Exhibit 10.72


                                   195,000,000

                                CREDIT AGREEMENT

                                      among

                      PUBLIC SERVICE COMPANY OF NEW MEXICO
                                  as Borrower,

                         THE LENDERS IDENTIFIED HEREIN,

                             BANK OF AMERICA, N.A.,
                             as Administrative Agent

                      WACHOVIA BANK, NATIONAL ASSOCIATION,
                              as Syndication Agent

                                       AND

                               FLEET NATIONAL BANK
                             as Documentation Agent

                          DATED AS OF DECEMBER 19, 2002


                         BANC OF AMERICA SECURITIES LLC,
                   as Sole Lead Arranger and Sole Book Manager



<PAGE>

                                TABLE OF CONTENTS
                                -----------------


SECTION 1  DEFINITIONS AND ACCOUNTING TERMS...................................1
         1.1      Definitions.................................................1
                  -----------
         1.2      Computation of Time Periods and Other
                  Definitional Provisions....................................16
                  -----------------------
         1.3      Accounting Terms/Calculation of
                  Financial Covenants........................................16
                  -------------------
         1.4      Time.......................................................16
                  ----
         1.5      Rounding of Financial Covenants............................16
                  -------------------------------
         1.6      References to Agreements and Requirement of Laws...........17
                  ------------------------------------------------

SECTION 2  CREDIT FACILITY...................................................17
         2.1      Revolving Loans............................................17
                  ---------------
         2.2      Letter of Credit Subfacility...............................18
                  ----------------------------
         2.3      Continuations and Conversions..............................25
                  -----------------------------
         2.4      Minimum Amounts............................................26
                  ---------------

SECTION 3  GENERAL PROVISIONS APPLICABLE TO REVOLVING LOANS..................26
         3.1      Interest...................................................26
                  --------
         3.2      Payments Generally.........................................27
                  ------------------
         3.3      Prepayments................................................28
                  -----------
         3.4      Fees.......................................................29
                  ----
         3.5      Payment in full at Maturity................................29
                  ---------------------------
         3.6      Computations of Interest and Fees..........................30
                  ---------------------------------
         3.7      Pro Rata Treatment.........................................30
                  ------------------
         3.8      Sharing of Payments........................................31
                  -------------------
         3.9      Capital Adequacy...........................................32
                  ----------------
         3.10     Eurodollar Provisions......................................32
                  ---------------------
         3.11     Illegality.................................................32
                  ----------
         3.12     Requirements of Law; Reserves on Eurodollar Loans..........33
                  -------------------------------------------------
         3.13     Taxes......................................................33
                  -----
         3.14     Compensation...............................................36
                  ------------
         3.15     Determination and Survival of Provisions...................36
                  ----------------------------------------

SECTION 4  CONDITIONS PRECEDENT TO CLOSING...................................37
         4.1      Closing Conditions.........................................37
                  ------------------

SECTION 5  CONDITIONS TO ALL EXTENSIONS OF CREDIT............................39
         5.1      Funding Requirements.......................................39
                  --------------------

SECTION 6  REPRESENTATIONS AND WARRANTIES....................................40
         6.1      Organization and Good Standing.............................40
                  ------------------------------
         6.2      Due Authorization..........................................40
                  -----------------
         6.3      No Conflicts...............................................40
                  ------------
         6.4      Consents...................................................40
                  --------
         6.5      Enforceable Obligations....................................41
                  -----------------------
         6.6      Financial Condition........................................41
                  -------------------
         6.7      No Material Change.........................................41
                  ------------------
         6.8      No Default.................................................41
                  ----------

                                       i
<PAGE>

         6.9      Litigation.................................................41
                  ----------
         6.10     Taxes......................................................41
                  -----
         6.11     Compliance with Law........................................42
                  -------------------
         6.12     ERISA......................................................42
                  -----
         6.13     Use of Proceeds; Margin Stock..............................43
                  -----------------------------
         6.14     Government Regulation......................................43
                  ---------------------
         6.15     Solvency...................................................43
                  --------
         6.16     Disclosure.................................................43
                  ----------
         6.17     Environmental Matters......................................44
                  ---------------------
         6.18     Material Leases............................................44
                  ---------------
         6.19     Material Lease Interest Payments and Discount Rate.........44
                  --------------------------------------------------

SECTION 7  AFFIRMATIVE COVENANTS.............................................44
           ---------------------
         7.1      Information Covenants......................................44
                  ---------------------
         7.2      Financial Covenants........................................46
                  -------------------
         7.3      Preservation of Existence and Franchises...................46
                  ----------------------------------------
         7.4      Books and Records..........................................47
                  -----------------
         7.5      Compliance with Law........................................47
                  -------------------
         7.6      Payment of Taxes and Other Indebtedness....................47
                  ---------------------------------------
         7.7      Insurance..................................................47
                  ---------
         7.8      Performance of Obligations.................................47
                  --------------------------
         7.9      Use of Proceeds............................................48
                  ---------------
         7.10     Audits/Inspections.........................................48
                  ------------------

SECTION 8  NEGATIVE COVENANTS................................................48
           ------------------
         8.1      Nature of Business.........................................48
                  ------------------
         8.2      Consolidation and Merger...................................48
                  ------------------------
         8.3      Sale or Lease of Assets....................................48
                  -----------------------
         8.4      Affiliate Transactions.....................................49
                  ----------------------
         8.5      Liens......................................................49
                  -----
         8.6      Accounting Changes.........................................50
                  ------------------

SECTION 9  EVENTS OF DEFAULT.................................................50
           -----------------
         9.1      Events of Default..........................................50
                  -----------------
         9.2      Acceleration; Remedies.....................................52
                  ----------------------
         9.3      Allocation of Payments After Event of Default..............53
                  ---------------------------------------------

SECTION 10  AGENCY PROVISIONS................................................54
         10.1     Appointment and Authorization of Administrative Agent......54
                  -----------------------------------------------------
         10.2     Delegation of Duties.......................................55
                  --------------------
         10.3     Liability of Administrative Agent..........................55
                  ---------------------------------
         10.4     Reliance by Administrative Agent...........................55
                  --------------------------------
         10.5     Notice of Default..........................................56
                  -----------------
         10.6     Credit Decision; Disclosure of Information by the
                  Administrative Agent.......................................56
                  --------------------
         10.7     Indemnification of Administrative Agent....................57
                  ---------------------------------------
         10.8     Administrative Agent in its Individual Capacity............57
                  -----------------------------------------------
         10.9     Successor Administrative Agent.............................58
                  ------------------------------
         10.10    Administrative Agent May File Proofs of Claim..............58
                  ---------------------------------------------
         10.11    Other Agents; Arrangers and Managers.......................59
                  ------------------------------------

                                       ii
<PAGE>


SECTION 11  MISCELLANEOUS....................................................59
         11.1     Notices and Other Communications; Facsimile Copies.........59
                  --------------------------------------------------
         11.2     Right of Set-Off...........................................60
                  ----------------
         11.3     Successors and Assigns.....................................61
                  ----------------------
         11.4     No Waiver; Remedies Cumulative.............................64
                  ------------------------------
         11.5     Attorney Costs, Expenses, Taxes and Indemnification
                  by Borrower................................................64
                  -----------
         11.6     Amendments, Waivers and Consents...........................66
                  --------------------------------
         11.7     Counterparts...............................................67
                  ------------
         11.8     Headings...................................................67
                  --------
         11.9     Survival of Indemnification and Representations
                  and Warranties.............................................67
                  --------------
         11.10    Governing Law; Venue; Jurisdiction.........................67
                  ----------------------------------
         11.11    Waiver of Jury Trial; Waiver of Consequential Damages......68
                  -----------------------------------------------------
         11.12    Severability...............................................68
                  ------------
         11.13    Further Assurances.........................................68
                  ------------------
         11.14    Confidentiality............................................68
                  ---------------
         11.15    Entirety...................................................69
                  --------
         11.16    Binding Effect; Continuing Agreement.......................69
                  ------------------------------------
         11.17    Regulatory Statement.......................................69
                  --------------------


                                       ii
<PAGE>




SCHEDULES
---------

Schedule 1.1(a)               Pro Rata Shares
Schedule 1.1(c)               Existing Letters of Credit
Schedule 6.18                 Material Leases
Schedule 6.19                 Material Lease Interest Payments and Discount Rate
Schedule 11.1                 Notices


EXHIBITS
--------

Exhibit 2.1(b)                Form of Notice of Borrowing
Exhibit 2.1(e)                Form of Revolving Note
Exhibit 2.3                   Form of Notice of Continuation/Conversion
Exhibit 7.1(c)                Form of Compliance Certificate
Exhibit 11.3(b)               Form of Assignment and Assumption


                                       iv
<PAGE>


                               CREDIT AGREEMENT


         THIS CREDIT AGREEMENT (this "Credit Agreement") is entered into as of
December 19, 2002 among PUBLIC SERVICE COMPANY OF NEW MEXICO, a New Mexico
corporation, as Borrower, the Lenders and BANK OF AMERICA, N.A., as
Administrative Agent and L/C Issuer.

                                    RECITALS

         WHEREAS, the Borrower has requested the Lenders to provide a senior
credit facility to the Borrower in an aggregate principal amount of
$195,000,000; and

         WHEREAS, the Lenders party hereto have agreed to make the requested
senior credit facility available to the Borrower on the terms and conditions
hereinafter set forth.

         NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:


                                    SECTION 1

                        DEFINITIONS AND ACCOUNTING TERMS

         1.1      Definitions.
                  -----------

         The following terms shall have the meanings specified herein unless the
context otherwise requires. Defined terms herein shall include in the singular
number the plural and in the plural the singular:

                  "Adjusted Eurodollar Rate" means the Eurodollar Rate plus the
         Applicable Percentage.

                  "Administrative Agent" means Bank of America or any successor
         administrative agent appointed pursuant to Section 10.9.

                  "Administrative Agent's Office" means the Administrative
         Agent's address and, as appropriate, account as set forth on Schedule
         11.1 or such other address or account with as the Administrative Agent
         may from time to time notify the Borrower and the Lenders.

                  "Administrative Fees" has the meaning set forth in Section
         3.4(d).

                  "Administrative Questionnaire" means an Administrative
         Questionnaire in a form supplied by the Administrative Agent.

                  "Affiliate" means, with respect to any Person, any other
         Person directly or indirectly controlling (including but not limited to


<PAGE>

         all directors and officers of such Person), controlled by or under
         direct or indirect common control with such Person. A Person shall be
         deemed to control a corporation if such Person possesses, directly or
         indirectly, the power (a) to vote 10% or more of the securities having
         ordinary voting power for the election of directors of such corporation
         or (b) to direct or cause direction of the management and policies of
         such corporation, whether through the ownership of voting securities,
         by contract or otherwise.

                  "Agent-Related Persons" means the Administrative Agent,
         together with its Affiliates and the officers, directors, employees,
         agents and attorneys-in-fact of the Administrative Agent and its
         Affiliates.

                  "Applicable Percentage" means, for Eurodollar Loans, L/C Fees,
         Commitment Fees and Utilization Fees, the appropriate applicable
         percentages, in each case, corresponding to the Debt Rating in effect
         as of the most recent Calculation Date as shown below:


------- --------------- ------------------ ----------------- -----------------
                             Applicable
                           Percentage for      Applicable        Applicable
Pricing                   Eurodollar Rate    Percentage for    Percentage for
 Level    Debt Rating   Loans and L/C Fees  Commitment Fees   Utilization Fees
------- --------------- ------------------ ----------------- -----------------
        greater than equal
   I    to BBB+/Baa1           .875%              .10%             .125%

------- --------------- ------------------ ----------------- -----------------
  II      BBB/Baa2             1.00%              .15%             .125%
------- --------------- ------------------ ----------------- -----------------
 III      BBB-/Baa3           1.125%              .20%             .125%
------- --------------- ------------------ ----------------- -----------------
  IV      BB+/Ba1              1.25%              .25%             .250%
------- --------------- ------------------ ----------------- -----------------
        less than
   V      BB+/Ba1             .50%              .30%             .500%
------- --------------- ------------------ ----------------- -----------------

                  The Applicable Percentages shall be determined and adjusted on
         the date (each a "Calculation Date") one Business Day after the date on
         which the Borrower's Debt Rating is upgraded or downgraded in a manner
         which requires a change in the then applicable Pricing Level set forth
         above. If at any time there is a split in the Borrower's Debt Ratings
         between S&P and Moody's, the Applicable Percentages shall be determined
         by the lower of the two Debt Ratings (i.e. the higher pricing);
         provided that if the two Debt Ratings are more than one level apart,
         the Applicable Percentage shall be based on the Debt Rating which is
         one level higher than the lower rating. Each Applicable Percentage
         shall be effective from one Calculation Date until the next Calculation
         Date. Any adjustment in the Applicable Percentage shall be applicable
         to all existing Eurodollar Loans as well as any new Eurodollar Loans
         made.

                  "Approved Fund" means any Fund that is administered or managed
         by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an
         Affiliate of an entity that administers or manages a Lender.

                  "Arranger" means Banc of America Securities LLC, together with
         its successors and/or assigns.

                  "Assignment and Assumption" means an Assignment and Assumption
         substantially in the form of Exhibit 11.3(b).

                                       2
<PAGE>

                  "Authorized Officer" means any of the president, chief
         executive officer, chief financial officer or treasurer of the
         Borrower.

                  "Bank of America" means Bank of America, N.A., together with
         its successors and/or assigns.

                  "Bankruptcy Code" means the Bankruptcy Code in Title 11 of the
         United States Code, as amended, modified, succeeded or replaced from
         time to time.

                  "Base Rate" means for any day a fluctuating rate per annum
         equal to the higher of (a) the Federal Funds Rate plus 1/2 of 1% and
         (b) the rate of interest in effect for such day as publicly announced
         from time to time by Bank of America as its "prime rate" (the "Prime
         Rate"). The Prime Rate is a rate set by Bank of America based upon
         various factors including Bank of America's costs and desired return,
         general economic conditions and other factors, and is used as a
         reference point for pricing some loans, which may be priced at, above,
         or below such announced rate. Any change in such rate announced by Bank
         of America shall take effect at the opening of business on the day
         specified in the public announcement of such change.

                  "Base Rate Loan" means any Revolving Loan bearing interest at
         a rate determined by reference to the Base Rate.

                  "Borrower" means Public Service Company of New Mexico, a New
         Mexico corporation, together with its successors and permitted assigns.

                  "Borrower Obligations" means, without duplication, all of the
         obligations of the Borrower to the Lenders and the Administrative
         Agent, whenever arising, under this Credit Agreement, the Revolving
         Notes, or any of the other Credit Documents.

                  "Borrowing" means a borrowing consisting of simultaneous
         Revolving Loans of the same Type and, in the case of Eurodollar Loans,
         having the same Interest Period made by each of the Lenders pursuant to
         Section 2.1.

                  "Business Day" means any day other than a Saturday, a Sunday,
         a legal holiday or a day on which banking institutions are authorized
         or required by Law or other governmental action to close in New York,
         New York or Charlotte, North Carolina; provided that in the case of
         Eurodollar Loans such day is also a day on which dealings are conducted
         by and between banks in the London interbank market.

                  "Capital Stock" means (a) in the case of a corporation, all
         classes of capital stock of such corporation, (b) in the case of a
         partnership, partnership interests (whether general or limited), (c) in
         the case of a limited liability company, membership interests and (d)
         any other interest or participation that confers on a Person the right
         to receive a share of the profits and losses of, or distributions of
         assets of, the issuing Person; including, in each case, all warrants,
         rights or options to purchase any of the foregoing.

                                       3
<PAGE>

                  "Cash Collateralize" means to pledge and deposit with or
         deliver to the Administrative Agent, for the benefit of the L/C Issuer
         and the Lenders, as collateral for the L/C Obligations, cash or deposit
         account balances pursuant to documentation in form and substance
         satisfactory to the Administrative Agent and the L/C Issuer.

                  "Change of Control" means the failure of PNM Resources, Inc.,
         a New Mexico corporation, to own and control less than 100% of the
         Voting Stock of the Borrower.

                  "Closing Date" means the date of this Credit Agreement, which
         is the first date all the conditions precedent in Section 5.1 are
         satisfied or waived in accordance with Section 5.1.

                  "Code" means the Internal Revenue Code of 1986 and the rules
         and regulations promulgated thereunder, as amended, modified, succeeded
         or replaced from time to time.

                  "Commitment" means, as to each Lender, its obligation to (a)
         make Revolving Loans to the Borrower pursuant to Section 2.1 and (b)
         fund or purchase Participation Interests in L/C Obligations pursuant to
         Section 2.2, in an aggregate principal amount at any one time
         outstanding not to exceed such Lender's Pro Rata Share of the Revolving
         Committed Amount as set forth opposite such Lender's name on Schedule
         1.1(a) or in the Assignment and Assumption pursuant to which such
         Lender becomes a party hereto, as applicable, as such amount may be
         adjusted from time to time in accordance with this Credit Agreement.

                  "Compensation Period" has the meaning set forth in Section
         3.2(c)(ii).

                  "Compliance Certificate" means a fully completed and duly
         executed officer's certificate in the form of Exhibit 7.1(c), together
         with a Covenant Compliance Worksheet.

                  "Consolidated Capitalization" means the sum of (a) all of the
         shareholders' equity or net worth of the Borrower and its Subsidiaries,
         as determined in accordance with GAAP plus (b) Consolidated
         Indebtedness.

                  "Consolidated EBITDA" means, for any period, an amount equal
         to (a) Consolidated Net Income (excluding any extraordinary gains and
         extraordinary losses) for such period plus (b) an amount which in the
         determination of Consolidated Net Income for such period was deducted
         for (i) Consolidated Interest Expense, (ii) income tax expense, (iii)
         depreciation expense and (iv) amortization expense plus (c) non-cash
         items reducing Consolidated Net Income for such period less (d)
         non-cash items increasing Consolidated Net Income for such period.

                  "Consolidated Indebtedness" means, as of any date of
         determination, with respect to the Borrower and its Subsidiaries on a
         consolidated basis, an amount equal to all Indebtedness of the Borrower
         and its Subsidiaries as of such date.

                  "Consolidated Interest Expense" means, for any period, with
         respect to the Borrower and its Subsidiaries on a consolidated basis,
         an amount equal to total interest expense of the Borrower and its

                                       4
<PAGE>

         Subsidiaries for such period (including, without limitation, all such
         interest expense accrued or capitalized during such period, whether or
         not actually paid during such period), as determined in accordance with
         GAAP.

                  "Consolidated Net Income" means the consolidated net income of
         the Borrower and its Subsidiaries, as determined in accordance with
         GAAP.

                  "Contingent Obligation" means, with respect to any Person, any
         direct or indirect liability of such Person with respect to any
         Indebtedness, liability or other obligation (the "primary obligation")
         of another Person (the "primary obligor"), whether or not contingent,
         (a) to purchase, repurchase or otherwise acquire such primary
         obligation or any property constituting direct or indirect security
         therefor, (b) to advance or provide funds (i) for the payment or
         discharge of any such primary obligation or (ii) to maintain working
         capital or equity capital of the primary obligor or otherwise to
         maintain the net worth or solvency or any balance sheet item, level of
         income or financial condition of the primary obligor, (c) to purchase
         property, securities or services primarily for the purpose of assuring
         the owner of any such primary obligation of the ability of the primary
         obligor in respect thereof to make payment of such primary obligation
         or (d) otherwise to assure or hold harmless the owner of any such
         primary obligation against loss or failure or inability to perform in
         respect thereof; provided, however, that, with respect to the Borrower
         and its Subsidiaries, the term Contingent Obligation shall not include
         endorsements for collection or deposit in the ordinary course of
         business. The amount of any Contingent Obligation of any Person shall
         be deemed to be an amount equal to the maximum amount of such Person's
         liability with respect to the stated or determinable amount of the
         primary obligation for which such Contingent Obligation is incurred or,
         if not stated or determinable, the maximum reasonably anticipated
         liability in respect thereof (assuming such Person is required to
         perform thereunder).

                  "Covenant Compliance Worksheet" shall mean a fully completed
         worksheet in the form of Attachment A to Exhibit 7.1(c).

                  "Credit Agreement" has the meaning set forth in the Preamble
         hereof.

                  "Credit Documents" means this Credit Agreement, the Revolving
         Notes, any Notice of Borrowing, any Notice of Continuation/Conversion,
         and any other document, agreement or instrument entered into or
         executed in connection with the foregoing.

                  "Credit Extension" means each of the following: (a) a
         Borrowing and (b) an L/C Credit Extension.

                  "Debt Rating" means the long term unsecured senior non-credit
         enhanced debt rating of the Borrower by S&P and Moody's.

                                       5
<PAGE>

                  "Debtor Relief Laws" means the Bankruptcy Code, and all other
         liquidation, conservatorship, bankruptcy, assignment for the benefit of

         creditors, moratorium, rearrangement, receivership, insolvency,
         reorganization, or similar debtor relief Laws of the United States or
         other applicable jurisdictions from time to time in effect and
         affecting the rights of creditors generally.

                  "Default" means any event, act or condition which with notice
         or lapse of time, or both, would constitute an Event of Default.

                  "Default Rate" means an interest rate equal to two percent
         (2%) plus the rate that otherwise would be applicable (or if no rate is
         applicable, the Base Rate plus two percent (2%) per annum).

                  "Defaulting Lender" means, at any time, any Lender that, (a)
         has failed to make a Revolving Loan or purchase or fund a Participation
         Interest (but only for so long as such Revolving Loan is not made or
         such Participation Interest is not purchased or funded), (b) has failed
         to pay to the Administrative Agent or any Lender an amount owed by such
         Lender pursuant to the terms of this Credit Agreement (but only for so
         long as such amount has not been repaid) or (c) has been deemed
         insolvent or has become subject to a bankruptcy or insolvency
         proceeding or to a receiver, trustee or similar official.

                  "Dollars" and "$" means dollars in lawful currency of the
         United States of America.

                  "Eligible Assignee" means (a) a Lender, (b) an Affiliate of a
         Lender, (c) an Approved Fund and (d) any other Person approved by the
         Administrative Agent, the L/C Issuer and the Borrower (such approval
         not to be unreasonably withheld or delayed); provided that (i) the
         Borrower's consent is not required during the existence and
         continuation of a Default or an Event of Default, (ii) approval by the
         Borrower shall be deemed given if no objection is received by the
         assigning Lender and the Administrative Agent from the Borrower within
         five Business Days after notice of such proposed assignment has been
         delivered to the Borrower and (iii) neither the Borrower nor any
         Subsidiary or Affiliate of the Borrower shall qualify as an Eligible
         Assignee.

                  "Environmental Claims" means any and all administrative,
         regulatory or judicial actions, suits, demands, demand letters, claims,
         liens, accusations, allegations, notices of noncompliance or violation,
         investigations (other than internal reports prepared by any Person in
         the ordinary course of its business and not in response to any third
         party action or request of any kind) or proceedings relating in any way
         to any actual or alleged violation of or liability under any
         Environmental Law or relating to any permit issued, or any approval
         given, under any such Environmental Law (collectively, "Claims"),
         including, without limitation, (a) any and all Claims by Governmental
         Authorities for enforcement, cleanup, removal, response, remedial or
         other actions or damages pursuant to any applicable Environmental Law
         and (b) any and all Claims by any third party seeking damages,
         contribution, indemnification, cost recovery, compensation or
         injunctive relief resulting from Hazardous Substances or arising from
         alleged injury or threat of injury to human health or the environment.

                                       6
<PAGE>

                  "Environmental Laws" shall mean any and all federal, state and
         local laws, statutes, ordinances, rules, regulations, permits,
         licenses, approvals, rules of common law and orders of courts or
         Governmental Authorities, relating to the protection of human health or
         occupational safety or the environment, now or hereafter in effect and
         in each case as amended from time to time, including, without
         limitation, requirements pertaining to the manufacture, processing,
         distribution, use, treatment, storage, disposal, transportation,
         handling, reporting, licensing, permitting, investigation or
         remediation of Hazardous Substances.

                  "ERISA" means the Employee Retirement Income Security Act of
         1974, as amended from time to time, and any successor statute, and all
         rules and regulations from time to time promulgated thereunder.

                  "ERISA Affiliate" means any Person (including any trade or
         business, whether or not incorporated) that would be deemed to be under
         "common control" with, or a member of the same "controlled group" as,
         the Borrower or any of its Subsidiaries, within the meaning of Sections
         414(b), (c), (m) or (o) of the Code or Section 4001 of ERISA.

                  "ERISA Event" means: (a) a Reportable Event with respect to a
         Plan or a Multiemployer Plan, (b) a complete or partial withdrawal by
         the Borrower, any of its Subsidiaries or any ERISA Affiliate from a
         Multiemployer Plan, or the receipt by the Borrower, any of its
         Subsidiaries or any ERISA Affiliate of notice from a Multiemployer Plan
         that it is in reorganization or insolvency pursuant to Section 4241 or
         4245 of ERISA or that it intends to terminate or has terminated under
         Section 4041A of ERISA, (c) the distribution by the Borrower, any of
         its Subsidiaries or any ERISA Affiliate under Section 4041 or 4041A of
         ERISA of a notice of intent to terminate any Plan or the taking of any
         action to terminate any Plan, (d) the commencement of proceedings by
         the PBGC under Section 4042 of ERISA for the termination of, or the
         appointment of a trustee to administer, any Plan, or the receipt by the
         Borrower, any of its Subsidiaries or any ERISA Affiliate of a notice
         from any Multiemployer Plan that such action has been taken by the PBGC
         with respect to such Multiemployer Plan, (e) the institution of a
         proceeding by any fiduciary of any Multiemployer Plan against the
         Borrower, any of its Subsidiaries or any ERISA Affiliate to enforce
         Section 515 of ERISA, which is not dismissed within thirty (30) days,
         (f) the imposition upon the Borrower, any of its Subsidiaries or any
         ERISA Affiliate of any liability under Title IV of ERISA, other than
         for PBGC premiums due but not delinquent under Section 4007 of ERISA,
         or the imposition or threatened imposition of any Lien upon any assets
         of the Borrower, any of its Subsidiaries or any ERISA Affiliate as a
         result of any alleged failure to comply with the Code or ERISA in
         respect of any Plan, (g) the engaging in or otherwise becoming liable
         for a nonexempt Prohibited Transaction by the Borrower, any of its
         Subsidiaries or any ERISA Affiliate, (h) a violation of the applicable
         requirements of Section 404 or 405 of ERISA or the exclusive benefit
         rule under Section 401(a) of the Code by any fiduciary of any Plan for
         which the Borrower, any of its Subsidiaries or any ERISA Affiliate may
         be directly or indirectly liable, (i) the adoption of an amendment to
         any Plan that, pursuant to Section 401(a)(29) of the Code or Section
         307 of ERISA, would result in the loss of tax-exempt status of the
         trust of which such Plan is a part if the Borrower, any of its
         Subsidiaries or any ERISA Affiliate fails to timely provide security to
         such Plan in accordance with the provisions of such sections or (j) the
         withdrawal of the Borrower, any of its Subsidiaries or any ERISA
         Affiliate from a Multiple Employer Plan during a play year in which it
         was a substantial employer (as such term is defined in Section
         4001(a)(2) of ERISA), or the termination of a Multiple Employer Plan.

                                       7
<PAGE>

                  "Eurodollar Loan" means a Revolving Loan bearing interest
         based at a rate determined by reference to the Adjusted Eurodollar
         Rate.

                  "Eurodollar Rate" means for any Interest Period with respect
         to any Eurodollar Loan:

                                    (a) the rate per annum equal to the rate
                           determined by the Administrative Agent to be the
                           offered rate that appears on the page of the Telerate
                           screen (or any successor thereto) that displays an
                           average British Bankers Association Interest
                           Settlement Rate for deposits in Dollars (for delivery
                           on the first day of such Interest Period) with a term
                           equivalent to such Interest Period, determined as of
                           approximately 11:00 a.m. (London time) two Business
                           Days prior to the first day of such Interest Period,
                           or

                                    (b) if the rate referenced in the preceding
                           clause (i) does not appear on such page or service or
                           such page or service shall not be available, the rate
                           per annum equal to the rate determined by the
                           Administrative Agent to be the offered rate on such
                           other page or other service that displays an average
                           British Bankers Association Interest Settlement Rate
                           for deposits in Dollars (for delivery on the first
                           day of such Interest Period) with a term equivalent
                           to such Interest Period, determined as of
                           approximately 11:00 a.m. (London time) two Business
                           Days prior to the first day of such Interest Period,
                           or

                                    (c) if the rates referenced in the preceding
                           clauses (i) and (ii) are not available, the rate per
                           annum reasonably determined by the Administrative
                           Agent as the rate of interest at which deposits in
                           Dollars for delivery on the first day of such
                           Interest Period in same day funds in the approximate
                           amount of the Eurodollar Loan being made, continued
                           or converted by Bank of America and with a term
                           equivalent to such Interest Period would be offered
                           by Bank of America's London Branch to major banks in
                           the London interbank eurodollar market at their
                           request at approximately 4:00 p.m. (London time) two
                           Business Days prior to the first day of such Interest
                           Period.

                  "Event of Default" has the meaning set forth in Section 9.1.

                  "Exchange Act" means the Securities Exchange Act of 1934, and
         the rules and regulations promulgated thereunder, as amended, modified,
         succeeded or replaced from time to time.

                                       8
<PAGE>

                  "Existing Credit Agreement" means that certain Credit
         Agreement, dated as of March 11, 1998, among the Borrower, the lenders
         party thereto, and The Chase Manhattan Bank, as Administrative Agent,
         as previously amended, modified or supplemented prior to the Closing
         Date.

                  "Existing Letters of Credit" means the letters of credit set
         forth on Schedule 1.1(c).

                  "Federal Funds Rate" means, for any day, the rate per annum
         equal to the weighted average (rounded upward, if necessary, to a whole
         multiple of 1/100 of 1%) of the rates on overnight Federal funds
         transactions with members of the Federal Reserve System arranged by
         Federal funds brokers on such day, as published by the Federal Reserve
         Bank on the Business Day next succeeding such day; provided that (a) if
         such day is not a Business Day, the Federal Funds Rate for such day
         shall be such rate on such transactions on the next preceding Business
         Day as so published on the next succeeding Business Day, and (b) if no
         such rate is so published on such next succeeding Business Day, the
         Federal Funds Rate for such day shall be the average rate (rounded
         upward, if necessary, to a whole multiple of 1/100 of 1%) charged to
         Bank of America on such day on such transactions as determined by the
         Administrative Agent.

