by
      other  companies.  EBITDA  should not be  construed as an  alternative  to
      operating  income  or  cash  flow  from  operating  activities,   each  as
      determined according to generally accepted accounting principles. Although
      we are required to meet minimum  EBITDA to interest  charges tests as part
      of our debt covenants, we use these measures in our financial and business
      planning process to provide  reasonable  assurance that our forecasts will
      provide  adequate  interest  coverage  to  maintain  or improve our target
      credit ratings.

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


                                       13
<PAGE>

                                  RISK FACTORS

      In addition to the  information  contained  elsewhere in this  prospectus,
prospective  investors should carefully consider the risks described below. Each
of the following  factors could have a material  adverse effect on our business,
prospects, financial condition, results of operations or net cash flows.

Credit, Commodity and Financial Market Risks May Have an Adverse Impact

      The revenues  generated by the  operation of our  generation  stations are
subject to market risks that are beyond our control.  Our generation output will
either  be  used  to  satisfy  our  wholesale  contracts  or be  sold  into  the
competitive  power markets or under other bilateral  contracts.  Participants in
the competitive power markets are not guaranteed any specified rate of return on
their  capital  investments  through  recovery  of  mandated  rates  payable  by
purchasers  of  electricity.  Although a majority of our revenue is generated by
the BGS  contract  with  PSE&G  (which  expires  on July  31,  2002 and is being
replaced with one-year  contracts  with various direct bidders in the New Jersey
BGS Auction) and from bilateral  contracts for the sale of electricity with LSEs
and power  marketers,  our revenues and results of operations  will be dependent
upon prevailing market prices for energy, capacity and ancillary services in the
markets we serve.

      Among the  factors  that will  influence  the market  prices  for  energy,
capacity and ancillary services are:

      o     the extent of additional supplies of capacity,  energy and ancillary
            services from current competitors or new market entrants,  including
            the  development  of new generation  facilities  that may be able to
            produce electricity less expensively;

      o     changes in the rules set by regulatory  authorities  with respect to
            the manner in which electricity sales will be priced;

      o     transmission  congestion and access in PJM and/or other  competitive
            markets;

      o     the  operation  of  nuclear  generation  plants  in  PJM  and  other
            competitive   markets  beyond  their  presently  expected  dates  of
            decommissioning;

      o     prevailing  market prices for enriched  uranium,  fuel oil, coal and
            natural gas and associated transportation costs;

      o     fluctuating weather conditions;

      o     reduced growth rate in electricity usage as a result of factors such
            as national and regional economic  conditions and the implementation
            of conservation programs; and

      o     changes  in  regulations  applicable  to PJM and  other  independent
            system operators ("ISOs").

      As a result of the BGS auction,  we have entered into  contracts  with the
direct  suppliers  of  the  New  Jersey  electric  utilities,  including  PSE&G,
commencing August 1, 2002. These bilateral contracts are subject to credit risk.
This credit risk relates to the ability of  counterparties to meet their payment
obligations for the power delivered under each BGS contract.  Depending upon the
creditworthiness of the counterparty, this risk may be substantially higher than
the risk  associated  with potential  nonpayment by PSE&G under the BGS contract
expiring July 31, 2002.  Any failure to collect these payments under the new BGS
contracts  with  counterparties  could  have a  material  adverse  impact on our
results of operations, cash flows and financial position.

Energy  Obligations,  Available  Supply  and  Trading  Risks May Have an Adverse
Impact

      Our  energy  trading  and  marketing  business   frequently  involves  the
establishment  of energy  trading  positions in the wholesale  energy markets on
long-term and short-term  bases. To the extent that we have forward contracts to
provide or  purchase  energy in excess of demand,  a downturn  in the markets is
likely to result in a loss from a decline in the value of such long positions as
we attempt to sell energy in a falling market. Conversely, to the extent that we
enter into  forward  sales  contracts  to deliver  energy we do not own, or take
short positions in the energy markets, an upturn in the energy markets is likely
to expose us to losses as we attempt to cover our short  positions  by acquiring
energy in a rising market.


                                       14
<PAGE>

      If the strategy we utilize to hedge our  exposures to these  various risks
is not effective,  we could incur  significant  losses.  Our substantial  energy
trading  positions can also be adversely  affected by the level of volatility in
the energy markets that, in turn, depends on various factors,  including weather
in various geographical areas and short-term supply and demand imbalances, which
cannot be predicted with any certainty.

Counterparty  Credit Risk or a  Deterioration  in Our Credit Quality May Have an
Adverse Effect

      We are  exposed to the risk that  counterparties  will not  perform  their
obligations.  Although we have devoted significant resources to develop our risk
management  policies,  procedures and counterparty  credit requirements and will
continue to do so in the future,  we can give no assurance  that losses from our
energy  trading  activities  will  not have a  material  adverse  effect  on our
business,  prospects,  results of  operations,  financial  condition or net cash
flows.

      In  connection  with our energy  trading  business,  we must meet  certain
credit quality  standards as are required by  counterparties.  Standard industry
contracts generally require trading  counterparties to maintain investment grade
ratings.  These same contracts provide reciprocal benefits to us. If we lose our
investment  grade credit  rating,  ER&T would have to provide  collateral in the
form of letters of credit or cash, which would  significantly  impact the energy
trading business.  This would increase our costs of doing business and limit our
ability to successfully conduct our energy trading operations.

Upon Expiration of BGS Contracts, We Cannot Guarantee We Will Be Able to Replace
those Revenues

      Our contract to provide  PSE&G's energy,  capacity and ancillary  services
necessary  to fulfill its  BPU-mandated  BGS expired on July 31,  2002.  We have
entered into one-year contracts commencing on August 1, 2002 with various direct
bidders  in the New  Jersey  BGS  Auction,  which  were  approved  by the BPU on
February 15, 2002.  Upon the  expiration  of these  contracts,  we will have the
opportunity  to  participate  in the  bidding  process  for New Jersey  LSEs for
subsequent  periods.  Because this will be a competitive bidding process open to
other market participants, any bids we may choose to make may not be successful.
Even if we are a successful  bidder,  we can give no assurance  that our revenue
stream and cash flows from a BGS contract for future periods will be the same or
higher than under current contracts.

The Electric Energy Industry is Undergoing Substantial Change

      The  electric  energy  industry  in the State of New Jersey and across the
country is undergoing major transformations. As a result of deregulation and the
unbundling of energy supplies and services,  the gas and electric retail markets
are now open to competition  from other  suppliers.  Increased  competition from
these  suppliers  could  reduce  the  quantity  of our sales and have a negative
impact on our earnings  and cash flows.  We are affected by many issues that are
common to the electric industry such as:

      o     energy sales retention and growth;

      o     revenue stability and growth;

      o     nuclear   operations  and   decommissioning;

      o     increased   capital   investments   attributable  to   environmental
            regulations;

      o     managing energy trading operations;

      o     ability to complete development or acquisition of current and future
            investments;

      o     managing electric generation  operations in locations outside of our
            traditional service territory;

      o     exposure to market price fluctuations and volatility;

      o     regulatory restrictions on affiliate transactions; and

      o     debt and equity market concerns.


                                       15
<PAGE>

Generation Operating Performance May Fall Below Projected Levels

      Operation  below  expected  capacity  levels may result in lost  revenues,
increased  expenses and penalties.  Individual  facilities may be unable to meet
operating and financial  obligations  resulting in reduced cash flow.  The risks
associated  with  operating  power  generation  facilities  (each of which could
result in performance below expected capacity levels) include:

      o     breakdown or failure of equipment or processes;

      o     disruptions in the transmission of electricity;

      o     labor disputes;

      o     fuel supply interruptions;

      o     limitations   which  may  be  imposed  by   environmental  or  other
            regulatory requirements;

      o     permit limitations; and

      o     operator error or  catastrophic  events such as fires,  earthquakes,
            explosions, floods, acts of terrorism or other similar occurrences.

      Operation  below  expected  capacity  levels may result in lost  revenues,
increased expenses and penalties.

      Individual  facilities  may be  unable  to meet  operating  and  financial
obligations resulting in reduced cash flow.

We Are Subject to Substantial Competition From Well Capitalized  Participants in
the Worldwide Energy Markets

      We are  subject  to  substantial  competition  in the United  States  from
merchant generators, domestic and multi-national utility generators, fuel supply
companies,  engineering  companies,  equipment  manufacturers  and affiliates of
other  industrial  companies.  Restructuring  of energy  markets and the sale of
utility-owned assets are creating opportunities for, and substantial competition
from,  well-capitalized  entities which may adversely affect our ability to make
investments  on  favorable  terms and achieve our growth  objectives.  Increased
competition  could  contribute  to a reduction  in prices  offered for power and
could  result in lower  returns  which may  affect our  ability  to service  our
outstanding indebtedness.

      Deregulation   may  continue  to  accelerate   the  current  trend  toward
consolidation  among  domestic  utilities  and could also  result in the further
splitting  of   vertically-integrated   utilities   into  separate   generation,
transmission and distribution  businesses.  As a result,  additional competitors
could become active in the independent power industry.

Our Ability to Service Our Debt Could Be Limited

      We are a holding  company with no material  assets other than the stock of
our  subsidiaries.  Accordingly,  all of our  operations  are  conducted  by our
subsidiaries. We depend on our subsidiaries' cash flow and our access to capital
in order to service our  indebtedness.  The  project-related  debt agreements of
subsidiaries  generally  restrict  their  ability  to pay  dividends,  make cash
distributions or otherwise  transfer funds to us. These restrictions may include
achieving and maintaining financial performance or debt coverage ratios, absence
of events of default,  or priority  in payment of other  current or  prospective
obligations.

      Our subsidiaries have financed some investments using non-recourse project
level financing.  Each non-recourse project financing is structured to be repaid
out of cash flows provided by the investment.  In the event of a default under a
financing  agreement which is not cured, the lenders would generally have rights
to the  related  assets.  In the  event  of  foreclosure  after a  default,  our
subsidiary  may lose its equity in the asset or may not be  entitled to any cash
that the asset may generate.

      We can give no assurances  that our current and future capital  structure,
operating  performance  or  financial  condition  will  permit us to access  the
capital markets or to obtain other financing at the times, in the amounts and on
the terms necessary or advisable for us to  successfully  carry out our business
strategy or to service our indebtedness.


                                       16
<PAGE>

Power  Transmission  Facilities  May Impact Our Ability to Deliver Our Output to
Customers

      If transmission is disrupted,  or if transmission  capacity is inadequate,
our ability to sell and deliver our  electric  energy  products may be adversely
impacted.  If a region's power  transmission  infrastructure is inadequate,  our
ability to generate revenues may be limited.

Regulatory Issues Significantly Impact Our Operations

      Federal,  state and local authorities  impose  substantial  regulation and
permitting  requirements  on the  electric  power  generation  business.  We are
required to comply with numerous  laws and  regulations  and to obtain  numerous
governmental permits in order to operate our generation stations.

      We believe  that we have  obtained all  material  energy-related  federal,
state and local  approvals,  including those required by the Nuclear  Regulatory
Commission (the "NRC"),  currently required to operate our generation  stations.
Although not currently required, additional regulatory approvals may be required
in the future due to a change in laws and  regulations or for other reasons.  No
assurance  can be given that we will be able to obtain any  required  regulatory
approval  that we may require in the  future,  or that we will be able to obtain
any necessary  extension in receiving any required regulatory  approvals.  If we
fail to obtain or comply with any required regulatory approvals,  there could be
a material  adverse effect on our ability to operate our generation  stations or
to sell electricity to third parties.

      We are  subject to  pervasive  regulation  by the NRC with  respect to the
operation of our nuclear generation stations.  This regulation involves testing,
evaluation and  modification  of all aspects of plant  operation in light of NRC
safety  and  environmental  requirements.   The  NRC  also  requires  continuous
demonstrations that plant operations meet applicable  requirements.  The NRC has
the  ultimate  authority to determine  whether any nuclear  generation  unit may
operate.

      We can give no assurance that existing  regulations will not be revised or
reinterpreted,  that new laws and  regulations  will not be  adopted  or  become
applicable  to us or any of our  generation  stations or that future  changes in
laws and regulations will not have a detrimental effect on our business.

Environmental Regulation May Limit Our Operations

      We  are  required  to  comply  with  numerous  statutes,  regulations  and
ordinances  relating to the safety and health of employees  and the public,  the
protection of the  environment  and land use. These  statutes,  regulations  and
ordinances are constantly  changing.  While we believe that we have obtained all
material  environmental-related  approvals currently required to own and operate
our  facilities or that such  approvals have been applied for and will be issued
in a timely  manner,  we may  incur  significant  additional  costs  because  of
compliance  with  these  requirements.  Failure  to  comply  with  environmental
statutes, regulations and ordinances could have a material adverse effect on us,
including  potential civil or criminal  liability and the imposition of clean-up
liens  or  fines  and  expenditures  of  funds  to  bring  our  facilities  into
compliance.

      We can give no assurance that we will be able to:

      o     obtain all required environmental  approvals that we do not yet have
            or that may be required in the future;

      o     obtain  any  necessary   modifications  to  existing   environmental
            approvals;

      o     maintain   compliance  with  all  applicable   environmental   laws,
            regulations and approvals; or

      o     recover any resulting costs through future sales.

      Delay in  obtaining  or failure to obtain and  maintain  in full force and
effect any such  environmental  approvals,  or delay or  failure to satisfy  any
applicable environmental regulatory requirements,  could prevent construction of
new  facilities,  operation  of our existing  facilities  or sale of energy from
these facilities or could result in significant additional cost to us.


                                       17
<PAGE>

We Are  Subject  to More  Stringent  Environmental  Regulation  than Many of Our
Competitors

      Our  facilities  are subject to both federal and state  pollution  control
requirements.  Most of our generating facilities are located in the State of New
Jersey.  In  particular,  New  Jersey's  environmental  programs  are  generally
considered  to be more  stringent  in  comparison  to similar  programs in other
states.  As such,  there may be instances  where the  facilities  located in New
Jersey are subject to more stringent and therefore more costly pollution control
requirements than competitive facilities in other states.

Insurance Coverage May Not Be Sufficient

      We have insurance for our generation stations, including:

      o     all-risk property damage insurance;

      o     commercial general public liability insurance;

      o     boiler and machinery coverage;

      o     nuclear liability; and,

      o     for our nuclear units,  replacement power and business  interruption
            insurance

in amounts and with  deductibles  that we consider  appropriate.  We can give no
assurance  that such  insurance  coverage  will be  available  in the  future on
commercially  reasonable terms nor that the insurance  proceeds received for any
loss of or any damage to any of the  generation  stations  will be sufficient to
permit  us to  continue  to make  payments  on our debt.  Additionally,  certain
properties that we own may not be insured in the event of an act of terrorism.

Acquisition, Construction and Development Activities May Not Be Successful

      We may seek to acquire,  develop and  construct new energy  projects,  the
completion  of any of  which is  subject  to  substantial  risk.  This  activity
requires  significant  lead time and requires us to expend  significant sums for
preliminary  engineering,  permitting,  fuel supply, legal and other expenses in
preparation  for  competitive  bids or  before it can be  established  whether a
project is economically feasible.

      The  construction,  expansion  or  refurbishment  of  a  power  generation
facility may involve:

      o     equipment and material supply interruptions;

      o     labor disputes;

      o     unforeseen engineering environmental and geological problems; and

      o     unanticipated cost overruns.

      The proceeds of any insurance, vendor warranties or performance guarantees
may not be adequate to cover lost  revenues,  increased  expenses or payments of
liquidated  damages.  In  addition,  some power  purchase  contracts  permit the
customer  to  terminate  the related  contract,  retain  security  posted by the
developer  as  liquidated  damages  or  change  the  payments  to be made to the
subsidiary  or the project  affiliate in the event certain  milestones,  such as
commencing  commercial operation of the project, are not met by specified dates.
If project  start-up is delayed and the customer  exercises  these  rights,  the
project may be unable to fund principal and interest  payments under its project
financing agreements. We can give no assurance that we will obtain access to the
substantial  debt and equity  capital  required  to develop  and  construct  new
generation  projects or to  refinance  existing  projects to supply  anticipated
future demand.

Changes in Technology May Make Our Power Generation Assets Less Competitive

      A key element of our  business  plan is that  generating  power at central
power  plants  produces  electricity  at  relatively  low cost.  There are other
technologies that produce electricity,  most notably fuel cells,  microturbines,
windmills and photovoltaic  (solar) cells. While these methods are not currently


                                       18
<PAGE>

cost-effective,  it is possible that advances in technology will reduce the cost
of alternative  methods of producing  electricity to a level that is competitive
with that of most central station electric  production.  If this were to happen,
our  market  share  could be eroded and the value of our power  plants  could be
significantly  impaired.  Changes in  technology  could also alter the  channels
through which retail  electric  customers  buy  electricity,  thereby  adversely
affecting our financial results.

Recession, Acts of War or Terrorism Could Have an Adverse Impact

      The long-term  consequences of the September 11, 2001 terrorist attacks on
the United  States are  difficult to predict.  The  consequences  of a prolonged
recession and market conditions may include the continued  uncertainty of energy
prices and the capital and commodity  markets.  We cannot  predict the impact of
any continued  economic  slowdown or fluctuating  energy prices;  however,  such
impact could have a material adverse effect on our financial condition,  results
of operations and net cash flows.

      Like other operators of major industrial facilities, our generation plants
may be targets of terrorist  activities  that could result in  disruption of our
ability to produce or distribute some portion of our energy  products.  Any such
disruption could result in a significant decrease in revenues and/or significant
additional  costs to repair,  which could have a material  adverse impact on our
financial condition, results of operation and net cash flows.

Our Indenture May Restrict Our Ability to Enter into Certain Transactions

      Our  Indenture  restricts  our ability  and the ability of our  Restricted
Subsidiaries  (as  defined  below  under  "Description  of the  Senior  Notes --
Definitions") to, among other things:

      o     in  the  case  of  our   Restricted   Subsidiaries,   incur  certain
            indebtedness;

      o     create liens;

      o     in the case of our  Restricted  Subsidiaries,  create  or  permit to
            exist dividend or payment restrictions with respect to us;

      o     sell assets; and

      o     engage in mergers and consolidations.

      These  restrictions  may limit our ability to finance  future  operations,
respond  to  changing  business  and  economic  conditions,  secure  any  needed
additional financing and engage in opportunistic transactions.  See "Description
of the Exchange Notes -- Selected Indenture Covenants."

We are Subject to Control by PSEG

      Our sole limited liability company member,  PSEG, controls the election of
our  directors  and all other  matters  submitted  for member  approval  and has
control over our management and affairs.  In circumstances  involving a conflict
of  interest  between  PSEG,  as the  sole  member,  on the  one  hand,  and our
creditors,  on the other,  we can give no assurance that PSEG would not exercise
its power to control us in a manner that would  benefit PSEG to the detriment of
our creditors, including the holders of the exchange notes.

      The Indenture imposes no limitations on our ability to pay dividends or to
make other  payments to PSEG or on our ability to enter into  transactions  with
PSEG or our other affiliates.

There is No Public Market for the Exchange Notes

      We do not  intend  to list  the  exchange  notes  on any  U.S.  securities
exchange.  We can give no assurance  concerning the liquidity of any market that
may  develop for the  exchange  notes,  the ability of any  investor to sell the
exchange  notes  or the  price at which  investors  would be able to sell  their
exchange notes.

Fraudulent  Transfer Statutes and Similar Limitations May Limit Your Rights as a
Noteholder

      Each of our Restricted  Subsidiaries will guarantee our obligations on the
exchange notes (each a "Subsidiary Guaranty").  See "Description of the Exchange
Notes -- Guaranty of Senior Notes."


