Document:

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                                                               EXHIBIT 10(pp)(1)

                                [TEXASGENCO LOGO]

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                                CREDIT AGREEMENT

                                      among

                           TEXAS GENCO HOLDINGS, INC.,

                              TEXAS GENCO GP, LLC,

                              TEXAS GENCO LP, LLC,

                            TEXAS GENCO SERVICES, LP,

                                TEXAS GENCO, LP,

                                VARIOUS LENDERS,

                        DEUTSCHE BANK AG NEW YORK BRANCH,

                  as Administrative Agent and Collateral Agent

                                       and

                                  COMPASS BANK,

                             as Documentation Agent

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

                          Dated as of December 23, 2003

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

                                   $75,000,000

                         DEUTSCHE BANK SECURITIES INC.,

                        as LEAD ARRANGER and BOOK RUNNER

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[DEUTSCHE BANK LOGO]                                         [COMPASS BANK LOGO]

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                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                       Page
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<S>                                                                                                    <C>
SECTION 1.        Amount and Terms of Credit.....................................................        1

         1.01     The Commitments................................................................        1
         1.02     Minimum Amount of Each Borrowing...............................................        1
         1.03     Notice of Borrowing............................................................        1
         1.04     Disbursement of Funds..........................................................        2
         1.05     Revolving Notes................................................................        3
         1.06     Conversions....................................................................        3
         1.07     Pro Rata Borrowings............................................................        4
         1.08     Interest.......................................................................        4
         1.09     Interest Periods...............................................................        5
         1.10     Increased Costs, Illegality, etc...............................................        6
         1.11     Compensation...................................................................        8
         1.12     Change of Lending Office.......................................................        8
         1.13     Replacement of Lenders.........................................................        8
         1.14     Recommitment; Replacement of Non-Continuing Lender.............................        9

SECTION 2.        Letters of Credit..............................................................       10

         2.01     Letters of Credit..............................................................       10
         2.02     Minimum Stated Amount..........................................................       11
         2.03     Letter of Credit Requests......................................................       11
         2.04     Letter of Credit Participations................................................       11
         2.05     Agreement to Repay Letter of Credit Drawings...................................       13
         2.06     Increased Costs................................................................       14

SECTION 3.        Commitment Commission; Fees; Reductions of Commitment..........................       15

         3.01     Fees...........................................................................       15
         3.02     Optional Commitment Reductions.................................................       16
         3.03     Mandatory Reduction of Commitments.............................................       16

SECTION 4.        Prepayments; Payments; Taxes...................................................       16

         4.01     Voluntary Prepayments..........................................................       16
         4.02     Mandatory Repayments and Cash Collateralizations...............................       17
         4.03     Method and Place of Payment....................................................       18
         4.04     Net Payments...................................................................       18

SECTION 5.        Conditions Precedent to the Effective Date.....................................       20

         5.01     Execution of Agreement; Revolving Notes........................................       20
         5.02     Officer's Certificate..........................................................       20
         5.03     Opinions of Counsel............................................................       20
         5.04     Corporate Documents; Proceedings; etc..........................................       20
</TABLE>

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<TABLE>
<S>                                                                                                    <C>
         5.05     Security Documents.............................................................       21
         5.06     Guaranties.....................................................................       21
         5.07     Adverse Change; Governmental and Third Party Approvals; etc....................       22
         5.08     Litigation.....................................................................       22
         5.09     Financial Statements; Projections..............................................       22
         5.10     Fees, etc......................................................................       23
         5.11     Insurance......................................................................       23

SECTION 6.        Conditions Precedent to All Credit Events......................................       23

         6.01     Effective Date.................................................................       23
         6.02     No Default; Representations and Warranties.....................................       23
         6.03     Notice of Borrowing; Letter of Credit Request..................................       23

SECTION 7.        Representations, Warranties and Agreements.....................................       23

         7.01     Corporate Status...............................................................       24
         7.02     Corporate Power and Authority..................................................       24
         7.03     No Violation...................................................................       24
         7.04     Governmental Approvals.........................................................       25
         7.05     Financial Statements; Financial Condition......................................       25
         7.06     Litigation.....................................................................       25
         7.07     True and Complete Disclosure...................................................       25
         7.08     Use of Proceeds; Margin Regulations............................................       26
         7.09     Tax Returns and Payments.......................................................       26
         7.10     Compliance with ERISA..........................................................       26
         7.11     Solvency.......................................................................       27
         7.12     Security Documents.............................................................       27
         7.13     Compliance with Statutes, etc..................................................       27
         7.14     Investment Company Act.........................................................       27
         7.15     Environmental Matters..........................................................       27
         7.16     Existing Indebtedness..........................................................       28

SECTION 8.        Affirmative Covenants..........................................................       28

         8.01     Information Covenants..........................................................       28
         8.02     Keeping of Books...............................................................       30
         8.03     Maintenance of Insurance.......................................................       30
         8.04     Preservation of Existence, Etc.................................................       30
         8.05     Maintenance of Properties, Etc.................................................       31
         8.06     Maintenance of Existing Business...............................................       31
         8.07     Compliance with Statutes, etc..................................................       31
         8.08     Visitation Rights..............................................................       31
         8.09     Use of Proceeds................................................................       32
         8.10     Payment of Taxes...............................................................       32
         8.11     Further Assurances.............................................................       32
         8.12     Future Guarantors..............................................................       32
</TABLE>

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<TABLE>
<S>                                                                                                    <C>
SECTION 9.        Negative Covenants.............................................................       32

         9.01     Liens..........................................................................       32
         9.02     Consolidation, Mergers or Disposal of Assets...................................       33
         9.03     Accounting Changes.............................................................       33
         9.04     Restrictions on Dividends, Intercompany Loans, or Investments..................       33
         9.05     Affiliate Transactions.........................................................       34
         9.06     Payments on Preferred Stock....................................................       35
         9.07     Use of Proceeds; Regulation U..................................................       35
         9.08     Maximum Total Debt for Borrowed Money to Consolidated Capitalization Ratio.....       35
         9.09     Minimum EBITDA to Cash Interest Ratio..........................................       35

SECTION 10.       Events of Default..............................................................       35

         10.01    Payment........................................................................       36
         10.02    Representations, etc...........................................................       36
         10.03    Covenants......................................................................       36
         10.04    Default Under Other Agreements.................................................       36
         10.05    Bankruptcy, etc................................................................       36
         10.06    Judgments......................................................................       37
         10.07    Non-Monetary Judgments.........................................................       37
         10.08    Change of Control..............................................................       37
         10.09    ERISA..........................................................................       37
         10.10    Security Documents.............................................................       37
         10.11    Guaranty.......................................................................       38

SECTION 11.       Definitions and Accounting Terms...............................................       38

         11.01    Defined Terms..................................................................       38
         11.02    Accounting Terms...............................................................       57

SECTION 12.       The Agents.....................................................................       58

         12.01    Appointment....................................................................       58
         12.02    Nature of Duties...............................................................       58
         12.03    Lack of Reliance on the Agents.................................................       58
         12.04    Certain Rights of the Agents...................................................       59
         12.05    Reliance.......................................................................       59
         12.06    Indemnification................................................................       59
         12.07    The Agents in Their Individual Capacity........................................       59
         12.08    Holders........................................................................       60
         12.09    Resignation....................................................................       60
         12.10    Documentation Agent............................................................       61

SECTION 13.       Miscellaneous..................................................................       61

         13.01    Payment of Expenses, etc.......................................................       61
         13.02    Right of Setoff................................................................       62
         13.03    Notices........................................................................       62
</TABLE>

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<TABLE>
<S>                                                                                                     <C>
         13.04    Benefit of Agreement...........................................................       63
         13.05    No Waiver; Remedies Cumulative.................................................       64
         13.06    Payments Pro Rata..............................................................       65
         13.07    Calculations; Computations.....................................................       65
         13.08    GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE...............................       65
         13.09    Counterparts...................................................................       66
         13.10    Effectiveness..................................................................       66
         13.11    Headings Descriptive...........................................................       67
         13.12    Amendment or Waiver; Removal of Lender etc.....................................       67
         13.13    Survival.......................................................................       68
         13.14    Domicile of Loans..............................................................       68
         13.15    Confidentiality................................................................       68
         13.16    Register.......................................................................       70

SECTION 14.       Guaranty.......................................................................       70

         14.01    Guaranty.......................................................................       70
         14.02    Bankruptcy.....................................................................       71
         14.03    Nature of Liability............................................................       71
         14.04    Independent Obligation.........................................................       71
         14.05    Authorization..................................................................       71
         14.06    Reliance.......................................................................       72
         14.07    Rights of Contribution.........................................................       72
         14.08    Waiver.........................................................................       73
         14.09    Payment........................................................................       74
         14.10    Savings Clause.................................................................       74
</TABLE>

<TABLE>
<S>               <C>
SCHEDULE I        Commitments
SCHEDULE II       Lender Addresses
SCHEDULE III      Governmental Approvals
SCHEDULE IV       Existing Indebtedness
EXHIBIT A-1       Form of Notice of Borrowing
EXHIBIT A-2       Form of Notice of Conversion/Continuation
EXHIBIT B         Form of Revolving Note
EXHIBIT C         Form of Letter of Credit Request
EXHIBIT D         Form of Section 4.04(b)(ii) Certificate
EXHIBIT E         Form of Opinion of Baker Botts LLP, special counsel to the Credit Parties
EXHIBIT F         Form of Officers' Certificate
EXHIBIT G         Form of Pledge Agreement
EXHIBIT H         Form of Indenture
EXHIBIT I         Form of Assignment and Assumption Agreement
</TABLE>

<PAGE>

                  CREDIT AGREEMENT, dated as of December 23, 2003, among TEXAS
GENCO HOLDINGS, INC., a Texas corporation (the "Parent"), TEXAS GENCO GP, LLC, a
Texas limited liability company ("Genco GP"), TEXAS GENCO LP, LLC, a Texas
limited liability company ("Genco LP"), TEXAS GENCO SERVICES, LP, a Texas
limited partnership ("Genco Services") TEXAS GENCO, LP, a Texas limited
partnership (the "Borrower"), the Lenders from time to time party hereto,
DEUTSCHE BANK AG NEW YORK BRANCH, as Administrative Agent and Collateral Agent
and COMPASS BANK, as Documentation Agent. Unless otherwise defined herein, all
capitalized terms used herein and defined in Section 11 are used herein as so
defined.

                              W I T N E S S E T H:

                  WHEREAS, subject to the terms and conditions set forth herein,
the Lenders are willing to make available to the Borrower the credit facility
provided herein;

                  NOW, THEREFORE, IT IS AGREED:

                  SECTION 1. Amount and Terms of Credit.

                  1.01 The Commitments. Subject to and upon the terms and
conditions set forth herein, each Lender severally agrees, at any time and from
time to time on and after the Effective Date and prior to the Maturity Date, to
make a revolving loan or revolving loans (each, a "Loan" and, collectively, the
"Loans") to the Borrower, which Loans (i) shall be denominated in Dollars, (ii)
shall, at the option of the Borrower, be incurred and maintained as, and/or
converted into, Base Rate Loans or Eurodollar Loans, provided that except as
otherwise specifically provided in Section 1.10(b), all Loans comprising the
same Borrowing shall at all times be of the same Type, (iii) may be repaid and
reborrowed in accordance with the provisions hereof, (iv) shall not exceed for
any Lender at any time outstanding that aggregate principal amount which, when
added to (I) the aggregate principal amount of all other then outstanding Loans
made by such Lender and (II) the product of (x) such Lender's Percentage and (y)
the aggregate amount of all Letter of Credit Outstandings (exclusive of Unpaid
Drawings which are repaid with the proceeds of, and simultaneously with the
incurrence of Loans) at such time, equals the Commitment of such Lender at such
time and (v) shall not exceed for all Lenders at any time outstanding that
aggregate principal amount which, when added to (I) the aggregate principal
amount of all Loans then outstanding and (II) the aggregate amount of all Letter
of Credit Outstandings (exclusive of Unpaid Drawings which are repaid with the
proceeds of, and simultaneously with the incurrence of Loans) at such time,
equals the Total Commitment at such time.

                  1.02 Minimum Amount of Each Borrowing. The aggregate principal
amount of each Borrowing of Loans shall be not less than the Minimum Borrowing
Amount. More than one Borrowing may occur on the same date, but at no time shall
there be outstanding more than five Borrowings of Eurodollar Loans.

                  1.03 Notice of Borrowing. Whenever the Borrower desires to
incur Loans hereunder, a Responsible Officer of the Borrower shall give the
Administrative Agent at the Notice Office, written notice (or telephonic notice
promptly confirmed in writing) on the date of each Borrowing of Base Rate Loans
and at least three Business Days' prior written notice (or

<PAGE>

telephonic notice promptly confirmed in writing) of each Eurodollar Loan to be
made hereunder, provided that any such notice shall be deemed to have been given
on a certain day only if given before 11:00 A.M. (New York City time) on such
day. Each such written notice or written confirmation of telephonic notice (each
a "Notice of Borrowing"), except as otherwise expressly provided in Section
1.10, shall be irrevocable and shall be given by a Responsible Officer of the
Borrower in the form of Exhibit A-1, appropriately completed to specify the
aggregate principal amount of the Loans to be made pursuant to such Borrowing,
the date of such Borrowing (which shall be a Business Day) and whether the Loans
being made pursuant to such Borrowing are to be initially maintained as Base
Rate Loans or Eurodollar Loans and, if Eurodollar Loans, the initial Interest
Period to be applicable thereto. The Administrative Agent shall promptly give
each Lender notice of such proposed Borrowing, of such Lender's proportionate
share thereof and of the other matters required by the immediately preceding
sentence to be specified in the Notice of Borrowing.

                  (a)      Without in any way limiting the obligation of the
Borrower to confirm in writing any telephonic notice of any Borrowing,
conversion or prepayment of Loans, the Administrative Agent may act without
liability upon the basis of telephonic notice of such Borrowing, conversion or
prepayment, believed by the Administrative Agent in good faith to be from a
Responsible Officer of the Borrower prior to receipt of written confirmation. In
each such case, the Borrower hereby waives the right to dispute the
Administrative Agent's record of the terms of such telephonic notice of such
Borrowing, conversion or prepayment.

                  1.04 Disbursement of Funds. Except as otherwise specifically
provided in the immediately succeeding sentence, no later than 12:00 Noon (New
York City time) on the date specified in each Notice of Borrowing, each Lender
will make available its to the Administrative Agent such Lender's Percentage of
each Borrowing to be made on such date. All such amounts shall be made available
in Dollars and in immediately available funds at the Payment Office, and the
Administrative Agent will make available to the Borrower at the Payment Office
the aggregate of the amounts so made available by the Lenders. Unless the
Administrative Agent shall have been notified by any Lender prior to the date of
Borrowing that such Lender does not intend to make available to the
Administrative Agent such Lender's portion of any Borrowing to be made on such
date, the Administrative Agent may assume that such Lender has made such amount
available to the Administrative Agent on such date of Borrowing and the
Administrative Agent may, in reliance upon such assumption, make available to
the Borrower a corresponding amount. If such corresponding amount is not in fact
made available to the Administrative Agent by such Lender, the Administrative
Agent shall be entitled to recover such corresponding amount on demand from such
Lender. If such Lender does not pay such corresponding amount forthwith upon the
Administrative Agent's demand therefor, the Administrative Agent shall promptly
notify the Borrower to immediately pay such corresponding amount to the
Administrative Agent. The Administrative Agent shall also be entitled to recover
on demand from such Lender or the Borrower, as the case may be, interest on such
corresponding amount in respect of each day from the date such corresponding
amount was made available by the Administrative Agent to the Borrower until the
date such corresponding amount is recovered by the Administrative Agent, at a
rate per annum equal to (i) if recovered from such Lender, the overnight Federal
Funds Rate for the first three days and at the interest rate otherwise
applicable to such Loans for each day thereafter and (ii) if recovered from the
Borrower, the rate of interest applicable to the respective Borrowing, as
determined pursuant to Section 1.08. Nothing in this Section 1.04 shall be

                                      -2-
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deemed to relieve any Lender from its obligation to make Loans hereunder or to
prejudice any rights which the Borrower may have against any Lender as a result
of any failure by such Lender to make Loans hereunder.

                  1.05 Revolving Notes. Subject to the provisions of Section
1.05(d), the Borrower's obligation to pay the principal of, and interest on, the
Loans made by each Lender shall be evidenced in the Register maintained by the
Administrative Agent pursuant to Section 13.16 and shall, if requested by such
Lender, also be evidenced by a promissory note duly executed and delivered by
the Borrower substantially in the form of Exhibit B, with blanks appropriately
completed in conformity herewith (each a "Revolving Note" and, collectively, the
"Revolving Notes").

                  (a)      Each Revolving Note issued to a Lender shall (i) be
executed by the Borrower, (ii) be payable to such Lender or its registered
assigns and be dated the Effective Date (or if issued thereafter, the date of
issuance), (iii) be in a stated principal amount equal to the Commitment of such
Lender (or, if issued after the termination thereof, be in a stated principal
amount equal to the outstanding Loans of such Lender at such time) and be
payable in the principal amount of the Loans evidenced thereby, (iv) mature on
the Maturity Date, (v) bear interest as provided in the appropriate clause of
Section 1.08 in respect of the Base Rate Loans and Eurodollar Loans, as the case
may be, evidenced thereby, (vi) be subject to voluntary prepayment as provided
in Section 4.01 and mandatory repayment as provided in Section 4.02 and (vii) be
entitled to the benefits of this Agreement and the other Credit Documents.

                  (b)      Each Lender will note on its internal records the
amount of each Loan made by it and each payment in respect thereof and will
prior to any transfer of any of its Revolving Notes endorse on the reverse side
thereof the outstanding principal amount of Loans evidenced thereby. Failure to
make any such notation or any error in any such notation or endorsement shall
not affect the Borrower's obligations in respect of such Loans.

                  (c)      Notwithstanding anything to the contrary contained
above or elsewhere in this Agreement, Revolving Notes shall only be delivered to
Lenders which at any time (or from time to time) specifically request the
delivery of such Revolving Notes. No failure of any Lender to request or obtain,
produce or maintain a Revolving Note evidencing its Loans to the Borrower shall
affect or in any manner impair the obligations of the Borrower to pay the Loans
(and all related Obligations) which would otherwise be evidenced thereby in
accordance with the requirements of this Agreement, and shall not in any way
affect (i) the guaranties therefor provided pursuant to the Guaranty or any
Credit Document or (ii) the security interests therefor granted pursuant to any
Security Document or any other Credit Document. Any Lender which does not have a
Revolving Note evidencing its outstanding Loans shall in no event be required to
make the notations otherwise described in preceding clause (c) of this Section
1.05. At any time when any Lender requests the delivery of a Revolving Note to
evidence any of its Loans, the Borrower shall promptly execute and deliver to
the respective Lender the requested Revolving Note or Revolving Notes in the
appropriate amount or amounts to evidence such Loans.

                  1.06 Conversions. The Borrower shall have the option to
convert, on any Business Day, all or a portion equal to at least the Minimum
Borrowing Amount of the outstanding principal amount of Loans made pursuant to
one or more Borrowings of one or more Types

                                      -3-
<PAGE>

of Loans into a Borrowing of another Type of Loan, provided that (i) except as
otherwise provided in Section 1.10(b), Eurodollar Loans may be converted into
Base Rate Loans only on the last day of an Interest Period applicable thereto
and no partial conversion of Eurodollar Loans shall reduce the outstanding
principal amount of such Eurodollar Loans made pursuant to a single Borrowing to
less than the Minimum Borrowing Amount applicable thereto, (ii) unless the
Required Lenders otherwise agree, Base Rate Loans may only be converted into
Eurodollar Loans if no Default or Event of Default is in existence on the date
of the conversion, and (iii) no conversion pursuant to this Section 1.06 shall
result in a greater number of Borrowings of Eurodollar Loans than is permitted
under Section 1.02. Each such conversion shall be effected by the Borrower by
giving the Administrative Agent at the Notice Office prior to 12:00 Noon (New
York City time) at least three Business Days' prior notice (each a "Notice of
Conversion/Continuation") in the form of Exhibit A-2, appropriately completed to
specify the Loans to be so converted, the Borrowing or Borrowings pursuant to
which such Loans were made and, if to be converted into Eurodollar Loans, the
Interest Period to be initially applicable thereto. The Administrative Agent
shall give each Lender prompt notice of any such proposed conversion.

                  1.07 Pro Rata Borrowings. Each Borrowing of Loans under this
Agreement shall be incurred from the Lenders pro rata on the basis of their
Commitments. It is understood that no Lender shall be responsible for any
default by any other Lender of its obligation to make Loans hereunder and that
each Lender shall be obligated to make the Loans provided to be made by it
hereunder, regardless of the failure of any other Lender to make its Loans
hereunder.

                  1.08 Interest. The Borrower agrees to pay interest in respect
of the unpaid principal amount of each Base Rate Loan from the date the proceeds
thereof are made available to the Borrower until the earlier of (i) the maturity
(whether by acceleration or otherwise) of such Base Rate Loan or (ii) the
conversion of such Base Rate Loan to a Eurodollar Loan pursuant to Section 1.06,
at a rate per annum which shall be equal to the sum of the Applicable Margin
plus the Base Rate in effect from time to time.

                  (a)      The Borrower agrees to pay interest in respect of the
unpaid principal amount of each Eurodollar Loan from the date the proceeds
thereof are made available to the Borrower until the earlier of (i) the maturity
(whether by acceleration or otherwise) of such Eurodollar Loan or (ii) the
conversion of such Eurodollar Loan to a Base Rate Loan pursuant to Section 1.06,
1.09 or 1.10, as applicable, at a rate per annum which shall, during each
Interest Period applicable thereto, be equal to the sum of the Applicable Margin
plus the Eurodollar Rate for such Interest Period.

                  (b)      Overdue principal and to the extent permitted by law,
overdue interest and any other amounts payable hereunder or under any other
Credit Document shall, in each case bear interest at a rate per annum equal to
the greater of (x) the rate which is 2% in excess of the rate then borne by such
Loans and (y) the rate which is 2% in excess of the rate otherwise applicable to
Base Rate Loans from time to time, and all other overdue amounts payable
hereunder and under any other Credit Document shall bear interest at a rate per
annum equal to the rate which is 2% in excess of the rate applicable to Base
Rate Loans from time to time. Interest which accrues under this Section 1.08(c)
shall be payable by the Borrower on demand.

                                      -4-
<PAGE>

                  (c)      Accrued (and theretofore unpaid) interest shall be
payable (i) in respect of each Base Rate Loan (x) quarterly in arrears on each
Quarterly Payment Date, (y) in the case of a repayment in full of all
outstanding Base Rate Loans, on the date of such repayment or prepayment, and
(z) at maturity (whether by acceleration or otherwise) or such earlier date upon
which the Total Commitment is terminated and, after such date, on demand, and
(ii) in respect of each Eurodollar Loan (x) on the last day of each Interest
Period applicable thereto and, in the case of an Interest Period in excess of
three months, on each date occurring at three month intervals after the first
day of such Interest Period and (y) on any repayment or prepayment (on the
amount repaid or prepaid), at maturity (whether by acceleration or otherwise)
and, after such maturity, on demand.

                  (d)      Upon each Interest Determination Date, the
Administrative Agent shall determine the Eurodollar Rate for the respective
Interest Period or Interest Periods and shall promptly notify the Borrower and
the Lenders thereof. Each such determination shall, absent manifest error, be
final and conclusive and binding on all parties hereto.

                  1.09 Interest Periods. At the time the Borrower gives any
Notice of Borrowing or Notice of Conversion/Continuation in respect of the
making of, or conversion into, any Eurodollar Loan (in the case of the initial
Interest Period applicable thereto) or on the third Business Day prior to the
expiration of an Interest Period applicable to such Eurodollar Loan (in the case
of any subsequent Interest Period), the Borrower shall have the right to elect,
by having a Responsible Officer of the Borrower give the Administrative Agent
notice thereof (including, without limitation, in any Notice of Borrowing made
in connection with a Eurodollar Loan), the interest period (each an "Interest
Period") applicable to such Eurodollar Loan, which Interest Period shall, at the
option of the Borrower, be a one, two, three or six-month period (or, if agreed
by all Lenders, nine months), provided that:

                  (i)      all Eurodollar Loans comprising a Borrowing shall at
all times have the same Interest Period;

                  (ii)     the initial Interest Period for any Eurodollar Loan
shall commence on the date of Borrowing of such Eurodollar Loan (including the
date of any conversion thereto from a Loan of a different Type) and each
Interest Period occurring thereafter in respect of such Eurodollar Loan shall
commence on the day on which the next preceding Interest Period applicable
thereto expires;

                  (iii)    if any Interest Period relating to a Eurodollar Loan
begins on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period, such Interest Period shall
end on the last Business Day of such calendar month; (iv) if any Interest Period
would otherwise expire on a day which is not a Business Day, such Interest
Period shall expire on the next succeeding Business Day; provided, however, that
if any Interest Period for a Eurodollar Loan would otherwise expire on a day
which is not a Business Day but is a day of the month after which no further
Business Day occurs in such month, such Interest Period shall expire on the next
preceding Business Day;

                                      -5-
<PAGE>

                  (v)      unless the Required Lenders otherwise agree, no
Interest Period may be selected at any time when a Default or an Event of
Default is then in existence; and

                  (vi)     no Interest Period in respect of any Borrowing of
Eurodollar Loans shall be selected which extends beyond the Maturity Date.

                  If upon the expiration of any Interest Period applicable to a
Borrowing of Eurodollar Loans, the Borrower has failed to elect, or is not
permitted to elect, a new Interest Period to be applicable to such Eurodollar
Loans as provided above, the Borrower shall be deemed to have elected to convert
such Eurodollar Loans into Base Rate Loans effective as of the expiration date
of such current Interest Period.

                  1.10 Increased Costs, Illegality, etc. (a) In the event that
any Lender shall have determined (which determination shall, absent manifest
error, be final and conclusive and binding upon all parties hereto but, with
respect to clause (i) below, may be made only by the Administrative Agent):

                  (i)      on any Interest Determination Date that, by reason of
any changes arising after the Effective Date affecting the interbank Eurodollar
market, adequate and fair means do not exist for ascertaining the applicable
interest rate on the basis provided for in the definition of Eurodollar Rate; or

                  (ii)     at any time, that such Lender shall incur increased
costs or reductions in the amounts received or receivable hereunder with respect
to any Eurodollar Loan because of any change since the Effective Date in any
applicable law or governmental rule, regulation, order, guideline or request
(whether or not having the force of law) or in the interpretation or
administration thereof and including the introduction of any new law or
governmental rule, regulation, order, guideline or request, such as, for
example, but not limited to: (A) a change in the basis of taxation of payment to
any Lender of the principal of or interest on the Loans or the Revolving Notes
or any other amounts payable hereunder (except for changes in the rate of tax
on, or determined by reference to, the net income or net profits of such Lender
pursuant to the laws of the jurisdiction in which it is organized or in which
its principal office or applicable lending office is located or any subdivision
thereof or therein), or (B) a change in official reserve requirements, but, in
all events, excluding reserves required under Regulation D to the extent
included in the computation of the Eurodollar Rate; or

                  (iii)    at any time, that the making or continuance of any
Eurodollar Loan has been made (x) unlawful by any law or governmental rule,
regulation or order, (y) impossible by compliance by any Lender in good faith
with any governmental request (whether or not having force of law) or (z)
impracticable as a result of a contingency occurring after the Effective Date
which materially and adversely affects the interbank Eurodollar market;

                  then, and in any such event, such Lender (or the
Administrative Agent, in the case of clause (i) above) shall promptly give
notice (by telephone confirmed in writing) to the Borrower and, except in the
case of clause (i) above, to the Administrative Agent of such determination
(which notice the Administrative Agent shall promptly transmit to each of the
other Lenders). Thereafter (x) in the case of clause (i) above, Eurodollar Loans
shall no longer

                                      -6-
<PAGE>

be available until such time as the Administrative Agent notifies the Borrower
and the Lenders that the circumstances giving rise to such notice by the
Administrative Agent no longer exist, and any Notice of Borrowing or Notice of
Conversion/Continuation given by the Borrower with respect to Eurodollar Loans
which have not yet been incurred (including by way of conversion) shall be
deemed rescinded by the Borrower, (y) in the case of clause (ii) above, the
Borrower agrees to pay to such Lender, upon written demand therefor, such
additional amounts (in the form of an increased rate of, or a different method
of calculating, interest or otherwise as such Lender in its sole discretion
shall determine) as shall be required to compensate such Lender for such
increased costs or reductions in amounts received or receivable hereunder (a
written notice as to the additional amounts owed to such Lender, showing the
basis for the calculation thereof, submitted to the Borrower by such Lender in
good faith shall, absent manifest error, be final and conclusive and binding on
all the parties hereto) and (z) in the case of clause (iii) above, the Borrower
shall take one of the actions specified in Section 1.10(b) as promptly as
possible and, in any event, within the time period required by law.

                  (b)      At any time that any Eurodollar Loan is affected by
the circumstances described in Section 1.10(a)(ii) or (iii), the Borrower may
(and in the case of a Eurodollar Loan affected by the circumstances described in
Section 1.10(a)(iii) shall) either (x) if the affected Eurodollar Loan is then
being made initially or pursuant to a conversion, cancel the respective
Borrowing by giving the Administrative Agent telephonic notice (confirmed in
writing) on the same date that the Borrower was notified by the affected Lender
or the Administrative Agent pursuant to Section 1.10(a)(ii) or (iii) or (y) if
the affected Eurodollar Loan is then outstanding, upon at least three Business
Days' written notice to the Administrative Agent, require the affected Lender to
convert such Eurodollar Loan into a Base Rate Loan, provided that if more than
one Lender is affected at any time, then all affected Lenders must be treated
the same pursuant to this Section 1.10(b).

                  (c)      If at any time after the Effective Date any Lender
determines that the introduction of or any change in any applicable law or
governmental rule, regulation, order, guideline, directive or request (whether
or not having the force of law) concerning capital adequacy, or any change in
interpretation or administration thereof by any governmental authority, central
bank or comparable agency, will have the effect of increasing the amount of
capital required or expected to be maintained by such Lender or any corporation
controlling such Lender based on the existence of such Lender's Commitment
hereunder or its obligations hereunder, then the Borrower agrees to pay to such
Lender, upon its written demand therefor, such additional amounts as shall be
required to compensate such Lender or such other corporation for the increased
cost to such Lender or such other corporation or the reduction in the rate of
return to such Lender or such other corporation as a result of such increase of
capital. In determining such additional amounts, each Lender will act reasonably
and in good faith and will use averaging and attribution methods which are
reasonable, provided that such Lender's determination of compensation owing
under this Section 1.10(c) shall, absent manifest error, be final and conclusive
and binding on all the parties hereto. Each Lender, upon determining that any
additional amounts will be payable pursuant to this Section 1.10(c), will give
written notice thereof to the Borrower, which notice shall show the basis for
calculation of such additional amounts.

                  (d)      The provisions contained in this Section 1.10 shall
survive the termination of this Agreement and the payment of all amounts payable
hereunder; provided, however, that in

                                      -7-
<PAGE>

no event shall the Borrower be obligated to reimburse or compensate any Lender
for amounts contemplated by this Section 1.10 for any period prior to the date
that is 90 days prior to the date upon which such Lender requests in writing
such reimbursement or compensation from the Borrower. This Section 1.10(d) shall
have no applicability to any other Section of this Agreement.

                  1.11 Compensation. The Borrower agrees to compensate each
Lender, upon its written request (which request shall set forth the basis for
requesting such compensation), for all reasonable losses, expenses and
liabilities (including, without limitation, any loss, expense or liability
incurred by reason of the liquidation or reemployment of deposits or other funds
required by such Lender to fund its Eurodollar Loans but excluding any loss of
anticipated profit) which such Lender may sustain: (i) if for any reason (other
than a default by such Lender) a Borrowing of, or conversion from or into,
Eurodollar Loans does not occur on a date specified therefor in a Notice of
Borrowing or Notice of Conversion/Continuation (whether or not withdrawn by the
Borrower or deemed withdrawn pursuant to Section 1.10(a)); (ii) if any repayment
(including any repayment made pursuant to Section 1.13, 1.14, 4.02 or 13.12(b)
or as a result of an acceleration of the Loans pursuant to Section 10) or
conversion of any of its Eurodollar Loans occurs on a date which is not the last
day of an Interest Period with respect thereto; (iii) if any prepayment of any
of its Eurodollar Loans is not made on any date specified in a notice of
prepayment given by the Borrower; or (iv) as a consequence of (x) any other
default by the Borrower to repay its Loans when required by the terms of this
Agreement or any Revolving Note held by such Lender or (y) any election made
pursuant to Section 1.10(b). The provisions contained in this Section 1.11 shall
survive the termination of this Agreement and the payment of all amounts payable
hereunder; provided, however, that in no event shall the Borrower be obligated
to reimburse or compensate any Lender for amounts contemplated by this Section
1.11 for any period prior to the date that is 90 days prior to the date upon
which such Lender requests in writing such reimbursement or compensation from
the Borrower, provided, further, that this sentence shall have no applicability
to any other Section of this Agreement

                  1.12 Change of Lending Office. Each Lender agrees that upon
the occurrence of any event giving rise to the operation of Section 1.10(a)(ii)
or (iii), Section 1.10(c), Section 2.06 or Section 4.04 with respect to such
Lender, it will, if requested by the Borrower, use reasonable efforts (subject
to overall policy considerations of such Lender) to designate another lending
office for any Loans or Letters of Credit affected by such event, provided that
such designation is made on such terms that such Lender and its lending office
suffer no economic, legal or regulatory disadvantage, with the object of
avoiding the consequence of the event giving rise to the operation of such
Section. Nothing in this Section 1.12 shall affect or postpone any of the
obligations of the Borrower or the rights of any Lender provided in Sections
1.10, 2.06 and 4.04.

                  1.13 Replacement of Lenders. If any Lender becomes a
Defaulting Lender or otherwise defaults in its obligations to make Loans or fund
Unpaid Drawings, (b) upon the occurrence of any event giving rise to the
operation of Section 1.10(a)(ii) or (iii), Section 1.10(c), Section 2.06 or
Section 4.04 with respect to any Lender which results in such Lender charging to
the Borrower increased costs in excess of those being generally charged by the
other Lenders, (c) if any Lender becomes a Non-Continuing Lender pursuant to
Section 1.14 or (d) if the Borrower elects to terminate a Lender's Commitment as
provided in Section 13.12(b), then, in each case the Borrower shall have the
right, if no Default or Event of Default will exist immediately after

                                      -8-
<PAGE>

giving effect to the respective replacement, to replace such Lender (the
"Replaced Lender") with one or more other Eligible Transferee or Transferees,
none of whom shall constitute a Defaulting Lender at the time of such
replacement (collectively, the "Replacement Lender") reasonably acceptable to
the Administrative Agent, provided that (i) at the time of any replacement
pursuant to this Section 1.13, the Replacement Lender shall enter into one or
more Assignment and Assumption Agreements pursuant to Section 13.04(b) (and with
all fees payable pursuant to said Section 13.04(b) to be paid by the Replacement
Lender) pursuant to which the Replacement Lender shall acquire all of the
Commitments and outstanding Loans of, and participations in Letters of Credit
by, the Replaced Lender and, in connection therewith, shall pay to (x) the
Replaced Lender in respect thereof an amount equal to the sum of (A) an amount
equal to the principal of, and all accrued interest on, all outstanding Loans of
the Replaced Lender, (B) an amount equal to all Unpaid Drawings that have been
funded by (and not reimbursed to) such Replaced Lender, together with all then
unpaid interest with respect thereto at such time and (C) an amount equal to all
accrued, but theretofore unpaid, Fees owing to the Replaced Lender pursuant to
Section 3.01 and (y) each Issuing Lender an amount equal to such Replaced
Lender's Percentage of any Unpaid Drawing (which at such time remains an Unpaid
Drawing) to the extent such amount was not theretofore funded by such Replaced
Lender to such Issuing Lender, and (ii) all obligations of the Borrower owing to
the Replaced Lender (other than those specifically described in clause (i) above
in respect of which the assignment purchase price has been, or is concurrently
being, paid) shall be paid in full to such Replaced Lender concurrently with
such replacement. Upon the execution of the respective Assignment and Assumption
Agreements, the payment of amounts referred to in clauses (i) and (ii) above
and, if so requested by the Replacement Lender, delivery to the Replacement
Lender of the appropriate Revolving Notes executed by the Borrower, the
Replacement Lender shall become a Lender hereunder and the Replaced Lender shall
cease to constitute a Lender hereunder, except with respect to indemnification
provisions under this Agreement (including, without limitation, Sections 1.10,
1.11, 2.06, 4.04, 13.01 and 13.06), which shall survive as to such Replaced
Lender.

                  1.14 Recommitment; Replacement of Non-Continuing Lender. So
long as no Default or Event of Default has occurred and is continuing, the
Borrower may, prior to (but not less than 30 days nor more than 45 days prior
to) the Maturity Date then in effect, by written notice (each such notice, a
"Recommitment Request") to the Administrative Agent (which notice the
Administrative Agent shall promptly transmit to each Lender), request that the
Maturity Date then in effect be extended to a date occurring 364 days after such
Maturity Date. Each Recommitment Request shall be accompanied by a certificate
of a Responsible Officer of the Borrower stating that no Default or Event of
Default has occurred and is continuing. Each Lender shall, in its sole
discretion, consent to such Recommitment Request no less than 10 Business Days
prior to the Maturity Date then in effect (each such date, a "Recommitment
Deadline"), in writing to the Borrower and the Administrative Agent, with the
failure of any Lender to consent on or prior to the Recommitment Deadline being
deemed to be a negative response. If each Lender, in its sole discretion, shall
consent to such Recommitment Request, by the relevant Recommitment Deadline, the
Maturity Date then in effect shall be automatically extended to the date
occurring 364 days following such Maturity Date and the term "Maturity Date"
shall automatically be deemed amended to such date with no further action on the
part of the Lenders or the Borrower. If the consent of each Lender in respect of
such Recommitment Request shall not have been obtained, the Borrower may prior
to the Maturity Date then in effect, (i) replace each such Lender failing to
consent to such Recommitment Request (each such

                                      -9-
<PAGE>

Lender, a "Non-Continuing Lender") in accordance with Section 1.13, and in the
event that the Replacement Lender with respect to each such Non-Continuing
Lender shall consent to such Recommitment Request prior to the Maturity Date
then in effect, such Recommitment Request shall be effective as if each Lender
had originally consented to such request or (ii) terminate each such
Non-Continuing Lender's Commitment and repay such Non-Continuing Lender's Loans
pursuant to Section 3.02(b), 4.01(b) and 13.12(b), and upon taking all actions
required thereby in connection with such removal, such Recommitment Request
shall be effective as if each Lender had originally consented to such request.
Promptly upon the effectiveness of any extension of the Maturity Date pursuant
to this Section 1.14, the Administrative Agent shall notify each Lender and the
Borrower of such effectiveness and the Maturity Date then in effect (after
giving effect to the extension thereof) which Maturity Date shall absent
manifest error, be final, conclusive and binding on all parties hereto.

                  SECTION 2. Letters of Credit.

                  2.01 Letters of Credit. Subject to and upon the terms and
conditions herein set forth, the Borrower may request that any Issuing Lender
issue, at any time and from time to time on and after the Effective Date and
prior to the fifth Business Day prior to the Maturity Date, for the account of
the Borrower and in support of, such obligations (that arise in the ordinary
course of business in respect of general corporate purposes and are not
otherwise prohibited hereunder) of the Borrower and its Subsidiaries to any
other Person, an irrevocable standby letter of credit, in a form customarily
used by such Issuing Lender (including Letters of Credit governed by ISP98) or
in such other form as has been approved by such Issuing Lender (each such letter
of credit, together with any amendments thereto and any extensions thereof, a
"Letter of Credit" and, collectively, the "Letters of Credit"). All Letters of
Credit shall be denominated in Dollars and shall be issued on a sight basis
only.

                  (a)      Subject to and upon the terms and conditions set
forth herein, each Issuing Lender agrees that it will, at any time and from time
to time on or after the Effective Date and prior to the fifth Business Day prior
to the Maturity Date, following its receipt of the respective Letter of Credit
Request, issue for the account of the Borrower one or more Letters of Credit as
is permitted to exist pursuant to this Agreement without giving rise to a
Default or Event of Default hereunder, provided that the respective Issuing
Lender shall be under no obligation to issue any Letter of Credit of the types
described above if at the time of such issuance:

                  (i)      any order, judgment or decree of any governmental
authority or arbitrator shall purport by its terms to enjoin or restrain such
Issuing Lender from issuing such Letter of Credit or any requirement of law
applicable to such Issuing Lender or any request or directive (whether or not
having the force of law) from any governmental authority with jurisdiction over
such Issuing Lender shall prohibit, or request that such Issuing Lender refrain
from, the issuance of letters of credit generally or such Letter of Credit in
particular or shall impose upon such Issuing Lender with respect to such Letter
of Credit any restriction or reserve or capital requirement (for which such
Issuing Lender is not otherwise compensated), in any such case not in effect on
the date hereof, or any unreimbursed loss, cost or expense which was not
applicable, in effect or known to such Issuing Lender as of the date hereof and
which such Issuing Lender in good faith deems material to it; or

                                      -10-
<PAGE>

                  (ii)     such Issuing Lender shall have determined or shall
have received notice from the Administrative Agent or any Lender prior to the
issuance of such Letter of Credit of the type described in the second sentence
of Section 2.03(b).

                  (b)      Notwithstanding the foregoing, (i) no Letter of
Credit shall be issued the Stated Amount of which, when added to the Letter of
Credit Outstandings (exclusive of Unpaid Drawings which are repaid on the date
of, and prior to the issuance of, the respective Letter of Credit) at such time
would exceed when added to the aggregate principal amount of all Loans then
outstanding, an amount equal to the Total Commitment at such time, and (ii) each
Letter of Credit shall by its terms expire on or before the fifth Business Day
prior to the Maturity Date.

                  2.02 Minimum Stated Amount. The Stated Amount of each Letter
of Credit shall not be less than $50,000 or such lesser amount as is acceptable
to the respective Issuing Lender.

                  2.03 Letter of Credit Requests. Whenever the Borrower desires
that a Letter of Credit be issued hereunder for its account, the Borrower shall
have (x) executed and delivered to the Administrative Agent and the respective
Issuing Lender at least three Business Days prior to the issuance thereof (or
such shorter period as may be acceptable to the respective Issuing Lender), a
Letter of Credit Request in the form of Exhibit C attached hereto (each a
"Letter of Credit Request").

                  (a)      The making of each Letter of Credit Request shall be
deemed to be a representation and warranty by the Borrower that (i) such Letter
of Credit may be issued in accordance with, and will not violate the
requirements of, Section 2.01(c) and (ii) the matters set forth in Section 7 are
true and correct in all material respects on the date thereof and the matters
set forth in Section 6 have been satisfied in accordance with the terms thereof.
Unless the respective Issuing Lender has determined or has received notice from
the Administrative Agent or any Lender before it issues a Letter of Credit that
one or more of the conditions specified in Section 6 are not then satisfied, or
that the issuance of such Letter of Credit would violate Section 2.01(c), then
such Issuing Lender may issue the requested Letter of Credit for the account of
the Borrower in accordance with such Issuing Lender's usual and customary
practices. Upon the issuance of, or modification or amendment to, any Letter of
Credit, the Issuing Lender thereof shall notify the Administrative Agent and the
Borrower, in writing, of such issuance, modification or amendment and such
notice shall be accompanied by a copy of such Letter of Credit, or modification
or amendment thereto, as the case may be. Upon receipt of such notice, the
Administrative Agent shall promptly notify each Lender, in writing of such
issuance, modification or amendment. Notwithstanding anything to the contrary
contained in this Agreement, in the event that a Lender Default exists, no
Issuing Lender shall be required to issue any Letter of Credit unless such
Issuing Lender has entered into arrangements satisfactory to it and the Borrower
to eliminate such Issuing Lender's risk with respect to the participation in
Letters of Credit by the Defaulting Lender or Lenders, including by cash
collateralizing such Defaulting Lender's or Lenders' Percentage or Percentages
of the Letter of Credit Outstandings.

                  2.04 Letter of Credit Participations. Immediately upon the
issuance by any Issuing Lender of any Letter of Credit, such Issuing Lender
shall be deemed to have sold and transferred to each Lender, other than such
Issuing Lender (each such Lender, in its capacity under this Section 2.04, a
"Participant"), and each such Participant shall be deemed irrevocably

                                      -11-
<PAGE>

and unconditionally to have purchased and received from such Issuing Lender,
without recourse or warranty, an undivided interest and participation, to the
extent of such Participant's Percentage, in such Letter of Credit and each
drawing or payment made thereunder and the obligations of the Borrower under
this Agreement with respect thereto, and any security therefor or guaranty
pertaining thereto. Upon any change in the Commitments or Percentages of the
Lenders pursuant to Section 1.13, 1.14, 3.02(b), 13.04 or 13.12(b), it is hereby
agreed that, with respect to all outstanding Letters of Credit and Unpaid
Drawings with respect thereto, there shall be an automatic adjustment to the
participations pursuant to this Section 2.04 to reflect the new Percentages of
the assignor and assignee Lender or of all Lenders, as the case may be.

                  (a)      In determining whether to pay under any Letter of
Credit, such Issuing Lender shall have no obligation relative to the other
Lenders other than to confirm that any documents required to be delivered under
such Letter of Credit have been delivered and that they substantially comply on
their face with the requirements of such Letter of Credit. Any action taken or
omitted to be taken by any Issuing Lender under or in connection with any Letter
of Credit shall not create for such Issuing Lender any resulting liability to
the Borrower or any other Lender, unless such action taken or omitted to be
taken was the result of gross negligence or willful misconduct (as determined by
a court of competent jurisdiction in a final and non-appealable proceeding) of
such Issuing Lender.

                  (b)      In the event that any Issuing Lender makes any
payment under any Letter of Credit issued by it and the Borrower shall not have
reimbursed such amount in full to such Issuing Lender pursuant to Section
2.05(a), such Issuing Lender shall promptly notify the Administrative Agent,
which shall promptly notify each Participant of such failure, and each
Participant shall promptly and unconditionally pay to such Issuing Lender the
amount of such Participant's Percentage of such unreimbursed payment in Dollars
and in same day funds. If the Administrative Agent so notifies, prior to 11:00
A.M. (New York City time) on any Business Day, any Participant required to fund
a payment under a Letter of Credit, such Participant shall make available to
such Issuing Lender in Dollars such Participant's Percentage of the amount of
such payment on such Business Day in same day funds. If and to the extent such
Participant shall not have so made its Percentage of the amount of such payment
available to such Issuing Lender, such Participant agrees to pay to such Issuing
Lender, forthwith on demand, such amount, together with interest thereon, for
each day from such date until the date such amount is paid to such Issuing
Lender at the overnight Federal Funds Rate for the first three days and at the
interest rate applicable to Base Rate Loans for each day thereafter. The failure
of any Participant to make available to such Issuing Lender its Percentage of
any payment under any Letter of Credit shall not relieve any other Participant
of its obligation hereunder to make available to such Issuing Lender its
Percentage of any payment with respect to any Letter of Credit on the date
required, as specified above, but no Participant shall be responsible for the
failure of any other Participant to make available to such Issuing Lender such
other Participant's Percentage of any such payment.

                  (c)      Whenever any Issuing Lender receives a payment of a
reimbursement obligation as to which it has received any payments from the
Participants pursuant to clause (c) above, such Issuing Lender shall pay to each
Participant which has paid its Percentage thereof, in Dollars and in same day
funds, an amount equal to such Participant's share (based upon the proportionate
aggregate amount originally funded by such Participant to the aggregate

                                      -12-
<PAGE>

amount funded by all Participants) of the principal amount of such reimbursement
obligation and interest thereon accruing after the purchase of the respective
participations.

                  (d)      Upon the request of any Participant, the
Administrative Agent shall deliver to such Participant copies of any Letters of
Credit or modifications or amendments thereto and such other documentation as
may be reasonably requested by such Participant.

                  (e)      The obligations of the Participants to make payments
to each Issuing Lender with respect to Letters of Credit issued thereunder shall
be irrevocable and not subject to any qualification or exception whatsoever (the
respective Issuing Lender's only obligation being to confirm that any documents
required to be delivered under such Letter of Credit have been delivered and
that they substantially comply on their face with the requirements of such
Letter of Credit) and shall be made in accordance with the terms and conditions
of this Agreement under all circumstances, including, without limitation, any of
the following circumstances:

                  (i)      any lack of validity or enforceability of this
Agreement or any of the other Credit Documents;

                  (ii)     the existence of any claim, setoff, defense or other
right which the Borrower or any of its Subsidiaries may have at any time against
a beneficiary named in a Letter of Credit, any transferee of any Letter of
Credit (or any Person for whom any such transferee may be acting), the
Administrative Agent, any Participant, or any other Person, whether in
connection with this Agreement, any Letter of Credit, the transactions
contemplated herein or any unrelated transactions (including any underlying
transaction between any Borrower and the beneficiary named in any such Letter of
Credit);

                  (iii)    any draft, certificate or any other document
presented under any 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;

                  (iv)     the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Credit Documents; or

                  (v)      the occurrence of any Default or Event of Default.

                  2.05 Agreement to Repay Letter of Credit Drawings. The
Borrower hereby agrees to reimburse the respective Issuing Lender, by making
payment in Dollars to the Administrative Agent at the Payment Office in
immediately available funds for the account of such Issuing Lender, for any
payment or disbursement made by such Issuing Lender under any Letter of Credit
(each such amount so paid until reimbursed, an "Unpaid Drawing"), within one
Business Day following the Issuing Lender's or the Administrative Agent's notice
to the Borrower of such payment or disbursement (provided that any such notice
shall be deemed to have been given on a certain day only if given before 11:00
A.M. (New York City time) on such day), with interest on the amount so paid or
disbursed by such Issuing Lender, to the extent not reimbursed prior to 12:00
Noon (New York City time) on the date of such payment or disbursement, from and
including the date paid or disbursed to but excluding the date such Issuing
Lender was reimbursed by the Borrower therefor at a rate per annum which shall
be the Base Rate in effect from time to time plus the Applicable Margin,
provided, however, to the extent

                                      -13-
<PAGE>

such amounts are not reimbursed prior to 12:00 Noon (New York City time) on the
second Business Day following notice by the Issuing Lender to the Borrower of
such payment or disbursement, interest shall thereafter accrue on the amounts so
paid or disbursed by such Issuing Lender (and until reimbursed by the Borrower)
at a rate per annum which shall be the Base Rate in effect from time to time
plus the Applicable Margin plus 2%, in each such case, with interest to be
payable by the Borrower on demand (it being understood that the Borrower may
simultaneously incur Loans in accordance with Section 1.01 and 1.03, in order to
repay such Unpaid Drawing).

                  (a)      The obligations of the Borrower under this Section
2.05 to reimburse the respective Issuing Lender with respect to drawings on
Letters of Credit (including interest thereon) (each, a "Drawing") shall be
absolute and unconditional under any and all circumstances and irrespective of
(i) any setoff, counterclaim or defense to payment which the Borrower may have
or have had against any Lender (including in its capacity as issuer of the
Letter of Credit or as Participant), (ii) any draft, certificate or any other
document presented under any 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 (iii) any nonapplication or misapplication by the
beneficiary of the proceeds of such Drawing. It being understood that, the
respective Issuing Lender's only obligation to the Borrower being to confirm
that any documents required to be delivered under such Letter of Credit have
been delivered and that they substantially comply on their face with the
requirements of such Letter of Credit. Any action taken or omitted to be taken
by any Issuing Lender under or in connection with any Letter of Credit if taken
or omitted in the absence of gross negligence or willful misconduct, as
determined by a court of competent jurisdiction in a final and non-appealable
proceeding, shall not create for such Issuing Lender any resulting liability to
the Borrower.

                  2.06 Increased Costs. If at any time after the date of this
Agreement, the introduction of or any change in any applicable law, rule,
regulation, order, guideline or request or in the interpretation or
administration thereof by any governmental authority charged with the
interpretation or administration thereof, or compliance by any Issuing Lender or
any Participant with any request or directive by any such authority (whether or
not having the force of law), or any change in generally acceptable accounting
principles, shall either (i) impose, modify or make applicable any reserve,
deposit, capital adequacy or similar requirement against Letters of Credit
issued by any Issuing Lender or participated in by any Participant, or (ii)
impose on any Issuing Lender or any Participant any other conditions relating,
directly or indirectly, to this Agreement, any Letter of Credit; and the result
of any of the foregoing is to increase the cost to any Issuing Lender or any
Participant of issuing, maintaining or participating in any Letter of Credit or
reduce the amount of any sum received or receivable by any Issuing Lender or any
Participant hereunder or reduce the rate of return on its capital with respect
to Letters of Credit (except for changes in the rate of tax on, or determined by
reference to, the net income or net profits of such Issuing Lender or such
Participant pursuant to the laws of the jurisdiction in which it is organized or
in which its principal office or applicable lending office is located or any
subdivision thereof or therein), then, upon demand to the Borrower by such
Issuing Lender or any Participant (a copy of which demand shall be sent by such
Issuing Lender or such Participant to the Administrative Agent), the Borrower
agrees to pay to such Issuing Lender or such Participant such additional amount
or amounts as will compensate such Lender for such increased cost or reduction
in the amount receivable or reduction on the rate of return on its capital. Any
Issuing

                                      -14-
<PAGE>

Lender or any Participant, upon determining that any additional amounts will be
payable pursuant to this Section 2.06, will give prompt written notice thereof
to the Borrower, which notice shall include a certificate submitted to the
Borrower by such Issuing Lender or such Participant (a copy of which certificate
shall be sent by such Issuing Lender or such Participant to the Administrative
Agent), setting forth in reasonable detail the basis for the calculation of such
additional amount or amounts necessary to compensate such Issuing Lender or such
Participant. The certificate required to be delivered pursuant to this Section
2.06 shall, and absent manifest error, be final and conclusive and binding on
the Borrower.

                  SECTION 3. Commitment Commission; Fees; Reductions of
Commitment.

                  3.01 Fees. The Borrower agrees to pay to the Administrative
Agent for distribution to each Non-Defaulting Lender a commitment commission
(the "Commitment Commission") for the period from the Effective Date to but
excluding the Maturity Date (or such earlier date as the Total Commitment shall
have been terminated), computed at a rate per annum equal to the Applicable
Commitment Commission Percentage on the Unutilized Commitment of each such
Non-Defaulting Lender as in effect from time to time. Accrued Commitment
Commission shall be due and payable quarterly in arrears on each Quarterly
Payment Date and at maturity (whether by acceleration or otherwise) or such
earlier date upon which the Total Commitment is terminated and after such date,
upon demand.

                  (a)      The Borrower agrees to pay to the Administrative
Agent for pro rata distribution to each Non-Defaulting Lender (based on each
such Lender's respective Percentage) a fee in respect of each Letter of Credit
(the "Letter of Credit Fee") for the period from and including the date of
issuance of such Letter of Credit to and including the date of termination or
expiration of such Letter of Credit, computed at a rate per annum equal to the
Applicable Margin as in effect from time to time with respect to Eurodollar
Loans on the daily Stated Amount of each such Letter of Credit. Accrued Letter
of Credit Fees shall be due and payable quarterly in arrears on each Quarterly
Payment Date and upon the first day on or after the termination of the Total
Commitment upon which no Letters of Credit remain outstanding.

                  (b)      The Borrower agrees to pay to the respective Issuing
Lender, for its own account, a facing fee in respect of each Letter of Credit
issued for its account hereunder (the "Facing Fee") for the period from and
including the date of issuance of such Letter of Credit to and including the
date of termination or expiration of such Letter of Credit, computed at a rate
per annum equal to 1/8 of 1% on the daily Stated Amount of such Letter of
Credit, provided that in any event the minimum amount of Facing Fees payable in
any twelve-month period for each Letter of Credit shall be not less than $500;
it being agreed that, on the date of issuance of any Letter of Credit and on
each anniversary thereof prior to the termination or expiration of such Letter
of Credit, if $500 will exceed the amount of Facing Fees that will accrue with
respect to such Letter of Credit for the immediately succeeding twelve-month
period, the full $500 shall be payable on the date of issuance of such Letter of
Credit and on each such anniversary thereof. Except as otherwise provided in the
proviso to the immediately preceding sentence, accrued Facing Fees shall be due
and payable quarterly in arrears on each Quarterly Payment Date and on the date
upon which the Total Commitment has been terminated and all Letters of Credit
have been terminated in accordance with their terms.

                                      -15-
<PAGE>

                  (c)      The Borrower agrees to pay, upon each drawing under,
issuance of, or amendment to any Letter of Credit, such amount as shall at the
time of such event be the administrative charge and out-of-pocket expenses which
the respective Issuing Lender customarily imposes in connection with such
occurrence with respect to letters of credit, as the case may be.

                  (d)      The Borrower agrees to pay to the Administrative
Agent, for its own account, such other fees as have been agreed to in writing by
the Borrower and the Administrative Agent.

                  3.02 Optional Commitment Reductions. Upon three Business Days'
prior notice from a Responsible Officer of the Borrower to the Administrative
Agent at the Notice Office (which notice the Administrative Agent shall promptly
transmit to each of the Lenders), the Borrower shall have the right, at any time
or from time to time, without premium or penalty, to terminate the Total
Unutilized Commitment in whole or reduce it in part, pursuant to this Section
3.02(a), in an integral multiple of $5,000,000, provided that each such
reduction shall apply proportionately to permanently reduce the Commitment of
each Lender.

                  (a)      In connection with the Borrower's rights under
Section 1.14 or 13.12(b), the Borrower may upon ten Business Days' prior written
notice to the Administrative Agent at the Notice Office (which notice the
Administrative Agent shall promptly transmit to each of the Lenders) terminate
the Commitment of such Lender so long as all Loans, together with accrued and
unpaid interest, Fees and all other amounts, owing to such Lender are repaid
concurrently with the effectiveness of such termination pursuant to Section
4.01(b) (at which time Schedule I shall be deemed modified to reflect such
changed amounts), and at such time, such Lender shall no longer constitute a
"Lender" for purposes of this Agreement, except with respect to indemnifications
under this Agreement (including, without limitation, Sections 1.10, 1.11, 2.06,
4.04, 13.01 and 13.06), which shall survive as to such repaid Lender.

                  3.03 Mandatory Reduction of Commitments. The Total Commitment
(and the Commitment of each Lender) shall terminate in its entirety on December
31, 2003 unless this Agreement has been executed and delivered by all of the
parties hereto and the Effective Date has occurred.

                  (a)      In addition to any other mandatory commitment
reductions pursuant to this Section 3.03, the Total Commitment (and the
Commitment of each Lender) shall terminate in its entirety on the Maturity Date.

                  SECTION 4. Prepayments; Payments; Taxes.

                  4.01 Voluntary Prepayments. The Borrower shall have the right
to prepay the Loans, without premium or penalty, in whole or in part at any time
and from time to time on the following terms and conditions: (i) a Responsible
Officer of the Borrower shall give the Administrative Agent prior to 12:00 Noon
(New York City time) at the Notice Office (x) at least one Business Day's prior
written notice (or telephonic notice promptly confirmed in writing) of the
Borrower's intent to prepay Base Rate Loans and (y) at least three Business
Days' prior written notice (or telephonic notice promptly confirmed in writing)
of their intent to prepay

                                      -16-
<PAGE>

Eurodollar Loans, the amount of such prepayment and the Types of Loans to be
prepaid and, in the case of Eurodollar Loans, the specific Borrowing or
Borrowings pursuant to which made, which notice the Administrative Agent shall
promptly transmit to each of the Lenders; (ii) each prepayment shall be in an
aggregate principal amount of at least $1,000,000, provided that if any partial
prepayment of Eurodollar Loans made pursuant to any Borrowing shall reduce the
outstanding Eurodollar Loans made pursuant to such Borrowing to an amount less
than the Minimum Borrowing Amount applicable thereto, then such Borrowing may
not be continued as a Borrowing of Eurodollar Loans and any election of an
Interest Period with respect thereto given by the Borrower shall have no force
or effect; and (iii) each prepayment in respect of any Loans made pursuant to a
Borrowing shall be applied pro rata among such Loans, provided that at the
Borrowers' election in connection with any prepayment of Loans pursuant to this
Section 4.01(a), such prepayment shall not, so long as no Default or Event of
Default then exists, be applied to the prepayment of Loans of a Defaulting
Lender.

                  (a)      In connection with rights of the Borrower under
Section 1.14 or 13.12(b), the Borrower may, upon ten Business Days' prior
written notice to the Administrative Agent at the Notice Office (which notice
the Administrative Agent shall promptly transmit to each of the Lenders) repay
all Loans, together with accrued and unpaid interest, Fees, and other amounts
owing to such Lender so long as the Commitment of such Lender is terminated
concurrently with such repayment pursuant to Section 3.02(b) (at which time
Schedule I shall be deemed modified to reflect the changed Commitments).

                  4.02 Mandatory Repayments and Cash Collateralizations. (a) On
any day on which the sum of (i) the aggregate outstanding principal amount of
all Loans (after giving effect to all other repayments thereof on such date) and
(ii) the aggregate amount of all Letter of Credit Outstandings (after giving
effect to all other repayments thereof on such date) exceeds Total Commitment as
then in effect, the Borrower agrees to prepay on such day the principal of Loans
in an amount equal to such excess. If, after giving effect to the prepayment of
all outstanding Loans, the aggregate amount of the Letter of Credit Outstandings
exceeds the Total Commitment as then in effect, the Borrower agrees to pay to
the Administrative Agent at the Payment Office on such date an amount of cash
equal to the amount of such excess (up to a maximum amount equal to the Letter
of Credit Outstandings at such time), such cash to be held as security for all
obligations of the Borrower to Lenders hereunder in a cash collateral account to
be established by the Administrative Agent on terms reasonably satisfactory to
the Administrative Agent.

                  (b)      With respect to each repayment of Loans required by
Section 4.02(a), the Borrower may designate the Types of Loans which are to be
repaid and, in the case of Eurodollar Loans, the specific Borrowing or
Borrowings pursuant to which made, provided that: (i) repayments of Eurodollar
Loans pursuant to Section 4.02(a) may only be made on the last day of an
Interest Period applicable thereto unless all Eurodollar Loans with Interest
Periods ending on such date of required repayment and all Base Rate Loans have
been paid in full; (ii) if any repayment of Eurodollar Loans made pursuant to a
single Borrowing shall reduce the outstanding Eurodollar Loans made pursuant to
such Borrowing to an amount less than the Minimum Borrowing Amount applicable
thereto, then such Borrowing shall be converted at the end of the then current
Interest Period into a Borrowing of Base Rate Loans; and (iii) each repayment of
Loans required by Section 4.02(a) shall be applied pro rata among such Loans. In
the absence of a designation by the Borrower as described in the preceding
sentence, the Administra-

                                      -17-
<PAGE>

tive Agent shall, subject to the above, make such designation in its sole
discretion with a view, but no obligation, to minimize breakage costs owing
under Section 1.11.

                  (c)      In addition to any other mandatory repayments
required pursuant to this Section 4.02, all then outstanding Loans shall be
repaid in full on the Maturity Date.

                  4.03 Method and Place of Payment. Except as otherwise
specifically provided herein, all payments under this Agreement or any Revolving
Note shall be made to the Administrative Agent for the account of the Lender or
Lenders entitled thereto not later than 12:00 Noon (New York City time) on the
date when due and shall be made in Dollars in immediately available funds at the
Payment Office. Any payments received by the Administrative Agent after such
time shall be deemed to have been received on the next Business Day. Whenever
any payment to be made hereunder or under any Revolving Note shall be stated to
be due on a day which is not a Business Day, the due date thereof shall be
extended to the next succeeding Business Day and, with respect to payments of
principal, interest shall be payable at the applicable rate during such
extension.

                  4.04 Net Payments. (a) All payments made by the Borrower
hereunder or under any Revolving Note will be made without setoff, counterclaim
or other defense. Except as provided in Section 4.04(b), all such payments will
be made free and clear of, and without deduction or withholding for, any present
or future taxes, levies, imposts, duties, fees, assessments or other charges of
whatever nature now or hereafter imposed by any jurisdiction or by any political
subdivision or taxing authority thereof or therein with respect to such payments
(but excluding, except as provided in the second succeeding sentence, any tax
imposed on or measured by the net income or net profits of a Lender pursuant to
the laws of the jurisdiction in which it is organized or the jurisdiction in
which the principal office or applicable lending office of such Lender is
located or any subdivision thereof or therein) and all interest, penalties or
similar liabilities with respect thereto (all such non-excluded taxes, levies,
imposts, duties, fees, assessments or other charges being referred to
collectively as "Taxes"). If any Taxes are so levied or imposed, the Borrower
agrees to pay the full amount of such Taxes, and such additional amounts as may
be necessary so that every payment of all amounts due under this Agreement or
under any Revolving Note, after withholding or deduction for or on account of
any Taxes, will not be less than the amount provided for herein or in such
Revolving Note. If any amounts are payable in respect of Taxes pursuant to the
preceding sentence, the Borrower agrees to reimburse each Lender, upon the
written request of such Lender, for taxes imposed on or measured by the net
income or net profits of such Lender pursuant to the laws of the jurisdiction in
which such Lender is organized or in which the principal office or applicable
lending office of such Lender is located or under the laws of any political
subdivision or taxing authority of any such jurisdiction in which such Lender is
organized or in which the principal office or applicable lending office of such
Lender is located and for any withholding or similar taxes as such Lender shall
determine are payable by, or withheld from, such Lender but only in respect of
such amounts so paid to or on behalf of such Lender pursuant to the preceding
sentence and in respect of any amounts paid to or on behalf of such Lender
pursuant to this sentence. The Borrower will furnish to the Administrative Agent
within 45 days after the date the payment or other documentary proof providing
evidence of such payment that is satisfactory to the Administrative Agent of any
Taxes is due pursuant to applicable law certified copies of tax receipts
evidencing such payment by the Borrower. The Borrower agrees to indemnify and
hold harmless each

                                      -18-
<PAGE>

Lender, and reimburse such Lender upon its written request, for the amount of
any Taxes so levied or imposed and paid by such Lender.

                  (b)      Each Lender that is not a United States person (as
such term is defined in Section 7701(a)(30) of the Internal Revenue Code) agrees
to deliver to the Borrower and the Administrative Agent on or prior to the
Effective Date, or in the case of a Lender that is an assignee or transferee of
an interest under this Agreement pursuant to Section 1.13 or 13.04 (unless the
respective Lender was already a Lender hereunder immediately prior to such
assignment or transfer), on the date of such assignment or transfer to such
Lender, (i) two accurate and complete original signed copies of Internal Revenue
Service Form W-8ECI or Form W-8BEN (with respect to a complete exemption under
an income tax treaty) (or successor forms) certifying to such Lender's
entitlement to a complete exemption from United States withholding tax with
respect to payments to be made under this Agreement and under any Revolving
Note, or (ii) if the Lender is not a "bank" within the meaning of Section
881(c)(3)(A) of the Internal Revenue Code and cannot deliver either Internal
Revenue Service Form W-8ECI or Form W-8BEN (with respect to a complete exemption
under an income tax treaty) pursuant to clause (i) above, (x) a certificate
substantially in the form of Exhibit D (any such certificate, a "Section
4.04(b)(ii) Certificate") and (y) two accurate and complete original signed
copies of Internal Revenue Service Form W-8BEN (with respect to the portfolio
interest exemption) (or successor form) certifying to such Lender's entitlement
to a complete exemption from United States withholding tax with respect to
payments of interest to be made under this Agreement and under any Revolving
Note. In addition, each Lender agrees that from time to time after the Effective
Date, when a lapse in time or change in circumstances renders the previous
certification obsolete or inaccurate in any material respect, it will deliver to
the Borrower and the Administrative Agent two new accurate and complete original
signed copies of Internal Revenue Service Form W-8ECI, Form W-8BEN (with respect
to the benefits of any income tax treaty), or Form W-8BEN (with respect to the
portfolio interest exemption) and a Section 4.04(b)(ii) Certificate, as the case
may be, and such other forms as may be required in order to confirm or establish
the entitlement of such Lender to a continued exemption from or reduction in
United States withholding tax with respect to payments under this Agreement and
any Revolving Note, or it shall immediately notify the Borrower and the
Administrative Agent of its inability to deliver any such Form or Certificate,
in which case such Lender shall not be required to deliver any such Form or
Certificate pursuant to this Section 4.04(b). Notwithstanding anything to the
contrary contained in Section 4.04(a), but subject to Section 13.04(b) and the
immediately succeeding sentence, (x) the Borrower shall be entitled, to the
extent it is required to do so by law, to deduct or withhold income or similar
taxes imposed by the United States (or any political subdivision or taxing
authority thereof or therein) from interest, fees or other amounts payable
hereunder for the account of any Lender which is not a United States person (as
such term is defined in Section 7701(a)(30) of the Internal Revenue Code) for
U.S. Federal income tax purposes to the extent that such Lender has not provided
to the Borrower U.S. Internal Revenue Service Forms that establish a complete
exemption from such deduction or withholding and (y) the Borrower shall not be
obligated pursuant to Section 4.04(a) hereof to gross-up payments to be made to
a Lender, or to indemnify, hold harmless or reimburse such Lender, in respect of
income or similar taxes imposed by the United States if (I) such Lender has not
provided to the Borrower the Internal Revenue Service Forms required to be
provided to the Borrower pursuant to this Section 4.04(b) or (II) in the case of
a payment, other than interest, to a Lender described in clause (ii) above, to
the extent that such forms do not establish a complete exemption from
withholding of such taxes.

                                      -19-
<PAGE>

Notwithstanding anything to the contrary contained in the preceding sentence or
elsewhere in this Section 4.04 and except as set forth in Section 13.04(b), the
Borrower agrees to pay additional amounts and to indemnify each Lender in the
manner set forth in Section 4.04(a) (without regard to the identity of the
jurisdiction requiring the deduction or withholding) in respect of any amounts
deducted or withheld by it as described in the immediately preceding sentence as
a result of any changes after the Effective Date in any applicable law, treaty,
governmental rule, regulation, guideline or order, or in the interpretation
thereof, relating to the deducting or withholding of income or similar Taxes
(except for changes in the rate of tax on, or determined by reference to, the
net income or net profits of such Lender pursuant to the laws of the
jurisdiction in which it is organized or in which its principal office or
applicable lending office is located or any subdivision thereof or therein
provided that this parenthetical exception shall not apply for purposes of
applying the fourth sentence of Section 4.04(a)).

                  SECTION 5.Conditions Precedent to the Effective Date. The
occurrence of the Effective Date pursuant to Section 13.10 is subject to the
satisfaction of the following conditions:

                  5.01 Execution of Agreement; Revolving Notes. On or prior to
the Effective Date (i) this Agreement shall have been executed and delivered as
provided in Section 13.10 and (ii) there shall have been delivered to the
Administrative Agent for the account of each Lender that has requested same, the
appropriate Revolving Note executed by the Borrower, in each case in the amount,
maturity and as otherwise provided herein.

                  5.02 Officer's Certificate. On the Effective Date, the
Administrative Agent shall have received a certificate, dated the Effective
Date, and signed on behalf of the Borrower by a Responsible Officer, stating
that all conditions in Sections 5.05, 5.07 and 6.02 have been satisfied on such
date.

                  5.03 Opinions of Counsel. The Administrative Agent shall have
received legal opinions addressed to each Agent and the Lenders from (i) New
York counsel opinion of Baker Botts LLP, (ii) the Deputy General Counsel of
CenterPoint Energy and (iii) local counsel opinion of Baker Botts LLP, and, in
each case covering matters, reasonably acceptable to the Administrative Agent
including, without limitation, (x) a no-conflicts opinion as to (1) the
Indebtedness of any Credit Party which will remain outstanding of the Effective
Date (if any) and (2) the CNP Credit Agreement, the RRI Option Agreement and any
other material contracts of CenterPoint Energy and any material contracts of
Parent or its subsidiaries, (y) title, perfection and priority of the security
interests securing the Bond and (z) and such other matters incident to the
transactions contemplated hereby as the Administrative Agent may reasonably
request.

                  5.04 Corporate Documents; Proceedings; etc. On the Effective
Date, the Administrative Agent shall have received from each Credit Party, a
certificate, dated the Effective Date, signed by a Responsible Officer of such
Credit Party, and attested to by the Secretary or Assistant Secretary of such
Credit Party, in the form of Exhibit F with appropriate insertions, together
with copies of (i) the certificate of incorporation and by-laws (or equivalent
organizational documents), (ii) long-form good standing certificates (or
equivalent thereof) of such Credit Party and (iii) the resolutions of such
Credit Party referred to in such certificate, and the foregoing shall be in form
and substance reasonably acceptable to the Administrative Agent.

                                      -20-
<PAGE>

                  (a)      All corporate, partnership, limited liability company
and legal proceedings and all instruments and agreements in connection with the
transactions contemplated by this Agreement and the other Credit Documents shall
be reasonably satisfactory in form and substance to the Administrative Agent,
and the Administrative Agent shall have received all information and copies of
all documents and papers, including governmental approvals, good standing
certificates and bring-down telegrams, if any, which the Administrative Agent
reasonably may have requested in connection therewith, such documents and papers
where appropriate to be certified by proper corporate or governmental
authorities.

                  5.05 (a) Security Documents. On the Effective Date, the
Borrower shall have duly authorized, executed and delivered the Pledge Agreement
in the form of Exhibit G (as modified, supplemented or amended from time to
time, the "Pledge Agreement") and shall have delivered to the Collateral Agent,
as pledgee thereunder, the Pledge Agreement Collateral, and the Pledge Agreement
shall be in full force and effect.

                  (b)      Indenture. On the Effective Date, the Borrower and
the Trustee shall have duly authorized, executed and delivered the Indenture,
dated December 23, 2003 made by the Borrower in favor of JPMorgan Chase Bank as
Trustee in the form of Exhibit H (as modified, supplemented or amended from time
to time the "Indenture") covering all of the Borrower's present and future
Indenture Collateral, together with:

                  (i)      proper Financing Statements (Form UCC-1 or the
         appropriate equivalent) fully executed for filing under the UCC of each
         jurisdiction as may be necessary or, in the opinion of the Collateral
         Agent, desirable to perfect the security interests purported to be
         created by the Indenture;

                  (ii)     certified copies of Requests for Information or
         Copies (Form UCC-11), or equivalent reports, listing all effective
         Financing Statements that name the Parent or any of its Subsidiaries,
         in each case as debtor and that are filed in the jurisdictions referred
         to in clause (1) above, together with copies of such other Financing
         Statements filed in any other jurisdiction that name the Parent or any
         of its Subsidiaries as debtor (none of which shall cover the Indenture
         Collateral except to the extent evidencing Permitted Liens);

                  (iii)    evidence of the completion of all other recordings
         and filings of, or with respect to, the Indenture as may be necessary
         or, in the reasonable opinion of the Collateral Agent, desirable to
         effectively to create a valid and enforceable first priority mortgage
         Lien and otherwise perfect the security interests purported to be
         created by the Indenture; and

                  (iv)     evidence that all other actions necessary or, in the
         reasonable opinion of the Collateral Agent, desirable to perfect and
         protect the security interests purported to be created by the Indenture
         have been taken;

and the Indenture shall be in full force and effect.

                  5.06 Guaranties. On the Effective Date, each Guarantor shall
have duly authorized, executed and delivered the Guaranty and the Guaranty shall
be in full force and effect.

                                      -21-
<PAGE>

                  5.07 Adverse Change; Governmental and Third Party Approvals;
etc. (a) Since December 31, 2002, nothing shall have occurred (and neither the
Administrative Agent nor any Lender shall have become aware of any facts or
conditions not previously known) which the Administrative Agent or the Required
Lenders shall determine could reasonably be expected to have a Material Adverse
Effect.

                  (b)      On or prior to the Effective Date, all necessary
governmental (domestic and foreign) and third party approvals and/or consents in
connection with the transactions contemplated by the Credit Documents and
otherwise referred to herein shall have been obtained and remain in effect, and
all applicable waiting periods shall have expired without any action being taken
by any competent authority which in the reasonable judgment of the
Administrative Agent or the Required Lenders restrains, prevents or imposes
materially adverse conditions upon the consummation of the transactions
contemplated by the Credit Documents. Additionally, there shall not exist any
judgment, order, injunction or other restraint issued or filed or a hearing
seeking injunctive relief or other restraint pending or notified prohibiting or
imposing materially adverse conditions upon the making of any Loan, issuance of
any Letter of Credit or the consummation of the transactions contemplated by the
Credit Documents.

                  (c)      On the Effective Date, no consents or approvals shall
be required to be obtained by CenterPoint Energy or any of its Affiliates or any
Credit Party or any of their Affiliates from (i) the lenders under CenterPoint
Energy's senior credit agreement, dated as of October 7, 2003 and agented by
JPMorgan Chase (as in effect on the Effective Date, the "CNP Credit Agreement")
or (ii) the holders of any option under the RRI Option Agreement, dated as of
December 31, 2000 between CenterPoint Energy (as successor in interest to
Reliant Energy Incorporated) and Reliant Resources Inc. (as in effect on the
Effective Date, the "RRI Option Agreement"), in each case, in connection with
the entering into of (1) this Agreement (and the incurrence of Loans hereunder),
(2) any Security Document (and the granting of Liens thereunder) or (3) any of
the other Credit Document or any other documents referred to therein or herein
(and any transaction contemplated hereby or thereby).