                  "Fee Letter" means that certain letter agreement, dated as of
         November 22, 2002, among the Borrower, Bank of America and the
         Arranger, as amended, modified, supplemented or restated from time to
         time.

                  "Financial Officer" means the chief financial officer, vice
         president-finance, principal accounting officer or treasurer of the
         Borrower.

                  "First Mortgage Bonds" means those first mortgage bonds issued
         pursuant to the FMB Indenture.

                  "FMB Indenture" means the Indenture of Mortgage and Deed of
         Trust, dated as of June 1, 1947, between the Borrower and The Bank of
         New York (formerly Irving Trust Company), as trustee thereunder, as
         supplemented and amended.

                  "Foreign Lender" has the meaning set forth in Section 3.13(f).

                  "Fund" means any Person (other than a natural person) that is
         (or will be) engaged in making, purchasing, holding or otherwise
         investing in commercial loans and similar extensions of credit in the
         ordinary course of its business.

                  "GAAP" means generally accepted accounting principles in the
         United States set forth in the opinions and pronouncements of the
         Accounting Principles Board and the American Institute of Certified
         Public Accountants and statements and pronouncements of the Financial
         Accounting Standards Board (or agencies with similar functions of
         comparable stature and authority within the U.S. accounting profession)
         or that are promulgated by any Governmental Authority having
         appropriate jurisdiction.

                                       9
<PAGE>

                  "Government Acts" has the meaning set forth in Section 2.2(k).

                  "Governmental Authority" means any domestic or foreign nation
         or government, any state or other political subdivision thereof and any
         central bank thereof, any municipal, local, city or county government,
         and any entity exercising executive, legislative, judicial, regulatory
         or administrative functions of or pertaining to government (including,
         without limitation, any state dental board) and any corporation or
         other entity owned or controlled, through stock or capital ownership or
         otherwise, by any of the foregoing.

                  "Granting Lender" has the meaning specified in Section
         11.3(g).

                  "Hazardous Substances" means any substances or materials (a)
         that are or become defined as hazardous wastes, hazardous substances,
         pollutants, contaminants or toxic substances under any Environmental
         Law, (b) that are defined by any Environmental Law as toxic, explosive,
         corrosive, ignitable, infectious, radioactive, mutagenic or otherwise
         hazardous, (c) the presence of which require investigation or response
         under any Environmental Law, (d) that constitute a nuisance, trespass
         or health or safety hazard to Persons or neighboring properties, (e)
         that consist of underground or aboveground storage tanks, whether
         empty, filled or partially filled with any substance, or (f) that
         contain, without limitation, asbestos, polychlorinated biphenyls, urea
         formaldehyde foam insulation, petroleum hydrocarbons, petroleum derived
         substances or wastes, crude oil, nuclear fuel, natural gas or synthetic
         gas.

                  "Hedging Agreements" means, collectively, interest rate
         protection agreements, equity index agreements, foreign currency
         exchange agreements, option agreements or other interest or exchange
         rate or commodity price hedging agreements.

                  "Indebtedness" means, with respect to any Person (without
         duplication), (a) all indebtedness and obligations of such Person for
         borrowed money or in respect of loans or advances of any kind, (b) all
         obligations of such Person evidenced by notes, bonds, debentures or
         similar instruments, (c) all reimbursement obligations of such Person
         with respect to surety bonds, letters of credit and bankers'
         acceptances (in each case, whether or not drawn or matured and in the
         stated amount thereof), (d) all obligations of such Person to pay the
         deferred purchase price of property or services, (e) all indebtedness
         created or arising under any conditional sale or other title retention
         agreement with respect to property acquired by such Person, (f) all
         obligations of such Person as lessee under leases that are or are
         required to be, in accordance with GAAP, recorded as capital leases, to
         the extent such obligations are required to be so recorded, (g) the net
         termination obligations of such Person under any Hedging Agreements,
         calculated as of any date as if such agreement or arrangement were
         terminated as of such date in accordance with the applicable rules
         under GAAP, (h) all Contingent Obligations of such Person, (i) all
         obligations and liabilities of such Person incurred in connection with
         any transaction or series of transactions providing for the financing
         of assets through one or more securitizations or in connection with, or
         pursuant to, any synthetic lease or similar off-balance sheet
         financing, (j) the aggregate amount of uncollected accounts receivable
         of such Person subject at the time of determination to a sale of
         receivables (or similar transaction) to the extent such transaction is
         effected with recourse to such Person (whether or not such transaction
         would be reflected on the balance sheet of such Person in accordance
         with GAAP), (k) all obligations, contingent or otherwise, under the
         Material Leases and (l) all indebtedness referred to in clauses (a)
         through (k) above secured by any Lien on any property or asset owned or
         held by such Person regardless of whether the indebtedness secured
         thereby shall have been assumed by such Person or is nonrecourse to the
         credit of such Person.

                                       10
<PAGE>

                  "Indemnified Liabilities" has the meaning set forth in Section
         11.5(b).

                  "Indemnitees" has the meaning set forth in Section 11.5(b).

                  "Insured Series First Mortgage Bonds" means First Mortgage
         Bonds in the aggregate principal amount of $111,000,000 pledged by the
         Borrower to secure guarantees of $111,000,000 principal amount of
         pollution control revenue bonds issued by the City of Farmington, New
         Mexico, for the benefit of the Borrower, which pollution control
         revenue bonds are also supported by a municipal bond insurance policy
         issued by AMBAC Indemnity Corporation.

                  "Interest Payment Date" means, (a) as to any Eurodollar Loan,
         the last day of each Interest Period applicable to such Loan and the
         Maturity Date; provided, however, that if any Interest Period for a
         Eurodollar Loan exceeds three months, the respective dates that fall
         every three months after the beginning of such Interest Period shall
         also be Interest Payment Dates and (b) as to any Base Rate Loan, the
         last Business Day of each fiscal quarter of the Borrower and the
         Maturity Date.

                  "Interest Period" means, as to each Eurodollar Loan, the
         period commencing on the date such Eurodollar Loan is disbursed or
         converted to or continued as a Eurodollar Loan and ending on the date
         one, two, three or six months thereafter, as selected by the Borrower
         in its Notice of Borrowing or Notice of Continuation/Conversion;
         provided that:

                           (a) any Interest Period that would otherwise end on a
                  day that is not a Business Day shall be extended to the next
                  succeeding Business Day unless such Business Day falls in
                  another calendar month, in which case such Interest Period
                  shall end on the next preceding Business Day;

                           (b) 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; and

                           (c) no Interest Period shall extend beyond the
                  Maturity Date.


                  "Laws" means, collectively, all international, foreign,
         federal, state and local statutes, treaties, rules, guidelines,
         regulations, ordinances, codes and administrative or judicial
         precedents or authorities, including the interpretation or
         administration thereof by any Governmental Authority charged with the
         enforcement, interpretation or administration thereof, and all
         applicable administrative orders, directed duties, requests, licenses,
         authorizations and permits of, and agreements with, any Governmental
         Authority, in each case whether or not having the force of law.

                                       11
<PAGE>

                  "L/C Credit Extension" means, with respect to any Letter of
         Credit, the issuance thereof, the extension of the expiry date thereof,
         the renewal or increase of the amount thereof or any extension of
         credit resulting from a drawing thereunder that has not been
         reimbursed.

                  "L/C Fees" has the meaning set forth in Section 3.4(c).

                  "L/C Fronting Fee" has the meaning set forth in Section
         2.2(i).

                  "L/C Issuer" means (a) solely with respect to the Existing
         Letters of Credit, J.P. Morgan Chase Bank in its capacity as issuer of
         such Existing Letters of Credit and (b) with respect to all other
         Letters of Credit, Bank of America in its capacity as issuer of such
         Letters of Credit hereunder, or any successor issuer of Letters of
         Credit hereunder.

                  "L/C Obligations" means, as of any date of determination, the
         aggregate undrawn amount of all outstanding Letters of Credit plus the
         aggregate of all unreimbursed drawings under any Letter of Credit.

                  "Lender" means any of the Persons identified as a "Lender" on
         the signature pages hereto, and any Eligible Assignee which may become
         a Lender by way of assignment in accordance with the terms hereof,
         together with their successors and permitted assigns.

                  "Lending Office" means, as to any Lender, the office or
         offices of such Lender described as such in such Lender's
         Administrative Questionnaire, or such other office or offices as a
         Lender may from time to time notify the Borrower and the Administrative
         Agent.

                  "Letter of Credit" means any letter of credit issued hereunder
         and shall include the Existing Letters of Credit.

                  "Letter of Credit Application" means an application and
         agreement for the issuance or amendment of a Letter of Credit in the
         form from time to time in use by the L/C Issuer.

                  "Letter of Credit Expiration Date" means the day that is ten
         days prior to the Maturity Date then in effect (or, if such day is not
         a Business Day, the next preceding Business Day).

                  "Letter of Credit Sublimit" means an amount equal to FIFTY
         MILLION DOLLARS ($50,000,000). The Letter of Credit Sublimit is part
         of, and not in addition to, the Revolving Committed Amount.

                  "Lien" means any mortgage, pledge, hypothecation, assignment,
         security interest, lien (statutory or otherwise), preference, priority,
         charge or other encumbrance of any nature, whether voluntary or
         involuntary, including, without limitation, the interest of any vendor
         or lessor under any conditional sale agreement, title retention
         agreement, capital lease or any other lease or arrangement having
         substantially the same effect as any of the foregoing.

                                       12
<PAGE>

                  "Mandatory Borrowing" has the meaning set forth in Section
         2.2(d).

                  "Margin Stock" has the meaning ascribed to such term in
         Regulation U.

                  "Material Adverse Change" means a material adverse change in
         the condition (financial or otherwise), operations, business,
         performance, properties or assets of the Borrower and its Subsidiaries,
         taken as a whole.

                  "Material Adverse Effect" means a material adverse effect upon
         (a) the business, assets, liabilities (actual or contingent),
         operations, condition (financial or otherwise) or prospects of the
         Borrower and its Subsidiaries, taken as a whole, (b) the ability of the
         Borrower to perform its obligations under this Credit Agreement or any
         of the other Credit Documents or (c) the legality, validity or
         enforceability of this Credit Agreement or any of the other Credit
         Documents or the rights and remedies of the Administrative Agent and
         the Lenders hereunder and thereunder.

                  "Material Lease" means any lease to the Borrower of its
         leasehold interests in (i) Unit 1 or Unit 2, and related common
         facilities, of the Palo Verde Nuclear Generating Station or (ii) the
         electric transmission line, and related facilities, known as the
         Eastern Interconnection Project, including, without limitation, any
         lease set forth on Schedule 6.18 hereto.

                  "Maturity Date" means December 18, 2003.

                  "Moody's" means Moody's Investors Service, Inc. and its
                  successors.

                  "Multiemployer Plan" means any "multiemployer plan" within the
         meaning of Section 4001(a)(3) of ERISA to which the Borrower, any of
         its Subsidiaries or any ERISA Affiliate makes, is making or is
         obligated to make contributions or has made or been obligated to make
         contributions.

                  "Multiple Employer Plan" means a Single Employer Plan to which
         the Borrower, any of its Subsidiaries or any ERISA Affiliate and at
         least one employer other than the Borrower, any of its Subsidiaries or
         any ERISA Affiliate are contributing sponsors.

                  "Nonrenewal Notice Date" has the meaning set forth in Section
         2.2(b)(iii).

                  "Notice of Borrowing" means a request by the Borrower for a
         Revolving Loan in the form of Exhibit 2.1(b).

                  "Notice of Continuation/Conversion" means a request by the
         Borrower to continue an existing Eurodollar Loan to a new Interest
         Period or to convert a Eurodollar Loan to a Base Rate Loan or a Base
         Rate Loan to a Eurodollar Loan, in the form of Exhibit 2.3.

                                       13
<PAGE>


                  "Other Taxes" has the meaning set forth in Section 3.13(b).

                  "PBGC" means the Pension Benefit Guaranty Corporation and any
         successor thereto.

                  "Participant" has the meaning set forth in Section 11.3(d).

                  "Participation Interest" means (a) the purchase by a Lender of
         a participation in Letters of Credit or L/C Obligations as provided in
         Section 2.2 or (b) the purchase by a Lender of a participation in any
         Revolving Loan as provided in Section 3.8.

                  "Person" means any individual, partnership, joint venture,
         firm, corporation, limited liability company, association, trust or
         other enterprise (whether or not incorporated), or any Governmental
         Authority.

                  "Plan" means any "employee benefit plan" (within the meaning
         of Section 3(3) of ERISA) which is covered by ERISA and with respect to
         which the Borrower, any of its Subsidiaries or any ERISA Affiliate is
         (or, if such plan were terminated at such time, would under Section
         4069 of ERISA be deemed to be) an "employer" within the meaning of
         Section 3(5) of ERISA.

                  "Prime Rate" has the meaning set forth in the definition of
         Base Rate in this Section 1.1.

                  "Pro Rata Share" means, with respect to each Lender at any
         time, a fraction (expressed as a percentage, carried out to the ninth
         decimal place), the numerator of which is the amount of the Commitment
         of such Lender at such time and the denominator of which is the amount
         of the Revolving Committed Amount at such time; provided that if the
         Commitment of each Lender to make Revolving Loans and the obligation of
         the L/C Issuer to make L/C Credit Extensions have been terminated
         pursuant to Section 9.2 or otherwise, then the Pro Rata Share of each
         Lender shall be determined based on such Lender's percentage ownership
         of the sum of the aggregate amount of outstanding Revolving Loans plus
         the aggregate amount of outstanding L/C Obligations. The initial Pro
         Rata Share of each Lender is set forth opposite the name of such Lender
         on Schedule 1.1(a) or in the Assignment and Assumption pursuant to
         which such Lender becomes a party hereto, as applicable.

                  "Prohibited Transaction" means any transaction described in
         (a) Section 406 of ERISA that is not exempt by reason of Section 408 of
         ERISA or by reason of a Department of Labor prohibited transaction
         individual or class exemption or (b) Section 4975(c) of the Code that
         is not exempt by reason of Section 4975(c)(2) or 4975(d) of the Code.

                  "Property" means any right, title or interest in or to any
         property or asset of any kind whatsoever, whether real, personal or
         mixed and whether tangible or intangible.

                  "Register" has the meaning set forth in Section 11.3(c).

                                       14
<PAGE>

                  "Regulations T, U and X" means Regulations T, U and X,
         respectively, of the Federal Reserve Board, and any successor
         regulations.

                  "Reportable Event" means (a) any "reportable event" within the
         meaning of Section 4043(c) of ERISA for which the notice under Section
         4043(a) of ERISA has not been waived by the PBGC (including any failure
         to meet the minimum funding standard of, or timely make any required
         installment under, Section 412 of the Code or Section 302 of ERISA,
         regardless of the issuance of any waivers in accordance with Section
         412(d) of the Code), (b) any such "reportable event" subject to advance
         notice to the PBGC under Section 4043(b)(3) of ERISA, (c) any
         application for a funding waiver or an extension of any amortization
         period pursuant to Section 412 of the Code, and (d) a cessation of
         operations described in Section 4062(e) of ERISA.

                  "Required Lenders" means Lenders whose aggregate Credit
         Exposure (as hereinafter defined) constitutes more than 50% of the
         Credit Exposure of all Lenders at such time; provided, however, that if
         any Lender shall be a Defaulting Lender at such time then there shall
         be excluded from the determination of Required Lenders the aggregate
         principal amount of Credit Exposure of such Lender at such time. For
         purposes of the preceding sentence, the term "Credit Exposure" as
         applied to each Lender shall mean (a) at any time prior to the
         termination of the Commitments, the Pro Rata Share of such Lender of
         the Revolving Committed Amount multiplied by the Revolving Committed
         Amount and (b) at any time after the termination of the Commitments,
         the sum of (i) the principal balance of the outstanding Revolving Loans
         of such Lender plus (ii) such Lender's Participation Interests in the
         face amount of the outstanding Letters of Credit.

                  "Requirement of Law" means, with respect to any Person, the
         organizational documents of such Person and any Law applicable to or
         binding upon such Person or any of its property or to which such Person
         or any of its property is subject or otherwise pertaining to any or all
         of the transactions contemplated by this Credit Agreement and the other
         Credit Documents.

                  "Responsible Officer" means the president, the chief executive
         officer, the co-chief executive officer, the chief financial officer,
         any executive officer, vice president-finance, principal accounting
         officer or treasurer of the Borrower, and any other officer or similar
         official thereof responsible for the administration of the obligations
         of the Borrower in respect of this Credit Agreement and the other
         Credit Documents.

                  "Revolving Committed Amount" means ONE HUNDRED NINETY-FIVE
         MILLION DOLLARS ($195,000,000) or such lesser amount, as it may be
         reduced from time to time in accordance with Section 2.1(d).

                  "Revolving Loans" or "Loans" has the meaning set forth in
         Section 2.1(a).

                                       15
<PAGE>

                  "Revolving Notes" or "Notes" means the promissory notes of the
         Borrower in favor of each of the Lenders evidencing the Revolving Loans
         provided pursuant to Section 2.1, individually or collectively, as
         appropriate, as such promissory notes may be amended, modified,
         supplemented, extended, renewed or replaced from time to time and as
         evidenced in the form of Exhibit 2.1(e).

                  "S&P" means Standard & Poor's Rating Service, a division of
         The McGraw-Hill  Companies,  Inc. and its successors.

                  "Securities Act" means the Securities Act of 1933, as amended,
         and the rules and regulations promulgated thereunder.

                  "Single Employer Plan" means any Plan which is covered by
         Title IV of ERISA, but which is not a Multiemployer Plan or Multiple
         Employer Plan.

                  "Solvent" means, with respect to any Person as of a particular
         date, that on such date (a) such Person is able to pay its debts and
         other liabilities, Contingent Obligations and other commitments as they
         mature in the normal course of business, (b) such Person does not
         intend to, and does not believe that it will, incur debts or
         liabilities beyond such Person's ability to pay as such debts and
         liabilities mature in their ordinary course, (c) such Person is not
         engaged in a business or a transaction, and is not about to engage in a
         business or a transaction, for which such Person's assets would
         constitute unreasonably small capital after giving due consideration to
         the prevailing practice in the industry in which such Person is engaged
         or is to engage, (d) the fair value of the assets of such Person is
         greater than the total amount of liabilities, including, without
         limitation, Contingent Obligations, of such Person and (e) the present
         fair saleable value of the assets of such Person is not less than the
         amount that will be required to pay the probable liability of such
         Person on its debts as they become absolute and matured.

                  "SPC" has the meaning set forth in Section 11.3(g).

                  "Subsidiary" means, as to any Person, (a) any corporation more
         than 50% of whose stock of any class or classes having by the terms
         thereof ordinary voting power to elect a majority of the directors of
         such corporation (irrespective of whether or not at the time, any class
         or classes of such corporation shall have or might have voting power by
         reason of the happening of any contingency) is at the time owned by
         such Person directly or indirectly through Subsidiaries, and (b) any
         partnership, association, joint venture or other entity in which such
         person directly or indirectly through Subsidiaries has more than a 50%
         equity interest at any time. Any reference to Subsidiary herein, unless
         otherwise identified, shall mean a Subsidiary, direct or indirect, of
         the Borrower. Any reference to a Subsidiary of the Borrower herein
         shall not include any Subsidiary that is inactive, has minimal or no
         assets and does not generate revenues.

                  "Taxes" has the meaning set forth in Section 3.13(a).

                  "3838 Securization" means the electric and gas accounts
         receivable securitization program which is the subject of New Mexico
         Public Regulation Commission in Case 3838.

                  "Total Assets" means all assets of the Borrower as shown on
         its most recent quarterly consolidated balance sheet, as determined in
         accordance with GAAP.

                                       16
<PAGE>

                  "Type" means, with respect to a Revolving Loan, its character
         as a Base Rate Loan or a Eurodollar Loan.

                  "Unused Revolving Commitment" means, for any date of
         determination, the amount by which (a) the aggregate Revolving
         Committed Amount on such date exceeds (b) the sum of the aggregate
         principal amount of outstanding Revolving Loans plus the aggregate
         principal amount of outstanding L/C Obligations on such date.

         "Utilization Fees" has the meaning set forth in Section 3.4(b).

                  "Voting Stock" means the Capital Stock of a Person that is
         then outstanding and normally entitled to vote in the election of
         directors and other securities of such Person convertible into or
         exercisable for such Capital Stock (whether or not such securities are
         then currently convertible or exercisable).

         1.2      Computation of Time Periods and Other Definitional Provisions.
                  -------------------------------------------------------------

         For purposes of computation of periods of time hereunder, the word
"from" means "from and including" and the words "to" and "until" each mean "to
but excluding." References in this Credit Agreement to "Articles", "Sections",
"Schedules" or "Exhibits" shall be to Articles, Sections, Schedules or Exhibits
of or to this Credit Agreement unless otherwise specifically provided.

         1.3      Accounting Terms/Calculation of Financial Covenants.
                  ---------------------------------------------------

         Except as otherwise expressly provided herein, all accounting terms
used herein or incorporated herein by reference shall be interpreted, and all
financial statements and certificates and reports as to financial matters
required to be delivered to the Administrative Agent or the Lenders hereunder
shall be prepared, in accordance with GAAP applied on a consistent basis.
Notwithstanding anything to the contrary in this Credit Agreement, for purposes
of calculation of the financial covenants set forth in Section 7.2, all
accounting determinations and computations thereunder shall be made in
accordance with GAAP as in effect as of the date of this Credit Agreement
applied on a basis consistent with the application used in preparing the most
recent financial statements of the Borrower referred to in Section 4.1(d). In
the event that any changes in GAAP after such date are required to be applied to
the Borrower and would affect the computation of the financial covenants
contained in Section 7.2, such changes shall be followed only from and after the
date this Credit Agreement shall have been amended to take into account any such
changes.

         1.4      Time.
                  ----

         All references to time herein shall be references to Central Standard
Time or Central Daylight time, as the case may be, unless specified otherwise.

                                       17
<PAGE>


         1.5      Rounding of Financial Covenants.
                  -------------------------------

         Any financial ratios required to be maintained by the Borrower pursuant
to this Credit Agreement shall be calculated by dividing the appropriate
component by the other component, carrying the result to one place more than the
number of places by which such ratio is expressed herein and rounding the result
up or down to the nearest number (with a rounding-up if there is no nearest
number).

         1.6      References to Agreements and Requirement of Laws.
                  ------------------------------------------------

         Unless otherwise expressly provided herein: (a) references to
organization documents, agreements (including the Credit Documents) and other
contractual instruments shall be deemed to include all subsequent amendments,
restatements, extensions, supplements and other modifications thereto, but only
to the extent that such amendments, restatements, extensions, supplements and
other modifications are not prohibited by any Credit Document and (b) references
to any Requirement of Law shall include all statutory and regulatory provisions
consolidating, amending, replacing, supplementing or interpreting such
Requirement of Law.


                                    SECTION 2

                                 CREDIT FACILITY

         2.1      Revolving Loans.
                  ---------------

                  (a) Revolving Loan Commitment. Subject to the terms and
         conditions set forth herein, each Lender severally agrees to make
         revolving loans (each a "Revolving Loan" or "Loan" and collectively the
         "Revolving Loans" or "Loans") in Dollars to the Borrower, at any time
         and from time to time, during the period from and including the Closing
         Date to but not including the Maturity Date (or such earlier date if
         the Commitments have been terminated as provided herein); provided,
         however, that after giving effect to any Borrowing (i) the sum of the
         aggregate principal amount of outstanding Revolving Loans plus the
         aggregate principal amount of outstanding L/C Obligations shall not
         exceed the Revolving Committed Amount and (ii) with respect to each
         individual Lender, the sum of the aggregate principal amount of
         outstanding Revolving Loans plus the aggregate principal amount of
         outstanding L/C Obligations of such Lender shall not exceed such
         Lender's Pro Rata Share of the Revolving Committed Amount. Subject to
         the terms of this Credit Agreement (including Section 3.3), the
         Borrower may borrow, repay and reborrow Revolving Loans.

                  (b) Method of Borrowing for Revolving Loans. By no later than
         11:00 a.m. (i) on the date of the requested Borrowing of Revolving
         Loans that will be Base Rate Loans and (ii) three Business Days prior
         to the date of the requested Borrowing of Revolving Loans that will be
         Eurodollar Loans, the Borrower shall telephone the Administrative Agent
         as well as submit a written Notice of Borrowing in the form of Exhibit

                                       18
<PAGE>

         2.1(b) to the Administrative Agent setting forth (A) the amount
         requested, (B) the date of the requested Borrowing, (C) the Type of
         Revolving Loan, (D) with respect to Revolving Loans that will be
         Eurodollar Loans, the Interest Period applicable thereto, and (E)
         certification that the Borrower has complied in all respects with
         Section 5. If the Borrower shall fail to specify (1) an Interest Period
         in the case of a Eurodollar Loan, then such Eurodollar Loan shall be
         deemed to have an Interest Period of one month or (2) the Type of
         Revolving Loan requested, then such Revolving Loan shall be deemed to
         be a Base Rate Loan. All Revolving Loans made on the Closing Date shall
         be Base Rate Loans. Thereafter, all or any portion of the Revolving
         Loans may be converted into Eurodollar Loans in accordance with the
         terms of Section 2.3.

                  (c) Funding of Revolving Loans. Upon receipt of a Notice of
         Borrowing, the Administrative Agent shall promptly inform the Lenders
         as to the terms thereof. Each such Lender shall make its Pro Rata Share
         of the requested Revolving Loans available to the Administrative Agent
         in immediately available funds at the Administrative Agent's Office not
         later than 1:00 p.m. on the Business Day specified in the applicable
         Notice of Borrowing. Upon satisfaction of the conditions set forth in
         Section 5, the amount of the requested Revolving Loans will then be
         made available to the Borrower by the Administrative Agent either by
         (i) crediting the account of the Borrower on the books of the
         Administrative Agent with the amount of such funds or (ii) wire
         transfer of such funds, in each case in accordance with instructions
         provided to (and reasonably acceptable to) the Administrative Agent by
         the Borrower.

                  (d) Reductions of Revolving Committed Amount. Upon at least
         three Business Days' notice, the Borrower shall have the right to
         permanently terminate or reduce the aggregate unused amount of the
         Revolving Committed Amount at any time or from time to time; provided
         that (i) each partial reduction shall be in an aggregate amount at
         least equal to $5,000,000 and in integral multiples of $1,000,000 above
         such amount and (ii) no reduction shall be made which would reduce the
         Revolving Committed Amount to an amount less than the sum of the
         aggregate principal amount of outstanding Revolving Loans plus the
         aggregate principal amount of outstanding L/C Obligations. Any
         reduction in (or termination of) the Revolving Committed Amount shall
         be permanent and may not be reinstated.

                  (e) Revolving Notes. The Revolving Loans made by each Lender
         shall be evidenced by a duly executed promissory note of the Borrower
         to such Lender in substantially the form of Exhibit 2.1(e).

         2.2      Letter of Credit Subfacility.
                  ----------------------------

                  (a)      The Letter of Credit Commitment.

                           (i) Subject to the terms and conditions set forth
                  herein and other terms and conditions that the L/C Issuer may
                  reasonably require, (A) the L/C Issuer agrees, in reliance
                  upon the agreements of the other Lenders set forth in this
                  Section 2.2, from time to time on any Business Day during the
                  period from the Closing Date until the Letter of Credit
                  Expiration Date, to issue standby Letters of Credit in Dollars

                                       19
<PAGE>

                  for the account of the Borrower and to amend Letters of Credit
                  previously issued by it, in each case in accordance with
                  subsection (b) below and (B) the Lenders severally agree to
                  participate in Letters of Credit issued for the account of the
                  Borrower; provided, however, that after giving effect to the
                  issuance of any Letter of Credit (1) the sum of the aggregate
                  principal amount of outstanding Revolving Loans plus the
                  aggregate principal amount of outstanding L/C Obligations
                  shall not exceed the Revolving Committed Amount, (2) with
                  respect to each individual Lender, the sum of the aggregate
                  principal amount of outstanding Revolving Loans of such Lender
                  plus the aggregate principal amount of outstanding L/C
                  Obligations of such Lender shall not exceed such Lender's Pro
                  Rata Share of the Revolving Committed Amount and (3) the
                  aggregate amount of L/C Obligations shall not at any time
                  exceed the Letter of Credit Sublimit. Within the foregoing
                  limits, and subject to the terms and conditions hereof, the
                  Borrower may, during the foregoing period, obtain Letters of
                  Credit to replace Letters of Credit that have expired or that
                  have been drawn upon and reimbursed.

                           (ii) The L/C Issuer shall not issue or amend any
                  Letter of Credit if:

                                    (A) any order, judgment or decree of any
                           Governmental Authority or arbitrator shall by its
                           terms purport to enjoin or restrain the L/C Issuer
                           from issuing such Letter of Credit, or any
                           Requirement of Law applicable to the L/C Issuer or
                           any request or directive (whether or not having the
                           force of law) from any Governmental Authority with
                           jurisdiction over the L/C Issuer shall prohibit, or
                           request that the L/C Issuer refrain from, the
                           issuance of letters of credit generally or such
                           Letter of Credit in particular or shall impose upon
                           the L/C Issuer with respect to such Letter of Credit
                           any restriction, reserve or capital requirement (for
                           which the L/C Issuer is not otherwise compensated
                           hereunder) not in effect on the Closing Date, or
                           shall impose upon the L/C Issuer any unreimbursed
                           loss, cost or expense which was not applicable on the
                           Closing Date and which the L/C Issuer in good faith
                           deems material to it;

                                    (B) the expiry date of such requested Letter
                           of Credit would occur more than twelve months after
                           the date of issuance, unless the Required Lenders
                           have approved such expiry date;

                                    (C) the expiry date of such requested Letter
                           of Credit would occur after the Letter of Credit
                           Expiration Date, unless all the Lenders have approved
                           such expiry date;

                                    (D) the issuance of such Letter of Credit
                           would violate one or more policies of the L/C Issuer;
                           or

                                    (E) such Letter of Credit is in an initial
                           amount less than $100,000 (unless otherwise agreed to
                           by the L/C Issuer), is to be used for a purpose other
                           than as permitted by Section 7.11, or is denominated
                           in a currency other than Dollars.

                                       20
<PAGE>

                           (iii) The L/C Issuer shall be under no obligation to
                  amend any Letter of Credit if (A) the L/C Issuer would have no
                  obligation at such time to issue such Letter of Credit in its
                  amended form under the terms hereof or (B) the beneficiary of
                  such Letter of Credit does not accept the proposed amendment
                  to such Letter of Credit.