                                       19
<PAGE>

      Under federal and state fraudulent  transfer laws, a court could find that
the  Subsidiary  Guaranty  provided by a  Restricted  Subsidiary  constituted  a
fraudulent  conveyance by that  Restricted  Subsidiary.  To do so, a court would
typically have to find that, at the time the Subsidiary Guaranty was issued, the
relevant Restricted Subsidiary:

      o     issued  the  Subsidiary  Guaranty  with  the  intent  of  hindering,
            delaying or defrauding our current or future creditors; or

      o     (a) received less than fair  consideration or reasonably  equivalent
            value for incurring the  indebtedness  represented by its Subsidiary
            Guaranty; and (b) either (x) was insolvent or was rendered insolvent
            by  reason  of the  issuance  of the  Subsidiary  Guaranty,  (y) was
            engaged,  or about to engage, in a business or transaction for which
            its assets were  unreasonably  small or (z)  intended  to incur,  or
            believed or should have  believed it would  incur,  debts beyond its
            ability to pay as such debts mature.

Many of the foregoing terms are defined in or interpreted under those fraudulent
transfer statutes.

      Different  jurisdictions  define  "insolvency"  differently.  However,  an
entity  generally  would be  considered  insolvent  at the time it incurred  any
particular  obligation  if (1) its  liabilities  exceeded its assets,  at a fair
valuation,  or (2) the  present  saleable  value of its  assets is less than the
amount required to pay its total existing debts and  liabilities  (including any
probable liability related to contingent liabilities) as they become absolute or
matured.  We cannot  assure you of the  standard a court would apply in order to
determine  whether any Restricted  Subsidiary was "insolvent" as of the date the
applicable  Subsidiary  Guaranty was issued, or that regardless of the method of
valuation,  a court would not determine,  regardless of whether such  Restricted
Subsidiary  was insolvent on the date the Subsidiary  Guaranty was issued,  that
the payments constituted fraudulent transfers on another ground.

      If a court were to make any such finding, it could:

      o     avoid  all or a  portion  of the  relevant  Restricted  Subsidiary's
            obligations on the Subsidiary Guarantees;

      o     subordinate the relevant Restricted Subsidiary's  obligations on the
            Subsidiary  Guarantees to obligations owed to its other existing and
            future  creditors,  entitling  those  creditors  to be  paid in full
            before any  payment  is made on the  relevant  Subsidiary  Guaranty;
            and/or

      o     take other actions  detrimental to you,  including  invalidating the
            relevant Subsidiary Guaranty.

      In that  event,  we cannot  assure you that you would  receive any payment
under the Subsidiary Guaranty of the relevant Restricted Subsidiary.

If You Fail to Exchange  Original  Notes,  They Will Remain  Subject to Transfer
Restrictions

      Any original notes that remain  outstanding after this exchange offer will
continue to be subject to restrictions  on their  transfer.  After this exchange
offer,  holders of original  notes will not (with limited  exceptions)  have any
further rights under the exchange and registration rights agreement.  Any market
for original  notes that are not  exchanged  could be adversely  affected by the
conclusion of this exchange offer.

Late  Deliveries of Notes and Other  Required  Documents  Could Prevent a Holder
From Exchanging Its Notes

      Holders are responsible for complying with all exchange offer  procedures.
Issuance of exchange  notes in exchange for original  notes will only occur upon
completion of the procedures described in this prospectus under the heading "The
Exchange Offer -- Procedures for Tendering Original Notes".  Therefore,  holders
of original  notes who wish to exchange  them for  exchange  notes  should allow
sufficient  time for timely  completion  of the exchange  procedure.  We are not
obligated to notify you of any failure to follow the proper procedure.


                                       20
<PAGE>

If You Are a Broker-Dealer, Your Ability to Transfer the Notes May Be Restricted

      A broker-dealer  that purchased original notes for its own account as part
of market-making  or trading  activities must deliver a prospectus when it sells
the  exchange  notes.  Our  obligation  to make  this  prospectus  available  to
broker-dealers  is  limited.  Consequently,  we cannot  guarantee  that a proper
prospectus will be available to broker-dealers  wishing to resell their exchange
notes.

                           FORWARD-LOOKING STATEMENTS

      This prospectus includes  "forward-looking  statements" within the meaning
of the Private Securities  Litigation Reform Act of 1995. All statements,  other
than  statements of historical  facts,  included in this prospectus that address
activities,  events or  developments  that we expect or  anticipate  will or may
occur in the future,  including such matters as our projections,  future capital
expenditures, business strategy, competitive strengths, goals, expansion, market
and industry  developments and the growth of our businesses and operations,  are
forward-looking  statements.  These  statements  are  based on  assumptions  and
analyses made by us in light of our  experience and our perception of historical
trends,  current  conditions and expected  future  developments as well as other
factors we believe are  appropriate  under the  circumstances.  However,  actual
results  and  developments  may  differ  materially  from our  expectations  and
predictions due to a number of risks and uncertainties, many of which are beyond
our control. These risks and uncertainties include:

      o     the significant  considerations  and risk factors  discussed in this
            prospectus;

      o     general and local economic, market or business conditions;

      o     demand (or lack  thereof) for  electricity,  capacity and  ancillary
            services in the markets served by our generation units;

      o     increasing competition from other companies;

      o     the acquisition and development opportunities (or lack thereof) that
            may be presented to and pursued by us;

      o     changes in laws or regulations that are applicable to us;

      o     environmental constraints on construction and operation;

      o     the rapidly changing market for energy products; and

      o     access to capital.

      Consequently,   all  of  the  forward-looking   statements  made  in  this
prospectus are qualified by these cautionary statements and we cannot assure you
that the results or developments  anticipated by us will be realized or, even if
realized,  will  have  the  expected  consequences  to or  effects  on us or our
business,  prospects,  financial condition or results of operations.  You should
not place undue  reliance  on these  forward-looking  statements  in making your
investment  decision.  We expressly  disclaim any  obligation or  undertaking to
release publicly any updates or revisions to these forward-looking statements to
reflect events or circumstances  that occur or arise or are anticipated to occur
or arise after the date hereof. In making an investment  decision  regarding the
exchange notes, we are not making,  and you should not infer, any representation
about  the  likely   existence  of  any  particular   future  set  of  facts  or
circumstances.

                                 USE OF PROCEEDS

      The exchange  offer is intended to satisfy some of our  obligations  under
the registration  rights  agreement.  We will not receive any cash proceeds from
the  issuance of the  exchange  notes in the  exchange  offer.  In exchange  for
issuing the exchange notes as described in this  prospectus,  we will receive an
equal principal amount of original notes, which will be canceled.

      The net proceeds  from the sale of the  original  notes were used to repay
$545 million of inter-company indebtedness payable to affiliates and for general
company purposes.


                                       21
<PAGE>

                                 CAPITALIZATION

      The following table sets forth our consolidated  capitalization as of June
30, 2002.

                                                             As of June 30, 2002
                                                             -------------------
                                                                 (unaudited)
                                                                (in millions)
          Long-term Debt:
            6 7/8% Senior Notes due 2006 ..................        $   500
            7 3/4% Senior Notes due 2011 ..................            800
            6.95% Senior Notes due 2012 ...................            600
            8 5/8% Senior Notes due 2031 ..................            500
            Project Level, Non-Recourse Debt ..............            800
            Pollution Control Notes .......................            124
            Unamortized Discount ..........................            (10)
                                                                   -------
            Total Debt ....................................        $ 3,314
                                                                   -------
          Member's Equity(1) ..............................          2,042
          Basis Adjustment ................................           (986)
                                                                   -------
          Total Capitalization ............................        $ 4,370
                                                                   =======

----------
(1)   We are a limited  liability  company of which PSEG,  is the sole owner and
      member.


                                       22
<PAGE>


                               THE EXCHANGE OFFER

Purpose of the Exchange Offer

      In connection  with the sale of the original  notes, we and the subsidiary
guarantors  entered  into a  registration  rights  agreement  with  the  initial
purchasers.  Under the  registration  rights  agreement,  we and the  subsidiary
guarantors  agreed to use our best efforts to complete the exchange offer and to
file and cause to become effective with the SEC a registration statement for the
exchange of the original notes for exchange notes.

      The terms of the exchange  notes are the same as the terms of the original
notes except that the exchange notes have been  registered  under the Securities
Act and will not be subject to some  restrictions  on transfer that apply to the
original notes. In that regard, the original notes provide,  among other things,
that if the exchange offer has not been consummated  within the period specified
in the registration  rights  agreement,  the interest rate on the original notes
will increase by 0.50% per annum, until the exchange offer is consummated.

      Upon completion of the exchange offer,  holders of original notes will not
be entitled to any further  registration  rights under the  registration  rights
agreement, except under limited circumstances.  See "Risk Factors -- If You Fail
to Exchange Original Notes,  They Will Remain Subject to Transfer  Restrictions"
and "Description of the Exchange Notes". The exchange offer is not being made to
holders of original notes in any jurisdiction in which the exchange offer or the
acceptance  of the notes  would not  comply  with  securities  or blue sky laws.
Unless the context  requires  otherwise,  the term  "holder" with respect to the
exchange offer means any person who has obtained a properly completed bond power
from the  registered  holder,  or any person  whose  original  notes are held of
record by The  Depository  Trust  Company  ("DTC") who  desires to deliver  such
original  notes by  book-entry  transfer  at DTC.  We will  exchange  as soon as
practicable  after the expiration  date of the exchange offer the original notes
for a like aggregate principal amount of the exchange notes.

      Completion  of the exchange  offer is subject to the  conditions  that the
exchange offer not violate any applicable law or  interpretation of the staff of
the Division of Corporate  Finance of the SEC and that no  injunction,  order or
decree has been issued which would  prohibit,  prevent or materially  impair our
ability to proceed with the exchange  offer.  The exchange offer is also subject
to various  procedural  requirements  discussed  below with which  holders  must
comply.  We reserve the right, in our absolute  discretion,  to waive compliance
with these requirements subject to applicable law.

Terms of the Exchange Offer

      We are offering, upon the terms and subject to the conditions described in
this prospectus and in the accompanying letter of transmittal, to exchange up to
$600 million  aggregate  principal amount of exchange notes for a like aggregate
principal amount of original notes properly tendered on or before the expiration
date of the exchange  offer and not properly  withdrawn in  accordance  with the
procedures described below. We will issue, promptly after the expiration date of
the  exchange  offer,  an  aggregate  principal  amount of up to $600 million of
exchange notes in exchange for a like principal  amount of outstanding  original
notes tendered and accepted in connection  with the exchange  offer. We will pay
all charges and expenses,  other than certain  applicable taxes described below,
in connection with the exchange offer. See "-- Fees and Expenses".

      Holders  may tender  their  original  notes in whole or in part in minimum
denominations of $1,000 and integral  multiples in excess thereof.  The exchange
offer is not  conditioned  upon any minimum  principal  amount of original notes
being  tendered.  As of the  date of this  prospectus,  $600  million  aggregate
principal  amount of the  original  notes is  outstanding.  (Holders of original
notes do not have any appraisal or  dissenters'  rights in  connection  with the
exchange  offer.  Original  notes which are not tendered for or are tendered but
not accepted in connection  with the exchange offer will remain  outstanding and
be entitled to the  benefits of the  indenture,  but will not be entitled to any
further  registration  rights under the registration  rights  agreement,  except
under  limited  circumstances.  See  "Risk  Factors  -- If You Fail to  Exchange
Original  Notes,  They  Will  Remain  Subject  to  Transfer   Restrictions"  and
"Description  of the Exchange  Notes".  If any tendered  original  notes are not
accepted


                                       23
<PAGE>

for  exchange  because of an invalid  tender,  the  occurrence  of other  events
described in this prospectus or otherwise,  appropriate book-entry transfer will
be made,  without  expense,  to the tendering holder of the notes promptly after
the expiration date of the exchange offer.  Holders who tender original notes in
connection  with the  exchange  offer  will  not be  required  to pay  brokerage
commissions  or  fees  or,  subject  to  the   instructions  in  the  letter  of
transmittal,  transfer  taxes with respect to the exchange of original  notes in
connection with the exchange offer.

      Neither we nor our Board of Directors make any  recommendation  to holders
of original  notes as to whether to tender or refrain from  tendering all or any
portion of their original notes in the exchange offer.  In addition,  no one has
been authorized to make any  recommendation  as to whether holders should tender
notes in the  exchange  offer.  Holders  of  original  notes must make their own
decisions whether to tender original notes in the exchange offer and, if so, the
aggregate amount of original notes to tender based on the holders' own financial
positions and requirements.

Expiration Date; Extensions; Amendments

      The term  "expiration  date"  means 5:00 p.m.,  Eastern  Time,  on , 2002.
However,  if the exchange  offer is extended by us, the term  "expiration  date"
will mean the latest date and time to which we extend the exchange offer.

      We  expressly  reserve  the  right in our sole  and  absolute  discretion,
subject to applicable law, at any time and from time to time:

      o     to delay the acceptance of the original notes for exchange,

      o     to extend the  expiration  date of the exchange offer and retain all
            original notes tendered in the exchange offer, subject,  however, to
            the right of holders of original  notes to withdraw  their  tendered
            original notes as described under "-- Withdrawal Rights", and

      o     to waive any condition or otherwise  amend the terms of the exchange
            offer in any respect.

      If  the  exchange  offer  is  amended  in a  manner  determined  by  us to
constitute a material change, we will promptly

      o     disclose  the  amendment  in a  prospectus  supplement  that will be
            distributed to the registered holders of the original notes,

      o     we  will  file  a  post-effective   amendment  to  the  registration
            statement  filed with the SEC with regard to the exchange  notes and
            the exchange offer, and

      o     we will  extend the  exchange  offer to the extent  required by Rule
            14e-1 under the Exchange Act.

      We will  promptly  notify the exchange  agent by making an oral or written
public  announcement  of any  delay in  acceptance,  extension,  termination  or
amendment.  This  announcement in the case of an extension will be made no later
than 9:00 a.m.,  Eastern  Time,  on the next  business day after the  previously
scheduled expiration date. Without limiting the manner in which we may choose to
make any public  announcement  and,  subject to applicable  law, we will have no
obligation  to  publish,  advertise  or  otherwise  communicate  any such public
announcement other than by issuing a release to an appropriate news agency.

Acceptance for Exchange and Issuance of Exchange Notes

      Upon the terms and subject to the  conditions  of the exchange  offer,  we
will exchange and issue to the exchange agent, exchange notes for original notes
validly  tendered and not withdrawn  promptly after the expiration  date. In all
cases,  delivery of exchange  notes in exchange for original  notes tendered and
accepted  for exchange  pursuant to the  exchange  offer will be made only after
timely receipt by the exchange agent of:

      -     original notes or a book-entry confirmation of a book-entry transfer
            of  original  notes  into  the  exchange  agent's  account  at  DTC,
            including  an agent's  message (as defined  below) if the  tendering
            holder has not delivered a letter of transmittal,


                                       24
<PAGE>

      -     the letter of transmittal (or facsimile thereof), properly completed
            and duly executed, with any required signature guarantees or (in the
            case of a  book-entry  transfer) an agent's  message  instead of the
            letter of transmittal, and

      -     any other documents required by the letter of transmittal.

      The  term  "book-entry  confirmation"  means a  timely  confirmation  of a
book-entry  transfer of original notes into the exchange agent's account at DTC.
The term "agent's  message" means a message,  transmitted by DTC to and received
by the  exchange  agent and forming a part of a book-entry  confirmation,  which
states that DTC has received an express  acknowledgment  from the  tendering DTC
participant.  This  acknowledgment  states that the participant has received and
agrees to be bound by the  letter of  transmittal  and that we may  enforce  the
letter of transmittal against the participant.

      Subject to the terms and  conditions  of the  exchange  offer,  we will be
deemed to have accepted for exchange,  and therefore  exchanged,  original notes
validly  tendered  and not  withdrawn  as, if and when we give  oral or  written
notice  to the  exchange  agent of our  acceptance  of such  original  notes for
exchange  pursuant to the exchange  offer.  The exchange agent will act as agent
for us for the  purpose of  receiving  tenders  of  original  notes,  letters of
transmittal and related  documents,  and as agent for tendering  holders for the
purpose  of  receiving  original  notes,  letters  of  transmittal  and  related
documents and transmitting  exchange notes to validly  tendering  holders.  This
exchange will be made promptly after the expiration date.

      If, for any reason whatsoever,  acceptance for exchange or the exchange of
any tendered  original notes is delayed,  whether before or after our acceptance
for exchange of original notes, or we extend the exchange offer or are unable to
accept for exchange or exchange tendered original notes, then, without prejudice
to  the  rights  we  have  in  the  exchange  offer,  the  exchange  agent  may,
nevertheless, on our behalf and subject to Rule 14e-1(c) under the Exchange Act,
retain tendered original notes. These original notes may not be withdrawn except
to the extent tendering  holders are entitled to withdrawal  rights as described
under "-- Withdrawal Rights".

      Under the letter of transmittal or agent's  message,  a holder of original
notes will  warrant  and agree that it has full power and  authority  to tender,
exchange,  sell,  assign and transfer original notes, that we will acquire good,
marketable and unencumbered title to the tendered original notes, free and clear
of all liens,  restrictions,  charges and  encumbrances,  and the original notes
tendered  for  exchange  are not subject to any adverse  claims or proxies.  The
holder  also will  warrant  and agree that it will,  upon  request,  execute and
deliver  any  additional  documents  deemed  by us or the  exchange  agent to be
necessary or desirable to complete the exchange, sale, assignment,  and transfer
of the original notes tendered in the exchange offer.

Procedures for Tendering Original Notes

      Valid Tender. Except as indicated below, in order for original notes to be
validly  tendered in the  exchange  offer,  an original  copy or  facsimile of a
properly  completed and duly executed letter of  transmittal,  with any required
signature guarantees, or, in the case of a book-entry tender, an agent's message
instead of the letter of transmittal,  and any other required documents, must be
received by the exchange agent at one of its addresses listed under "-- Exchange
Agent". In addition, either:

      -     tendered original notes must be received by the exchange agent,

      -     the  tender  of  original  notes  must  follow  the  procedures  for
            book-entry  transfer described below and a book-entry  confirmation,
            including  an  agent's  message  if the  tendering  holder  has  not
            delivered a letter of transmittal,  must be received by the exchange
            agent, in each case on or before the expiration date, or

      -     the guaranteed delivery procedures  described below must be complied
            with.

      If less than all of the original  notes are tendered,  a tendering  holder
should fill in the amount of original  notes being  tendered in the  appropriate
box on the letter of transmittal. The entire amount of


                                       25
<PAGE>

original  notes  delivered  to the  exchange  agent  will be deemed to have been
tendered unless otherwise indicated.

      The method of delivery of certificates,  the letter of transmittal and all
other required documents is at the option and sole risk of the tendering holder.
Delivery will be deemed made only when actually  received by the exchange agent.
If delivery is by mail, we recommend  properly insured  registered mail,  return
receipt requested,  or an overnight  delivery service.  In all cases, you should
allow sufficient time to ensure timely delivery.

      Book-Entry  Transfer.  The exchange  agent will  establish an account with
respect to the original  notes at DTC for purposes of the exchange  offer within
two business days after the date of this prospectus.  Any financial  institution
that is a participant in DTC's  book-entry  transfer  facility system may make a
book-entry  delivery  of the  original  notes by causing  DTC to  transfer  such
Original Notes into the exchange agent's account at DTC in accordance with DTC's
procedures for transfers.  However,  although  delivery of original notes may be
effected through  book-entry  transfer into the exchange agent's account at DTC,
the letter of transmittal (or facsimile  thereof),  properly  completed and duly
executed, with any required signature guarantees,  or an agent's message instead
of the letter of transmittal, and any other required documents, must in any case
be delivered to and received by the exchange  agent at its address  listed under
"--  Exchange  Agent" on or  before  the  expiration  date.  Alternatively,  the
guaranteed delivery procedure described below must be complied with.

