Document:

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                                                                     EXHIBIT 4.7

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                          REGISTRATION RIGHTS AGREEMENT

                                 by and between

                             CEDAR BRAKES II, L.L.C.
                                    as Issuer

                                       and

                     CREDIT SUISSE FIRST BOSTON CORPORATION
                              as Initial Purchaser

                          Dated as of December 7, 2001

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                          REGISTRATION RIGHTS AGREEMENT

                  This Registration Rights Agreement (this "Agreement") is made
and entered into as of December 7, 2001 by and between Cedar Brakes II, L.L.C.,
a Delaware limited liability company (the "Issuer"), and Credit Suisse First
Boston Corporation (the "Initial Purchaser"), who has agreed to purchase the
Issuer's 9.875% Series A Senior Secured Bonds due 2013 (the "Initial Bonds")
pursuant to the Purchase Agreement (as defined below).

                  This Agreement is made pursuant to the Purchase Agreement,
dated December 7, 2001 (the "Purchase Agreement"), by and between the Issuer and
the Initial Purchaser. In order to induce the Initial Purchaser to purchase the
Initial Bonds, the Issuer has agreed to provide the registration rights set
forth in this Agreement. The execution and delivery of this Agreement is a
condition to the obligations of the Initial Purchaser set forth in Section 6 of
the Purchase Agreement. Capitalized terms used herein and not otherwise defined
shall have the meaning assigned to them in the Indenture, dated as of December
12, 2001 between the Issuer and Bankers Trust Company, as Trustee (the
"Indenture").

                  The parties hereby agree as follows:

SECTION 1. DEFINITIONS

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

                  Act: The Securities Act of 1933, as amended.

                  Additional Interest: As defined in Section 5 hereof.

                  Additional Interest Rate: As defined in Section 5 hereof.

                  Affiliate: As defined in Rule 144 of the Act.

                  Agreement: As defined in the initial paragraph hereof.

                  Bonds: As defined in Section 3(c) hereof.

                  Broker-Dealer: Any broker or dealer registered under the
Exchange Act.

                  Closing Date: The date hereof.

                  Commission: The Securities and Exchange Commission.

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                  Consummate: An Exchange Offer shall be deemed "Consummated"
for purposes of this Agreement upon the occurrence of (a) the filing and
effectiveness under the Act of the Exchange Offer Registration Statement
relating to the Exchange Bonds to be issued in the Exchange Offer, (b) the
maintenance of such Exchange Offer Registration Statement as continuously
effective and the keeping open of the Exchange Offer for a period not less than
the minimum period required pursuant to Section 3(b) hereof and (c) the
delivery, by the Issuer to the Registrar under the Indenture, of Exchange Bonds
in the same aggregate principal amount as the aggregate principal amount of
Initial Bonds tendered by Holders thereof pursuant to the Exchange Offer.

                  Consummation Deadline: As defined in Section 3(b) hereof.

                  Effectiveness Deadline: As defined in Sections 3(a) and
4(a)(2) hereof.

                  Exchange Act: The Securities Exchange Act of 1934, as amended.

                  Exchange Bonds: The Issuer's 9.875% Series B Senior Secured
Bonds due 2013 to be issued pursuant to the Indenture (i) in the Exchange Offer
or (ii) as contemplated by Section 4 hereof.

                  Exchange Offer: The offer made by the Issuer to the Holders of
the Initial Bonds with respect to the exchange and issuance by the Issuer of a
principal amount of Exchange Bonds (which shall be registered pursuant to the
Exchange Offer Registration Statement) equal to the outstanding principal amount
of Initial Bonds that are tendered by such Holders in connection with such
exchange and issuance.

                  Exchange Offer Registration Statement: The Registration
Statement relating to the Exchange Offer, including the related Prospectus.

                  Exempt Resales: The transactions in which the Initial
Purchaser proposes to sell the Initial Bonds to certain "qualified institutional
buyers," as such term is defined in Rule 144A under the Act, to certain
institutional "accredited investors," as such term is defined in Rule 501(a)(1),
(2), (3) or (7) under the Act, and pursuant to Regulation S under the Act.

                  Filing Deadline: As defined in Sections 3(a) and 4(a)(1)
hereof.

                  Holders: As defined in Section 2 hereof.

                  Indenture: As defined in the second paragraph hereof.

                  Initial Bonds: As defined in the initial paragraph hereof.

                  Initial Purchaser: As defined in the initial paragraph hereof.

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                  Issuer: As defined in the initial paragraph hereof.

                  Plan of Distribution: As described in Annex A hereof.

                  Private Exchange: As defined in Section 3(c) hereof.

                  Private Exchange Bonds: As defined in Section 3(c) hereof.

                  Prospectus: The prospectus included in a Registration
Statement at the time such Registration Statement is declared effective, as
amended or supplemented by any prospectus supplement and by all other amendments
thereto, including post-effective amendments, and all material incorporated by
reference into such prospectus.

                  Purchase Agreement: As defined in the second paragraph hereof.

                  Recommencement Date: As defined in Section 6(d) hereof.

                  Registration Default: As defined in Section 5 hereof.

                  Registration Statement: Any registration statement of the
Issuer relating to (a) an offering of Exchange Bonds pursuant to an Exchange
Offer or (b) the registration for resale of Transfer Restricted Securities
pursuant to the Shelf Registration Statement, in each case, (i) that is filed
pursuant to the provisions of this Agreement and (ii) including the Prospectus
included therein, all amendments and supplements thereto (including
post-effective amendments) and all exhibits and material incorporated by
reference therein.

                  Regulation S: Regulation S promulgated under the Act.

                  Rule 144: Rule 144 promulgated under the Act.

                  Rules: As defined in Section 6(c)(xxi) hereof.

                  Shelf Registration Statement: As defined in Section 4(a)
hereof.

                  Suspension Notice: As defined in Section 6(d) hereof.

                  Suspension Period: As defined in Section 6(d) hereof.

                  TIA: The Trust Indenture Act of 1939 as in effect on the date
of the Indenture.

                  Transfer Restricted Securities: (a) Each Initial Bond, until
the earliest to occur of (i) (x) the date on which such Initial Bond is
exchanged in the Private Exchange

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for a Private Exchange Bond or (y) the date on which such Initial Bond is
exchanged in the Exchange Offer for an Exchange Bond which is entitled to be
resold to the public by the Holder thereof without complying with the prospectus
delivery requirements of the Act, (ii) the date on which such Initial Bond has
been disposed of in accordance with a Shelf Registration Statement (and the
purchasers thereof have been issued Exchange Bonds or Private Exchange Bonds, as
applicable), or (iii) the date on which such Initial Bond is distributed to the
public pursuant to Rule 144 under the Act (and purchasers thereof have been
issued Exchange Bonds or Private Exchange Bonds, as applicable) and (b) each
Exchange Bond or Private Exchange Bond, as the case may be, until the date on
which such Exchange Bond or Private Exchange Bond, as the case may be, is
disposed of by a Broker-Dealer pursuant to the "Plan of Distribution"
contemplated by the Exchange Offer Registration Statement (including the
delivery of the Prospectus contained therein).

SECTION 2. HOLDERS

                  A Person is deemed to be a holder of Transfer Restricted
Securities (each, a "Holder") whenever such Person owns Transfer Restricted
Securities.