                  5.08 Litigation. On the Effective Date, no litigation by any
entity (private or governmental) shall be pending or threatened with respect to
this Agreement, any other Credit Document or any other documentation executed in
connection herewith and therewith or the transactions contemplated hereby and
thereby, or which the Administrative Agent or the Required Lenders shall
determine has had, or could reasonably be expected to have, a Material Adverse
Effect.

                  5.09 Financial Statements; Projections. On or prior to the
Effective Date, there shall have been delivered to the Administrative Agent and
each Lender (i) true and correct copies of the historical financial statements
referred to in Section 7.05(a) and (ii) detailed projected consolidated
financial statements of the Parent and its Subsidiaries for the period through
December 31, 2008 (the "Projections"), which Projections and historical
financial statements shall (x) in the case of the Projections, reflect the
forecasted financial condition and results of operations of the Parent and its
Subsidiaries after giving effect to the transactions contemplated hereby and by
the other Credit Documents and (y) in each case, be in form and substance
reasonably satisfactory to the Administrative Agent and the Required Lenders.

                                      -22-
<PAGE>

                  5.10 Fees, etc. On the Effective Date, all costs, fees and
expenses (including, without limitation, the reasonable legal fees and expenses
of White & Case LLP) payable to the Lead Arranger, the Agents and the Lenders
shall have been paid to the extent due.

                  5.11 Insurance. On or prior to the Effective Date, the
Administrative Agent shall have received evidence of insurance maintained by the
Parent and its Subsidiaries with responsible and reputable insurance companies
or associations in such amounts, subject to customary self-insurance, and
covering such risks as is customarily carried by companies engaged in the
electric generation industry with similar assets in similar areas which the
Parent and such Subsidiaries operate which insurance shall name the Trustee as
an additional insured and/or loss payee and shall state that such insurance
shall not be cancelled without at least 30 days' prior written notice to the
Trustee.

                  SECTION 6. Conditions Precedent to All Credit Events. The
obligation of each Lender to make Loans (including Loans made on the Effective
Date), and the obligation of an Issuing Lender to issue any Letter of Credit, is
subject, at the time of each such Credit Event, to the satisfaction of the
following conditions:

                  6.01 Effective Date. The Effective Date shall have occurred.

                  6.02 No Default; Representations and Warranties. At the time
of each such Credit Event and also after giving effect thereto (i) there shall
exist no Default or Event of Default and (ii) all representations and warranties
contained herein and in the other Credit Documents shall be true and correct in
all material respects with the same effect as though such representations and
warranties had been made on the date of such Credit Event (it being understood
and agreed that any representation or warranty which by its terms is made as of
a specified date shall be required to be true and correct in all material
respects only as of such specified date).

                  6.03 (a) Notice of Borrowing; Letter of Credit Request. Prior
to the making of each Loan, the Administrative Agent shall have received the
notice required by Section 1.03(a).

                  (b)      Prior to the issuance of each Letter of Credit, the
Administrative Agent and the respective Issuing Lender shall have received a
Letter of Credit Request meeting the requirements of Section 2.03.

The acceptance of the benefit of each Credit Event shall constitute a
representation and warranty by the Borrower to the Agents and each of the
Lenders that all the conditions specified (x) in the case of Credit Events
occurring on the Effective Date, in Section 5 and (y) in the case of Credit
Events occurring on or after the Effective Date, in this Section 6 and
applicable to such Credit Event have been satisfied as of that time. All of the
Revolving Notes, certificates, legal opinions and other documents and papers
referred to in Section 5 and in this Section 6, unless otherwise specified,
shall be delivered to the Administrative Agent at the Notice Office for the
account of each of the Lenders and, except for the Revolving Notes, in
sufficient counterparts or copies for each of the Lenders and shall be in form
and substance reasonably satisfactory to the Lenders.

                  SECTION 7. Representations, Warranties and Agreements. In
order to induce the Lenders to enter into this Agreement and to make the Loans,
and issue (or participate in) the

                                      -23-
<PAGE>

Letters of Credit as provided herein, each Credit Party makes the following
representations, warranties and agreements, in each case after giving effect to
the occurrence of the Effective Date, all of which shall survive the execution
and delivery of this Agreement and the Revolving Notes and the making of the
Loans and issuance of the Letters of Credit, with the occurrence of each Credit
Event on or after the Effective Date being deemed to constitute a representation
and warranty that the matters specified in this Section 7 are true and correct
in all material respects on and as of the Effective Date and on the date of each
such Credit Event (it being understood and agreed that any representation or
warranty which by its terms is made as of a specified date shall be required to
be true and correct in all material respects only as of such specified date).

                  7.01 Corporate Status. Each Credit Party and each of its
Subsidiaries (i) is a duly organized and validly existing corporation, limited
partnership or limited liability company, as the case may be, in good standing
under the laws of the jurisdiction of its organization, (ii) has the corporate,
limited partnership or limited liability company power and authority, as the
case may be, to own its property and assets and to transact the business in
which it is engaged and presently proposes to engage and (iii) is duly qualified
as a foreign corporation, limited partnership or limited liability company, as
the case may be, and is authorized to do business and is in good standing in
each jurisdiction where the ownership, leasing or operation of property or the
conduct of its business requires such qualifications, except, in the case of
preceding clause (iii), in those jurisdictions where the failure to be so
qualified could not reasonably be expected to, either individually or in the
aggregate, have a Material Adverse Effect.

                  7.02 Corporate Power and Authority. Each Credit Party has the
corporate, limited partnership or limited liability company power and authority,
as the case may be, to execute, deliver and carry out the terms and provisions
of each of the Credit Documents to which it is party and has taken all necessary
corporate, limited partnership or limited liability company action, as the case
may be, to authorize the execution, delivery and performance by it of each
Credit Document to which it is a party. Each Credit Party has duly executed and
delivered each Credit Document to which it is party and each such Credit
Document constitutes the legal, valid and binding obligation of such Credit
Party enforceable in accordance with its terms, except to the extent that the
enforcement thereof may be limited by applicable bankruptcy, insolvency,
reorganization or other similar laws affecting creditors' rights generally and
by equity principles (regardless of whether enforcement is sought in equity or
at law).

                  7.03 No Violation. Neither the execution, delivery or
performance by any Credit Party of any Credit Document to which it is a party,
nor compliance by it with any of the terms and provisions thereof, (i) will
contravene any provision of any law, statute, rule or regulation or any order,
writ, injunction or decree of any court or governmental instrumentality, (ii)
will conflict or be inconsistent with or result in any breach of any of the
terms, covenants, conditions or provisions of, or constitute a default under, or
result in the creation or imposition of (or the obligation to create or impose)
any Lien (except pursuant to the Security Documents) upon (x) any property or
asset of such Credit Party or any of its Subsidiaries pursuant to the terms of
any indenture, mortgage, deed of trust, credit agreement, loan agreement or any
other material agreement, contract or instrument to which such Credit Party or
any of its Subsidiaries is a party or by which it or any of their respective
property or assets are bound or to which it may be subject or (y) under the CNP
Credit Agreement or the RRI Option Agreement or (iii) will violate

                                      -24-
<PAGE>

any provision of the articles of incorporation or by-laws (or equivalent
organizational documents) of such Credit Party or any of its Subsidiaries.

                  7.04 Governmental Approvals. No order, consent, approval,
license, authorization or validation of, or filing, recording or registration
with (except as have been obtained or made and are listed in Schedule III
attached hereto, if any, and except for any filings of financing statements,
mortgages and other documents required by the Security Documents, all of which
have been made), or exemption by, any governmental or public body or authority,
or any subdivision thereof, is required to authorize, or is required in
connection with, (i) the execution, delivery and performance of any Credit
Document or (ii) the legality, validity, binding effect or enforceability of any
such Credit Document.

                  7.05 (a) Financial Statements; Financial Condition. The
statements of Consolidated financial condition of the Parent and its
Subsidiaries for the fiscal year ending December 31, 2002 and the nine-month
period ending September 30, 2003 and the related Consolidated statements of
income and cash flows of the Parent and its Subsidiaries for the fiscal year and
nine-month period ended on such dates, as the case may be (which (x) in the case
of the financial statements for the fiscal year ended on December 31, 2002, have
been certified by nationally recognized independent certified public accountants
satisfactory to the Administrative Agent and (y) in the case of all such
financial statements, have heretofore been furnished to the Lenders), fairly
present, in all material respects, the Consolidated financial condition of the
Parent and its Subsidiaries as at such dates and the Consolidated results of the
operations of the Parent and its Subsidiaries for the periods ended on such
dates, all in accordance with generally accepted accounting principles
consistently applied, except for the inclusion of detailed footnotes and subject
to year-end audit adjustments.

                  (b)      Since December 31, 2002, there has been no Material
Adverse Change.

                  7.06 Litigation. There is no pending or threatened action,
suit, investigation, litigation or proceeding, including, without limitation,
any Environmental Action, affecting any Credit Party or any of its Subsidiaries
before any court, agency of any Governmental Authority, or arbitrator that (i)
could reasonably be expected to have a Material Adverse Effect or (ii) purports
to affect the legality, validity or enforceability of this Agreement or any
other Credit Document or the consummation of the transactions contemplated
hereby.

                  7.07 True and Complete Disclosure. All written information
heretofore furnished by or on behalf of any Credit Party to the Administrative
Agent or any Lender for purposes of or in connection with this Agreement, any
Credit Document or any transaction contemplated hereby or thereby is, and all
such information hereafter furnished by or on behalf of any Credit Party to the
Administrative Agent or any Lender will be, true and accurate in all material
respects on the date as of which such information is stated in the light of the
circumstances under which such information was provided (as modified or
supplemented by other information so furnished, when taken together as a whole
as of the date so stated); provided, that, with respect to the Projections, such
Credit Party represents only that such information was prepared in good faith
based on assumptions believed to be reasonable at the time, it being recognized
by the Lenders that such Projections as to future events are not to be viewed as
facts and that actual results during the period or periods covered by any such
projections may differ from the projected results. Each

                                      -25-
<PAGE>

Credit Party has disclosed to the Administrative Agent any and all facts
specific to such Credit Party and its Subsidiaries and known as of the Effective
Date to a Responsible Officer of such Credit Party that could reasonably be
expected to result in a Material Adverse Effect or which could reasonably be
expected to result in a Material Adverse Change.

                  7.08 Use of Proceeds; Margin Regulations. All proceeds of
Loans shall be used (i) to pay fees and expenses incurred in connection with
this Agreement and the other Credit Documents and (ii) for the Borrower's and
its Subsidiaries' ongoing working capital and general corporate purposes
(including, without limitation, the repayment of intercompany loans).

                  (a)      No Credit Party is engaged in the business of
extending credit for the purpose of purchasing or carrying Margin Stock, and no
proceeds of any Loan will be used to purchase or carry any Margin Stock or to
extend credit to others for the purpose of purchasing or carrying any Margin
Stock.

                  7.09 Tax Returns and Payments. Each of Parent and each of its
Subsidiaries has timely filed or caused to be timely filed with the appropriate
taxing authority all federal and state income tax returns and all other material
tax returns, statements, forms and reports for taxes, domestic and foreign (the
"Returns") required to be filed by, or with respect to the income, properties or
operations of, Parent and/or any of its Subsidiaries, except to the extent
failure to make such filings could not reasonably be expected to have a Material
Adverse Effect. The Returns accurately reflect in all material respects all
liability for taxes of Parent and its Subsidiaries for the periods covered
thereby. Each of Parent and each of its Subsidiaries has paid all taxes and
assessments payable, other than those that are being contested in good faith and
adequately disclosed and fully provided for on the financial statements of
Parent and its Subsidiaries in accordance with GAAP, except to the extent
failure to make such payment could not reasonably be expected to have a Material
Adverse Effect. There is no material action, suit, proceeding, investigation,
audit or claim now pending or, to the best knowledge of Parent or any of its
Subsidiaries, threatened by any authority regarding any taxes relating to Parent
or any of its Subsidiaries which could reasonably be expected to have a Material
Adverse Effect. Neither Parent nor any of its Subsidiaries has entered into an
agreement or waiver or been requested to enter into an agreement or waiver
extending any statute of limitations relating to the payment or collection of
taxes of Parent or any of its Subsidiaries which could reasonably be expected to
have a Material Adverse Effect.

                  7.10 Compliance with ERISA. Each Credit Party and each of its
Subsidiaries are in compliance with all applicable laws, ordinances, rules,
regulations, and requirements of governmental authorities (including, without
limitation, Environmental Laws and ERISA and the rules and regulations
thereunder), and have obtained and are in compliance with, all Environmental
Permits required for the operation of the Borrower's business except for any
non-compliance that could not reasonably be expected to have a Material Adverse
Effect. No ERISA Event has occurred which could reasonably be expected to have a
Material Adverse Effect. No Plan has an Unfunded Current Liability which, when
added to the aggregate amount of Unfunded Current Liabilities with respect to
all other Plans, could reasonably be expected to have a Material Adverse Effect.

                                      -26-
<PAGE>

                  7.11 Solvency. On the Effective Date and after giving effect
to the Loans incurred thereon, the transactions and financings contemplated
hereby and by each of the other Credit Documents, (i) the Borrower on a stand
alone basis and (ii) each of the Parent and its Subsidiaries taken as a whole
is, in each case Solvent.

                  7.12 Security Documents.

                  (a)      The security interests created in favor of the
Collateral Agent for the benefit of the Lenders under the Pledge Agreement
constitute first priority perfected security interests in the Pledge Agreement
Collateral subject to no Lien of any other Person. No consents, filings or
recordings are required in order to perfect, and/or maintain the perfection and
priority of, the security interests purported to be created by the Pledge
Agreement.

                  (b)      The Indenture creates, in favor of the Trustee for
the benefit of the Collateral Agent on behalf of the Lenders, a valid and
enforceable perfected first priority security interest in and Lien on all of the
Indenture Collateral, as may be perfected by the filing of the Indenture (and
related UCC fixture filings), superior to and prior to the rights and Liens
(other than Permitted Liens) of all third Persons and subject to no other Liens
other than Permitted Liens. No consents, filings or recordings are required to
maintain the perfection and priority of the security interests purported to be
created by the Indenture. At the time of the granting of any security interests
pursuant to the Indenture the Borrower thereunder has good and marketable title
to all Indenture Collateral referred to therein free and clear of all Liens
(other than Permitted Liens).

                  7.13 Compliance with Statutes, etc. The Borrower and each of
its Subsidiaries is in compliance with all applicable statutes, regulations and
orders of, and all applicable restrictions imposed by, all governmental bodies,
domestic or foreign, in respect of the conduct of their business and the
ownership of their property, except such noncompliances as could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

                  7.14 Investment Company Act. No Credit Party nor any
Subsidiary of any Credit Party is an "investment company" as defined in, or
otherwise subject to regulation under, the Investment Company Act of 1940, as
amended. Neither the execution, delivery or performance by any Credit Party of
any Credit Document to which it is a party, nor compliance by it with any of the
terms and provisions thereof will violate any regulation under the Public
Utility Holding Company Act of 1935, as amended or any order or approval issued
in connection therewith.

                  7.15 Environmental Matters. There are no facts, circumstances
or conditions relating to the past or present business or operations of each
Credit Party or any of its Subsidiaries or any of their predecessors (including
the disposal of any wastes, hazardous substances or other materials), or to any
Real Property at any time owned, leased or operated by any of them, that could
reasonably be expected (i) to give rise to any Environmental Action which could
reasonably be expected to have a Material Adverse Effect, or (ii) to subject any
Real Property owned, leased or operated by each Credit Party or any of its
Subsidiaries to any restrictions on the ownership, lease, occupancy, use or
transfer of such Real Property under any Environmental Law which could
reasonably be expected to have a Material Affect Effect.

                                      -27-
<PAGE>

                  7.16 Existing Indebtedness. On the Effective Date (after
giving effect to the use of proceeds from the Loans made on such date), the
Parent and its Subsidiaries shall have no (x) outstanding Indebtedness for
Borrowed Money (including, without limitation, intercompany Indebtedness for
Borrowed Money) or (y) preferred equity, in each case, except as set forth on
Schedule IV hereto.

                  SECTION 8. Affirmative Covenants. Each Credit Party hereby
covenants and agrees that on and after the Effective Date and until the Total
Commitment and all Letters of Credit have terminated and the Loans, Revolving
Notes and Unpaid Drawings (in each case together with interest thereon), Fees
and all other Obligations (other than indemnities described in Section 13.13
which are not then due and payable) incurred hereunder and thereunder, are paid
in full:

                  8.01 Information Covenants. The Parent and the Borrower shall
furnish to each Lender:

                  (a)      as soon as practicable and in any event within 60
days after the end of each of the first three quarters of each fiscal year of
the Parent, unaudited Consolidated balance sheets of the Parent and its
Subsidiaries, prepared in conformity with GAAP consistently applied, as of the
end of such quarter and Consolidated statements of income and cash flows of the
Parent and its Subsidiaries, prepared in conformity with GAAP consistently
applied, for the period commencing at the end of the previous fiscal year and
ending with the end of such quarter, duly certified (subject to year-end audit
adjustments and the inclusion of abbreviated footnotes) by a Responsible Officer
of the Parent as having been prepared in accordance with GAAP and certificates
of a Responsible Officer of the Parent as to compliance with the terms of this
Agreement and setting forth in reasonable detail the calculations necessary to
demonstrate compliance with Sections 9.08 and 9.09 (which requirement may be
satisfied by delivering the Parent's quarterly report on Form 10-Q with respect
to such fiscal quarter as filed with the Securities and Exchange Commission);

                  (b)      as soon as practicable and in any event within 120
days after the end of each fiscal year of the Parent commencing 2003, a copy of
the annual audit report for such year for the Parent and its Subsidiaries,
containing Consolidated balance sheets of the Parent and its Subsidiaries as of
the end of such fiscal year and Consolidated statements of income and cash flows
of the Parent and its Subsidiaries for such fiscal year accompanied by an
opinion of an independent public accountants, in each case prepared in
conformity with GAAP consistently applied (which requirement may be satisfied by
delivering the Borrower's annual report on Form 10-K with respect to such fiscal
year as filed with the Securities and Exchange Commission) together with a
certificate of a Responsible Officer of the Parent identifying Significant
Subsidiaries determined with respect to such financial statements;

                  (c)      without duplication of any other certificate
described in Section 8.01(a), with each set of statements to be delivered
pursuant to Section 8.01(a) and (b) above, a certificate in a form reasonably
satisfactory to the Administrative Agent, signed by a Responsible Officer of the
Parent certifying compliance with Sections 9.08 and 9.09 and setting out in
reasonable detail the calculations necessary to demonstrate such compliance as
at the date of the most recent balance sheet included in such financial
statements and stating that no Default or Event of

                                      -28-
<PAGE>

Default has occurred and is continuing or, if there is any Default or Event of
Default, describing it and the steps, if any, being taken to cure it.

                  (d)      as soon as practicable and in any event, within seven
Business Days after a Responsible Officer of the Borrower becomes aware of the
occurrence of each Default or Event of Default continuing on the date of such
statement, a statement of a Responsible Officer of the Borrower setting forth
details of such Default or Event of Default and the action that the Borrower has
taken and proposes to take with respect thereto;

                  (e)      within ten (10) days of the filing thereof, copies of
all periodic reports (other than (x) reports on Form 11-K or any successor form,
(y) current reports on Form 8-K that contain no information other than exhibits
filed therewith and (z) reports on Form 10-Q or 10-K or any successor forms)
under the Exchange Act (in each case other than exhibits thereto and documents
incorporated by reference therein)) filed by the Parent with the Securities and
Exchange Commission;

                  (f)      promptly after the commencement thereof, notice of
all actions and proceedings before any court, governmental agency or arbitrator
affecting the Borrower or any of its Subsidiaries of the type described in
Section 7.06;

                  (g)      within ten Business Days after any officer of a
Credit Party or any of its Subsidiaries obtains knowledge thereof, notice of any
of the following environmental matters, to the extent such matters individually
or in the aggregate could reasonably be expected to have a Material Adverse
Effect: (i) any claim against any Credit Party or any of its Subsidiaries, or
any Real Property owned, leased or occupied by any Credit Party or any of its
Subsidiaries, under any Environmental Law; (ii) any condition or occurrence that
results in noncompliance by any Credit Party or any of its Subsidiaries with
Environmental Law or that could reasonably be expected to form the basis of any
Environmental Action against, or to any liability on the part of any Credit
Party or any of its Subsidiaries under any Environmental Law; and (iii) any
condition or occurrence that could reasonably be expected to cause any Real
Property owned, leased or occupied by any Credit Party or any of its
Subsidiaries to be subject to any restrictions on the ownership, lease,
occupancy, use or transfer of such Real Property under any Environmental Law;
such notices shall describe in reasonable detail the nature of the claim,
threatened claim, notice of potential liability, condition or occurrence and the
Credit Party's or such Subsidiary's response thereto;

                  (h)      with reasonable promptness, upon the Borrower or any
ERISA Affiliate becoming aware of (A) the occurrence of any ERISA Event that
could, individually or in the aggregate, be reasonably expected to result in a
liability in excess of $50,000,000 to any Credit Party or any ERISA Affiliate or
that could reasonably be expected to have a Material Adverse Effect, or (B) a
Plan that has an Unfunded Current Liability which, when added to the aggregate
amount of Unfunded Current Liabilities with respect to all other Plans could
reasonably be expected to have a Material Adverse Effect, a written notice
specifying the nature thereof, what action the Credit Party or any ERISA
Affiliate has taken, is taking or proposes to take with respect thereto and,
when known, any action taken or threatened by the Internal Revenue Service, the
Department of Labor or the PBGC with respect thereto;

                                      -29-
<PAGE>

                  (i)      with reasonable promptness, copies of (a) all written
notices received by the Borrower or any ERISA Affiliate from a Multiemployer
Plan sponsor concerning an ERISA Event that could reasonably be expected to
result in a liability in excess of $50,000,000 or that could reasonably be
expected to have a Material Adverse Effect; and (b) such other documents or
governmental reports or filings relating to any Plan or Multiemployer Plan as
the Lenders shall reasonably request;

                  (j)      upon and after the receipt of any Debt Rating the
Borrower shall deliver to the Administrative Agent, notice of any change by S&P
or Moody's in such Debt Rating, promptly upon the effectiveness of any such
change (it being understood that a change in outlook status (e.g. watch status,
negative outlook status) is not a change in rating as contemplated hereby); and

                  (k)      such other information respecting the Parent or any
of its Subsidiaries as any Lender through the Administrative Agent may from time
to time reasonably request.

                  Information required to be delivered pursuant to this Section
8.01 shall be deemed to have been delivered on the date on which the
Administrative Agent receives such Information or notice (which notice the
Administrative Agent shall convey promptly to the Lenders) that such information
has been posted on the Securities and Exchange Commission website on the
internet at sec.gov/edgar/searches.htm or at another website identified in such
notice and accessible by the Lenders without charge; provided that such notice
may be included in a certificate delivered pursuant to Section 8.01(c).

                  8.02 Keeping of Books. Each Credit Party shall keep, and cause
each of its Subsidiaries to keep, proper books of record and account, in which
full and correct entries shall be made of all financial transactions and the
assets and business of such Credit Party and each such Subsidiary in accordance
with GAAP.

                  8.03 Maintenance of Insurance. Each Credit Party shall, and
shall cause each of its respective Subsidiaries to, maintain, insurance with
responsible and reputable insurance companies or associations in such amounts
and covering such risks as is usually carried by companies engaged in similar
businesses and owning similar properties; provided, however, that any Credit
Party or its Subsidiaries may self-insure to the extent consistent with prudent
business practice.

                  8.04 Preservation of Existence, Etc. Each Credit Party shall
preserve and maintain, and cause each of its Subsidiaries to preserve and
maintain, its existence, rights (charter and statutory) and franchises, except
(other than in the case of the Borrower) to the extent such failure could not
reasonably be expected to have a Material Adverse Effect; provided, however,
that the Credit Parties and their Subsidiaries may consummate any merger or
consolidation permitted under Section 9.02 and provided further that no the
Credit Party nor any of its Subsidiaries shall be required to preserve any right
or franchise if the board of directors of the such Credit Party or such
Subsidiary shall determine that the preservation thereof is no longer desirable
in the conduct of the business of such Credit Party or such Subsidiary, as the
case may be, and that the loss thereof is not disadvantageous in any material
respect to such Credit Party, such Subsidiary or the Lenders.

                                      -30-
<PAGE>

                  8.05 Maintenance of Properties, Etc. Each Credit Party shall
maintain and preserve, and cause each of its Subsidiaries to maintain and
preserve, all of its properties that are used or useful in the conduct of its
business in good working order and condition, ordinary wear and tear excepted;
provided, however, the foregoing shall not prohibit the Borrower from (i)
mothballing any of its generating units from time to time in its reasonable
commercial judgment if mothballing such units could not reasonably be expected
to have a Material Adverse Effect or (ii) failing to preserve or maintain any
such properties, the preservation and maintenance of which in the good faith
judgment of the Borrower is inadvisable or unnecessary to the business of the
Borrower or its Subsidiaries, taken as a whole and if the failure to so preserve
or maintain could not reasonably be expected to result in a Material Adverse
Effect.

                  8.06 Maintenance of Existing Business. Each Credit Party shall
maintain and preserve, and cause each of its respective Subsidiaries to maintain
and preserve, its fundamental business of being a company and/or an owner
(directly or indirectly) and operator of power generation facilities; provided,
however, the foregoing shall not prohibit the Borrower from mothballing any of
its generating units from time to time in its reasonable commercial judgment, if
the operation of such units in the good faith judgment of the Borrower is
inadvisable or unnecessary to the business of the Borrower and its Subsidiaries,
taken as a whole and if mothballing such units could not reasonably be expected
to have a Material Adverse Effect.

                  8.07 Compliance with Statutes, etc. Each Credit Party shall
comply, and cause each of its Subsidiaries to comply, with all applicable laws,
rules, regulations and orders, such compliance to include, without limitation,
compliance with ERISA, Environmental Laws and Environmental Permits, except to
the extent the failure to so comply could not reasonably be expected to have a
Material Adverse Effect. Each Credit Party shall pay, or cause to be paid, all
costs and expenses incurred in connection with such compliance, and shall keep
or cause to be kept all Real Property free and clear of any Liens imposed under
Environmental Laws, except to the extent failure to do so could not reasonably
be expected to have a Material Adverse Effect.

                  8.08 Visitation Rights. Each Credit Party shall, and shall
cause each of its Subsidiaries to, at any reasonable time and from time to time,
permit up to six representatives of the Lenders designated by the Required
Lenders, or representatives of the Agents, on not less than five (5) Business
Days' notice, to examine and make copies of and abstracts from the records and
books of account of, and visit the properties of, such Credit Party and each
Subsidiary of such Credit Party and to discuss the general business affairs of
such Credit Party and each of its Subsidiaries with their respective officers
and independent certified public accountants; subject, however, in all cases to
the imposition of such reasonable conditions as such Credit Party and each of
its Subsidiaries shall deem necessary based on reasonable considerations of
safety and security; provided, however, that no Credit Party nor any of its
Subsidiaries shall be required to disclose to any Agent, any Lender or any
agents or representatives thereof any information which is the subject of
attorney-client privilege or attorney work-product privilege properly asserted
by the applicable Person to prevent the loss of such privilege in connection
with such information or which is prevented from disclosure pursuant to a
confidentiality agreement with third parties. Notwithstanding the foregoing,
none of the conditions precedent to the exercise of the right of access
described in the preceding sentence that relate to notice requirements or
limitations on the Persons permitted to exercise such right shall apply at any
time when a Default or an Event of Default shall have occurred.

                                      -31-
<PAGE>

                  8.09 Use of Proceeds. The Borrower shall use the proceeds of
each Credit Event for general corporate purposes, including the repayment of
intercompany obligations owed to CenterPoint Energy and its Subsidiaries,
capital expenditures and working capital of the Borrower and its Subsidiaries
and the repayment of commercial paper.

                  8.10 Payment of Taxes. Each Credit Party shall pay and
discharge, and cause each of its Subsidiaries to pay and discharge, before the
same shall become delinquent, (i) all taxes, assessments and governmental
charges or levies imposed upon it or upon its property and (ii) all lawful
claims that, if unpaid, might become a Lien upon its property or unless the
failure to pay could not reasonably be expected to result in a Material Adverse
Effect; provided, however, that no Credit Party nor any of its Subsidiaries
shall be required to pay or discharge any such tax, assessment, charge or claim
that is being contested in good faith and by proper proceedings and as to which
appropriate reserves are being maintained in accordance with GAAP or unless the
failure to pay could not reasonably be expected to result in a Material Adverse
Effect.

                  8.11 Further Assurances. Each of the Credit Parties shall, and
shall cause each of its Subsidiaries to, at its own expense, make, execute,
endorse, acknowledge, file and/or deliver to the Collateral Agent from time to
time such vouchers, invoices, schedules, confirmatory assignments, conveyances,
financing statements, transfer endorsements, powers of attorney, certificates,
real property surveys, reports, landlord-lender agreements and other assurances
or instruments and take such further steps relating to the collateral covered by
any of the Security Documents as the Collateral Agent may reasonably require.
Furthermore, the Credit Parties shall cause to be delivered to the Collateral
Agent such opinions of counsel and other related documents as may be reasonably
requested by the Administrative Agent to assure themselves that this Section
8.11 has been complied with. Each of the Credit Parties agree that each action
required above by this Section 8.11 shall be completed as soon as possible, but
in no event later than 90 days after such action is requested to be taken by the
Administrative Agent or the Required Lenders.

                  8.12 Future Guarantors. Each of the Credit Parties shall and
shall cause each of its Subsidiaries to promptly upon any Person becoming a
direct or indirect Subsidiary of the Parent to become a guarantor under the
Guaranty by executing an accession agreement in respect of this Agreement in
form and substance reasonably satisfactory to the Administrative Agent, provided
that no such Subsidiary that is not a Domestic Subsidiary shall be required to
become a guarantor under the Guaranty, unless such Subsidiary shall at such time
guarantee any Indebtedness of the Parent or any Domestic Subsidiary.

                  SECTION 9. Negative Covenants. Each Credit Party covenants and
agrees that on and after the Effective Date and until the Total Commitment and
all Letters of Credit have terminated and the Loans, Revolving Notes and Unpaid
Drawings (in each case together with interest thereon), Fees and all other
Obligations (other than indemnities described in Section 13.13 which are not
then due and payable) incurred hereunder and thereunder, are paid in full:

                  9.01 Liens. The Credit Parties shall not pledge, mortgage or
hypothecate, or permit to exist, and shall not permit any Subsidiary (other than
a Project Finance Subsidiary) to pledge, mortgage or hypothecate, or permit to
exist, except in favor of the Borrower or any

                                      -32-
<PAGE>

Wholly-Owned Subsidiary of the Parent (other than a Project Finance Subsidiary),
any Lien upon, any Property at any time owned by such Credit Party or a
Subsidiary of such Credit Party (other than a Project Finance Subsidiary);
provided, however, that this restriction shall not apply to or prevent the
creation or existence of any Permitted Lien.

                  9.02 Consolidation, Mergers or Disposal of Assets. The Credit
Parties shall not, and shall not permit any Subsidiary to, (i) consolidate with,
or merge into or amalgamate with or into, any other Person; (ii) liquidate, wind
up or dissolve itself (or suffer any liquidation or dissolution); or (iii)
convey, sell, transfer, lease or otherwise dispose of all or substantially all
of its assets to any Person, or permit any Subsidiary (other than a Project
Finance Subsidiary) to do so; provided, however, that nothing contained in this
Section 9.02 shall prohibit (A) a merger in which any Credit Party is the
surviving entity thereof; (B) mergers involving Subsidiaries of the Parent in
which any Credit Party or, if no Credit Party is a party to such merger, a
Wholly-Owned Significant Subsidiary of any Credit Party (other than a Project
Finance Subsidiary, except for the case where all parties to such merger are
Project Finance Subsidiaries) is the surviving entity; (C) so long as no Default
or Event of Default has occurred or would result therefrom, a merger involving
any Credit Party other than the Borrower, in which a Wholly-Owned domestic
Subsidiary of CenterPoint Energy is the surviving Person, provided, that, such
surviving Person shall (I) expressly agree in writing to assume all obligations
and liabilities of such Credit Party under this Agreement and each of the other
Credit Documents (including, without limitation, the Guaranty) and (II) take all
actions and deliver all documents reasonably requested by the Administrative
Agent to evidence the assumption of such obligations including, without
limitation, those actions and documents described in Section 5 of this
Agreement, as if such surviving Person were a Credit Party on the Effective
Date; (D) the liquidation, winding up or dissolution of a Significant Subsidiary
of any Credit Party if all of the assets of such Subsidiary are conveyed,
transferred or distributed to any Credit Party or a Wholly-Owned Subsidiary of
any Credit Party (other than a Project Finance Subsidiary, unless such Person is
also a Project Finance Subsidiary); (E) the conveyance, sale, transfer, lease or
other disposal of all or substantially all (or any lesser portion) of the assets
of any Credit Party to another Credit Party or a Wholly-Owned Significant
Subsidiary of any Credit Party (other than a Project Finance Subsidiary, unless
such Significant Subsidiary is also a Project Finance Subsidiary); or (F)
additional conveyances, sales, transfers, leases or other disposals of assets of
any Credit Party and its Subsidiaries, provided, that the aggregate net book
value of all assets of the Credit Parties and their Subsidiaries conveyed, sold,
transferred, leased or otherwise disposed of pursuant to this clause (F) shall
not exceed $200,000,000 or shall constitute assets that are no longer necessary
for the operation of the business of the Credit Parties and their Subsidiaries;
provided that, in each case covered by this Section 9.02, immediately before and
after giving effect to any such merger, dissolution or liquidation, or
conveyance, sale, transfer, lease or other disposition, no Default or Event of
Default shall have occurred and be continuing.

                  9.03 Accounting Changes. The Credit Parties shall 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 or permitted by
GAAP.

                  9.04 Restrictions on Dividends, Intercompany Loans, or
Investments. The Credit Parties shall not permit, or permit any Significant
Subsidiary (other than a Project Finance Subsidiary) to, create or otherwise
cause or permit to exist or become effective any explicit and

                                      -33-
<PAGE>

direct restriction under any agreement evidencing or providing for the issuance
of Indebtedness for Borrowed Money (other than this Agreement) on the ability of
any Significant Subsidiary (other than a Project Finance Subsidiary) to (i) pay
dividends or make any other distributions on its capital stock or pay any
Indebtedness owed to any Credit Party or any Subsidiary of any Credit Party,
(ii) make any loans or advances to or investments in the Borrower or any
Subsidiary of the Borrower, or (iii) transfer any of its property or assets to
the Borrower or any Subsidiary of the Borrower; provided, that the foregoing
shall not prohibit financial incurrence, maintenance and similar covenants that
indirectly have the practical effect of prohibiting or restricting the ability
of a Significant Subsidiary to make such payments or provisions that require
that a certain amount of capital be maintained, or prohibit the return of
capital to shareholders above certain dollar limits; provided, further, that the
foregoing shall not apply to (i) restrictions and conditions imposed by law or
by this Agreement, (ii) restrictions and conditions existing on the date hereof,
any amendment or modification thereof (other than an amendment or modification
expanding the scope of any such restriction or condition and any restrictions or
conditions) that (x) replace restrictions or conditions existing on the date
hereof and (y) are substantially similar to such existing restriction or
condition, (iii) restrictions (including any extension of such restrictions that
does not expand the scope of any such restrictions) existing at the time at
which any such Subsidiary first becomes a Significant Subsidiary, so long as
such restriction was in existence prior to such time in accordance with the
other provisions of this Agreement and was not agreed to or incurred in
contemplation of such change of status and (iv) any restrictions with respect to
a Significant Subsidiary imposed pursuant to an agreement that has been entered
into in connection with a disposition of all or substantially all of the Equity
Interests or assets of such Subsidiary, so long as such disposal is otherwise
permitted under this Agreement.

                  9.05 Affiliate Transactions. The Credit Parties shall not, and
shall not permit any Subsidiary of such Credit Party to, make, directly or
indirectly, (i) any transfer, sale, lease or other disposition of any Property
to any Affiliate of such Credit Party or any Subsidiary of such Credit Party or
any purchase or acquisition of any Property from any such Affiliate; or (ii) any
other arrangement or transaction directly or indirectly with or for the benefit
of any such Affiliate (including without limitation, guaranties and assumptions
of obligations of any such Affiliate); provided, that (A) any Credit Party and
their Subsidiaries may enter into any arrangement or other transaction with any
such Affiliate if the monetary or business consideration arising therefrom would
be substantially at least as advantageous to such Credit Party or such
Subsidiary as the monetary or business consideration which would be obtained in
a comparable arm's length transaction with a Person not an Affiliate of such
Credit Party or any Subsidiary of such Credit Party; (B) the Credit Parties and
their Subsidiaries may become liable in connection with guaranties of the
obligations of any such Affiliate in the ordinary course of business, (C) the
Credit Parties and their Subsidiaries may make purchases of receivables of any
kind from the Credit Parties and their Subsidiaries on terms that any of them
deem acceptable; (D) the Credit Parties may enter into any arrangement or other
transaction with any Wholly-Owned Subsidiary of the any Credit Party, and any
Wholly-Owned Subsidiary of any Credit Party may enter into any arrangement or
other transaction with any Credit Party or any other Wholly-Owned Subsidiary of
any Credit Party, in each case under this clause (D) only if such arrangements
and other transactions do not involve any Person other than a Credit Party or
any Wholly-Owned Subsidiaries of a Credit Party; (E) the Credit Parties may
enter into arrangements or other transactions permitted by Section 9.02(D) and
(F) any Credit Party and any Subsidiary

                                      -34-
<PAGE>

of a Credit Party may, directly or indirectly, enter into any arrangement or
transaction with any Affiliate (including with CenterPoint Energy or its
Subsidiaries) (i) that is authorized by order of the Securities and Exchange
Commission ("SEC") under the Public Utility Holding Company Act of 1935, as
amended; (ii) that is in existence on the Effective Date or is described in
Parent's filings with the SEC on the Effective Date; or (iii) on terms not
substantially less favorable to the Credit Party or its Subsidiaries than the
terms of similar arrangements or transactions that are entered into from time to
time among CenterPoint Energy or any of its Affiliates that are not a Credit
Party or its Subsidiaries. Notwithstanding anything to the contrary contained in
this Section 9.05 no Credit Party may make any loan, investment, advance or any
extension of credit to CenterPoint Energy or its Affiliates that are not Credit
Parties or their Subsidiaries, provided, however, that (i) at any time any Loan
or Letter of Credit is outstanding hereunder and so long as no Default or Event
of Default is in existence or would result therefrom, the Credit Parties may
make intercompany loans under and pursuant to the Money Pool, in each case up to
an aggregate principal amount of $100,000,000 (determined without giving effect
to any write-downs or write-offs thereof) outstanding at any time and (ii) at
any time no Loan or Letter of Credit is outstanding hereunder and so long as no
Default or Event of Default is in existence or would result therefrom, the
Credit Parties may make intercompany loans under and pursuant to the Money Pool
in excess of $100,000,000 (determined without giving effect to any write-downs
or write-offs thereof).

                  9.06 Payments on Preferred Stock. The Credit Parties shall
not, and shall not permit any Subsidiary of the Borrower to, make or agree to
make any payment or other distribution on or in connection with, or purchase,
redeem or otherwise acquire or agree to do so, or convert or exchange or agree
to convert or exchange, in whole or in part, any capital stock or other equity
interest of the Borrower or any Subsidiary of the Borrower, in whole or in part
(including, without limitation, dividends), in each case if prior to and
immediately after giving effect thereto, any Default or Event of Default exists
or would occur.

                  9.07 Use of Proceeds; Regulation U. The Borrower shall not
directly or indirectly use the proceeds of any Borrowing (i) to purchase or
carry, within the meaning of Regulation U, any Margin Stock, (ii) to participate
in any tender offer for the securities of any Person, unless such tender offer
has been approved by the board of directors, general partners or other governing
body of such Person or (iii) for any purpose that would violate or result in a
violation of any law or regulation. No Credit Party shall, nor shall permit any
of its Subsidiaries to engage principally, or as one of its important
activities, in the business of extending credit for the purpose of purchasing or
carrying, within the meaning of Regulation U, any Margin Stock.

                  9.08 Maximum Total Debt for Borrowed Money to Consolidated
Capitalization Ratio. The Borrower shall not permit the ratio of Total Debt for
Borrowed Money to Consolidated Capitalization to be greater than 0.50:1.00,
calculated on a quarterly basis.

                  9.09 Minimum EBITDA to Cash Interest Ratio. The Borrower shall
not permit the ratio of EBITDA to Cash Interest for the immediately preceding
four calendar quarters to be less than 4.00:1.00, calculated on a quarterly
basis.

                  SECTION 10. Events of Default. Upon the occurrence of any of
the following specified events (each an "Event of Default"):

                                      -35-
<PAGE>

                  10.01 Payments. The Borrower shall fail (i) to pay any
principal of any Loan or Revolving Note, or any Unpaid Drawing when the same
becomes due and payable; or the Borrower shall fail to pay any interest on any
Loan or Revolving Note or any Unpaid Drawing or (ii) make any other payment of
fees or other amounts payable under this Agreement or any Revolving Note within
five Business Days after the same becomes due and payable; or

                  10.02 Representations, etc. Any representation or warranty
made by or on behalf of any Credit Party (or any of its officers) in this
Agreement or any other Credit Document shall prove to have been incorrect in any
material respect when made; or

                  10.03 Covenants. (i) any Credit Party shall fail to perform or
observe any term, covenant or agreement contained in Sections 8.01(d), 8.04,
8.06 or 8.08, Section 9 or Section 14, or (ii) any Credit Party shall fail to
perform or observe any other term, covenant or agreement contained in this
Agreement on its part to be performed or observed if such failure shall not have
been remedied within 30 days; or

                  10.04 Default Under Other Agreements. Any Credit Party or any
of its Significant Subsidiaries (other than a Project Finance Subsidiary) shall
fail to pay any principal of or premium or interest on any Indebtedness for
Borrowed Money that is outstanding in a principal amount of at least $30,000,000
individually or in the aggregate (but excluding Indebtedness outstanding
hereunder) of such Credit Party or such Subsidiary (as the case may be), when
the same becomes due and payable (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise), and such failure shall continue
after the applicable grace period, if any, specified in the agreement or
instrument relating to such Indebtedness; or any other event shall occur or
condition shall exist under any agreement or instrument relating to any such
Indebtedness and shall continue after the applicable grace period, if any,
specified in such agreement or instrument, if the effect of such event or
condition is to accelerate, or to permit the acceleration of, the maturity of
such Indebtedness; or any such Indebtedness shall be declared to be due and
payable, or required to be prepaid or redeemed (other than by a regularly
scheduled required prepayment or redemption), purchased or defeased, or an offer
to prepay, redeem, purchase or defease such Indebtedness shall be required to be
made, in each case prior to the stated maturity thereof; or

                  10.05 Bankruptcy, etc. Any Credit Party or any of its
Significant Subsidiaries (other than a Project Finance Subsidiary) shall
generally not pay its debts as such debts become due, or shall admit in writing
its inability to pay its debts generally, or shall make a general assignment for
the benefit of creditors; or any proceeding shall be instituted by or against
such Credit Party or any of its Significant Subsidiaries (other than any Project
Finance Subsidiary) seeking to adjudicate it a bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment, protection,
relief, or composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the entry of an
order for relief or the appointment of a receiver, trustee, custodian or other
similar official for it or for any substantial part of its property and, in the
case of any such proceeding instituted against it (but not instituted by it),
either such proceeding shall remain undismissed or unstayed for a period of 30
days, or any of the actions sought in such proceeding (including, without
limitation, the entry of an order for relief against, or the appointment of a
receiver, trustee, custodian or other similar official for, it or for any
substantial part of its property) shall

                                      -36-
<PAGE>

occur; or any Credit Party or any of its Significant Subsidiaries (other than
any Project Finance Subsidiary) shall take any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in, any of the acts
described in this Section 10.05; or

                  10.06 Judgments. Judgments or orders for the payment of money
in excess of $30,000,000 individually or in the aggregate shall be rendered
against any Credit Party or any of its Significant Subsidiaries (other than a
Project Finance Subsidiary) and either (i) enforcement proceedings shall have
been commenced by any creditor upon such judgment or order or (ii) there shall
be any period of 30 consecutive days during which a stay of enforcement of such
judgment or order, by reason of a pending appeal or otherwise, shall not be in
effect; or

                  10.07 Non-Monetary Judgments. Any non-monetary judgment or
order shall be rendered against any Credit Party or any of its Significant
Subsidiaries (other than a Project Finance Subsidiary) that could be reasonably
expected to have a Material Adverse Effect, and there shall be any period of 10
consecutive days during which a stay of enforcement of such judgment or order,
by reason of a pending appeal or otherwise, shall not be in effect; or

                  10.08 Change of Control. For any reason, (i) CenterPoint
Energy fails to own, directly or indirectly, at least 50% of the economic
interest in the Borrower or (ii) CenterPoint Energy fails to own, directly or
indirectly, at least 50% of the outstanding shares of stock, Voting Stock or
other ownership interests having ordinary voting power (other than stock or such
other ownership interests having such power only by reason of the happening of a
contingency) to elect directors or other managers of the general partner of the
Borrower or (iii) the Parent fails to own, directly or indirectly, at least 50%
of the economic interest in the Borrower or (iv) the Parent fails to own at
least 50% of the outstanding shares of stock, Voting Stock or other ownership
interests having ordinary voting power (other than stock or such other ownership
interests having such power only by reason of the happening of a contingency) to
elect directors or other managers of the general partner of the Borrower; or

                  10.09 ERISA. Any Credit Party or any of its ERISA Affiliates
shall incur, or could be reasonably expected to incur, any liability in excess
of $50,000,000 individually or in the aggregate as a result of the occurrence of
any ERISA Event, or a Plan has an Unfunded Current Liability which, when added
to the aggregate amount of Unfunded Current Liabilities with respect to all
other Plans, could reasonably be expected to have a Material Adverse Effect, in
each case, if such liability or Unfunded Current Liability, as the case may be,
is not discharged, satisfied or otherwise reduced below the respective threshold
amounts described or set forth above in this Section 10.09 within 30 days from
the date such liability or Unfunded Current Liability, as the case may be,
exceeded such threshold amount;

                  10.10 Security Documents. Any Security Document shall cease to
be in full force and effect in all material respects, or shall cease to give the
Collateral Agent or the Trustee for the benefit of the Collateral Agent, as the
case may be the Liens, rights, powers and privileges purported to be created
thereby in favor of the Collateral Agent or the Trustee for the benefit of the
Collateral Agent, as the case may be, or (b) any Credit Party shall default in
the due performance or observance of any term, covenant or agreement on its part
to be performed or observed pursuant to any such Security Document and such
default shall continue beyond any

                                      -37-
<PAGE>

cure or grace period specifically applicable thereto pursuant to the terms of
such Security Document; or

                  10.11 Guaranty. The Guaranty or any provision thereof shall
cease to be in full force and effect in all material respects, or any Guarantor
or any Person acting by or on behalf of such Guarantor shall deny or disaffirm
such Guarantor's obligations under any Guaranty;

then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Administrative Agent, upon the written request of
the Required Lenders, shall by written notice to the Borrower, take any or all
of the following actions, without prejudice to the rights of any Agent, any
Lender or the holder of any Revolving Note to enforce its claims against any
Credit Party (provided that, if an Event of Default specified in Section 10.05
shall occur with respect to the Borrower, the result of which would occur upon
the giving of such written notice by the Administrative Agent to the Borrower as
specified in clauses (i) and (ii) below shall occur automatically without the
giving of any such notice): (i) declare the Total Commitment terminated,
whereupon the Commitment of each Lender shall forthwith terminate immediately
and any Commitment Commission and other Fees shall forthwith become due and
payable without any other notice of any kind; (ii) declare the principal of and
any accrued interest in respect of all Loans and the Revolving Notes and all
Obligations owing hereunder and thereunder to be, whereupon the same shall
become, forthwith due and payable without presentment, demand, protect or other
notice of any kind, all of which are hereby waived by each Credit Party; (iii)
terminate any Letter of Credit which may be terminated in accordance with its
terms; and (iv) direct the Borrower to pay (and the Borrower agrees that upon
receipt of such notice, or upon the occurrence of an Event of Default specified
in Section 10.05 with respect to the Borrower, it will pay) to the
Administrative Agent at the Payment Office such additional amount of cash, to be
held as security by the Administrative Agent, as is equal to the aggregate
Stated Amount of all Letters of Credit issued for the account of the Borrower
then outstanding.

                  SECTION 11. Definitions and Accounting Terms.

                  11.01 Defined Terms. As used in this Agreement, the following
terms shall have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):

                  "Acquired Entity" shall have the meaning set forth in the
definition of "Permitted Liens".

                  "Administrative Agent" shall mean DBAG, in its capacity as
Administrative Agent for the Lenders hereunder, and shall include any successor
to the Administrative Agent appointed pursuant to Section 12.09.

                  "Affiliate" of any Person shall mean any other Person that,
directly or indirectly, Controls or is Controlled by or is under common Control
with such first Person.

                  "Agents" shall mean and include (i) the Administrative Agent,
(ii) the Collateral Agent, (iii) for the purposes of Section 12 only, the
Documentation Agent and (iv) for purposes of Sections 12, 13.01, 13.12 and 13.15
only, the Lead Arranger.

                                      -38-
<PAGE>

                  "Agreement" shall mean this Credit Agreement, as modified,
supplemented, amended, restated, extended, renewed or replaced from time to
time.

                  "Applicable Commitment Commission Percentage" and "Applicable
Margin" shall mean (i) at all times when there is not a Debt Rating from both
Moody's and S&P (x) with respect to Commitment Commission, a percentage per
annum equal to 0.25% and (y) with respect to Loans maintained as (i) Eurodollar
Loans, a percentage per annum equal to 1.50% and (ii) Base Rate Loans, a
percentage per annum equal to 0.50% and (2) at all times after the receipt of an
initial Debt Rating from both Moody's and S&P by the Borrower (A) with respect
to Commitment Commission, the respective percentage per annum set forth below
under the column "Applicable Commitment Commission Percentage" and (B) with
respect to Loans, maintained as (i) Eurodollar Loans, the respective percentage
per annum set forth below under the column "Eurodollar Margin" below and (ii)
Base Rate Loans, the respective percentage per annum set forth below under the
column "Base Rate Margin" and, in the case of preceding clauses (A) and (B),
opposite the respective Level (i.e., Level 1, Level 2, Level 3, Level 4, Level 5
or Level 6, as the case may be) that is currently then in effect based on the
Debt Rating:

<TABLE>
<CAPTION>
                                                                                          Applicable
                                                                                          Commitment
                                                                 Eurodollar   Base Rate   Commission
Level                                                              Margin      Margin     Percentage
----------------------------------------------------------------------------------------------------
<S>                                                              <C>          <C>         <C>
Level 1
a rating from S&P of A- or above and a rating from
Moody's of A3 or above                                              0.75%        0.0%        0.10%
----------------------------------------------------------------------------------------------------
Level 2
does not qualify for Level 1, with a rating from S&P of
BBB+ or above and a rating from Moody's of Baa1 or
above                                                              0.875%        0.0%       0.125%
----------------------------------------------------------------------------------------------------
Level 3
does not qualify for Level 1 or Level 2, with a
rating from S&P of BBB or above and a rating from
Moody's of Baa2 or above.                                           1.00%        0.0%        0.15%
----------------------------------------------------------------------------------------------------
Level 4
does not qualify for Level 1, Level 2 or Level 3 with a
rating from S&P of BBB- or above and a rating from
Moody's of Baa3 or above                                            1.25%       0.25%        0.20%
----------------------------------------------------------------------------------------------------
Level 5
does not qualify for Level 1, Level 2, Level 3 or Level 4,
but has a rating from S&P of at least BB+ or above or a
rating from Moody's of Ba1 or above, and the other
such rating agency shall have a rating in the case of S&P, of
BBB- or above or in the case of Moody's, of Baa3 or
above, as the case may be.                                          1.50%       0.50%        0.25%
----------------------------------------------------------------------------------------------------
Level 6
does not qualify for Level 1, Level 2, Level 3, Level 4 or
Level 5                                                             1.75%       0.75%        0.30%
----------------------------------------------------------------------------------------------------
</TABLE>

                                      -39-
<PAGE>

; provided that (I) Level 6 pricing shall apply at all times (x) when a Default
under Section 10.01 or 10.05 or an Event of Default is in existence or (y) after
the Borrower has received an initial Debt Rating, either or both rating agencies
no longer maintain any such rating and (II) any change in the Applicable Margin
or the Applicable Commitment Commission Percentage due to a change in the Debt
Rating shall be effective on the effective date of such change in the applicable
Debt Rating.

                  "Assignment and Assumption Agreement" shall mean the
Assignment and Assumption Agreement substantially in the form of Exhibit I
(appropriately completed).

                  "Bankruptcy Code" shall mean Title 11 of the United States
Code entitled "Bankruptcy" as now or hereafter in effect or any successor
thereto.

                  "Base Rate" shall mean the higher of (x) the Prime Lending
Rate and (y) 1/2 of 1% in excess of the overnight Federal Funds Rate.

                  "Base Rate Loan" shall mean each Loan designated or deemed
designated as such by the Borrower at the time of the incurrence thereof or
conversion thereto.

                  "Board" shall mean the Board of Governors of the Federal
Reserve System of the United States (or any successor).

                  "Bond" shall mean the bond in the original principal amount of
the Total Commitment as in effect on the Effective Date issued under the
Indenture and pledged pursuant to the Pledge Agreement.

                  "Borrowed Money" of any Person shall mean any Indebtedness of
such Person for or in respect of money borrowed or raised by whatever means
(including acceptances, deposits and lease obligations under Capital Leases);
provided, however, that Borrowed Money shall not include (a) any guarantees that
may be incurred by endorsement of negotiable instruments for deposit or
collection in the ordinary course of business or similar transactions, (b) any
obligations or guarantees of performance of obligations under a franchise,
performance bonds, franchise bonds, obligations to reimburse drawings under
letters of credit issued in accordance with the terms of any safe harbor lease
or franchise or in lieu of performance or in lieu of franchise bonds or other
obligations that do not represent money borrowed or raised, which reimbursement
obligations in each case shall be payable in full within ten (10) Business Days
after the date upon which such obligation arises, (c) trade payables, (d)
customer advance payments and deposits arising in the ordinary course of such
Person's business, (e) operating leases and (f) obligations under swap
agreements.

                  "Borrower" shall have the meaning provided in the first
paragraph of this Agreement.

                  "Borrowing" shall mean the incurrence of one Type of Loan by
the Borrower from all of the Lenders on a pro rata basis on a given date (or
resulting from conversions on a given date), having in the case of Eurodollar
Loans the same Interest Period; provided that Base

                                      -40-
<PAGE>

Rate Loans incurred pursuant to Section 1.10(b) shall be considered part of any
related Borrowing of Eurodollar Loans.

                  "Business Day" shall mean (i) for all purposes other than as
covered by clause (ii) below, any day except Saturday, Sunday and any day which
shall be in New York City a legal holiday or a day on which banking institutions
are authorized or required by law or other government action to close and (ii)
with respect to all notices and determinations in connection with, and payments
of principal and interest on, Eurodollar Loans, any day which is a Business Day
described in clause (i) above and which is also a day for trading by and between
banks in the New York interbank Eurodollar market.

                  "Capital Lease" shall mean a lease that, in accordance with
GAAP, would be recorded as a capital lease on the balance sheet of the lessee.

                  "Cash Interest" shall mean interest expense of the Parent and
its Subsidiaries, to the extent actually paid in cash, during the relevant
period; provided that Cash Interest for the quarter ended December 31, 2002
shall be deemed to be an amount equal to $1,956,000.

                  "CenterPoint Energy" shall mean CenterPoint Energy, Inc., a
Texas corporation.

                  "CNP Credit Agreement" shall have the meaning provided in
Section 5.07(c).

                  "Collateral Agent" shall mean Deutsche Bank AG New York
Branch, in its capacity of collateral agent under the Credit Documents.

                  "Commitment" shall mean, for each Lender, the amount set forth
opposite such Lender's name in Schedule I hereto directly below the column
entitled "Commitment," as same may be (x) reduced from time to time pursuant to
Sections 1.14, 3.02, 3.03 and/or 10 or (y) adjusted from time to time as a
result of assignments to or from such Lender pursuant to Section 1.13 or
13.04(b).

                  "Commitment Commission" shall have the meaning provided in
Section 3.01(a).

                  "Consolidated" refers to the consolidation of accounts in
accordance with GAAP.

                  "Consolidated Capitalization" shall mean the sum of (a)
Consolidated Shareholders' Equity, (b) Consolidated Indebtedness for Borrowed
Money and (c) without duplication, any Mandatory Payment Preferred Stock.

                  "Consolidated Net Tangible Assets" shall mean the total amount
of assets of the Parent and its Subsidiaries less, without duplication, (a)
total current liabilities (excluding Indebtedness for Borrowed Money due within
12 months); (b) all reserves for depreciation and other asset valuation
reserves, but, excluding reserves for deferred federal income taxes arising from
accelerated amortization or otherwise; (c) all intangible assets such as
goodwill, trademarks, trade names, patents and unamortized debt discount and
expense carried as an asset; and (d) all appropriate adjustments on account of
minority interests of other persons holding common stock of any Subsidiary; all
as reflected in the Parent's audited consolidated balance

                                      -41-
<PAGE>

sheet most recently delivered pursuant hereto prior to the date of a
determination of Consolidated Net Tangible Assets hereunder.

                  "Consolidated Shareholders' Equity" shall mean, as of any date
of determination, the total assets of the Parent and its Consolidated
Subsidiaries less all liabilities of the Parent and its Consolidated
Subsidiaries. (As used in this definition, "liabilities" means all obligations
that, in accordance with GAAP consistently applied, would be classified on a
balance sheet as liabilities, including, without limitation, (a) Indebtedness;
(b) deferred liabilities; and (c) Indebtedness of the Parent or any of its
Consolidated Subsidiaries that is expressly subordinated in right and priority
of payment to other liabilities of the Parent or such Consolidated Subsidiaries,
as the case may be, but in any case excluding as at such date of determination
any adjustment, non-cash charge to net income or other non-cash charges or
write-offs resulting thereto from the application of SFAS No. 142 and similar
provisions of GAAP).

                  "Controlled" shall mean, with respect to any Person, the
ability of another Person (whether directly or indirectly and whether by the
ownership of voting securities, contract or otherwise) to appoint and/or remove
the majority of the members of the board of directors or other governing body of
that Person (and "Control" and "Controls" shall be similarly construed).

                  "Credit Documents" shall mean this Agreement (including,
without limitation, the Guaranty), the Revolving Notes, the Security Documents,
each Letter of Credit and all other documents executed in connection herewith
and therewith, including, without limitation, each Notice of Borrowing.

                  "Credit Event" shall mean the making of any Loan or the
issuance of any Letter of Credit.

                  "Credit Party" shall mean the Borrower and each Guarantor.

                  "DBAG" shall mean Deutsche Bank AG New York Branch, in its
individual capacity.

                  "Debt Rating" shall mean, on any date, each of the ratings
most recently publicly announced by Moody's and S&P for the Borrower's
non-credit enhanced senior secured long-term Indebtedness.

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

                  "Defaulting Lender" shall mean any Lender with respect to
which a Lender Default is in effect.

                  "Documentation Agent" shall mean Compass Bank, in its capacity
as Documentation Agent.

                  "Dollars" and the sign "$" shall each mean freely transferable
lawful money of the United States.

                                      -42-
<PAGE>

                  "Domestic Subsidiary" shall mean each Subsidiary of the Parent
that is incorporated or organized in the United States, any State or territory
thereof or the District of Columbia or which is treated as a partnership by the
Parent or any Domestic Subsidiary thereof or a disregarded entity pursuant to
the provisions of Treasury Regulations Section 301.7701-3.

                  "Drawing" shall have the meaning provided in Section 2.05(b).

                  "EBITDA" shall mean, for any period, net income (or net loss)
plus the sum of (a) interest expense, (b) income tax expense, (c) depreciation
expense, (d) amortization expense and (e) to the extent reflected as a charge in
the computation of net income for such period, any other non-cash charges, in
each case determined in accordance with GAAP for such period, provided that,
EBITDA for the quarter ended December 31, 2002 will be deemed to be an amount
equal to -$27,878,000.

                  "Effective Date" shall have the meaning provided in Section
13.10.

                  "Eligible Transferee" shall mean and include a commercial
bank, a financial institution, any fund that regularly invests in bank loans or
other "accredited investor" (as defined in Regulation D of the Securities Act)
but in any event excluding the Borrower and its Subsidiaries.

                  "Environmental Action" shall mean any action, suit, demand,
demand letter, claim, notice of non-compliance or violation, notice of liability
or potential liability, investigation, proceeding, consent order or consent
agreement relating in any way to any Environmental Law, Environmental Permit or
Hazardous Materials or arising from alleged injury or threat of injury to
health, safety or the environment, including, without limitation, (a) by any
governmental or regulatory authority for enforcement, cleanup, removal,
response, remedial or other actions or damages and (b) by any governmental or
regulatory authority or any third party for damages, contribution,
indemnification, cost recovery, compensation or injunctive relief.

                  "Environmental Law" shall mean any federal, state, local or
foreign statute, law, ordinance, rule, regulation, code, order, judgment, rule
of common law, decree or judicial or agency interpretation, policy or guidance
having the force of law relating to pollution or protection of the environment,
health, safety or natural resources, including, without limitation, those
relating to the use, handling, transportation, treatment, storage, disposal,
release or discharge of Hazardous Materials.

                  "Environmental Permit" shall mean any permit, approval,
identification number, license or other authorization required under any
Environmental Law.

                  "Equity Interests" shall mean any capital stock, partnership,
joint venture, member or limited liability or unlimited liability company
interest, beneficial interest in a trust or similar entity or other equity
interest or investment of whatever nature.

                  "ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time, and the regulations promulgated and
rulings issued thereunder.

                                      -43-
<PAGE>

                  "ERISA Affiliate" shall mean any Person that for purposes of
Title IV of ERISA is a member of the Borrower's controlled group, or under
common control with the Borrower, within the meaning of Section 414 of the
Internal Revenue Code.

                  "ERISA Event" shall mean (a) (i) the occurrence of a
reportable event, within the meaning of Section 4043 of ERISA, with respect to
any Plan unless the 30-day notice requirement with respect to such event has
been waived by the PBGC, or (ii) the requirements of subsection (1) of Section
4043(b) of ERISA (without regard to subsection (2) of such Section) are met with
respect to a contributing sponsor, as defined in Section 4001(a)(13) of ERISA,
of a Plan, and an event described in paragraph (9), (10), (11), (12) or (13) of
Section 4043(c) of ERISA is reasonably expected to occur with respect to such
Plan within the following 30 days; (b) the application for a minimum funding
waiver with respect to a Plan; (c) the provision by the administrator of any
Plan of a notice of intent to terminate such Plan pursuant to Section 4041(a)(2)
of ERISA (including any such notice with respect to a plan amendment referred to
in Section 4041(e) of ERISA); (d) the cessation of operations at a facility of
the Borrower or any ERISA Affiliate in the circumstances described in Section
4062(e) of ERISA; (e) the withdrawal by the Borrower or any ERISA Affiliate from
a Multiple Employer Plan during a plan year for which it was a substantial
employer, as defined in Section 4001(a)(2) of ERISA; (f) the conditions for the
imposition of a lien under Section 302(f) of ERISA or Section 412(n) of the
Internal Revenue Code shall have been met with respect to any Plan; (g) the
adoption of an amendment to a Plan requiring the provision of security to such
Plan pursuant to Section 307 of ERISA; (h) the institution by the PBGC of
proceedings to terminate a Plan pursuant to Section 4042 of ERISA, or the
occurrence of any event or condition described in Section 4042 of ERISA that
constitutes grounds for the termination of, or the appointment of a trustee to
administer, a Plan; (i) using actuarial assumptions and computation methods
consistent with Part 1 of subtitle E of Title IV of ERISA, the aggregate
liabilities of the Borrower and its ERISA Affiliates to all Multiemployer Plans
in the event of a complete withdrawal therefrom, as of the close of the most
recent fiscal year of each such Multiemployer Plan ended prior to the date of
the most recent Credit Event, exceed $50,000,000; (j) the partial or complete
withdrawal of the Borrower or any of its ERISA Affiliates from a Multiemployer
Plan; and (k) the reorganization or termination of a Multiemployer Plan.

                  "Eurodollar Loan" shall mean each Loan designated as such by
the Borrower at the time of the incurrence thereof or conversion thereto.

                  "Eurodollar Rate" shall mean with respect to each Interest
Period for a Eurodollar Loan, (i) the arithmetic average (rounded to the nearest
1/100 of 1%) of the offered quotation to first-class banks in the New York
interbank Eurodollar market by DBAG for U.S. dollar deposits of amounts in same
day funds comparable to the outstanding principal amount of the Eurodollar Loan
of DBAG for which an interest rate is then being determined with maturities
comparable to the Interest Period to be applicable to such Eurodollar Loan,
determined as of 10:00 A.M. (New York City time) on the Interest Determination
Date for such Interest Period divided (and rounded upward to the next whole
multiple of 1/16 of 1%) by (ii) a percentage equal to 100% minus the then stated
maximum rate of all reserve requirements (including, without limitation, any
marginal, emergency, supplemental, special or other reserves) applicable to any
member bank of the Federal Reserve System in respect of Eurocurrency liabilities
as defined in Regulation D (or any successor category of liabilities under
Regulation D).

                                      -44-
<PAGE>

                  "Event of Default" shall have the meaning provided in Section
10.

                  "Exchange Act" shall mean the Securities Exchange Act of 1933,
as amended.

                  "Excess Funding Guarantor" shall have the meaning provided in
Section 14.07(b).

                  "Excess Payment" shall have the meaning provided in Section
14.07(b).

                  "Facing Fee" shall have the meaning provided in Section
3.01(c).

                  "Federal Funds Rate" shall mean for any period, a fluctuating
interest rate equal for each day during such period to the weighted average of
the rates on overnight Federal Funds transactions with members of the Federal
Reserve System arranged by Federal Funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by the Administrative Agent from three Federal Funds
brokers of recognized standing selected by the Administrative Agent.

                  "Fees" shall mean all amounts payable pursuant to or referred
to in Section 3.01.

                  "First Mortgage Bond" shall mean any bond, note or similar
instrument issued pursuant to the Indenture.

                  "GAAP" shall have the meaning specified in Section 11.02.

                  "Genco GP" shall have the meaning provided in the first
paragraph of this Agreement.

                  "Genco LP" shall have the meaning provided in the first
paragraph of this Agreement.

                  "Genco Services" shall have the meaning provided in the first
paragraph of this Agreement.

                  "Governmental Authority" shall mean any nation or government,
any state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.

                  "Guarantee" shall mean, as to any Person (the "guaranteeing
person"), any obligation of (a) the guaranteeing person or (b) another Person
(including, without limitation, any bank under any letter of credit) to induce
the creation of which the guaranteeing person has issued a reimbursement,
counterindemnity or similar obligation, in either case guaranteeing or in effect
guaranteeing any principal of any Indebtedness for Borrowed Money (the "primary
obligations") of any other third Person in any manner, whether directly or
indirectly, including, without limitation, any obligation of the guaranteeing
person, whether or not contingent, (i) to purchase any such primary obligation
or any property constituting direct or indirect security therefor, (ii) to
advance or supply funds for the purchase or payment of any such primary

                                      -45-
<PAGE>

obligation or (iii) otherwise to assure or hold harmless the owner of any such
primary obligation against loss in respect thereof. The amount of any Guarantee
of any guaranteeing person shall be deemed to be the lower of (a) an amount
equal to the stated or determinable amount of the primary obligation in respect
of which such Guarantee is made and (b) the maximum amount for which such
guaranteeing person may be liable pursuant to the terms of the instrument
embodying such Guarantee, unless such primary obligation and the maximum amount
for which such guaranteeing person may be liable are not stated or determinable,
in which case the amount of such Guarantee shall be such guaranteeing person's
maximum reasonably anticipated liability in respect thereof as determined by the
Borrower in good faith (and "guaranteed" and "guarantor" shall be construed
accordingly).

                  "Guaranteed Creditors" shall mean and include the
Administrative Agent, the Collateral Agent, the Documentation Agent, the Issuing
Lender and each of the Lenders.

                  "Guaranteed Obligations" shall mean the full and prompt
payment when due (whether at the stated maturity, by acceleration or otherwise)
of all obligations, liabilities and indebtedness (including, without limitation,
all principal, premium, interest (including, without limitation, all interest
that accrues after the commencement of any case, proceeding or other action
relating to the bankruptcy, insolvency, reorganization or similar proceeding of
the Borrower or any Subsidiary thereof at the rate provided for in the
respective documentation, whether or not a claim for post-petition interest is
allowed in any such proceeding), reimbursement obligations under Letters of
Credit, fees, costs and indemnities) of the Borrower to the Guaranteed
Creditors, whether now existing or hereafter incurred under, arising out of, or
in connection with, this Agreement and the other Credit Documents and the due
performance and compliance by each Borrower with all of the terms, conditions
and agreements contained in this Agreement and in the other Credit Documents.

                  "Guarantor" shall mean each of the Parent, Genco GP, Genco
Services and Genco LP and any other Person required to become a guarantor under
the Guaranty from time to time as contemplated by Section 8.12 of this
Agreement.

                  "Guaranty" shall mean the guaranty of the Guarantors pursuant
to Section 14 of this Agreement.

                  "Hazardous Materials" shall mean (a) petroleum and petroleum
products, byproducts or breakdown products, radioactive materials,
asbestos-containing materials, polychlorinated biphenyls and radon gas and (b)
any other chemicals, materials or substances designated, classified or regulated
as hazardous or toxic or as a pollutant or contaminant under any Environmental
Law.

                  "Indebtedness" of any Person shall mean the sum of (a) all
items (other than capital stock, capital surplus and retained earnings) that, in
accordance with GAAP consistently applied, would be included in determining
total liabilities as shown on the liability side of a balance sheet of such
Person as at the date on which the Indebtedness is to be determined and (b) the
amount of all Guarantees by such Person.

                  "Indenture" shall have the meaning set forth in Section
5.05(b) of this Agreement.

                                      -46-
<PAGE>

                  "Indenture Collateral" shall mean all of the power generation
assets of Parent and its Subsidiaries securing the Obligations of the Borrower
under and in connection with the Bond, as provided in the Indenture.

                  "Interest Determination Date" shall mean, with respect to any
Eurodollar Loan, the second Business Day prior to the commencement of any
Interest Period relating to such Eurodollar Loan.

                  "Interest Period" shall have the meaning provided in Section
1.09.

                  "Internal Revenue Code" shall mean the Internal Revenue Code
of 1986, as amended from time to time, and the regulations promulgated and
rulings issued thereunder.

                  "Issuing Lender" shall mean Compass Bank (which for purposes
of this definition also shall include any banking affiliate of Compass Bank) and
any other Lender which at the request of the Borrower and with the consent of
the Administrative Agent (which shall not be unreasonably withheld or delayed)
agrees, in such Lender's sole discretion, to become an Issuing Lender for the
purpose of issuing Letters of Credit pursuant to Section 2. It being understood
and agreed that on the Effective Date the sole Issuing Lender is Compass Bank.

                  "Lead Arranger" shall mean Deutsche Bank Securities Inc., in
its capacity as Lead Arranger.

                  "Leaseholds" of any Person shall mean all of the right, title
and interest of such Person as lessee or licensee in, to and under leases or
licenses of land, improvements and/or fixtures.

                  "Lender" shall mean each financial institution listed on
Schedule I, as well as any Person which becomes a "Lender" hereunder pursuant to
Section 1.13 or 13.04(b).

                  "Lender Default" shall mean (i) the refusal (which has not
been retracted) or the failure of a Lender to make available its pro rata
portion of any Borrowing or to fund its portion of any unreimbursed payment
under Section 2.04(c) or (ii) a Lender having notified in writing the Borrower
and/or the Administrative Agent that it does not intend to comply with its
obligations under Section 1.01 or Section 2, in the case of either clause (i) or
(ii) above as a result of the appointment of a receiver or conservator with
respect to such Lender at the direction or request of any regulatory agency or
authority.

                  "Letter of Credit" shall have the meaning provided in Section
2.01(a).

                  "Letter of Credit Fee" shall have the meaning provided in
Section 3.01(b).

                  "Letter of Credit Outstandings" shall mean, at any time, the
sum of (i) the aggregate Stated Amount of all outstanding Letters of Credit and
(ii) the amount of all Unpaid Drawings.

                  "Letter of Credit Request" shall have the meaning provided in
Section 2.03(a).

                                      -47-
<PAGE>

                  "Lien" shall mean any mortgage, deed of trust, pledge,
hypothecation, assignment, deposit arrangement, charge, security interest,
encumbrance or lien of any kind whatsoever (including any Capital Lease).

                  "Loan" shall have the meaning provided in Section 1.01(a).

                  "Mandatory Payment Preferred Stock" shall mean any preference
or preferred stock of the Parent or of any of its Subsidiaries (in each case
other than any issued to the Parent or its Subsidiaries that is subject to
mandatory redemption, sinking fund or retirement provisions; provided, that any
amounts subject to any mandatory redemption, sinking fund or retirement
provisions due and payable prior to the Maturity Date or within one year
following the Maturity Date will not be considered Mandatory Payment Preferred
Stock.

                  "Margin Stock" shall mean any margin stock (as defined in
Regulation U) and any margin security (as defined in Regulation T).

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

                  "Material Adverse Effect" shall mean a material adverse effect
on the ability of any Credit Party to perform its obligations under this
Agreement or any other Credit Document to which it is a party.

                  "Maturity Date" shall mean December 21, 2004.

                  "Minimum Borrowing Amount" shall mean an amount equal to
$1,000,000.

                  "Moody's" shall mean Moody's Investors Service, Inc.

                  "Money Pool" shall have the meaning provided in the Texas
Genco Money Pool Agreement, dated as of October 22, 2003, among CenterPoint
Energy and certain of its direct and indirect subsidiaries, as in effect on the
Effective Date, as may be amended from time to time.

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

                  "Multiple Employer Plan" shall mean a single employer plan, as
defined in Section 4001(a)(15) of ERISA, that (a) is maintained for employees
of, or is contributed to (or to which there is an obligation to contribute of)
by, the Borrower or any ERISA Affiliate and at least one Person other than the
Borrower and the ERISA Affiliates or (b) was so maintained, or contributed to
by, and in respect of which the Borrower or any ERISA Affiliate could have
liability under Section 4064 or 4069 of ERISA in the event such plan has been or
were to be terminated.

                                      -48-
<PAGE>

                  "Non-Continuing Lender" shall have the meaning provided in
Section 1.14.

                  "Non-Defaulting Lender" shall mean and include each Lender
other than a Defaulting Lender.

                  "Non-Recourse Debt" shall mean (i) any Indebtedness for
Borrowed Money incurred by any Project Finance Subsidiary to finance the
acquisition, improvement, installation, design, engineering, construction,
development, completion, maintenance or operation of, or otherwise to pay costs
and expenses relating to or providing financing for any project, which
Indebtedness for Borrowed Money does not provide for recourse against the Parent
or any Subsidiary of the Parent (other than a Project Finance Subsidiary and
such recourse as exists under a Performance Guaranty) or any property or asset
of the Parent or any Subsidiary of the Parent (other than Equity Interests in,
or the property or assets of, a Project Finance Subsidiary and such recourse as
exists under a Performance Guaranty) and (ii) any refinancing of such
Indebtedness for Borrowed Money that does not increase the outstanding principal
amount thereof (other than to pay costs incurred in connection therewith and the
capitalization of any interest, fees, premium or penalties) at the time of the
refinancing or increase the property subject to any Lien securing such
Indebtedness for Borrowed Money or otherwise add additional security or support
for such Indebtedness for Borrowed Money.

                  "Notice of Borrowing" shall have the meaning provided in
Section 1.03.

                  "Notice of Conversion/Continuation" shall have the meaning
provided in Section 1.06.

                  "Notice Office" shall mean the office of the Administrative
Agent located at 90 Hudson Street, Fifth Floor, Jersey City, New Jersey 07302,
Attention: Peter Medina, or such other office as the Administrative Agent may
hereafter designate in writing as such to the other parties hereto.

                  "Obligation" shall mean, with respect to any Person, any
payment, performance or other obligation of such Person of any kind, including,
without limitation, any liability of such Person on any claim, whether or not
the right of any creditor to payment in respect of such claim is reduced to
judgment, liquidated, unliquidated, fixed, contingent, matured, disputed,
undisputed, legal, equitable, secured or unsecured, and whether or not claim is
discharged, stayed or otherwise affected by any proceeding referred to in
Section 10.05. Without limiting the generality of the foregoing, the Obligations
of any Credit Party under each Credit Document to which it is a party include
(a) the obligation to pay principal, interest, charges, expenses, fees,
attorneys' fees and disbursements, indemnities and other amounts payable by such
Credit Party under any Credit Document and (b) the obligation of such Credit
Party to reimburse any amount in respect of any of the foregoing that any
Lender, in its sole discretion, may elect to pay or advance on behalf of such
Credit Party.