      Delivery of documents to DTC in accordance with DTC's  procedures does not
constitute delivery to the exchange agent.

      Signature  Guarantees.  Certificates  for the  original  notes need not be
endorsed and signature  guarantees on the letter of transmittal  are unnecessary
unless

      (1) a  certificate  for the original  notes is  registered in a name other
than  that  of the  person  surrendering  the  certificate  or (2)  such  holder
completes the box entitled "Special Issuance  Instructions" or "Special Delivery
Instructions" in the letter of transmittal. In the case of (1) or (2) above, the
certificates  for  original  notes must be duly  endorsed  or  accompanied  by a
properly  executed  bond power,  with the  endorsement  or signature on the bond
power and on the  letter of  transmittal  guaranteed  by a firm or other  entity
identified  in Rule 17Ad-15  under the  Exchange  Act as an "eligible  guarantor
institution," including (as such terms are defined therein):

      -     a bank;

      -     a  broker,   dealer,   municipal  securities  broker  or  dealer  or
            government securities broker or dealer;

      -     a credit union;

      -     a national securities exchange, registered securities association or
            clearing agency; or

      -     a savings association that is a participant in a Securities Transfer
            Association  (an  "Eligible  Institution"),  unless  surrendered  on
            behalf of that Eligible Institution. See Instruction 1 to the letter
            of transmittal.

      Guaranteed  Delivery.  If a holder desires to tender original notes in the
exchange offer and the  certificates  for the original notes are not immediately
available or time will not permit all  required  documents to reach the exchange
agent on or  before  the  expiration  date,  or the  procedures  for  book-entry
transfer  cannot  be  completed  on a  timely  basis,  the  original  notes  may
nevertheless be tendered, provided that all of the following guaranteed delivery
procedures are complied with:

      (1) the tenders are made by or through an Eligible Institution;

      (2) a properly completed and duly executed Notice of Guaranteed  Delivery,
substantially in the form accompanying the letter of transmittal, is received by
the exchange agent, as provided below, on or before the expiration date; and

      (3) the  certificates  (or a  book-entry  confirmation)  representing  all
tendered  original notes, in proper form for transfer,  together with a properly
completed and duly executed letter of transmittal (or facsimile  thereof),  with
any required signature  guarantees,  or an agent's message instead of the letter
of


                                       26
<PAGE>

transmittal,  and any other documents required by the letter of transmittal, are
received by the exchange agent within three New York Stock Exchange trading days
after the date of execution of the Notice of Guaranteed Delivery.

      The Notice of Guaranteed Delivery may be delivered by hand, or transmitted
by facsimile  or mail to the  exchange  agent and must include a guarantee by an
Eligible  Institution  in the form shown in the notice.  Regardless of any other
provision in this  prospectus,  the  delivery of exchange  notes in exchange for
original  notes tendered and accepted for exchange in the exchange offer will in
all cases be made only after timely  receipt by the  exchange  agent of original
notes, or of a book-entry confirmation with respect to those original notes, and
an original copy or facsimile of a properly  completed and duly executed  letter
of transmittal,  together with any required signature guarantees,  or an agent's
message instead of the letter of transmittal,  and any other documents  required
by the letter of transmittal.  Accordingly, the delivery of exchange notes might
not be made to all tendering holders at the same time, and will depend upon when
original  notes,  book-entry  confirmations  with respect to original  notes and
other required  documents are received by the exchange agent. Our acceptance for
exchange of original notes tendered under any of the procedures  described above
will constitute a binding agreement between the tendering holder and us upon the
terms and subject to the conditions of the exchange offer.

      Determination  of Validity.  All  questions  as to the form of  documents,
validity, eligibility, including time of receipt, and acceptance for exchange of
any tendered  original  notes will be determined by us, in our sole  discretion.
The  interpretation  by us of the terms and  conditions  of the exchange  offer,
including the letter of transmittal and the accompanying  instructions,  will be
final and binding.

      We reserve the absolute  right,  in our sole and absolute  discretion,  to
reject  any and all  tenders  determined  by us not to be in proper  form or the
acceptance of which,  or exchange  for,  may, in the opinion of our counsel,  be
unlawful.  We also reserve the absolute  right,  subject to  applicable  law, to
waive any  condition  or  irregularity  in any tender of  original  notes of any
particular holder whether or not similar conditions or irregularities are waived
in the case of other holders. No tender of original notes will be deemed to have
been validly made until all irregularities with respect to such tender have been
cured or waived.  Neither we, any of our  affiliates  or assigns,  the  exchange
agent nor any other  person will be under any duty to give any  notification  of
any  irregularities  in tenders or incur any  liability  for failure to give any
notification.

      If any letter of transmittal,  endorsement, bond power, power of attorney,
or any other  document  required  by the  letter of  transmittal  is signed by a
trustee,  executor,  administrator,  guardian,  attorney-in-fact,  officer  of a
corporation  or other person acting in a fiduciary or  representative  capacity,
that person  should so indicate  when  signing,  and unless waived by us, proper
evidence satisfactory to us, in our sole discretion,  of that person's authority
must be  submitted.  A  beneficial  owner of original  notes that are held by or
registered in the name of a broker,  dealer,  commercial  bank, trust company or
other  nominee or  custodian  is urged to contact  that entity  promptly if that
beneficial holder wishes to participate in the exchange offer.

Resales of Exchange Notes

      We are making the exchange offer for the exchange notes in reliance on the
position  of the staff of the  Division  of  Corporation  Finance  of the SEC as
defined in certain  interpretive  letters  addressed  to third  parties in other
transactions. However, we did not seek our own interpretive letter and we cannot
assure  you that the staff of the  Division  of  Corporation  Finance of the SEC
would make a similar  determination with respect to the exchange offer as it has
in other interpretive letters to third parties.  Based on these  interpretations
by the staff of the Division of  Corporation  Finance of the SEC, and subject to
the two immediately  following sentences,  we believe that exchange notes issued
pursuant to this  exchange  offer in exchange for original  notes may be offered
for resale,  resold and otherwise  transferred by a holder thereof (other than a
holder who is a broker-dealer)  without further compliance with the registration
and prospectus  delivery  requirements of the Securities Act, provided that such
exchange notes are acquired in the ordinary course of the holder's  business and
that the holder is not  participating,  and has no arrangement or  understanding
with any person to  participate,  in a  distribution  (within the meaning of the
Securities Act) of the exchange notes.


                                       27
<PAGE>

      However, any holder of original notes who is an "affiliate" of ours or who
intends to  participate  in the exchange  offer for the purpose of  distributing
exchange notes,  or any  broker-dealer  who purchased  original notes from us to
resell  pursuant  to Rule  144A  or any  other  available  exemption  under  the
Securities Act,

      (a) will not be able to rely on the  interpretations  of the  staff of the
Division  of  Corporation  Finance  of the SEC  defined  in the  above-mentioned
interpretive letters,

      (b) will not be permitted or entitled to tender such original notes in the
exchange offer and

      (c) must comply with the registration and prospectus delivery requirements
of the  Securities  Act in  connection  with any sale or other  transfer of such
original  notes  unless  such sale is made  pursuant to an  exemption  from such
requirements.

      In addition, as described below, if any broker-dealer holds original notes
acquired  for its own  account  as a result of  market-making  or other  trading
activities  and exchanges  those original  notes for exchange  notes,  then that
broker-dealer  must  deliver  a  prospectus  meeting  the  requirements  of  the
Securities  Act in connection  with any resales of those  exchange  notes.  Each
holder of original  notes who wishes to  exchange  original  notes for  exchange
notes in the exchange offer will be required to represent that:

      -     it is not an "affiliate" of ours,

      -     any  exchange  notes to be received by it are being  acquired in the
            ordinary course of its business,

      -     it  has  no  arrangement  or   understanding   with  any  person  to
            participate in a distribution  (within the meaning of the Securities
            Act) of such exchange notes, and

      -     if the tendering holder is not a  broker-dealer,  that holder is not
            engaged in, and does not intend to engage in, a distribution (within
            the meaning of the Securities Act) of its exchange notes.

      In addition,  we may require the holder,  as a condition to that  holder's
eligibility to participate in the exchange  offer, to furnish to us (or an agent
of ours) in writing, information as to the number of "beneficial owners" (within
the meaning of Rule 13d-3 under the Exchange  Act) on behalf of whom that holder
holds the original notes to be exchanged in the exchange offer.

      Each broker-dealer that receives exchange notes for its own account in the
exchange offer must  acknowledge that it acquired the original notes for its own
account as the result of  market-making  activities or other trading  activities
and must agree that it will deliver a prospectus meeting the requirements of the
Securities Act in connection with any resale of those exchange notes. The letter
of  transmittal  states that by making that  acknowledgement  and  delivering  a
prospectus,  a  broker-dealer  will  not  be  deemed  to  admit  that  it  is an
"underwriter"  within the meaning of the  Securities  Act. Based on the position
taken by the staff of the  Division  of  Corporation  Finance  of the SEC in the
interpretive   letters   referred  to  above,  we  believe  that   participating
broker-dealers who acquired original notes for their own accounts as a result of
market-making   activities  or  other  trading   activities  may  fulfill  their
prospectus  delivery  requirements  with respect to the exchange  notes received
upon exchange of original  notes (other than original  notes which  represent an
unsold  allotment from the initial sale of the original notes) with a prospectus
meeting the  requirements  of the  Securities  Act,  which may be the prospectus
prepared for this  exchange  offer so long as it contains a  description  of the
plan of distribution regarding the resale of the exchange notes.

      Accordingly,  this prospectus,  as it may be amended or supplemented  from
time to time, may be used by a  participating  broker-dealer  in connection with
resales of exchange  notes  received in exchange  for  original  notes where the
original  notes were  acquired by the  participating  broker-dealer  for its own
account as a result of market-making or other trading  activities.  See "Plan of
Distribution".  Subject  to certain  provisions  contained  in the  registration
rights agreement,  we have agreed that this prospectus,  as it may be amended or
supplemented from time to time, may be used by a participating  broker-dealer in
connection  with  resales of exchange  notes for a period not  exceeding 90 days
after the expiration date. However, a participating broker-dealer who intends to
use this  prospectus in connection with the resale of exchange notes received in
exchange for original notes pursuant to the exchange


                                       28
<PAGE>

offer must notify us on or before the expiration date that it is a participating
broker-dealer.  This notice may be given in the space  provided for that purpose
in the letter of transmittal or may be delivered to the exchange agent at one of
the addresses set forth herein under "-- Exchange Agent".

      Any participating broker-dealer who is an "affiliate" of ours may not rely
on  these  interpretive  letters  and must  comply  with  the  registration  and
prospectus  delivery  requirements  of the Securities Act in connection with any
resale  transaction.  In  that  regard,  each  participating  broker-dealer  who
surrenders  original  notes in the exchange offer will be deemed to have agreed,
by  execution  of the letter of  transmittal  or an agent's  message,  that upon
receipt of notice from us of the occurrence of any event or the discovery of:

      (1) any fact  which  makes any  statement  contained  or  incorporated  by
reference in this prospectus untrue in any material respect or

      (2) any fact which causes this prospectus to omit to state a material fact
necessary in order to make the statements contained or incorporated by reference
in this prospectus,  in light of the  circumstances  under which they were made,
not misleading, or

      (3) the occurrence of other events  specified in the  registration  rights
agreement,

that  participating  broker-dealer will suspend the sale of exchange notes under
this prospectus until we have amended or supplemented this prospectus to correct
the  misstatement  or  omission  and have  furnished  copies of the  amended  or
supplemented  prospectus to the  participating  broker-dealer,  or we have given
notice that the sale of the exchange notes may be resumed, as the case may be.

Withdrawal Rights

      Except as otherwise provided in this prospectus, tenders of original notes
may be withdrawn at any time on or before the  expiration  date.  In order for a
withdrawal  to  be  effective  a  written,   telegraphic,   telex  or  facsimile
transmission of the notice of withdrawal must be timely received by the exchange
agent  at its  address  listed  under  "--  Exchange  Agent"  on or  before  the
expiration  date.  Any notice of withdrawal  must specify the name of the person
who tendered the original notes to be withdrawn,  the aggregate principal amount
of original notes to be withdrawn,  and, if certificates  for the original notes
have been tendered,  the name of the registered holder of the original notes, if
different from that of the person who tendered the original notes.

      If original  notes have been  delivered  or  otherwise  identified  to the
exchange  agent,  then before the physical  release of the original  notes,  the
tendering holder must submit the serial numbers shown on the particular original
notes to be  withdrawn  and the  signature on the notice of  withdrawal  must be
guaranteed  by an Eligible  Institution,  except in the case of  original  notes
tendered for the account of an Eligible Institution. For original notes tendered
under the  procedures for  book-entry  transfer  described in "-- Procedures for
Tendering  Original  Notes",  the notice of withdrawal must specify the name and
number of the  account at DTC to be  credited  with the  withdrawal  of original
notes,  in which case a notice of  withdrawal  will be effective if delivered to
the exchange  agent by written,  telegraphic,  telex or facsimile  transmission.
Withdrawals  of tenders of original  notes may not be rescinded.  Original notes
properly  withdrawn  will not be deemed  validly  tendered  for  purposes of the
exchange  offer,  but may be retendered at any subsequent  time on or before the
expiration  date by following any of the  procedures  described  above under "--
Procedures for Tendering Original Notes". All questions as to the validity, form
and  eligibility,  including  time of receipt,  of  withdrawal  notices  will be
determined by us, in our sole discretion, whose determination shall be final and
binding on all  parties.  Neither we, the  subsidiary  guarantors,  the exchange
agent nor any other  person  is under any duty to give any  notification  of any
irregularities  in any notice of  withdrawal  nor will those  parties  incur any
liability  for failure to give that notice.  Any original  notes which have been
tendered but which are withdrawn  will be returned to the holder  promptly after
withdrawal.

Interest on Exchange Notes

      Interest  on the Senior  Notes will  accrue at the rate of 6.95% per annum
and will be payable  semi-annually  in arrears on June 1 and  December 1 of each
year, commencing December 1, 2002. We will


                                       29
<PAGE>

make each interest  payment to the persons in whose names the exchange notes are
registered  at the close of business on the 15th day  immediately  preceding the
applicable interest payment date. The exchange notes will bear interest from and
including the last interest  payment date on the original  notes,  or if one has
not yet  occurred,  the date of issuance  of the  original  notes.  Accordingly,
holders of  original  notes that are  accepted  for  exchange  will not  receive
accrued but unpaid  interest on  original  notes at the time of tender.  Rather,
that  interest will be payable on the exchange  notes  delivered in exchange for
the original notes on the first interest payment date after the expiration date.

Accounting Treatment

      The  exchange  notes will be  recorded at the same  carrying  value as the
original  notes for which they are exchanged,  which is the aggregate  principal
amount of the original notes, as reflected in our accounting records on the date
of  exchange.  Accordingly,  no gain or loss  for  accounting  purposes  will be
recognized in connection with the exchange offer. The cost of the exchange offer
will be amortized over the term of the exchange notes.

Exchange Agent

      The Bank of New York has been  appointed  as the  exchange  agent  for the
exchange  offer.  Delivery of the letters of transmittal  and any other required
documents,  questions,  requests for  assistance,  and  requests for  additional
copies of this prospectus or of the letters of transmittal should be directed to
the exchange agent as follows:

                        By Registered or Certified Mail:
                               101 Barclay Street
                                  Floor 7 East
                               New York, NY 10286
                          Attention: Ms. Diane Amoroso
                            Reorganization Department

                     By Hand or Overnight Delivery Service:
                              The Bank of New York
                               101 Barclay Street
                     Corporate Trust Window -- Ground Level
                               New York, NY 10286
                          Attention: Ms. Diane Amoroso
                            Reorganization Department

           By Facsimile Transmission (for Eligible Institutions only):
                                 (212) 298-1915

                              Confirm by Telephone:
                                or (212) 815-3798

      Delivery to other than the above  addresses or  facsimile  number will not
constitute a valid delivery.

Fees and Expenses

      We have agreed to pay the exchange agent reasonable and customary fees for
its services and will reimburse it for its reasonable out-of-pocket expenses. We
will also pay brokerage  houses and other  custodians,  nominees and fiduciaries
the reasonable  out-of-pocket  expenses incurred by them in forwarding copies of
this  prospectus  and related  documents  to the  beneficial  owners of original
notes,  and in handling or  tendering  for their  customers.  Holders who tender
their  original  notes for  exchange  will not be  obligated to pay any transfer
taxes in connection  with the transfer.  If,  however,  exchange notes are to be
delivered  to, or are to be issued in the name of,  any  person  other  than the
registered  holder of the  original  notes  tendered,  or if a  transfer  tax is
imposed for any reason other than the exchange of original  notes in  connection
with the exchange offer, then the amount of any such transfer


                                       30
<PAGE>

taxes,  whether imposed on the registered  holder or any other persons,  will be
payable by the tendering  holder.  If  satisfactory  evidence of payment of such
taxes or exemption  therefrom is not submitted  with the letter of  transmittal,
the amount of such  transfer  taxes will be billed  directly  to such  tendering
holder.  We will not make any  payment to  brokers,  dealers  or other  nominees
soliciting acceptances of the exchange offer.

                        DESCRIPTION OF THE EXCHANGE NOTES

General

      We issued the original  notes and will issue the exchange  notes under the
indenture dated as of April 16, 2001 (the "indenture") between and among us, the
Subsidiary Guarantors and The Bank of New York, as trustee (the "trustee").  The
trustee's address is 101 Barclay Street, Floor 8W, New York, NY 10286. The terms
of the exchange notes are stated in the indenture and include terms made part of
the  indenture by reference to the Trust  Indenture Act of 1939, as amended (the
"Trust  Indenture  Act").  You  should  refer  to the  indenture  and the  Trust
Indenture Act for a statement of these terms. The indenture and the Senior Notes
are governed by New York law. As used  herein,  "Senior  Notes"  means  original
notes and/or exchange notes as the context requires.

      The  following  summary of selected  provisions  of the  indenture  is not
complete.  We recommend  that you read the indenture  which may be obtained from
the trustee.  You can find the definitions of certain  capitalized terms used in
the following summary under the subheading "-- Definitions."

      The exchange  notes will be our senior  unsecured  obligations.  They will
rank  equally  in right of  payment to all of our  existing  and  future  senior
unsecured   indebtedness.   Upon  completion  of  the  exchange,  we  will  have
approximately  $2,500,000,000 of senior indebtedness  outstanding.  The exchange
notes  will rank  junior  to  secured  indebtedness  to the  extent  of  related
collateral. We currently do not have any outstanding secured indebtedness.

      The  exchange  notes will be  guaranteed,  jointly and  severally,  by the
Subsidiary  Guarantors as described below.  The Subsidiary  Guaranties will rank
equally  in right  of  payment  to all  existing  and  future  senior  unsecured
indebtedness of the Subsidiary  Guarantors.  Other than  intercompany  debt, the
Subsidiary Guarantors currently have no indebtedness outstanding.

Principal, Maturity and Interest

      The  indenture  does not  limit  the  aggregate  principal  amount of debt
securities  that we may issue under it and provides that debt  securities may be
issued  under it up to the  principal  amount as we may  authorize  from time to
time. The debt securities may be issued from time to time in one or more series.
We may "reopen" any series of debt securities,  including the 6.95% Senior Notes
due 2012, and issue additional debt securities of that series.

