Document:

<PAGE>
                                                                  EXHIBIT 10.27

November 20, 2001

James B. Breitmeyer, M.D., Ph.D.
30 Old Road
Weston, MA  02493

Dear Jim,

I am pleased to offer you the position of Chief Medical Officer at a starting
monthly exempt salary of $25,000.00, which is equivalent to $300,000.00
annually. As a member of our executive staff you will be eligible for an annual
performance based incentive of up to 25% of your base salary subject to Board
approval. You will report directly to William D. Huse, M.D., Ph.D., Chief
Executive Officer and President.

In addition, after you have accepted our offer of employment, you will be
offered 200,000 stock options under the Company's Incentive Stock Option Plan,
which provides for vesting over a four-year period. You also will be eligible
for an annual performance based option grant at the discretion of the Board of
Directors.

Applied Molecular Evolution agrees to provide a loan of $400,000.00 at an annual
interest rate of 6% secured by the second deed of trust on the home you will be
purchasing upon your relocation to San Diego. Interest on the loan shall
cumulate and shall be payable with principal in four years from the date of
inception of the loan. This loan will be fully forgivable on the 4th year
anniversary of its inception, subject to your continued employment by AME.
Additionally, AME will pay to move your household goods and automobiles and give
you $20,000.00 in gross pretax dollars for miscellaneous moving expenses.

You will be authorized to continue your consulting relationship with Cleveland
Cancer Therapies, Collagenex, Inc., and Aton Pharma, Inc. Additionally, Applied
Molecular Evolution agrees in the event of terminating your employment for any
reason except cause, within four years of your start date, we will pay you
severance equivalent to six months of your base salary.

As an employee of Applied Molecular Evolution, you will receive employer-paid
medical, dental, life/AD&D, short and long-term disability insurance effective
your first date of employment. You will also be eligible to enroll in Applied
Molecular Evolution's 401(k) and Flexible Benefits and Employee Stock Purchase
plans during any enrollment period following employment.

As a pre-condition of your employment, you will be required to sign a copy of
our Proprietary Information and Inventions Agreement. Two copies of this
agreement are attached for your review and signature. Please return both copies
and subsequently, one copy will be returned to you after they have been signed
by Applied Molecular Evolution's Chief Executive Officer. Also, it should be
noted that it is Applied Molecular Evolution's policy to respect fully
proprietary and/or confidential information of your previous employers. No
employee is expected to disclose, or is allowed to use for Applied Molecular
Evolution's purposes, any confidential or proprietary information he or she may
have acquired as a result of previous employment.

To conform with the Immigration Reform and Control Act of 1986, please bring
with you on your start date the original of either one of the documents noted in
List A, or one document from List B and one document from List C from the
Employment Eligibility Verification (I-9), (Attached).

Your employment with Applied Molecular Evolution will be at-will. In other
words, either you or Applied Molecular Evolution can terminate your employment
at any time for any reason, with or without cause and with or

<PAGE>

without notice. This term of employment is not subject to change or modification
of any kind except if in writing and signed by you and the Chief Executive
Officer of Applied Molecular Evolution.

I am pleased to extend this offer to you and look forward to your acceptance.
Please sign and return the attached copy of this offer letter as soon as
possible, but no later than November 26, 2001, at which time, it will expire.
Once signed by you, this letter will constitute the complete agreement between
you and the Company regarding employment matters and will supersede any and all
prior written or oral agreements or understanding on these matters.

I am confident that you will make significant contributions to Applied Molecular
Evolution's efforts and that you will enjoy the rewards of working for an
innovative, fast-paced company. I hope that you will join Applied Molecular
Evolution as a regular full-time employee by December 12, 2001. Finally, please
feel free to contact me, if you have any questions or concerns regarding any of
the above information and/or if you would like additional information on Applied
Molecular Evolution's benefit package.

