Exhibit 4.2

                                 PSEG Power LLC

                          6.875% Senior Notes Due 2006
                           7.75% Senior Notes Due 2011
                          8.625% Senior Notes Due 2031

                                   ----------

                          Registration Rights Agreement
                          -----------------------------

                                                    April 9, 2001

Morgan Stanley & Co. Incorporated
Salomon Smith Barney, Inc.
UBS Warburg LLC
Banc of America Securities LLC
Banc One Capital Markets, Inc.
Chase Securities Inc.
First Union Securities, Inc.
c/o Morgan Stanley & Co. Incorporated
      1585 Broadway
      New York, New York 10036

Ladies and Gentlemen:

      THIS REGISTRATION  RIGHTS AGREEMENT (this "Agreement") is made and entered
into April 9, 2001, among PSEG POWER LLC, a Delaware limited  liability  company
(the  "Company"),  PSEG  NUCLEAR  LLC,  a  Delaware  limited  liability  company
("Nuclear"),  PSEG FOSSIL LLC, a Delaware limited liability company  ("Fossil"),
PSEG  ENERGY  RESOURCES  AND TRADE  LLC, a Delaware  limited  liability  company
("ER&T"), and MORGAN STANLEY & CO. INCORPORATED, Salomon Smith Barney, Inc., UBS
Warburg LLC, Banc of America  Securities  LLC, Banc One Capital  Markets,  Inc.,
Chase  Securities  Inc.  and First Union  Securities,  Inc.  (collectively,  the
"Purchase Agents"). Nuclear, Fossil and ER&T are individually referred to herein
as a "Guarantor" and collectively referred to herein as the "Guarantors," as the
context requires.

      This Agreement is made pursuant to the Purchase  Agreement  dated April 9,
2001,  among the Company,  as issuer of the Notes (as defined  below),  Nuclear,
Fossil and ER&T,  as  Guarantors  of the Notes,  and the  Purchase  Agents  (the
"Purchase  Agreement"),  which provides for, among other things, the sale by the
Company to the Purchase Agents of an aggregate of $500,000,000  principal amount
of the Company's 6.875% Senior Notes Due 2006, $800,000,000


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principal  amount of the Company's 7.75% Senior Notes Due 2011, and $500,000,000
principal  amount of the Company's  8.625% Senior Notes Due 2031  (collectively,
the  "Notes").  Each of Nuclear,  Fossil and ER&T will jointly and severally and
unconditionally  guarantee  the  payment  of  principal  and  interest  and  any
make-whole  premium on the Notes (each,  a  "Guarantee"  and  collectively,  the
"Guarantees").  The Notes and the Guarantees  will be issued under an indenture,
dated as of April  16,  2001 (the  "Indenture"),  among  the  Company,  Nuclear,
Fossil,  ER&T,  and The Bank of New York,  a New York  banking  corporation,  as
Trustee (the  "Trustee").  The Notes will be issued in accordance with terms set
forth in  resolutions  adopted by the  Company's  Sale and Pricing  Committee on
April 9, 2001.

      In order  to  induce  the  Purchase  Agents  to  enter  into the  Purchase
Agreement,  the Company and each Guarantor has agreed to provide to the Purchase
Agents and their direct and indirect  transferees  the  registration  rights set
forth  in  this  Agreement.  The  execution  of  this  Agreement  is  one of the
conditions to the closing under the Purchase Agreement.

      In consideration of the foregoing, the parties hereto agree as follows:

      1. Definitions.

      As used in this Agreement,  the following  capitalized defined terms shall
have the following meanings:

      "1933 Act" shall mean the  Securities Act of 1933, as amended from time to
time.

      "1934 Act" shall mean the Securities Exchange Act of 1934, as amended from
time to time.

      "Closing  Date"  shall mean the  Closing  Date as defined in the  Purchase
Agreement.

      "Company"  shall have the  meaning  set forth in the  preamble  hereto and
shall also include the Company's successors.

      "Effectiveness  Period"  shall have the meaning set forth in Section  2(b)
hereof.

      "ER&T" shall have the meaning set forth in the  preamble  hereto and shall
include ER&T's successors.

      "Exchange  Offer"  shall mean the  exchange  offer by the Company and each
Guarantor of Exchange Securities for Registrable  Securities pursuant to Section
2(a) hereof.

      "Exchange Offer Registration" shall mean a registration under the 1933 Act
effected pursuant to Section 2(a) hereof.

      "Exchange  Offer  Registration  Statement"  shall mean an  exchange  offer
registration  statement on Form S-4 (or, if applicable,  on another  appropriate
form) and all amendments and supplements to such registration statement, in each
case including the


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Prospectus contained therein, all exhibits thereto and all material incorporated
by reference therein.

      "Exchange  Securities" shall mean securities issued by the Company and the
Guarantors  under the Indenture  containing  terms  identical to the  Securities
(except  that (i)  interest on the notes  issued by the Company  pursuant to the
Exchange Offer shall accrue from the last date on which interest was paid on the
Notes or, if no such  interest has been paid on the Notes,  from April 16, 2001,
(ii) the Exchange Securities will not contain restrictions on transfer under the
1933 Act,  and (iii) the  Exchange  Securities  will not provide for any Special
Interest Premium thereon) to be offered to Holders of Securities in exchange for
Securities pursuant to the Exchange Offer.

      "Fossil" shall have the meaning set forth in the preamble hereto and shall
include Fossil's successors.

      "Guarantee"  and  "Guarantees"  shall have the  meanings  set forth in the
preamble hereto.

      "Guarantor"  and  "Guarantors"  shall have the  meanings  set forth in the
preamble hereto.

      "Holder"  shall  mean  the  Purchase  Agents,  for so long as they own any
Registrable  Securities,  and each of their  successors,  assigns and direct and
indirect  transferees  who become  registered  owners of Registrable  Securities
under the  Indenture;  provided  that for  purposes  of Sections 4 and 5 of this
Agreement, the term "Holder" shall include Participating Broker-Dealers.

      "Indenture"  shall have the meaning set forth in the  preamble  hereto and
shall include any amendments or supplements thereto.

      "Majority  Holders"  shall mean the Holders of a majority of the aggregate
principal  amount of  outstanding  Notes;  provided that whenever the consent or
approval of Holders of a specified  percentage  of Notes is required  hereunder,
Notes held by the  Company,  its  affiliates  or any of its  direct or  indirect
subsidiaries,  including  each  Guarantor,  shall not be counted in  determining
whether  such  consent or  approval  was given by the  Holders of such  required
percentage or amount.

      "Notes" shall have the meaning set forth in the preamble hereto.

      "Nuclear"  shall have the  meaning  set forth in the  preamble  hereto and
shall include Nuclear's successors.

      "Participating  Broker-Dealer" shall have the meaning set forth in Section
4(a) hereof.

      "Person" shall mean an individual, partnership, limited liability company,
corporation,  trust or unincorporated organization, or a government or agency or
political subdivision thereof.


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      "Purchase Agents" shall have the meaning set forth in the preamble hereto.