SECTION 3. REGISTERED EXCHANGE OFFER

                  (a) Unless the Exchange Offer shall not be permitted by
applicable federal law or Commission policy (after the procedures set forth in
Section 6(a)(i) below have been complied with), the Issuer shall (i) cause the
Exchange Offer Registration Statement to be filed with the Commission as soon as
practicable after the Closing Date, but in no event later than 90 days after the
Closing Date (such 90th day being the "Filing Deadline"), (ii) use commercially
reasonable efforts to cause such Exchange Offer Registration Statement to become
effective at the earliest possible time, but in no event later than 230 days
after the Closing Date (such 230th day being the "Effectiveness Deadline"), and
(iii) use commercially reasonable efforts to commence and Consummate the
Exchange Offer upon the effectiveness of such Exchange Offer Registration
Statement. The Exchange Offer shall be on the appropriate form permitting (x)
registration of the Exchange Bonds to be offered in exchange for the Initial
Bonds that are Transfer Restricted Securities and (y) resales of Exchange Bonds
by Broker-Dealers that tendered into the Exchange Offer Initial Bonds that such
Broker-Dealer acquired for its own account as a result of market making
activities or other trading activities (other than Initial Bonds acquired
directly from the Issuer or any of its Affiliates), as contemplated by Section
3(c) below.

                  (b) The Issuer shall use commercially reasonable efforts to
cause the Exchange Offer Registration Statement to be effective continuously,
and shall use commercially reasonable efforts to keep the Exchange Offer open
for a period of not less than the minimum period required under applicable
federal and state securities laws to Consummate the Exchange Offer; provided,
that in no event shall such period be less

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than 30 days. The Issuer shall cause the Exchange Offer to comply with all
applicable federal and state securities laws. No securities other than the
Exchange Bonds shall be included in the Exchange Offer Registration Statement.
The Issuer shall use commercially reasonable efforts to cause the Exchange Offer
to be Consummated on the earliest practicable date after the Exchange Offer
Registration Statement has become effective, but in no event later than 40 days
thereafter (such 40th day being the "Consummation Deadline").

                  (c) The Issuer shall include a "Plan of Distribution" section
which contains the information in Annex A hereto in the Prospectus contained in
the Exchange Offer Registration Statement and indicate therein that any
Broker-Dealer who holds Transfer Restricted Securities that were acquired for
the account of such Broker-Dealer as a result of market-making activities or
other trading activities (other than Initial Bonds acquired directly from the
Issuer or any Affiliate of the Issuer) may exchange such Transfer Restricted
Securities pursuant to the Exchange Offer. Such "Plan of Distribution" section
shall also contain all other information with respect to such sales by such
Broker-Dealers that the Commission may require in order to permit such sales
pursuant thereto, but such "Plan of Distribution" shall not name any such
Broker-Dealer or disclose the amount of Transfer Restricted Securities held by
any such Broker-Dealer, except to the extent required by the Commission as a
result of a change in law, policy, rules or regulations after the date of this
Agreement.

                  Because such Broker-Dealer may be deemed to be an
"underwriter" within the meaning of the Act and must, therefore, deliver a
prospectus meeting the requirements of the Act in connection with its initial
sale of any Exchange Bonds received by such Broker-Dealer in the Exchange Offer,
the Issuer shall permit the use of the Prospectus contained in the Exchange
Offer Registration Statement by such Broker-Dealer to satisfy such prospectus
delivery requirement. To the extent necessary to ensure that the Prospectus
contained in the Exchange Offer Registration Statement is available for sales of
Exchange Bonds by Broker-Dealers, the Issuer agrees to use commercially
reasonable efforts to keep the Exchange Offer Registration Statement
continuously effective, supplemented, amended and current as required by and
subject to the provisions of Sections 6(a) and (c) hereof and in conformity with
the requirements of this Agreement, the Act and the policies, rules and
regulations of the Commission as announced from time to time, for a period of
180 days from the Consummation Deadline or such shorter period as will terminate
when all Transfer Restricted Securities covered by such Registration Statement
have been sold pursuant thereto. The Issuer shall provide sufficient copies of
the latest version of such Prospectus to such Broker-Dealers promptly upon
request, and in no event later than one day after such request, at any time
during such period.

                  Following the declaration of the effectiveness of the Exchange
Offer Registration Statement, the Issuer shall promptly commence the Registered
Exchange

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Offer, it being the objective of such Registered Exchange Offer to enable each
Holder of Transfer Restricted Securities electing to exchange the Initial Bonds
for Exchange Bonds (assuming that such Holder is not an Affiliate of the Issuer,
acquires the Exchange Bonds in the ordinary course of such Holder's business and
has no arrangements with any Person to participate in the distribution of the
Bonds and is not prohibited by any law or policy of the Commission from
participating in the Registered Exchange Offer) to trade such Exchange Bonds
from and after their receipt without any limitations or restrictions under the
Act and without material restrictions under the securities laws of the several
states of the United States.

                  If, upon consummation of the Registered Exchange Offer, the
Initial Purchaser holds Initial Bonds acquired by it as part of its initial
distribution, the Issuer, simultaneously with the delivery of the Exchange Bonds
pursuant to the Registered Exchange Offer, shall issue and deliver to the
Initial Purchaser upon the written request of the Initial Purchaser, in exchange
(the "Private Exchange") for the Initial Bonds held by the Initial Purchaser, a
like principal amount of debt securities of the Issuer issued under the
Indenture and identical in all material respects (including the existence of
restrictions on transfer under the Securities Act and the securities laws of the
several states of the United States) to the Initial Bonds (the "Private Exchange
Bonds"). The Initial Bonds, the Exchange Bonds and the Private Exchange Bonds
are herein collectively called the "Bonds."

SECTION 4. SHELF REGISTRATION

                  (a) Shelf Registration. If (i) the Exchange Offer is not
permitted by applicable law or Commission policy (after the Issuer has complied
with the procedures set forth in Section 6(a)(i) below) or (ii) any Holder of
Transfer Restricted Securities shall notify the Issuer within 10 Business Days
following the Consummation Deadline that (A) such Holder was prohibited by law
or Commission policy from participating in the Exchange Offer or (B) such Holder
may not resell the Exchange Bonds acquired by it in the Exchange Offer to the
public without delivering a prospectus and that the Prospectus contained in the
Exchange Offer Registration Statement is not appropriate or available for such
resales by such Holder or (C) such Holder is a Broker-Dealer and holds Initial
Bonds or Private Exchange Bonds not eligible for participation in the
Registration Exchange Offer, then the Issuer shall:

                  (1)      cause to be filed, on or prior to 45 days after the
                           earlier of (i) the date on which the Issuer
                           determines that the Exchange Offer Registration
                           Statement cannot be filed as a result of clause
                           (a)(i) above and (ii) the date on which the Issuer
                           receives the notice specified in clause (a)(ii)
                           above, (such earlier date, the "Filing Deadline"), a
                           shelf registration statement pursuant to Rule 415
                           under the Act (which may be an amendment to the
                           Exchange Offer

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                           Registration Statement (the "Shelf Registration
                           Statement")), relating to all Transfer Restricted
                           Securities, and

                  (2)      shall use commercially reasonable efforts to cause
                           such Shelf Registration Statement to become effective
                           on or prior to 230 days after the Filing Deadline for
                           the Shelf Registration Statement (such 230th day the
                           "Effectiveness Deadline").

