##### 



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$1,250,000,000
AMENDED AND RESTATED CREDIT AGREEMENT

among

PG&E NATIONAL ENERGY GROUP,
INC.,as Borrower

THE CHASE MANHATTAN BANK,as Issuing Bank

The Several Lenders
from Time to Time Parties Hereto,

BARCLAYS BANK PLC and
WESTDEUTSCHE LANDESBANK GIROZENTALE, NEW YORK BRANCH,
as Documentation Agents

DRESDNER BANK AG, NEW YORK AND GRAND CAYMAN BRANCHES, and
THE ROYAL BANK OF SCOTLAND PLC,
as Syndication Agents

and

THE CHASE MANHATTAN BANK,
as Administrative Agent



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J.P. MORGAN SECURITIES INC.,
as Lead Arranger and Bookrunner



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Dated as of August 22, 2001



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Table of Contents

|                                          |                                                                        |  |      |    | 
|----------------------------------------- | ---------------------------------------------------------------------- |  | ---- | -- | 
|                                          |                                                                        |  | Page |   
|                                          |                                                                        |  |      |   
|ARTICLE
I DEFINITIONS                     |                                                                        |  | 1    |   
|                                          | SECTION 1.1 Defined Terms                                              |  |      | 1  | 
|                                          | SECTION 1.2 Other Definitional Provisions                              |  |      | 21 | 
|ARTICLE II LETTERS OF CREDIT              |                                                                        |  | 22   |   
|                                          | SECTION 2.1 L/C Commitment                                             |  |      | 22 | 
|                                          | SECTION 2.2 Procedure for Issuance of Letter of Credit                 |  |      | 23 | 
|                                          | SECTION 2.3 Fees and Other Charges                                     |  |      | 23 | 
|                                          | SECTION 2.4 L/C Participations                                         |  |      | 24 | 
|                                          | SECTION 2.5 Reimbursement Obligation of the Borrower                   |  |      | 25 | 
|                                          | SECTION 2.6 Obligations Absolute                                       |  |      | 26 | 
|                                          | SECTION 2.7 Letter of Credit Payments                                  |  |      | 26 | 
|                                          | SECTION 2.8 Applications for Issuance                                  |  |      | 26 | 
|ARTICLE III LOANS                         |                                                                        |  | 26   |   
|                                          | SECTION 3.1 Loans                                                      |  |      | 26 | 
|                                          | SECTION 3.2 Procedure for Loan Borrowing                               |  |      | 27 | 
|                                          | SECTION 3.3 Evidence of Debt                                           |  |      | 28 | 
|                                          | SECTION 3.4 Facility Fees, etc                                         |  |      | 28 | 
|                                          | SECTION 3.5 Termination or Reduction of Commitments                    |  |      | 28 | 
|                                          | SECTION 3.6 Optional Prepayments; Mandatory Prepayments                |  |      | 29 | 
|                                          | SECTION 3.7 Conversion and Continuation Options                        |  |      | 29 | 
|                                          | SECTION 3.8 Limitations on Eurodollar Tranches                         |  |      | 30 | 
|                                          | SECTION 3.9 Interest Rates and Payment Dates                           |  |      | 30 | 
|                                          | SECTION 3.10 Computation of Interest and Fees                          |  |      | 31 | 
|                                          | SECTION 3.11 Inability to Determine Interest Rate                      |  |      | 31 | 
|                                          | SECTION 3.12 Pro Rata Treatment and Payments                           |  |      | 31 | 
|                                          | SECTION 3.13 Requirements of Law                                       |  |      | 33 | 
|                                          | SECTION 3.14 Taxes                                                     |  |      | 34 | 
|                                          | SECTION 3.15 Indemnity                                                 |  |      | 35 | 
|                                          | SECTION 3.16 Illegality                                                |  |      | 36 | 
|                                          | SECTION 3.17 Change of Lending Office                                  |  |      | 36 | 
|                                          | SECTION 3.18 Replacement of Lenders                                    |  |      | 37 | 
|                                          | SECTION 3.19 Extension of Termination Dates                            |  |      | 37 | 
|ARTICLE IV REPRESENTATIONS AND WARRANTIES |                                                                        |  | 39   |   
|                                          | SECTION 4.1 Organization; Powers; Ownership of Property                |  |      | 39 | 
|                                          | SECTION 4.2 Authorization                                              |  |      | 40 | 
|                                          | SECTION 4.3 Enforceability                                             |  |      | 40 | 
|                                          | SECTION 4.4 Financial Statements                                       |  |      | 40 | 
|                                          | SECTION 4.5 Litigation                                                 |  |      | 40 | 
|                                          | SECTION 4.6 Federal Reserve Regulations                                |  |      | 40 | 
|                                          | SECTION 4.7 Investment Company Act; Public Utility Holding Company Act |  |      | 41 | 
|                                          | SECTION 4.8 No Material Misstatements                                  |  |      | 41 | 
|                                          | SECTION 4.9 Taxes                                                      |  |      | 41 | 
|                                          | SECTION 4.10 Employee Benefit Plans                                    |  |      | 42 | 
|                                          | SECTION 4.11 Governmental Approval; Compliance with Law and Contracts  |  |      | 42 | 
|                                          | SECTION 4.12 Environmental Matters                                     |  |      | 42 | 
|                                          | SECTION 4.13 Ranking                                                   |  |      | 42 | 
|                                          | SECTION 4.14 Unrestricted Subsidiaries                                 |  |      | 43 | 
|                                          | SECTION 4.15 Use of Letters of Credit                                  |  |      | 43 | 

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Table of Contents

|                               |                                                                                                                             |  |      |    | 
|------------------------------ | --------------------------------------------------------------------------------------------------------------------------- |  | ---- | -- | 
|                               |                                                                                                                             |  | Page |   
|                               |                                                                                                                             |  |      |   
|                               | SECTION 4.16 CPUC                                                                                                           |  |      | 43 | 
|                               | SECTION 4.17 Separateness from PG&E                                                                                         |  |      | 43 | 
|ARTICLE
V CONDITIONS PRECEDENT |                                                                                                                             |  | 43   |   
|                               | SECTION 5.1 Conditions to Initial Extension of Credit                                                                       |  |      | 43 | 
|                               | SECTION 5.2 Conditions to Issuance of Each Letter of Credit under
Section 2.1 and each Loan under Section 3.1(a) and 3.1(b) |  |      | 45 | 
|ARTICLE
VI COVENANTS           |                                                                                                                             |  | 45   |   
|                               | SECTION 6.1 Maintenance of Ownership                                                                                        |  |      | 45 | 
|                               | SECTION 6.2 Existence                                                                                                       |  |      | 45 | 
|                               | SECTION 6.3 Compliance with Law; Business and Properties                                                                    |  |      | 46 | 
|                               | SECTION 6.4 Financial Statements, Reports, Etc                                                                              |  |      | 46 | 
|                               | SECTION 6.5 Insurance                                                                                                       |  |      | 47 | 
|                               | SECTION 6.6 Taxes, Etc                                                                                                      |  |      | 48 | 
|                               | SECTION 6.7 Maintaining Records; Access to Properties and Inspections                                                       |  |      | 48 | 
|                               | SECTION 6.8 Risk Management Procedures                                                                                      |  |      | 48 | 
|                               | SECTION 6.9 Merger                                                                                                          |  |      | 48 | 
|                               | SECTION 6.10 Investments                                                                                                    |  |      | 48 | 
|                               | SECTION 6.11 Liens                                                                                                          |  |      | 49 | 
|                               | SECTION 6.12 Indebtedness                                                                                                   |  |      | 50 | 
|                               | SECTION 6.13 Transactions with Affiliates                                                                                   |  |      | 52 | 
|                               | SECTION 6.14 Distributions                                                                                                  |  |      | 52 | 
|                               | SECTION 6.15 Financial Covenants                                                                                            |  |      | 53 | 
|                               | SECTION 6.16 Separateness from PG&E Corp                                                                                    |  |      | 53 | 
|                               | SECTION 6.17 Asset Sales                                                                                                    |  |      | 53 | 
|ARTICLE
VII EVENTS OF DEFAULT  |                                                                                                                             |  | 53   |   
|                               | SECTION 7.1 Events of Default                                                                                               |  |      | 53 | 
|ARTICLE
VIII THE AGENTS        |                                                                                                                             |  | 57   |   
|                               | SECTION 8.1 Appointment                                                                                                     |  |      | 57 | 
|                               | SECTION 8.2 Delegation of Duties                                                                                            |  |      | 57 | 
|                               | SECTION 8.3 Exculpatory Provisions                                                                                          |  |      | 57 | 
|                               | SECTION 8.4 Reliance by Administrative Agent                                                                                |  |      | 57 | 
|                               | SECTION 8.5 Notice of Default                                                                                               |  |      | 58 | 
|                               | SECTION 8.6 Non-Reliance on Administrative Agent and Other Lenders                                                          |  |      | 58 | 
|                               | SECTION 8.7 Indemnification                                                                                                 |  |      | 59 | 
|                               | SECTION 8.8 Agent in Its Individual Capacity                                                                                |  |      | 59 | 
|                               | SECTION 8.9 Successor Administrative Agent                                                                                  |  |      | 59 | 
|                               | SECTION 8.10 Documentation and Syndication Agents                                                                           |  |      | 60 | 
|ARTICLE
IX MISCELLANEOUS       |                                                                                                                             |  | 60   |   
|                               | SECTION 9.1 Amendments and Waivers                                                                                          |  |      | 60 | 
|                               | SECTION 9.2 Notices                                                                                                         |  |      | 61 | 
|                               | SECTION 9.3 No Waiver; Cumulative Remedies                                                                                  |  |      | 62 | 
|                               | SECTION 9.4 Survival of Representations and Warranties                                                                      |  |      | 62 | 
|                               | SECTION 9.5 Payment of Expenses                                                                                             |  |      | 62 | 
|                               | SECTION 9.6 Successors and Assigns; Participations and Assignments                                                          |  |      | 63 | 
|                               | SECTION 9.7 Adjustments; Set-off                                                                                            |  |      | 66 | 
|                               | SECTION 9.8 Counterparts                                                                                                    |  |      | 67 | 
|                               | SECTION 9.9 Severability                                                                                                    |  |      | 67 | 
|                               | SECTION 9.10 Integration                                                                                                    |  |      | 67 | 

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Table of Contents

|                                                 |  |      |    | 
|------------------------------------------------ |  | ---- | -- | 
|                                                 |  | Page |   
|                                                 |  |      |   
|SECTION 9.11 GOVERNING LAW                       |  |      | 67 | 
|SECTION 9.12 Submission To Jurisdiction; Waivers |  |      | 67 | 
|SECTION 9.13 Acknowledgments                     |  |      | 68 | 
|SECTION 9.14 Confidentiality                     |  |      | 68 | 
|SECTION 9.15 Accounting Changes                  |  |      | 69 | 
|SECTION 9.16 Delivery of Lender Addenda          |  |      | 69 | 
|SECTION 9.17 WAIVERS OF JURY TRIAL               |  |      | 69 | 

|           |  |                                          
|---------- |  | -----------------------------------------
|SCHEDULES: |  |                                          
|1.1        |  | Commitments                              
|1.1A       |  | Applicable Margins                       
|1.1B       |  | Notices to Lenders                       
|2.1        |  | Existing Letters of Credit               
|2.3(B)     |  | Letter of Credit Customary Fees and Costs
|4.5        |  | Litigation                               
|4.12       |  | Environmental Matters                    
|4.14       |  | Unrestricted Subsidiaries                
|6.1        |  | Certain Restricted Subsidiaries          
|6.10       |  | Investments                              
|6.11       |  | Other Liens                              
|6.12(A)    |  | Other Credit Facilities                  
|6.12(F)    |  | Existing Indebtedness                    
|6.12(H)-1  |  | Terms of Subordination  Affiliates      
|6.12(H)-2  |  | Terms of Subordination  Non-Affiliates  
|6.12(J)    |  | Permitted Sale-leaseback Transactions    
|6.13       |  | Service Agreements                       

|          |  |                                                                                                         
|--------- |  | --------------------------------------------------------------------------------------------------------
|EXHIBITS: |  |                                                                                                         
|A
B
C-1   |  | Form of Closing Certificate
Form of Assignment and Acceptance
Form of Legal Opinion of Hunton & Williams
|C-2       |  | Form of Opinion of Hunton & Williams                                                                    
|C-3       |  | Form of Legal Opinion of Stephen A. Herman                                                              
|D         |  | Form of Exemption Certificate                                                                           
|E         |  | Form of Application for Issuance                                                                        

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AMENDED AND RESTATED CREDIT AGREEMENT, dated as of August 22, 2001, among
PG&E NATIONAL ENERGY GROUP, INC., a Delaware corporation (the Borrower), the
several banks and other financial institutions from time to time parties to
this Agreement (the Lenders), THE CHASE MANHATTAN BANK, as the letter of
credit issuing bank (in such capacity, the Issuing Bank), BARCLAYS BANK PLC
and WESTDEUTSCHE LANDESBANK GIROZENTALE, NEW YORK BRANCH, each as a
documentation agent (in such capacity, collectively the Documentation
Agents), DRESDNER BANK AG, NEW YORK AND GRAND CAYMAN BRANCHES and THE ROYAL
BANK OF SCOTLAND PLC, each as a syndication agent (in such capacity,
collectively the Syndication Agents), and THE CHASE MANHATTAN BANK, as
Administrative Agent (in such capacity, the Administrative Agent).

WITNESSETH:

WHEREAS, some of the Lenders herein made available to the Borrower a
364-day revolving loan and letter of credit facility with a total committed
amount of $550 million (the $550M Credit Facility);

WHEREAS, the commitments to be made available under this Agreement will
replace the $550M Credit Facility and will consist of a two-tranche revolving
loan and letter of credit facility with a total committed amount of $1.25
billion as of the Closing Date; and

WHEREAS, the Issuing Bank and the Lenders are willing to make such credit
facility available to the Borrower upon and subject to the terms and conditions
set forth herein.

NOW, THEREFORE, in consideration of the premises and the agreements
hereinafter set forth, the parties hereto hereby agree as follows:

ARTICLE I
DEFINITIONS

SECTION 1.1 Defined Terms.

As used in this Agreement, the terms listed in this Section 1.1 shall have
the respective meanings set forth in this Section 1.1.

$1.1 Billion PG&E Gen Credit Agreement means the $1,100,000,000 Credit
Agreement, dated as of September 1, 1998, among PG&E Gen and the lenders party
thereto, as the same may be amended, modified or supplemented from time to
time.

$550M Credit Facility has the meaning given such term in the first
recital.

Actual Knowledge means, with respect to any Person as to any event or
circumstance, the actual knowledge of the Responsible Officer of such Person or
receipt by such Person from the Administrative Agent of notice of such event or
circumstance.

Administrative Agent has the meaning given such term in the preamble
hereto.

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Affiliate means, when used with respect to a specified Person, another
Person that directly or indirectly controls or is controlled by or is under
common control with the Person specified. For this purpose, control of a
Person shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such Person,
whether through ownership of voting shares, by contract or otherwise.

Agents means the Administrative Agent, the Documentation Agents and the
Syndication Agents.

Aggregate Exposure means with respect to any Lender at any time, an
amount equal to the amount of such Lenders Commitment at such time or, if the
Commitments have been terminated, the amount of such Lenders Extensions of
Credit then outstanding.

Aggregate Exposure Percentage means with respect to any Lender at any
time, the ratio (expressed as a percentage) of such Lenders Aggregate Exposure
at such time to the sum of the Aggregate Exposures of all Lenders at such time.

Agreement means this Credit Agreement, as amended, supplemented or
otherwise modified from time to time.

Applicable Margin means for Base Rate Loans and for Eurodollar Loans, as
set forth in the Pricing Grid.

Application for Issuance means an application, in the form of Exhibit E,
requesting the Issuing Bank to open a Letter of Credit.

Arrangers means J.P. Morgan Securities Inc., Salomon Smith Barney Inc.
and Société Générale, collectively.

Asset Company means any entity (a) (i) whose principal purpose is the
acquisition, improvement, installation, design, engineering, construction,
development, completion, financing, maintenance or operation of all or any part
of a project or projects, or any asset related thereto, used in the business of
generating, transmitting, transporting, distributing, producing or storing
electric power, thermal energy, natural gas or other fuel or other
energy-related businesses and (ii) substantially all its assets are limited to
those assets being financed (or to be financed), or the operation of which is
being financed (or to be financed), in whole or in part by a Project Financing
Facility entered into by such entity and/or any Investment Vehicle that owns
such entity or by contributions or intercompany loans from the Borrower, any
Restricted Subsidiary or any such Investment Vehicle or (b) which entity is a
Subsidiary of an entity described in clause (a) and the business and assets of
which are related to the business of such entity and which does not incur any
Indebtedness other than (A) intercompany loans from an Asset Company which is
the parent of such Subsidiary, the Borrower, any Restricted Subsidiary or any
Investment Vehicle that indirectly owns such Subsidiary, (B) Indebtedness of
the type described in Section 6.12(i) or (C) Indebtedness under a Project
Financing Facility.

Assignee has the meaning given such term in Section 9.6(c).

Assignor has the meaning given such term in Section 9.6(c).

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Available Commitment means with respect to any Lender at any time, an
amount equal to the excess, if any, of (a) such Lenders Commitment then in
effect over (b) such Lenders Extensions of Credit.

Base Rate means for any day, a rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the greater of (a) the Prime Rate
in effect on such day and (b) the Federal Funds Effective Rate in effect on
such day plus 1/2 of 1%. Any change in the Base Rate due to a change in the
Prime Rate or the Federal Funds Effective Rate shall be effective as of the
opening of business on the effective day of such change in the Prime Rate or
the Federal Funds Effective Rate, respectively.

Base Rate Loans means Loans for which the applicable rate of interest is
based upon the Base Rate.

Benefited Lender has the meaning given such term in Section 9.7.

Board means the Board of Governors of the Federal Reserve System (or any
successor).

Borrower has the meaning given such term in the preamble hereto.

Borrowing Date means any Business Day specified by the Borrower as a
date on which the Borrower requests the Lenders to make Loans hereunder.

Business Day means (a) for all purposes other than as covered by clause
(b) below, a day other than a Saturday, Sunday or other day on which commercial
banks in New York City are authorized or required by law to close and (b) with
respect to all notices and determinations in connection with, and payments of
principal and interest on, Eurodollar Loans, any day which is a Business Day
described in clause (a) and which is also a day for trading by and between
banks in Dollar deposits in the interbank eurodollar market.

Cash Collateral Account has the meaning given such term in Section 7.1.

Cash Equivalents means (a) any evidence of indebtedness with a maturity
of 180 days or less issued or directly and fully guaranteed or insured by the
United States, Canada or any U.S. agency or instrumentality; (b) certificates
of deposit or acceptances or Eurodollar time deposits with a maturity of 180
days or less of, and overnight bank deposits and demand accounts with (i) any
financial institution that is not a foreign bank or a foreign bank holding
company that has a bankwatch rating of at least B/C by Fitch and a commercial
paper rating of at least A-1 by S&P, F1 by Fitch or P-1 by Moodys or (ii) any
financial institution that is a foreign bank or a foreign bank holding company
that has a sovereign risk rating of at least AA by Fitch, a bankwatch rating of
at least B by Fitch, a commercial paper rating of at least A-1 by S&P, F1 by
Fitch or P-1 by Moodys and a minimum of US$20 billion in assets; (c)
commercial paper with a maturity of 180 days or less issued by a U.S. or
Canadian incorporated company that is not an Affiliate of the Borrower and
rated at least A-1 by S&P, F1 by Fitch or at least P-1 by Moodys; (d)
Repurchase Agreements with a maturity of 90 days or less made with banks which
meet the criteria in clause (b) above and primary government security dealers
(as defined by the Federal Reserve System) which meet the criteria in clause
(c) above, and are fully collateralized

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by investments meeting the criteria of clause (a) above; (e) tax-exempt
municipal obligations of any state of the United States, or any municipality of
any such state which mature within 180 days from the date of acquisition
thereof and which, in each case, are rated at least MIG-1 or VMIG-1 by Moodys,
and SP-1/A-1 or AA/A-1 by S&P; and (f) institutional money market funds that
exclusively invest in any of the foregoing.

Cash Flow Available for Fixed Charges for any period means, without
duplication, (i) EBITDA of the Borrower and its Consolidated Subsidiaries which
are not Unrestricted Subsidiaries for such period, minus(ii) EBITDA for such
period of such Consolidated Subsidiaries that are financed with Indebtedness of
such Subsidiary or which are direct or indirect Subsidiaries of a Financed
Subsidiary of the Borrower, plus(iii) Distributions received by the Borrower
from Subsidiaries described in the foregoing clause (ii) during such period
except to the extent the amount of such Distributions previously constituted
Cash Flow Available for Fixed Charges during such period as a result of
clause (viii) below, minus(iv) Distributions described in the foregoing clause
(iii) that are attributable to extraordinary gains or other non-recurring items
described in clause (iii) of the definition of EBITDA, minus(v) any income
reported by the Borrower for such period for Persons that are not Consolidated
Subsidiaries of the Borrower, plus(vi) Distributions received by the Borrower
from Persons described in the foregoing clause (v) during such period, minus
(vii) Distributions described in the foregoing clause (vi) that are
attributable to extraordinary gains or other non-recurring items described in
clause (iii) of the definition of EBITDA, plus,(viii) cash and Cash
Equivalents of Subsidiaries described in clause (ii) above that are legally and
contractually available to such Subsidiary for the payment of dividends to the
Borrower, but only to the extent that the source of such cash and Cash
Equivalents is from such Subsidiarys EBITDA for such period or from repayments
during such period to such Subsidiary of loans made by such Subsidiary.

Closing Date means the date on which the conditions precedent set forth
in Section 5.1 shall have been satisfied, which date is August 23, 2001.

Code means the Internal Revenue Code of 1986, as amended from time to
time.

Commitments means, as to any Lender, the Tranche A Commitment and the
Tranche B Commitment of such Lender.

Conduit Lender means any special purpose corporation organized and
administered by any Lender for the purpose of making Loans otherwise required
to be made by such Lender and designated by such Lender in a written
instrument; provided, that the designation by any Lender of a Conduit Lender
shall not relieve the designating Lender of any of its obligations to fund a
Loan under this Agreement if, for any reason, its Conduit Lender fails to fund
any such Loan, and the designating Lender (and not the Conduit Lender) shall
have the sole right and responsibility to deliver all consents and waivers
required or requested under this Agreement with respect to its Conduit Lender,
and provided, further, that no Conduit Lender shall (a) be entitled to receive
any greater amount pursuant to Section 3.13, 3.14, 3.15 or 9.5 than the
designating Lender would have been entitled to receive in respect of the
extensions of credit made by such Conduit Lender or (b) be deemed to have any
Commitment.

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Consolidated Net Worth means, as of any date of determination thereof,
the amount which would be reflected as stockholders equity upon a consolidated
balance sheet of the Borrower (but excluding any portion thereof attributable
to Unrestricted Subsidiaries) determined in accordance with GAAP, excluding
other comprehensive income arising from the accounting treatment of hedging and
mark-to-market transactions.

Consolidated Subsidiary means with respect to any Person at any date any
Subsidiary or other entity the accounts of which would be consolidated in
accordance with GAAP with those of such Person in its consolidated financial
statements as of such date.

Consolidated Tangible Net Assets means at any date the total net assets
of the Borrower and its Consolidated Subsidiaries (other than Unrestricted
Subsidiaries) determined in accordance with GAAP, excluding, however, from the
determination of total net assets (i) goodwill, organizational expenses,
research and product development expenses, trade marks, trade names,
copyrights, patents, patent applications, licenses and rights in any thereof,
and other similar intangibles, (ii) all deferred charges or unamortized debt
discount and expenses, (iii) all reserves carried and not deducted from assets,
(iv) securities which are not readily marketable, (v) cash held in sinking or
other analogous funds established for the purpose of redemption, retirement or
prepayment of capital stock or other equity interests or Indebtedness, and
(vi) any items not included in clauses (i) through (v) above which are treated
as intangibles in conformity with GAAP.

Credit Agreement means the Amended and Restated Credit Agreement, dated
as of August 22, 2001, among the Borrower, the Lenders, the Issuing Bank, the
Documentation Agents, the Syndication Agents and the Administrative Agent.

Credit Support Arrangements means any Guaranty, letter of credit or
other instrument or arrangement issued as support for the payment or
performance obligations of a party under any Trading Arrangement.