      "Purchase  Agreement"  shall have the  meaning  set forth in the  preamble
hereto.

      "Prospectus"  shall  mean  the  prospectus   included  in  a  Registration
Statement,  including any  preliminary  prospectus,  and any such  prospectus as
amended or  supplemented  by any prospectus  supplement,  including a prospectus
supplement  with  respect  to the terms of the  offering  of any  portion of the
Registrable  Securities  covered by a Shelf Registration  Statement,  and by all
other amendments and supplements to such prospectus,  and in each case including
all material incorporated by reference therein.

      "Registrable  Securities"  shall mean the Securities;  provided,  however,
that  the  Securities  shall  cease  to be  Registrable  Securities  (i)  when a
Registration  Statement with respect to such Securities shall have been declared
effective  under the 1933 Act and such  Securities  shall have been exchanged or
disposed of pursuant to such Registration  Statement,  (ii) when such Securities
have been sold to the public pursuant to Rule 144 (or any similar provision then
in  force,  but not Rule  144A)  under the 1933 Act or are  eligible  to be sold
pursuant to Rule 144(k) under the 1933 Act, or (iii) when such Securities  shall
have ceased to be outstanding.

      "Registration  Expenses"  shall mean any and all expenses  incident to the
performance  of or  compliance  by the  Company  and each  Guarantor  with  this
Agreement, including without limitation: (i) all SEC, stock exchange or National
Association  of  Securities  Dealers,  Inc.  registration  and  filing  fees and
expenses, including fees and disbursements of counsel for the placement or sales
agent or underwriters in connection with any such  registration or filing,  (ii)
all  fees and  expenses  incurred  in  connection  with  compliance  with  state
securities or blue sky laws  (including  reasonable  fees and  disbursements  of
counsel  for  any   underwriters   or  Holders  in  connection   with  blue  sky
qualification  of any of the Exchange  Securities  or  Registrable  Securities),
(iii) all expenses of any Persons in preparing or assisting in  preparing,  word
processing,   printing  and  distributing  any   Registration   Statement,   any
Prospectus,  any amendments or supplements thereto, any underwriting agreements,
securities sales  agreements and other documents  relating to the performance of
and compliance  with this  Agreement,  (iv) all rating agency fees, (v) all fees
and  disbursements   relating  to  the  qualification  of  the  Indenture  under
applicable  securities laws, (vi) the fees and  disbursements of the Trustee and
its  counsel  and  any  exchange   agent  or  custodian,   (vii)  the  fees  and
disbursements of counsel for the Company and each Guarantor, and, in the case of
a Shelf  Registration  Statement,  the fees and disbursements of one counsel for
the Holders (which  counsel shall be selected by the Majority  Holders and which
counsel  may also be counsel  for the  Purchase  Agents) and (viii) the fees and
disbursements  of the  independent  public  accountants  of the Company and each
Guarantor,  including  the  expenses  of any  special  audits or "cold  comfort"
letters  required  by or  incident  to  such  performance  and  compliance,  but
excluding fees and expenses of counsel to the underwriters  (other than fees and
expenses  set  forth in  clause  (ii)  above) or the  Holders  and  underwriting
discounts and commissions  and transfer  taxes, if any,  relating to the sale or
disposition of Registrable Securities by a Holder.

      "Registration  Statement"  shall mean any  registration  statement  of the
Company  and the  Guarantors  that  covers  any of the  Exchange  Securities  or
Registrable  Securities pursuant to the provisions of this Agreement,  including
an Exchange Offer Registration Statement or a


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Shelf  Registration  Statement,  and all amendments and  supplements to any such
Registration  Statement,  including  post-effective  amendments,  in  each  case
including  the  Prospectus  contained  therein,  all  exhibits  thereto  and all
material incorporated by reference therein.

      "Special  Interest  Premium"  shall have the  meaning set forth in Section
2(d) hereof.

      "SEC" shall mean the Securities and Exchange Commission.

      "Securities" shall mean the Notes and the Guarantees.

      "Shelf  Registration"  shall  mean a  registration  effected  pursuant  to
Section 2(b) hereof.

      "Shelf Registration Statement" shall mean a "shelf" registration statement
of the Company and the Guarantors  pursuant to the provisions of Section 2(b) of
this  Agreement  which covers all of the  Registrable  Securities  (but no other
securities  unless  approved by the Holders  whose  Registrable  Securities  are
covered by such Shelf Registration  Statement) on an appropriate form under Rule
415 under the 1933 Act, or any similar  rule that may be adopted by the SEC, and
all  amendments  and  supplements  to  such  registration  statement,  including
post-effective  amendments,  in each case  including  the  Prospectus  contained
therein,  all  exhibits  thereto  and all  material  incorporated  by  reference
therein.

      "Trustee" shall mean the trustee with respect to the Securities  under the
Indenture.

      "Underwriter" shall have the meaning set forth in Section 3 hereof.

      "Underwritten  Registration"  or  "Underwritten  Offering"  shall  mean  a
registration  in which  Registrable  Securities are sold to an  Underwriter  for
reoffering to the public.

      2. Registration Under the 1933 Act.

      (a) To the extent  not  prohibited  by any  applicable  law or  applicable
interpretation of the staff of the SEC, the Company and the Guarantors shall use
their best efforts to cause to be filed an Exchange Offer Registration Statement
covering the offer by the Company and the  Guarantors to the Holders to exchange
all of the  Registrable  Securities  for  Exchange  Securities  and to have such
Exchange Offer Registration  Statement remain effective until the closing of the
Exchange Offer. The Company and the Guarantors shall commence the Exchange Offer
promptly  after the Exchange  Offer  Registration  Statement  has been  declared
effective by the SEC and shall use their best efforts to have the Exchange Offer
consummated  not later than 60 days after such  effective  date. The Company and
the Guarantors shall commence the Exchange Offer by mailing the related exchange
offer Prospectus and accompanying  documents to each Holder stating, in addition
to such other disclosures as are required by applicable law,:

      (i) that the Exchange  Offer is being made pursuant to this  Agreement and
that all Registrable Securities validly tendered will be accepted for exchange;


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      (ii) the dates of acceptance  for exchange  (which shall be a period of at
least 30 business days from the date such notice is mailed)  (collectively,  the
"Exchange Dates");

      (iii) that any Registrable  Security not tendered will remain  outstanding
and  Notes  not  tendered  will  continue  to  accrue  interest,  but  that  any
Registrable  Security  not  tendered  will not  retain  any  rights  under  this
Agreement  (except  in  the  case  of  the  Purchase  Agents  and  Participating
Broker-Dealers as provided herein);

      (iv) that Holders electing to have a Registrable Security exchanged for an
Exchange  Security  pursuant to the Exchange Offer will be required to surrender
such Registrable Security, together with the enclosed letters of transmittal, to
the  institution  and at the address  (located in the Borough of Manhattan,  The
City of New York) specified in such notice prior to the close of business on the
last Exchange Date; and

      (v) that Holders will be entitled to withdraw their election to exchange a
Registrable  Security  for an  Exchange  Security,  not later  than the close of
business on the last  Exchange  Date, by sending to the  institution  and at the
address (located in the Borough of Manhattan, The City of New York) specified in
the notice a telegram, telex, facsimile transmission or letter setting forth the
name of such Holder,  the principal amount of Registrable  Securities  delivered
for exchange  and a statement  that such Holder is  withdrawing  his election to
have such Registrable Securities exchanged.