                  (3)      If, after the Issuer has filed an Exchange Offer
                           Registration Statement that satisfies the
                           requirements of Section 3(a) above, the Issuer is
                           required to file and make effective a Shelf
                           Registration Statement solely because the Exchange
                           Offer is not permitted under applicable federal law
                           (i.e., clause (a)(i) above), then the filing of the
                           Exchange Offer Registration Statement shall be deemed
                           to satisfy the requirements of clause (x) above;
                           provided that, in such event, the Issuer shall remain
                           obligated to meet the Effectiveness Deadline set
                           forth in clause (2).

                  (4)      To the extent necessary to ensure that the Shelf
                           Registration Statement is available for sales of
                           Transfer Restricted Securities by the Holders thereof
                           entitled to the benefit of this Section 4(a) and the
                           other securities required to be registered therein
                           pursuant to Section 6(b)(ii) hereof, the Issuer shall
                           use commercially reasonable efforts to keep any Shelf
                           Registration Statement required by this Section 4(a)
                           continuously effective, supplemented, amended and
                           current as required by and subject to the provisions
                           of Sections 6(b) and (c) hereof and in conformity, as
                           to all matters within the Issuer's control, with the
                           requirements of this Agreement, the Act and the
                           policies, rules and regulations of the Commission as
                           announced from time to time, for a period of at least
                           two years (as extended pursuant to Section 6(d))
                           following the Closing Date, or such shorter period as
                           will terminate when all Transfer Restricted
                           Securities covered by such Shelf Registration
                           Statement have been sold pursuant thereto.

                  (b) Provision by Holders of Certain Information in Connection
with the Shelf Registration Statement. No Holder of Transfer Restricted
Securities may include any of its Transfer Restricted Securities in any Shelf
Registration Statement pursuant to this Agreement unless and until such Holder
furnishes to the Issuer in writing, within 20 days after receipt of a request
therefor, the information specified in Item 507 or 508 of Regulation S-K, as
applicable, of the Act for use in connection with any Shelf Registration
Statement or Prospectus or preliminary Prospectus included therein. No Holder of
Transfer Restricted Securities shall be entitled to Additional Interest pursuant

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to Section 5 hereof unless and until such Holder shall have provided all such
information, and no Holder shall be entitled to have the Bonds held by it
covered by such Shelf Registration Statement unless such Holder agrees in
writing to be bound by all the provisions of this Agreement applicable to such
Holder. Each selling Holder agrees to promptly furnish additional information
required to be disclosed in order to make the information previously furnished
to the Issuer by such Holder not materially misleading.

SECTION 5. ADDITIONAL INTEREST UNDER CERTAIN CIRCUMSTANCES

                  If (a) any Registration Statement required by this Agreement
is not filed with the Commission on or prior to the applicable Filing Deadline,
(b) any such Registration Statement has not been declared effective by the
Commission on or prior to the applicable Effectiveness Deadline or (c) the
Exchange Offer has not been Consummated on or prior to the Consummation Deadline
(each such event referred to in clauses (a) through (c), a "Registration
Default"), then the Issuer hereby agrees to pay additional interest ("Additional
Interest") with respect to the Bonds. Additional Interest shall accrue on the
Bonds over and above the interest set forth in the title of the Bonds from and
including the date on which any such Registration Default shall occur, but
excluding the date on which all such Registration Defaults have been cured, at a
rate of 0.50% per annum regardless of the number of Registration Defaults (the
"Additional Interest Rate"). Notwithstanding anything to the contrary set forth
herein, (i) upon filing of the Exchange Offer Registration Statement (and/or, if
applicable, the Shelf Registration Statement), in the case of (a) above, (ii)
upon the effectiveness of the Exchange Offer Registration Statement (and/or, if
applicable, the Shelf Registration Statement), in the case of (b) above or (iii)
upon Consummation of the Exchange Offer, in the case of (c) above, Additional
Interest payable with respect to the Transfer Restricted Securities as a result
of such clause (a), (b) or (c), as applicable, shall cease to accrue.

                  Any amounts of Additional Interest due pursuant to this
Section 5 shall be payable in cash on the regular Interest Payments Dates with
respect to the Bonds. The amount of Additional Interest shall be determined by
multiplying the applicable Additional Interest Rate by the principal amount of
the Bonds and further multiplied by a fraction, the numerator of which is the
number of days such Additional Interest Rate was applicable during such period
(determined on the basis of a 360-day year comprised of twelve 30-day months),
and the denominator of which is 360.

SECTION 6. REGISTRATION PROCEDURES

                  (a) Exchange Offer Registration Statement. (i) In connection
with the Exchange Offer or the Private Exchange, as the case may be, the Issuer
shall (A) comply with all applicable provisions of Section 6(c) below and (B)
use commercially reasonable

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efforts to effect such exchange and to permit the resale of Exchange Bonds or
the Private Exchange Bonds, as the case may be, by Broker-Dealers that tendered
in the Exchange Offer or the Private Exchange, as the case may be, Initial Bonds
that such Broker-Dealer acquired for its own account as a result of its
market-making activities or other trading activities (other than Initial Bonds
acquired directly from the Issuer or any of its Affiliates) being sold in
accordance with the intended method or methods of distribution thereof.

                           (i) If, following the date hereof there has been
                  announced a change in Commission policy with respect to
                  exchange offers such as the Exchange Offer, that in the
                  reasonable opinion of counsel to the Issuer raises a
                  substantial question as to whether the Exchange Offer is
                  permitted by applicable federal law, the Issuer hereby agrees
                  to seek a no-action letter or other favorable decision from
                  the Commission allowing the Issuer to Consummate an Exchange
                  Offer for such Transfer Restricted Securities. The Issuer
                  hereby agrees to pursue the issuance of such a decision to the
                  Commission staff level. In connection with the foregoing, the
                  Issuer hereby agrees to take all such other actions as may be
                  requested by the Commission or otherwise required in
                  connection with the issuance of such decision, including
                  without limitation (A) participating in telephonic conferences
                  with the Commission, (B) delivering to the Commission staff an
                  analysis prepared by counsel to the Issuer setting forth the
                  legal bases, if any, upon which such counsel has concluded
                  that such an Exchange Offer should be permitted and (C)
                  diligently pursuing a resolution (which need not be favorable)
                  by the Commission staff. At any point in the process, the
                  Issuer may, in lieu of continuing or pursuing a no-action
                  letter, file a Shelf Registration Statement.