                  (b) Procedures for Issuance and Amendment of Letters of
                      Credit.

                           (i) Each Letter of Credit shall be issued or amended,
                  as the case may be, upon the request of the Borrower delivered
                  to the L/C Issuer (with a copy to the Administrative Agent) in
                  the form of a Letter of Credit Application, appropriately
                  completed and signed by a Responsible Officer of the Borrower.
                  The Letter of Credit Application must be received by the L/C
                  Issuer and the Administrative Agent not later than 11:00 a.m.
                  at least two Business Days (or such later date and time as the
                  L/C Issuer may agree in a particular instance in its sole
                  discretion) prior to the proposed issuance date or date of
                  amendment, as applicable. In the case of a request for an
                  initial issuance of a Letter of Credit, such Letter of Credit
                  Application shall specify in form and detail satisfactory to
                  the L/C Issuer: (A) the proposed issuance date of the
                  requested Letter of Credit (which shall be a Business Day),
                  (B) the amount thereof, (C) the expiry date thereof, (D) the
                  name and address of the beneficiary thereof, (E) the documents
                  to be presented by such beneficiary in case of any drawing
                  thereunder, (F) the full text of any certificate to be
                  presented by such beneficiary in case of any drawing
                  thereunder and (G) such other matters as the L/C Issuer may
                  require. In the case of a request for an amendment of any
                  outstanding Letter of Credit, such Letter of Credit
                  Application shall specify in form and detail satisfactory to
                  the L/C Issuer (1) the Letter of Credit to be amended, (2) the
                  proposed date of amendment thereof (which shall be a Business
                  Day), (3) the nature of the proposed amendment and (4) such
                  other matters as the L/C Issuer may require.

                           (ii) Promptly after receipt of any Letter of Credit
                  Application, the L/C Issuer will confirm with the
                  Administrative Agent (by telephone or in writing) that the
                  Administrative Agent has received a copy of such Letter of
                  Credit Application from the Borrower and, if not, the L/C
                  Issuer will provide the Administrative Agent with a copy
                  thereof. Upon receipt by the L/C Issuer of confirmation from
                  the Administrative Agent that the requested issuance or
                  amendment is permitted in accordance with the terms hereof,
                  then, subject to the terms and conditions hereof, the L/C
                  Issuer shall, on the requested date, issue a Letter of Credit
                  for the account of the Borrower or enter into the applicable
                  amendment, as the case may be, in each case in accordance with
                  the L/C Issuer's usual and customary business practices.

                           (iii) If the Borrower so requests in any applicable
                  Letter of Credit Application, the L/C Issuer may, in its sole
                  and absolute discretion, agree to issue a Letter of Credit
                  that has automatic renewal provisions (each, an "Auto-Renewal
                  Letter of Credit"); provided that any such Auto-Renewal Letter
                  of Credit must permit the L/C Issuer to prevent any such
                  renewal at least once in each twelve-month period (commencing

                                       21
<PAGE>

                  with the date of issuance of such Letter of Credit) by giving
                  prior notice to the beneficiary thereof not later than a day
                  (the "Nonrenewal Notice Date") in each such twelve-month
                  period to be agreed upon at the time such Letter of Credit is
                  issued. Unless otherwise directed by the L/C Issuer, the
                  Borrower shall not be required to make a specific request to
                  the L/C Issuer for any such renewal. Once an Auto-Renewal
                  Letter of Credit has been issued, the Lenders shall be deemed
                  to have authorized (but may not require) the L/C Issuer to
                  permit the renewal of such Letter of Credit at any time to an
                  expiry date not later than the Letter of Credit Expiration
                  Date; provided, however, that the L/C Issuer shall not permit
                  any such renewal if (A) the L/C Issuer has determined that it
                  would have no obligation at such time to issue such Letter of
                  Credit in its renewed form under the terms hereof (by reason
                  of the provisions of Section 2.2(a)(ii) or otherwise), or (B)
                  it has received notice (which may be by telephone or in
                  writing) on or before the day that is two Business Days before
                  the Nonrenewal Notice Date (1) from the Administrative Agent
                  that the Required Lenders have elected not to permit such
                  renewal or (2) from the Administrative Agent, any Lender or
                  the Borrower that one or more of the applicable conditions
                  specified in Section 5 is not then satisfied.

                           (iv) Promptly after its delivery of any Letter of
                  Credit or any amendment to a Letter of Credit to an advising
                  bank with respect thereto or to the beneficiary thereof, the
                  L/C Issuer will also deliver to the Borrower and the
                  Administrative Agent a true and complete copy of such Letter
                  of Credit or amendment.

                  (c)      Participations.

                           (i) On the Closing Date, each Lender shall be deemed
                  to have purchased without recourse a risk participation from
                  the L/C Issuer in each Existing Letter of Credit and the
                  obligations arising thereunder and any collateral relating
                  thereto, in each case in an amount equal to its Pro Rata Share
                  of the obligations under such Existing Letter of Credit, and
                  shall absolutely, unconditionally and irrevocably assume, as
                  primary obligor and not as surety, and be obligated to pay to
                  the L/C Issuer therefor and discharge when due, its Pro Rata
                  Share of the obligations arising under such Existing Letter of
                  Credit.

                           (ii) Each Lender, upon issuance of a Letter of
                  Credit, shall be deemed to have purchased without recourse a
                  risk participation from the L/C Issuer in such Letter of
                  Credit and the obligations arising thereunder and any
                  collateral relating thereto, in each case in an amount equal
                  to its Pro Rata Share of the obligations under such Letter of
                  Credit, and shall absolutely, unconditionally and irrevocably
                  assume, as primary obligor and not as surety, and be obligated
                  to pay to the L/C Issuer therefor and discharge when due, its
                  Pro Rata Share of the obligations arising under such Letter of
                  Credit.

                                       22
<PAGE>

                  (d)    Reimbursement.

                           (i) In the event of any drawing under any Letter of
                  Credit, the L/C Issuer will promptly notify the Borrower. The
                  Borrower shall reimburse the L/C Issuer on the day of drawing
                  under any Letter of Credit either with the proceeds of a
                  Revolving Loan obtained hereunder or otherwise in immediately
                  available funds. If the Borrower shall fail to reimburse the
                  L/C Issuer as provided hereinabove, the unreimbursed amount of
                  such drawing shall bear interest at a per annum rate equal to
                  the Base Rate plus two percent (2%).

                           (ii) Subsequent to a drawing under any Letter of
                  Credit, unless the Borrower shall immediately notify the L/C
                  Issuer of its intent to otherwise reimburse the L/C Issuer,
                  the Borrower shall be deemed to have requested a Base Rate
                  Loan in the amount of the drawing as described herein, the
                  proceeds of which will be used to satisfy the reimbursement
                  obligations. On any day on which the Borrower shall be deemed
                  to have requested a Revolving Loan borrowing to reimburse a
                  drawing under a Letter of Credit, the Administrative Agent
                  shall give notice to the Lenders that a Revolving Loan has
                  been deemed requested in connection with a drawing under a
                  Letter of Credit, in which case a Revolving Loan borrowing
                  comprised solely of Base Rate Loans (each such borrowing, a
                  "Mandatory Borrowing") shall be immediately made from all
                  Lenders (without giving effect to any termination of the
                  Commitments pursuant to Section 9.2 or otherwise) pro rata
                  based on each Lender's respective Pro Rata Share and the
                  proceeds thereof shall be paid directly to the L/C Issuer for
                  application to the respective L/C Obligations. Each Lender
                  hereby irrevocably agrees to make such Revolving Loans
                  immediately upon any such request or deemed request on account
                  of each such Mandatory Borrowing in the amount and in the
                  manner specified in the preceding sentence and on the same
                  such date notwithstanding (A) the amount of Mandatory
                  Borrowing may not comply with the minimum amount for
                  borrowings of Revolving Loans otherwise required hereunder,
                  (B) the failure of any conditions specified in Section 5.2 to
                  have been satisfied, (C) the existence of a Default or an
                  Event of Default, (D) the failure of any such request or
                  deemed request for Revolving Loans to be made by the time
                  otherwise required hereunder, (E) the date of such Mandatory
                  Borrowing, or (F) any reduction in the Revolving Committed
                  Amount or any termination of the Commitments.

                           (iii) In the event that any Mandatory Borrowing
                  cannot for any reason be made on the date otherwise required
                  above (including, without limitation, as a result of the
                  commencement of a proceeding under the Bankruptcy Code with
                  respect to the Borrower), then each such Lender hereby agrees
                  that it shall forthwith fund (as of the date the Mandatory
                  Borrowing would otherwise have occurred, but adjusted for any
                  payments received from the Borrower on or after such date and
                  prior to such purchase) its Pro Rata Share in the outstanding
                  L/C Obligations; provided, that in the event any Lender shall

                                       23
<PAGE>

                  fail to fund its Pro Rata Share on the day the Mandatory
                  Borrowing would otherwise have occurred, then the amount of
                  such Lender's unfunded participation interest therein shall
                  bear interest payable to the L/C Issuer upon demand, at the
                  rate equal to, if paid within two Business Days of such date,
                  the Federal Funds Rate, and thereafter at a rate equal to the
                  Base Rate. Simultaneously with the making of each such payment
                  by a Lender to the L/C Issuer, such Lender shall,
                  automatically and without any further action on the part of
                  the L/C Issuer or such Lender, acquire a participation in an
                  amount equal to such payment (excluding the portion of such
                  payment constituting interest owing to the L/C Issuer) in the
                  related unreimbursed drawing portion of the L/C Obligation and
                  in the interest thereon and shall have a claim against the
                  Borrower with respect thereto. Any payment by the Lenders
                  pursuant to this clause (iii) shall not relieve or otherwise
                  impair the obligations of the Borrower to reimburse the L/C
                  Issuer under a Letter of Credit.

                  (e) Obligations Absolute. The obligation of the Borrower to
         reimburse the L/C Issuer for each drawing under each Letter of Credit
         shall be absolute, unconditional and irrevocable, and shall be paid
         strictly in accordance with the terms of this Credit Agreement under
         all circumstances, including the following:

                           (i) any lack of validity or enforceability of such
                  Letter of Credit, this Credit Agreement, or any other
                  agreement or instrument relating thereto;

                           (ii) the existence of any claim, counterclaim,
                  set-off, defense or other right that the Borrower may have at
                  any time against any beneficiary or any transferee of such
                  Letter of Credit (or any Person for whom any such beneficiary
                  or any such transferee may be acting), the L/C Issuer or any
                  other Person, whether in connection with this Credit
                  Agreement, the transactions contemplated hereby or by such
                  Letter of Credit or any agreement or instrument relating
                  thereto, or any unrelated transaction;

                           (iii) any draft, demand, certificate or other
                  document presented under such Letter of Credit proving to be
                  forged, fraudulent, invalid or insufficient in any respect or
                  any statement therein being untrue or inaccurate in any
                  respect; or any loss or delay in the transmission or otherwise
                  of any document required in order to make a drawing under such
                  Letter of Credit;

                           (iv) any payment by the L/C Issuer under such Letter
                  of Credit against presentation of a draft or certificate that
                  does not strictly comply with the terms of such Letter of
                  Credit; or any payment made by the L/C Issuer under such
                  Letter of Credit to any Person purporting to be a trustee in
                  bankruptcy, debtor-in-possession, assignee for the benefit of
                  creditors, liquidator, receiver or other representative of or
                  successor to any beneficiary or any transferee of such Letter
                  of Credit, including any arising in connection with any
                  proceeding under any Debtor Relief Law; or

                           (v) any other circumstance or happening whatsoever,
                  whether or not similar to any of the foregoing, including any
                  other circumstance that might otherwise constitute a defense
                  available to, or a discharge of, the Borrower.

         The Borrower shall promptly examine a copy of each Letter of Credit and
         each amendment thereto that is delivered to it and, in the event of any
         claim of noncompliance with the Borrower's instructions or other
         irregularity, the Borrower will immediately notify the L/C Issuer. The
         Borrower shall be conclusively deemed to have waived any such claim
         against the L/C Issuer and its correspondents unless such notice is
         given as aforesaid.

                                       24
<PAGE>

                  (f) Role of L/C Issuer. Each Lender and the Borrower agree
         that, in paying any drawing under a Letter of Credit, the L/C Issuer
         shall not have any responsibility to obtain any document (other than
         any sight draft, certificates and documents expressly required by the
         Letter of Credit) or to ascertain or inquire as to the validity or
         accuracy of any such document or the authority of the Person executing
         or delivering any such document. None of the L/C Issuer, any
         Agent-Related Person nor any of the respective correspondents,
         participants or assignees of the L/C Issuer shall be liable to any
         Lender for (i) any action taken or omitted in connection herewith at
         the request or with the approval of the Lenders or the Required
         Lenders, as applicable, (ii) any action taken or omitted in the absence
         of gross negligence or willful misconduct or (iii) the due execution,
         effectiveness, validity or enforceability of any document or instrument
         related to any Letter of Credit or Letter of Credit Application. The
         Borrower hereby assumes all risks of the acts or omissions of any
         beneficiary or transferee with respect to its use of any Letter of
         Credit; provided, however, that this assumption is not intended to, and
         shall not, preclude the Borrower's pursuing such rights and remedies as
         it may have against the beneficiary or transferee at law or under any
         other agreement. None of the L/C Issuer, any Agent-Related Person, nor
         any of the respective correspondents, participants or assignees of the
         L/C Issuer, shall be liable or responsible for any of the matters
         described in clauses (i) through (v) of Section 2.2(e). In furtherance
         and not in limitation of the foregoing, the L/C Issuer may accept
         documents that appear on their face to be in order, without
         responsibility for further investigation and the L/C Issuer shall not
         be responsible for the validity or sufficiency of any instrument
         transferring or assigning or purporting to transfer or assign a Letter
         of Credit or the rights or benefits thereunder or proceeds thereof, in
         whole or in part, which may prove to be invalid or ineffective for any
         reason.

                  (g) Cash Collateral. If, as of the Letter of Credit Expiration
         Date, any Letter of Credit for any reason remains outstanding and
         partially or wholly undrawn, the Borrower shall immediately Cash
         Collateralize the then aggregate principal amount of all L/C
         Obligations (in an amount equal to such aggregate principal amount
         determined as of the Letter of Credit Expiration Date). The Borrower
         hereby grants to the Administrative Agent, for the benefit of the L/C
         Issuer and the Lenders, a security interest in all such cash, deposit
         accounts and all balances therein and all proceeds of the foregoing.
         Cash collateral shall be maintained in blocked, non-interest bearing
         deposit accounts at Bank of America.

                  (h) Applicability of ISP98 and UCP. Unless otherwise expressly
         agreed by the L/C Issuer and the Borrower when a Letter of Credit is
         issued (including any such agreement applicable to an Existing Letter
         of Credit), the rules of the "International Standby Practices 1998"
         published by the Institute of International Banking Requirement of Law
         & Practice (or such later version thereof as may be in effect at the
         time of issuance) and the rules of the Uniform Customs and Practice for
         Documentary Credits, as most recently published by the International
         Chamber of Commerce (the "ICC") at the time of issuance (including the
         ICC decision published by the Commission on Banking Technique and
         Practice on April 6, 1998 regarding the European single currency
         (euro)) shall apply to each Letter of Credit.

                                       25
<PAGE>

                  (i) Fronting Fee and Documentary and Processing Charges
         Payable to L/C Issuer. The Borrower shall pay directly to the L/C
         Issuer for its own account a fronting fee with respect to each Letter
         of Credit in an amount equal to 0.125% times the daily maximum amount
         available to be drawn under such Letter of Credit (the "L/C Fronting
         Fee"). The L/C Fronting Fee shall be computed on a quarterly basis in
         arrears and shall be due and payable on the last Business Day of each
         fiscal quarter of the Borrower (as well as on the Letter of Credit
         Expiration Date) for the fiscal quarter (or portion thereof) then
         ending, beginning with the first of such dates to occur after the
         issuance of such Letter of Credit. In addition, the Borrower shall pay
         directly to the L/C Issuer for its own account the customary issuance,
         presentation, amendment and other processing fees, and other standard
         costs and charges, of the L/C Issuer relating to letters of credit as
         from time to time in effect. Such customary fees and standard costs and
         charges are due and payable on demand and are nonrefundable.

                  (j) Conflict with Letter of Credit Application. In the event
         of any conflict between the terms hereof and the terms of any Letter of
         Credit Application, the terms hereof shall control.

                  (k) Indemnification of L/C Issuer.

                           (i) In addition to its other obligations under this
                  Credit Agreement, the Borrower hereby agrees to protect,
                  indemnify, pay and hold the L/C Issuer harmless from and
                  against any and all claims, demands, liabilities, damages,
                  losses, costs, charges and expenses (including reasonable
                  attorneys' fees) that the L/C Issuer may incur or be subject
                  to as a consequence, direct or indirect, of (A) the issuance
                  of any Letter of Credit or (B) the failure of the L/C Issuer
                  to honor a drawing under a Letter of Credit as a result of any
                  act or omission, whether rightful or wrongful, of any present
                  or future de jure or de facto government or Governmental
                  Authority (all such acts or omissions, herein called
                  "Government Acts").

                           (ii) As between the Borrower and the L/C Issuer, the
                  Borrower shall assume all risks of the acts, omissions or
                  misuse of any Letter of Credit by the beneficiary thereof. In
                  the absence of gross negligence or willful misconduct, the L/C
                  Issuer shall not be responsible for: (A) the form, validity,
                  sufficiency, accuracy, genuineness or legal effect of any
                  document submitted by any party in connection with the
                  application for and issuance of any Letter of Credit, even if
                  it should in fact prove to be in any or all respects invalid,
                  insufficient, inaccurate, fraudulent or forged; (B) the
                  validity or sufficiency of any instrument transferring or
                  assigning or purporting to transfer or assign any Letter of
                  Credit or the rights or benefits thereunder or proceeds
                  thereof, in whole or in part, that may prove to be invalid or
                  ineffective for any reason; (C) failure of the beneficiary of
                  a Letter of Credit to comply fully with conditions required in
                  order to draw upon a Letter of Credit; (D) errors, omissions,
                  interruptions or delays in transmission or delivery of any
                  messages, by mail, cable, telegraph, telex or otherwise,
                  whether or not they be in cipher; (E) errors in interpretation
                  of technical terms; (F) any loss or delay in the transmission
                  or otherwise of any document required in order to make a
                  drawing under a Letter of Credit or of the proceeds thereof;
                  and (G) any consequences arising from causes beyond the
                  control of the L/C Issuer, including, without limitation, any
                  Government Acts. None of the above shall affect, impair, or
                  prevent the vesting of the L/C Issuer's rights or powers
                  hereunder.

                                       26
<PAGE>

                           (iii) In furtherance and extension and not in
                  limitation of the specific provisions hereinabove set forth,
                  any action taken or omitted by the L/C Issuer, under or in
                  connection with any Letter of Credit or the related
                  certificates, if taken or omitted in good faith, shall not put
                  the L/ C Issuer under any resulting liability to the Borrower.
                  It is the intention of the parties that this Credit Agreement
                  shall be construed and applied to protect and indemnify the
                  L/C Issuer against any and all risks involved in the issuance
                  of the Letters of Credit, all of which risks are hereby
                  assumed by the Borrower, including, without limitation, any
                  and all risks of the acts or omissions, whether rightful or
                  wrongful, of any present or future Government Acts. The L/C
                  Issuer shall not, in any way, be liable for any failure by the
                  L/C Issuer or anyone else to pay any drawing under any Letter
                  of Credit as a result of any Government Acts or any other
                  cause beyond the control of the L/C Issuer.

                           (iv) Nothing in this subsection (l) is intended to
                  limit the reimbursement obligation of the Borrower contained
                  in this Section 2.2. The obligations of the Borrower under
                  this subsection (l) shall survive the termination of this
                  Credit Agreement. No act or omission of any current or prior
                  beneficiary of a Letter of Credit shall in any way affect or
                  impair the rights of the L/ C Issuer to enforce any right,
                  power or benefit under this Credit Agreement.

                  (l) Letter of Credit Amounts. Unless otherwise specified, all
         references herein to the amount of a Letter of Credit at any time shall
         be deemed to mean the maximum face amount of such Letter of Credit
         after giving effect to all increases thereof contemplated by such
         Letter of Credit or the Letter of Credit Application therefor, whether
         or not such maximum face amount is in effect at such time.

         2.3      Continuations and Conversions.
                  -----------------------------

         Subject to the terms below, the Borrower shall have the option, on any
Business Day prior to the Maturity Date, to continue existing Eurodollar Loans
for a subsequent Interest Period, to convert Base Rate Loans into Eurodollar
Loans or to convert Eurodollar Loans into Base Rate Loans. By no later than
11:00 a.m. (a) on the date of the requested conversion of a Eurodollar Loan to a
Base Rate Loan and (b) three Business Days prior to the date of the requested
continuation of a Eurodollar Loan or conversion of a Base Rate Loan to a
Eurodollar Loan, the Borrower shall provide telephonic notice to the
Administrative Agent, followed promptly by a written Notice of
Continuation/Conversion in the form of Exhibit 2.3, setting forth whether the
Borrower wishes to continue or convert such Revolving Loans. Notwithstanding
anything herein to the contrary, (A) except as provided in Section 3.11,
Eurodollar Loans may only be continued or converted into Base Rate Loans on the
last day of the Interest Period applicable thereto, (B) Eurodollar Loans may not
be continued nor may Base Rate Loans be converted into Eurodollar Loans during
the existence and continuation of a Default or an Event of Default and (C) any
request to continue a Eurodollar Loan that fails to comply with the terms hereof
or any failure to request a continuation of a Eurodollar Loan at the end of an
Interest Period shall be deemed a request to convert such Eurodollar Loan to a
Base Rate Loan on the last day of the applicable Interest Period.

                                       27
<PAGE>

         2.4      Minimum Amounts.
                  ---------------

         Each request for a borrowing, conversion or continuation shall be
subject to the requirements that (a) each Eurodollar Loan shall be in a minimum
amount of $5,000,000 and in integral multiples of $1,000,000 in excess thereof,
(b) each Base Rate Loan shall be in a minimum amount of $3,000,000 and in
integral multiples of $100,000 in excess thereof (or the remaining amount of
outstanding Revolving Loans) and (c) no more than five Eurodollar Loans shall be
outstanding hereunder at any one time. For the purposes of this Section 2.4,
separate Eurodollar Loans that begin and end on the same date, as well as
Eurodollar Loans that begin and end on different dates, shall all be considered
as separate Eurodollar Loans.


                                    SECTION 3

                          GENERAL PROVISIONS APPLICABLE
                               TO REVOLVING LOANS

         3.1      Interest.
                  --------

                  (a) Interest Rate. Subject to Sections 3.1(b), (i) all Base
         Rate Loans shall accrue interest at the Base Rate and (ii) all
         Eurodollar Loans shall accrue interest at the Adjusted Eurodollar Rate.

                  (b) Default Rate of Interest. After the occurrence, and during
         the continuation, of an Event of Default, the principal of and, to the
         extent permitted by Law, interest on the Revolving Loans and any other
         amounts owing hereunder or under the other Credit Documents (including
         without limitation fees and expenses) shall bear interest, payable on
         demand, at the Default Rate.

                  (c) Interest Payments. Interest on Revolving Loans shall be
         due and payable in arrears on each Interest Payment Date.

         3.2      Payments Generally.
                  ------------------

                  (a) No Deductions; Place and Time of Payments. All payments to
         be made by the Borrower shall be made without condition or deduction
         for any counterclaim, defense, recoupment or setoff. Except as
         otherwise expressly provided herein, all payments by the Borrower
         hereunder shall be made to the Administrative Agent, for the account of
         the respective Lenders to which such payment is owed, at the
         Administrative Agent's Office in Dollars and in immediately available
         funds not later than 2:00 p.m. on the date specified herein. The
         Administrative Agent will promptly distribute to each Lender its Pro
         Rata Share (or other applicable share as provided herein) of such
         payment in like funds as received by wire transfer to such Lender's
         Lending Office. All payments received by the Administrative Agent after
         2:00 p.m. shall deemed received on the next succeeding Business Day and
         any applicable interest or fee shall continue to accrue.

                                       28
<PAGE>

                  (b) Payment Dates. Subject to the definition of "Interest
         Period," if any payment to be made by the Borrower shall come due on a
         day other than a Business Day, payment shall be made on the next
         following Business Day, and such extension of time shall be reflected
         in computing interest or fees, as the case may be.

                  (c) Advances by Administrative Agent. Unless the Borrower or
         any Lender has notified the Administrative Agent, prior to the date any
         payment is required to be made by it to the Administrative Agent
         hereunder, that the Borrower or such Lender, as the case may be, will
         not make such payment, the Administrative Agent may assume that the
         Borrower or such Lender, as the case may be, has timely made such
         payment and may (but shall not be so required to), in reliance thereon,
         make available a corresponding amount to the Person entitled thereto.
         If and to the extent that such payment was not in fact made to the
         Administrative Agent in immediately available funds, then:

                           (i) if the Borrower failed to make such payment, each
                  Lender shall forthwith on demand repay to the Administrative
                  Agent the portion of such assumed payment that was made
                  available to such Lender in immediately available funds,
                  together with interest thereon in respect of each day from and
                  including the date such amount was made available by the
                  Administrative Agent to such Lender to the date such amount is
                  repaid to the Administrative Agent in immediately available
                  funds at the Federal Funds Rate from time to time in effect;
                  and

                           (ii) if any Lender failed to make such payment, such
                  Lender shall forthwith on demand pay to the Administrative
                  Agent the amount thereof in immediately available funds,
                  together with interest thereon for the period from the date
                  such amount was made available by the Administrative Agent to
                  the Borrower to the date such amount is recovered by the
                  Administrative Agent (the "Compensation Period") at a rate per
                  annum equal to the Federal Funds Rate from time to time in
                  effect. If such Lender pays such amount to the Administrative
                  Agent, then such amount shall constitute such Lender's
                  Revolving Loan included in the applicable Borrowing. If such
                  Lender does not pay such amount forthwith upon the
                  Administrative Agent's demand therefor, the Administrative
                  Agent may make a demand therefor upon the Borrower, and the
                  Borrower shall pay such amount to the Administrative Agent,
                  together with interest thereon for the Compensation Period at
                  a rate per annum equal to the rate of interest applicable to
                  such Borrowing. Nothing herein shall be deemed to relieve any
                  Lender from its obligation to fulfill its Commitment or to
                  prejudice any rights which the Administrative Agent or the
                  Borrower may have against any Lender as a result of any
                  default by such Lender hereunder.

         A notice of the Administrative Agent to any Lender or the Borrower with
         respect to any amount owing under this subsection (c) shall be
         conclusive, absent manifest error.

                                       29
<PAGE>

                  (d) Several Obligations. The obligations of the Lenders
         hereunder to make Revolving Loans and to fund or purchase Participation
         Interests are several and not joint. The failure of any Lender to make
         any Revolving Loan or to fund or purchase any Participation Interest on
         any date required hereunder shall not relieve any other Lender of its
         corresponding obligation to do so on such date, and no Lender shall be
         responsible for the failure of any other Lender to so make its
         Revolving Loan or fund or purchase its Participation Interest.

                  (e) Funding Offices. Nothing herein shall be deemed to
         obligate any Lender to obtain the funds for any Revolving Loan in any
         particular place or manner or to constitute a representation by any
         Lender that it has obtained or will obtain the funds for any Revolving
         Loan in any particular place or manner.

         3.3      Prepayments.
                  -----------

                  (a) Voluntary Prepayments. The Borrower shall have the right
         to prepay the Revolving Loans in whole or in part from time to time
         without premium or penalty; provided, however, that (i) all prepayments
         under this Section 3.3(a) shall be subject to Section 3.14, (ii)
         Eurodollar Loans may only be prepaid on three Business Days' prior
         written notice to the Administrative Agent, (iii) each such partial
         prepayment of Eurodollar Loans shall be in the minimum principal amount
         of $5,000,000 and integral multiples of $1,000,000 and (iv) each such
         partial prepayment of Base Rate Loans shall be in the minimum principal
         amount of $500,000 and integral multiples of $100,000 or, in the case
         of clauses (iii) and (iv), if less than such minimum amounts, the
         entire principal amount thereof then outstanding. Amounts prepaid
         pursuant to this Section 3.3(a) shall be applied as the Borrower may
         elect based on the Lenders' Pro Rata Shares; provided, however, if the
         Borrower fails to specify, such prepayment shall be applied by the
         Administrative Agent, subject to Section 3.7, in such manner as it
         deems reasonably appropriate.

                  (b) Mandatory Prepayments. If at any time (i) the sum of the
         aggregate principal amount of Revolving Loans outstanding plus the
         aggregate principal amount of L/C Obligations outstanding exceeds the
         Revolving Committed Amount or (ii) the aggregate principal amount of
         L/C Obligations outstanding exceeds the Letter of Credit Sublimit, the
         Borrower shall immediately make a principal payment to the
         Administrative Agent and/or Cash Collateralize outstanding L/C
         Obligations in a manner, in an amount and in Dollars as is necessary to
         be in compliance with Sections 2.1 and 2.2, as applicable, and as
         directed by the Administrative Agent. All amounts required to be
         prepaid pursuant to this Section 3.3(b) shall be applied first to Base
         Rate Loans, second to Eurodollar Loans in direct order of Interest
         Period maturities and third to Cash Collateralize outstanding L/C
         Obligations. All prepayments pursuant to this Section 3.3(b) shall be
         subject to Section 3.14.

         3.4      Fees.
                  ----

                  (a) Commitment Fees. In consideration of the Revolving
         Committed Amount being made available by the Lenders hereunder, the
         Borrower agrees to pay to the Administrative Agent, for the pro rata
         benefit of each Lender based on its Pro Rata Share, a per annum fee

                                       30
<PAGE>

         equal to the daily average sum of the Applicable Percentage for
         Commitment Fees for each day during the period of determination
         multiplied by the Unused Revolving Commitment for each such day (the
         "Commitment Fees"). The Commitment Fees shall commence to accrue on the
         Closing Date and shall be due and payable in arrears on the last
         Business Day of each fiscal quarter of the Borrower (as well as on the
         Maturity Date and on any date that the Revolving Committed Amount is
         reduced) for the fiscal quarter (or portion thereof) then ending,
         beginning with the first of such dates to occur after the Closing Date.