      As soon as practicable  after the last Exchange Date, the Company and each
Guarantor shall:

      (i)  accept  for  exchange  Registrable  Securities  or  portions  thereof
tendered and not validly withdrawn under the Exchange Offer; and

      (ii) deliver,  or cause to be delivered,  to the Trustee for  cancellation
all Registrable  Securities or portions  thereof so accepted for exchange by the
Company  and the  Guarantors  and  issue,  and cause  the  Trustee  to  promptly
authenticate  and mail to each Holder,  an Exchange  Security equal in principal
amount to the principal amount of the Notes surrendered by such Holder.

The  Company and the  Guarantors  shall use their best  efforts to complete  the
Exchange   Offer  as  provided  above  and  shall  comply  with  the  applicable
requirements  of the  1933  Act,  the  1934 Act and  other  applicable  laws and
regulations in connection with the Exchange Offer.  The Exchange Offer shall not
be  subject  to any  conditions,  other  than that the  Exchange  Offer does not
violate applicable law or any applicable interpretation of the staff of the SEC.
The Company  shall inform the Purchase  Agents of the names and addresses of the
Holders to whom the Exchange Offer is made,  and the Purchase  Agents shall have
the right,  subject to  applicable  law, to contact such  Holders and  otherwise
facilitate the tender of Registrable Securities in the Exchange Offer.

      (b) In the event that (i) the Company  determines  that the Exchange Offer
Registration  provided for in Section 2(a) above is not  available or may not be
consummated as soon as practicable after the last Exchange Date because it would
violate  applicable  law or the applicable  interpretations  of the staff of the
SEC, (ii) the Exchange Offer is not for any other reason consummated by February
25, 2002, (iii) the Exchange Offer has been completed and, in


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the opinion of counsel for the Purchase Agents, a Registration Statement must be
filed and a Prospectus  must be delivered by the Purchase  Agents in  connection
with any  offering  or sale of  Registrable  Securities,  (iv)  any  Registrable
Securities validly tendered pursuant to the Exchange Offer are not exchanged for
Exchange  Securities within 10 days of being accepted in the Exchange Offer, (v)
any Purchase Agent so requests with respect to Registrable  Securities  that are
not eligible to be exchanged in the Exchange  Offer,  (vi) the Exchange Offer is
not available to any Holder, or (vii) any Holder of Registrable  Securities that
participates in the Exchange Offer does not receive freely transferable Exchange
Securities  in  exchange  for its  Registrable  Securities,  the Company and the
Guarantors  shall  use  their  best  efforts  to  cause  to be  filed as soon as
practicable after (but in no event more than 45 days after) such  determination,
date or notice of such opinion of counsel is given to the  Company,  as the case
may be, a Shelf Registration  Statement providing for the sale by the Holders of
all of the Registrable  Securities and to have such Shelf Registration Statement
declared  effective by the SEC. In the event the Company and the  Guarantors are
required  to file a Shelf  Registration  Statement  solely  as a  result  of the
matters referred to in clause (iii) of the preceding  sentence,  the Company and
the Guarantors shall use their best efforts to file and have declared  effective
by the SEC both an Exchange  Offer  Registration  Statement  pursuant to Section
2(a) hereof with respect to all Registrable  Securities and a Shelf Registration
Statement  (which may be a combined  Registration  Statement  with the  Exchange
Offer  Registration  Statement)  with respect to offers and sales of Registrable
Securities held by the Purchase  Agents after  completion of the Exchange Offer.
The Company and the Guarantors agree to use their best efforts to keep the Shelf
Registration  Statement  continuously effective for the lesser of two years from
the Closing  Date or until all of the  Registrable  Securities  are eligible for
resale  pursuant to Rule 144 under the 1933 Act or such shorter period that will
terminate  when  all  of  the  Registrable   Securities  covered  by  the  Shelf
Registration  Statement  have  been  sold  pursuant  to the  Shelf  Registration
Statement (the "Effectiveness  Period").  The Company and the Guarantors further
agree to supplement or amend the Shelf Registration Statement if required by the
rules,  regulations or instructions  applicable to the registration form used by
the Company and the Guarantors for such Shelf  Registration  Statement or by the
1933  Act  or  by  any  other  rules  and   regulations   thereunder  for  shelf
registrations or if reasonably requested by a Holder with respect to information
relating  to such  Holder,  and to use  their  best  efforts  to cause  any such
amendment to become  effective and such Shelf  Registration  Statement to become
usable as soon as thereafter  practicable.  The Company and the Guarantors agree
to  furnish  to the  Holders  of  Registrable  Securities  copies  of  any  such
supplement or amendment promptly after its being used or filed with the SEC.

      (c) The Company and the Guarantors shall pay all Registration  Expenses in
connection  with the  registration  of Registrable  Securities  and/or  Exchange
Securities  pursuant to Section 2(a) and Section 2(b) hereof.  Each Holder shall
pay all  underwriting  discounts and  commissions  and transfer  taxes,  if any,
relating to the sale or  disposition  of such  Holder's  Registrable  Securities
pursuant to the Shelf Registration Statement.

      (d) An Exchange  Offer  Registration  Statement  pursuant to Section  2(a)
hereof or a Shelf  Registration  Statement  pursuant to Section 2(b) hereof will
not be deemed to have become effective unless it has been declared  effective by
the SEC; provided, however, that, if, after such Registration Statement has been
declared effective,  the offering of Registrable  Securities pursuant to a Shelf
Registration Statement is interfered with by any stop order, injunction or other
order or requirement of the SEC or any other governmental agency or court,


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such  Registration  Statement will be deemed not to have become effective during
the period of such  interference  until the offering of  Registrable  Securities
pursuant to such  Registration  Statement may legally resume.  In the event that
(i) the Exchange Offer is not consummated or the Shelf Registration Statement is
not declared  effective by the SEC on or prior to February 25, 2002, or (ii) the
Shelf  Registration  Statement  has  been  declared  effective  by the  SEC  but
thereafter  ceases to be effective  without being succeeded within 45 days after
the  Shelf  Registration  Statement  cease  to be  effective  by  an  additional
registration  statement  covering the  Registrable  Securities  that is declared
effective by the SEC, the interest rate on the  Securities  will be increased by
 .50% per annum (the  "Special  Interest  Premium")  until the Exchange  Offer is
consummated or the Shelf  Registration  Statement is declared effective or again
becomes  effective,  as the case may be. All accrued  Special  Interest  Premium
shall  be paid to the  Holders  in the  same  manner  and on the  same  dates as
interest is payable on the Notes.