                  "Parent" shall have the meaning provided in the first
paragraph of this Agreement.

                  "Participant" shall have the meaning provided in Section
2.04(a).

                                      -49-
<PAGE>

                  "Payment Office" shall mean the office of the Administrative
Agent located at 90 Hudson Street, Fifth Floor, Jersey City, New Jersey 07302,
or such other office as the Administrative Agent may hereafter designate in
writing as such to the other parties hereto.

                  "PBGC" shall mean the Pension Benefit Guaranty Corporation (or
any successor).

                  "Percentage" of any Lender at any time shall mean a fraction
(expressed as a percentage) the numerator of which is the Commitment of such
Lender at such time and the denominator of which is the Total Commitment at such
time, provided that if the Percentage of any Lender is to be determined after
the Total Commitment has been terminated, then the Percentages of the Lenders
shall be determined immediately prior (and without giving effect) to such
termination.

                  "Performance Guaranty" shall mean any guaranty issued in
connection with any Non-Recourse Debt that (i) if secured, is secured only by
assets of or Equity Interests in a Project Finance Subsidiary, and (ii)
guarantees to the provider of such Non-Recourse Debt or any other Person (a)
performance of the improvement, installation, design, engineering, construction,
acquisition, development, completion, maintenance or operation of, or otherwise
affects any such act in respect of, all or any portion of the project that is
financed by such Non-Recourse Debt, (b) completion of the minimum agreed equity
or other contributions or support to the relevant Project Finance Subsidiary, or
(c) performance by a Project Finance Subsidiary of obligations to Persons other
than the provider of such Non-Recourse Debt.

                  "Permitted Liens" shall mean:

                           (a)      Liens securing Indebtedness under any First
                  Mortgage Bond issued pursuant to and in accordance with the
                  Indenture (or secured by a First Mortgage Bond) in an
                  aggregate principal amount which, together with all other
                  Indebtedness of the Parent and its Subsidiaries secured by a
                  Lien permitted by this clause (a) (not including Indebtedness
                  permitted to be secured under clauses (b)-(w) below unless
                  such Indebtedness is secured pursuant to the Indenture or by a
                  First Mortgage Bond issued pursuant to the Indenture) and the
                  sum of the Value of all Sale and Leaseback Transactions of
                  Parent and its Subsidiaries in existence at such time (other
                  than any Sale and Leaseback Transaction which, if such Sale
                  and Leaseback Transaction had been a Lien, would have been
                  permitted by clauses (k) or (m) below), does not at the time
                  of incurrence of such Indebtedness exceed $250,000,000,
                  provided that all such Liens shall rank pari passu with the
                  Liens securing the Obligations of the Credit Parties pursuant
                  to the Security Documents and shall be subject to the
                  intercreditor provisions contained in the Indenture;

                           (b)      undetermined or inchoate Liens and charges
                  incidental to construction, maintenance, development or
                  operation;

                           (c)      the Lien of taxes and assessments for the
                  then current year, the Lien of taxes and assessments not at
                  the time delinquent and the Lien of specified taxes and
                  assessments which are delinquent but the validity of which is
                  being contested

                                      -50-
<PAGE>

                  at the time by the Parent or such Subsidiary of the Parent in
                  good faith and by appropriate proceedings or for which its
                  non-payment could not reasonably be expected to have a
                  Material Adverse Effect;

                           (d)      Liens in existence on the date hereof;

                           (e)      Liens arising in connection with the
                  securitization of accounts receivable of the Parent and its
                  Subsidiaries or any securitization Subsidiary, in the case of
                  the Parent and its Subsidiaries, to the extent affecting only
                  the accounts receivable of the Parent and its Subsidiaries and
                  assets customarily related thereto and Liens on the stock or
                  assets of securitization Subsidiaries;

                           (f)      the Lien reserved in leases for rent and for
                  compliance with the terms of the lease in the case of
                  leasehold estates;

                           (g)      any obligations or duties, affecting the
                  property of the Parent or such Subsidiary, to any municipality
                  or public authority with respect to any franchise, grant,
                  license, permit or similar arrangement;

                           (h)      the Liens of any judgments or attachments in
                  an aggregate amount not in excess of $30,000,000, or the Lien
                  of any judgment or attachment the execution or enforcement of
                  which has been stayed or which has been appealed and secured,
                  if necessary, by the filing of an appeal bond;

                           (i)      Liens upon any property heretofore or
                  hereafter acquired, constructed or improved, created at the
                  time of acquisition or commercial operation thereof within one
                  year thereafter (and the accessions thereto and proceeds
                  thereof) to secure all or a portion of the purchase price
                  thereof or the cost of such construction or improvement, or
                  existing thereon at the date of acquisition or within one year
                  thereafter to secure all or a portion of the purchase price
                  thereof or the cost of such construction or improvement, or
                  existing thereon at the date of acquisition, whether or not
                  assumed by the Parent or any Subsidiary of the Parent,
                  provided, that every such Lien shall apply only to the
                  property so acquired or constructed and fixed improvements
                  thereon (and the accessions thereto and proceeds thereof);

                           (j)      any extension, renewal or refunding, in
                  whole or in part, of any mortgage, pledge, Lien or encumbrance
                  permitted by subparagraph (i) above, if limited to the same
                  property or any portion thereof subject to, and securing not
                  more than the amount secured by, the mortgage, pledge, Lien or
                  encumbrance extended, renewed or refunded and related
                  transaction costs and expenses;

                           (k)      Liens upon any property heretofore or
                  hereafter acquired by any Person that is or becomes a
                  Subsidiary after the date hereof ("Acquired Entity"),
                  provided, that (1) every such Lien shall either (A) exist
                  prior to the time the Acquired Entity becomes a Subsidiary or
                  (B) be created at the time the Acquired Entity becomes a
                  Subsidiary or within one year thereafter to secure all or a
                  portion of the acquisition price thereof and (2) every such
                  Lien shall only apply to

                                      -51-
<PAGE>

                  those properties owned by the Acquired Entity at the time it
                  becomes a Subsidiary or thereafter acquired by it from sources
                  other than the Parent or any Subsidiary of the Parent;

                           (l)      the pledge of current assets, in the
                  ordinary course of business, to secure current liabilities;

                           (m)      mechanics' or materialmen's Liens, any Liens
                  or charges arising by reason of pledges or deposits to secure
                  payment of workmen's compensation or other insurance, good
                  faith deposits in connection with tenders, leases of real
                  estate, bids or contracts (other than contracts for the
                  payment of money), deposits to secure duties or public or
                  statutory obligations, deposits to secure, or in lieu of,
                  surety, stay or appeal bonds, and deposits as security for the
                  payment of taxes or assessments or similar charges;

                           (n)      any Lien arising by reason of deposits with,
                  or the giving of any form of security to, any governmental
                  regulation for any purpose at any time in connection with the
                  financing of the acquisition or construction of property to be
                  used in the business of the Parent or a Subsidiary or as
                  required by law or governmental regulation as a condition to
                  the transaction of any business or the exercise of any
                  privilege or license, or to enable the Parent or a Subsidiary
                  to maintain self-insurance or to participate in any funds
                  established to cover any insurance risks or in connection with
                  workmen's compensation, unemployment insurance, old age
                  pensions or other social security, or to share in the
                  privileges or benefits required for companies participating in
                  such arrangements;

                           (o)      any Lien of or upon any office equipment,
                  data processing equipment (including, without limitation,
                  computer and computer peripheral equipment), or transportation
                  equipment (including, without limitation, motor vehicles,
                  tractors, trailers, marine vessels, barges, towboats, rolling
                  stock and aircraft);

                           (p)      any Lien created or assumed by the Parent or
                  a Subsidiary in connection with the issuance of debt
                  securities the interest on which is excludable from gross
                  income of the holder of such security pursuant to the Internal
                  Revenue Code, as amended, for the purpose of financing, in
                  whole or in part, the acquisition or construction or property
                  to be used by the Parent or a Subsidiary;

                           (q)      the pledge or assignment of accounts
                  receivable, or the pledge or assignment of conditional sales
                  contracts or chattel mortgages and evidences of indebtedness
                  secured thereby, received in connection with the sale by the
                  Parent or such Subsidiary or others of goods or merchandise to
                  customers of the Parent or such Subsidiary;

                           (r)      any other Liens securing obligations under
                  agreements to which the Parent or any of its Subsidiaries is a
                  party or by which it is bound as of the Effective Date, which
                  the Parent is obligated to equally and ratably secure as a
                  result of granting the Liens to secure Indebtedness hereunder;

                                      -52-
<PAGE>

                           (s)      Liens on Property of the Parent or any of
                  its Subsidiaries securing non-recourse Indebtedness of the
                  Parent or any such Subsidiary;

                           (t)      Liens on cash collateral to secure
                  obligations of the Parent and its Subsidiaries in respect of
                  cash management arrangements with any Lender or Affiliate
                  thereof;

                           (u)      Liens on cash and short-term investments (i)
                  deposited by the Borrower or any of its Subsidiaries in
                  accounts with or on behalf of futures contract brokers or
                  other counterparties or (ii) pledged by the Parent or any of
                  its Subsidiaries, in the case of clause (i) or (ii) to secure
                  its obligations with respect to contracts (including without
                  limitation, physical delivery, option (whether cash or
                  financial), exchange, swap and futures contracts) for the
                  purchase or sale of any energy-related commodity or interest
                  rate or currency rate management contracts;

                           (v)      Liens on (i) Property owned by a Project
                  Finance Subsidiary or (ii) equity interests in a Project
                  Finance Subsidiary (including in each case a pledge of a
                  partnership interest, common stock or a membership interest in
                  a limited liability company) securing Indebtedness incurred in
                  connection with a project financing; or

                           (w)      Liens not otherwise permitted by Section
                  9.01 securing Indebtedness or other obligations of the Parent
                  and its Subsidiaries so long as the aggregate principal amount
                  outstanding at any time of the obligations secured thereby
                  does not at any time exceed (as to the Parent and all of its
                  Subsidiaries) $20,000,000 at such time.

                  "Person" shall mean an individual, partnership, corporation
(including a business trust), joint stock company, trust, unincorporated
association, joint venture, limited liability company or other entity, or a
government or any political subdivision or agency thereof.

                  "Plan" shall mean a Single Employer Plan or a Multiple
Employer Plan.

                  "Pledge Agreement" shall have the meaning provided in Section
5.05(a).

                  "Pledge Agreement Collateral" shall mean all "Collateral" as
defined in the Pledge Agreement.

                  "Prime Lending Rate" shall mean the rate which DBAG announces
from time to time as its prime lending rate, the Prime Lending Rate to change
when and as such prime lending rate changes. The Prime Lending Rate is a
reference rate and does not necessarily represent the lowest or best rate
actually charged to any customer. DBAG may make commercial loans or other loans
at rates of interest at, above or below the Prime Lending Rate.

                  "Project Finance Subsidiary" and "Project Finance
Subsidiaries" shall mean any Subsidiary of the Parent designated by the Borrower
whose principal purpose is to incur Non-Recourse Debt and/or construct, lease,
own or operate the assets financed thereby, or to become

                                      -53-
<PAGE>

a direct or indirect partner, member or other equity participant or owner in a
Person created for such purpose, and substantially all the assets of which
Subsidiary or Person are limited to (x) those assets being financed (or to be
financed), or the operation of which is being financed (or to be financed), in
whole or in part by Non-Recourse Debt, or (y) Equity Interests in, or
Indebtedness or other obligations of, one or more other such Subsidiaries or
Persons, or (z) Indebtedness or other obligations of the Borrower or its
Subsidiaries or other Persons; provided, however, that the sum of the net book
value of all Project Finance Subsidiaries shall at no time exceed 10% of
Consolidated Net Tangible Assets.

                  "Projections" shall have the meaning provided in Section 5.09.

                  "Property" shall mean any interest or right in any kind of
property or asset, whether real, personal or mixed, owned or leased, tangible or
intangible and whether now held or hereafter acquired.

                  "Pro Rata Share" shall have the meaning provided in Section
14.07(b).

                  "Quarterly Payment Date" shall mean the last Business Day of
each March, June, September and December, occurring after the Effective Date.

                  "Real Property" of any Person shall mean all of the right,
title and interest of such Person in and to land, improvements and fixtures,
including Leaseholds.

                  "Recommitment Deadline" shall have the meaning provided in
Section 1.14.

                  "Recommitment Request" shall have the meaning provided in
Section 1.14.

                  "Register" shall have the meaning provided in Section 13.16.

                  "Regulation D" shall mean Regulation D of the Board as from
time to time in effect and any successor to all or a portion thereof
establishing reserve requirements.

                  "Regulation T" and "Regulation U" shall mean Regulation T and
U, respectively, of the Board, in each case, as from time to time in effect and
any successor to all or a portion thereof.

                  "Replaced Lender" shall have the meaning provided in Section
1.13.

                  "Replacement Lender" shall have the meaning provided in
Section 1.13.

                  "Required Lenders" shall mean Non-Defaulting Lenders, the sum
of whose outstanding Commitments (or after the termination thereof, outstanding
Loans and Percentage of Letter of Credit Outstandings) represent greater than
50% of the Total Commitment less the Commitments of all Defaulting Lenders (or
after the termination thereof, the sum of the then total outstanding Loans of
Non-Defaulting Lenders and the aggregate Percentages of all Non-Defaulting
Lenders of the Letter of Credit Outstandings at such time).

                                      -54-
<PAGE>

                  "Responsible Officer" shall mean, with respect to any Person,
its chief financial officer, chief accounting officer, assistant treasurer,
treasurer or comptroller of such Person or any other officer of such Person
whose primary duties are similar to the duties of any of the previously listed
officers of such Person.

                  "Returns" shall have the meaning provided in Section 7.09.

                  "Revolving Note" shall have the meaning provided in Section
1.05(a).

                  "RRI Option Agreement" shall have the meaning provided in
Section 5.07(c).

                  "S&P" shall mean Standard & Poor's Rating Services.

                  "Sale and Leaseback Transaction" shall mean any arrangement
with any Person providing for the leasing to the Parent or any Subsidiary of the
Parent of any Property (except for temporary leases for a term, including any
renewal thereof of not more than three years and except for leases between the
Parent and a Subsidiary of the Parent or between Subsidiaries of the Parent),
which Property has been or is to be sold or transferred by the Parent or any
Subsidiary of the Parent to such Person.

                  "SEC" shall have the meaning provided in Section 9.05.

                  "Section 4.04(b)(ii) Certificate" shall have the meaning
provided in Section 4.04(b)(ii).

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

                  "Security Documents" shall mean the Indenture, the Bond and
Pledge Agreement and each other document or instrument entered into pursuant to
Section 5.05 or 8.11, if any, in each case as and when delivered in accordance
with this Agreement as same may be amended, modified or supplemented from time
to time in accordance with the terms thereof and/or hereof.

                  "Significant Subsidiary" shall mean (i) for the purposes of
determining what constitutes an "Event of Default" under Sections 10.04, 10.05,
10.06 and 10.07, a Subsidiary of any Credit Party (other than a Project Finance
Subsidiary) whose total assets, as determined in accordance with GAAP, represent
at least 10% of the total assets of such Credit Party, on a consolidated basis,
as determined in accordance with GAAP and (ii) for all other purposes the
"Significant Subsidiaries" shall be those Subsidiaries whose total assets, as
determined in accordance with GAAP, represent at least 10% of the total assets
of such Credit Party on a consolidated basis, as determined in accordance with
GAAP for such Credit Party's most recently completed fiscal year and identified
in the certificate most recently delivered pursuant to Section 8.01(b).

                  "Single Employer Plan" shall mean a single employer plan, as
defined in Section 4001(a)(15) of ERISA, that (a) is maintained for employees
of, or is contributed to (or to which there is an obligation to contribute of)
by, the Borrower or any ERISA Affiliate and no Person other than the Borrower
and the ERISA Affiliates, or (b) was so maintained, or

                                      -55-
<PAGE>

contributed to by, and in respect of which the Borrower or any ERISA Affiliate
could have liability under Section 4069 of ERISA in the event such plan has been
or were to be terminated.

                  "Solvent" shall mean, with respect to any Person on a
particular date, that on such date (a) the fair value of the property of such
Person is greater than the total amount of liabilities, including, without
limitation, contingent liabilities, of such Person, (b) the present fair salable
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, (c) such Person does not intend to, and does not
believe that it will, incur debts or liabilities beyond such Person's ability to
pay such debts and liabilities as they mature and (d) such Person is not engaged
in business or a transaction, and is not about to engage in business or a
transaction, for which such Person's property would constitute an unreasonably
small capital. The amount of contingent liabilities at any time shall be
computed as the amount that, in the light of all the facts and circumstances
existing at such time, represents the amount that can reasonably be expected to
become an actual or matured liability.

                  "Stated Amount" of each Letter of Credit shall, at any time,
mean the maximum amount available to be drawn thereunder (in each case
determined without regard to whether any conditions to drawing could then be
met).

                  "Subsidiary" of any Person shall mean any corporation,
partnership, joint venture, limited liability company, trust or estate of which
(or in which) more than 50% of (a) the issued and outstanding capital stock
having ordinary voting power to elect a majority of the Board of Directors of
such corporation (irrespective of whether at the time capital stock of any other
class or classes of such corporation shall or might have voting power upon the
occurrence of any contingency), (b) the interest in the capital or profits of
such limited liability company, partnership, joint venture or other Person or
(c) the beneficial interest in such trust or estate is at the time directly or
indirectly owned or controlled by such Person, by such Person and one or more of
its other Subsidiaries or by one or more of such Person's other Subsidiaries.

                  "Taxes" shall have the meaning provided in Section 4.04(a).

                  "Total Commitment" shall mean, at any time, the sum of the
Commitments of each of the Lenders at such time.

                  "Total Debt" shall mean, as of any date of determination, the
sum of the total Indebtedness for Borrowed Money as shown on the consolidated
balance sheet of the Parent and its Consolidated Subsidiaries, determined
without duplication of any Guarantee of Indebtedness for Borrowed Money of the
Parent by any of its Consolidated Subsidiaries or of any Guarantee of
Indebtedness of any such Consolidated Subsidiary by the Parent or any other
Consolidated Subsidiary of the Parent, and any Mandatory Payment Preferred
Stock, less Non-Recourse Debt of the Parent and its Subsidiaries.

                  "Total Unutilized Commitment" shall mean, at any time, an
amount equal to the remainder of (i) the Total Commitment then in effect, less
(ii) the sum of the aggregate principal amount of Loans plus the then aggregate
amount of Letter of Credit Outstandings.

                                      -56-
<PAGE>

                  "Trustee" shall mean JPMorgan Chase Bank, in its capacity as
Trustee under the Indenture.

                  "Type" shall mean the type of Loan determined with regard to
the interest option applicable thereto, i.e., whether a Base Rate Loan or a
Eurodollar Loan.

                  "UCC" shall mean the Uniform Commercial Code as from time to
time in effect in the relevant jurisdiction.

                  "Unfunded Current Liability" of any Plan shall mean the
amount, if any, by which the value of the accumulated plan benefits under the
Plan determined on a plan termination basis in accordance with actuarial
assumptions at such time consistent with those prescribed by the PBGC for
purposes of Section 4044 of ERISA, exceeds the fair market value of all plan
assets allocable to such liabilities under Title IV of ERISA (excluding any
accrued but unpaid contributions).

                  "United States" and "U.S." shall each mean the United States
of America.

                  "Unpaid Drawing" shall have the meaning provided for in
Section 2.05(a).

                  "Unutilized Commitment" with respect to any Lender, at any
time, shall mean such Lender's Commitment at such time less the sum of (i) the
aggregate outstanding principal amount of Loans made by such Lender and (ii)
such Lender's Percentage of the Letter of Credit Outstandings at such time.

                  "Value" shall mean, with respect to a Sale and Leaseback
Transaction, as of any particular time, the amount equal to the greater of (1)
the net proceeds from the sale or transfer of the property leased pursuant to
such Sale and Leaseback Transaction or (2) the fair value, in the opinion of the
board of directors, of such property at the time of entering into such Sale and
Leaseback Transaction, in either case divided first by the number of full years
of the term of the lease and then multiplied by the number of full years of such
term remaining at the time of determination, without regard to any renewal or
extension options contained in the lease.

                  "Voting Stock" shall mean capital stock issued by a
corporation, or equivalent interests in any other Person, the holders of which
are ordinarily, in the absence of contingencies, entitled to vote for the
election of directors (or persons performing similar functions) of such Person,
even if the right so to vote has been suspended by the happening of such a
contingency.

                  "Wholly-Owned" shall mean, with respect to any Subsidiary of
any Person, a Subsidiary, all the outstanding capital stock (other than
directors' qualifying shares required by law) or other ownership interest of
which are at the time owned by such Person or by one or more Wholly-Owned
Subsidiaries of such Person, or both.

                  11.02 Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with generally accepted
accounting principles in effect from time to time in the United States of
America ("GAAP"); provided that, if the Borrower notifies the Administrative
Agent that the Borrower requests an amendment to any provision of the Credit
Documents to eliminate the effect of any change occurring after the date hereof
in GAAP

                                      -57-
<PAGE>

or in the application thereof or in federal or foreign tax laws which adversely
affects any of the Borrower and its Subsidiaries' ability to comply with its
obligations under the Credit Documents, regardless of whether any such notice is
given before or after such change or in the application thereof, then such
provision shall be interpreted on the basis of GAAP or such tax laws as in
effect and applied immediately before such change shall have become effective
until such notice shall have been withdrawn or such provision amended in
accordance herewith.

                  SECTION 12. The Agents.

                  12.01 Appointment. The Lenders hereby designate (i) DBAG as
Administrative Agent and Collateral Agent to act as specified herein and in the
other Credit Documents, (ii) Compass Bank as Documentation Agent and (iii)
Deutsche Bank Securities, Inc. as Lead Arranger, in each case to act as
specified herein and in the other Credit Documents. Each Lender hereby
irrevocably authorizes, and each holder of any Revolving Note by the acceptance
of such Revolving Note shall be deemed irrevocably to authorize, each Agent to
take such action on its behalf under the provisions of this Agreement, the other
Credit Documents and any other instruments and agreements referred to herein or
therein and to exercise such powers and to perform such duties hereunder and
thereunder as are specifically delegated to or required of each Agent by the
terms hereof and thereof and such other powers as are reasonably incidental
thereto. Each Agent may perform any of their duties hereunder by or through
their respective officers, directors, agents, employees or affiliates.

                  12.02 Nature of Duties. The Agents shall not have any duties
or responsibilities except those expressly set forth in this Agreement and the
other Credit Documents. No Agent nor any of its respective officers, directors,
agents, employees or affiliates shall be liable for any action taken or omitted
by them hereunder or under any other Credit Document or in connection herewith
or therewith, unless caused by their gross negligence or willful misconduct (as
determined by a court of competent jurisdiction in a final and non-appealable
decision). The duties of the Agents shall be mechanical and administrative in
nature; no Agent shall have by reason of this Agreement or any other Credit
Document a fiduciary relationship in respect of any Lender or the holder of any
Revolving Note; and nothing in this Agreement or any other Credit Document,
expressed or implied, is intended to or shall be so construed as to impose upon
any Agent any obligations in respect of this Agreement or any other Credit
Document except as expressly set forth herein or therein.

                  12.03 Lack of Reliance on the Agents. Independently and
without reliance upon any Agent, each Lender and the holder of each Revolving
Note, to the extent it deems appropriate, has made and shall continue to make
(i) its own independent investigation of the financial condition and affairs of
the Parent and its Subsidiaries in connection with the making and the
continuance of the Loans and the taking or not taking of any action in
connection herewith and (ii) its own appraisal of the creditworthiness of the
Parent and its Subsidiaries and, except as expressly provided in this Agreement,
no Agent shall have any duty or responsibility, either initially or on a
continuing basis, to provide any Lender or the holder of any Revolving Note with
any credit or other information with respect thereto, whether coming into its
possession before the making of the Loans or at any time or times thereafter. No
Agent nor any of its affiliates or any of its officers, directors, agents or
employees shall be responsible to any Lender or the holder of any Revolving Note
for any recitals, statements, information, representations or

                                      -58-
<PAGE>

warranties herein or in any document, certificate or other writing delivered in
connection herewith or for the execution, effectiveness, genuineness, validity,
enforceability, perfection, collectibility, priority or sufficiency of this
Agreement or any other Credit Document or the financial condition of the Parent
and its Subsidiaries or be required to make any inquiry concerning either the
performance or observance of any of the terms, provisions or conditions of this
Agreement or any other Credit Document, or the financial condition of the Parent
and its Subsidiaries or the existence or possible existence of any Default or
Event of Default.

                  12.04 Certain Rights of the Agents. If any Agent shall request
instructions from the Required Lenders with respect to any act or action
(including failure to act) in connection with this Agreement or any other Credit
Document, such Agent shall be entitled to refrain from such act or taking such
action unless and until such Agent shall have received instructions from the
Required Lenders; and such Agent shall not incur liability to any Person by
reason of so refraining. Without limiting the foregoing, no Lender nor any
holder of any Revolving Note shall have any right of action whatsoever against
any Agent as a result of such Agent acting or refraining from acting hereunder
or under any other Credit Document in accordance with the instructions of the
Required Lenders.

                  12.05 Reliance. Each Agent shall be entitled to rely, and
shall be fully protected in relying, upon any note, writing, resolution, notice,
statement, certificate, telex, teletype, facsimile or telecopier message,
cablegram, radiogram, order or other document or telephone message signed, sent
or made by any Person that such Agent believed to be the proper Person, and,
with respect to all legal matters pertaining to this Agreement and any other
Credit Document and its duties hereunder and thereunder, upon advice of counsel
selected by such Agent (which may be counsel for the Credit Parties).

                  12.06 Indemnification. To the extent that any Agent is not
reimbursed and indemnified by the Borrower, each Lender will reimburse and
indemnify such Agent, in proportion to its "percentage" as used in determining
the Required Lenders (determined as if there were no Defaulting Lenders) for and
against any and all liabilities, obligations, losses, damages, penalties,
claims, actions, judgments, suits, costs, expenses or disbursements of
whatsoever kind or nature which may be imposed on, asserted against or incurred
by such Agent in performing its duties hereunder or under any other Credit
Document, in any way relating to or arising out of this Agreement or any other
Credit Document; provided that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, claims, actions,
judgments, suits, costs, expenses or disbursements resulting from such Agent's
gross negligence or willful misconduct (as determined by a court of competent
jurisdiction in a final and non-appealable decision).

                  12.07 The Agents in Their Individual Capacity. With respect to
its obligation to make Loans and participate in Letters of Credit under this
Agreement, each Agent shall have the rights and powers specified herein for a
"Lender" and may exercise the same rights and powers as though it were not
performing the duties specified herein; and the term "Lenders," "Required
Lenders," "holders of Revolving Notes" or any similar terms shall, unless the
context clearly otherwise indicates, include each Agent in its individual
capacity. Each Agent may accept deposits from, lend money to, and generally
engage in any kind of banking, trust or other business with any Credit Party or
any Affiliate of any Credit Party as if it were not performing the

                                      -59-
<PAGE>

duties specified herein, and may accept fees and other consideration from the
Borrower, or any other Credit Party for services in connection with this
Agreement and otherwise without having to account for the same to the Lenders.

                  12.08 Holders. The Administrative Agent may deem and treat the
payee of any Revolving Note as the owner thereof for all purposes hereof unless
and until a written notice of the assignment, transfer or endorsement thereof,
as the case may be, shall have been filed with the Administrative Agent. Any
request, authority or consent of any Person who, at the time of making such
request or giving such authority or consent, is the holder of any Revolving Note
shall be conclusive and binding on any subsequent holder, transferee, assignee
or endorsee, as the case may be, of such Revolving Note or of any Revolving Note
or Revolving Notes issued in exchange therefor.

                  12.09 (a) Resignation. The Administrative Agent may resign
from the performance of all its functions and duties hereunder and/or under the
other Credit Documents at any time by giving 15 Business Days' prior written
notice to the Borrower and the Lenders. Any such resignation by any Agent
hereunder shall also constitute its resignation as an Issuing Lender (if
applicable), in which case upon the effectiveness of such resignation in
accordance with this Section 12.09 such resigning Agent (x) shall not be
required to issue any further Letters of Credit hereunder and (y) shall maintain
all of its rights as an Issuing Lender with respect to any Letters of Credit
issued by it, in each case prior to the effective date of such resignation. Such
resignation shall take effect upon the appointment of a successor Administrative
Agent pursuant to clauses (b) and (c) below or as otherwise provided below.

                  (b)      Upon any such notice of resignation, the Required
Lenders shall, with the consent of the Borrower (which consent shall not be
unreasonably withheld or delayed and shall not be required at any time when an
Event of Default exists), appoint a successor Administrative Agent hereunder or
thereunder who shall be a commercial bank or trust company.

                  (c)      If a successor Administrative Agent shall not have
been so appointed within such 15 Business Day period, the Administrative Agent,
with the consent of the Borrower (which consent shall not be unreasonably
withheld or delayed and shall not be required at any time when an Event of
Default exists), shall then appoint a commercial bank or trust company as
successor Administrative Agent who shall serve as Administrative Agent hereunder
or thereunder until such time, if any, as the Required Lenders appoint a
successor Administrative Agent as provided above.

                  (d)      If no successor Administrative Agent has been
appointed pursuant to clause (b) or (c) above by the 20th Business Day after the
date such notice of resignation was given by the Administrative Agent, the
Administrative Agent's resignation shall become effective and the Required
Lenders shall thereafter perform all the duties of the Administrative Agent
hereunder and/or under any other Credit Document until such time, if any, as the
Required Lenders appoint a successor Administrative Agent as provided in clause
(b) above.

                  (e)      Upon a resignation of any Agent pursuant to this
Section 12.09, such Agent shall remain indemnified to the extent provided in
this Agreement and the other Credit

                                      -60-
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Documents and the provisions of this Section 12 shall continue in effect for the
benefit of such Agent for all of its actions and inactions while serving as an
Agent.

                  12.10 Documentation Agent. Notwithstanding anything to the
contrary contained herein, nothing in this Agreement shall impose on the
Documentation Agent, in such capacity, any duties or obligations.

                  SECTION 13. Miscellaneous.

                  13.01 Payment of Expenses, etc. The Borrower shall: (i)
whether or not the transactions herein contemplated are consummated, pay all
reasonable out-of-pocket costs and expenses of (x) the Administrative Agent
(including, without limitation, the reasonable fees and disbursements of White &
Case LLP) in connection with the preparation, execution and delivery of this
Agreement and the other Credit Documents and the documents and instruments
referred to herein and therein and any amendment, waiver or consent relating
hereto or thereto, it being understood that for purposes of this clause (x), the
Administrative Agent shall use no more than one transaction counsel and such
local counsel as reasonably necessary, (y) each Agent in connection with its
syndication efforts with respect to this Agreement and (z) the Administrative
Agent and, following and during the continuation of an Event of Default, each of
the Lenders in connection with the enforcement of this Agreement and the other
Credit Documents and the documents and instruments referred to herein and
therein (including, without limitation, the reasonable fees and disbursements of
counsel and consultants for the Administrative Agent and, following and during
the continuation of an Event of Default, for each of the Lenders) in each case
promptly following receipt of a reasonably detailed invoice therefor; (ii)
without duplication of any other payments paid or payable pursuant to any other
provision of this Agreement or any other Credit Document, pay and hold each of
the Lenders harmless from and against any and all present and future stamp,
excise and other similar taxes with respect to the foregoing matters and hold
each of the Lenders harmless from and against any and all liabilities with
respect to or resulting from any delay or omission (other than to the extent
attributable to such Lender) to pay such taxes; and (iii) without duplication of
any other payments paid or payable pursuant to any other provision of this
Agreement or any other Credit Document, indemnify each Agent and each Lender
(including in its capacity as an Issuing Lender), and each of their respective
officers, directors, employees, representatives, affiliates and agents from and
hold each of them harmless against any and all liabilities, obligations
(including removal or remedial actions), losses, damages, penalties, claims,
actions, judgments, suits, costs, expenses and disbursements (including
reasonable attorneys' and consultants' fees and disbursements) incurred by,
imposed on or assessed against any of them as a result of, or arising out of, or
in any way related to, or by reason of, (a) any investigation, litigation or
other proceeding (whether or not any Agent or any Lender is a party thereto)
related to the entering into and/or performance of this Agreement or any other
Credit Document or the use of any Letter of Credit or the proceeds of any Loans
hereunder or the consummation of any transactions contemplated herein or in any
other Credit Document or the exercise of any of their rights or remedies
provided herein or in the other Credit Documents, or (b) the actual or alleged
presence of Hazardous Materials in the air, surface water or groundwater or on
the surface or subsurface of any Real Property owned or at any time operated by
the Borrower or any of its Subsidiaries, the generation, storage,
transportation, handling or disposal of Hazardous Materials at any location,
whether or not owned or operated by the Borrower or any of its Subsidiaries, the
non-compliance of any Real Property with

                                      -61-
<PAGE>

foreign, federal, state and local laws, regulations, and ordinances (including
applicable permits thereunder) applicable to any Real Property, or any
Environmental Action asserted against the Borrower, any of its Subsidiaries, or
any Real Property owned or at any time operated by the Borrower or any of its
Subsidiaries, including, in each case, without limitation, the reasonable fees
and disbursements of counsel and other consultants incurred in connection with
any such investigation, litigation or other proceeding (but excluding any
losses, liabilities, claims, damages or expenses to the extent incurred by
reason of the gross negligence or willful misconduct of the Person to be
indemnified (as determined by a court of competent jurisdiction in a final and
non-appealable decision)). To the extent that the undertaking to indemnify, pay
or hold harmless any Agent or any Lender set forth in the preceding sentence may
be unenforceable because it is violative of any law or public policy, the
Borrower shall make the maximum contribution to the payment and satisfaction of
each of the indemnified liabilities which is permissible under applicable law.

                  13.02 Right of Setoff. 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 and during the continuance of
an Event of Default, each Lender is hereby authorized at any time or from time
to time, without presentment, demand, protest or other notice of any kind to the
Borrower or to any other Person, any such notice 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, by branches and agencies of such Lender wherever
located) to or for the credit or the account of any Credit Party against and on
account of the Obligations and liabilities of all Credit Parties to such Lender
under this Agreement or under any of the other Credit Documents, including,
without limitation, all interests in Obligations purchased by such Lender
pursuant to Section 13.06(b), and all other claims of any nature or description
arising out of or connected with this Agreement or any other Credit Document,
irrespective of whether or not such Lender shall have made any demand hereunder
and although said Obligations, liabilities or claims, or any of them, shall be
contingent or unmatured.

                  13.03 Notices. Except as otherwise expressly provided herein,
all notices and other communications provided for hereunder shall be in writing
(including telegraphic, telex, telecopier or cable communication) and mailed,
telegraphed, telexed, telecopied, cabled or delivered: if to the Borrower, at
the Borrower's address specified opposite its signature below; if to any other
Credit Party, at such Credit Party's address set forth opposite its signature
below; if to any Lender, at its address specified on Schedule II below; and if
to the Administrative Agent, at the Notice Office; or, as to any Credit Party or
the Administrative Agent, at such other address as shall be designated by such
party in a written notice to the other parties hereto and, as to each Lender, at
such other address as shall be designated by such Lender in a written notice to
the Borrower and the Administrative Agent. All such notices and communications
shall, when mailed, telegraphed, telexed, telecopied, or cabled or sent by
overnight courier, be effective when deposited in the mails, delivered to the
telegraph company, cable company or overnight courier, as the case may be, or
sent by telex or telecopier, except that notices and communications to the
Administrative Agent shall not be effective until received by the Administrative
Agent.

                                      -62-
<PAGE>
                  13.04 (a) Benefit of Agreement. This Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
successors and assigns of the parties hereto; provided, however, that the
Borrower may not assign or transfer any of its rights, obligations or interest
hereunder or under any other Credit Document without the prior written consent
of all of the Lenders and the Administrative Agent and, provided further, that
although any Lender may transfer, assign or grant participations in its rights
hereunder, such Lender shall remain a "Lender" for all purposes hereunder (and
may not transfer or assign all or any portion of its Commitment hereunder except
as provided in Section 13.04(b)) and the transferee, assignee or participant, as
the case may be, shall not constitute a "Lender" hereunder and, provided
further, that no Lender shall transfer or grant any participation under which
the participant shall have rights to approve any amendment to or waiver of this
Agreement or any other Credit Document except to the extent such amendment or
waiver would (i) extend the final scheduled maturity of any Loan or Revolving
Note or extend the expiry date of any Letter of Credit beyond the Maturity Date,
or reduce the rate or extend the time of payment of interest or Fees thereon
(except in connection with a waiver of applicability of any post-default
increase in interest rates) or reduce the principal amount thereof, or increase
the amount of the participant's participation over the amount thereof then in
effect (it being understood that waivers or modifications of conditions
precedent, covenants, Defaults or Events of Default or of a mandatory reduction
in the Total Commitment shall not constitute a change in the terms of such
participation, and that an increase in any Commitment shall be permitted without
the consent of any participant if the participant's participation is not
increased as a result thereof) or (ii) consent to the assignment or transfer by
the Borrower of any of their rights and obligations under this Agreement. In the
case of any such participation, the participant shall not have any rights under
this Agreement or any of the other Credit Documents (the participant's rights
against such Lender in respect of such participation to be those set forth in
the agreement executed by such Lender in favor of the participant relating
thereto) and all amounts payable by the Borrower hereunder shall be determined
as if such Lender had not sold such participation.

                  (b)      Notwithstanding the foregoing, any Lender (or any
Lender together with one or more other Lenders) may (x) assign all or a portion
of its Commitment and related outstanding Obligations hereunder (or, if the
Commitments have terminated, its outstanding Obligations) to (i) its parent
company and/or any affiliate of such Lender which is at least 50% owned by such
Lender or its parent company or to one or more other Lenders or (ii) in the case
of any Lender that is a fund that invests in bank loans, any other fund that
invests in bank loans and is managed by the same investment advisor of such
Lender or by an Affiliate of such investment advisor or (y) assign all, or if
less than all, a portion equal to at least $1,000,000 in the aggregate for the
assigning Lender or assigning Lenders, of such Commitments and related
outstanding Obligations hereunder (or, if the Commitments have terminated, its
outstanding Obligations) to one or more Eligible Transferees, each of which
assignees shall become a party to this Agreement as a Lender by execution of an
Assignment and Assumption Agreement, provided that (i) at such time Schedule I
shall be deemed modified to reflect the Commitment of such new Lender and of the
existing Lenders, (ii) at the request of the assignee Lender, and upon surrender
of the relevant Revolving Notes or the provision of a customary lost note
indemnification agreement from the assignor or assignee Lender, as the case may
be, new Revolving Notes will be issued, at the Borrowers' expense, to such new
Lender and to the assigning Lender, such new Revolving Notes to be in conformity
with the requirements of Section 1.05 (with appropriate modifications) to the
extent needed to reflect the revised

                                      -63-
<PAGE>

Commitments, (iii) the consent of the Administrative Agent, any Issuing Lender
and, at any time when no Default or Event of Default is in existence, the
Borrower shall be required in connection with any such assignment pursuant to
clause (y) above (each of which consents shall not to be unreasonably withheld
or delayed), and (iv) the Administrative Agent shall receive at the time of each
such assignment, from the assigning or assignee Lender, the payment of a
non-refundable assignment fee of $3,500 and, provided further, that such
transfer or assignment will not be effective until recorded by the
Administrative Agent on the Register pursuant to Section 13.16 hereof. To the
extent of any assignment pursuant to this Section 13.04(b), the assigning Lender
shall be relieved of its obligations hereunder with respect to its assigned
Commitments. At the time of each assignment pursuant to this Section 13.04(b) to
a Person which is not already a Lender hereunder and which is not a United
States person (as such term is defined in Section 7701(a)(30) of the Internal
Revenue Code) for Federal income tax purposes, the respective assignee Lender
shall provide to the Borrower and the Administrative Agent the appropriate
Internal Revenue Service Forms (and, if applicable a Section 4.04(b)(ii)
Certificate) described in Section 4.04(b). To the extent that an assignment of
all or any portion of a Lender's Commitments and related outstanding Obligations
pursuant to Section 1.13 or this Section 13.04(b) would, at the time of such
assignment, result in increased costs under Section 1.10, 1.11 or 4.04 greater
than those being charged by the respective assigning Lender prior to such
assignment, then the Borrower shall not be obligated to pay such greater
increased costs (although the Borrower shall be obligated to pay any other
increased costs of the type described above resulting from changes after the
date of the respective assignment).

                  (b)      Nothing in this Agreement shall prevent or prohibit
any Lender from pledging its Loans and Revolving Notes hereunder to a Federal
Reserve Bank in support of borrowings made by such Lender from such Federal
Reserve Bank and, with the consent of the Administrative Agent, any Lender which
is a fund may pledge all or any portion of its Revolving Notes or Loans to its
trustee or to a collateral agent providing credit or credit support to such
Lender in support of its obligations to its trustee or such collateral agent, as
the case may be. No pledge pursuant to this clause (c) shall release the
transferor Lender from any of its obligations hereunder.

                  13.05 No Waiver; Remedies Cumulative. No failure or delay on
the part of any Agent or any Lender or any holder of any Revolving Note in
exercising any right, power or privilege hereunder or under any other Credit
Document and no course of dealing between the Borrower or any other Credit Party
and any Agent or any Lender or the holder of any Revolving Note 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, powers and remedies herein or in any other
Credit Document expressly provided are cumulative and not exclusive of any
rights, powers or remedies which any Agent or any Lender or the holder of any
Revolving Note would otherwise have. No notice to or demand on any Credit Party
in any case shall entitle any Credit Party to any other or further notice or
demand in similar or other circumstances or constitute a waiver of the rights of
any Agent or any Lender or the holder of any Revolving Note to any other or
further action in any circumstances without notice or demand.

                                      -64-
<PAGE>
                  13.06 (a) Payments Pro Rata. Except as otherwise provided in
this Agreement, the Administrative Agent agrees that promptly after its receipt
of each payment from or on behalf of the Borrower in respect of any Obligations
hereunder, it shall distribute such payment to the Lenders (other than any
Lender that has consented in writing to waive its pro rata share of any such
payment) pro rata based upon their respective shares, if any, of the Obligations
with respect to which such payment was received.

                  (b)      Each of the Lenders agrees that, if it should receive
any amount hereunder (whether by voluntary payment, by realization upon
security, by the exercise of the right of setoff or banker's lien, by
counterclaim or cross action, by the enforcement of any right under the Credit
Documents, or otherwise), which is applicable to the payment of the principal
of, or interest on, the Loans, Unpaid Drawings, Commitment Commission or other
Fees, of a sum which with respect to the related sum or sums received by other
Lenders is in a greater proportion than the total of such Obligation then owed
and due to such Lender bears to the total of such Obligation then owed and due
to all of the Lenders immediately prior to such receipt, then such Lender
receiving such excess payment shall purchase for cash without recourse or
warranty from the other Lenders an interest in the Obligations of the Borrower
to such Lenders in such amount as shall result in a proportional participation
by all the Lenders in such amount; provided that if all or any portion of such
excess amount is thereafter recovered from such Lender, such purchase shall be
rescinded and the purchase price restored to the extent of such recovery, but
without interest.

                  (c)      Notwithstanding anything to the contrary contained
herein, the provisions of the preceding Sections 13.06(a) and (b) shall be
subject to the express provisions of this Agreement which require, or permit,
differing payments to be made to Non-Defaulting Lenders as opposed to Defaulting
Lenders.

                  13.07 Calculations; Computations. (a) The financial statements
to be furnished to the Lenders pursuant hereto shall be made and prepared in
accordance with generally accepted accounting principles in the United States
consistently applied throughout the periods involved (except as set forth in the
notes thereto or as otherwise disclosed in writing by the Borrower to the
Lenders), provided that except as otherwise specifically provided herein, all
computations of Applicable Commitment Commission Percentage and the Applicable
Margin, and all computations and all definitions (including accounting terms)
used in determining compliance with Sections 9.08 and 9.09, shall utilize
accounting principles and policies in conformity with those used to prepare the
historical financial statements referred to in Section 7.05(a).

                  (b)      All computations of interest on Eurodollar Loans
hereunder shall be made on the basis of a year of 360 days for the actual number
of days (including the first day but excluding the last day) occurring in the
period for which such interest is payable. All computations of interest on Base
Rate Loans and computations of Fees hereunder shall be made on the basis of a
year of 365/366 days for the actual number of days (including the first day but
excluding the last day) occurring in the period for which such interest or Fees
are payable.

                  13.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE. THIS
AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER AND THEREUNDER SHALL BE CON-

                                      -65-
<PAGE>

STRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK.
ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER
CREDIT DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE
UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, IN EACH CASE WHICH ARE
LOCATED IN THE COUNTY OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, EACH CREDIT PARTY HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE
AFORESAID COURTS. EACH CREDIT PARTY HEREBY FURTHER IRREVOCABLY WAIVES ANY CLAIM
THAT ANY SUCH COURTS LACK PERSONAL JURISDICTION OVER IT, AND AGREES NOT TO PLEAD
OR CLAIM, IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR
ANY OTHER CREDIT DOCUMENTS BROUGHT IN ANY OF THE AFOREMENTIONED COURTS, THAT
SUCH COURTS LACK PERSONAL JURISDICTION OVER IT. EACH CREDIT PARTY FURTHER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED
COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO EACH CREDIT PARTY AT ITS
ADDRESS SET FORTH OPPOSITE ITS SIGNATURE BELOW, SUCH SERVICE TO BECOME EFFECTIVE
30 DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY AGENT,
ANY LENDER OR THE HOLDER OF ANY NOTE TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST
ANY CREDIT PARTY IN ANY OTHER JURISDICTION.

                  (a)      EACH CREDIT PARTY HEREBY IRREVOCABLY WAIVES ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF
THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT OR ANY OTHER CREDIT DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN
CLAUSE (a) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD
OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY
SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

                  13.09 Counterparts. This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall together constitute one and the same instrument. A set of
counterparts executed by all the parties hereto shall be lodged with the
Borrower and the Administrative Agent.

                  13.10 Effectiveness. This Agreement shall become effective on
the date (the "Effective Date") on which (i) the Borrower, each Lender and the
Administrative Agent shall have signed a counterpart hereof (whether the same or
different counterparts) and shall have delivered (including by way of facsimile)
the same to the Administrative Agent at the Notice Office or, in the case of the
Lenders, shall have given the Administrative Agent telephonic (confirmed in
writing), written or telex notice (actually received) at such office that same
has been signed and mailed to it and (ii) the conditions contained in Section 5
are met to the satis-

                                      -66-
<PAGE>

faction of the Agents and the Required Lenders. Unless the Administrative Agent
has received actual notice from any Lender that the conditions contained in
Section 5 have not been met to its reasonable satisfaction, upon the
satisfaction of the condition described in clause (i) of the immediately
preceding sentence and upon the Administrative Agent's good faith determination
that the conditions described in clause (ii) of the immediately preceding
sentence have been met, then the Effective Date shall have been deemed to have
occurred, regardless of any subsequent determination that one or more of the
conditions thereto had not been met (although the occurrence of the Effective
Date shall not release the Borrower from any liability for failure to satisfy
one or more of the applicable conditions contained in Section 5). The
Administrative Agent will give the Borrower and each Lender prompt written
notice of the occurrence of the Effective Date.

                  13.11 Headings Descriptive. The headings of the several
sections and subsections of this Agreement are inserted for convenience only and
shall not in any way affect the meaning or construction of any provision of this
Agreement.

                  13.12 (a) Amendment or Waiver; Removal of Lender etc. Neither
this Agreement nor any other Credit Document nor any terms hereof or thereof may
be changed, waived, discharged or terminated unless such change, waiver,
discharge or termination is in writing signed by the respective Credit Parties
party thereto and the Required Lenders, provided that no such change, waiver,
discharge or termination shall, without the consent of each Lender (other than a
Defaulting Lender) (with Obligations being directly affected thereby in the case
of following clause (i)), (i) extend the final scheduled maturity of any Loan or
Revolving Note, or extend the stated maturity of, or any reimbursement
obligation under, any Letter of Credit beyond the Maturity Date, or reduce the
rate or extend the time of payment of interest or Fees (it being understood that
any amendment or modification to the financial definitions in this Agreement or
to Section 13.07(a) shall not constitute a reduction in the rate of interest or
Fees for the purposes of this clause (i)), or reduce the principal amount
thereof, or reduce any reimbursement obligations under any Letter of Credit,
(ii) amend, modify or waive any provision of this Section 13.12 (except for
technical amendments with respect to additional extensions of credit under this
Agreement of the type which afford the protections to such additional extensions
of credit provided to the Commitments on the Effective Date), (iii) reduce the
percentage specified in the definition of Required Lenders (it being understood
and agreed that, with the consent of the Required Lenders, additional extensions
of credit pursuant to this Agreement may be included in the determination of the
Required Lenders on substantially the same basis as the Commitments are included
on the Effective Date) or (iv) consent to the assignment or transfer by the
Borrower of any of its rights and obligations under this Agreement; provided
further, that no such change, waiver, discharge or termination shall (1)
increase the Commitment of any Lender over the amount thereof then in effect
without the consent of such Lender (it being understood and agreed that waivers
or modifications of conditions precedent, covenants (including, without
limitation, by means of modifications to the financial definitions or
modifications in the method of calculation of any financial covenants), Defaults
or Events of Default or of a mandatory reduction in the Total Commitments shall
not constitute an increase of the Commitment of any Lender, and that an increase
in the available portion of any Commitment of any Lender shall not constitute an
increase in the Commitment of such Lender), (2) without the consent of the
respective Issuing Lender or Issuing Lenders, amend, modify or waive any
provision of Section 2 with respect to Letters of Credit issued by it or alter
its rights or

                                      -67-
<PAGE>

obligations with respect to Letters of Credit, or (3) without the consent of
each Agent affected thereby, amend, modify or waive any provision of Section 12
as same applies to such Agent or any other provision as same relates to the
rights or obligations of such Agent.

                  (b)      Notwithstanding anything herein to the contrary, the
Borrower may in accordance with and subject to the provisions of Sections
3.02(b) and/or 4.01(b) as applicable, at any time in its sole discretion,
terminate any Lender's Commitment upon ten Business Days' prior written notice
to such Lender and the Administrative Agent (the contents of which notices shall
be promptly communicated by the Administrative Agent to each other Lender),
provided that notwithstanding the foregoing, it is understood and agreed that no
Lender's Commitment may be terminated hereunder at a time when an Event of
Default shall have occurred and be continuing or solely as a result of the
exercise of such Lender's rights pursuant to the second proviso to Section
13.12(a) (including the withholding of any required consent by such Lender
pursuant thereto). Concurrently with any termination made pursuant to this
Section 13.12(b), the Borrower shall pay to such removed Lender all amounts
owing to such Lender hereunder and under each other Credit Document in
immediately available funds and take all other actions, in each case in
accordance with Sections 3.02(b) and/or 4.01(b) as applicable, in connection
with such termination and immediately upon making such payments and taking such
actions, such Lender shall no longer constitute a "Lender" for purposes of this
Agreement, except with respect to indemnifications under this Agreement
(including, without limitation, Sections 1.10, 1.11, 2.06, 4.04, 13.01 and
13.06), which shall survive as to such Lender. Each notice by the Borrower under
this Section 13.12(b) shall constitute a representation by Borrower that the
removal described in such notice is permitted under this Section 13.12(b).

                  13.13 Survival. All indemnities set forth herein including,
without limitation, in Sections 1.10, 1.11, 2.06, 4.04, 13.01 and 13.06 shall,
survive the execution, delivery and termination of this Agreement and the
Revolving Notes and the making and repayment of the Loans.

                  13.14 Domicile of Loans. Each Lender may transfer and carry
its Loans at, to or for the account of any office, Subsidiary or Affiliate of
such Lender. Notwithstanding anything to the contrary contained herein, to the
extent that a transfer of Loans pursuant to this Section 13.14 would, at the
time of such transfer, result in increased costs under Section 1.10, 1.11, 2.06
or 4.04 from those being charged by the respective Lender prior to such
transfer, then the Borrower shall not be obligated to pay such increased costs
(although the Borrower shall be obligated to pay any other increased costs of
the type described above resulting from changes after the date of the respective
transfer).

                  13.15 Confidentiality. Subject to the provisions of clause (b)
of this Section 13.15, each Lender agrees that it will not disclose without the
prior consent of the Parent (other than to its employees, auditors, advisors or
counsel or to another Lender if the Lender or such Lender's holding or parent
company in its sole discretion determines that any such party should have access
to such information, provided such Persons shall be subject to the provisions of
this Section 13.15 to the same extent as such Lender) any information with
respect to the Parent or any of its Subsidiaries which is now or in the future
furnished pursuant to this Agreement or any other Credit Document and which is
designated by the Parent to the Lenders in writing as confidential, provided
that any Lender may disclose any such information (a) as has become

                                      -68-
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generally available to the public, (b) as may be required or appropriate in any
report, statement or testimony submitted to any municipal, state or Federal
regulatory body having or claiming to have jurisdiction over such Lender or to
the Federal Reserve Board or the Federal Deposit Insurance Corporation or
similar organizations (whether in the United States or elsewhere) or their
successors, (c) as may be required or appropriate in respect to any summons or
subpoena or in connection with any litigation, (d) in order to comply with any
law, order, regulation or ruling applicable to such Lender, (e) to any Agent,
(f) to any prospective or actual transferee or participant in connection with
any contemplated transfer or participation of any of the Revolving Notes or
Commitments or any interest therein by such Lender, provided that such
prospective transferee agrees to be subject to the provisions contained in this
Section 13.15 and (g) to any nationally recognized rating agency that requires
access to information about such Lender's investment portfolio in connection
with ratings issued to such Lender.

                  (b)      Each Credit Party hereby acknowledges and agrees that
each Lender may share with any of its Affiliates any information related to the
Parent or any of its Subsidiaries (including, without limitation, any nonpublic
customer information regarding the creditworthiness of the Parent and its
Subsidiaries), provided such Persons shall be subject to the provisions of this
Section 13.15 to the same extent as such Lender.

                  (c)      Each Credit Party hereby represents and acknowledges
that, to the best of its knowledge, no Agent nor any Lender, nor any employees
or agents of, or other persons affiliated with, any Agent or any Lender, have
directly or indirectly made or provided any statement (oral or written) to such
Credit Party or to any of their respective employees or agents, or other persons
affiliated with or related to such Credit Party (or, so far as such Credit Party
is aware, to any other Person), as to the potential tax consequences of this
Agreement, any other Credit Document or any of the transactions contemplated
hereby or thereby.

                  (d)      Neither the Agents, the Lenders or any of their
respective affiliates nor any Credit Party provide accounting, tax, or legal
advice and each party has consulted, or will consult, its own advisors regarding
its participation in the transactions contemplated by this Agreement.
Notwithstanding anything provided herein, in the other Credit Documents or in
any other document or agreement relating to the transactions contemplated herein
and in the other Credit Documents, and any express or implied claims of
exclusivity or proprietary rights, the Agents, the Lenders and each of the
Credit Parties hereby agree and acknowledge that each Credit Party, the Agents,
the Lenders and any of their respective affiliates (and each of their respective
employees, representatives or other agents) are authorized to disclose to any
and all persons, beginning immediately upon commencement of their discussions
regarding such transactions and without limitation of any kind, the U.S.
federal, state, or local tax treatment and tax structure of such transactions,
and all materials of any kind (including opinions or other tax analyses) that
are provided by either any Credit Party, any Agent, any Lender or any of their
respective affiliates (and any of their respective employees, representatives or
other agents) to any other such party relating to such tax treatment and tax
structure, except to the extent that such disclosure is subject to restrictions
reasonably necessary to comply with securities laws. For purposes of this
authorization, "tax treatment" of a transaction means the purported or claimed
tax treatment of the transaction and "tax structure" of a transaction means any
fact that may be relevant to understanding the purported or claimed tax
treatment of the transaction. Nothing herein is intended to imply that any oral
or written statement as to any potential tax

                                      -69-
<PAGE>

consequences that are related to, or may result from, the transactions
contemplated by the Agreement and the other Credit Documents have been made or
provided to, or for the benefit of, any Agent, Lender, Credit Party or any of
their respective affiliates by any other such party.

                  13.16 Register. The Borrower hereby designates the
Administrative Agent to serve as the Borrower's agent, solely for purposes of
this Section 13.16, to maintain a register (the "Register") on which it will
record the Commitments from time to time of each of the Lenders, the Loans made
by each of the Lenders and each repayment in respect of the principal amount of
the Loans of each Lender. The entries in the Register shall be conclusive and
binding for all purposes, absent manifest error. Failure to make any such
recordation, or any error in such recordation shall not affect the Borrower's
obligations in respect of such Loans. With respect to any Lender, the transfer
of the Commitments of such Lender and the rights to the principal of, and
interest on, any Loan made pursuant to such Commitments shall not be effective
until such transfer is recorded on the Register maintained by the Administrative
Agent with respect to ownership of such Commitments and Loans and prior to such
recordation all amounts owing to the transferor with respect to such Commitments
and Loans shall remain owing to the transferor. The registration of assignment
or transfer of all or part of any Commitments and Loans shall be recorded by the
Administrative Agent on the Register only upon the acceptance by the
Administrative Agent of a properly executed and delivered Assignment and
Assumption Agreement pursuant to Section 13.04(b). Coincident with the delivery
of such an Assignment and Assumption Agreement to the Administrative Agent for
acceptance and registration of assignment or transfer of all or part of a Loan,
or as soon thereafter as practicable, the assigning or transferor Lender shall
surrender the Revolving Note evidencing such Loan, and thereupon one or more new
Revolving Notes in the same aggregate principal amount shall be issued to the
assigning or transferor Lender and/or the new Lender. The Borrower agrees to
indemnify the Administrative Agent from and against any and all losses, claims,
damages and liabilities of whatsoever nature which may be imposed on, asserted
against or incurred by the Administrative Agent in performing its duties under
this Section 13.16.

                  SECTION 14. Guaranty.

                  14.01 Guaranty. In order to induce the Lenders to enter into
this Agreement and to extend credit hereunder and in recognition of the direct
benefits to be received by each Guarantor from the proceeds of the Loans and the
issuance of, and participations in, the Letters of Credit, each Guarantor hereby
agrees with the Lenders as follows: Each Guarantor hereby unconditionally and
irrevocably guarantees, as primary obligor and not merely as surety the full and
prompt payment when due in cash, whether upon maturity, acceleration or
otherwise, of any and all of the Guaranteed Obligations to the Guaranteed
Creditors. If any or all of the Guaranteed Obligations to the Guaranteed
Creditors becomes due and payable hereunder, each Guarantor unconditionally
promises to pay such indebtedness to the Guaranteed Creditors, or order, on
demand, together with any and all expenses which may be incurred by the
Guaranteed Creditors in collecting any of the Guaranteed Obligations. This
Guaranty is a continuing one and the Guaranteed Obligations shall be
conclusively presumed to have been created in reliance hereon. If claim is ever
made upon any Guaranteed Creditor for repayment or recovery of any amount or
amounts received in payment or on account of any of the Guaranteed Obligations
and any of the Guaranteed Creditors repays all or part of said amount by reason
of (i) any judgment, decree or order of any court or administrative body having
jurisdiction over such Guaranteed

                                      -70-
<PAGE>

Creditor or any of its property or (ii) any settlement or compromise of any such
claim effected by such Guaranteed Creditor with any such claimant (including the
Borrower), then and in such event each Guarantor agrees that any such judgment,
decree, order, settlement or compromise shall be binding upon the Guarantors,
notwithstanding any revocation of this Guaranty or any other instrument
evidencing any liability of the Borrower, and each Guarantor shall be and remain
liable to the Guaranteed Creditors hereunder for the amount so repaid or
recovered to the same extent as if such amount had never originally been
received by any such payee.

                  14.02 Bankruptcy. Additionally, each Guarantor unconditionally
and irrevocably guarantees the payment of any and all of the Guaranteed
Obligations to the Guaranteed Creditors whether or not due or payable by the
Borrower upon the occurrence of any of the events specified in Section 10.05,
and unconditionally promises to pay such indebtedness to the Guaranteed
Creditors, or order, on demand.

                  14.03 Nature of Liability. The liability of each Guarantor
hereunder is exclusive and independent of any security for or other guaranty of
the Guaranteed Obligations whether executed by any Guarantor, any other
guarantor or by any other party, and the liability of each Guarantor hereunder
is not affected or impaired by (a) any direction as to application of payment by
any Borrower or by any other party, or (b) any other continuing or other
guaranty, undertaking or maximum liability of a guarantor or of any other party
as to the Guaranteed Obligations, or (c) any payment on or in reduction of any
such other guaranty or undertaking, or (d) any dissolution, termination or
increase, decrease or change in personnel by the Borrower, or (e) any payment
made to the Guaranteed Creditors on the Guaranteed Obligations which any such
Guaranteed Creditor repays to the Borrower pursuant to court order in any
bankruptcy, reorganization, arrangement, moratorium or other debtor relief
proceeding, and each Guarantor waives any right to the deferral or modification
of its obligations hereunder by reason of any such proceeding.

                  14.04 Independent Obligation. No invalidity, irregularity or
unenforceability of all or any part of the Guaranteed Obligations or of any
security therefor shall affect, impair or be a defense to this Guaranty, and
this Guaranty shall be primary, absolute and unconditional notwithstanding the
occurrence of any event or the existence of any other circumstances which might
constitute a legal or equitable discharge of a surety or guarantor except
payment in full of the Guaranteed Obligations. The obligations of each Guarantor
hereunder are independent of the obligations of the Borrower, any other
guarantor or any other Person, and a separate action or actions may be brought
and prosecuted against each Guarantor whether or not action is brought against
any Borrower, any other guarantor or any other Person and whether or not any
Borrower, any other guarantor or any other Person be joined in any such action
or actions. Each Guarantor waives, to the full extent permitted by law, the
benefit of any statute of limitations affecting its liability hereunder or the
enforcement thereof. Any payment by a Borrower or other circumstance which
operates to toll any statute of limitations as to such Borrower shall operate to
toll the statute of limitations as to the Guarantors.

                  14.05 Authorization. Each Guarantor authorizes the Guaranteed
Creditors without notice or demand (except as shall be required by applicable
law and cannot be waived), and without affecting or impairing its liability
hereunder, from time to time to:

                                      -71-
<PAGE>

                  (a)      change the manner, place or terms of payment of,
and/or change or extend the time of payment of, renew, increase, accelerate or
alter, any of the Guaranteed Obligations (including any increase or decrease in
the rate of interest thereon), any security therefor, or any liability incurred
directly or indirectly in respect thereof, and this Guaranty shall apply to the
Guaranteed Obligations as so changed, extended, renewed or altered;

                  (b)      take and hold security for the payment of the
Guaranteed Obligations and sell, exchange, release, surrender, realize upon or
otherwise deal with in any manner and in any order any property by whomsoever at
any time pledged or mortgaged to secure, or howsoever securing, the Guaranteed
Obligations or any liabilities (including any of those hereunder) incurred
directly or indirectly in respect thereof or hereof, and/or any offset
thereagainst;

                  (c)      exercise or refrain from exercising any rights
against the Borrower or others, or otherwise act or refrain from acting;

                  (d)      release or substitute any one or more endorsers,
guarantors, the Borrower or other obligors;

                  (e)      settle or compromise any of the Guaranteed
Obligations, any security therefor or any liability (including any of those
hereunder) incurred directly or indirectly in respect thereof or hereof, and may
subordinate the payment of all or any part thereof to the payment of any
liability (whether due or not) of the Borrower to its creditors other than the
Guaranteed Creditors;

                  (f)      apply any sums by whomsoever paid or howsoever
realized to any liability or liabilities of the Borrower to the Guaranteed
Creditors regardless of what liability or liabilities of the Borrower remain
unpaid;

                  (g)      consent to or waive any breach of, or any act,
omission or default under, this Agreement, any other Credit Document or any of
the instruments or agreements referred to herein or therein, or otherwise amend,
modify or supplement this Agreement, any other Credit Document or any of such
other instruments or agreements; and/or

                  (h)      take any other action which would, under otherwise
applicable principles of common law, give rise to a legal or equitable discharge
of any Guarantor from its liabilities under this Guaranty.

                  14.06 Reliance. It is not necessary for the Guaranteed
Creditors to inquire into the capacity or powers of the Borrower or the
officers, directors, partners or agents acting or purporting to act on its or
their behalf, and any Guaranteed Obligations made or created in reliance upon
the professed exercise of such powers shall be guaranteed hereunder.

                  14.07 Rights of Contribution. (a) The Guarantors hereby agree,
as between themselves, that if any Guarantor shall become an Excess Funding
Guarantor (as defined below) by reason of the payment by such Guarantor of any
Guaranteed Obligations, each other Guarantor shall, on demand of such Excess
Funding Guarantor (but subject to the next sentence),

                                      -72-
<PAGE>

pay to such Excess Funding Guarantor an amount equal to such Guarantor's Pro
Rata Share (as defined below and determined, for this purpose, without reference
to the properties, debts and liabilities of such Excess Funding Guarantor) of
the Excess Payment (as defined below) in respect of such Guaranteed Obligations.
The payment obligation of a Guarantor to any Excess Funding Guarantor under this
Section shall be subordinate and subject in right of payment to the prior
payment in full of the obligations of such Guarantor under the other provisions
of this Article 14 and such Excess Funding Guarantor shall not exercise any
right or remedy with respect to such excess until payment in full of all
Guaranteed Obligations.

                  (b)      For purpose of this Section, (i) "Excess Funding
Guarantor" means, in respect of any Guaranteed Obligations, a Guarantor that has
paid an amount in excess of its Pro Rata Share of such Guaranteed Obligations,
(ii) "Excess Payment" means, in respect of any Guaranteed Obligations, the
amount paid by an Excess Funding Guarantor in excess of its Pro Rata Share of
such Guaranteed Obligations and (iii) "Pro Rata Share" means, for any Guarantor,
the ratio (expressed as percentage) or (x) the amount by which the aggregate
present fair saleable value of all properties of such Guarantor (excluding any
shares of stock of any other Guarantor) exceeds the amount of all the debts and
liabilities of such Guarantor (including contingent, subordinated, unmatured and
unliquidated liabilities, but excluding the obligations of such Guarantor
hereunder and any obligations of any other Guarantor that have been Guaranteed
by such Guarantor) to (y) the amount by which the aggregate fair saleable value
of all properties of all the Guarantors exceeds the amount of all the debts and
liabilities (including contingent, subordinated, unmatured and unliquidated
liabilities, but excluding the obligations of the Borrower and the Guarantors
hereunder and under the other Credit Documents) of all the Guarantors,
determined (A) with respect to any Guarantor that is a party hereto on the
Effective Date, as of the Effective Date, and (B) with respect to any other
Guarantor, as of the date such Guarantor becomes a Guarantor hereunder.

                  14.08 Waiver. (a) Each Guarantor waives any right (except as
shall be required by applicable law and cannot be waived) to require any
Guaranteed Creditor to (i) proceed against the Borrower, any other guarantor or
any other party, (ii) proceed against or exhaust any security held from the
Borrower, any other guarantor or any other party or (iii) pursue any other
remedy in any Guaranteed Creditor's power whatsoever. Each Guarantor waives any
defense based on or arising out of any defense of the Borrower any other
guarantor or any other party, other than payment in full in cash of the
Guaranteed Obligations, based on or arising out of the disability of the
Borrower, any other guarantor or any other party, or the unenforceability of the
Guaranteed Obligations or any part thereof from any cause, or the cessation from
any cause of the liability of the Borrower other than payment in full of the
Guaranteed Obligations. The Guaranteed Creditors may, at their election,
foreclose on any security held by the Administrative Agent, the Collateral Agent
or any other Guaranteed Creditor by one or more judicial or nonjudicial sales,
whether or not every aspect of any such sale is commercially reasonable (to the
extent permitted by applicable law and subject to the relevant provisions of the
applicable Security Documents), or exercise any other right or remedy the
Guaranteed Creditors may have against the Borrower or any other party, or any
security, without affecting or impairing in any way the liability of any
Guarantor hereunder except to the extent the Guaranteed Obligations have been
irrevocably and indefeasibly paid in full in cash. Each Guarantor waives any
defense arising out of any such election by the Guaranteed Creditors, even
though such election operates to impair or extinguish

                                      -73-
<PAGE>

any right of reimbursement or subrogation or other right or remedy of any
Guarantor against the Borrower or any other party or any security.

                  (b)      Each Guarantor waives all presentments, demands for
performance, protests and notices, including, without limitation, notices of
nonperformance, notices of protest, notices of dishonor, notices of acceptance
of this Guaranty, and notices of the existence, creation or incurring of new or
additional Guaranteed Obligations. Each Guarantor assumes all responsibility for
being and keeping itself informed of the Borrower's financial condition and
assets, and of all other circumstances bearing upon the risk of nonpayment of
the Guaranteed Obligations and the nature, scope and extent of the risks which
such Guarantor assumes and incurs hereunder, and agrees that the Guaranteed
Creditors shall have no duty to advise any Guarantor of information known to
them regarding such circumstances or risks.

                  (c)      Until such time as the Guaranteed Obligations have
been paid in full in cash, each Guarantor hereby waives all rights of
subrogation which it may at any time otherwise have as a result of this Guaranty
(whether contractual, under Section 509 of the Bankruptcy Code, or otherwise) to
the claims of the Guaranteed Creditors against the Borrower or any other
guarantor of the Guaranteed Obligations and all contractual, statutory or common
law rights of reimbursement, contribution or indemnity from the Borrower or any
other guarantor which it may at any time otherwise have as a result of this
Guaranty.

                  (d)      Each Guarantor warrants and agrees that each of the
waivers set forth above is made with full knowledge of its significance and
consequences and that if any of such waivers are determined to be contrary to
any applicable law of public policy, such waivers shall be effective only to the
maximum extent permitted by law.

                  14.09 Payment. All payments made by any Guarantor pursuant to
this Section 14 shall be made in Dollars in immediately available funds. All
payments made by any Guarantor pursuant to this Section 14 will be made without
setoff, counterclaim or other defense, and shall be subject to the provisions of
Sections 4.03 and 4.04.

                  14.10 Savings Clause. Each Lender and each Guarantor hereby
confirms that it is its intention that this Guaranty not constitute a fraudulent
transfer or conveyance for purposes of the Bankruptcy Code, the Uniform
Fraudulent Transfer Act or any similar federal or state law. To effectuate the
foregoing intention, each Lender and each Guarantor hereby irrevocably agrees
that Guaranteed Obligations guaranteed by each Guarantor under this Guaranty
shall be limited to such amount as will, after giving effect to such maximum
amount and all of such Guarantor's other (contingent or otherwise) liabilities
that are relevant under such laws (but excluding, to the maximum extent
permitted by applicable law, any liabilities of a Guarantor arising under any
other indebtedness that is subordinated to the Guaranteed Obligations or any
obligations under this Guarantee), and after giving effect to any rights to
contribution pursuant to Section 14.07 hereof, result in the Guaranteed
Obligations of such Guarantor in respect of such maximum amount not constituting
a fraudulent transfer or conveyance.

                                     ******

                                      -74-
<PAGE>

                  IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Agreement as of the date first
above written.

Address:                                 TEXAS GENCO, LP
c/o Texas Genco GP, LLC
1111 Louisiana Street                    By: TEXAS GENCO GP, LLC,
Houston, Texas 77002                     its General Partner
Attn: Linda Geiger, Assistant Treasurer
Facsimile: (713) 207-3301                By: /s/ MARC KILBRIDE
copy to: Marc Kilbride, Treasurer            -----------------------------------
Facsimile: (713) 207-3301                    Name:  Marc Kilbride
                                             Title: Vice President and Treasurer

Address:                                 TEXAS GENCO HOLDINGS, INC.
1111 Louisiana Street
Houston, Texas 77002                     By: /s/ MARC KILBRIDE
Attn: Linda Geiger, Assistant Treasurer      -----------------------------------
Facsimile: (713) 207-3301                    Name:  Marc Kilbride
copy to: Marc Kilbride, Treasurer            Title: Vice President and Treasurer
Facsimile: (713) 207-3301

Address:                                 TEXAS GENCO GP, LLC
1111 Louisiana Street
Houston, Texas 77002                     By: /s/ MARC KILBRIDE
Attn: Linda Geiger, Assistant Treasurer      -----------------------------------
Facsimile: (713) 207-3301                    Name:  Marc Kilbride
copy to: Marc Kilbride, Treasurer            Title: Vice President and Treasurer
Facsimile: (713) 207-3301

                 SIGNATURE PAGE TO TEXAS GENCO CREDIT AGREEMENT
<PAGE>

Address:                                 TEXAS GENCO LP, LLC
1011 Centre Road, Suite 324
Wilmington, DE 19805                     By: /s/ PATRICIA F. GENZEL
Telephone: 302-225-0600                      -----------------------------------
Facsimile: 302-225-0625                      Name:  Patricia F. Genzel
Attn: President                              Title: President and Secretary

with a copy to:
c/o Texas Genco Holdings, Inc.
1111 Louisiana Street
Houston, Texas 77002
Attn: Linda Geiger, Assistant Treasurer
Facsimile: (713) 207-3301
copy to: Marc Kilbride, Treasurer
Facsimile: (713) 207-3301

Address:                                 TEXAS GENCO SERVICES , LP
c/o Texas Genco GP, LLC
1111 Louisiana Street                     By:  TEXAS GENCO GP, LLC,
Houston, Texas 77002                      its General Partner
Attn: Linda Geiger, Assistant Treasurer
Facsimile: (713) 207-3301                By: /s/ MARC KILBRIDE
copy to: Marc Kilbride, Treasurer            -----------------------------------
Facsimile: (713) 207-3301                    Name:  Marc Kilbride
                                             Title: Vice President and Treasurer

                 SIGNATURE PAGE TO TEXAS GENCO CREDIT AGREEMENT
<PAGE>

                                         DEUTSCHE BANK AG NEW YORK BRANCH,
                                         individually and as
                                         Administrative Agent and
                                         Collateral Agent

                                         By: /s/ RICHARD HENSHALL
                                             -----------------------------------
                                             Name:  Richard Henshall
                                             Title: Director

                                         By: /s/ JOEL MAKOWSKY
                                             -----------------------------------
                                             Name:  Joel Makowsky
                                             Title: Director

                 SIGNATURE PAGE TO TEXAS GENCO CREDIT AGREEMENT
<PAGE>

                                         COMPASS BANK, individually and as
                                         Documentation Agent

                                         By:  /s/ COLLIN G. SANDERS
                                             -----------------------------------
                                             Name:  Collin G. Sanders
                                             Title: Senior Vice President

                 SIGNATURE PAGE TO TEXAS GENCO CREDIT AGREEMENT
<PAGE>

                                             BANK OF AMERICA N.A.

                                             By: /s/ RICHARD L. STEIN
                                                 ----------------------
                                                 Name: Richard L. Stein
                                                 Title: Principal

                                             CITIBANK, N.A.