                  (b) Utilization Fees. If at any time the aggregate principal
         amount of outstanding Revolving Loans exceeds an amount equal to
         thirty-three percent (33%) of the Revolving Committed Amount, the
         Borrower shall pay to the Administrative Agent, for the ratable benefit
         of the Lenders, a utilization fee (the "Utilization Fees") equal to the
         product of (i) the average daily aggregate principal amount of
         outstanding Revolving Loans, calculated from the date the aggregate
         principal amount of outstanding Revolving Loans exceeds an amount equal
         to thirty-three percent (33%) of the Revolving Committed Amount but
         excluding the date the aggregate principal amount of outstanding
         Revolving Loans falls below an amount equal to thirty-three percent
         (33%), times (ii) a per annum percentage equal to the Applicable
         Percentage for Utilization Fees. The Utilization Fees shall be payable
         in arrears on the last Business Day of each fiscal quarter of the
         Borrower (as well as on the Maturity Date and on any date that the
         Revolving Committed Amount is reduced) for the fiscal quarter (or
         portion thereof) then ending, beginning with the first of such dates to
         occur after the Closing Date.

                  (c) L/C Fees. The Borrower shall pay to the Administrative
         Agent for the account of each Lender in accordance with its Pro Rata
         Share a fee for each Letter of Credit equal to the Applicable
         Percentage for L/C Fees times the daily maximum amount available to be
         drawn under such Letter of Credit (the "L/C Fees"). The L/C Fees shall
         be computed on a quarterly basis in arrears and shall be due and
         payable on the last Business Day of each fiscal quarter of the Borrower
         (as well as on the Letter of Credit Expiration Date) for the fiscal
         quarter (or portion thereof) then ending, beginning with the first of
         such dates to occur after the issuance of such Letter of Credit.

                  (d) Administrative Fees. The Borrower agrees to pay to the
         Administrative Agent, for its own account, an annual fee as agreed to
         between the Borrower and the Administrative Agent (the "Administrative
         Fees") in the Fee Letter.

         3.5      Payment in full at Maturity.
                  ---------------------------

         On the Maturity Date, the entire outstanding principal balance of all
Revolving Loans, together with accrued but unpaid interest and all fees and
other sums owing under the Credit Documents, shall be due and payable in full,
unless accelerated sooner pursuant to Section 9.2; provided that if the Maturity
Date is not a Business Day, then such principal, interest, fees and other sums
shall be due and payable in full on the next preceding Business Day.

                                       31
<PAGE>

         3.6      Computations of Interest and Fees.
                  ---------------------------------

                  (a) Calculation of Interest. Except for Base Rate Loans that
         are based upon the Prime Rate, in which case interest shall be computed
         on the basis of the actual number of days elapsed over a year of 365 or
         366 days, as the case may be, all computations of interest and fees
         hereunder shall be made on the basis of the actual number of days
         elapsed over a year of 360 days. Interest shall accrue from and
         including the first date of Borrowing (or continuation or conversion)
         to but excluding the last day occurring in the period for which such
         interest is payable.

                  (b) Usury. It is the intent of the Lenders and the Borrower to
         conform to and contract in strict compliance with applicable usury Law
         from time to time in effect. All agreements between the Lenders and the
         Borrower are hereby limited by the provisions of this subsection which
         shall override and control all such agreements, whether now existing or
         hereafter arising and whether written or oral. In no way, nor in any
         event or contingency (including but not limited to prepayment or
         acceleration of the maturity of any Borrower Obligation), shall the
         interest taken, reserved, contracted for, charged, or received under
         this Credit Agreement, under the Revolving Notes or otherwise, exceed
         the maximum nonusurious amount permissible under applicable Law. If,
         from any possible construction of any of the Credit Documents or any
         other document, interest would otherwise be payable in excess of the
         maximum nonusurious amount, any such construction shall be subject to
         the provisions of this subsection and such documents shall be
         automatically reduced to the maximum nonusurious amount permitted under
         applicable Law, without the necessity of execution of any amendment or
         new document. If any Lender shall ever receive anything of value which
         is characterized as interest on the Revolving Loans under applicable
         Law and which would, apart from this provision, be in excess of the
         maximum nonusurious amount, an amount equal to the amount which would
         have been excessive interest shall, without penalty, be applied to the
         reduction of the principal amount owing on the Revolving Loans and not
         to the payment of interest, or refunded to the Borrower or the other
         payor thereof if and to the extent such amount which would have been
         excessive exceeds such unpaid principal amount of the Revolving Loans.
         The right to demand payment of the Revolving Loans or any other
         Indebtedness evidenced by any of the Credit Documents does not include
         the right to accelerate the payment of any interest which has not
         otherwise accrued on the date of such demand, and the Lenders do not
         intend to charge or receive any unearned interest in the event of such
         demand. All interest paid or agreed to be paid to the Lenders with
         respect to the Revolving Loans shall, to the extent permitted by
         applicable Law, be amortized, prorated, allocated, and spread
         throughout the full stated term (including any renewal or extension) of
         the Revolving Loans so that the amount of interest on account of the
         Revolving Loans does not exceed the maximum nonusurious amount
         permitted by applicable Law.

         3.7      Pro Rata Treatment.
                  ------------------

         Except to the extent otherwise provided herein, each Borrowing, each
payment or prepayment of principal of any Revolving Loan, each L/C Credit
Extension, each payment of interest, each payment of fees (other than
administrative fees paid to the Administrative Agent and fronting, documentary
and processing fees paid to the L/C Issuer), each conversion or continuation of
any Revolving Loans and each reduction in the Revolving Committed Amount, shall
be allocated pro rata among the relevant Lenders in accordance with their Pro
Rata Shares; provided that, if any Lender shall have failed to pay its Pro Rata
Share of any Revolving Loan or fund or purchase its Participation Interest, then

                                       32
<PAGE>

any amount to which such Lender would otherwise be entitled pursuant to this
Section 3.7 shall instead be payable to the Administrative Agent until the share
of such Revolving Loan or such Participation Interest not funded or purchased by
such Lender has been repaid. In the event any principal, interest, fee or other
amount paid to any Lender pursuant to this Credit Agreement or any other Credit
Document is rescinded or must otherwise be returned by the Administrative Agent,
(a) such principal, interest, fee or other amount that had been satisfied by
such payment shall be revived, reinstated and continued in full force and effect
as if such payment had not occurred and (b) such Lender shall, upon the request
of the Administrative Agent, repay to the Administrative Agent the amount so
paid to such Lender, with interest for the period commencing on the date such
payment is returned by the Administrative Agent until the date the
Administrative Agent receives such repayment at a rate per annum equal to the
Federal Funds Rate if repaid within two (2) Business Days after such request and
thereafter the Base Rate.

         3.8      Sharing of Payments.
                  -------------------

         The Lenders agree among themselves that, except to the extent otherwise
provided herein, in the event that any Lender shall obtain payment in respect of
any Revolving Loan, any L/C Obligations or any other obligation owing to such
Lender under this Credit Agreement through the exercise of a right of setoff,
banker's lien or counterclaim, or pursuant to a secured claim under Section 506
of the Bankruptcy Code or other security or interest arising from, or in lieu
of, such secured claim, received by such Lender under any applicable Debtor
Relief Law or other similar Law or otherwise, or by any other means, in excess
of its Pro Rata Share of such payment as provided for in this Credit Agreement,
such Lender shall promptly pay in cash or purchase from the other Lenders a
participation in such Revolving Loans, L/C Obligations and other obligations in
such amounts, and make such other adjustments from time to time, as shall be
equitable to the end that all Lenders share such payment in accordance with
their Pro Rata Shares. The Lenders further agree among themselves that if
payment to a Lender obtained by such Lender through the exercise of a right of
setoff, banker's lien, counterclaim or other event as aforesaid shall be
rescinded or must otherwise be returned, each Lender which shall have shared the
benefit of such payment shall, by payment in cash or a repurchase of a
participation theretofore sold, return its share of that benefit (together with
its share of any accrued interest payable with respect thereto) to each Lender
whose payment shall have been rescinded or otherwise returned. The Borrower
agrees that (a) any Lender so purchasing such a participation may, to the
fullest extent permitted by Law, exercise all rights of payment, including
setoff, banker's lien or counterclaim, with respect to such participation as
fully as if such Lender were a holder of such Revolving Loan, L/C Obligations or
other obligation in the amount of such participation and (b) the Borrower
Obligations that have been satisfied by a payment that has been rescinded or
otherwise returned shall be revived, reinstated and continued in full force and
effect as if such payment had not occurred. Except as otherwise expressly
provided in this Credit Agreement, if any Lender or the Administrative Agent
shall fail to remit to any other Lender an amount payable by such Lender or the
Administrative Agent to such other Lender pursuant to this Credit Agreement on
the date when such amount is due, such payments shall be made together with
interest thereon for each date from the date such amount is due until the date
such amount is paid to the Administrative Agent or such other Lender at a rate
per annum equal to the Federal Funds Rate. If under any applicable Debtor Relief
Law or other similar Law, any Lender receives a secured claim in lieu of a
setoff to which this Section 3.8 applies, such Lender shall, to the extent
practicable, exercise its rights in respect of such secured claim in a manner
consistent with the rights of the Lenders under this Section 3.8 to share in the
benefits of any recovery on such secured claim.

                                       33
<PAGE>

         3.9      Capital Adequacy.

         If any Lender determines that the introduction after the Closing Date
of any Law, rule or regulation or other Requirement of Law regarding capital
adequacy or any change therein or in the interpretation thereof, or compliance
by such Lender (or its Lending Office) therewith, has or would have the effect
of reducing the rate of return on the capital or assets of such Lender or any
corporation controlling such Lender as a consequence of such Lender's
obligations hereunder (taking into consideration its policies with respect to
capital adequacy and such Lender's desired return on capital), then from time to
time upon demand of such Lender (with a copy of such demand to the
Administrative Agent), the Borrower shall pay to such Lender such additional
amounts as will compensate such Lender for such reduction.

         3.10     Eurodollar Provisions.

                  If the Administrative Agent determines (which determination
         shall be conclusive and binding upon the Borrower) in connection with
         any request for a Eurodollar Loan or a conversion to or continuation
         thereof that (i) deposits in Dollars are not being offered to banks in
         the applicable offshore interbank market for the applicable amount and
         Interest Period of such Eurodollar Loan, (ii) adequate and reasonable
         means do not exist for determining the Eurodollar Rate for such
         Eurodollar Loan, or (iii) the Eurodollar Rate for such Eurodollar Loan
         in such does not adequately and fairly reflect the cost to the Lenders
         of funding such Eurodollar Loan, the Administrative Agent will promptly
         notify the Borrower and the Lenders. Thereafter, the obligation of the
         Lenders to make or maintain Eurodollar Loans shall be suspended until
         the Administrative Agent revokes such notice. Upon receipt of such
         notice, the Borrower may revoke any pending Notice of Borrowing or
         Notice of Continuation/Conversion with respect to Eurodollar Loans or,
         failing that, will be deemed to have converted such request into a
         request for a Borrowing of or, to the extent permitted hereunder,
         conversion into a Base Rate Loan in the amount specified therein.

         3.11     Illegality.

         If any Lender determines that any Requirement of Law has made it
unlawful, or that any Governmental Authority has asserted that it is unlawful,
for any Lender or its applicable Lending Office to make, maintain or fund
Eurodollar Loans, or materially restricts the authority of such Lender to
purchase or sell, or to take deposits of Dollars in the London interbank market,
or to determine or charge interest rates based upon the Eurodollar Rate, then,
on notice thereof by such Lender to the Borrower through the Administrative
Agent, any obligation of such Lender to make or continue Eurodollar Loans or to
convert Base Rate Loans to Eurodollar Loans shall be suspended until such Lender
notifies the Administrative Agent and the Borrower that the circumstances giving
rise to such determination no longer exist. Upon receipt of such notice, the
Borrower shall, upon demand to the Borrower from such Lender (with a copy to the
Administrative Agent), prepay or, if applicable, convert all Eurodollar Loans of
such Lender to Base Rate Loans, either on the last day of the Interest Period

                                       34
<PAGE>

thereof, if such Lender may lawfully continue to maintain such Eurodollar Loans
to such day, or immediately, if such Lender may not lawfully continue to
maintain such Eurodollar Loans. Upon any such prepayment or conversion, the
Borrower shall also pay interest on the amount so prepaid or converted, together
with any amounts due with respect thereto pursuant to Section 3.14.

         3.12     Requirements of Law; Reserves on Eurodollar Loans.
                  -------------------------------------------------

                  (a) Changes in Law. If any Lender determines that as a result
         of the introduction of or any change in, or in the interpretation of,
         any Requirement of Law, or such Lender's compliance therewith, there
         shall be any increase in the cost to such Lender of agreeing to make or
         making, funding or maintaining Eurodollar Loans, or a reduction in the
         amount received or receivable by such Lender in connection with any of
         the foregoing (excluding for purposes of this Section 3.12 any such
         increased costs or reduction in amount resulting from (i) Taxes or
         Other Taxes (as to which Section 3.13 shall govern) and (ii) reserve
         requirements contemplated by subsection (b) below), then from time to
         time, upon demand of such Lender (through the Administrative Agent),
         the Borrower shall pay to such Lender such additional amounts as will
         compensate such Lender for such increased cost or reduction in yield.

                  (b) Reserves. The Borrower shall pay to each Lender (to the
         extent such Lender has not otherwise been compensated therefor
         hereunder), as long as such Lender shall be required to maintain
         reserves with respect to liabilities or assets consisting of or
         including Eurodollar funds or deposits (currently known as "Eurodollar
         liabilities"), additional interest on the unpaid principal amount of
         each Eurodollar Loan equal to the actual costs of such reserves
         allocated to such Loan by such Lender (as determined by such Lender in
         good faith, which determination shall be conclusive absent demonstrable
         error), which shall be due and payable on each date on which interest
         is payable on such Loan; provided that the Borrower shall have received
         at least 15 days' prior notice (with a copy to the Administrative
         Agent) of such additional interest from such Lender. If a Lender fails
         to give notice 15 days prior to the relevant Interest Payment Date,
         such additional interest shall be due and payable 15 days from receipt
         of such notice.

         3.13     Taxes.
                  -----

                  (a) Payment of Taxes. Any and all payments by the Borrower to
         or for the account of the Administrative Agent or any Lender under any
         Credit Document shall be made free and clear of and without deduction
         for any and all present or future income, stamp or other taxes, duties,
         levies, imposts, deductions, assessments, fees, withholdings or similar
         charges, and all liabilities with respect thereto, but excluding, in
         the case of the Administrative Agent and each Lender, taxes imposed on
         or measured by its net income, and franchise taxes imposed on it (in
         lieu of net income taxes), by the jurisdiction (or any political
         subdivision thereof) under the Laws of which the Administrative Agent
         or such Lender, as the case may be, is organized or maintains its
         Lending Office (all such non-excluded present or future income, stamp
         or other taxes, duties, levies, imposts, deductions, assessments, fees,
         withholdings or similar charges, and liabilities being hereinafter
         referred to as "Taxes"). If the Borrower shall be required by any

                                       35
<PAGE>

         Requirement of Law to deduct any Taxes from or in respect of any sum
         payable under any Credit Document to the Administrative Agent or any
         Lender, (i) the sum payable shall be increased as necessary so that
         after making all required deductions (including deductions applicable
         to additional sums payable under this Section 3.13(a)), the
         Administrative Agent or such Lender, as the case may be, receives an
         amount equal to the sum it would have received had no such deductions
         been made, (ii) the Borrower shall make such deductions, (iii) the
         Borrower shall pay the full amount deducted to the relevant taxation
         authority or other Governmental Authority in accordance with applicable
         Requirements of Law, and (iv) within 30 days after the date of such
         payment, the Borrower shall furnish to the Administrative Agent (which
         shall forward the same to such Lender, if applicable) the original or a
         certified copy of a receipt evidencing payment thereof, to the extent
         such receipt is issued therefor, or other written proof of payment
         thereof that is reasonably satisfactory to the Administrative Agent.

                  (b) Additional Taxes. In addition, the Borrower agrees to pay
         any and all present or future stamp, court or documentary taxes and any
         other excise or property taxes or charges or similar levies which arise
         from any payment made under any Credit Document or from the execution,
         delivery, performance, enforcement or registration of, or otherwise
         with respect to, any Credit Document (hereinafter referred to as "Other
         Taxes").

                  (c) No Deduction for Taxes. If the Borrower shall be required
         to deduct or pay any Taxes or Other Taxes from or in respect of any sum
         payable under any Credit Document to the Administrative Agent or any
         Lender, the Borrower shall also pay to the Administrative Agent (for
         the account of such Lender) or to such Lender, at the time interest is
         paid, such additional amount that such Lender specifies as necessary to
         preserve the after-tax yield (after factoring in all taxes, including
         taxes imposed on or measured by net income) such Lender would have
         received if such Taxes or Other Taxes had not been imposed.

                  (d) Indemnification. The Borrower agrees to indemnify the
         Administrative Agent and each Lender for (i) the full amount of Taxes
         and Other Taxes (including any Taxes or Other Taxes imposed or asserted
         by any jurisdiction on amounts payable under this Section 3.13(d)) paid
         by the Administrative Agent and such Lender, and (ii) any liability
         (including penalties, interest and expenses) arising therefrom or with
         respect thereto.

                  (e) Exemption from Taxes. In the case of any payment hereunder
         or under any other Credit Document by or on behalf of the Borrower
         through an account or branch outside the United States, or on behalf of
         the Borrower by a payor that is not a United States person, if the
         Borrower determines that no taxes are payable in respect thereof, the
         Borrower shall furnish, or shall cause such payor to furnish, to the
         Administrative Agent, an opinion of counsel reasonably acceptable to
         the Administrative Agent stating that such payment is exempt from
         Taxes. For purposes of this subsection (e), the terms "United States"
         and "United States person" shall have the meanings specified in Section
         7701 of the Code.

                  (f) Foreign Lenders. Each Lender that is a foreign
         corporation, foreign partnership or foreign trust within the meaning of
         the Code (a "Foreign Lender") shall deliver to the Administrative
         Agent, prior to receipt of any payment subject to withholding under the
         Code, two duly signed completed copies of either IRS Form W-8BEN or any

                                       36
<PAGE>

         successor thereto (relating to such Lender and entitling it to an
         exemption from, or reduction of, withholding tax on all payments to be
         made to such Lender by the Borrower pursuant to this Credit Agreement),
         as appropriate, or IRS Form W-8ECI or any successor thereto (relating
         to all payments to be made to such Lender by the Borrower pursuant to
         this Credit Agreement) or such other evidence satisfactory to the
         Borrower and the Administrative Agent that such Lender is entitled to
         an exemption from, or reduction of, United States withholding tax.
         Thereafter and from time to time, each such Lender shall (i) promptly
         submit to the Administrative Agent such additional duly completed and
         signed copies of one of such forms (or such successor forms as shall be
         adopted from time to time by the relevant United States taxing
         authorities), as appropriate, as may reasonably be requested by the
         Borrower or the Administrative Agent and then be available under then
         current United States Laws and regulations to avoid, or such evidence
         as is satisfactory to the Borrower and the Administrative Agent of any
         available exemption from or reduction of, United States withholding
         taxes in respect of all payments to be made to such Lender by the
         Borrower pursuant to this Credit Agreement, (ii) promptly notify the
         Administrative Agent of any change in circumstances which would modify
         or render invalid any claimed exemption or reduction, and (iii) take
         such steps as shall not be materially disadvantageous to it, in the
         reasonable judgment of such Lender, and as may be reasonably necessary
         (including the re-designation of its Lending Office) to avoid any
         Requirement of Law that the Borrower make any deduction or withholding
         for taxes from amounts payable to such Lender. If the forms or other
         evidence provided by such Lender at the time such Lender first becomes
         a party to this Credit Agreement indicate a United States interest
         withholding tax rate in excess of zero, withholding tax at such rate
         shall be considered excluded from Taxes unless and until such Lender
         provides the appropriate forms certifying that a lesser rate applies,
         whereupon withholding tax at such lesser rate only shall be considered
         excluded from Taxes for periods governed by such forms; provided,
         however, that, if at the date of any assignment pursuant to which a
         Lender becomes a party to this Credit Agreement, the assignor Lender
         was entitled to payments under Section 3.13(a) in respect of United
         States withholding tax with respect to interest paid at such date,
         then, to such extent, the term Taxes shall include (in addition to
         withholding taxes that may be imposed in the future or other amounts
         otherwise includable in Taxes) United States withholding tax, if any,
         applicable with respect to the assignee Lender on such date. If such
         Lender fails to deliver the above forms or other evidence, then the
         Administrative Agent may withhold from any interest payment to such
         Lender an amount equal to the applicable withholding tax imposed by
         Sections 1441 and 1442 of the Code, without reduction. If any
         Governmental Authority asserts that the Administrative Agent did not
         properly withhold any tax or other amount from payments made in respect
         of such Lender, such Lender shall indemnify the Administrative Agent
         therefor, including all penalties and interest, any taxes imposed by
         any jurisdiction on the amounts payable to the Administrative Agent
         under this Section 3.13(f), and costs and expenses (including the
         reasonable fees and expenses of legal counsel) of the Administrative
         Agent. For any period with respect to which a Lender has failed to
         provide the Borrower with the above forms or other evidence (other than
         if such failure is due to a change in the applicable Law, or in the
         interpretation or application thereof, occurring after the date on
         which such form or other evidence originally was required to be
         provided or if such form or other evidence otherwise is not required),
         such Lender shall not be entitled to indemnification under subsection
         (a) or (c) of this Section 3.13 with respect to Taxes imposed by the
         United States by reason of such failure; provided, however, that should

                                       37
<PAGE>

         a Lender become subject to Taxes because of its failure to deliver such
         form or other evidence required hereunder, the Borrower shall take such
         steps as such Lender shall reasonably request to assist such Lender in
         recovering such Taxes. The obligation of the Lenders under this Section
         3.13(f) shall survive the payment of all Borrower Obligations and the
         resignation or replacement of the Administrative Agent.

                  (g) Reimbursement. In the event that an additional payment is
         made under Section 3.13(a) or (c) for the account of any Lender and
         such Lender, in its reasonable judgment, determines that it has finally
         and irrevocably received or been granted a credit against or release or
         remission for, or repayment of, any tax paid or payable by it in
         respect of or calculated with reference to the deduction or withholding
         giving rise to such payment, such Lender shall, to the extent that it
         determines that it can do so without prejudice to the retention of the
         amount of such credit, relief, remission or repayment, pay to the
         Borrower such amount as such Lender shall, in its reasonable judgment,
         have determined to be attributable to such deduction or withholding and
         which will leave such Lender (after such payment) in no worse position
         than it would have been in if the Borrower had not been required to
         make such deduction or withholding. Nothing herein contained shall
         interfere with the right of a Lender to arrange its tax affairs in
         whatever manner it thinks fit nor oblige any Lender to claim any tax
         credit or to disclose any information relating to its tax affairs or
         any computations in respect thereof or require any Lender to do
         anything that would prejudice its ability to benefit from any other
         credits, reliefs, remissions or repayments to which it may be entitled.

         3.14     Compensation.
                  ------------

         Upon the written demand of any Lender, the Borrower shall promptly
compensate such Lender for and hold such Lender harmless from any loss, cost or
expense incurred by it as a result of:

                  (a) any continuation, conversion, payment or prepayment of any
         Eurodollar Loan on a day other than the last day of the Interest Period
         for such Eurodollar Loan (whether voluntary, mandatory, automatic, by
         reason of acceleration, or otherwise); or

                  (b) any failure by a Borrower (for a reason other than the
         failure of such Lender to make a Eurodollar Loan) to prepay, borrow,
         continue or convert any Eurodollar Loan on the date or in the amount
         previously requested by such Borrower.

The amount each such Lender shall be compensated pursuant to this Section 3.14
shall include, without limitation, (i) any loss incurred by such Lender in
connection with the re-employment of funds prepaid, repaid, not borrowed or
paid, as the case may be and (ii) any reasonable out-of-pocket expenses
(including the reasonable fees and expenses of legal counsel) incurred and
reasonably attributable thereto.

         For purposes of calculating amounts payable by the Borrower to the
Lenders under this Section 3.14, each Lender shall be deemed to have funded each
Eurodollar Loan made by it at the Eurodollar Rate for such Loan by a matching
deposit or other borrowing in the London interbank market for a comparable
amount and for a comparable period, whether or not such Eurodollar Loan was in
fact so funded.

                                       38
<PAGE>

         3.15     Determination and Survival of Provisions.
                  ----------------------------------------

         All determinations by the Administrative Agent or a Lender of amounts
owing under Sections 3.9 through 3.14, inclusive, shall, absent manifest error,
be conclusive and binding on the parties hereto and all amounts owing thereunder
shall be due and payable within ten Business Days of demand therefor. In
determining such amount, the Administrative Agent or such Lender may use any
reasonable averaging and attribution methods. Section 3.9 through 3.14,
inclusive, shall survive the termination of this Credit Agreement and the
payment of all Borrower Obligations.


                                    SECTION 4

                         CONDITIONS PRECEDENT TO CLOSING

         4.1      Closing Conditions.
                  ------------------

         The obligation of the Lenders to enter into this Credit Agreement and
make the initial Revolving Loans is subject to satisfaction of the following
conditions:

                  (a) Executed Credit Documents. Receipt by the Administrative
         Agent of duly executed copies of: (i) this Credit Agreement, (ii) the
         Revolving Notes, and (iii) all other Credit Documents, each in form and
         substance reasonably acceptable to the Lenders in their sole
         discretion.

                  (b) Authority Documents. Receipt by the Administrative Agent
         of the following:

                           (i) Organizational Documents. Copies of the articles
                  of incorporation of the Borrower certified to be true and
                  complete as of a recent date by the appropriate Governmental
                  Authority of the state or other jurisdiction of its formation
                  and copies of the bylaws of the Borrower certified by a
                  secretary or assistant secretary (or the equivalent) of the
                  Borrower to be true and correct as of the Closing Date.

                           (ii) Resolutions. Copies of resolutions of the board
                  of directors of the Borrower approving and adopting this
                  Credit Agreement and the other Credit Documents to which it is
                  a party, the transactions contemplated herein and therein and
                  authorizing execution and delivery hereof and thereof,
                  certified by a secretary or assistant secretary (or the
                  equivalent) of the Borrower to be true and correct and in full
                  force and effect as of the Closing Date.

                           (iii) Good Standing. Copies of certificates of good
                  standing, existence or its equivalent with respect to the
                  Borrower certified as of a recent date by the appropriate
                  Governmental Authority of the state or other jurisdiction of
                  its formation.

                                       39
<PAGE>

                           (iv) Incumbency. An incumbency certificate of the
                  Borrower certified by a secretary or assistant secretary (or
                  the equivalent) of the Borrower to be true and correct as of
                  the Closing Date.

                  (c) Opinions of Counsel. Receipt by the Administrative Agent
         of opinions of counsel from outside counsel to the Borrower, in form
         and substance acceptable to the Administrative Agent, addressed to the
         Administrative Agent and the Lenders and dated as of the Closing Date.

                  (d) Financial Statements. Receipt by the Administrative Agent
         of a copy of (i) the annual consolidated financial statements
         (including balance sheets, income statements and cash flow statements)
         of the Borrower and its Subsidiaries for fiscal years 2000 and 2001,
         audited by independent public accountants of recognized national
         standing, (ii) the consolidated balance sheet and income statement of
         the Borrower and its Subsidiaries for the fiscal quarter ended
         September 30, 2002, together with the related consolidated statement of
         income for such fiscal quarter and a year to date statement of cash
         flows and (iii) such other financial information regarding the Borrower
         as the Administrative Agent may reasonably request.

                  (e) Due Diligence. The Administrative Agent and the Lenders
         shall have completed all due diligence with respect to the Borrower and
         its Subsidiaries and the transactions contemplated by this Credit
         Agreement and the other Credit Documents, in scope and determination
         reasonably satisfactory to the Administrative Agent and the Lenders.

                  (f) Material Adverse Effect. Since December 31, 2001, there
         shall have been no development or event relating to or affecting the
         Borrower or any of its Subsidiaries that has had or could be reasonably
         expected to have a Material Adverse Effect and no Material Adverse
         Change in the facts and information regarding the Borrower and its
         Subsidiaries as represented to date.

                  (g) Absence of Market Disruption. There shall not have
         occurred a material adverse change in or material disruption of
         conditions in the financial, banking or capital markets which the
         Administrative Agent and the Arranger, in their sole discretion, deem
         material in connection with the syndication of the Credit Agreement.

                  (h) Litigation. There shall not exist any material order,
         decree, judgment, ruling or injunction or any material pending or
         threatened action, suit, investigation or proceeding against the
         Borrower or any of its Subsidiaries.

                  (i) Consents. All necessary governmental, shareholder and
         third party consents and approvals, if any, with respect to this Credit
         Agreement and the Credit Documents and the transactions contemplated
         herein and therein have been received and no condition or Requirement
         of Law exists which would reasonably be likely to restrain, prevent or
         impose any material adverse conditions on the transactions contemplated
         hereby and by the other Credit Documents.

                                       40
<PAGE>

                  (j) Officer's Certificates. Receipt by the Administrative
         Agent of a certificate or certificates executed by an Authorized
         Officer of the Borrower as of the Closing Date stating that (i) the
         Borrower and each of its Subsidiaries are in compliance in all material
         respects with all existing material financial obligations and all
         material Requirements of Law, (ii) there does not exist any material
         order, decree, judgment, ruling or injunction or any material pending
         or threatened action, suit, investigation or proceeding against the
         Borrower or any of its Subsidiaries, (iii) the financial statements and
         information delivered to the Administrative Agent on or before the
         Closing Date were prepared in good faith and in accordance with GAAP
         and (iv) immediately after giving effect to this Credit Agreement, the
         other Credit Documents and all the transactions contemplated herein or
         therein to occur on such date, (A) the Borrower is Solvent, (B) no
         Default or Event of Default exists, (C) all representations and
         warranties contained herein and in the other Credit Documents are true
         and correct in all material respects, (D) since December 31, 2001,
         there has been no development or event relating to or affecting the
         Borrower or any of its Subsidiaries that has had or could be reasonably
         expected to have a Material Adverse Effect and there exists no event,
         condition or state of facts that could result in or reasonably be
         expected to result in a Material Adverse Change and (E) the Borrower is
         in compliance with each of the financial covenants set forth in Section
         7.2, as of September 30, 2002, as demonstrated in Covenant Compliance
         Worksheets attached to such certificate.