      (e) Without limiting the remedies available to the Purchase Agents and the
Holders,  the Company  and each  Guarantor  acknowledge  that any failure by the
Company or any Guarantor to comply with their  obligations under Section 2(a) or
Section  2(b) hereof may result in material  irreparable  injury to the Purchase
Agents or the Holders for which there is no adequate remedy at law, that it will
not be possible to measure damages for such injuries  precisely and that, in the
event of any such  failure,  the  Purchase  Agents or any Holder may obtain such
relief as may be required to specifically enforce the obligations of the Company
and each Guarantor under Section 2(a) or Section 2(b) hereof.

      3. Registration Procedures.

      In connection  with the obligations of the Company and each Guarantor with
respect to the  Registration  Statements  under  Section  2(a) and Section  2(b)
hereof, the Company and each Guarantor shall as expeditiously as possible:

      (a)  prepare  and  file  with  the  SEC a  Registration  Statement  on the
appropriate  form under the 1933 Act,  which form (x) shall be  selected  by the
Company and the Guarantors and (y) shall,  in the case of a Shelf  Registration,
be available for the sale of the  Registrable  Securities by the selling Holders
thereof,  and (z) shall  comply  as to form in all  material  respects  with the
requirements  of the  applicable  form  and  include  all  financial  statements
required by the SEC to be filed  therewith,  and use their best efforts to cause
such  Registration  Statement  to  become  effective  and  remain  effective  in
accordance with Section 2 hereof;

      (b)  prepare  and file  with the SEC such  amendments  and  post-effective
amendments  to each  Registration  Statement  as may be  necessary  to keep such
Registration  Statement  effective  for the  applicable  period  and cause  each
Prospectus to be supplemented by any required  prospectus  supplement and, as so
supplemented,  to be filed pursuant to Rule 424 under the 1933 Act; to keep each
Prospectus  current during the period  described  under Section 4(3) of the 1933
Act and Rule 174  under  the 1933 Act  that is  applicable  to  transactions  by
brokers or  dealers  with  respect to the  Registrable  Securities  or  Exchange
Securities;

      (c) in the  case of a  Shelf  Registration,  furnish  to  each  Holder  of
Registrable  Securities,  to counsel for the Purchase Agents, to counsel for the
Holders and to each  Underwriter  of an  Underwritten  Offering  of  Registrable
Securities, if any, without charge, as


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many copies of each Prospectus,  including each preliminary Prospectus,  and any
amendment  or  supplement  thereto,  and such other  documents as such Holder or
Underwriter  may reasonably  request,  in order to facilitate the public sale or
other  disposition  of the  Registrable  Securities;  and  the  Company  and the
Guarantors consent to the use of such Prospectus and any amendment or supplement
thereto in  accordance  with  applicable  law by each of the selling  Holders of
Registrable Securities and any such Underwriters in connection with the offering
and sale of the Registrable Securities covered by and in the manner described in
such  Prospectus  or any  amendment or  supplement  thereto in  accordance  with
applicable law;

      (d) use  their  best  efforts  to  register  or  qualify  the  Registrable
Securities  under all  applicable  state  securities  or "blue sky" laws of such
jurisdictions as any Holder of Registrable  Securities covered by a Registration
Statement  shall  reasonably  request  in  writing  by the time  the  applicable
Registration  Statement is declared effective by the SEC, to cooperate with such
Holders in  connection  with any filings  required to be made with the  National
Association of Securities Dealers, Inc. and do any and all other acts and things
which  may be  reasonably  necessary  or  advisable  to  enable  such  Holder to
consummate  the  disposition  in each  such  jurisdiction  of  such  Registrable
Securities owned by such Holder;  provided,  however,  that the Company and each
Guarantor shall not be required to (i) qualify as a foreign  corporation or as a
dealer  in  securities  in any  jurisdiction  where it would  not  otherwise  be
required to qualify but for this Section 3(d),  (ii) file any general consent to
service of process, or (iii) subject itself to taxation in any such jurisdiction
if it is not already so subject to taxation;

      (e) in the case of a Shelf Registration, notify each Holder of Registrable
Securities, counsel for the Holders and counsel for the Purchase Agents promptly
and, if requested by any such Holder or counsel,  confirm such advice in writing
(i)  when  a   Registration   Statement  has  become   effective  and  when  any
post-effective  amendment  thereto  has  been  filed  with  the SEC and  becomes
effective,  (ii) of any request by the SEC or any state securities authority for
amendments or  supplements  to a  Registration  Statement and  Prospectus or for
additional  information  after the Registration  Statement has become effective,
(iii) of the issuance by the SEC or any state  securities  authority of any stop
order suspending the effectiveness of a Registration Statement or the initiation
of any  proceedings  for that purpose,  (iv) if, between the effective date of a
Registration  Statement  and the closing of any sale of  Registrable  Securities
covered  thereby,  the  representations  and  warranties  of the  Company or any
Guarantor contained in any underwriting agreement, securities sales agreement or
other  similar  agreement,  if any,  relating  to the  offering  of  Registrable
Securities  cease to be true and  correct  in all  material  respects  or if the
Company  or  any  Guarantor  receives  any  notification  with  respect  to  the
suspension of the  qualification  of the Registrable  Securities for sale in any
jurisdiction  or the initiation of any  proceeding for such purpose,  (v) of the
happening  of any event  during the  period a Shelf  Registration  Statement  is
effective which makes any statement made in such  Registration  Statement or the
related  Prospectus  untrue in any material respect or which requires the making
of any changes in such Registration Statement or Prospectus in order to make the
statements  therein not misleading and (vi) of any  determination by the Company
or any Guarantor that a  post-effective  amendment to a  Registration  Statement
would be appropriate;

      (f) make every  reasonable  effort to obtain the  withdrawal  of any order
suspending  the  effectiveness  of a  Registration  Statement  at  the  earliest
possible moment and provide immediate notice to each Holder of the withdrawal of
any such order;


                                       9
<PAGE>

      (g) in the  case of a  Shelf  Registration,  furnish  to  each  Holder  of
Registrable  Securities,  without  charge,  at least one conformed  copy of each
Registration  Statement  and  any  post-effective   amendment  thereto  (without
documents  incorporated  therein  by  reference  or  exhibits  thereto,   unless
requested);

      (h) in the  case of a  Shelf  Registration,  cooperate  with  the  selling
Holders of  Registrable  Securities to  facilitate  the timely  preparation  and
delivery of certificates  representing Registrable Securities to be sold and not
bearing any restrictive legends and enable such Registrable  Securities to be in
such  denominations  (consistent  with  the  provisions  of the  Indenture)  and
registered in such names as the selling Holders may reasonably  request at least
one business day prior to the closing of any sale of Registrable Securities;

      (i) in the case of a Shelf Registration,  upon the occurrence of any event
contemplated by Section  3(e)(v)  hereof,  use their best efforts to prepare and
file with the SEC a supplement  or  post-effective  amendment to a  Registration
Statement  or the related  Prospectus  or any document  incorporated  therein by
reference or file any other required  document so that, as thereafter  delivered
to the  purchasers  of the  Registrable  Securities,  such  Prospectus  will not
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements  therein,  in light of the circumstances  under
which they were made, not  misleading.  The Company and the Guarantors  agree to
notify the Holders to suspend use of the  Prospectus as promptly as  practicable
after the  occurrence of such an event,  and the Holders hereby agree to suspend
use of the  Prospectus  until the Company  and the  Guarantors  have  amended or
supplemented the Prospectus to correct such misstatement or omission;