                           (ii) As a condition to its participation in the
                  Exchange Offer, each Holder of Transfer Restricted Securities
                  (including, without limitation, any Holder who is a
                  Broker-Dealer) shall furnish, upon the request of the Issuer,
                  prior to the Consummation of the Exchange Offer, a written
                  representation to the Issuer (which may be contained in the
                  letter of transmittal contemplated by the Exchange Offer
                  Registration Statement) to the effect that (A) it is not an
                  Affiliate of the Issuer, (B) it is not engaged in, and does
                  not intend to engage in, and has no arrangement or
                  understanding with any Person to participate in, a
                  distribution of the Exchange Bonds to be issued in the
                  Exchange Offer, (C) it is acquiring the Exchange Bonds in its
                  ordinary course of business and (D) if such Holder is a
                  Broker-Dealer, that it will receive Exchange Bonds for its own
                  account in exchange for Initial Bonds that were acquired as a
                  result of market-making activities or other trading activities
                  and that it will be required to acknowledge that it will
                  deliver a prospectus in connection

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                  with any resale of such Exchange Bonds. As a condition to its
                  participation in the Exchange Offer, each Holder using the
                  Exchange Offer to participate in a distribution of the
                  Exchange Bonds shall acknowledge and agree that, if the
                  resales are of Exchange Bonds obtained by such Holder in
                  exchange for Initial Bonds acquired directly from the Issuer
                  or an Affiliate thereof, it (1) could not, under Commission
                  policy as in effect on the date of this Agreement, rely on the
                  position of the Commission enunciated in Morgan Stanley and
                  Co., Inc. (available June 5, 1991) and Exxon Capital Holdings
                  Corporation (available May 13, 1988), as interpreted in the
                  Commission's letter to Shearman & Sterling dated July 2, 1993,
                  and similar no-action letters (including, if applicable, any
                  no-action letter obtained pursuant to clause (i) above), and
                  (2) must comply with the registration and prospectus delivery
                  requirements of the Act in connection with a secondary resale
                  transaction and that such a secondary resale transaction must
                  be covered by an effective registration statement containing
                  the selling security holder information required by Item 507
                  or 508, as applicable, of Regulation S-K.

                  (b) Shelf Registration Statement. In connection with the Shelf
Registration Statement, the Issuer shall:

                           (i) comply with all the provisions of Section 6(c)
                  below and use commercially reasonable efforts to effect such
                  registration to permit the sale of the Transfer Restricted
                  Securities being sold in accordance with the intended method
                  or methods of distribution thereof (as indicated in the
                  information furnished to the Issuer pursuant to Section 4(b)
                  hereof), and pursuant thereto the Issuer will prepare and file
                  with the Commission a Registration Statement relating to the
                  registration on any appropriate form under the Act, which form
                  shall be available for the sale of the Transfer Restricted
                  Securities in accordance with the intended method or methods
                  of distribution thereof within the time periods and otherwise
                  in accordance with the provisions hereof and include the names
                  of the Holders who propose to sell Bonds pursuant to the Shelf
                  Registration Statement as selling securityholders.

                           (ii) issue, upon the request of any Holder or
                  purchaser of Initial Bonds or Private Exchange Bonds, as the
                  case may be, covered by any Shelf Registration Statement
                  contemplated by this Agreement, Exchange Bonds having an
                  aggregate principal amount equal to the aggregate principal
                  amount of Initial Bonds or Private Exchange Bonds, as the case
                  may be, sold pursuant to the Shelf Registration Statement and
                  surrendered to the Issuer for cancellation; the Issuer shall
                  register Exchange Bonds on the Shelf Registration Statement
                  for this purpose and issue the Exchange

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                  Bonds to the purchaser(s) of securities subject to the Shelf
                  Registration Statement in the names as such purchaser(s) shall
                  designate.

                  (c) General Provisions. In connection with any Registration
Statement and any related Prospectus required by this Agreement, the Issuer
shall:

                           (i) use commercially reasonable efforts to keep such
                  Registration Statement continuously effective and provide all
                  requisite financial statements for the period specified in
                  Section 3 or 4 of this Agreement, as applicable. Upon the
                  occurrence of any event that would cause any such Registration
                  Statement or the Prospectus contained therein (A) to contain
                  an untrue statement of material fact or omit to state any
                  material fact necessary to make the statements therein not
                  misleading or (B) not to be effective and usable for resale of
                  Transfer Restricted Securities during the period required by
                  this Agreement, the Issuer shall file promptly an appropriate
                  amendment to such Registration Statement curing such defect,
                  and, if Commission review is required, use commercially
                  reasonable efforts to cause such amendment to be declared
                  effective as soon as practicable.

                           (ii) (A) prepare and file with the Commission such
                  amendments and post-effective amendments to the applicable
                  Registration Statement as may be necessary to keep such
                  Registration Statement effective for the applicable period set
                  forth in Section 3 or 4 hereof, as the case may be; (B) cause
                  the Prospectus to be supplemented by any required Prospectus
                  supplement, and as so supplemented to be filed pursuant to
                  Rule 424 under the Act, and to comply fully with Rules 424,
                  430A and 462, as applicable, under the Act in a timely manner;
                  and (C) comply with the provisions of the Act with respect to
                  the disposition of all securities covered by such Registration
                  Statement during the applicable period in accordance with the
                  intended method or methods of distribution by the sellers
                  thereof set forth in such Registration Statement or supplement
                  to the Prospectus;

                           (iii) advise each Holder promptly and, if requested
                  by such Holder, confirm such advice in writing, (A) with
                  respect to any applicable Registration Statement or any
                  post-effective amendment thereto, when the same has become
                  effective, (B) of any request by the Commission for amendments
                  to the Registration Statement or amendments or supplements to
                  the Prospectus or for additional information relating thereto,
                  (C) of the issuance by the Commission of any stop order
                  suspending the effectiveness of the Registration Statement
                  under the Act or of the suspension by any state securities
                  commission of the qualification of the

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                  Transfer Restricted Securities for offering or sale in any
                  jurisdiction, or the initiation of any proceeding for any of
                  the preceding purposes, (D) of the receipt by the Issuer or
                  its legal counsel of any notification with respect to the
                  suspension of the qualification of the Bonds for sale in any
                  jurisdiction or the initiation or threatening of any
                  proceeding for such purpose, and (E) of the existence of any
                  fact or the happening of any event that makes any statement of
                  a material fact made in the Registration Statement, the
                  Prospectus, any amendment or supplement thereto or any
                  document incorporated by reference therein untrue, or that
                  requires the making of any additions to or changes in the
                  Registration Statement in order to make the statements therein
                  not misleading, or that requires the making of any additions
                  to or changes in the Prospectus in order to make the
                  statements therein, in light of the circumstances under which
                  they were made, not misleading. If at any time the Commission
                  shall issue any stop order suspending the effectiveness of the
                  Registration Statement, or any state securities commission or
                  other regulatory authority shall issue an order suspending the
                  qualification or exemption from qualification of the Transfer
                  Restricted Securities under state securities or Blue Sky laws,
                  the Issuer shall use commercially reasonable efforts to obtain
                  the withdrawal or lifting of such order at the earliest
                  possible time;

                           (iv) subject to Section 6(c)(i), if any fact or event
                  contemplated by Section 6(c)(iii)(D) above shall exist or have
                  occurred, prepare a supplement or post-effective amendment to
                  the Registration Statement or related Prospectus or any
                  document incorporated therein by reference or file any other
                  required document so that, as thereafter delivered to the
                  purchasers of Transfer Restricted Securities, the Prospectus
                  will not contain an untrue statement of a material fact or
                  omit to state any material fact necessary to make the
                  statements therein, in light of the circumstances under which
                  they were made, not misleading;