                  (k) Existing Credit Agreement. Receipt by the Administrative
         Agent of evidence that all amounts outstanding under the Existing
         Credit Agreement have been paid in full and the commitments thereunder
         terminated or that such payments will be made and commitments
         terminated simultaneously with the execution and delivery of the Credit
         Documents.

                  (l) Fees and Expenses. Unless waived by the Person entitled
         thereto, payment by the Borrower of all fees and expenses owed by them
         to the Administrative Agent, the Arranger and the Lenders on or before
         the Closing Date, including, without limitation, as set forth in the
         Fee Letter.

                  (m) Other. Receipt by the Lenders of such other documents,
         instruments, agreements or information as reasonably requested by any
         Lender.

                                    SECTION 5

                     CONDITIONS TO ALL EXTENSIONS OF CREDIT

         5.1      Funding Requirements.
                  --------------------

         In addition to the conditions precedent stated elsewhere herein, the
Lenders shall not be obligated to make Revolving Loans and the L/C Issuer shall
not be obligated to issue Letters of Credit unless:

                  (a) Notice. The Borrower shall have delivered (i) in the case
         of any new Revolving Loan, a Notice of Borrowing, duly executed and
         completed, by the time specified in Section 2.1 and (ii) in the case of
         any Letter of Credit, a Letter of Credit Application, duly executed and
         completed, by the time specified in Section 2.2.

                                       41
<PAGE>

                  (b) Representations and Warranties. The representations and
         warranties made by the Borrower in any Credit Document are true and
         correct in all material respects at and as if made as of such date
         except to the extent they expressly and exclusively relate to an
         earlier date.

                  (c) No Default. No Default or Event of Default shall exist and
         be continuing either prior to or after giving effect to such Credit
         Extension.

                  (d) Availability. Immediately after giving effect to such
         Credit Extension (and the application of the proceeds thereof), (i) the
         aggregate principal amount of outstanding Revolving Loans plus the
         aggregate principal amount of outstanding L/C Obligations shall not
         exceed the Revolving Committed Amount, (ii) with respect to each
         individual Lender, the sum of outstanding principal amount of Revolving
         Loans of such Lender and outstanding principal amount of L/C
         Obligations of such Lender shall not exceed such Lender's Pro Rata
         Share of the Revolving Committed Amount and (iii) the aggregate amount
         of L/C Obligations shall not exceed the Letter of Credit Sublimit.

The delivery of each Notice of Borrowing or a Letter of Credit Application shall
constitute a representation and warranty by the Borrower of the correctness of
the matters specified in subsections (b), (c) and (d) above.


                                    SECTION 6

                         REPRESENTATIONS AND WARRANTIES

         To induce the Administrative Agent and the Lenders to enter into this
Credit Agreement and to induce the Lenders to extend the credit contemplated
hereby, the Borrower represents and warrants to the Administrative Agent and the
Lenders as follows:

         6.1      Organization and Good Standing.
                  ------------------------------

         Each of the Borrower and its Subsidiaries (a) is a corporation, duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, (b) is duly qualified and in good standing as
a foreign entity authorized to do business in every other jurisdiction where the
failure to so qualify would have a Material Adverse Effect and (c) has the
requisite power and authority to own its properties and to carry on its business
as now conducted and as proposed to be conducted.

         6.2      Due Authorization.
                  -----------------

         The Borrower (a) has the requisite power and authority to execute,
deliver and perform this Credit Agreement and the other Credit Documents and to
incur the obligations herein and therein provided for and (b) has been
authorized by all necessary action to execute, deliver and perform this Credit
Agreement and the other Credit Documents.

                                       42
<PAGE>

         6.3      No Conflicts.
                  ------------

         Neither the execution and delivery of this Credit Agreement and the
other Credit Documents, nor the consummation of the transactions contemplated
herein and therein, nor performance of and compliance with the terms and
provisions hereof and thereof by the Borrower will (a) violate or conflict with
any provision of its organizational documents, (b) violate, contravene or
conflict with any law (including without limitation, the Public Utility Holding
Company Act of 1935, as amended), regulation (including without limitation,
Regulation U and Regulation X), order, writ, judgment, injunction, decree or
permit applicable to it, (c) violate, contravene or conflict with contractual
provisions of, or cause an event of default under, any indenture, loan
agreement, mortgage, deed of trust, contract or other agreement or instrument to
which it is a party or by which it may be bound, the violation of which would
have or would be reasonably expected to have a Material Adverse Effect or (d)
result in or require the creation of any Lien upon or with respect to its
properties.

         6.4      Consents.
                  --------

         Other than the filing of annual short-term financing plans with the New
Mexico Public Regulation Commission in the normal course of business, no
consent, approval, authorization or order of, or filing, registration or
qualification with, any court or Governmental Authority or third party is
required in connection with the execution, delivery or performance of this
Credit Agreement or any of the other Credit Documents that has not been obtained
or completed.

         6.5      Enforceable Obligations.
                  -----------------------

         This Credit Agreement and the other Credit Documents have been duly
executed and delivered and constitute the legal, valid and binding obligations
of the Borrower enforceable against the Borrower in accordance with their
respective terms, except as may be limited by Debtor Relief Laws or similar laws
affecting creditors' rights generally or by general equitable principles.

         6.6      Financial Condition.
                  -------------------

         The financial statements delivered to the Lender pursuant to Section
4.1(d) and pursuant to Sections 7.1(a) and (b): (i) have been prepared in
accordance with GAAP except that the quarterly financial statements are subject
to year-end adjustments and have fewer footnotes than annual statements and (ii)
present fairly the financial condition, results of operations and cash flows of
the Borrower and its Subsidiaries as of such date and for such periods. No
opinion provided with respect to the Borrower's financial statements pursuant to
Section 7.1 (or as to any prior annual financial statements) has been withdrawn.

         6.7      No Material Change.
                  ------------------

                  (a) Since December 31, 2001, there has been no development or
         event relating to or affecting the Borrower which would have or would
         reasonably be expected to have a Material Adverse Effect.

                                       43
<PAGE>

                  (b) Since December 31, 2001, there has been no sale, transfer
         or other disposition by the Borrower of any material part of its
         business or property, and no purchase or other acquisition by the
         Borrower of any business or property (including the Capital Stock of
         any other Person) material in relation to the financial condition of
         the Borrower, in each case which is not (i) reflected in the most
         recent financial statements delivered to the Lender pursuant to Section
         4.1(d) or 7.1 or in the notes thereto or (ii) otherwise permitted by
         the terms of this Credit Agreement and communicated to the Lender.

         6.8      No Default.
                  ----------

         Neither the Borrower nor any of its Subsidiaries is in default in any
respect under any contract, lease, loan agreement, indenture, mortgage, security
agreement or other agreement or obligation to which it is a party or by which
any of its properties is bound which default would have or would reasonably be
expected to have a Material Adverse Effect. No Default or Event of Default
presently exists and is continuing.

         6.9      Litigation.
                  ----------

         There are no actions, suits, investigations or legal, equitable,
arbitration or administrative proceedings, pending or, to the knowledge of the
Borrower, threatened against the Borrower or any of its Subsidiaries which would
have or would reasonably be expected to have a Material Adverse Effect.

         6.10     Taxes.
                  -----

         Each of the Borrower and its Subsidiaries has filed, or caused to be
filed, all material tax returns (federal, state, local and foreign) required to
be filed and paid all amounts of taxes shown thereon to be due (including
interest and penalties) and has paid all other taxes, fees, assessments and
other governmental charges (including mortgage recording taxes, documentary
stamp taxes and intangibles taxes) owing by it, except for such taxes which are
not yet delinquent or that are being contested in good faith and by proper
proceedings, and against which adequate reserves are being maintained in
accordance with GAAP.

         6.11     Compliance with Law.
                  -------------------

         Each of the Borrower and its Subsidiaries is in compliance with all
laws, rules, regulations, orders and decrees applicable to it or to its
properties, unless such failure to comply would not have or would not reasonably
be expected to have a Material Adverse Effect.

         6.12     ERISA.
                  -----

         Except as would not result or reasonably be expected to result in a
Material Adverse Effect:

                  (a) During the five-year period prior to the date on which
         this representation is made or deemed made: (i) no ERISA Event has
         occurred, and, to the best knowledge of the Borrower, no event or
         condition has occurred or exists as a result of which any ERISA Event
         would be reasonably expected to occur, with respect to any Plan; (ii)
         no "accumulated funding deficiency," as such term is defined in Section

                                       44
<PAGE>

         302 of ERISA and Section 412 of the Code, whether or not waived, has
         occurred with respect to any Plan; (iii) each Plan has been maintained,
         operated, and funded in compliance with its own terms and in material
         compliance with the provisions of ERISA, the Code, and any other
         applicable federal or state laws; and (iv) no Lien in favor or the PBGC
         or a Plan has arisen or is reasonably likely to arise on account of any
         Plan.

                  (b) The actuarial present value of all "benefit liabilities"
         under each Single Employer Plan (determined within the meaning of
         Section 401(a)(2) of the Code, utilizing the actuarial assumptions used
         to fund such Plans), whether or not vested, did not, as of the last
         annual valuation date prior to the date on which this representation is
         made or deemed made, exceed the current value of the assets of such
         Plan allocable to such accrued liabilities, except as disclosed in the
         Borrower's financial statements.

                  (c) Neither the Borrower nor any ERISA Affiliate has incurred,
         or, to the best knowledge of the Borrower, is reasonably expected to
         incur, any withdrawal liability under ERISA to any Multiemployer Plan
         or Multiple Employer Plan. Neither the Borrower nor any ERISA Affiliate
         has received any notification that any Multiemployer Plan is in
         reorganization (within the meaning of Section 4241 of ERISA), is
         insolvent (within the meaning of Section 4245 of ERISA), or has been
         terminated (within the meaning of Title IV of ERISA), and no
         Multiemployer Plan is, to the best knowledge of the Borrower,
         reasonably expected to be in reorganization, insolvent, or terminated.

                  (d) No prohibited transaction (within the meaning of Section
         406 of ERISA or Section 4975 of the Code) or breach of fiduciary
         responsibility has occurred with respect to a Plan which has subjected
         or would be reasonably likely to subject the Borrower or any ERISA
         Affiliate to any liability under Sections 406, 409, 502(i), or 502(l)
         of ERISA or Section 4975 of the Code, or under any agreement or other
         instrument pursuant to which the Borrower or any ERISA Affiliate has
         agreed or is required to indemnify any person against any such
         liability.

                  (e) The present value (determined using actuarial and other
         assumptions which are reasonable with respect to the benefits provided
         and the employees participating) of the liability of the Borrower and
         each ERISA Affiliate for post-retirement welfare benefits to be
         provided to their current and former employees under Plans which are
         welfare benefit plans (as defined in Section 3(1) of ERISA), net of all
         assets under all such Plans allocable to such benefits, are reflected
         on the financial statements referenced in Section 7.1 in accordance
         with FASB 106.

                  (f) Each Plan which is a welfare plan (as defined in Section
         3(1) of ERISA) to which Sections 601-609 of ERISA and Section 4980B of
         the Code apply has been administered in compliance in all material
         respects with such sections.

         6.13     Use of Proceeds; Margin Stock.
                  -----------------------------

         The proceeds of the Credit Extensions hereunder will be used solely for
the purposes specified in Section 7.9. None of such proceeds will be used for
the purpose of (a) (i) purchasing or carrying any Margin Stock or (ii) reducing

                                       45
<PAGE>

or retiring any Indebtedness which was originally incurred to purchase or carry
Margin Stock, or (iii) for any other purpose that might constitute this
transaction a "purpose credit" within the meaning of Regulation U or (b) for the
acquisition of another Person unless the board of directors (or other comparable
governing body) or stockholders, as appropriate, of such Person has approved
such acquisition.

         6.14     Government Regulation.
                  ---------------------

                  (a) The Borrower is not a "holding company" within the meaning
         of the Public Utility Holding Company Act of 1935, as amended
         ("PUHCA"). The issuance of the Note by the Borrower and the Credit
         Extensions contemplated by this Credit Agreement are not subject to
         regulation under PUHCA or subject to regulation by the Securities and
         Exchange Commission

                  (b) The Borrower is not an "investment company" registered or
         required to be registered under the Investment Company Act of 1940, as
         amended, or controlled by such a company.

         6.15     Solvency.
                  --------

         The Borrower is and, after the consummation of the transactions
contemplated by this Credit Agreement, will be Solvent.

         6.16     Disclosure.
                  ----------

         Neither this Credit Agreement nor any financial statements delivered to
the Lender nor any other document, certificate or statement furnished to the
Lender by or on behalf of the Borrower in connection with the transactions
contemplated hereby contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements contained
therein or herein, taken as a whole, not misleading.

         6.17     Environmental Matters.
                  ---------------------

         Except as would not result or reasonably be expected to result in a
Material Adverse Effect: (a) each of the properties of the Borrower and its
Subsidiaries (the "Properties") and all operations at the Properties are in
substantial compliance with all applicable Environmental Laws, (b) there is no
undocumented or unreported violation of any Environmental Law with respect to
the Properties or the businesses operated by the Borrower and its Subsidiaries
(the "Businesses") that the Borrower is aware of, and (c) there are no
conditions relating to the Businesses or Properties that have given rise to or
would reasonably be expected to give rise to a liability under any applicable
Environmental Laws.

         6.18     Material Leases.
                  ---------------

         Set forth on Schedule 6.18 hereto is a complete and accurate list of
the Material Leases on the date hereof, showing the expiration date and annual
rental cost thereof. The Borrower is entitled to exercise all of the rights of
lessee purported to be granted to the Borrower under each such Material Lease.

                                       46
<PAGE>

         6.19     Material Lease Interest Payments and Discount Rate.
                  --------------------------------------------------

         Schedule 6.19 hereto, as most recently provided to the Administrative
Agent, sets forth the same (a) amounts with respect to the interest portion of
payments under the Material Leases and (b) discount rate used to calculate the
net present value of all amounts payable under the Material Leases as have been
most recently provided (or that the Borrower intends to provide shortly) to
Moody's and S&P or as have otherwise been agreed to by the Required Lenders.


                                    SECTION 7

                              AFFIRMATIVE COVENANTS
                              ---------------------

         The Borrower covenants and agrees that, until the termination of the
Commitments, the termination or expiration of all Letters of Credit and the
payment in full of all Borrower Obligations:

                  7.1      Information Covenants.
                           ---------------------

         The Borrower will furnish, or cause to be furnished, to the Lenders:

                  (a) Annual Financial Statements. As soon as available, and in
         any event within 120 days after the close of each fiscal year of the
         Borrower, a consolidated balance sheet and income statement of the
         Borrower and its Subsidiaries, as of the end of such fiscal year,
         together with the related consolidated statements of income and of cash
         flows for such fiscal year, setting forth in comparative form figures
         for the preceding fiscal year, all such financial information described
         above to be in reasonable form and detail and, in each case, audited by
         independent certified public accountants of recognized national
         standing reasonably acceptable to the Lender and whose opinion shall be
         furnished to the Lender, and shall be to the effect that such financial
         statements have been prepared in accordance with GAAP (except for
         changes with which such accountants concur) and shall not be limited as
         to the scope of the audit or qualified in any respect.

                  (b) Quarterly Financial Statements. As soon as available, and
         in any event within 60 days after the close of each fiscal quarter of
         the Borrower (other than the fourth fiscal quarter), a consolidated
         balance sheet and income statement of the Borrower and its Subsidiaries
         as of the end of such fiscal quarter, together with the related
         consolidated statement of income for such fiscal quarter and a year to
         date statement of cash flows, in each case setting forth in comparative
         form figures for the corresponding period of the preceding fiscal year,
         all such financial information described above to be in reasonable form
         and detail and reasonably acceptable to the Lender, and, in each case,
         accompanied by a certificate of a Financial Officer of the Borrower to
         the effect that such quarterly financial statements fairly present in
         all material respects the financial condition of such Person and have
         been prepared in accordance with GAAP, subject to changes resulting
         from audit and normal year-end audit adjustments and except that the
         quarterly financial statements have fewer footnotes than annual
         statements.

                                       47
<PAGE>

                  (c) Officer's Certificate. At the time of delivery of the
         financial statements provided for in Sections 7.1(a) and 7.1(b) above,
         a certificate of a Financial Officer substantially in the form of
         Exhibit 7.1(c): (i) setting forth calculations demonstrating compliance
         by the Borrower with the financial covenants set forth in Section 7.2
         as of the end of such fiscal period and (ii) stating that no Default or
         Event of Default exists, or if any Default or Event of Default does
         exist, specifying the nature and extent thereof and what action the
         Borrower proposes to take with respect thereto.

                  (d) Reports. Notice of the filing by the Borrower of any Form
         10-Q, Form 10-K or Form 8-K with the SEC promptly upon the filing
         thereof and copies of all financial statements, proxy statements,
         notices and reports as the Borrower shall send to its shareholders
         concurrently with the mailing of any such statements, notices or
         reports to its shareholders.

                  (e) Notices. Upon the Borrower obtaining knowledge thereof,
         the Borrower will give written notice to the Lender within ten days of
         (i) the occurrence of a Default or Event of Default, specifying the
         nature and extent thereof and what action the Borrower proposes to take
         with respect thereto and (ii) the occurrence of any of the following
         with respect to the Borrower or any of its Subsidiaries (A) the
         pendency or commencement of any litigation, arbitration or governmental
         proceeding against the Borrower or any of its Subsidiaries which, if
         adversely determined, would have or would reasonably be expected to
         have a Material Adverse Effect, (B) one or more judgments, orders, or
         decrees shall be entered against the Borrower or any of its
         Subsidiaries involving a liability of $5,000,000 or more, in the
         aggregate or (C) the institution of any proceedings against the
         Borrower or any of its Subsidiaries with respect to, or the receipt of
         notice by such Person of potential liability or responsibility for
         violation or alleged violation of, any federal, state or local law,
         rule or regulation (including, without limitation, any Environmental
         Law), the violation of which would have or would reasonably be expected
         to have a Material Adverse Effect.

                  (f) ERISA. Upon the Borrower or any ERISA Affiliate obtaining
         knowledge thereof, the Borrower will give written notice to the Lender
         promptly (and in any event within ten days) of any of the following
         which would result in or reasonably would be expected to result in a
         Material Adverse Effect: (i) any event or condition, including, but not
         limited to, any Reportable Event, that constitutes, or would be
         reasonably expected to lead to, an ERISA Event; (ii) with respect to
         any Multiemployer Plan, the receipt of notice as prescribed in ERISA or
         otherwise of any withdrawal liability assessed against the Borrower or
         any of its ERISA Affiliates, or of a determination that any
         Multiemployer Plan is in reorganization or insolvent (both within the
         meaning of Title IV of ERISA); (iii) the failure to make full payment
         on or before the due date (including extensions) thereof of all amounts
         which the Borrower or any of its Subsidiaries or ERISA Affiliates is
         required to contribute to each Plan pursuant to its terms and as
         required to meet the minimum funding standard set forth in ERISA and
         the Code with respect thereto; or (iv) a change in the funding status
         of any Plan, in each case together with a description of any such event
         or condition or a copy of any such notice and a statement by an officer
         of the Borrower briefly setting forth the details regarding such event,

                                       48
<PAGE>

         condition, or notice, and the action, if any, which has been or is
         being taken or is proposed to be taken with respect thereto. Promptly
         upon request, the Borrower shall furnish the Lender with such
         additional information concerning any Plan as may be reasonably
         requested, including, but not limited to, copies of each annual
         report/return (Form 5500 series), as well as all schedules and
         attachments thereto required to be filed with the Department of Labor
         and/or the Internal Revenue Service pursuant to ERISA and the Code,
         respectively, for each "plan year" (within the meaning of Section 3(39)
         of ERISA).

                  (g) Debt Ratings. Promptly upon any change in its Debt
         Ratings.

                  (h) Other Information. With reasonable promptness upon any
         such request, such other information regarding the business, properties
         or financial condition of the Borrower as the Lender may reasonably
         request.

         7.2      Financial Covenants.
                  -------------------

                  (a) Debt Capitalization. At all times the ratio of (i)
         Consolidated Indebtedness to (ii) Consolidated Capitalization shall be
         less than or equal to .65 to 1.0. For purposes of such calculation, the
         portion of Consolidated Indebtedness attributable to obligations under
         Material Leases shall be the net present value (using (i) the discount
         rate (A) set forth in Schedule 6.19, so long as Schedule 6.19 specifies
         the same relevant discount rate as is used in calculating such net
         present value provided to Moody's and S&P or (B) the discount rate used
         in calculating such net present value provided to Moody's and S&P or
         (ii) any such other rate as shall be proposed by the Borrower (and
         agreed upon by the Required Lenders) of all amounts payable under the
         Material Leases.

                  (b) Interest Coverage Ratio. As of the last day of each fiscal
         quarter of the Borrower, for the twelve month period ending on such
         date, the ratio of (i) Consolidated EBITDA to (ii) Consolidated
         Interest Expense shall be greater than or equal to 3.0 to 1.0.

         7.3      Preservation of Existence and Franchises.
                  ----------------------------------------

                  (a) The Borrower will do (and will cause each of its
         Subsidiaries to do) all things necessary to preserve and keep in full
         force and effect its existence and rights, franchises and authority.

                  (b) The Borrower will maintain (and will cause each of its
         Subsidiaries to maintain) its properties in good condition and not
         waste or otherwise permit such properties to deteriorate, reasonable
         wear and tear excepted.

         7.4      Books and Records.
                  -----------------

         The Borrower will keep (and will cause each of its Subsidiaries to
keep) complete and accurate books and records of its transactions in accordance
with good accounting practices on the basis of GAAP (including the establishment
and maintenance of appropriate reserves).

                                       49
<PAGE>

         7.5      Compliance with Law.
                  -------------------

         (a) The Borrower will comply (and will cause each of its Subsidiaries
to comply) with all laws (including, without limitation, all Environmental Laws
and ERISA laws), rules, regulations and orders, and all applicable restrictions
imposed by all Governmental Authorities, applicable to it and its properties, if
the failure to comply would have or would reasonably be expected to have a
Material Adverse Effect.

         (b) The Borrower will timely file with the New Mexico Public Regulation
Commission such short-term financing plans (and obtain all appropriate
approvals) as are necessary to ensure that the indebtedness incurred hereunder
is permitted.

         7.6      Payment of Taxes and Other Indebtedness.
                  ---------------------------------------

         The Borrower will (and will cause each of its Subsidiaries to) pay,
settle or discharge (a) all taxes, assessments and governmental charges or
levies imposed upon it, or upon its income or profits, or upon any of its
properties, before they shall become delinquent, (b) all lawful claims
(including claims for labor, materials and supplies) which, if unpaid, might
give rise to a Lien upon any of its properties, and (c) all of its other
Indebtedness as it shall become due (to the extent such repayment is not
otherwise prohibited by this Credit Agreement); provided, however, that the
Borrower and its Subsidiaries shall not be required to pay any such tax,
assessment, charge, levy, claim or Indebtedness which is being contested in good
faith by appropriate proceedings and as to which adequate reserves therefor have
been established in accordance with GAAP, unless the failure to make any such
payment (i) would give rise to an immediate right to foreclose or collect on a
Lien securing such amounts or (ii) would have or would be reasonably expected to
have a Material Adverse Effect.

         7.7      Insurance.
                  ---------

         The Borrower will (and will cause each of its Subsidiaries to) at all
times maintain in full force and effect insurance (including worker's
compensation insurance and general liability insurance) in such amounts,
covering such risks and liabilities and with such deductibles or self-insurance
retentions as are in accordance with normal industry practice.

         7.8      Performance of Obligations.
                  --------------------------

         The Borrower will perform (and will cause each of its Subsidiaries to
perform) in all material respects all of its obligations under the terms of all
material agreements, indentures, mortgages, security agreements or other debt
instruments to which it is a party or by which it is bound.

         7.9      Use of Proceeds.
                  ---------------

         The proceeds of the Credit Extensions may be used solely (a) to repay
amounts under the Existing Credit Agreement, (b) to pay fees and expenses
required by the Credit Document, and (c) for general corporate purposes of the
Borrower (including working capital and capital expenditures).

                                       50
<PAGE>

         7.10     Audits/Inspections.
                  ------------------

         Upon reasonable notice and during normal business hours, the Borrower
will permit representatives appointed by the Lender, including, without
limitation, independent accountants, agents, attorneys, and appraisers to visit
and inspect the Borrower's property, including its books and records, its
accounts receivable and inventory, the Borrower's facilities and its other
business assets, and to make photocopies or photographs thereof and to write
down and record any information such representative obtains and shall permit the
Lender or its representatives to investigate and verify the accuracy of
information provided to the Lender and to discuss all such matters with the
officers, employees and representatives of the Borrower; provided, that an
officer or authorized agent of the Borrower shall be present during any such
discussions between the officers, employees or representatives of the Borrower
and the representatives of the Lender.


                                    SECTION 8

                               NEGATIVE COVENANTS
                               ------------------

         Unless otherwise approved in writing by the Required Lenders, the
Borrower covenants and agrees that, until the termination of the Commitments,
the termination or expiration of all Letters of Credit and the payment in full
of all Borrower Obligations:

         8.1      Nature of Business.
                  ------------------

         The Borrower will not materially alter the character of its business
from that conducted as of the Closing Date.

         8.2      Consolidation and Merger.
                  ------------------------

         The Borrower will not (a) enter into any transaction of merger or (b)
consolidate, liquidate, wind up or dissolve itself (or suffer any liquidation or
dissolution); provided that, so long as no Default or Event of Default shall
exist or be caused thereby, a Person may be merged or consolidated with or into
the Borrower so long as the Borrower shall be the continuing or surviving
corporation.

         8.3      Sale or Lease of Assets.
                  -----------------------

         The Borrower will not (nor will it permit its Subsidiaries to) sell,
lease, transfer or otherwise dispose of, any of its assets (including, without
limitation, all or substantially all of its assets, whether in one transaction
or a series of related transactions) except (a) sales of accounts receivable and
energy services contract revenues in connection with the 3838 Securitization and
other sales of accounts receivable and energy services contract revenues so long
as such other sales are non-recourse to the Borrower and are otherwise on
customary market terms; (b) sales of assets (excluding those permitted in clause
(a) hereof) for fair value, if the aggregate value of all such transactions in
any calendar year, does not exceed 25% of the book value of Total Assets, as
calculated as of the end of the most recent fiscal quarter; and (c) sale, lease,
transfer or other disposition, at less than fair value, of any other assets,
provided that the aggregate book value of such assets shall not exceed
$10,000,000 in any calendar year.

                                       51
<PAGE>

         8.4      Affiliate Transactions.
                  ----------------------

         The Borrower will not enter into any transaction or series of
transactions, whether or not in the ordinary course of business, with any
Affiliate other than on terms and conditions substantially as favorable as would
be obtainable in a comparable arm's-length transaction with a Person other than
an Affiliate.

         8.5      Liens.
                  -----

         The Borrower will not (and will not permit its Subsidiaries to)
contract, create, incur, assume or permit to exist any Lien with respect to any
of its property or assets of any kind (whether real or personal, tangible or
intangible), whether now owned or hereafter acquired, securing any Indebtedness
other than the following: (a) Liens securing Borrower Obligations, (b) Liens for
taxes not yet due or Liens for taxes being contested in good faith by
appropriate proceedings for which adequate reserves determined in accordance
with GAAP have been established (and as to which the property subject to any
such Lien is not yet subject to foreclosure, sale or loss on account thereof),
(c) Liens in respect of property imposed by law arising in the ordinary course
of business such as materialmen's, mechanics', warehousemen's, carrier's,
landlords' and other nonconsensual statutory Liens which are not yet due and
payable, which have been in existence less than 90 days or which are being
contested in good faith by appropriate proceedings for which adequate reserves
determined in accordance with GAAP have been established (and as to which the
property subject to any such Lien is not yet subject to foreclosure, sale or
loss on account thereof), (d) pledges or deposits made in the ordinary course of
business to secure payment of worker's compensation insurance, unemployment
insurance, pensions or social security programs, (e) Liens arising from good
faith deposits in connection with or to secure performance of tenders, bids,
leases, government contracts, performance and return-of-money bonds and other
similar obligations incurred in the ordinary course of business (other than
obligations in respect of the payment of borrowed money), (f) Liens arising from
good faith deposits in connection with or to secure performance of statutory
obligations and surety and appeal bonds, (g) easements, rights-of-way,
restrictions (including zoning restrictions), minor defects or irregularities in
title and other similar charges or encumbrances not, in any material respect,
impairing the use of the encumbered property for its intended purposes, (h)
judgment Liens that would not constitute an Event of Default, (i) Liens arising
by virtue of any statutory or common law provision relating to banker's liens,
rights of setoff or similar rights as to deposit accounts or other funds
maintained with a creditor depository institution, (j) any Lien created or
arising over any property which is acquired, constructed or created by the
Borrower or its Subsidiaries, but only if (i) such Lien secures only principal
amounts (not exceeding the cost of such acquisition, construction or creation)
raised for the purposes of such acquisition, construction or creation, together
with any costs, expenses, interest and fees incurred in relation thereto or a
guarantee given in respect thereof, (ii) such Lien is created or arises on or
before 180 days after the completion of such acquisition, construction or
creation, (iii) such Lien is confined solely to the property so acquired,
constructed or created and any improvements thereto and (iv) the aggregate
principal amount of all Indebtedness secured by such Liens shall not exceed
$25,000,000 at any one time outstanding, (k) any Lien on Margin Stock, (l) the

                                       52
<PAGE>

FMB Indenture, but only to the extent of the Insured Series First Mortgage
Bonds, and the "permitted encumbrances" under the FMB Indenture, (m) the
assignment of, or Liens on, accounts receivable in connection with 3838
Securitization and the filing of related financing statements under the Uniform
Commercial Code of the applicable jurisdictions, (n) the assignment of, or Liens
on, demand, energy or wheeling revenues, or on capacity reservation or option
fees, payable to the Borrower with respect to any wholesale electric service or
transmission agreements, the assignment of, or Liens on, revenues from energy
services contracts, and the assignment of, or Liens on, capacity reservation or
option fees payable to the Borrower with respect to asset sales permitted
herein, (o) any extension, renewal or replacement (or successive extensions,
renewals or replacements), as a whole or in part, of any Liens referred to in
the foregoing clauses (a) through (n), for amounts not exceeding the principal
amount of the Indebtedness secured by the Lien so extended, renewed or replaced,
provided that such extension, renewal or replacement Lien is limited to all or a
part of the same property or assets that were covered by the Lien extended,
renewed or replaced (plus improvements on such property or assets), (p) Liens on
Property that is subject to a Material Lease that is classified as an operating
lease as of the Closing Date but which is subsequently converted into a capital
lease, and (q) Liens on Property, in addition to those otherwise permitted by
clauses (a) through (p) above, securing, directly or indirectly, Indebtedness or
obligations arising pursuant to other agreements entered into in the ordinary
course of business which do not exceed, in the aggregate at any one time
outstanding, $25,000,000.