      (j) a reasonable time prior to the filing of any  Registration  Statement,
any  Prospectus,  any  amendment  to a  Registration  Statement  or amendment or
supplement  to a  Prospectus  or any  document  which is to be  incorporated  by
reference into a Registration Statement or a Prospectus after the initial filing
of a  Registration  Statement,  provide  copies of such document to the Purchase
Agents and their counsel (and,  in the case of a Shelf  Registration  Statement,
the  Holders  and their  counsel)  and make such of the  representatives  of the
Company and the  Guarantors  as shall be  reasonably  requested  by the Purchase
Agents or their counsel (and, in the case of a Shelf Registration Statement, the
Holders or their counsel)  available for discussion of such document,  and shall
not at any time file or make any amendment to the  Registration  Statement,  any
Prospectus or any amendment of or  supplement to a  Registration  Statement or a
Prospectus  or any document  which is to be  incorporated  by  reference  into a
Registration  Statement or a Prospectus,  of which the Purchase Agents and their
counsel (and,  in the case of a Shelf  Registration  Statement,  the Holders and
their counsel) shall not have previously been advised and furnished a copy or to
which  the  Purchase  Agents  or  their  counsel  (and,  in the  case of a Shelf
Registration Statement, the Holders or their counsel) shall object;

      (k)  obtain a CUSIP  number for all  Exchange  Securities  or  Registrable
Securities,  as the case  may be,  not  later  than  the  effective  date of the
applicable Registration Statement;

      (l) cause the Indenture to be qualified  under the Trust  Indenture Act of
1939,  as amended  (the  "TIA"),  in  connection  with the  registration  of the
Exchange  Securities or Registrable  Securities,  as the case may be,  cooperate
with the Trustee and the Holders to effect


                                       10
<PAGE>

such  changes to the  Indenture  as may be required  for the  Indenture to be so
qualified in  accordance  with the terms of the TIA and  execute,  and use their
best efforts to cause the Trustee to execute,  all  documents as may be required
to effect such  changes and all other forms and  documents  required to be filed
with the SEC to enable the Indenture to be so qualified in a timely manner;

      (m) in the case of a Shelf Registration,  make available for inspection by
a representative of the Holders of the Registrable  Securities,  any Underwriter
participating in any disposition pursuant to such Shelf Registration  Statement,
and attorneys and accountants designated by the Holders, at reasonable times and
in a reasonable manner, all financial and other records, pertinent documents and
properties of the Company and the Guarantors, and cause the respective officers,
directors  and  employees  of the  Company  and the  Guarantors  to  supply  all
information  reasonably  requested  by  any  such  representative,  Underwriter,
attorney or accountant in connection with a Shelf Registration Statement;

      (n) in the case of a Shelf  Registration,  use their best efforts to cause
all  Registrable  Securities  to be listed  on any  securities  exchange  or any
automated quotation system on which similar securities issued by the Company and
the  Guarantors  are then listed if requested by the  Majority  Holders,  to the
extent such Registrable Securities satisfy applicable listing requirements;

      (o) use their best efforts to cause the Exchange Securities or Registrable
Securities,  as the  case  may  be,  to be  rated  by at  least  two  nationally
recognized  statistical  rating  organizations  (as such term is defined in Rule
436(g)(2) under the 1933 Act);

      (p) if  reasonably  requested  by any  Holder  of  Registrable  Securities
covered by a Registration  Statement,  (i) promptly  incorporate in a Prospectus
supplement  or  post-effective   amendment  to  a  Registration  Statement  such
information with respect to such Holder as such Holder reasonably requests to be
included  therein  and  (ii)  make  all  required  filings  of  such  Prospectus
supplement  or such  post-effective  amendment  as soon  as the  Company  or any
Guarantor has received  notification  of the matters to be  incorporated in such
filing; and

      (q) in the  case  of a  Shelf  Registration,  enter  into  such  customary
agreements  and take all such other actions in connection  therewith  (including
those requested by the Holders of a majority of the aggregate  principal  amount
of Notes being sold) in order to expedite or facilitate the  disposition of such
Registrable  Securities including,  but not limited to, an Underwritten Offering
and in such connection,  (i) to the extent possible,  make such  representations
and  warranties  to  the  Holders  and  any  Underwriters  of  such  Registrable
Securities  with respect to the business of the Company and the  Guarantors  and
their direct and indirect subsidiaries,  the Registration Statement,  Prospectus
and  documents  incorporated  by  reference  or  deemed  to be  incorporated  by
reference  therein,  if any, in each case,  in form,  substance and scope as are
customarily  made by issuers  to  underwriters  in  underwritten  offerings  and
confirm the same if and when  requested,  (ii) obtain opinions of counsel to the
Company and the  Guarantors  (which  counsel and  opinions,  in form,  scope and
substance, shall be reasonably satisfactory to the Holders and such Underwriters
and their respective  counsel)  addressed to each selling Holder and Underwriter
of Registrable Securities,  covering the matters customarily covered in opinions
requested in underwritten offerings, (iii) obtain "cold comfort" letters from


                                       11
<PAGE>

the independent  certified public  accountants of the Company and the Guarantors
(and, if necessary,  any other certified public  accountant of any subsidiary of
the Company or any Subsidiary of any Guarantor,  or of any business  acquired by
the Company and the Guarantors for which financial statements and financial data
are or are required to be included in the Registration  Statement)  addressed to
each selling Holder and Underwriter of Registrable  Securities,  such letters to
be in customary  form and covering  matters of the type  customarily  covered in
"cold  comfort"  letters in connection  with  underwritten  offerings,  and (iv)
deliver such documents and  certificates  as may be reasonably  requested by the
Holders of a majority of the aggregate  principal amount of the Notes being sold
or the  Underwriters,  and  which  are  customarily  delivered  in  underwritten
offerings,  to  evidence  the  continued  validity  of the  representations  and
warranties of the Company and the  Guarantors  made pursuant to clause (i) above
and to  evidence  compliance  with  any  customary  conditions  contained  in an
underwriting agreement.

      In the  case  of a  Shelf  Registration  Statement,  the  Company  and the
Guarantors may require each Holder of  Registrable  Securities to furnish to the
Company  and the  Guarantors  such  information  regarding  the  Holder  and the
proposed  distribution  by such  Holder of such  Registrable  Securities  as the
Company and the Guarantors may from time to time reasonably request in writing.