                                             By: /s/ STUART J. GLEN
                                                 -----------------------
                                                 Name: Stuart J. Glen
                                                 Title: Vice President

                                             CREDIT SUISSE FIRST BOSTON ACTING
                                             THROUGH ITS CAYMAN ISLANDS BRANCH

                                             By: /s/ S. WILLIAM FOX
                                                 -------------------------
                                                 Name: S. William Fox
                                                 Title: Director

                                             By: /s/ DAVID J. DODD
                                                 --------------------------
                                                 Name: David J. Dodd
                                                 Title: Associate

                                             JPMORGAN CHASE BANK

                                             By: /s/ ROBERT TRUBAND
                                                 ---------------------------
                                                 Name: Robert Truband
                                                 Title: Vice President

                                             WACHOVIA BANK, NATIONAL ASSOCIATION

                                             By: /s/ D. MITCH WILSON
                                                 --------------------------
                                                 Name: D. Mitch Wilson
                                                 Title: Vice President

<PAGE>

                                                                      SCHEDULE 7

                                   COMMITMENTS

<TABLE>
<CAPTION>
Lender                                                 Commitment
------                                                 ----------
<S>                                                    <C>
Deutsche Bank AG New York Branch                       $15,000,000
Bank of America, N.A.                                  $10,000,000
Citibank N.A.                                          $10,000,000
Compass Bank                                           $10,000,000
Credit Suisse First Boston, acting through its         $10,000,000
Cayman Islands Branch
JPMorgan Chase Bank                                    $10,000,000
Wachovia                                               $10,000,000

                                               Total:  $75,000,000
                                                       ===========
</TABLE>

<PAGE>

                                                                     SCHEDULE II

                                LENDER ADDRESSES

DEUTSCHE BANK AG NEW YORK BRANCH
60 Wall Street
New York, NY  10005-2858
Telephone: (212) 250-3968
Facsimile: (212) 797-4346
Attention: Richard Henshall

COMPASS BANK
24 Greenway Plaza, Suite 1400
Houston, TX  77046
Telephone: (713) 968-8234
Facsimile: (713) 968-8211
Attention: Collis Sanders

BANK OF AMERICA, N.A.
901 Main Street, 14th Floor
Dallas, TX  75202
Telephone: (214) 209-1228
Facsimile: (214) 290-9415
Attention: Marija Salic

CITIBANK, N.A.
2 Penns Way, Suite 110
New Castle, DE  19720
Telephone: (302) 894-6084
Facsimile: (212) 994-0847
Attention: Karen Riley

CREDIT SUISSE FIRST BOSTON, ACTING THROUGH ITS
CAYMAN ISLANDS BRANCH
One Madison Avenue
New York, NY  10010
Telephone: (212) 538-3380
Facsimile: (212) 325-9049
Attention: Ed Markowski

JPMORGAN CHASE BANK
1111 Fannin Street, 10th Floor
Houston, TX  77002
Telephone: (713) 750-2355
Facsimile: (713) 427-6307
Attention: Claudette Reid

<PAGE>

                                                                          Page 2

WACHOVIA BANK, NATIONAL ASSOCIATION
201 S. College St. 9th Floor
NC 1183
Charlotte, NC 28288-1183
Telephone: (704) 374-4425
Facsimile: (704) 715-0097
Attention: Cynthia Rawson

<PAGE>

                                                                    SCHEDULE III

                             Governmental Approvals

                                      None

<PAGE>

                                                                     SCHEDULE IV

                              Existing Indebtedness

      OUTSTANDING INDEBTEDNESS FOR BORROWED MONEY AS OF THE EFFECTIVE DATE
                                 (IN THOUSANDS)

<TABLE>
<S>                                      <C>       <C>          <C>
Kilman Note                              12.50%    8/25/2017    $   436
Capitalized Lease Obligations                                     6,784
Money Pool Borrowings                                                 0
Credit Agreement Borrowings                                      26,000
                                                                -------
Total for Parent and its Subsidiaries                           $33,220
                                                                =======
</TABLE>
<PAGE>

                             FORM OF REVOLVING NOTE

THIS NOTE AND THE OBLIGATIONS REPRESENTED HEREBY MAY NOT BE TRANSFERRED EXCEPT
IN COMPLIANCE WITH THE TERMS AND CONDITIONS OF THE AGREEMENT REFERRED TO BELOW.
TRANSFERS OF THIS NOTE AND THE OBLIGATIONS REPRESENTED HEREBY MUST BE RECORDED
IN THE REGISTER MAINTAINED BY THE ADMINISTRATIVE AGENT PURSUANT TO THE TERMS OF
SUCH AGREEMENT.

$_________________                                            New York, New York
                                                             __________ __, 200_

FOR VALUE RECEIVED, TEXAS GENCO, LP (the "Borrower") hereby promises to pay to
______________ or its registered assigns (the "Lender"), in Dollars (as defined
in the Agreement referred to below) in immediately available funds, at the
office of Deutsche Bank AG New York Branch (the "Administrative Agent") located
at 90 Hudson Street, First Floor, Jersey City, New Jersey 07302 on the Maturity
Date (as defined in the Agreement) the principal sum of ________ DOLLARS ($____)
or, if less, the unpaid principal amount of all Loans (as defined in the
Agreement) made by the Lender pursuant to the Agreement.

The Borrower promises also to pay interest on the unpaid principal amount hereof
in like money at said office from the date hereof until paid at the rates and at
the times provided in Section 1.08 of the Agreement.

This Note is one of the Revolving Notes referred to in the Credit Agreement,
dated as of December 23, 2003, among the Borrower, Texas Genco Holdings, Inc.,
Texas Genco GP, LLC, Texas Genco LP, LLC, Texas Genco Services, LP, certain
financial institutions from time to time party thereto (including the Lender),
Compass Bank, as Documentation Agent and the Administrative Agent in such
capacity and as Collateral Agent (as amended, modified or supplemented from time
to time, the "Agreement") and is entitled to the benefits thereof and of the
other Credit Documents (as defined in the Agreement). This Note is secured by
the Security Documents (as defined in the Agreement) to the extent provided
therein, and is entitled to the benefits of the Guaranty (as defined in the
Agreement). This Note is subject to voluntary prepayment and mandatory repayment
prior to the Maturity Date (as defined in the Agreement), in whole or in part,
as provided in the Agreement.

In case an Event of Default (as defined in the Agreement) shall occur and be
continuing, the principal of and accrued interest on this Note may become or be
declared to be due and payable in the manner and with the effect provided in the
Agreement.

The Borrower hereby waives presentment, demand, protest or notice of any kind in
connection with this Note.

<PAGE>

THIS NOTE MAY NOT BE TRANSFERRED EXCEPT PURSUANT TO AND IN ACCORDANCE WITH THE
REGISTRATION AND OTHER PROVISIONS OF SECTION 13.16 OF THE AGREEMENT.

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

                                       TEXAS GENCO, LP

                                       By:  TEXAS GENCO GP, LLC,
                                       its General Partner

                                       By:______________________________________
                                          Name:
                                          Title:

<PAGE>

                          FORM OF OFFICER'S CERTIFICATE
                             [NAME OF CREDIT PARTY]

         The undersigned, the duly elected or appointed, authorized and acting
Responsible Officer of [Name of Credit Party], a _________ corporation, pursuant
to Section 5.04 of the Credit Agreement dated as of December 23, 2003 (the
"Credit Agreement") among Texas Genco, Texas Genco, LP, Texas Genco GP, LLC,
Texas Genco LP, LLC, Texas Genco Services, LP, the lenders from time party
thereto, Deutsche Bank AG New York Branch, as Administrative Agent and
Collateral Agent, and Compass Bank, as Documentation Agent (all capitalized
terms not defined herein have the meaning ascribed to them in the Credit
Agreement), hereby certifies as follows:

         a.       The following named individuals are Responsible Officers of
[Name of Credit Party], each of which holds the office of [Name of Credit Party]
set forth opposite his name as of the date hereof. The signature written
opposite the name and title of each such officer is his genuine signature.

<TABLE>
<CAPTION>
     Name                               Office                     Signature
------------------------        -----------------------      -------------------------
<S>                             <C>                          <C>
________________________        ________________________     _________________________
________________________        ________________________     _________________________
________________________        ________________________     _________________________
</TABLE>

         b.       Attached hereto as Exhibits "A" and "B," respectively, are
true and correct copies of (i) the [Articles of Incorporation or equivalent
organizational document] of [Name of Credit Party] as filed in the Office of the
Secretary of State of the State of _____ on ______ as in full force and effect
on the date hereof and (ii) the [Bylaws or equivalent organizational document]
of [Name of Credit Party] as in full force and effect on the date hereof.

         c.       Attached hereto as Exhibit "C" are true and correct copies of
certain resolutions (the "Resolutions") duly adopted by the [Board of
Directors][Sole Manager] of [Name of Credit Party] approving and authorizing the
execution, delivery and performance by [Name of Credit Party] of each Credit
Document to which such person is a party and authorizing the borrowings and
other transactions contemplated thereunder. The Resolutions have not been
amended, modified or revoked since their adoption and remain in full force and
effect as of the date hereof. Except as attached hereto as Exhibit C, no
resolutions have been adopted by the [Board of Directors][Sole Manager] of [Name
of Credit Party] which deal with the execution, delivery or performance of any
of the Credit Documents to which [Name of Credit Party] is party.

         d.       Attached hereto as Exhibit "D" is a true and correct copy of a
[long form good standing certificate][certificate of existence and a certificate
of account status] of [Name of Credit Party] in its jurisdiction of
organization.

                 REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK

<PAGE>

         IN WITNESS WHEREOF, the undersigned has executed this certificate as of
December __, 2003.

                                           _____________________________________
                                           Name:________________________________
                                           Title:_______________________________

         I, the undersigned, [Responsible Officer] of [Name of Credit Party], do
hereby certify on behalf of [Name of Credit Party] that:

         1.       [Name of Person making above certifications] is the duly
elected and qualified [Responsible Officer] of [Name of Credit Party] and the
signature above is his genuine signature.

         2.       The certifications made by [name of Person making above
certifications] on behalf of [Name of Credit Party] in items a, b, c and d above
are true and correct.

         IN WITNESS WHEREOF, I have hereunto set my hand this _____ day of
December, 2003.

                                         [NAME OF CREDIT PARTY]

                                         By: ___________________________________
                                             Name:
                                             Title:

<PAGE>

                            FORM OF PLEDGE AGREEMENT

PLEDGE AGREEMENT, dated as of ______, 200_, made by and among Texas Genco, LP, a
Texas limited partnership (the "Company"), with and in favor of the Collateral
Agent (as defined below).

                              W I T N E S S E T H:

WHEREAS, the Company, Texas Genco Holdings, Inc., Texas Genco GP, LLC, Texas
Genco GP, LLC, Texas Genco, LP, Texas Genco Services, LP, the lenders from time
to time party thereto (the "Lenders"), Deutsche Bank AG New York Branch, as
Administrative Agent and Compass Bank, as Documentation Agent, have entered into
a Credit Agreement, dated the date hereof (as amended, modified or supplemented
from time to time, the "Credit Agreement"), providing for the making of Loans
to, and the issuance of Letters of Credit for the account of, the Company as
contemplated therein;

                  WHEREAS, it is a condition precedent to the making of Loans
and the issuance of, and participation in, Letters of Credit for the account of
the Company under the Credit Agreement that the Company shall have executed and
delivered to the Collateral Agent this Agreement; and

WHEREAS, the Company will obtain benefits from the incurrence of Loans by, and
the issuance of, and participation in, Letters of Credit for its account under
the Credit Agreement and, accordingly, the Company desires to enter into this
Agreement in order to satisfy the condition described in the preceding
paragraph;

NOW, THEREFORE, in consideration of the premises and to induce the Lenders to
maintain or make Loans and issue Letters of Credit under the Credit Agreement,
the parties hereto hereby agree as follows:

                  1.       Defined Terms. (a) Unless otherwise defined herein,
each term defined in the Credit Agreement and used herein shall have the meaning
given to such term in the Credit Agreement.

                  (b)      The following terms shall have the following
meanings:

"Agreement": this Pledge Agreement, as the same may be amended, modified or
otherwise supplemented from time to time.

"Bonds": bonds issued by the Company pursuant to the Indenture, including
without limitation, the Pledged Bonds.

                                      -5-

<PAGE>

"Collateral": the collective reference to (i) the Pledged Bonds, all documents
and instruments issued or delivered in respect of any Pledged Bonds, the rights
and interest of the holder or registered owner of each Pledged Bond in and under
the Pledged Bonds (including such rights and interest in any and all collateral
securing the Pledged Bonds), such documents and instruments, any and all other
documents and instruments that from time to time secure payment of such Pledged
Bond, (ii) all Investment Property constituting or arising from any Collateral,
and (iii) all Proceeds of any of the foregoing.

"Collateral Agent": Deutsche Bank AG New York Branch, in its capacity as
Collateral Agent under the Credit Agreement.

"Credit Agreement": the Credit Agreement, dated as of December 23, 2003, among
Texas Genco Holdings, Inc., Texas Genco GP, LLC, Texas Genco GP, LLC, Texas
Genco, LP, the lenders from time to time party thereto, Deutsche Bank AG New
York Branch, as Administrative Agent and Compass Bank, as Documentation Agent,
as amended, supplemented or otherwise modified from time to time.

"Indenture": the First Mortgage Indenture, dated as of December 23, 2003,
between the Company and the Trustee, as amended or supplemented from time to
time.

"Investment Property": the collective reference to (i) all "investment property"
as such term is defined in Section 9-102(a)(49) of the New York UCC as in effect
in the State of New York on the date hereof and (ii) whether or not constituting
"investment property" as so defined, all Pledged Bonds.

"New York UCC": the Uniform Commercial Code as from time to time in effect in
the State of New York.

"Obligations": shall mean and include all of the following:

                  (1)      the full and prompt payment when due (whether at the
stated maturity, by acceleration or otherwise) of all obligations, liabilities
and indebtedness (including, without limitation, principal, premium, interest
(including, without limitation, all interest that accrues after the commencement
of any case, proceeding or other action relating to the bankruptcy, insolvency,
reorganization or similar proceeding of any Credit Party at the rate provided
for in the respective documentation, whether or not a claim for post-petition
interest is allowed in any such proceeding), reimbursement obligations under
Letters of Credit, fees, costs and indemnities) of each Credit Party to the
Secured Parties, whether now existing or hereafter incurred under, arising out
of, or in connection with, the Credit Agreement and the other Credit Documents
(including, in the case of each Credit Party that is a Guarantor, all such
obligations, liabilities and indebtedness of such Credit Party under the
Guaranty) and the due performance and compliance by each Credit Party with all
of the terms, conditions and agreements contained in the Credit Agreement and in
such other Credit Documents;

                  (2)      any and all sums advanced by the Collateral Agent in
order to preserve the Collateral or preserve its security interest in the
Collateral;

                                      -6-

<PAGE>

                  (3)      in the event of any proceeding for the collection or
enforcement of any indebtedness, obligations, or liabilities of any Credit Party
referred to in clause (1), after an Event of Default shall have occurred and be
continuing, the reasonable expenses of retaking, holding, preparing for sale or
lease, selling or otherwise disposing of or realizing on the Collateral, or of
any exercise by the Collateral Agent of its rights hereunder, together with
reasonable attorneys' fees and court costs;

                  (4)      all amounts paid by any Agent or Lender as to which
such Agent or Lender has the right to reimbursement under the relevant Sections
described in Section 13.13 of the Credit Agreement; and

                  (5)      all amounts owing to the Administrative Agent
pursuant to any of the Credit Documents in its capacity as such;

it being acknowledged and agreed that the "Obligations" shall include extensions
of credit of the types described above, whether outstanding on the date of this
Agreement or extended from time to time after the date of this Agreement.

"Pledged Bonds": shall mean the First Mortgage Indenture Bonds Series A,
initially authenticated and delivered in the aggregate principal amount of
Seventy-five Million Dollars ($75,000,000), established in the First
Supplemental Indenture, dated as of December 23, 2003, between the Company and
the Trustee.

"Primary Obligations" shall have the meaning provided in Section 6(c) of this
Agreement.

"Pro Rata Share" shall have the meaning provided in Section 6(c) of this
Agreement.

"Proceeds": all "proceeds" as such term is defined in Section 9-102(a)(64) of
the New York UCC in effect in the State of New York on the date hereof and, in
any event, including, without limitation, principal, interest and other income
from the Pledged Bonds and all collections thereon and any money or property
realized or collected in connection with any collateral security or guarantee
with respect to the Pledged Bonds.

"Secondary Obligations" shall have the meaning provided in Section 6(c) of this
Agreement.

"Secured Party": each Lender under the Credit Agreement, the Issuing Lenders,
the Collateral Agent and each other Agent.

"Securities Act": the Securities Act of 1933, as amended.

"Termination Date": shall have the meaning provided in Section 21 of this
Agreement.

"Trustee": JPMorgan Chase Bank, in its capacity as Trustee under the Indenture.

                  (c)      The words "hereof," "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any

                                      -7-

<PAGE>

particular provision of this Agreement, and section and paragraph references are
to this Agreement unless otherwise specified.

                  (d)      The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.

                  2.       Delivery and Pledge. (a) The Company hereby delivers,
transfers, assigns, pledges and issues to the Collateral Agent, for the ratable
benefit of the Secured Parties, the Pledged Bonds, and hereby grants to the
Collateral Agent, for the ratable benefit of the Secured Parties, a first
priority security interest in the Collateral, in each case as collateral
security for the prompt and complete payment and performance by the Company when
due (whether at the stated maturity, by acceleration or otherwise) of the
Obligations. The Company hereby agrees that (i) subject to the terms hereof, the
Collateral Agent is, and will have all the rights and interests of a holder and
registered owner of each Pledged Bond, and all rights and interests under and in
the Collateral, and (ii) the Collateral Agent may exercise such rights and any
other rights set forth herein or under applicable law, and realize on such
interests, in each case for the ratable benefit of the Secured Parties, to
satisfy, in whole or in part, the Obligations, in accordance with, and subject
to, the terms hereof and the terms of the Credit Agreement.

                  (b)      The Company shall cause the physical delivery of the
Pledged Bonds in certificated form to the Collateral Agent, registered in its
name as Collateral Agent.

                  3.       Restrictions on Transfer of Pledged Bonds; Voting of
Pledged Bonds. (a) unless an Event of Default shall have occurred and be
continuing, the Collateral Agent shall not sell, assign or transfer the Pledged
Bonds.

                  (b)      Unless an Event of Default shall have occurred or
unless otherwise instructed by the Required Lenders, where consent of holders of
Bonds of the Company is sought, the Collateral Agent shall vote, or shall
consent with respect thereto, as follows: (i) the Collateral Agent shall vote
all Pledged Bonds then held by it, or consent with respect thereto, in favor of
any or all amendments or modifications of the Indenture which the Company has
requested in connection with the supplemental indentures thereto for the
issuance of additional Bonds to the extent permitted under the Credit Agreement;
and (ii) with respect to any other amendments or modifications of the Indenture,
the Collateral Agent shall vote all Pledged Bonds then held by it, or consent
with respect thereto, in accordance with the written direction of the Required
Lenders. Notwithstanding the foregoing, if an Event of Default shall have
occurred and be continuing, the Collateral Agent may vote the Pledged Bonds as
contemplated by Section 6 of this Agreement.

                  4.       Representations and Warranties. The Company
represents and warrants that:

                  (a)      The Pledged Bonds in certificated form delivered to
         the Collateral Agent and registered in its name as Collateral Agent
         represents all of the Bonds authenticated and delivered on the date
         hereof.

                                      -8-

<PAGE>

                  (b)      Each of the Pledged Bonds constitutes the legal,
         valid and binding obligation of the Company, enforceable in accordance
         with its terms, subject to the effects of bankruptcy, insolvency,
         fraudulent conveyance, reorganization, moratorium and other similar
         laws relating to or affecting creditors' rights generally, general
         equitable principles (whether considered in a proceeding in equity or
         at law) and an implied covenant of good faith and fair dealing.

                  (c)      Upon delivery in certificated form to the Collateral
         Agent of the Pledged Bonds, (i) subject to Section 3(b) hereof, the
         Collateral Agent shall be entitled to all voting, consensual and other
         rights accruing to the holders of Bonds under the Indenture, and (ii)
         the security interest created pursuant to this Agreement will
         constitute a valid, perfected first priority security interest in the
         Collateral, enforceable in accordance with its terms against all
         creditors of the Company and any persons purporting to purchase any
         Collateral from the Company, subject to the effects of bankruptcy,
         insolvency, fraudulent conveyance, reorganization, moratorium and other
         similar laws relating to or affecting creditors' rights generally,
         general equitable principles (whether considered in a proceeding in
         equity or at law) and an implied covenant of good faith and fair
         dealing.

                  (d)      There exists no default under any Pledged Bond.

                  5.       Covenants. The Company covenants and agrees with the
Collateral Agent, for the benefit of the Secured Parties, that, from and after
the date of this Agreement until this Agreement is terminated and the security
interests created hereby are released:

                  (a)      The Company shall (i) not take or omit to take any
         action, the taking or the omission of which would result in an
         alteration or impairment of the security interest created by this
         Agreement, it being understood that the foregoing is not intended to
         restrict any supplement to the Indenture that is effected from time to
         time in accordance with the terms thereof to the extent permitted by
         the Credit Agreement and (ii) defend such security interest against
         claims and demands of all persons whomsoever. At any time and from time
         to time, upon the written request of the Collateral Agent and at the
         sole expense of the Company, the Company shall promptly and duly
         execute and deliver, and have recorded, such further instruments and
         documents and take such further actions as the Collateral Agent
         reasonably may request for the purposes of obtaining or preserving the
         full benefits of this Agreement and of the rights and powers herein
         granted, including, without limitation, in the case of any relevant
         Collateral, taking any actions necessary to enable the Collateral Agent
         to obtain "control" (within the meaning of the New York UCC) with
         respect thereto.

                  (b)      The Company shall not enter into any agreement
         amending or supplementing the Collateral except in accordance with, and
         subject to the terms of, the Indenture and to the extent permitted by
         the Credit Agreement.

                  (c)      The Company shall pay, and save the Collateral Agent
         and the Secured Parties harmless from, any and all liabilities with
         respect to, or resulting from any delay in paying, any and all stamp,
         excise, sales or other taxes and any and all recording and

                                      -9-

<PAGE>

         filing fees which may be payable or determined to be payable with
         respect to any of the Collateral or in connection with any of the
         transactions contemplated by this Agreement.

                  (d)      Any sums paid upon or in respect of the Pledged Bonds
         upon the liquidation or dissolution of the Company shall be paid over
         to the Collateral Agent to be held by it or applied hereunder, for the
         ratable benefit of the Secured Parties, as additional collateral
         security for the Obligations, and in case any distribution of capital
         shall be made on or in respect of the Pledged Bonds or any property
         shall be distributed upon or with respect to the Pledged Bonds pursuant
         to the recapitalization or reclassification of the capital of the
         Company or pursuant to the reorganization thereof, the property so
         distributed shall, unless otherwise subject to a perfected security
         interest in favor of the Collateral Agent, be delivered to the
         Collateral Agent to be held or applied hereunder, for the ratable
         benefit of the Secured Parties, as additional collateral security for
         the Obligations. If any sums of money or property so paid or
         distributed in respect of the Pledged Bonds shall be received by the
         Company, the Company shall, until such money or property is paid or
         delivered to the Collateral Agent, hold such money or property in trust
         for the Collateral Agent and the Secured Parties, segregated from other
         funds of the Company, as additional collateral security for the
         Obligations.

                  (e)      The Company shall not (i) create, incur or permit to
         exist any Lien or option in favor of, or any claim of any person with
         respect to, any of the Pledged Bonds, or any interest therein, except
         for the security interests created by this Agreement or by the
         Indenture or (ii) enter into any agreement or undertaking restricting
         the right or ability of the Company or the Collateral Agent to sell,
         assign, transfer or apply to the Obligations any of the Collateral.

                  6.       Remedies; Application of Proceeds. (a) If an Event of
Default shall have occurred and be continuing, the rights and remedies of the
Collateral Agent with respect to the Company and the Collateral shall include
(without limitation of the other rights and remedies available to the Collateral
Agent or any Secured Party under the Credit Agreement, the Indenture, each other
Credit Document or otherwise available to it under applicable law) (i) the right
to collect all amounts payable under the Pledged Bonds or any other Collateral
for the benefit of the Secured Parties and hold it for their benefit or apply it
to the Obligations, (ii) the right to attend or be represented by proxy at any
meeting of bondholders under the Indenture without regard to Section 3(b)
hereof, (iii) the right to vote the Pledged Bonds in accordance with the terms
of the Indenture without regard to Section 3(b) hereof, (iv) the right to issue
consents and waivers with respect to the Pledged Bonds without regard to Section
3(b) hereof, (v) the right to issue any and all instructions and requests for
action to the Trustee that are permitted to a bondholder under the Indenture
without regard to Section 3(b) hereof, and (vi) the right to exercise all other
rights and remedies of a registered "holder" of a Pledged Bond under the
Indenture without regard to Section 3(b) hereof.

                  (b)      Application of Proceeds by the Collateral Agent
hereunder, or any other application by the Collateral Agent of sums or property
hereunder to be made to, or for the benefit of, the Secured Parties shall be as
follows:

                                      -10-

<PAGE>

                  (i)      first, to the payment of all amounts owing to the
Collateral Agent of the type described in clauses (2), (3) and (4) of the
definition of "Obligations";

                  (ii)     second, to the extent proceeds remain after the
application pursuant to the preceding clause (i), to the payment of all amounts
owing to the Administrative Agent of the type described in clauses (4) and (5)
of the definition of "Obligations";

                  (iii)    third, to the extent proceeds remain after the
application pursuant to the preceding clauses (i) and (ii), an amount equal to
the outstanding Primary Obligations shall be paid to the Secured Parties as
provided in Section 6(f) hereof, with each Secured Party receiving an amount
equal to its outstanding Primary Obligations or, if the proceeds are
insufficient to pay in full all such Primary Obligations, its Pro Rata Share of
the amount remaining to be distributed;

                  (iv)     fourth, to the extent proceeds remain after the
application pursuant to the preceding clauses (i) through (iii), inclusive, an
amount equal to the outstanding Secondary Obligations shall be paid to the
Secured Parties as provided in Section 6(f) hereof, with each Secured Party
receiving an amount equal to its outstanding Secondary Obligations or, if the
proceeds are insufficient to pay in full all such Secondary Obligations, its Pro
Rata Share of the amount remaining to be distributed; and

                  (v)      fifth, to the extent proceeds remain after the
application pursuant to the preceding clauses (i) through (iv), inclusive, and
following the termination of this Agreement pursuant to Section 21 hereof, to
the Company or to whomever may be lawfully entitled to receive such surplus.

                  (c)      For purposes of this Agreement (x) "Pro Rata Share"
shall mean, when calculating a Secured Party's portion of any distribution or
amount, that amount (expressed as a percentage) equal to a fraction the
numerator of which is the then unpaid amount of such Secured Party's Primary
Obligations or Secondary Obligations, as the case may be, and the denominator of
which is the then outstanding amount of all Primary Obligations or Secondary
Obligations, as the case may be, (y) "Primary Obligations" shall mean all
principal of, premium and interest on, all Loans, all Unpaid Drawings, the
Stated Amount on all outstanding Letters of Credit and all Fees and (z)
"Secondary Obligations" shall mean all Obligations other than Primary
Obligations.

                  (d)      When payments to the Secured Parties are based upon
their respective Pro Rata Shares, the amounts received by such Secured Parties
hereunder shall be applied (for purposes of making determinations under this
Section 6 only) (i) first, to their Primary Obligations and (ii) second, to
their Secondary Obligations. If any payment to any Secured Party of its Pro Rata
Share of any distribution would result in overpayment to such Secured Party,
such excess amount shall instead be distributed in respect of the unpaid Primary
Obligations or Secondary Obligations, as the case may be, of the other Secured
Parties, with each Secured Party whose Primary Obligations or Secondary
Obligations, as the case may be, have not been paid in full to receive an amount
equal to such excess amount multiplied by a fraction the numerator of which is
the unpaid Primary Obligations or Secondary Obligations, as the case may be, of
such Secured Party and the denominator of which is the unpaid Primary
Obligations or Secondary Obligations, as the case may be, of all Secured Parties
entitled to such distribution.

                                      -11-

<PAGE>

                  (e)      Each of the Secured Parties, by their acceptance of
the benefits hereof, agrees and acknowledges that if the Secured Parties are to
receive a distribution on account of undrawn amounts with respect to Letters of
Credit issued under the Credit Agreement (which shall only occur after all
outstanding Loans and Unpaid Drawings with respect to such Letters of Credit
have been paid in full), such amounts shall be paid to the Administrative Agent
under the Credit Agreement and held by it, for the equal and ratable benefit of
the Secured Parties, as cash security for the repayment of Obligations owing to
the Secured Parties as such. If any amounts are held as cash security pursuant
to the immediately preceding sentence, then upon the termination of all
outstanding Letters of Credit, and after the application of all such cash
security to the repayment of all Obligations owing to the Secured Parties after
giving effect to the termination of all such Letters of Credit, if there remains
any excess cash, such excess cash shall be returned by the Administrative Agent
to the Collateral Agent for distribution in accordance with Section 6(b) hereof.

                  (f)      All payments required to be made hereunder shall be
made to the Administrative Agent under the Credit Agreement for the account of
the Secured Parties.

                  (g)      For purposes of applying payments received in
accordance with this Section 6, the Collateral Agent shall be entitled to rely
upon the Administrative Agent under the Credit Agreement or, in the absence
thereof, upon the Required Lenders for a determination of the outstanding
Primary Obligations and Secondary Obligations owed to the Secured Parties.
Unless the Collateral Agent has received written notice from a Secured Party to
the contrary, the Administrative Agent, in furnishing information pursuant to
the preceding sentence, the Collateral Agent, in acting hereunder, shall be
entitled to assume that no Secondary Obligations are outstanding.

                  (h)      It is understood that the Company and the Guarantors
shall remain liable to the extent of any deficiency between the amount of the
proceeds of the Collateral and the aggregate amount of the Obligations.

                  (i)      If an Event of Default shall have occurred and be
continuing, the Collateral Agent, on behalf of the Secured Parties, may
exercise, in addition to all other rights and remedies granted in this Agreement
and in any other instrument or agreement securing, evidencing or relating to the
Obligations, all rights and remedies of a secured party under the New York UCC.
Without limiting the generality of the foregoing, the Collateral Agent, without
demand of performance or other demand, presentment, protest, advertisement or
notice of any kind (except any notice required by law referred to below) to or
upon the Company or any other person (all and each of which demands, defenses,
advertisements and notices are hereby waived), may in such circumstances
forthwith collect, receive, appropriate and realize upon the Collateral, or any
part thereof, and/or may forthwith sell, assign, give option or options to
purchase or otherwise dispose of and deliver the Collateral or any part thereof
(or contract to do any of the foregoing), in one or more parcels at public or
private sale or sales, at any exchange, broker's board or office of the
Collateral Agent or Secured Party or elsewhere upon such terms and conditions as
it may deem advisable and at such prices as it may deem best, for cash or on
credit or for future delivery without assumption of any credit risk. The
Collateral Agent or any Secured Party shall have the right upon any such public
sale or sales, and, to the extent permitted

                                      -12-

<PAGE>

by law, upon any such private sale or sales, to purchase the whole or any part
of the Collateral so sold, free of any right or equity of redemption in the
Company, which right or equity is hereby waived or released. The Collateral
Agent shall apply the net proceeds of any such collection, recovery, receipt,
appropriation, realization or sale, as set forth in Section 6(b) hereof, and
only after such application and after the payment by the Collateral Agent of any
other amount required by any provision of law, including, without limitation,
Section 9-615(a)(3) of the New York UCC, need the Collateral Agent account for
the surplus, if any, to the Company. To the extent permitted by applicable law,
the Company waives all claims, damages and demands it may acquire against the
Collateral Agent or any Secured Party arising out of the exercise by them of any
rights hereunder. If any notice of a proposed sale or other disposition of
Collateral shall be required by law, such notice shall be deemed reasonable and
proper if given in writing at least 10 days before such sale or other
disposition.

                  (i)      (i) The Company recognizes that the Collateral Agent
may be unable to effect a public sale of any or all the Pledged Bonds, by reason
of certain prohibitions contained in the Securities Act and applicable state
securities laws or otherwise, and may be compelled to resort to one or more
private sales thereof to a restricted group of purchasers which will be obliged
to agree, among other things, to acquire such securities for their own account
for investment and not with a view to the distribution or resale thereof. The
Company acknowledges and agrees that any such private sale may result in prices
and other terms less favorable than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private sale shall be
deemed to have been made in a commercially reasonable manner. The Collateral
Agent shall be under no obligation to delay a sale of any of the Pledged Bonds
for the period of time necessary to permit the Company to register such
securities for public sale under the Securities Act, or under applicable state
securities laws, even if the Company would agree to do so.

                  (ii)     The Company agrees to use its reasonable efforts to
do or cause to be done all such other acts as may be necessary to make such sale
or sales of all or any portion of the Pledged Bonds pursuant to this Section
6(j) valid and binding and in compliance with any and all other applicable
requirements of law.

                  7.       Collateral Agent's Appointment as Attorney-in-Fact.
At any time after the occurrence and during the continuance of an Event of
Default, the Company hereby irrevocably constitutes and appoints the Collateral
Agent and any officer or agent thereof, with full power of substitution, as its
true and lawful attorney-in-fact with full irrevocable power and authority in
the place and stead of the Company and in the name of the Company or in its own
name, for the purpose of carrying out the terms of this Agreement, to take any
and all appropriate action and to execute any and all documents and instruments
which may be necessary or desirable to accomplish the purposes of this
Agreement. All powers, authorizations and agencies contained in this Agreement
are coupled with an interest and are irrevocable until this Agreement is
terminated and the security interests created hereby are released.

                  8.       Duty of Collateral Agent. The Collateral Agent's sole
duty with respect to the custody, safekeeping and physical preservation of the
Collateral in its possession, under Section 9-207 of the New York UCC or
otherwise, shall be to deal with it in the same manner as

                                      -13-

<PAGE>

the Collateral Agent deals with its securities and property for its own
accounts. None of the Collateral Agent, any Lender nor any of their respective
directors, officers, employees or agents shall be liable for failure to demand,
collect or realize upon any of the Collateral or for any delay in doing so or
shall be under any obligation to sell or otherwise dispose of any Collateral
upon the request of the Company or any other person or to take any other action
whatsoever with regard to the Collateral or any part thereof. The powers
conferred on the Collateral Agent hereunder are solely to protect the Secured
Parties' interests in the Collateral and shall not impose any duty upon the
Collateral Agent to exercise any such powers. The Collateral Agent shall be
accountable only for amounts that it actually receives as a result of the
exercise of such powers, and neither it nor any of its officers, directors,
employees or agents shall be responsible to the Company for any act or failure
to act hereunder, except for their own gross negligence or willful misconduct.

                  9.       Authority of Collateral Agent. The Company
acknowledges that the rights and responsibilities of the Collateral Agent under
this Agreement with respect to any action taken by it or the exercise or
non-exercise by it of any option, voting right, request, judgment or other right
or remedy provided for herein or resulting or arising out of this Agreement
shall, as between the Collateral Agent and the Secured Parties, be governed by
the Credit Agreement and by such other agreements with respect thereto as may
exist from time to time among them, but, as between the Collateral Agent and the
Company, the Collateral Agent shall be conclusively presumed to be acting as an
agent for the Lenders with full and valid authority so to act or refrain from
acting, and the Company shall not be under any obligation, or entitlement, to
make any inquiry respecting such authority.

                  10.      Execution of Financing Statements. Pursuant to any
applicable law, the Company authorizes the Collateral Agent to file or record
financing statements and other filing or recording documents or instruments with
respect to the Collateral without the signature of the Company in such form and
in such offices as the Collateral Agent reasonably determines appropriate to
perfect the security interests of the Collateral Agent under this Agreement. A
carbon, photographic or other reproduction of this Agreement shall be sufficient
as a financing statement or other filing or recording document or instrument for
filing or recording for filing in any jurisdiction.

                  11.      Notices. All notices, requests and demands to or upon
the Company or the Collateral Agent to be effective shall be in writing (or by
telex, fax or similar electronic transfer confirmed in writing) and shall be
deemed to have been duly given or made (i) when delivered by hand or (ii) if
given by mail, when deposited in the mails by certified mail, return receipt
requested, or (iii) if by telex, fax or similar electronic transfer, when sent
and receipt has been confirmed, addressed to the Company or the Collateral Agent
at the following:

                  (x)      if to the Company: c/o Texas Genco GP, LLC, 1111
         Louisiana, Houston, Texas 77002, Attention of Linda Geiger, Assistant
         Treasurer (Telecopy No. 713-207-3301), copy to Marc Kilbride, Treasurer
         (Telecopy No. 713 207-3301); and

                  (y)      if to the Collateral Agent: Deutsche Bank AG New York
         Branch, 90 Hudson Street, First Floor, Jersey City, NJ 07302,
         Attention: Peter Medina.

                                      -14-

<PAGE>

                  12.      Return of Documents; Cooperation. Upon the payment in
full of all Obligations and termination of this Agreement, the Collateral Agent
shall (a) surrender the Pledged Bonds to the Trustee and (b) return to the
Company all other Collateral previously delivered to the Collateral Agent and
then held by it, in each case without recourse, representation or warranty, and
execute and deliver to the Trustee or the Company, as the case may be, such
documents of assignment as are reasonably necessary to terminate the Collateral
Agent's security interest in the Collateral interest hereunder.

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

                  14.      Amendments. (a) Except as set forth in clause (b)
below, none of the terms or provisions of this Agreement may be waived, amended,
supplemented or otherwise modified except by a written instrument executed by
the Company and the Collateral Agent (as instructed by the Required Lenders
pursuant to the terms of the Credit Agreement).

                  (b)      The Collateral Agent is authorized (but is under no
obligation) to enter into amendments and modifications of a technical nature
that do not materially impair the rights of the Secured Parties hereunder taken
as a whole.

                  15.      No Waiver; Cumulative Remedies. (a) None of the
Secured Parties shall by any act (except by a written instrument pursuant to
Section 14(a) hereof), delay, indulgence, omission or otherwise be deemed to
have waived any right or remedy hereunder or to have acquiesced in any Default
or Event of Default or in any breach of any of the terms and conditions hereof.
No failure to exercise, nor any delay in exercising, on the part of any Secured
Party, any right, power or privilege hereunder shall operate as a waiver
thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by any Secured Party of any
right or remedy hereunder on any one occasion shall not be construed as a bar to
any right or remedy which such Secured Party would otherwise have on any future
occasion.

                  (b)      The rights and remedies herein provided are
cumulative, may be exercised singly or concurrently and are not exclusive of any
other rights or remedies provided by law.

                  16.      Headings. The headings used in this Agreement are for
convenience of reference only and are not to affect the construction hereof or
be taken into consideration in the interpretation hereof.

                  17.      Successors and Assigns. This Agreement shall be
binding upon the successors and assigns of the Company and shall inure to the
benefit of each of the Secured Parties and its successors and assigns.

                  18.      Governing Law. This Agreement shall be governed by,
and construed and interpreted in accordance with, the law of the State of New
York.

                                      -15-

<PAGE>

                  19.      Integration. This Agreement, the Credit Agreement and
the other Credit Documents represent the agreement of the Company and the
Secured Parties with respect to the subject matter hereof and thereof, and there
are no promises, undertakings, representations or warranties by the Secured
Parties relative to subject matter hereof and thereof not expressly set forth or
referred to herein, in the Credit Agreement or in the other Credit Documents.

                  20.      Submission To Jurisdiction; Waivers. The Company
hereby irrevocably and unconditionally:

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

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

                  (c)      agrees that service of process in any such action or
         proceeding may be effected by mailing a copy thereof by registered or
         certified mail (or any substantially similar form of mail), postage
         prepaid, to the Company at its address referred to in Section 11 or at
         such other address of which the Collateral Agent shall have been
         notified pursuant thereto;

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

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

                  21.      Termination. After the Termination Date, this
Agreement shall terminate and the Collateral Agent, at the request and expense
of the Company, will promptly execute and deliver to the Company a proper
instrument or instruments (including Uniform Commercial Code termination
statements on Form UCC-3) acknowledging the satisfaction and termination of this
Agreement, and will duly assign, transfer and deliver to the Company (without
recourse and without any representation or warranty) such of the Collateral as
may be in the possession of the Collateral Agent and as has not theretofore been
sold or otherwise applied or released pursuant to this Agreement. As used in
this Agreement, "Termination Date" shall mean the date upon which the Total
Commitment has been terminated, no Revolving Note, Loan or Letter of Credit is
outstanding and all other Obligations (other than indemnities described in
Section 13.13 of the Credit Agreement, and any other indemnities set forth in
any other Security Document, in each case which are not then due and payable)
have been paid in full in cash.

                                      -16-

<PAGE>

IN WITNESS WHEREOF, the undersigned has caused this Agreement to be duly
executed and delivered as of the date first above written.

                                 TEXAS GENCO, LP

                                 By:  TEXAS GENCO GP, LLC, its General Partner
                                 By:____________________________________________
                                    Name:
                                    Title:

<PAGE>

                                 DEUTSCHE BANK AG NEW YORK BRANCH, as
                                     Collateral Agent

                                 By:___________________________________________
                                    Name:______________________________________
                                    Title:_____________________________________

<PAGE>

                  FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT(1)

This Assignment and Assumption Agreement (this "Assignment"), is dated as of the
Effective Date set forth below and is entered into by and between [the][each]
Assignor identified in item [1][2] below ([the] [each, an] "Assignor") and [the]
[each] Assignee identified in item 2 below ([the] [each, an] "Assignee"). [It is
understood and agreed that the rights and obligations of such [Assignees][and
Assignors] hereunder are several and not joint.] Capitalized terms used herein
but not defined herein shall have the meanings given to them in the Credit
Agreement identified below (as amended, restated, supplemented and/or otherwise
modified from time to time, the "Credit Agreement"). The Standard Terms and
Conditions for Assignment and Assumption Agreement set forth in Annex 1 hereto
(the "Standard Terms and Conditions") are hereby agreed to and incorporated
herein by reference and made a part of this Assignment as if set forth herein in
full.

For an agreed consideration, [the][each] Assignor hereby irrevocably sells and
assigns to [the] [each] Assignee, and [the] [each] Assignee hereby irrevocably
purchases and assumes from [the][each] 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, the
interest in and to all of [the][each] Assignor's rights and obligations under
the Credit Agreement and any other document or instrument delivered pursuant
thereto that represents the amount and percentage interest identified below of
all of the [respective] Assignor's outstanding rights and obligations under the
respective facilities identified below (including, to the extent included in any
such facilities, Letters of Credit) ([the] [each, an] "Assigned Interest").
[Each] [Such] sale and assignment is without recourse to [the][any] Assignor
and, except as expressly provided in this Assignment, without representation or
warranty by [the][any] Assignor.

[1. Assignor:              ___________________________________

2.  Assignee:              ___________________________________](2)

[1][3]. Credit Agreement:  Credit Agreement, dated as of December 23, 2003,
                           among Texas Genco Holdings, Inc. ("Parent"), Texas
                           Genco GP, LLC, Texas Genco LP, LLC, Texas Genco
                           Services, LP, Texas Genco, LP (the "Borrower"), the
                           lenders from time to time party thereto, Deutsche
                           Bank AG New York Branch, as Administrative Agent and
                           Collateral Agent, Compass Bank, as Documentation
                           Agent, and [Deutsche Bank Securities Inc., as Lead
                           Arranger and Bookrunner].

-------------------
(1)      This Form of Assignment and Assumption Agreement should be used by
         Lenders for an assignment to a single Assignee or to funds managed by
         the same or related investment managers.

(2)      If the form is used for a single Assignor and Assignee, items 1 and 2
         should list the Assignor and the Assignee, respectively. In the case of
         an assignment to funds managed by the same or related investment
         managers, or an assignment by multiple Assignors, the Assignors and the
         Assignee(s) should be listed in the table under bracketed item 2 below.

<PAGE>

[2.  Assigned Interest:(3)

<TABLE>
<CAPTION>
                                    Aggregate Amount of
                                 Commitment/Loans for all            Amount of           Percentage of Assigned
 Assignor         Assignee                Lenders            Commitment/Loans Assigned      Commitment/Loans(4)
---------         ---------      ------------------------    -------------------------   ----------------------
<S>               <C>            <C>                         <C>                         <C>
 [Name of         [Name of
Assignor]         Assignee]              ----------                  ----------                 ----------%

[Name of          [Name of
Assignor]         Assignee]              ----------                  ----------                 ----------%]
</TABLE>

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

(3)      Insert this chart if this Form of Assignment and Assumption Agreement
         is being used for assignments to funds managed by the same or related
         investment managers or for an assignment by multiple Assignors. Insert
         additional rows as needed.

(4)      Set forth, to at least 9 decimals, as a percentage of the
         Commitment/Loans of all Lenders.

<PAGE>

[4. Assigned Interest:(5)

<TABLE>
<CAPTION>
       Aggregate Amount of              Amount of Commitment/Loans       Percentage of Assigned
Commitment/Loans for all Lenders                Assigned                   Commitment/Loans (6)
--------------------------------        --------------------------       ----------------------
<S>                                     <C>                              <C>

      $--------------                         $--------------                %--------------
</TABLE>

Effective Date ___________, ____, 200__.

<TABLE>
ASSIGNOR[S] INFORMATION                 ASSIGNEE[S] INFORMATION
<S>                    <C>              <C>
Payment Instructions:  _______________    Payment Instructions: __________________

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

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

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

                       Reference:_____                          Reference:_________

Notice Instructions:   _______________  Notice Instructions:    __________________

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

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

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

                       Reference:______                         Reference:_________
</TABLE>

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

ASSIGNOR                                  ASSIGNEE
[NAME OF ASSIGNOR]                        [NAME OF ASSIGNEE](7)

By:_______________________________        By:__________________________________
   Name:                                     Name:
   Title:                                    Title:

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

(5)      Insert this chart if this Form of Assignment and Assumption Agreement
         is being used by a single Assignor for an assignment to a single
         Assignee.

(6)      Set forth, to at least 9 decimals, as a percentage of the
         Commitment/Loans of all Lenders thereunder.

(7)      Add additional signature blocks, as needed, if this Form of Assignment
         and Assumption Agreement is being used by funds managed by the same or
         related investment managers.

<PAGE>

[Consented to and](8) Accepted:

DEUTSCHE BANK AG NEW YORK BRANCH,
     as Administrative Agent

By:____________________________
    Name:
    Title:

TEXAS GENCO, LP

By:  TEXAS GENCO GP, LLC,
    its General Partner

By:____________________________
    Name:
    Title:](9)

[[NAME OF EACH ISSUING LENDER],
    as Issuing Lender

By:____________________________
    Name:
    Title:](10)

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

(8)      Insert only if assignment is being made to an Eligible Transferee
         pursuant to Section 13.04(b)(y) of the Credit Agreement. Consent of the
         Administrative Agent shall not be unreasonably withheld or delayed.

(9)      Insert only if (i) no Event of Default or Default of the Credit
         Agreement is then in existence and, (ii) the assignment is being made
         to an Eligible Transferee pursuant to 13.04(b)(y) of the Credit
         Agreement. Consent of the Borrower shall not be unreasonably withheld
         or delayed.

(10)     Insert for any assignment of a Commitment pursuant to clause (x) or (y)
         of Section 13.04(b) of the Credit Agreement.

<PAGE>

                                TEXAS GENCO, LP

                                CREDIT AGREEMENT

                  STANDARD TERMS AND CONDITIONS FOR ASSIGNMENT
                            AND ASSUMPTION AGREEMENT

1.       Representations and Warranties.

1.1.     Assignor. [The] [Each] Assignor (a) represents and warrants that (i) it
is the legal and beneficial owner of [the] [its] Assigned Interest, (ii) [the]
[its] 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 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 any Credit Document, (ii) the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Credit Agreement, any
other Credit Document or any other instrument or document delivered pursuant
thereto (other than this Assignment) or any collateral thereunder, (iii) the
financial condition of the Parent, 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 Parent, any of its Subsidiaries or affiliates or any other
Person of any of their respective obligations under any Credit Document.

1.2.     Assignee. [The] [Each] 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 to consummate the transactions contemplated hereby
and to become a Lender under the Credit Agreement, (ii) confirms that it is (A)
a Lender, (B) a parent company and/or an affiliate of [the][each] Assignor which
is at least 50% owned by [the][each] Assignor or its parent company, (C) a fund
that invests in bank loans and is managed by the same investment advisor as a
Lender, by an affiliate of such investment advisor or by a Lender or (D) an
Eligible Transferee under Section 13.04(b) of the Credit Agreement; (iii) from
and after the Effective Date, it shall be bound by the provisions of the Credit
Agreement and, to the extent of [the][its] 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 8.01 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 to purchase [the][its]
Assigned Interest on the basis of which it has made such analysis and decision
and (v) if it is organized under the laws of a jurisdiction outside the United
States, it has attached to this Assignment any tax documentation required to be
delivered by it pursuant to the terms of the Credit Agreement, duly completed
and executed by it; (b) agrees that it will, independently and without reliance
upon the Administrative Agent, [the][each] 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 Agreement; (c) appoints and authorizes each of the
Administrative Agent, the Documentation Agent and the Collateral Agent to take
such action as agent on its behalf and to exercise such powers under the Credit
Agreement and the other Credit Documents as are delegated to or otherwise
conferred upon the Administrative Agent, the Documentation Agent or the
Collateral

<PAGE>

Agent, as the case may be, by the terms thereof, together with such powers as
are reasonably incidental thereto; and (d) agrees that 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.       Payment. From and after the Effective Date, the Administrative Agent
shall make all payments in respect [the] [each] Assigned Interest (including
payments of principal, interest, fees, commissions and other amounts) to
[the][each] Assignor for amounts which have accrued to but excluding the
Effective Date and to [the] [each] Assignee for amounts which have accrued from
and after the Effective Date.

3.       Effect of Assignment. Upon the delivery of a fully executed original
hereof to the Administrative Agent, as of the Effective Date, (i) [the][each]
Assignee shall be a party to the Credit Agreement and, to the extent provided in
this Assignment, have the rights and obligations of a Lender thereunder and
under the other Credit Documents and (ii) [the][each] Assignor shall, to the
extent provided in this Assignment, relinquish its rights and be released from
its obligations under the Credit Agreement and the other Credit Documents.

4.       General Provisions. This Assignment shall be binding upon, and inure to
the benefit of, the parties hereto and their respective successors and assigns.
This Assignment 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 by telecopy shall be effective as delivery of
a manually executed counterpart of the Assignment. THIS ASSIGNMENT SHALL BE
GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAW OF THE STATE
OF NEW YORK.

                                      * * *

                                      -8-<PAGE>
                                                               EXHIBIT 10(pp)(2)

                   This Instrument Grants a Security Interest
                                  by a Utility

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

                                 TEXAS GENCO, LP

                                       To

                               JPMORGAN CHASE BANK

                                     Trustee

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

                            First Mortgage Indenture

                          Dated as of December 23, 2003

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

           This Instrument Contains After-Acquired Property Provisions

<PAGE>

                 CERTAIN SECTIONS OF THIS INDENTURE RELATING TO
                            SECTIONS 310 THROUGH 318,
                 INCLUSIVE, OF THE TRUST INDENTURE ACT OF 1939:

<TABLE>
<CAPTION>
TRUST INDENTURE
  ACT SECTION                                                                   INDENTURE SECTION(S)
<S>                                                                             <C>
Section 310(a)(1)........................................................            1009
        (a)(2)...........................................................            1009
        (a)(3)...........................................................            1014(3)
        (a)(4)...........................................................            Not Applicable
        (b)..............................................................            1008, 1010
Section 311(a)...........................................................            1013
        (b)..............................................................            1013
        (c)..............................................................            Not Applicable
Section 312(a)...........................................................            1101, 1102
        (b)..............................................................            1102
        (c)..............................................................            1102
Section 313(a)...........................................................            1103
         (b).............................................................            1103
         (c).............................................................            1103
         (d).............................................................            1103
Section 314(a)...........................................................            610, 1102
        (b)..............................................................            608
        (c)(1)...........................................................            105
        (c)(2)...........................................................            105
        (c)(3)...........................................................            106
        (d)..............................................................            402, 607(2), 703,
                                                                                     704, 709
        (e)..............................................................            105
Section 315(a)...........................................................            1001, 1003
        (b)..............................................................            1002
        (c)..............................................................            1001
        (d)..............................................................            1001
        (e)..............................................................            918
Section 316(a)...........................................................            916, 917
        (a)(1)(A)........................................................            916
        (a)(1)(B)........................................................            917
        (a)(2)...........................................................            Not Applicable
        (b)..............................................................            912
        (c)..............................................................            107
Section 317(a)(1)........................................................            906
        (a)(2)...........................................................            909
        (b)..............................................................            603
Section 318(a)...........................................................            110
</TABLE>

----------

      NOTE: This reconciliation and tie shall not, for any purpose, be deemed to
be a part of the Indenture.

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                              PAGE
                                                                                                              ----
<S>                                                                                                           <C>
ARTICLE ONE. DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION.....................................       5

SECTION 101.  General Definitions........................................................................       5
"Accountant".............................................................................................       6
"Act"....................................................................................................       6
"Adjusted Net Earnings"..................................................................................       6
"Affiliate"..............................................................................................       6
"Annual Interest Requirements"...........................................................................       7
"Authenticating Agent"...................................................................................       7
"Authorized Officer".....................................................................................       7
"Authorized Publication".................................................................................       7
"Authorized Purposes"....................................................................................       7
"Business Day"...........................................................................................       7
"Commission".............................................................................................       7
"Company"................................................................................................       7
"Company Request"........................................................................................       8
"Corporate Trust Office".................................................................................       8
"Corporation"............................................................................................       8
"Cost"...................................................................................................       8
"Defaulted Interest".....................................................................................       8
"Dollar".................................................................................................       8
"Eligible Obligations"...................................................................................       8
"Event of Default".......................................................................................       8
"Excepted Property"......................................................................................       8
"Exchange Act"...........................................................................................       8
"Exchange Rate"..........................................................................................       8
"Expert".................................................................................................       8
"Expert's Certificate"...................................................................................       8
"Expiration Date"........................................................................................       9
"Fair Value".............................................................................................       9
"Funded Cash"............................................................................................       9
"Funded Property"........................................................................................       9
"General Partner"........................................................................................       9
"General Partner Resolution".............................................................................       9
"Governmental Authority".................................................................................       9
"Government Obligations".................................................................................       9
"Holder".................................................................................................      10
"Indenture"..............................................................................................      10
"Independent"............................................................................................      10
</TABLE>

                                        i
<PAGE>

                         TABLE OF CONTENTS - CONTINUED -
<TABLE>
<CAPTION>
                                                                                                              PAGE
                                                                                                              ----
<S>                                                                                                           <C>
"Independent Expert's Certificate".......................................................................      10
"Initial Expert's Certificate"...........................................................................      10
"Initial Series".........................................................................................      10
"Interest"...............................................................................................      11
"Interest Payment Date"..................................................................................      11
"Investment Securities"..................................................................................      11
"Lien"...................................................................................................      12
"Maturity"...............................................................................................      12
"Maximum Interest Rate"..................................................................................      12
"Mortgaged Property".....................................................................................      12
"Net Earnings Certificate"...............................................................................      12
"Notice of Default"......................................................................................      12
"Officer's Certificate"..................................................................................      12
"Opinion of Counsel".....................................................................................      12
"Original Issue Discount Security".......................................................................      12
"Outstanding"............................................................................................      12
"Paying Agent"...........................................................................................      13
"Periodic Offering"......................................................................................      13
"Permitted Liens"........................................................................................      13
"Person".................................................................................................      16
"Place of Payment".......................................................................................      16
"Predecessor Security"...................................................................................      16
"Prepaid Lien"...........................................................................................      16
"Property Additions".....................................................................................      16
"Purchase Money Lien"....................................................................................      17
"Redemption Date"........................................................................................      17
"Redemption Price".......................................................................................      17
"Regular Record Date"....................................................................................      17
"Responsible Officer"....................................................................................      17
"Retired Securities".....................................................................................      17
"Securities".............................................................................................      18
"Security Register"......................................................................................      18
"Special Record Date"....................................................................................      18
"Stated Interest Rate"...................................................................................      18
"Stated Maturity"........................................................................................      18
"Successor Corporation"..................................................................................      18
"Tranche"................................................................................................      18
"Transaction Costs"......................................................................................      18
"Trust Indenture Act"....................................................................................      18
"Trustee"................................................................................................      18
"Trustee's Lien".........................................................................................      19
"United States"..........................................................................................      19
SECTION 102.  Funded Property; Funded Cash...............................................................      19
SECTION 103.  Property Additions; Cost...................................................................      20
SECTION 104.  Net Earnings Certificate; Adjusted Net Earnings; Annual Interest Requirements..............      22
</TABLE>

                                       ii
<PAGE>

                         TABLE OF CONTENTS - CONTINUED -
<TABLE>
<CAPTION>
                                                                                                              PAGE
                                                                                                              ----
<S>                                                                                                           <C>
SECTION 105.  Compliance Certificates and Opinions.......................................................      24
SECTION 106.  Content and Form of Documents Delivered to Trustee.........................................      25
SECTION 107.  Acts of Holders; Record Dates..............................................................      26
SECTION 108.  Notices, Etc., to Trustee and Company......................................................      29
SECTION 109.  Notice to Holders; Waiver..................................................................      29
SECTION 110.  Conflict with Trust Indenture Act..........................................................      29
SECTION 111.  Effect of Headings and Table of Contents...................................................      29
SECTION 112.  Successors and Assigns.....................................................................      30
SECTION 113.  Separability Clause........................................................................      30
SECTION 114.  Benefits of Indenture......................................................................      30
SECTION 115.  Governing Law..............................................................................      30
SECTION 116.  Legal Holidays.............................................................................      30
SECTION 117.  Investment of Cash Held by Trustee.........................................................      30

ARTICLE TWO. SECURITY FORMS..............................................................................      31

SECTION 201.  Forms Generally............................................................................      31
SECTION 202.  Form of Trustee's Certificate of Authentication............................................      32

ARTICLE THREE. THE SECURITIES............................................................................      32

SECTION 301.  Amount Unlimited; Issuable in Series.......................................................      32
SECTION 302.  Denominations..............................................................................      35
SECTION 303.  Execution, Authentication, Delivery and Dating.............................................      36
SECTION 304.  Temporary Securities.......................................................................      36
SECTION 305.  Registration, Registration of Transfer and Exchange........................................      37
SECTION 306.  Mutilated, Destroyed, Lost and Stolen Securities...........................................      38
SECTION 307.  Payment of Interest; Interest Rights Preserved.............................................      39
SECTION 308.  Persons Deemed Owners......................................................................      40
SECTION 309.  Cancellation...............................................................................      40
SECTION 310.  Computation of Interest; Usury Not Intended................................................      41
SECTION 311.  CUSIP Numbers..............................................................................      41

ARTICLE FOUR. ISSUANCE OF SECURITIES.....................................................................      42

SECTION 401.  General....................................................................................      42
SECTION 402.  Issuance of Securities on the Basis of Property Additions..................................      44
SECTION 403.  Issuance of Securities on the Basis of Retired Securities..................................      47
SECTION 404.  Issuance of Securities on the Basis of Deposit of Cash.....................................      47

ARTICLE FIVE. REDEMPTION OF SECURITIES...................................................................      48

SECTION 501.  Applicability of Article...................................................................      48
SECTION 502.  Election to Redeem; Notice to Trustee......................................................      48
SECTION 503.  Selection by Trustee of Securities to Be Redeemed..........................................      49
SECTION 504.  Notice of Redemption.......................................................................      50
SECTION 505.  Deposit of Redemption Price................................................................      51
SECTION 506.  Securities Payable on Redemption Date......................................................      51
</TABLE>

                                      iii
<PAGE>

                         TABLE OF CONTENTS - CONTINUED -
<TABLE>
<CAPTION>
                                                                                                              PAGE
                                                                                                              ----
<S>                                                                                                           <C>
SECTION 507.  Securities Redeemed in Part................................................................      51

ARTICLE SIX. COVENANTS...................................................................................      52

SECTION 601.  Payment of Securities; Lawful Possession; Maintenance of Lien..............................      52
SECTION 602.  Maintenance of Office or Agency............................................................      52
SECTION 603.  Money for Securities Payments to Be Held in Trust..........................................      53
SECTION 604.  Existence..................................................................................      54
SECTION 605.  Maintenance of Properties..................................................................      54
SECTION 606.  Payment of Taxes; Discharge of Liens.......................................................      54
SECTION 607.  Insurance..................................................................................      55
SECTION 608.  Recording, Filing, etc.....................................................................      58
SECTION 609.  Waiver of Certain Covenants................................................................      59
SECTION 610.  Annual Officer's Certificate as to Compliance..............................................      59

ARTICLE SEVEN. POSSESSION, USE AND RELEASE OF MORTGAGED PROPERTY.........................................      60

SECTION 701.  Quiet Enjoyment............................................................................      60
SECTION 702.  Dispositions without Release...............................................................      60
SECTION 703.  Release of Funded Property.................................................................      61
SECTION 704.  Release of Property Not Constituting Funded Property.......................................      66
SECTION 705.  Release of Minor Properties................................................................      67
SECTION 706.  Withdrawal or Other Application of Funded Cash; Purchase Money Obligations.................      68
SECTION 707.  Release of Property Taken by Eminent Domain, etc...........................................      71
SECTION 708.  Disclaimer or Quitclaim....................................................................      71
SECTION 709.  Miscellaneous..............................................................................      72

ARTICLE EIGHT. SATISFACTION AND DISCHARGE................................................................      73

SECTION 801.  Satisfaction and Discharge of Securities...................................................      73
SECTION 802.  Satisfaction and Discharge of Indenture....................................................      76
SECTION 803.  Application of Trust Money.................................................................      77

ARTICLE NINE. EVENTS OF DEFAULT; REMEDIES................................................................      77

SECTION 901.  Events of Default..........................................................................      77
SECTION 902.  Acceleration of Maturity; Rescission and Annulment.........................................      79
SECTION 903.  Entry upon Mortgaged Property..............................................................      80
SECTION 904.  Power of Sale; Suits for Enforcement.......................................................      80
SECTION 905.  Incidents of Sale..........................................................................      82
SECTION 906.  Collection of Indebtedness and Suits for Enforcement by Trustee............................      83
SECTION 907.  Application of Money Collected.............................................................      83
SECTION 908.  Receiver...................................................................................      84
SECTION 909.  Trustee May File Proofs of Claim...........................................................      84
SECTION 910.  Trustee May Enforce Claims Without Possession of Securities................................      85
SECTION 911.  Limitation on Suits........................................................................      85
</TABLE>

                                       iv
<PAGE>

                         TABLE OF CONTENTS - CONTINUED -
<TABLE>
<CAPTION>
                                                                                                              PAGE
                                                                                                              ----
<S>                                                                                                           <C>
SECTION 912.  Unconditional Right of Holders to Receive Principal, Premium and Interest..................      86
SECTION 913.  Restoration of Rights and Remedies.........................................................      86
SECTION 914.  Rights and Remedies Cumulative.............................................................      86
SECTION 915.  Delay or Omission Not Waiver...............................................................      87
SECTION 916.  Control by Holders.........................................................................      87
SECTION 917.  Waiver of Past Defaults....................................................................      87
SECTION 918.  Undertaking for Costs......................................................................      88
SECTION 919.  Waiver of Appraisement, Usury, Stay and Other Laws.........................................      88

ARTICLE TEN. THE TRUSTEE.................................................................................      88

SECTION 1001. Certain Duties and Responsibilities........................................................      88
SECTION 1002. Notice of Defaults.........................................................................      89
SECTION 1003. Certain Rights of Trustee..................................................................      90
SECTION 1004. Not Responsible for Recitals or Issuance of Securities or Application of Proceeds..........      91
SECTION 1005. May Hold Securities........................................................................      91
SECTION 1006. Money Held in Trust........................................................................      92
SECTION 1007. Compensation and Reimbursement.............................................................      92
SECTION 1008. Conflicting Interests......................................................................      93
SECTION 1009. Corporate Trustee Required; Eligibility....................................................      93
SECTION 1010. Resignation and Removal; Appointment of Successor..........................................      93
SECTION 1011. Acceptance of Appointment by Successor.....................................................      95
SECTION 1012. Merger, Conversion, Consolidation or Succession to Business................................      95
SECTION 1013. Preferential Collection of Claims Against Company..........................................      95
SECTION 1014. Co-trustees and Separate Trustees..........................................................      96
SECTION 1015. Appointment of Authenticating Agent........................................................      97
SECTION 1016. Environmental Matters......................................................................      99

ARTICLE ELEVEN. LISTS OF HOLDERS; REPORTS BY TRUSTEE AND COMPANY.........................................     100

SECTION 1101. Company to Furnish Trustee Names and Addresses of Holders..................................     100
SECTION 1102. Preservation of Information; Communications to Holders.....................................     100
SECTION 1103. Reports by Trustee.........................................................................     100
SECTION 1104. Reports by Company.........................................................................     101

ARTICLE TWELVE. CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE.....................................     101

SECTION 1201. Company May Consolidate, Etc., Only on Certain Terms.......................................     101
SECTION 1202. Successor Corporation Substituted..........................................................     102
SECTION 1203. Extent of Lien Hereof on Property of Successor Corporation.................................     103
SECTION 1204. Release of Company upon Conveyance or Other Transfer.......................................     103
SECTION 1205. Merger into Company; Extent of Lien Hereof.................................................     103

ARTICLE THIRTEEN. SUPPLEMENTAL INDENTURES................................................................     104
</TABLE>

                                       v
<PAGE>

                         TABLE OF CONTENTS - CONTINUED -
<TABLE>
<CAPTION>
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<S>                                                                                                           <C>
SECTION 1301. Supplemental Indentures Without Consent of Holders.........................................     104
SECTION 1302. Supplemental Indentures With Consent of Holders............................................     105
SECTION 1303. Execution of Supplemental Indentures.......................................................     107
SECTION 1304. Effect of Supplemental Indentures..........................................................     107
SECTION 1305. Conformity with Trust Indenture Act........................................................     107
SECTION 1306. Reference in Securities to Supplemental Indentures.........................................     107
SECTION 1307. Modification Without Supplemental Indenture................................................     107

ARTICLE FOURTEEN. MEETINGS OF HOLDERS; ACTION WITHOUT MEETING............................................     108

SECTION 1401. Purposes for Which Meetings May Be Called..................................................     108
SECTION 1402. Call, Notice and Place of Meetings.........................................................     108
SECTION 1403. Persons Entitled to Vote at Meetings.......................................................     109
SECTION 1404. Quorum; Action.............................................................................     109
SECTION 1405. Attendance at Meetings; Determination of Voting Rights; Conduct and Adjournment of Meetings     110
SECTION 1406. Counting Votes and Recording Action of Meetings............................................     111
SECTION 1407. Action Without Meeting.....................................................................     111

ARTICLE FIFTEEN. IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS, DIRECTORS AND EMPLOYEES..............     111

SECTION 1501. Exemption from Individual Liability........................................................     111

Exhibit A Real Property..................................................................................     A-1
Exhibit B Previously Conveyed Property...................................................................     B-1
</TABLE>

                                       vi
<PAGE>

      FIRST MORTGAGE INDENTURE (herein called this "Indenture"), dated as of
December 23, 2003, between TEXAS GENCO, LP, a Texas limited partnership (herein
called the "Company"), having its principal office at 1111 Louisiana, Houston,
Texas 77002, and JPMORGAN CHASE BANK, a New York state bank having an office at
600 Travis Street, Suite 1150, Houston, Texas 77002, as Trustee (hereinafter
called the "Trustee").

                             RECITALS OF THE COMPANY

      The Company has duly authorized the execution and delivery of this
Indenture, as originally executed and delivered, to provide for the issuance
from time to time of its bonds, notes or other evidences of indebtedness (herein
called the "Securities"), to be issued in one or more series as contemplated
herein, and to provide security for the payment of the principal of and premium,
if any, and interest, if any, on the Securities. All acts necessary to make this
Indenture a valid agreement of the Company, in accordance with its terms, have
been performed. For all purposes of this Indenture, except as otherwise
expressly provided or unless the context otherwise requires, capitalized terms
used herein shall have the meanings assigned to them in Article One of this
Indenture.

                                GRANTING CLAUSES

      NOW, THEREFORE, THIS INDENTURE WITNESSETH, that, in consideration of the
premises and of the purchase of the Securities by the Holders thereof, and in
order to secure the payment of the principal of and premium, if any, and
interest, if any, on all Securities from time to time Outstanding and the
performance of the covenants therein and herein contained and to declare the
terms and conditions on which such Securities are secured, the Company hereby
grants, bargains, sells, conveys, assigns, transfers, mortgages, pledges, sets
over and confirms to the Trustee, and grants to the Trustee a security interest
in, the following (subject, however, to the terms and conditions set forth in
this Indenture):

                              GRANTING CLAUSE FIRST

      All right, title and interest of the Company, as of the date of the
execution and delivery of this Indenture, as originally executed and delivered,
in and to all property, real, personal and mixed (other than Excepted Property)
including without limitation all right, title and interest of the Company in and
to the following property so located (other than Excepted Property): (a) all
real property owned in fee, easements and other interests in real property
located in the State of Texas including, without limitation, the real property
interests described in Exhibit A hereto, save and except the real property,
easements and other interests described therein title to which has been conveyed
by the Company to any third party prior to the date hereof, including, without
limitation, the real property and other interests described in Exhibit B hereto;
(b) all licenses, permits to use the real property of others, franchises to use
public roads, streets and other public properties, rights of way and other
rights or interests relating to the occupancy or use of real property located in
the State of Texas; (c) all facilities, machinery, equipment and fixtures
located in the State of Texas for the generation, transmission and distribution
of electric energy including, but not limited to, all plants, powerhouses, dams,
diversion works, generators,

                                       1
<PAGE>

turbines, engines, boilers, fuel handling and transportation facilities, air and
water pollution control and sewage and solid waste disposal facilities,
switchyards, towers, substations, transformers, poles, lines, cables, conduits,
ducts, conductors, meters, regulators and all other property used or to be used
for any or all of such purposes; (d) all buildings, offices, warehouses,
structures or improvements located in the State of Texas in addition to those
referred to or otherwise included in clauses (a) and (c) above; (e) all
computers, data processing, data storage, data transmission and/or
telecommunications facilities, equipment and apparatus necessary for the
operation or maintenance of any facilities, machinery, equipment or fixtures
described or referred to in clause (c) above; and (f) all of the foregoing
property in the process of construction;

                             GRANTING CLAUSE SECOND

      Subject to the applicable exceptions permitted by Section 709(3), Section
1203 and Section 1205, all right, title and interest of the Company in all
property, real, personal and mixed located in the State of Texas (other than
Excepted Property) which may be hereafter acquired by the Company, it being the
intention of the Company that all such property acquired by the Company after
the date of the execution and delivery of this Indenture, as originally executed
and delivered, shall be as fully embraced within and subjected to the Lien
hereof as if such property were owned by the Company as of the date of the
execution and delivery of this Indenture, as originally executed and delivered;

                              GRANTING CLAUSE THIRD

      Any Excepted Property, which may, from time to time after the date of the
execution and delivery of this Indenture, as originally executed and delivered,
by delivery or by an instrument supplemental to this Indenture, be subjected to
the Lien hereof by the Company, the Trustee being hereby authorized to receive
the same at any time as additional security hereunder; it being understood that
any such subjection to the Lien hereof of any Excepted Property as additional
security may be made subject to such reservations, limitations or conditions
respecting the use and disposition of such property or the proceeds thereof as
shall be set forth in such instrument; and

                             GRANTING CLAUSE FOURTH

      All tenements, hereditaments, servitudes and appurtenances belonging or in
any wise appertaining to the aforesaid property, with the reversions and
remainders thereof;

                                EXCEPTED PROPERTY

      Expressly excepting and excluding, however, from the Lien of this
Indenture all right, title and interest of the Company in and to the following
property, whether now owned or hereafter acquired (herein sometimes called
"Excepted Property"):

      (1) all cash on hand or in banks or other financial institutions, deposit
accounts, shares of stock, interests in general or limited partnerships, bonds,
membership interests in limited liability companies, notes, other evidences of
ownership, equity, indebtedness and other

                                       2
<PAGE>

securities, of whatsoever kind and nature, not hereafter paid or delivered to,
deposited with or held by the Trustee hereunder or required so to be;

      (2) all contracts, leases, operating agreements and other agreements of
whatsoever kind and nature; all contract rights, bills, notes and other
instruments and chattel paper (except to the extent that any of the same
constitute securities, in which case they are separately excepted from the Lien
of this Indenture under clause (1) above); all revenues, income and earnings,
all accounts, accounts receivable and unbilled revenues, and all rents, tolls,
issues, product and profits, claims, credits, demands and judgments; all
governmental and other licenses, permits, franchises, consents and allowances
(except to the extent that any of the same are specifically described in clause
(b) of Granting Clause First of this Indenture, in which case they are included
within the Lien of this Indenture); and all patents, patent licenses and other
patent rights, patent applications, trade names, trademarks, copyrights, domain
names, claims, credits, choses in action and other intangible property and
general intangibles including, but not limited to, computer software;

      (3) all automobiles, buses, trucks, truck cranes, tractors, trailers and
similar vehicles and movable equipment; all rolling stock, rail cars and other
railroad equipment; all vessels, boats, barges and other marine equipment; all
airplanes, helicopters, aircraft engines and other flight equipment; all parts,
accessories and supplies used in connection with any of the foregoing; and all
personal property of such character that the perfection of a security interest
therein or other Lien thereon is not governed by the Uniform Commercial Code as
in effect in the jurisdiction in which such property is located;

      (4) all goods, stock in trade, wares, merchandise and inventory held for
the purpose of sale or lease in the ordinary course of business; all materials,
supplies, inventory and other items of personal property which are consumable
(otherwise than by ordinary wear and tear) in their use in the operation or
ownership of the Mortgaged Property; all fuel, whether or not any such fuel is
in a form consumable in the operation or ownership of the Mortgaged Property,
including separate components of any fuel in the forms in which such components
exist at any time before, during or after the period of the use thereof as fuel;
all hand and other portable tools and equipment; all furniture and furnishings;
and computers and data processing, data storage, data transmission,
telecommunications and other facilities, equipment and apparatus, which, in any
case, are used primarily for administrative or clerical purposes or are
otherwise not necessary for the operation or maintenance of the facilities,
machinery, equipment or fixtures described or referred to in clause (c) or (d)
of Granting Clause First of this Indenture;

      (5) all coal, lignite, ore, sand, gravel, gas, oil and other minerals and
all timber, and all rights and interests in any of the foregoing, whether or not
such minerals or timber shall have been mined or extracted or otherwise
separated from the land; and all electric energy, gas (natural or artificial),
steam, water and other products generated, produced, manufactured, purchased or
otherwise acquired by the Company;

      (6) all real property, leaseholds, gas rights, wells, gas works, stations
and substations, transmission pipelines, storage facilities, holders, tanks,
retorts, purifiers, odorizers, scrubbers, compressors, valves, regulators,
pumps, mains, pipes, service pipes, conduits, ducts, fittings and connections,
services, meters, gathering, tap or other pipe lines, facilities, equipment,
apparatus

                                       3
<PAGE>

or any other property used or to be used for the production, gathering,
transmission, storage or distribution of natural gas, crude oil or other
hydro-carbons or minerals;

      (7) all property which is the subject of a lease agreement designating the
Company as lessee and all right, title and interest of the Company in and to
such property and in, to and under such lease agreement, whether or not such
lease agreement is intended as security;

      (8) all facilities, machinery, equipment and fixtures for the
appropriation, storage, transmission and distribution of water including, but
not limited to, water works, reservoirs, diversion works, stations and
substations, transmission pipelines, canals, raceways, flumes, waterways,
aqueducts, storage facilities, tanks, purifiers, valves, regulators, pumps,
mains, pipes, service pipes, conduits, fittings and connections, services,
meters and any and all other property used or to be used for any or all of such
purposes; and

      (9) all right, title and interest of the Company in personal or mixed
property related to real property located outside of the State of Texas;

provided, however, that subject to the provisions of Section 1203, (x) if,
at any time after the occurrence of an Event of Default, the Trustee, or any
separate trustee or co-trustee appointed under Section 1014 or any receiver
appointed pursuant to Section 908 or otherwise, shall have entered into
possession of all or substantially all of the Mortgaged Property, all the
Excepted Property described or referred to in the foregoing clauses (2), (3) and
(4), then owned or held or thereafter acquired by the Company, to the extent
that the same is used in connection with, or otherwise relates or is
attributable to, the Mortgaged Property, shall immediately, and, in the case of
any Excepted Property described or referred to in clause (7), to the extent that
the same is used in connection with, or otherwise relates or is attributable to,
the Mortgaged Property, upon demand of the Trustee or such other trustee or
receiver, become subject to the Lien of this Indenture to the extent not
prohibited by law or by the terms of any other Lien or encumbrance on such
Excepted Property, and the Trustee or such other trustee or receiver may, to the
extent not prohibited by law or by the terms of any such other Lien (and subject
to the rights of the holders of all such other Liens), at the same time likewise
take possession thereof, and (y) whenever all Events of Default shall have been
cured and the possession of all or substantially all of the Mortgaged Property
shall have been restored to the Company, such Excepted Property shall again be
excepted and excluded from the Lien hereof to the extent set forth above; it
being understood that the Company may, however, pursuant to Granting Clause
Third, subject to the Lien of this Indenture any Excepted Property, whereupon
the same shall cease to be Excepted Property;

      TO HAVE AND TO HOLD all such property, real, personal and mixed, unto the
Trustee, its successors in trust and their assigns forever;

      SUBJECT, HOWEVER, to (a) Liens existing at the date of the execution and
delivery of this Indenture, as originally executed and delivered, (b) as to
property acquired by the Company after the date of the execution and delivery of
this Indenture, as originally executed and delivered, Liens existing or placed
thereon at the time of the acquisition thereof (including, but not limited to,
Purchase Money Liens), (c) Permitted Liens and all other Liens permitted to
exist under Section 606;

                                       4
<PAGE>

      IN TRUST, NEVERTHELESS, for the equal and ratable benefit and security of
the Holders from time to time of all Outstanding Securities without any priority
of any such Security over any other such Security;

      PROVIDED, HOWEVER, that the right, title and interest of the Trustee in
and to the Mortgaged Property shall cease, terminate and become void in
accordance with, and subject to the conditions set forth in, Article Eight or
Article Thirteen hereof, and if, thereafter, the principal of and premium, if
any, and interest, if any, on the Securities shall have been paid to the Holders
thereof, or shall have been paid to the Company pursuant to Section 603 hereof,
then and in that case this Indenture shall terminate, and the Trustee shall
execute and deliver to the Company such instruments as the Company shall require
to evidence such termination; otherwise this Indenture, and the estate and
rights hereby granted, shall be and remain in full force and effect; and

      IT IS HEREBY COVENANTED AND AGREED by and between the Company and the
Trustee that all the Securities are to be authenticated and delivered, and that
the Mortgaged Property is to be held, subject to the further covenants,
conditions and trusts hereinafter set forth, and the Company hereby covenants
and agrees to and with the Trustee, for the equal and ratable benefit of all
Holders, as follows:

                                  ARTICLE ONE.