      The 6.95% Senior Notes due 2012 were  initially  limited to $600  million.
This series of Senior Notes was issued in registered form only, without coupons,
in minimum denominations of $1,000 and integral multiples in excess thereof. The
6.95%  Senior  Notes  due 2012 will  mature at par on June 1, 2012 (the  "Stated
Maturity  Date") unless we redeem them in  accordance  with their terms prior to
such date.

      Interest on the 6.95%  Senior  Notes due 2012 accrues at the rate of 6.95%
per annum and is payable  semi-annually  in arrears on June 1 and  December 1 of
each year (each, an "Interest  Payment Date"),  commencing  December 1, 2002. We
will make each  interest  payment to the persons in whose names the Senior Notes
are  registered at the close of business on the 15th day  immediately  preceding
the applicable Interest Payment Date.

      Interest  on the  exchange  notes will  accrue  from the date of  original
issuance or, if interest has already  been paid,  from the most recent  Interest
Payment Date to which  interest was paid or duly provided for.  Interest will be
computed on the basis of a 360-day year comprised of twelve 30-day months.

      If any  Interest  Payment  Date  or the  Stated  Maturity  Date or date of
earlier  redemption is not a Business Day, the required payment shall be made on
the next succeeding day that is a Business Day,


                                       31
<PAGE>

without  any  interest  or other  payment in respect of the  payment  subject to
delay, with the same force and effect as if made on the Interest Payment Date or
Stated Maturity Date or date of earlier redemption.

Payment and Paying Agents

      Interest  on the  exchange  notes  will be payable at any office or agency
that we maintain for such purpose in West  Paterson,  New Jersey and The City of
New York.  At our option,  however,  interest may be paid (i) by check mailed to
the address of the person  entitled to the interest  payment at the address that
appears in the "security  register" that we maintain for such purpose or (ii) by
wire transfer to an account  maintained  by the person  entitled to the interest
payment  as  specified  in the  security  register  subject  to  the  provisions
described under "-- Book Entry, Delivery and Form". (Sections 301, 1001 and 1002
of the indenture.)

Transfer and Exchange

      Under the indenture, debt securities of any series, including the exchange
notes,  may be presented for  registration  of transfer and may be presented for
exchange  (i) at each  office or agency that we are  required  to  maintain  for
payment of such series as described in "-- Payment and Paying Agents," above and
(ii) at each other office or agency that we may designate  from time to time for
such  purposes.  No service  charge will be made for any transfer or exchange of
debt securities, including the exchange notes, but we may require payment of any
tax or other  governmental  charge  payable in  connection  with the transfer or
exchange. (Section 305 of the indenture.)

      The indenture  does not require us to (i) issue,  register the transfer of
or exchange debt securities during a period beginning at the opening of business
15 days before any  selection of debt  securities  of that series to be redeemed
and ending at the close of business on the day of mailing of the relevant notice
of  redemption;  (ii)  register the transfer of or exchange any debt security in
registered  form,  or  portion  thereof,  called  for  redemption,   except  the
unredeemed  portion of any debt  security in registered  form being  redeemed in
part;  or (iii) issue,  register  the transfer of or exchange any debt  security
which has been surrendered for repayment at the option of the holder, except the
portion, if any, of such debt security not to be so repaid.  (Section 305 of the
indenture.)

      The registered holder of an exchange note will be treated as its owner for
all purposes.

Mandatory Redemption

      We will not be  required  to make  mandatory  redemption  or sinking  fund
payments with respect to the exchange notes.

Optional Redemption

      We may redeem the exchange  notes at any time,  in whole or in part,  upon
not less than 30 nor more than 60 days'  prior  written  notice,  as more  fully
described under "-- Selection and Notice" below, at a price equal to the greater
of:

      (a)   100  percent of the  principal  amount of the  exchange  notes being
            redeemed, or

      (b)   as  determined  by the  calculation  agent,  the sum of the  present
            values of the remaining scheduled payments of principal and interest
            on the exchange  notes being  redeemed not  including any portion of
            such payment of interest accrued on the date of redemption, from the
            redemption  date to the maturity date,  discounted to the redemption
            date on a semiannual  basis  (assuming a 360-day year  consisting of
            twelve 30-day months) at the treasury rate plus 30 basis points.

plus any accrued and unpaid  interest to the date of redemption  and  liquidated
damages, if any, and additional amounts, if any.


                                       32
<PAGE>

      "Treasury rate" means,  with respect to any redemption date for any of the
exchange notes being redeemed:

      (a)   the yield for the maturity  corresponding to the comparable treasury
            issue (as defined  below),  under the heading  that  represents  the
            average for the immediately  preceding  week,  appearing in the most
            recently published statistical release designated "H.15(519)" or any
            successor  publication  that is  published  weekly  by the  Board of
            Governors of the Federal Reserve System and that establishes  yields
            on actively  traded United States  Treasury  securities  adjusted to
            constant maturity under the caption "Treasury Constant  Maturities,"
            provided, that if no maturity is within three months before or after
            the maturity date for any of the exchange  notes being  redeemed the
            yields for the two published  maturities most closely  corresponding
            to the comparable treasury issue will be determined and the treasury
            rate shall be interpolated  or  extrapolated  from those yields on a
            straight line basis, rounding to the nearest month; or

      (b)   if the release referred to in (a) (or any successor  release) is not
            published during the week preceding the calculation date or does not
            contain the yields  referred  to above,  the rate per annum equal to
            the  semiannual  equivalent  yield  to  maturity  of the  comparable
            treasury issue, calculated using a price for the comparable treasury
            issue  (expressed as a percentage of its principal  amount) equal to
            the comparable treasury price for that redemption date.

      The treasury rate will be  calculated on the third  business day preceding
the redemption date.

      "Comparable treasury issue" means, with respect to any redemption date for
any of the exchange notes being redeemed,  the United States  Treasury  security
selected by an "independent investment banker" as having the maturity comparable
to the  remaining  term of the  exchange  notes  to be  redeemed  that  would be
utilized,  at the time of selection and in accordance  with customary  financial
practice,  in pricing new issues of  corporate  debt  securities  of  comparable
maturity to the remaining term of the exchange  notes.  "Independent  investment
banker" means one of the  reference  treasury  dealers  appointed by the trustee
after consultation with us.

      "Comparable  treasury price" means with respect to any redemption date for
any of the exchange notes being redeemed:

      (a)   the average of four reference treasury dealer quotations (as defined
            below) for the  redemption  date,  after  excluding  the highest and
            lowest of those reference treasury dealer quotations, or

      (b)   if the calculation agent obtains fewer than four reference  treasury
            dealer  quotations,  the average of all  reference  treasury  dealer
            quotations obtained.

      "Reference  treasury  dealer"  means each of four primary U.S.  Government
securities dealers in New York City selected by the trustee in consultation with
us and  initially  will include J.P.  Morgan  Securities  Inc. and Salomon Smith
Barney  Inc.  If any  reference  treasury  dealer  ceases to be a  primary  U.S.
government  securities  dealer, the trustee will substitute another primary U.S.
government securities dealer for that dealer.

      "Reference   treasury  dealer  quotations"  means,  with  respect  to  any
redemption date, the average, as determined by the calculation agent, of the bid
and asked prices for the comparable  treasury issue (expressed in each case as a
percentage  of its principal  amount)  quoted to the  calculation  agent by that
reference  treasury  dealer at 5:00 p.m. New York time on the third business day
preceding the redemption date.

      Unless we default in payment  of the  redemption  price,  on and after the
redemption date,  interest will cease to accrue on the exchange notes called for
redemption.

Selection and Notice

      The trustee will select the exchange  notes for  redemption  on a pro rata
basis or in  accordance  with any other  method the trustee  considers  fair and
appropriate.  Exchange  notes  in  denominations  of  $1,000  or less may not be
redeemed in part.  Notices of  redemption  will be mailed by first class mail at
least 15 but not more than 60 days prior to the  redemption  date to each holder
of  exchange  notes to be  redeemed  at its  registered  address.  The notice of
redemption will state the portion of the principal


                                       33
<PAGE>

amount  to be  redeemed  if the  exchange  note is to be  redeemed  in part.  An
exchange note in principal amount equal to the unredeemed portion will be issued
in the name of the holder upon  cancellation  of the original  exchange note. On
and after the redemption date,  interest will no longer accrue on those exchange
notes or portions of exchange notes called for redemption  (unless we default in
the payment of any amount payable by us upon such redemption).

      Notices to the holders of the exchange notes shall be given by first class
mail, postage prepaid, to the registered holders of such exchange notes at their
addresses appearing in the note register.

Selected Indenture Covenants

      Limitations on Obligations

      Restricted Subsidiaries.  We will not permit any Restricted Subsidiary to,
directly or indirectly,  Incur any Obligations  (including,  without limitation,
Acquired  Obligations),   except  for  (i)  the  Subsidiary   Guaranties;   (ii)
Obligations  existing on the date of the  indenture;  (iii)  Obligations of ER&T
related to the purchase and sale of fuel, capacity,  energy (including,  but not
limited to,  electric  power,  natural gas and coal),  environmental  credits or
entitlements, utility services, fuel, water, related transportation services and
other  similar  or related  products  and  services  in the  ordinary  course of
business;  (iv)  Obligations of Nuclear related to the purchase and sale of fuel
and related  transportation  services in the ordinary  course of  business;  (v)
Permitted Hedging Obligations; (vi) Obligations incurred in exchange for, or the
net  proceeds  of which are used to refund,  refinance,  or replace  Obligations
described under "Limitations on Obligations",  provided that the average life of
the  refinancing  Obligations  shall not be shorter than the average life of the
Obligations  being  refinanced  and  the  principal  amount  of the  refinancing
obligations  shall not exceed the principal  amount of the Obligations  being so
refinanced; and (vii) Obligations to us or any other Restricted Subsidiary which
are subordinated to the Subsidiary  Guaranty with respect to the Senior Notes of
the Restricted Subsidiary incurring the Obligations.

      The  foregoing   notwithstanding,   Restricted   Subsidiaries   may  Incur
Obligations not otherwise  permitted by the preceding  paragraph in an aggregate
amount  outstanding  after giving effect to such Incurrence not to exceed at any
one time the greater of $250 million or 15% of Consolidated  Net Tangible Assets
as of the last day of the preceding month.

      Subsidiaries  Other Than  Restricted  Subsidiaries.  Except  for  parental
guaranties  of  debt  service  reserves,   surety  bonds,   equity   guarantees,
performance  bonds and bid bonds entered into in the ordinary course of business
aggregating at any one time not more than $100 million,  we shall not permit any
Subsidiary that is not a Restricted Subsidiary to, directly or indirectly, Incur
any Obligations (including,  without limitation,  Acquired Obligations) that are
recourse to us or any Restricted Subsidiary. (Section 1008 of the indenture.)

      Limitation on Liens

      We may not, and may not permit any Restricted  Subsidiary to,  directly or
indirectly,  create, incur, assume or permit to exist any Lien of any kind on or
with  respect to any  Property or interest in our Property or that of any of our
Restricted  Subsidiaries  or any  income or  profits  therefrom  (in each  case,
whether  the  Property  is  owned  at the date of the  indenture  or  thereafter
acquired),  unless the Senior  Notes are secured  equally  and ratably  with (or
prior to) any and all other Obligations secured by the Lien, provided,  however,
that these restrictions shall not apply to or prevent the creation,  incurrence,
assumption or existence of Permitted Liens.

      Permitted Liens shall include:

      o     Liens existing on the date of the indenture;

      o     Liens to secure or  provide  for the  payment  of all or part of the
            purchase  price  of any  Property  or the  cost of  construction  or
            improvement  thereof;  provided that no such Lien shall extend to or
            cover any other of our or our Restricted Subsidiaries' Property;


                                       34
<PAGE>

      o     Liens  existing on Property at the time such Property is acquired by
            us or any  Restricted  Subsidiary;  provided that such Liens (x) are
            not created,  Incurred or assumed in  contemplation of such Property
            being acquired and (y) do not extend to or cover any other of our or
            our Restricted Subsidiaries' Property;

      o     Liens  existing on Property of any entity at the time such entity is
            merged  with  or  into  or  consolidated  with  us  or a  Restricted
            Subsidiary;  provided that such Liens (x) are not created,  Incurred
            or assumed in contemplation of such merger or consolidation  and (y)
            do not  extend to any other of our or our  Restricted  Subsidiaries'
            Property;

      o     Liens securing Permitted Hedging Obligations;

      o     Liens for taxes,  assessments or  governmental  charges that are not
            yet  delinquent  or that are being  contested  in good  faith by any
            appropriate  legal  proceedings  promptly  instituted and diligently
            conducted  and for  which a  reserve  or other  appropriate  reserve
            provision, if any, as is required in conformity with GAAP shall have
            been made;

      o     Liens  arising  by  reason of any  judgment,  decree or order of any
            court, so long as any such Lien is being contested in good faith and
            is bonded or such  judgment,  decree or order  does not  exceed  $50
            million,  and any appropriate  legal  proceedings that may have been
            duly initiated for the review of such judgment, decree or order have
            not  been  finally  terminated  or  the  period  within  which  such
            proceedings may be initiated has not expired;

      o     Liens to secure  pledges or deposits made in the ordinary  course of
            business in connection with bids,  tenders or contracts  (other than
            for payment of indebtedness) or to secure  guarantees,  statutory or
            regulatory  obligations or surety or performance  bonds each made in
            the ordinary course of business;

      o     Liens  imposed  by  law  such  as  carriers',   warehousemen's   and
            mechanics'  Liens,  in each case arising in the  ordinary  course of
            business and with respect to amounts not yet due or being  contested
            in good faith by appropriate legal proceedings  promptly  instituted
            and   diligently   conducted  and  for  which  a  reserve  or  other
            appropriate  provision,  if any, as is required in  conformity  with
            GAAP shall have been made;

      o     Survey  exceptions,  encumbrances,  easements or reservations of, or
            rights  of  others  for,  rights  of way,  sewers,  electric  lines,
            telegraph and telephone lines and other similar purposes,  or zoning
            or other restrictions as to the use of real properties incidental to
            the conduct of the business or to the ownership of Properties  which
            were  not  incurred  in  connection   with   indebtedness  or  other
            extensions  of credit and which do not in the  aggregate  materially
            and  adversely  affect  the value of the  Properties  or  materially
            impair their use in the operation of the business;

      o     Liens securing letters of credit entered into in the ordinary course
            of business;

      o     Liens to  secure  pollution  control  revenue  bonds  or  industrial
            revenue bonds;

      o     Liens   securing    Non-Recourse    Obligations   of    Unrestricted
            Subsidiaries;

      o     Liens granted on the capital stock of Unrestricted  Subsidiaries for
            the  purpose  of  securing  the  Obligations  of  such  Unrestricted
            Subsidiaries;

      o     Liens pursuant to Capitalized  Leases or Synthetic  Leases permitted
            to be entered into under the "Limitation on Obligations" covenant;

      o     Liens arising by reason of leases and subleases of Property pursuant
            to a Sale/Leaseback  Transaction allowed pursuant to the "Limitation
            on Sale of Assets"  covenant that do not  materially  interfere with
            the ordinary  conduct of our or any of our Restricted  Subsidiaries'
            business;

      o     Liens created in connection with worker's compensation, unemployment
            insurance and other social security statutes or regulations;


                                       35
<PAGE>

      o     Liens  by  a  Wholly-Owned   Subsidiary  to  us  or  any  Restricted
            Subsidiary;

      o     Liens  on  Property,   other  than  Capital   Stock  of   Restricted
            Subsidiaries, to secure Obligations so long as the sum of the amount
            of outstanding  Obligations  secured by Liens  Incurred  pursuant to
            this provision does not exceed the greater of $250 million or 15% of
            Consolidated  Net  Tangible  Assets as of the end of the most recent
            fiscal quarter for which financial statements are available; and

      o     The replacement,  extension or renewal (or successive  replacements,
            extensions  or  renewals),  as a whole or in part, of any Lien or of
            any  agreement  referred to above or the  replacement,  extension or
            renewal  (not  exceeding  the   outstanding   principal   amount  of
            Indebtedness  secured thereby  together with any premium,  interest,
            fee or expense  payable  in  connection  with any such  replacement,
            extension or renewal) of Indebtedness secured thereby; provided that
            such replacement,  extension or renewal is limited to all or part of
            the same  Property  that  secured  the Lien  replaced,  extended  or
            renewed  (plus  improvements  thereon  or  additions  or  accessions
            thereto). (Section 1005 of the indenture.)

      Guarantee of Senior Notes

      Each initial Subsidiary Guarantor (Fossil,  Nuclear and ER&T) has executed
and any subsequent  Subsidiary Guarantor at or before the time the definition of
Subsidiary  Guarantor  shall be  applicable to it, shall  execute,  a Subsidiary
Guaranty  of the Senior  Notes in  substantially  the form  provided  for by the
indenture. (Section 1601 of the indenture.)

      Guarantee of ER&T Obligations

      We have executed a guarantee of the Obligations of ER&T  substantially  in
the form provided for by the  indenture.  Our guarantee is  subordinated  to the
Senior Notes.

      Payment of Dividends by ER&T to Us

      For so long as we continue to guarantee the  Obligations of ER&T, we shall
cause  ER&T,  to the  extent  permitted  by  applicable  law,  to pay,  at least
quarterly, dividends or distributions to us of the excess cash not then required
for its business operations. (Section 1010 of the indenture.)

      Limitation on Dividend and Other Payment Restrictions

      Other than  pursuant to the  indenture or as otherwise  may be required by
law, we will not, and will not permit any Restricted  Subsidiary to, directly or
indirectly,  create or cause to become, or as a result of the acquisition of any
Person or Property, or upon any Person becoming a Restricted Subsidiary,  remain
subject to, any consensual  encumbrance or consensual restriction of any kind on
the ability of any Restricted Subsidiary to:

      (i)   pay dividends or make any other distributions on its Capital Stock;

      (ii)  make payments on any Obligations owed to us or any of our Restricted
            Subsidiaries;

      (iii) make  loans  or  advances  to  us  or  to  any  of  our   Restricted
            Subsidiaries;

      (iv)  transfer  any of  its  Property  to us or to  any of our  Restricted
            Subsidiaries; or

      (v)   make payments under a Subsidiary Guaranty with respect to the Senior
            Notes.

      The foregoing shall not prohibit:

      (a)   encumbrances  and restrictions  resulting from customary  provisions
            relating to (i) transfers of Property  that restrict the  subletting
            or  assignment  of any lease or (ii)  transfers of Property that are
            contained  in  licenses  and that  relate  to the  Property  covered
            thereby,  in each  case  entered  into  in the  ordinary  course  of
            business;

      (b)   encumbrances and  restrictions on transfers of Property  existing on
            any  assets at the time such  assets  are  acquired  (or the  entity
            owning  such  assets  is  acquired)  by any  Restricted  Subsidiary,
            whether  by  merger,  consolidation,  purchase  of  such  assets  or
            otherwise; provided


                                       36
<PAGE>

            that  such  restrictions  and  encumbrances  (i)  are  not  created,
            Incurred or assumed in  contemplation of such assets or entity being
            acquired by the Restricted  Subsidiary and (ii) do not extend to any
            other assets of the Restricted Subsidiary; and

      (c)   restrictions  on transfers of Property  created in  connection  with
            sales or purchases of electricity,  energy,  capacity,  natural gas,
            coal, ancillary services, environmental credits and/or entitlements,
            utility services,  fuel, water, related transportation  services and
            other similar  products and services,  in each case, in the ordinary
            course of  business;  provided  that  restrictions  arising from any
            transaction  or  series of  related  transactions  pursuant  to this
            clause  (c) shall not be  materially  more  restrictive,  taken as a
            whole,  than encumbrances and restrictions  customarily  accepted as
            industry  standard for similar  transactions.  (Section  1007 of the
            indenture.)