      In the case of a Shelf  Registration  Statement,  each Holder agrees that,
upon receipt of any notice from the Company or any Guarantor of the happening of
any event of the kind  described  in Section  3(e)(v)  hereof,  such Holder will
forthwith  discontinue  disposition  of  Registrable  Securities  pursuant  to a
Registration  Statement  until  such  Holder's  receipt  of  the  copies  of the
supplemented or amended Prospectus  contemplated by Section 3(j) hereof, and, if
so  directed by the Company or any  Guarantor,  such Holder will  deliver to the
Company and the Guarantors (at its expense) all copies in its possession,  other
than permanent file copies then in such Holder's  possession,  of the Prospectus
covering  such  Registrable  Securities  current  at the time of receipt of such
notice.  If the Company or any  Guarantor  shall give any such notice to suspend
the disposition of Registrable Securities pursuant to a Registration  Statement,
the  Company  and the  Guarantors  shall  extend  the  period  during  which the
Registration  Statement shall be maintained effective pursuant to this Agreement
by the  number of days  during  the period  from and  including  the date of the
giving of such  notice to and  including  the date when the  Holders  shall have
received copies of the  supplemented or amended  Prospectus  necessary to resume
such dispositions.  The Company and the Guarantors may give any such notice only
twice during any 365 day period and any such  suspensions may not exceed 30 days
for each  suspension  and there may not be more than two  suspensions  in effect
during any 365 day period.

      The  Holders of  Registrable  Securities  covered by a Shelf  Registration
Statement  who  desire  to do so may  sell  such  Registrable  Securities  in an
Underwritten  Offering. In any such Underwritten Offering, the investment banker
or investment bankers and manager or managers (collectively, the "Underwriters")
that will  administer  the offering will be selected by the Majority  Holders of
the Registrable Securities included in such offering.


                                       12
<PAGE>

      4. Participation of Broker-Dealers in Exchange Offer.

      (a) The  staff of the SEC has taken the  position  that any  broker-dealer
that receives  Exchange  Securities for its own account in the Exchange Offer in
exchange for Securities that were acquired by such  broker-dealer as a result of
market-making or other trading activities (a "Participating Broker-Dealer"), may
be deemed to be an  "underwriter"  within  the  meaning of the 1933 Act and must
deliver a prospectus meeting the requirements of the 1933 Act in connection with
any resale of such Exchange Securities.

      The Company and the Guarantors  understand that it is the staff's position
that if the Prospectus  contained in the Exchange Offer  Registration  Statement
includes a plan of  distribution  containing a statement to the above effect and
the  means  by  which  Participating  Broker-Dealers  may  resell  the  Exchange
Securities,  without naming the  Participating  Broker-Dealers or specifying the
amount of Exchange Securities owned by them, such Prospectus may be delivered by
Participating  Broker-Dealers  to satisfy their prospectus  delivery  obligation
under the 1933 Act in connection  with resales of Exchange  Securities for their
own accounts,  so long as the Prospectus otherwise meets the requirements of the
1933 Act.

      (b) In light of the above,  notwithstanding  the other  provisions of this
Agreement,  the Company and the  Guarantors  agree that the  provisions  of this
Agreement as they relate to a Shelf Registration shall also apply to an Exchange
Offer Registration to the extent, and with such reasonable modifications thereto
as may  be,  reasonably  requested  by the  Purchase  Agents  or by one or  more
Participating Broker-Dealers,  in each case as provided in clause (ii) below, in
order to expedite or facilitate the  disposition  of any Exchange  Securities by
Participating  Broker-Dealers consistent with the positions of the staff recited
in Section 4(a) above; provided that:

      (i) the  Company  and the  Guarantors  shall not be  required  to amend or
supplement  the  Prospectus   contained  in  the  Exchange  Offer   Registration
Statement,  as would  otherwise be  contemplated  by Section 3(j) hereof,  for a
period  exceeding  90 days after the last  Exchange  Date (as such period may be
extended  pursuant to the penultimate  paragraph of Section 3 of this Agreement)
and Participating  Broker-Dealers shall not be authorized by the Company and the
Guarantors to deliver and shall not deliver such Prospectus after such period in
connection with resales of Exchange  Securities  contemplated by this Section 4;
and

      (ii) the  application  of the Shelf  Registration  procedures set forth in
Section 3 of this Agreement to an Exchange Offer Registration, to the extent not
required by the  positions of the staff of the SEC or the 1933 Act and the rules
and regulations thereunder, will be in conformity with the reasonable request to
the Company and the  Guarantors  by the Purchase  Agents or with the  reasonable
request  in  writing  to  the  Company  and  the   Guarantors  by  one  or  more
broker-dealers  who  certify  to  the  Purchase  Agents,  the  Company  and  the
Guarantors  in  writing  that they  anticipate  that they will be  Participating
Broker-Dealers;  and provided  further that, in connection with such application
of the  Shelf  Registration  procedures  set  forth in  Section  3 hereof  to an
Exchange  Offer  Registration,  the Company  shall be obligated (x) to deal only
with one entity  representing the Participating  Broker-Dealers,  which shall be
Morgan  Stanley  & Co.  Incorporated  unless  it  elects  not  to  act  as  such
representative,   (y)  to  pay  the  fees  and  expenses  of  only  one  counsel
representing the Participating Broker-Dealers, which shall be


                                       13
<PAGE>

counsel to the Purchase Agents unless such counsel elects not to so act, and (z)
to cause to be delivered only one, if any, "cold comfort" letter with respect to
the  Prospectus  in the form existing on the last Exchange Date and with respect
to each subsequent  amendment or supplement,  if any, effected during the period
specified in clause (i) above.

      (c) The  Purchase  Agents  shall have no  liability  to the  Company,  the
Guarantors or any Holder with respect to any request that they may make pursuant
to Section 4(b) above.

      5. Indemnification and Contribution.

      (a) The Company and each of the Guarantors,  jointly and severally,  agree
to indemnify and hold harmless the Purchase Agents, each Holder and each Person,
if any,  who controls  any  Purchase  Agent or any Holder  within the meaning of
either  Section 15 of the 1933 Act or  Section  20 of the 1934 Act,  or is under
common control with, or is controlled by, any Purchase Agent or any Holder, from
and against all losses,  claims,  damages and  liabilities  (including,  without
limitation,  any legal or other  expenses  reasonably  incurred by the  Purchase
Agent,  any Holder or any such  controlling  or affiliated  Person in connection
with defending or  investigating  any such action or claim) caused by any untrue
statement  or alleged  untrue  statement  of a material  fact  contained  in any
Registration  Statement (or any amendment  thereto)  pursuant to which  Exchange
Securities  or  Registrable  Securities  were  registered  under  the 1933  Act,
including all  documents  incorporated  therein by  reference,  or caused by any
omission or alleged  omission to state  therein a material  fact  required to be
stated therein or necessary to make the statements  therein not  misleading,  or
caused by any untrue  statement or alleged  untrue  statement of a material fact
contained in any  Prospectus (as amended or  supplemented  if the Company or any
Guarantor shall have furnished any amendments or supplements thereto), or caused
by any omission or alleged  omission to state therein a material fact  necessary
to make the statements  therein in light of the  circumstances  under which they
were made not  misleading,  except  insofar as such losses,  claims,  damages or
liabilities  are caused by any such  untrue  statement  or  omission  or alleged
untrue  statement or omission  based upon  information  relating to the Purchase
Agents or any Holder  furnished  to the  Company and the  Guarantors  in writing
through Morgan Stanley & Co.  Incorporated  or any selling Holder  expressly for
use therein. In connection with any Underwritten Offering permitted by Section 3
hereof,  the  Company  and  each  of the  Guarantors  will  also  indemnify  the
Underwriters,  if any, selling brokers,  dealers and similar securities industry
professionals  participating in the  distribution,  their officers and directors
and each Person who controls  such  Persons  (within the meaning of the 1933 Act
and the 1934 Act) to the same  extent as  provided  above  with  respect  to the
indemnification of the Holders, if requested in connection with any Registration
Statement.