Default means any of the events specified in Section 7.1, which with the
giving of notice, the lapse of time, or both, will become an Event of Default.

Distribution means, in respect of any Person, (i) any payment of any
dividends or other distributions with respect to the capital stock or other
equity interests of such Person (except distributions in such capital stock or
other equity interests) and (ii) any purchase, redemption or other acquisition
or retirement for value of any capital stock or other equity interests of such
Person or any Affiliate of such Person unless made contemporaneously from the
net proceeds of the sale of capital stock or other equity interests.

Documentation Agents has the meaning given such term in the preamble
hereto.

Dollars and $ means lawful currency of the United States of America.

Downgrade Event means (i) the Borrowers senior unsecured long term debt
(x) ceases to be rated at least BBB- by S&P and (y) ceases to be rated at least
Baa3 by Moodys (or if ratings of such debt have not been issued by such rating
agencies, such debt ceases to be

5



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impliedly rated by an issuer rating or indicative rating at least BBB- by
S&P and Baa3 by Moodys).

EBITDA means, with respect to any Person for any period, the (i) income
(or loss) before interest and taxes of such Person, plus(ii) to the extent
deducted in determining such income (or loss), depreciation, amortization and
other similar non-cash charges and reserves, minus(iii) to the extent
recognized in determining such income (or loss), extraordinary gains (or
losses), restructuring charges or other non-recurring items, plus(iv) to the
extent deducted in determining such income (or loss), Lease Payment Obligations
described in clause (iii) of the definition of Lease Payment Obligations.

Equity Funding Arrangement means (i) an agreement to provide a capital
contribution to or other equity investment in any Asset Company or Investment
Vehicle in connection with any Project Financing Facility, (ii) a Guaranty,
letter of credit or other similar arrangement with respect to any obligations
of any Asset Company or Investment Vehicle under a Project Financing Facility,
(iii) a Guaranty of any Investment Vehicles obligation to make a capital
contribution to or other equity investment in any Asset Company or Investment
Vehicle in connection with a Project Financing Facility or (iv) a Guaranty,
letter of credit or other similar arrangement to support any of the obligations
or arrangements described in clauses (i) through (iii) hereof.

ERISA means the Employee Retirement Income Security Act of 1974, as
amended from time to time.

ERISA Affiliate means any trade or business (whether or not
incorporated) that is a member of a group of (i) organizations described in
Sections 414(b) or 414(c) of the Code and (ii) solely for purposes of the Lien
created under Section 412(n) of the Code, organizations described in Sections
414(m) or 414(o) of the Code of which the Borrower is a member.

ERISA Event means (i) the Borrower or any ERISA Affiliate shall fail to
pay when due an amount or amounts aggregating in excess of $15,000,000 which it
shall have become liable to pay under Title IV of ERISA; or (ii) notice of
intent to terminate a Material Plan shall be filed under Title IV of ERISA by
the Borrower or any ERISA Affiliate, any plan administrator or any combination
of the foregoing; or (iii) the PBGC shall institute proceedings under Title IV
of ERISA to terminate, to impose liability (other than for premiums under
Section 4007 of ERISA) in respect of, or to cause a trustee to be appointed to
administer any Material Plan; or (iv) a condition shall exist by reason of
which the PBGC would be entitled to obtain a decree adjudicating that any
Material Plan must be terminated; or (v) there shall occur a complete or
partial withdrawal from, or a default, within the meaning of Section 4219(c)(5)
of ERISA, with respect to, one or more Multiemployer Plans which could cause
the Borrower or any ERISA Affiliate to incur a current payment obligation in
excess of $15,000,000; or (vi) receipt by the Borrower or any ERISA Affiliate
of notice from one or more Multiemployer Plans of intent to terminate or that
it is insolvent or in reorganization (within the meaning of Section 4241 or
4245 of ERISA, as applicable) which termination, insolvency or reorganization,
individually or together with other such events, could cause the Borrower
and/or any ERISA Affiliate, individually or in the aggregate, to incur a
current payment obligation in excess of $15,000,000; or (vii) the Borrower or
any ERISA Affiliate shall engage in one or more non-

6



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##### 



exempt prohibited transactions (as defined in Section 406 of ERISA or
Section 4975 of the Code) which could result in a current payment obligation of
the Borrower and/or any ERISA Affiliate individually or in the aggregate, in an
amount or amounts aggregating in excess of $15,000,000; or (viii) the
occurrence of any event or series of events of which the nature described in
clauses (i) through (vii) with respect to any Plan or Multiemployer Plan which,
individually or in the aggregate, could result in a liability to the Borrower
and/or any ERISA Affiliate, individually or in the aggregate, in an amount or
amounts aggregating in excess of $50,000,000.

ET Credit Agreements means (i) the $50,000,000 Credit Agreement, dated
as of November 13, 1998, between PG&E Energy Trading Gas Corporation, PG&E
Energy Trading, Canada Corporation, ET Holdings, PG&E Energy Trading Power,
L.P. and Bank of Montreal and (ii) the $35,000,000 Credit Agreement, dated as
of November 13, 1998, between PG&E Energy Trading # Gas Corporation, PG&E
Energy Trading, Canada Corporation, PG&E Energy # Trading Power Holdings
Corporation, PG&E Energy Trading Power, L.P. and The Chase Manhattan Bank, as
each may be amended, modified or supplemented from time to time.

ET Holdings means PG&E Energy Trading Holdings Corporation, a California
corporation.

Eurocurrency Reserve Requirements means for any day, the aggregate
(without duplication) of the maximum rates (expressed as a decimal fraction) of
reserve requirements in effect on such day (including, without limitation,
basic, supplemental, marginal and emergency reserves) under any regulations of
the Board or other Governmental Authority having jurisdiction with respect
thereto dealing with reserve requirements prescribed for eurocurrency funding
(currently referred to as Eurocurrency Liabilities in Regulation D of the
Board) maintained by a member bank of the Federal Reserve System.

Eurodollar Base Rate means with respect to each day during each Interest
Period, the rate per annum determined on the basis of the rate for deposits in
Dollars for a period equal to such Interest Period commencing on the first day
of such Interest Period appearing on Page 3750 of the Telerate screen as of
11:00 A.M., London time, two Business Days prior to the beginning of such
Interest Period. In the event that such rate does not appear on Page 3750 of
the Telerate screen (or otherwise on such screen), the Eurodollar Base Rate
for purposes of this definition shall be determined by reference to such other
comparable publicly available service for displaying eurodollar rates as may be
selected by the Administrative Agent.

Eurodollar Loans means Loans for which the applicable rate of interest
is based upon the Eurodollar Rate.

Eurodollar Rate means with respect to each day during each Interest
Period, a rate per annum determined for such day in accordance with the
following formula (rounded upward to the nearest 1/100th of 1%):

Eurodollar Base Rate
1.00  Eurocurrency Reserve Requirements

7



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##### 



Eurodollar Tranche means the collective reference to Eurodollar Loans
the then current Interest Periods with respect to all of which begin on the
same date and end on the same later date (whether or not such Loans shall
originally have been made on the same day).

Event of Default means any of the events specified in Section 7.1,
providedthat any requirement for the giving of notice, the lapse of time, or
both, has been satisfied.

Extensions of Credit means, as to any Lender at any time, the sum of
Tranche A Extensions of Credit and Tranche B Extensions of Credit of such
Lender.

Existing Letters of Credit means the letters of credit described in
Schedule 2.1.

Facility Fee Rate means as set forth in the Pricing Grid.

Federal Funds Effective Rate means for any day, the weighted average of
the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day which is a Business Day, the average of
the quotations for the day of such transactions received by the Reference
Lender from three federal funds brokers of recognized standing selected by it.

Federal Reserve System means the Federal Reserve System of the United
States of America.

Financed Subsidiary means any direct or indirect Subsidiary of the
Borrower that is financed with Indebtedness of such Subsidiary.

Financial Officer of any Person means the chief financial officer,
principal accounting officer, treasurer, associate or assistant treasurer, or
any responsible officer analogous to the foregoing or designated by the one of
the foregoing Persons, of such Person.

Fitch means Fitch, Inc.

Fixed Charges means, with respect to the Borrower for any period, the
sum, without duplication, of (i) the aggregate amount of interest expense and
commitment and other periodic fees with respect to Funded Indebtedness of the
Borrower Scheduled to be Paid for such period, including (A) the net costs
under Swaps, (B) all capitalized interest, (C) the interest portion of any
deferred payment obligation and (D) the Lease Payment Obligations of the
Borrower Scheduled to be Paid by the Borrower during such period, and (ii) the
aggregate amount of all mandatory scheduled payments (whether designated as
payments or prepayments) and scheduled sinking fund payments with respect to
principal of any Funded Indebtedness of the Borrower, including payments in the
nature of principal under Lease Obligations, providedthat with respect to any
Funded Indebtedness of the Borrower consisting of Equity Funding Arrangements,
Fixed Charges shall not include any of the foregoing enumerated items to the
extent paid by a Subsidiary of the Borrower (so long as the funds used to make
such payments were not provided by the Borrower).

8



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Funded Indebtedness of a Person means all Indebtedness of such Person
(after intercompany eliminations) other than any Guaranty obligations that are
not reasonably quantifiable under standard accounting practices as of the date
of determination.

Funding Office means the office of the Administrative Agent specified in
Section 9.2 or such other office as may be specified from time to time by the
Administrative Agent as its funding office by written notice to the Borrower
and the Lenders.

GAAP means generally accepted accounting principles in the United States
of America as in effect from time to time.

Government Authority means any Federal, state, county, municipal or
other local governmental authority or judicial or regulatory agency, board,
body, commission or instrumentality.

Governmental Approvals means all authorizations, consents, approvals,
licenses and exemptions of, registrations and filings with, and notices and
reports to all Governmental Authorities.

GTN means PG&E Gas Transmission, Northwest Corporation, a California
corporation.

GTN Credit Agreements means (i) the $750,000,000 Indenture, dated as of
May 22, 1995, between GTN and The First National Bank of Chicago, as trustee
and (ii) the $100,000,000 Amended and Restated Credit Agreement, dated May 24,
1999, between GTN, the lenders party thereto and Citicorp USA, Inc., as
administrative agent for such lenders, including any commercial paper supported
by credit facilities made available under such credit agreements, as the same
may be amended, modified or supplemented from time to time.

Guaranty means (a) a guaranty by a Person (other than by endorsement of
negotiable instruments for collection in the ordinary course of business),
directly or indirectly, in any manner, of any part or all of the obligations of
another Person; and (b) an agreement by a Person, direct or indirect,
contingent or otherwise, and whether or not constituting a guaranty, the
practical effect of which is to assure the payment or performance (or payment
of damages in the event of nonperformance) of any part or all of the
obligations of another Person (other than in respect of operating leases not
otherwise included in the definition of Lease Obligations), whether by (i)
the purchase of securities or obligations, (ii) the purchase, sale or lease of
property or the purchase or sale of services primarily for the purpose of
enabling the obligor with respect to such obligation to make any payment or
performance (or payment of damages in the event of nonperformance) of or on
account of any part or all of such obligation, or to assure the obligee of such
obligation against loss, (iii) repayment of amounts drawn down by beneficiaries
of letters of credit, (iv) the maintenance of working capital, equity capital,
available cash or other financial statement condition so as to enable the
primary obligor to pay Indebtedness; (v) the provision of equity or other
capital under or in respect of equity or other capital subscription
arrangements, (vi) the supplying of funds to or investing in a Person on
account of all or any part of such Persons obligation or indemnifying or
holding harmless, in any way, such Person against any

9



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part or all of such obligation or (vii) the placing of any Lien on
property (including, without limitation, accounts and contract rights) of a
Person to secure another Persons Indebtedness.

Indebtedness of any Person means (i) all indebtedness 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 to pay the deferred purchase price of property or services, (iv) all
indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such property), (v)
all Lease Obligations of such Person, (vi) all obligations, contingent or
otherwise, of such Person under any issued and outstanding acceptance, letter
of credit or similar instruments, (vii) all obligations of such Person to
redeem or purchase any capital stock of such Person which is mandatorily
redeemable, (viii) all Swaps of such Person and (ix) any Guaranty of such
Person with respect to liabilities of the type described in clauses (i) through
(viii) hereof.

Indemnified Liabilities has the meaning given such term in Section 9.5.

Indemnitee has the meaning given such term in Section 9.5.

Interest Payment Date means (a) as to any Base Rate Loan, the last day
of each March, June, September and December to occur while such Loan is
outstanding and the final maturity date of such Loan, (b) as to any Eurodollar
Loan having an Interest Period of three months or shorter, the last day of such
Interest Period, (c) as to any Eurodollar Loan having an Interest Period longer
than three months, each day that is three months, or a whole multiple thereof,
after the first day of such Interest Period and the last day of such Interest
Period and (d) as to any Loan, the date of any repayment or prepayment made in
respect thereof.

Interest Period means as to any Eurodollar Loan, (a) initially, the
period commencing on borrowing date or the conversion date, as the case may be,
with respect to such Eurodollar Loan and ending one, two, three or six months
thereafter, as selected by the Borrower in its notice of borrowing or of
conversion, as the case may be, given with respect thereto; and (b) thereafter,
each period commencing on the last day of the next preceding Interest Period
applicable to such Eurodollar Loan and ending one, two, three or six months
thereafter, as selected by the Borrower by irrevocable notice to the
Administrative Agent not less than three Business Days prior to the last day of
the then current Interest Period with respect thereto; provided that, all of
the foregoing provisions relating to Interest Periods are subject to the
following:

(i)  if any Interest Period would otherwise end on a day that is not a
Business Day, such Interest Period shall be extended to the next succeeding
Business Day unless the result of such extension would be to carry such
Interest Period into another calendar month in which event such Interest Period
shall end on the immediately preceding Business Day;

(ii)  any Interest Period that would otherwise extend beyond the
Termination Date or beyond the date final payment is due on any Loan shall end
on the Termination Date or such due date, as applicable; and

10



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(iii)  any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period) shall end on the last
Business Day of the calendar month at the end of such Interest Period.

Investment means the acquisition of any interest in any Person or
property, a loan or advance to any Person or other arrangement for the purpose
of providing funds or credit to any Person, a capital contribution in or to any
Person, or any other investment in any Person or property, or any Guaranty of
any of the foregoing.

Investment Vehicle means each Subsidiary of the Borrower which is
organized solely to acquire, make or hold one or more Investments in an Asset
Company or Asset Companies, either directly or indirectly through one or more
other Investment Vehicles.

Issuing Bank has the meaning given such term in the preamble hereto.

L/C Fee Payment Date means the last day of each March, June, September
and December and the last day of the Tranche A Commitment Period or Tranche B
Commitment Period, whichever is applicable.

L/C Obligations means at any time, an amount equal to the sum of the
Tranche A L/C Obligations and the Tranche B L/C Obligations.

L/C Participants means the Tranche A L/C Participants and the Tranche B
L/C Participants.

Lease Obligations means, without duplication, (i) any Indebtedness
represented by obligations under a lease that is required to be capitalized for
financial reporting purposes and (ii) the present value, determined using a
discount rate equal to the incremental borrowing rate (as defined in Statement
of Financial Accounting Standards No. 13) of the Person incurring such
obligations, of rent obligations under leases of electric generating assets or
natural gas pipelines and related facilities.

Lease Payment Obligations means, with respect to any Person for any
period, (i) the interest component of all Lease Obligations of such Person that
are described in clause (i) of the definition of Lease Obligations and that
are Scheduled to be Paid during such period, plus(ii) the principal portion of
all Lease Obligations of such Person that are described in clause (i) of the
definition of Lease Obligations that are Scheduled to be Paid during such
period, plus(iii) all rent payment obligations relating to Lease Obligations
of such Person described in clause (ii) of the definition of Lease
Obligations and that are Scheduled to be Paid during such period.

Lender Affiliate (a) any Affiliate of any Lender, (b) any Person that is
administered or managed by any Lender and that is engaged in making,
purchasing, holding or otherwise investing in commercial loans and similar
extensions of credit in the ordinary course of its business and (c) with
respect to any Lender which is a fund that invests in commercial loans and
similar extensions of credit, any other fund that invests in commercial loans
and similar extensions of credit and is managed or advised by the same
investment advisor as such Lender or by an Affiliate of such Lender or
investment advisor.

11



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Lenders has the meaning given such term in the preamble hereto;
provided, that unless the context otherwise requires, each reference herein to
the Lenders shall be deemed to include any Conduit Lender.

Letter Agreement means the Letter Agreement, dated as of August 22,
2001, from NEG LLC addressed to the Administrative Agent, for the benefit of
the Lenders.

Letters of Credit means the Tranche A Letters of Credit and the Tranche
B Letters of Credit.

Lien means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset
or any interest or title of a vendor or lessor under any conditional sale
agreement, capital lease or other title retention agreement relating to such
asset.

Loan Documents means this Agreement, the Applications for Issuance and
the Notes.

Loans means, as to any Lender, the Tranche A Loans and Tranche B Loans
made by such Lender.

Margin Stock has the meaning given such term under Regulation U.

Material Adverse Effect means a material adverse effect on (a) the
business, assets, property, condition (financial or otherwise) or prospects of
Borrower and its Subsidiaries taken as a whole or (b) the validity or
enforceability of this Agreement or any of the other Loan Documents or the
rights or remedies of the Administrative Agent or the Lenders hereunder or
thereunder.

Material Plan means any Plan or Plans having aggregate Unfunded
Liabilities in excess of $50,000,000.

Minimum Consolidated Net Worth means $1.8 billion.

Minimum Non-Trading Consolidated Net Worth means $1.4 billion.

Moodys means Moodys Investors Service, Inc.

Multiemployer Plan means a multiemployer plan as defined in Section
4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate is making, or
accruing an obligation to make, contributions, or has within any of the
preceding six years made, or accrued an obligation to make, contributions.

NEG Guarantees means (i) the Guarantee and Agreement (La Paloma), dated
as of April 6, 2001, made by the Borrower in favor of Citibank, N.A., for the
benefit of the creditors identified therein, (ii) the Guarantee and Agreement
(Lake Road), dated as of April 6, 2001, made by the Borrower in favor of
Citibank, N.A., for the benefit of the creditors identified therein, (iii) the
Guarantee and Agreement (Harquahala), dated as of April 30, 2001, made by the
Borrower in favor of State Street Bank and Trust Company, for the benefit of
the creditors

12



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identified therein and (iv) the Guarantee and Agreement (Turbine Credit
Agreement), dated as of May 29, 2001, made by the Borrower in favor of Société
Générale, for the benefit of the lenders identified therein, as each may be
amended, modified or supplemented from time to time.

NEG Indenture means the Indenture, dated as of May 22, 2001, between the
Borrower and Wilmington Trust Company, as trustee.

NEG LLC means PG&E National Energy Group, LLC, a Delaware limited
liability company.

Non-Excluded Taxes has the meaning given such term in Section 3.14(a).

Non-Trading Consolidated Net Worth means, as of any date of
determination thereof, the amount which would be reflected as stockholders
equity upon a consolidated balance sheet of the Borrower (but excluding any
portion thereof attributable to (i) Unrestricted Subsidiaries or (ii) ET
Holdings or any Subsidiary thereof) excluding other comprehensive income
arising from the accounting treatment of hedging and mark-to-market
transactions.

Non-U.S. Lender has the meaning given such term in Section 3.14(d).

Note means any promissory note evidencing any Loan.

Obligations means the unpaid principal of and interest on (including,
without limitation, interest accruing after the maturity of the Loans and
interest accruing after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to
the Borrower, whether or not a claim for post-filing or post-petition interest
is allowed in such proceeding) the Loans and all other obligations and
liabilities of the Borrower to the Administrative Agent or to any Lender,
whether direct or indirect, absolute or contingent, due or to become due, or
now existing or hereafter incurred, which may arise under, out of, or in
connection with, this Agreement, any other Loan Document, the Letters of Credit
or any other document made, delivered or given in connection herewith or
therewith, whether on account of principal, interest, reimbursement
obligations, fees, indemnities, costs, expenses (including, without limitation,
all fees, charges and disbursements of counsel to the Administrative Agent or
to any Lender that are required to be paid by the Borrower pursuant hereto) or
otherwise.

Other Taxes means any and all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made hereunder or from the execution, delivery or enforcement
of, or otherwise with respect to, this Agreement or any other Loan Document.

Participant means as defined in Section 9.6(b).

Payment Amount has the meaning given such term in Section 2.4.

Payment Office means the office specified from time to time by the
Administrative Agent as its payment office by notice to the Borrower and the
Lenders.

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PBGC means the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA (or any successor).

Permitted
Encumbrances means, as to any Person at any date, any of the
following:



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) Liens for taxes, assessments or governmental charges not then
delinquent, and Liens for taxes, assessments or governmental charges then
delinquent but the validity of which is being contested at the time by
such Person in good faith and for which adequate reserves have been
established in accordance with GAAP, and (ii) Liens incurred or created
in connection with or to secure the performance of bids, tenders,
contracts (other than for the payment of money), leases, statutory
obligations, surety bonds or appeal bonds, and carriers, warehousemens,
mechanics or materialmens Liens, assessments or similar encumbrances
incurred in the ordinary course of business;



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (ii) easements, restrictions, exceptions or reservations in any
property and/or rights of way of such Person for the purpose of roads,
pipe lines, substations, transmission lines, transportation lines,
distribution lines, removal of oil, gas, lignite, coal or other minerals
or timber, and other like purposes, or for the joint or common use of
real property, rights of way, facilities and/or equipment, and defects,
irregularities and deficiencies in titles of any property and/or rights
of way, which do not individually or in the aggregate materially impair
the use or value of such property and/or rights of way for the purposes
for which such property and/or rights of way are held by such Person;



| |                                                                                                                                    
| | -----------------------------------------------------------------------------------------------------------------------------------
| | (iii) rights reserved to or vested in any municipality or public
authority to use, control or regulate any property of such Person;



| |                                                                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (iv) any obligations or duties, affecting the property of such
Person, to any municipality or public authority with respect to any
franchise, grant, license or permit;



| |                                                                                                                                                                                                                                                       
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (v) any judgment Lien against such Person securing a judgment for an
amount not exceeding $50,000,000, so long as the finality of such
judgment is being contested by appropriate proceedings conducted in good
faith and execution thereon is stayed;



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (vi) any Lien arising by reason of deposits with or giving of any
form of security to any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality,
domestic or foreign, for any purpose at any time as required by law or
governmental regulation as a condition to the transaction of any business
or the exercise of any privilege or license, or to enable such Person to
maintain self-insurance or to participate in any fund for liability on
any insurance risks or in connection with workers compensation,
unemployment insurance, old age pensions or other social security or to
share in the privileges or benefits required for companies participating
in such arrangements; or



| |                                                                                                                                                                                              
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (vii) any landlords Lien on fixtures or movable property located on
premises leased by such Person in the ordinary course of business so long
as the rent secured thereby is not in default.

14



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Permitted Sale-Leaseback Transactions means (i) Sale-Leaseback
transactions by any Restricted Subsidiary or Asset Company, entered into on or
prior to the date of this Credit Agreement and identified on Schedule 6.12(j)
and (ii) one or more Sale/Leaseback transactions entered into by any Asset
Company in connection with or as part of a Project Financing Facility entered
into after the date of execution of this Agreement.

Permitted Subordinated Indebtedness means all unsecured Indebtedness of
the Borrower that shall have been subordinated to all Indebtedness of the
Borrower under this Agreement and otherwise containing terms and conditions set
forth in Schedule 6.12(h)-1 with respect to Indebtedness of the Borrower to
Affiliates of the Borrower or in Schedule 6.12(h)-2 with respect to
Indebtedness of the Borrower to non-Affiliates of the Borrower.

Person means an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other entity of whatever
nature.

PG&E means Pacific Gas & Electric Company, a California corporation.

PG&E Corp. means PG&E Corporation, a California corporation.

PG&E Gen means PG&E Generating Company, LLC, a Delaware limited
liability company, formerly known as U.S. Generating Company, LLC.

PG&E Gen Credit Agreement means the $10,000,000 Credit Agreement, dated
as of December 14, 1999, between PG&E Gen and ABN AMRO Bank N.V., as each may
be amended, modified or supplemented from time to time.

Plan means any employee pension benefit plan described under Section
3(2) of ERISA (other than a Multiemployer Plan) subject to the provisions of
Title IV of ERISA that is maintained by the Borrower or any ERISA Affiliate or
with respect to which the Borrower or any ERISA Affiliate could have liability
under Section 4069 of ERISA.