      Limitation on Sale of Assets

      Except for a sale of all or substantially  all of our assets,  as provided
in the "Merger,  Consolidation or Sale of Assets"  covenant,  and other than (1)
assets  required  to be sold to conform  with  government  regulations,  laws or
impositions,  (2)  sales  or  dispositions  of  surplus,  obsolete  or worn  out
equipment,  (3) sales or  dispositions  of ownership  interests in  Unrestricted
Subsidiaries,  or (4) any  other  sale or  disposition  so long as after  giving
effect to such events, the Rating Agencies shall have confirmed their ratings on
our debt securities in effect immediately prior to such sale or disposition,  we
may not, and may not permit any  Restricted  Subsidiary  to, make any Asset Sale
(other  than  short-term,  readily  marketable  investments  purchased  for cash
management  purposes  with funds not  representing  the  proceeds of other Asset
Sales) if, on a pro forma basis,  the aggregate net book value of all such Asset
Sales during the most recent  12-month  period would exceed 15% of  Consolidated
Net Tangible Assets computed as of the most recent quarter  preceding such sale;
provided, however, that any such Asset Sale shall be disregarded for purposes of
this 15% limitation if the Net Cash Proceeds are within 270 days  thereafter (i)
invested in a Permitted  Business,  (ii) used to purchase and retire Obligations
ranking  equal in right of payment  to the Senior  Notes or (iii) used to redeem
the Senior Notes at a redemption  price equal to 100% of the principal amount of
the Senior Notes to be redeemed,  plus accrued and unpaid interest thereon up to
and including the applicable  redemption  date, plus a make-whole  premium equal
to, with respect to any Senior  Note,  the excess of (a) the  aggregate  present
value as of the date of  prepayment  of the  expected  future  cash flows of the
Senior  Note (for the  avoidance  of doubt,  these  amounts  shall  include  all
principal  and interest  payable with respect to the Senior Note)  (exclusive of
interest accrued to the date of prepayment) that, but for the prepayment,  would
have been payable if the prepayment had not been made, determined by discounting
such amounts at a rate that is equal to the applicable treasury rate (as defined
under "-- Optional  Redemption" above) plus 0.30% for the 6.95% Senior Notes due
2012 (b) the aggregate principal amount of the Senior Note then to be prepaid.

      In addition, on a cumulative basis we may not sell or otherwise dispose of
more than 25% of the assets or Capital Stock in Fossil, unless Net Cash Proceeds
from  such  sale are  invested  in other  non-nuclear  generation  assets or the
capital stock of entities engaged in fossil  generation and related  businesses.
(Section 1006 of the indenture.)

      Merger, Consolidation or Sale of Assets

      We may not, directly or indirectly,  consolidate or merge with or into any
other person  (whether or not we are the  surviving  entity),  or sell,  assign,
transfer,  lease, convey or otherwise dispose of all or substantially all of our
assets, in one or more related transactions, to another Person unless:

      (i)   the Person  formed by the  consolidation  or surviving the merger or
            the Person that acquires by sale, assignment,  transfer,  conveyance
            or other disposition,  or that leases, the assets (if other than us)
            (in each such case,  the  "Successor  Entity"),  is a corporation or
            limited  liability  company organized and existing under the laws of
            the United States, any state thereof or the District of Columbia and
            expressly assumes our obligations under the indenture and the Senior
            Notes;


                                       37
<PAGE>

      (ii)  if any of our or a Restricted  Subsidiary's Property or assets would
            become  subject  to a Lien  other  than a  Permitted  Lien under the
            "Limitations on Liens"  covenant,  the Senior Notes shall be equally
            and ratably secured in accordance with such covenant;

      (iii) immediately  after such  transaction no event exists that is or with
            the  passage  of time or the  giving of  notice or both  would be an
            Event of Default under the indenture; and

      (iv)  each Subsidiary  Guarantor shall have by amendment to its Subsidiary
            Guaranty  with  respect  to the  Senior  Notes  confirmed  that  its
            Subsidiary  Guaranty shall apply to the obligations of the Successor
            Entity under the indenture and the Senior Notes. (Section 801 of the
            indenture.)

Events of Default and Remedies

      Each of the  following  is an Event of Default  under the  indenture  with
respect to any series of the Senior Notes:

      (i)   default for five days in the payment  when due of interest on any of
            the exchange notes of such series;

      (ii)  default in the payment when due of the principal of, or premium,  if
            any, or make-whole amount, on, the exchange notes of such series;

      (iii) default in the deposit of any sinking fund payment,  when and as due
            by the terms of the debt securities of such series;

      (iv)  failure  by us or any  Restricted  Subsidiary  to  comply  with  the
            provisions  described  under  "Limitation  on  Sale  of  Assets"  or
            "Merger, Consolidation or Sale of Assets";

      (v)   failure by us or any Restricted Subsidiary for 60 days after written
            notice by the  trustee or to us and to the trustee by the holders of
            25% or more in  aggregate  principal  amount of the Senior  Notes of
            such series to comply with any of our agreements in the indenture or
            the Senior  Notes of such series that are not  otherwise  covered in
            clauses (i), (ii), (iii), (iv), (vi), (vii) or (viii);

      (vi)  default  under any  mortgage,  indenture or  instrument  under which
            there may be issued or by which  there may be secured  or  evidenced
            any of our or  any  of  our  Subsidiaries;  indebtedness  (including
            indebtedness  represented  by any other  series  of debt  securities
            under the  indenture or the payment of which is  guaranteed by us or
            by  any  of  our   Subsidiaries)   (but  other   than   Non-Recourse
            Obligations)  which  default  (a) is caused by a failure  to pay the
            principal  of  such  indebtedness  at the  stated  maturity  of such
            indebtedness  after the expiration of grace periods  provided in the
            indebtedness  (a  "Payment  Default")  or (b)  has  resulted  in the
            acceleration of the indebtedness prior to its stated maturity;  and,
            in each case the principal amount of the indebtedness, together with
            the principal amount of any other indebtedness under which there has
            been a  Payment  Default  or the  maturity  of  which  has  been  so
            accelerated, aggregates $50 million or more;

      (vii) failure by us or any of our  Restricted  Subsidiaries  to pay one or
            more final judgments not otherwise covered by insurance  aggregating
            in excess of $50 million,  which judgments are not paid,  discharged
            or stayed for a period of 60 days; and

      (viii)certain  events of bankruptcy  or  insolvency  with respect to us or
            any of our Restricted Subsidiaries. (Section 501 of the indenture.)

      Each series of debt  securities  issued  under the  indenture  may specify
other events of default for such series of debt securities.

      We  are  required  to  file  with  the  trustee,  annually,  an  officer's
certificate  as to our compliance  with all  conditions and covenants  under the
indenture.  (Section 1011 of the  indenture.)  The  indenture  provides that the
trustee  may  withhold  notice to the  holders of debt  securities  of a series,
including the Senior Notes, of any default (except payment  defaults on the debt
securities  of that series) if it considers it in the interest of the holders of
debt securities of the series to do so. (Section 515 of the indenture.)


                                       38
<PAGE>

      If an Event of Default  (other than an Event of Default  occasioned by our
or any of our Restricted Subsidiaries' bankruptcy or insolvency) with respect to
debt  securities of a series,  including  the Senior Notes,  has occurred and is
continuing,  the trustee or the holders of not less than 25% in principal amount
of outstanding  debt securities of that series may declare the principal (or, if
the debt  securities of that series are issued with original  issue  discount or
are "indexed debt securities" (i.e., debt securities, the interest and principal
payments on which are determined by reference to a particular  index,  such as a
foreign  currency  or  commodity),  such  portion  of  the  principal  as may be
specified in the terms of those debt  securities) of all of the debt  securities
of that series to be due and payable  immediately,  by a notice in writing to us
and any Restricted Subsidiary.

      If an  Event  of  Default  occasioned  by our  or  any  of our  Restricted
Subsidiaries'  bankruptcy or insolvency occurs and is continuing,  the principal
of and interest on all debt securities,  including the Senior Notes, shall, ipso
facto become and be immediately due and payable without any declaration or other
act on the part of the trustee or any holders of debt securities.
(Section 502 of the indenture.)

      Subject to the  provisions of the indenture  relating to the duties of the
trustee,  in case an event of default  with  respect to debt  securities  of any
series, including the Senior Notes, has occurred and is continuing,  the trustee
is under no  obligation  to  exercise  any of its  rights  or  powers  under the
indenture at the request,  order or direction of the holders of debt  securities
of that  series,  unless  those  holders  have  offered  the  trustee  indemnity
satisfactory to the trustee against the expenses and liabilities  which might be
incurred by it in compliance with such request. (Section 507 of the indenture.)

      Subject to such  provisions for the  indemnification  of the trustee,  the
holders of a majority in principal  amount of the outstanding debt securities of
any series of debt securities,  including each series of the Senior Notes,  will
have the right to direct the time, method and place of conducting any proceeding
for any  remedy  available  to the  trustee,  or  exercising  any trust or power
conferred  on the trustee with  respect to the debt  securities  of that series.
(Section 512 of the indenture.)

      The  holders of a majority in  principal  amount of the  outstanding  debt
securities  of a series,  including  the  Senior  Notes,  may,  on behalf of the
holders of all debt securities of such series and any related coupons, waive any
past  default  under  the  indenture   with  respect  to  such  series  and  its
consequences,  except a  default  (i) in the  payment  of the  principal  of (or
premium,  if any) or  interest,  if any,  on or  additional  amounts  payable in
respect of any debt  security of such  series or any related  coupons or (ii) in
respect of a covenant or  provision  that cannot be modified or amended  without
the  consent of the holder of each  outstanding  debt  security  of such  series
affected thereby. (Section 513 of the indenture.)

Definitions

      "Acquired  Obligations" means, with respect to any Person, (i) Obligations
of any other Person existing at the time the other Person is merged with or into
or became a Subsidiary of the Person, including, without limitation, Obligations
Incurred in connection  with, or in  contemplation  of, the other Person merging
with or into or  becoming  a  Subsidiary  of the  Person;  and (ii)  Obligations
secured by a Lien  encumbering  any asset acquired by the Person at the time the
asset is acquired by the Person.

      "Asset  Sale"  means  any  sale,  transfer,  conveyance,  lease  or  other
disposition (including by way of merger,  consolidation or sale-leaseback) by us
or any of our  Restricted  Subsidiaries  to any  Person  (other  than to us or a
Restricted Subsidiary of ours and other than in the ordinary course of business)
of any  Capital  Stock or  other  Property  of ours or of any of our  Restricted
Subsidiaries  (including  Capital Stock of Subsidiaries).  The term "Asset Sale"
will not include (i) any sale, transfer,  conveyance, lease or other disposition
of Property  governed by the "Merger,  Consolidation or Sale of Assets" covenant
and (ii) any  transaction  or series of related  transactions  consisting of the
sale, transfer, conveyance, lease or other disposition of Capital Stock or other
Property  with a Fair  Market  Value  aggregating  less than $50  million in any
fiscal  year.  The term  "Asset  Sale" also will not include (a) the grant of or
realization  upon a Lien permitted  under the  "Limitation on Liens" covenant or
the  exercise of remedies  thereunder  and (b) sales of fuel,  capacity,  energy
(including,  but  not  limited  to,  electric  power,  natural  gas  and  coal),
environmental credits or entitlements, related transportation services and other
related services by ER&T and its Permitted  Hedging  Obligations as permitted by
the "Limitation on Obligations" covenant.


                                       39
<PAGE>

      "Attributable Debt" means with respect to any Sale/Leaseback  Transaction,
at the time of determination,  the present value (discounted at a rate per annum
equal to the weighted  average interest rate of all outstanding debt securities,
compounded  semi-annually)  of the total  Obligations  of the  lessee for rental
payments during the remaining term of the lease included in such  Sale/Leaseback
Transaction (including any period for which the lease has been extended).

      "Board of Directors"  means either the Board of Directors of PSEG Power or
any duly authorized committee of such Board.

      "Business Day" means each Monday, Tuesday, Wednesday,  Thursday and Friday
which is not a day on which banking  institutions in Newark,  New Jersey and The
City of New York are authorized or obligated by law or executive order to close.

      "Capital Stock" means (i) in the case of a corporation,  corporate  stock,
(ii) in the case of an  association  or  business  entity,  any and all  shares,
interests,  participations,  rights or other equivalents (however designated) of
corporate  stock,  (iii)  in the  case of a  partnership  or  limited  liability
company,  partnership or membership  interests  (whether general or limited) and
(iv) any other interest or  participation  that confers on a Person the right to
receive a share of the profits and losses of, or distributions of assets of, the
issuing Person.

      "Capitalized  Lease"  means as  applied  to any  Person,  any lease of any
Property of which the discounted present value of the rental obligations of such
Person as lessee,  in conformity with GAAP, is required to be capitalized on the
balance  sheet of such Person,  and  "Capitalized  Lease  Obligation"  means the
rental obligations, as aforesaid, under such lease.

      "Commodity  Trading  Obligations,"  with respect to any Person,  means the
Obligations  of such Person under (i) any commodity  swap  agreement,  commodity
future agreement, commodity option agreement, commodity cap agreement, commodity
floor agreement,  commodity collar agreement, commodity hedge agreement, and any
put, call or other agreement or arrangement, or combination thereof, designed to
protect  such  Person  against  fluctuations  in  commodity  prices  or (ii) any
commodity  swap  agreement,   commodity  future   agreement,   commodity  option
agreement,  commodity hedge  agreement,  and any put, call or other agreement or
arrangement,  or combination  thereof  (including an agreement or arrangement to
hedge  foreign  exchange  risks) in respect of  commodities  entered  into by us
pursuant to asset  optimization  and risk  management  policies  and  procedures
adopted in good faith by the Board of Directors.

      "Consolidated Current Liabilities," as of the date of determination, means
the aggregate  amount of our and our Restricted  Subsidiaries'  liabilities on a
consolidated  basis which may  properly  be  classified  as current  liabilities
(including taxes accrued as estimated),  after eliminating (i) all inter-company
items between us and any consolidated  Restricted  Subsidiary,  (ii) all current
maturities of long-term indebtedness,  all as determined in accordance with GAAP
and (iii) all liabilities  attributable to Subsidiaries  that are not Restricted
Subsidiaries.

      "Consolidated Net Tangible Assets" means, as of any date of determination,
the total  amount of assets  (less  accumulated  depreciation  or  amortization,
allowances  for  doubtful  receivables,  other  applicable  reserves  and  other
properly deductible items) of us and our Restricted Subsidiaries,  determined on
a consolidated basis in accordance with GAAP,  consistently  applied,  and after
giving  effect to purchase  accounting  and after  deducting  therefrom,  to the
extent otherwise included, the amounts of:

      o     Consolidated Current Liabilities;

      o     excess of cost over fair value of assets of businesses acquired,  as
            determined in good faith by the Board of Directors;

      o     unamortized debt discount and expense and other unamortized deferred
            charges, goodwill, patents, trademarks,  service marks, trade names,
            copyrights,   licenses,  deferred  project  costs,  organization  or
            developmental expenses and other intangible items;

      o     treasury stock;


                                       40
<PAGE>

      o     any cash set  apart and held in a sinking  or other  analogous  fund
            established  for the purpose of  redemption  or other  retirement of
            Capital  Stock to the extent such  obligation  is not  reflected  in
            Consolidated Current Liabilities; and

      o     all assets  attributable  to  Subsidiaries  that are not  Restricted
            Subsidiaries (including Capital Stock thereof), except to the extent
            of dividends or distributions received from such Subsidiaries.

      "Default"  means any event,  act or condition  that is, or after notice or
the passage of time or both would be, an Event of Default.

      "Event  of  Default"  has the  meaning  specified  in  Section  501 of the
indenture.

      "Fair Market Value" means the price that would be paid by a purchaser to a
seller in an arm's-length transaction.

      "GAAP" means generally accepted accounting principles in the United States
applied on a basis  consistent  with the  principles,  methods,  procedures  and
practices  employed  in the  preparation  of our audited  financial  statements,
including,   without   limitation,   those  set  forth  in  the   opinions   and
pronouncements of the Accounting  Principles Board of the American  Institute of
Certified Public  Accountants and statements and pronouncements of the Financial
Accounting  Standards Board or in such other  statements by such other entity as
approved by a significant segment of the accounting profession.

      "Hedging  Obligations"  means, with respect to any Person, the obligations
of such Person under any interest rate or currency swap agreement, interest rate
or currency future agreement,  interest rate cap or collar  agreement,  interest
rate or  currency  hedge  agreement,  and any put,  call or other  agreement  or
arrangement  designed to protect such Person  against  fluctuations  in interest
rates or currency exchange rates.

      "Incur" means,  with respect to any Obligation,  to directly or indirectly
create,  incur,  issue,  assume,  guarantee  or  otherwise  become  directly  or
indirectly liable for or with respect to, or become  responsible for payment of,
contingently  or  otherwise,  such  Obligation.  The  term  "Incurrence"  has  a
corresponding meaning.

      "Lien" means any  mortgage,  pledge,  hypothecation,  charge,  assignment,
deposit arrangement,  encumbrance, security interest, lien (statutory or other),
or preference,  priority, or other security or similar agreement or preferential
arrangement of any kind or nature whatsoever (including, without limitation, any
conditional  sale or other title retention  agreement,  any financing or similar
statement or notice filed under the UCC or any other similar recording or notice
statute,  and any  lease  having  substantially  the same  effect  as any of the
foregoing).

      "Net Cash  Proceeds"  from an Asset Sale is defined to mean cash  payments
received  (including any cash payments received by way of a payment of principal
pursuant to a note or installment receivable or otherwise,  but only as and when
received  (including any cash received upon sale or disposition of any such note
or  receivable),  excluding  any  other  consideration  received  in the form of
assumption  by the  acquiring  Person of  Obligations  relating to the  Property
disposed  of in such  Asset  Sale or  received  in any  form  other  than  cash)
therefrom, in each case, net of (i) all legal, title and recording tax expenses,
commissions  and other fees and  expenses  of any kind  (including  consent  and
waiver fees and any applicable  premiums,  earn-out or working interest payments
or payments  in lieu or in  termination  thereof)  Incurred,  (ii) all  federal,
state,  provincial,  foreign  and local  taxes and  other  governmental  charges
required to be accrued as a liability  under GAAP as a consequence of such Asset
Sale, (iii) a reasonable  reserve for the after-tax cost of any  indemnification
payments  (fixed and  contingent)  attributable  to seller's  indemnities to the
purchaser  undertaken by us or any of our  Subsidiaries  in connection with such
Asset Sale,  (iv) all payments  made on any  Obligation  that is secured by such
Property,  in accordance with the terms of any Lien upon or with respect to such
Property, or that must by its terms or by applicable law or in order to obtain a
required  consent or waiver be repaid out of the proceeds  from or in connection
with  such  Asset  Sale and (v) all  distributions  and other  payments  made to
holders  of  Capital  Stock of  Subsidiaries  (other  than us or our  Restricted
Subsidiaries) as a result of such Asset Sale.


                                       41
<PAGE>

      "Non-Recourse Obligation" means, with respect to any Person, any financing
that is or was Incurred with respect to the  development,  acquisition,  design,
engineering,  procurement,  construction,  operation,  ownership,  servicing  or
management of one or more facilities  used or useful in a Permitted  Business in
respect of which such Person has a direct or indirect  interest,  provided  that
such  financing is without  recourse to any Person or Property other than to (i)
the Property that constitutes such facilities, (ii) the income from and proceeds
of such  facilities,  (iii) the Capital Stock of, and other  investments in, the
Person that owns the Property that  constitutes any such facilities and (iv) the
Capital Stock of, and other investments in, any Person obligated with respect to
such  financing  and of any  Subsidiary  of such  Person  that  owns a direct or
indirect interest in any such facilities.