                        DEFINITIONS AND OTHER PROVISIONS
                             OF GENERAL APPLICATION

SECTION 101. General Definitions.

      For all purposes of this Indenture, except as otherwise expressly provided
or unless the context otherwise requires:

            (1) the terms defined in this Article One have the meanings assigned
to them in this Article One and include the plural as well as the singular;

            (2) all other terms used herein without definition which are defined
in the Trust Indenture Act, either directly or by reference therein, have the
meanings assigned to them therein;

            (3) all terms used herein without definition which are defined in
the Uniform Commercial Code as in effect in any jurisdiction in which any
portion of the Mortgaged Property is located shall have the meanings assigned to
them therein with respect to such portion of the Mortgaged Property;

            (4) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles in the United States, and, except as otherwise herein expressly
provided, the term "generally accepted accounting principles" with respect to
any computation required or permitted hereunder shall mean such accounting
principles as are generally accepted in the United States at the date of such

                                       5
<PAGE>

computation or, at the election of the Company from time to time, at the date of
the execution and delivery of this Indenture, as originally executed and
delivered;

            (5) unless the context otherwise requires, any reference to an
"Article" or a "Section" refers to an Article or a Section, as the case may be,
of this Indenture;

            (6) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision;

            (7) words importing either gender include the other gender;

            (8) references to statutes are to be construed as including all
statutory provisions consolidating, amending or replacing the statute referred
to;

            (9) references to "writing" include printing, typing, lithography
and other means of reproducing words in a visible form;

            (10) the words "including," "includes" and "include" shall be deemed
to be followed by the words "without limitation"; and

            (11) unless otherwise provided, references to agreements and other
instruments shall be deemed to include all amendments and other modifications to
such agreements and instruments, but only to the extent such amendments and
other modifications are not prohibited by the terms of this Indenture.

      "Accountant" means a Person engaged in the accounting profession or
otherwise qualified to pass on accounting matters (including, but not limited
to, a Person certified or licensed as a public accountant, whether or not then
engaged in the public accounting profession), which Person, unless required to
be Independent, may be an employee or Affiliate of the Company.

      "Act", when used with respect to any Holder, has the meaning specified in
Section 107.

      "Adjusted Net Earnings" means the amount calculated in accordance with
Section 104(1); provided, however, that if any of the property of the Company
owned by it at the time of the making of any Net Earnings Certificate (a) shall
have been acquired during or after any period for which Adjusted Net Earnings of
the Company are to be computed, (b) shall not have been acquired in exchange or
substitution for property the net earnings of which have been included in the
Adjusted Net Earnings of the Company, and (c) had been operated as a separate
unit and items of revenue and expense attributable thereto are readily
ascertainable, then the net earnings of such property (computed in the manner
provided for the computation of the Adjusted Net Earnings of the Company) during
such period or such part of such period as shall have preceded the acquisition
thereof, to the extent that the same have not otherwise been included in the
Adjusted Net Earnings of the Company, shall be so included.

      "Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified

                                       6
<PAGE>

Person. For the purposes of this definition, "control" when used with respect to
any specified Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.

      "Annual Interest Requirements" means the amount calculated in accordance
with Section 104(2).

      "Authenticating Agent" means any Person authorized by the Trustee pursuant
to Section 1015 to act on behalf of the Trustee to authenticate Securities of
one or more series.

      "Authorized Officer" means the President, any Vice President or the
Treasurer of the General Partner, or any other duly authorized officer, agent or
attorney-in-fact of the General Partner named in an Officer's Certificate signed
by any of such officers.

      "Authorized Publication" means a newspaper or financial journal of general
circulation, printed in the English language and customarily published on each
Business Day, whether or not published on Saturdays, Sundays or holidays; or, in
the alternative, shall mean such form of communication as may have come into
general use for the dissemination of information of import similar to that of
the information specified to be published by the provisions hereof. In the event
that successive weekly publications in an Authorized Publication are required
hereunder they may be made (unless otherwise expressly provided herein) on the
same or different days of the week and in the same or in different Authorized
Publications. In case, by reason of the suspension of publication of any
Authorized Publication, or by reason of any other cause, it shall be impractical
without unreasonable expense to make publication of any notice in an Authorized
Publication as required by this Indenture, then such method of publication or
notification as shall be made with the approval of the Trustee shall be deemed
the equivalent of the required publication of such notice in an Authorized
Publication.

      "Authorized Purposes" means the authentication and delivery of Securities,
the release of property and/or the withdrawal of cash under any of the
provisions of this Indenture.

      "Business Day", when used with respect to any Place of Payment or any
other particular location specified in the Securities or this Indenture, means
each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which
banking institutions in that Place of Payment are authorized or obligated by law
or executive order to close.

      "Commission" means the Securities and Exchange Commission, from time to
time constituted, created under the Exchange Act, or, if at any time after the
execution of this Indenture, as originally executed and delivered, such
Commission is not existing and performing the duties now assigned to it under
the Trust Indenture Act, then the body performing such duties at such time.

      "Company" means the Person named as the "Company" in the first paragraph
of this Indenture until a Successor Corporation shall have become such pursuant
to the applicable provisions of this Indenture, and thereafter "Company" shall
mean such Successor Corporation.

                                       7
<PAGE>

      "Company Request" or "Company Order" mean, respectively, a written request
or order signed in the name of the Company by the Chief Executive Officer, the
Chief Financial Officer, the President or a Vice President of the General
Partner, and by the Treasurer, an Assistant Treasurer, the Secretary or an
Assistant Secretary of the General Partner, and delivered to the Trustee.

      "Corporate Trust Office" means the office of the Trustee at which at any
particular time its corporate trust business shall be principally administered,
which office at the date of the execution and delivery of this Indenture, as
originally executed and delivered, is as follows: at 600 Travis Street, Suite
1150, Houston, Texas 77002.

      "Corporation" means a corporation, limited liability company, company,
association, joint-stock company or business trust.

      "Cost" has the meaning specified in Section 103.

      "Defaulted Interest" has the meaning specified in Section 307.

      "Dollar" or "$" means a dollar or other equivalent unit in such coin or
currency of the United States as at the time shall be legal tender for the
payment of public and private debts.

      "Eligible Obligations" means:

      (1) with respect to Securities denominated in Dollars, Government
Obligations; or

      (2) with respect to Securities denominated in a currency other than
Dollars or in a composite currency, such other obligations or instruments as
shall be specified with respect to such Securities as contemplated by Section
301.

      "Event of Default" has the meaning specified in Section 901.

      "Excepted Property" has the meaning specified in the Granting Clauses of
this Indenture.

      "Exchange Act" means the Securities Exchange Act of 1934 and any statute
successor thereto, in each case as amended from time to time.

      "Exchange Rate" has the meaning specified in Section 901.

      "Expert" means a Person which is an engineer, appraiser or other expert
and which, with respect to any certificate to be signed by such Person and
delivered to the Trustee, is qualified to pass upon the matters set forth in
such certificate. For purposes of this definition, (a) "engineer" means a Person
engaged in the engineering profession or otherwise qualified to pass upon
engineering matters (including, but not limited to, a Person licensed as a
professional engineer) and (b) "appraiser" means a Person engaged in the
business of appraising property or otherwise qualified to pass upon the Fair
Value or fair market value of property.

      "Expert's Certificate" means a certificate signed by an Authorized Officer
and by an Expert (which Expert (a) shall be selected by an Authorized Officer,
the execution of such

                                       8
<PAGE>

certificate by such Authorized Officer to be conclusive evidence of such
selection, and (b) except as otherwise required in Sections 402, 607 and 709,
may be an employee or Affiliate of the Company duly authorized by an Authorized
Officer) and delivered to the Trustee. The amount stated in any Expert's
Certificate as to the Cost or Fair Value of property shall be conclusive and
binding upon the Company, the Trustee and the Holders.

      "Expiration Date" has the meaning specified in Section 107.

      "Fair Value", with respect to property, means the fair value of such
property as may reasonably be determined by reference to (a) the amount which
would be likely to be obtained in an arm's-length transaction with respect to
such property between an informed and willing buyer and an informed and willing
seller, under no compulsion, respectively, to buy or sell, (b) the amount of
investment with respect to such property which, together with a reasonable
return thereon, would be likely to be recovered through ordinary business
operations or otherwise, (c) the Cost, accumulated depreciation and replacement
cost with respect to such property and/or (d) any other relevant factors;
provided, however, that (x) the Fair Value of property shall be determined
without deduction for any Liens on such property prior to the Lien of this
Indenture (except as otherwise provided in Section 703) and (y) the Fair Value
to the Company of Property Additions shall not reflect any reduction relating to
the fact that such Property Additions may be of less value to a Person which is
not the owner or operator of the Mortgaged Property or any portion thereof than
to a Person which is such owner or operator. Fair Value may be determined, in
the discretion of the Expert certifying the same, without physical inspection,
by the use of accounting and/or engineering records and/or other data maintained
by the Company or otherwise available to such Expert.

      "Funded Cash" has the meaning specified in Section 102.

      "Funded Property" has the meaning specified in Section 102.

      "General Partner" means Texas Genco GP, LLC, the general partner of the
Company.

      "General Partner Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the General Partner to have been duly
adopted by the managers of the General Partner and to be in full force and
effect on the date of such certification, and delivered to the Trustee.

      "Governmental Authority" means the government of the United States or of
any State or Territory thereof or of the District of Columbia or of any county,
municipality or other political subdivision of any thereof, or any department,
agency, authority or other instrumentality of any of the foregoing.

      "Government Obligations" means:

      (1) any security which is (A) a direct obligation of the United States of
America for the payment of which the full faith and credit of the United States
of America is pledged or (B) an obligation of a Person controlled or supervised
by and acting as an agency or instrumentality of the United States of America
the payment of which is unconditionally guaranteed as a full

                                       9
<PAGE>

faith and credit obligation by the United States of America, which, in either
case (A) or (B), is not callable or redeemable at the option of the issuer
thereof; and

      (2) certificates, depositary receipts or other instruments which evidence
a direct ownership interest in obligations described in clause (1) above or in
any specific interest or principal payments due in respect thereof; provided,
however, that the custodian of such obligations or specific interest or
principal payments shall be a bank or trust company (which may include the
Trustee or any Paying Agent) subject to Federal or State supervision or
examination with a combined capital and surplus of at least Fifty Million
Dollars ($50,000,000); and provided, further, that except as may be otherwise
required by law, such custodian shall be obligated to pay to the holders of such
certificates, depositary receipts or other instruments the full amount received
by such custodian in respect of such obligations or specific payments and shall
not be permitted to make any deduction therefrom.

      "Holder" means a Person in whose name a Security is registered in the
Security Register.

      "Indenture" means this instrument as originally executed and as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof,
including, for all purposes of this instrument and any such supplemental
indenture, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this instrument and any such supplemental indenture,
respectively. The term "Indenture" shall also include the terms of particular
series of Securities established as contemplated by Section 301.

      "Independent", when applied to any Accountant or Expert, means such a
Person who (a) is in fact independent, (b) does not have any direct material
financial interest in the Company or in any other obligor upon the Securities or
in any Affiliate of the Company or of such other obligor, (c) is not connected
with the Company or such other obligor as an officer, employee, promoter,
underwriter, trustee, partner, director or any person performing similar
functions and (d) is approved by the Trustee in the exercise of reasonable care.

      "Independent Expert's Certificate" means a certificate signed by an
Independent Expert and delivered to the Trustee.

      "Initial Expert's Certificate" means an Expert's certificate delivered
upon the earliest of (a) the first authentication and delivery of Securities,
subsequent to the initial authentication and delivery of the Securities of the
Initial Series (excluding Securities of the Initial Series issued in connection
with a transfer, exchange or replacement of any Predecessor Securities of such
series), upon the basis of Property Additions pursuant to Section 402, (b) the
first release of any part of the Mortgaged Property pursuant to Section 703 or
704 and (c) the first withdrawal of cash on the basis of Property Additions
pursuant to Section 706.

      "Initial Series" means:

      (1) the series of Securities, initially authenticated and delivered in the
aggregate principal amount of Seventy Five Million Dollars ($75,000,000)
established in the First Supplemental Indenture, dated as of December 23, 2003,
between the Company and the Trustee,

                                       10
<PAGE>

the form and terms of which are established in the Officer's Certificate, dated
December 23, 2003, pursuant to the First Supplemental Indenture; and

      (2) each additional series of Securities, provided that the aggregate
principal amount of the Securities to be authenticated and delivered in respect
of such series, when added to the aggregate principal amount of Securities
Outstanding immediately prior to the issuance thereof (other than any Securities
for the payment or redemption of which such Securities are to be issued and any
Securities pledged as security for the payment obligations of the Company in
respect of indebtedness for the satisfaction of which such Securities are to be
issued), shall not exceed an amount equal to the sum of Two Hundred Fifty
Million Dollars ($250,000,000) and the aggregate amount of all Transaction Costs
relating to any such series.

      "Interest" when used with respect to an Original Issue Discount Security
which by its terms bears interest only after Maturity, means interest payable
after Maturity.

      "Interest Payment Date", when used with respect to any Security, means the
Stated Maturity of an installment of interest on such Security.

      "Investment Securities" means any of the following obligations or
securities on which neither the Company, any other obligor on the Securities nor
any Affiliate of either is the obligor: (a) Government Obligations; (b) interest
bearing deposit accounts (which may be represented by certificates of deposit)
in any national or state bank (which may include the Trustee or any Paying
Agent) or savings and loan association which has outstanding securities rated by
a nationally recognized rating organization in either of the two (2) highest
rating categories (without regard to modifiers) for short term securities or in
any of the three (3) highest rating categories (without regard to modifiers) for
long term securities; (c) bankers' acceptances drawn on and accepted by any
commercial bank (which may include the Trustee or any Paying Agent) which has
outstanding securities rated by a nationally recognized rating organization in
either of the two (2) highest rating categories (without regard to modifiers)
for short term securities or in any of the three (3) highest rating categories
(without regard to modifiers) for long term securities; (d) direct obligations
of, or obligations the principal of and interest on which are unconditionally
guaranteed by, any State or Territory of the United States or the District of
Columbia, or any political subdivision of any of the foregoing, which are rated
by a nationally recognized rating organization in either of the two (2) highest
rating categories (without regard to modifiers) for short term securities or in
any of the three (3) highest rating categories (without regard to modifiers) for
long term securities; (e) bonds or other obligations of any agency or
instrumentality of the United States; (f) corporate debt securities which are
rated by a nationally recognized rating organization in either of the two (2)
highest rating categories (without regard to modifiers) for short term
securities or in any of the three (3) highest rating categories (without regard
to modifiers) for long term securities; (g) repurchase agreements with respect
to any of the foregoing obligations or securities with any banking or financial
institution (which may include the Trustee or any Paying Agent) which has
outstanding securities rated by a nationally recognized rating organization in
either of the two (2) highest rating categories (without regard to modifiers)
for short term securities or in any of the three (3) highest rating categories
(without regard to modifiers) for long term securities; (h) securities issued by
any regulated investment company (including any investment company for which the
Trustee or any Paying Agent is the advisor), as defined in Section 851 of the
Internal Revenue Code of 1986, as

                                       11
<PAGE>

amended, or any successor Section of such Code or successor federal statute,
provided that the portfolio of such investment company is limited to obligations
or securities of the character and investment quality contemplated in clauses
(a) through (f) above and repurchase agreements which are fully collateralized
by any of such obligations or securities; and (i) any other obligations or
securities which may lawfully be purchased by the Trustee in its capacity as
such.

      "Lien" means any mortgage, deed of trust, pledge, security interest,
encumbrance, easement, lease, reservation, restriction, servitude, charge or
similar right and any other lien of any kind, including, without limitation, the
interest of a vendor or a lessor under any conditional sale agreement, capital
lease or title retention agreement.

      "Maturity", when used with respect to any Security, means the date on
which the principal of such Security or an installment of principal becomes due
and payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, call for redemption or otherwise.

      "Maximum Interest Rate" has the meaning specified in Section 310.

      "Mortgaged Property" means, as of any particular time, all property which
at such time is subject to the Lien of this Indenture.

      "Net Earnings Certificate" has the meaning specified in Section 104.

      "Notice of Default" has the meaning specified in Section 901.

      "Officer's Certificate" means a certificate signed by an Authorized
Officer and delivered to the Trustee.

      "Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Company or other counsel acceptable to the Trustee and who may
be an employee or Affiliate of the Company.

      "Original Issue Discount Security" means any Security which provides for
an amount less than the principal amount thereof to be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to Section 902.

      "Outstanding", when used with respect to Securities, means, as of the date
of determination, all Securities theretofore authenticated and delivered under
this Indenture, except:

      (1) Securities theretofore canceled or delivered to the Securities
Registrar or the Trustee for cancellation;

      (2) Securities deemed to have been paid for all purposes of this Indenture
in accordance with Section 801 (whether or not the Company's indebtedness in
respect thereof shall be satisfied and discharged for any other purpose); and

      (3) Securities which have been paid pursuant to Section 306 or in exchange
for or in lieu of which other Securities have been authenticated and delivered
pursuant to this Indenture,

                                       12
<PAGE>

other than any such Securities in respect of which there shall have been
presented to the Trustee proof satisfactory to it and the Company that such
Securities are held by a bona fide purchaser in whose hands such Securities are
valid obligations of the Company; provided, however, that in determining whether
or not the Holders of the requisite principal amount of the Outstanding
Securities under this Indenture, or the Outstanding Securities of any series or
Tranche, have given, made or taken any request, demand, authorization,
direction, notice, consent, election, waiver or other action hereunder or
whether or not a quorum is present at a meeting of Holders, as of any date, (A)
the principal amount of an Original Issue Discount Security which shall be
deemed to be Outstanding shall be the amount of the principal thereof which
would be due and payable as of such date upon acceleration of the Maturity
thereof to such date pursuant to Section 902; (B) if, as of such date, the
principal amount payable at the Stated Maturity of a Security is not
determinable, the principal amount of such Security which shall be deemed to be
Outstanding shall be the amount as specified or determined as contemplated by
Section 301; (C) the principal amount of a Security denominated in one or more
foreign currencies or currency units which shall be deemed to be Outstanding
shall be the U.S. dollar equivalent, determined as of such date in the manner
provided as contemplated by Section 301, of the principal amount of such
Security (or, in the case of a Security described in clause (A) or (B) above, of
the amount determined as provided in such clause); and (D) Securities owned by
the Company or any other obligor upon the Securities or any Affiliate of the
Company or of such other obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be protected
in relying upon any such request, demand, authorization, direction, notice,
consent, election, waiver or other action, only Securities which the Trustee
knows to be so owned shall be so disregarded. Securities so owned which have
been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so to act
with respect to such Securities and that the pledgee is not the Company or any
other obligor upon the Securities or any Affiliate of the Company or of such
other obligor.

      "Paying Agent" means any Person, including the Company or any of its
Affiliates, authorized by the Company to pay the principal of or any premium or
interest on any Securities on behalf of the Company.

      "Periodic Offering" means an offering of Securities of a series from time
to time any or all of the specific terms of which Securities, including without
limitation the rate or rates of interest, if any, thereon, the Stated Maturity
or Maturities thereof and the redemption provisions, if any, with respect
thereto, are to be determined by the Company or its agents from time to time
subsequent to the initial request for the authentication and delivery of such
Securities by the Trustee, all as contemplated in Section 301 and clause (2) of
Section 401.

      "Permitted Liens" means, as of any particular time, any of the following:

      (1) Liens for taxes, assessments and other governmental charges or
requirements which are not delinquent or which are being contested in good faith
by appropriate proceedings or which secure charges that do not exceed Five
Million Dollars ($5,000,000);

      (2) mechanics', workmen's, repairmen's, materialmen's, warehousemen's and
carriers' Liens, other Liens incident to construction, improvement, repair or
maintenance of

                                       13
<PAGE>

property, Liens or privileges of any officers or employees of the Company for
compensation earned which is not delinquent, and other Liens, including without
limitation Liens for worker's compensation awards, arising in the ordinary
course of business for charges or requirements which are not delinquent or which
are being contested in good faith and by appropriate proceedings;

      (3) Liens in respect of attachments, judgments or awards arising out of
judicial or administrative proceedings (i) in an amount not exceeding the
greater of (A) Thirty Million Dollars ($30,000,000) and (B) three percentum (3%)
of the principal amount of the Securities Outstanding at the time such Lien
arises or (ii) with respect to which the Company shall (X) in good faith be
prosecuting an appeal or other proceeding for review and with respect to which
the Company shall have secured a stay of execution pending such appeal or other
proceeding or (Y) have the right to prosecute an appeal or other proceeding for
review;

      (4) easements, leases, reservations or other rights of others in, on, over
and/or across, and laws, regulations and restrictions affecting, and defects,
irregularities, deficiencies, exceptions and limitations in title to, the
Mortgaged Property or any part thereof; provided, however, that such easements,
leases, reservations, rights, laws, regulations, restrictions, defects,
irregularities, deficiencies, exceptions and limitations do not in the aggregate
materially impair the use by the Company of the Mortgaged Property considered as
a whole for the purposes for which it is held by the Company;

      (5) Liens, defects, irregularities, exceptions and limitations in title to
property subject to rights-of-way in favor of the Company or otherwise or used
or to be used by the Company primarily for right-of-way purposes or property
held by the Company under lease, easement, license or similar right; provided,
however, that (i) the Company shall have obtained from the apparent owner or
owners of such property a sufficient right, by the terms of the instrument
granting such right-of-way, lease, easement, license or similar right, to the
use thereof for the purposes for which the Company acquired the same, (ii) the
Company has power under eminent domain or similar statutes to remove such
defects, irregularities, exceptions or limitations or (iii) such defects,
irregularities, exceptions and limitations may be otherwise remedied without
undue effort or expense; and defects, irregularities, exceptions and limitations
in title to flood lands, flooding rights and/or water rights;

      (6) Liens securing indebtedness or other obligations neither created,
assumed nor guaranteed by the Company, nor on account of which it customarily
pays interest, upon real property or rights in or relating to real property of
the Company existing at the date of execution and delivery of this Indenture,
or, as to property thereafter acquired, at the time of the acquisition thereof
by the Company;

      (7) leases existing at the date of the execution and delivery of this
Indenture, as originally executed and delivered, affecting properties owned by
the Company at such date and renewals and extensions thereof; and leases
affecting such properties entered into after such date or affecting properties
acquired by the Company after such date which, in either case, (i) have
respective terms (or periods at the end of which the Company may terminate the
lease) of not more than fifteen (15) years (including extensions or renewals at
the option of the tenant) or (ii)

                                       14
<PAGE>

do not in the aggregate materially impair the use by the Company of such
properties considered as a whole for the purpose for which they are held by the
Company;

      (8) Liens vested in lessors, licensors, franchisors, permitters or others
for rent or other amounts to become due or for other obligations or acts to be
performed, the payment of which rent or the performance of which other
obligations or acts is required under leases, subleases, licenses, franchises or
permits, so long as the payment of such rent or other amounts or the performance
of such other obligations or acts is not delinquent or is being contested in
good faith and by appropriate proceedings;

      (9) controls, restrictions, obligations, duties and/or other burdens
imposed by federal, state, municipal or other law, or by rules, regulations or
orders of Governmental Authorities, upon the Mortgaged Property or any part
thereof or the operation or use thereof or upon the Company with respect to the
Mortgaged Property or any part thereof or the operation or use thereof or with
respect to any franchise, grant, license, permit or public purpose requirement,
or any rights reserved to or otherwise vested in Governmental Authorities to
impose any such controls, restrictions, obligations, duties and/or other
burdens;

      (10) rights which Governmental Authorities may have by virtue of
franchises, grants, licenses, permits or contracts, or by virtue of law, to
purchase, recapture or designate a purchaser of or order the sale of the
Mortgaged Property or any part thereof, to terminate franchises, grants,
licenses, permits, contracts or other rights or to regulate the property and
business of the Company; and any and all obligations of the Company correlative
to any such rights;

      (11) Liens required by law or governmental regulations (i) as a condition
to the transaction of any business or the exercise of any privilege or license,
(ii) to enable the Company to maintain self-insurance or to participate in any
funds established to cover any insurance risks, (iii) in connection with
workmen's compensation, unemployment insurance, social security, any pension or
welfare benefit plan or (iv) to share in the privileges or benefits required for
companies participating in one or more of the arrangements described in clauses
(ii) and (iii) above;

      (12) Liens on the Mortgaged Property or any part thereof which are granted
by the Company to secure (or to obtain letters of credit that secure) the
performance of duties or public or statutory, bid or performance obligations or
to secure, or serve in lieu of, surety, stay or appeal bonds;

      (13) rights reserved to or vested in others to take or receive any part of
any coal, ore, gas, oil and other minerals, any timber and/or any electric
capacity or energy, gas, water, steam and any other products, developed,
produced, manufactured, generated, purchased or otherwise acquired or used by
the Company or by others on property of the Company;

      (14) (i) rights and interests of Persons other than the Company arising
out of contracts, agreements and other instruments to which the Company is a
party and which relate to the common ownership or joint use of property; and
(ii) all Liens on the interests of Persons other than the Company in property
owned in common by such Persons and the Company if and to the

                                       15
<PAGE>

extent that the enforcement of such Liens would not adversely affect the
interests of the Company in such property in any material respect;

      (15) any restrictions on assignment and/or requirements of any assignee to
qualify as a permitted assignee and/or public utility or public service
corporation or company;

      (16) any Liens which have been bonded for the full amount in dispute or
for the payment of which other adequate security arrangements have been made;

      (17) rights and interests granted pursuant to Section 702(4);

      (18) Liens granted on air or water pollution control, sewage or solid
waste disposal, or other similar facilities of the Company in connection with
the issuance of pollution control revenue bonds, in connection with financing
the cost of, or the construction, acquisition, improvement, repair or
maintenance of, such facilities;

      (19) the Trustee's Lien; and

      (20) Prepaid Liens.

      "Person" means any individual, Corporation, partnership, limited liability
partnership, joint venture, trust, unincorporated organization or any
Governmental Authority.

      "Place of Payment", when used with respect to the Securities of any
series, or any Tranche thereof, means the place or places where the principal of
and any premium and interest on the Securities of that series are payable as
specified as contemplated by Section 301.

      "Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 306 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed (to the extent
lawful) to evidence the same debt as the mutilated, destroyed, lost or stolen
Security.

      "Prepaid Lien" means any Lien securing indebtedness for the payment,
prepayment or redemption of which there shall have been irrevocably deposited in
trust with the trustee or other holder of such Lien moneys and/or Investment
Securities which (together with the interest reasonably expected to be earned
from the investment and reinvestment in Investment Securities of the moneys
and/or the principal of and interest on the Investment Securities so deposited)
shall be sufficient for such purpose; provided, however, that if such
indebtedness is to be redeemed or otherwise prepaid prior to the stated maturity
thereof, any notice requisite to such redemption or prepayment shall have been
given in accordance with the instrument creating such Lien or irrevocable
instructions to give such notice shall have been given to such trustee or other
holder.

      "Property Additions" has the meaning specified in Section 103.

                                       16
<PAGE>

      "Purchase Money Lien" means, with respect to any property (and any
improvements or accessions thereto) being acquired or disposed of by the Company
or being released from the Lien of this Indenture, a Lien on such property
which:

      (1) is taken or retained by the transferor of such property to secure all
or part of the purchase price thereof;

      (2) is granted to one or more Persons other than the transferor which, by
making advances or incurring an obligation, give value to enable the grantor of
such Lien to acquire rights in or the use of such property;

      (3) is granted to any other Person in connection with the release of such
property from the Lien of this Indenture on the basis of the deposit with the
Trustee or the trustee or other holder of a Lien prior to the Lien of this
Indenture of obligations secured by such Lien on such property (as well as any
other property subject thereto);

      (4) is held by a trustee or agent for the benefit of one or more Persons
described in clause (1), (2) and/or (3) above, provided that such Lien may be
held, in addition, for the benefit of one or more other Persons which shall have
theretofore given, or may thereafter give, value to or for the benefit or
account of the grantor of such Lien for one or more other purposes; or

      (5) otherwise constitutes a purchase money mortgage or a purchase money
security interest under applicable law; and, without limiting the generality of
the foregoing, for purposes of this Indenture, the term Purchase Money Lien
shall be deemed to include any Lien described above whether or not such Lien (x)
shall permit the issuance or other incurrence of additional indebtedness secured
by such Lien on such property, (y) shall permit the subjection to such Lien of
additional property and the issuance or other incurrence of additional
indebtedness on the basis thereof and/or (z) shall have been granted prior to
the acquisition, disposition or release of such property, shall attach to or
otherwise cover property other than the property being acquired, disposed of or
released and/or shall secure obligations issued prior and/or subsequent to the
issuance of the obligations delivered in connection with such acquisition,
disposition or release.

      "Redemption Date", when used with respect to any Security to be redeemed,
means the date fixed for such redemption by or pursuant to this Indenture.

      "Redemption Price", when used with respect to any Security to be redeemed,
means the price at which it is to be redeemed pursuant to this Indenture.

      "Regular Record Date" for the interest payable on any Interest Payment
Date on the Securities of any series means the date specified for that purpose
as contemplated by Section 301.

      "Responsible Officer", when used with respect to the Trustee, means an
officer in the Institutional Trust Services department of the Trustee having
direct responsibility for administration of this Indenture.

      "Retired Securities" means any Securities authenticated and delivered
under this Indenture which (a) no longer remain Outstanding by reason of the
applicability of clause (1) or

                                       17
<PAGE>

(2) in the definition of "Outstanding" (other than any Predecessor Security of
any Security), (b) have not been made the basis under any of the provisions of
this Indenture of one or more Authorized Purposes and (c) have not been paid,
redeemed, purchased or otherwise retired by the application thereto of Funded
Cash; provided, however, that, after the delivery to the Trustee of the Initial
Expert's Certificate, no Security shall be deemed to be a Retired Security
unless the retirement thereof shall have occurred after such delivery of the
Initial Expert's Certificate.

      "Securities" has the meaning stated in the first recital of this Indenture
and more particularly means any Securities authenticated and delivered under
this Indenture.

      "Security Register" and "Security Registrar" have the respective meanings
specified in Section 305.

      "Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 307.

      "Stated Interest Rate" means a rate (whether fixed or variable) at which
an obligation by its terms is stated to bear simple interest. Any calculation or
other determination to be made under this Indenture by reference to the Stated
Interest Rate on a Security shall be made (a) without regard to the effective
interest cost to the Company of such Security and (b) without regard to the
Stated Interest Rate on, or the effective cost to the Company of, any other
obligation for which such Security is pledged or otherwise delivered as
security.

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

      "Successor Corporation" has the meaning specified in Section 1201.

      "Tranche" means a group of Securities which (a) are of the same series and
(b) have identical terms except as to principal amount and/or date of issuance.

      "Transaction Costs" means all costs associated with any transaction
involving the issuance and sale of Securities, including but not limited to the
fees and disbursements of counsel, the compensation of underwriters, and
accountants' or other professional fees.

      "Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at
the date as of which this instrument was executed; provided, however, that in
the event the Trust Indenture Act of 1939 is amended after such date, "Trust
Indenture Act" means, to the extent required by any such amendment, the Trust
Indenture Act of 1939 as so amended.

      "Trustee" means the Person named as the "Trustee" in the first paragraph
of this Indenture until a successor trustee shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter "Trustee" shall mean
or include each Person who is then a Trustee hereunder, and if at any time there
is more than one such Person, "Trustee" as used with respect to the Securities
of any series shall mean the Trustee with respect to the Securities of that
series.

                                       18
<PAGE>

      "Trustee's Lien" has the meaning specified in Section 1007.

      "United States" means the United States of America, its Territories, its
possessions and other areas subject to its political jurisdiction.

SECTION 102. Funded Property; Funded Cash.

      "Funded Property" means:

      (1) all Property Additions to the extent that the same shall have been
designated in an Initial Expert's Certificate to be deemed to be Funded
Property;

      (2) all Property Additions to the extent that the same shall have been
made the basis of the authentication and delivery of Securities under this
Indenture pursuant to Section 402;

      (3) all Property Additions to the extent that the same shall have been
made the basis of the release of property from the Lien of this Indenture
pursuant to Section 703;

      (4) all Property Additions to the extent that the same shall have been
substituted for Funded Property retired pursuant to Section 702;

      (5) all Property Additions to the extent that the same shall have been
made the basis of the withdrawal of cash held by the Trustee pursuant to Section
404 or 706; and

      (6) all Property Additions to the extent that the same shall have been
used as the basis of a credit against, or otherwise in satisfaction of, the
requirements of any sinking, improvement, maintenance, replacement or similar
fund or analogous provision established with respect to the Securities of any
series, or any Tranche thereof, as contemplated by Section 301; provided,
however, that any such Property Additions shall cease to be Funded Property when
all of the Securities of such series or Tranche shall have been paid.

      In the event that in any certificate filed with the Trustee in connection
with any of the transactions referred to in clauses (1), (2), (3), (5) and (6)
of this Section, only a part of the Cost or Fair Value of the Property Additions
described in such certificate shall be required for the purposes of such
certificate, then such Property Additions shall be deemed to be Funded Property
only to the extent so required for the purpose of such certificate.

      All Funded Property that shall be abandoned, destroyed, released or
otherwise disposed of shall for the purpose of Section 103 hereof be deemed
Funded Property retired and for other purposes of this Indenture shall thereupon
cease to be Funded Property but as in this Indenture provided may at any time
thereafter again become Funded Property. Neither any reduction in the cost or
book value of property recorded in the plant account of the Company, nor the
transfer of any amount appearing in such account to intangible and/or adjustment
or expense accounts, otherwise than in connection with actual retirements of
physical property abandoned, destroyed, released or disposed of, and otherwise
than in connection with the removal of such property in its entirety from plant
account, shall be deemed to constitute a retirement of Funded Property.

                                       19
<PAGE>

      The Company may make allocations, on a pro-rata or other reasonable basis
(including, but not limited to, the designation of specific properties or the
designation of all or a specified portion of the properties reflected in one or
more generic accounts or subaccounts in the Company's books of account), for the
purpose of determining the extent to which fungible properties, or other
properties not otherwise identified, reflected in the same generic account or
subaccount in the Company's books of account constitute Funded Property or
Funded Property retired.

      "Funded Cash" means:

      (1) cash, held by the Trustee hereunder, to the extent that it represents
the proceeds of insurance on Funded Property (except as otherwise provided in
Section 607), or cash deposited in connection with the release of Funded
Property pursuant to Article Seven, or the payment of the principal of, or the
proceeds of the release of, obligations secured by Purchase Money Lien and
delivered to the Trustee pursuant to Article Seven, all subject, however, to the
provisions of Section 607 and Section 706; and

      (2) any cash deposited with the Trustee under Section 404.

SECTION 103. Property Additions; Cost.

            (1) "Property Additions" means, as of any particular time, any item,
unit or element of property which at such time is owned by the Company and is
subject to the Lien of this Indenture; provided, however, that Property
Additions shall not include:

                  (A) goodwill, going concern value rights or intangible
property except as provided in clause (3) of this Section; or

                  (B) any property the cost of acquisition or construction of
which is, in accordance with generally accepted accounting principles, properly
chargeable to an operating expense account of the Company.

            (2) When any Property Additions are certified to the Trustee as the
basis of any Authorized Purpose (except as otherwise provided in Section 703 and
Section 706):

                  (A) there shall be deducted from the Cost or Fair Value to the
Company thereof, as the case may be (as of the date so certified), an amount
equal to the Cost (or as to Property Additions of which the Fair Value to the
Company at the time the same became Funded Property was certified to be an
amount less than the Cost as determined pursuant to this Section, then such Fair
Value, as so certified, in lieu of Cost) of all Funded Property of the Company
retired to the date of such certification (other than the Funded Property, if
any, in connection with the application for the release of which such
certificate is filed) and not theretofore deducted from the Cost or Fair Value
to the Company of Property Additions theretofore certified to the Trustee; and

                  (B) there may, at the option of the Company, be added to such
Cost or Fair Value, as the case may be, the sum of:

                                       20
<PAGE>

                        (i) the principal amount of any obligations secured by
Purchase Money Lien, not theretofore so added and which the Company then elects
so to add, which shall theretofore have been delivered to the Trustee or the
trustee or other holder of a Lien prior to the Lien of this Indenture as the
basis of the release of Funded Property retired from the Lien of this Indenture
or such prior Lien, as the case may be;

                        (ii) ten-sevenths (10/7) of the amount of any cash, not
theretofore so added and which the Company then elects so to add, which shall
theretofore have been delivered to the Trustee or the trustee or other holder of
a Lien prior to the Lien of this Indenture as the proceeds of insurance on
Funded Property retired (to the extent of the portion thereof deemed to be
Funded Cash) or as the basis of the release of Funded Property retired from the
Lien of this Indenture or from such prior Lien, as the case may be;

                        (iii) ten-sevenths (10/7) of the principal amount of any
Security or Securities, or portion of such principal amount, not theretofore so
added and which the Company then elects so to add, (I) which shall theretofore
have been delivered to the Trustee as the basis of the release of Funded
Property retired or (II) the right to the authentication and delivery of which
under the provisions of Section 403 shall at any time theretofore have been
waived under Section 703(4)(C) as the basis of the release of Funded Property
retired;

                        (iv) the Cost or Fair Value to the Company (whichever
shall be less), after making any deductions and any additions pursuant to this
Section, of any Property Additions, not theretofore so added and which the
Company then elects so to add, which shall theretofore have been made the basis
of the release of Funded Property retired (such Fair Value to be the amount
shown in the Expert's Certificate delivered to the Trustee in connection with
such release); and

                        (v) the Cost to the Company of any Property Additions
not theretofore so added and which the Company then elects so to add, to the
extent that the same shall have been substituted for Funded Property retired;

provided, however, that the aggregate of the amounts added under clause (B)
above shall in no event exceed the amounts deducted under clause (A) above.

            (3) Except as otherwise provided in Section 703, the term "Cost"
with respect to Property Additions shall mean the sum of (i) any cash delivered
in payment therefor or for the acquisition thereof, (ii) an amount equivalent to
the fair market value in cash (as of the date of delivery) of any securities or
other property delivered in payment therefor or for the acquisition thereof,
(iii) the principal amount of any obligations secured by prior Lien upon such
Property Additions outstanding at the time of the acquisition thereof, (iv) the
principal amount of any other obligations incurred or assumed in connection with
the payment for such Property Additions or for the acquisition thereof and (v)
any other amounts which, in accordance with generally accepted accounting
principles, are properly charged or chargeable to the plant or other property
accounts of the Company with respect to such Property Additions as part of the
cost of construction or acquisition thereof, including, but not limited to any
allowance for funds used during construction or any similar or analogous amount;
provided, however, that, notwithstanding any other provision of this Indenture,

                                       21
<PAGE>

                  (A) with respect to Property Additions owned by a Successor
Corporation immediately prior to the time it shall have become such by
consolidation or merger or acquired by a Successor Corporation in or as a result
of a consolidation or merger (excluding, in any case, Property Additions owned
by the Company immediately prior to such time), Cost shall mean the amount or
amounts at which such Property Additions are recorded in the plant or other
property accounts of such Successor Corporation, or the predecessor corporation
from which such Property Additions are acquired, as the case may be, immediately
prior to such consolidation or merger;

                  (B) with respect to Property Additions which shall have been
acquired (otherwise than by construction) by the Company without any
consideration consisting of cash, securities or other property or the incurring
or assumption of indebtedness or other obligation, no determination of Cost
shall be required, and, wherever in this Indenture provision is made for Cost or
Fair Value, Cost with respect to such Property Additions shall mean an amount
equal to the Fair Value to the Company thereof or, if greater, the aggregate
amount reflected in the Company's books of account with respect thereto upon the
acquisition thereof; and

                  (C) in no event shall the Cost of Property Additions be
required to reflect any depreciation or amortization in respect of such Property
Additions, or any adjustment to the amount or amounts at which such Property
Additions are recorded in plant or other property accounts due to the
non-recoverability of investment or otherwise.

      If any Property Additions are shown by the Expert's Certificate provided
for in Section 402 (2)(B) to include property which has been used or operated by
others than the Company in a business similar to that in which it has been or is
to be used or operated by the Company, the Cost thereof need not be reduced by
any amount in respect of any goodwill, going concern value rights and/or
intangible property simultaneously acquired and in such case the term Property
Additions as defined herein may include such goodwill, going concern value
rights and intangible property.

SECTION 104. Net Earnings Certificate; Adjusted Net Earnings; Annual Interest
             Requirements.

      A "Net Earnings Certificate" means a certificate signed by an Authorized
Officer and an accountant (who may be employed by or Affiliated with the
Company), stating:

            (1) the "Adjusted Net Earnings" of the Company for a period of
twelve (12) consecutive calendar months within the eighteen (18) calendar months
immediately preceding the first day of the month in which the Company Order
requesting the authentication and delivery under this Indenture of Securities is
delivered to the Trustee, specifying:

                  (A) its operating revenues (which may include revenues of the
Company subject when collected or accrued to possible refund at a future date);

                  (B) its operating expenses, excluding (i) expenses for taxes
on income or profits and other taxes measured by, or dependent on, net income,
(ii) provisions for reserves for renewals, replacements, depreciation, depletion
or retirement of property (or any expenditures therefor), or provisions for
amortization of property, (iii) expenses or provisions for

                                       22
<PAGE>

interest on any indebtedness of the Company, for the amortization of debt
discount, premium, expense or loss on reacquired debt, for any maintenance and
replacement, improvement or sinking fund or other device for the retirement of
any indebtedness, or for other amortization, (iv) expenses or provisions for any
non-recurring charge to income or to retained earnings of whatever kind or
nature (including without limitation the recognition of expense or impairment
due to the non-recoverability of assets or expense), whether or not recorded as
a non-recurring charge in the Company's books of account, and (v) provisions for
any refund of revenues previously collected or accrued by the Company subject to
possible refund;

                  (C) the amount remaining after deducting the amount required
to be stated in such certificate by clause (B) above from the amount required to
be stated therein by clause (A) above;

                  (D) its other income, net of related expenses (excluding
expenses or provisions for any non-recurring charge to the income or retained
earnings of the entity which is the source of such other income of whatever kind
or nature (including without limitation the recognition of expense or impairment
due to the non-recoverability of assets or expense), whether or not recorded and
a non-recurring charge in such entity's books of account), which other income
may include any portion of the allowance for funds used during construction and
other deferred costs (or any analogous amounts) which is not included in "other
income" (or any analogous item) in the Company's books of account; and

                  (E) the Adjusted Net Earnings of the Company for such period
of twelve (12) consecutive calendar months (being the sum of the amounts
required to be stated in such certificate by clauses (C) and (D) above); and

            (2) the "Annual Interest Requirements," being the interest
requirements for one year, at the respective Stated Interest Rates, if any,
borne prior to Maturity, upon:

                  (A) all Securities Outstanding hereunder at the date of such
certificate, except any for the payment or redemption of which the Securities
applied for are to be issued; provided, however, that, if Outstanding Securities
of any series bear interest at a variable rate or rates, then the interest
requirement on the Securities of such series shall be determined by reference to
the rate or rates in effect on the day immediately preceding the date of such
certificate;

                  (B) all Securities then applied for in pending applications
for the original issuance of Securities, including the application in connection
with which such certificate is made; provided, however, that if Securities of
any series are to bear interest at a variable rate or rates, then the interest
requirement on the Securities of such series shall be determined by reference to
the rate or rates to be in effect at the time of the initial authentication and
delivery of such Securities; and provided, further, that the determination of
the interest requirement on Securities of a series subject to a Periodic
Offering shall be further subject to the provisions of clause (6) of Section
401; and

                  (C) the principal amount of all other indebtedness (except (i)
indebtedness of the Company the repayment of which supports or is supported by
other

                                       23
<PAGE>

indebtedness included in Annual Interest Requirements pursuant to one of the
other clauses of this definition, (ii) indebtedness for the payment of which the
Securities applied for are to be issued, and (iii) indebtedness secured by a
Prepaid Lien prior to the Lien of this Indenture upon property subject to the
Lien of this Indenture) outstanding on the date of such certificate and secured
by a Lien on a parity with or prior to the Lien of this Indenture upon property
subject to the Lien of this Indenture, if such indebtedness has been issued,
assumed or guaranteed by the Company or if the Company customarily pays the
interest upon the principal thereof or collections from the Company's customers
are applied to, or pledged as security for the payment of such interest;
provided, however, that if any such indebtedness bears interest at a variable
rate or rates, then the interest requirement on such indebtedness shall be
determined by reference to the rate or rates in effect on the day immediately
preceding the date of such certificate; and provided, further, that any amounts
collected by others to be applied to debt service on indebtedness of the
Company, and not otherwise treated on the Company's books as revenue, shall be
added to the Company's operating revenues when determining Adjusted Net
Earnings.

      In any case where a Net Earnings Certificate is required as a condition
precedent to the authentication and delivery of Securities, such certificate
shall be accompanied by a certificate signed by an Independent Accountant if the
aggregate principal amount of Securities then applied for plus the aggregate
principal amount of Securities authenticated and delivered hereunder since the
commencement of the then current calendar year (other than those with respect to
which a Net Earnings Certificate is not required, or with respect to which a Net
Earnings Certificate accompanied by a certificate signed by an Independent
Accountant has previously been furnished to the Trustee) is ten percent (10%) or
more of the principal amount of the Securities at the time Outstanding, which
certificate shall provide that such Independent Accountant has reviewed the Net
Earnings Certificate and that such Independent Accountant has no knowledge that
any statements in such Net Earnings Certificate are not true.

SECTION 105. Compliance Certificates and Opinions.

      Upon any application or request by the Company to the Trustee to take any
action under any provision of this Indenture, the Company shall furnish to the
Trustee such certificates and opinions as may be required under the Trust
Indenture Act. Each such certificate or opinion shall be given in the form of an
Officers' Certificate, if to be given by an officer of the Company, or an
Opinion of Counsel, if to be given by counsel, and shall comply with the
requirements of the Trust Indenture Act and any other requirements set forth in
this Indenture.

      Every certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture shall include:

            (1) a statement that each Person signing such certificate or opinion
has read such covenant or condition and the definitions herein relating thereto;

            (2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;

                                       24
<PAGE>

            (3) a statement that, in the opinion of each such Person, such
Person has made such examination or investigation as is necessary to enable such
Person to express an informed opinion as to whether or not such covenant or
condition has been complied with; and

            (4) a statement as to whether, in the opinion of each such Person,
such condition or covenant has been complied with.

SECTION 106. Content and Form of Documents Delivered to Trustee.

            (1) Any Officer's Certificate may be based (without further
examination or investigation), insofar as it relates to or is dependent upon
legal matters, upon an opinion of, or representations by, counsel, and, insofar
as it relates to or is dependent upon matters which are subject to verification
by Accountants, upon a certificate or opinion of, or representations by, an
Accountant, and, insofar as it relates to or is dependent upon matters which are
required in this Indenture to be covered by a certificate or opinion of, or
representations by, an Expert, upon the certificate or opinion of, or
representations by, an Expert, unless, in any case, such officer has actual
knowledge that the certificate or opinion or representations with respect to the
matters upon which such Officer's Certificate may be based as aforesaid are
erroneous.

      Any Expert's Certificate may be based (without further examination or
investigation), insofar as it relates to or is dependent upon legal matters,
upon an opinion of, or representations by, counsel, and insofar as it relates to
or is dependent upon factual matters, information with respect to which is in
the possession of the Company and which are not subject to verification by
Experts, upon a certificate or opinion of, or representations by, an officer or
officers of the Company, unless such Expert has actual knowledge that the
certificate or opinion or representations with respect to the matters upon which
his certificate or opinion may be based as aforesaid are erroneous.

      Any certificate of an Accountant may be based (without further examination
or investigation), insofar as it relates to or is dependent upon legal matters,
upon an opinion of, or representations by, counsel, and insofar as it relates to
or is dependent upon factual matters, information with respect to which is in
the possession of the Company and which are not subject to verification by
Accountants, upon a certificate of, or representations by, an officer or
officers of the Company, unless such Accountant has actual knowledge that the
certificate or opinion or representations with respect to the matters upon which
his certificate or opinion may be based as aforesaid are erroneous.

      Any Opinion of Counsel may be based (without further examination or
investigation), insofar as it relates to or is dependent upon factual matters,
information with respect to which is in the possession of the Company, upon a
certificate of, or representations by, an officer or officers of the Company,
and, insofar as it relates to or is dependent upon matters which are subject to
verification by Accountants upon a certificate or opinion of, or representations
by, an Accountant, and, insofar as it relates to or is dependent upon matters
required in this Indenture to be covered by a certificate or opinion of, or
representations by, an Expert, upon the certificate or opinion of, or
representations by, an Expert, unless such counsel has actual knowledge that the
certificate or opinion or representations with respect to the matters upon which
his opinion may be based as aforesaid are erroneous. In addition, any Opinion of
Counsel may be based (without

                                       25
<PAGE>

further examination or investigation), insofar as it relates to or is dependent
upon matters covered in an Opinion of Counsel rendered by other counsel, upon
such other Opinion of Counsel, unless such counsel has actual knowledge that the
Opinion of Counsel rendered by such other counsel with respect to the matters
upon which his Opinion of Counsel may be based as aforesaid are erroneous.
Further, any Opinion of Counsel with respect to the status of title to or the
sufficiency of descriptions of property, and/or the existence of Liens thereon,
and/or the recording or filing of documents, and/or any similar matters, may be
based (without further examination or investigation) upon (i) title insurance
policies or commitments and reports, lien search certificates and other similar
documents or (ii) certificates of, or representations by, officers, employees,
agents and/or other representatives of the Company or (iii) any combination of
the documents referred to in (i) and (ii), unless, in any case, such counsel has
actual knowledge that the document or documents with respect to the matters upon
which his opinion may be based as aforesaid are erroneous. If, in order to
render any Opinion of Counsel provided for herein, the signer thereof shall deem
it necessary that additional facts or matters be stated in any Officer's
Certificate, certificate of an Accountant or Expert's Certificate provided for
herein, then such certificate may state all such additional facts or matters as
the signer of such Opinion of Counsel may request.

            (2) In any case where several matters are required to be certified
by, or covered by an opinion of, any specified Person, it is not necessary that
all such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents. Where any
Person is required to make, give or execute two or more applications, requests,
consents, certificates, statements, opinions or other instruments under this
Indenture, they may, but need not, be consolidated and form one instrument.

            (3) Whenever, subsequent to the receipt by the Trustee of any
General Partner Resolution, Officer's Certificate, Expert's Certificate, Net
Earnings Certificate, Opinion of Counsel or other document or instrument, a
material clerical, typographical or other inadvertent or unintentional error or
omission shall be discovered therein, a new document or instrument shall be
substituted therefor in corrected form with the same force and effect as if
originally filed in the corrected form and, irrespective of the date or dates of
the actual execution and/or delivery thereof, such substitute document or
instrument shall be deemed to have been executed and/or delivered as of the date
or dates required with respect to the document or instrument for which it is
substituted. Anything in this Indenture to the contrary notwithstanding, if any
such corrective document or instrument indicates that action has been taken by
or at the request of the Company which could not have been taken had the
original document or instrument not contained such error or omission, the action
so taken shall not be invalidated or otherwise rendered ineffective but shall be
and remain in full force and effect, except to the extent that such action was a
result of willful misconduct or bad faith. Without limiting the generality of
the foregoing, any Securities issued under the authority of such defective
document or instrument shall nevertheless be the valid obligations of the
Company entitled to the benefit of the Lien of this Indenture equally and
ratably with all other Outstanding Securities, except as aforesaid.

SECTION 107. Acts of Holders; Record Dates.

                                       26
<PAGE>

      Any request, demand, authorization, direction, notice, consent, election,
waiver or other action provided or permitted by this Indenture to be given, made
or taken by Holders may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by such Holders in person or by an agent
duly appointed in writing; or, alternatively, may be embodied in and evidenced
by the record of Holders voting in favor thereof, either in person or by proxies
duly appointed in writing, at any meeting of Holders duly called and held in
accordance with the provisions of Article Fourteen, or a combination of such
instruments and any such record. Except as herein otherwise expressly provided,
such action shall become effective when such instrument or instruments or record
or both are delivered to the Trustee and, where it is hereby expressly required,
to the Company. Such instrument or instruments and any such record (and the
action embodied therein and evidenced thereby) are herein sometimes referred to
as the "Act" of the Holders signing such instrument or instruments and so voting
at any such meeting. Proof of execution of any such instrument or of a writing
appointing any such agent, or of the holding by any Person of a Security, shall
be sufficient for any purpose of this Indenture and (subject to Section 1001)
conclusive in favor of the Trustee and the Company, if made in the manner
provided in this Section 107. The record of any meeting of Holders shall be
proved in the manner provided in Section 1406.

      The fact and date of the execution by any Person of any such instrument or
writing may be proved in any reasonable manner which the Trustee and the Company
deem sufficient. Where such execution is by a signer acting in a capacity other
than his individual capacity, such certificate or affidavit shall also
constitute sufficient proof of his authority. The fact and date of the execution
of any such instrument or writing, or the authority of the Person executing the
same, may also be proved in any other manner which the Trustee and the Company
deem sufficient.

      The ownership of Securities shall be proved by the Security Register.

      Any request, demand, authorization, direction, notice, consent, election,
waiver or other Act of a Holder shall bind every future Holder of the same
Security and the Holder of every Security issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done, omitted or suffered to be done by the Trustee or the Company in
reliance thereon, whether or not notation of such action is made upon such
Security.

      The Company may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities of any series entitled to
give, make or take any request, demand, authorization, direction, notice,
consent, election, waiver or other action provided or permitted by this
Indenture to be given, made or taken by Holders of Securities of such series,
provided that the Company may not set a record date for, and the provisions of
this paragraph shall not apply with respect to, the giving or making of any
notice, declaration, request or direction referred to in the next paragraph. If
any record date is set pursuant to this paragraph, the Holders of Outstanding
Securities of the relevant series on such record date, and no other Holders,
shall be entitled to take the relevant action, whether or not such Holders
remain Holders after such record date; provided that no such action shall be
effective hereunder unless taken on or prior to the applicable Expiration Date
by Holders of the requisite principal amount of Outstanding Securities of such
series on such record date. Nothing in this paragraph shall be construed to
prevent the Company from setting a new record date for any action for which a

                                       27
<PAGE>

record date has previously been set pursuant to this paragraph (whereupon the
record date previously set shall automatically and with no action by any Person
be canceled and of no effect), and nothing in this paragraph shall be construed
to render ineffective any action taken by Holders of the requisite principal
amount of Outstanding Securities of the relevant series on the date such action
is taken. Promptly after any record date is set pursuant to this paragraph, the
Company, at its own expense, shall cause notice of such record date, the
proposed action by Holders and the applicable Expiration Date to be given to the
Trustee in writing and to each Holder of Securities of the relevant series in
the manner set forth in Section 109.

      The Trustee may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities of any series entitled to join
in the giving or making of (i) any Notice of Default, (ii) any declaration of
acceleration referred to in Section 902, (iii) any request to institute
proceedings referred to in Section 911 or (iv) any direction referred to in
Section 916, in each case with respect to Securities of such series. If any
record date is set pursuant to this paragraph, the Holders of Outstanding
Securities of such series on such record date, and no other Holders, shall be
entitled to join in such notice, declaration, request or direction, whether or
not such Holders remain Holders after such record date; provided that no such
action shall be effective hereunder unless taken on or prior to the applicable
Expiration Date by Holders of the requisite principal amount of Outstanding
Securities of such series on such record date. Nothing in this paragraph shall
be construed to prevent the Trustee from setting a new record date for any
action for which a record date has previously been set pursuant to this
paragraph (whereupon the record date previously set shall automatically and with
no action by any Person be canceled and of no effect), and nothing in this
paragraph shall be construed to render ineffective any action taken by Holders
of the requisite principal amount of Outstanding Securities of the relevant
series on the date such action is taken. Promptly after any record date is set
pursuant to this paragraph, the Trustee, at the Company's expense, shall cause
notice of such record date, the proposed action by Holders and the applicable
Expiration Date to be given to the Company in writing and to each Holder of
Securities of the relevant series in the manner set forth in Section 109.

      With respect to any record date set pursuant to this Section 107, the
party hereto which sets such record dates may designate any day as the
"Expiration Date" and from time to time may change the Expiration Date to any
earlier or later day; provided that no such change shall be effective unless
notice of the proposed new Expiration Date is given to the other party hereto in
writing, and to each Holder of Securities of the relevant series in the manner
set forth in Section 109, on or prior to the existing Expiration Date. If an
Expiration Date is not designated with respect to any record date set pursuant
to this Section 107, the party hereto which set such record date shall be deemed
to have initially designated the one hundred eightieth (180th) day after such
record date as the Expiration Date with respect thereto, subject to its right to
change the Expiration Date as provided in this paragraph. Notwithstanding the
foregoing, no Expiration Date shall be later than the one hundred eightieth
(180th) day after the applicable record date.

      Without limiting the foregoing, a Holder entitled hereunder to take any
action hereunder with regard to any particular Security may do so with regard to
all or any part of the principal amount of such Security or by one or more duly
appointed agents, each of which may do so pursuant to such appointment with
regard to all or any part of such principal amount.

                                       28
<PAGE>

SECTION 108. Notices, Etc., to Trustee and Company.

      Except as otherwise provided herein, any request, demand, authorization,
direction, notice, consent, election, waiver or Act of Holders or other document
provided or permitted by this Indenture to be made upon, given or furnished to,
or filed with

            (1) the Trustee by any Holder or by the Company shall be sufficient
for every purpose hereunder if made, given, furnished or filed in writing to or
with the Trustee at its Corporate Trust Office, Attention: Institutional Trust
Services, or

            (2) the Company by the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided) if in
writing and mailed, first-class postage prepaid, to the Company addressed to the
attention of the Treasurer of the Company at the address of the Company's
principal office specified in the first paragraph of this instrument or at any
other address previously furnished in writing to the Trustee by the Company.

SECTION 109. Notice to Holders; Waiver.

      Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at his address as it appears in the Security Register, not later
than the latest date (if any), and not earlier than the earliest date (if any),
prescribed for the giving of such notice. In any case where notice to Holders is
given by mail, neither the failure to mail such notice, nor any defect in any
notice so mailed, to any particular Holder shall affect the sufficiency of such
notice with respect to other Holders. Where this Indenture provides for notice
in any manner, such notice may be waived in writing by the Person entitled to
receive such notice, either before or after the event otherwise to be specified
therein, and such waiver shall be the equivalent of such notice. Waivers of
notice by Holders shall be filed with the Trustee, but such filing shall not be
a condition precedent to the validity of any action taken in reliance upon such
waiver.

      In case by reason of the suspension of regular mail service or by reason
of any other cause it shall be impracticable to give such notice by mail, then
such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.

SECTION 110. Conflict with Trust Indenture Act.

      If any provision of this Indenture limits, qualifies or conflicts with a
provision of the Trust Indenture Act which is required under such Act to be a
part of and govern this Indenture, the latter provision shall control. If any
provision of this Indenture modifies or excludes any provision of the Trust
Indenture Act which may be so modified or excluded, the latter provision shall
be deemed to apply to this Indenture as so modified or to be excluded, as the
case may be.

SECTION 111. Effect of Headings and Table of Contents.

                                       29
<PAGE>

      The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.

SECTION 112. Successors and Assigns.

      All covenants and agreements in this Indenture by the Company shall bind
its successors and assigns, whether so expressed or not.

SECTION 113. Separability Clause.

      In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.

SECTION 114. Benefits of Indenture.

      Nothing in this Indenture or in the Securities, express or implied, shall
give to any Person, other than the parties hereto and their successors hereunder
and the Holders, any benefit or any legal or equitable right, remedy or claim
under this Indenture.

SECTION 115. Governing Law.

      This Indenture and the Securities shall be governed by and construed in
accordance with the law of the State of New York (including without limitation
Section 5-1401 of the New York General Obligations Law or any successor to such
statute), except to the extent that the Trust Indenture Act shall be applicable
and except to the extent that the law of any jurisdiction wherein any portion of
the Mortgaged Property is located shall mandatorily govern the creation of a
mortgage lien on and security interest in, or perfection, priority or
enforcement of the Lien of this Indenture or exercise of remedies with respect
to, such portion of the Mortgaged Property.

SECTION 116. Legal Holidays.

      In any case where any Interest Payment Date, Redemption Date or Stated
Maturity of any Security shall not be a Business Day at any Place of Payment,
then (notwithstanding any other provision of this Indenture or of the Securities
(other than a provision of any Security which specifically states that such
provision shall apply in lieu of this Section 116)) payment of interest or
principal (and premium, if any) need not be made at such Place of Payment on
such date, but may be made on the next succeeding Business Day at such Place of
Payment with the same force and effect as if made on the Interest Payment Date
or Redemption Date, or at the Stated Maturity, and no additional interest shall
accrue as the result of such delayed payment.

SECTION 117. Investment of Cash Held by Trustee.

      Any cash held by the Trustee or any Paying Agent under any provision of
this Indenture shall, except as otherwise provided in Section 706 or in Article
Eight, at the request of the Company evidenced by Company Order, be invested or
reinvested in Investment Securities designated by the Company (such Company
Order to contain a representation to the effect that the securities designated
therein constitute Investment Securities), and any interest on such

                                       30
<PAGE>

Investment Securities shall be promptly paid over to the Company as received
free and clear of any Lien. Such Investment Securities shall be held subject to
the same provisions hereof as the cash used to purchase the same, but upon a
like request of the Company shall be sold, in whole or in designated part, and
the proceeds of such sale shall be held subject to the same provisions hereof as
the cash used to purchase the Investment Securities so sold. If such sale shall
produce a net sum less than the cost of the Investment Securities so sold, the
Company shall pay to the Trustee or any such Paying Agent, as the case may be,
such amount in cash as, together with the net proceeds from such sale, shall
equal the cost of the Investment Securities so sold, and if such sale shall
produce a net sum greater than the cost of the Investment Securities so sold,
the Trustee or any such Paying Agent, as the case may be, shall promptly pay
over to the Company an amount in cash equal to such excess, free and clear of
any Lien. In no event shall the Trustee be liable for any loss incurred in
connection with the sale of any Investment Security pursuant to this Section.

      Notwithstanding the foregoing, if an Event of Default shall have occurred
and be continuing, interest on Investment Securities and any gain upon the sale
thereof shall be held as part of the Mortgaged Property until such Event of
Default shall have been cured or waived, whereupon such interest and gain shall
be promptly paid over to the Company free and clear of any Lien.

                                  ARTICLE TWO.

                                 SECURITY FORMS

SECTION 201. Forms Generally.

      The definitive Securities of each series shall be in substantially the
form or forms established in the indenture supplemental hereto establishing such
series, or in a General Partner Resolution establishing such series, or in an
Officer's Certificate pursuant to such a supplemental indenture or General
Partner Resolution, in any case with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Indenture, and may have such letters, numbers or other marks of identification
and such legends or endorsements placed thereon as may be required to comply
with applicable tax laws or the rules of any securities exchange or automated
quotation system on which the Securities of such series may be listed or traded
or as may, consistently herewith, be determined by the officers executing such
Securities, as evidenced by their execution thereof. If the form of Securities
of any series is established by action taken pursuant to a General Partner
Resolution, a copy of an appropriate record of such action shall be certified by
the Secretary or an Assistant Secretary of the General Partner and delivered to
the Trustee at or prior to the delivery of the Company Order contemplated by
Section 401 for the authentication and delivery of such Securities.

      The Securities of each series shall be issuable in registered form without
coupons. The definitive Securities of each series shall be typewritten, printed,
lithographed or engraved or produced by any combination of these methods, if
required by any securities exchange or automated quotation system on which the
Securities of such series may be listed or traded, on steel engraved borders or
may be produced in any other manner permitted by the rules of any securities
exchange or automated quotation system on which the Securities of such series
may be

                                       31
<PAGE>

listed or traded, all as determined by the officers executing such Securities,
as evidenced by their execution of such Securities.

SECTION 202. Form of Trustee's Certificate of Authentication.

      The Trustee's certificates of authentication shall be in substantially the
following form:

      This is one of the Securities of the series designated therein referred to
in the within-mentioned Indenture.

Date of Authentication: ____________                  __________________________
                                                                      As Trustee

                                                    By: ________________________
                                                            Authorized Signatory

                                 ARTICLE THREE.

                                 THE SECURITIES

SECTION 301. Amount Unlimited; Issuable in Series.

      Subject to the provisions of Article Four, the aggregate principal amount
of Securities which may be authenticated and delivered under this Indenture is
unlimited.

      The Securities may be issued in one or more series each of which may be
issued in Tranches. Subject to the penultimate paragraph of this Section, prior
to the authentication and delivery of Securities of any series there shall be
established by specification in a supplemental indenture or in a General Partner
Resolution, or in an Officer's Certificate pursuant to a supplemental indenture
or a General Partner Resolution:

            (1) the title of the Securities of such series (which shall
distinguish the Securities of such series from Securities of all other series);

            (2) any limit upon the aggregate principal amount of the Securities
of such series which may be authenticated and delivered under this Indenture
(except for Securities authenticated and delivered upon registration of transfer
of, or in exchange for, or in lieu of, other Securities of such series pursuant
to Section 304, 305, 306, 507 or 1306 and except for any Securities which,
pursuant to Section 303, are deemed never to have been authenticated and
delivered hereunder);

            (3) the Persons (without specific identification) to whom interest
on Securities of such series, or any Tranche thereof, shall be payable on any
Interest Payment Date, if other than the Persons in whose names such Securities
(or one or more Predecessor Securities) are registered at the close of business
on the Regular Record Date for such interest;

                                       32
<PAGE>

            (4) the date or dates on which the principal of the Securities of
such series, or any Tranche thereof, is payable or any formulary or other method
or other means by which such date or dates shall be determined, by reference to
an index or other fact or event ascertainable outside of this Indenture or
otherwise (without regard to any provisions for redemption, prepayment,
acceleration, purchase or extension);

            (5) the rate or rates at which the Securities of such series, or any
Tranche thereof, shall bear interest, if any (including the rate or rates at
which overdue principal shall bear interest, if different from the rate or rates
at which such Securities shall bear interest prior to Maturity, and, if
applicable, the rate or rates at which overdue premium or interest shall bear
interest, if any), or any formulary or other method or other means by which such
rate or rates shall be determined, by reference to an index or other fact or
event ascertainable outside of this Indenture or otherwise; the date or dates
from which such interest shall accrue; the Interest Payment Dates on which such
interest shall be payable and the Regular Record Date, if any, for the interest
payable on such Securities on any Interest Payment Date; and the basis of
computation of interest, if other than as provided in Section 310;

            (6) the place or places at which and/or the methods (if other than
as provided elsewhere in this Indenture) by which (i) the principal of and
premium, if any, and interest, if any, on Securities of such series, or any
Tranche thereof, shall be payable, (ii) registration of transfer of Securities
of such series, or any Tranche thereof, may be effected, (iii) exchanges of
Securities of such series, or any Tranche thereof, may be effected and (iv)
notices and demands to or upon the Company in respect of the Securities of such
series, or any Tranche thereof, and this Indenture may be served; the Security
Registrar and any Paying Agent or Agents for such series or Tranche; and, if
such is the case, that the principal of such Securities shall be payable without
the presentment or surrender thereof;

            (7) the period or periods within which or the date or dates on
which, the price or prices at which and the terms and conditions upon which the
Securities of such series, or any Tranche thereof, may be redeemed, in whole or
in part, at the option of the Company;

            (8) the obligation or obligations, if any, of the Company to redeem
or purchase the Securities of such series, or any Tranche thereof, pursuant to
any sinking fund or other mandatory redemption provisions or at the option of a
Holder thereof and the period or periods within which or the date or dates on
which, the price or prices at which and the terms and conditions upon which such
Securities shall be redeemed or purchased, in whole or in part, pursuant to such
obligation, and applicable exceptions to the requirements of Section 504 in the
case of mandatory redemption or redemption at the option of the Holder;

            (9) the denominations in which Securities of such series, or any
Tranche thereof, shall be issuable if other than denominations of One Thousand
Dollars ($1,000) and any integral multiple thereof;

            (10) the currency or currencies, including composite currencies, in
which payment of the principal of and premium, if any, and interest, if any, on
the Securities of such series, or any Tranche thereof, shall be payable (if
other than in Dollars); it being understood that, for purposes of calculations
under this Indenture (including calculations of principal amount

                                       33
<PAGE>

under Article Four), any amounts denominated in a currency other than Dollars or
in a composite currency shall be converted to Dollar equivalents by calculating
the amount of Dollars which could have been purchased by the amount of such
other currency based on such quotations or methods of determination as shall be
specified pursuant to this clause (10);

            (11) if the principal of or premium, if any, or interest, if any, on
the Securities of such series, or any Tranche thereof, are to be payable, at the
election of the Company or a Holder thereof, in a coin or currency other than
that in which the Securities are stated to be payable, the coin or currency in
which payment of any amount as to which such election is made will be payable,
the period or periods within which, and the terms and conditions upon which,
such election may be made; it being understood that, for purposes of
calculations under this Indenture (including calculations of principal amount
under Article Four), any such election shall be required to be taken into
account, in the manner contemplated in clause (10) of this paragraph, only after
such election shall have been made;

            (12) if the principal of or premium, if any, or interest, if any, on
the Securities of such series, or any Tranche thereof, are to be payable, or are
to be payable at the election of the Company or a Holder thereof, in securities
or other property, the type and amount of such securities or other property, or
the formulary or other method or other means by which such amount shall be
determined, and the period or periods within which, and the terms and conditions
upon which, any such election may be made; it being understood that all
calculations under this Indenture (including calculations of principal amount
under Article Four) shall be made on the basis of the fair market value of such
securities or the Fair Value of such other property, in either case determined
as of the most recent practicable date, except that, in the case of any amount
of principal or interest that may be so payable at the election of the Company
or a Holder, if such election shall not yet have been made, such calculations
shall be made on the basis of the amount of principal or interest, as the case
may be, that would be payable if no such election were made;

            (13) if the amount payable in respect of principal of or premium, if
any, or interest, if any, on the Securities of such series, or any Tranche
thereof, may be determined with reference to an index or other fact or event
ascertainable outside of this Indenture, the manner in which such amounts shall
be determined (to the extent not established pursuant to clause (5) of this
paragraph); it being understood that all calculations under this Indenture
(including calculations of principal amount under Article Four) shall be made on
the basis of the amount that would be payable as principal if such principal
were due, or on the basis of the interest rates in effect, as the case may be,
on the date next preceding the date of such calculation;

            (14) if other than the principal amount thereof, the portion of the
principal amount of Securities of such series, or any Tranche thereof, which
shall be payable upon declaration of acceleration of the Maturity thereof
pursuant to Section 902;

            (15) the terms, if any, pursuant to which the Securities of such
series, or any Tranche thereof, may be converted into or exchanged for
membership interests or shares of capital stock or other securities of the
Company or any other Person;

                                       34
<PAGE>

            (16) the obligations or instruments, if any, which shall be
considered to be Eligible Obligations in respect of the Securities of such
series, or any Tranche thereof, denominated in a currency other than Dollars or
in a composite currency, and any additional or alternative provisions for the
reinstatement of the Company's indebtedness in respect of such Securities after
the satisfaction and discharge thereof as provided in Section 801;

            (17) if the Securities of such series, or any Tranche thereof, are
to be issued in global form, (i) any limitations on the rights of the Holder or
Holders of such Securities to transfer or exchange the same or to obtain the
registration of transfer thereof, (ii) any limitations on the rights of the
Holder or Holders thereof to obtain certificates therefor in definitive form in
lieu of temporary form and (iii) any and all other matters incidental to such
Securities;

            (18) if the Securities of such series, or any Tranche thereof, are
to be issuable as bearer securities, any and all matters incidental thereto
which are not specifically addressed in a supplemental indenture as contemplated
by clause (4) of Section 1301;

            (19) to the extent not established pursuant to clause (17) of this
paragraph, any limitations on the rights of the Holders of the Securities of
such series, or any Tranche thereof, to transfer or exchange such Securities or
to obtain the registration of transfer thereof; and if a service charge will be
made for the registration of transfer or exchange of Securities of such series,
or any Tranche thereof, the amount or terms thereof;

            (20) any exceptions to Section 116, or variation in the definition
of Business Day, with respect to the Securities of such series, or any Tranche
thereof;

            (21) the terms of any sinking, improvement, maintenance, replacement
or analogous fund for any series; and

            (22) any other terms of the Securities of such series, or any
Tranche thereof.

      With respect to Securities of a series subject to a Periodic Offering, the
indenture supplemental hereto or the General Partner Resolution which
establishes such series, or the Officer's Certificate pursuant to such
supplemental indenture or General Partner Resolution, as the case may be, may
provide general terms or parameters for Securities of such series and provide
either that the specific terms of Securities of such series, or any Tranche
thereof, shall be specified in a Company Order or that such terms shall be
determined by the Company or its agents in accordance with procedures specified
in a Company Order as contemplated by clause (2) of Section 401.

Anything herein to the contrary notwithstanding, the Trustee shall be under no
obligation to authenticate and deliver Securities of any series the terms of
which, established as contemplated by this Section, would affect the rights,
duties, obligations, liabilities or immunities of the Trustee under this
Indenture or otherwise.

SECTION 302. Denominations.

                                       35
<PAGE>

      Unless otherwise provided as contemplated by Section 301 with respect to
any series of Securities, or any Tranche thereof, the Securities of each series
shall be issuable in denominations of One Thousand Dollars ($1,000) and any
integral multiple thereof.

SECTION 303. Execution, Authentication, Delivery and Dating.

      The Securities shall be executed on behalf of the Company by an Authorized
Officer, under seal reproduced or impressed thereon and attested by the
Secretary or one of the Assistant Secretaries of the General Partner. The
signature of any of these officers on the Securities may be manual or facsimile.

      Securities bearing the manual or facsimile signatures of individuals who
were at time of execution the proper officers of the General Partner shall bind
the Company, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Securities or
did not hold such offices at the date of such Securities.

      Unless otherwise specified as contemplated by Section 301 with respect to
any series of Securities, or any Tranche thereof, each Security shall be dated
the date of its authentication.

      Unless otherwise specified as contemplated by Section 301 with respect to
any series of Securities, or any Tranche thereof, no Security shall be entitled
to any benefit under this Indenture or be valid or obligatory for any purpose
unless there appears on such Security a certificate of authentication
substantially in the form provided for herein executed by the Trustee by the
manual signature of one of its authorized signatories, and such certificate upon
any Security shall be conclusive evidence, and the only evidence, that such
Security has been duly authenticated and delivered hereunder. Notwithstanding
the foregoing, if (a) any Security shall have been authenticated and delivered
hereunder to the Company, or any Person acting on its behalf, but shall never
have been issued and sold by the Company, (b) the Company shall deliver such
Security to the Security Registrar for cancellation or shall cancel such
Security and deliver evidence of such cancellation to the Trustee, in each case
as provided in Section 309, and (c) the Company, at its election, shall deliver
to the Trustee a written statement (which need not comply with Section 105 and
need not be accompanied by an Officer's Certificate or an Opinion of Counsel)
stating that such Security has never been issued and sold by the Company, then,
for all purposes of this Indenture, such Security shall be deemed never to have
been authenticated and delivered hereunder and shall never be entitled to the
benefits hereof.

SECTION 304. Temporary Securities.

      Pending the preparation of definitive Securities of any series, or any
Tranche thereof, the Company may execute, and upon Company Order the Trustee
shall authenticate and deliver, temporary Securities which are printed,
lithographed, typewritten, mimeographed or otherwise produced, in any authorized
denomination, substantially of the tenor of the definitive Securities of such
series in lieu of which they are issued and with such appropriate insertions,
omissions, substitutions and other variations as the officers executing such
Securities may determine, as evidenced by their execution of such Securities.

      Except as otherwise specified as contemplated by Section 301 with respect
to the Securities of any series, or any Tranche thereof, after the preparation
of definitive Securities of

                                       36
<PAGE>

such series or Tranche, the temporary Securities of such series or Tranche shall
be exchangeable, without charge to the Holder thereof, for definitive Securities
of such series or Tranche upon surrender of such temporary Securities at the
office or agency of the Company maintained pursuant to Section 602 in a Place of
Payment for such Securities. Upon such surrender of temporary Securities, the
Company shall, except as aforesaid, execute and the Trustee shall authenticate
and deliver in exchange therefor definitive Securities of the same series and
Tranche, of authorized denominations and of like tenor and aggregate principal
amount.

SECTION 305. Registration, Registration of Transfer and Exchange.

      The Company shall cause to be kept, with respect to the Securities of each
series, or any Tranche thereof, at the Corporate Trust Office of the Trustee a
register (the register maintained in such office and in any other office or
agency of the Company in a Place of Payment being herein sometimes collectively
referred to as the "Security Register") in which, subject to such reasonable
regulations as it may prescribe, the Company shall provide for the registration
of Securities of such series or Tranche and the registration of transfer
thereof. The Trustee is hereby appointed "Security Registrar" for the purpose of
registering Securities and transfers of Securities as herein provided. If any
indenture supplemental hereto refers to any transfer agents (in addition to the
Security Registrar) initially designated by the Company with respect to any
series of Securities, the Company may at any time rescind the designation of any
such transfer agent or approve a change in the location through which such
transfer agent acts, provided that the Company maintains a transfer agent in
each Place of Payment for such series. The Company may at any time designate
additional transfer agents with respect to the Securities of any series, or any
Tranche thereof.