Sincerely,

/s/ Lawrence E. Bloch
Lawrence E. Bloch, M.D.
Chief Financial Officer and
Vice President of Business Development

I accept your offer of employment extended to me on 11/20/01,

and will start my employment on 12/12/01

Signature: /s/ James B. Brietmeyer

Date:  11/24/01Prepared by R.R. Donnelley Financial -- First Amendment to Credit Agreement

  
 EXHIBIT 10.2 
  
 FIRST AMENDMENT TO CREDIT AGREEMENT 
  
 FIRST AMENDMENT, dated as of November 19, 2001 (this
“Amendment”), to the Credit Agreement, dated as of March 1, 2001 (as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”), among PG&E Corporation, a California
corporation (the “Borrower”), the lenders party thereto (the “Lenders”), General Electric Capital Corporation, a New York corporation, as Co-Arranger (in such capacity, the “Co-Arranger”), Lehman
Commercial Paper Inc., a New York corporation, as Administrative Agent (in such capacity, the “Administrative Agent”), and Lehman Brothers Inc., a Delaware corporation, as Lead Arranger and Book Manager (in such
capacity, the “Lead Arranger”). 
  
 W I T N E S S E T H: 
  
 WHEREAS, the Borrower, the Lenders, the Co-Arranger, the Administrative Agent and the Lead Arranger are parties to the Credit Agreement; 
  
 WHEREAS, the Borrower has requested that the Administrative Agent and the Lenders amend certain provisions of the Credit Agreement; and 

 
 WHEREAS, the Administrative Agent, the Lenders and the other parties hereto are willing to agree to the requested amendments on the terms and
conditions contained herein; 
  
 NOW THEREFORE, in consideration of the premises herein contained and for other good and valuable
consideration, the receipt of which is hereby acknowledged, the parties hereto hereby agree as follows: 
  
 1.    Defined Terms.    Unless otherwise defined herein, capitalized terms used herein which are defined in the Credit Agreement are used herein as therein defined. 
  
 2.     Amendments to the Credit Agreement.    (a) Appendix A to the Credit Agreement is
hereby amended by deleting therefrom the definitions of “Authorized Officer,” “Disclosure Letter,” “Extension Fee,” “Financing Documents,” “Tranche A Lender” and “Tranche B Lender” and by
substituting, in lieu thereof, the following in their respective places: 
  
 “ ‘Authorized
Officer’ shall mean (i) with respect to any Person that is a corporation or a limited liability company, the Chairman, President, any Vice President, Treasurer or Secretary of such Person and (ii) with respect to any Person that is a
partnership, the President, any Vice President, Treasurer or Secretary (or Assistant Secretary) of a general partner or managing partner of such Person and in each case whose name appears on a certificate of incumbency of such Person delivered in
accordance with the Credit Agreement, as such certificate may be amended from time to time.” 
  
 “ ‘Disclosure Letter’ shall mean the letter from the Borrower, addressed to the Administrative Agent and the Lenders, dated as of March 2, 2001, with respect to certain disclosure of the Borrower, as amended,
modified or 
 

 1 

  
 supplemented by the letter dated May 14, 2001 and the letter, captioned “Supplemental
Disclosure Letter” dated the First Amendment Effective Date.” 
  
 “ ‘Extension
Fee’ shall have the meaning set forth in the Fee Letter, the Lehman Fee Letter or the Additional Fee Letter, as applicable.” 
  
 “ ‘Financing Documents’ shall mean, collectively, the Credit Agreement, the Notes, the Fee Letter, the Lehman Fee Letter, the Additional Fee Letter, the Escrow Agreement, the Security
Documents and the Option Agreement.” 
  
 “ ‘Tranche A Lender’ shall be the
collective reference to (i) General Electric Capital Corporation, a New York corporation, and (ii) any other holder of the Tranche A Loan (including, without limitation, any Lender which becomes a holder of the Tranche A Loan pursuant to Section
2.10).” 
  
 “ ‘Tranche B Lender’ shall be the collective reference to Lehman
Commercial Paper Inc., a New York corporation, and any Assignee thereof pursuant to Section 9.11.” 
  
 (b)
Appendix A to the Credit Agreement is hereby amended by adding thereto each of the following new definitions in its proper alphabetical order: 
  
 “ ‘Additional Extended Date Certain’ shall mean each of (i) March 2, 2005, and (ii) March 2, 2006.” 