      "Obligations" of any Person shall mean at any date,  without  duplication,
(i) all obligations of such Person for borrowed  money,  (ii) all obligations of
such Person evidenced by bonds, debentures,  notes or other similar instruments,
(iii) all obligations of such Person arising under any conditional sale or other
title retention  arrangement or otherwise to pay the deferred  purchase price of
Property or services, (iv) all obligations of such Person Incurred in respect of
Attributable Debt associated with any  Sale/Leaseback  Transaction,  Capitalized
Lease or Synthetic  Lease,  (v) all  obligations of such Person under letters of
credit, (vi) all obligations of such Person under trade or bankers' acceptances,
(vii) all  obligations  of such Person under Hedging  Obligations  and Commodity
Trading Obligations,  (viii) trade payables in respect of fuel, labor,  supplies
or other  materials  or  services  or the  obligation  to  provide  power,  (ix)
Preferred  Stock and  Redeemable  Stock  issued to any Person other than us or a
Restricted  Subsidiary,  (x) all  obligations of others secured by a Lien on any
asset of such Person, whether or not such obligations are assumed by such Person
and (xi) all obligations of others to the extent guaranteed by such Person.  The
amount of any obligation shall be deemed to be the amount equal to the stated or
determinable  amount  thereof  or, if not stated or  determinable,  the  maximum
probable liability thereunder as determined by us in good faith.

      "Permitted  Business"  means  any  business  in  which  we or  any  of our
Subsidiaries  were  engaged on the date of the  indenture  or any other power or
energy-related business, including the business of acquiring, developing, owning
or  operating  electric  power or  thermal  energy  generation  or  cogeneration
facilities,  electric power  transmission,  fuel supply and fuel  transportation
facilities,  together with their related power supply,  thermal  energy and fuel
contracts  and  other   facilities,   services  or  goods  that  are  ancillary,
incidental,  complementary  or  reasonably  related to the  marketing,  trading,
development, construction or management servicing, ownership or operation of the
foregoing.

      "Permitted  Hedging  Obligations"  of any Person  shall  mean (i)  Hedging
Obligations  entered into in the ordinary  course of business and in  accordance
with such Person's  established  risk  management  policies that are designed to
protect such Person against, among other things,  fluctuations in interest rates
or  currency  exchange  rates and which in the case of  agreements  relating  to
interest  rates shall have a notional  amount no greater  than the  payments due
with respect to the Obligations  being hedged thereby and (ii) Commodity Trading
Obligations.

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

      "Preferred Stock" means,  with respect to any Person,  any and all shares,
interests,  participations or other  equivalents  (however  designated,  whether
voting or  non-voting)  or preferred or preference  stock of such Person that is
outstanding  or  issued on or after the date of  original  issuance  of the debt
securities under the indenture.

      "Property"  of any Person is defined to mean all types of real,  personal,
tangible or mixed  property  owned by such Person whether or not included in the
most recent consolidated balance sheet of such Person under GAAP.

      "Rating Agencies" means Moody's Investors Service Inc.,  Standard & Poor's
Ratings Services, Fitch Inc. and any successor thereof.

      "Redeemable Stock" is defined to mean any class or series of Capital Stock
of any Person  that by its terms or  otherwise  is (i)  required  to be redeemed
prior to the Stated Maturity of the Senior Notes,


                                       42
<PAGE>

(ii)  redeemable  at the option of the holder of such Capital  Stock at any time
prior to the Stated  Maturity of the Senior Notes or (iii)  convertible  into or
exchangeable  for  Capital  Stock  referred  to in clause  (i) or (ii)  above or
Obligations  having a  scheduled  maturity  prior to the Stated  Maturity of the
Senior Notes.

      "Restricted Subsidiary" means only PSEG Fossil LLC, PSEG Nuclear LLC, PSEG
Energy Resources & Trade LLC and each other of our Subsidiaries  that executes a
Subsidiary  Guaranty  with  respect  to the  Senior  Notes  and is  subsequently
designated  by the Board of  Directors  by  written  notice to the  trustee as a
Restricted Subsidiary.

      "Sale/Leaseback Transaction" means an arrangement relating to Property now
owned or hereafter acquired whereby we or one of our Subsidiaries  transfers the
Property to a Person and leases it back from that Person,  other than leases for
a term of not more  than 12  months or  between  us and one of our  Wholly-Owned
Subsidiaries   that  is  a  Restricted   Subsidiary   or  between   Wholly-Owned
Subsidiaries that are Restricted Subsidiaries.

      "Stated Maturity" means with respect to any Senior Note or any installment
of interest thereon, the date specified in such Senior Note as the fixed date on
which any principal of such Senior Note or any such  installment  of interest is
due and payable.

      "Subsidiary"  means,  with  respect to any  Person,  (i) any  corporation,
limited  liability  company,  association or other business entity of which more
than 50% of the  total  voting  power of  Voting  Stock is at the time  owned or
controlled,  directly or indirectly,  by such Person or one or more of the other
Subsidiaries of that Person (or a combination  thereof) and (ii) any partnership
(a) the sole general  partner or the managing  general  partner of which is such
Person or a Subsidiary of such Person or (b) the only general  partners of which
are such Person or one or more  Subsidiaries  of such Person (or any combination
thereof).

      "Subsidiary  Guarantor"  means all  current  and  subsequently  designated
Restricted Subsidiaries.

      "Subsidiary  Guaranty" means a guaranty of a Subsidiary Guarantor in favor
of  the  trustee  for  the  benefit  of  the  holders  of the  Senior  Notes  in
substantially  the  form  provided  for  by the  indenture  or a  guaranty  of a
Subsidiary Guarantor of any other of our Obligations.

      "Synthetic  Lease"  means  (i) a lease  pursuant  to which  the  lessee is
treated  as the owner of the  Property  subject  to the lease for tax  purposes,
whether  or not such  lease is  treated  as an  operating  lease for  accounting
purposes or (ii) a lease treated as an operating  lease for accounting  purposes
but having at least three of the following characteristics,  (a) the term of the
lease,  inclusive of all renewal periods at the lessee's option, is greater than
75% of the useful life of the Property  subject to the lease as estimated at the
inception of the Lease,  (b) the lessee has the right to purchase  such Property
at a fixed price,  (c) the lessee's  payments  under the lease are calculated to
amortize  and  service  the debt of the lessor  incurred in order to acquire the
asset  and (d) the  lessor  obtains  80% or more of the cost of the  asset  from
borrowed funds.

      "Unrestricted  Subsidiary"  means a  Subsidiary  that is not a  Restricted
Subsidiary.

      "Voting  Stock"  means any class or classes of Capital  Stock  pursuant to
which  the  holders  thereof  have  the  general  voting  power  under  ordinary
circumstances  to elect at least a majority of the Board of Directors,  managers
or trustees of any Person (irrespective of whether or not, at the time, stock of
any other class or classes shall have, or might have,  voting power by reason of
the happening of any contingency).

      "Weighted Average Life to Maturity" means, when applied to any Obligations
at any date, the number of years  obtained by dividing (i) the then  outstanding
principal amount of such Obligations into (ii) the total of the product obtained
by multiplying (a) the amount of each then remaining installment,  sinking fund,
serial maturity or other required  payments of principal,  including  payment at
final maturity,  in respect thereof,  by (b) the numbers of years (calculated to
the nearest  one-twelfth)  that will elapse  between such date and the making of
such payment.


                                       43
<PAGE>

      "Wholly-Owned  Subsidiary"  means a  Subsidiary  all the Capital  Stock of
which  (other than  directors'  qualifying  shares) is owned by us and/or one or
more of our Wholly-Owned Subsidiaries.

Reports and Rule 144A Information Requirement

      We must file with the trustee, within 30 days of filing them with the SEC,
copies of the  current,  quarterly  and annual  reports and of the  information,
documents  and other reports (or copies of such portions of any of the foregoing
as the SEC may by rules and regulations  prescribe) that we are required to file
with the SEC pursuant to Section 13 or 15(d) of the Exchange  Act. If we are not
subject to the  requirements of Section 13 or 15(d) of the Exchange Act, we must
nevertheless file with the SEC (if permitted) and the trustee,  on the date upon
which we would have been required to file with the SEC,  current,  quarterly and
annual  financial  statements,  including any notes thereto (and with respect to
annual  reports,  an  auditor's  report  by  a  firm  of  established   national
reputation,  upon which the trustee may conclusively  rely), and a "Management's
Discussion and Analysis of Financial  Condition and Results of Operations," both
comparable to that which we would have been required to include in such current,
quarterly and annual reports,  information,  documents or other reports on Forms
8-K, 10-Q and 10-K if we were subject to the requirements of Section 13 or 15(d)
of the Exchange Act; provided that we will not be required to register under the
Exchange Act by virtue of this provision, if not otherwise required to do so.

      We  have  agreed  to  furnish  to the  holders  of the  Senior  Notes  and
prospective  purchasers of the Senior Notes  designated by holders of the Senior
Notes, upon their request,  the information required to be delivered pursuant to
Rule 144A(d)(4) under the Securities Act until such time as the Senior Notes are
no longer  "restricted  securities"  within  the  meaning  of Rule 144 under the
Securities  Act (assuming  such Senior Notes have not been owned by an affiliate
of ours).

No Personal Liability of Directors, Officers, Employees and Members

      No past,  present or future director,  officer,  employee,  or member,  as
such, shall have any liability for any of our obligations under the Senior Notes
and the  indenture  or for any claim  based on, in respect  of, or by reason of,
such  obligations or their  creation.  Each holder by accepting an exchange note
waives and releases all such liability as part of the consideration for issuance
of the exchange  notes.  This waiver may not be  effective to waive  liabilities
under the federal securities laws and it is the view of the SEC that such waiver
is against public policy.
(Section 113 of the indenture.)

Satisfaction and Discharge

      According  to  the  terms  of the  indenture,  we  may  discharge  certain
obligations to holders of any series of debt securities,  including the exchange
notes,  that have not already been delivered to the trustee for cancellation and
that  either  have  become due and payable or are by their terms due and payable
within one year (or scheduled  for  redemption  within one year) by  irrevocably
depositing with the trustee,  in trust, funds in an amount sufficient to pay the
entire  indebtedness on such debt securities for principal (and premium, if any)
and interest,  if any, and any additional  amounts with respect thereto,  to the
date of such deposit (if the debt  securities have become due and payable) or to
the maturity date or redemption date, as the case may be.
(Section 401 of the indenture.)

Legal Defeasance and Covenant Defeasance

      The indenture  provides that, if the provisions of Article Fourteen of the
indenture are made  applicable  to the debt  securities of or within any series,
including the exchange notes,  and any related  coupons  pursuant to Section 301
thereunder,  we may elect either (a) to defease and be  discharged  from any and
all  obligations  with respect to such debt  securities and any related  coupons
(except  for  the  obligation  to pay  additional  amounts,  if  any,  upon  the
occurrence  of certain  events of tax,  assessment or  governmental  charge with
respect to payments on such debt  securities and the obligations to register the
transfer or exchange of such debt securities and any related coupons, to replace
temporary  or  mutilated,  destroyed,  lost or stolen  debt  securities  and any
related  coupons,  to  maintain  an office or  agency  in  respect  of such debt
securities and any related coupons, and to hold


                                       44
<PAGE>

moneys for payment in trust) (defeasance) (Section 1402 of the indenture) or (b)
to be released from our  obligations  under any covenant  specified  pursuant to
Section 301 with respect to such debt  securities and any related  coupons,  and
any omission to comply with such  obligations  shall not constitute a default or
an event of default with respect to such debt securities and any related coupons
(covenant  defeasance) (Section 1403 of the indenture),  in either case upon the
irrevocable  deposit by us with the trustee (or other  qualifying  trustee),  in
trust,  of (i) an amount in United States Dollars,  (ii) Government  Obligations
(as defined below)  applicable to such debt  securities and coupons that through
the  payment of  principal  and  interest  in  accordance  with their terms will
provide  money  in an  amount,  or (iii) a  combination  thereof  in an  amount,
sufficient to pay the principal of (and premium,  if any) and interest,  if any,
on such debt securities and any related coupons,  and any mandatory sinking fund
or analogous payments thereon, on the scheduled due dates therefor.

      Such a trust may only be  established  if,  among  other  things,  we have
delivered to the trustee an opinion of counsel to the effect that the holders of
such debt securities and any related coupons will not recognize income,  gain or
loss  for  United  States  federal  income  tax  purposes  as a  result  of such
defeasance or covenant  defeasance  and will be subject to United States federal
income  tax on the same  amounts,  in the same  manner  and at the same times as
would  have been the case if such  defeasance  or  covenant  defeasance  had not
occurred.  The  opinion of counsel in the case of  defeasance  under  clause (a)
above must refer to and be based upon a ruling of the Internal  Revenue  Service
or a change in applicable  United States federal income tax law occurring  after
the date of the Indenture. (Section 1404 of the indenture.)

      "Government Obligations" means securities which are (i) direct obligations
of the United States or (ii) obligations of a person controlled or supervised by
and acting as an agency or  instrumentality of the United States, the payment of
which is unconditionally guaranteed as a full faith and credit obligation by the
United States,  which are not callable or redeemable at the option of the issuer
of that obligation.  Government  Obligations  also include a depository  receipt
issued  by a bank or  trust  company  as  custodian  with  respect  to any  such
Government  Obligation or a specific  payment of interest on or principal of any
such Government  Obligation held by such custodian for the account of the holder
of a  depository  receipt;  provided  that,  except  as  required  by law,  such
custodian is not authorized to make any deduction from the amount payable to the
holder of such  depository  receipt from the amount received by the custodian in
respect of the Government  Obligation or the specific  payment of interest on or
principal of the Government  Obligation  evidenced by such  depository  receipt.
(Section 101 of the indenture.)

      In the  event we  effect  covenant  defeasance  with  respect  to any debt
securities  and any  related  coupons and such debt  securities  and coupons are
declared  due and  payable  because  of the  occurrence  of any event of default
(other than the events of default  described  in clause  (iii) under  "Events of
Default and  Remedies"  which  provisions  would no longer be applicable to such
debt securities and coupons),  the amount of Government Obligations and funds on
deposit  with the  trustee  will be  sufficient  to pay amounts due on such debt
securities  and  coupons  at the time of their  stated  maturity  but may not be
sufficient to pay amounts due on such debt securities and coupons at the time of
the  acceleration  resulting from such event of default.  In such case, we would
remain  liable to make  payment of such amount due at the time of  acceleration.
(Section 501 of the indenture.)

      If the  trustee  or any  paying  agent is  unable  to apply  any  money in
accordance with the indenture by reason of any order or judgment of any court or
governmental  authority  enjoining,  restraining or otherwise  prohibiting  such
application,  then our obligations  under the indenture and such debt securities
and any related coupons shall be revived and reinstated as though no deposit had
occurred  pursuant to the  indenture,  until such time as such trustee or paying
agent is permitted  to apply all such money in  accordance  with the  Indenture;
provided,  however,  that if we make any payment of principal of (or premium, if
any) or  interest,  if any,  on any such debt  security  or any  related  coupon
following the  reinstatement of its  obligations,  we shall be subrogated to the
rights of the holders of such debt securities and any related coupons to receive
such payment from the money held by such trustee or paying agent.


                                       45
<PAGE>

Amendment, Supplement and Waiver

      We and the trustee may modify and amend the indenture  with the consent of
the holders of a majority in principal amount of all outstanding debt securities
that  are  affected  by  the   modification  or  amendment;   provided  that  no
modification  or  amendment  may,  without  the  consent  of the  holder of each
outstanding debt security affected thereby, among other things:

      o     change the stated maturity date of the principal of (or premium,  if
            any, on) or any  installment of principal of or interest on any debt
            security;

      o     reduce the principal amount of, or the rate or amount of interest in
            respect of, or any premium  payable upon the redemption of, any debt
            security;

      o     change the rate, or manner of calculating the rate, of interest;

      o     change any of our  obligations to pay additional  amounts in respect
            of any debt security;

      o     reduce the portion of the principal of a debt  security  issued with
            the original  issue  discount or an indexed debt security that would
            be  due  and  payable  upon a  declaration  of  acceleration  of the
            maturity of the debt security or provable in bankruptcy;

      o     adversely  affect any right of repayment at the option of the holder
            of any such debt security;

      o     change  the Place of  Payment  of  principal  of, or any  premium or
            interest on, the debt security;

      o     impair  the  right  to  institute  suit for the  enforcement  of any
            payment on or after the stated maturity date of the debt security or
            on or  after  any  redemption  date or  repayment  date for the debt
            security;

      o     adversely affect any right to convert or exchange any debt security;

      o     reduce the percentage in principal  amount of such  outstanding debt
            securities,  the  consent of whose  holders is  required to amend or
            waive  compliance  with certain  provisions  of the  indenture or to
            waive certain defaults under the indenture;

      o     reduce the requirements for voting or quorum described below; or

      o     modify any of the foregoing  requirements  or any of the  provisions
            relating  to  waiving  past  defaults  or  compliance  with  certain
            restrictive provisions, except to increase the percentage of holders
            required  to  effect   waiver  or  to  provide  that  certain  other
            provisions of the indenture cannot be modified or waived without the
            consent  of  the  holder  of  each  debt  security  affected  by the
            modification  or  waiver;  or

      o     modify or affect the terms and conditions of the  obligations of any
            Subsidiary  Guarantor in respect of the due and punctual  payment of
            principal of, or any premium or interest on, guaranteed  securities.
            (Section 902 of the indenture.)

      The trustee and we may modify and amend the indenture  without the consent
of any holder, for any of the following purposes:

      o     to  evidence  the  succession  of  another  person  to  us  and  the
            assumption by any successor of our covenants under the indenture and
            the debt securities;

      o     to add to our covenants for the benefit of the holders of all or any
            series of debt securities issued under the indenture,  including the
            exchange notes, and any related coupons or to surrender any right or
            power conferred upon us by the indenture;

      o     to add events of default  for the  benefit of the  holders of all or
            any series of debt securities,  including the exchange notes, issued
            under the indenture;

      o     to add to or change any  provisions  of the  indenture to facilitate
            the  issuance  of, or to  liberalize  the terms of, debt  securities
            issued in bearer  form or to permit or  facilitate  the  issuance of
            debt  securities  in  uncertificated  form,  provided  that any such
            actions do not adversely  affect the interests of the holders of the
            debt securities issued under the indenture or any related coupons in
            any material respect;


                                       46
<PAGE>

      o     to change or eliminate  any  provisions of the  indenture,  provided
            that any change or elimination of this nature will become  effective
            only when  there are no debt  securities  outstanding  of any series
            created prior to the change or elimination  of the provisions  which
            are entitled to the benefit of the provisions;

      o     to secure the debt securities,  including the exchange notes,  under
            the indenture pursuant to the "Limitations on Liens" covenant of the
            indenture, or otherwise;

      o     to establish the form or terms of debt  securities of any series and
            any related coupons;

      o     to evidence  and  provide for the  acceptance  of  appointment  by a
            successor  trustee or facilitate  the  administration  of the trusts
            under the indenture by more than one trustee;

      o     to cure an  ambiguity,  defect or  inconsistency  in the  indenture,
            provided  such action does not  adversely  affect the  interests  of
            holders  of debt  securities  of a series,  including  the  exchange
            notes,  issued  under the  indenture  or any related  coupons in any
            material way; or

      o     to supplement  any of the  provisions of the indenture to the extent
            necessary to permit or  facilitate  defeasance  and discharge of any
            series of debt securities issued under the indenture,  including the
            exchange notes,  provided that the action does not adversely  affect
            the interests of the holders of the debt  securities of that series,
            including  the  exchange  notes,  and  any  related  coupons  in any
            material way. (Section 901 of the indenture.)