      Upon surrender for registration of transfer of any Security of such series
or Tranche at the office or agency of the Company in a Place of Payment for such
series or Tranche, the Company shall execute, and the Trustee shall authenticate
and deliver, in the name of the designated transferee or transferees, one or
more new Securities of the same series and Tranche, of authorized denominations
and of like tenor and aggregate principal amount.

      Except as otherwise specified as contemplated by Section 301 with respect
to the Securities of any series, or any Tranche thereof, any Security of such
series or Tranche may be exchanged at the option of the Holder, for one or more
new Securities of the same series and Tranche, of authorized denominations and
of like tenor and aggregate principal amount, upon surrender of the Securities
to be exchanged at any such office or agency. Whenever any Securities are so
surrendered for exchange, the Company shall execute, and the Trustee shall
authenticate and deliver, the Securities which the Holder making the exchange is
entitled to receive.

      All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such registration of transfer or exchange.

      Every Security presented or surrendered for registration of transfer or
for exchange shall (if so required by the Company, the Trustee or the Security
Registrar) be duly endorsed or shall be accompanied by a written instrument of
transfer in form satisfactory to the Company, the

                                       37
<PAGE>

Trustee or the Security Registrar, as the case may be, duly executed by the
Holder thereof or his attorney duly authorized in writing.

      Unless otherwise specified as contemplated by Section 301 with respect to
Securities of any series, or any Tranche thereof, no service charge shall be
made for any registration of transfer or exchange of Securities, but the Company
may require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or
exchange of Securities, other than exchanges pursuant to Section 304, 507 or
1306 not involving any transfer.

      Neither the Trustee nor the Company shall be required, pursuant to the
provisions of this Section 305, (A) to issue, register the transfer of or
exchange any Securities of any series (or of any Tranche thereof) during a
period beginning at the opening of business fifteen (15) days before the day of
the mailing of a notice of redemption of any such Securities of such series or
Tranche selected for redemption under Section 503 and ending at the close of
business on the day of such mailing, or (B) to register the transfer of or
exchange any Security so selected for redemption, in whole or in part, except,
in the case of any Security to be redeemed in part, any portion not to be
redeemed.

SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities.

      If any mutilated Security is surrendered to the Trustee together with such
security or indemnity as may be required by the Company or the Trustee to save
each of them and any agent of either of them harmless, the Company shall execute
and the Trustee shall authenticate and deliver in exchange therefor a new
Security of the same series and Tranche, and of like tenor and principal amount
and bearing a number not contemporaneously outstanding and shall cancel and
destroy such mutilated Security.

      If there shall be delivered to the Company and the Trustee (i) evidence to
their satisfaction of the destruction, loss or theft of any Security and (ii)
such security or indemnity as may be required by them to save each of them and
any agent of either of them harmless, then, in the absence of notice to the
Company or the Trustee that such Security is held by a Person purporting to be
the owner of such Security, the Company shall execute and the Trustee shall
authenticate and deliver, in lieu of any such destroyed, lost or stolen
Security, a new Security of the same series and Tranche, and of like tenor and
principal amount and bearing a number not contemporaneously outstanding. If,
after the delivery of such new Security, a bona fide purchaser of the original
Security in lieu of which such new Security was issued presents for payment or
registration such original Security, the Trustee shall be entitled to recover
such new Security from the party to whom it was delivered or any party taking
therefrom, except a bona fide purchaser, and shall be entitled to recover upon
the security or indemnity provided therefor to the extent of any loss, damage,
cost or expense incurred by the Company and the Trustee in connection therewith
and shall cancel and destroy such new Security.

      In case any such mutilated, destroyed, lost or stolen Security has become
or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.

                                       38
<PAGE>

      Upon the issuance of any new Security under this Section 306, the Company
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of counsel to the Company and the fees
and expenses of the Trustee, its agents and counsel) connected therewith.

      Every new Security of any series issued pursuant to this Section 306 in
lieu of any destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, whether or not the destroyed,
lost or stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities of that series duly issued hereunder.

      The provisions of this Section 306 are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities.

SECTION 307. Payment of Interest; Interest Rights Preserved.

      Except as otherwise provided as contemplated by Section 301 with respect
to the Securities of any series, or any Tranche thereof, interest on any
Security which is payable, and is punctually paid or duly provided for, on any
Interest Payment Date shall be paid to the Person in whose name that Security
(or one or more Predecessor Securities) is registered at the close of business
on the Regular Record Date for such interest in respect of Securities of such
series, or any Tranche thereof, except that, unless otherwise provided in the
Securities of such series, or any Tranche thereof, interest payable on the
Stated Maturity of the principal of a Security shall be paid to the Person to
whom principal is paid. The initial payment of interest on any Security of any
series which is issued between a Regular Record Date and the related Interest
Payment Date shall be payable as provided in such Security or in the General
Partner Resolution pursuant to Section 301 with respect to the related series of
Securities. Except in the case of a Security in global form, at the option of
the Company, interest on any series of Securities may be paid (i) by check
mailed to the address of the Person entitled thereto as it shall appear on the
Security Register of such series or (ii) by wire transfer in immediately
available funds at such place and to such account as designated in writing by
the Person entitled thereto as specified in the Security Register of such
series.

      Any Paying Agents will be identified in a supplemental indenture hereto.
The Company may at any time designate additional Paying Agents or rescind the
designation of any Paying Agent; however, the Company at all times will be
required to maintain a Paying Agent in each Place of Payment for each series of
Securities.

      Unless otherwise provided as contemplated by Section 301 with respect to
any series of Securities, any interest on any Security of any series which is
payable, but is not timely paid or duly provided for, on any Interest Payment
Date for Securities of such series (herein called "Defaulted Interest") shall
forthwith cease to be payable to the registered Holder on the relevant Regular
Record Date by virtue of having been such Holder, and such Defaulted Interest
may be paid by the Company, at its election in each case, as provided in clause
(1) or (2) below:

                                       39
<PAGE>

            (1) The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the Securities of such series in respect of which
interest is in default (or their respective Predecessor Securities) are
registered at the close of business on a date (herein called a "Special Record
Date") for the payment of such Defaulted Interest, which shall be fixed in the
following manner. The Company shall notify the Trustee in writing of the amount
of Defaulted Interest proposed to be paid on each Security of such series and
the date of the proposed payment, and at the same time the Company shall deposit
with the Trustee an amount of money equal to the aggregate amount proposed to be
paid in respect of such Defaulted Interest or shall make arrangements
satisfactory to the Trustee for such deposit prior to the date of the proposed
payment, such money when deposited to be held in trust for the benefit of the
Persons entitled to such Defaulted Interest as provided in this clause (1).
Thereupon the Trustee shall fix a Special Record Date for the payment of such
Defaulted Interest which shall be not more than fifteen (15) days and not less
than ten (10) days prior to the date of the proposed payment and not less than
ten (10) days after the receipt by the Trustee of the notice of the proposed
payment. The Trustee shall promptly notify the Company of such Special Record
Date and, in the name and at the expense of the Company, shall cause notice of
the proposed payment of such Defaulted Interest and the Special Record Date
therefor to be given to each Holder of Securities of such series in the manner
set forth in Section 109, not less than ten (10) days prior to such Special
Record Date. Notice of the proposed payment of such Defaulted Interest and the
Special Record Date therefor having been so mailed, such Defaulted Interest
shall be paid to the Persons in whose names the Securities of such series (or
their respective Predecessor Securities) are registered at the close of business
on such Special Record Date and shall no longer be payable pursuant to the
following clause (2).

            (2) The Company may make payment of any Defaulted Interest on the
Securities of any series in any other lawful manner not inconsistent with the
requirements of any securities exchange or automated quotation system on which
such Securities may be listed or traded, and upon such notice as may be required
by such exchange or automated quotation system, if, after notice given by the
Company to the Trustee of the proposed payment pursuant to this clause, such
manner of payment shall be deemed practicable by the Trustee.

      Subject to the foregoing provisions of this Section 307 and Section 305,
each Security delivered under this Indenture upon registration of transfer of or
in exchange for or in lieu of any other Security shall carry the rights to
interest accrued and unpaid, and to accrue, which were carried by such other
Security.

SECTION 308. Persons Deemed Owners.

      The Company, the Trustee and any agent of the Company or the Trustee may
treat the Person in whose name any Security is registered as the absolute owner
of such Security for the purpose of receiving payment of principal of and
premium, if any, and (subject to Sections 305 and 307) interest, if any, on such
Security and for all other purposes whatsoever, whether or not such Security be
overdue, and neither the Company, the Trustee nor any agent of the Company or
the Trustee shall be affected by notice to the contrary.

SECTION 309. Cancellation.

                                       40
<PAGE>

      All Securities surrendered for payment, redemption, registration of
transfer or exchange shall, if surrendered to any Person other than the Trustee,
be delivered to the Trustee and shall be promptly canceled by it. The Company
may at any time deliver to the Trustee for cancellation any Securities
previously authenticated and delivered hereunder which the Company may have
acquired in any manner whatsoever, and may deliver to the Trustee (or to any
other Person for delivery to the Trustee) for cancellation any Securities
previously authenticated hereunder which the Company has not issued and sold,
and all Securities so delivered shall be promptly canceled by the Trustee. No
Securities shall be authenticated in lieu of or in exchange for any Securities
canceled as provided in this Section 309, except as expressly permitted by this
Indenture. All canceled Securities held by the Trustee shall be treated in
accordance with the Trustee's document retention policies.

SECTION 310. Computation of Interest; Usury Not Intended.

      Except as otherwise specified as contemplated by Section 301 for
Securities of any series, or any Tranche thereof, interest on the Securities of
each series shall be computed on the basis of a three hundred sixty (360)-day
year of twelve (12) thirty (30)-day months and interest on the Securities of
each series for any partial period shall be computed on the basis of a three
hundred sixty (360)-day year of twelve (12) thirty (30)-day months and the
actual number of days elapsed in any partial month.

      The amount of interest (or amounts deemed to be interest under applicable
law) payable or paid on any Security shall be limited to an amount which shall
not exceed the maximum nonusurious rate of interest allowed by the applicable
laws of the State of Texas or any applicable law of the United States permitting
a higher maximum nonusurious rate that preempts such applicable Texas laws,
which could lawfully be contracted for, taken, reserved, charged or received
(the "Maximum Interest Rate"). If, as a result of any circumstances whatsoever,
the Company or any other Person is deemed to have paid interest (or amounts
deemed to be interest under applicable law) or any Holder is deemed to have
contracted for, taken, reserved, charged or received interest (or amounts deemed
to be interest under applicable law), in excess of the Maximum Interest Rate,
then, ipso facto, the obligation to be fulfilled shall be reduced to the limit
of validity, and if from any such circumstance, the Trustee, acting on behalf of
the Holders, or any Holder shall ever receive interest or anything that might be
deemed interest under applicable law that would exceed the Maximum Interest
Rate, such amount that would be excessive interest shall be applied to the
reduction of the principal amount owing on the applicable Security or Securities
and not to the payment of interest, or if such excessive interest exceeds the
unpaid principal balance of any such Security or Securities, such excess shall
be refunded to the Company. In addition, for purposes of determining whether
payments in respect of any Security are usurious, all sums paid or agreed to be
paid with respect to such Security for the use, forbearance or detention of
money shall, to the extent permitted by applicable law, be amortized, prorated,
allocated and spread throughout the full term of such Security.

SECTION 311. CUSIP Numbers.

      The Company in issuing the Securities may use "CUSIP" or other similar
numbers (if then generally in use), and, if so, the Trustee or Security
Registrar may use "CUSIP" or such other numbers in notices of redemption as a
convenience to Holders; provided that any such

                                       41
<PAGE>

notice may state that no representation is made as to the correctness of such
numbers either as printed on the Securities or as contained in any notice of a
redemption and that reliance may be placed only on the other identification
numbers printed on the Securities, in which case none of the Company or, as the
case may be, the Trustee or the Security Registrar, or any agent of any of them,
shall have any liability in respect of any CUSIP number used on any such notice,
and any such redemption shall not be affected by any defect in or omission of
such numbers. The Company shall promptly notify the Trustee in writing of any
change in "CUSIP" numbers.

                                 ARTICLE FOUR.

                             ISSUANCE OF SECURITIES

SECTION 401. General.

      Subject to the provisions of Section 402, 403 or 404, whichever may be
applicable, the Trustee shall authenticate and deliver Securities of a series,
for original issue, at one time or from time to time in accordance with the
Company Order referred to below, upon receipt by the Trustee of:

            (1) the instrument or instruments establishing the form or forms and
terms of such series, as provided in Sections 201 and 301;

            (2) a Company Order requesting the authentication and delivery of
such Securities and, to the extent that the terms of such Securities shall not
have been established in an indenture supplemental hereto or in a General
Partner Resolution, or in an Officer's Certificate pursuant to a supplemental
indenture or General Partner Resolution, all as contemplated by Section 301,
either (i) establishing such terms or (ii) in the case of Securities of a series
subject to a Periodic Offering, specifying procedures, acceptable to the
Trustee, by which such terms are to be established (which procedures may provide
for authentication and delivery pursuant to oral or electronic instructions from
the Company or any agent or agents thereof, which oral instructions are to be
promptly confirmed electronically or in writing), in either case in accordance
with the instrument or instruments delivered pursuant to clause (1) above;

            (3) the Securities of such series, executed on behalf of the Company
by an Authorized Officer; (4) an Opinion of Counsel to the effect that:

                  (A) the form or forms of such Securities have been duly
authorized by the Company and have been established in conformity with the
provisions of this Indenture;

                  (B) the terms of such Securities have been duly authorized by
the Company and have been established in conformity with the provisions of this
Indenture; and

                  (C) when such Securities shall have been authenticated and
delivered by the Trustee and issued and delivered by the Company in the manner
and subject to any conditions specified in such Opinion of Counsel, such
Securities will constitute valid and legally binding obligations of the Company,
enforceable against the Company (subject to customary

                                       42
<PAGE>

exceptions) and entitled to the benefit of the Lien of this Indenture equally
and ratably with all other Securities then Outstanding;

provided, however, that, with respect to Securities of a series subject to a
Periodic Offering, the Trustee shall be entitled to receive such Opinion of
Counsel only once at or prior to the time of the first authentication and
delivery of such Securities (provided that such Opinion of Counsel addresses the
authentication and delivery of all such Securities) and that, in lieu of the
opinions described in clauses (B) and (C) above, counsel may opine that:

            (X)   when the terms of such Securities shall have been established
                  pursuant to a Company Order or Orders or pursuant to such
                  procedures as may be specified from time to time by a Company
                  Order or Orders, all as contemplated by and in accordance with
                  the instrument or instruments delivered pursuant to clause (1)
                  above, such terms will have been duly authorized by the
                  Company and will have been established in conformity with the
                  provisions of this Indenture; and

            (Y)   when such Securities shall have been authenticated and
                  delivered by the Trustee in accordance with this Indenture and
                  the Company Order or Orders or the specified procedures
                  referred to in paragraph (X) above and issued and delivered by
                  the Company in the manner and subject to any conditions
                  specified in such Opinion of Counsel, such Securities will
                  constitute valid and legally binding obligations of the
                  Company, entitled to the benefit of the Lien of this Indenture
                  equally and ratably with all other Securities then
                  Outstanding, and enforceable against the Company (subject to
                  customary exceptions);

            (5) an Officer's Certificate to the effect that, to the knowledge of
the signer, no Event of Default has occurred and is continuing; provided,
however, that with respect to Securities of a series subject to a Periodic
Offering, either (i) such an Officer's Certificate shall be delivered at the
time of the authentication and delivery of each Security of such series or (ii)
the Officer's Certificate delivered at or prior to the time of the first
authentication and delivery of the Securities of such series shall state that
the statements therein shall be deemed to be made at the time of each, or each
subsequent, authentication and delivery of Securities of such series;

            (6) a Net Earnings Certificate showing the Adjusted Net Earnings of
the Company for the period therein specified to have been not less than an
amount equal to two (2) times the Annual Interest Requirements therein
specified, all in accordance with the provisions of Section 104; provided,
however, that the Trustee shall not be entitled to receive a Net Earnings
Certificate hereunder if the Securities of such series are to have no Stated
Interest Rate prior to Maturity; and provided, further, that, with respect to
Securities of a series subject to a Periodic Offering, other than Securities
theretofore authenticated and delivered, (i) it shall be assumed in the Net
Earnings Certificate delivered in connection with the authentication and
delivery of Securities of such series that none of the Securities of such series
not yet authenticated and delivered shall have a Stated Interest Rate in excess
of a maximum rate to be stated therein, and thereafter no Securities of such
series which would have a Stated Interest Rate at the time of the initial
authentication and delivery thereof in excess of such maximum rate shall

                                       43
<PAGE>

be authenticated and delivered under the authority of such Net Earnings
Certificate but instead shall only be authenticated and delivered under the
authority of a new Net Earnings Certificate which complies with the requirements
of this clause (6), including the proviso relating to Securities of a series
subject to a Periodic Offering, and (ii) so long as the Stated Interest Rate
that Securities of a series subject to a Periodic Offering bear at the time of
the initial authentication and delivery thereof does not exceed the maximum rate
assumed in the most recent Net Earnings Certificate delivered with respect to
the Securities of such series, the Trustee shall not be entitled to receive a
new Net Earnings Certificate at the time of any subsequent authentication and
delivery of the Securities of such series (unless such Securities are
authenticated and delivered on or after the date which is two years after the
most recent Net Earnings Certificate with respect to such series was delivered
pursuant to this clause (6), in which case this subclause (ii) shall not apply),
provided that no Net Earnings Certificate shall be required in connection with
the initial authentication and delivery of the Securities in the Initial Series;
and

            (7) such other Opinions of Counsel, certificates and other documents
as may be required under Section 402, 403 or 404, whichever may be applicable to
the authentication and delivery of the Securities of such series.

      With respect to Securities of a series subject to a Periodic Offering, the
Trustee may conclusively rely, as to the authorization by the Company of any of
such Securities, the forms and terms thereof, the validity thereof and the
compliance of the authentication and delivery thereof with the terms and
conditions of this Indenture, upon the Opinion or Opinions of Counsel and the
certificates and other documents delivered pursuant to this Article Four at or
prior to the time of the first authentication and delivery of Securities of such
series until any of such opinions, certificates or other documents have been
superseded or revoked or expire by their terms. In connection with the
authentication and delivery of Securities of a series subject to a Periodic
Offering, the Trustee shall be entitled to assume that the Company's
instructions to authenticate and deliver such Securities do not violate any
applicable law or any applicable rule, regulation or order of any Governmental
Authority having jurisdiction over the Company.

      Anything herein to the contrary notwithstanding, none of the conditions
specified in Sections 402, 403 and 404 shall be required to be satisfied in
connection with the initial authentication and delivery of the Securities of the
Initial Series.

SECTION 402. Issuance of Securities on the Basis of Property Additions.

            (1) Securities of any one or more series may be authenticated and
delivered on the basis of Property Additions which do not constitute Funded
Property in a principal amount not exceeding seventy percentum (70%) of the
balance of the Cost or the Fair Value to the Company of such Property Additions
(whichever shall be less) after making any deductions and any additions pursuant
to Section 103(2) except as otherwise specified in clause (2) with respect to
the Initial Expert's Certificate.

            (2) Securities of any series shall be authenticated and delivered by
the Trustee on the basis of Property Additions upon receipt by the Trustee of:

                                       44
<PAGE>

                  (A) the documents with respect to the Securities of such
series specified in Section 401;

                  (B) an Expert's Certificate dated as of a date not more than
ninety (90) days prior to the date of the Company Order requesting the
authentication and delivery of such Securities:

                        (i) describing generally all property constituting
Property Additions and designated by the Company, in its discretion, to be made
the basis of the authentication and delivery of such Securities (such
description of property to be made by reference, at the election of the Company,
either to specified items, units and/or elements of property or portions
thereof, on a percentage or Dollar basis, or to properties reflected in
specified accounts or subaccounts in the Company's books of account or portions
thereof, on a Dollar basis), and stating the Cost of such property;

                        (ii) stating that all such property constitutes Property
Additions;

                        (iii) stating that such Property Additions are desirable
for use in the conduct of the business, or one of the businesses, of the
Company;

                        (iv) stating that such Property Additions, to the extent
of the Cost or Fair Value to the Company thereof (whichever is less) to be made
the basis of the authentication and delivery of such Securities, do not
constitute Funded Property;

                        (v) stating, except as to Property Additions acquired,
made or constructed wholly through the delivery of securities or other property
or the incurrence of other obligations, that the amount of cash forming all or
part of the Cost thereof was equal to or more than an amount to be stated
therein;

                        (vi) briefly describing, with respect to any Property
Additions acquired, made or constructed in whole or in part through the delivery
of securities or other property or the incurrence of other obligations, the
securities or other property so delivered or obligations so incurred and stating
the date of such delivery or incurrence;

                        (vii) stating what part, if any, of such Property
Additions includes property which within six months prior to the date of
acquisition thereof by the Company had been used or operated by others than the
Company in a business similar to that in which it has been or is to be used or
operated by the Company and stating whether or not, in the judgment of the
signers, the Fair Value thereof to the Company, as of the date of such
certificate, is less than One Hundred Thousand Dollars ($100,000) and whether or
not such Fair Value is less than one percentum (1%) of the aggregate principal
amount of Securities then Outstanding;

                        (viii) stating, in the judgment of the signers, the Fair
Value to the Company, as of the date of such certificate, of such Property
Additions, except any thereof with respect to the Fair Value to the Company of
which a statement is to be made in an Independent Expert's Certificate pursuant
to clause (C) below;

                                       45
<PAGE>

                        (ix) stating the amount required to be deducted under
Section 103(2)(A) and the amounts elected to be added under Section 103(2)(B) in
respect of Funded Property retired of the Company;

                        (x) if any property included in such Property Additions
is subject to a Lien of the character described (a) in clause (4) of the
definition of Permitted Liens, stating that such Lien does not, in the judgment
of the signers, materially impair the use by the Company of the Mortgaged
Property considered as a whole, or (b) in clause (7)(ii) of the definition of
Permitted Liens, stating that such Lien does not, in the judgment of the
signers, in the aggregate materially impair the use by the Company of such
properties, considered as a whole for the purposes for which it is held by the
Company or (c) in clause (14)(ii) of the definition of Permitted Liens, stating
that the enforcement of such Lien would not, in the judgment of the signers,
adversely affect the interests of the Company in such property in any material
respect;

                        (xi) stating the lower of the Cost or the Fair Value to
the Company of such Property Additions, after the deductions therefrom and
additions thereto specified in such Expert's Certificate pursuant to clause (ix)
above;

                        (xii) stating the amount equal to seventy percentum
(70%) of the amount required to be stated pursuant to clause (xi) above; and

                        (xiii) stating the aggregate principal amount of the
Securities to be authenticated and delivered on the basis of such Property
Additions (such amount not to exceed the amount stated pursuant to clause (xii)
above); provided, however, that in the Initial Expert's Certificate there shall
be stated, in lieu of such principal amount, the sum of (a) the principal amount
of Securities to be authenticated and delivered on the basis of Property
Additions and (b) the aggregate principal amount of all Securities then
Outstanding (such sum not to exceed the amount stated pursuant to clause (xii)
above);

                  (C) in case any Property Additions are shown by the Expert's
Certificate provided for in clause (B) above to include property which, within
six months prior to the date of acquisition thereof by the Company, had been
used or operated by others than the Company in a business similar to that in
which it has been or is to be used or operated by the Company and such
certificate does not show the Fair Value thereof to the Company, as of the date
of such certificate, to be less than One Hundred Thousand Dollars ($100,000) or
less than one percentum (1%) of the aggregate principal amount of Securities
then Outstanding, an Independent Expert's Certificate stating, in the judgment
of the signer, the Fair Value to the Company, as of the date of such Independent
Expert's Certificate, of (X) such Property Additions which have been so used or
operated and (at the option of the Company) as to any other Property Additions
included in the Expert's Certificate provided for in clause (B) above and (Y) in
case such Independent Expert's Certificate is being delivered in connection with
the authentication and delivery of Securities, any property so used or operated
which has been subjected to the Lien of this Indenture since the commencement of
the then current calendar year as the basis for the authentication and delivery
of Securities and as to which an Independent Expert's Certificate has not
previously been furnished to the Trustee;

                                       46
<PAGE>

                  (D) in case any Property Additions are shown by the Expert's
Certificate provided for in clause (B) above to have been acquired, made or
constructed in whole or in part through the delivery of securities or other
property or the incurrence of an obligation, an Expert's Certificate stating, in
the judgment of the signers, the fair market value in cash of such securities or
other property or other obligation at the time of delivery thereof in payment
for or for the acquisition of such Property Additions;

                  (E) an Opinion of Counsel to the effect that:

                        (i) this Indenture constitutes, or, upon the delivery
of, and/or the filing and/or recording in the proper places and manner of, the
instruments of conveyance, assignment or transfer, if any, specified in said
opinion, will constitute, a Lien on all the Property Additions to be made the
basis of the authentication and delivery of such Securities, subject to no Lien
thereon prior to the Lien of this Indenture except Permitted Liens; and

                        (ii) the Company has limited partnership authority to
operate such Property Additions; and

                  (F) copies of the instruments of conveyance, assignment and
transfer, if any, specified in the Opinion of Counsel provided for in clause (E)
above.

SECTION 403. Issuance of Securities on the Basis of Retired Securities.

            (1) Securities of any one or more series may be authenticated and
delivered on the basis of, and in an aggregate principal amount not exceeding
the aggregate principal amount of, Retired Securities.

            (2) Securities of any series shall be authenticated and delivered by
the Trustee on the basis of Retired Securities upon receipt by the Trustee of:

                  (A) the documents with respect to the Securities of such
series specified in Section 401; provided, however, that no Net Earnings
Certificate shall be required to be delivered unless the maximum Stated Interest
Rate, if any, on such Retired Securities at the time of their authentication and
delivery was less than the maximum Stated Interest Rate, if any, on such
Securities to be in effect upon the initial authentication and delivery thereof;
and

                  (B) an Officer's Certificate stating that Retired Securities,
specified by series, in an aggregate principal amount not less than the
aggregate principal amount of Securities to be authenticated and delivered, have
theretofore been authenticated and delivered and, as of the date of such
Officer's Certificate, constitute, or will constitute upon the application of
the proceeds of issuance of the Securities to be authenticated and delivered on
the basis of such Retired Securities to the repayment of the aggregate principal
amount of such Retired Securities, Retired Securities and are the basis for the
authentication and delivery of such Securities.

SECTION 404. Issuance of Securities on the Basis of Deposit of Cash.

                                       47
<PAGE>

            (1) Securities of any one or more series may be authenticated and
delivered on the basis of, and in an aggregate principal not exceeding the
amount of, any deposit with the Trustee of cash for such purpose.

            (2) Securities of any series shall be authenticated and delivered by
the Trustee on the basis of the deposit of cash when the Trustee shall have
received, in addition to such deposit, the documents with respect to the
Securities of such series specified in Section 401.

            (3) All cash deposited with the Trustee under the provisions of this
Section shall be held by the Trustee as a part of the Mortgaged Property and may
be withdrawn from time to time by the Company, upon application of the Company
to the Trustee, in an amount equal to the aggregate principal amount of
Securities to the authentication and delivery of which the Company shall be
entitled under any of the provisions of this Indenture by virtue of compliance
with all applicable provisions of this Indenture (except as hereinafter in this
clause (3) otherwise provided).

      Upon any such application for withdrawal, the Company shall comply with
all applicable provisions of this Indenture relating to the authentication and
delivery of Securities except that the Company shall not in any event be
required to deliver the documents specified in Section 401.

      Any withdrawal of cash under this clause (3) shall operate as a waiver by
the Company of its right to the authentication and delivery of the Securities on
which it is based and such Securities may not thereafter be authenticated and
delivered hereunder. Any Property Additions which have been made the basis of
any such right to the authentication and delivery of Securities so waived shall
be deemed to have been made the basis of the withdrawal of such cash and any
Retired Securities which have been made the basis of any such right to the
authentication and delivery of Securities so waived shall be deemed to have been
made the basis of the withdrawal of such cash.

            (4) If at any time the Company shall so direct, any sums deposited
with the Trustee under the provisions of this Section may be used or applied to
the purchase, payment or redemption of Securities in the manner and subject to
the conditions provided in clauses (4) and (5) of Section 706.

                                 ARTICLE FIVE.

                            REDEMPTION OF SECURITIES

SECTION 501. Applicability of Article.

      Securities of any series, or any Tranche thereof, which are redeemable
before their Stated Maturity shall be redeemable in accordance with their terms
and (except as otherwise specified as contemplated by Section 301 for Securities
of such series or Tranche) in accordance with this Article.

SECTION 502. Election to Redeem; Notice to Trustee.

                                       48
<PAGE>

      The election of the Company to redeem any Securities shall be evidenced by
a General Partner Resolution or in another manner specified as contemplated by
Section 301 for such Securities. In case of any redemption at the election of
the Company of less than all the Securities of any series (including any such
redemption affecting only a single Security), the Company shall, not less than
forty-five (45) nor more than sixty (60) days prior to the Redemption Date fixed
by the Company (unless a shorter notice shall be satisfactory to the Trustee),
notify the Trustee of such Redemption Date, of the principal amount of
Securities of such series, or any Tranche thereof, to be redeemed and, if
applicable, of the tenor of the Securities to be redeemed. In the case of any
redemption of Securities (a) prior to the expiration of any restriction on such
redemption provided in the terms of such Securities or elsewhere in this
Indenture, or (b) pursuant to an election of the Company which is subject to a
condition specified in the terms of such Securities, the Company shall furnish
the Trustee with an Officers' Certificate and an Opinion of Counsel evidencing
compliance with such restriction or condition.

SECTION 503. Selection by Trustee of Securities to Be Redeemed.

      If less than all the Securities of any series, or any Tranche thereof, are
to be redeemed (unless all the Securities of such series or Tranche and of a
specified tenor are to be redeemed or unless such redemption affects only a
single Security), the particular Securities to be redeemed shall be selected not
more than sixty (60) days prior to the Redemption Date by the Trustee, from the
Outstanding Securities of such series, or any Tranche thereof, not previously
called for redemption, by such method as the Trustee shall deem fair and
appropriate and which may provide for the selection for redemption of a portion
of the principal amount of any Security of such series, or any Tranche thereof,
provided that the unredeemed portion of the principal amount of any Security
shall be in an authorized denomination (which shall not be less than the minimum
authorized denomination) for such Security. If less than all the Securities of
such series, or any Tranche thereof, and of a specified tenor are to be redeemed
(unless such redemption affects only a single Security), the particular
Securities to be redeemed shall be selected not more than sixty (60) days prior
to the Redemption Date by the Trustee, from the Outstanding Securities of such
series, or any Tranche thereof, and specified tenor not previously called for
redemption in accordance with the preceding sentence.

      The Trustee shall promptly notify the Company in writing of the Securities
selected for redemption as aforesaid and, in case of any Securities selected for
partial redemption as aforesaid, the principal amount thereof to be redeemed.

      The provisions of the two preceding paragraphs shall not apply with
respect to any redemption affecting only a single Security, whether such
Security is to be redeemed in whole or in part. In the case of any such
redemption in part, the unredeemed portion of the principal amount of the
Security shall be in an authorized denomination (which shall not be less than
the minimum authorized denomination) for such Security.

      For all purposes of this Indenture, unless the context otherwise requires,
all provisions relating to the redemption of Securities shall relate, in the
case of any Securities redeemed or to be redeemed only in part, to the portion
of the principal amount of such Securities which has been or is to be redeemed.
If the Company shall so direct, Securities registered in the name of

                                       49
<PAGE>

the Company or any Affiliate thereof shall not be included in the Securities
selected for redemption.

SECTION 504. Notice of Redemption.

      Notice of redemption shall be given by first-class mail, postage prepaid,
mailed not less than thirty (30) nor more than sixty (60) days prior to the
Redemption Date, to each Holder of Securities to be redeemed, at his address
appearing in the Security Register.

      With respect to Securities of each series, or any Tranche thereof, to be
redeemed, each notice of redemption shall identify the Securities to be redeemed
(including CUSIP numbers) and shall state:

            (1) the Redemption Date;

            (2) the Redemption Price;

            (3) if less than all the Outstanding Securities of any series, or
any Tranche thereof, consisting of more than a single Security are to be
redeemed, the identification (and, in the case of partial redemption of any such
Securities, the principal amounts) of the particular Securities to be redeemed
and, if less than all the Outstanding Securities of any series, or any Tranche
thereof, consisting of a single Security are to be redeemed, the principal
amount of the particular Security to be redeemed;

            (4) that on the Redemption Date the Redemption Price, together with
accrued interest, if any, to the Redemption Date, will become due and payable
upon each such Security to be redeemed and, if applicable, that interest thereon
will cease to accrue on and after said date;

            (5) the place or places where such Securities are to be surrendered
for payment of the Redemption Price and accrued interest, if any, unless it
shall have been specified as contemplated by Section 301 with respect to such
Securities that such surrender shall not be required;

            (6) that the redemption is for a sinking fund, if such is the case;

            (7) such other matters as the Company shall deem desirable or
appropriate; and

            (8) with respect to any notice of redemption of Securities at the
election of the Company, unless, upon the giving of such notice, such Securities
shall be deemed to have been paid in accordance with Section 801, such notice
may state that such redemption shall be conditional upon the receipt by the
Paying Agent or Agents for such Securities, on or prior to the date fixed for
such redemption, of money sufficient to pay the principal of and premium, if
any, and interest, if any, on such Securities and that if such money shall not
have been so received such notice shall be of no force or effect and the Company
shall not be required to redeem such Securities. In the event that such notice
of redemption contains such a condition and such money is not so received, the
redemption shall not be made and within a reasonable time thereafter notice
shall be given, in the manner in which the notice of redemption was given, that
such

                                       50
<PAGE>

money was not so received and such redemption was not required to be made, and
the Paying Agent or Agents for the Securities otherwise to have been redeemed
shall promptly return to the Holders thereof any of such Securities which had
been surrendered for payment upon such redemption.

      Notice of redemption of Securities to be redeemed at the election of the
Company, and any notice of non-satisfaction of a condition for redemption as
aforesaid, shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company and shall be irrevocable.
The notice if mailed in the manner herein provided shall be conclusively
presumed to have been duly given, whether or not the Holder receives such
notice. In any case, a failure to give such notice by mail or any defect in the
notice to the Holder of any Security designated for redemption as a whole or in
part shall not affect the validity of the proceedings for the redemption of any
other Security.

SECTION 505. Deposit of Redemption Price.

      On or before the Redemption Date specified in the notice of redemption
given as provided in Section 504, the Company shall deposit with the Trustee or
with a Paying Agent (or, if the Company is acting as its own Paying Agent,
segregate and hold in trust as provided in Section 603) an amount of money
sufficient to pay the Redemption Price of, and (except if the Redemption Date
shall be an Interest Payment Date) accrued interest on, all the Securities which
are to be redeemed on that date.

SECTION 506. Securities Payable on Redemption Date.

      Notice of redemption having been given as aforesaid, and the conditions,
if any, set forth in such notice having been satisfied, the Securities or
portions thereof so to be redeemed shall, on the Redemption Date, become due and
payable at the Redemption Price therein specified, and from and after such date
(unless, in the case of an unconditional notice of redemption, the Company shall
default in the payment of the Redemption Price and accrued interest, if any)
such Securities or portions thereof, if interest bearing, shall cease to bear
interest. Upon surrender of any such Security for redemption in accordance with
such notice, such Security or portion thereof shall be paid by the Company at
the Redemption Price, together with accrued interest, if any, to the Redemption
Date; provided, however, that no such surrender shall be a condition to such
payment if so specified as contemplated by Section 301 with respect to such
Security; and provided, further, that, except as otherwise specified as
contemplated by Section 301 with respect to such Security, any installment of
interest on any Security the Stated Maturity of which installment is on or prior
to the Redemption Date shall be payable to the Holder of such Security, or one
or more Predecessor Securities, registered as such at the close of business on
the related Record Date according to the terms of such Security and subject to
the provisions of Section 307.

      If any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the principal and any premium shall, until paid, bear
interest from the Redemption Date at the rate prescribed therefor in the
Security.

SECTION 507. Securities Redeemed in Part.

                                       51
<PAGE>

      Any Security which is to be redeemed only in part shall be surrendered at
a Place of Payment therefor (with, if the Company or the Trustee so requires,
due endorsement by, or a written instrument of transfer in form satisfactory to
the Company and the Trustee duly executed by, the Holder thereof or his attorney
duly authorized in writing), and the Company shall execute, and the Trustee
shall authenticate and deliver to the Holder of such Security without service
charge, a new Security or Securities of the same series and of like tenor, of
any authorized denomination as requested by such Holder, in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Security so surrendered.

                                  ARTICLE SIX.

                                    COVENANTS

SECTION 601. Payment of Securities; Lawful Possession; Maintenance of Lien.

            (1) The Company covenants and agrees that it will duly and
punctually pay the principal of and any premium and interest on the Securities
of each series in accordance with the terms of such Securities and this
Indenture.

            (2) At the date of the execution and delivery of this Indenture, as
originally executed and delivered, the Company is lawfully possessed of the
Mortgaged Property.

            (3) The Company shall maintain and preserve the Lien of this
Indenture so long as any Securities shall remain Outstanding, subject, however,
to the provisions of Article Seven and Article Thirteen.

SECTION 602. Maintenance of Office or Agency.

      The Company will maintain in each Place of Payment for the Securities of
each series, or any Tranche thereof, an office or agency where Securities of
that series or Tranche may be presented or surrendered for payment, where
Securities of that series or Tranche may be surrendered for registration of
transfer or exchange and where notices and demands to or upon the Company in
respect of the Securities of that series or Tranche and this Indenture may be
served. The Company initially appoints the Trustee, acting through its Corporate
Trust Office, as its agent for said purpose. The Company will give prompt
written notice to the Trustee of the location, and any change in the location,
of such office or agency and prompt notice to the Holders of any such change in
the manner specified in Section 109. If at any time the Company shall fail to
maintain any such required office or agency or shall fail to furnish the Trustee
with the address thereof, such presentations, surrenders, notices and demands
may be made or served at the Corporate Trust Office of the Trustee, and the
Company hereby appoints the Trustee as its agent to receive all such
presentations, surrenders, notices and demands.

      The Company may also from time to time designate one or more other offices
or agencies where the Securities of one or more series, or any Tranche thereof,
may be presented or surrendered for any or all such purposes and may from time
to time rescind such designations; provided, however, that no such designation
or rescission shall in any manner relieve the Company of its obligation to
maintain an office or agency in each Place of Payment for Securities of any
series for such purposes. The Company will give prompt written notice to the

                                       52
<PAGE>

Trustee, and prompt notice to the Holders in the manner specified in Section
109, of any such designation or rescission and of any change in the location of
any such other office or agency.

      Anything herein to the contrary notwithstanding, any office or agency
required by this Section may be maintained at an office of the Company, in which
event the Company shall perform all functions to be performed at such office or
agency.

SECTION 603. Money for Securities Payments to Be Held in Trust.

      If the Company shall at any time act as its own Paying Agent with respect
to the Securities of any series, or any Tranche thereof, it will, on or before
each due date of the principal of or any premium or interest on any such
Securities, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal and any premium and interest so
becoming due until such sums shall be paid to such Persons or otherwise disposed
of as herein provided and will promptly notify the Trustee of its action or
failure so to act.

      Whenever the Company shall have one or more Paying Agents for the
Securities of any series, or any Tranche thereof, it will provide to a Paying
Agent a sum sufficient to pay the principal of or any premium or interest on
such Securities, such sum to be held as provided by the Trust Indenture Act, and
(unless such Paying Agent is the Trustee) the Company will promptly notify the
Trustee of its action or failure so to act.

      The Company will cause each Paying Agent for the Securities of any series,
or any Tranche thereof, other than the Company or the Trustee, to execute and
deliver to the Trustee an instrument in which such Paying Agent shall agree with
the Trustee, subject to the provisions of this Section 603, that such Paying
Agent will:

            (1) comply with the provisions of the Trust Indenture Act applicable
to it as a Paying Agent; and

            (2) during the continuance of any default by the Company (or any
other obligor upon such Securities), upon the written request of the Trustee,
forthwith pay to the Trustee all sums held in trust by such Paying Agent for
payment in respect of such Securities.

      The Company may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, pay, or by Company
Order direct any Paying Agent to pay, to the Trustee all sums held in trust by
the Company or such Paying Agent, such sums to be held by the Trustee upon the
same trusts as those upon which such sums were held by the Company or such
Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
money.

      Any money deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of the principal of or any premium or
interest on any Security and remaining unclaimed for two years after such
principal, premium or interest has become due and payable shall be paid to the
Company on Company Request, or (if then held by the Company) shall be discharged
from such trust; and the Holder of such Security shall thereafter, as an
unsecured general creditor, look only to the Company for payment thereof, and
all liability

                                       53
<PAGE>

of the Trustee or such Paying Agent with respect to such trust money, and all
liability of the Company as trustee thereof, shall thereupon cease; provided,
however, that the Trustee or such Paying Agent, before being required to make
any such repayment, shall, upon receipt of a Company Request and at the expense
of the Company, cause to be published once, in a newspaper published in the
English language, customarily published on each Business Day and of general
circulation in The City of New York, notice that such money remains unclaimed
and that, after a date specified therein, which shall not be less than thirty
(30) days from the date of such publication, any unclaimed balance of such money
then remaining will be repaid to the Company. In the absence of a written
request from the Company to return unclaimed funds to the Company, the Trustee
or Paying Agent shall from time to time deliver all unclaimed funds to or as
directed by applicable escheat authorities, as determined by the Trustee or the
Paying Agent in its sole discretion, in accordance with its customary practices
and procedures. Any unclaimed funds held by the Trustee or Paying Agent pursuant
to this Section 603 shall be held uninvested and without any liability for
interest.

SECTION 604. Existence.

      Subject to Article Twelve and the Company's ability to convert into a
corporation, limited liability company or limited liability partnership or other
legal entity under applicable law, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its existence as
a limited partnership. On and after any conversion of the Company into a
corporation, limited liability company or limited liability partnership or other
legal entity under applicable law, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate,
limited liability company or limited liability partnership or other existence,
as applicable.

SECTION 605. Maintenance of Properties.

      The Company shall cause (or, with respect to property owned in common with
others, make reasonable effort to cause) the Mortgaged Property, considered as a
whole, to be maintained and kept in good condition, repair and working order and
shall cause (or, with respect to property owned in common with others, make
reasonable effort to cause) to be made such repairs, renewals, replacements,
betterments and improvements thereof, as, in the judgment of the Company, may be
necessary in order that the operation of the Mortgaged Property, considered as a
whole, may be conducted in accordance with common industry practice; provided,
however, that nothing in this Section shall prevent the Company from
discontinuing, or causing the discontinuance of, the operation and maintenance
of any portion of the Mortgaged Property; and provided, further, that nothing in
this Section shall prevent the Company from selling, transferring or otherwise
disposing of, or causing the sale, transfer or other disposition of, any portion
of the Mortgaged Property or other property, subject to the provisions of this
Indenture.

SECTION 606. Payment of Taxes; Discharge of Liens.

      The Company shall pay all taxes and assessments and other governmental
charges lawfully levied or assessed upon the Mortgaged Property, or upon any
part thereof, or upon the interest of the Trustee in the Mortgaged Property,
before the same shall become delinquent, and

                                       54
<PAGE>

shall make reasonable effort to observe and conform in all material respects to
all valid requirements of any Governmental Authority relative to any of the
Mortgaged Property and all covenants, terms and conditions upon or under which
any of the Mortgaged Property is held; and the Company shall not suffer any Lien
to be created upon the Mortgaged Property, or any part thereof, prior to the
Lien hereof, other than Permitted Liens and other than, in the case of property
hereafter acquired, Purchase Money Liens and any other Liens existing or placed
thereon at the time of the acquisition thereof; provided, however, that nothing
in this Section contained shall require the Company (i) to observe or conform to
any requirement of Governmental Authority or to cause to be paid or discharged,
or to make provision for, any such Lien, or to pay any such tax, assessment or
governmental charge so long as the validity thereof shall be contested in good
faith and by appropriate legal proceedings or such Lien, tax, assessment or
charge is not greater than Five Million Dollars ($5,000,000), (ii) to pay,
discharge or make provisions for any tax, assessment or other governmental
charge, the validity of which shall not be so contested if adequate security for
the payment of such tax, assessment or other governmental charge and for any
penalties or interest which may reasonably be anticipated from failure to pay
the same shall be given to the Trustee or (iii) to pay, discharge or make
provisions for any Liens existing on the Mortgaged Property at the date of
execution and delivery of this Indenture, as originally executed and delivered;
and provided, further, that nothing in this Section shall prohibit the issuance
or other incurrence of additional indebtedness, or the refunding of outstanding
indebtedness, secured by any Lien prior to the Lien hereof which is permitted
under this Section to continue to exist.

SECTION 607. Insurance.

            (1) The Company shall (i) keep or cause to be kept all the Mortgaged
Property insured against loss by fire, to the extent that property of similar
character is usually so insured by companies similarly situated and operating
like properties, to a reasonable amount, by reputable insurance companies, the
proceeds of such insurance (except as to any loss of Excepted Property and
except as to any particular loss less than the greater of (A) Thirty Million
Dollars ($30,000,000) and (B) three percentum (3%) of the principal amount of
Securities Outstanding on the date of such particular loss) to be made payable,
subject to applicable law, to the Trustee as the interest of the Trustee may
appear, or to the trustee or other holder of any other Lien prior hereto upon
property subject to the Lien hereof, if the terms thereof require such payment
or (ii) in lieu of or supplementing such insurance in whole or in part, adopt
some other method or plan of protection against loss by fire at least equal in
protection to the method or plan of protection against loss by fire of companies
similarly situated and operating properties subject to similar fire hazards or
properties on which an equal primary fire insurance rate has been set by
reputable insurance companies; and if the Company shall adopt such other method
or plan of protection, it shall, subject to applicable law (and except as to any
loss of Excepted Property and except as to any particular loss less than the
greater of (X) Thirty Million Dollars ($30,000,000) and (Y) three percentum (3%)
of the principal amount of Securities Outstanding on the date of such particular
loss) pay to the Trustee on account of any loss covered by such method or plan
an amount in cash equal to the amount of such loss less any amounts otherwise
paid to the Trustee in respect of such loss or paid to the trustee or other
holder of any other Lien prior hereto upon property subject to the Lien hereof
in respect of such loss if the terms thereof require such payment. Any cash so
required to be paid by the Company pursuant to any such method or plan shall for
the purposes of this Indenture be deemed to be proceeds of insurance. In case of
the adoption of such

                                       55
<PAGE>

other method or plan of protection, the Company shall also furnish to the
Trustee a certificate of an actuary or other qualified person appointed by the
Company with respect to the adequacy of such method or plan.

      Anything herein to the contrary notwithstanding, the Company may have fire
insurance policies with (i) a deductible provision in a dollar amount per
occurrence not exceeding the greater of (A) Thirty Million Dollars ($30,000,000)
and (B) three percentum (3%) of the principal amount of the Securities
Outstanding on the date such policy goes into effect and/or (ii) co-insurance
provisions with a dollar amount per occurrence not exceeding thirty percentum
(30%) of the loss proceeds otherwise payable; provided, however, that the dollar
amount described in clause (i) above may be exceeded to the extent such dollar
amount per occurrence is below the deductible amount in effect as to fire
insurance (X) on property of similar character insured by companies similarly
situated and operating like property or (Y) on property as to which an equal
primary fire insurance rate has been set by reputable insurance companies.

            (2) All moneys paid to the Trustee by the Company in accordance with
this Section or received by the Trustee as proceeds of any insurance, in either
case on account of a loss on or with respect to Funded Property, shall, subject
to the requirements of any other Lien prior hereto upon property subject to the
Lien hereof, be held by the Trustee and, subject as aforesaid, shall be paid by
it from time to time to the Company to reimburse the Company for amounts
(including incremental amounts) expended or committed for expenditure in the
rebuilding, renewal and/or replacement of or substitution for the property
destroyed or damaged or lost, upon receipt by the Trustee of:

                  (A) a Company Request requesting such payment;

                  (B) an Expert's Certificate:

                        (i) describing the property so damaged or destroyed or
otherwise lost;

                        (ii) stating the Cost of such property (or, if the Fair
Value to the Company of such property at the time the same became Funded
Property was certified to be an amount less than the Cost thereof, then such
Fair Value, as so certified, in lieu of Cost) or, if such damage or destruction
shall have affected only a portion of such property, stating the allocable
portion of such Cost or Fair Value;

                        (iii) stating the amounts so expended or committed for
expenditure in the rebuilding, renewal, replacement of and/or substitution for
such property; and

                        (iv) stating the Fair Value to the Company of such
property as rebuilt or renewed or as to be rebuilt or renewed and/or of the
replacement or substituted property, and if:

                              (a) within six months prior to the date of
acquisition thereof by the Company, such property has been used or operated, by
a person or persons other than the Company, in a business similar to that in
which it has been or is to be used or operated by the Company; and

                                       56
<PAGE>

                              (b) the Fair Value to the Company of such property
as set forth in such Expert's Certificate is not less than One Hundred Thousand
Dollars ($100,000) and not less than one percentum (1%) of the aggregate
principal amount of the Securities at the time Outstanding, the Expert making
the statement required by this clause (B) shall be an Independent Expert; and

                  (C) an Opinion of Counsel stating that, in the opinion of the
signer, the property so rebuilt or renewed or to be rebuilt or renewed, and/or
the replacement property, is or will be subject to the Lien hereof to the same
extent as was the property so destroyed or damaged or otherwise lost.

      Any such moneys not so applied within thirty-six (36) months after its
receipt by the Trustee, or in respect of which notice in writing of intention to
apply the same to the work of rebuilding, renewal, replacement or substitution
then in progress and uncompleted shall not have been given to the Trustee by the
Company within such thirty-six (36) months, or which the Company shall at any
time notify the Trustee is not to be so applied, shall thereafter be withdrawn,
used or applied in the manner, to the extent and for the purposes, and subject
to the conditions, provided in Section 706; provided, however, that if the
amount of such moneys shall exceed seventy percentum (70%) of the amount stated
pursuant to clause (B) in the Expert's Certificate referred to above, the amount
of such excess shall not be deemed to be Funded Cash, shall not be subject to
Section 706 and shall be remitted to or upon the order of the Company upon the
withdrawal, use or application of the balance of such moneys pursuant to Section
706.

      Anything in this Indenture to the contrary notwithstanding, if property on
or with respect to which a loss occurs constitutes Funded Property in part only,
the Company may, at its election, obtain the reimbursement of insurance proceeds
attributable to the part of such property which constitutes Funded Property
under this clause (2) and obtain the reimbursement of insurance proceeds
attributable to the part of such property which does not constitute Funded
Property under clause (3) of this Section 607.

            (3) All moneys paid to the Trustee by the Company in accordance with
this Section or received by the Trustee as proceeds of any insurance, in either
case on account of a loss on or with respect to property which does not
constitute Funded Property, shall, subject to the requirements of any other Lien
prior hereto upon property subject to the Lien hereof, be held by the Trustee
and, subject as aforesaid, shall be paid by it to the Company upon receipt by
the Trustee of:

                  (A) a Company Request requesting such payment;

                  (B) an Expert's Certificate stating:

                        (i) that such moneys were paid to or received by the
Trustee on account of a loss on or with respect to property which does not
constitute Funded Property; and

                        (ii) if true, either (I) that the aggregate amount of
the Cost or Fair Value to the Company (whichever is less) of all Property
Additions which do not constitute Funded Property (excluding, to the extent of
such loss, the property on or with respect to which

                                       57
<PAGE>

such loss was incurred), after making deductions therefrom and additions thereto
of the character contemplated by Section 103, is not less than zero (0) or (II)
that the amount of such loss does not exceed the aggregate Cost or Fair Value to
the Company (whichever is less) of Property Additions acquired, made or
constructed on or after the ninetieth (90th) day prior to the date of the
Company Request requesting such payment; or

                        (iii) if neither of the statements contemplated in
subclause (ii) above can be made, the amount by which zero (0) exceeds the
amount referred to in subclause (ii)(I) above (showing in reasonable detail the
calculation thereof); and

                  (C) if the Expert's Certificate required by clause (B) above
contains neither of the statements contemplated in clause (B)(ii) above, an
amount in cash, to be held by the Trustee as part of the Mortgaged Property,
equal to seventy percentum (70%) of the amount shown in clause (B)(iii) above.

      To the extent that the Company shall be entitled to withdraw proceeds of
insurance pursuant to this clause (3), such proceeds shall be deemed not to
constitute Funded Cash.

            (4) Whenever under the provisions of this Section the Company is
required to deliver moneys to the Trustee and at the same time shall have
satisfied the conditions set forth herein for payment of moneys by the Trustee
to the Company, there shall be paid to or retained by the Trustee or paid to the
Company, as the case may be, only the net amount.

SECTION 608. Recording, Filing, etc.

      The Company shall cause this Indenture and all indentures and instruments
supplemental hereto (or notices, memoranda or financing statements as may be
recorded or filed to place third parties on notice thereof) to be promptly
recorded and filed and re-recorded and re-filed in such manner and in such
places, as may be required by law in order fully to preserve and protect the
security of the Holders and all rights of the Trustee, and shall furnish to the
Trustee:

            (1) promptly after the execution and delivery of this Indenture, as
originally executed and delivered, and of each supplemental indenture, an
Opinion of Counsel either stating that in the opinion of such counsel this
Indenture or such supplemental indenture (or any other instrument, notice,
memorandum or financing statement in connection therewith) has been properly
recorded and filed, so as to make effective the Lien intended to be created
hereby or thereby, and reciting the details of such action, or stating that in
the opinion of such counsel no such action is necessary to make such Lien
effective. The Company shall be deemed to be in compliance with this clause (1)
if (i) the Opinion of Counsel herein required to be delivered to the Trustee
shall state that this Indenture or such supplemental indenture (or any other
instrument, notice, memorandum or financing statement in connection therewith)
has been received for record or filing in each jurisdiction in which it is
required to be recorded or filed and that, in the opinion of such counsel (if
such is the case), such receipt for record or filing makes effective the Lien
intended to be created by this Indenture or such supplemental indenture, and
(ii) such opinion is delivered to the Trustee within such time, following the
date of the execution and delivery of this Indenture, as originally executed and
delivered, or such supplemental indenture, as shall be practicable having due
regard to the number and distance of the

                                       58
<PAGE>

jurisdictions in which this Indenture or such supplemental indenture (or such
other instrument, notice, memorandum or financing statement in connection
therewith) is required to be recorded or filed; and

            (2) on or before April 1 of each year, beginning April 1, 2004, an
Opinion of Counsel stating either (i) that in the opinion of such counsel such
action has been taken, since the date of the most recent Opinion of Counsel
furnished pursuant to this clause (2) or the first Opinion of Counsel furnished
pursuant to clause (1) of this Section, with respect to the recording, filing,
re-recording, and re-filing of this Indenture and of each indenture supplemental
to this Indenture (or any other instrument, notice, memorandum or financing
statement in connection therewith), as is necessary to maintain the
effectiveness of the Lien hereof, and reciting the details of such action, or
(ii) that in the opinion of such counsel no such action is necessary to maintain
the effectiveness of such Lien.

      The Company shall execute and deliver such supplemental indenture or
indentures and such further instruments and do such further acts as may be
necessary or proper to carry out the purposes of this Indenture and to make
subject to the Lien hereof any property hereafter acquired, made or constructed
and intended to be subject to the Lien hereof, and to transfer to any new
trustee or trustees or co-trustee or co-trustees, the estate, powers,
instruments or funds held in trust hereunder.

SECTION 609. Waiver of Certain Covenants.

      The Company may omit in any particular instance to comply with any term,
provision or condition set forth in:

            (1) any covenant or restriction specified with respect to the
Securities of any one or more series, or any one or more Tranches thereof, as
contemplated by Section 301 if before the time for such compliance the Holders
of at least a majority in aggregate principal amount of the Outstanding
Securities of all series and Tranches with respect to which compliance with such
covenant or restriction is to be omitted, considered as one class, shall, by Act
of such Holders, either waive such compliance in such instance or generally
waive compliance with such term, provision or condition; provided, however, that
no such waiver shall be effective as to any of the matters contemplated in
clause (1), (2), (3) or (4) in Section 1302 without the consent of the Holders
specified in such Section; and

            (2) Section 604, 605, 606 or 607 or Article Twelve if before the
time for such compliance the Holders of at least a majority in principal amount
of Securities Outstanding under this Indenture shall, by Act of such Holders,
either waive such compliance in such instance or generally waive compliance with
such term, provision or condition; but, in either case, no such waiver shall
extend to or affect such term, provision or condition except to the extent so
expressly waived, and, until such waiver shall become effective, the obligations
of the Company and the duties of the Trustee in respect of any such term,
provision or condition shall remain in full force and effect.

SECTION 610. Annual Officer's Certificate as to Compliance.

                                       59
<PAGE>

      Within one hundred twenty (120) days after the end of each fiscal year of
the Company ending after the date hereof, the Company shall deliver to the
Trustee an Officer's Certificate which need not comply with Section 105,
executed by the principal executive officer, the principal financial officer or
the principal accounting officer of the Company, as to such officer's knowledge
of the Company's compliance with all conditions and covenants under this
Indenture, such compliance to be determined (solely for the purpose of this
Section 610) without regard to any period of grace or requirement of notice
under this Indenture.

                                 ARTICLE SEVEN.

                POSSESSION, USE AND RELEASE OF MORTGAGED PROPERTY

SECTION 701. Quiet Enjoyment.

      Unless one or more Events of Default shall have occurred and be
continuing, the Company shall be permitted to possess, use and enjoy the
Mortgaged Property (except, to the extent not herein otherwise provided, such
cash and securities as are expressly required to be deposited with the Trustee).

SECTION 702. Dispositions without Release.

      Unless an Event of Default shall have occurred and be continuing, the
Company may at any time and from time to time, without any release or consent
by, or report to, the Trustee:

            (1) sell or otherwise dispose of, free from the Lien of this
Indenture, any machinery, equipment, apparatus, towers, transformers, poles,
lines, cables, conduits, ducts, conductors, meters, regulators, holders, tanks,
retorts, purifiers, odorizers, scrubbers, compressors, valves, pumps, mains,
pipes, service pipes, fittings, connections, services, tools, implements, or any
other fixtures or personalty, then subject to the Lien hereof, which shall have
become old, inadequate, obsolete, worn out, unfit, unadapted, unserviceable,
undesirable or unnecessary for use in the operations of the Company upon
replacing the same by, or substituting for the same, similar or analogous
property, or other property performing a similar or analogous function or
otherwise obviating the need therefor, having a Fair Value to the Company at
least equal to that of the property sold or otherwise disposed of and subject to
the Lien hereof, subject to no Liens prior hereto except Permitted Liens and any
other Liens to which the property sold or otherwise disposed of was subject;

            (2) cancel or make changes or alterations in or substitutions for
any and all easements, servitudes, rights-of-way and similar rights and/or
interests;

            (3) surrender or assent to the modification of any right, power,
franchise, license, governmental consent or permit under which it may be
operating, provided that any such surrender or modification which adversely
affects the Mortgaged Property, taken as a whole, in any material respect is, in
the opinion of the General Partner (such opinion to be stated in a resolution to
be filed with the Trustee), necessary or desirable in the conduct of the
business of the Company; and

                                       60
<PAGE>

            (4) grant, free from the Lien of this Indenture, easements, ground
leases or rights-of-way in, upon, over and/or across the property or
rights-of-way of the Company for the purpose of roads, pipe lines, transmission
lines, distribution lines, communication lines, railways, removal of coal or
other minerals or timber, and other like purposes, or for the joint or common
use of real property, rights-of-way, facilities and/or equipment; provided,
however, that such grant shall not materially impair the use of the property or
rights-of-way for the purposes for which such property or rights-of-way are held
by the Company.

SECTION 703. Release of Funded Property.

      Unless an Event of Default shall have occurred and be continuing, the
Company may obtain the release of any part of the Mortgaged Property, or any
interest therein, which constitutes Funded Property, and the Trustee shall
release all its right, title and interest in and to the same from the Lien
hereof, upon receipt by the Trustee of:

            (1) a Company Order requesting the release of such property and
transmitting therewith a form of instrument to effect such release;

            (2) an Officer's Certificate stating that, to the knowledge of the
signer, no Event of Default has occurred and is continuing;

            (3) an Expert's Certificate made and dated not more than ninety (90)
days prior to the date of such Company Order:

                  (A) describing the property to be released;

                  (B) stating the Fair Value, in the judgment of the signers, of
the property to be released;

                  (C) stating the Cost of the property to be released (or, if
the Fair Value to the Company of such property at the time the same became
Funded Property was certified to be an amount less than the Cost thereof, then
such Fair Value, as so certified, in lieu of Cost); and

                  (D) stating that, in the judgment of the signers, such release
will not impair the security under this Indenture in contravention of the
provisions hereof;

            (4) an amount in cash to be held by the Trustee as part of the
Mortgaged Property, equal to the amount, if any, by which seventy percentum
(70%) of the amount referred to in clause (3)(C) above exceeds the aggregate of
the following items:

                  (A) an amount equal to seventy percentum (70%) of the
aggregate principal amount of any obligations secured by Purchase Money Lien
delivered to the Trustee, to be held as part of the Mortgaged Property, subject
to the limitations hereafter in this Section set forth;

                  (B) an amount equal to seventy percentum (70%) of the Cost or
Fair Value to the Company (whichever is less), after making any deductions and
any additions

                                       61
<PAGE>

pursuant to Section 103, of any Property Additions not constituting Funded
Property described in an Expert's Certificate, dated not more than ninety (90)
days prior to the date of the Company Order requesting such release and
complying with clause (B) and, to the extent applicable, clause (C) in Section
402(2), delivered to the Trustee; provided, however, that the deductions and
additions contemplated by Section 103 shall not be required to be made if such
Property Additions were acquired, made or constructed on or after the ninetieth
(90th) day preceding the date of such Company Order;

                  (C) the aggregate principal amount of Securities to the
authentication and delivery of which the Company shall be entitled under the
provisions of Section 403, by virtue of compliance with all applicable
provisions of Section 403 (except as hereinafter in this Section otherwise
provided); provided, however, that such release shall operate as a waiver by the
Company of the right to the authentication and delivery of such Securities and,
to such extent, no such Securities may thereafter be authenticated and delivered
hereunder; and any Securities which were the basis of such right to the
authentication and delivery of Securities so waived shall be deemed to have been
made the basis of such release of property;

                  (D) any amount in cash and/or an amount equal to seventy
percentum (70%) of the aggregate principal amount of any obligations secured by
Purchase Money Lien that, in either case, is evidenced to the Trustee by a
certificate of the trustee or other holder of a Lien prior to the Lien of this
Indenture to have been received by such trustee or other holder in accordance
with the provisions of such Lien in consideration for the release of such
property or any part thereof from such Lien, all subject to the limitations
hereafter in this Section set forth;

                  (E) the aggregate principal amount of any Outstanding
Securities delivered to the Trustee; and

                  (F) any taxes and expenses incidental to any sale, exchange,
dedication or other disposition of the property to be released;

            (5) if the release is on the basis of Property Additions or on the
basis of the right to the authentication and delivery of Securities under
Section 403, all documents contemplated below in this Section; and

            (6) if the release is on the basis of the delivery to the Trustee or
to the trustee or other holder of a prior Lien of obligations secured by
Purchase Money Lien, all documents contemplated below in this Section, to the
extent required.

      If and to the extent that the release of property is, in whole or in part,
based upon Property Additions (as permitted under the provisions of clause
(4)(B) in the first paragraph of this Section), the Company shall, subject to
the provisions of said clause (4)(B) and except as hereafter in this paragraph
provided, comply with all applicable provisions of this Indenture as if such
Property Additions were to be made the basis of the authentication and delivery
of Securities equal in principal amount to seventy percentum (70%) of the Cost
(or, as to property of which the Fair Value to the Company at the time the same
became Funded Property was certified to be an amount less than the Cost thereof,
such Fair Value, as so certified, in lieu of Cost) of that portion of the
property to be released which is to be released on the basis of such

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<PAGE>

Property Additions, as shown by the Expert's Certificate required by clause (3)
in the first paragraph of this Section; provided, however, that the Cost of any
Property Additions received or to be received by the Company in whole or in part
as consideration in exchange for the property to be released shall for all
purposes of this Indenture be deemed to be the amount stated in the Expert's
Certificate provided for in clause (3) in the first paragraph of this Section to
be the Fair Value of the property to be released (x) plus the amount of any cash
and the fair market value of any other consideration, further to be stated in
such Expert's Certificate, paid and/or delivered or to be paid and/or delivered
by, and the amount of any obligations assumed or to be assumed by, the Company
in connection with such exchange as additional consideration for such Property
Additions and/or (y) less the amount of any cash and the fair market value of
any other consideration, which shall also be stated in such Expert's
Certificate, received or to be received by the Company in connection with such
exchange in addition to such Property Additions. If and to the extent that the
release of property is in whole or in part based upon the right to the
authentication and delivery of Securities under Section 403 (as permitted under
the provisions of clause (4)(C) in the first paragraph of this Section), the
Company shall, except as hereafter in this paragraph provided, comply with all
applicable provisions of Section 403 relating to such authentication and
delivery. Notwithstanding the foregoing provisions of this paragraph, in no
event shall the Company be required to deliver the documents specified in
Section 401.

      If the release of property is, in whole or in part, based upon the
delivery to the Trustee or the trustee or other holder of a Lien prior to the
Lien of this Indenture of obligations secured by Purchase Money Lien, the
Company shall deliver to the Trustee:

            (A) an Officer's Certificate (i) stating that no event has occurred
and is continuing which entitles the holder of such Purchase Money Lien to
accelerate the maturity of the obligations, if any, outstanding thereunder and
(ii) reciting the aggregate principal amount of obligations, if any, then
outstanding thereunder in addition to the obligations then being delivered in
connection with the release of such property and the terms and conditions, if
any, on which additional obligations secured by such Purchase Money Lien are
permitted to be issued; and

            (B) an Opinion of Counsel stating that, in the opinion of the
signer, (i) such obligations are valid and legally binding obligations,
enforceable against the Company (subject to customary exceptions) and entitled
to the benefit of such Purchase Money Lien equally and ratably with all other
obligations, if any, then outstanding thereunder, (ii) that such Purchase Money
Lien constitutes, or, upon the delivery of, and/or the filing and/or recording
in the proper places and manner of, the instruments of conveyance, assignment or
transfer, if any, specified in such opinion, will constitute, a Lien upon the
property to be released, subject to no Lien prior thereto except Liens generally
of the character of Permitted Liens and such Liens, if any, as shall have
existed thereon immediately prior to such release as Liens prior to the Lien of
this Indenture, (iii) if any obligations in addition to the obligations being
delivered in connection with such release of property are then outstanding, or
are permitted to be issued, under such Purchase Money Lien, (a) that such
Purchase Money Lien constitutes, or, upon the delivery of, and/or the filing
and/or recording in the proper places and manner of, the instruments of
conveyance, assignment or transfer, if any, specified in such opinion, will
constitute, a Lien upon all other property, if any, purporting to be subject
thereto, subject to no Lien prior thereto except Liens generally of the
character of Permitted Liens and Liens permitted to exist or to be hereafter

                                       63
<PAGE>

created under Section 606 and (b) that the terms of such Purchase Money Lien, as
then in effect, do not permit the issuance of obligations thereunder except on
the basis of property generally of the character of Property Additions, the
retirement or deposit of outstanding obligations, the deposit of prior Lien
obligations or the deposit of cash.

      Anything herein to the contrary notwithstanding (a) the aggregate
principal amount of obligations secured by Purchase Money Lien which may be used
pursuant to subclause (A) and/or subclause (D) of clause (4) in the first
paragraph of this Section as the basis for the release of property from the Lien
of this Indenture shall not exceed seventy-five percentum (75%) of the Fair
Value of the property to be released, as certified pursuant to clause (3)(B) in
the first paragraph of this Section, and (b) no obligations secured by Purchase
Money Lien shall be used as the basis for the release of property hereunder, if
the aggregate principal amount of such obligations to be used by the Company
pursuant to subclause (A) and/or subclause (D) of such clause (4) plus the
aggregate principal amount used by the Company pursuant to said subclause (A)
and subclause (D) in connection with all previous releases of property from the
Lien hereof on the basis of obligations secured by Purchase Money Lien
theretofore delivered to and then held by the Trustee or the trustee or other
holder of a Lien prior to the Lien of this Indenture shall, immediately after
the release then being applied for, exceed forty percentum (40%) of the
aggregate principal amount of Securities then Outstanding; provided, however,
that the limitation set forth in clause (a) above shall not be applicable if no
additional obligations are then outstanding, or are permitted to be issued,
under the Purchase Money Lien securing such obligations; and provided, further,
that there shall not be taken into account for purposes of the calculation
contemplated in clause (b) above any obligations secured by Purchase Money Lien
with respect to which there shall have been delivered to the Trustee:

            (X)   an Officer's Certificate (i) if any obligations shall then be
                  outstanding under such Purchase Money Lien and/or additional
                  obligations are permitted to be issued thereunder, either (A)
                  stating that the terms of such Purchase Money Lien, as then in
                  effect, do not permit the issuance of obligations thereunder
                  on the basis of property additions in a principal amount
                  exceeding seventy percentum (70%) of the balance of the cost
                  or fair value of such property additions to the issuer thereof
                  (whichever shall be less) after making deductions and
                  additions similar to those provided for in Section 103 or (B)
                  in the event that the statements contained in clause (A) above
                  cannot be made, stating that such issuer has irrevocably
                  waived its right to the authentication and delivery of
                  obligations under such Purchase Money Lien (1) on any basis,
                  in a principal amount equal to the excess of (I) the aggregate
                  principal amount of obligations, if any, then outstanding
                  under such Purchase Money Lien which were issued on the basis
                  of property additions or on the basis of the retirement of
                  obligations which were issued (whether directly or indirectly
                  when considered in light of the successive issuance and
                  retirement of obligations) on the basis of property additions
                  over (II) an amount equal to seventy percentum (70%) of the
                  aggregate Dollar amount of property additions certified as the
                  basis for the issuance of such obligations then outstanding
                  and (2) on the basis of property additions, in a principal
                  amount exceeding seventy percentum (70%) of the balance of the
                  cost or fair value thereof to such issuer

                                       64
<PAGE>

                  (whichever shall be less) after making deductions and
                  additions similar to those provided for in Section 103 and
                  (ii) stating either (A) that the obligations secured by such
                  Purchase Money Lien delivered to the Trustee or to the trustee
                  or other holder of a Lien prior to the Lien of this Indenture
                  as the basis for such release of property contain a provision
                  for mandatory redemption upon the acceleration of the maturity
                  of all Outstanding Securities following an Event of Default
                  (whether or not such redemption may be rescinded upon the
                  rescission of such acceleration) or (B) that so long as such
                  obligations are held by the Trustee or the trustee or other
                  holder of such a prior Lien, an Event of Default under this
                  Indenture constitutes a matured event of default under such
                  Purchase Money Lien (provided, however, that the waiver or
                  cure of such Event of Default hereunder and the rescission and
                  annulment of the consequences thereof may constitute a cure of
                  the corresponding event of default under such Purchase Money
                  Lien and a rescission and annulment of the consequences
                  thereof); and

            (Y)   an Opinion or Opinions of Counsel to the effect that (i) if
                  any obligations shall then be outstanding under such Purchase
                  Money Lien and/or additional obligations are permitted to be
                  issued thereunder, to the effect either (A) that the terms of
                  such Purchase Money Lien, as then in effect, do not permit the
                  issuance of obligations thereunder upon the basis of property
                  additions in a principal amount exceeding seventy percentum
                  (70%) of the balance of the cost or the fair value thereof to
                  the issuer of such obligations (whichever shall be less) after
                  making deductions and additions similar to those provided for
                  in Section 103, or, if such is not the case, (B) that the
                  waivers contemplated by clause (X)(i)(B) above have been duly
                  made and (ii) to the effect either (A) that the obligations
                  secured by such Purchase Money Lien delivered to the Trustee
                  or to the trustee or other holder of a Lien prior to the Lien
                  of this Indenture as the basis for such release of property
                  contain a provision for mandatory redemption upon an
                  acceleration of the maturity of all Outstanding Securities
                  following an Event of Default (whether or not such redemption
                  may be rescinded upon the rescission of such acceleration) or
                  (B) that, so long as such obligations are held by the Trustee
                  or the trustee or other holder of such a prior Lien, an Event
                  of Default under this Indenture constitutes a matured event of
                  default under such Purchase Money Lien (provided, however,
                  that the waiver or cure of such Event of Default hereunder and
                  the rescission and annulment of the consequences thereof may
                  constitute a cure of the corresponding event of default under
                  such Purchase Money Lien and a rescission and annulment of the
                  consequences thereof).

      If (a) any property to be released from the Lien of this Indenture under
any provision of this Article (other than Section 707) is subject to a Lien
prior to the Lien hereof and is to be sold, exchanged, dedicated or otherwise
disposed of subject to such prior Lien and (b) after such release, such prior
Lien will not be a Lien on any property subject to the Lien hereof, then the
Fair Value of such property to be released shall be deemed, for all purposes of
this Indenture, to

                                       65
<PAGE>

be the value thereof unencumbered by such prior Lien less the principal amount
of the indebtedness secured by such prior Lien.

      Any Outstanding Securities delivered to the Trustee pursuant to clause (4)
in the first paragraph of this Section shall forthwith be canceled by the
Trustee. Any cash and/or obligations so deposited with the Trustee, and the
proceeds of any such obligations, shall be held as part of the Mortgaged
Property and shall be withdrawn, released, used or applied in the manner, to the
extent and for the purposes, and subject to the conditions, provided in Section
706.

      Anything in this Indenture to the contrary notwithstanding, if property to
be released constitutes Funded Property in part only, the Company shall obtain
the release of the part of such property which constitutes Funded Property under
this Section 703 and obtain the release of the part of such property which does
not constitute Funded Property under Section 704. In such event, (a) the
application of Property Additions in the release under this Section 703 as
contemplated in clause (4)(B) in the first paragraph thereof shall be taken into
account in clause (E) or clause (F), whichever may be applicable, of the
Expert's Certificate described in clause (3) in Section 704 and (b) the Trustee
shall, at the election of the Company, execute and deliver a separate instrument
of release with respect to the property released under each of such Sections or
a consolidated instrument of release with respect to the property released under
both of such Sections considered as a whole.

SECTION 704. Release of Property Not Constituting Funded Property.

      Unless an Event of Default shall have occurred and be continuing, the
Company may obtain the release of any part of the Mortgaged Property, or any
interest therein, which does not constitute Funded Property, and the Trustee
shall release all its right, title and interest in and to the same from the Lien
hereof, upon receipt by the Trustee of:

            (1) a Company Order requesting the release of such property and
transmitting therewith a form of instrument to effect such release;

            (2) an Officer's Certificate stating that, to the knowledge of the
signer, no Event of Default has occurred and is continuing;

            (3) an Expert's Certificate, made and dated not more than ninety
(90) days prior to the date of such Company Order:

                  (A) describing the property to be released;

                  (B) stating the Fair Value, in the judgment of the signers, of
the property to be released;

                  (C) stating the Cost of the property to be released;

                  (D) stating that the property to be released does not
constitute Funded Property;

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<PAGE>

                  (E) if true, stating either (i) that the aggregate amount of
the Cost or Fair Value to the Company (whichever is less) of all Property
Additions which do not constitute Funded Property (excluding the property to be
released), after making deductions therefrom and additions thereto of the
character contemplated by Section 103, is not less than zero (0) or (ii) that
the Cost or Fair Value (whichever is less) of the property to be released does
not exceed the aggregate Cost or Fair Value to the Company (whichever is less)
of Property Additions acquired, made or constructed on or after the ninetieth
(90th) day prior to the date of the Company Order requesting such release;

                  (F) if neither of the statements contemplated in clause (E)
above can be made, stating the amount by which zero (0) exceeds the amount
referred to in subclause (E)(i) above (showing in reasonable detail the
calculation thereof); and

                  (G) stating that, in the judgment of the signers, such release
will not impair the security under this Indenture in contravention of the
provisions hereof; and

            (4) if the Expert's Certificate required by clause (3) above
contains neither of the statements contemplated in clause (3)(E) above, an
amount in cash, to be held by the Trustee as part of the Mortgaged Property,
equal to the amount, if any, by which seventy percentum (70%) of the lower of
(i) the Cost or Fair Value (whichever shall be less) of the property to be
released and (ii) the amount shown in clause (3)(F) above exceeds the aggregate
of items of the character described in subclauses (C) and (E) of clause (4) in
the first paragraph of Section 703 then to be used as a credit under this
Section 704 (subject, however, to the same limitations and conditions with
respect to such items as are set forth in Section 703).