 
 “ ‘Attala Note’ shall mean that certain Promissory Note dated September 28, 2000, executed by
Attala Power Corporation, a Delaware corporation, in favor of the Borrower.” 
  
 “ ‘Additional Fee Letter’ shall mean the fee letter, dated the First Amendment Effective Date, between the Borrower and the Administrative Agent.” 
  
 “ ‘Bring Down Disclosure Letter’ shall mean the letter captioned “Bring Down Disclosure Letter” from the Borrower, addressed to the
Administrative Agent and the Lenders, dated the First Amendment Effective Date.” 
  
 “ ‘Excess Additional Option Percentage’ shall have the meaning provided in Section 2.10(c).” 
  
 “ ‘Extension Interest Prepayment Amount’ shall mean with respect to an extension of the maturity date granted pursuant to
Section 2.9(b) of the Credit Agreement the amount that is the total amount of interest payable on the Loans during such extension period based on a one-year Eurodollar Rate as of the first date of such extension discounted to present value as of
such date using a discount rate of 4.25%.” 
 

 2 

  
 “ ‘First Amendment Effective Date’ shall mean the
date on which the First Amendment, dated as of November 16, 2001, to this Agreement became effective in accordance with its terms, which date is November 19, 2001.” 
  
 “ ‘LLC’ shall mean individually and collectively PG&E National Energy Group, LLC, a Delaware limited liability company and the New LLC.

  
 “ ‘NEG Equity Sale’ shall mean the sale of up to 20% of the outstanding equity of
NEG, Inc., substantially in the manner described in the NEG Equity Sale Letter with such changes in the transactions described therein as may hereafter occur; provided that no such changes will be made that will adversely affect the
Lenders’ security interest in the Collateral or the rights of the Holders under the Option Agreement (other than the effect of the release of up to 20% of the outstanding equity of NEG, Inc. to be released by the Lenders pursuant to the terms
hereof in connection with any NEG Equity Sale).” 
  
 “ ‘NEG Equity Sale Letter’
shall mean the letter from the Borrower addressed to the Administrative Agent and the Lenders dated of even date herewith, describing the terms of a potential sale of no more than 20% of the outstanding equity of NEG, Inc. and certain other actions
related thereto.” 
  
 “ ‘New Investor’ shall mean any purchaser of shares of the
outstanding equity of NEG, Inc. in connection with the NEG Equity Sale, and their successors and assigns.” 
  
 “ ‘New LLC’ shall have the meaning provided in Section 7.” 
  
 “ ‘Supplemental Schedule’ shall mean the “Supplemental Schedule” delivered by the Borrower to the Administrative Agent and the Lenders on the First Amendment Effective Date.” 

 
 “ ‘Utility Spin-Off’ shall mean individually and collectively, any transfers, Investments,
Indebtedness, Dividends, and other transactions to the extent substantially consistent with the transactions described in the attached Annex 1 and undertaken pursuant to a confirmed plan of reorganization of PGE Utility under Chapter 11 of the
Bankruptcy Code.” 
  
 (c)  Section 2 of the Credit Agreement is hereby amended by adding the
following new Section 2.10 at the end thereof: 
  
 “2.10    Conversion of Tranche B
Loan; Conversion of Put Option Purchase Price to Tranche A Loans.    (a) Notwithstanding anything in this Agreement or any other Financing Document to the contrary, on the First Amendment Effective Date, $92,000,000 of the
outstanding principal amount of the Tranche B Loan shall be automatically converted into, and become part of, the Tranche A Loan with the identical terms of the existing Tranche A Loan and shall be held by the Tranche B Lender and any Assignee
thereof on a ratable basis. For the avoidance of doubt, after giving effect to the conversion described above, the aggregate 
 

 3 

  
 principal amount of the Tranche A Loan and the Tranche B Loan outstanding on the First
Amendment Effective Date shall be $692,000,000 and $308,000,000, respectively. 
  