         8.6      Accounting Changes.
                  ------------------

         The Borrower will not make or permit, or permit any of its Subsidiaries
to make or permit, any change in accounting policies or reporting practices,
except as required by GAAP, or as permitted by GAAP, if the amounts involved are
not material.


                                    SECTION 9

                                EVENTS OF DEFAULT
                                -----------------

         9.1      Events of Default.
                  -----------------

         An Event of Default shall exist upon the occurrence of any of the
following specified events (each an "Event of Default"):

                  (a) Payment. The Borrower shall: (i) default in the payment
         when due of any principal of any of the Revolving Loans; or (ii)
         default, and such default shall continue for three or more Business
         Days, in the payment when due of any interest on the Loans or of any
         fees or other amounts owing hereunder, under any of the other Credit
         Documents or in connection herewith or therewith.

                  (b) Representations. Any representation, warranty or statement
         made or deemed to be made by the Borrower herein, in any of the other
         Credit Documents, or in any statement or certificate delivered or
         required to be delivered pursuant hereto or thereto shall prove untrue
         in any material respect on the date as of which it was deemed to have
         been made.

                                       53
<PAGE>

                  (c) Covenants. The Borrower shall:

                           (i) default in the due performance or observance of
                  any term, covenant or agreement contained in Sections 7.2,
                  7.3(a) (solely with respect to the existence of the Borrower),
                  7.9, 7.10 or 8.1 through 8.6, inclusive; or

                           (ii) default in the due performance or observance by
                  it of any term, covenant or agreement (other than those
                  referred to in subsections (a), (b) or (c)(i) of this Section
                  9.1) contained in this Credit Agreement or any other Credit
                  Document and such default shall continue unremedied for a
                  period of at least 10 days after the earlier of the Borrower
                  becoming aware of such default or notice thereof given by the
                  Lender.

                  (d) Credit Documents. Any Credit Document shall fail to be in
         force and effect or the Borrower shall so assert or any Credit Document
         shall fail to give the Lender the rights, powers, liens and privileges
         purported to be created thereby.

                  (e) Bankruptcy, etc. The occurrence of any of the following
         with respect to the Borrower or any of its Subsidiaries (i) a court or
         governmental agency having jurisdiction in the premises shall enter a
         decree or order for relief in respect of the Borrower or any of its
         Subsidiaries in an involuntary case under any applicable Debtor Relief
         Law now or hereafter in effect, or appoint a receiver, liquidator,
         assignee, custodian, trustee, sequestrator or similar official of the
         Borrower or any of its Subsidiaries or for any substantial part of
         their property or ordering the winding up or liquidation of its
         affairs; or (ii) an involuntary case under any applicable Debtor Relief
         Law now or hereafter in effect is commenced against the Borrower or any
         of its Subsidiaries and such petition remains unstayed and in effect
         for a period of 60 consecutive days; or (iii) the Borrower or any of
         its Subsidiaries shall commence a voluntary case under any applicable
         Debtor Relief Law now or hereafter in effect, or consent to the entry
         of an order for relief in an involuntary case under any such law, or
         consent to the appointment or taking possession by a receiver,
         liquidator, assignee, custodian, trustee, sequestrator or similar
         official of such Person or any substantial part of its property or make
         any general assignment for the benefit of creditors; or (iv) the
         Borrower or any of its Subsidiaries shall admit in writing its
         inability to pay its debts generally as they become due or any action
         shall be taken by any Person in furtherance of any of the aforesaid
         purposes.

                  (f)      Defaults under Other Agreements.

                           (i) The Borrower or any of its Subsidiaries shall
                  default in the due performance or observance (beyond the
                  applicable grace period with respect thereto) of any material
                  obligation or condition of any contract or lease to which it
                  is a party, if such default would have or would reasonably be
                  expected to have a Material Adverse Effect.

                           (ii) With respect to any Indebtedness of the Borrower
                  or any of its Subsidiaries (other than Indebtedness
                  outstanding under this Credit Agreement) in excess of
                  $20,000,000 in the aggregate (A) the Borrower or such
                  Subsidiary shall (x) default in any payment (beyond the
                  applicable grace period with respect thereto, if any) with

                                       54
<PAGE>

                  respect to such Indebtedness, or (y) default (after giving
                  effect to any applicable grace period) in the observance or
                  performance of any covenant or agreement relating to such
                  Indebtedness or contained in any instrument or agreement
                  evidencing, securing or relating thereto, or any other event
                  or condition shall occur or condition exist, the effect of
                  which default or other event or condition is to cause or
                  permit the holder or the holders of such Indebtedness (or any
                  trustee or agent on behalf of such holders) to cause
                  (determined without regard to whether any notice or lapse of
                  time is required) such Indebtedness to become due prior to its
                  stated maturity; or (B) such Indebtedness shall be declared
                  due and payable, or required to be prepaid other than by a
                  regularly scheduled required prepayment prior to the stated
                  maturity thereof; or (C) such Indebtedness shall mature and
                  remain unpaid.

                  (g) Judgments. Any judgment, order or decree involving a
         liability of $20,000,000 or more, or one or more judgments, orders, or
         decrees involving a liability of $40,000,000 or more, in the aggregate,
         shall be entered against the Borrower or any of its Subsidiaries and
         such judgments, orders or decrees shall continue unsatisfied,
         undischarged and unstayed for a period ending on the first to occur of
         (i) the last day on which such judgment, order or decree becomes final
         and unappealable and, where applicable, with the status of a judicial
         lien or (ii) 60 days; provided that if such judgment, order or decree
         provides for periodic payments over time then the Borrower or such
         Subsidiary shall have a grace period of 30 days with respect to each
         such periodic payment.

                  (h) ERISA. The occurrence of any of the following events or
         conditions if any of the same would have or would be reasonably
         expected to have a Material Adverse Effect: (i) any "accumulated
         funding deficiency," as such term is defined in Section 302 of ERISA
         and Section 412 of the Code, whether or not waived, shall exist with
         respect to any Plan, or any lien shall arise on the assets of the
         Borrower or any ERISA Affiliate in favor of the PBGC or a Plan; (ii) an
         ERISA Event shall occur with respect to a Single Employer Plan which
         is, in the reasonable opinion of the Lender, likely to result in the
         termination of such Plan for purposes of Title IV of ERISA; (iii) an
         ERISA Event shall occur with respect to a Multiemployer Plan or
         Multiple Employer Plan which is, in the reasonable opinion of the
         Lender, likely to result in (A) the termination of such Plan for
         purposes of Title IV of ERISA, or (B) the Borrower or any ERISA
         Affiliate incurring any liability in connection with a withdrawal from,
         reorganization of (within the meaning of Section 4241 of ERISA), or
         insolvency (within the meaning of Section 4245 of ERISA) of such Plan;
         or (iv) any prohibited transaction (within the meaning of Section 406
         of ERISA or Section 4975 of the Code) or breach of fiduciary
         responsibility shall occur which would be reasonably expected to
         subject the Borrower or any ERISA Affiliate to any liability under
         Sections 406, 409, 502(i), or 502(l) of ERISA or Section 4975 of the
         Code, or under any agreement or other instrument pursuant to which the
         Borrower or any ERISA Affiliate has agreed or is required to indemnify
         any person against any such liability.

                  (i) Change of Control. There shall occur a Change of Control.

                                       55
<PAGE>

         9.2      Acceleration; Remedies.
                  ----------------------

         Upon the occurrence and during the continuation of an Event of Default,
the Administrative Agent may or, upon the request and direction of the Required
Lenders, shall take the following actions without prejudice to the rights of the
Administrative Agent or any Lender to enforce its claims against the Borrower,
except as otherwise specifically provided for herein:

                  (a) Termination of Commitments. Declare the Commitments and
         the obligation of the L/C Issuer to make L/C Credit Extensions
         terminated whereupon the Commitments and the obligation of the L/C
         Issuer to make L/C Credit Extensions shall be immediately terminated.

                  (b) Acceleration of Revolving Loans. Declare the unpaid
         principal of and any accrued interest in respect of all Revolving
         Loans, all L/C Obligations and any and all other Borrower Obligations
         of any and every kind owing by the Borrower to the Administrative Agent
         or the Lenders under the Credit Documents to be due, whereupon the same
         shall be immediately due and payable without presentment, demand,
         protest or other notice of any kind, all of which are hereby waived by
         the Borrower.

                  (c) Cash Collateral. Direct the Borrower to Cash Collateralize
         (and the Borrower agrees that upon receipt of such notice, or upon the
         occurrence of an Event of Default under Section 9.1(e), it will
         immediately Cash Collateralize) L/C Obligations in respect of
         subsequent drawings under all then outstanding Letters of Credit in an
         amount equal to the then outstanding principal amount of L/C
         Obligations.

                  (d) Enforcement of Rights. To the extent permitted by Law
         enforce any and all rights and interests created and existing under
         applicable Law and under the Credit Documents, including, without
         limitation, all rights of set-off.

Notwithstanding the foregoing, if an Event of Default specified in Section
9.1(e) shall occur, then the Commitments and any obligation of the L/C Issuer to
make L/C Credit Extensions shall automatically terminate and all Revolving
Loans, all L/C Obligations, all accrued interest in respect thereof, all accrued
and unpaid fees and other Borrower Obligations owing to the Administrative Agent
and the Lenders hereunder shall immediately become due and payable without the
giving of any notice or other action by the Administrative Agent or the Lenders,
which notice or other action is expressly waived by the Borrower.

Notwithstanding the fact that enforcement powers reside primarily with the
Administrative Agent, each Lender has, to the extent permitted by Law, a
separate right of payment and shall be considered a separate "creditor" holding
a separate "claim" within the meaning of Section 101(5) of the Bankruptcy Code
or any other insolvency statute.

         9.3      Allocation of Payments After Event of Default.
                  ---------------------------------------------

         Notwithstanding any other provisions of this Credit Agreement, after
the occurrence and during the continuation of an Event of Default, all amounts
collected or received by the Administrative Agent or any Lender on account of
amounts outstanding under any of the Credit Documents shall be paid over or
delivered as follows:

                                       56
<PAGE>

                  FIRST, to the payment of all reasonable out-of-pocket costs
         and expenses (including the reasonable fees and expenses of legal
         counsel) of the Administrative Agent, the L/C Issuer or any of the
         Lenders in connection with enforcing the rights of the Administrative
         Agent, the L/C Issuer and the Lenders under the Credit Documents,
         ratably among them in proportion to the amounts described in this
         clause "FIRST" payable to them;

                  SECOND, to payment of any fees owed to the Administrative
         Agent, the L/C Issuer or any Lender, ratably among them in proportion
         to the amounts described in this clause "SECOND" payable to them;

                  THIRD, to the payment of all accrued interest payable to the
         Lenders, and the L/C Issuer hereunder, ratably among them in proportion
         to the amounts described in this clause "THIRD" payable to them;

                  FOURTH, to the payment of the outstanding principal amount of
         the Revolving Loans and L/C Obligations, ratably among them in
         proportion to the amounts described in this clause "FOURTH" payable to
         them;

                  FIFTH, to the Administrative Agent, for the account of the L/C
         Issuer, to Cash Collateralize that portion of the L/C Obligations
         comprised of the aggregate undrawn amount of Letters of Credit;

                  SIXTH, to all other Borrower Obligations which shall have
         become due and payable under the Credit Documents and not repaid
         pursuant to clauses "FIRST" through "FIFTH" above, ratably among the
         holders of such Borrower Obligations in proportion to the amounts
         described in this clause "SIXTH" payable to them; and

                  SEVENTH, the payment of the surplus, if any, to whomever may
         be lawfully entitled to receive such surplus.

Amounts used to Cash Collateralize the aggregate undrawn amount of Letters of
Credit pursuant to clause "FIFTH" above shall be applied to satisfy drawings
under such Letters of Credit as they occur. If any amount remains on deposit as
cash collateral after all Letters of Credit have either been fully drawn or
expired, such remaining amount shall be applied to the other Borrower
Obligations, if any, in the order set forth above.


                                       57
<PAGE>

                                   SECTION 10

                                AGENCY PROVISIONS

         10.1     Appointment and Authorization of Administrative Agent.
                  -----------------------------------------------------

                  (a) Each Lender hereby irrevocably appoints, designates and
         authorizes the Administrative Agent to take such action on its behalf
         under the provisions of this Credit Agreement and each other Credit
         Document and to exercise such powers and perform such duties as are
         expressly delegated to it by the terms of this Credit Agreement or any
         other Credit Document, together with such powers as are reasonably
         incidental thereto. Notwithstanding any provision to the contrary
         contained elsewhere herein or in any other Credit Document, the
         Administrative Agent shall not have any duties or responsibilities,
         except those expressly set forth herein, nor shall the Administrative
         Agent have or be deemed to have any fiduciary relationship with any
         Lender or participant, and no implied covenants, functions,
         responsibilities, duties, obligations or liabilities shall be read into
         this Credit Agreement or any other Credit Document or otherwise exist
         against the Administrative Agent. Without limiting the generality of
         the foregoing sentence, the use of the term "agent" herein and in the
         other Credit Documents with reference to the Administrative Agent is
         not intended to connote any fiduciary or other implied (or express)
         obligations arising under agency doctrine of any applicable Requirement
         of Law. Instead, such term is used merely as a matter of market custom,
         and is intended to create or reflect only an administrative
         relationship between independent contracting parties.

                  (b) The L/C Issuer shall act on behalf of the Lenders with
         respect to any Letters of Credit issued by it and the documents
         associated therewith, and the L/C Issuer shall have all of the benefits
         and immunities (i) provided to the Administrative Agent in this Section
         10 with respect to any acts taken or omissions suffered by the L/C
         Issuer in connection with Letters of Credit issued by it or proposed to
         be issued by it and the applications and agreements for letters of
         credit pertaining to such Letters of Credit as fully as if the term
         "Administrative Agent" as used in this Section 10 and in the definition
         of "Agent-Related Person" included the L/C Issuer with respect to such
         acts or omissions, and (ii) as additionally provided herein with
         respect to the L/C Issuer.

         10.2     Delegation of Duties.
                  --------------------

         The Administrative Agent may execute any of its duties under this
Credit Agreement or any other Credit Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel and other
consultants or experts concerning all matters pertaining to such duties. The
Administrative Agent shall not be responsible for the negligence or misconduct
of any agent or attorney-in-fact that it selects in the absence of gross
negligence or willful misconduct.

         10.3     Liability of Administrative Agent.
                  ---------------------------------

         No Agent-Related Person shall (a) be liable for any action taken or
omitted to be taken by any of them under or in connection with this Credit
Agreement or any other Credit Document or the transactions contemplated hereby
(except for its own gross negligence or willful misconduct in connection with
its duties expressly set forth herein), or (b) be responsible in any manner to
any Lender or participant for any recital, statement, representation or warranty

                                       58
<PAGE>

made by the Borrower or any officer thereof, contained herein or in any other
Credit Document, or in any certificate, report, statement or other document
referred to or provided for in, or received by the Administrative Agent under or
in connection with, this Credit Agreement or any other Credit Document, or the
validity, effectiveness, genuineness, enforceability or sufficiency of this
Credit Agreement or any other Credit Document, or for any failure of the
Borrower or any other party to any Credit Document to perform its obligations
hereunder or thereunder. No Agent-Related Person shall be under any obligation
to any Lender or participant to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this Credit
Agreement or any other Credit Document, or to inspect the properties, books or
records of the Borrower or any Affiliate thereof.

         10.4     Reliance by Administrative Agent.
                  --------------------------------

                  (a) The Administrative Agent shall be entitled to rely, and
         shall be fully protected in relying, upon any writing, communication,
         signature, resolution, representation, notice, consent, certificate,
         affidavit, letter, telegram, facsimile, telex or telephone message,
         electronic mail message, statement or other document or conversation
         believed by it to be genuine and correct and to have been signed, sent
         or made by the proper Person or Persons, and upon advice and statements
         of legal counsel (including counsel to the Borrower), independent
         accountants and other experts selected by the Administrative Agent. The
         Administrative Agent shall be fully justified in failing or refusing to
         take any action under any Credit Document unless it shall first receive
         such advice or concurrence of the Required Lenders as it deems
         appropriate and, if it so requests, it shall first be indemnified to
         its satisfaction by the Lenders against any and all liability and
         expense which 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
         Credit Agreement or any other Credit Document in accordance with a
         request or consent of the Required Lenders (or such greater number of
         Lenders as may be expressly required hereby in any instance) and such
         request and any action taken or failure to act pursuant thereto shall
         be binding upon all the Lenders.

                  (b) For purposes of determining compliance with the conditions
         specified in Section 4.1, each Lender that has signed this Credit
         Agreement shall be deemed to have consented to, approved or accepted or
         to be satisfied with, each document or other matter required thereunder
         to be consented to or approved by or acceptable or satisfactory to a
         Lender unless the Administrative Agent shall have received notice from
         such Lender prior to the proposed Closing Date specifying its objection
         thereto.

         10.5     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, except with respect
to defaults in the payment of principal, interest and fees required to be paid
to the Administrative Agent for the account of the Lenders, unless the
Administrative Agent shall have received written notice from a Lender or the
Borrower referring to this Credit Agreement, describing such Default or Event of

                                       59
<PAGE>

Default and stating that such notice is a "notice of default." The
Administrative Agent will notify the Lenders of its receipt of any such notice.
The Administrative Agent shall take such action with respect to such Default or
Event of Default as may be directed by the Required Lenders in accordance with
Section 9; provided, however, that unless and until the Administrative Agent has
received any such direction, 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 or in the best
interest of the Lenders.

         10.6     Credit Decision; Disclosure of Information by the
                  -------------------------------------------------
                  Administrative Agent.
                  --------------------

         Each Lender acknowledges that no Agent-Related Person has made any
representation or warranty to it, and that no act by the Administrative Agent
hereafter taken, including any consent to and acceptance of any assignment or
review of the affairs of the Borrower or any Affiliate thereof, shall be deemed
to constitute any representation or warranty by any Agent-Related Person to any
Lender as to any matter, including whether Agent-Related Persons have disclosed
material information in their possession. Each Lender represents to the
Administrative Agent that it has, independently and without reliance upon any
Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Borrower and their respective Subsidiaries, and all
applicable bank or other regulatory Requirement of Laws relating to the
transactions contemplated hereby, and made its own decision to enter into this
Credit Agreement and to extend credit to the Borrower hereunder. Each Lender
also represents that it will, independently and without reliance upon any
Agent-Related Person 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 Credit
Agreement and the other Credit Documents, and to make such investigations as it
deems necessary to inform itself as to the business, prospects, operations,
property, financial and other condition and creditworthiness of the Borrower.
Except for notices, reports and other documents expressly required to be
furnished to the Lenders by the Administrative Agent herein, the Administrative
Agent shall not have any duty or responsibility to provide any Lender with any
credit or other information concerning the business, prospects, operations,
property, financial and other condition or creditworthiness of the Borrower or
any of their respective Affiliates which may come into the possession of any
Agent-Related Person.

         10.7     Indemnification of Administrative Agent.
                  ---------------------------------------

         Whether or not the transactions contemplated hereby are consummated,
the Lenders shall indemnify upon demand each Agent-Related Person (to the extent
not reimbursed by or on behalf of the Borrower and without limiting the
obligation of the Borrower to do so), pro rata, and hold harmless each
Agent-Related Person from and against any and all Indemnified Liabilities
incurred by it; provided, however, that no Lender shall be liable for the
payment to any Agent-Related Person of any portion of such Indemnified
Liabilities to the extent determined in a final, nonappealable judgment by a
court of competent jurisdiction to have resulted from such Agent-Related
Person's own gross negligence or willful misconduct; it being understood and
agreed that no action taken in accordance with the directions of the Required
Lenders shall be deemed to constitute gross negligence or willful misconduct for
purposes of this Section. Without limitation of the foregoing, each Lender shall

                                       60
<PAGE>

reimburse the Administrative Agent upon demand for its ratable share of any
costs or out-of-pocket expenses (including, without limitation, the reasonable
fees and expenses of legal counsel) incurred by the Administrative Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Credit Agreement, any other Credit Document, or any
document contemplated by or referred to herein, to the extent that the
Administrative Agent is not reimbursed for such expenses by or on behalf of the
Borrower. The undertaking in this Section shall survive termination of the
Commitments, the payment of all Borrower Obligations and the resignation of the
Administrative Agent.

         10.8     Administrative Agent in its Individual Capacity.
                  -----------------------------------------------

         Bank of America and its Affiliates may make loans to, issue letters of
credit for the account of, accept deposits from, acquire equity interests in and
generally engage in any kind of banking, trust, financial advisory, underwriting
or other business with the Borrower and its Affiliates as though Bank of America
were not the Administrative Agent or the L/C Issuer hereunder and without notice
to or consent of the Lenders. The Lenders acknowledge that, pursuant to such
activities, Bank of America or its Affiliates may receive information regarding
the Borrower or its Affiliates (including information that may be subject to
confidentiality obligations in favor of the Borrower or an Affiliate) and
acknowledge that the Administrative Agent shall be under no obligation to
provide such information to them. With respect to its Revolving Loans, Bank of
America shall have the same rights and powers under this Credit Agreement as any
other Lender and may exercise such rights and powers as though it were not the
Administrative Agent or the L/C Issuer, and the terms "Lender" and "Lenders"
include Bank of America in its individual capacity. The foregoing provisions of
this Section 10.8 shall apply equally to Lenders and their Affiliates to the
extent such Lenders are acting in their individual capacities and not in their
capacities as Lenders hereunder.

         10.9     Successor Administrative Agent.
                  ------------------------------

         The Administrative Agent may resign as Administrative Agent upon 30
days' notice to the Lenders; provided that any such resignation by Bank of
America shall also constitute its resignation as L/C Issuer. If the
Administrative Agent resigns under this Credit Agreement, the Required Lenders
shall appoint from among the Lenders a successor Administrative Agent for the
Lenders, which successor Administrative Agent shall be consented to by the
Borrower at all times other than during the existence of an Event of Default
(which consent of the Borrower shall not be unreasonably withheld or delayed).
If no successor Administrative Agent is appointed prior to the effective date of
the resignation of the retiring Administrative Agent, the retiring
Administrative Agent may appoint, after consulting with the Lenders and the
Borrower, a successor Administrative Agent from among the Lenders. Upon the
acceptance of its appointment as successor Administrative Agent hereunder, the
Person acting as such successor Administrative Agent shall succeed to all the
rights, powers and duties of the retiring Administrative Agent and the retiring
L/C Issuer and the respective terms "Administrative Agent" and "L/C Issuer"
shall mean such successor Administrative Agent and L/C Issuer and the retiring
Administrative Agent's appointment, powers and duties as Administrative Agent
shall be terminated and the retiring L/C Issuer's rights, powers and duties as
such shall be terminated, without any other or further act or deed on the part


                                       61
<PAGE>

of such retiring Administrative Agent or L/C Issuer or any other Lender, other
than the obligation of the successor L/C Issuer to issue letters of credit in
substitution for the Letters of Credit, if any, outstanding at the time of such
succession or to make other arrangements satisfactory to the retiring L/C Issuer
to effectively assume the obligations of the retiring L/C Issuer with respect to
such Letters of Credit. After any retiring Administrative Agent's resignation
hereunder as Administrative Agent, the provisions of this Section 10 and
Sections 11.5 and 11.6 shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Administrative Agent under this Credit
Agreement. If no successor Administrative Agent has accepted appointment as
Administrative Agent by the date which 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 perform all of the duties of the Administrative Agent hereunder
until such time, if any, as the Required Lenders appoint a successor
Administrative Agent as provided for above.

         10.10    Administrative Agent May File Proofs of Claim.
                  ---------------------------------------------

         In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Borrower, the Administrative Agent
(irrespective of whether the principal of any Revolving Loan or L/C Obligation
shall then be due and payable as herein expressed or by declaration or otherwise
and irrespective of whether the Administrative Agent shall have made any demand
on the Borrower) shall be entitled and empowered, by intervention in such
proceeding or otherwise

                  (a) to file and prove a claim for the whole amount of the
         principal and interest owing and unpaid in respect of the Revolving
         Loans, L/C Obligations and all other Borrower Obligations that are
         owing and unpaid and to file such other documents as may be necessary
         or advisable in order to have the claims of the Lenders and the
         Administrative Agent (including any claim for the reasonable
         compensation, expenses, disbursements and advances of the Lenders and
         the Administrative Agent and its respective agents and counsel and all
         other amounts due the Lenders and the Administrative Agent under
         Sections 3.4 and 11.5) allowed in such judicial proceeding; and

                  (b) to collect and receive any monies or other property
         payable or deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender to make such payments to the Administrative Agent and, in the event
that the Administrative Agent shall consent to the making of such payments
directly to the Lenders, to pay to the Administrative Agent any amount due for
the reasonable compensation, expenses, disbursements and advances of the
Administrative Agent and its agents and counsel, and any other amounts due the
Administrative Agent under Sections 3.4 and 11.5.

         Nothing contained herein shall be deemed to authorize the
Administrative Agent to authorize or consent to or accept or adopt on behalf of
any Lender any plan of reorganization, arrangement, adjustment or composition
affecting the Borrower Obligations or the rights of any Lender or to authorize
the Administrative Agent to vote in respect of the claim of any Lender in any
such proceeding.

                                       62
<PAGE>

         10.11    Other Agents; Arrangers and Managers.
                  ------------------------------------

         None of the Lenders or other Persons identified on the facing page or
signature pages of this Credit Agreement as a "syndication agent,"
"documentation agent," "co-agent," "book manager," "lead manager," "arranger,"
"lead arranger" or "co-arranger" shall have any right, power, obligation,
liability, responsibility or duty under this Credit Agreement other than, in the
case of such Lenders, those applicable to all Lenders as such. Without limiting
the foregoing, none of the Lenders or other Persons so identified shall have or
be deemed to have any fiduciary relationship with any Lender. Each Lender
acknowledges that it has not relied, and will not rely, on any of the Lenders or
other Persons so identified in deciding to enter into this Credit Agreement or
in taking or not taking action hereunder.


                                   SECTION 11

                                  MISCELLANEOUS

         11.1     Notices and Other Communications; Facsimile Copies.
                  --------------------------------------------------

                  (a) General. Unless otherwise expressly provided herein, all
         notices and other communications provided for hereunder shall be in
         writing (including by facsimile transmission). All such written notices
         shall be mailed, faxed or delivered to the applicable address,
         facsimile number or (subject to subsection (c) below) electronic mail
         address, and all notices and other communications expressly permitted
         hereunder to be given by telephone shall be made to the applicable
         telephone number, as follows:

                           (i) if to the Borrower, the Administrative Agent or
                  the L/C Issuer, to the address, facsimile number, electronic
                  mail address or telephone number specified for such Person on
                  Schedule 11.1 or to such other address, facsimile number,
                  electronic mail address or telephone number as shall be
                  designated by such party in a notice to the other parties; and

                           (ii) if to any other Lender, to the address,
                  facsimile number, electronic mail address or telephone number
                  specified in its Administrative Questionnaire or to such other
                  address, facsimile number, electronic mail address or
                  telephone number as shall be designated by such party in a
                  notice to the Borrower, the Administrative Agent and the L/C
                  Issuer.

All such notices and other communications shall be deemed to be given or made
upon the earlier to occur of (i) actual receipt by the relevant party hereto and
(ii) (A) if delivered by hand or by courier, when signed for by or on behalf of
the relevant party hereto; (B) if delivered by mail, four Business Days after
deposit in the mails, postage prepaid; (C) if delivered by facsimile, when sent
and receipt has been confirmed by telephone; and (D) if delivered by electronic

                                       63
<PAGE>

mail (which form of delivery is subject to the provisions of subsection (c)
below), when delivered; provided, however, that notices and other communications
to the Administrative Agent and the L/C Issuer pursuant to Section 2 shall not
be effective until actually received by such Person. In no event shall a
voicemail message be effective as a notice, communication or confirmation
hereunder.

                  (b) Effectiveness of Facsimile Documents and Signatures.
         Credit Documents may be transmitted and/or signed by facsimile. The
         effectiveness of any such documents and signatures shall, subject to
         applicable Requirement of Law, have the same force and effect as
         manually-signed originals and shall be binding on the Borrower, the
         Administrative Agent and the Lenders. The Administrative Agent may also
         require that any such documents and signatures be confirmed by a
         manually-signed original thereof; provided, however, that the failure
         to request or deliver the same shall not limit the effectiveness of any
         facsimile document or signature.

                  (c) Limited Use of Electronic Mail. Electronic mail and
         Internet and intranet websites may be used only to distribute routine
         communications, such as financial statements and other information as
         provided in Section 7.1 and 7.2, and to distribute Credit Documents for
         execution by the parties thereto, and may not be used for any other
         purpose.

                  (d) Reliance by Administrative Agent and Lenders. The
         Administrative Agent and the Lenders shall be entitled to rely and act
         upon any notices (including telephonic Notices of Borrowing)
         purportedly given by or on behalf of the Borrower even if (i) such
         notices were not made in a manner specified herein, were incomplete or
         were not preceded or followed by any other form of notice specified
         herein, or (ii) the terms thereof, as understood by the recipient,
         varied from any confirmation thereof. The Borrower shall indemnify each
         Agent-Related Person and each Lender from all losses, costs, expenses
         and liabilities resulting from the reliance by such Person on each
         notice purportedly given by or on behalf of the Borrower. All
         telephonic notices to and other communications with the Administrative
         Agent may be recorded by the Administrative Agent, and each of the
         parties hereto hereby consents to such recording.