      Anything herein to the contrary notwithstanding, if any part of the
Mortgaged Property is to be released prior to the delivery of the Initial
Expert's Certificate pursuant to Section 402(2)(B), the Company shall deliver to
the Trustee an Initial Expert's Certificate complying with the provisions of
Section 402(2)(B), except that there shall be stated in clause (xiii) the
aggregate principal amount of Securities then Outstanding. Such Initial Expert's
Certificate shall be accompanied by the documents specified in clauses (C),(D),
and (E) of Section 402(2). Thereupon, the part of the Mortgaged Property to be
released shall be released pursuant to Section 703, to the extent the same shall
constitute Funded Property, and/or pursuant to Section 704, to the extent the
same shall not constitute Funded Property.

SECTION 705. Release of Minor Properties.

      Notwithstanding the provisions of Sections 703 and 704, unless an Event of
Default shall have occurred and be continuing, the Company may obtain the
release from the Lien hereof of any part of the Mortgaged Property, or any
interest therein, and the Trustee shall whenever from time to time requested by
the Company in a Company Order transmitting therewith a form of instrument to
effect such release, and without requiring compliance with any of the provisions
of Section 703 or 704, release from the Lien hereof all the right, title and
interest of the Trustee in and to the same provided that the aggregate Fair
Value of the property to be so released on any date in a given calendar year,
together with all other property released pursuant to this Section 705 in such
calendar year, shall not exceed the greater of (a) Thirty Million Dollars
($30,000,000) and (b) three percentum (3%) of the aggregate principal amount of
Securities then

                                       67
<PAGE>

Outstanding. Prior to the granting of any such release, there shall be delivered
to the Trustee (x) an Officer's Certificate stating that, to the knowledge of
the signer, no Event of Default has occurred and is continuing and (y) an
Expert's Certificate stating, in the judgment of the signers, the Fair Value of
the property to be released, the aggregate Fair Value of all other property
theretofore released pursuant to this Section in such calendar year and, as to
Funded Property, the Cost thereof (or, if the Fair Value to the Company of such
property at the time the same became Funded Property was certified to be an
amount less than the Cost thereof, then such Fair Value, as so certified, in
lieu of Cost), and that, in the judgment of the signers, the release thereof
will not impair the security under this Indenture in contravention of the
provisions hereof. On or before December 31st of each calendar year, the Company
shall deposit with the Trustee an amount in cash equal to seventy percentum
(70%) of the aggregate Cost of the properties constituting Funded Property so
released during such year (or, if the Fair Value to the Company of any
particular property at the time the same became Funded Property was certified to
be an amount less than the Cost thereof, then such Fair Value, as so certified,
in lieu of Cost); provided, however, that no such deposit shall be required to
be made hereunder to the extent that cash or other consideration shall, as
indicated in an Officer's Certificate delivered to the Trustee, have been
deposited with the trustee or other holder of any other Lien prior to the Lien
of this Indenture in accordance with the provisions thereof; and provided,
further, that the amount of cash so required to be deposited may be reduced, at
the election of the Company, by the items specified in clause (4) in the first
paragraph of Section 703, subject to all of the limitations and conditions
specified in such Section, to the same extent as if such property were being
released pursuant to Section 703. Any cash deposited with the Trustee under this
Section may thereafter be withdrawn, used or applied in the manner, to the
extent and for the purposes, and subject to the conditions, provided in Section
706.

SECTION 706. Withdrawal or Other Application of Funded Cash; Purchase Money
             Obligations.

      Subject to the provisions of Section 404 and except as hereafter in this
Section provided, unless an Event of Default shall have occurred and be
continuing, any Funded Cash held by the Trustee, and any other cash which is
required to be withdrawn, used or applied as provided in this Section:

            (1) may be withdrawn from time to time by the Company to the extent
of an amount equal to seventy percentum (70%) of the Cost or the Fair Value to
the Company (whichever is less) of Property Additions not constituting Funded
Property, after making any deductions and additions pursuant to Section 103,
described in an Expert's Certificate, dated not more than ninety (90) days prior
to the date of the Company Order requesting such withdrawal and complying with
clause (B) and, to the extent applicable, clause (C) in Section 402(2),
delivered to the Trustee; provided, however, that the deductions and additions
contemplated by Section 103 shall not be required to be made if such Property
Additions were acquired, made or constructed on or after the ninetieth (90th)
day preceding the date of such Company Order;

            (2) may be withdrawn from time to time by the Company in an amount
equal to the aggregate principal amount of Securities to the authentication and
delivery of which the Company shall be entitled under the provisions of Section
403 hereof, by virtue of compliance with all applicable provisions of Section
403 (except as hereinafter in this Section otherwise

                                       68
<PAGE>

provided); provided, however, that such withdrawal of cash shall operate as a
waiver by the Company of the right to the authentication and delivery of such
Securities and, to such extent, no such Securities may thereafter be
authenticated and delivered hereunder; and any such Securities which were the
basis of such right to the authentication and delivery of Securities so waived
shall be deemed to have been made the basis of such withdrawal of cash;

            (3) may be withdrawn from time to time by the Company in an amount
equal to the aggregate principal amount of any Outstanding Securities delivered
to the Trustee;

            (4) may, upon the request of the Company, be used by the Trustee for
the purchase of Securities in the manner, at the time or times, in the amount or
amounts, at the price or prices and otherwise as directed or approved by the
Company, all subject to the limitations hereafter in this Section set forth; or

            (5) may, upon the request of the Company, be applied by the Trustee
to the payment (or provision therefor pursuant to Article Seven) at Stated
Maturity of any Securities or to the redemption (or similar provision therefor)
of any Securities which are, by their terms, redeemable, in each case of such
series as may be designated by the Company, any such redemption to be in the
manner and as provided in Article Five, all subject to the limitations hereafter
in this Section set forth. Such moneys shall, from time to time, be paid or used
or applied by the Trustee, as aforesaid, upon the request of the Company in a
Company Order, and upon receipt by the Trustee of an Officer's Certificate
stating that, to the knowledge of the signer, no Event of Default has occurred
and is continuing. If and to the extent that the withdrawal of cash is based
upon Property Additions (as permitted under the provisions of clause (1) above),
the Company shall, subject to the provisions of said clause (1) and except as
hereafter in this paragraph provided, comply with all applicable provisions of
this Indenture as if such Property Additions were made the basis for the
authentication and delivery of Securities equal in principal amount to the cash
so to be withdrawn. If and to the extent that the withdrawal of cash is based
upon the right to the authentication and delivery of Securities (as permitted
under the provisions of clause (2) above), the Company shall, except as
hereafter in this paragraph provided, comply with all applicable provisions of
Section 403 relating to such authentication and delivery. Notwithstanding the
foregoing provisions of this paragraph, in no event shall the Company be
required to deliver the documents specified in Section 401.

      Notwithstanding the generality of clauses (3) and (4) above, no cash to be
applied pursuant to such clauses shall be applied to the payment of an amount in
excess of the principal amount of any Securities to be purchased, paid or
redeemed except to the extent that the aggregate principal amount of all
Securities theretofore, and of all Securities then to be, purchased, paid or
redeemed pursuant to such clauses is not less than the aggregate cost for
principal of, premium, if any, and accrued interest, if any, on and brokerage
commissions, if any, with respect to, such Securities.

      Any obligations secured by Purchase Money Lien delivered to the Trustee in
consideration of the release of property from the Lien of this Indenture,
together with any evidence of such Purchase Money Lien held by the Trustee,
shall be released from the Lien of

                                       69
<PAGE>

this Indenture and delivered to or upon the order of the Company upon payment by
the Company to the Trustee of an amount in cash equal to the aggregate principal
amount of such obligations less the aggregate amount theretofore paid to the
Trustee (by the Company, the obligor or otherwise) in respect of the principal
of such obligations.

      The principal of and interest on any such obligations secured by Purchase
Money Lien held by the Trustee shall be held by the Trustee as and when the same
are received by the Trustee. The interest received by the Trustee on any such
obligations shall be deemed not to constitute Funded Cash and shall be remitted
to the Company; provided, however, that if an Event of Default shall have
occurred and be continuing, such proceeds shall be held as part of the Mortgaged
Property until such Event of Default shall have been cured or waived.

      The Trustee shall have and may exercise all the rights and powers of any
owner of such obligations and of all substitutions therefor and, without
limiting the generality of the foregoing, may collect and receive all insurance
moneys payable to it under any of the provisions thereof and apply the same in
accordance with the provisions thereof, may consent to extensions thereof at a
higher or lower rate of interest, may join in any plan or plans of voluntary or
involuntary reorganization or readjustment or rearrangement and may accept and
hold hereunder new obligations, stocks or other securities issued in exchange
therefor under any such plan. Any discretionary action which the Trustee may be
entitled to take in connection with any such obligations or substitutions
therefor shall be taken, so long as no Event of Default shall have occurred and
be continuing, in accordance with a Company Order, and, during the continuance
of an Event of Default, in its own discretion.

      Anything herein to the contrary notwithstanding, the Company may
irrevocably waive all right to the withdrawal pursuant to this Section of, and
any other rights with respect to, any obligations secured by Purchase Money Lien
held by the Trustee, and the proceeds of any such obligations, by delivery to
the Trustee of a Company Order:

            (1) specifying such obligations and stating that the Company thereby
waives all rights to the withdrawal thereof and of the proceeds thereof pursuant
to this Section, and any other rights with respect thereto; and

            (2) directing that the principal of such obligations be applied as
provided in clause (4) in the first paragraph of this Section, specifying the
Securities to be paid or redeemed or for the payment or redemption of which
payment is to be made.

      Following any such waiver, the interest on any such obligations shall be
applied to the payment of interest, if any, on the Securities to be paid or
redeemed or for the payment or redemption of which provision is to be made, as
specified in the aforesaid Company Order, as and when such interest shall become
due from time to time, and any excess funds remaining from time to time after
such application shall be applied to the payment of interest on any other
Securities as and when the same shall become due. Pending any such application,
the interest on such obligations shall be invested in Investment Securities. The
principal of any such obligations shall be applied solely to the payment of
principal of the Securities to be paid or redeemed or for the payment or
redemption of which provision is to be made, as specified in the aforesaid
Company Order. Pending such application, the principal of such obligations shall
be invested in

                                       70
<PAGE>

Eligible Obligations. The obligation of the Company to pay the principal of such
Securities when the same shall become due at Maturity, shall be offset and
reduced by the amount of the proceeds of such obligations then held, and to be
applied, by the Trustee in accordance with this paragraph.

SECTION 707. Release of Property Taken by Eminent Domain, etc.

      Should any of the Mortgaged Property, or any interest therein, be taken by
exercise of the power of eminent domain or be sold to an entity possessing the
power of eminent domain under a threat to exercise the same, and should the
Company elect not to obtain the release of such property pursuant to other
provisions of this Article, the Trustee shall, upon request of the Company
evidenced by a Company Order transmitting therewith a form of instrument to
effect such release, release from the Lien hereof all its right, title and
interest in and to the property so taken or sold (or with respect to an interest
in property, subordinate the Lien hereof to such interest), upon receiving (a)
an Opinion of Counsel to the effect that such property has been taken by
exercise of the power of eminent domain or has been sold to an entity possessing
the power of eminent domain under threat of an exercise of such power, (b) an
Officer's Certificate stating the amount of net proceeds received or to be
received for such property so taken or sold, and the amount so stated shall be
deemed to be the Fair Value of such property for the purpose of any notice to
the Holders, (c) if any portion of such property constitutes Funded Property, an
Expert's Certificate stating the Cost thereof (or, if the Fair Value to the
Company of such portion of such property at the time the same became Funded
Property was certified to be an amount less than the Cost thereof, then such
Fair Value, as so certified, in lieu of Cost) and (d) if any portion of such
property constitutes Funded Property, a deposit by the Company of an amount in
cash equal to seventy percentum (70%) of the Cost or Fair Value stated in the
Expert's Certificate delivered pursuant to clause (c) above; provided, however,
that the amount required to be so deposited shall not exceed the portion of the
net proceeds received or to be received for such property so taken or sold which
is allocable on a pro-rata or other reasonable basis to the portion of such
property constituting Funded Property; and provided, further, that no such
deposit shall be required to be made hereunder if the proceeds of such taking or
sale shall, as indicated in an Officer's Certificate delivered to the Trustee,
have been deposited with the trustee or other holder of any other Lien prior to
the Lien of this Indenture. Any cash deposited with the Trustee under this
Section may thereafter be withdrawn, used or applied in the manner, to the
extent and for the purposes, and subject to the conditions, provided in Section
706.

SECTION 708. Disclaimer or Quitclaim.

      In case the Company has sold, exchanged, dedicated or otherwise disposed
of, or has agreed or intends to sell, exchange, dedicate or otherwise dispose
of, or a Governmental Authority has ordered the Company to divest itself of, any
Excepted Property or any other property not subject to the Lien hereof, or the
Company desires to disclaim or quitclaim title to property to which the Company
does not purport to have title, the Trustee shall, from time to time, disclaim
or quitclaim such property upon receipt by the Trustee of the following:

            (1) a Company Order requesting such disclaimer or quitclaim and
transmitting therewith a form of instrument to effect such disclaimer or
quitclaim;

                                       71
<PAGE>

            (2) an Officer's Certificate describing the property to be
disclaimed or quitclaimed; and

            (3) an Opinion of Counsel stating the signer's opinion that such
property is not subject to the Lien hereof or required to be subject thereto by
any of the provisions hereof.

SECTION 709. Miscellaneous.

            (1) No Expert's Certificate as to the Fair Value of property to be
released from the Lien of this Indenture in accordance with any provision of
this Article, and as to the nonimpairment, by reason of such release, of the
security under this Indenture in contravention of the provisions hereof, shall
be required to be made, if the Fair Value of such property and of all other
property released since the commencement of the then current calendar year, is
such that the disposition of such property would not contravene Section 9.02 of
the Credit Agreement dated December 23, 2003 by and among the Company, the
General Partner, Texas Genco LP, LLC, Texas Genco Holdings, Inc., Texas Genco
Services, LP, the lenders from time party thereto, Deutsche Bank AG New York
Branch, as administrative agent and collateral agent, and Compass Bank, as
documentation agent.

            (2) No release of property from the Lien of this Indenture effected
in accordance with the provisions, and in compliance with the conditions, set
forth in this Article and in Sections 105 and 106 shall be deemed to impair the
security of this Indenture in contravention of any provision hereof.

            (3) If the Mortgaged Property shall be in the possession of a
receiver or trustee, lawfully appointed, the powers herein before conferred upon
the Company with respect to the release of any part of the Mortgaged Property or
any interest therein or the withdrawal of cash may be exercised, with the
approval of the Trustee, by such receiver or trustee, notwithstanding that an
Event of Default may have occurred and be continuing, and any request,
certificate, appointment or approval made or signed by such receiver or trustee
for such purposes shall be as effective as if made by the Company or any of its
officers or appointees in the manner herein provided; and if the Trustee shall
be in possession of the Mortgaged Property under any provision of this
Indenture, then such powers may be exercised by the Trustee in its discretion
notwithstanding that an Event of Default may have occurred and be continuing.

            (4) If the Company shall retain any interest in any property
released from the Lien of this Indenture as provided in Section 703, 704 or 705,
this Indenture shall not become or be, or be required to become or be, a Lien
upon such property or such interest therein or any improvements, accessions,
extensions or additions to such property or renewals, replacements or
substitutions of or for such property or any part or parts thereof or the
proceeds thereof unless the Company shall execute and deliver to the Trustee an
indenture supplemental hereto, in recordable form, containing a grant,
conveyance, transfer and mortgage thereof.

            (5) Notwithstanding the occurrence and continuance of an Event of
Default, the Trustee, in its discretion, may release from the Lien hereof any
part of the Mortgaged Property or permit the withdrawal of cash, upon compliance
with the other conditions specified in this Article in respect thereof.

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<PAGE>

            (6) No purchaser or grantee of property purporting to have been
released hereunder shall be bound to ascertain the authority of the Trustee to
execute the release, or to inquire as to any facts required by the provisions
hereof for the exercise of such authority; nor shall any purchaser or grantee of
any property or rights permitted by this Article to be sold, granted, exchanged,
dedicated or otherwise disposed of, be under obligation to ascertain or inquire
into the authority of the Company to make any such sale, grant, exchange,
dedication or other disposition.

                                 ARTICLE EIGHT.

                           SATISFACTION AND DISCHARGE

SECTION 801. Satisfaction and Discharge of Securities.

      Any Security or Securities, or any portion of the principal amount
thereof, shall be deemed to have been paid for all purposes of this Indenture,
and the entire indebtedness of the Company in respect thereof shall be satisfied
and discharged, if there shall have been irrevocably deposited with the Trustee
or any Paying Agent (other than the Company), in trust:

            (1) money (including Funded Cash not otherwise applied pursuant to
Section 706) in an amount which shall be sufficient; or

            (2) in the case of a deposit made prior to the Maturity of such
Securities or portions thereof, Eligible Obligations, which shall not contain
provisions permitting the redemption or other prepayment thereof at the option
of the issuer thereof, the principal of and the interest on which when due,
without any regard to reinvestment thereof, will provide moneys which, together
with the money, if any, deposited with or held by the Trustee or such Paying
Agent, shall be sufficient; or

            (3) a combination of (1) or (2) which shall be sufficient, to pay
when due the principal of and premium, if any, and interest, if any, due and to
become due on such Securities or portions thereof; provided, however, that in
the case of the provision for payment or redemption of less than all the
Securities of any series or Tranche, such Securities or portions thereof shall
have been selected by the Security Registrar as provided herein and, in the case
of a redemption, the notice requisite to the validity of such redemption shall
have been given or irrevocable authority shall have been given by the Company to
the Trustee to give such notice, under arrangements satisfactory to the Trustee;
and provided, further, that the Company shall have delivered to the Trustee and
such Paying Agent:

                  (A) if such deposit shall have been made prior to the Maturity
of such Securities, a Company Order stating that the money and Eligible
Obligations deposited in accordance with this Section shall be held in trust, as
provided in Section 803;

                  (B) if Eligible Obligations shall have been deposited, an
Opinion of Counsel to the effect that such obligations constitute Eligible
Obligations and do not contain provisions permitting the redemption or other
prepayment thereof at the option of the issuer thereof, and an opinion of an
Independent Accountant of nationally recognized standing, selected

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by the Company, to the effect that the other requirements set forth in clause
(2) above have been satisfied;

            (C) if such deposit shall have been made prior to the Maturity of
such Securities, an Officer's Certificate stating the Company's intention that,
upon delivery of such Officer's Certificate, its indebtedness in respect of such
Securities or portions thereof will have been satisfied and discharged as
contemplated in this Section; and

            (D) either:

                  (i) an Opinion of Counsel in the United States reasonably
acceptable to the Trustee confirming that (a) the Company has received from, or
there has been published by the Internal Revenue Service a ruling or (b) since
the date of this Indenture, there has been a change in the applicable federal
income tax law, in either case (a) or (b) to the effect that, and based thereon
such opinion shall confirm that, the Holders of such Securities shall not
recognize income, gain or loss for federal income tax purposes as a result of
the deposit, defeasance and discharge to be effected with respect to such
Securities and will be subject to federal income tax on the same amounts, in the
same manner and at the same times as would be the case if such deposit,
defeasance and discharge had not occurred; or

                  (ii) an instrument wherein the Company, notwithstanding the
satisfaction and discharge of its indebtedness in respect of the Securities,
shall assume the obligation (which shall be absolute and unconditional) to
irrevocably deposit with the Trustee such additional sums of money, if any, or
additional Government Obligations, if any, or any combination thereof, at such
time or times, as shall be necessary, together with the money and/or Government
Obligations theretofore so deposited, to pay when due the principal of and
premium, if any, and interest due and to become due on such Securities or
portions thereof; provided, however, that such instrument may state that the
Company's obligation to make additional deposits as aforesaid shall be subject
to the delivery to it by the Trustee of (a) a notice asserting the deficiency
accompanied by an opinion of an independent public accountant of nationally
recognized standing showing the calculation thereof and (b) an opinion of tax
counsel in the United States reasonably acceptable to the Trustee to the effect
that the Holders of the Outstanding Securities will not recognize income, gain
or loss for federal income tax purposes as a result of such defeasance and will
be subject to federal income tax on the same amounts, in the same manner and at
the same times as would have been the case if such defeasance had not occurred.

      Upon the deposit of money or Eligible Obligations, or both, in accordance
with this Section, together with the documents required by clauses (A), (B), (C)
and (D) above, the Trustee shall, upon Company Request, acknowledge in writing
that such Securities or portions thereof are deemed to have been paid for all
purposes of this Indenture and that the entire indebtedness of the Company in
respect thereof has been satisfied and discharged as contemplated in this
Section. In the event that all of the conditions set forth in the preceding
paragraph shall have been satisfied in respect of any Securities or portions
thereof except that, for any reason, the Officer's Certificate specified in
clause (C) (if otherwise required) shall not have been delivered, such
Securities or portions thereof shall nevertheless be deemed to have been paid
for all purposes of this Indenture, and the Holders of such Securities or
portions

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<PAGE>

thereof shall nevertheless be no longer entitled to the benefit of the Lien of
this Indenture or of any of the covenants of the Company under Article Six
(except the covenants contained in Sections 602 and 603) or any other covenants
made in respect of such Securities or portions thereof as contemplated by
Section 301, but the indebtedness of the Company in respect of such Securities
or portions thereof shall not be deemed to have been satisfied and discharged
prior to Maturity for any other purpose; and, upon Company Request, the Trustee
shall acknowledge in writing that such Securities or portions thereof are deemed
to have been paid for all purposes of this Indenture.

      If payment at Stated Maturity of less than all of the Securities of any
series, or any Tranche thereof, is to be provided for in the manner and with the
effect provided in this Section, the Security Registrar shall select such
Securities, or portions of principal amount thereof, in the manner specified by
Section 503 for selection for redemption of less than all the Securities of a
series or Tranche.

      In the event that Securities which shall be deemed to have been paid for
purposes of this Indenture, and, if such is the case, in respect of which the
Company's indebtedness shall have been satisfied and discharged, all as provided
in this Section, do not mature and are not to be redeemed within the sixty (60)
day period commencing with the date of the deposit of moneys or Eligible
Obligations, as aforesaid, the Company shall, as promptly as practicable, give a
notice, in the same manner as a notice of redemption with respect to such
Securities, to the Holders of such Securities to the effect that such deposit
has been made and the effect thereof.

      Notwithstanding that any Securities shall be deemed to have been paid for
purposes of this Indenture, as aforesaid, the obligations of the Company and the
Trustee in respect of such Securities under Sections 304, 305, 306, 504, 602,
603, 1007 and 1014 and this Article shall survive.

      The Company shall pay, and shall indemnify the Trustee or any Paying Agent
with which Eligible Obligations shall have been deposited as provided in this
Section against, any tax, fee or other charge imposed on or assessed against
such Eligible Obligations or the principal or interest received in respect of
such Eligible Obligations, including, but not limited to, any such tax payable
by any entity deemed, for tax purposes, to have been created as a result of such
deposit.

      Anything herein to the contrary notwithstanding, (a) if, at any time after
a Security would be deemed to have been paid for purposes of this Indenture,
and, if such is the case, the Company's indebtedness in respect thereof would be
deemed to have been satisfied and discharged, pursuant to this Section (without
regard to the provisions of this paragraph), the Trustee or any Paying Agent, as
the case may be, shall be required to return the money or Eligible Obligations,
or combination thereof, deposited with it as aforesaid to the Company or its
representative under any applicable Federal or State bankruptcy, insolvency or
other similar law, such Security shall thereupon be deemed retroactively not to
have been paid and any satisfaction and discharge of the Company's indebtedness
in respect thereof shall retroactively be deemed not to have been effected, and
such Security shall be deemed to remain Outstanding and (b) any satisfaction and
discharge of the Company's indebtedness in respect of any Security shall be
subject to the provisions of the last paragraph of Section 603.

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<PAGE>

SECTION 802. Satisfaction and Discharge of Indenture.

      This Indenture shall upon Company Request cease to be of further effect
(except as to any surviving rights of registration of transfer or exchange of
Securities herein expressly provided for and as otherwise provided in this
Section 802), and the Trustee, on demand of and at the expense of the Company,
shall execute proper instruments acknowledging the satisfaction and discharge of
this Indenture, when:

            (1) either,

                  (A) all Securities theretofore authenticated and delivered
(other than (i) Securities which have been destroyed, lost or stolen and which
have been replaced or paid as provided in Section 306 and (ii) Securities for
the payment of which money has theretofore been deposited in trust or segregated
and held in trust by the Company and thereafter repaid to the Company or
discharged from such trust, as provided in Section 603) have been delivered to
the Trustee for cancellation; or

                  (B) all such Securities not theretofore delivered to the
Trustee for cancellation:

                        (i) have become due and payable; or

                        (ii) will become due and payable at their Stated
Maturity within one year of the date of deposit; or

                        (iii) are to be called for redemption within one year
under arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the Company;

and the Company, in the case of (i), (ii) or (iii) above, has deposited or
caused to be deposited with the Trustee as trust funds in trust for such purpose
money in an amount sufficient to pay and discharge the entire indebtedness on
such Securities not theretofore delivered to the Trustee for cancellation, for
principal and any premium and interest to the date of such deposit (in the case
of Securities which have become due and payable) or to the Stated Maturity or
Redemption Date, as the case may be;

            (2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and

            (3) the Company has delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge of this
Indenture have been complied with.

      Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 1007, the obligations of
the Trustee to any Authenticating Agent under Section 1015 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of clause (1) of
this Section 802, the obligations of the Trustee under Section 803 and the last
paragraph of Section 603 shall survive.

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<PAGE>

      Upon satisfaction and discharge of this Indenture as provided in this
Section, the Trustee shall release, quit claim and otherwise turn over to the
Company the Mortgaged Property (other than money and Eligible Obligations held
by the Trustee pursuant to Section 803) and shall execute and deliver to the
Company such deeds and other instruments as, in the judgment of the Company,
shall be necessary, desirable or appropriate to effect or evidence such release
and quitclaim and the satisfaction and discharge of this Indenture.

SECTION 803. Application of Trust Money.

      Neither the Eligible Obligations nor the money deposited pursuant to
Section 801, nor the principal or interest payments on any such Eligible
Obligations, shall be withdrawn or used for any purpose other than, and shall be
held in trust for, the payment of the principal of and premium, if any, and
interest, if any, on the Securities or portions of principal amount thereof in
respect of which such deposit was made, all subject, however, to the provisions
of Section 603; provided, however, that any cash received from such principal or
interest payments on such Eligible Obligations, if not then needed for such
purpose, shall, to the extent practicable and upon Company Request and delivery
to the Trustee of the documents referred to in clause (y) in the first paragraph
of Section 801, be invested in Eligible Obligations of the type described in
clause (2) in the first paragraph of Section 801 maturing at such times and in
such amounts as shall be sufficient, together with any other moneys and the
proceeds of any other Eligible Obligations then held by the Trustee, to pay when
due the principal of and premium, if any, and interest, if any, due and to
become due on such Securities or portions thereof on and prior to the Maturity
thereof, and interest earned from such reinvestment shall be paid over to the
Company as received, free and clear of the Lien of this Indenture, except the
Lien provided by Section 1007; and provided, further, that any moneys held in
accordance with this Section on the Maturity of all such Securities in excess of
the amount required to pay the principal of and premium, if any, and interest,
if any, then due on such Securities shall be paid over to the Company free and
clear of the Lien of this Indenture, except the Lien provided by Section 1007;
and provided, further, that if an Event of Default shall have occurred and be
continuing, moneys to be paid over to the Company pursuant to this Section shall
be held as part of the Mortgaged Property until such Event of Default shall have
been waived or cured.

                                 ARTICLE NINE.

                           EVENTS OF DEFAULT; REMEDIES

SECTION 901. Events of Default.

      "Event of Default" means any of the following events which shall have
occurred and be continuing:

            (1) default in the payment of any interest upon any Security when it
becomes due and payable, and continuance of such default for a period of thirty
(30) days; or

            (2) default in the payment of the principal of or any premium on any
Security when it becomes due and payable; or

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            (3) default in the performance, or breach, of any covenant or
warranty of the Company in this Indenture (other than a covenant or warranty a
default in the performance of which or the breach of which is elsewhere in this
Section 901 specifically dealt with and continuance of such default or breach
for a period of ninety (90) days after there has been given, by registered or
certified mail, to the Company by the Trustee or to the Company and the Trustee
by the Holders of at least thirty-three percentum (33%) in principal amount of
the Securities then Outstanding a written notice specifying such default or
breach and requiring it to be remedied and stating that such notice is a "Notice
of Default" unless the Trustee, or the Trustee and the Holders of a principal
amount of Securities not less than the principal amount of Securities the
Holders of which gave such notice, as the case may be, shall agree in writing to
an extension of such period prior to its expiration; provided, however, that the
Trustee, or the Trustee and the Holders of such principal amount of Securities,
as the case may be, shall be deemed to have agreed to an extension of such
period if corrective action is initiated by the Company within such period and
is being diligently pursued; or

            (4) the entry by a court having jurisdiction in the premises of (A)
a decree or order for relief in respect of the Company in an involuntary case or
proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or (B) a decree or order adjudging the
Company a bankrupt or insolvent, or approving as properly filed a petition by
one or more Persons other than the Company seeking reorganization, arrangement,
adjustment or composition of or in respect of the Company under any applicable
Federal or State law, or appointing a custodian, receiver, liquidator, assignee,
trustee, sequestrator or other similar official of the Company or of any
substantial part of its property, or ordering the winding up or liquidation of
its affairs, and any such decree or order for relief or any such other decree or
order shall have remained unstayed and in effect for a period of ninety (90)
consecutive days; or

            (5) the commencement by the Company of a voluntary case or
proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or of any other case or proceeding to be
adjudicated a bankrupt or insolvent, or the consent by it to the entry of a
decree or order for relief in respect of the Company in an involuntary case or
proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or to the commencement of any bankruptcy or
insolvency case or proceeding against it, or the filing by it of a petition or
answer or consent seeking reorganization or relief under any applicable Federal
or State law, or the consent by it to the filing of such petition or to the
appointment of or taking possession by a custodian, receiver, liquidator,
assignee, trustee, sequestrator or other similar official of the Company or of
any substantial part of its property, or the making by it of an assignment of a
substantial part of its property and assets for the benefit of creditors, or the
admission by it in writing of its inability to pay its debts generally as they
become due, or the taking of corporate action by the Company in furtherance of
any such action.

      Notwithstanding the foregoing provisions of this Section 901, if the
principal or any premium or interest on any Security is payable in a currency
other than the currency of the United States and such currency is not available
to the Company for making payment thereof due to the imposition of exchange
controls or other circumstances beyond the control of the Company, the Company
will be entitled to satisfy its obligations to Holders by making such payment in
the currency of the United States in an amount equal to the currency of the
United States equivalent of the amount payable in such other currency, as
determined by the Trustee by

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<PAGE>

reference to the noon buying rate in The City of New York for cable transfers
for such currency ("Exchange Rate"), as such Exchange Rate is reported or
otherwise made available by the Federal Reserve Bank of New York on the date of
such payment, or, if such rate is not then available, on the basis of the most
recently available Exchange Rate. Notwithstanding the foregoing provisions of
this Section 901, any payment made under such circumstances in the currency of
the United States where the required payment is in a currency other than the
currency of the United States will not constitute an Event of Default under this
Indenture.

SECTION 902. Acceleration of Maturity; Rescission and Annulment.

      If an Event of Default shall have occurred and be continuing, then in
every such case the Trustee or the Holders of not less than thirty-three
percentum (33%) in principal amount of the Securities then Outstanding may
declare the principal amount (or, if any of the Securities are Discount
Securities, such portion of the principal amount of such Securities as may be
specified in the terms thereof as contemplated by Section 301) of all Securities
then Outstanding to be due and payable immediately, by a notice in writing to
the Company (and to the Trustee if given by Holders), and upon such declaration
such principal amount (or specified amount), together with premium, if any, and
accrued interest, if any, thereon, shall become immediately due and payable.

      At any time after such a declaration of acceleration of the Maturity of
the Securities has been made, but before any sale of any of the Mortgaged
Property has been made and before a judgment or decree for payment of the money
due has been obtained by the Trustee as hereinafter provided in this Article
Nine, the Event of Default giving rise to such declaration of acceleration
shall, without further act, be deemed to have been waived, and such declaration
and its consequences shall, without further act, be deemed to have been
rescinded and annulled, if:

            (1) the Company has paid or deposited with the Trustee a sum
sufficient to pay:

                  (A) all overdue installments of interest on all Securities;

                  (B) the principal of and premium, if any, on any Securities
then Outstanding which have become due otherwise than by such declaration of
acceleration and any interest thereon at the rate or rates prescribed therefor
in such Securities; and

                  (C) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel;

      and

            (2) all Events of Default with respect to Securities, other than the
non-payment of the principal of Securities which have become due solely by such
declaration of acceleration, have been cured or waived as provided in Section
917.

No such rescission shall affect any subsequent default or impair any right
consequent thereon.

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SECTION 903. Entry upon Mortgaged Property.

      If an Event of Default shall have occurred and be continuing, the Company,
upon demand of the Trustee and if and to the extent permitted by law, shall
forthwith surrender to the Trustee the actual possession of, and the Trustee, by
such officers or agents as it may appoint, may enter upon and take possession
of, the Mortgaged Property; and the Trustee may hold, operate and manage the
Mortgaged Property and make all needful repairs and such renewals, replacements,
betterments and improvements as to the Trustee shall seem prudent; and the
Trustee may receive the rents, issues, profits, revenues and other income of the
Mortgaged Property, to the extent, if any, that the same shall not then
constitute Excepted Property; and, after deducting the costs and expenses of
entering, taking possession, holding, operating and managing the Mortgaged
Property, as well as payments for insurance and taxes and other proper charges
upon the Mortgaged Property prior to the Lien of this Indenture and reasonable
compensation to itself, its agents and counsel, the Trustee may apply the same
as provided in Section 907. Whenever all that is then due in respect of the
principal of and premium, if any, and interest, if any, on the Securities and
under any of the terms of this Indenture shall have been paid and all defaults
hereunder shall have been cured or shall have been waived as provided in Section
917, the Trustee shall surrender possession of the Mortgaged Property to the
Company.

SECTION 904. Power of Sale; Suits for Enforcement.

      If an Event of Default shall have occurred and be continuing, the Trustee,
by such officers or agents as it shall appoint, with or without entry, in its
discretion may, subject to the provisions of Section 916 and if and to the
extent permitted by law:

            (1) Foreclosure. Sell, subject to applicable law, the Mortgaged
Property.

                  (A) Foreclosure of Real Property. Mortgaged Property
constituting real property shall be sold in accordance with this Section
904(1)(A). The sale shall be a public sale at auction held between 10 A.M. and 4
P.M. on the first Tuesday of a month. The sale shall take place at the county
courthouse in the county in which the Mortgaged Property is located, or if it is
located in more than one county, the sale will be made at the courthouse in one
of those counties. The sale shall occur at the area at that courthouse which the
commissioners' court of that county has designated as the place where such sales
are to take place by designation recorded in the real property records of that
county, or if no area is so designated, then the notice of sale shall designate
the area at the courthouse where the sale covered by that notice is to take
place, and the sale shall occur in that area. Notice of the sale shall include a
statement of the earliest time at which the sale will occur and shall be given
at least twenty-one (21) days before the date of the sale; (i) by posting at the
courthouse door of each county in which the Mortgaged Property is located a
written notice designating the county in which the Mortgaged Property will be
sold; (ii) by filing in the Office of the County Clerk of each county in which
the Mortgaged Property is located a copy of the notice posted under subsection
(1) above; and (iii) by the holders of the indebtedness to which this power of
sale is related serving written notice of the sale by certified mail on each
debtor who, according to the records of such holders, is obligated to pay such
indebtedness. The sale shall begin at the time stated in the notice of sale or
not later than three (3) hours after that time. Service of any notice under this
Section 904(1)(A) by certified mail is complete when the notice is deposited in
the United States mail, postage prepaid

                                       80
<PAGE>

and addressed to the debtor entitled to it at that debtor's last known address
as shown by the records of the Trustee and the Holders. The affidavit of a
person knowledgeable of the facts to the effect that service was completed is
prima facie evidence of service. After such written notice shall have been
posted and filed, as aforesaid, and such notice shall have been served upon such
debtor or debtors, as aforesaid, the Trustee (or his successor or substitute
then acting) shall perform his duty to enforce this Indenture by selling the
Mortgaged Property, either as an entirety or in parcels, by one sale or several
sales, as the Trustee acting may elect, all rights to a marshalling of assets or
sale in inverse order of alienation being WAIVED, as aforesaid to the highest
bidder or bidders for cash, and make due conveyance to the purchaser or
purchasers, with general warranty, and the title to such purchaser or
purchasers, when so made by the Trustee acting, the Company binds itself, its
successors and assigns, to warrant and forever defend against claims and demands
of every person whomsoever lawfully claiming or to claim the same or any part
thereof (such warranty to supersede any provision contained in this Indenture
limiting the liability of the Company), subject to Permitted Liens and Liens and
claims permitted in accordance with Section 606. The provisions of this
Indenture with respect to posting and giving notices of sale are intended to
comply with the provisions of Section 51.002 of the Texas Property Code as in
force and effect as of the date hereof, and in the event the requirement for any
notice under such Section 51.002 shall be eliminated or the prescribed manner of
giving it shall be modified by future amendment to, or adoption of any statute
superseding, such Section 51.002, the requirement for such particular notice
shall be deemed stricken from or modified in this Indenture in conformity with
such amendment or superseding statute, effective as of its effective date. The
manner prescribed in this Indenture for serving or giving any notice, other than
that to be posted or caused to be posted by the Trustee acting, shall not be
deemed exclusive but such notice or notices may be given in any other manner
permitted by applicable law. Said sale shall forever be a bar against the
Company, its successors and assigns, and all other persons claiming under it. It
is expressly agreed that the recitals in each conveyance to the purchaser shall
be full evidence of the truth of the matters therein stated, and all lawful
prerequisites to said sale shall be conclusively presumed to have been
performed. The Trustee may require minimum bids at any foreclosure sale and may
cancel and abandon the sale if no bid is received equal to or greater than any
such minimum bid. For the avoidance of doubt, references to the term Mortgaged
Property in this Section 904(1)(A) are references to all or a portion of the
Mortgaged Property to be sold in accordance with this Section 904(1)(A) at any
one time and not the Mortgaged Property in its entirety.

            (B) Foreclosure of Other Property. Mortgaged Property constituting
property other than real property shall be sold in accordance with this Section
904(1)(B). In conducting the sale, the Trustee shall have all of the rights and
remedies provided by applicable law or by this Indenture, including but not
limited to the right to require the Company to assemble the Mortgaged Property
and make it available to the Trustee at a place to be designated by the Trustee
which is reasonably convenient to both the Trustee and the Company, the right to
take possession of the Mortgaged Property with or without demand and with or
without process of law and the right to sell and dispose of the same and
distribute the proceeds according to Section 907 of this Indenture. Any
requirement of reasonable notice shall be met if the Trustee sends such notice
to the Company at least ten (10) days prior to the date of sale, disposition or
other event giving rise to the required notice. The parties hereto further agree
that any sale of the Mortgaged Property held contemporaneously with and upon the
same notice as required in Section 904(1)(A) (for the real property) shall be
deemed to be a public sale conducted in a

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commercially reasonable manner. With respect to the Mortgaged Property that has
become so attached to the real property that an interest therein arises under
the real property law of the State of Texas, this Indenture shall also
constitute a financing statement and a fixture filing under the Texas Uniform
Commercial Code.

            (2) Judicial Foreclosure. In addition to the foregoing, proceed to
protect and enforce its rights and the rights of the Holders under this
Indenture by sale pursuant to judicial proceedings or by a suit, action or
proceeding in equity or at law or otherwise, whether for the specific
performance of any covenant or agreement contained in this Indenture or in aid
of the execution of any power granted in this Indenture or for the foreclosure
of this Indenture or for the enforcement of any other legal, equitable or other
remedy, as the Trustee, being advised by counsel, shall deem most effectual to
protect and enforce any of the rights of the Trustee or the Holders.

SECTION 905. Incidents of Sale.

      Upon any sale of any of the Mortgaged Property, whether made under the
power of sale hereby given or pursuant to judicial proceedings, to the extent
permitted by law:

            (1) the principal amount (or, if any of the Securities are Original
Issue Discount Securities, such portion of the principal amount of such
Securities as may be specified in the terms thereof as contemplated by Section
301) of all Outstanding Securities, if not previously due, shall at once become
and be immediately due and payable, together with premium, if any, and accrued
interest, if any, thereon;

            (2) any Holder or Holders or the Trustee may bid for and purchase
the property offered for sale, and upon compliance with the terms of sale may
hold, retain and possess and dispose of such property, without further
accountability, and may, in paying the purchase money therefor, deliver any
Outstanding Securities or claims for interest thereon in lieu of cash to the
amount which shall, upon distribution of the net proceeds of such sale, be
payable thereon, and such Securities, in case the amounts so payable thereon
shall be less than the amount due thereon, shall be returned to the Holders
thereof after being appropriately stamped to show partial payment;

            (3) the Trustee may make and deliver to the purchaser or purchasers
a good and sufficient deed, bill of sale and instrument of assignment and
transfer of the property sold;

            (4) the Trustee is hereby irrevocably appointed the true and lawful
attorney of the Company, in its name and stead, to make all necessary deeds,
bills of sale and instruments of assignment and transfer of the property so
sold; and for that purpose it may execute all necessary deeds, bills of sale and
instruments of assignment and transfer, and may substitute one or more persons,
firms or corporations with like power, the Company hereby ratifying and
confirming all that its said attorney or such substitute or substitutes shall
lawfully do by virtue hereof; but, if so requested by the Trustee or by any
purchaser, the Company shall ratify and confirm any such sale or transfer by
executing and delivering to the Trustee or to such purchaser or purchasers all
proper deeds, bills of sale, instruments of assignment and transfer and releases
as may be designated in any such request;

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            (5) all right, title, interest, claim and demand whatsoever, either
at law or in equity or otherwise, of the Company of, in and to the property so
sold shall be divested and such sale shall be a perpetual bar both at law and in
equity against the Company, its successors and assigns, and against any and all
persons claiming or who may claim the property sold or any part thereof from,
through or under the Company; and

            (6) the receipt of the Trustee or of the officer making such sale
shall be a sufficient discharge to the purchaser or purchasers at such sale for
his or their purchase money and such purchaser or purchasers and his or their
assigns or personal representatives shall not, after paying such purchase money
and receiving such receipt, be obliged to see to the application of such
purchase money, or be in anywise answerable for any loss, misapplication or
non-application thereof.

SECTION 906. Collection of Indebtedness and Suits for Enforcement by Trustee.

      If an Event of Default described in clause (1) or (2) of Section 901 shall
have occurred and be continuing, the Company shall, upon demand of the Trustee,
pay to it, for the benefit of the Holders of the Securities with respect to
which such Event of Default shall have occurred, the whole amount then due and
payable on such Securities for principal and premium, if any, and interest, if
any, and, in addition thereto, such further amount as shall be sufficient to
cover any amounts due to the Trustee under Section 1007.

      If the Company shall fail to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce the same
against the Company or any other obligor upon such Securities and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon such Securities, wherever
situated.

      The Trustee shall, to the extent permitted by law, be entitled to sue and
recover judgment as aforesaid either before, during or after the pendency of any
proceedings for the enforcement of the Lien of this Indenture, and in case of a
sale of the Mortgaged Property or any part thereof and the application of the
proceeds of sale as aforesaid, the Trustee, in its own name and as trustee of an
express trust, shall be entitled to enforce payment of, and to receive, all
amounts then remaining due and unpaid upon the Securities then Outstanding for
principal, premium, if any, and interest, if any, for the benefit of the Holders
thereof, and shall be entitled to recover judgment for any portion of the same
remaining unpaid, with interest as aforesaid. No recovery of any such judgment
by the Trustee and no levy of any execution upon any such judgment upon any of
the Mortgaged Property or any other property of the Company shall affect or
impair the Lien of this Indenture upon the Mortgaged Property or any part
thereof or any rights, powers or remedies of the Trustee hereunder, or any
rights, powers or remedies of the Holders.

SECTION 907. Application of Money Collected.

      Any money collected by the Trustee pursuant to this Article, including any
rents, issues, profits, revenues and other income collected pursuant to Section
903 (after the deductions therein provided) and any proceeds of any sale (after
deducting the costs and expenses of such sale,

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including a reasonable compensation to the Trustee, its agents and counsel, and
any taxes, assessments or Liens prior to the Lien of this Indenture, except any
thereof subject to which such sale shall have been made), whether made under any
power of sale herein granted or pursuant to judicial proceedings, and any money
collected by the Trustee under Section 706, together with, in the case of an
entry or sale or as otherwise provided herein, any other sums then held by the
Trustee as part of the Mortgaged Property, shall be applied in the following
order, to the extent permitted by law, at the date or dates fixed by the Trustee
and, in case of the distribution of such money on account of principal or
premium, if any, or interest, if any, upon presentation of the Securities and
the notation thereon of the payment if only partially paid and upon surrender
thereof if fully paid:

            First: To the payment of all amounts due the Trustee under Section
            1007;

            Second: To the payment of the whole amount then due and unpaid upon
            the Outstanding Securities for principal and premium, if any, and
            interest, if any, in respect of which or for the benefit of which
            such money has been collected; and in case such proceeds shall be
            insufficient to pay in full the whole amount so due and unpaid upon
            such Securities, then to the payment of such principal and interest,
            if any, thereon without any preference or priority, ratably
            according to the aggregate amount so due and unpaid, with any
            balance then remaining to the payment of premium, if any, and, if so
            specified as contemplated by Section 301 with respect to the
            Securities of any series, or any Tranche thereof, interest, if any,
            on overdue premium, if any, and overdue interest, if any, ratably as
            aforesaid, all to the extent permitted by applicable law; provided,
            however, that any money collected by the Trustee pursuant to Section
            706 in respect of interest or pursuant to Section 903 shall first be
            applied to the payment of interest accrued on the principal of
            Outstanding Securities; and

            Third: To the payment of the remainder, if any, to the Company or to
            whomsoever may be lawfully entitled to receive the same or as a
            court of competent jurisdiction may direct.

SECTION 908. Receiver.

      If an Event of Default shall have occurred and, during the continuance
thereof, the Trustee shall have commenced judicial proceedings to enforce any
right under this Indenture, the Trustee shall, to the extent permitted by law,
be entitled, as against the Company, without notice or demand and without regard
to the adequacy of the security for the Securities or the solvency of the
Company, to the appointment of a receiver of the Mortgaged Property.

SECTION 909. Trustee 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 Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of the Securities
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective

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of whether the Trustee shall have made any demand on the Company for the payment
of overdue principal or interest) shall be entitled and empowered, by
intervention in such proceeding or otherwise,

            (1) to file and prove a claim for the whole amount of principal,
premium, if any, and interest, if any, owing and unpaid in respect of the
Securities and to file such other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee (including any claim for
amounts due to the Trustee under Section 1007) and of the Holders allowed in
such judicial proceeding, and

            (2) to collect and receive any moneys 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 Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders, to
pay to the Trustee any amounts due it under Section 1007.

      Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.

SECTION 910. Trustee May Enforce Claims Without Possession of Securities.

      All rights of action and claims under this Indenture or the Securities may
be prosecuted and enforced by the Trustee without the possession of any of the
Securities or the production thereof in any proceeding relating thereto, and any
such proceeding instituted by the Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgment shall, after provision
for the payment of the reasonable compensation, expenses, disbursements and
advances of the Trustee under Section 1007, its agents and counsel, be for the
ratable benefit of the Holders of the Securities in respect of which such
judgment has been recovered.

SECTION 911. Limitation on Suits.

      No Holder of any Security shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver, assignee, trustee, liquidator or sequestor (or other
similar official), or for any other remedy hereunder, unless:

            (1) such Holder has previously given written notice to the Trustee
of a continuing Event of Default;

            (2) the Holders of not less than a majority in aggregate principal
amount of the Outstanding Securities shall have made written request to the
Trustee to institute proceedings in respect of such Event of Default in its own
name as Trustee hereunder;

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<PAGE>

            (3) such Holder or Holders have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities to be incurred
in compliance with such request;

            (4) the Trustee for sixty (60) days after its receipt of such
notice, request and offer of indemnity has failed to institute any such
proceeding; and

            (5) no direction inconsistent with such written request has been
given to the Trustee during such sixty (60) day period by the Holders of a
majority in principal amount of the Outstanding Securities;

it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing himself of, any
provision of this Indenture to affect, disturb or prejudice the Lien of this
Indenture or the rights of any other Holders, or to obtain or to seek to obtain
priority or preference over any other of such Holders or to enforce any right
under this Indenture, except in the manner herein provided and for the equal and
ratable benefit of all of such Holders.

SECTION 912. Unconditional Right of Holders to Receive Principal, Premium and
Interest.

      Notwithstanding any other provision in this Indenture, the Holder of any
Security shall have the right, which is absolute and unconditional, to receive
payment of the principal of and any premium and (subject to Section 307)
interest on such Security on the Stated Maturity or Maturities expressed in such
Security (or, in the case of redemption, on the Redemption Date) and to
institute suit for the enforcement of any such payment, and such rights shall
not be impaired without the consent of such Holder.

SECTION 913. Restoration of Rights and Remedies.

      If the Trustee or any Holder has instituted any proceeding to enforce any
right or remedy under this Indenture and such proceeding has been discontinued
or abandoned for any reason, or has been determined adversely to the Trustee or
to such Holder, then and in every such case, subject to any determination in
such proceeding, the Company, the Trustee and such Holder shall be restored
severally and respectively to their former positions hereunder and thereafter
all rights and remedies of the Trustee and such Holder shall continue as though
no such proceeding had been instituted.

SECTION 914. Rights and Remedies Cumulative.

      Except as otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Securities in the last paragraph of Section
306, no right or remedy herein conferred upon or reserved to the Trustee or to
the Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.

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      Anything in this Article to the contrary notwithstanding, the availability
of the remedies set forth herein (on an individual or cumulative basis) and the
procedures set forth herein relating to the exercise thereof shall be subject to
(a) the law (including, for purposes of this paragraph, general principles of
equity) of any jurisdiction wherein the Mortgaged Property or any part thereof
is located to the extent that such law is mandatorily applicable and (b) the
rights of the holder of any Lien prior to the Lien of this Indenture, and, if
and to the extent that any provision of this Article conflicts with any
provision of such applicable law and/or with the rights of the holder of any
such prior Lien, such provision of law and/or the rights of such holder shall
control.

SECTION 915. Delay or Omission Not Waiver.

      No delay or omission of the Trustee or of any Holder of any Securities to
exercise any right or remedy accruing upon any Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article Nine or by
law to the Trustee or to the Holders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Holders, as the case
may be.

SECTION 916. Control by Holders.

      If an Event of Default shall have occurred and be continuing, the Holders
of not less than a majority in principal amount of the Securities then
Outstanding shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred on the Trustee, provided that:

            (1) such direction shall not be in conflict with any rule of law or
with this Indenture;

            (2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction; and

            (3) subject to the provisions of Section 1001, the Trustee shall
have the right to decline to follow such direction if a Responsible Officer or
Officers of the Trustee shall, in good faith, determine that the proceeding so
directed would involve the Trustee in personal liability or would otherwise be
contrary to applicable law.

SECTION 917. Waiver of Past Defaults.

      Before any sale of any of the Mortgaged Property and before a judgment or
decree for payment of the money due shall have been obtained by the Trustee as
herein provided, the Holders of not less than a majority in principal amount of
the Securities then Outstanding may on behalf of the Holders of all the
Outstanding Securities waive any past default hereunder and its consequences,
except a default:

            (1) in the payment of the principal of or any premium or interest on
any Security Outstanding; or

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            (2) in respect of a covenant or provision hereof which under Article
Thirteen cannot be modified or amended without the consent of the Holder of each
Outstanding Security of any series or Tranche affected.

      Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
default or impair any right consequent thereon.

SECTION 918. Undertaking for Costs.

      The Company and the Trustee agree, and each Holder of any Security by his
acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy under
this Indenture, or in any suit against the Trustee for any action taken or
omitted by it as Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and such court may in its discretion
assess reasonable costs including reasonable attorneys' fees and expenses,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; provided that
the provisions of this Section 918 shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Holder or group of Holders holding in the
aggregate more than ten percentum (10%) in principal amount of the Securities
then Outstanding, or to any suit instituted by any Holder for the enforcement of
the payment of the principal of or interest on any Security, on or after the
Stated Maturity or Maturities expressed in such Security (or, in the case of
redemption, on or after the Redemption Date). Neither this Section 918 nor the
Trust Indenture Act shall be deemed to authorize any court to require such an
undertaking or such an assessment in any proceeding instituted by the Company.

SECTION 919. Waiver of Appraisement, Usury, Stay and Other Laws.

      To the full extent that it may lawfully so agree, the Company shall not at
any time set up, claim or otherwise seek to take the benefit or advantage of any
appraisement, valuation, stay, extension or redemption law, now or hereafter in
effect, in order to prevent or hinder the enforcement of this Indenture or the
absolute sale of the Mortgaged Property, or any part thereof, or the possession
thereof, or any part thereof, by any purchaser at any sale under this Article;
and the Company, for itself and all who may claim under it, so far as it or they
now or hereafter may lawfully do so, hereby waives the benefit of all such laws.
The Company, for itself and all who may claim under it, waives, to the extent
that it may lawfully do so, all right to have the Mortgaged Property marshalled
upon any foreclosure of the Lien hereof, and agrees that any court having
jurisdiction to foreclose the Lien of this Indenture may order the sale of the
Mortgaged Property as an entirety.

                                  ARTICLE TEN.

                                   THE TRUSTEE

SECTION 1001. Certain Duties and Responsibilities.

      (1) Except during the continuance of an Event of Default, (A) the Trustee
undertakes to perform such duties and only such duties as are specifically set
forth in this

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Indenture, and no implied covenants or obligations shall be read into this
Indenture against the Trustee; and (B) in the absence of negligence or bad faith
on its part, the Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Trustee and conforming to the
requirements of this Indenture; but in the case of any such certificates or
opinions which by any provisions hereof are specifically required to be
furnished to the Trustee, the Trustee shall be under a duty to examine the same
to determine whether or not they conform to the requirements of this Indenture.

            (2) In case an Event of Default shall have occurred and be
continuing, the Trustee shall exercise such of the rights and powers vested in
it by this Indenture, and use the same degree of care and skill in their
exercise, as a prudent man would exercise or use under the circumstances in the
conduct of his own affairs.

            (3) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct, except that:

                  (A) this subsection shall not be construed to limit the effect
of Clause (1) of this Section;

                  (B) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it shall be proved that the
Trustee was negligent in ascertaining the pertinent facts;

                  (C) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with the
direction of the Holders entitled to so direct the Trustee, as provided herein,
relating to the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred upon
the Trustee, under this Indenture; and

                  (D) no provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.

      Whether or not therein expressly so provided, every provision of this
Indenture relating to the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provisions of this Section.

SECTION 1002. Notice of Defaults.

      The Trustee shall give the Holders notice of any default hereunder in the
manner and to the extent required to do so by the Trust Indenture Act, unless
such default shall have been cured or waived; provided, however, that in the
case of any default of the character specified in Section 901(3), no such notice
to Holders shall be given until at least seventy-five (75) days after the

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occurrence thereof. For the purpose of this Section 1002, the term "default"
means any event which is, or after notice or lapse of time, or both, would
become, an Event of Default.

SECTION 1003. Certain Rights of Trustee.

      Subject to the provisions of Section 1001:

            (1) the Trustee may conclusively rely and shall be protected in
acting or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or document
believed by it to be genuine and to have been signed or presented by the proper
party or parties;

            (2) any request or direction of the Company mentioned herein shall
be sufficiently evidenced by a Company Request or Company Order, and any
resolution of the General Partner shall be sufficiently evidenced by a General
Partner Resolution;

            (3) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officer's Certificate;

            (4) the Trustee may consult with counsel, and the written advice of
such counsel or any Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon;

            (5) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders pursuant to this Indenture, unless such Holders shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with such
request or direction;

            (6) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or document, but
the Trustee, in its discretion, may make such further inquiry or investigation
into such facts or matters as it may see fit, and, if the Trustee shall
determine to make such further inquiry or investigation, it shall be entitled to
examine the books, records and premises of the Company, personally or by agent
or attorney;

            (7) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder;

            (8) the Trustee is not required to give any bond or surety with
respect to the performance of its duties or the exercise of its powers under
this Indenture;

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            (9) in the event the Trustee receives inconsistent or conflicting
requests and indemnity from two or more groups of Holders, each representing
less than a majority in aggregate principal amount of the Securities then
Outstanding, the Trustee, in its sole discretion, may determine what action, if
any, shall be taken;

            (10) the Trustee's immunities and protections from liability and its
right to indemnification in connection with the performance of its duties under
this Indenture shall extend to the Trustee's officers, directors, agents and
employees. Such immunities and protections and right to indemnification,
together with the Trustee's right to compensation, shall survive the Trustee's
resignation or removal and final payment of the Securities; and

            (11) the Trustee is not required to take notice or deemed to have
notice of any default or Event of Default hereunder, except Events of Default
under Section 901(1) and (2), unless a Responsible Officer of the Trustee has
actual knowledge thereof or has received notice in writing of such default or
Event of Default from the Company or the holders of at least thirty-three
percentum (33%) in aggregate principal amount of the Securities then
Outstanding, and in the absence of any such notice, the Trustee may conclusively
assume that no such default or Event of Default exists.

SECTION 1004. Not Responsible for Recitals or Issuance of Securities or
              Application of Proceeds.

      The recitals contained herein and in the Securities, except the Trustee's
certificates of authentication, shall be taken as the statements of the Company,
and neither the Trustee nor any Authenticating Agent assumes any responsibility
for their correctness. The Trustee makes no representations as to the value or
condition of the Mortgaged Property or any part thereof, or as to the title of
the Company thereto or as to the security afforded thereby or hereby, or as to
the validity or genuineness of any securities at any time pledged and deposited
with the Trustee hereunder, or as to the validity or sufficiency of this
Indenture or of the Securities. The Trustee shall not be accountable for the use
or application by the Company of the Securities or the proceeds thereof or of
any money paid to the Company or upon Company Order under any provision hereof.
The Trustee shall have no responsibility to make or to see to the making of any
recording, filing or registration of any instrument or notice (including any
financing or continuation statement or any tax or securities form) (or any
rerecording, refiling or reregistration of any thereof); at any time in any
public office or elsewhere for the purpose of perfecting, maintaining the
perfection of or otherwise making effective the Lien of this Indenture or for
any other purpose and shall have no responsibility for seeing to the insurance
on the Mortgaged Property or for paying any taxes relating to the Mortgaged
Property or for otherwise maintaining the Mortgaged Property, including, but not
limited to, attending to any environmental matters in respect thereof or
disposing of any hazardous or other wastes located thereon.

SECTION 1005. May Hold Securities.

      Each of the Trustee, any Authenticating Agent, any Paying Agent, any
Security Registrar or any other agent of the Company, in its commercial banking
or in any other capacity, may become the owner or pledgee of Securities and,
subject to Sections 1008 and 1013, may

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otherwise deal with the Company with the same rights it would have if it were
not Trustee, Authenticating Agent, Paying Agent, Security Registrar or such
other agent. Each of said entities, in its commercial banking or in any other
capacity, may also engage in or be interested in any financial or other
transaction with the Company and, subject to Sections 1008 and 1013, may act as
depository, trustee or agent for any committee of Holders of Securities secured
hereby or other obligations of the Company as freely as if it were not Trustee,
Authenticating Agent, Paying Agent or Security Registrar. The provisions of this
Section shall extend to Affiliates of said entities.

SECTION 1006. Money Held in Trust.

      Money held by the Trustee in trust hereunder need not be segregated from
other funds except to the extent required by law. The Trustee shall be under no
liability for interest on any money received by it hereunder except as otherwise
agreed with the Company.

SECTION 1007. Compensation and Reimbursement.

      The Company agrees:

            (1) to pay to the Trustee from time to time such compensation for
all services rendered by it hereunder in such amounts as the Company and the
Trustee shall agree in writing from time to time (which compensation shall not
be limited by any provision of law in regard to the compensation of a trustee of
an express trust);

            (2) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and advances
incurred or made by the Trustee in accordance with any provision of this
Indenture (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense, disbursement
or advance as may be attributable to its negligence, willful misconduct or bad
faith; and

            (3) to indemnify the Trustee for, and to hold it harmless against,
any loss, liability or expense incurred without negligence, willful misconduct
or bad faith on its part, arising out of or in connection with the acceptance or
administration of the trust or trusts hereunder, including: (a) the costs and
expenses of defending itself against any claim or liability in connection with
the exercise or performance of any of its powers or duties hereunder, except
those attributable to its negligence, willful misconduct or bad faith, and (b)
any such loss, liability or expense relating to a hazardous substance or a
violation by the Company of any environmental law.

      As security for the performance of the obligations of the Company under
this Section 1007, the Trustee shall have a Lien (the "Trustee's Lien") secured
by this Indenture prior to the Securities upon the Mortgaged Property and upon
all other property and funds held or collected by the Trustee as such, other
than property and funds held in trust under Section 803 (except moneys payable
to the Company as provided in Section 803). "Trustee" for purposes of this
Section 1007 shall include any predecessor Trustee; provided, however, that the
negligence, willful misconduct or bad faith of any Trustee hereunder shall not
affect the rights of any other Trustee hereunder.

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      The Trustee shall notify the Company promptly of any claim for which it
may seek indemnity under this Section 1007. The Company shall defend the claim
and the Trustee shall cooperate in the defense. The Trustee may have separate
counsel and, in the event the subject matter of the claim involves a conflict of
interest between the Company and the Trustee, the Company shall pay the
reasonable fees and expenses of such counsel. The Company need not pay for any
settlement made without its consent.

      In the event the Trustee incurs expenses or renders services in any
proceedings which result from an Event of Default under Section 901(4) or (5),
or from any default which, with the passage of time, would become such Event of
Default, the expenses so incurred and compensation for services so rendered are
intended to constitute expenses of administration under the United States
Bankruptcy Code or equivalent law.

SECTION 1008. Conflicting Interests.

      If the Trustee has or shall acquire a conflicting interest within the
meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture. To the extent
permitted by such Act, the Trustee shall not be deemed to have a conflicting
interest by virtue of being a trustee under this Indenture with respect to
Securities of more than one series.

SECTION 1009. Corporate Trustee Required; Eligibility.

      There shall at all times be a Trustee hereunder which shall be a Person
that is eligible pursuant to the Trust Indenture Act to act as such and has a
combined capital and surplus of at least Fifty Million Dollars ($50,000,000). If
any such Person publishes reports of condition at least annually, pursuant to
law or to the requirements of its supervising or examining authority, then for
the purposes of this Section 1009 and to the extent permitted by the Trust
Indenture Act, the combined capital and surplus of such Person shall be deemed
to be its combined capital and surplus as set forth in its most recent report of
condition so published. If at any time the Trustee with respect to the
Securities of any series shall cease to be eligible in accordance with the
provisions of this Section 1009, it shall resign immediately in the manner and
with the effect hereinafter specified in this Article Ten.

SECTION 1010. Resignation and Removal; Appointment of Successor.

            (1) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article Ten shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 1011.

            (2) The Trustee may resign at any time with respect to the
Securities of one or more series by giving written notice thereof to the
Company. If the instrument of acceptance by a successor Trustee required by
Section 1011 shall not have been delivered to the Trustee within thirty (30)
days after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Trustee with respect to the Securities of such series.

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            (3) The Trustee may be removed at any time with respect to the
Securities of any series by Act of the Holders of a majority in principal amount
of the Outstanding Securities of such series, delivered to the Trustee and to
the Company.

            (4) If at any time:

                  (A) the Trustee shall fail to comply with Section 1008 after
written request therefor by the Company or by any Holder who has been a bona
fide Holder for at least six months; or

                  (B) the Trustee shall cease to be eligible under Section 1009
and shall fail to resign after written request therefor by the Company or by any
such Holder; or

                  (C) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property
shall be appointed or any public officer shall take charge or control of the
Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then, in any such case, (a) the Company, acting
pursuant to the authority of a General Partner Resolution, may remove the
Trustee with respect to all Securities, or (b) subject to Section 918, any
Holder who has been a bona fide Holder for at least six months may, on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee with respect to all Securities and
the appointment of a successor Trustee or Trustees.

            (5) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause
(other than as contemplated in subclause (B) in clause (4) of this Section),
with respect to the Securities of one or more series, the Company, by a General
Partner Resolution, shall promptly appoint a successor Trustee or Trustees with
respect to the Securities of that or those series (it being understood that any
such successor Trustee may be appointed with respect to the Securities of one or
more or all of such series) and shall comply with the applicable requirements of
Section 1011. If, within one year after such resignation, removal or
incapability, or the occurrence of such vacancy, a successor Trustee with
respect to the Securities of such series shall be appointed by Act of the
Holders of a majority in principal amount of the Outstanding Securities of such
series delivered to the Company and the retiring Trustee, the successor Trustee
so appointed shall, forthwith upon its acceptance of such appointment in
accordance with the applicable requirements of Section 1011, become the
successor Trustee with respect to the Securities of such series and to that
extent supersede the successor Trustee appointed by the Company. If no successor
Trustee with respect to the Securities of such series shall have been so
appointed by the Company or the Holders and accepted appointment in the manner
required by Section 1011, any Holder who has been a bona fide Holder of a
Security of such series for at least six months may, on behalf of himself and
all others similarly situated, petition any court of competent jurisdiction for
the appointment of a successor Trustee with respect to the Securities of such
series.

            (6) So long as no event which is, or after notice or lapse of time,
or both, would become, an Event of Default shall have occurred and be
continuing, if the Company shall have delivered to the Trustee (i) a General
Partner Resolution appointing a successor Trustee, effective as of a date
specified therein, and (ii) an instrument of acceptance of such appointment,

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effective as of such date, by such successor Trustee in accordance with Section
1011, the Trustee shall be deemed to have resigned as contemplated in clause (2)
of this Section, the successor Trustee shall be deemed to have been appointed
pursuant to clause (5) of this Section and such appointment shall be deemed to
have been accepted as contemplated in Section 1011, all as of such date, and all
other provisions of this Section and Section 1011 shall be applicable to such
resignation, appointment and acceptance except to the extent inconsistent with
this clause (6).

            (7) The Company shall give notice of each resignation and each
removal of the Trustee with respect to the Securities of any series and each
appointment of a successor Trustee with respect to the Securities of any series
to all Holders of Securities of such series in the manner provided in Section
109. Each notice shall include the name of the successor Trustee with respect to
the Securities of such series and the address of its Corporate Trust Office.

SECTION 1011. Acceptance of Appointment by Successor.

            (1) In case of the appointment hereunder of a successor Trustee with
respect to any series of Securities, every such successor Trustee so appointed
shall execute, acknowledge and deliver to the Company and to the retiring
Trustee an instrument accepting such appointment, and thereupon the resignation
or removal of the retiring Trustee shall become effective and such successor
Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties of the retiring Trustee; but, on the
request of the Company or the successor Trustee, such retiring Trustee shall,
upon payment of its charges, execute and deliver an instrument transferring to
such successor Trustee all the rights, powers and trusts of the retiring Trustee
and shall duly assign, transfer and deliver to such successor Trustee all
property and money held by such retiring Trustee hereunder.

            (2) Upon request of any such successor Trustee, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all such rights, powers and trusts referred
to in clause (1) of this Section.

            (3) No successor Trustee shall accept its appointment unless at the
time of such acceptance such successor Trustee shall be qualified and eligible
under this Article Ten.

SECTION 1012. Merger, Conversion, Consolidation or Succession to Business.

      Any corporation into which the Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article Ten,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Securities shall have been authenticated,
but not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Securities so authenticated with the same effect
as if such successor Trustee had itself authenticated such Securities.

SECTION 1013. Preferential Collection of Claims Against Company.

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      If and when the Trustee shall be or become a creditor of the Company (or
any other obligor upon the Securities (other than by reason of a relationship
described in Section 311(b) of the Trust Indenture Act)), the Trustee shall be
subject to the provisions of the Trust Indenture Act regarding the collection of
claims against the Company (or any such other obligor). For purposes of Section
311(b)(4) and (6) of the Trust Indenture Act:

            (1) "cash transaction" means any transaction in which full payment
for goods or securities sold is made within seven days after delivery of the
goods or securities in currency or in checks or other orders drawn upon banks
and payable upon demand; and

            (2) "self-liquidating paper" means any draft, bill of exchange,
acceptance or obligation which is made, drawn, negotiated or incurred by the
Company (or any such obligor) for the purpose of financing the purchase,
processing, manufacturing, shipment, storage or sale of goods, wares or
merchandise and which is secured by documents evidencing title to, possession
of, or a Lien upon, the goods, wares or merchandise or the receivables or
proceeds arising from the sale of the goods, wares or merchandise previously
constituting the security; provided the security is received by the Trustee
simultaneously with the creation of the creditor relationship with the Company
(or any such obligor) arising from the making, drawing, negotiating or incurring
of the draft, bill of exchange, acceptance or obligation.

SECTION 1014. Co-trustees and Separate Trustees.

            (1) At any time or times, for the purpose of meeting the legal
requirements of any jurisdiction in which any of the Mortgaged Property may at
the time be located, the Company and the Trustee shall have power to appoint,
and, upon the written request of the Trustee or of the Holders of at least
thirty-three percentum (33%) in principal amount of the Securities then
Outstanding, the Company shall for such purpose join with the Trustee in the
execution and delivery of all instruments and agreements necessary or proper to
appoint, one or more Persons approved by the Trustee and, if no Event of Default
shall have occurred and be continuing, by the Company either to act as
co-trustee, jointly with the Trustee, of all or any part of the Mortgaged
Property, or to act as separate trustee of any such property, in either case
with such powers as may be provided in the instrument of appointment, and to
vest in such Person or Persons, in the capacity aforesaid, any property, title,
right or power deemed necessary or desirable, subject to the other provisions of
this Section. If the Company does not join in such appointment within fifteen
(15) days after the receipt by it of a request so to do, or if an Event of
Default shall have occurred and be continuing, the Trustee alone shall have
power to make such appointment.

            (2) Should any written instrument or instruments from the Company be
required by any co-trustee or separate trustee so appointed to more fully
confirm to such co-trustee or separate trustee such property, title, right or
power, any and all such instruments shall, on request, be executed, acknowledged
and delivered by the Company.

            (3) Every co-trustee or separate trustee shall, to the extent
permitted by law, but to such extent only, be appointed subject to the following
conditions:

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                  (A) the Securities shall be authenticated and delivered, and
all rights, powers, duties and obligations hereunder in respect of the custody
of securities, cash and other personal property held by, or required to be
deposited or pledged with the Trustee hereunder shall be exercised solely by the
Trustee;

                  (B) the rights, powers, duties and obligations hereby
conferred or imposed upon the Trustee in respect of any property covered by such
appointment shall be conferred or imposed upon and exercised or performed either
by the Trustee or by the Trustee and such co-trustee or separate trustee
jointly, as shall be provided in the instrument appointing such co-trustee or
separate trustee, except to the extent that under any law of any jurisdiction in
which any particular act is to be performed the Trustee shall be incompetent or
unqualified to perform such act, in which event such rights, powers, duties and
obligations shall be exercised and performed by such co-trustee or separate
trustee;

                  (C) the Trustee at any time, by an instrument in writing
executed by it, with the concurrence of the Company, may accept the resignation
of or remove any co-trustee or separate trustee appointed under this Section,
and, if an Event of Default shall have occurred and be continuing, the Trustee
shall have power to accept the resignation of, or remove, any such co-trustee or
separate trustee without the concurrence of the Company. Upon the written
request of the Trustee, the Company shall join with the Trustee in the execution
and delivery of all instruments and agreements necessary or proper to effectuate
such resignation or removal. A successor to any co-trustee or separate trustee
so resigned or removed may be appointed in the manner provided in this Section;

                  (D) neither the Trustee nor any co-trustee or separate trustee
hereunder shall be personally liable by reason of any act or omission of any
other trustee hereunder; and

                  (E) any Act of Holders delivered to the Trustee shall be
deemed to have been delivered to each such co-trustee and separate trustee.

SECTION 1015. Appointment of Authenticating Agent.

      The Trustee may appoint an Authenticating Agent or Agents with respect to
the Securities of one or more series, or any Tranche thereof which shall be
authorized to act on behalf of the Trustee to authenticate Securities of such
series or Tranche issued upon original issuance, exchange, registration of
transfer or partial redemption thereof or pursuant to Section 306, and
Securities so authenticated shall be entitled to the benefits of this Indenture
and shall be valid and obligatory for all purposes as if authenticated by the
Trustee hereunder. Wherever reference is made in this Indenture to the
authentication and delivery of Securities by the Trustee or the Trustee's
certificate of authentication, such reference shall be deemed to include
authentication and delivery on behalf of the Trustee by an Authenticating Agent
and a certificate of authentication executed on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent shall be acceptable to the
Company and shall at all times be a corporation organized and doing business
under the laws of the United States, any State or Territory thereof or the
District of Columbia or the Commonwealth of Puerto Rico, authorized under such
laws to act as Authenticating Agent, having a combined capital and surplus of
not less than Fifty Million Dollars ($50,000,000) and subject to supervision or
examination by Federal or State authority. If

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such Authenticating Agent publishes reports of condition at least annually,
pursuant to law or to the requirements of said supervising or examining
authority, then for the purposes of this Section 1015, the combined capital and
surplus of such Authenticating Agent shall be deemed to be its combined capital
and surplus as set forth in its most recent report of condition so published. If
at any time an Authenticating Agent shall cease to be eligible in accordance
with the provisions of this Section 1015, such Authenticating Agent shall resign
immediately in the manner and with the effect specified in this Section 1015.

      Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to all or substantially all of
the corporate agency or corporate trust business of an Authenticating Agent
shall be the successor Authenticating Agent hereunder, provided such corporation
shall be otherwise eligible under this Section 1015, without the execution or
filing of any paper or any further act on the part of the Trustee or the
Authenticating Agent.

      An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Company. The Trustee may at any time terminate
the agency of an Authenticating Agent by giving written notice thereof to such
Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section 1015, the Trustee may appoint a successor
Authenticating Agent which shall be acceptable to the Company and shall give
notice of such appointment in the manner provided in Section 109 to all Holders
of Securities of the series or Tranche with respect to which such Authenticating
Agent will serve. Any successor Authenticating Agent upon acceptance of its
appointment hereunder shall become vested with all the rights, powers and duties
of its predecessor hereunder, with like effect as if originally named as an
Authenticating Agent. No successor Authenticating Agent shall be appointed
unless eligible under the provisions of this Section 1015.

      The Trustee agrees to pay to each Authenticating Agent from time to time
reasonable compensation for its services under this Section 1015, and the
Trustee shall be entitled to be reimbursed for such payments, subject to the
provisions of Section 1007.

      If an appointment with respect to the Securities of one or more series, or
any Tranche thereof, shall be made pursuant to this Section 1015, the Securities
of such series or Tranche may have endorsed thereon, in addition to the
Trustee's certificate of authentication, an alternative certificate of
authentication in the following form:

      This is one of the Securities of the series designated therein referred to
in the within-mentioned Indenture.

Date of Authentication: _____________

                                              _______________________,
                                                            as Trustee

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                                         By: _____________________________,
                                               as Authenticating Agent

                                         By: ______________________________
                                                   Authorized Officer

      If all of the Securities of a series may not be originally issued at one
time, and if the Trustee does not have an office capable of authenticating
Securities upon original issuance located in a Place of Payment where the
Company wishes to have Securities of such series authenticated upon original
issuance, the Trustee, if so requested by the Company in writing (which writing
need not comply with Section 105 and need not be accompanied by an Opinion of
Counsel), shall appoint, in accordance with this Section and in accordance with
such procedures as shall be acceptable to the Trustee, an Authenticating Agent
having an office in a Place of Payment designated by the Company with respect to
such series of Securities.

SECTION 1016. Environmental Matters.

      Notwithstanding any other provision of this Indenture, the Trustee shall
have the power and the right, but not the duty, to:

            (1) refuse to accept property as Mortgaged Property if the Trustee
determines, based upon a report of an environmental science engineering firm
acceptable to it, that such property either is contaminated by any hazardous
substance or is being used or has been used for any activity directly or
indirectly involving a hazardous substance which would result in liability to
the Mortgaged Property or the Trustee or otherwise impair the value of the
Mortgaged Property; and

            (2) disclaim any power (including, without limitation, the power to
sell any Mortgaged Property) granted by the Indenture or any statute or rule of
law, the exercise of which power may, in the sole discretion of the Trustee, as
advised by counsel, cause the Trustee to incur corporate or personal liability
under any environmental law.

      For purposes of this Section and Section 1007(3), the term "environmental
law" means any federal, state or local law, rule, regulation or ordinance
relating to the protection of the environment or human health. For purposes of
this Section, the term "hazardous substance" means any substance defined as
hazardous or toxic or otherwise regulated by any environmental law. The Trustee
shall not be liable or responsible to the Company or any other party for any
decrease in value of the Mortgaged Property by reason of availing itself of the
rights granted by this Section or by reason of the Trustee's compliance with any
environmental law, specifically including any reporting requirement under any
such law. Neither the acceptance by the Trustee of property or a failure by the
Trustee to inspect property shall be deemed to create any inference that there
is or may be liability under any environmental law with respect to such
property.