 (b)  In the event
that, pursuant to Article VI of the Option Agreement, any Holder exercises its right to put any Option of such Holder to a Purchasing Party on any Put Repurchase Date (as defined in the Option Agreement) prior to the Additional Extended Date
Certain, the Put Option Purchase Price (as defined in the Option Agreement) with respect to such put shall be determined in accordance with the Option Agreement, and, as provided in Section 6.04 of the Option Agreement, the amount of such Put Option
Purchase Price shall be paid in immediately available funds or, at Borrower’s option, shall be deemed to constitute a Tranche A Loan made by such Holder, or its Affiliate Lender, on such Put Repurchase Date in a principal amount equal to the
amount of such Put Option Purchase Price. 
  
 (c)  In the event that, pursuant to Section 2.01(b) of
the Option Agreement, the Holders may be entitled to receive an Additional Option (as defined in the Option Agreement) to purchase from LLC in excess of one percent (1.0%) of the total common equity of NEG, Inc. computed on a Fully Diluted Basis (as
defined in the Option Agreement) (such excess only, the “Excess Additional Option Percentage”), at Borrower’s option, (i) LLC may grant such Additional Option with respect to the Excess Additional Option Percentage in accordance with
the terms of Section 2.01(b) of the Option Agreement, or (ii) the amount of the Put Option Purchase Price (as defined in the Option Agreement) with respect to such Excess Additional Option Percentage shall be determined in accordance with Section
2.01(b) of the Option Agreement, and, as provided therein, the amount of such Put Option Purchase Price with respect to such Excess Additional Option Percentage (x) shall be paid in immediately available funds or, at Borrower’s option, (y)
shall be deemed to constitute a Tranche A Loan made by such Lender on such Put Repurchase Date in a principal amount equal to the amount of such Put Option Purchase Price with respect to such Excess Additional Option Percentage. 

 
 Any Tranche A Loan arising pursuant to Section 2.10(b) or (c) shall be subject to the terms and conditions of this Agreement applicable to
the Tranche A Loan and shall be evidenced by a Note in a principal amount equal to the applicable Put Option Purchase Price, which Note the Borrower shall duly execute and deliver to such Lender on the applicable Put Repurchase Date.”

  
 (d)  Section 2.9 of the Credit Agreement is hereby amended by deleting such Section in its entirety
and by substituting, in lieu thereof, the following: 
  
 “2.9    Extension of
Maturity Date.    (a) The Borrower may by notice to the Administrative Agent and the holders of the Tranche A Loan not later than thirty (30) days prior to March 2, 2003 or September 2, 2003 (if the maturity date of the
Tranche A Loan was extended March 2, 2003 to September 2, 2003), and upon 
 

 4 

  
 payment of the Extension Fees relating to such extension, extend the maturity date of the
Tranche A Loan to the earlier of (i) the date of a Spin-Off of NEG, Inc. and (ii) September 2, 2003 or March 2, 2004, as set forth in the Borrower’s notice, but in no event shall the Date Certain with respect to the Tranche A Loan be
beyond March 2, 2004, unless further extended pursuant to Section 2.9(b) below; provided, that there shall be no extension of the maturity date of the Tranche A Loan pursuant to this Section 2.9(a) if on the date of such extension, (i) a
Default or an Event of Default shall be continuing or (ii) the Tranche B Loan shall not have been paid in full. 
  
 (b)  The Borrower may by notice to the Administrative Agent and the holders of the Tranche A Loan not later than thirty (30) days prior to March 2, 2004 or March 2, 2005 (if the maturity date of the Tranche A Loan was extended to
March 2, 2005), and upon payment of the Extension Fees relating to such extension, extend the maturity date of the Tranche A Loan to the earlier of (i) the date of a Spin-Off of NEG, Inc. and (ii) March 2, 2005 or March 2, 2006, respectively, but in
no event shall the Date Certain with respect to the Tranche A Loan be beyond March 2, 2006; provided, that there shall be no extension of the maturity date of the Tranche A Loan pursuant to this paragraph (b) if (i) on the date of such
extension, a Default or an Event of Default shall be continuing, (ii) the Tranche B Loan shall not have been paid in full on or before the earlier of (x) March 3, 2002 and (y) the date which is twenty (20) days after the Borrower or any of its
Subsidiaries receives cash payment in full of the Attala Note, in an amount equal to 100% of such cash payments or (iii) on the date of such extension the Borrower (x) does not own cash or Cash Equivalents in its name in an amount no less than 15%
of the total principal amount of Loans then outstanding, free and clear of all Liens and (y) has not prepaid the Extension Interest Prepayment Amount. 
  