Pricing Grid means as set forth in Schedule 1.1A.

Prime Rate means the rate of interest per annum publicly announced from
time to time by the Reference Lender as its prime or base rate in effect at its
principal office in New York City.

Project Financing Facility means any loan, note purchase agreement,
indenture, lease, credit agreement, reimbursement agreement, letter of credit
or other facility pursuant to which an Asset Company or Investment Vehicle
which directly or indirectly owns an Asset Company incurs Indebtedness,
providedthat any such Indebtedness is recourse only to (a) the assets of such
Asset Company or any Asset Company which is a Subsidiary of such Asset Company,
(b) the equity or ownership interests of such Asset Company or any Investment
Vehicle which owns such Asset Company or (c) any Equity Funding Arrangements
provided with respect to such Asset Company or Investment Vehicle or a Lien on
any such Equity Funding Arrangements.

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Projections means the projections dated July 10, 2001 provided to the
Administrative Agent by the Borrower.

PUHCA means the Public Utility Holding Company Act of 1935, as amended.

Ratio of Cash Flow to Fixed Charges means, as of the end of each fiscal
quarter of the Borrower, the ratio of (a) Cash Flow Available for Fixed Charges
of the Borrower for the period of four consecutive fiscal quarters ending on,
or most recently ended prior to, such date to (b) Fixed Charges of the Borrower
for such period, excluding from the calculation of Fixed Charges all Trading
Arrangements and Credit Support Arrangements.

Ratio of Debt to Capitalization means, as of any date, the ratio of the
aggregate principal amount of Funded Indebtedness of the Borrower to the Total
Capitalization of the Borrower (excluding from the calculation of Funded
Indebtedness all Trading Arrangements, Credit Support Arrangements and Swaps);
providedthat any Equity Funding Arrangements shall only be included in Funded
Indebtedness in an amount equal to the lesser of (x) the maximum amount that
would be payable under such Equity Funding Arrangements (assuming a drawing is
permissible as of the date of determination) and (y) the amount outstanding
under any underlying Indebtedness to which any payment under such Equity
Funding Arrangements would be applied (assuming such Indebtedness were due and
payable as of the date of determination).

Reference Lender means The Chase Manhattan Bank.

Refinanceable Facilities has the meaning ascribed thereto in Section
6.12(a).

Register has the meaning given such term in Section 9.6(d).

Regulation U means Regulation U of the Board as in effect from time to
time.

Reimbursement Date has the meaning given such term in Section 2.4.

Reimbursement Obligation means the obligation of the Borrower to
reimburse the Issuing Bank pursuant to Section 2.5 for amounts drawn under
Letters of Credit issued by the Issuing Bank.

Repurchase Agreement means any written agreement:



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) that provides for (i) the transfer of one or more United
States or Canadian Governmental Securities or any security issued
by a U.S. agency or instrumentality in an aggregate principal
amount at least equal to the amount of the Transfer Price (defined
below) to the Borrower or any Restricted Subsidiary from a
financial institution that is (1) a member of the Federal Reserve
System having a minimum of US$20 billion in assets, and (2) has
commercial paper rated at least A-1 by S&P, at least F1 by Fitch or
at least P-1 by Moodys, against a transfer of funds (the Transfer
Price) by the Borrower or such Restricted Subsidiary to such
financial institution and (ii) a simultaneous agreement by the
Borrower or such Restricted Subsidiary, in connection with such
transfer of funds, to transfer to such financial institution the
same or substantially similar United

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| |                                                                                                                                                                                                                                                            
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | States or Canadian Governmental Securities or any security
issued by a U.S. agency or instrumentality for a price not less
than the Transfer Price plus a reasonable return thereon at a date
certain not later than 180 days after such transfer of funds,



| |                                                                                                                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (ii) in respect of which the Borrower or such Restricted
Subsidiary shall have the right, whether by contract or pursuant to
applicable law, to liquidate such agreement upon the occurrence of
any default thereunder, and



| |                                                                                                                                                                                                                                                                                                              
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (iii) in connection with which the Borrower or such Restricted
Subsidiary, or an agent thereof, shall have taken all action
required by applicable law or regulations to perfect a Lien in such
United States or Canadian Governmental Securities or any security
issued by a U.S. agency or instrumentality.

Required Lenders means at any time, (i) with respect to Tranche A Loans
or Tranche A Letters of Credit, Tranche A Lenders whose Tranche A Aggregate
Exposure Percentages are, in the aggregate, greater than 50%, (ii) with respect
to Tranche B Loans or Tranche B Letters of Credit, Tranche B Lenders whose
Tranche B Aggregate Exposure Percentages are, in the aggregate, greater than
50% and (iii) in all other cases, Lenders whose Aggregate Exposure Percentages
are, in the aggregate, greater than 50%.

Requirement of Law means as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person
or any of its property is subject.

Responsible Officer of the Borrower, shall mean any president or senior
vice president of the Borrower.

Restricted Subsidiary means any Subsidiary of the Borrower that is not
(x) an Asset Company, (y) an Investment Vehicle or (z) an Unrestricted
Subsidiary.

S&P means Standard & Poors Ratings Service, a division of McGraw Hill
Companies, Inc.

Sale/Leaseback means any lease whereby any Person becomes or remains
liable as lessee or as Borrower or other surety of any property, whether now
owned or hereafter acquired, that such Person has sold or transferred or is to
sell or transfer to any other Person (other than any Subsidiary of such
Person), as part of a financing transaction to which such Person is a party, in
contemplation of leasing such property to such Person.

Scheduled to be Paid means, with respect to any liability or expense for
any period, the amount of such liability or expense scheduled to be paid during
such period or the amount of such liability or expense that would have been
scheduled to be paid during such period had the payment schedule with respect
to such liability or expense been divided equally into successive periods
having a duration equal to the duration of such period.

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SEC means the Securities and Exchange Commission (or successors thereto
or an analogous Governmental Authority).

Subsidiary means, with respect to any Person (the Parent), any
corporation or other entity of which sufficient securities or other ownership
interests having ordinary voting power to elect a majority of the board of
directors or other Persons performing similar functions are at the time
directly or indirectly owned by such Parent.

Swaps means, with respect to any Person, payment obligations with
respect to interest rate swaps, currency swaps and similar obligations
obligating such Person to make payments, whether periodically or upon the
happening of a contingency. The amount of the obligation under any Swap shall
be the amount determined in respect thereof as of the end of the then most
recently ended fiscal quarter of such Person, based on the assumption that such
Swap had terminated at the end of such fiscal quarter, and in making such
determination, if any agreement relating to such Swap provides for the netting
of amounts payable by and to such Person thereunder or if any such agreement
provides for the simultaneous payment of amounts by and to such Person, then in
each such case, the amount of such obligation shall be the net amount so
determined.

Syndication Agents has the meaning given such term in the preamble
hereto.

Termination Date means either the Tranche A Termination Date or the
Tranche B Termination Date, whichever is applicable.

Total Capitalization means, with respect to the Borrower, the sum,
without duplication, of (i) total common stock equity or analogous ownership
interests of the Borrower, (ii) preferred stock and preferred securities of the
Borrower, (iii) additional paid in capital or analogous interests of the
Borrower, (iv) retained earnings of the Borrower, excluding other comprehensive
income arising from accounting treatment of hedging and mark-to-market
transactions and (v) the aggregate principal amount of Funded Indebtedness of
the Borrower.

Total Commitments means at any time, the aggregate amount of Tranche A
Commitments and Tranche B Commitments of all Lenders then in effect. The
original amount of Total Commitments is One Billion and Two Hundred Fifty
Million Dollars ($1,250,000,000).

Total Extensions of Credit means at any time, the aggregate amount of
Extensions of Credit of all Lenders outstanding at such time.

Trading Arrangement means any transaction entered into by PG&E Energy
Trading  Power, L.P., a Delaware limited partnership, PG&E Energy Trading Gas
Corporation, a California corporation, or PG&E Energy Trading, Canada
Corporation, an Alberta corporation, any other Restricted Subsidiary, Asset
Company or Investment Vehicle, whether pursuant to master trading agreements or
otherwise, for (1) the purchase and sale of energy, capacity, ancillary
services and other energy or energy-related products, including transmission
rights, environmental allowances and offsets and storage; (2) the purchase and
sale of natural gas, coal, oil and other fuel, including transportation and
storage rights; (3) the purchase and sale of fuel conversion services,
including tolling arrangements; (4) the purchase and sale of any energy or
energy-related derivatives, including weather derivatives; (5) hedging
arrangements with respect

18



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to any of the foregoing and interest rate, foreign currency or credit
exposure; or (6) any similar arrangements entered into in the ordinary course
of business as conducted by such Persons or by other Persons in the energy
trading, energy services, power generating, electric transmission or gas
transmission and storage businesses (including technologies related to such
businesses).

Tranche A Aggregate Exposure means with respect to any Lender at any
time, an amount equal to the amount of such Lenders Tranche A Commitment at
such time or, if the Tranche A Commitments have been terminated, the amount of
such Lenders Tranche A Loans then outstanding.

Tranche A Aggregate Exposure Percentage means with respect to any Lender
at any time, the ratio (expressed as a percentage) of such Lenders Tranche A
Aggregate Exposure at such time to the sum of the Tranche A Aggregate Exposures
of all Lenders at such time.

Tranche A Commitment means as to any Lender, the obligation of such
Lender to make Tranche A Loans and participate in Tranche A Letters of Credit
pursuant to the terms hereof, in an aggregate principal and/or stated amount
not to exceed the amount set forth under the heading Tranche A Commitment
opposite such Lenders name (i) on Schedule 1.1 or (ii) in the Assignment and
Acceptance pursuant to which such Lender became a party hereto, as applicable,
as the same may be changed from time to time pursuant to the terms hereof.

Tranche A Commitment Period means the period from and including the
Closing Date to the Tranche A Termination Date.

Tranche A Extensions of Credit means as to any Tranche A Lender at any
time, an amount equal to the sum of (a) the aggregate principal amount of all
Tranche A Loans made by such Lender then outstanding and (b) such Tranche A
Lenders Aggregate Exposure Percentage of the Tranche A L/C Obligations then
outstanding.

Tranche A L/C Obligations means at any time, an amount equal to the sum
of (a) the aggregate of the stated amounts of the then outstanding Tranche A
Letters of Credit and (b) the aggregate amount of drawings under Tranche A
Letters of Credit that have not been reimbursed pursuant to Section 2.4(a)(i).

Tranche A L/C Participants means all the Tranche A Lenders other than
the Issuing Bank.

Tranche A Lender means each Lender that has a Tranche A Commitment or
that holds a Tranche A Loan.

Tranche A Letters of Credit has the meaning given to such term in
Section 2.1(a).

Tranche A Loans has the meaning given to such term in Section 3.1(a)(i).

Tranche A Termination Date means the date which is two years from the
Closing Date, subject to extension in accordance with Section 3.19.

19



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Tranche B Aggregate Exposure means with respect to any Lender at any
time, an amount equal to the amount of such Lenders Tranche B Commitment at
such time or, if the Tranche B Commitments have been terminated, the amount of
such Lenders Tranche B Loans then outstanding.

Tranche B Aggregate Exposure Percentage means with respect to any Lender
at any time, the ratio (expressed as a percentage) of such Lenders Tranche B
Aggregate Exposure at such time to the sum of the Tranche B Aggregate Exposures
of all Lenders at such time.

Tranche B Commitment means as to any Lender, the obligation of such
Lender to make Tranche B Loans and participate in Tranche B Letters of Credit
pursuant to the terms hereof, in an aggregate principal and/or stated amount
not to exceed the amount set forth under the heading Tranche B Commitment
opposite such Lenders name (i) on Schedule 1.1 or (ii) in the Assignment and
Acceptance pursuant to which such Lender became a party hereto, as applicable,
as the same may be changed from time to time pursuant to the terms hereof.

Tranche B Commitment Period means the period from and including the
Closing Date to the Tranche B Termination Date.

Tranche B Extensions of Credit means as to any Tranche B Lender at any
time, an amount equal to the sum of (a) the aggregate principal amount of all
Tranche B Loans made by such Lender then outstanding and (b) such Tranche B
Lenders Aggregate Exposure Percentage of the Tranche B L/C Obligations then
outstanding.

Tranche B L/C Limit means $150 million.

Tranche B L/C Obligations means at any time, an amount equal to the sum
of (a) the aggregate of the stated amounts of the then outstanding Tranche B
Letters of Credit and (b) the aggregate amount of drawings under Tranche B
Letters of Credit that have not been reimbursed pursuant to Section 2.4(a)(ii).

Tranche B L/C Participants means all the Tranche B Lenders other than
the Issuing Bank.

Tranche B Lender means each Lender that has a Tranche B Commitment or
that holds a Tranche B Loan.

Tranche B Letters of Credit has the meaning given to such term in
Section 2.1(b).

Tranche B Loans has the meaning given to such term in Section 3.1(b)(i).

Tranche B Termination Date means the date which is 364 days from the
Closing Date, subject to extension in accordance with Section 3.19.

Transferee has the meaning given such term in Section 9.15.

Type means as to any Loan, its nature as a Base Rate Loan or a
Eurodollar Loan.

20



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 Unfunded Liabilities means, with respect to any Plan at any time, the
amount (if any) by which (i) the value of all benefit liabilities under such
Plan, determined on a plan termination basis using the assumptions prescribed
by the PBGC for purposes of Section 4044 of ERISA, exceeds (ii) the fair market
value of all Plan assets allocable to such liabilities under Title IV of ERISA
(excluding any accrued but unpaid contributions), all determined as of the then
most recent valuation date for such Plan, but only to the extent that such
excess represents a potential liability of the Borrower or any ERISA Affiliate
to the PBGC or any other Person under Title IV of ERISA.

 United
States or  U.S. or US means the United States of America.

 Unrestricted Subsidiary means any Subsidiary of the Borrower designated
as such on the Closing Date, or, after the Closing Date, designated as such at
the time of formation thereof or, if acquired by the Borrower, at the time of
acquisition thereof, but, in any such case, only if at such time (i) no Event
of Default, Incipient Event of Default or Downgrade Event has occurred and is
continuing or would occur as a result thereof and (ii) such Subsidiary or any
of its Subsidiaries does not own any capital stock or Indebtedness of or have
any Investment in, or own or hold any Lien on any property of, any other
Subsidiary of the Borrower which is not a Subsidiary of the Subsidiary to be so
designated or otherwise an Unrestricted Subsidiary.

 USGenNE means USGen New England, Inc., a Delaware corporation and an
indirect, wholly-owned Subsidiary of the Borrower.

 USGenNE Credit Agreement means the $575,000,000 Credit Agreement, dated
as of September 1, 1998, among USGenNE, the lenders party thereto, The Chase
Manhattan Bank, as competitive advance facility agent and as administrative
agent for the lenders thereunder, and The Chase Manhattan Bank, as the issuer
of letters of credit thereunder, as the same may be amended, modified or
supplemented from time to time.

Other Definitional Provisions.

The following rules of usage shall apply unless otherwise required by the
context or unless otherwise specified herein:

(b)  Definitions set forth herein shall be equally applicable to the
singular and plural forms of the terms defined.

(c)  References in this Agreement to articles, sections, paragraphs,
clauses, annexes, appendices, schedules or exhibits are references to articles,
sections, paragraphs, clauses, annexes, appendices, schedules or exhibits in
such document.

(d)  The headings, subheadings and table of contents used herein are solely
for convenience of reference and shall not constitute a part hereof nor shall
they affect the meaning, construction or effect of any provision hereof.

(e)  References to any Person shall include such Person, its successors and
permitted assigns and transferees.

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(f)  Reference to any agreement means such agreement as amended,
supplemented or otherwise modified from time to time in accordance with the
applicable provisions thereof.

(g)  References to any law includes any amendment or modification to such
law and any rules or regulations issued thereunder or any law enacted in
substitution or replacement thereof.

(h)  The words hereof, herein, hereto and hereunder and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement.

(i)  References to including means including without limiting the
generality of any description preceding such term and for purposes hereof the
rule of ejusdem generisshall not be applicable to limit a general statement,
followed by or referable to an enumeration of specific matters, to matters
similar to those specifically mentioned.

(j)  Each of the parties to this Agreement and their counsel have reviewed
and revised, or requested revisions to this Agreement, and the usual rule of
construction that any ambiguities are to be resolved against the drafting party
shall be inapplicable in the construing and interpretation of this Agreement
and any amendments hereto and the other Loan Documents.

(k)  Except as otherwise expressly provided herein, all terms of an
accounting or financial nature shall be construed in accordance with GAAP, as
in effect from time to time; providedthat for purposes of determining
compliance with any covenant set forth herein, such terms shall be construed in
accordance with GAAP as in effect on the date hereof applied on a basis
consistent with the application used in preparing the Borrowers audited
financial statements.

ARTICLE II

LETTERS OF CREDIT

SECTION 2.1 L/C Commitment.

(a)  Prior to the Closing Date, the Issuing Bank has issued the Existing
Letters of Credit which, from and after the Closing Date, shall constitute
Tranche A Letters of Credit hereunder. Subject to the terms and conditions
hereof, the Issuing Bank, in reliance on the agreements of the Tranche A L/C
Participants set forth in Section 2.4(a)(i), agrees to issue, from time to
time, letters of credit (each letter of credit issued on and after the Closing
Date pursuant to this Section 2.1(a) and each Existing Letter of Credit, a
Tranche A Letter of Credit, and collectively, the Tranche A Letters of
Credit) for the account of the Borrower on any Business Day during the Tranche
A Commitment Period pursuant to the procedures set forth in Section 2.2;
provided, that the Issuing Bank shall not issue any Tranche A Letter of Credit
if, after giving effect to such issuance, the aggregate Tranche A Extensions of
Credit of all Tranche A Lenders would exceed the aggregate Tranche A
Commitments of all Tranche A Lenders. Each Tranche A Letter of Credit shall
(i) be denominated in Dollars, (ii) be in a minimum stated

22



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amount of $500,000 and (iii) expire no later than five Business Days prior
to the Tranche A Termination Date.

(b)  Subject to the terms and conditions hereof, the Issuing Bank, in
reliance on the agreements of the Tranche B L/C Participants set forth in
Section 2.4(a)(ii), agrees to issue, from time to time, letters of credit (each
a Tranche B Letter of Credit and collectively, the Tranche B Letters of
Credit) for the account of the Borrower on any Business Day during the Tranche
B Commitment Period pursuant to the procedures set forth in Section 2.2;
provided, that the Issuing Bank shall not issue any Tranche B Letter of Credit
if, after giving effect to such issuance, (i) the aggregate Tranche B
Extensions of Credit of all Tranche B Lenders would exceed the aggregate
Tranche B Commitments of all Tranche B Lenders or (ii) the aggregate of the
stated amounts of all outstanding Tranche B Letters of Credit would exceed the
Tranche B L/C Limit. Each Tranche B Letter of Credit shall (i) be denominated
in Dollars, (ii) be in a minimum stated amount of $500,000 and (iii) expire no
later than five Business Days prior to the Tranche B Termination Date.

(c)  The Issuing Bank shall not at any time be obligated to issue any
Letter of Credit hereunder if such issuance would conflict with, or cause the
Issuing Bank or any L/C Participant to exceed any limits imposed by, any
applicable Requirement of Law.

SECTION 2.2 Procedure for Issuance of Letter of Credit.

(a)  Subject to the terms and conditions hereof, each Letter of Credit
shall be issued (or the stated maturity thereof extended or terms thereof
modified or amended) on not less than two Business Days prior notice thereof
waivable by the Administrative Agent by delivery to the address set forth in
Section 9.2 of an Application for Issuance to the Administrative Agent (which
shall promptly distribute copies thereof to the Tranche A Lenders or Tranche B
Lenders, whichever is applicable) and the Issuing Bank. Each Application for
Issuance shall specify (i) the date (which shall be a Business Day) of issuance
of such Letter of Credit (or the date of effectiveness of such extension,
modification or amendment) and the stated expiry date thereof, (ii) the
proposed stated amount of such Letter of Credit, (iii) the name and address of
the beneficiary of such Letter of Credit and (iv) a statement of drawing
conditions applicable to such Letter of Credit, and if such Application for
Issuance relates to an amendment or modification of a Letter of Credit, it
shall be accompanied by the consent of the beneficiary of the Letter of Credit
thereto. Each Application for Issuance shall be irrevocable unless modified or
rescinded by the Borrower not less than one day prior to the proposed date of
issuance (or effectiveness) specified therein. Not later than 12:00 noon (New
York City time) on the proposed date of issuance (or effectiveness) specified
in such Application for Issuance, and upon fulfillment of the applicable
conditions precedent and the other requirements set forth herein, the Issuing
Bank shall issue (or extend, amend or modify) such Letter of Credit and provide
notice and a copy thereof to the Borrower and the Administrative Agent, which
shall promptly furnish copies thereof to the Tranche A Lenders or Tranche B
Lenders, whichever is applicable.

SECTION 2.3 Fees and Other Charges.

(a)  (i) The Borrower will pay to the Administrative Agent, for the account
of the Tranche A Lenders, a fee on the stated amount of each outstanding
Tranche A Letter of Credit at

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a per annum rate equal to the Applicable Margin in effect from time to
time with respect to Eurodollar Loans, shared ratably among the Tranche A
Lenders in accordance with their respective Tranche A Aggregate Exposure
Percentages and payable in arrears on each L/C Fee Payment Date after the
issuance date of such Tranche A Letter of Credit.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (ii) The Borrower will pay to the Administrative Agent, for the
account of the Tranche B Lenders, a fee on the stated amount of each
outstanding Tranche B Letter of Credit at a per annum rate equal to the
Applicable Margin in effect from time to time with respect to Eurodollar
Loans, shared ratably among the Tranche B Lenders in accordance with
their respective Tranche B Aggregate Exposure Percentages and payable in
arrears on each L/C Fee Payment Date after the issuance date of such
Tranche B Letter of Credit.

(b)  The Borrower shall pay to the Issuing Bank, for its own account, a
fronting fee at the rate of 0.10% per annum on the undrawn and unexpired amount
of each Letter of Credit issued by it, payable in arrears on each L/C Fee
Payment Date after the issuance date. In addition, the Borrower shall pay or
reimburse the Issuing Bank on demand for such normal and customary fees and
costs as are incurred or charged by the Issuing Bank in issuing, negotiating,
effecting payment under, amending, cancelling or otherwise administering any
Letter of Credit. A schedule of such normal and customary fees and costs is
attached as Schedule 2.3(b).

SECTION 2.4 L/C Participations.

(a)  (i) The Issuing Bank irrevocably agrees to grant and hereby grants to
each Tranche A L/C Participant, and, to induce the Issuing Bank to issue
Tranche A Letters of Credit, each Tranche A L/C Participant irrevocably agrees
to accept and purchase and hereby accepts and purchases from the Issuing Bank,
on the terms and conditions set forth below, for such Tranche A L/C
Participants own account and risk an undivided interest equal to such Tranche
A L/C Participants Tranche A Aggregate Exposure Percentage in the Issuing
Banks obligations and rights under and in respect of each Tranche A Letter of
Credit and the amount of each draft paid by the Issuing Bank thereunder. Each
Tranche A L/C Participant unconditionally and irrevocably agrees with the
Issuing Bank that, if a draft is paid under any Tranche A Letter of Credit for
which the Issuing Bank is not reimbursed in full by the Borrower in accordance
with the terms of this Agreement, such Tranche A L/C Participant shall pay to
the Issuing Bank upon demand at the Issuing Banks address for notices
specified herein an amount equal to such Tranche A L/C Participants Tranche A
Aggregate Exposure Percentage of the amount of such draft, or any part thereof,
that is not so reimbursed.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (ii) The Issuing Bank irrevocably agrees to grant and hereby grants
to each Tranche B L/C Participant, and, to induce the Issuing Bank to
issue Tranche B Letters of Credit, each Tranche B L/C Participant
irrevocably agrees to accept and purchase and hereby accepts and
purchases from the Issuing Bank, on the terms and conditions set forth
below, for such Tranche B L/C Participants own account and risk an
undivided interest equal to such Tranche B L/C Participants Tranche B
Aggregate Exposure Percentage in the Issuing Banks obligations and
rights under and in respect of each Tranche B Letter of Credit and the
amount of each draft paid by the Issuing Bank thereunder. Each Tranche B
L/C Participant unconditionally and irrevocably agrees with

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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | the Issuing Bank that, if a draft is paid under any Tranche B Letter
of Credit for which the Issuing Bank is not reimbursed in full by the
Borrower in accordance with the terms of this Agreement, such Tranche B
L/C Participant shall pay to the Issuing Bank upon demand at the Issuing
Banks address for notices specified herein an amount equal to such
Tranche B L/C Participants Tranche B Aggregate Exposure Percentage of
the amount of such draft, or any part thereof, that is not so reimbursed.