                           (v) furnish to each Holder in connection with such
                  exchange or sale, if any, before filing with the Commission,
                  copies of any Registration Statement or any Prospectus
                  included therein or any amendments or supplements to any such
                  Registration Statement or Prospectus (including all documents
                  incorporated by reference after the initial filing of such
                  Registration Statement);

                           (vi) promptly prior to the filing of any document
                  that is to be incorporated by reference into a Registration
                  Statement or Prospectus, provide copies of such document to
                  each Holder in connection with such exchange or sale, if any,
                  make the Issuer's representatives available for discussion of
                  such document and other customary due diligence matters,

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                  and include such information in such document prior to the
                  filing thereof as such Holders may reasonably request;

                           (vii) make available, at reasonable times, for
                  inspection by the Trustee and any attorney or accountant
                  retained by the Trustee, all financial and other records, and
                  pertinent corporate documents of the Issuer and cause the
                  Issuer's officers, directors and employees to supply all
                  information reasonably requested by the Trustee, attorney or
                  accountant in connection with such Registration Statement or
                  any post-effective amendment thereto subsequent to the filing
                  thereof and prior to its effectiveness; provided, that (A) the
                  information and inspection requests and due diligence
                  investigations made pursuant to this clause (vii) and clause
                  (vi) of this Section 6 shall be coordinated on behalf of the
                  Initial Purchaser, the Holders and on behalf of the other
                  parties, by one counsel designated by and on behalf of such
                  parties and (B) each Holder shall bear its expenses and the
                  expenses of its consultants and advisers (including, without
                  limitation, any attorney, accountant or other agent retained
                  by such Person) incurred pursuant to this clause (vii) and
                  clause (vi) of this Section 6;

                           (viii) if requested by the Initial Purchaser in
                  connection with such exchange or sale, (A) promptly include in
                  any Registration Statement or Prospectus, pursuant to a
                  supplement or post-effective amendment if necessary, such
                  information as the Initial Purchaser may reasonably request to
                  have included therein, including, without limitation, the
                  information relating to the "Plan of Distribution" of the
                  Transfer Restricted Securities set forth in Annex A hereto;
                  and (B) make all required filings of such Prospectus
                  supplement or post-effective amendment as soon as practicable
                  after the Issuer is notified of the matters to be included in
                  such Prospectus supplement or post-effective amendment;

                           (ix) furnish to each Holder in connection with such
                  exchange or sale, without charge, at least one copy of the
                  Registration Statement, as first filed with the Commission,
                  and of each amendment thereto, including all documents
                  incorporated by reference therein and all exhibits (including
                  exhibits incorporated by reference therein);

                           (x) deliver to each Holder, without charge, as many
                  copies of the Prospectus (including each preliminary
                  Prospectus) and any amendment or supplement thereto as such
                  Persons reasonably may request; the Issuer hereby consents,
                  subject to the provisions of this Agreement, to the use (in
                  accordance with applicable law) of the

                                       13
<PAGE>

                  Prospectus and any amendment or supplement thereto by each
                  selling Holder in connection with the offering and the sale of
                  the Transfer Restricted Securities covered by the Prospectus
                  or any amendment or supplement thereto;

                           (xi) upon the request of any Holder, (A) enter into
                  such customary agreements (including underwriting agreements)
                  and make such representations and warranties and take all such
                  other actions in connection therewith in order to expedite or
                  facilitate the disposition of the Transfer Restricted
                  Securities pursuant to any applicable Registration Statement
                  contemplated by this Agreement as may be reasonably requested
                  by any Holder in connection with any sale or resale pursuant
                  to any applicable Registration Statement; and (B) in such
                  connection:

                           (1)      upon request of any Holder, furnish (or in
                                    the case of paragraphs (y) and (z), use
                                    commercially reasonable efforts to cause to
                                    be furnished) to each Holder, upon
                                    Consummation of the Exchange Offer or upon
                                    the effectiveness of the Shelf Registration
                                    Statement, as the case may be:

                                    (x)      a certificate, dated such date,
                                             signed on behalf of the Issuer by
                                             the President or any Vice President
                                             of the Issuer confirming, as of the
                                             date thereof, the matters set forth
                                             in Section 6(e) of the Purchase
                                             Agreement and such other similar
                                             matters as such Holders may
                                             reasonably request;

                                    (y)      an opinion, dated the date of
                                             Consummation of the Exchange Offer
                                             or the date of effectiveness of the
                                             Shelf Registration Statement, as
                                             the case may be, of in-house
                                             counsel for the Issuer (A)covering
                                             matters similar - to those set
                                             forth in Section 6(c) of the
                                             Purchase Agreement and such other
                                             matters as such Holder may
                                             reasonably request, with similar
                                             assumptions and exceptions and in
                                             form and substance substantially
                                             similar to that customarily
                                             delivered in public offerings of
                                             securities, and, in any event,
                                             including a statement to the effect
                                             that such counsel has participated

                                       14
<PAGE>

                                             in conferences with officers and
                                             other representatives of the Issuer
                                             and with representatives of the
                                             independent public accountants for
                                             the Issuer, and has considered the
                                             matters required to be stated
                                             therein and the statements
                                             contained therein, although such
                                             counsel has not independently
                                             verified the accuracy, completeness
                                             or fairness of such statements; and
                                             (B) that such counsel - advises
                                             that, on the basis of the
                                             foregoing, no facts came to such
                                             counsel's attention that caused
                                             such counsel to believe that the
                                             applicable Registration Statement,
                                             at the time such Registration
                                             Statement or any post-effective
                                             amendment thereto became effective,
                                             and, in the case of the Exchange
                                             Offer Registration Statement, as of
                                             the date of Consummation of the
                                             Exchange Offer, contained an untrue
                                             statement of a material fact or
                                             omitted to state a material fact
                                             required to be stated therein or
                                             necessary to make the statements
                                             therein not misleading, or that the
                                             Prospectus contained in such
                                             Registration Statement as of its
                                             date and, in the case of the
                                             opinion dated the date of
                                             Consummation of the Exchange Offer,
                                             as of the date of Consummation,
                                             contained an untrue statement of a
                                             material fact or omitted to state a
                                             material fact necessary in order to
                                             make the statements therein, in
                                             light of the circumstances under
                                             which they were made, not
                                             misleading; provided, that without
                                             limiting the foregoing, such
                                             counsel may state further that such
                                             counsel assumes no responsibility
                                             for, and has not independently
                                             verified, the accuracy,
                                             completeness or fairness of the
                                             financial statements, notes and
                                             schedules thereto, and other
                                             financial data included in any
                                             Registration Statement contemplated
                                             by this Agreement or the related
                                             Prospectus; and

                                       15
<PAGE>

                                    (z)      a customary comfort letter, dated
                                             the date of Consummation of the
                                             Exchange Offer, or as of the date
                                             of effectiveness of the Shelf
                                             Registration Statement, as the case
                                             may be, from the Issuer's
                                             independent accountants, in the
                                             customary form and covering matters
                                             of the type customarily covered in
                                             comfort letters to underwriters in
                                             connection with underwritten
                                             offerings, and affirming the
                                             matters set forth in the comfort
                                             letters delivered pursuant to
                                             Section 6(a) of the Purchase
                                             Agreement; and