      In determining  whether the holders of the requisite  principal  amount of
outstanding  debt  securities  have given any  request,  demand,  authorization,
direction,  notice, consent or waiver under the Indenture or whether a quorum is
present at a meeting of holders of debt securities thereunder:

      o     the principal  amount of a debt security  issued with original issue
            discount that will be deemed to be outstanding will be the amount of
            the  principal  thereof that would be due and payable as of the date
            of such  determination upon acceleration of the maturity of the debt
            security;

      o     the principal amount of an indexed debt security that may be counted
            in making the  determination  of calculation and that will be deemed
            outstanding  will be  equal  to the  principal  face  amount  of the
            indexed  debt  security  at  original  issuance,   unless  otherwise
            provided pursuant to Section 301 of the indenture; and

      o     Debt  securities  owned  by us or any  other  obligor  upon the debt
            securities  or any  affiliate of ours or of such other obligor shall
            be disregarded. (Section 101 of the indenture.)

      The indenture contains provisions for convening meetings of the holders of
debt  securities  of a series if debt  securities of that series are issuable in
bearer form.  (Section  1501 of the  indenture.)  A meeting may be called at any
time by the trustee,  and also,  upon request,  by us or the holders of at least
10% in principal  amount of the outstanding  debt securities of that series,  in
any such case upon notice given as provided in the  indenture.  (Section 1502 of
the indenture.)  Except for any consent that must be given by the holder of each
debt security,  as described above, any resolution presented at a meeting (or an
adjourned  meeting duly  reconvened) at which a quorum is present may be adopted
by the  affirmative  vote of the  holders of a majority in  principal  amount of
outstanding  debt  securities  of  that  series;  provided,  however,  that  any
resolution  with  respect  to any  request,  demand,  authorization,  direction,
notice,  consent, waiver or other action that may be made, given or taken by the
holders of a specified  percentage  which is less than a majority  in  principal
amount of  outstanding  debt  securities of a series may be adopted at a meeting
(or an adjourned  meeting duly  reconvened)  at which a quorum is present by the
affirmative vote of the holders of such specified percentage in principal amount
of the  outstanding  debt  securities of that series.  Any resolution  passed or
decision taken at any meeting of the holders of debt securities of a series duly
held in  accordance  with the  Indenture  will be binding on all holders of debt
securities  of that  series and any related  coupons.  The quorum at any meeting
called to adopt a resolution  will be persons holding or representing a majority
in principal  amount of the outstanding  debt securities of a series;  provided,
however,  that,  if any  action is to be taken at a meeting  with  respect  to a
consent or waiver which may be given by the holders of not less than a specified
percentage in principal  amount of the outstanding  debt securities of a series,
the persons holding or representing the specified percentage in principal amount
of the  outstanding  debt  securities  of that series will  constitute a quorum.
(Section 1504 of the indenture.)


                                       47
<PAGE>

      Notwithstanding the foregoing provisions,  if any action is to be taken at
a meeting of holders of debt  securities  of a series,  including  the  exchange
notes, with respect to any request, demand,  authorization,  direction,  notice,
consent,  waiver or other action that the  Indenture  expressly  provides may be
made,  given or taken by the  holders of a  specified  percentage  in  principal
amount of all  outstanding  debt  securities  affected  by the  action or of the
holders of that series and one or more additional series:

      o     there shall be no minimum quorum requirement for that meeting; and

      o     the  principal  amount of the  outstanding  debt  securities  of the
            series  that vote in favor of the  request,  demand,  authorization,
            direction,  notice,  consent,  waiver or other  action will be taken
            into  account  in   determining   whether  such   request,   demand,
            authorization,  direction,  notice,  consent, waiver or other action
            has been made, given or taken under the indenture.  (Section 1504 of
            the indenture.)

Concerning the Trustee

      The Bank of New York is the trustee under the indenture.

      The indenture  provides that, except during the continuance of an Event of
Default, the trustee will perform only such duties as are specifically set forth
in the indenture.  During the existence of an Event of Default, the trustee will
be  required,  in the  exercise  of its  power,  to use the  degree of care of a
prudent man in the conduct of his own affairs.  Subject to such provisions,  the
trustee  will be under no  obligation  to  exercise  any of its rights or powers
under the  indenture at the request of any Holder of Senior  Notes,  unless such
Holder will have offered to the trustee  security and indemnity  satisfactory to
it against any loss,  liability  or expense.  The trustee may resign at any time
with respect to a series of debt securities by written notice in accordance with
the  indenture.  In addition,  the trustee may be removed upon the  happening of
certain events specified in the indenture.  Following any resignation or removal
of the trustee, our Board of Directors will promptly appoint a successor trustee
with respect to the debt securities affected in accordance with the indenture.

Book-Entry, Delivery and Form

      The  certificates  representing  the  exchange  notes  will  be  in  fully
registered form without interest coupons.

      Ownership  of  beneficial  interests  in a Global  Note will be limited to
persons  who  have  accounts  with  DTC  ("participants")  or  persons  who hold
interests through  participants.  Ownership of beneficial  interests in a Global
Note will be shown on, and the transfer of that  ownership will be effected only
through,  records maintained by DTC or its nominee (with respect to interests of
participants)  and the records of  participants  (with  respect to  interests of
persons other than participants).

      So long as DTC or its  nominee  is the  registered  owner or holder of the
Global Notes,  DTC or such nominee,  as the case may be, will be considered  the
sole record owner or holder of the  exchange  notes  represented  by such Global
Notes for all purposes under the indenture.  No beneficial  owner of an interest
in the Global Notes will be able to transfer that interest  except in accordance
with DTC's  applicable  procedures,  in addition to those provided for under the
indenture and, if applicable, Euroclear or Clearstream.

      Payments of the principal of, premium,  if any, and interest on the Global
Notes will be made to DTC or its nominee,  as the case may be, as the registered
owner  thereof.  None of us,  the  trustee,  or any  paying  agent will have any
responsibility  or  liability  for any  aspect  of the  records  relating  to or
payments made on account of beneficial  ownership  interests in the Global Notes
or for  maintaining,  supervising  or  reviewing  any  records  relating to such
beneficial ownership interests.

      We  expect  that  DTC or its  nominee,  upon  receipt  of any  payment  of
principal,  premium,  if any, or  interest  in respect of the Global  Notes will
credit  participants,  accounts with payments in amounts  proportionate to their
respective beneficial ownership interests in the principal amount of such Global
Notes,  as shown on the  records  of DTC or its  nominee.  We also  expect  that
payments by participants to owners of beneficial  interests in such Global Notes
held through such participants will be governed


                                       48
<PAGE>

by  standing  instructions  and  customary  practices,  as is now the case  with
securities  held  for the  accounts  of  customers  registered  in the  names of
nominees for such customers.  Such payments will be the  responsibility  of such
participants.

      DTC has  advised us as follows:  DTC is a limited  purpose  trust  company
organized  under  the laws of the State of New York,  a  "banking  organization"
within the meaning of the New York Banking Law, a member of the Federal  Reserve
System,  a "clearing  corporation"  within the  meaning of the New York  Uniform
Commercial Code and a "Clearing Agency" registered pursuant to the provisions of
Section 17A of the  Exchange  Act.  DTC was created to hold  securities  for its
participants   and   facilitate  the  clearance  and  settlement  of  securities
transactions  between  participants  through  electronic  book-entry  changes in
accounts of its participants, thereby eliminating the need for physical movement
of Senior Notes.  Participants  include securities  brokers and dealers,  banks,
trust  companies  and clearing  corporations  and certain  other  organizations.
Indirect access to the DTC system is available to others such as banks, brokers,
dealers  and  trust  companies  that  clear  through  or  maintain  a  custodial
relationship  with a  participant,  either  directly  or  indirectly  ("indirect
participants").

      Neither  the  trustee  nor  we  will  have  any   responsibility  for  the
performance  by  DTC or its  participants  or  indirect  participants  of  their
respective   obligations   under  the  rules  and  procedures   governing  their
operations.

      If DTC is at any time  unwilling or unable to continue as a depositary for
the Global Notes and a successor  depositary is not appointed within 90 days, we
will issue  definitive,  certificated  Senior  Notes in exchange  for the Global
Notes.

      Euroclear has advised us as follows: Euroclear was created in 1968 to hold
securities for its participants and to clear and settle transactions between its
participants  through  simultaneous   electronic   book-entry  delivery  against
payment,  thereby eliminating the need for physical movement of certificates and
any risk from lack of simultaneous  transfers of securities and cash.  Euroclear
provides various other services, including securities lending and borrowing, and
interfaces with domestic markets in several countries.  Euroclear is operated by
Euroclear  Bank  S.A./N.V.  (the  "Euroclear  Operator"),  under  contract  with
Euroclear  Clearance  Systems,  S.C.,  a Belgian  cooperative  corporation  (the
"Cooperative").  All operations are conducted by the Euroclear Operator, and all
Euroclear securities clearance accounts and Euroclear cash accounts are accounts
with the Euroclear Operator,  not the Cooperative.  The Cooperative  establishes
policy for Euroclear on behalf of Euroclear participants. Euroclear participants
include banks  (including  central  banks),  securities  brokers and dealers and
other  professional  financial  intermediaries.  Indirect access to Euroclear is
also available to others that clear through or maintain a custodial relationship
with a Euroclear participant, either directly or indirectly.

      The  Euroclear  Operator  was  granted a banking  license  by the  Belgian
Banking  and Finance  Commission  in 2000,  authorizing  it to carry out banking
activities  on a global  basis.  It took over  operation of  Euroclear  from the
Brussels,  Belgium  office  of  Morgan  Guaranty  Trust  Company  of New York on
December 31, 2000.

      Securities  clearance  accounts  and  cash  accounts  with  the  Euroclear
Operator are governed by the Terms and Conditions Governing Use of Euroclear and
the related Operating Procedures of the Euroclear System, and applicable Belgian
law (collectively,  the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within Euroclear, withdrawals of securities and
cash from  Euroclear,  and receipts of payments  with respect to  securities  in
Euroclear.  All  securities  in Euroclear  are held on a fungible  basis without
attribution of specific  certificates to specific securities clearance accounts.
The  Euroclear  Operator acts under the Terms and  Conditions  only on behalf of
Euroclear participants and has no record of or relationship with persons holding
through Euroclear participants.

      Distributions  with respect to exchange  notes held  beneficially  through
Euroclear  will be credited to the cash  accounts of Euroclear  participants  in
accordance with the Terms and Conditions, to the extent received by Euroclear.

      Clearstream has advised us as follows:  Clearstream is incorporated  under
the  laws  of The  Grand  Duchy  of  Luxembourg  as a  professional  depositary.
Clearstream  holds securities for its participants and facilitates the clearance
and  settlement  of securities  transactions  between its  participants  through


                                       49
<PAGE>

electronic   book-entry  changes  in  accounts  of  its  participants,   thereby
eliminating the need for physical movement of certificates. Clearstream provides
to  its   participants,   among  other   things,   services   for   safekeeping,
administration,  clearance and settlement of  internationally  traded securities
and  securities  lending and  borrowing.  Clearstream  interfaces  with domestic
markets in several  countries.  As a  professional  depositary,  Clearstream  is
subject  to  regulation  by  the  Luxembourg  Monetary  Institute.   Clearstream
participants are financial  institutions around the world,  including securities
brokers and dealers,  banks, trust companies,  clearing corporations and certain
other organizations.  Indirect access to Clearstream is also available to others
that clear  through or  maintain a  custodial  relationship  with a  Clearstream
participant either directly or indirectly.

      Distributions  with respect to exchange  notes held  beneficially  through
Clearstream  will be credited to cash accounts of  Clearstream  participants  in
accordance with its rules and procedures, to the extent received by Clearstream.

                        FEDERAL INCOME TAX CONSIDERATIONS

General

      The following is a summary of the material  United States  federal  income
tax consequences resulting from the exchange offer and from the ownership of the
exchange notes. It deals only with exchange notes held as capital assets and not
with  special  classes  of  noteholders,   such  as  dealers  in  securities  or
currencies, life insurance companies, tax exempt entities, and persons that hold
an exchange note in connection with an arrangement  that completely or partially
hedges the exchange note. The discussion is based upon the Internal Revenue Code
of 1986,  as  amended,  (the  "Code")  and  regulations,  rulings  and  judicial
decisions  thereunder as of the date hereof.  Such  authorities may be repealed,
revoked or modified so as to produce federal income tax  consequences  different
from those discussed below.  The information  contained in this section has been
passed  upon for us by James T. Foran,  Esquire,  Associate  General  Counsel of
PSEG. We have received an opinion from Mr. Foran regarding the material  federal
income tax consequences of the exchange offer.

      Noteholders  tendering  their original notes or prospective  purchasers of
exchange  notes  should  consult  their own tax advisors  concerning  the United
States  federal  income  tax and any  state or local  income  or  franchise  tax
consequences in their particular  situations and any consequences under the laws
of any other taxing jurisdiction.

Consequences of Tendering Original Notes

      The  exchange of original  notes for the  exchange  notes  pursuant to the
exchange  offer will not be treated as an "exchange"  for United States  federal
income tax purposes  because the exchange notes will not be considered to differ
materially in kind or extent from the original notes. Rather, the exchange notes
received by a noteholder will be treated as a continuation of the original notes
in the hands of such  noteholder.  As a result,  there will be no United  States
federal income tax consequences to noteholders exchanging the original notes for
the exchange notes pursuant to the exchange offer.  The noteholder must continue
to include  stated  interest in income as if the exchange had not occurred.  The
adjusted basis and holding period of the exchange notes for any noteholder  will
be the same as the  adjusted  basis and holding  period of the  original  notes.
Similarly,  there would be no United States federal income tax consequences to a
holder of original notes that does not participate in the exchange offer.

United States Holders

      For purposes of this discussion, a "United States Holder" means:

      (1) a citizen or resident of the United States;

      (2) a partnership, corporation or other entity treated as a corporation or
partnership for United States federal income tax purposes,  created or organized
in or under the law of the United  States or of any State of the  United  States
including the District of Columbia;


                                       50
<PAGE>

      (3) an estate  the income of which is  subject  to United  States  federal
income tax regardless of its source;

      (4) a trust, if either:

            (a) a court  within the United  States is able to  exercise  primary
      supervision over the  administration  of the trust, and one or more United
      States persons have the authority to control all substantial  decisions of
      the trust; or

            (b) the trust was in  existence on August 20, 1996 and elected to be
      treated as a United States person at all times thereafter;

      (5) any other person that is subject to United States  federal  income tax
on  interest  income  derived  from a note  as a  result  of such  income  being
effectively  connected  with the  conduct by such  person of a trade or business
within the United States; or

      (6) certain former  citizens of the United States whose income and gain on
the exchange notes will be subject to U.S. income tax.

      Payments of Interest

      Interest on an exchange  note will be taxable to a United States Holder as
ordinary interest income at the time it is received or accrued, depending on the
noteholder's method of accounting for tax purposes.

      Disposition of an Exchange Note

      Upon the sale, exchange or retirement of an exchange note, a United States
Holder  generally  will  recognize  taxable gain or loss equal to the difference
between the amount  realized on the sale,  exchange  or  retirement  (other than
amounts  representing  accrued  and  unpaid  interest,  which will be treated as
ordinary  income) and such holder's  adjusted basis in the exchange  note.  Such
gain or loss  generally  will be long-term  capital gain or loss if the holder's
holding  period  in the  exchange  note  was  more  than one year at the time of
disposition.

      Backup Withholding and Information Reporting

      In general,  information reporting requirements will apply with respect to
non-corporate  United States Holders to payments of principal and interest on an
exchange note and the proceeds of the sale of an exchange note before  maturity.
A "backup  withholding" tax at the applicable  statutory rate will apply to such
payments  if the United  States  Holder  fails to provide an  accurate  taxpayer
identification  number or to report all  interest and  dividends  required to be
shown on its federal income tax returns.

Payments to United States Aliens

      As used herein,  a "United  States Alien" is a person or entity that,  for
United States  federal  income tax  purposes,  is not a United States Holder (as
defined above).

      Under current United States federal income and estate tax law:

      (1)  payments of principal  and interest on an exchange  note by us or any
paying agent to a noteholder  that is a United  States Alien will not be subject
to  withholding  of  United  States  federal  income  tax,   provided  that  the
noteholder:

            (a)  does  not  actually  or  constructively  own 10% or more of the
      combined voting power of our stock;

            (b) is not a controlled  foreign  corporation  related to us through
      stock ownership;

            (c)  is  not  a  bank  receiving   interest   described  in  Section
      881(c)(3)(A) of the Code; and

            (d) provides a statement,  under  penalties of perjury (such as Form
      W-8BEN),  to us that the holder is a United  States Alien and provides its
      name and address;


                                       51
<PAGE>

      (2) a  noteholder  that is a United  States  Alien  will not be subject to
United  States  federal  income tax on gain  realized  on the sale,  exchange or
redemption of such note, unless:

            (a) the gain is effectively connected with the conduct of a trade or
      business within the United States by the United States Alien; or

            (b) in the case of a United States Alien who is a nonresident  alien
      individual and holds the exchange note as a capital asset,  such holder is
      present in the United  States for 183 or more days in the taxable year and
      certain other requirements are met; and

      (3) an exchange note will not be subject to United States  federal  estate
tax as a result of the death of a noteholder who is not a citizen or resident of
the United States at the time of death, provided that:

            (a)  such  noteholder  did not at the  time  of  death  actually  or
      constructively own 10% or more of the combined voting power of all classes
      of our stock; and,

            (b) at the time of such noteholder's death,  payments of interest on
      such  exchange  note would not have been  effectively  connected  with the
      conduct by such noteholder of a trade or business in the United States.

      United States  information  reporting  requirements and backup withholding
tax will not apply to  payments  on an  exchange  note made  outside  the United
States  by us or  any  paying  agent  (acting  in its  capacity  as  such)  to a
noteholder that is a United States Alien provided that a statement  described in
(1)(d)  above has been  received  and neither we nor our paying agent has actual
knowledge that the payee is not a United States Alien.

      Information  reporting  requirements  and backup  withholding tax will not
apply to any payment of the  proceeds of the sale of an exchange  note  effected
outside  the  United  States by a foreign  office of a "broker"  (as  defined in
applicable Treasury regulations), provided that such broker:

      (1) is a United States Alien;

      (2) derives less than 50% of its gross income for certain periods from the
conduct of a trade or business in the United States; and

      (3) is not a controlled  foreign  corporation as to the United States or a
foreign  partnership in which one or more of its partners are "U.S.  persons" as
defined in U.S. Treasury regulations,  who, in the aggregate, hold more than 50%
of the income or capital  interest in the  partnership or a foreign  partnership
engaged in a United States trade or business (a person described in (1), (2) and
(3) above  being  hereinafter  referred  to as a "foreign  controlled  person").
Payment of the  proceeds of the sale of an exchange  note  effected  outside the
United States by a foreign office of any broker that is not a foreign controlled
person  will not be subject to backup  withholding  tax,  but will be subject to
information  reporting  requirements unless such broker has documentary evidence
in its records that the  beneficial  owner is a United  States Alien and certain
other  conditions  are met, or the  beneficial  owner  otherwise  establishes an
exemption.