(b)  If any amount required to be paid by any L/C Participant to the
Issuing Bank pursuant to Section 2.4(a) in respect of any unreimbursed portion
of any payment made by the Issuing Bank under any Letter of Credit is paid to
the Issuing Bank within three Business Days after the date such payment is due,
such L/C Participant shall pay to the Issuing Bank on demand an amount equal to
the product of (i) such amount, (ii) the daily average Federal Funds Effective
Rate during the period from and including the date such payment is required to
the date on which such payment is immediately available to the Issuing Bank,
and (iii) a fraction the numerator of which is the number of days that elapse
during such period and the denominator of which is 360. If any such amount
required to be paid by any L/C Participant pursuant to Section 2.4(a) is not
made available to the Issuing Bank by such L/C Participant within three
Business Days after the date such payment is due, the Issuing Bank shall be
entitled to recover from such L/C Participant, on demand, such amount with
interest thereon calculated from such due date at the rate per annum applicable
to Base Rate Loans. A certificate of the Issuing Bank submitted to any L/C
Participant with respect to any amounts owing under this Section shall be
conclusive in the absence of manifest error.

(c)  Whenever, at any time after the Issuing Bank has made payment under
any Letter of Credit and has received from any L/C Participant its pro rata
share of such payment in accordance with Section 2.4(a), the Issuing Bank
receives any payment related to such Letter of Credit (whether directly from
the Borrower or otherwise), or any payment of interest on account thereof, the
Issuing Bank will distribute to such L/C Participant its pro ratashare
thereof; provided, however, that in the event that any such payment received by
the Issuing Bank shall be required to be returned by the Issuing Bank, such L/C
Participant shall return to the Issuing Bank the portion thereof previously
distributed by the Issuing Bank to it.

SECTION 2.5 Reimbursement Obligation of the Borrower. The Borrower agrees
to reimburse the Issuing Bank on the second Business Day next succeeding the
Business Day on which the Issuing Bank notifies the Borrower of the date and
amount of a draft presented under any Letter of Credit and paid by the Issuing
Bank in the amount of (a) such draft so paid and (b) any taxes, fees, charges
or other costs or expenses incurred by the Issuing Bank in connection with such
payment. Each such payment shall be made to the Administrative Agent for
disbursement to the Issuing Bank in Dollars and in immediately available funds.
Interest shall be payable on any such amounts from the date on which the
relevant draft is paid by the Issuing Bank until payment in full by the
Borrower at the rate set forth in (i) until the second Business Day next
succeeding the date of the relevant notice, Section 3.9(b) and (ii) thereafter,
Section 3.9(c).

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SECTION 2.6 Obligations Absolute. The Borrowers obligations under this
Section 2 shall be absolute and unconditional under any and all circumstances
and irrespective of any setoff, counterclaim or defense to payment that the
Borrower may have or have had against the Issuing Bank, any beneficiary of a
Letter of Credit or any other Person. The Borrower also agrees with the
Issuing Bank that the Issuing Bank shall not be responsible for, and the
Borrowers Reimbursement Obligations under Section 2.5 shall not be affected
by, among other things, the validity or genuineness of documents or of any
endorsements thereon, even though such documents shall in fact prove to be
invalid, fraudulent or forged, or any dispute between or among the Borrower and
any beneficiary of any Letter of Credit or any other party to which such Letter
of Credit may be transferred or any claims whatsoever of the Borrower against
any beneficiary of such Letter of Credit or any such transferee. The Issuing
Bank shall not be liable for any error, omission, interruption or delay in
transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit, except for errors or
omissions found by a final and non-appealable decision of a court of competent
jurisdiction to have resulted from the gross negligence or willful misconduct
of the Issuing Bank. The Borrower agrees that any action taken or omitted by
the Issuing Bank under or in connection with any Letter of Credit or the
related drafts or documents, if done in the absence of gross negligence or
willful misconduct and in accordance with the standards of care specified in
the Uniform Commercial Code of the State of New York, shall be binding on the
Borrower and shall not result in any liability of the Issuing Bank to the
Borrower.

SECTION 2.7 Letter of Credit Payments. If any draft shall be presented
for payment under any Letter of Credit, the Issuing Bank shall promptly notify
the Borrower of the date and amount thereof. The responsibility of the Issuing
Bank to the Borrower in connection with any draft presented for payment under
any Letter of Credit shall, in addition to any payment obligation expressly
provided for in such Letter of Credit, be limited to determining that the
documents (including each draft) delivered under such Letter of Credit in
connection with such presentment appear on their face to be in conformity with
such Letter of Credit.

SECTION 2.8 Applications for Issuance. To the extent that any provision
of any Application for Issuance is inconsistent with the provisions of this
Section 2, the provisions of this Section 2 shall apply.

ARTICLE III

LOANS

SECTION 3.1 Loans.

(a)  (i) Subject to the terms and conditions of this Agreement, each
Tranche A Lender severally agrees to make revolving credit loans (the Tranche
A Loans) to the Borrower from time to time during the Tranche A Commitment
Period in an aggregate principal amount at any one time outstanding which, when added to such Tranche A Lenders Tranche
A Aggregate Exposure Percentage of the Tranche A L/C Obligations then
outstanding does not exceed the amount of such Tranche A Lenders Tranche A
Commitment. During the Tranche A Commitment Period, the Borrower may use the
Tranche A Commitments by borrowing,

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prepaying the Tranche A Loans in whole or
in part, and reborrowing, all in accordance with the terms and conditions
hereof.



| |                                                                                              
| | ---------------------------------------------------------------------------------------------
| | (i) The Borrower shall pay all outstanding Tranche A Loans on the
Tranche A Termination Date.

(b)        (i) Subject to the terms and conditions of this Agreement, each
Tranche B Lender severally agrees to make revolving credit loans (the Tranche
B Loans) to the Borrower from time to time during the Tranche B Commitment
Period in an aggregate principal amount at any one time outstanding which, when
added to such Tranche B Lenders Tranche B Aggregate Exposure Percentage of the
Tranche B L/C Obligations then outstanding does not exceed the amount of such
Lenders Tranche B Commitment. During the Tranche B Commitment Period, the
Borrower may use the Tranche B Commitments by borrowing, prepaying the Tranche
B Loans in whole or in part, and reborrowing, all in accordance with the terms
and conditions hereof.



| |                                                                                               
| | ----------------------------------------------------------------------------------------------
| | (ii) The Borrower shall pay all outstanding Tranche B Loans on the
Tranche B Termination Date.

(c)  The Loans may from time to time be Eurodollar Loans or Base Rate
Loans, as determined by the Borrower and notified to the Administrative Agent
in accordance with this Section, Section 3.2 and Section 3.7.

SECTION 3.2 Procedure for Loan Borrowing. The Borrower may borrow under the
Commitments during the Tranche A Commitment Period or Tranche B Commitment
Period, whichever is applicable, on any Business Day, providedthat the
Borrower shall give the Administrative Agent irrevocable notice (which notice
must be received by the Administrative Agent prior to 12:00 Noon, New York City
time, (a) three Business Days prior to the requested Borrowing Date, in the
case of Eurodollar Loans, or (b) one Business Day prior to the requested
Borrowing Date, in the case of Base Rate Loans), specifying (i) the amount and
Type of Loans to be borrowed, (ii) the requested Borrowing Date and (iii) in
the case of Eurodollar Loans, the respective lengths of the initial Interest
Period therefore (each, a Notice of Borrowing). Any Loans made on the
Closing Date shall initially be Base Rate Loans. Each borrowing under the
Commitments shall be in an amount equal to (x) in the case of Base Rate Loans,
$1,000,000 or a whole multiple thereof (or, if the then aggregate Available
Commitments are less than $1,000,000, such lesser amount) and (y) in the case
of Eurodollar Loans, $1,000,000 or a whole multiple of $1,000,000 in excess
thereof. Upon receipt of any such notice from the Borrower, the Administrative
Agent shall promptly notify each Tranche A Lender and/or Tranche B Lender (as
applicable) thereof. Each Tranche A Lender and/or Tranche B Lender, as
applicable, will make the amount of its pro ratashare of each borrowing
available to the Administrative Agent for the account of the Borrower at the
Funding Office prior to 12:00 Noon, New York City time, on the Borrowing Date
requested by the Borrower in funds immediately available to the Administrative Agent. The proceeds of each such
Loan shall be disbursed by the Administrative Agent in accordance with
instructions provided by the Borrower in each Notice of Borrowing, which, if so
specified in the applicable Notice of Borrowing, may be used to repay (1) with
respect to Tranche A Loans, the Borrowers Reimbursement Obligations in respect
of a drawing
27

under a Tranche A Letter of Credit and (2) with respect to Tranche
B Loans, the Borrowers Reimbursement Obligations in respect of a drawing under
a Tranche B Letter of Credit.

SECTION 3.3 Evidence of Debt.

(a)  Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing indebtedness of the Borrower to such Lender
resulting from each Loan of such Lender from time to time, including the
amounts of principal and interest payable and paid to such Lender from time to
time under this Agreement.

(b)  The Administrative Agent, on behalf of the Borrower, shall maintain
the Register pursuant to Section 9.6(d), and a subaccount therein for each
Lender, in which shall be recorded (i) the amount of each Loan made hereunder
and any Note evidencing such Loan, the Type of such Loan and each Interest
Period applicable thereto, (ii) the amount of any principal or interest due and
payable or to become due and payable from the Borrower to each Lender hereunder
and (iii) both the amount of any sum received by the Administrative Agent
hereunder from the Borrower and each Lenders share thereof.

(c)  The entries made in the Register and the accounts of each Lender
maintained pursuant to Section 3.3(a) shall, to the extent permitted by
applicable law, be prima facieevidence of the existence and amounts of the
obligations of the Borrower therein recorded; provided, however, that the
failure of any Lender or the Administrative Agent to maintain the Register or
any such account, or any error therein, shall not in any manner affect the
obligation of the Borrower to repay (with applicable interest) the Loans made
to the Borrower by such Lender in accordance with the terms of this Agreement.

(d)  The Borrower agrees that, upon the request to the Administrative Agent
by any Lender, the Borrower will promptly execute and deliver to such Lender a
promissory note of the Borrower evidencing any Loans of such Lender, with
appropriate insertions as to date and principal amount.

SECTION 3.4 Facility Fees, etc.

(a)  The Borrower agrees to pay to the Administrative Agent for the account
of each Lender a facility fee for the period from and including the Closing
Date to the last day of the Tranche A Commitment Period or Tranche B Commitment
Period, whichever is applicable, computed at the Facility Fee Rate on such
Lenders Commitment during the period for which payment is made, payable
quarterly in arrears on the last day of each March, June, September and
December and on the Tranche A Termination Date or Tranche B Termination Date,
whichever is applicable, commencing on the first of such dates to occur after
the date hereof.

(b)  The Borrower agrees to pay to each Agent the fees in the amounts and
on the dates previously agreed to in writing by the Borrower and such Agent.

SECTION 3.5 Termination or Reduction of Commitments. (a) The Borrower
shall have the right, upon not less than three Business Days notice to the
Administrative Agent, to terminate the Tranche A Commitments or, from time to
time, to reduce the aggregate amount of the Tranche A Commitments; provided,
that no such termination or reduction of Tranche A

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Commitments shall be
permitted if, after giving effect thereto and to any prepayments of the Tranche
A Loans made on the effective date thereof, the aggregate Tranche A Extensions
of Credit of all Tranche A Lenders would exceed the aggregate Tranche A
Commitments of all Tranche A Lenders. Any such reduction shall be in an amount
equal to $10,000,000, or a whole multiple thereof, and shall reduce permanently
the Tranche A Commitments then in effect.

(b)  The Borrower shall have the right, upon not less than three Business
Days notice to the Administrative Agent, to terminate the Tranche B
Commitments or, from time to time, to reduce the aggregate amount of the
Tranche B Commitments; provided, that no such termination or reduction of
Tranche B Commitments shall be permitted if, after giving effect thereto and to
any prepayments of the Tranche B Loans made on the effective date thereof, the
aggregate Tranche B Extensions of Credit of all Tranche B Lenders would exceed
the aggregate Tranche B Commitments of all Tranche B Lenders. Any such
reduction shall be in an amount equal to $10,000,000, or a whole multiple
thereof, and shall reduce permanently the Tranche B Commitments then in effect.

SECTION 3.6 Optional Prepayments; Mandatory Prepayments. The Borrower may
at any time and from time to time prepay the Loans, in whole or in part,
without premium or penalty, upon irrevocable notice delivered to the
Administrative Agent at least three Business Days prior thereto in the case of
Eurodollar Loans and at least one Business Day prior thereto in the case of
Base Rate Loans, which notice shall specify the date and amount of such
prepayment, and whether such prepayment is of Eurodollar Loans or Base Rate
Loans; provided, that if a Eurodollar Loan is prepaid on any day other than the
last day of the Interest Period applicable thereto, the Borrower shall also pay
any amounts owing pursuant to Section 3.15. Upon receipt of any such notice
the Administrative Agent shall promptly notify each relevant Lender thereof.
If any such notice is given, the amount specified in such notice shall be due
and payable on the date specified therein, together with accrued interest to
such date on the amount prepaid. The principal amount of any prepayment
received by the Administrative Agent shall be delivered to the relevant Lenders
ratably in accordance with their Tranche A Aggregate Exposure Percentages or
Tranche B Aggregate Exposure Percentages, whichever is applicable. Partial
prepayments of Loans shall be in a minimum aggregate principal amount of the
lesser of (i) $5,000,000 or (ii) the outstanding principal amount of the Loans
being prepaid.

SECTION 3.7 Conversion and Continuation Options.

(a)  The Borrower may elect from time to time to convert Eurodollar Loans
to Base Rate Loans by giving the Administrative Agent at least two Business
Days prior irrevocable notice of such election, providedthat any such
conversion of Eurodollar Loans may be made only on the last day of an Interest
Period with respect thereto. The Borrower may elect from time to time to
convert Base Rate Loans to Eurodollar Loans by giving the Administrative Agent
at least three Business Days prior irrevocable notice of such election
(which notice shall specify the length of the initial Interest Period
therefor), providedthat no Base Rate Loan may be converted into a Eurodollar
Loan (i) when any Event of Default has occurred and is continuing and the
Administrative Agent has, or the Required Lenders have, determined in its or
their sole discretion not to permit such conversions or (ii) after the date
that is one month prior to the final scheduled termination or maturity date of
such Loan. Upon receipt of any such notice the Administrative Agent shall
promptly notify each relevant Lender thereof.

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(b)  The Borrower may elect to continue any Eurodollar Loan as such upon
the expiration of the then current Interest Period with respect thereto by
giving irrevocable notice to the Administrative Agent, in accordance with the
applicable provisions of the term Interest Period set forth in Section 1.1,
of the length of the next Interest Period to be applicable to such Loans,
providedthat no Eurodollar Loan may be continued as such (i) when any Event of
Default has occurred and is continuing and the Administrative Agent has, or the
Required Lenders have, determined in its or their sole discretion not to permit
such continuations or (ii) after the date that is one month prior to the final
scheduled termination or maturity date of such Loan, and provided, further,
that if the Borrower shall fail to give any required notice as described above
in this paragraph or if such continuation is not permitted pursuant to the
preceding proviso, such Loans shall be converted automatically to Base Rate
Loans on the last day of such then expiring Interest Period. Upon receipt of
any such notice the Administrative Agent shall promptly notify each relevant
Lender thereof.

SECTION 3.8 Limitations on Eurodollar Tranches. Notwithstanding anything
to the contrary in this Agreement, all borrowings, conversions, continuations
and optional prepayments of Eurodollar Loans and all selections of Interest
Periods shall be in such amounts and be made pursuant to such elections so
that, (a) after giving effect thereto, the aggregate principal amount of the
Eurodollar Loans comprising each Eurodollar Tranche shall be equal to
$5,000,000 or a whole multiple of $1,000,000 in excess thereof and (b) no more
than ten Eurodollar Tranches shall be outstanding at any one time.

SECTION 3.9 Interest Rates and Payment Dates.

(a)  Each Eurodollar Loan shall bear interest for each day during each
Interest Period with respect thereto at a rate per annum equal to the
Eurodollar Rate determined for such day plus the Applicable Margin for
Eurodollar Loans in effect for such day.

(b)  Each Base Rate Loan shall bear interest for each day on which it is
outstanding at a rate per annum equal to the Base Rate in effect for such day
plus the Applicable Margin for Base Rate Loans.

(c)  (i) If all or a portion of the principal amount of any Reimbursement
Obligation or Loan shall not be paid when due (whether at the stated maturity,
by acceleration or otherwise), all outstanding Loans (whether or not overdue)
(to the extent legally permitted) shall bear interest at a rate per annum that
is equal to in the case of the Loans, the rate that would otherwise be
applicable thereto pursuant to the provisions of Section 2 or Section 3, as
applicable, plus2%, and (ii) if all or a portion of any interest payable on
any Loan or any facility fee or other amount or fee payable hereunder shall not be paid when due (whether at the stated
maturity, by acceleration or otherwise), such overdue amount shall bear
interest at a rate per annum equal to the rate then applicable to Base Rate
Loans plus2%, in each case, with respect to clauses (i) and (ii) above, from
the date of such non-payment until such amount is paid in full (after as well
as before judgment).

(d)  Interest shall be payable in arrears on each Interest Payment Date,
providedthat interest accruing pursuant to paragraph (c) of this Section shall
be payable from time to time on demand.

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SECTION 3.10 Computation of Interest and Fees.

(a)  Interest, fees and commissions payable pursuant hereto shall be
calculated on the basis of a 360-day year for the actual days elapsed, except
that, with respect to Base Rate Loans on which interest is calculated on the
basis of the Prime Rate, the interest thereon shall be calculated on the basis
of a 365- (or 366-, as the case may be) day year for the actual days elapsed.
The Administrative Agent shall as soon as practicable notify the Borrower and
the Lenders of each determination of a Eurodollar Rate. Any change in the
interest rate on a Loan resulting from a change in the Base Rate or the
Eurocurrency Reserve Requirements shall become effective as of the opening of
business on the day on which such change becomes effective. The Administrative
Agent shall as soon as practicable notify the Borrower and the Lenders of the
effective date and the amount of each such change in interest rate.

(b)  Each determination of an interest rate by the Administrative Agent
pursuant to any provision of this Agreement shall be conclusive and binding on
the Borrower and the Lenders in the absence of manifest error. The
Administrative Agent shall, at the request of the Borrower, deliver to the
Borrower a statement showing the quotations used by the Administrative Agent in
determining any interest rate pursuant to Section 3.9(a).

SECTION 3.11 Inability to Determine Interest Rate. If prior to the first
day of any Interest Period:

(a)  the Administrative Agent shall have determined (which determination
shall be conclusive and binding upon the Borrower) that, by reason of
circumstances affecting the relevant market, adequate and reasonable means do
not exist for ascertaining the Eurodollar Rate for such Interest Period, or

(b)  the Administrative Agent shall have received notice from the Required
Lenders that the Eurodollar Rate determined or to be determined for such
Interest Period will not adequately and fairly reflect the cost to such Lenders
(as conclusively certified by such Lenders) of making or maintaining their
affected Loans during such Interest Period, the Administrative Agent shall give telecopy or telephonic notice thereof to
the Borrower and the relevant Lenders as soon as practicable thereafter. If
such notice is given (x) any Loans that were to have been converted on the
first day of such Interest Period to Eurodollar Loans shall be continued as
Base Rate Loans and (y) any outstanding Eurodollar Loans shall be converted, on
the last day of the then current Interest Period with respect thereto, to Base
Rate Loans. Until such notice has been withdrawn by the Administrative Agent, no further
Eurodollar Loans shall be continued as such, nor shall the Borrower have the
right to convert Loans to Eurodollar Loans.

SECTION 3.12 Pro Rata Treatment and Payments.

(a)  Each borrowing by the Borrower from the Lenders hereunder, each
payment by the Borrower on account of any facility fee, and any reduction of
the Commitments of the Lenders, shall be made pro rataaccording to the
respective Aggregate Exposure Percentages of the Lenders. Each payment in
respect of principal or interest in respect of the Loans shall be

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applied to
the amounts of such obligations owing to the Lenders pro rataaccording to the
respective Aggregate Exposure Percentages of the Lenders.

(b)  Each payment to the Administrative Agent of amounts owing to the
Issuing Bank pursuant to Section 2.3 shall be promptly transferred by the
Administrative Agent to the Issuing Bank.

(c)  Each payment (including each prepayment) by the Borrower on account of
principal of the Loans shall be accompanied by accrued interest to the date of
such payment on the amount paid.

(d)  All payments (including prepayments) to be made by the Borrower
hereunder, whether on account of principal, interest, fees or otherwise, shall
be made without setoff or counterclaim and shall be made prior to 12:00 Noon,
New York City time, on the due date thereof to the Administrative Agent, for
the account of the Lenders or the Issuing Bank, as the case may be, at the
Payment Office, in Dollars and in immediately available funds. Any payment
made by the Borrower after 12:00 Noon, New York City time, on any Business Day
shall be deemed to have been on the next following Business Day. The
Administrative Agent shall distribute such payments to the Lenders or the
Issuing Bank, as the case may be, promptly upon receipt in like funds as
received. If any payment hereunder (other than payments on the Eurodollar
Loans) becomes due and payable on a day other than a Business Day, such payment
shall be extended to the next succeeding Business Day. If any payment on a
Eurodollar Loan becomes due and payable on a day other than a Business Day, the
maturity thereof shall be extended to the next succeeding Business Day unless
the result of such extension would be to extend such payment into another
calendar month, in which event such payment shall be made on the immediately
preceding Business Day. In the case of any extension of any payment of
principal pursuant to the preceding two sentences, interest thereon shall be
payable at the then applicable rate during such extension.

(e)  Unless the Administrative Agent shall have been notified in writing by
any Lender prior to a borrowing that such Lender will not make the amount that
would constitute its share of such borrowing available to the Administrative
Agent, the Administrative Agent may assume that such Lender is making such
amount available to the Administrative Agent, and the Administrative Agent may,
in reliance upon such assumption, make available to the Borrower a
corresponding amount. If such amount is not made available to the
Administrative Agent by the required time on the Borrowing Date therefor, such
Lender shall pay to the Administrative Agent, on demand, such amount with
interest thereon at a rate equal to the daily average Federal Funds Effective Rate for the period until such Lender makes such amount
immediately available to the Administrative Agent. A certificate of the
Administrative Agent submitted to any Lender with respect to any amounts owing
under this paragraph shall be conclusive in the absence of manifest error. If
such Lenders share of such borrowing is not made available to the
Administrative Agent by such Lender within three Business Days after such
Borrowing Date, the Administrative Agent shall also be entitled to recover such
amount with interest thereon at the rate per annum applicable to Base Rate
Loans, on demand, from the Borrower.

(f)  Unless the Administrative Agent shall have been notified in writing by
the Borrower prior to the date of any payment due to be made by the Borrower
hereunder that the

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Borrower will not make such payment to the Administrative
Agent, the Administrative Agent may assume that the Borrower is making such
payment, and the Administrative Agent may, but shall not be required to, in
reliance upon such assumption, make available to the Lenders their respective
pro ratashares of a corresponding amount. If such payment is not made to the
Administrative Agent by the Borrower within three Business Days after such due
date, the Administrative Agent shall be entitled to recover, on demand, from
each Lender to which any amount which was made available pursuant to the
preceding sentence, such amount with interest thereon at the rate per annum
equal to the daily average Federal Funds Effective Rate. Nothing herein shall
be deemed to limit the rights of the Administrative Agent or any Lender against
the Borrower.

SECTION 3.13 Requirements of Law.