      (b) Each Holder agrees,  severally and not jointly,  to indemnify and hold
harmless the Company and each of the  Guarantors,  the  Purchase  Agents and the
other selling Holders, and each of their respective directors, officers who sign
the Registration  Statement and each Person, if any, who controls the Company or
any  Guarantor,  any  Purchase  Agent and any other  selling  Holder  within the
meaning  of either  Section  15 of the 1933 Act or Section 20 of the 1934 Act to
the same  extent as the  foregoing  indemnity  from the  Company and each of the
Guarantors to the Purchase  Agents and the Holders,  but only with  reference to
information relating to such Holder furnished to the Company or any Guarantor in
writing by such Holder expressly for use in any


                                       14
<PAGE>

Registration  Statement (or any  amendment  thereto) or any  Prospectus  (or any
amendment or supplement thereto).

      (c) In case any  proceeding  (including  any  governmental  investigation)
shall be instituted  involving  any Person in respect of which  indemnity may be
sought pursuant to either paragraph (a) or paragraph (b) above, such Person (the
"indemnified  party")  shall  promptly  notify  the  Person  against  whom  such
indemnity  may  be  sought  (the  "indemnifying   party")  in  writing  and  the
indemnifying  party, upon request of the indemnified party, shall retain counsel
reasonably  satisfactory to the  indemnified  party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel,  but the fees and expenses of such counsel  shall be at the expense
of such indemnified party unless (i) the indemnifying  party and the indemnified
party shall have  mutually  agreed to the  retention of such counsel or (ii) the
named parties to any such proceeding  (including any impleaded  parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel  would be  inappropriate  due to actual or potential
differing  interests between them. It is understood that the indemnifying  party
shall not, in connection with any proceeding or related  proceedings in the same
jurisdiction,  be liable for (a) the fees and expenses of more than one separate
firm (in addition to any local counsel) for the Purchase Agents and all Persons,
if any, who control any Purchase  Agent within the meaning of either  Section 15
of the 1933 Act or Section 20 of the 1934 Act, (b) the fees and expenses of more
than one separate  firm (in  addition to any local  counsel) for the Company and
the  Guarantors,  their  directors,  their  officers  who sign the  Registration
Statement  and each Person,  if any,  who controls the Company or any  Guarantor
within the meaning of either such  Section and (c) the fees and expenses of more
than one separate  firm (in  addition to any local  counsel) for all Holders and
all Persons,  if any, who control any Holders  within the meaning of either such
Section,  and that all such fees and expenses  shall be  reimbursed  as they are
incurred. In such case involving the Purchase Agents and Persons who control the
Purchase  Agents,  such firm shall be designated in writing by Morgan  Stanley &
Co.  Incorporated.  In such case  involving  the  Holders  and such  Persons who
control  Holders,  such firm shall be  designated  in  writing  by the  Majority
Holders.  In all other cases,  such firm shall be  designated by the Company and
the Guarantors. The indemnifying party shall not be liable for any settlement of
any proceeding  effected  without its written  consent but, if settled with such
consent or if there be a final  judgment  for the  plaintiff,  the  indemnifying
party agrees to  indemnify  the  indemnified  party from and against any loss or
liability  by  reason  of  such  settlement  or  judgment.  Notwithstanding  the
foregoing sentence,  if at any time an indemnified party shall have requested an
indemnifying  party to reimburse the indemnified  party for fees and expenses of
counsel as contemplated by the second and third sentences of this paragraph, the
indemnifying  party  agrees  that it shall be liable for any  settlement  of any
proceeding  effected  without  its  written  consent if (i) such  settlement  is
entered into more than 30 days after receipt by such  indemnifying  party of the
aforesaid  request,  and (ii) such indemnifying  party shall not have reimbursed
the  indemnified  party for such fees and expenses of counsel in accordance with
such request prior to the date of such settlement.  No indemnifying party shall,
without  the  prior  written  consent  of  the  indemnified  party,  effect  any
settlement  of any  pending or  threatened  proceeding  in respect of which such
indemnified  party is or could have been a party and  indemnity  could have been
sought hereunder by such indemnified party, unless such


                                       15
<PAGE>

settlement includes an unconditional  release of such indemnified party from all
liability on claims that are the subject matter of such proceeding.

      (d) If the indemnification  provided for in paragraph (a) or paragraph (b)
of this Section 5 is  unavailable  to an indemnified  party or  insufficient  in
respect of any losses,  claims,  damages or liabilities,  then each indemnifying
party under such  paragraph,  in lieu of  indemnifying  such  indemnified  party
thereunder,  shall  contribute to the amount paid or payable by such indemnified
party as a  result  of such  losses,  claims,  damages  or  liabilities  in such
proportion as is appropriate  to reflect the relative fault of the  indemnifying
party or parties on the one hand and of the indemnified  party or parties on the
other hand in connection  with the statements or omissions that resulted in such
losses, claims, damages or liabilities,  as well as any other relevant equitable
considerations.  The relative fault of the Company,  a Guarantor and the Holders
shall be determined  by reference to, among other things,  whether the untrue or
alleged untrue  statement of a material fact or the omission or alleged omission
to state a material  fact  relates to  information  supplied by the  Company,  a
Guarantor or by the Holders and the parties' relative intent, knowledge,  access
to information and opportunity to correct or prevent such statement or omission.
The Holders' respective  obligations to contribute pursuant to this Section 5(d)
are several in  proportion to the  respective  principal  amount of  Registrable
Securities  of such  Holder  that were  registered  pursuant  to a  Registration
Statement.

      (e) The  Company,  each of the  Guarantors  and each Holder  agree that it
would not be just or equitable if  contribution  pursuant to this Section 5 were
determined by pro rata allocation or by any other method of allocation that does
not take account of the  equitable  considerations  referred to in paragraph (d)
above.  The amount  paid or payable by an  indemnified  party as a result of the
losses, claims, damages and liabilities referred to in paragraph (d) above shall
be deemed to include,  subject to the limitations set forth above,  any legal or
other expenses  reasonably incurred by such indemnified party in connection with
investigating  or  defending  any such  action  or  claim.  Notwithstanding  the
provisions  of this  Section 5, no Holder  shall be  required  to  indemnify  or
contribute  any amount in excess of the amount by which the total price at which
Registrable  Securities  were  sold by such  Holder  exceeds  the  amount of any
damages that such Holder has  otherwise  been  required to pay by reason of such
untrue or alleged untrue  statement or omission or alleged  omission.  No Person
guilty of fraudulent  misrepresentation  (within the meaning of Section 11(f) of
the 1933 Act)  shall be  entitled  to  contribution  from any Person who was not
guilty of such fraudulent  misrepresentation.  The remedies provided for in this
Section 5 are not exclusive and shall not limit any rights or remedies which may
otherwise be available to any indemnified party at law or in equity.