                           (2)      deliver such other documents and
                                    certificates as may be reasonably requested
                                    by the selling Holders to evidence
                                    compliance with the matters covered in
                                    clause (1) above and with any customary
                                    conditions contained in any agreement
                                    entered into by the Issuer pursuant to this
                                    clause (xi);

                           (xii) prior to any public offering of Transfer
                  Restricted Securities, cooperate with the selling Holders and
                  their counsel in connection with the registration and
                  qualification of the Transfer Restricted Securities under the
                  securities or Blue Sky laws of such jurisdictions as the
                  selling Holders may request and do any and all other acts or
                  things necessary or advisable to enable the disposition in
                  such jurisdictions of the Transfer Restricted Securities
                  covered by the applicable Registration Statement; provided,
                  that (A) the Issuer shall not be required to -------- register
                  or qualify as a foreign corporation where it is not now so
                  qualified or to take any action that would subject it to the
                  service of process in suits or to taxation, other than as to
                  matters and transactions relating to the Registration
                  Statement, in any jurisdiction where it is not now so subject
                  and (B) the Issuer shall not be obligated to pay for expenses
                  incurred pursuant to this subparagraph in excess of $5,000;

                           (xiii) in connection with any sale of Transfer
                  Restricted Securities that will result in such securities no
                  longer being Transfer Restricted Securities, cooperate with
                  the Holders to facilitate the timely preparation and delivery
                  of certificates representing Transfer Restricted Securities to
                  be sold and not bearing any restrictive legends, and to
                  register such Transfer Restricted Securities in such
                  denominations and such names as the selling Holders may
                  request at least two Business Days prior to such sale of
                  Transfer Restricted Securities;

                                       16
<PAGE>

                           (xiv) provide a CUSIP number for all Transfer
                  Restricted Securities not later than the effective date of a
                  Registration Statement covering such Transfer Restricted
                  Securities and provide the Trustee under the Indenture with
                  printed certificates for the Transfer Restricted Securities
                  which are in a form eligible for deposit with The Depository
                  Trust Company;

                           (xv) otherwise use commercially reasonable efforts to
                  comply with all applicable rules and regulations of the
                  Commission, and make generally available to its security
                  holders with regard to any applicable Registration Statement,
                  as soon as practicable, a consolidated earnings statement
                  meeting the requirements of Rule 158 (which need not be
                  audited) covering a twelve-month period beginning after the
                  effective date of the Registration Statement (as such term is
                  defined in paragraph (c) of Rule 158 under the Act);

                           (xvi) cause the Indenture to be qualified under the
                  TIA not later than the effective date of the first
                  Registration Statement required by this Agreement and, in
                  connection therewith, cooperate with the Trustee and the
                  Holders to effect such changes to the Indenture as may be
                  required for the Indenture to be so qualified in accordance
                  with the terms of the TIA;

                           (xvii) provide promptly to each Holder, upon request,
                  each document filed with the Commission pursuant to the
                  requirements of Section 13 or Section 15(d) of the Exchange
                  Act;

                           (xviii) if a Registered Exchange Offer or a Private
                  Exchange is to be consummated, upon delivery of the Initial
                  Bonds by Holders to the Issuer (or to such other Person as
                  directed by the Issuer) in exchange for the Exchange Bonds or
                  the Private Exchange Bonds, as the case may be, the Company
                  shall mark, or caused to be marked, on the Initial Bonds so
                  exchanged that such Initial Bonds are being canceled in
                  exchange for the Exchange Bonds or the Private Exchange Bonds,
                  as the case may be, in no event shall the Initial Bonds be
                  marked as paid or otherwise satisfied;

                           (xix) cooperate with the Holders of the Bonds to
                  facilitate the timely transfer of Bonds to be sold pursuant to
                  any Registration Statement free of any restrictive legends
                  and, to the extent consistent with the terms of the Indenture,
                  facilitate timely preparation and delivery of certificates
                  representing the Bonds, in such denominations and registered
                  in such names as the Holders may request a reasonable period
                  of time prior to sales of the Bonds pursuant to such
                  Registration Statement;

                                       17
<PAGE>

                           (xx) use commercially reasonable efforts to confirm
                  that the ratings received for the Initial Bonds prior to their
                  initial sale will apply to the Bonds covered by a Registration
                  Statement;

                           (xxi) in the event that any Broker-Dealer shall
                  underwrite any Bonds or participate as a member of an
                  underwriting syndicate or selling group or "assist in the
                  distribution" (within the meaning of the Conduct Rules (the
                  "Rules") of the National Association of Securities Dealers,
                  Inc.) thereof, whether as a Holder of such Bonds or as an
                  underwriter, a placement or sales agent or a broker or dealer
                  in respect thereof, or otherwise, the Issuer will assist such
                  Broker-Dealer in complying with the requirements of such
                  Rules, including, without limitation, by (A) if such Rules,
                  including Rule 2720, shall so require, engaging a "qualified
                  independent underwriter" (as defined in Rule 2720) to
                  participate in the preparation of the Registration Statement
                  relating to such Bonds, to exercise usual standards of due
                  diligence in respect thereto and, if any portion of the
                  offering contemplated by such Registration Statement is an
                  underwritten offering or is made through a placement or sales
                  agent, to recommend the yield of such Bonds, (B) indemnifying
                  any such qualified independent underwriter to the extent of
                  the indemnification of underwriters provided in Section 8
                  hereof and (C) providing such information to such
                  Broker-Dealer as may be required in order for such
                  Broker-Dealer to comply with the requirements of the Rules;
                  and

                           (xxii) use commercially reasonable efforts to take
                  all other steps necessary to effect the registration of the
                  Bonds covered by a Registration Statement contemplated hereby.

                  (d) Restrictions on Holders. Each Holder agrees by acquisition
of a Transfer Restricted Security that, upon receipt of the notice referred to
in Section 6(c)(iii)(C) or any notice from the Issuer of the existence of any
fact of the kind described in Section 6(c)(iii)(D) or (E) hereof (in each case,
a "Suspension Notice"), such Holder will forthwith discontinue disposition of
Transfer Restricted Securities pursuant to the applicable Registration Statement
until (i) such Holder has received copies of the supplemented or amended
Prospectus contemplated by Section 6(c)(iv) hereof, or (ii) such Holder is
advised in writing by the Issuer that the use of the Prospectus may be resumed,
and has received copies of any additional or supplemental filings that are
incorporated by reference in the Prospectus (in each case, the "Recommencement
Date"). Any such period from the date of such Suspension Notice until the
Recommencement Date is referred to herein as a "Suspension Period." Upon issuing
a Suspension Notice, the Issuer shall promptly prepare and file such additional
or supplemental fillings to the related prospectus and any other required
document so that, as thereafter delivered to Holders of the Bonds or purchasers
of Bonds, the Prospectus will not contain an untrue

                                       18
<PAGE>

statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Each Holder receiving
a Suspension Notice hereby agrees that it will either (x) destroy any
Prospectuses, other than permanent file copies, then in such Holder's possession
which have been replaced by the Issuer with more recently dated Prospectuses or
(y) deliver to the Issuer (at the Issuer' expense) all copies, other than
permanent file copies, then in such Holder's possession of the Prospectus
covering such Transfer Restricted Securities that was current at the time of
receipt of the Suspension Notice. The time period regarding the effectiveness of
such Registration Statement set forth in Section 3 or 4 hereof, as applicable,
shall be extended by a number of days equal to the number of days in the period
from and including the date of delivery of the Suspension Notice to the date of
delivery of the Recommencement Date. There shall be no more than three
Suspension Periods in any 12-month period, the aggregate number of days of such
Suspension Periods shall not exceed 90 days in such 12-month period and no
Suspension Period shall exceed 60 days. The Issuer shall be deemed not to have
used commercially reasonable efforts to keep any Registration Statement
effective during the requisite period if it voluntarily takes any action (other
than an action permitted by this Section 6(d)) that would result in Holders of
Bonds covered thereby not being able to offer and sell such Bonds during that
period, unless such action is required by applicable law.