(a)  If the adoption of or any change in any Requirement of Law or in the
interpretation or application thereof or compliance by the Issuing Bank or any
Lender (the term Lender as used below in this Section to include the Issuing
Bank) with any request or directive (whether or not having the force of law)
from any central bank or other Governmental Authority made subsequent to the
date hereof:

(i)  shall subject any Lender to any tax of any kind whatsoever with
respect to this Agreement, any Letter of Credit, any Application for Issuance
or any Eurodollar Loan made by it, or change the basis of taxation of payments
to such Lender in respect thereof (except for Non-Excluded Taxes covered by
Section 3.14 and changes in the rate of tax on the overall net income of such
Lender);

(ii)  shall impose, modify or hold applicable any reserve, special deposit,
compulsory loan or similar requirement against assets held by, deposits or
other liabilities in or for the account of, advances, loans or other extensions
of credit by, or any other acquisition of funds by, any office of such Lender
that is not otherwise included in the determination of the Eurodollar Rate
hereunder; or

(iii)  shall impose on such Lender any other condition; and the result of any
of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting
into, continuing or maintaining Eurodollar Loans, or to reduce any amount
receivable hereunder in respect thereof, then, in any such case, the Borrower
shall promptly pay such Lender, upon its demand, any additional
amounts necessary to compensate such Lender for such increased cost or reduced
amount receivable. If any Lender becomes entitled to claim any additional
amounts pursuant to this Section, it shall promptly notify the Borrower (with a
copy to the Administrative Agent) of the event by reason of which it has become
so entitled.

(b)  If any Lender shall have determined that the adoption of or any change
in any Requirement of Law regarding capital adequacy or in the interpretation
or application thereof or compliance by such Lender or any corporation
controlling such Lender with any request or directive regarding capital
adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof shall have the effect of reducing
the
33

rate of return on such Lenders or such corporations capital as a
consequence of its obligations hereunder or under or in respect of any Letter
of Credit to a level below that which such Lender or such corporation could
have achieved but for such adoption, change or compliance (taking into
consideration such Lenders or such corporations policies with respect to
capital adequacy) by an amount deemed by such Lender to be material, then from
time to time, after submission by such Lender to the Borrower (with a copy to
the Administrative Agent) of a written request therefor, the Borrower shall pay
to such Lender such additional amount or amounts as will compensate such Lender
or such corporation for such reduction.

(c)  A certificate as to any additional amounts payable pursuant to this
Section submitted by any Lender to the Borrower (with a copy to the
Administrative Agent) shall be conclusive in the absence of manifest error.
The obligations of the Borrower pursuant to this Section shall survive the
termination of this Agreement and the payment of the Loans and all other
amounts payable hereunder.

SECTION 3.14 Taxes.

(a)  All payments made by the Borrower under this Agreement shall be made
free and clear of, and without deduction or withholding for or on account of,
any present or future income, stamp or other taxes, levies, imposts, duties,
charges, fees, deductions or withholdings, now or hereafter imposed, levied,
collected, withheld or assessed by any Governmental Authority, excluding net
income taxes and franchise taxes (imposed in lieu of net income taxes) imposed
on the Administrative Agent or any Lender as a result of a present or former
connection between the Administrative Agent or such Lender and the jurisdiction
of the Governmental Authority imposing such tax or any political subdivision or
taxing authority thereof or therein (other than any such connection arising
solely from such Administrative Agents or such Lenders having executed,
delivered or performed its obligations or received a payment under, or
enforced, this Agreement or any other Loan Document). If any such non-excluded
taxes, levies, imposts, duties, charges, fees, deductions or withholdings
(Non-Excluded Taxes) or any Other Taxes are required to be withheld from any
amounts payable to the Administrative Agent or any Lender hereunder, the
amounts so payable to the Administrative Agent or such Lender shall be
increased to the extent necessary to yield to the Administrative Agent or such
Lender (after payment of all Non-Excluded Taxes and Other Taxes) interest or
any such other amounts payable hereunder at the rates or in the amounts
specified in this Agreement; provided, however, that the Borrower shall not be
required to increase any such amounts payable to any Lender with respect to any
Non-Excluded Taxes (i) that are attributable to such Lenders failure to comply
with the requirements of paragraph (d) or (e) of this Section or (ii) that are
United States withholding taxes imposed on amounts payable to such Lender at the time
such Lender becomes a party to this Agreement, except to the extent that such
Lenders assignor (if any) was entitled, at the time of assignment, to receive
additional amounts from the Borrower with respect to such Non-Excluded Taxes
pursuant to this paragraph (a).

(b)  In addition, the Borrower shall pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.

(c)  Whenever any Non-Excluded Taxes or Other Taxes are payable by the
Borrower, as promptly as possible thereafter the Borrower shall send to the
Administrative Agent for the

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account of the Administrative Agent or the
relevant Lender, as the case may be, a certified copy of an original official
receipt received by the Borrower showing payment thereof. If the Borrower
fails to pay any Non-Excluded Taxes or Other Taxes when due to the appropriate
taxing authority or fails to remit to the Administrative Agent the required
receipts or other required documentary evidence, the Borrower shall indemnify
the Administrative Agent and the Lenders for any incremental taxes, interest or
penalties that may become payable by the Administrative Agent or any Lender as
a result of any such failure.

(d)  Each Lender (or Transferee) that is not a citizen or resident of the
United States of America, a corporation, partnership or other entity created or
organized in or under the laws of the United States of America (or any
jurisdiction thereof), or any estate or trust that is subject to federal income
taxation regardless of the source of its income (a Non-U.S. Lender) shall
deliver to the Borrower and the Administrative Agent (or, in the case of a
Participant, to the Lender from which the related participation shall have been
purchased) two copies of either U.S. Internal Revenue Service Form W-8BEN or
Form W-8ECI, or, in the case of a Non-U.S. Lender claiming exemption from U.S.
federal withholding tax under Section 871(h) or 881(c) of the Code with respect
to payments of portfolio interest a statement substantially in the form of
Exhibit D and a Form W-8BEN, or any subsequent versions thereof or successors
thereto properly completed and duly executed by such Non-U.S. Lender claiming
complete exemption from, or a reduced rate of, U.S. federal withholding tax on
all payments by the Borrower under this Agreement and the other Loan Documents.
Such forms shall be delivered by each Non-U.S. Lender on or before the date it
becomes a party to this Agreement (or, in the case of any Participant, on or
before the date such Participant purchases the related participation). In
addition, each Non-U.S. Lender shall deliver such forms promptly upon the
obsolescence or invalidity of any form previously delivered by such Non-U.S.
Lender. Each Non-U.S. Lender shall promptly notify the Borrower at any time it
determines that it is no longer in a position to provide any previously
delivered certificate to the Borrower (or any other form of certification
adopted by the U.S. taxing authorities for such purpose). Notwithstanding any
other provision of this paragraph, a Non-U.S. Lender shall not be required to
deliver any form pursuant to this paragraph that such Non-U.S. Lender is not
legally able to deliver.

(e)  A Lender that is entitled to an exemption from or reduction of
non-U.S. withholding tax under the law of the jurisdiction in which the
Borrower is located, or any treaty to which such jurisdiction is a party, with
respect to payments under this Agreement shall deliver to the Borrower (with a
copy to the Administrative Agent), at the time or times prescribed by
applicable law or reasonably requested by the Borrower, such properly completed
and executed documentation prescribed by applicable law as will permit such
payments to be made without withholding or at a reduced rate, providedthat such Lender is legally
entitled to complete, execute and deliver such documentation and in such
Lenders reasonable judgment such completion, execution or submission would not
materially prejudice the legal position of such Lender.

(f)  The agreements in this Section shall survive the termination of this
Agreement and the payment of the Loans and all other amounts payable hereunder.

SECTION 3.15 Indemnity. The Borrower agrees to indemnify each Lender for,
and to hold each Lender harmless from, any loss or expense that such Lender may
sustain or

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incur as a consequence of (a) default by the Borrower in making a
borrowing of, conversion into or continuation of Eurodollar Loans after the
Borrower has given a notice requesting the same in accordance with the
provisions of this Agreement, (b) default by the Borrower in making any
prepayment of or conversion from Eurodollar Loans after the Borrower has given
a notice thereof in accordance with the provisions of this Agreement or (c) the
making of a prepayment or conversion of Eurodollar Loans on a day that is not
the last day of an Interest Period with respect thereto. Such indemnification
may include an amount equal to the excess, if any, of (i) the amount of
interest that would have accrued on the amount so prepaid, or not so borrowed,
converted or continued, for the period from the date of such prepayment or of
such failure to borrow, convert or continue to the last day of such Interest
Period (or, in the case of a failure to borrow, convert or continue, the
Interest Period that would have commenced on the date of such failure) in each
case at the applicable rate of interest for such Loans provided for herein
(excluding, however, the Applicable Margin included therein, if any)
over (ii)
the amount of interest (as reasonably determined by such Lender) that would
have accrued to such Lender on such amount by placing such amount on deposit
for a comparable period with leading banks in the interbank eurodollar market.
A certificate as to any amounts payable pursuant to this Section submitted to
the Borrower by any Lender shall be conclusive in the absence of manifest
error. This covenant shall survive the termination of this Agreement and the
payment of the Loans and all other amounts payable hereunder.

SECTION 3.16 Illegality. Notwithstanding any other provision herein, if
the adoption of or any change in any Requirement of Law or in the
interpretation or application thereof shall make it unlawful for any Lender to
make or maintain Eurodollar Loans as contemplated by this Agreement, (a) the
commitment of such Lender hereunder to make Eurodollar Loans, continue
Eurodollar Loans as such and convert Base Rate Loans to Eurodollar Loans shall
forthwith be canceled and (b) such Lenders Loans then outstanding as
Eurodollar Loans, if any, shall be converted automatically to Base Rate Loans
on the respective last days of the then current Interest Periods with respect
to such Loans or within such earlier period as required by law. If any such
conversion of a Eurodollar Loan occurs on a day which is not the last day of
the then current Interest Period with respect thereto, the Borrower shall pay
to such Lender such amounts, if any, as may be required pursuant to Section
3.15.

SECTION 3.17 Change of Lending Office. Each of the Issuing Bank and the
Lenders (the term Lender as used below in this Section to include the Issuing
Bank) agrees that, upon the occurrence of any event giving rise to the
operation of Section 3.13, 3.14(a) or 3.16 with respect to such Lender, it
will, if requested by the Borrower, use reasonable efforts (subject to overall
policy considerations of such Lender) to designate another lending office for
any Loans or Letters of Credit affected by such event with the object of
avoiding the consequences of such event; provided, that such designation is
made on terms that, in the sole judgment of such Lender, cause such Lender and
its lending office(s) to suffer no economic, legal or regulatory disadvantage,
and provided, further, that nothing in this Section shall affect or postpone
any of the obligations of any Borrower or the rights of any Lender pursuant to
Section 3.13, 3.14(a) or 3.16.

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SECTION 3.18 Replacement of Lenders. The Borrower shall be permitted to
replace any Lender that (a) requests reimbursement for amounts owing pursuant
to Section 3.13 or 3.14(a) or (b) defaults in its obligation to make Loans
hereunder, with a replacement financial institution; providedthat (i) such
replacement does not conflict with any Requirement of Law, (ii) except in the
case of a replacement as a result of a default described in clause (b) above,
no Event of Default shall have occurred and be continuing at the time of such
replacement, (iii) prior to any such replacement, such Lender shall have taken
no action under Section 3.17 so as to eliminate the continued need for payment
of amounts owing pursuant to Section 3.13 or 3.14(a), (iv) the replacement
financial institution shall purchase, at par, all Loans and other amounts owing
to such replaced Lender on or prior to the date of replacement, (v) the
replacement financial institution, if not already a Lender, shall be reasonably
satisfactory to the Administrative Agent, (vi) the replaced Lender shall be
obligated to make such replacement in accordance with the provisions of Section
9.6 (providedthat the Borrower shall be obligated to pay the registration and
processing fee referred to therein), (viii) until such time as such replacement
shall be consummated, the Borrower shall pay all additional amounts (if any)
required pursuant to Section 3.13 or 3.14(a), as the case may be, and (ix) any
such replacement shall not be deemed to be a waiver of any rights that the
Borrower, the Administrative Agent or any other Lender shall have against the
replaced Lender.

SECTION 3.19 Extension of Termination Dates

(a)  So long as no Default or Event of Default shall have occurred and is
continuing, any Termination Date, and concomitantly the Commitments of the
relevant Lenders, may be extended for successive 364-day periods expiring on
the date which is 364 days from the then scheduled Termination Date. In order
to request such extension, the Borrower will deliver to the Administrative
Agent not more than sixty (60) days nor less than forty-five (45) days prior to
the then scheduled Termination Date a written request that such Termination
Date be extended for 364 days from the then scheduled Termination Date. The
Administrative Agent shall then promptly notify each relevant Lender of such
request, and each relevant Lender shall notify the Administrative Agent in
writing no later than ten Business Days after receipt by such Lenders of the
relevant request for an extension from the Borrower, pursuant to this Section
3.19, whether such Lender, in the exercise of its sole discretion, will extend
the Termination Date for such 364-day period. Any relevant Lender which shall
not timely notify the Administrative Agent whether it will extend such Termination Date shall be deemed not to have agreed to
the extension. No Lender shall have any obligation whatsoever to agree to
extend any Termination Date. Any agreement to extend any Termination Date by
any Lender shall be irrevocable, except to the extent revocable by the Borrower
as provided in Section 3.19(c)(C)(iii).

(b)  If all the relevant Lenders notify the Administrative Agent pursuant
to the foregoing provisions of this Section 3.19 of their agreement to extend
the relevant Termination Date (such Lenders agreeing to extend such Termination
Date, the Accepting Lenders), then the Administrative Agent shall so notify
each relevant Lender and the Borrower, and such extension shall become
effective without further action by any party hereto.

(c)  If Lenders constituting at least the Required Lenders approve the
extension of the relevant Termination Date and if one or more of the relevant
Lenders shall notify, or be deemed to have notified, the Administrative Agent
that they will not extend the then scheduled

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Termination Date (such Lenders,
the Declining Lenders), then (A) the Administrative Agent shall promptly so
notify the Borrower and the Accepting Lenders, (B) the Accepting Lenders shall,
upon the Borrowers election to extend the then scheduled Termination Date in
accordance with clause (C)(i) or (C)(ii) below, extend the then scheduled
Termination Date and (C) the Borrower shall, pursuant to a notice delivered to
the Administrative Agent, the Accepting Lenders and the Declining Lenders, no
later than the tenth day following the date by which each Lender is required,
pursuant to this Section 3.19, to approve or disapprove the requested
extension, either:

(i)  elect to extend such Termination Date with respect to the Accepting
Lenders and direct the Declining Lenders to terminate their Commitments, which
termination shall become effective on the date which would have been the
Termination Date except for the operation of this Section 3.19. On such date,
(x) the Borrower shall deliver a notice of the effectiveness of such
termination to the Declining Lenders with a copy to the Administrative Agent,
(y) the Borrower shall pay in full in immediately available funds all
Obligations owing to the Declining Lenders and (z) upon the occurrence of the
events set forth in clauses (x) and (y), the Declining Lenders shall each cease
to be a Lender hereunder for all purposes and the Declining Lenders shall no
longer have any obligations hereunder; provided, however, such Person shall be
obligated to make or entitled to receive payments pursuant to Sections 3.13,
3.15, 8.7 and 9.5 (but only to the extent the event giving rise to such payment
occurred prior to the time at which the events set forth in clauses (x) and (y)
shall have occurred) as if it were a Lender, and the Administrative Agent shall
promptly notify the Accepting Lenders and the Borrower of any new Commitments
and any new Termination Date; or

(ii)  elect to extend such Termination Date with respect to the Accepting
Lenders and, prior to or no later than the then scheduled Termination Date, (a)
the Borrower shall replace the Declining Lenders with one or more lenders
reasonably acceptable to the Administrative Agent (such lenders, the
Replacement Lenders) or with any one or more of the Accepting Lenders, if
any, which have agreed with the Borrower to increase their respective
Commitments (the Increasing Accepting Lenders) or to the extent the Borrower
is not able to replace all Commitments of any Declining Lender, direct such
Declining Lenders to terminate any such Commitments not being replaced as
provided in clause (i) above and (b) the Borrower shall pay in full in
immediately available funds all Obligations owed by the Borrower to the
Declining Lenders which are not being replaced; providedthat (x) the Replacement
Lenders and Increasing Accepting Lenders shall purchase, and the Declining
Lenders being replaced shall sell, the interest of the Declining Lenders being
replaced and their rights hereunder without recourse or expense to, or warranty
(except warranty of ownership which is free and clear of any adverse claims)
by, such Declining Lenders being replaced for a purchase price equal to the
aggregate outstanding principal amount of Obligations payable to such Declining
Lenders plus any accrued but unpaid interest on such Obligations and accrued
but unpaid fees in respect of such Declining Lenders Loans and Commitments
hereunder, and (y) all Obligations of the Borrower owing under or in connection
with this Agreement with respect to the Declining Lenders being replaced
(including, without limitation, such increased costs, breakage fees payable
under Sections 3.13 and 3.14 and all other costs and expenses payable to each
such Declining Lender) shall be paid in full in immediately available funds to
such Declining Lenders concurrently with such replacement, and (z) upon the
payment of such amounts referred to in clauses (x) and (y), the Replacement
Lenders shall each constitute a Lender hereunder and the Declining Lenders
being

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so replaced shall no longer constitute a Lender or Issuing Bank (if
applicable) and shall no longer have any obligations hereunder. However, such
Person shall be obligated to make or entitled to receive payments pursuant to
Sections 3.13, 3.15, 8.7 and 9.5 (but only to the extent the event giving rise
to such payment occurred prior to the time at which the events set forth in
clauses (x) and (y) shall have occurred) as if it were a Lender; or

(iii)  elect to revoke and cancel such extension request by giving notice
of such revocation and cancellation to the Administrative Agent (which shall
promptly notify the relevant Lenders thereof) no later than the tenth day
following the date by which each relevant Lender is required, pursuant to this
Section 3.19, to approve or disapprove the requested extension of such
Termination Date, and concomitantly the Commitments of the relevant Lenders.
If the Borrower fails to timely provide the election notice referred to in this
clause (C), the Borrower shall be deemed to have revoked and canceled such
extension request and to have elected not to extend the relevant Termination
Date and the Commitments of the relevant Lenders, and, on the then scheduled
Termination Date, the Borrower shall repay in full all Obligations under the
Loan Documents.

(d)  Notwithstanding any of the foregoing, in the event that the Issuing
Bank is a Declining Lender, the Borrower shall implement arrangements
satisfactory in all respects to the Issuing Bank with respect to all Letters of
Credit that would remain outstanding after the Issuing Bank ceases to be a
Lender and Issuing Bank under this Agreement.

(e)  On and after the effectiveness of any extension under this Section
3.19, in no event shall (i) the aggregate stated amount of all outstanding
Tranche A Letters of Credit exceed the aggregate Tranche A Commitments and (ii)
the aggregate stated amount of all outstanding Tranche B Letters of Credit
exceed the aggregate Tranche B L/C Limit.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

To induce the Administrative Agent, the Issuing Bank and the Lenders to
enter into this Agreement, to issue the Letters of Credit and to make the
Loans, the Borrower hereby represents and warrants to the Administrative Agent,
the Issuing Bank and each Lender that:

SECTION 4.1 Organization; Powers; Ownership of Property. The Borrower and
each of its Subsidiaries (other than Unrestricted Subsidiaries) (a) is duly
formed, validly existing and in good standing under the laws of the
jurisdiction of its formation, except, with respect to such Subsidiaries, where
the failure to be validly existing or in good standing is not reasonably likely
to result in a Material Adverse Effect, (b) has all requisite power and
authority to own its property and assets and to carry on its business as now
conducted and as proposed to be conducted, (c) is qualified to do business in
every jurisdiction where such qualification is required, except where the
failure so to qualify is not reasonably likely to result in a Material Adverse
Effect, (d) as to the Borrower only, has the power and authority to execute,
deliver and perform its obligations under this Agreement and the other Loan
Documents, and (e) owns and has good and marketable title to all of its
properties and assets, subject to no Liens other than those permitted by
Section 6.11 hereof, except where the failure to own or to have good and

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marketable title to such property or asset is not reasonably likely to result
in a Material Adverse Effect.

SECTION 4.2 Authorization. The execution, delivery and performance by the
Borrower of this Agreement and the other Loan Documents each (a) have been duly
authorized by all requisite corporate action on the part of the Borrower, and
(b) will not (i) violate (A) any provision of any law, statute, rule or
regulation to which the Borrower is subject, (B) the articles of incorporation
or by-laws of the Borrower, (C) any order of any Governmental Authority to
which the Borrower is subject, or (D) any material provision of any indenture,
agreement or other instrument to which the Borrower is a party or by which it
or any of its property is or may be bound, which such violation is reasonably
likely to result in a Material Adverse Effect, (ii) constitute (alone or with
notice or lapse of time or both) a default under any such indenture, agreement
or other instrument, which such default is reasonably likely to result in a
Material Adverse Effect or (iii) result in the creation or imposition of any
Lien upon any property or assets of the Borrower, which such Lien is reasonably
likely to result in a Material Adverse Effect.

SECTION 4.3 Enforceability. This Agreement and the other Loan Documents
each constitutes a legal, valid and binding obligation of the Borrower
enforceable in accordance with its terms except to the extent that enforcement
may be limited by bankruptcy, insolvency or similar laws affecting the
enforcement of creditors rights generally.

SECTION 4.4 Financial Statements.

(a)  The consolidated balance sheet of the Borrower and its Subsidiaries as
of December 31, 1999 and December 31, 2000, reported on by an independent
public accountant of nationally recognized standing, and the related
consolidated statements of income, retained earnings and cash flows for the
fiscal periods then ended, copies of which have been delivered to the Administrative
Agent, fairly presented in conformity with GAAP, the consolidated financial position
of the Borrower and its Subsidiaries as of such dates and their consolidated results
of operations and cash flows for such periods ending on such dates.

(b)  The assumptions used in preparing the Projections were made in good
faith and are reasonable as of the date of such Projections and as of the date
hereof.

(c)  Since December 31, 2000, there has been no development or condition
that has had, or could reasonably be expected to result in, a Material Adverse
Effect.

SECTION 4.5 Litigation. Except as set forth on Schedule 4.5, there is no
investigation, action, suit or proceeding pending against, or to the Actual
Knowledge of the Borrower threatened against or affecting, the Borrower or any
of its Subsidiaries (other than Unrestricted Subsidiaries) before any court or
arbitrator or any governmental body, agency or official in which an adverse
decision is reasonably likely to result in a Material Adverse Effect or call
into question the enforceability of this Agreement or the other Loan Documents.

SECTION 4.6 Federal Reserve Regulations.

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(a)  Neither the Borrower nor any of its Subsidiaries is engaged
principally, or as one of its important activities, in the business of
extending credit for the purpose of buying or carrying Margin Stock (within
the respective meanings of each of the quoted terms under Regulation U). No
part of the proceeds of any Loans, and no other extensions of credit hereunder,
will be used for buying or carrying Margin Stock (within the respective
meanings of such quoted terms under Regulation U) or for any purpose that
violates the provisions of the regulations of the Board. If requested by any
Lender or the Administrative Agent, the Borrower will furnish to the
Administrative Agent and each Lender a statement to the foregoing effect in
conformity with the requirements of FR Form G-3 or FR Form U-1, as applicable,
referred to in Regulation U.

(b)  Not more than 25 % of the value of the assets of the Borrower is
represented by Margin Stock.

SECTION 4.7 Investment Company Act; Public Utility Holding Company Act.

(a)  Neither the Borrower nor any of its Subsidiaries is an investment
company as defined in, or subject to regulation under, the Investment Company
Act of 1940.

(b)  The Borrower is not a holding company but is a subsidiary company
and an affiliate of a holding company, PG&E Corp., that is exempt from all
provisions, except Section 9(a)(2), of the Public Utility Holding Company Act
of 1935, as amended, and the execution, delivery and performance by the
Borrower of this Agreement and the other Loan Documents and its obligations
hereunder and thereunder do not violate any provision of such Act or any rule
or regulation thereunder.

SECTION 4.8 No Material Misstatements. The reports, financial statements
and other written information furnished by or on behalf of the Borrower to the
Administrative Agent, the Issuing Bank or any Lender pursuant to or in connection
with this Agreement and the other Loan Documents do not contain, when taken as a
whole, any untrue statement of a material fact and do not omit, when taken as a whole,
to state any fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading in any material
respect.