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                                ARTICLE ELEVEN.

                LISTS OF HOLDERS; REPORTS BY TRUSTEE AND COMPANY

SECTION 1101. Company to Furnish Trustee Names and Addresses of Holders.

      The Company will furnish or cause to be furnished to the Trustee:

            (1) semi-annually, not later than January 15 and July 15 in each
year, a list, in such form as the Trustee may reasonably require, of the names
and addresses of the Holders of Securities of each series as of the preceding
January 1 or July 1 as the case may be; and

            (2) at such other times as the Trustee may request in writing,
within thirty (30) days after the receipt by the Company of any such request, a
list of similar form and content as of a date not more than fifteen (15) days
prior to the time such list is furnished;

provided, however, that if and so long as the Trustee shall be Security
Registrar for Securities of a series, no such list need be furnished with
respect to such series of Securities.

SECTION 1102. Preservation of Information; Communications to Holders.

      The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 1101 and the names and
addresses of Holders received by the Trustee in its capacity as Security
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 1101 upon receipt of a new list so furnished.

      The rights of Holders to communicate with other Holders with respect to
their rights under this Indenture or under the Securities, and the corresponding
rights and privileges of the Trustee, shall be as provided in the Trust
Indenture Act.

      Every Holder, by receiving and holding the same, agrees with the Company
and the Trustee that neither the Company nor the Trustee nor any agent of either
of them shall be held accountable by reason of any disclosure of information as
to names and addresses of Holders made pursuant to the Trust Indenture Act.

SECTION 1103. Reports by Trustee.

      The Trustee shall transmit to Holders such reports concerning the Trustee
and its actions under this Indenture as may be required pursuant to the Trust
Indenture Act at the times and in the manner provided pursuant thereto.

      Reports so required to be transmitted at stated intervals of not more than
twelve (12) months shall be transmitted no later than January 31 in each
calendar year, commencing with the first January 31 after the first issuance of
Securities under this Indenture.

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      A copy of each such report shall, at the time of such transmission to
Holders, be filed by the Trustee with each stock exchange upon which any
Securities are listed, with the Commission and with the Company.

SECTION 1104. Reports by Company.

      The Company shall file with the Trustee and the Commission, and transmit
to Holders, such information, documents and other reports, and such summaries
thereof, as may be required pursuant to the Trust Indenture Act at the times and
in the manner provided in the Trust Indenture Act. The Company will notify the
Trustee when any Securities are listed on any stock exchange.

                                ARTICLE TWELVE.

              CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE

SECTION 1201. Company May Consolidate, Etc., Only on Certain Terms.

      The Company shall not consolidate with or merge into any other Person or
convey, transfer or lease, subject to the Lien of this Indenture, all of the
Mortgaged Property as or substantially as an entirety to any Person, unless:

            (1) in case the Company shall consolidate with or merge into another
Person or convey, transfer or lease all of the Mortgaged Property as or
substantially as an entirety to any Person, the Person formed by such
consolidation or into which the Company is merged or the Person which acquires
by conveyance or transfer, or which leases, the Mortgaged Property as or
substantially as an entirety shall be a Person organized and validly existing
under the laws of the United States, any State or Territory thereof or the
District of Columbia (such Person being hereinafter sometimes called the
"Successor Corporation") and shall execute and deliver to the Trustee an
indenture supplemental hereto, in form satisfactory to the Trustee, which:

                  (A) in the case of a consolidation, merger, conveyance or
other transfer, or in the case of a lease if the term thereof extends beyond the
last Stated Maturity of the Securities then Outstanding, contains an express
assumption by the Successor Corporation of the due and punctual payment of the
principal of and premium, if any, and interest, if any, on all the Securities
then Outstanding and the performance and observance of every covenant and
condition of this Indenture to be performed or observed by the Company; and

                  (B) in the case of a consolidation, merger, conveyance or
other transfer, contains a grant, conveyance, transfer and mortgage by the
Successor Corporation, of the same tenor of the Granting Clauses herein:

                        (i) confirming the Lien of this Indenture on the
Mortgaged Property (as constituted immediately prior to the time such
transaction became effective) and subjecting to the Lien of this Indenture all
property, real, personal and mixed, thereafter acquired by the Successor
Corporation which shall constitute an improvement, extension or addition to the
Mortgaged Property (as so constituted) or a renewal, replacement or substitution
of or for any part thereof; and

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                        (ii) at the election of the Successor Corporation
subjecting to the Lien of this Indenture such property, real, personal or mixed,
in addition to the property described in clause (i) of this Section, then owned
or thereafter acquired by the Successor Corporation as the Successor Corporation
shall, in its sole discretion, specify or describe therein, and the Lien
confirmed or created by such grant, conveyance, transfer and mortgage shall have
force, effect and standing similar to those which the Lien of this Indenture
would have had if the Company had not been a party to such consolidation,
merger, conveyance or other transfer and had itself, after the time such
transaction became effective, purchased, constructed or otherwise acquired the
property subject to such grant, conveyance, transfer and mortgage;

            (2) in the case of a lease, such lease shall be made expressly
subject to termination by the Company or by the Trustee at any time during the
continuance of an Event of Default, and also by the purchaser of the property so
leased at any sale thereof hereunder, whether such sale be made under the power
of sale hereby conferred or pursuant to judicial proceedings;

            (3) immediately after giving effect to such transaction, no Event of
Default, and no event which, after notice or lapse of time or both, would become
an Event of Default, shall have happened and be continuing; and

            (4) the Company has delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel stating that such consolidation, merger,
conveyance, transfer or lease and such supplemental indenture, comply with this
Article Twelve and that all conditions precedent herein provided for relating to
such transaction have been complied with.

SECTION 1202. Successor Corporation Substituted.

      Upon any consolidation of the Company with, or merger of the Company into,
any other Person or any conveyance, transfer or lease, subject to the Lien of
this Indenture, of the Mortgaged Property as or substantially as an entirety in
accordance with Section 1201, the Successor Corporation formed by such
consolidation or into which the Company is merged or to which such conveyance,
transfer or lease is made shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under this Indenture with the
same effect as if such Successor Corporation had been named as the Company
herein. Without limiting the generality of the foregoing:

            (1) all property of the Successor Corporation then subject to the
Lien of this Indenture, of the character described in Section 103, shall
constitute Property Additions;

            (2) the Successor Corporation may execute and deliver to the
Trustee, and thereupon the Trustee shall, subject to the provisions of Article
Four, authenticate and deliver, Securities upon any basis provided in Article
Four; and

            (3) the Successor Corporation may, subject to the applicable
provisions of this Indenture, cause Property Additions to be applied to any
other Authorized Purpose.

      All Securities so executed by the Successor Corporation, and authenticated
and delivered by the Trustee, shall in all respects be entitled to the benefit
of the Lien of this Indenture equally

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and ratably with all Securities executed, authenticated and delivered prior to
the time such consolidation, merger, conveyance or other transfer became
effective.

SECTION 1203. Extent of Lien Hereof on Property of Successor Corporation.

      Unless, in the case of a consolidation, merger, conveyance or other
transfer contemplated by Section 1201, the indenture supplemental hereto
contemplated in clause (1)(B) in Section 1201, or any other indenture, contains
a grant, conveyance, transfer and mortgage by the Successor Corporation as
described in subclause (ii) thereof, neither this Indenture nor such
supplemental indenture shall become or be, or be required to become or be, a
Lien upon any of the properties:

            (1) owned by the Successor Corporation or any other party to such
transaction (other than the Company) immediately prior to the time of
effectiveness of such transaction; or

            (2) acquired by the Successor Corporation at or after the time of
effectiveness of such transaction, except, in either case, properties acquired
from the Company in or as a result of such transaction and improvements,
extensions and additions to such properties and renewals, replacements and
substitutions of or for any part or parts thereof.

SECTION 1204. Release of Company upon Conveyance or Other Transfer.

      In the case of a conveyance or other transfer to any Person or Persons as
contemplated in Section 1201, upon the satisfaction of all the conditions
specified in Section 1201, the Company (such term being used in this Section
without giving effect to such transaction) shall be released and discharged from
all obligations and covenants under this Indenture and on and under all
Securities then Outstanding (unless the Company shall have delivered to the
Trustee an instrument in which it shall waive such release and discharge) and
the Trustee shall acknowledge in writing that the Company has been so released
and discharged.

SECTION 1205. Merger into Company; Extent of Lien Hereof.

            (1) Nothing in this Indenture shall be deemed to prevent or restrict
any consolidation or merger after the consummation of which the Company would be
the surviving or resulting corporation or any conveyance or other transfer, or
lease, subject to the Lien of this Indenture, of any part of the Mortgaged
Property which does not constitute the entirety, or substantially the entirety,
thereof.

            (2) Unless, in the case of a consolidation or merger described in
clause (1) of this Section, an indenture supplemental hereto shall otherwise
provide, this Indenture shall not become or be, or be required to become or be,
a Lien upon any of the properties acquired by the Company in or as a result of
such transaction or any improvements, extensions or additions to such properties
or any renewals, replacements or substitutions of or for any part or parts
thereof.

                                      103
<PAGE>

                               ARTICLE THIRTEEN.

                             SUPPLEMENTAL INDENTURES

SECTION 1301. Supplemental Indentures Without Consent of Holders.

      Without the consent of any Holders, the Company, when authorized by a
General Partner Resolution, and the Trustee, at any time and from time to time,
may enter into one or more indentures supplemental hereto, in form reasonably
satisfactory to the Trustee, for any of the following purposes:

            (1) to evidence the succession of another Person to the Company, or
successive successions, and the assumption by any such successor of the
covenants, agreements and obligations of the Company herein and in the
Securities, all as provided in Article Twelve; or

            (2) to add one or more covenants of the Company or other provisions
for the benefit of the Holders of, or to remain in effect only so long as there
shall be Outstanding, all or any series of Securities, or any Tranches thereof
(and if such covenants are to be for the benefit of less than all series of
Securities, stating that such covenants are expressly being included solely for
the benefit of such series), or to surrender any right or power herein conferred
upon the Company; or

            (3) to correct or amplify the description of any property at any
time subject to the Lien of this Indenture; or better to assure, convey and
confirm unto the Trustee any property subject or required to be subjected to the
Lien of this Indenture; or to subject to the Lien of this Indenture additional
property (including property of Persons other than the Company), to specify any
additional Permitted Liens with respect to such additional property and to
modify Section 702 in order to specify therein any additional items with respect
to such additional property; or

            (4) to establish the form or terms of Securities of any series or
Tranche as permitted by Sections 201 and 301; or

            (5) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities of one or more
series and to add to or change any of the provisions of this Indenture as shall
be necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee, pursuant to the requirements of Section
1011; or

            (6) to provide for the procedures required to permit the Company to
utilize, at its option, a non-certificated system of registration for all, or
any series or Tranche of, the Securities; or

            (7) to change any place or places where (A) the principal of and
premium, if any, and interest, if any, on all or any series of Securities, or
any Tranche thereof, shall be payable, (B) all or any series of Securities, or
any Tranche thereof, may be surrendered for registration of transfer, (C) all or
any series of Securities, or any Tranche thereof, may be

                                      104
<PAGE>

surrendered for exchange and (D) notices and demands to or upon the Company in
respect of all or any series of Securities, or any Tranche thereof, and this
Indenture may be served; or

            (8) to cure any ambiguity, to correct or supplement any provision in
this Indenture which may be defective or inconsistent with any other provision
herein, or to make any other additions to, deletions from or other changes to
the provisions under this Indenture, provided that such additions, deletions
and/or other changes shall not adversely affect the interests of the Holders of
Securities of any series or Tranche in any material respect; or

            (9) to provide for the authentication and delivery of bearer bonds
and coupons appertaining thereto representing interest, if any, thereon and for
the procedures for the registration, exchange and replacement thereof and for
the giving of notice to, and the solicitation of the vote or consent of, the
Holders thereof, and for any and all other matters incidental thereto; or

            (10) to comply with the rules or regulations of any securities
exchange or automated quotation system on which any of the Securities may be
listed or traded; or

            (11) to modify, eliminate or add to the provisions of this Indenture
to such extent as shall be necessary to effect the qualification of this
Indenture under the Trust Indenture Act, or under any similar federal statute
hereafter enacted, and to add to this Indenture such other provisions as may be
expressly permitted by the Trust Indenture Act, excluding, however the
provisions referred to in Section 316(a)(2) of the Trust Indenture Act as in
effect at the date as of which this instrument was executed or any corresponding
provision in any similar federal statute hereafter enacted.

Without limiting the generality of the foregoing, if the Trust Indenture Act as
in effect at the date of the execution and delivery of this Indenture, as
originally executed and delivered, or at any time thereafter shall be amended
and if any such amendment shall require one or more changes to any provisions
hereof or the inclusion herein of any additional provisions, or shall by
operation of law be deemed to effect such changes or incorporate such provisions
by reference or otherwise, this Indenture shall be deemed to have been amended
so as to conform to such amendment to the Trust Indenture Act, and the Company
and the Trustee may, without the consent of any Holders, enter into an indenture
supplemental hereto to evidence such amendment hereof.

SECTION 1302. Supplemental Indentures With Consent of Holders.

      Subject to the provisions of Section 1301, with the consent of the Holders
of not less than a majority in aggregate principal amount of the Securities of
all series then Outstanding under this Indenture, considered as one class, by
Act of said Holders delivered to the Company and the Trustee, the Company and
the Trustee may enter into an indenture or indentures supplemental hereto for
the purpose of adding any provisions to, or changing in any manner or
eliminating any of the provisions of, this Indenture; provided, however, that if
there shall be Securities of more than one series Outstanding hereunder and if a
proposed supplemental indenture shall directly affect the rights of the Holders
of Securities of one or more, but less than all, of such series, then the
consent only of the Holders of a majority in aggregate principal amount of the
Outstanding

                                      105
<PAGE>

Securities of all series so directly affected, considered as one class, shall be
required; and provided, further, that if the Securities of any series shall have
been issued in more than one Tranche and if a proposed supplemental indenture
shall directly affect the rights of the Holders of Securities of one or more,
but less than all, of such Tranches, then the consent only of the Holders of a
majority in aggregate principal amount of the Outstanding Securities of all
Tranches so directly affected, considered as one class, shall be required; and
provided, further, that no such supplemental indenture shall:

            (1) change the Stated Maturity of the principal of, or any
installment of principal of or interest on, any Security, or reduce the
principal amount thereof or the rate of interest thereon or the amount of any
installment of interest thereon or change the method of calculating such rate or
any premium payable upon the redemption thereof, or reduce the amount of the
principal of an Original Issue Discount Security or any other Security which
would be due and payable upon a declaration of acceleration of the Maturity
thereof pursuant to Section 902, or change the coin or currency in which, any
Security or any premium or interest thereon is payable, or impair the right to
institute suit for the enforcement of any such payment on or after the Stated
Maturity thereof (or, in the case of redemption, on or after the Redemption
Date) without the consent of the Holder of such Security; or

            (2) permit the creation of any Lien (not otherwise permitted hereby)
ranking prior to the Lien of this Indenture with respect to all or substantially
all of the Mortgaged Property, or (except by virtue of a supplemental indenture
described in clause (9) in Section 1301) terminate the Lien of this Indenture on
all or substantially all of the Mortgaged Property or deprive the Holders of the
benefit of the Lien of this Indenture, without, in any such case, the consent of
the Holders of all Securities then Outstanding; or

            (3) reduce the percentage in principal amount of the Outstanding
Securities of any series, or any Tranche thereof, the consent of the Holders of
which is required for any such supplemental indenture, or the consent of the
Holders of which is required for any waiver (of compliance with any provision of
this Indenture or any default hereunder and its consequence), or reduce the
requirements for quorum or voting provided for in this Indenture without the
consent of the Holder of each Outstanding Security of such series; or

            (4) modify any of the provisions of this Section 1302, Section 917
or Section 609, except to increase any such percentage or to provide that
certain other provisions of this Indenture cannot be modified or waived, without
the consent of the Holder of each Outstanding Security affected thereby;
provided, however, that this clause shall not be deemed to require the consent
of any Holder with respect to changes in the references to "the Trustee" and
concomitant changes in this Section 1302 and Section 609, or the deletion of
this proviso, in accordance with the requirements of Sections 1011 and 1301(5).

      A supplemental indenture which changes or eliminates any covenant or other
provision of this Indenture which has expressly been included solely for the
benefit of, or that is to remain in effect only so long as there shall be
Outstanding, one or more particular series of Securities, or which modifies the
rights of the Holders of Securities of such series with respect to such covenant
or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Securities of any other series or Tranche.

                                      106
<PAGE>

      It shall not be necessary for any Act of Holders under this Section 1302
to approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.

SECTION 1303. Execution of Supplemental Indentures.

      In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article Thirteen or the modifications
thereby of the trusts created by this Indenture, the Trustee shall be entitled
to receive, and (subject to Section 1001) shall be fully protected in relying
upon, an Officers' Certificate and an Opinion of Counsel stating that the
execution of such supplemental indenture is authorized or permitted by this
Indenture. The Trustee may, but shall not be obligated to, enter into any such
supplemental indenture which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.

SECTION 1304. Effect of Supplemental Indentures.

      Upon the execution of any supplemental indenture under this Article
Thirteen, this Indenture shall be modified in accordance therewith, and such
supplemental indenture shall form a part of this Indenture for all purposes; and
every Holder of Securities theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby.

SECTION 1305. Conformity with Trust Indenture Act.

      Every supplemental indenture executed pursuant to this Article Thirteen
shall conform to the requirements of the Trust Indenture Act.

SECTION 1306. Reference in Securities to Supplemental Indentures.

      Securities of any series, or any Tranche thereof, authenticated and
delivered after the execution of any supplemental indenture pursuant to this
Article Thirteen may, and shall if required by the Trustee, bear a notation in
form approved by the Trustee as to any matter provided for in such supplemental
indenture. If the Company shall so determine, new Securities of any series, or
any Tranche thereof, so modified as to conform, in the opinion of the Trustee
and the Company, to any such supplemental indenture may be prepared and executed
by the Company and authenticated and delivered by the Trustee in exchange for
Outstanding Securities of such series or Tranche.

SECTION 1307. Modification Without Supplemental Indenture.

      To the extent, if any, that the terms of any particular series of
Securities shall have been established in or pursuant to a General Partner
Resolution or an Officer's Certificate pursuant to a supplemental indenture or a
General Partner Resolution as contemplated by Section 301, and not in a
supplemental indenture, additions to, changes in or the elimination of any of
such terms may be effected by means of a supplemental General Partner Resolution
or a supplemental Officer's Certificate, as the case may be, delivered to, and
accepted by, the Trustee, provided, however, that such supplemental General
Partner Resolution or supplemental Officer's Certificate shall not be accepted
by the Trustee or otherwise be effective unless all conditions set forth in this
Indenture which would be required to be satisfied if such additions, changes or

                                      107
<PAGE>

elimination were contained in a supplemental indenture shall have been
appropriately satisfied. Upon the acceptance thereof by the Trustee, any such
supplemental General Partner Resolution or supplemental Officer's Certificate
shall be deemed to be a "supplemental indenture" for purposes of Section 1304
and 1306 and a "supplemental indenture", "indenture supplemental" to this
Indenture or "instrument" supplemental to this Indenture for purposes of Section
608.

                               ARTICLE FOURTEEN.

                   MEETINGS OF HOLDERS; ACTION WITHOUT MEETING

SECTION 1401. Purposes for Which Meetings May Be Called.

      A meeting of Holders of Securities of one or more, or all, series, or any
Tranche or Tranches thereof, may be called at any time and from time to time
pursuant to this Article to make, give or take any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be made, given or taken by Holders of Securities of such
series or Tranches.

SECTION 1402. Call, Notice and Place of Meetings.

            (1) The Trustee may at any time call a meeting of Holders of
Securities of one or more, or all, series, or any Tranche or Tranches thereof,
for any purpose specified in Section 1401, to be held at such time and (except
as provided in clause (2) of this Section 1402) at such place in the Borough of
Manhattan, the City of New York, as the Trustee shall determine, or, with the
approval of the Company, at any other place. Notice of every such meeting,
setting forth the time and the place of such meeting and in general terms the
action proposed to be taken at such meeting, shall be given, in the manner
provided in Section 109, not less than twenty-one (21) nor more than one hundred
eighty (180) days prior to the date fixed for the meeting.

            (2) The Trustee may be asked to call a meeting of the Holders of
Securities of one or more, or all, series, or any Tranche or Tranches thereof,
by the Company or by the Holders of thirty-three percentum (33%) in aggregate
principal amount of all of such series and Tranches, considered as one class,
for any purpose specified in Section 1401, by written request setting forth in
reasonable detail the action proposed to be taken at the meeting. If the Trustee
shall have been asked by the Company to call such a meeting, the Company shall
determine the time and place for such meeting and may call such meeting by
giving notice thereof in the manner provided in clause (1) of this Section, or
shall direct the Trustee, in the name and at the expense of the Company, to give
such notice. If the Trustee shall have been asked to call such a meeting by
Holders in accordance with this clause (2), and the Trustee shall not have given
the notice of such meeting within twenty-one (21) days after receipt of such
request or shall not thereafter proceed to cause the meeting to be held as
provided herein, then the Holders of Securities of such series and Tranches, in
the principal amount above specified, may determine the time and the place in
the Borough of Manhattan, The City of New York, or in such other place as shall
be determined or approved by the Company, for such meeting and may call such
meeting for such purposes by giving notice thereof as provided in clause (1) of
this Section.

                                      108
<PAGE>

            (3) Any meeting of Holders of Securities of one or more, or all,
series, or any Tranche or Tranches thereof, shall be valid without notice if the
Holders of all Outstanding Securities of such series or Tranches are present in
person or by proxy and if representatives of the Company and the Trustee are
present, or if notice is waived in writing before or after the meeting by the
Holders of all Outstanding Securities of such series, or any Tranche or Tranches
thereof, or by such of them as are not present at the meeting in person or by
proxy, and by the Company and the Trustee.

SECTION 1403. Persons Entitled to Vote at Meetings.

      To be entitled to vote at any meeting of Holders of Securities of one or
more, or all, series, or any Tranche or Tranches thereof, a Person shall be (a)
a Holder of one or more Outstanding Securities of such series or Tranches or (b)
a Person appointed by an instrument in writing as proxy for a Holder or Holders
of one or more Outstanding Securities of such series or Tranches by such Holder
or Holders. The only Persons who shall be entitled to attend any meeting of
Holders of Securities of any series or Tranche shall be the Persons entitled to
vote at such meeting and their counsel, any representatives of the Trustee and
its counsel and any representatives of the Company and its counsel.

SECTION 1404. Quorum; Action.

      The Persons entitled to vote a majority in aggregate principal amount of
the Outstanding Securities of the series and Tranches with respect to which a
meeting shall have been called as herein before provided, considered as one
class, shall constitute a quorum for a meeting of Holders of Securities of such
series and Tranches; provided, however, that if any action is to be taken at
such meeting which this Indenture expressly provides may be taken by the Holders
of a specified percentage, which is less than a majority, in principal amount of
the Outstanding Securities of such series and Tranches, considered as one class,
the Persons entitled to vote such specified percentage in principal amount of
the Outstanding Securities of such series and Tranches, considered as one class,
shall constitute a quorum. In the absence of a quorum within one hour of the
time appointed for any such meeting, the meeting shall, if convened at the
request of Holders of Securities of such series and Tranches, be dissolved. In
any other case the meeting may be adjourned for such period as may be determined
by the chairman of the meeting prior to the adjournment of such meeting. In the
absence of a quorum at any such adjourned meeting, such adjourned meeting may be
further adjourned for such period as may be determined by the chairman of the
meeting prior to the adjournment of such adjourned meeting. Except as provided
by Section 1405, notice of the reconvening of any meeting adjourned for more
than thirty (30) days shall be given as provided in Section 109 not less than
ten (10) days prior to the date on which the meeting is scheduled to be
reconvened. Notice of the reconvening of an adjourned meeting shall state
expressly the percentage, as provided above, of the principal amount of the
Outstanding Securities of such series and Tranches which shall constitute a
quorum.

      Except as limited by Section 1302, any resolution presented to a meeting
or adjourned meeting duly reconvened at which a quorum is present as aforesaid
may be adopted only by the affirmative vote of the Holders of a majority in
aggregate principal amount of the Outstanding Securities of the series and
Tranches with respect to which such meeting shall have been called,

                                      109
<PAGE>

considered as one class; provided, however, that, except as so limited, any
resolution with respect to any action which this Indenture expressly provides
may be taken by the Holders of a specified percentage, which is less than a
majority, in principal amount of the Outstanding Securities of such series and
Tranches, considered as one class, may be adopted at a meeting or an adjourned
meeting duly reconvened and at which a quorum is present as aforesaid by the
affirmative vote of the Holders of such specified percentage in principal amount
of the Outstanding Securities of such series and Tranches, considered as one
class.

      Any resolution passed or decision taken at any meeting of Holders of
Securities duly held in accordance with this Section shall be binding on all the
Holders of Securities of the series and Tranches with respect to which such
meeting shall have been held, whether or not present or represented at the
meeting.

SECTION 1405. Attendance at Meetings; Determination of Voting Rights; Conduct
              and Adjournment of Meetings.

            (1) Attendance at meetings of Holders may be in person or by proxy;
and, to the extent permitted by law, any such proxy shall remain in effect and
be binding upon any future Holder of the Securities with respect to which it was
given unless and until specifically revoked by the Holder or future Holder
(except as provided in Section 107) of such Securities before being voted.

            (2) Notwithstanding any other provisions of this Indenture, the
Trustee may make such reasonable regulations as it may deem advisable for any
meeting of Holders in regard to proof of the holding of such Securities and of
the appointment of proxies and in regard to the appointment and duties of
inspectors of votes, the submission and examination of proxies, certificates and
other evidence of the right to vote, and such other matters concerning the
conduct of the meeting as it shall deem appropriate. Except as otherwise
permitted or required by any such regulations and approved by the Company, the
holding of Securities shall be proved in the manner specified in Section 107 and
the appointment of any proxy shall be proved in the manner specified in Section
107. Such regulations may provide that written instruments appointing proxies,
regular on their face, may be presumed valid and genuine without the proof
specified in Section 107 or other proof.

            (3) The Trustee shall, by an instrument in writing, appoint a
temporary chairman of the meeting, unless the meeting shall have been called by
the Company or by Holders as provided in Section 1402(2), in which case the
Company or the Holders of Securities of the series and Tranches calling the
meeting, as the case may be, shall in like manner appoint a temporary chairman.
A permanent chairman and a permanent secretary of the meeting shall be elected
by vote of the Persons entitled to vote a majority in aggregate principal amount
of the Outstanding Securities of all series and Tranches represented at the
meeting, considered as one class.

            (4) At any meeting each Holder or proxy shall be entitled to one
vote for each One Thousand Dollars ($1,000) principal amount of Outstanding
Securities held or represented by such Holder; provided, however, that no vote
shall be cast or counted at any meeting in respect of any Security challenged as
not Outstanding and ruled by the chairman of the meeting

                                      110
<PAGE>

to be not Outstanding. The chairman of the meeting shall have no right to vote,
except as a Holder of a Security or proxy.

            (5) Any meeting duly called pursuant to Section 1402 at which a
quorum is present may be adjourned from time to time by Persons entitled to vote
a majority in aggregate principal amount of the Outstanding Securities of all
series and Tranches represented at the meeting, considered as one class; and the
meeting may be held as so adjourned without further notice.

SECTION 1406. Counting Votes and Recording Action of Meetings.

      The vote upon any resolution submitted to any meeting of Holders shall be
by written ballots on which shall be subscribed the signatures of the Holders or
of their representatives by proxy and the principal amounts and serial numbers
of the Outstanding Securities, of the series and Tranches with respect to which
the meeting shall have been called, held or represented by them. The permanent
chairman of the meeting shall appoint two (2) inspectors of votes who shall
count all votes cast at the meeting for or against any resolution and who shall
make and file with the secretary of the meeting their verified written reports
of all votes cast at the meeting. A record in duplicate of the proceedings of
each meeting of Holders shall be prepared by the secretary of the meeting and
there shall be attached to such record the original reports of the inspectors of
votes on any vote by ballot taken thereat and affidavits by one or more persons
having knowledge of the facts setting forth a copy of the notice of the meeting
and showing that such notice was given as provided in Section 1402 and, if
applicable, Section 1404. Each copy shall be signed and verified by the
affidavits of the permanent chairman and secretary of the meeting and one such
copy shall be delivered to the Company, and another to the Trustee to be
preserved by the Trustee, the latter to have attached thereto the ballots voted
at the meeting. Any record so signed and verified shall be conclusive evidence
of the matters therein stated.

SECTION 1407. Action Without Meeting.

      In lieu of a vote of Holders at a meeting as herein before contemplated in
this Article, any request, demand, authorization, direction, notice, consent,
waiver or other action may be made, given or taken by Holders by one or more
written instruments as provided in Section 106.

                                ARTICLE FIFTEEN.

   IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS, DIRECTORS AND EMPLOYEES

SECTION 1501. Exemption from Individual Liability.

      No recourse under or upon any obligation, covenant or agreement of this
Indenture, or of any Security, or for any claim based thereon or otherwise in
respect thereof, shall be had against any incorporator, member, manager,
stockholder, officer, director or employee, as such, past, present or future, of
the Company or any predecessor or successor corporation or company, either
directly or through the Company or any predecessor or successor corporation or
company or any Successor Corporation, whether by virtue of any constitution,
statute or rule of law, or by the enforcement of any assessment or penalty or
otherwise; it being expressly understood that

                                      111
<PAGE>

this Indenture and the obligations issued hereunder are solely corporate
obligations of the Company, and that no such personal liability whatsoever shall
attach to, or is or shall be incurred by, the incorporators, members, managers,
stockholders, officers, directors, or employees, as such, of the Company or any
predecessor or successor corporation or company, or any of them, because of the
creation of the indebtedness hereby authorized, or under or by reason of the
obligations, covenants or agreements contained in this Indenture or in any of
the Securities or implied therefrom; and that any and all such personal
liability, either at common law or in equity or by constitution or statute, of,
and any and all such rights and claims against, every such incorporator, member,
manager, stockholder, officer, director or employee, as such, because of the
creation of the indebtedness hereby authorized, or under or by reason of the
obligations, covenants or agreements contained in this Indenture or in any of
the Securities or implied therefrom, are hereby expressly waived and released as
a condition of, and as a consideration for, the execution of this Indenture and
the issuance of such Securities.

      This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.

                                      112
<PAGE>

      IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed as of the day and year first above written.

                                   TEXAS GENCO, LP

                                   By: TEXAS GENCO GP, LLC

                                       By: /s/ Marc Kilbride
                                           -----------------------------------
                                           Name:  Marc Kilbride
                                           Title: Vice President and Treasurer

                                   JPMORGAN CHASE BANK, as Trustee

                                   By: /s/ Carol Logan
                                       ---------------------------------------
                                       Name:  Carol Logan
                                       Title: Vice President and Trust Officer

                                      113
<PAGE>

                                                                       EXHIBIT A

                                  REAL PROPERTY

A.    S. R. BERTRON ELECTRIC GENERATING STATION (2012 Miller Cut-Off Road, Deer
      Park, Harris County, Texas)

      1.    The land, improvements, fixtures and other property thereon and
            appurtenances thereto conveyed by the Company pursuant to that
            certain Deed related to the S. R. Bertron Electric Generating
            Station filed for record under Clerk's File No. W048257 and Film
            Code No. ###-##-#### in the Real Property Records of HARRIS COUNTY,
            TEXAS, together with all equipment, supplies, and other tangible or
            intangible personal property located thereon or used or enjoyed in
            connection therewith which are owned by the Grantee (as defined
            therein).

      2.    The easements and appurtenant rights conveyed by the Company
            pursuant to that certain Easement and Covenant Agreement related to
            the S. R. Bertron Electric Generating Station filed for record under
            Clerk's File No. W048258 and Film Code No. 555-89-2094 in the Real
            Property Records of HARRIS COUNTY, TEXAS (it being understood that
            the property being released from the lien of the Mortgage consists
            only of the easements granted by the Company and not fee title to
            the land covered by such easements).

      3.    The land, improvements, fixtures and other property thereon and
            appurtenances thereto conveyed by the Company pursuant to that
            certain Deed related to Barnes Island at S. R. Bertron Electric
            Generating Station filed for record under Clerk's File No. W048259
            and Film Code No. 555-89-2199 in the Real Property Records of HARRIS
            COUNTY, TEXAS, together with all equipment, supplies, and other
            tangible or intangible personal property located thereon or used or
            enjoyed in connection therewith which are owned by the Grantee (as
            defined therein).

      4.    The easements and appurtenant rights conveyed by the Company
            pursuant to that certain Assignment and Conveyance of Easements
            related to S. R. Bertron Electric Generating Station filed for
            record under Clerk's File No. W048260 and Film Code No. 555-89-2219
            in the Real Property Records of HARRIS COUNTY, TEXAS (it being
            understood that the property being released from the lien of the
            Mortgage consists only of the easements granted by the Company and
            not fee title to the land covered by such easements).

B.    CEDAR BAYOU ELECTRIC GENERATING STATION (7705 Old West Bay Boulevard,
      Eldon, Chambers County, Texas)

      1.    The land, improvements, fixtures and other property thereon and
            appurtenances thereto conveyed by the Company pursuant to that
            certain Deed related to the Cedar Bayou Electric Generating Station
            filed for record under Clerk's File No. 6952B and Volume 575, Page
            835 in the Real Property Records of

                                      A-1
<PAGE>

            CHAMBERS COUNTY, TEXAS, together with all equipment, supplies, and
            other tangible or intangible personal property located thereon or
            used or enjoyed in connection therewith which are owned by the
            Grantee (as defined therein).

      2.    The easements and appurtenant rights conveyed by the Company
            pursuant to that certain Easement and Covenant Agreement related to
            the Cedar Bayou Electric Generating Station filed for record under
            Clerk's File No. 6953B and Volume 576, Page 1 in the Real Property
            Records of CHAMBERS COUNTY, TEXAS (it being understood that the
            property being released from the lien of the Mortgage consists only
            of the easements granted by the Company and not fee title to the
            land covered by such easements).

      3.    The land, improvements, fixtures and other property thereon and
            appurtenances thereto conveyed by the Company pursuant to that
            certain Deed related to the Fisher tracts and Intake Canal at Cedar
            Bayou Electric Generating Station filed for record under Clerk's
            File No. W048261 and Film Code No. 555-89-2222 in the Real Property
            Records of HARRIS COUNTY, TEXAS, together with all equipment,
            supplies, and other tangible or intangible personal property located
            thereon or used or enjoyed in connection therewith which are owned
            by the Grantee (as defined therein).

      4.    The land, improvements, fixtures and other property thereon and
            appurtenances thereto conveyed by the Company pursuant to that
            certain Special Warranty Deed related to the Conference Center at
            Cedar Bayou Electric Generating Station filed for record under
            Clerk's File No. 6955B and Volume 576, Page 100 in the Real Property
            Records of CHAMBERS COUNTY, TEXAS, together with all equipment,
            supplies, and other tangible or intangible personal property located
            thereon or used or enjoyed in connection therewith which are owned
            by the Grantee (as defined therein).

      5.    The easements and appurtenant rights conveyed by the Company
            pursuant to that certain Assignment Agreement related to five
            easements comprising part of the Cooling Pond at the Cedar Bayou
            Electric Generating Station filed for record under Clerk's File No.
            6954B and Volume 576, Page 88 in the Real Property Records of
            CHAMBERS COUNTY, TEXAS.

      6.    Interests conveyed by the Company pursuant to that certain
            Assignment of Fencing License related to the Fisher Tracts at the
            Cedar Bayou Electric Generating Station filed for record under
            Clerk's File No. W048264 and Film Code No. 555-89-2245 in the Real
            Property Records of HARRIS COUNTY, TEXAS.

      7.    The easements and appurtenant rights conveyed by the Company
            pursuant to that certain Easement Agreement relating to the Cooling
            Pond Fishing License at the Cedar Bayou Electric Generating Station
            filed for record under Clerk's File No. 6956B and Volume 576, Page
            111 in the Real Property Records of CHAMBERS COUNTY, TEXAS.

                                      A-2
<PAGE>

C.    H.O. CLARKE ELECTRIC GENERATING STATION (12100 Hiram Clark Road, Houston,
      Harris County, Texas)

      1.    The land, improvements, fixtures and other property thereon and
            appurtenances thereto conveyed by the Company pursuant to that
            certain Deed related to the H.O. Clark Electric Generating Station
            filed for record under Clerk's File No. W048265 and Film Code No.
            ###-##-#### in the Real Property Records of HARRIS COUNTY, TEXAS,
            together with all equipment, supplies, and other tangible or
            intangible personal property located thereon or used or enjoyed in
            connection therewith which are owned by the Grantee (as defined
            therein).

      2.    The easements and appurtenant rights conveyed by the Company
            pursuant to that certain Easement and Covenant Agreement related to
            the H.O. Clark Electric Generating Station filed for record under
            Clerk's File No. W048266 and Film Code No. 555-89-2302 in the Real
            Property Records of HARRIS COUNTY, TEXAS (it being understood that
            the property being released from the lien of the Mortgage consists
            only of the easements granted by the Company and not fee title to
            the land covered by such easements).

D.    DEEPWATER ELECTRIC GENERATING STATION (901 Light Company Road, Pasadena,
      Harris County, Texas)

      1.    The land, improvements, fixtures and other property thereon and
            appurtenances thereto conveyed by the Company pursuant to that
            certain Deed related to the Deepwater Electric Generating Station
            filed for record under Clerk's File No. W048267 and Film Code No.
            ###-##-#### in the Real Property Records of HARRIS COUNTY, TEXAS,
            together with all equipment, supplies, and other tangible or
            intangible personal property located thereon or used or enjoyed in
            connection therewith which are owned by the Grantee (as defined
            therein).

      2.    The easements and appurtenant rights conveyed by the Company
            pursuant to that certain Easement and Covenant Agreement related to
            the Deepwater Electric Generating Station filed for record under
            Clerk's File No. W048268 and Film Code No. 555-89-2426 in the Real
            Property Records of HARRIS COUNTY, TEXAS (it being understood that
            the property being released from the lien of the Mortgage consists
            only of the easements granted by the Company and not fee title to
            the land covered by such easements).

E.    GREENS BAYOU ELECTRIC GENERATING STATION (12070 Beaumont Highway, Houston,
      Harris County, Texas

      1.    The land, improvements, fixtures and other property thereon and
            appurtenances thereto conveyed by the Company pursuant to that
            certain Deed related to the Greens Bayou Electric Generating Station
            filed for record under Clerk's File No. W048269 and Film Code No.
            ###-##-#### in the Real Property Records of HARRIS COUNTY, TEXAS,
            together with all equipment, supplies, and other tangible

                                      A-3
<PAGE>

            or intangible personal property located thereon or used or enjoyed
            in connection therewith which are owned by the Grantee (as defined
            therein).

      2.    The easements and appurtenant rights conveyed by the Company
            pursuant to that certain Easement and Covenant Agreement related to
            the Greens Bayou Electric Generating Station filed for record under
            Clerk's File No. W048270 and Film Code No. 555-89-2569 in the Real
            Property Records of HARRIS COUNTY, TEXAS (it being understood that
            the property being released from the lien of the Mortgage consists
            only of the easements granted by the Company and not fee title to
            the land covered by such easements).

      3.    The land, improvements, fixtures and other property thereon and
            appurtenances thereto conveyed by the Company pursuant to that
            certain Deed related to the offsite Fore-Bay Cooling Pond at Greens
            Bayou Electric Generating Station filed for record under Clerk's
            File No. W048271 and Film Code No. 555-89-2659 in the Real Property
            Records of HARRIS COUNTY, TEXAS, together with all equipment,
            supplies, and other tangible or intangible personal property located
            thereon or used or enjoyed in connection therewith which are owned
            by the Grantee (as defined therein).

      4.    The easements, facilities and appurtenances thereto conveyed by the
            Company pursuant to that certain Easement and Conveyance related to
            the offsite Fore-Bay Water Line, Supervisory Cable and Metering
            Station at Greens Bayou Electric Generating Station filed for record
            under Clerk's File No. W048272 and Film Code No. 555-89-2670 in the
            Real Property Records of HARRIS COUNTY, TEXAS (it being understood
            that the property being released from the lien of the Mortgage
            consists only of the easements granted by the Company and not fee
            title to the land covered by such easements).

      5.    The easements, facilities and appurtenances thereto conveyed by the
            Company pursuant to that certain Partial Assignment and Conveyance
            related to the offsite Fore-Bay Water Line and Supervisory Cable at
            Greens Bayou Electric Generating Station filed for record under
            Clerk's File No. W048273 and Film Code No. 555-89-2708 in the Real
            Property Records of HARRIS COUNTY, TEXAS.

F.    LIMESTONE ELECTRIC GENERATING STATION (Route 1, Box 85, Jewett, Limestone
      County, Texas, Limestone, Leon and Freestone Counties, Texas)

      1.    The land, improvements, fixtures and other property thereon and
            appurtenances thereto conveyed by the Company pursuant to that
            certain Deed related to the Limestone Electric Generating Station
            filed for record under Clerk's File No. 024120 and Volume 1092, Page
            397 in the Real Property Records of LIMESTONE COUNTY, TEXAS, under
            Clerk's File No. 00302738 and Volume 1120, Page 395 in the Real
            Property Records of LEON COUNTY, TEXAS and under Clerk's File No.
            2006184 and Volume 1210, Page 1 in the Real Property Records of
            FREESTONE COUNTY, TEXAS, together with all equipment, supplies, and
            other

                                      A-4
<PAGE>

            tangible or intangible personal property located thereon or used or
            enjoyed in connection therewith which are owned by the Grantee (as
            defined therein).

      2.    The easements and appurtenant rights conveyed by the Company
            pursuant to that certain Easement and Covenant Agreement related to
            the Limestone Electric Generating Station filed for record under
            Clerk's File No. 024121 and Volume 1092, Page 458 in the Real
            Property Records of LIMESTONE COUNTY, TEXAS, under Clerk's File No.
            00302729 and Volume 1120, Page 456 in the Real Property Records of
            LEON COUNTY, TEXAS and under Clerk's File No. 2006185 and Volume
            1210, Page 62 in the Real Property Records of FREESTONE COUNTY,
            TEXAS (it being understood that the property being released from the
            lien of the Mortgage consists only of the easements granted by the
            Company and not fee title to the land covered by such easements).

      3.    The land, improvements, fixtures and other property thereon and
            appurtenances thereto conveyed by the Company pursuant to that
            certain Deed related to the Conference Center at Limestone Electric
            Generating Station filed for record under Clerk's File No. 024122
            and Volume 1092, Page 554 in the Real Property Records of LIMESTONE
            COUNTY, TEXAS, together with all equipment, supplies, and other
            tangible or intangible personal property located thereon or used or
            enjoyed in connection therewith which are owned by the Grantee (as
            defined therein).

      4.    The land, improvements, fixtures and other property thereon and
            appurtenances thereto conveyed by the Company pursuant to that
            certain Deed related to the offsite Limestone Water Line(s) at
            Limestone Electric Generating Station filed for record under Clerk's
            File No. 00302730 and Volume 1120, Page 552 in the Real Property
            Records of LEON COUNTY, TEXAS, together with all equipment,
            supplies, and other tangible or intangible personal property located
            thereon or used or enjoyed in connection therewith which are owned
            by the Grantee (as defined therein).

      5.    The easements, facilities and appurtenant rights conveyed by the
            Company pursuant to that certain Easement and Conveyance related to
            the offsite Limestone Water Line(s) at Limestone Electric Generating
            Station filed for record under Clerk's File No. 00302731 and Volume
            1120, Page 563 in the Real Property Records of LEON COUNTY, TEXAS
            (it being understood that the property being released from the lien
            of the Mortgage consists only of the easements granted by the
            Company and not fee title to the land covered by such easements).

      6.    The easements, facilities and appurtenant rights conveyed by the
            Company pursuant to that certain Easement and Conveyance related to
            the offsite Limestone Water Line(s) at Limestone Electric Generating
            Station filed for record under Clerk's File No. 024123 and Volume
            1092, Page 568 in the Real Property Records of LIMESTONE COUNTY,
            TEXAS (it being understood that the property being released from the
            lien of the Mortgage consists only of the easements granted by the
            Company and not fee title to the land covered by such easements).

                                      A-5
<PAGE>

      7.    The easements, facilities and appurtenances thereto conveyed by the
            Company pursuant to that certain Assignment and Conveyance related
            to the offsite Limestone Water Line(s) at Limestone Electric
            Generating Station filed for record under Clerk's File No. 00302732
            and Volume 1120, Page 598 in the Real Property Records of LEON
            COUNTY, TEXAS.

      8.    The easements, facilities and appurtenances thereto conveyed by the
            Company pursuant to that certain Partial Assignment and Conveyance
            related to the offsite Limestone Water Line(s) at Limestone Electric
            Generating Station filed for record under Clerk's File No. 00302733
            and Volume 1120, Page 613 in the Real Property Records of LEON
            COUNTY, TEXAS.

G.    W.A. PARISH ELECTRIC GENERATING STATION (2500 Y.U. Jones Road, Thompson,
      Fort Bend County, Texas)

      1.    The land, improvements, fixtures and other property thereon and
            appurtenances thereto conveyed by the Company pursuant to that
            certain Deed related to the W.A. Parish Electric Generating Station
            filed for record under Clerk's File No. 2002094433 in the Real
            Property Records of FORT BEND COUNTY, TEXAS, together with all
            equipment, supplies, and other tangible or intangible personal
            property located thereon or used or enjoyed in connection therewith
            which are owned by the Grantee (as defined therein).

      2.    The easements and appurtenant rights conveyed by the Company
            pursuant to that certain Easement and Covenant Agreement related to
            the W.A. Parish Electric Generating Station filed for record under
            Clerk's File No. 2002094434 in the Real Property Records of FORT
            BEND COUNTY, TEXAS (it being understood that the property being
            released from the lien of the Mortgage consists only of the
            easements granted by the Company and not fee title to the land
            covered by such easements).

      3.    The land, improvements, fixtures and other property thereon and
            appurtenances thereto conveyed by the Company pursuant to that
            certain Deed related to the offsite Rail Line Fee Tracts at W.A.
            Parish Electric Generating Station filed for record under Clerk's
            File No. 2002094435 in the Real Property Records of FORT BEND
            COUNTY, TEXAS, together with all equipment, supplies, and other
            tangible or intangible personal property located thereon or used or
            enjoyed in connection therewith which are owned by the Grantee (as
            defined therein).

      4.    The land, improvements, fixtures and other property thereon and
            appurtenances thereto conveyed by the Company pursuant to that
            certain Deed related to the offsite Richmond Rice Canal at W.A.
            Parish Electric Generating Station filed for record under Clerk's
            File No. 2002094439 in the Real Property Records of FORT BEND
            COUNTY, TEXAS, together with all equipment, supplies, and other
            tangible or intangible personal property located thereon or used or
            enjoyed in connection therewith which are owned by the Grantee (as
            defined therein).

                                      A-6
<PAGE>

      5.    The facilities and appurtenances thereto conveyed by the Company
            pursuant to that certain Assignment and Conveyance related to the
            offsite Rail Spur Easement and offsite Smithers Lake Road easement
            at W.A. Parish Electric Generating Station filed for record under
            Clerk's File No. 2002094436 in the Real Property Records of FORT
            BEND COUNTY, TEXAS.

      6.    The easements, facilities and appurtenances thereto conveyed by the
            Company pursuant to that certain Assignment and Conveyance related
            to the offsite Richmond Rice Canal at W.A. Parish Electric
            Generating Station filed for record under Clerk's File No.
            2002094438 in the Real Property Records of FORT BEND COUNTY, TEXAS.

H.    P.H. ROBINSON ELECTRIC GENERATING STATION (5501 State Highway 146,
      Bacliff, Galveston County, Texas)

      1.    The land, improvements, fixtures and other property thereon and
            appurtenances thereto conveyed by the Company pursuant to that
            certain Deed related to the P.H. Robinson Electric Generating
            Station filed for record under Clerk's File No. 2002050899 and Film
            Code No. ###-##-#### in the Real Property Records of GALVESTON
            COUNTY, TEXAS, together with all equipment, supplies, and other
            tangible or intangible personal property located thereon or used or
            enjoyed in connection therewith which are owned by the Grantee (as
            defined therein).

      2.    The easements and appurtenant rights conveyed by the Company
            pursuant to that certain Easement and Covenant Agreement related to
            the P.H. Robinson Electric Generating Station filed for record under
            Clerk's File No. 2002050900 and Film Code No. 017-36-0282 in the
            Real Property Records of GALVESTON COUNTY, TEXAS (it being
            understood that the property being released from the lien of the
            Mortgage consists only of the easements granted by the Company and
            not fee title to the land covered by such easements).

      3.    The land, improvements, fixtures and other property thereon and
            appurtenances thereto conveyed by the Company pursuant to that
            certain Deed related to four Spoils Tracts at P.H. Robinson Electric
            Generating Station filed for record under Clerk's File No.
            2002050901 and Film Code No. 017-36-0403 in the Real Property
            Records of GALVESTON COUNTY, TEXAS, together with all equipment,
            supplies, and other tangible or intangible personal property located
            thereon or used or enjoyed in connection therewith which are owned
            by the Grantee (as defined therein).

I.    SAN JACINTO STEAM ELECTRIC GENERATING STATION (845 Sens Road, LaPorte,
      Harris County, Texas)

      1.    The interest in that certain tract of land more particularly
            described on Exhibit A-1 attached hereto and improvements thereon
            and appurtenances thereto related to the San Jacinto Steam Electric
            Generating Station which is covered by the Mortgage.

                                      A-7
<PAGE>

      2.    That certain Easement and Covenant Agreement related to the San
            Jacinto Steam Electric Station filed for record under Clerk's File
            No. W048250 and Film Code No. 555-89-1794 in the Real Property
            Records of HARRIS COUNTY, TEXAS (it being understood that the
            property being released from the lien of the Mortgage consists only
            of the easements granted by the Company and not fee or leasehold
            title to the land covered by such easements).

J.    SOUTH TEXAS POWER PLANT (P.O. Box 289, Wadsworth, Matagorda County, Texas)

      1.    The land, improvements, fixtures and other property thereon and
            appurtenances thereto conveyed by the Company pursuant to that
            certain Deed related to the South Texas Power Plant filed for record
            under Clerk's File No. 025924 in the Real Property Records of
            MATAGORDA COUNTY, TEXAS, together with all equipment, supplies, and
            other tangible or intangible personal property located thereon or
            used or enjoyed in connection therewith which are owned by the
            Grantee (as defined therein).

K.    WEBSTER ELECTRIC GENERATING STATION (19801 Old Galveston Road, Webster,
      Harris County, Texas)

      1.    The land, improvements, fixtures and other property thereon and
            appurtenances thereto conveyed by the Company pursuant to that
            certain Deed related to the Webster Electric Generating Station
            filed for record under Clerk's File No. W048251 and Film Code No.
            ###-##-#### in the Real Property Records of HARRIS COUNTY, TEXAS,
            together with all equipment, supplies, and other tangible or
            intangible personal property located thereon or used or enjoyed in
            connection therewith which are owned by the Grantee (as defined
            therein) (save and except the portion thereof described in Schedules
            2A and 2B of the Deed described in this paragraph).

      2.    The easements and appurtenant rights conveyed by the Company
            pursuant to that certain Easement and Covenant Agreement related to
            the Webster Electric Generating Station filed for record under
            Clerk's File No. W048252 and Film Code No. 555-89-1877 in the Real
            Property Records of HARRIS COUNTY, TEXAS (it being understood that
            the property being released from the lien of the Mortgage consists
            only of the easements granted by the Company and not fee title to
            the land covered by such easements).

      3.    The land, improvements, fixtures and other property thereon and
            appurtenances thereto conveyed by the Company pursuant to that
            certain Deed related to the offsite Webster Discharge Canals at
            Webster Electric Generating Station filed for record under Clerk's
            File No. W048253 and Film Code No. 555-89-1969 in the Real Property
            Records of HARRIS COUNTY, TEXAS, together with all equipment,
            supplies, and other tangible or intangible personal property located
            thereon or used or enjoyed in connection therewith which are owned
            by the Grantee (as defined therein).

                                      A-8
<PAGE>

      4.    The land, improvements, fixtures and other property thereon and
            appurtenances thereto conveyed by the Company pursuant to that
            certain Deed related to the offsite Webster Discharge Canals at
            Webster Electric Generating Station filed for record under Clerk's
            File No. 2002050903 and Film Code No. 017-36-0433 in the Real
            Property Records of GALVESTON COUNTY, TEXAS, together with all
            equipment, supplies, and other tangible or intangible personal
            property located thereon or used or enjoyed in connection therewith
            which are owned by the Grantee (as defined therein).

      5.    The easements, facilities and appurtenances thereto conveyed by the
            Company pursuant to that certain Easement and Conveyance related to
            the offsite Webster Discharge Canals at Webster Electric Generating
            Station filed for record under Clerk's File No. W048254 and Film
            Code No. ###-##-#### in the Real Property Records of HARRIS COUNTY,
            TEXAS (it being understood that the property being released from the
            lien of the Mortgage consists only of the easements granted by the
            Company and not fee title to the land covered by such easements).

      6.    The easements, facilities and appurtenances thereto conveyed by the
            Company pursuant to that certain Easement and Conveyance related to
            the offsite Webster Discharge Canals at Webster Electric Generating
            Station filed for record under Clerk's File No. 2002050904 and Film
            Code No. ###-##-#### in the Real Property Records of GALVESTON
            COUNTY, TEXAS (it being understood that the property being released
            from the lien of the Mortgage consists only of the easements granted
            by the Company and not fee title to the land covered by such
            easements).

      7.    The easements, facilities and appurtenances thereto conveyed by the
            Company pursuant to that certain Assignment and Conveyance related
            to the offsite Webster Discharge Canals at Webster Electric
            Generating Station filed for record under Clerk's File No. W048255
            and Film Code No. 555-89-2017 in the Real Property Records of HARRIS
            COUNTY, TEXAS.

      8.    The easements, facilities and appurtenances thereto conveyed by the
            Company pursuant to that certain Assignment and Conveyance related
            to the offsite Webster Discharge Canals at Webster Electric
            Generating Station filed for record under Clerk's File No.
            2002050905 and Film Code No. 017-36-0483 in the Real Property
            Records of GALVESTON COUNTY, TEXAS.

      9.    The land, improvements, fixtures and other property thereon and
            appurtenances thereto conveyed by the Company pursuant to that
            certain Deed related to the Submerged Tract at Webster Electric
            Generating Station filed for record under Clerk's File No. W048256
            and Film Code No. 555-89-2030 in the Real Property Records of HARRIS
            COUNTY, TEXAS, together with all equipment, supplies, and other
            tangible or intangible personal property located thereon or used or
            enjoyed in connection therewith which are owned by the Grantee (as
            defined therein).

                                      A-9
<PAGE>

L.    T.H. WHARTON ELECTRIC GENERATING STATION (16301 Tomball Parkway (SH 249),
      Harris County, Texas)

      1.    The land, improvements, fixtures and other property thereon and
            appurtenances thereto conveyed by the Company pursuant to that
            certain Deed related to the T.H. Wharton Electric Generating Station
            filed for record under Clerk's File No. W048282 and Film Code No.
            ###-##-#### in the Real Property Records of HARRIS COUNTY, TEXAS,
            together with all equipment, supplies, and other tangible or
            intangible personal property located thereon or used or enjoyed in
            connection therewith which are owned by the Grantee (as defined
            therein).

      2.    The easements and appurtenant rights conveyed by the Company
            pursuant to that certain Easement and Covenant Agreement related to
            the T.H. Wharton Electric Generating Station filed for record under
            Clerk's File No. W048283 and Film Code No. 555-89-2793 in the Real
            Property Records of HARRIS COUNTY, TEXAS (it being understood that
            the property being released from the lien of the Mortgage consists
            only of the easements granted by the Company and not fee title to
            the land covered by such easements).

M.    FUEL OIL PIPELINE (Harris County, Texas)

      1.    The easements, facilities and appurtenances thereto conveyed by the
            Company pursuant to that certain Easement and Conveyance related to
            the Fuel Oil Pipeline filed for record under Clerk's File No.
            W048284 and Film Code No. 555-89-2878 in the Real Property Records
            of HARRIS COUNTY, TEXAS (it being understood that the property being
            released from the lien of the Mortgage consists only of the
            easements granted by the Company and not fee title to the land
            covered by such easements).

      2.    The easements, facilities and appurtenances thereto conveyed by the
            Company pursuant to that certain Assignment and Conveyance related
            to the Fuel Oil Pipeline filed for record under Clerk's File No.
            W048285 and Film Code No. 555-89-3244 in the Real Property Records
            of HARRIS COUNTY, TEXAS.

      3.    The easements, facilities and appurtenances thereto conveyed by the
            Company pursuant to that certain Partial Assignment and Conveyance
            related to the Fuel Oil Pipeline filed for record under Clerk's File
            No. W048286 and Film Code No. 555-89-3270 in the Real Property
            Records of HARRIS COUNTY, TEXAS.

      4.    The land, improvements, fixtures and other property thereon and
            appurtenances thereto conveyed by the Company pursuant to that
            certain Deed related to the Gas Injection Facility adjacent to the
            Fuel Oil Pipeline filed for record under Clerk's File No. W048287
            and Film Code No. 555-89-3303 in the Real Property Records of HARRIS
            COUNTY, TEXAS, together with all equipment, supplies, and other
            tangible or intangible personal property located thereon or used or
            enjoyed in connection therewith which are owned by the Grantee (as
            defined therein).

                                      A-10
<PAGE>

N.    FUEL OIL PIPELINE (Galveston County, Texas)

      1.    The easements, facilities and appurtenances thereto conveyed by the
            Company pursuant to that certain Easement and Conveyance related to
            the Fuel Oil Pipeline filed for record under Clerk's File No.
            2002050907 and Film Code No. 017-36-0503 in the Real Property
            Records of GALVESTON COUNTY, TEXAS (it being understood that the
            property being released from the lien of the Mortgage consists only
            of the easements granted by the Company and not fee title to the
            land covered by such easements).

      2.    The easements, facilities and appurtenances thereto conveyed by the
            Company pursuant to that certain Assignment and Conveyance related
            to the Fuel Oil Pipeline filed for record under Clerk's File No.
            2002050908 and Film Code No. 017-36-0561 in the Real Property
            Records of GALVESTON COUNTY, TEXAS.

      3.    The easements, facilities and appurtenances thereto conveyed by the
            Company pursuant to that certain Partial Assignment and Conveyance
            related to the Fuel Oil Pipeline filed for record under Clerk's File
            No. 2002050909 and Film Code No. 017-36-0576 in the Real Property
            Records of GALVESTON COUNTY, TEXAS.

O.    FUEL OIL PIPELINE (Chambers County, Texas)

      1.    The easements, facilities and appurtenances thereto conveyed by the
            Company pursuant to that certain Assignment and Conveyance related
            to the Fuel Oil Pipeline filed for record under Clerk's File No.
            6957B and Volume 576, Page 120 in the Real Property Records of
            CHAMBERS COUNTY, TEXAS.

      2.    The easements, facilities and appurtenances thereto conveyed by the
            Company pursuant to that certain Assignment related to the North
            Dayton Corridor of the Fuel Oil Pipeline filed for record under
            Clerk's File No. 6958B and Volume 576, Page 133 in the Real Property
            Records of CHAMBERS COUNTY, TEXAS.

      3.    The easements conveyed by the Company pursuant to that certain
            Partial Assignment related to the North Dayton Corridor of the Fuel
            Oil Pipeline filed for record under Clerk's File No. 6959B and
            Volume 576, Page 152 in the Real Property Records of CHAMBERS
            COUNTY, TEXAS.

P.    NORTH DAYTON SALT DOME / HUFFMAN ELECTRICAL SUBSTATION AND PIPELINE / GAS
      STORAGE FACILITY (Liberty County, Texas)

      1.    The easements, facilities, and appurtenant rights conveyed by the
            Company pursuant to that certain Assignment and Conveyance related
            to the Huffman Electrical Substation and Pipeline filed for record
            under Clerk's File No. 12605 and Volume 1993, Page 761 in the Real
            Property Records of LIBERTY COUNTY, TEXAS.

      2.    The services, agreements and appurtenant rights conveyed by the
            Company pursuant to that certain Assignment related to the Gas
            Storage Service Contract in

                                      A-11
<PAGE>

            connection with the Gas Storage Facility filed for record under
            Clerk's File No. 12606 and Volume 1993, Page 774 in the Real
            Property Records of LIBERTY COUNTY, TEXAS.

                  Q. ENERGY DEVELOPMENT CENTER AND CONKLIN TRACT (Harris County,
Texas)

1.    The land, improvements, fixtures and other property thereon and
      appurtenances thereto conveyed by the Company pursuant to that certain
      Deed related to the Energy Development Center filed for record under
      Clerk's File No. W048288 and Film Code No. 555-89-3315 in the Real
      Property Records of HARRIS COUNTY, TEXAS, together with all equipment,
      supplies, and other tangible or intangible personal property located
      thereon or used or enjoyed in connection therewith which are owned by the
      Grantee (as defined therein).

2.    The leases, facilities and appurtenances thereto conveyed by the Company
      pursuant to that certain Assignment and Assumption of Tenant Lease related
      to the Energy Development Center filed for record under Clerk's File No.
      W0484289 and Film Code No. 555-89-3330 in the Real Property Records of
      HARRIS COUNTY, TEXAS.

R.    JEWETT MINE (Limestone, Leon and Freestone Counties, Texas)

      1.    The land, improvements, fixtures and other property thereon and
            appurtenances thereto conveyed by the Company pursuant to that
            certain Deed related to the Jewett Mine filed for record under
            Clerk's File No. 024124 and Volume 1092, Page 603 in the Real
            Property Records of LIMESTONE COUNTY, TEXAS, together with all
            equipment, supplies, and other tangible or intangible personal
            property located thereon or used or enjoyed in connection therewith
            which are owned by the Grantee (as defined therein).

      2.    The land, improvements, fixtures and other property thereon and
            appurtenances thereto conveyed by the Company pursuant to that
            certain Deed related to the Jewett Mine filed for record under
            Clerk's File No. 00302734 and Volume 1120, Page 650 in the Real
            Property Records of LEON COUNTY, TEXAS, together with all equipment,
            supplies, and other tangible or intangible personal property located
            thereon or used or enjoyed in connection therewith which are owned
            by the Grantee (as defined therein).

      3.    The land, improvements, fixtures and other property thereon and
            appurtenances thereto conveyed by the Company pursuant to that
            certain Deed related to the Jewett Mine filed for record under
            Clerk's File No. 2006186 and Volume 1210, Page 158 in the Real
            Property Records of FREESTONE COUNTY, TEXAS, together with all
            equipment, supplies, and other tangible or intangible personal
            property located thereon or used or enjoyed in connection therewith
            which are owned by the Grantee (as defined therein).

                                      A-12
<PAGE>

      4.    The facilities and appurtenances thereto conveyed by the Company
            pursuant to that certain Assignment of Option Agreement related to
            the Jewett Mine filed for record under Clerk's File No. 2006190 and
            Volume 1210, Page 209 in the Real Property Records of FREESTONE
            COUNTY, TEXAS, under Clerk's File No. 00302737 and Volume 1120, Page
            688 in the Real Property Records of LEON COUNTY, TEXAS and under
            Clerk's File No. 024125 and Volume 1092, Page 625 in the Real
            Property Records of LIMESTONE COUNTY, TEXAS.

                                      A-13
<PAGE>

                                   EXHIBIT A-1
                                   Page 1 of 2

                                                    San Jacinto Electric Station
                                                               Job No. 13015020P
                                                                Ref. Map 14-H-5E
                                                                         Tract 3

      Description of 7.306 acres of land in the Enoch Brinson League, Abstract
5, Harris County, Texas, being partly out of the residue of an 822.154-acre
tract recorded in Volume 1318, Page 364 of the Deed Records of Harris County,
Texas, and partly out of the residue of a 97.477-acre tract recorded in Volume
7034, Page 10 of said Deed Records and out of a 9.991-acre tract recorded in
Clerk's File No. N 530947 and Film Code No. 014-59-1718 of the Official Public
Records of Real Property of Harris County, Texas:

      All coordinates and bearings herein refer to the Texas Coordinate System
of 1983, South Central Zone as defined in the Texas Natural Resources Code, and
based on the position of H.G.C.S.D. 42 (1986), having published coordinates of N
(Y) = 13,823,622.030 and E (X) = 3,216,990.899 U.S. Survey Foot with an applied
scale factor of 0.9998839. Said 7.306-acre tract is described by metes and
bounds as follows:

COMMENCING at a 3/4 inch iron pipe found at the southwest corner of said
97.477-acre tract, having coordinates of N (Y)= 13,820,895.82 and E (X)=
3,223,298.68 same being the southwest corner of a 250-foot wide easement
described as Way No. 2 recorded in File D332601 and Film Code 129-23-2583 of the
Official Public Records of Real Property of Harris County, Texas and also on the
east line of Sens Road (60 feet wide), from which a found 3/4 inch iron pipe
bears North 58 degrees 48 minutes 36 seconds West, a distance of 0.82 feet and
from which a found 3/4 inch iron rod bears North 72 degrees 01 minutes 34
seconds West, a distance of 1.17 feet;

THENCE, North 86 degrees 55 minutes 32 seconds East, a distance of 2482.03 feet
along the south line of said 97.477-acre tract, same being the south line of
said 250-foot wide easement, to a point;

THENCE, North 03 degrees 04 minutes 28 seconds West, a distance of 301.31 feet
to a chain link fence post found for the southeast corner of Tract 1 and said
9.991- acre tract;

THENCE, South 86 degrees 53 minutes 39 seconds West, with the south line of
Tract 1 and said 9.991- acre tract, a distance of 265.00 feet to a found iron
rod with aluminum cap stamped HL&P;

<PAGE>

                                   EXHIBIT A-1
                                   Page 2 of 2

THENCE, North 86 degrees 15 minutes 30 seconds West, continuing with said south
line, a distance of 60.40 feet to a R.R. spike set for a common corner of Tract
1, and a 7.306-acre tract referred to as Tract 3, and the POINT OF BEGINNING
having coordinates of N (Y)= 13,821,319.34 and E (X)= 3,225,435.84;

THENCE, North 86 degrees 15 minutes 30 seconds West, with the south line of said
Tract 3 and said 9.991- acre tract, a distance of 100.72 feet to a point for
corner;

THENCE, South 86 degrees 53 minutes 39 seconds West, a distance of 540.00 feet
to a found iron rod with aluminum cap stamped HL&P for the southwest corner of
the herein described tract and said 9.991- acre tract;

THENCE, North 51 degrees 40 minutes 56 seconds West, at 463.30 feet passing the
common line of said 94.477-acre tract with said 822.154 -acre tract, for a total
distance of 566.79 feet to a found iron rod with aluminum cap stamped HL&P for
the northwest corner of the herein described tract and said 9.991- acre tract;

THENCE, North 86 degrees 53 minutes 39 seconds East, with the north line of
Tract 3 and said 9.991- acre tract, a distance of 1,059.63 feet to a 3/4 inch
iron rod with plastic cap stamped "Reliant Energy HL&P" set for the common
corner of Tract 1, 3, and 4;

THENCE, South 03 degrees 02 minutes 05 seconds East, at 75.00 feet passing the
southwest corner of said tract 4, at 119.08 feet passing the northeast corner of
a 0.155-acre tract referred to as Tract 2, at 276.83 feet passing the southeast
corner of said Tract 2, for a total distance of 364.33 feet to a 3/4 inch iron
rod with plastic cap stamped "Reliant Energy HL&P" set for corner;

THENCE, South 90 degrees 00 minutes 00 seconds East, a distance of 7.05 feet to
a 3/4 inch iron rod with plastic cap stamped "Reliant Energy HL&P" set for
corner;

THENCE, South 00 degrees 00 minutes 00 seconds West, a distance of 22.33 feet to
the POINT OF BEGINNING and containing 7.306 acres of land.

A survey drawing with Map Number 14-H-5E was prepared by Carter & Burgess, Inc.
in conjunction with this metes and bounds description.

<PAGE>

                                                                       EXHIBIT B

                          PREVIOUSLY CONVEYED PROPERTY

A.    ALLEN'S CREEK TRACT (Austin County, Texas)

The land, improvements, fixtures and other property thereon and easements and
appurtenances thereto conveyed by the Company pursuant to that certain Deed
related to the Allen's Creek Tract filed for record under Clerk's File No.
025196 in the Real Property Records of AUSTIN COUNTY, TEXAS, together with all
equipment, supplies, and other tangible or intangible personal property located
thereon or used or enjoyed in connection therewith which are owned by the
Grantee (as defined therein).

B.    MILL'S CREEK TRACTS (Austin County, Texas)

The land, improvements, fixtures and other property thereon and appurtenances
thereto conveyed by the Company pursuant to that certain Deed related to the
Mill's Creek Tracts filed for record under Clerk's File No. 025200 in the Real
Property Records of AUSTIN COUNTY, TEXAS, together with all equipment, supplies,
and other tangible or intangible personal property located thereon or used or
enjoyed in connection therewith which are owned by the Grantee (as defined
therein).

C.    CEDAR BAYOU TRACTS (Chambers County, Texas)

Those certain tracts of land comprising approximately 12.085 acres and 5.05
acres in the Benjamin Winfree League, Abstract 28 in CHAMBERS COUNTY, TEXAS as
recorded in Volume 340, page 320 and Volume 340 page 650 respectively in the
deed records of Chambers County; such tracts were subsequently conveyed to Texas
Genco, LP by that certain deed recorded in the Deed Records of Chambers County,
Texas under County Clerk's File No. 6952B, Volume 575, Page 835.

D.    P.H. ROBINSON MINERALS (Galveston County, Texas)

Certain lands located in GALVESTON COUNTY, TEXAS which lands are more
particularly described on EXHIBIT A to that certain Oil, Gas and Mineral Lease
dated December 12, 1980 and recorded in the office of the County Clerk of
Galveston County, Texas under County Clerk's file No. 8101167 and bearing said
Clerk's film code No. ###-##-####, between Houston Lighting & Power Company, a
Texas corporation and predecessor in interest to Grantor, as lessor, and Lofco,
a Texas general partnership, as lessee (the "Lease"), together with all rights
and interests appurtenant thereto, including without limitation Grantor's right,
title and interest in and to the Lease.

                                      B-1
<PAGE>

                                                                       EXHIBIT B

E.    MALAKOFF TRACTS - TRINITY MINE (Anderson County, Texas and Henderson
      County, Texas)

The land, improvements, fixtures and other property thereon and appurtenances
thereto conveyed by the Company pursuant to that certain Deed related to the
Malakoff Tracts and Trinity Mine filed for record under Clerk's File No. 0017482
and Volume 1740, Page 558 in the Real Property Records of ANDERSON COUNTY, TEXAS
and under Clerk's File No. 0015448 and Volume 2221, Page 372 in the Real
Property Records of HENDERSON COUNTY, TEXAS, together with all equipment,
supplies, and other tangible or intangible personal property located thereon or
used or enjoyed in connection therewith which are owned by the Grantee (as
defined therein).

F.    PARTITION TRACTS MINERALS (Leon County, Texas and Freestone County, Texas)

                                     TRACT I

669.75 Acres, more or less, out of the W. R. Nichols Survey, A-1159, T. J.
McCallom Survey, A-564 & A-576, J. H. Thomas Survey, A-891 and the J. L. Green
Survey, A-318, being more fully described in Pooling Designation dated January
11, 1982, recorded in Volume 519, Page 287, Deed Records of LEON COUNTY, TEXAS
and correction to Amendment of Pooling Designation dated October 8, 1982,
recorded in Volume 530, Page 122, Deed Records of Leon County, Texas.

                                    TRACTS II

Tract 1:    84.485 acres situated in the Samuel M. Phariss Survey, A-516,
            Freestone County, Texas, being the same land described as the "First
            Tract" in that certain deed dated April 30, 1963, from Clifton
            Harper, et ux, to the Veterans Land Board Of The State of Texas,
            recorded in Volume 330, Page 64, Deed Records, FREESTONE COUNTY,
            TEXAS.

Tract 2:    55.00 acres situated in the I. M. Childre Survey, A-883, Freestone
            County, Texas, and A-1284, LEON COUNTY, TEXAS, and being described
            in two (2) tracts, as follows:

            Tract 2A:   53.823 acres situated in the I. M. Childre Survey,
                        A-883, Freestone County, Texas, and A-1284, LEON COUNTY,
                        TEXAS, being the same land described in that certain
                        deed dated April 16, 1965, from Hayse E. Willingham, et
                        ux, to Calvin Pate, recorded in Volume 351, Page 270,
                        Deed Records, Freestone County, Texas and Volume 326,
                        Page 76, Deed Records, Leon County, Texas, SAVE AND
                        EXCEPT: 1.177 acres, being Tract 2B described below.

                                      B-2
<PAGE>

                                                                       EXHIBIT B

            Tract 2B:   1.177 acres situated in the I. M. Childre Survey,
                        A-1284, LEON COUNTY, TEXAS, being the same land
                        described in that certain deed dated August 27, 1970
                        from Calvin Pate, et ux, to Betsy L. Thompson, recorded
                        in Volume 364, Page 11, Deed Records, Leon County,
                        Texas.

Tract 3:    11.332 acres out of a 95.11 acre tract situated in the Samuel M.
            Phariss Survey, A-516, FREESTONE COUNTY, TEXAS, such 95.11 acre
            tract being in that certain deed dated December 20, 1968, from Exla
            Brown, et al, to Ben F. Brown, et ux, recorded in Volume 385, Page
            681, Deed Records, Freestone County, Texas.

Tract 4:    28.095 acres situated in the I. M. Childre Survey, A-883, FREESTONE
            COUNTY, TEXAS, and A-1284, Leon County, Texas and being described in
            two (2) tracts, as follows:

            Tract 4A:   20.975 acres situated in the I. M. Childre Survey,
                        A-883, FREESTONE COUNTY, TEXAS, and A-1284, Leon County,
                        Texas, being the same land described as the "Second
                        Tract" in that certain deed dated April 30, 1963, from
                        Clifton Harper, et ux, to the Veterans Land Board of The
                        State of Texas, recorded in Volume 330, Page 64, Deed
                        Records, Freestone County, Texas, SAVE AND EXCEPT: 7.12
                        acres, being 4B described below.

            Tract 4B:   7.12 acres situated in the I. M. Childre Survey, A-1284,
                        LEON COUNTY, TEXAS, being the same land described in
                        that certain deed dated September 3, 1971 from Marvin M.
                        Risner, et ux, to Jodie Vann, recorded in Volume 372,
                        Page 160, Deed Records, Leon County, Texas.

Tract 5:    30.003 acres out of a 60.006 acre tract situated in the Samuel M.
            Phariss Survey, A-516, FREESTONE COUNTY, TEXAS, such 60.006 acre
            tract being described in two (2) tracts, as follows:

            Tract 5A:   30.70 acres situated in the Samuel M. Phariss Survey,
                        A-516, FREESTONE COUNTY, TEXAS, and being described in
                        that certain deed dated June 4, 1965 from Fred D. Scott
                        to Glen White, recorded in Volume 351, Page 576, Deed
                        Records, Freestone County, Texas.

            Tract 5B:   37.5 acres situated in the Samuel M. Phariss Survey,
                        A-516, FREESTONE COUNTY, TEXAS, and being described in
                        that certain deed dated August 31, 1963 from Dorris
                        Stone, et ux, to Glen White, recorded in Volume 335,
                        Page 375, Deed Records, Freestone County, Texas.

                                      B-3
<PAGE>

                                                                       EXHIBIT B

                                    TRACT III

310.949 acres of land, more or less, out of the Gertrudis Diaz Survey, A-178,
FREESTONE COUNTY, TEXAS, as further described in that certain Declaration of
Pooled Unit dated September 27, 2000, effective September 1, 2000, recorded in
Volume 1133 at Page 295 of the Official Records of Freestone County, Texas.

                                    TRACT IV

320.0 acres of land, more or less out of the Gertrudis Diaz Survey, A-178,
FREESTONE COUNTY, TEXAS as further described in the Declaration of Pooled Unit
for the Kelly "A" Unit dated June 21, 2000, effective May 1, 2000, recorded at
Volume 1121, Page 172 et seq. of the Official Records of Freestone County,
Texas.

                                     TRACT V

653.055 acres in the M. C. Rejon Eleven League Grant, A-19, LEON COUNTY, TEXAS
and including all of Grantor's right title and interest in and to the oil and/or
gas royalty provided under two (2) Oil and Gas Leases, each dated October 11,
2002, recorded in Volume 1130, Pages 206 and 210, respectively, Official Records
of Leon County, Texas, and as such leases have been pooled into that certain
pooled unit called the "Reliant Energy Unit," as described in a Pooling
Declaration dated August 4, 2003, recorded in Volume 1152, Page 38, Official
Records of Leon County, Texas.

                                      B-4

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