 (c)  Any extension of the maturity date of the Tranche A Loan made pursuant to this Section 2.9 shall become effective on the maturity date in effect
immediately prior to giving effect to such extension.” 
  
 (e)  Section 3.2(b) of the Credit
Agreement is hereby amended by deleting such Section in its entirety and by substituting, in lieu thereof, the following: 
  
 “(b)  (i)  In addition to any other mandatory repayments pursuant to this Section 3.2, on the date which is 20 days after the Borrower or any of its Subsidiaries receives any cash payments
made pursuant to the Atalla Note, an amount equal to 100% of such cash payments shall be applied on such date in accordance with the requirements of Section 3.2(h). 
  
 (ii)  In addition to any other mandatory repayments pursuant to this Section 3.2, on each date on or after the Closing Date upon which LLC, NEG, Inc. or any
NEG Subsidiary receives any cash proceeds from any incurrence by LLC, NEG, Inc. or any NEG Subsidiary of Indebtedness for borrowed money, an amount equal to 100% of the Net Debt Proceeds of the respective incurrence of 
 

 5 

  
 Indebtedness shall be applied on such date in accordance with the requirements of Section
3.2(h); provided that such Net Debt Proceeds shall not be required to be so applied to the extent such Net Debt Proceeds are (x) retained as cash or Cash Equivalents by LLC, NEG, Inc. or any NEG Subsidiary or (y) applied to repay
Indebtedness for borrowed money of NEG, Inc. or any NEG Subsidiary or (iii) reinvested in the business of NEG, Inc. or any NEG Subsidiary within the scope of business as described by the Business Plan; provided, further, that if a
Default or Event of Default shall have occurred and be continuing, such reinvestment may only be made to the extent specified in Part II of the Business Plan.” 
  
 (f)  Section 3.2(h) of the Credit Agreement is hereby amended by deleting such Section in its entirety and by substituting, in lieu thereof, the following:

  
 “(h)  Each amount (other than any amount described in Section 3.2(b)(A)) required to be
applied pursuant to this Section 3.2(h) shall be first paid to the Lenders ratably according to the respective outstanding principal amounts of Loans held by the Lenders and shall be applied by each Lender to payment of any amount owing to such
Lender under Section 2.8, then to payment of any interest then due and payable to such Lender, and then to reduce ratably the remaining principal balance of the Loans of such Lender. Each amount described in Section 3.2(b)(i) required to be applied
pursuant to this Section 3.2(h) shall be first paid to the Tranche B Lenders ratably according to the respective outstanding principal amounts of the Tranche B Loan held by such Tranche B Lenders and shall be applied by each such Tranche B Lender to
payment of any amount owing to such Tranche B Lender under Section 2.8, then to payment of any interest then due and payable to such Tranche B Lender on account of the Tranche B Loan, and then to reduce the remaining principal balance of the Tranche
B Loan of such Tranche B Lender; and after payment in full of the amounts described above in this sentence, any funds remaining from the amount described in Section 3.2(b)(A) shall be applied as specified in the first sentence of this
paragraph.” 
  
 (g)  Section 5.16(c) is hereby amended by deleting such clause (c) in its entirety
and substituting, in lieu thereof, the following: 
  
 “(c)  Each member of the NEG Group (other
than a QF during the period during which it was a QF) that owns assets subject to the jurisdiction of FERC pursuant to the FPA or sells power at wholesale in the United States has charged rates or provided services only pursuant to either: (i) one
or more rate schedules on file with FERC; or (ii) market rate contracts in compliance with such entity’s market rate authority from FERC, in each case, except such noncompliances with ongoing ministerial FERC filing requirements previously
disclosed in writing to Lenders and other noncompliances which, in each case, could not reasonably be expected to affect the status of any member(s) of the NEG Group as an EWG or power marketer or have a Material Adverse Effect or result in a
Material Adverse Change to NEG, Inc. or any of the NEG Subsidiaries. Each QF during the period it was a QF has sold power only in a manner consistent with its status as a QF.” 
 