SECTION 4.9 Taxes. The Borrower has filed or caused to be filed all
Federal and material state and local tax returns which to its Actual Knowledge
are required to be filed by it, and has paid or caused to be paid all material
taxes shown to be due and payable on such returns or on any assessments
received by it, other than any taxes or assessments the validity of which is
being contested in good faith by appropriate proceedings and with respect to
which appropriate accounting reserves have to the extent required by GAAP been
set aside. Each Subsidiary of the Borrower (other than any Unrestricted
Subsidiary) has filed or caused to be filed all Federal and material state and
local tax returns which to the Actual Knowledge of the Borrower or such
Subsidiary are required to be filed by such Subsidiary, and has paid or caused
to be paid all material taxes shown to be due and payable on such returns or on
any assessments received by it, other than the taxes the failure of which to
pay or file a return with respect thereto is not reasonably likely to result in
a Material Adverse Effect.

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SECTION 4.10 Employee Benefit Plans. With respect to each Plan, the
Borrower and its ERISA Affiliates are in compliance in all material respects
with the applicable provisions of ERISA and the Code and the final regulations
and published interpretations thereunder. No ERISA Event has occurred that
alone or together with any other ERISA Event has resulted or is reasonably
likely to result in a Material Adverse Effect.

SECTION 4.11 Governmental Approval; Compliance with Law and Contracts.
The Borrower and each of its Subsidiaries (other than Unrestricted
Subsidiaries) is in compliance with (a) and has obtained each Governmental
Approval applicable to it in respect of this Agreement and the other Loan
Documents, the conduct of its business and the ownership of its property, each
of which (i) is in full force and effect, (ii) is sufficient for its purpose
without any material restraint or adverse condition and (iii) is not subject to
any waiting period, further action on the part of any Governmental Authority or
other Person, or stay or injunction, (b) all applicable laws relating to its
business and (c) each indenture, agreement or other instrument to which it is a
party or by which it or any of its property is or may be bound that is material
to the conduct of its business, except in each such case for noncompliances
which, and Governmental Approvals the failure to possess which, are not, singly
or in the aggregate, reasonably likely to result in a Material Adverse Effect.

SECTION 4.12 Environmental Matters. Except as set forth in Schedule 4.12
or as set forth in or contemplated by the financial statements or other reports
of the type referred to in Section 4.4 hereof and which have been delivered to the
Administrative Agent on or prior to the date hereof, the
Borrower and each of its Subsidiaries (other than Unrestricted Subsidiaries)
have complied in all material respects with all Federal, state, local and other
statutes, ordinances, orders, judgments, rulings and regulations relating to
environmental pollution or to environmental or nuclear regulation or control,
except to the extent that failure to so comply is not reasonably likely to
result in a Material Adverse Effect. Except as set forth in or contemplated by
such financial statements or other reports, neither the Borrower nor any of its
Subsidiaries (other than Unrestricted Subsidiaries) has received notice of any
material failure so to comply, except where such failure is not reasonably
likely to result in a Material Adverse Effect. Except as set forth in or
contemplated by such financial statements or other reports, no facilities of
the Borrower or any of its Subsidiaries (other than Unrestricted Subsidiaries)
are used to manage any hazardous wastes, hazardous substances, hazardous
materials, toxic substances, toxic pollutants or substances similarly
denominated, as those terms or similar terms are used in the Resource
Conservation and Recovery Act, the Comprehensive Environmental Response
Compensation and Liability Act, the Hazardous Materials Transportation Act, the
Toxic Substance Control Act, the Clean Air Act, the Clean Water Act or any
other applicable law relating to environmental pollution, or any nuclear fuel
or other radioactive materials, in violation of any law or any regulations
promulgated pursuant thereto, except to the extent that such violations,
individually or in the aggregate, are not reasonably likely to result in a
Material Adverse Effect. Except as set forth in or contemplated by such
financial statements or other reports, the Borrower is aware of no events,
conditions or circumstances involving environmental pollution or contamination
that are reasonably likely to result in a Material Adverse Effect.

SECTION 4.13 Ranking. Under applicable laws in force on the date hereof,
the claims and rights of the Lenders under this Agreement and the other Loan
Documents in respect

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of the Obligations shall not be subordinate to, and shall
rank at least pari passuin all respects with, the claims and rights of any
other holders of unsecured Indebtedness of the Borrower.

SECTION 4.14 Unrestricted Subsidiaries. All Unrestricted Subsidiaries
designated as such on the date hereof are identified on Schedule 4.14.

SECTION 4.15 Use of Letters of Credit. The Letters of Credit shall not be
used as payment assurance in connection with any Equity Funding Arrangement of
the Borrower or any of its Subsidiaries.

SECTION 4.16 CPUC. Neither the Borrower nor any of its Subsidiaries are
regulated by the California Public Utilities Commission.

SECTION 4.17 Separateness from PG&E.

(a)  The Borrower has operated as a business entity separate and distinct
in all relevant respects from PG&E Corp. and PG&E such that the Borrower
believes there exists no reasonable basis for a substantive consolidation of
NEG LLC or any of its Subsidiaries with either PG&E Corp. or PG&E in the event
of a bankruptcy proceeding with respect to either of such Persons.

(b)  Any transfer of assets or funds from PG&E Corp. or PG&E (either
directly or through PG&E Corp.) to the Borrower during the period from the date
of the Borrowers incorporation on December 18, 1998 until the date hereof (i)
to the Borrowers knowledge, after due inquiry, was made at a time when the
transferor was solvent and was able to pay its reasonably anticipated
liabilities as they became due, (ii) was received by the Borrower in good faith
and (iii) to the Borrowers knowledge, was made without intent to hinder, delay
or defraud creditors of the transferor.

ARTICLE V

CONDITIONS PRECEDENT

SECTION 5.1 Conditions to Initial Extension of Credit. The obligations of
the Issuing Bank to issue the initial Letter of Credit requested by Borrower
pursuant to Section 2.1 of this Agreement and of the Lenders to make the
initial Loans requested by Borrower to be made pursuant to Section 3.1(a)
and/or 3.1(b) of this Agreement are subject to the satisfaction of the
following conditions precedent:

(a)  Loan Documents. The Administrative Agent shall have received (i) this
Agreement, executed and delivered by the Agents, the Borrower and each Person
listed on Schedule 1.1, (ii) an Application for Issuance, if applicable,
executed by the Borrower and (iii) the Letter Agreement, executed by NEG LLC.

(b)  Financial Statements. The Administrative Agent shall have received
(i) audited consolidated financial statements of the Borrower for the 1999 and
2000 fiscal years, (ii) unaudited unconsolidated financial statements of the
Borrower for the 2000 fiscal year and (iii) unaudited interim consolidated and
unconsolidated financial statements of the Borrower, in each

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case, for each
quarterly period ended subsequent to the date of the latest applicable
financial statements delivered pursuant to clauses (i) and (ii) of this
paragraph as to which such financial statements are available; and such
financial statements shall not, in the reasonable judgment of the
Administrative Agent, reflect any material adverse change in the consolidated
financial condition of the Borrower, as reflected in the financial statements
or Projections previously disclosed to the Administrative Agent.

(c)  Approvals. All Governmental Approvals and third party approvals
necessary in connection with the financing contemplated hereby shall have been
obtained and be in full force and effect.

(d)  Related Agreements. The Administrative Agent shall have received (in
a form reasonably satisfactory to the Administrative Agent), true and correct
copies, certified as to authenticity by the Borrower, of such other documents or instruments as
may be reasonably requested by the Administrative Agent, including, without
limitation, a copy of any debt instrument, security agreement or other material
contract to which Borrower may be a party. The Administrative Agent shall be
reasonably satisfied that no such instrument, agreement or contract shall be in
default immediately prior to or after giving effect to this Agreement and the
other Loan Documents, and the Borrower shall so certify in writing.

(e)  Fees. The Lenders and the Administrative Agent shall have received
all fees required to be paid, and all expenses for which invoices have been
presented (including reasonable fees, disbursements and other charges of
counsel to the Administrative Agents), on or before the Closing Date. All such
amounts may be paid with proceeds of Loans made on the Closing Date and may be
reflected in the funding instructions given by the Borrower to the
Administrative Agent on or before the Closing Date.

(f)  Closing Certificate. The Administrative Agent shall have received a
certificate of the Borrower, dated the Closing Date, substantially in the form
of Exhibit A, with appropriate insertions and attachments.

(g)  Legal Opinions. The Administrative Agent shall have received the
following executed legal opinions:

(i)  the legal opinion of Hunton & Williams, counsel to Borrower,
substantially in the form of Exhibit C-1;

(ii)  the legal opinion of Hunton & Williams, substantially in the form of
Exhibit C-2;

(iii)  the legal opinion of Stephen A. Herman, general counsel of the
Borrower, substantially in the form of Exhibit C-3.

(h)  $1.1 Billion PG&E Gen Credit Agreement. The Administrative Agent
shall have received confirmation from the Borrower that the $1.1 Billion PG&E
Gen Credit Agreement has been terminated and all loans, borrowings and other
amounts due thereunder have been paid.

(i)  $550M Credit Facility. The $550M Credit Facility shall have been
replaced by the Agreement (it being understood and agreed that all letters of
credit outstanding under the

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$550M Credit Facility on the Closing Date shall
constitute Tranche A Letters of Credit hereunder).

SECTION 5.2 Conditions to Issuance of Each Letter of Credit under Section
2.1 and each Loan under Section 3.1(a) and 3.1(b). The obligations of the
Issuing Bank to issue any Letter of Credit requested to be issued by it
hereunder on any date, and the Lenders to make a Loan under Section 3.1(a)
and/or 3.1(b) hereof on any date is subject to the satisfaction of the
following conditions precedent:

(a)  Representations and Warranties. Each of the representations and
warranties made by the Borrower in or pursuant to the Loan Documents shall be
true and correct on and as of such date as if made on and as of such date.

(b)  No Default. No Default or Event of Default shall have occurred and be
continuing on such date or after giving effect to the extensions of credit
requested to be made on such date.

Each request by the Borrower for issuance of a Letter of Credit under Section
2.1 hereof or a Loan under Section 3.1(a) and/or 3.1(b) shall constitute a
representation and warranty by the Borrower as of the date of such issuance
that the conditions contained in this Section 5.2 have been satisfied.

ARTICLE VI

COVENANTS

The Borrower hereby agrees that, so long as the Commitments remain in
effect, any Letter of Credit remains outstanding or any Loan or other amount is
owing to the Issuing Bank, any Lender or the Administrative Agent hereunder,
the Borrower shall and shall cause each of its Subsidiaries to comply with each
of the following covenants:

SECTION 6.1 Maintenance of Ownership. The Borrower shall continue (x) to
own at least 50% of the equity ownership interests of, and (y) control the
management and operations of, each of its Restricted Subsidiaries (except for
certain Restricted Subsidiaries listed on Schedule 6.1); providedthat (I) the
Borrower will in any event continue to own at least 80% of the equity ownership
interests of PG&E Gen, ET Holdings and GTN; provided, further, that the
Borrower may wind up, dissolve or liquidate any Restricted Subsidiary (other
than PG&E Gen, ET Holdings and GTN) without complying with the foregoing, so
long as assets thereof are transferred or otherwise conveyed to another
Restricted Subsidiary or the Borrower.

SECTION 6.2 Existence. The Borrower will, and will cause each of its
Subsidiaries (other than Unrestricted Subsidiaries) to, do or cause to be done
all things necessary to preserve and keep in full force and effect its legal
existence and all rights, licenses, permits, franchises and authorizations
necessary or desirable in the normal conduct of its business, except as
otherwise permitted pursuant to Sections 6.1 (including Schedule 6.1) and 6.9,
and in the case of any such Subsidiaries, except as such failure to so preserve
or to keep its legal existence and

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such rights, licenses, permits, franchises
or authorizations in full force and effect is not reasonably likely to result
in a Material Adverse Effect.

SECTION 6.3 Compliance with Law; Business and Properties. The Borrower
will, and will cause each of its Restricted Subsidiaries to, comply with all
applicable material laws, rules, regulations and orders of any Governmental
Authority, whether now in effect or hereafter enacted, except where the
validity or applicability of such laws, rules, regulations or orders is being
contested by appropriate proceedings in good faith or where such non-compliance
is not reasonably likely to result in a Material Adverse Effect; comply with
the terms of each indenture, agreement or other instrument to which it is a
party and enforce all of its rights thereunder, except to the extent that
noncompliance or failure to enforce is not reasonably likely to cause a
Material Adverse Effect; and at all times maintain and preserve all property
material to the conduct of its business and keep such property in good repair,
working order and condition and from time to time make, or cause to be made,
all needful and proper repairs, renewals, additions, improvements and
replacements thereto necessary in order that the business carried on in
connection therewith may be properly conducted at all times, except where the
failure to take any such actions is not reasonably likely to result in a
Material Adverse Effect.

SECTION 6.4 Financial Statements, Reports, Etc. The Borrower will furnish
to the Administrative Agent, which will promptly forward the same to each
Lender:

(a)  as soon as available and in any event within 120 days after the end of
each fiscal year of the Borrower, an audited consolidated balance sheet of the
Borrower and its Subsidiaries as of the end of such fiscal year and the related
audited consolidated statements of income, retained earnings and cash flows for
such fiscal year, setting forth in each case in comparative form the figures
for the previous fiscal year, to the extent available, all reported on by an
independent public accountant of nationally recognized standing;

(b)  as soon as available and in any event within 45 days after the end of
each of the first three quarters of each fiscal year of the Borrower a
consolidated balance sheet of the Borrower and its Subsidiaries as of the end
of such quarter and the related consolidated statements of income for such
quarter and for the portion of the Borrowers fiscal year ended at the end of
such quarter, and the related consolidated statement of cash flows for such
quarter and for the portion of the Borrowers fiscal year ended at the end of
such quarter, in each case setting forth comparative figures for the previous
dates and periods, to the extent available, all certified (subject to normal
year-end adjustments) as to fairness of presentation, GAAP and consistency by a
Financial Officer of the Borrower;

(c)  simultaneously with any delivery of each set of financial statements
referred to in paragraphs (a) and (b) above, (i) an unconsolidated balance
sheet of the Borrower and the related unconsolidated statements of income,
retained earnings and cash flows as of the same date and for the same periods
applicable to the statements delivered pursuant to paragraph (a) or (b) above,
as applicable, all certified (subject to normal year-end adjustments in the
case of quarterly statements) as to fairness of presentation by a Financial
Officer of the Borrower and (ii) a certificate of a Financial Officer of the
Borrower (A) setting forth in reasonable detail the calculations required to
establish whether the Borrower was in compliance with the requirements of
Section 6.15 on the date of such financial statements, and schedules setting
forth all

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Indebtedness described in Section 6.12(o) that was incurred during
the applicable period and (B) stating whether any Default or Event of Default
exists on the date of such certificate and, if any Default or Event of Default
then exists, setting forth the details thereof and the action which the
Borrower is taking or proposes to take with respect thereto;

(d)  simultaneously with the delivery of each set of financial statements
referred to in paragraph (a) above, a statement of the firm of independent
public accountants which reported on such statements confirming the calculations
set forth in the Financial Officers certificate delivered simultaneously
therewith pursuant to subsection (c) above;

(e)  promptly upon a Responsible Officer of the Borrower obtaining Actual
Knowledge of the occurrence of any Default or Event of Default, a certificate
of a Financial Officer of the Borrower setting forth the details thereof and
the action which the Borrower is taking or proposes to take with respect
thereto;

(f)  on or prior to the date of incurrence of any Indebtedness pursuant to
Section 6.12(c) or (l) or the date of any Distribution pursuant to Section
6.14, (i) a certificate of a Financial Officer of the Borrower setting forth in
reasonable detail the calculations demonstrating compliance by the Borrower
with the applicable financial tests, together with the pro forma calculations
referred to in the applicable Section, and copies of all financial statements
and other supporting documents and reports, if any, upon which the Borrower
relied in making such calculations, and (ii) with respect to Section 6.12(c)
and (l) only, written evidence of the confirmation of the rating agency
ratings, to the extent such confirmation is required under Section 6.12 (c) or
(l), as the case may be;

(g)  (i) on or prior to the date hereof, copies of the PG&E Gen Credit
Agreement, ET Credit Agreements, GTN Credit Agreements, USGenNE Credit
Agreements, NEG Guarantees and NEG Indenture in each case accompanied by a
certificate of a Responsible Officer of the Borrower stating that such copies
are true and complete, and (ii) promptly upon any refinancing of the loans
under any such facility, copies of the refinancing documents, accompanied by a
certificate of a Responsible Officer of the Borrower stating that such copies
are true and complete;

(h)  promptly upon a Responsible Officer of the Borrower obtaining Actual
Knowledge of any change in the credit rating of the Borrower by S&P or Moodys,
a notice thereof.

SECTION 6.5 Insurance. The Borrower will, and will cause each of its
Subsidiaries (other than Unrestricted Subsidiaries) to, maintain such insurance
or self insurance, to such extent and against such risks, including fire and
other risks insured against by extended coverage, as is customary with
companies similarly situated and in the same or similar businesses except, in
the case of any such Subsidiaries, where such failure to so maintain is not
reasonably likely to result in a Material Adverse Effect.

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SECTION 6.6 Taxes, Etc. The Borrower will, and will cause each of its
Subsidiaries (other than Unrestricted Subsidiaries) to, pay and discharge
promptly when due all material taxes, assessments and governmental charges
imposed upon it or upon its income or profits or in respect of its property,
in each case before the same shall become delinquent or in default and
before penalties accrue thereon, unless and to the extent that the same are
being contested in good faith by appropriate proceedings and adequate reserves
with respect thereto shall, to the extent required by GAAP, have been set aside
except, in the case of any such Subsidiaries, where such failure to so pay or
discharge is not reasonably likely to result in a Material Adverse Effect.

SECTION 6.7 Maintaining Records; Access to Properties and Inspections.
The Borrower will, and will cause each of its Restricted Subsidiaries to,
maintain financial records in accordance with GAAP and, upon reasonable notice
and at reasonable times, permit authorized representatives designated by the
Administrative Agent to visit and inspect its properties, books and records and
to discuss its affairs, finances and condition with its officers.

SECTION 6.8 Risk Management Procedures. The Borrower will, and will cause
each of its Restricted Subsidiaries to, maintain in effect prudent risk
management procedures with respect to Trading Arrangements and Swaps.

SECTION 6.9 Merger. The Borrower will not consolidate or merge with or
into any Person, or sell, lease or otherwise transfer, in a single transaction
or in a series of transactions, all or substantially all of its assets to any
Person or Persons, unless (i) the surviving Person or transferee is formed
under the laws of a State of the United States of America and assumes or is
responsible by operation of law for all the Obligations and (ii) no Default,
Event of Default or Downgrade Event shall have occurred or be continuing at the
time of or after giving effect to such consolidation or merger or transfer.

SECTION 6.10 Investments. The Borrower will not make any Investment, or
permit any of its Restricted Subsidiaries to make any Investment, except:

(a)  Investments in any Restricted Subsidiary, Investment Vehicle or Asset
Company (or any Person that will become a Restricted Subsidiary, Investment
Vehicle or Asset Company, as the case may be, upon the making of such
Investment); or

(b)  Investments (not otherwise permitted under this Section 6.10) existing
on the date of execution of this Agreement which are identified on Schedule
6.10 or Schedule 6.13; or

(c)  Investments permitted to be incurred as Indebtedness under Section
6.12; or

(d)  (i) Investments made by any Restricted Subsidiary in the Borrower or
any Restricted Subsidiary in connection with the Borrowers cash management
program or (ii) Investments in Cash Equivalents; or

(e)  Investments constituting Equity Funding Arrangements permitted
hereunder; or

(f)  Investments otherwise made by the Borrower and its Restricted
Subsidiaries in the ordinary course of business as conducted by the Borrower or
its Restricted Subsidiaries or by

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other Persons in the energy trading, energy
services, power generation, electric transmission or gas transmission and
storage businesses (including technologies related to such businesses); or

(g)  Investments in connection with obligations in support of Trading
Arrangements; or

(h)  Investments in any Unrestricted Subsidiary with amounts which would
otherwise be available for distribution in accordance with Section 6.14.

SECTION 6.11 Liens. The Borrower will not create or assume or permit to
exist any Lien, or permit any Restricted Subsidiary, Investment Vehicle or
Asset Company to, create or assume or permit to exist any Lien, in respect of
any of its property or assets of any kind (real or personal, tangible or
intangible), except:

(a)  Liens granted pursuant to Lease Obligations described in clause (i) of
the definition of Lease Obligations and permitted by Section 6.12; or

(b)  Liens on cash collateral securing Equity Funding Arrangements, Credit
Support Arrangements, Investments or Indebtedness permitted hereunder; or

(c)  Liens existing on the assets of any Person at the time such Person
becomes a Subsidiary of the Borrower; or

(d)  Liens on the equity or ownership interests of any Asset Company or any
Investment Vehicle which owns such Asset Company and Liens on any Equity
Funding Arrangements securing the applicable Project Financing Facility; or

(e)  Liens on any of the assets of any Asset Company or Investment Vehicle
securing or in connection with the applicable Project Financing Facility; or

(f)  Liens on any asset of the Borrower or any Restricted Subsidiary
incurred or assumed for the purpose of financing all or any part of the cost of
acquiring, constructing or improving such asset, providedthat such Lien
attaches contemporaneously with, or within 12 months of, the purchase,
construction or improvement of such asset; or

(g)  Other Liens (not otherwise permitted under this Section 6.11) existing
as of the date of this Credit Agreement and identified on Schedule 6.11; or

(h)  Permitted Encumbrances; or

(i)  without limiting the ability to incur Liens under the other
subsections of this Section 6.11, extensions or renewals of any Lien otherwise
permitted to be incurred under this Section 6.11 securing Indebtedness in an
amount not exceeding the principal amount of, and accrued interest on, the
Indebtedness secured by such Lien as so extended or renewed at the time of
such extension or renewal; providedthat such Lien shall apply only to
the same property theretofore subject to the same and fixed improvements
constructed thereon.