      The  indemnity  and  contribution  provisions  contained in this Section 5
shall  remain  operative  and in full  force and  effect  regardless  of (i) any
termination of this Agreement,  (ii) any  investigation  made by or on behalf of
the Purchase Agents,  any Holder or any Person controlling any Purchase Agent or
any Holder,  or by or on behalf of the Company or any Guarantor,  their officers
or  directors  or any Person  controlling  either the Company or any  Guarantor,
(iii)  acceptance  of any of the  Exchange  Securities  and  (iv)  any  sale  of
Registrable Securities pursuant to a Shelf Registration Statement.


                                       16
<PAGE>

      6. Miscellaneous.

      (a) No  Inconsistent  Agreements.  The Company and each of the  Guarantors
have not entered into, and on or after the date of this Agreement will not enter
into, any agreement which is inconsistent with the rights granted to the Holders
of  Registrable  Securities in this  Agreement or otherwise  conflicts  with the
provisions hereof. The rights granted to the Holders hereunder do not in any way
conflict with and are not inconsistent with the rights granted to the holders of
the Company's or any Guarantor's  other issued and outstanding  securities under
any such agreements.

      (b) Amendments and Waivers.  The provisions of this  Agreement,  including
the provisions of this sentence,  may not be amended,  modified or supplemented,
and waivers or  consents to  departures  from the  provisions  hereof may not be
given unless the Company and the Guarantors have obtained the written consent of
Holders  of at  least  a  majority  of the  aggregate  principal  amount  of the
outstanding Notes affected by such amendment,  modification,  supplement, waiver
or consent;  provided,  however,  that no amendment,  modification,  supplement,
waiver or consent to any departure from the provisions of Section 5 hereof shall
be effective as against any Holder of Registrable Securities unless consented to
in writing by such Holder.

      (c)  Notices.  All  notices  and  other  communications  provided  for  or
permitted  hereunder  shall  be made in  writing  by  hand-delivery,  registered
first-class  mail,  telex,  telecopier,  or any courier  guaranteeing  overnight
delivery (i) if to a Holder, at the most current address given by such Holder to
the Company and the Guarantors by means of a notice given in accordance with the
provisions of this Section 6(c), which address initially is, with respect to the
Purchase Agents, the address set forth in the Purchase Agreement; and (ii) if to
the Company  and the  Guarantors,  initially  at the address for the Company and
each Guarantor set forth in the Purchase  Agreement and thereafter at such other
address,  notice of which is given in  accordance  with the  provisions  of this
Section 6(c).

      All such  notices  and  communications  shall be  deemed to have been duly
given:  at the time  delivered by hand, if personally  delivered;  five business
days after  being  deposited  in the mail,  postage  prepaid,  if  mailed;  when
answered back, if telexed; when receipt is acknowledged,  if telecopied;  and on
the  next  business  day if  timely  delivered  to an air  courier  guaranteeing
overnight delivery.

      Copies of all such  notices,  demands,  or other  communications  shall be
concurrently  delivered  by the Person  giving the same to the  Trustee,  at the
address specified in the Indenture.

      (d) Successors and Assigns.  This Agreement  shall inure to the benefit of
and be binding  upon the  successors,  assigns  and  transferees  of each of the
parties,  including,  without  limitation  and  without  the need for an express
assignment,  subsequent Holders; provided that nothing herein shall be deemed to
permit any assignment,  transfer or other disposition of Registrable  Securities
in violation of the terms of the Purchase  Agreement.  If any  transferee of any
Holder shall acquire Registrable Securities, in any manner, whether by operation
of law or otherwise, such Registrable Securities shall be held subject to all of
the terms of this Agreement,


                                       17
<PAGE>

and by taking and holding  such  Registrable  Securities  such  Person  shall be
conclusively  deemed  to have  agreed to be bound by and to  perform  all of the
terms and  provisions  of this  Agreement  and such Person  shall be entitled to
receive the benefits hereof.  The Purchase Agents (in their capacity as Purchase
Agents)  shall have no liability or  obligation  to the Company or any Guarantor
with  respect to any  failure by a Holder to comply  with,  or any breach by any
Holder of, any of the obligations of such Holder under this Agreement.

      (e)  Third  Party   Beneficiary.   Each   Holder  and  any   Participating
Broker-Dealer  shall  be  third  party  beneficiaries  to  the  agreements  made
hereunder among the Company,  the Guarantors,  and the Purchase Agents,  and the
Purchase Agents shall have the right to enforce such agreements  directly to the
extent it deems such enforcement necessary or advisable to protect its rights or
the rights of Holders hereunder.

      (f)  Counterparts.  This  Agreement  may  be  executed  in any  number  of
counterparts and by the parties hereto in separate  counterparts,  each of which
when so  executed  shall be  deemed  to be an  original  and all of which  taken
together shall constitute one and the same agreement.

      (g)  Headings.  The  headings in this  Agreement  are for  convenience  of
reference only and shall not limit or otherwise affect the meaning hereof.

      (h)  Governing  Law. THIS  AGREEMENT  SHALL BE GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK.

      (i)  Severability.  In the  event  that any one or more of the  provisions
contained  herein,  or the  application  thereof  in any  circumstance,  is held
invalid, illegal or unenforceable,  the validity, legality and enforceability of
any such  provision  in every  other  respect  and of the  remaining  provisions
contained herein shall not be affected or impaired thereby.


                                       18
<PAGE>

      IN WITNESS  WHEREOF,  the parties have executed  this  Agreement as of the
date first written above.

                                  PSEG Power LLC

                                  By: /s/ Morton A. Plawner
                                      -------------------------------------
                                      Name: Morton A. Plawner
                                      Title:   Vice President and Treasurer

                                  PSEG Nuclear LLC

                                  By: /s/ Morton A. Plawner
                                      -------------------------------------
                                      Name: Morton A. Plawner
                                      Title:  Treasurer

                                  PSEG Fossil LLC

                                  By: /s/ Morton A. Plawner
                                      -------------------------------------
                                      Name: Morton A. Plawner
                                      Title:   Treasurer

                                  PSEG Energy Resources and Trade LLC

                                  By: /s/ Morton A. Plawner
                                      -------------------------------------
                                      Name:  Morton A. Plawner
                                      Title:   Treasurer


<PAGE>

Confirmed and accepted as of
the date first above written:

MORGAN STANLEY & CO. INCORPORATED
SALOMON SMITH BARNEY, INC.
UBS WARBURG LLC
BANC OF AMERICA SECURITIES LLC
BANC ONE CAPITAL MARKETS, INC.
CHASE SECURITIES INC.
FIRST UNION SECURITIES, INC.
By:  MORGAN STANLEY & CO. INCORPORATED

By: /s/ Todd J. Singer
    ---------------------
    Name: Todd J. Singer
    Title: Vice President

                                       20