         11.2     Right of Set-Off.
                  ----------------

         In addition to any rights now or hereafter granted under applicable Law
or otherwise, and not by way of limitation of any such rights, upon the
occurrence of an Event of Default and the commencement of remedies described in
Section 9.2, each Lender is authorized at any time and from time to time,
without presentment, demand, protest or other notice of any kind (all of which
rights being hereby expressly waived), to set-off and to appropriate and apply
any and all deposits (general or special) and any other indebtedness at any time
held or owing by such Lender (including, without limitation, branches, agencies
or Affiliates of such Lender wherever located) to or for the credit or the
account of the Borrower against obligations and liabilities of the Borrower to
the Lenders hereunder, under the Revolving Notes, the other Credit Documents or
otherwise, irrespective of whether the Administrative Agent or the Lenders shall
have made any demand hereunder and although such obligations, liabilities or
claims, or any of them, may be contingent or unmatured, and any such set-off
shall be deemed to have been made immediately upon the occurrence of an Event of
Default even though such charge is made or entered on the books of such Lender
subsequent thereto. The Borrower hereby agrees that any Person purchasing a
participation in the Revolving Loans and Commitments hereunder pursuant to
Sections 3.8 or 11.3(e) may exercise all rights of set-off with respect to its
participation interest as fully as if such Person were a Lender hereunder.


                                       64
<PAGE>

         11.3     Successors and Assigns.
                  ----------------------

                  (a) The provisions of this Credit Agreement shall be binding
         upon and inure to the benefit of the parties hereto and their
         respective successors and assigns permitted hereby, except that the
         Borrower may not assign or otherwise transfer any of its rights or
         obligations hereunder without the prior written consent of each Lender
         and no Lender may assign or otherwise transfer any of its rights or
         obligations hereunder except (i) to an Eligible Assignee in accordance
         with the provisions of subsection (b) of this Section, (ii) by way of
         participation in accordance with the provisions of subsection (d) of
         this Section, or (iii) by way of pledge or assignment of a security
         interest subject to the restrictions of subsection (f) or (i) of this
         Section, or (iv) to an SPC in accordance with the provisions of
         subsection (g) of this Section (and any other attempted assignment or
         transfer by any party hereto shall be null and void). Nothing in this
         Credit Agreement, expressed or implied, shall be construed to confer
         upon any Person (other than the parties hereto, their respective
         successors and assigns permitted hereby, Participants to the extent
         provided in subsection (d) of this Section and, to the extent expressly
         contemplated hereby, the Indemnitees) any legal or equitable right,
         remedy or claim under or by reason of this Credit Agreement.

                  (b) Any Lender may at any time assign to one or more Eligible
         Assignees all or a portion of its rights and obligations under this
         Credit Agreement (including all or a portion of its Commitment and the
         Loans (including for purposes of this subsection (b), participations in
         L/C Obligations) at the time owing to it); provided that (i) except in
         the case of an assignment of the entire remaining amount of the
         assigning Lender's Commitment and the Loans at the time owing to it or
         in the case of an assignment to a Lender or an Affiliate of a Lender or
         an Approved Fund (as defined in subsection (g) of this Section) with
         respect to a Lender, the aggregate amount of the Commitment (which for
         this purpose includes Loans outstanding thereunder) subject to each
         such assignment, determined as of the date the Assignment and
         Assumption with respect to such assignment is delivered to the
         Administrative Agent or, if "Trade Date" is specified in the Assignment
         and Assumption, as of the Trade Date, shall not be less than $5,000,000
         unless each of the Administrative Agent and, so long as no Event of
         Default has occurred and is continuing, the Borrower otherwise consents
         (each such consent not to be unreasonably withheld or delayed); (ii)
         each partial assignment shall be made as an assignment of a
         proportionate part of all the assigning Lender's rights and obligations
         under this Credit Agreement with respect to the Loans or the Commitment
         assigned, (iii) any assignment of a Commitment must be approved by the
         Administrative Agent and the L/C Issuer (such approval not to be
         unreasonably withheld or delayed) unless the Person that is the
         proposed assignee is itself a Lender (whether or not the proposed
         assignee would otherwise qualify as an Eligible Assignee); and (iv) the
         parties to each assignment shall execute and deliver to the
         Administrative Agent an Assignment and Assumption, together with a
         processing and recordation fee of $3,500. Subject to acceptance and
         recording thereof by the Administrative Agent pursuant to subsection
         (c) of this Section, from and after the effective date specified in
         each Assignment and Assumption, the Eligible Assignee thereunder shall

                                       65
<PAGE>

         be a party to this Credit Agreement and, to the extent of the interest
         assigned by such Assignment and Assumption, have the rights and
         obligations of a Lender under this Credit Agreement, and the assigning
         Lender thereunder shall, to the extent of the interest assigned by such
         Assignment and Assumption, be released from its obligations under this
         Credit Agreement (and, in the case of an Assignment and Assumption
         covering all of the assigning Lender's rights and obligations under
         this Credit Agreement, such Lender shall cease to be a party hereto but
         shall continue to be entitled to the benefits of Sections 3.9, 3.12,
         3.13, 3.14, and 11.5(b) with respect to facts and circumstances
         occurring prior to the effective date of such assignment). Upon
         request, the Borrower (at its expense) shall execute and deliver a Note
         to the assignee Lender. Any assignment or transfer by a Lender of
         rights or obligations under this Credit Agreement that does not comply
         with this subsection shall be treated for purposes of this Credit
         Agreement as a sale by such Lender of a participation in such rights
         and obligations in accordance with subsection (d) of this Section.

                  (c) The Administrative Agent, acting solely for this purpose
         as an agent of the Borrower, shall maintain at the Administrative
         Agent's Office a copy of each Assignment and Assumption delivered to it
         and a register for the recordation of the names and addresses of the
         Lenders, and the Commitments of, and principal amounts of the Loans and
         L/C Obligations owing to, each Lender pursuant to the terms hereof from
         time to time (the "Register"). The entries in the Register shall be
         conclusive, and the Borrower, the Administrative Agent and the Lenders
         may treat each Person whose name is recorded in the Register pursuant
         to the terms hereof as a Lender hereunder for all purposes of this
         Credit Agreement, notwithstanding notice to the contrary. The Register
         shall be available for inspection by the Borrower and any Lender, at
         any reasonable time and from time to time upon reasonable prior notice.

                  (d) Any Lender may at any time, without the consent of, or
         notice to, the Borrower or the Administrative Agent, sell
         participations to any Person (other than a natural person or the
         Borrower or any of the Borrower's Affiliates or Subsidiaries) (each, a
         "Participant") in all or a portion of such Lender's rights and/or
         obligations under this Credit Agreement (including all or a portion of
         its Commitment and/or the Loans (including such Lender's participations
         in L/C Obligations) owing to it); provided that (i) such Lender's
         obligations under this Credit Agreement shall remain unchanged, (ii)
         such Lender shall remain solely responsible to the other parties hereto
         for the performance of such obligations and (iii) the Borrower, the
         Administrative Agent and the other Lenders shall continue to deal
         solely and directly with such Lender in connection with such Lender's
         rights and obligations under this Credit Agreement. Any agreement or
         instrument pursuant to which a Lender sells such a participation shall
         provide that such Lender shall retain the sole right to enforce this
         Credit Agreement and to approve any amendment, modification or waiver
         of any provision of this Credit Agreement; provided that such agreement
         or instrument may provide that such Lender will not, without the
         consent of the Participant, agree to any amendment, waiver or other
         modification described in the first proviso to Section 11.6 that
         directly affects such Participant. Subject to subsection (e) of this
         Section, the Borrower agrees that each Participant shall be entitled to
         the benefits of Sections 3.9, 3.12, 3.13 and 3.14 to the same extent as
         if it were a Lender and had acquired its interest by assignment
         pursuant to subsection (b) of this Section. To the extent permitted by
         Law, each Participant also shall be entitled to the benefits of Section
         3.7 as though it were a Lender, provided such Participant agrees to be
         subject to Section 3.8 as though it were a Lender.

                                       66
<PAGE>

                  (e) A Participant shall not be entitled to receive any greater
         payment under Section 3.9, 3.12, 3.13 or 3.14 than the applicable
         Lender would have been entitled to receive with respect to the
         participation sold to such Participant, unless the sale of the
         participation to such Participant is made with the Borrower's prior
         written consent. A Participant that would be a Foreign Lender if it
         were a Lender shall not be entitled to the benefits of Section 3.13
         unless the Borrower is notified of the participation sold to such
         Participant and such Participant agrees, for the benefit of the
         Borrower, to comply with Section 3.13(f) as though it were a Lender.

                  (f) Any Lender may at any time pledge or assign a security
         interest in all or any portion of its rights under this Credit
         Agreement (including under its Note, if any) to secure obligations of
         such Lender, including any pledge or assignment to secure obligations
         to a Federal Reserve Bank; provided that no such pledge or assignment
         shall release such Lender from any of its obligations hereunder or
         substitute any such pledgee or assignee for such Lender as a party
         hereto.

                  (g) Notwithstanding anything to the contrary contained herein,
         any Lender (a "Granting Lender") may grant to a special purpose funding
         vehicle identified as such in writing from time to time by the Granting
         Lender to the Administrative Agent and the Borrower (an "SPC") the
         option to provide all or any part of any Loan that such Granting Lender
         would otherwise be obligated to make pursuant to this Credit Agreement;
         provided that (i) nothing herein shall constitute a commitment by any
         SPC to fund any Loan, and (ii) if an SPC elects not to exercise such
         option or otherwise fails to make all or any part of such Loan, the
         Granting Lender shall be obligated to make such Loan pursuant to the
         terms hereof. Each party hereto hereby agrees that (A) neither the
         grant to any SPC nor the exercise by any SPC of such option shall
         increase the costs or expenses or otherwise increase or change the
         obligations of the Borrower under this Credit Agreement (including its
         obligations under Sections 3.9, 3.12, 3.13 and 3.14), (B) no SPC shall
         be liable for any indemnity or similar payment obligation under this
         Credit Agreement for which a Lender would be liable, and (C) the
         Granting Lender shall for all purposes, including the approval of any
         amendment, waiver or other modification of any provision of any Credit
         Document, remain the lender of record hereunder. The making of a
         Committed Loan by an SPC hereunder shall utilize the Commitment of the
         Granting Lender to the same extent, and as if, such Loan were made by
         such Granting Lender. In furtherance of the foregoing, each party
         hereto hereby agrees (which agreement shall survive the termination of
         this Credit Agreement) that, prior to the date that is one year and one
         day after the payment in full of all outstanding commercial paper or
         other senior debt of any SPC, it will not institute against, or join
         any other Person in instituting against, such SPC any bankruptcy,
         reorganization, arrangement, insolvency, or liquidation proceeding
         under the Laws of the United States or any State thereof.
         Notwithstanding anything to the contrary contained herein, any SPC may
         (i) with notice to, but without prior consent of the Borrower and the
         Administrative Agent and without paying any processing fee therefor,
         assign all or any portion of its right to receive payment with respect
         to any Loan to the Granting Lender and (ii) disclose on a confidential
         basis any non-public information relating to its funding of Loans to
         any rating agency, commercial paper dealer or provider of any surety or
         guarantee or credit or liquidity enhancement to such SPC.

                                       67
<PAGE>

                  (i) Notwithstanding anything to the contrary contained herein,
         any Lender that is a Fund may create a security interest in all or any
         portion of the Loans owing to it and the Note, if any, held by it to
         the trustee for holders of obligations owed, or securities issued, by
         such Fund as security for such obligations or securities, provided that
         unless and until such trustee actually becomes a Lender in compliance
         with the other provisions of this Section 11.3, (i) no such pledge
         shall release the pledging Lender from any of its obligations under the
         Credit Documents and (ii) such trustee shall not be entitled to
         exercise any of the rights of a Lender under the Credit Documents even
         though such trustee may have acquired ownership rights with respect to
         the pledged interest through foreclosure or otherwise.

                  (j) Notwithstanding anything to the contrary contained herein,
         if at any time Bank of America assigns all of its Commitment and Loans
         pursuant to subsection (b) above, Bank of America may upon 30 days'
         notice to the Borrower and the Lenders, resign as L/C Issuer. In the
         event of any such resignation as L/C Issuer, the Borrower shall be
         entitled to appoint from among the Lenders a successor L/C Issuer
         hereunder; provided, however, that no failure by the Borrower to
         appoint any such successor shall affect the resignation of Bank of
         America as L/C Issuer. If Bank of America resigns as L/C Issuer, it
         shall retain all the rights and obligations of the L/C Issuer hereunder
         with respect to all Letters of Credit outstanding as of the effective
         date of its resignation as L/C Issuer and all L/C Obligations with
         respect thereto (including the right to require the Lenders to make
         Loans or fund risk participations pursuant to Section 2.2.

         11.4     No Waiver; Remedies Cumulative.
                  ------------------------------

         No failure or delay on the part of the Administrative Agent or any
Lender in exercising any right, power or privilege hereunder or under any other
Credit Document and no course of dealing between the Borrower and the
Administrative Agent or any Lender shall operate as a waiver thereof; nor shall
any single or partial exercise of any right, power or privilege hereunder or
under any other Credit Document preclude any other or further exercise thereof
or the exercise of any other right, power or privilege hereunder or thereunder.
The rights and remedies provided herein are cumulative and not exclusive of any
rights or remedies which the Administrative Agent or any Lender would otherwise
have. No notice to or demand on the Borrower in any case shall entitle the
Borrower to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the Administrative Agent
or the Lenders to any other or further action in any circumstances without
notice or demand.

         11.5     Attorney Costs, Expenses, Taxes and Indemnification by
                  ------------------------------------------------------
                  Borrower.
                  --------

                  (a) The Borrower agrees (i) to pay or reimburse the
         Administrative Agent and the Arranger for all costs and expenses
         incurred in connection with the development, preparation, negotiation
         and execution of this Credit Agreement and the other Credit Documents
         and any amendment, waiver, consent or other modification of the
         provisions hereof and thereof (whether or not the transactions

                                       68
<PAGE>

         contemplated hereby or thereby are consummated), and the consummation
         and administration of the transactions contemplated hereby and thereby,
         including all reasonable fees and expenses of legal counsel, and (ii)
         to pay or reimburse the Administrative Agent and each Lender for all
         costs and expenses incurred in connection with the enforcement,
         attempted enforcement, or preservation of any rights or remedies under
         this Credit Agreement or the other Credit Documents (including all such
         costs and expenses incurred during any "workout" or restructuring in
         respect of the Borrower Obligations and during any legal proceeding,
         including any proceeding under any Debtor Relief Law), including all
         reasonable fees and expenses of legal counsel. The foregoing costs and
         expenses shall include all search, filing, recording, and appraisal
         charges and fees and taxes related thereto, and other out-of-pocket
         expenses incurred by the Administrative Agent and the Arranger and the
         cost of independent public accountants and other outside experts
         retained by the Administrative Agent, the Arranger or any Lender. Other
         than costs and expenses payable in connection with the closing of the
         transactions contemplated by this Credit Agreement pursuant to Section
         11.5(a) (which shall be payable on the Closing Date unless otherwise
         agreed by the Administrative Agent and the Arranger), all amounts due
         under this Section 11.5 shall be payable within ten Business Days after
         demand therefor. The agreements in this Section shall survive the
         termination of the Commitments and repayment of all other Borrower
         Obligations.

                  (b) Whether or not the transactions contemplated hereby are
         consummated, the Borrower shall indemnify and hold harmless each
         Agent-Related Person, each Lender and their respective Affiliates,
         directors, officers, employees, counsel, agents and attorneys-in-fact
         (collectively the "Indemnitees") from and against any and all
         liabilities, obligations, losses, damages, penalties, claims, demands,
         actions, judgments, suits, costs, expenses and disbursements (including
         the reasonable fees and expenses of legal counsel) of any kind or
         nature whatsoever which may at any time be imposed on, incurred by or
         asserted against any such Indemnitee in any way relating to or arising
         out of or in connection with (i) the execution, delivery, enforcement,
         performance or administration of any Credit Document or any other
         agreement, letter or instrument delivered in connection with the
         transactions contemplated thereby or the consummation of the
         transactions contemplated thereby, (ii) any Commitment, Loan or Letter
         of Credit or the use or proposed use of the proceeds therefrom
         (including any refusal by the L/C Issuer to honor a demand for payment
         under a Letter of Credit if the documents presented in connection with
         such demand do not strictly comply with the terms of such Letter of
         Credit), or (iii) any actual or alleged presence or release of
         Hazardous Substances on or from any property currently or formerly
         owned or operated by the Borrower, any Subsidiary of the Borrower, or
         any Environmental Claim related in any way to the Borrower or any
         Subsidiary of the Borrower, or (iv) any actual or prospective claim,
         litigation, investigation or proceeding relating to any of the
         foregoing, whether based on contract, tort or any other theory
         (including any investigation of, preparation for, or defense of any
         pending or threatened claim, investigation, litigation or proceeding)
         and regardless of whether any Indemnitee is a party thereto (all the
         foregoing, collectively, the "Indemnified Liabilities"), in all cases,
         whether or not caused by or arising, in whole or in part, out of the
         negligence of the Indemnitee; provided that such indemnity shall not,
         as to any Indemnitee, be available to the extent that such liabilities,
         obligations, losses, damages, penalties, claims, demands, actions,
         judgments, suits, costs, expenses or disbursements are determined by a

                                       69
<PAGE>

         court of competent jurisdiction by final and nonappealable judgment to
         have resulted from the gross negligence or willful misconduct of such
         Indemnitee. No Indemnitee shall be liable for any damages arising from
         the use by others of any information or other materials obtained
         through IntraLinks or other similar information transmission systems in
         connection with this Credit Agreement, nor shall any Indemnitee have
         any liability for any indirect or consequential damages relating to
         this Credit Agreement or any other Credit Document or arising out of
         its activities in connection herewith or therewith (whether before or
         after the Closing Date). All amounts due under this Section 11.5 shall
         be payable within ten Business Days after demand therefor. The
         agreements in this Section shall survive the resignation of the
         Administrative Agent, the replacement of any Lender, the termination of
         the Commitments and the repayment, satisfaction or discharge of all the
         other Borrower Obligations.

         11.6     Amendments, Waivers and Consents.
                  --------------------------------

         Neither this Credit Agreement nor any other Credit Document nor any of
the terms hereof or thereof may be amended, changed, waived, discharged or
terminated unless such amendment, change, waiver, discharge or termination is in
writing and signed by the Required Lenders and the Borrower; provided that no
such amendment, change, waiver, discharge or termination shall, without the
consent of each Lender directly affected thereby:

                  (a) extend the Maturity Date;

                  (b) reduce the rate or extend the time of payment of interest
         (other than as a result of waiving the applicability of any
         post-default increase in interest rates on the Revolving Loans or fees
         hereunder;

                  (c) reduce or waive the principal amount of any Revolving Loan
         or extend the time of payment thereof;

                  (d) increase or extend the Commitment of a Lender (it being
         understood and agreed that a waiver of any Default or Event of Default
         or a waiver of any mandatory reduction in the Commitments shall not
         constitute a change in the terms of any Commitment of any Lender);

                  (e) release the Borrower from its obligations or consent to
         the assignment or transfer by the Borrower of any of its rights and
         obligations under (or in respect of) the Credit Documents;

                  (f) amend, modify or waive any provision of this Section 11.6
         or Sections 3.7, 3.8, 9.1(a), 11.2, 11.3 or 11.5; or

                  (g) reduce any percentage specified in, or otherwise modify,
         the definition of Required Lenders.

                                       70
<PAGE>

         Notwithstanding the above, (i) no provision of Section 3.4(d) or
Section 10 may be amended or modified without the consent of the Administrative
Agent, (ii) no provision of this Credit Agreement or any other Credit Document
that addresses the rights or obligations of the Administrative Agent may be
amend or modified without prior written consent of the Administrative Agent and
(iii) no provision of Section 2.2 and no other provision of this Credit
Agreement or any other Credit Document that addresses the rights or obligations
of the L/C Issuer may be amended or modified without the prior written consent
of the L/C Issuer.

         Each Lender understands and agrees that if such Lender is a Defaulting
Lender then, notwithstanding the provisions of this Section 11.6, it shall not
be entitled to vote on any matter requiring the consent of the Required Lenders
or to object to any matter requiring the consent of all the Lenders; provided,
however, that all other benefits and obligations under the Credit Documents
shall apply to such Defaulting Lender.

         Notwithstanding the fact that the consent of all the Lenders is
required in certain circumstances as set forth above, (A) each Lender is
entitled to vote as such Lender sees fit on any reorganization plan that affects
the Borrower Obligations, and each Lender acknowledges that the provisions of
Section 1126(c) of the Bankruptcy Code supersede the unanimous consent
provisions set forth herein and (B) the Required Lenders may consent to allow a
Borrower to use cash collateral in the context of a bankruptcy or insolvency
proceeding.

         11.7     Counterparts.
                  ------------

         This Credit Agreement may be executed in any number of counterparts,
each of which when so executed and delivered shall be an original, but all of
which shall constitute one and the same instrument.

         11.8     Headings.
                  --------

         The headings of the sections and subsections hereof are provided for
convenience only and shall not in any way affect the meaning or construction of
any provision of this Credit Agreement.

         11.9     Survival of Indemnification and Representations and
                  ---------------------------------------------------
                  Warranties.
                  ----------

                  (a) Survival of Indemnification. All indemnities set forth
         herein shall survive the execution and delivery of this Credit
         Agreement, the making of any Credit Extension and the repayment of the
         Revolving Loans and other Borrower Obligations and the termination of
         the Commitments hereunder.

                  (b) Survival of Representations and Warranties. All
         representations and warranties made hereunder and in any other Credit
         Document or other document delivered pursuant hereto or thereto or in
         connection herewith or therewith shall survive the execution and
         delivery hereof and thereof. Such representations and warranties have
         been or will be relied upon by the Administrative Agent and each
         Lender, regardless of any investigation made by the Administrative
         Agent or any Lender or on their behalf and notwithstanding that the
         Administrative Agent or any Lender may have had notice or knowledge of
         any Default or Event of Default at the time of any Credit Extension,
         and shall continue in full force and effect as long as any Loan or any
         other Borrower Obligation hereunder shall remain unpaid or unsatisfied
         or any Letter of Credit shall remain outstanding.

                                       71
<PAGE>

         11.10    Governing Law; Service.
                  ----------------------

                  THIS CREDIT AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE
         RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE
         GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS
         OF THE STATE OF NEW YORK (INCLUDING SECTIONS 5-1401 AND 5-1402 OF THE
         NEW YORK GENERAL OBLIGATIONS LAW, BUT EXCLUDING ALL OTHER CHOICE OF LAW
         AND CONFLICTS OF LAW RULES). The Borrower irrevocably consents to the
         service of process in any action or proceeding with respect to this
         Credit Agreement or any other Credit Document by the mailing of copies
         thereof by registered or certified mail, postage prepaid, to it at the
         address for notices pursuant to Section 11.1, such service to become
         effective ten days after such mailing. Nothing herein shall affect the
         right of a Lender to serve process in any other manner permitted by
         Law.

         11.11    Waiver of Jury Trial; Waiver of Consequential Damages.
                  -----------------------------------------------------

         EACH OF THE PARTIES TO THIS CREDIT AGREEMENT HEREBY IRREVOCABLY WAIVES
ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT
OF OR RELATING TO THIS CREDIT AGREEMENT, ANY OF THE OTHER CREDIT DOCUMENTS OR
THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY. Each of the parties to this
Credit Agreement agrees not to assert any claim against any other party hereto,
Administrative Agent, any Lender, any of their Affiliates, or any of their
respective directors, officers, employees, attorneys or agents, on any theory of
liability, for special, indirect, consequential or punitive damages arising out
of or otherwise relating to any of the transactions contemplated herein and in
the other Credit Documents.

         11.12    Severability.
                  ------------

         If any provision of any of the Credit Documents is determined to be
illegal, invalid or unenforceable, such provision shall be fully severable and
the remaining provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or unenforceable
provisions.

         11.13    Further Assurances.
                  ------------------

         The Borrower agrees, upon the request of the Administrative Agent, to
promptly take such actions, as reasonably requested, as is necessary to carry
out the intent of this Credit Agreement and the other Credit Documents.

         11.14    Confidentiality.
                  ---------------

         Each Lender agrees that it will use reasonable efforts to keep
confidential any non-public information from time to time supplied to it under
any Credit Document; provided, however, that nothing herein shall prevent the
disclosure of any such information to (a) the extent a Lender in good faith
believes such disclosure is required by Law or judicial process, (b) counsel for

                                       72
<PAGE>

a Lender or to its accountants, (c) bank examiners or auditors or comparable
Persons, (d) any Affiliate of a Lender, (e) any other Lender, or any assignee,
transferee or Participant, or any potential assignee, transferee or Participant,
of all or any portion of any Lender's rights under this Credit Agreement who is
notified of the confidential nature of such information or (f) any other Person
in connection with (i) any litigation to which any one or more of the Lenders is
a party if required by a court of Law of competent jurisdiction or (ii) any
proceeding to enforce such Lender's rights hereunder, under any other Credit
Document or under any Hedging Agreement. No Lender shall have any obligation
under this Section 11.14 to the extent any such information becomes available on
a non-confidential basis from a source other than a Borrower or that any
information becomes publicly available other than by a breach of this Section
11.14 by any Lender or representative thereof.

         11.15    Entirety.
                  --------

         This Credit Agreement together with the other Credit Documents, the Fee
Letter and any confidentiality agreements between the Borrower and any Lender
represent the entire agreement of the parties hereto and thereto, and supersede
all prior agreements and understandings, oral or written, if any, including any
commitment letters or correspondence relating to the Credit Documents or the
transactions contemplated herein and therein.

         11.16    Binding Effect; Continuing Agreement.
                  ------------------------------------

                  (a) This Credit Agreement shall become effective at such time
         when all of the conditions set forth in Section 5.1 have been satisfied
         or waived by the Lenders and it shall have been executed by the
         Borrower and the Administrative Agent, and the Administrative Agent
         shall have received copies hereof (telefaxed or otherwise) which, when
         taken together, bear the signatures of each Lender, and thereafter this
         Credit Agreement shall be binding upon and inure to the benefit of the
         Borrower, the Administrative Agent and each Lender and their respective
         successors and assigns.

                  (b) This Credit Agreement shall be a continuing agreement and
         shall remain in full force and effect until all Revolving Loans,
         interest, fees and other Borrower Obligations have been paid in full
         and all Letters of Credit and Commitments have been terminated. Upon
         termination, the Borrower shall have no further obligations (other than
         the indemnification provisions and other provisions that by their terms
         survive) under the Credit Documents; provided that should any payment,
         in whole or in part, of the Borrower Obligations be rescinded or
         otherwise required to be restored or returned by the Administrative
         Agent or any Lender, whether as a result of any proceedings in
         bankruptcy or reorganization or otherwise, then the Credit Documents
         shall automatically be reinstated and all amounts required to be
         restored or returned and all costs and expenses incurred by the
         Administrative Agent or any Lender in connection therewith shall be
         deemed included as part of the Borrower Obligations.

                                       73
<PAGE>

         11.17    Regulatory Statement.
                  --------------------

         Pursuant to the terms of an order issued by the New Mexico Public
Regulation Commission, the Borrower is required to include the following
separateness covenants in any debt instrument:

         (a) The Borrower and its corporate parent, PNM Resources, Inc.
("Parent") are being operated as separate corporate and legal entities. In
agreeing to make loans to Parent, Parent's lenders are relying solely on the
creditworthiness of Parent based on the assets owned by Parent, and the
repayment of the loan will be made solely from the assets of Parent and not from
any assets of the Borrower; and the Parent's lenders will not take any steps for
the purpose of procuring the appointment of an administrative receiver or the
making of an administrative order for instituting any bankruptcy,
reorganization, insolvency, wind up or liquidation or any like proceeding under
applicable law in respect of the Borrower.

         (b) Notwithstanding any of the foregoing set forth in this Section
11.17, the Borrower and the Lenders hereby acknowledge and agree that (i) this
Credit Agreement and the Revolving Notes evidence Indebtedness of the Borrower
and not of the Parent, (ii) the Lenders are not, and shall not at any time be
deemed to be, "Parent's lenders" under this Credit Agreement and the Revolving
Notes and the foregoing covenants are therefore wholly inapplicable and
ineffective under the terms of this Credit Agreement and the Revolving Notes,
(iii) as set forth in this Credit Agreement and the Revolving Notes, the
Borrower is responsible for the repayment of all amounts outstanding hereunder,
(iv) the Lenders reserve all rights to pursue any and all remedies available at
law and otherwise (including, without limitation, in bankruptcy) should the
Borrower breach any of the its obligations under this Credit Agreement and/or
the Revolving Notes.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]


                                       74
<PAGE>

         Each of the parties hereto has caused a counterpart of this Credit
Agreement to be duly executed and delivered as of the date first above written.

BORROWER:
--------

                            PUBLIC SERVICE COMPANY OF NEW MEXICO,
                            a New Mexico corporation


                            By:      /s/ T. R. Horn
                               -----------------------------------------------
                            Name:    T. R. Horn
                                 ---------------------------------------------
                            Title:   Vice President and Treasurer
                                  --------------------------------------------




LENDERS:
-------

                             BANK OF AMERICA, N.A.,
                             individually in its capacity as a Lender and in
                             its capacity as Administrative Agent and L/C Issuer


                             By:      /s/ Michelle A. Schoenfeld
                                ----------------------------------------------
                             Name:    Michelle A. Schoenfeld
                                  --------------------------------------------
                             Title:   Principal
                                   -------------------------------------------


                                      S-1
<PAGE>

                                 SCHEDULE 1.1(a)

                                 PRO RATA SHARES
                                 ---------------

-------------------------------------------- ---------------- ---------------
                Lender                          Commitment    Pro Rata Share
-------------------------------------------- ---------------- ---------------

Bank of America, N.A                          $25,000,000.00  12.8205128205%
-------------------------------------------- ---------------- ---------------
Fleet National Bank                            25,000,000.00  12.8205128205%
-------------------------------------------- ---------------- ---------------
Wachovia Bank, National Association            25,000,000.00  12.8205128205%
-------------------------------------------- ---------------- ---------------
Bank of Albuquerque, N.A.                      20,000,000.00  10.2564102564%
-------------------------------------------- ---------------- ---------------
Wells Fargo Bank, National Association         20,000,000.00  10.2564102564%
-------------------------------------------- ---------------- ---------------
JPMorgan Chase Bank                            15,000,000.00   7.6923076923%
-------------------------------------------- ---------------- ---------------
Citibank NA                                    15,000,000.00   7.6923076923%
-------------------------------------------- ---------------- ---------------
Bank of the West                               15,000,000.00   7.6923076923%
-------------------------------------------- ---------------- ---------------
Compass Bank                                   15,000,000.00   7.6923076923%
-------------------------------------------- ---------------- ---------------
Mellon Bank, N.A.                              10,000,000.00   5.1282051282%
-------------------------------------------- ---------------- ---------------
Morgan Stanley Bank                            10,000,000.00   5.1282051282%
-------------------------------------------- ---------------- ---------------
                                     Total:  $195,000,000.00       100%
-------------------------------------------- ---------------- ---------------


<PAGE>

                                 SCHEDULE 1.1(c)

                           EXISTING LETTERS OF CREDIT
                           --------------------------

ISSUER: JP Morgan Chase Bank


$3,000,000.0      Expiration Date: January 4, 2003   L/C No. P-360138
---------------------------------------------------------------------

Beneficiary:      The California Power Exchange Corporation
                  200 South Los Robles Ste 400
                  Pasadena, California 91011-2482

$500,000.00       Expiration Date: March 11, 2003    L/C No. P-227635
---------------------------------------------------------------------

Beneficiary:      California Independent System Operator Corporation
                  Blue Raven Road
                  Folsom, California 95630



<PAGE>

                                  SCHEDULE 6.18

                                 MATERIAL LEASES
                                 ---------------
                                     Page 1


<TABLE>
<CAPTION>
         Description                                               Expiration         Annual Rent
         -----------                                               ----------         -----------

Palo Verde Unit 1

<S>                                                                <C>             <C>
Facility Lease dated as of  December 16, 1985 between              1/15/2015       $  5,580,122.54
PNM and State Street Bank and Trust Company,( as successor
to The First National Bank of Boston), as Owner Trustee under
a Trust Agreement dated as of  December 16, 1985, with MFS
Leasing Corp. as Owner Participant, as amended.