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SECTION 6.12 Indebtedness. The Borrower will not incur, create, assume or
permit to exist Indebtedness, or permit any Restricted Subsidiary, Investment
Vehicle or Asset Company to, incur, create, assume or permit to exist
Indebtedness, except:

(a)  Indebtedness under (i) this Agreement, the PG&E Gen Credit Agreement,
the USGenNE Credit Agreement, the GTN Credit Agreements and the ET Credit
Agreements (the Refinanceable Facilities), (ii) the NEG Indenture and the NEG
Guarantees, and (iii) other credit facilities entered into by the Borrower or
any Restricted Subsidiary prior to the date of this Agreement and identified on
Schedule 6.12(a); provided, that this subsection (a) shall not be deemed to
permit an amendment to the facilities referred to in this subsection (a) which
has the effect of increasing the available commitments thereunder; or

(b)  Lease Obligations (1) under leases for any office buildings in which
the Borrower or any of its Subsidiaries has or will have offices; (2) under
leases for any equipment not to exceed $10,000,000 in the aggregate outstanding
at any time; or (3) described in clause (i) of the definition thereof of the
Borrower and its Restricted Subsidiaries if, immediately after the incurrence
of any such Lease Obligation, the outstanding aggregate principal amount of all
such Lease Obligations (other than those Lease Obligations incurred under
subsections (c), (j), (l) and (q) below) would not exceed 2% of Consolidated
Tangible Net Assets; or

(c)  Indebtedness of (i) any Asset Company under any Project Financing
Facility or (ii) any Investment Vehicle under any Project Financing Facility;
provided, that if any Asset Company owned (directly or indirectly) by such
Investment Vehicle has incurred any Indebtedness under a Project Financing
Facility, then such Investment Vehicle may only incur Indebtedness under a
Project Financing Facility if (I)(x) after giving effect to such Indebtedness,
the Ratio of Cash Flow to Fixed Charges of the Borrower would not be less than
2.0:1.0, calculated on a pro formabasis to include such Indebtedness and
related cash flows, (y) the Borrowers senior unsecured long-term debt is, at
the time of such incurrence, rated at least BBB by S&P and Baa2 by Moodys (or
if ratings of such debt have not been issued by such rating agencies, such debt
is impliedly rated by an issuer rating or indicative rating of at least BBB by
S&P and Baa2 by Moodys), and (z) the Borrower obtains a reaffirmation of such
ratings from S&P and Moodys (taking into account the Indebtedness to be
incurred by such Investment Vehicle under this Section 6.12(c)) or (II) such
Investment Vehicle owns only one Asset Company and such Indebtedness is
incurred in connection with a Project Financing Facility and the proceeds
thereof are promptly invested in such Asset Company; or

(d)  Trading Arrangements and Credit Support Arrangements, to the extent
such arrangements constitute Indebtedness; or

(e)  Indebtedness with respect to any securitization, receivables financing
or similar transaction entered into by ET Holdings, GTN, USGenNE or any of
their respective Subsidiaries; or

(f)  Indebtedness not otherwise permitted under this Section 6.12, existing
on the date of this Agreement and set forth on Schedule 6.12(f) or Schedule
6.13; or

(g)  Indebtedness under any Swap; or

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(h)  Permitted Subordinated Indebtedness; or

(i)  Indebtedness between any of the Borrower, any Restricted Subsidiary,
Investment Vehicle, any Asset Company or any Indebtedness under any short-term
overdraft lines of credit or similar arrangements entered into in the ordinary
course of business, in each case associated with the Borrowers cash management
program; or

(j)  Indebtedness attributable to any Permitted Sale-Leaseback
Transactions; or

(k)  Any Guaranty constituting Indebtedness of the Borrower or any
Restricted Subsidiary, Investment Vehicle or Asset Company under clause (ix) of
the definition of Indebtedness to the extent that the obligations covered by
such Guaranty are not reasonably quantifiable under GAAP; or

(l)  other Indebtedness of the Borrower or any Restricted Subsidiary (other
than PG&E Gen) incurred after the date of this Agreement, providedthat (i)
after giving effect to any such Indebtedness, the Ratio of Cash Flow to Fixed
Charges of the Borrower would not be less than 2.0:1.0 (calculated on a pro
forma basis as of the end of the most recent fiscal quarter with respect to
which financial statements of the Borrower are available and assuming for such
purpose that such Indebtedness was incurred one year prior to the end of such
fiscal quarter and taking into account any related cash flows) and (ii) if such
Indebtedness would constitute Indebtedness of a Restricted Subsidiary, no Asset
Company, Investment Vehicle or Restricted Subsidiary owned directly or
indirectly by such Restricted Subsidiary has Indebtedness outstanding which
would otherwise be permitted under Section 6.12(a), (b)(3), (c), (h), (j), (l),
(o) or (p); provided, further, that clause (ii) of this Section 6.12(l) will
not be applicable if the Borrower obtains a reaffirmation of the rating of its
senior unsecured long-term debt of at least BBB by S&P and Baa2 by Moodys (or
if ratings of such debt have not been issued by such rating agencies, such debt
is impliedly rated by an issuer rating or indicative rating of at least BBB by
S&P and Baa2 by Moodys) after taking into account the Indebtedness to be
incurred by such Restricted Subsidiary and related cash flows; or

(m)  Indebtedness of the Borrower or any Restricted Subsidiary in respect
of letters of credit or surety, performance or bid bonds used in the ordinary
course of business not in excess of $25,000,000 in the aggregate outstanding at
any time; or

(n)  Indebtedness constituting intercompany loans (1) between the Borrower
and its Restricted Subsidiaries or between such Restricted Subsidiaries or (2)
made by the Borrower, any Restricted Subsidiary, any Investment Vehicle or any
Asset Company to any Investment Vehicle or any Asset Company or (3) made by any
Investment Vehicle to the Borrower, any Restricted Subsidiary, or any other
Investment Vehicle; or

(o)  Equity Funding Arrangements; or

(p)  without limiting the ability to incur Indebtedness under the other
subsections of this Section 6.12, any refinancing of any Indebtedness permitted
under Section 6.12(f) and under the Refinanceable Facilities, providedthat
either (i) (x) the average life of any refinanced Indebtedness shall not be
less than the average life of the Indebtedness so refinanced (plus fees and
expenses, including any premium or defeasance costs, of such refinancing),
taking into

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account the prepayment or repayment of a portion of any such
Indebtedness, and (y) the principal amount of the refinanced Indebtedness shall
not exceed the principal amount plus accrued interest thereon of the
Indebtedness so refinanced, or (ii) the Borrower shall demonstrate pro forma
compliance with the financial ratio described in Section 6.12(l) above; or

(q)  Indebtedness of any Subsidiary of the Borrower existing at the time
such Person becomes a Subsidiary of the Borrower (except for any such
Indebtedness of such Subsidiary incurred in contemplation of or to finance the
acquisition of such Subsidiary).

SECTION 6.13 Transactions with Affiliates. The Borrower will not enter
into, or permit any Restricted Subsidiary, Investment Vehicle or Asset Company
to enter into, any transaction with any Affiliate of the Borrower (other than
the Borrower, any Subsidiary of the Borrower, any Investment Vehicle and any
Asset Company), except:

(a)  transactions with such Affiliates upon fair and reasonable terms which
are no less favorable to the Borrower than would be obtained in a comparable
arms length transaction with a Person not an Affiliate of the Borrower;

(b)  management, operating, sharing or other similar services arrangements
or promissory notes between and among the Borrower, its Subsidiaries and its
other Affiliates either existing on the date hereof and described on Schedule
6.13 or, other than in the case of promissory notes, entered into after the
date hereof on commercially reasonable terms;

(c)  tax sharing arrangements between the Borrower and PG&E Corp.
approximating the tax position that the Borrower would be in if it were not
part of PG&E Corp.s consolidated group, as determined by the management of the
Borrower in its reasonable business judgment or such other arrangements as may
be approved by the Lenders prior to the date hereof; or

(d)  paying or declaring any Distribution to the extent permitted under
Section 6.14.

The provisions of this Section 6.13 shall not apply to (i) transactions
between the Borrower or any of its Subsidiaries, on the one hand, and any
employee of the Borrower or any of its Subsidiaries, on the other hand, that
are approved by the Board of Directors of the Borrower or any committee of the
Board of Directors and (ii) the payment of reasonable and customary regular
fees to directors of the Borrower or any Subsidiary of the Borrower.

SECTION 6.14 Distributions. The Borrower will not declare or make any
Distribution if (a) a Default, Event of Default or Downgrade Event has occurred
and is continuing or shall occur after giving effect to such Distribution, (b)
the Ratio of Cash Flow to Fixed Charges of the Borrower determined as of
the end of the immediately preceding fiscal quarter was not at least
2.0:1.0 or (c) the Borrower fails to satisfy the requirements of the test set
forth in Section 6.15(b), or the Borrower fails to have a Consolidated Net
Worth of at least $2.15 billion, in each case calculated on a pro formabasis
as of the end of the most recent fiscal period with respect to which financial
statements of the Borrower are available (assuming such Distribution and all
material events with respect to the Borrower and its Subsidiaries which
occurred after the end of such fiscal period had occurred on the last day of
such fiscal period); providedthat the Borrower may declare and make
Distributions of assets of or equity ownership interests in any Unrestricted
Subsidiary at any time without complying with the foregoing.

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SECTION 6.15 Financial Covenants.

(a)  The Borrower shall not, as of the end of each fiscal quarter, permit
the Ratio of Cash Flow to Fixed Charges to be less than 1.5:1.0.

(b)  The Borrower shall not, as of the end of each fiscal quarter, permit
the Ratio of Debt to Capitalization to be greater than 0.6:1.0.

(c)  The Borrower shall not, at the end of each fiscal quarter, permit (i)
Consolidated Net Worth to be less than the Minimum Consolidated Net Worth and
(ii) Non-Trading Consolidated Net Worth to be less than the Minimum Non-Trading
Consolidated Net Worth.

SECTION 6.16 Separateness from PG&E Corp. The Borrower shall (i) maintain
adequate capital in light of the business in which it is engaged; (ii) maintain
books and corporate records separate from PG&E Corp. and PG&E; (iii) not
commingle assets with PG&E Corp. or PG&E; and (iv) conduct business in its own
name and hold itself out as separate from PG&E Corp. and PG&E. The Borrower
shall promptly notify the Administrative Agent upon a Responsible Officer of
the Borrower obtaining Actual Knowledge that a creditor of PG&E Corp. or of
PG&E has made a claim or filing in writing seeking the substantive
consolidation of NEG LLC in any bankruptcy proceeding of PG&E Corp. or of PG&E.

SECTION 6.17 Asset Sales. Except for the sale of all or substantially all
of the assets of the Borrower pursuant to Section 6.9, and other than assets
required to be sold to conform with governmental regulations, the Borrower
shall not, and shall cause its Subsidiaries not to, sell or otherwise dispose
of any assets (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 formabasis, the aggregate net book value of all such
sales during the most recent 12-month period would exceed 10% of Consolidated
Tangible Net Assets computed as of the end of the most recent quarter preceding
such sale; provided, however, that any such sales shall be disregarded for
purposes of this 10% limitation if the proceeds are invested in assets in the
Borrowers business in the energy trading, energy services, power generation,
electric transmission or gas transmission and storage businesses or in similar
or related lines of business, and, provided further, that the Borrower may sell
or otherwise dispose of assets in excess of such 10% limitation if the proceeds
from such sales or dispositions, which are not reinvested as provided
above, are retained by the Borrower as cash or Cash Equivalents or are
used by the Borrower to prepay the Loans hereunder or to purchase and retire
notes or Indebtedness ranking pari passuin right of payment to the Loans or
Indebtedness of the Borrowers Subsidiaries. (For the avoidance of doubt, any
sale of assets otherwise permitted by this Section 6.17 shall not be permitted
if such sale would result in a violation of any other provision of this
Agreement.)

ARTICLE VII

EVENTS OF DEFAULT

SECTION 7.1 Events of Default. If any of the following events shall occur
and be continuing:

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(a)  The Borrower shall fail to pay any principal of any Loan when due in
accordance with the terms hereof; or the Borrower shall fail to pay any
interest on any Loan, or any other amount payable hereunder or under any other
Loan Document, within five days after any such interest or other amount becomes
due in accordance with the terms hereof or thereof; or

(b)  Any representation or warranty made or deemed made by the Borrower
herein or in any other Loan Document or that is contained in any certificate,
document or financial or other statement furnished by it at any time under or
in connection with this Agreement or any such other Loan Document shall prove
to have been inaccurate in any material respect on or as of the date made or
deemed made or furnished; or

(c)  the Borrower shall default in any material respect in the due
observance or performance of any agreement contained in Sections 6.1, 6.2, 6.9,
6.11, 6.12, 6.13, 6.14, 6.15 or 6.16; or

(d)  the Borrower shall default in the observance or performance of any
other agreement contained in this Agreement or any other Loan Document (other
than as provided in paragraphs (a) through (c) of this Section), and such
default shall continue unremedied for a period of 30 days after notice thereof
from the Administrative Agent, which may be at the request of any Lender, to
the Borrower; or

(e)  the Borrower or any Restricted Subsidiary shall default in respect of
any Indebtedness or default in its obligations to make payments when due under
any Equity Funding Arrangements which at the time have an aggregate principal
amount outstanding or, in the case of Equity Funding Arrangements, due and
unpaid, in excess of $50,000,000, and such Indebtedness is then due and payable
in full at maturity or as a result thereof such Indebtedness shall have been
accelerated or otherwise become due or subject to prepayment in full prior to
its stated maturity; or

(f)  an involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking (i) relief
in respect of the Borrower or any Restricted Subsidiary or of a substantial
part of the property or assets of the Borrower or any Restricted Subsidiary
under Title 11 of the United States Code, as now constituted or hereafter
amended, or any other Federal or state bankruptcy, insolvency, receivership or
similar law, (ii) the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Borrower or any Restricted Subsidiary
or (other than in connection with any proceeding relating solely to one or more
Unrestricted Subsidiaries, Investment Vehicles or Project Companies of the
Borrower) for a substantial part of the property or assets of the Borrower or
any Restricted Subsidiary or (iii) the winding up or liquidation of the
Borrower or any Restricted Subsidiary; and such proceeding or petition shall
continue undismissed for 60 days or an order or decree approving or ordering
any of the foregoing shall be entered; or

(g)  the Borrower or any Restricted Subsidiary shall (i) voluntarily
commence any proceeding or file any petition seeking relief under Title 11 of
the United States Code, as now constituted or hereafter amended, or any other
Federal or state bankruptcy, insolvency, receivership or similar law, (ii)
consent to the institution of, or fail to contest in a timely and appropriate
manner, any proceeding or the filing of any petition described in Section
7.1(f)

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above, (iii) apply for or consent to the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar official for the
Borrower or any Restricted Subsidiary (other than in connection with any
proceeding relating solely to one or more Unrestricted Subsidiaries, Investment
Vehicles or Project Companies of the Borrower) for a substantial part of the
property or assets of the Borrower or any Restricted Subsidiary, (iv) file an
answer admitting the material allegations of a petition filed against it in any
such proceeding, (v) make a general assignment for the benefit of creditors, or
(vi) take any corporate action for the purpose of effecting any of the
foregoing, become unable, admit in writing its inability, or fail generally, to
pay its debts as they become due; or

(h)  one or more final judgments for the payment of money in an aggregate
amount in excess of $50,000,000 (exclusive of amounts covered by insurance)
shall be rendered against the Borrower or any Restricted Subsidiary and such
judgment or order shall remain undischarged, unbonded or unstayed for a period
of 60 days; or

(i)  an ERISA Event shall have occurred that, either alone or in
combination with other ERISA Events that shall have occurred, is reasonably
likely to result in a Material Adverse Effect; or

(j)  a court of competent jurisdiction shall issue an order, decree or
judgment requiring the substantive consolidation of the Borrower with PG&E
Corp. or PG&E or a court of competent jurisdiction with administrative
oversight over the assets and liabilities of PG&E Corp. or PG&E shall issue an
order, decree or judgment otherwise subjecting the any material assets and
liabilities of the Borrower to administration by such court;

then, and in any such event, (A) if such event is an Event of Default specified
in paragraphs (f) or (g) above with respect to the Borrower, automatically the
Commitments shall immediately terminate and the Loans hereunder (with accrued
interest thereon) and all other amounts owing under this Agreement and the
other Loan Documents (including all L/C Obligations, whether or not the
beneficiaries of the then outstanding Letters of Credit shall have presented
the documents required for drawings thereunder) shall immediately become due
and payable, and (B) if such event is any other Event of Default, either or
both of the following actions may be taken: (i) with the consent of the
Required Lenders, the Administrative Agent may, or upon the request of the
Required Lenders, the Administrative Agent shall, by notice to the Borrower
declare the Commitments to be terminated forthwith, whereupon the Commitments shall
immediately terminate; and (ii) with the consent of the Required Lenders, the
Administrative Agent may, or upon the request of the Required Lenders, the
Administrative Agent shall, by notice to the Borrower, declare the Loans
hereunder (with accrued interest thereon) and all other amounts owing under
this Agreement and the other Loan Documents (including all L/C Obligations,
whether or not the beneficiaries of the then outstanding Letters of Credit
shall have presented the documents required for drawings thereunder) to be due
and payable forthwith, whereupon the same shall immediately become due and
payable. In the case of all Letters of Credit with respect to which
presentment for honor shall not have occurred at the time of an acceleration
pursuant to this paragraph, the Borrower shall at such time deposit in a cash
collateral account opened by the Administrative Agent (the Cash Collateral
Account) an amount equal to the then aggregate undrawn and unexpired amount of
such Letters of Credit. The Borrower shall grant a security interest on the
Cash Collateral Account to the Administrative Agent, for the benefit of the

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Lenders, on such terms as are reasonably satisfactory to the Administrative
Agent. Amounts held in the Cash Collateral Account shall be applied by the
Administrative Agent to the payment of drafts drawn under such Letters of
Credit, and the unused portion thereof after all such Letters of Credit shall
have expired or been fully drawn upon, if any, shall be applied to repay other
obligations of the Borrower hereunder and under the other Loan Documents.
After all such Letters of Credit shall have expired or been fully drawn upon,
all Reimbursement Obligations shall have been satisfied and all other
obligations of the Borrower hereunder and under the other Loan Documents shall
have been paid in full, the balance, if any, in the Cash Collateral Account
shall be returned to the Borrower (or such other Person as may be lawfully
entitled thereto). Except as expressly provided above in this Section,
presentment, demand, protest and all other notices of any kind are hereby
expressly waived by the Borrower.

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ARTICLE VIII

THE AGENTS

SECTION 8.1 Appointment. Each Lender (the term Lender as used in this
Section 9 to include the Issuing Bank, except as specified below) hereby
irrevocably designates and appoints the Administrative Agent as the
Administrative Agent of such Lender under this Agreement and the other Loan
Documents, and each Lender irrevocably authorizes the Administrative Agent, in
such capacity, to take such action on its behalf under the provisions of this
Agreement and the other Loan Documents and to exercise such powers and perform
such duties as are expressly delegated to the Administrative Agent by the terms
of this Agreement and the other Loan Documents, together with such other powers
as are reasonably incidental thereto. Notwithstanding any provision to the
contrary elsewhere in this Agreement, the Administrative Agent shall not have
any duties or responsibilities, except those expressly set forth herein, or any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the
Administrative Agent.

SECTION 8.2 Delegation of Duties. The Administrative Agent may execute
any of its duties under this Agreement and the other Loan Documents by or
through agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Administrative Agent
shall not be responsible for the negligence or misconduct of any agents or
attorneys in fact selected by it with reasonable care.

SECTION 8.3 Exculpatory Provisions. None of the Agents or any of their
respective officers, directors, employees, agents, attorneys-in-fact or
affiliates shall be (i) liable for any action lawfully taken or omitted to be
taken by it or such Person under or in connection with this Agreement or any
other Loan Document (except to the extent that any of the foregoing are found
by a final and non-appealable decision of a court of competent jurisdiction to
have resulted from its or such Persons own gross negligence or willful
misconduct) or (ii) responsible in any manner to any of the Lenders for any
recitals, statements, representations or warranties made by the Borrower or any
officer thereof contained in this Agreement or any other Loan Document or in
any certificate, report, statement or other document referred to or provided
for in, or received by the Agents under or in connection with, this Agreement
or any other Loan Document or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document or for any failure of the Borrower to perform its obligations
hereunder or thereunder. The Agents shall not be under any obligation to any
Lender to ascertain or to inquire as to the observance or performance of any of
the agreements contained in, or conditions of, this Agreement or any other Loan Document,
or to inspect the properties, books or records of the Borrower.

SECTION 8.4 Reliance by Administrative Agent. The Administrative Agent
shall be entitled to rely, and shall be fully protected in relying, upon any
instrument, writing, resolution, notice, consent, certificate, affidavit,
letter, telecopy, telex or teletype message, statement, order or other document
or conversation believed by it to be genuine and correct and

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to have been
signed, sent or made by the proper Person or Persons and upon advice and
statements of legal counsel (including, without limitation, counsel to the
Borrower), independent accountants and other experts selected by the
Administrative Agent. The Administrative Agent may deem and treat the payee of
any Note as the owner thereof for all purposes unless such Note shall have been
transferred in accordance with Section 9.6 and all actions required by such
Section in connection with such transfer shall have been taken. The
Administrative Agent shall be fully justified in failing or refusing to take
any action under this Agreement or any other Loan Document unless it shall
first receive such advice or concurrence of the Required Lenders (or, if so
specified by this Agreement, all Lenders or any other instructing group of
Lenders specified by this Agreement) as it deems appropriate or it shall first
be indemnified to its satisfaction by the Lenders against any and all liability
and expense that may be incurred by it by reason of taking or continuing to
take any such action. The Administrative Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement and the
other Loan Documents in accordance with a request of the Required Lenders (or,
if so specified by this Agreement, all Lenders or any other instructing group
of Lenders specified by this Agreement), and such request and any action taken
or failure to act pursuant thereto shall be binding upon all the Lenders and
all future holders of the Loans.

SECTION 8.5 Notice of Default. The Administrative Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default or Event of
Default hereunder unless the Administrative Agent shall have received notice
from a Lender, or the Borrower referring to this Agreement, describing such
Default or Event of Default and stating that such notice is a notice of
default. In the event that the Administrative Agent shall receive such a
notice, the Administrative Agent shall give notice thereof to the Lenders. The
Administrative Agent shall take such action with respect to such Default or
Event of Default as shall be reasonably directed by the Required Lenders (or,
if so specified by this Agreement, all Lenders or any other instructing group
of Lenders specified by this Agreement); providedthat unless and until the
Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it
shall deem advisable in the best interests of the Lenders.

SECTION 8.6 Non-Reliance on Administrative Agent and Other Lenders. Each
Lender expressly acknowledges that none of the Agents or any of their
respective officers, directors, employees, agents, attorneys-in-fact or
affiliates have made any representations or warranties to it and that no act by
any Agent hereafter taken, including any review of the affairs of the Borrower
or any affiliate of the Borrower, shall be deemed to constitute any representation
or warranty by any Agent to any Lender.
Each Lender represents to the Agents that it has, independently and without
reliance upon any Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, financial and other
condition and creditworthiness of the Borrower and their affiliates and made
its own decision to make its Loans hereunder and enter into this Agreement.
Each Lender also represents that it will, independently and without reliance
upon any Agent or any other Lender, and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit
analysis, appraisals and decisions in taking or not taking action under this
Agreement and the other Loan Documents, and to make such investigation as it
deems necessary to inform itself as to the

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business, operations, property,
financial and other condition and creditworthiness of the Borrower and their
affiliates. Except for notices, reports and other documents expressly required
to be furnished to the Lenders by the Administrative Agent hereunder, the
Administrative Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business,
operations, property, condition (financial or otherwise), prospects or
creditworthiness of the Borrower or any affiliate of the Borrower that may come
into the possession of the Administrative Agent or any of its officers,
directors, employees, agents, attorneys-in-fact or affiliates.

SECTION 8.7 Indemnification. The Lenders (other than the Issuing Bank)
agree to indemnify each Agent in its capacity as such (to the extent not
reimbursed by the Borrower and without limiting the obligation of the Borrower
to do so), ratably according to their respective Aggregate Exposure Percentages
in effect on the date on which indemnification is sought under this Section
(or, if indemnification is sought after the date upon which the Commitments
shall have terminated and the Loans shall have been paid in full, ratably in
accordance with such Aggregate Exposure Percentages immediately prior to such
date), for, and to save each Agent harmless from and against, any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind whatsoever that may at any
time (including, without limitation, at any time following the payment of the
Loans) be imposed on, incurred by or asserted against such Agent in any way
relating to or arising out of, the Commitments, this Agreement, any of the
other Loan Documents or any documents contemplated by or referred to herein or
therein or the transactions contemplated hereby or thereby or any action taken
or omitted by such Agent under or in connection with any of the foregoing;
providedthat no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements that are found by a final and
non-appealable decision of a court of competent jurisdiction to have resulted
from such Agents gross negligence or willful misconduct. The agreements in
this Section 8.7 shall survive the payment of the Loans and all other amounts
payable hereunder.

SECTION 8.8 Agent in Its Individual Capacity. Each Agent, in its
individual capacity, and its affiliates may make loans to, accept deposits from
and generally engage in any kind of business with the Borrower as though such
Agent were not the Agent. With respect to its Loans made or renewed by it and
with respect to any Letter of Credit issued or participated in by it, each
Agent, in its individual capacity, shall have the same rights and powers under
this Agreement and the other Loan
Documents as any Lender and may exercise the same as though it were not an
Agent, and the terms Lender and Lenders shall include the Agent, in its
individual capacity.

SECTION 8.9 Successor Administrative Agent. The Administrative Agent may
resign as Administrative Agent upon (i) 10 Business Days notice to the Lenders
and the Borrower and (ii) the appointment of a successor Administrative Agent
in accordance with this Section 8.9. If the Administrative Agent shall give
notice of its intent to resign as Administrative Agent under this Agreement and
the other Loan Documents, then the Required Lenders shall appoint from among
the Lenders a successor Administrative Agent for the Lenders, which successor
Administrative Agent shall (unless an Event of Default under Section 7.1(a) or
Section 7.1(f) or Section 7.1(g) with respect to the Borrower shall have
occurred and be continuing) be

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subject to approval by the Borrower (which
approval shall not be unreasonably withheld or delayed), whereupon such
successor Administrative Agent shall succeed to the rights, powers and duties
of the Administrative Agent, and the term Administrative Agent shall mean
such successor Administrative Agent effective upon such appointment and
approval, and the former Administrative Agents rights, powers and duties as
Administrative Agent shall be terminated, without any other or further act or
deed on the part of such former Administrative Agent or any of the parties to
this Agreement or any holders of the Loans. If no successor agent has accepted
appointment as Administrative Agent by the date that is 30 days following a
retiring Administrative Agents notice of resignation, the retiring
Administrative Agents resignation shall nevertheless thereupon become
effective, and the Lenders shall assume and perform all of the duties of the
Administrative Agent hereunder until such time, if any, as the Required Lenders
appoint a successor agent as provided for above. After any retiring
Administrative Agents resignation as Administrative Agent, the provisions of
this Section 8 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Administrative Agent under this Agreement and the
other Loan Documents.