                              PLAN OF DISTRIBUTION

      We are making the exchange  offer in reliance on the position of the staff
of the  Division  of  Corporation  Finance  of the  SEC as  defined  in  certain
interpretive letters issued to third parties in other transactions.

      Each  broker-dealer  that  receives  exchange  notes  for its own  account
pursuant  to the  exchange  offer  must  acknowledge  that  it  will  deliver  a
prospectus meeting the requirements of the Securities Act in connection with any
resale  of  such  exchange  notes.  This  prospectus,  as it may be  amended  or
supplemented  from time to time,  may be used by a  broker-dealer  in connection
with resales of exchange  notes  received in exchange  for original  notes where
such  original  notes were acquired as a result of  market-making  activities or
other  trading  activities.  We have agreed that,  for a period not to exceed 90
days after the exchange offer has been completed,  we will make this prospectus,
as amended or  supplemented,  available  to any  broker-dealer  that  reasonably
requests  such  document  for use in  connection  with any such  resale.  Broker
dealers who acquired original notes directly from us may


                                       52
<PAGE>

not rely on the staff's  interpretations  and must comply with the  registration
and prospectus  delivery  requirements  of the Securities  Act,  including being
named as a selling security holder, in order to resell the original notes or the
exchange notes.

      We will not  receive  any  proceeds  from any  sale of  exchange  notes by
broker-dealers.  Exchange notes received by broker-dealers for their own account
pursuant  to the  exchange  offer  may be sold  from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the exchange notes or a combination of such methods of
resale,  at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or negotiated  prices. Any such resale may be made
directly  to  purchasers  or to or through  brokers or dealers  who may  receive
compensation   in  the  form  of  commissions  or  concessions   from  any  such
broker-dealer   and/or  the   purchasers  of  any  such  exchange   notes.   Any
broker-dealer  that resells  exchange notes that were received by it for its own
account   pursuant  to  the  exchange  offer  and  any  broker  or  dealer  that
participates  in a  distribution  of such exchange  notes may be deemed to be an
"underwriter"  within the  meaning of the  Securities  Act and any profit on any
such resale of exchange notes and any commissions or concessions received by any
such persons may be deemed to be underwriting  compensation under the Securities
Act. The letter of transmittal states that by acknowledging that it will deliver
and by delivering a prospectus, a broker-dealer will not be deemed to admit that
it is an "underwriter" within the meaning of the Securities Act.

      For a period of 90 days after the exchange  offer has been  completed,  we
will promptly send  additional  copies of this  prospectus  and any amendment or
supplement to this prospectus to any  broker-dealer  that requests such document
in the letter of transmittal. We have agreed to pay certain expenses incident to
the exchange  offer,  other than  commission  or  concessions  of any brokers or
dealers,  and will  indemnify the holders of the exchange  notes  (including any
broker-dealers)  against certain  liabilities,  including  liabilities under the
Securities Act.

      By acceptance of this exchange  offer,  each  broker-dealer  that receives
exchange  notes for its own account  pursuant to the exchange offer agrees that,
upon  receipt of notice  from us of the  happening  of any event which makes any
statement  in the  prospectus  untrue in any  material  respect or requires  the
making of any changes in the prospectus in order to make the statements  therein
not   misleading   (which   notice  we  agree  to  deliver   promptly   to  such
broker-dealer),  such  broker-dealer will suspend use of the prospectus until we
have amended or  supplemented  the  prospectus to correct such  misstatement  or
omission and have furnished copies of the amended or supplemental  prospectus to
such broker-dealer.

                                 LEGAL OPINIONS

      The validity of the exchange  notes will be passed upon for us by James T.
Foran, Esquire,  Associate General Counsel of PSEG. The information contained in
"Federal Income Tax Considerations" has been passed upon for us by Mr. Foran.

                                     EXPERTS

      The financial  statements and the related  financial  statement  schedule,
incorporated  in this  prospectus  by  reference  from the PSEG Power LLC Annual
Report on Form  10-K for the year  ended  December  31,  2001 and the  financial
statements  from which the Selected  Financial Data included in this  prospectus
under the captions "Income  Statement  Data",  "Balance Sheet Data", and Capital
Expenditures  under the caption  "Other  Data" for each of the five years in the
period ended December 31, 2001 have been derived,  have been audited by Deloitte
&  Touche  LLP,  independent  auditors,  as  stated  in their  report,  which is
incorporated  herein by reference and have been so incorporated  and included in
reliance  upon the report of such firm given upon their  authority as experts in
accounting and auditing.


                                       53
<PAGE>

================================================================================

                                  $600,000,000

                            [Logo] PSEG
                                   Power LLC

                                Offer to Exchange

                    $600,000,000 6.95% Senior Notes due 2012
               Which have been registered under the Securities Act

                           For Any and All Outstanding
                    $600,000,000 6.95% Senior Notes due 2012
                        Which have not been so registered

================================================================================


<PAGE>

                                     Part II
                     Information not required in Prospectus

Item 20. Indemnification of Directors and Officers

      Article 18 of each registrant's  limited liability agreement provides,  as
follows:

            o     No Member, Officer, Director, employee or agent of the Company
                  and no  employee,  representative,  agent or  Affiliate of the
                  Member  (collectively,  the "Covered Persons") shall be liable
                  to the  Company or any other  Person who has an interest in or
                  claim  against  the  Company  for any  loss,  damage  or claim
                  incurred by reason of any act or omission performed or omitted
                  by such Covered  Person in good faith on behalf of the Company
                  and in a manner reasonably  believed to be within the scope of
                  the  authority  conferred  on  such  Covered  Person  by  this
                  Agreement,  except that a Covered  Person  shall be liable for
                  any such  loss,  damage  or claim  incurred  by reason of such
                  Covered Person's willful misconduct.

      Article 18 also provides as follows:

            o     To the fullest extent  permitted by applicable  law, a Covered
                  Person shall be entitled to  indemnification  from the Company
                  for any loss,  damage or claim incurred by such Covered Person
                  by reason of any act or omission  performed or omitted by such
                  Covered Person in good faith on behalf of the Company and in a
                  manner  reasonably  believed  to be  within  the  scope of the
                  authority  conferred on such Covered Person by this Agreement,
                  except  that  no  Covered  Person  shall  be  entitled  to  be
                  indemnified  in respect of any loss,  damage or claim incurred
                  by such  Covered  Person by reason  of such  Covered  Person's
                  willful  misconduct  with  respect to such acts or  omissions;
                  provided,  however,  that any indemnity  under this Section 18
                  shall be provided  out of and to the extent of Company  assets
                  only,  and no Member shall have personal  liability on account
                  thereof.

      The directors and officers of the  registrants  are insured under policies
of insurance,  within the limits and subject to the limitations of the policies,
against claims made against them for acts in the discharge of their duties,  and
each registrant is insured to the extent that it is required or permitted by law
to indemnify  the  directors  and officers for such loss.  The premiums for such
insurance are paid by the respective registrant.

Item 21. Exhibits and Financial Statement Schedules

(a)   Exhibits.

Exhibit
Number                              Description
-------                             -----------

3.1  --  Certificate of Formation of PSEG Power LLC.(1)
3.2  --  PSEG Power LLC Limited Liability Company Agreement.(1)
3.3  --  Certificate of Formation of PSEG Fossil LLC.(1)
3.4  --  PSEG Fossil LLC Limited Liability Company Agreement.(1)
3.5  --  Certificate of Formation of PSEG Nuclear LLC.(1)
3.6  --  PSEG Nuclear LLC Limited Liability Company Agreement.(1)
3.7  --  Certificate of Formation of PSEG Energy Resources & Trade LLC.(1)
3.8  --  PSEG  Energy   Resources  &  Trade  LLC   Limited   Liability   Company
         Agreement.(1)
4.1  --  Indenture dated April 16, 2001 between  Registrants and The Bank of New
         York and form of Subsidiary Guaranty included therein.(1)
4.2  --  Registration  Rights  Agreement dated June 4, 2002 between  Registrants
         and the purchasers named therein.
4.3  --  Form of 6.95% Exchange Note.
5    --   Opinion of James T. Foran, Esquire.
8    --  Opinion of James T. Foran, Esquire regarding tax matters.
10   --  Basic Generation Service Contract with PSE&G.(1)
12   --  Statement regarding computation of ratios of earnings.


                                      II-1
<PAGE>

Exhibit
Number                              Description
-------                             -----------

21    --  Subsidiaries of the Registrants.(1)
23.1  --  Consent of James T. Foran, Esquire (contained in Exhibits 5 and 8).
23.2  --  Independent Auditors' Consent.
24    --  Power of Attorney.
25    --  Statement of Eligibility of Trustee on Form T-1.
99.1  --  Form of Letter of Transmittal.
99.2  --  Form of Notice of Guaranteed Delivery.

----------
(1)   Previously  filed as the respectively  numbered exhibit with  Registrant's
      Registration Statement on Form S-4, No. 333-69228,  September 10, 2001 and
      incorporated herein by reference.

Item 22. Undertakings

      Insofar as  indemnification  for liabilities  arising under the Securities
Act may be  permitted to  directors,  officers  and  controlling  persons of the
registrants pursuant to the foregoing provisions,  or otherwise, the registrants
have been advised that in the opinion of the Securities and Exchange  Commission
such  indemnification  is against  public policy as expressed in the Act and is,
therefore  unenforceable.  In the event that a claim for indemnification against
such liabilities (other than the payment by the registrants of expenses incurred
or paid by a director,  officer or controlling  person of the registrants in the
successful  defense of any  action,  suit or  proceeding)  is  asserted  by such
director,  officer or controlling person in connection with the securities being
registered,  the  registrants  will,  unless in the  opinion of its  counsel the
matter  has  been  settled  by  controlling  precedent,  submit  to a  court  of
appropriate  jurisdiction  the question  whether such  indemnification  by it is
against  public policy as expressed in the Act and will be governed by the final
adjudication of such issue.

      The undersigned  registrants  hereby  undertake to file an application for
the  purpose  of  determining  the  eligibility  of the  trustee  to  act  under
subsection (a) of Section 310 of the Trust  Indenture Act in accordance with the
rules and regulations  prescribed by the Commission  under Section  305(b)(2) of
the Act.

      The undersigned registrants hereby undertake (a):

         1. To file,  during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:

         (i)      To include any prospectus  required by Section 10(a)(3) of the
                  Securities Act of 1933.

         (ii)     To reflect in the prospectus any facts or events arising after
                  the effective date of the registration  statement (or the most
                  recent post-effective  amendment thereof) which,  individually
                  or in the  aggregate,  represent a  fundamental  change in the
                  information set forth in the registration statement.

         (iii)    To include any material  information  with respect to the plan
                  of distribution  not previously  disclosed in the registration
                  statement or any material  change in such  information  in the
                  registration statement; provided, however, that the registrant
                  need  not  file a  post-effective  amendment  to  include  the
                  information required to be included by subsection (a)(1)(i) or
                  (a)(l)(ii)  if  such  information  is  contained  in  periodic
                  reports  filed by the  registrant  pursuant  to  Section 13 or
                  Section 15(d) of the Securities  Exchange Act of 1934 that are
                  incorporated by reference in the registration statement.

         2.  That,  for the  purpose  of  determining  any  liability  under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such  securities at that time shall be deemed to be the initial bona
fide offering thereof.

         3. To remove from  registration by means of a post-effective  amendment
any of the securities being registered which remain unsold at the termination of
the offering.


                                      II-2
<PAGE>

                                   SIGNATURES

      Pursuant  to  the   requirements  of  the  Securities  Act  of  1933,  the
registrant, PSEG Fossil LLC, certifies that it has reasonable grounds to believe
it meets all of the requirements for filing on Form S-4 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,  thereunto
duly authorized,  in the City of Newark, State of New Jersey, on this 8th day of
August, 2002.

                                                         PSEG Fossil LLC

                                                         By: /s/ Thomas R. Smith
                                                             -------------------
                                                                 Thomas R. Smith
                                                                    President

      Pursuant  to  the  requirements  of  the  Securities  Act  of  1933,  this
Registration  Statement  has  been  signed  by  the  following  persons  in  the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
                    Signature                              Title                                          Date
                    ---------                              -----                                          ----
<S>                                                        <C>                                        <C>
               /s/ Thomas R. Smith                         Principal Executive                        August 8, 2002
------------------------------------------------           Officer, Principal Financial
                 Thomas R. Smith                           Officer and Director

              /s/ Patricia A. Rado                         Principal Accounting Officer               August 8, 2002
------------------------------------------------
                Patricia A. Rado

                /s/ Frank Cassidy                          Director                                   August 8, 2002
------------------------------------------------
                  Frank Cassidy

              /s/ Harold W. Keiser                         Director                                   August 8, 2002
------------------------------------------------
                Harold W. Keiser

           /s/ Steven R. Teitelman                         Director                                   August 8, 2002
------------------------------------------------
               Steven R. Teitelman
</TABLE>


                                      II-3
<PAGE>

                                   SIGNATURES

      Pursuant  to  the   requirements  of  the  Securities  Act  of  1933,  the
registrant,  PSEG  Nuclear  LLC,  certifies  that it has  reasonable  grounds to
believe  it meets all of the  requirements  for  filing on Form S-4 and has duly
caused  this  Registration   Statement  to  be  signed  on  its  behalf  by  the
undersigned,  thereunto  duly  authorized,  in the City of Newark,  State of New
Jersey, on this 8th day of August, 2002.

                                                        PSEG Nuclear LLC

                                                        By: /s/ Harold W. Keiser
                                                            --------------------
                                                                Harold W. Keiser
                                                                  President

      Pursuant  to  the  requirements  of  the  Securities  Act  of  1933,  this
Registration  Statement  has  been  signed  by  the  following  persons  in  the
capacities indicated on the dates indicated.

<TABLE>
<CAPTION>
                    Signature                              Title                                          Date
                    ---------                              ----                                           ----
<S>                                                        <C>                                        <C>
              /s/ Harold W. Keiser                         Principal Executive                        August 8, 2002
------------------------------------------------           Officer, Principal Financial
                Harold W. Keiser                           Officer and Director

              /s/ Patricia A. Rado                         Principal Accounting Officer               August 8, 2002
------------------------------------------------
                Patricia A. Rado

              /s/ Frank Cassidy                            Director                                   August 8, 2002
------------------------------------------------
                  Frank Cassidy

               /s/ Thomas R. Smith                         Director                                   August 8, 2002
------------------------------------------------
                 Thomas R. Smith

             /s/ Steven R. Teitelman                       Director                                   August 8, 2002
------------------------------------------------
               Steven R. Teitelman
</TABLE>


                                      II-4
<PAGE>

                                   SIGNATURES

      Pursuant  to  the   requirements  of  the  Securities  Act  of  1933,  the
registrant,  PSEG Energy Resources & Trade LLC, certifies that it has reasonable
grounds to believe it meets all of the  requirements  for filing on Form S-4 and
has duly caused this  Registration  Statement  to be signed on its behalf by the
undersigned,  thereunto  duly  authorized,  in the City of Newark,  State of New
Jersey, on this 8th day of August, 2002.

                                               PSEG Energy Resources & Trade LLC

                                               By: /s/ Steven R. Teitelman
                                                   -----------------------------
                                                       Steven R. Teitelman
                                                         President

      Pursuant  to  the  requirements  of  the  Securities  Act  of  1933,  this
Registration  Statement  has  been  signed  by  the  following  persons  in  the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
                    Signature                              Title                                          Date
                    ---------                              ----                                           ----
<S>                                                        <C>                                        <C>
             /s/ Steven R. Teitelman                       Principal Executive                        August 8, 2002
------------------------------------------------           Officer, Principal Financial
               Steven R. Teitelman                         Officer and Director

              /s/ Patricia A. Rado                         Principal Accounting Officer               August 8, 2002
------------------------------------------------
                Patricia A. Rado

                /s/ Frank Cassidy                          Director                                   August 8, 2002
------------------------------------------------
                  Frank Cassidy

              /s/ Harold W. Keiser                         Director                                   August 8, 2002
------------------------------------------------
                Harold W. Keiser

               /s/ Thomas R. Smith                         Director                                   August 8, 2002
------------------------------------------------
                 Thomas R. Smith
</TABLE>


                                      II-5
<PAGE>

                                   SIGNATURES

      Pursuant  to  the   requirements  of  the  Securities  Act  of  1933,  the
registrant,  PSEG Power LLC, certifies that it has reasonable grounds to believe
it meets all of the requirements for filing on Form S-4 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,  thereunto
duly authorized,  in the City of Newark, State of New Jersey, on this 8th day of
August, 2002.

                                                           PSEG POWER LLC

                                                           By: /s/ Frank Cassidy
                                                               -----------------
                                                                   Frank Cassidy
                                                                    President

      Pursuant  to  the  requirements  of  the  Securities  Act  of  1933,  this
Registration  Statement  has  been  signed  by  the  following  persons  in  the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
                    Signature                              Title                                          Date
                    ---------                              ----                                           ----
<S>                                                        <C>                                        <C>
              /s/ E. James Ferland                         Principal Executive                        August 8 , 2002
------------------------------------------------           Officer, and Director
                E. James Ferland

              /s/ Thomas M. O'Flynn                        Principal Financial Officer                August 8, 2002
------------------------------------------------           and Director
                Thomas M. O'Flynn

              /s/ Patricia A. Rado                         Principal Accounting Officer               August 8, 2002
------------------------------------------------
                Patricia A. Rado

               /s/ Robert E. Busch                         Director                                   August 8, 2002
------------------------------------------------
                 Robert E. Busch

           /s/ Robert J. Dougherty Jr.                     Director                                   August 8, 2002

------------------------------------------------
            Robert J. Dougherty, Jr.

                /s/ Frank Cassidy                          Director                                   August 8, 2002
------------------------------------------------
                  Frank Cassidy

              /s/ R. Edwin Selover                         Director                                   August 8, 2002
------------------------------------------------
                R. Edwin Selover

             /s/ Michael J. Thomson                        Director                                   August 8, 2002
------------------------------------------------
               Michael J. Thomson
</TABLE>


                                      II-6
<PAGE>

                                 Exhibit Index
                                 -------------

3.1   --  Certificate of Formation of PSEG Power LLC.(1)
3.2   --  PSEG Power LLC Limited Liability Company Agreement.(1)
3.3   --  Certificate of Formation of PSEG Fossil LLC.(1)
3.4   --  PSEG Fossil LLC Limited Liability Company Agreement.(1)
3.5   --  Certificate of Formation of PSEG Nuclear LLC.(1)
3.6   --  PSEG Nuclear LLC Limited Liability Company Agreement.(1)
3.7   --  Certificate of Formation of PSEG Energy Resources & Trade LLC.(1)
3.8   --  PSEG  Energy   Resources  &  Trade  LLC  Limited   Liability   Company
          Agreement.(1)
4.1   --  Indenture dated April 16, 2001 between Registrants and The Bank of New
          York and form of Subsidiary Guaranty included therein.(1)
4.2   --  Registration  Rights Agreement dated June 4, 2002 between  Registrants
          and the purchasers named therein.
4.3   --  Form of 6.95% Exchange Note.
5     --   Opinion of James T. Foran, Esquire.
8     --  Opinion of James T. Foran, Esquire regarding tax matters.
10    --  Basic Generation Service Contract with PSE&G.(1)
12    --  Statement regarding computation of ratios of earnings.
21    --  Subsidiaries of the Registrants.(1)
23.1  --  Consent of James T. Foran, Esquire (contained in Exhibits 5 and 8).
23.2  --  Independent Auditors' Consent.
24    --  Power of Attorney.
25    --  Statement of Eligibility of Trustee on Form T-1.
99.1  --  Form of Letter of Transmittal.
99.2  --  Form of Notice of Guaranteed Delivery.