Facility Lease dated as of  December 16, 1985 between              1/15/2015       $ 15,693,862.76
PNM and State Street Bank and Trust Company, (as successor
to The First National Bank of Boston), as Owner Trustee under
a Trust Agreement dated as of  December 16, 1985, with Daimler
Chrysler Services North America LLC (as successor to Chrysler
Financial Corporation), as Owner Participant, as amended.

Facility Lease dated as of  December 15, 1986 between              1/15/2015       $  4,757,769.00
PNM and State Street Bank and Trust Company, (as successor
to The First National Bank of Boston), as Owner Trustee under
a Trust Agreement dated as of  December 15, 1986, with Palo
Verde 1- PNM [December 75] Corporation (successor-in-interest
to  Chase Manhattan Realty Leasing Corporation), as Owner
Participant (Unit 1), as amended.

Facility Lease dated as of July 31, 1986 between                   1/15/2015       $  6,974,313.00
PNM and State Street Bank and Trust Company, (as successor
to The First National Bank of Boston), as Owner Trustee under
a Trust Agreement dated as of July 31, 1986, with Palo
Verde 1- PNM [August 50] Corporation (successor-in-interest
to  Chase Manhattan Realty Leasing Corporation), as Owner
Participant  (Unit 1), as amended.


Total - Unit 1                                                                     $ 33,006.067.10

</TABLE>

<PAGE>


                                  SCHEDULE 6.18
                                 MATERIAL LEASES
                                 ---------------
                                     Page 2

<TABLE>
<CAPTION>
         Description                                                  Expiration         Annual Rent
         -----------                                                  ----------         -----------

Palo Verde Unit 2

<S>                                                                    <C>            <C>
Facility Lease dated as of August  12, 1986 between                    1/15/2016      $  5,742,060.00
PNM and State Street Bank and Trust Company,( as successor
to The First National Bank of Boston), as Owner Trustee under
a Trust Agreement dated as of  August 12, 1986, with MFS
Leasing Corp. as Owner Participant, as amended.

Facility Lease dated as of August 12,  1986 between                    1/15/2016      $  9,958,478.04
PNM and State Street Bank and Trust Company, (as successor
to The First National Bank of Boston), as Owner Trustee under
a Trust Agreement dated as of August 12, 1986, with CGI
Capital, Inc., as Owner Participant, as amended.

Facility Lease dated as of August 12, 1986 between                     1/15/2016      $  9,569,653.00
PNM and State Street Bank and Trust Company, (as successor
to The First National Bank of Boston), as Owner Trustee under
a Trust Agreement dated as of August 12, 1986, with Palo Verde
Leasing Corporation (successor-in-interest to First Chicago Lease
Holdings, Inc.) as Owner Participant, as amended.

Facility Lease dated as of August 12, 1986 between                     1/15/2016      $  4,743,012.00
PNM and State Street Bank and Trust Company, (as successor
to The First National Bank of Boston), as Owner Trustee under
a Trust Agreement dated as of August 12, 1986, with  MFS
(successor-in-interest to Beneficial Leasing Group, Inc.),
as Owner Participant, as amended.

Facility Lease dated as of December 15, 1986 between                   1/15/2016      $  3,272,560.40
PNM and State Street Bank and Trust Company, (as successor
to The First National Bank of Boston), as Owner Trustee under
a Trust Agreement dated as of December 15, 1986, with Palo
Verde 2- PNM [December 35] Corporation (successor-in-interest
to  Chase Manhattan Realty Leasing Corporation), as Owner
Participant  (Unit 2), as amended.


Total - Unit 2                                                                        $ 33,285.763.44
</TABLE>

<PAGE>


                                  SCHEDULE 6.18
                                 MATERIAL LEASES
                                 ---------------
                                     Page 3


<TABLE>
<CAPTION>
         Description                                       Expiration            Annual Rent
         -----------                                       ----------            -----------

Eastern Interconnection Project (EIP)

<S>                                                         <C>               <C>
Amended and Restated Lease dated as of September 1,         4/1/2015          $  4,009,766.52*
1993, between PNM as Lessee, and  State Street Bank                           $  4,487,119.64
and Trust Company,( as successor to The First National
Bank of Boston), as Owner Trustee under a Trust
Agreement dated as of January 2, 1985, with DCC
Project Finance Two, Inc., as Lessor.

Amended and Restated Lease dated as of September 1,         4/1/2015          $  2,675,739.30*
1993, between PNM as Lessee, and  State Street Bank                           $  2,844,913.50
and Trust Company,( as successor to The First National
Bank of Boston), as Owner Trustee under a Trust
Agreement dated as of January 2, 1985, with General
Foods Credit Corporation, as Lessor.

Total EIP                                                                     $ 6, 685,505.82*
                                                                              $  7,332,033.14

                                                                                  * 1994 Only

</TABLE>



<PAGE>

                                  SCHEDULE 6.19

               MATERIAL LEASE INTEREST PAYMENTS AND DISCOUNT RATE


<PAGE>

                                  Schedule 11.1

                                     Notices
                                     -------

PUBLIC SERVICE COMPANY OF NEW MEXICO:

Public Service Company of New Mexico
414 Silver Avenue, MS 2702
Albuquerque, NM 87102
Attention:  Kirk Meyer
Telephone:  505-241-4529
Facsimile:  505-241-2369
Electronic Mail:  kmeyer@pnm.com

ADMINISTRATIVE AGENT:

Administrative Agent's Office
-----------------------------
(for payments and Requests for Credit Extensions):
Bank of America, N.A.
Bank of America Plaza
901 Main St., 14th Floor
Mail Code:  TX1-492-14-14
Dallas, TX 75202-3714
Attention:  Charlotte A. Conn
Telephone: 214.209.3606
Facsimile: 214.290.9653
Electronic Mail:  charlotte.a.conn@bankofamerica.com
Account No.:  1292000883
Ref:  Public Service Co of New Mexico
ABA# 111000012


Other Notices as Administrative Agent:
-------------------------------------
Bank of America, N.A.
Agency Management
Bank of America Plaza
901 Main St., 14th Floor
Mail Code:  TX1-492-14-11
Dallas, TX 75202-3714
Attention:  Ramon Garcia
Telephone: 214.209.4126
Facsimile: 214.290.9520
Electronic Mail:  ramon.garcia@bankofamerica.com


<PAGE>

L/C ISSUER:

Bank of America, N.A.
Trade Operations-Los Angeles #22621
333 S. Beaudry Avenue, 19th Floor
Mail Code:  CA9-703-19-23
Los Angeles, CA 90017-1466
Attention:        Sandra Leon
                  Vice President
Telephone:  213.345.5231
Facsimile:  213.345.6694
Electronic Mail:  Sandra.Leon@bankofamerica.com


LENDERS:

Bank of America, N.A.
Bank of America Corporate Center
100 N. Tryon Street, 16th Floor
Charlotte, NC  28255
Attn:  Michelle A. Schoenfeld
Telephone:  704.386.1432
Facsimile:  704.386.1319
Electronic Mail:  michelle.a.schoenfeld@bankofamerica.com

Bank of Albuquerque, N.A.
201 Third Street NW, Suite 1400
Albuquerque, NM  87102
Attn:  Richard W. Burdick
Telephone:  505.222.8441
Facsimile:  505.222.8481
Electronic Mail:  rburdick@bokf.com


Mellon Bank, N.A.
One Mellon Center
Room 151-4530
Pittsburgh, PA  15258
Attn:  Mark W. Rogers
Telephone:  412-234-1888
Facsimile:  412-236-1840
Electronic Mail:  rogers.mw@mellon.com


<PAGE>


Morgan Stanley Bank
750 Seventh Avenue, 11th Floor
New York, NY  10020
Attn:  Joseph DiTomaso
Telephone:  212-537-1470
Facsimile:  212-537-1867/1866
Electronic Mail:  Joseph.DiTomaso@morganstanley.com


Compass Bank
2444 Louisiana Blvd., NE
Suite 200
Albuquerque, NM  87110
Attn:  Abran C. Villegas
Telephone:  505-888-9038
Facsimile:  505-888-9176
Electronic Mail:  abran.villegas@compassbnk.com


Citibank NA
388 Greenwich Street, 23rd Floor
New York, NY  10013
Attn:  Stuart Glen
Telephone:  212-816-8553
Facsimile:  TBD
Electronic Mail:  Stuart.j.glen@citigroup.com


Fleet National Bank
Energy/Utilities, MA, DE 10009H
100 Federal Street
Boston, MA  02110
Attn:  Stephen Hoffman
Telephone:  617-434-6520
Facsimile:  617-434-3652
Electronic Mail:  stephen_j_hoffman@fleet.com
                  ---------------------------


Bank of the West
500 Marquette NW, 14th Floor
Albuquerque, NM  87102
Attn:  J. Chesley Steel
Telephone:  505-843-9180
Facsimile:  505-843-9164
Electronic Mail:  csteel@bankofthewest.com


<PAGE>


Wells Fargo Bank, N.A.
200 Lomas Blvd. NW
MAC Q2129-013
Albuquerque, NM  87102
Attn:  Richard A. Zeigner
Telephone:  505-766-6239
Facsimile:  505-247-4639
Electronic Mail:  ziegnerr@wellsfargo.com


Wachovia Bank, National Association
301 S. College Street
Charlotte, NC  28288
Attn:  Joe Dancy
Telephone:  704-383-4748
Facsimile:  704-374-2570
Electronic Mail:  Joe.dancy@wachovia.com


JPMorgan Chase Bank
270 Park Avenue, 4th Floor
New York, NY  10017
Attn:  Thomas Hou
Telephone:  212-270-6072
Facsimile:  212-270-3089
Electronic Mail:  Thomas.Hou@jpmorgan.com




<PAGE>


                                 EXHIBIT 2.1(b)



                                     FORM OF
                               NOTICE OF BORROWING
                               -------------------


TO:           BANK OF AMERICA, N.A., as Administrative Agent

RE:           Credit Agreement dated as of December 19, 2002 among Public
              Service Company of New Mexico (the "Borrower"), Bank of America,
              N.A., as Administrative Agent, and the Lenders identified
              therein (as the same may be amended, modified, extended or
              restated from time to time, the "Credit Agreement")

DATE:         _____________, ______


1.       This Notice of Borrowing is made pursuant to the terms of the Credit
         Agreement. All capitalized terms used herein unless otherwise defined
         shall have the meanings set forth in the Credit Agreement.

2.       Please be advised that the Borrower is requesting Revolving Loans on
         the terms set forth below:

                  (a)      Principal amount of requested
                           Revolving Loans                $___________________

                  (b)      Date of requested Revolving
                           Loans                           ___________________

                  (c)      Interest rate applicable to the
                           requested Revolving Loans:

                           (i)      ________Base Rate

                           (ii)     ________Adjusted Eurodollar Rate for an
                                            Interest Period of:

                                                     ________ one month
                                                     ________ two months
                                                     ________ three months
                                                     ________ six months

3.       Subsequent to the funding of the requested Revolving Loan, the
         aggregate amount of Revolving Loans outstanding plus the aggregate
         amount of L/C Obligations outstanding will be $________________ which
         is less than or equal the Revolving Committed Amount.


<PAGE>

4.       The representations and warranties made by the Borrower in any Credit
         Document are true and correct in all material respects at and as if
         made on the date of the requested Revolving Loans except to the extent
         they expressly relate to an earlier date.

5.       No Default or Event of Default exists or shall be continuing either
         prior to or after giving effect to the Revolving Loans made pursuant to
         this Notice of Borrowing.


                                       PUBLIC SERVICE COMPANY OF NEW MEXICO,
                                       a New Mexico corporation


                                       By:
                                          ----------------------------------
                                       Name:
                                            --------------------------------
                                       Title:
                                             -------------------------------

<PAGE>


                                 Exhibit 2.1(e)



                                     FORM OF
                                 REVOLVING NOTE
                                 --------------


Lender:  ______________                                    _____________, 2002


         FOR VALUE RECEIVED, PUBLIC SERVICE COMPANY OF NEW MEXICO, a New Mexico
corporation (the "Borrower"), hereby promises to pay to the order of the Lender
referenced above (the "Lender"), at the Administrative Agent's Office set forth
in that certain Credit Agreement dated as of December 19, 2002 (as amended,
modified, extended or restated from time to time, the "Credit Agreement") among
the Borrower, the Lenders party thereto (including the Lender) and Bank of
America, N.A., as Administrative Agent (the "Administrative Agent") (or at such
other place or places as the holder of this Revolving Note may designate), the
aggregate unpaid principal amount of the Revolving Loans made by the Lender to
the Borrower under the Credit Agreement, in lawful money and in immediately
available funds, on the dates and in the principal amounts provided in the
Credit Agreement, and to pay interest on the unpaid principal amount of each
Revolving Loan made by the Lender, at such office, in like money and funds, for
the period commencing on the date of each Revolving Loan until each Revolving
Loan shall be paid in full, at the rates per annum and on the dates provided in
the Credit Agreement.

         This Note is one of the Revolving Notes referred to in the Credit
Agreement and evidences Revolving Loans made by the Lender thereunder.
Capitalized terms used in this Revolving Note have the respective meanings
assigned to them in the Credit Agreement and the terms and conditions of the
Credit Agreement are expressly incorporated herein and made a part hereof.

         The Credit Agreement provides for the acceleration of the maturity of
the Revolving Loans evidenced by this Revolving Note upon the occurrence of
certain events (and for payment of collection costs in connection therewith) and
for prepayments of Revolving Loans upon the terms and conditions specified
therein. In the event this Revolving Note is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to principal and
interest, all costs of collection, including reasonable attorney fees.

         The date, amount, type, interest rate and duration of Interest Period
(if applicable) of each Revolving Loan made by the Lender to the Borrower, and
each payment made on account of the principal thereof, shall be recorded by the
Lender on its books; provided that the failure of the Lender to make any such
recordation or endorsement shall not affect the obligations of the Borrower to
make a payment when due of any amount owing under the Credit Agreement or under
this Revolving Note in respect of the Revolving Loans to be evidenced by this
Revolving Note, and each such recordation or endorsement shall be prima facie
evidence of such information, absent manifest error.

         Except as permitted by Section 11.3(b) of the Credit Agreement, this
Revolving Note may not be assigned by the Lender to any other Person.


<PAGE>


   THIS REVOLVING NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
                       THE LAWS OF THE STATE OF NEW YORK.

         IN WITNESS WHEREOF, the Borrower has caused this Revolving Note to be
executed as of the date first above written.


                                          PUBLIC SERVICE COMPANY OF NEW MEXICO,
                                          a New Mexico corporation


                                          By:
                                             ---------------------------------
                                          Name:
                                               -------------------------------
                                          Title:
                                                ------------------------------




<PAGE>


                                   EXHIBIT 2.3

                    FORM OF NOTICE OF CONTINUATION/CONVERSION
                    -----------------------------------------

TO:         BANK OF AMERICA, N.A., as Administrative Agent

RE:         Credit Agreement dated as of December 19, 2002 among Public Service
            Company of New Mexico (the "Borrower"), Bank of America, N.A., as
            Administrative Agent, and the Lenders named therein (as the same may
            be amended, modified, extended or restated from time to time, the
            "Credit Agreement")

DATE:       _____________, 200_

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

1.       This Notice of Continuation/Conversion is made pursuant to the terms of
         the Credit Agreement. All capitalized terms used herein unless
         otherwise defined shall have the meanings set forth in the Credit
         Agreement.

2.       Please be advised that the Borrower is requesting that a portion of the
         current outstanding Revolving Loans in the amount of $ currently
         accruing interest at
         be extended or converted as of _____________, 200__ at the interest
         rate option set forth in paragraph 3 below.

3.       The interest rate option applicable to the extension or conversion of
         all or part of the existing Revolving Loans (as set forth above) shall
         be:

         a. ________ the Base Rate

         b. ________ the Adjusted Eurodollar Rate for an Interest Period of:

                                    ________ one month
                                    ________ two months
                                    ________ three months
                                    ________ six months

4.       As of the date hereof, no Default or Event of Default has occurred and
         is continuing.


                                          PUBLIC SERVICE COMPANY OF NEW MEXICO,
                                          a New Mexico corporation


                                          By:
                                             ---------------------------------
                                          Name:
                                               -------------------------------
                                          Title:
                                                ------------------------------


<PAGE>

                                 EXHIBIT 7.1(c)


                                     FORM OF
                             COMPLIANCE CERTIFICATE
                             ----------------------



TO:           BANK OF AMERICA, N.A., as Administrative Agent

RE:           Credit Agreement dated as of December 19, 2002 among Public
              Service Company of New Mexico (the "Borrower"), Bank of America,
              N.A. as Administrative Agent, and the Lenders named therein (as
              the same may be amended, modified, extended or restated from time
              to time, the "Credit Agreement")

DATE:         _____________, 200__

________________________________________________________________________________


         Pursuant to the terms of the Credit Agreement, I, ______________, Chief
Financial Officer of Public Service Company of New Mexico, hereby certify on
behalf of the Borrower that, as of the quarter ending ________, 200__, the
statements below are accurate and complete in all respects (all capitalized
terms used below shall have the meanings set forth in the Credit Agreement):

                  a. Attached hereto as Schedule 1 are calculations (calculated
         as of the date of the financial statements referred to in paragraph c.
         below) demonstrating compliance by the Borrower with the financial
         covenants contained in Section 7.2 of the Credit Agreement.

                  b. No Default or Event of Default exists under the Credit
         Agreement, except as indicated on a separate page attached hereto,
         together with an explanation of the action taken or proposed to be
         taken by the Borrower with respect thereto.



<PAGE>


                  c. The quarterly/annual financial statements for the fiscal
         quarter/year ended __________, 200__ which accompany this certificate
         fairly present in all material respects the financial condition of the
         Borrower and its Subsidiaries and have been prepared in accordance with
         GAAP, subject to changes resulting from normal year-end audit
         adjustments and except that the quarterly financial statements have
         fewer footnotes than annual statements.

                                          PUBLIC SERVICE COMPANY OF NEW MEXICO,
                                          a New Mexico corporation


                                          By:
                                             ---------------------------------
                                          Name:
                                               -------------------------------
                                          Title:
                                                ------------------------------



<PAGE>


                      SCHEDULE 1 TO COMPLIANCE CERTIFICATE
                      ------------------------------------



         A.       Compliance with Section 7.2(a):
                  Debt to Capitalization
                  ----------------------

                  1. Consolidated Indebtedness*                   $___________

                  2. Consolidated Capitalization*                 $___________
                  3. Debt to Capitalization Ratio
                           (Line 1 / Line 2)                       _____:_____

                  Maximum Allowed:  Line A.3 shall be less than
                             or equal to 0.65 to 1.0

         B.       Compliance with Section 7.2(b):
                  Interest Coverage Ratio
                  -----------------------

                  1.       Consolidated EBITDA
                           (See Exhibit A attached hereto)        $___________

                  2.       Consolidated Interest Expense          $___________
                  3.       Interest Coverage Ratio
                           (Line 1 / Line 2)                       _____:_____

                  Minimum Required: Line B.3 shall be greater than
                                    or equal to 3.00 to 1.0



__________________
* For purposes of such calculation, the portion of Consolidated Indebtedness
attributable to obligations under Material Leases shall be the net present value
(using (i) the discount rate (A) set forth in Schedule 6.19 of the Credit
Agreement, so long as such Schedule 6.19 specifies the same relevant discount
rate as is used in calculating such net present value provided to Moody's and
S&P or (B) the discount rate used in calculating such net present value provided
to Moody's and S&P or (ii) any such other rate as shall be proposed by the
Borrower (and agreed upon by the Required Lenders) of all amounts payable under
the Material Leases.

<PAGE>

                                    Exhibit A
                                  to Schedule 1
                                to Exhibit 7.2(a)


                 Calculation Schedule to Compliance Certificate
                            As of __________________


------------------------ ---------- --------- ---------- ---------- ----------
                           Twelve
                           Months    Quarter   Quarter     Quarter   Quarter
Consolidated EBITDA        Ended      Ended     Ended       Ended     Ended
                          --------  --------   --------   --------   --------
------------------------ ---------- --------- ---------- ---------- ----------
Consolidated Net Income
------------------------ ---------- --------- ---------- ---------- ----------
+ Extraordinary Losses
------------------------ ---------- --------- ---------- ---------- ----------
- Extraordinary Gains
------------------------ ---------- --------- ---------- ---------- ----------
+ Consolidated Interest
  Expense
------------------------ ---------- --------- ---------- ---------- ----------
+ Taxes
------------------------ ---------- --------- ---------- ---------- ----------
+ Depreciation
------------------------ ---------- --------- ---------- ---------- ----------
+ Amortization
------------------------ ---------- --------- ---------- ---------- ----------
+ Other Non-Cash Losses
------------------------ ---------- --------- ---------- ---------- ----------
- Other Non-Cash Gains
------------------------ ---------- --------- ---------- ---------- ----------
= Consolidated EBITDA
------------------------ ---------- --------- ---------- ---------- ----------



<PAGE>

                                 Exhibit 11.3(b)



                                     FORM OF
                            ASSIGNMENT AND ASSUMPTION
                            -------------------------

         This Assignment and Assumption (the "Assignment and Assumption") is
dated as of the Effective Date set forth below and is entered into by and
between ______________ (the "Assignor") and _______________________ (the
"Assignee"). Capitalized terms used but not defined herein shall have the
meanings given to them in the Credit Agreement identified below (as amended, the
"Credit Agreement"), receipt of a copy of which is hereby acknowledged by the
Assignee. The Standard Terms and Conditions set forth in Schedule 1 attached
hereto (the "Standard Terms and Conditions") are hereby agreed to and
incorporated herein by reference and made a part of this Assignment and
Assumption as if set forth herein in full.

         For an agreed consideration, the Assignor hereby irrevocably sells and
assigns to the Assignee, and the Assignee hereby irrevocably purchases and
assumes from the Assignor, subject to and in accordance with the Standard Terms
and Conditions and the Credit Agreement, as of the Effective Date inserted by
the Administrative Agent as contemplated below (a) all of the Assignor's rights
and obligations in its capacity as a Lender under the Credit Agreement and any
other documents or instruments delivered pursuant thereto to the extent related
to the amount and percentage interest identified below of all of such
outstanding rights and obligations of the Assignor under the respective
facilities identified below (including without limitation any Letters of Credit,
guarantees, and swingline loans included in such facilities) and (b) to the
extent permitted to be assigned under applicable law, all claims, suits, causes
of action and any other right of the Assignor (in its capacity as a Lender)
against any Person, whether known or unknown, arising under or in connection
with the Credit Agreement, any other documents or instruments delivered pursuant
thereto or the loan transactions governed thereby or in any way based on or
related to any of the foregoing, including, but not limited to, contract claims,
tort claims, malpractice claims, statutory claims and all other claims at law or
in equity related to the rights and obligations sold and assigned pursuant to
clause (a) above (the rights and obligations sold and assigned pursuant to
clauses (a) and (b) above being referred to herein collectively as, the
"Assigned Interest"). Such sale and assignment is without recourse to the
Assignor and, except as expressly provided in this Assignment and Assumption,
without representation or warranty by the Assignor.

1.       Assignor:                   ______________________________

2.       Assignee:                   ______________________________
                                     and is an Affiliate/Approved Fund
                                     of _________________

3.                                   Borrower: Public Service Company of
                                     New Mexico

4.       Administrative Agent:       Bank of America, N.A. as the Administrative
                                     Agent under the Credit Agreement

5.                                   Credit Agreement: Credit Agreement
                                     dated as of December 19, 2002 among
                                     Public Service Company of New
                                     Mexico, as Borrower, the Lenders
                                     party thereto and Bank of America,
                                     N.A., as Administrative Agent for
                                     the Lenders

6.                                   Assigned Interest:


<PAGE>

   ------------------------ -------------------------- ----------------------
      Aggregate Amount of   Amount of Commitment/Loans Percentage Assigned of
   Commitment/Loans for all          Assigned             Commitment/Loans
            Lenders
   ------------------------ -------------------------- ----------------------
   $                        $                                    %
   ------------------------ -------------------------- ----------------------

7.       After giving effect to the foregoing assignment, the Assignor and the
Assignee shall have the following Commitments, Pro Rata Shares, outstanding
Loans and Participation Interests:

----------- ------------ -------------- ----------------- -------------------
            Commitments  Pro Rata Share   Outstanding       Participation
                                           Revolving         Interests in
                                             Loans        Letters of Credit
----------- ------------ -------------- ----------------- -------------------
Assignor
----------- ------------ -------------- ----------------- -------------------
Assignee
----------- ------------ -------------- ----------------- -------------------

8.      Trade Date: ______________

Effective Date:   _____________ ___, 200__

The terms set forth in this Assignment and Assumption are hereby agreed to:

                                    ASSIGNOR
                                    --------

                                    [NAME OF ASSIGNOR]

                                    By:
                                       -----------------------------------------
                                    Name:
                                         ---------------------------------------
                                    Title:
                                          --------------------------------------

                                    ASSIGNEE
                                    --------

                                    [NAME OF ASSIGNEE]

                                    By:
                                       -----------------------------------------
                                    Name:
                                         ---------------------------------------
                                    Title:
                                          --------------------------------------


Consented to and Accepted:

BANK OF AMERICA, N.A.,
as Administrative Agent and L/C Issuer

By:
   -----------------------------------------
Name:
     ---------------------------------------
Title:
      --------------------------------------



<PAGE>


Consented to:

PUBLIC SERVICE COMPANY OF NEW MEXICO

By:
   -----------------------------------------
Name:
     ---------------------------------------
Title:
      --------------------------------------

<PAGE>


                                    Schedule1

                            TERMS AND CONDITIONS FOR
                            ASSIGNMENT AND ASSUMPTION

         1.       Representations and Warranties.

                  1.1 Assignor. The Assignor (a) represents and warrants that
         (i) it is the legal and beneficial owner of the Assigned Interest, (ii)
         the Assigned Interest is free and clear of any lien, encumbrance or
         other adverse claim and (iii) it has full power and authority, and has
         taken all action necessary, to execute and deliver this Assignment and
         Assumption and to consummate the transactions contemplated hereby; and
         (b) assumes no responsibility with respect to (i) any statements,
         warranties or representations made in or in connection with the Credit
         Agreement or any other Credit Document, (ii) the execution, legality,
         validity, enforceability, genuineness, sufficiency or value of the
         Credit Documents or any collateral thereunder, (iii) the financial
         condition of the Borrower, any of its Subsidiaries or Affiliates or any
         other Person obligated in respect of any Credit Document or (iv) the
         performance or observance by the Borrower, any of its Subsidiaries or
         Affiliates or any other Person of any of their respective obligations
         under any Credit Document.

                  1.2. Assignee. The Assignee (a) represents and warrants that
         (i) it has full power and authority, and has taken all action
         necessary, to execute and deliver this Assignment and Assumption and to
         consummate the transactions contemplated hereby and to become a Lender
         under the Credit Agreement, (ii) it meets all requirements of an
         Eligible Assignee under the Credit Agreement (subject to receipt of
         such consents as may be required under the Credit Agreement), (iii)
         from and after the Effective Date, it shall be bound by the provisions
         of the Credit Agreement as a Lender thereunder and, to the extent of
         the Assigned Interest, shall have the obligations of a Lender
         thereunder, (iv) it has received a copy of the Credit Agreement,
         together with copies of the most recent financial statements delivered
         pursuant to Section 7.1 thereof, as applicable, and such other
         documents and information as it has deemed appropriate to make its own
         credit analysis and decision to enter into this Assignment and
         Assumption and to purchase the Assigned Interest on the basis of which
         it has made such analysis and decision independently and without
         reliance on the Administrative Agent or any other Lender, and (v) if it
         is a foreign lender, attached to the Assignment and Assumption is any
         documentation required to be delivered by it pursuant to the terms of
         the Credit Agreement, duly completed and executed by the Assignee; and
         (b) agrees that (i) it will, independently and without reliance on the
         Administrative Agent, the Assignor 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 decisions in taking or not taking
         action under the Credit Documents, and (ii) it will perform in
         accordance with their terms all of the obligations which by the terms
         of the Credit Documents are required to be performed by it as a Lender.

         2. Payments. From and after the Effective Date, the Administrative
Agent shall make all payments in respect of the Assigned Interest (including
payments of principal, interest, fees and other amounts) to the Assignor for
amounts which have accrued to but excluding the Effective Date and to the
Assignee for amounts which have accrued from and after the Effective Date.


<PAGE>

         3. General Provisions. This Assignment and Assumption shall be binding
upon, and inure to the benefit of, the parties hereto and their respective
successors and assigns. This Assignment and Assumption may be executed in any
number of counterparts, which together shall constitute one instrument. Delivery
of an executed counterpart of a signature page of this Assignment and Assumption
by telecopy shall be effective as delivery of a manually executed counterpart of
this Assignment and Assumption. This Assignment and Assumption shall be governed
by, and construed in accordance with, the law of the State of New York.