SECTION 8.10 Documentation and Syndication Agents. Neither the
Documentation Agents nor the Syndication Agents shall have any duties or
responsibilities hereunder in their capacities as such.

ARTICLE IX

MISCELLANEOUS

SECTION 9.1 Amendments and Waivers. Neither this Agreement or any other
Loan Document, nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this Section 9.1. The
Required Lenders and the Borrower may, or (with the written consent of the
Required Lenders) the Administrative Agent and the Borrower may, from time to
time, (a) enter into written amendments, supplements or modifications hereto
and to the other Loan Documents (including amendments and restatements hereof
or thereof) for the purpose of adding any provisions to this Agreement or the
other Loan Documents or changing in any manner the rights of the Lenders or of
the Borrower hereunder or thereunder or (b) waive, on
such terms and conditions as may be specified in the instrument of waiver, any
of the requirements of this Agreement or the other Loan Documents or any
Default or Event of Default and its consequences; provided, however, that no
such waiver and no such amendment, supplement or modification shall:

(i)  forgive any part of the principal amount or extend the final scheduled
date of maturity of any Loan or Reimbursement Obligation or extend the expiry
date of any Letter of Credit (beyond the dates provided in Section 2.1(a) and
2.1(b)), reduce the stated rate of any interest or fee payable hereunder or
extend the scheduled date of any payment thereof, or increase the amount or
extend the expiration date of any Commitment of any Lender, in each case
without the written consent of each Lender or Issuing Bank, as the case may be,
directly affected thereby;

(ii)  amend, modify or waive any provision of this Section or reduce any
percentage specified in the definition of Required Lenders, or consent to the
assignment or transfer by the

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Borrower of any of its rights and obligations
under this Agreement and the other Loan Documents;

(iii)  eliminate or reduce the voting rights of any Lender under this
Section 9.1 without the written consent of such Lender;

(iv)  amend, modify or waive any provision of Section 3.12 or the
definition of Aggregate Exposure Percentages without the written consent of
each Lender directly affected thereby; or

(v)  amend, modify or waive any provision of Section 2 without the written
consent of the Issuing Bank.

Any such waiver and any such amendment, supplement or modification shall apply
equally to each of the Issuing Bank and the Lenders and shall be binding upon
the Borrower, the Issuing Bank, the Lenders and the Administrative Agent. In
the case of any waiver, the Borrower, the Issuing Bank, the Lenders and the
Administrative Agent shall be restored to their former position and rights
hereunder and under the other Loan Documents, and any Default or Event of
Default waived shall be deemed to be cured and not continuing; but no such
waiver shall extend to any subsequent or other Default or Event of Default, or
impair any right consequent thereon. Any such waiver, amendment, supplement or
modification shall be effected by a written instrument signed by the parties
required to sign pursuant to the foregoing provisions of this Section;
provided, that delivery of an executed signature page of any such instrument by
facsimile transmission shall be effective as delivery of a manually executed
counterpart thereof.

SECTION 9.2 Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
telecopy), and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered, or three Business Days after being
deposited in the mail, postage prepaid, or, in the case of telecopy notice,
when received, addressed (a) in the case of the Borrower, the Issuing Bank and
the Administrative Agent, as follows and (b) in the case of the Lenders, as set forth on
Schedule 1.1B hereto, or, in the case of a Lender which becomes a party to this
Agreement pursuant to an Assignment and Acceptance, in such Assignment and
Acceptance or (c) in the case of any party, to such other address as such party
may hereafter notify to the other parties hereto:

The Borrower:

|                                                                                                                                                                                                 
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|PG&E National Energy Group, Inc.
7500 Old Georgetown Road
Bethesda, Maryland 20814
Attention:    Senior Vice President and General Counsel
Facsimile:   (301) 280-6319
Telephone:  (301) 280-6815

The Administrative Agent:

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|                                                                                                                   
|-------------------------------------------------------------------------------------------------------------------
|The Chase Manhattan Bank
One Chase Manhattan Plaza
8th Floor
New York, New York 10081
Attention: Jacqueline D. Reid
|Facsimile:     (212) 552-7683
Telephone:   (212) 552-5777                                                          

The Issuing Bank:

|                                                                                                                                                                                                   
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|The Chase Manhattan Bank
4 Chase MetroTech Center, 8th Floor
Brooklyn, New York 11245-0001
Attention: Standby Letter of Credit Department
Facsimile:     (718) 242-6501
Telephone:   (718) 242-5045

provided,that any notice, request or demand to or upon the Administrative
Agent, the Issuing Bank or any Lender shall not be effective until received.
All Applications for Issuance shall be delivered to the Issuing Bank as
follows:

Deliver Application for Issuance to:

|                                                                                                                                                                                                   
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|The Chase Manhattan Bank
4 Chase MetroTech Center, 8th Floor
Brooklyn, New York 11245-0001
Attention: Standby Letter of Credit Department
Facsimile:     (718) 242-6501
Telephone:   (718) 242-5045

SECTION 9.3 No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of the Administrative Agent, the Issuing Bank
or any Lender, any right, remedy, power or privilege hereunder or under the
other Loan Documents shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude
any other or further exercise thereof or the exercise of any other right,
remedy, power or privilege. The rights, remedies, powers and privileges herein
provided are cumulative and not exclusive of any rights, remedies, powers and
privileges provided by law.

SECTION 9.4 Survival of Representations and Warranties. All
representations and warranties made herein, in the other Loan Documents and in
any document, certificate or statement delivered pursuant hereto or in
connection herewith shall survive the execution and delivery of this Agreement
and the making of the Loans and other extensions of credit hereunder.

SECTION 9.5 Payment of Expenses. The Borrower agrees (a) to pay or
reimburse the Issuing Bank and the Administrative Agent for all their
reasonable out-of-pocket costs and expenses incurred in connection with the
syndication of the facilities herein (other than fees payable to syndicate
members) and the development, preparation and execution of, and any amendment,
supplement or modification to, this Agreement and the other Loan Documents and

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any other documents prepared in connection herewith or therewith, and the
consummation and administration of the transactions contemplated hereby and
thereby, including, without limitation, the reasonable fees and disbursements
and other charges of single counsel to both the Issuing Bank and the
Administrative Agent, (b) to pay or reimburse the Issuing Bank, each Lender and
the Administrative Agent for all their costs and expenses incurred in
connection with the enforcement or preservation of any rights under this
Agreement, the other Loan Documents and any other documents prepared in
connection herewith or therewith, including, without limitation, the fees and
disbursements of counsel to the Lenders, the Issuing Bank and the
Administrative Agent, (c) to pay, indemnify, or reimburse the Issuing Bank,
each Lender and the Administrative Agent for, and hold the Issuing Bank, each
Lender and the Administrative Agent harmless from, any and all recording and
filing fees and any and all liabilities with respect to, or resulting from any
delay in paying, stamp, excise and other taxes, if any, which may be payable or
determined to be payable in connection with the execution and delivery of, or
consummation or administration of any of the transactions contemplated by, or
any amendment, supplement or modification of, or any waiver or consent under or
in respect of, this Agreement, the other Loan Documents and any such other
documents, and (d) to pay, indemnify or reimburse the Issuing Bank, each
Lender, the Administrative Agent, their respective affiliates, and their
respective officers, directors, trustees, employees, advisors, Administrative
Agents and controlling persons (each, an Indemnitee) for, and hold each
Indemnitee harmless from and against any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever with respect to the
execution, delivery, enforcement, performance and administration of, and the
syndication of commitments under, this Agreement, the other Loan Documents and
any such other documents or any investigation, litigation or proceeding
relating to or arising out of any of the foregoing (whether or not any
Indemnitee is a party thereto), including, without limitation, any of the
foregoing relating to the use of proceeds of the Loans and the fees and disbursements and other
charges of legal counsel in connection with claims, actions or proceedings by
any Indemnitee against the Borrower hereunder (all the foregoing in this clause
(d), collectively, the Indemnified Liabilities), provided, that the Borrower
shall have no obligation hereunder to any Indemnitee with respect to
Indemnified Liabilities to the extent such Indemnified Liabilities are found by
a final and non-appealable decision of a court of competent jurisdiction to
have resulted from the gross negligence or willful misconduct of such
Indemnitee. All amounts due under this Section shall be payable not later than
30 days after written demand therefor. Statements payable by the Borrower
pursuant to this Section shall be submitted to PG&E National Energy Group, Inc.
Attention: Accounts Payable (Telephone No. 301-280-6800) (Fax No.
301-280-6900), at the address of the Borrower set forth in Section 9.2, or to
such other Person or address as may be hereafter designated by the Borrower in
a notice to the Administrative Agent. The agreements in this Section shall
survive repayment of the Loans and all other amounts payable hereunder.

SECTION 9.6 Successors and Assigns; Participations and Assignments.

(a)  This Agreement shall be binding upon and inure to the benefit of the
Borrower, the Issuing Bank, the Lenders, the Administrative Agent, all future
holders of the Loans and their respective successors and assigns, except that
the Borrower may not assign or transfer any of its rights or obligations under
this Agreement without the prior written consent of the Administrative Agent,
the Issuing Bank and each Lender.

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(b)  Any Lender other than any Conduit Lender may, without the consent of
the Borrower, in accordance with applicable law, at any time sell to one or
more banks, financial institutions or other entities (each, a Participant)
participating interests in any Loan owing to such Lender, any Commitment of
such Lender or any other interest of such Lender hereunder and under the other
Loan Documents. In the event of any such sale by a Lender of a participating
interest to a Participant, such Lenders obligations under this Agreement to
the other parties to this Agreement shall remain unchanged, such Lender shall
remain solely responsible for the performance thereof, such Lender shall remain
the holder of any such Loan for all purposes under this Agreement and the other
Loan Documents, and the Borrower, the Issuing Bank and the Administrative Agent
shall continue to deal solely and directly with such Lender in connection with
such Lenders rights and obligations under this Agreement and the other Loan
Documents. In no event shall any Participant under any such participation have
any right to approve any amendment or waiver of any provision of any Loan
Document, or any consent to any departure by the Borrower therefrom, except to
the extent that such amendment, waiver or consent would require the consent of
all Lenders pursuant to Section 9.1. The Borrower agrees that if amounts
outstanding under this Agreement and the Loans are due or unpaid, or shall have
been declared or shall have become due and payable upon the occurrence of an
Event of Default, each Participant shall, to the maximum extent permitted by
applicable law, be deemed to have the right of setoff in respect of its
participating interest in amounts owing under this Agreement to the same extent
as if the amount of its participating interest were owing directly to it as a
Lender under this Agreement, providedthat, in purchasing such participating
interest, such Participant shall be deemed to have agreed to share with the
Lenders the proceeds thereof as provided in Section 9.7(a) as fully as if such
Participant were a Lender hereunder. The Borrower also agrees that each
Participant shall be entitled to the benefits of Sections 3.13, 3.14 and 3.15
with respect to its participation in the Commitments and the Loans outstanding
from time to time as if such Participant were a Lender; providedthat, in the
case of Section 3.14, such Participant shall have complied with the
requirements of said Section, and provided, further, that no Participant shall
be entitled to receive any greater amount pursuant to any such Section than the
transferor Lender would have been entitled to receive in respect of the amount
of the participation transferred by such transferor Lender to such Participant
had no such transfer occurred.

(c)  Any Lender
other than any Conduit Lender (an Assignor) may, in
accordance with applicable law and upon written notice to the Administrative
Agent, at any time and from time to time assign to any Lender or any Lender
Affiliate or, with the consent of the Borrower, the Issuing Bank and the
Administrative Agent (which, in each case, shall not be unreasonably withheld
or delayed), to an additional bank, financial institution or other entity (an
Assignee) all or any part of its rights and obligations under this Agreement
pursuant to an Assignment and Acceptance, substantially in the form of Exhibit
B, executed by such Assignee and such Assignor (and, where the consent of the
Borrower, the Issuing Bank or the Administrative Agent is required pursuant to
the foregoing provisions, by the Borrower and such other Persons) and delivered
to the Administrative Agent for its acceptance and recording in the Register;
providedthat no such assignment to an Assignee (other than any Lender or any
affiliate thereof) shall be in an aggregate principal amount of less than
$10,000,000 or result in the assigning Lender holding an aggregate principal
amount of less than $10,000,000 (other than in the case of an assignment of all
of a Lenders interests under this Agreement), unless otherwise agreed by the
Borrower and the Administrative Agent. For purposes of the proviso contained
in the preceding

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sentence, the amount described therein shall be aggregated in
respect of each Lender and its Lender Affiliates, if any. Upon such execution,
delivery, acceptance and recording, from and after the effective date
determined pursuant to such Assignment and Acceptance, (x) the Assignee
thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Lender
hereunder with Commitments and/or Loans as set forth therein, and (y) the
Assignor thereunder shall, to the extent provided in such Assignment and
Acceptance, be released from its obligations under this Agreement (and, in the
case of an Assignment and Acceptance covering all of an Assignors rights and
obligations under this Agreement, such Assignor shall cease to be a party
hereto, except as to Section 3.13, 3.14 and 9.5 in respect of the period prior
to such effective date). Notwithstanding any provision of this Section, the
consent of the Borrower shall not be required for any assignment that occurs at
any time when any Event of Default shall have occurred and be continuing.
Notwithstanding the foregoing, any Conduit Lender may assign at any time to its
designating Lender hereunder without the consent of the Borrower or the
Administrative Agent any or all of the Loans it may have funded hereunder and
pursuant to its designation agreement and without regard to the limitations set
forth in the first sentence of this Section 9.6(c).

(d)  The Administrative Agent shall, on behalf of the Borrower, maintain at
its address referred to in Section 9.2 a copy of each Assignment and Acceptance
delivered to it and a register (the Register) for the recordation of the
names and addresses of the Lenders and the Commitment of, and principal amount
of the Loans owing to, each Lender from time to time. The entries in the
Register shall be conclusive, in the absence of manifest error, and the
Borrower, the Issuing Bank, the Administrative Agent and the Lenders shall
treat each Person whose name is recorded in the Register as the owner of the
Loans and any Notes evidencing such Loans recorded therein for all purposes of
this Agreement. Any assignment of any Loan, whether or not evidenced by a Note,
shall be effective only upon
appropriate entries with respect thereto being made in the Register (and each
Note shall expressly so provide). Any assignment or transfer of all or part of
a Loan evidenced by a Note shall be registered on the Register only upon
surrender for registration of assignment or transfer of the Note evidencing
such Loan, accompanied by a duly executed Assignment and Acceptance; thereupon
one or more new Notes in the same aggregate principal amount shall be issued to
the designated Assignee, and the old Notes shall be returned by the
Administrative Agent to the Borrower marked canceled. The Register shall be
available for inspection by the Borrower or any Lender (with respect to any
entry relating to such Lenders Loans) at any reasonable time and from time to
time upon reasonable prior notice.

(e)  Upon its receipt of an Assignment and Acceptance executed by an
Assignor, an Assignee and any other Person whose consent is required by Section
9.6(c), together with payment by either the Assignor or the Assignee, as they
may agree upon between themselves, to the Administrative Agent of a
registration and processing fee of $4,000 (provided, that such registration and
processing fee shall not be required to be paid if the assignment is between a
Lender and such Lenders Lender Affiliate), the Administrative Agent shall (i)
promptly accept such Assignment and Acceptance and (ii) on the effective date
determined pursuant thereto record the information contained therein in the
Register and give notice of such acceptance and recordation to the Borrower.
On or prior to such effective date, the Borrower, at its own expense, upon
request, shall execute and deliver to the Administrative Agent (in exchange for
the Note of the assigning Lender) new Note to the order of such Assignee in an
amount equal to the

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applicable Loans assumed or acquired by it pursuant to such
Assignment and Acceptance and, if the Assignor has retained Commitments, upon
request, a new Note to the order of the Assignor in an amount equal to the
applicable Loans retained by it hereunder. Such new Note or Notes shall be
dated the Closing Date and shall otherwise be in the form of the Note or Notes
replaced thereby.

(f)  For avoidance of doubt, the parties to this Agreement acknowledge that
the provisions of this Section concerning assignments of Loans and Notes relate
only to absolute assignments and that such provisions do not prohibit
assignments creating security interests in Loans and Notes, including, without
limitation, any pledge or assignment by a Lender of any Loan or Note to any
Federal Reserve Bank in accordance with applicable law.

(g)  Each of the Borrower, each Lender and the Administrative Agent hereby
confirms that it will not institute against a Conduit Lender or join any other
Person in instituting against a Conduit Lender any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceeding under any state bankruptcy or
similar law, for one year and one day after the payment in full of the latest
maturing commercial paper note issued by such Conduit Lender; provided,
however, that each Lender designating any Conduit Lender hereby agrees to
indemnify, save and hold harmless each other party hereto for any loss, cost,
damage or expense arising out of its inability to institute such a proceeding
against such Conduit Lender during such period of forbearance.

SECTION 9.7 Adjustments; Set-off.

(a)  Except to the extent that this Agreement provides for payments to be
allocated to a particular Lender or to the Lenders, if any Lender (a Benefited
Lender) shall at any time receive any payment of all or part of the
Obligations owing to it, or receive any collateral in respect thereof (whether
voluntarily or involuntarily, by set-off, pursuant to events or proceedings of
the nature referred to in Section 7.1(f), Section 7.1(g) or otherwise), in a
greater proportion than any such payment to or collateral received by any other
Lender, if any, in respect of the Obligations owing to Lender, such Benefited
Lender shall purchase for cash from the other Lenders a participating interest
in such portion of the Obligations owing to each such other Lender, or shall
provide such other Lenders with the benefits of any such collateral, as shall
be necessary to cause such Benefited Lender to share the excess payment or
benefits of such collateral ratably with each of the Lenders; provided,
however, that if all or any portion of such excess payment or benefits is
thereafter recovered from such Benefited Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest unless the Benefited Lender is required by law
to pay interest thereon, in which case, each Lender returning funds to the
Benefited Lender shall pay its pro ratashare of such interest.

(b)  In addition to any rights and remedies of the Lenders provided by law,
each Lender shall have the right, without prior notice to the Borrower, any
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waived by the Borrower to the extent permitted by
applicable law, upon any amount becoming due and payable by the Borrower
hereunder (whether at the stated maturity, by acceleration or otherwise), to
set off and appropriate and apply against such amount any and all deposits
(general or special, time or demand, provisional or final), in any currency,
and any other credits, indebtedness or claims, in any currency, in each case
whether direct or indirect, absolute or contingent, matured or unmatured, at
any time held or owing by such Lender or any branch, agency or affiliate
thereof (other than any such affiliate engaged in the energy trading business)
to or for the credit or the account of the Borrower. Each Lender agrees
promptly to notify the Borrower and the Administrative Agent after any such
setoff and application made by such Lender, providedthat the failure to give
such notice shall not affect the validity of such setoff and application.

SECTION 9.8 Counterparts. This Agreement may be executed by one or more
of the parties to this Agreement on any number of separate counterparts, and
all of said counterparts taken together shall be deemed to constitute one and
the same instrument. Delivery of an executed signature page of this Agreement
or of a Lender Addendum by facsimile transmission shall be effective as
delivery of a manually executed counterpart hereof. A set of the copies of this
Agreement signed by all the parties shall be lodged with the Borrower and the
Administrative Agent.

SECTION 9.9 Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or unenforceability
in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

SECTION 9.10 Integration. This Agreement and the other Loan Documents
represent the entire agreement of the Borrower, the Administrative Agent, the
Issuing Bank and the Lenders with respect to the subject matter hereof and
thereof, and there are no promises, undertakings, representations or warranties
by the Administrative Agent, the Issuing Bank or any Lender relative to subject
matter hereof not expressly set forth or referred to herein or in the other
Loan Documents.

SECTION 9.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

SECTION 9.12 Submission To Jurisdiction; Waivers. Borrower hereby
irrevocably and unconditionally:

(a)  submits in any legal action or proceeding relating to this Agreement
and the other Loan Documents to which it is a party, or for recognition and
enforcement of any judgment in respect thereof, to the non-exclusive general
jurisdiction of the courts of the State of New York, the courts of the United
States of America for the Southern District of New York, and appellate courts
from any thereof;

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(b)  consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the venue
of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or
claim the same;

(c)  agrees that service of process in any such action or proceeding may be
effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to the Borrower, as the
case may be, at its address set forth in Section 9.2 or at such other address
of which the Administrative Agent shall have been notified pursuant thereto;

(d)  agrees that nothing herein shall affect the right to effect service of
process in any other manner permitted by law or shall limit the right to sue in
any other jurisdiction; and

(e)  waives, to the maximum extent not prohibited by law, any right it may
have to claim or recover in any legal action or proceeding related to the Loan
Documents any special, exemplary, punitive or consequential damages.

SECTION 9.13 Acknowledgments. Borrower hereby acknowledges that:

(a)  it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents;

(b)  neither the Administrative Agent, the Issuing Bank nor any Lender has
any fiduciary relationship with or duty to the Borrower arising out of or in
connection with this Agreement or any of the other Loan Documents, and the
relationship between the Administrative Agent, the Issuing Bank and the
Lenders, on one hand, and the Borrower, on the other hand, in connection
herewith or therewith is solely that of debtor and creditor; and

(c)  no joint venture is created hereby or by the other Loan Documents or
otherwise exists by virtue of the transactions contemplated hereby among the
Administrative Agent, the Issuing Bank and the Lenders or among the Borrower,
the Issuing Bank and the Lenders.

SECTION 9.14 Confidentiality. Each of the Administrative Agent, the
Issuing Bank and the Lenders agrees to keep confidential all non-public
information provided to it by Borrower pursuant to this Agreement that is
designated by Borrower as confidential; providedthat nothing herein shall
prevent the Administrative Agent, the Issuing Bank or any Lender from
disclosing any such information (a) to the Administrative Agent, the Issuing
Bank, any other Lender or any affiliate of any thereof, (b) to any Participant
or Assignee (each, a Transferee) or prospective Transferee that agrees to
comply with the provisions of this Section, (c) to any of its employees,
directors, agents, attorneys, accountants and other professional advisors, (d)
to any financial institution that is a direct or indirect contractual
counterparty in swap agreements or such contractual counterpartys professional
advisor (so long as such contractual counterparty or professional advisor to
such contractual counterparty agrees to be bound by the provisions of this
Section), (e) upon the request or demand of any Governmental Authority having
jurisdiction over it, (f) in response to any order of any court or other
Governmental Authority or as may otherwise be required pursuant to any
requirement of law, (g) in connection with any litigation or similar
proceeding, (h) that has been publicly disclosed other than in breach of this
Section, (i) to the National Association of Insurance Commissioners or any
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recognized rating agency that requires
access to information about a Lenders investment portfolio in connection with
ratings issued with respect to such Lender or (j) in connection with the
exercise of any remedy hereunder or under any other Loan Document.

SECTION 9.15 Accounting Changes. In the event that any Accounting
Change (as defined below) shall occur and such change results in a change in
the method of calculation of financial covenants, standards or terms in this
Agreement, then the Borrower and the Administrative Agent agree to enter into
negotiations in order to amend such provisions of this Agreement so as to
equitably reflect such Accounting Change with the desired result that the
criteria for evaluating the financial condition of the Borrower shall be the
same after such Accounting Change as if such Accounting Change had not been
made. Until such time as such an amendment shall have been executed and
delivered by the Borrower, the Administrative Agent and the Required Lenders,
all financial covenants, standards and terms in this Agreement shall continue
to be calculated or construed as if such Accounting Change had not occurred.
Accounting Change refers to any change in accounting principles required by
the promulgation of any rule, regulation, pronouncement or opinion by the Financial
Accounting Standards Board of the American Institute of Certified Public Accountants or, if
applicable, the SEC.

SECTION 9.16 Delivery of Lender Addenda. Each initial Lender shall become
a party to this Agreement by delivering to the Administrative Agent a Lender
Addendum duly executed by such Lender, the Borrower, the Issuing Bank and the
Administrative Agent.

SECTION 9.17 WAIVERS OF JURY TRIAL. THE BORROWER, THE ADMINISTRATIVE
AGENT, THE ISSUING BANK AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.

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