                  (e) Effectiveness of Registration Statement. Notwithstanding
anything to the contrary contained in this Agreement, the obligation of the
Issuer hereunder to maintain the effectiveness of any Registration Statement and
any related Prospectus may be suspended, without default or penalty to the
Issuer, for one or more periods of time as may be required with respect to such
Registration Statement if (i) the Management Committee of the Issuer shall have
determined that the offering and sales under the Registration Statement, the
filing of such Registration Statement or the maintenance of its effectiveness
would require disclosure of or would interfere in any material respect with any
material financing, acquisition, merger, offering or other transaction involving
the Issuer or would otherwise require disclosure of nonpublic information that
could materially and adversely affect the Issuer or (ii) the Issuer is required
by any state or federal securities laws to file an amendment or supplement to
such Registration Statement for the purpose of incorporating quarterly or annual
information, which is not automatically effective. Further, the Issuer shall be
deemed to have used commercially reasonable efforts to keep any Registration
Statement continuously effective if either (i) or (ii) above has occurred.

SECTION 7. REGISTRATION EXPENSES

                  (a) All expenses incident to the Issuer's performance of or
compliance with this Agreement will be borne by the Issuer, regardless of
whether a Registration Statement becomes effective, including without
limitation: (i) all registration and filing

                                       19
<PAGE>

fees and expenses; (ii) all fees and expenses of compliance with federal
securities and state Blue Sky or securities laws; (iii) all expenses of printing
(including printing certificates for the Exchange Bonds and/or the Private
Exchange Bonds to be issued in the Exchange Offer and/or the Private Exchange
and printing of Prospectuses), messenger and delivery services and telephone;
(iv) all fees and disbursements of counsel for the Issuer and the Holders of
Transfer Restricted Securities; (v) all application and filing fees in
connection with listing the Exchange Bonds on a national securities exchange or
automated quotation system pursuant to the requirements hereof; and (vi) all
fees and disbursements of independent certified public accountants of the Issuer
(including the expenses of any special audit and comfort letters required by or
incident to such performance).

                  The Issuer will, in any event, bear its internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expenses of any annual
audit and the fees and expenses of any Person, including special experts,
retained by the Issuer.

                  (b) In connection with any Registration Statement required by
this Agreement (including, without limitation, the Exchange Offer Registration
Statement and the Shelf Registration Statement), the Issuer will reimburse the
Initial Purchaser and the Holders of Transfer Restricted Securities who are
tendering Initial Bonds in the Exchange Offer and/or selling or reselling
Initial Bonds or Exchange Bonds pursuant to the "Plan of Distribution" contained
in the Exchange Offer Registration Statement or the Shelf Registration
Statement, as applicable, for the reasonable fees and disbursements, which fees
shall not exceed $25,000, of not more than one counsel, who shall be Skadden,
Arps, Slate, Meagher & Flom LLP, unless another firm shall be chosen by the
Holders of a majority in principal amount of the Transfer Restricted Securities
for whose benefit such Registration Statement is being prepared.

SECTION 8. INDEMNIFICATION

                  (a) The Issuer agrees to indemnify and hold harmless each
Holder, its directors, officers and each Person, if any, who controls such
Holder (within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act), from and against any and all losses, claims, damages,
liabilities, judgments (including without limitation, any reasonable legal or
other expenses incurred in connection with investigating or defending any
matter, including any action that could give rise to any such losses, claims,
damages, liabilities or judgments) caused by any untrue statement or alleged
untrue statement of a material fact contained in any Registration Statement,
preliminary Prospectus or Prospectus (or any amendment or supplement thereto)
provided by the Issuer to any Holder or any prospective purchaser of Exchange
Bonds or registered Initial Bonds, or caused by any omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, except insofar

                                       20
<PAGE>

as such losses, claims, damages, liabilities or judgments are caused by an
untrue statement or omission or alleged untrue statement or omission that is
based upon information relating to any of the Holders furnished in writing to
the Issuer by any of the Holders.

                  (b) Each Holder of Transfer Restricted Securities agrees,
severally and not jointly, to indemnify and hold harmless the Issuer and its
directors and officers, and each Person, if any, who controls the Issuer (within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act) to the
same extent as the foregoing indemnity from the Issuer set forth in Section 8(a)
above, but only with reference to information relating to such Holder furnished
in writing to the Issuer by such Holder expressly for use in any Registration
Statement.

                  (c) In case any action shall be commenced involving any Person
in respect of which indemnity may be sought pursuant to Section 8(a) or 8(b)
(the "indemnified party"), the indemnified party shall promptly notify the
Person against whom such indemnity may be sought (the "indemnifying party") in
writing and the indemnifying party shall assume the defense of such action,
including the employment of counsel reasonably satisfactory to the indemnified
party and the payment of all fees and expenses of such counsel, as incurred
(except that in the case of any action in respect of which indemnity may be
sought pursuant to both Sections 8(a) and 8(b), a Holder shall not be required
to assume the defense of such action pursuant to this Section 8(c), but may
employ separate counsel and participate in the defense thereof, but the fees and
expenses of such counsel, except as provided below, shall be at the expense of
the Holder). Any indemnified party shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of the indemnified party
unless (i) the employment of such counsel shall have been specifically
authorized in writing by the indemnifying party, (ii) the indemnifying party
shall have failed to assume the defense of such action or employ counsel
reasonably satisfactory to the indemnified party or (iii) the named parties to
any such action (including any impleaded parties) include both the indemnified
party and the indemnifying party, and the indemnified party shall have been
advised by such counsel that there may be one or more legal defenses available
to it which are different from or additional to those available to the
indemnifying party (in which case the indemnifying party shall not have the
right to assume the defense of such action on behalf of the indemnified party).
In any such case, the indemnifying party shall not, in connection with any one
action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the fees and expenses of more than one separate firm of attorneys (in
addition to any local counsel) for all indemnified parties and all such fees and
expenses shall be reimbursed as they are incurred. Such firm shall be designated
in writing by a majority of the Holders, in the case of the parties indemnified
pursuant to Section 8(a), and by the Issuer, in the case of parties indemnified
pursuant to Section 8(b). The indemnifying

                                       21
<PAGE>

party shall indemnify and hold harmless the indemnified party from and against
any and all losses, claims, damages, liabilities and judgments by reason of any
settlement of any action (i) effected with its written consent or (ii) effected
without its written consent if the settlement is entered into more than 20
Business Days after the indemnifying party shall have received a request from
the indemnified party for reimbursement for the fees and expenses of counsel (in
any case where such fees and expenses are at the expense of the indemnifying
party) and, prior to the date of such settlement, the indemnifying party shall
have failed to comply with such reimbursement request. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement or compromise of, or consent to the entry of judgment with respect
to, any pending or threatened action in respect of which the indemnified party
is or could have been a party and indemnity or contribution may be or could have
been sought hereunder by the indemnified party, unless such settlement,
compromise or judgment (x) includes an unconditional release of the indemnified
party from all liability on claims that are or could have been the subject
matter of such action and (y) does not include a statement as to or an admission
of fault, culpability or a failure to act, by or on behalf of the indemnified
party.