 6 

  
 (h)  Section 6.1(a) of the Credit Agreement is hereby amended by
deleting the number “45” in line one thereof and substituting the number “60” therefor, and deleting the phrase “and consolidating” in lines three and seven thereof. 
  

(i)  Section 6.1(b) of the Credit Agreement is hereby amended by deleting the number “90” in line one thereof and substituting the number
“120” therefor. 
  
 (j)  Section 6.18 of the Credit Agreement is hereby amended by deleting
such Section in its entirety and by substituting, in lieu thereof, the following: 
  
 “6.18  Cash Reserve.    (a) The Borrower shall at all times commencing on March 2, 2002 and until and including the earlier of (i) repayment in full of the Loans and (ii) (x) March 2, 2003 or (y) if
such date is extended, March 2, 2004, own cash or Cash Equivalents in its name in an amount no less than 15% of the total principal amount of Loans then outstanding, free and clear of all Liens. 
  

(b) The Borrower shall at all times after the extension of the Date Certain pursuant to Section 2.9(b) and until the Loans are repaid in full own cash or Cash
Equivalents in its name in an amount no less than 10% of the total principal amount of Loans then outstanding, free and clear of all Liens; provided, that if at any time after any such extension pursuant to Section 2.9(b) the Borrower shall
fail to comply with the requirements of this Section 6.18(b), the Borrower shall be permitted to cure such noncompliance by prepaying the Extension Interest Prepayment Amount.” 
  
 (k)  Section 7 of the Credit Agreement is hereby amended to add the following new Section at the end thereof: 
  
 “7.12  Nothing in this Section 7 shall prohibit (a) the effectuation of the Utility Spin-Off, (b) the transfer of up to
200 shares of the common stock of NEG, Inc. to a wholly-owned Subsidiary of NEG, Inc. (the “New LLC”), provided that prior to such transfer, the New LLC becomes a party to the Stock Pledge Agreement on the same terms as those
applicable to the Borrower, or (c) the NEG Equity Sale.” 
  
 (l)  Section 7.1 of the Credit
Agreement is hereby amended by deleting the word “and” after the end of clause (xii) thereof, deleting the period after the end of clause (xiii) thereof and substituting therefor the phrase “; and”, and adding the following new
clause (xiv) thereto: 
  
 “(xiv)  Liens on assets of the Borrower to secure Hedging Agreements
entered into in the ordinary course of business by the Borrower hedging the interest rate fluctuations in respect of interest payable on the Loan.” 
  
 (m)  Section 7.1 (viii) of the Credit Agreement is hereby amended by deleting the proviso at the end thereof in its entirety and by substituting, in lieu
thereof, the following: 
 

 7 

  
 “provided that the aggregate amount of deposits at any time
pursuant to sub-clauses (y) and (z) and other Indebtedness permitted under Section 7.4(ix) shall not exceed $25,000,000 in the aggregate.” 
  
 (n)  Section 7.3 of the Credit Agreement is hereby amended by deleting such Section in its entirety and by substituting, in lieu thereof, the following:

  
 “7.3    Dividends.    The Borrower will not, and will not
permit any of the other Covered Parties to, authorize, declare or pay any Dividends (other than the Dividend being Refinanced hereunder), except that (i) any Subsidiary of the Borrower may pay cash Dividends to the Borrower or to LLC, NEG, Inc. or
any NEG Subsidiary, (ii) NEG, Inc. may distribute a note to LLC or the Borrower, and LLC may distribute any such note to the Borrower, solely in connection with the IPO, (iii) LLC may authorize, declare and pay Dividends to the Borrower in
connection with a Spin-Off of NEG, Inc. and (iv) NEG, Inc. may pay cash Dividends to any New Investor to the extent that Dividends are paid pro rata to the Borrower and such New Investor in accordance with their respective equity interests in NEG,
Inc. 
  
 Nothing in this Section shall prohibit the Borrower or LLC from performing in full its obligations under
Article VI of the Option Agreement.” 
  
 (o)  Section 7.4 of the Credit Agreement is hereby
amended by deleting the word “and” after the end of clause (vi) thereof, deleting the period after the end of clause (vii) thereof and substituting therefor a comma, and adding the following new clauses (viii) and (ix) thereto:

  
 “(viii)  Hedging Agreements entered into in the ordinary course of business by the Borrower
hedging the interest rate fluctuations in respect of interest payable on the Loan; and 
  
 (ix)  other
Indebtedness, provided that the aggregate amount of such other Indebtedness together with deposits permitted under sub-clauses (y) and (z) of Section 7.1(viii) shall not exceed the amount set forth in Section 7.1(viii).” 

 
 (p)  Section 7.5 of the Credit Agreement is hereby amended by deleting the word “and” after the end of
clause (x) thereof, deleting the period after the end of clause (xi) thereof and substituting therefor the phrase “; and”, and adding the following new clause (xii) thereto: 
  
 “(xi)  any Investment in a Hedging Agreement entered into by the Borrower hedging the interest rate fluctuations in respect of interest payable on the
Loan.” 
  
 (q)  Section 9 of the Credit Agreement is hereby amended to add the following new
Section 9.24: 
 

 8 

  
 “9.24    Release of Liens for NEG Equity
Sale.    Concurrently with the consummation of the NEG Equity Sale, the Lenders agree to cause the Collateral Agent (at the expense of the Borrower) to release the security interest held by the Collateral Agent, pursuant to
the Stock Pledge Agreement, in the shares of common stock of NEG, Inc. being sold in the NEG Equity Sale.” 
  
 (r)  Effective as of the date hereof, anywhere the term “Chief Financial Officer” is used in the Credit Agreement with respect to any Person such term shall be understood to include the Treasurer of such Person.

  
 (s)  Effective as of the date hereof, all references to “Schedule” or
“Schedules” in the Credit Agreement or any other Financing Document shall be deemed to be references to the Schedules attached hereto; provided, that references to “Schedule” or “Schedules” in representations or
warranties made prior to the date hereof shall be references to the Schedules attached to the Credit Agreement prior to the effectiveness of this Amendment, as modified by the Supplemental Schedule. 
  
 3.    Effectiveness.    This Amendment shall become effective as of the date hereof when (i) each Lender
shall have received counterparts hereof duly executed by the Borrower, the Co-Arranger, the Lead Arranger, the Administrative Agent and the Lenders, (ii) the Administrative Agent shall have received, for the account of each Lender that has executed
this Amendment on or prior to 5:00 p.m. (New York time) on November 19, 2001, an amendment fee in an amount equal to 1.0% of the outstanding Tranche A Loan of such Lender on such date after giving effect to the amendment to Section 2.10 of the
Credit Agreement set forth herein, which fee shall be payable to such Lender upon effectiveness of this Amendment, (iii) each Lender shall have received acknowledgments and consents hereto from the Borrower, LLC and NEG, Inc. under the LLC Pledge
Agreement and the Stock Pledge Agreement, as applicable, (iv) each Lender shall have received copies of the First Amendment, dated the date hereof, to the Option Agreement, duly executed by each party thereto and consented to by each Person
specified therein (the “Option Amendment”) and (v) each Lender shall have received favorable opinions of counsel to the Borrower, LLC and NEG, Inc. covering such matters with respect to this Agreement, the Option Amendment, the
Additional Fee Letter and the transactions contemplated hereby as the Lenders shall reasonably request. 
  
 4.    Representations and Warranties.    The Borrower hereby represents and warrants that each of the representations and warranties of the Borrower and its Subsidiaries contained in the Credit
Agreement and the other Financing Documents (as modified by the Bring Down Disclosure Letter and the Schedules attached hereto) shall be, after giving effect to this Amendment, true and correct in all material respects, as if made on and as of the
date hereof except for any representations and warranties made as of a specific date, which shall be true and correct in all material respects as of such date; provided that with respect to Section 5.19 of the Credit Agreement the filing by
PGE Utility of a petition with the United States Bankruptcy Court on April 6, 2001, shall be an exception to such representation and warranty that no Reportable Event has occurred. 
  
 5.    Reference to Credit Agreement.    Upon the effectiveness of this Amendment, each reference in the Credit Agreement to “this
Agreement,” “hereunder,” or words of like or 
 

 9 

 
similar import shall mean and be reference to the Credit Agreement as affected and amended by this Amendment. 
  
 6.    Continuing Effect of Credit Agreement.    This Amendment shall not be construed as a waiver or consent to any further or future
action on the part of the Borrower or any of its Subsidiaries that would require a waiver or consent of the Administrative Agent and/or the Lenders. Except as amended hereby, the provisions of the Credit Agreement and the other Financing Documents
are and shall remain in full force and effect. 
  
 7.    Counterparts.    This
Amendment may be executed in counterparts and all of the said counterparts taken together shall be deemed to constitute one and the same instrument. This Amendment may be validly executed and delivered by facsimile or other electronic transmission.

  
 8.    GOVERNING LAW, ETC.    THIS AMENDMENT SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. 
  
 9.    Expenses.    The Borrower agrees to pay or reimburse the Administrative Agent and each Lender for all of its out-of-pocket costs and expenses incurred in connection with the preparation,
negotiation and execution of this Amendment, including, without limitation, the fees and disbursements of counsel to the Administrative Agent and counsel to General Electric Capital Corporation, as a Lender. 
  
 [The remainder of this page is intentionally left blank.] 
  
 

 10 

  
 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed and delivered
by their duly authorized officers as of the date first written above. 
  
 
	 PG&E CORPORATION
 
	 
	 By:
 	 	             Peter A. Darbee
 

	  	 	 Name: Peter A. Darbee
 Title: Senior Vice President and Chief Financial
Officer
 

 
  
 
	 GENERAL ELECTRIC CAPITAL CORPORATION, as a Lender and
Co-Arranger
 
	 
	 By:
 	 	             J. Alex Urquhart, Jr.
 

	  	 	 Name: J. Alex Urquhart, Jr.
 Title: Vice President of GECC
 

 
  
 
	 LEHMAN COMMERCIAL PAPER INC.,
 as a Lender and Administrative Agent
 
	 
	 By:
 	 	             Jeff Goodwin
 

	  	 	 Name: Jeff Goodwin
 Title: Authorized Signatory
 

 
  
 
	 WILMINGTON TRUST COMPANY, as a Lender
 
	 
	 By:
 	 	             Bruce L. Bisson
 

	  	 	 Name: Bruce L. Bisson
 Title: Vice President
 

 
 

 11 

  
 Each of the undersigned does hereby consent and agree to the foregoing Amendment and
acknowledge and agree that (i) all obligations of the Borrower under the Credit Agreement, as amended by the foregoing Amendment, are Secured Obligations (as defined in the relevant Security Document) which are secured by the Security Documents to
which it is a party, (ii) all references to the Credit Agreement in the Security Documents refer to the Credit Agreement, as amended from time to time (including pursuant to the foregoing Amendment), and (iii) all references to Loans in the Security
Documents refer to the Loans under the Credit Agreement. 
  
 
	 PG&E CORPORATION
 
	 
	 By:
 	 	             Peter A. Darbee
 
	  	 	 

	  	 	 Name: Peter A. Darbee
 
	  	 	 Title: Senior Vice President and Chief Financial Officer
 
	 
	 PG&E NATIONAL ENERGY GROUP, LLC
 
	 
	 By:
 	 	             Thomas G. Boren
 
	  	 	 

	  	 	 Name: Thomas G. Boren
 
	  	 	 Title: President and Chief Executive Officer
 
	 
	 PG&E NATIONAL ENERGY GROUP, INC.
 
	 
	 By:
 	 	             Thomas G. Boren
 
	  	 	 

	  	 	 Name: Thomas G. Boren
 
	  	 	 Title: President and Chief Executive Officer
 

 
 

 12

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