                  (d) To the extent that the indemnification provided for in
this Section 8 is unavailable to an indemnified party in respect of any losses,
claims, damages, liabilities or judgments referred to therein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities or judgments (i) in such proportion
as is appropriate to reflect the relative benefits received by the Issuer, on
the one hand, and the Holders, on the other hand, from their sale of Transfer
Restricted Securities or (ii) if the allocation provided by clause 8(d)(i) is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause 8(d)(i) above but also the
relative fault of the Issuer, on the one hand, and of the Holder, on the other
hand, in connection with the statements or omissions which resulted in such
losses, claims, damages, liabilities or judgments, as well as any other relevant
equitable considerations. The relative fault of the Issuer, on the one hand, and
of the Holder, on the other hand, shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Issuer, on the one hand, or by the Holder, on the
other hand, and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.

         The Issuer and each Holder agree that it would not be just and
equitable if contribution pursuant to this Section 8(d) were determined by pro
rata allocation (even if the Holders were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an indemnified party

                                       22
<PAGE>

as a result of the losses, claims, damages, liabilities or judgments referred to
in the immediately preceding paragraph shall be deemed to include, subject to
the limitations set forth above, any legal or other expenses incurred by such
indemnified party in connection with investigating or defending any matter,
including any action that could have given rise to such losses, claims, damages,
liabilities or judgments. Notwithstanding the provisions of this Section 8, no
Holder, its directors, its officers or any Person, if any, who controls such
Holder (within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act) shall be required to contribute, in the aggregate, any amount in
excess of the amount by which the total received by such Holder with respect to
the sale of Transfer Restricted Securities pursuant to a Registration Statement
exceeds (i) the amount paid by such Holder for such Transfer Restricted
Securities plus (ii) the amount of any damages which such Holder has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation. The Holders' obligations to contribute pursuant to this
Section 8(d) are several in proportion to the respective principal amount of
Transfer Restricted Securities held by each Holder hereunder and not joint.

SECTION 9. RULE 144A AND RULE 144

         The Issuer agrees with each Holder, for so long as any Transfer
Restricted Securities remain outstanding and during any period in which the
Issuer (a) is not subject to Section 13 or 15(d) of the Exchange Act, to use
commercially reasonable efforts to make available, upon request of any Holder,
to such Holder or beneficial owner of Transfer Restricted Securities in
connection with any sale thereof and any prospective purchaser of such Transfer
Restricted Securities designated by such Holder or beneficial owner, the
information required by Rule 144A(d)(4) under the Act in order to permit resales
of such Transfer Restricted Securities pursuant to Rule 144A, and (b) is subject
to Section 13 or 15(d) of the Exchange Act, to use commercially reasonable
efforts to make all filings required thereby in a timely manner in order to
permit resales of such Transfer Restricted Securities pursuant to Rule 144.

SECTION 10. UNDERWRITTEN REGISTRATIONS

         If any of the Transfer Restricted Securities covered by any Shelf
Registration are to be sold in an underwritten offering, the investment banker
or investment bankers and manager or managers that will administer the offering
will be selected by the Holders of a majority in aggregate principal amount of
such Transfer Restricted Securities to be included in such offering.

         No Person may participate in any underwritten registration hereunder
unless such Person (a) agrees to sell such Person's Transfer Restricted
Securities on the

                                       23
<PAGE>

basis reasonably provided in any underwriting arrangements approved by the
Persons entitled hereunder to approve such arrangements and (b) completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of such
underwriting arrangements.

SECTION 11. MISCELLANEOUS

                  (a) Remedies. The Issuer acknowledges and agree that any
failure by the Issuer to comply with its obligations under Sections 3 and 4
hereof may result in material irreparable injury to the Initial Purchaser or the
Holders for which there is no adequate remedy at law, that it will not be
possible to measure damages for such injuries precisely and that, in the event
of any such failure, the Initial Purchaser or any Holder may obtain such relief
as may be required to specifically enforce the Issuer's obligations under
Sections 3 and 4 hereof. The Issuer further agrees to waive the defense in any
action for specific performance that a remedy at law would be adequate.

                  (b) No Inconsistent Agreements. The Issuer will not, on or
after the date of this Agreement, enter into any agreement with respect to its
securities that is inconsistent with the rights granted to the Holders in this
Agreement or otherwise conflicts with the provisions hereof. The rights granted
to the Holders hereunder do not in any way conflict with and are not
inconsistent with the rights granted to the holders of the Issuer's securities
under any agreement in effect on the date hereof.

                  (c) Amendments and Waivers. The provisions of this Agreement
may not be amended, modified or supplemented, and waivers or consents to or
departures from the provisions hereof may not be given unless the Issuer has
obtained the written consent of Holders of a majority of the outstanding
principal amount of Transfer Restricted Securities (excluding Transfer
Restricted Securities held by the Issuer or its Affiliates).

                  (d) Third Party Beneficiary. The Holders shall be third party
beneficiaries to the agreements made hereunder between the Issuer, on the one
hand, and the Initial Purchaser, on the other hand, and shall have the right to
enforce such agreements directly to the extent they may deem such enforcement
necessary or advisable to protect its rights or the rights of Holders hereunder.

                  (e) Notices. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand-delivery, first-class
mail (registered or certified, return receipt requested), telex, telecopier, or
air courier guaranteeing overnight delivery:

                                       24
<PAGE>

                           (i)      If to a Holder, at the address set forth on
                                    the records of the Registrar under the
                                    Indenture, with a copy to the Registrar
                                    under the Indenture; and

                           (ii)     if to the Issuer:

                                    Cedar Brakes II, L.L.C.
                                    1001 Louisiana Street
                                    Houston, Texas 77002
                                    (713) 420-2813
                                    Attention: President

                                    With a copy to:
                                    Chadbourne & Parke L.L.P.
                                    30 Rockefeller Plaza
                                    New York, New York  10112
                                    Telecopier No.: (212) 541-5369
                                    Attention: Andrea Satty

                  All such notices and communications shall be deemed to have
been duly given: (A) at the time delivered by hand, if personally delivered; (B)
five Business Days after being deposited in the mail, postage prepaid, if
mailed; (C) when receipt acknowledged, if telecopied; and (D) on the next
Business Day, if timely delivered to an air courier guaranteeing overnight
delivery.

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

                  (f) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, subsequent Holders; provided, that nothing herein shall be deemed to
permit any assignment, transfer or other disposition of Transfer Restricted
Securities in violation of the terms hereof or of the Purchase Agreement or the
Indenture. If any transferee of any Holder shall acquire Transfer Restricted
Securities in any manner, whether by operation of law or otherwise, such
Transfer Restricted Securities shall be held subject to all of the terms of this
Agreement, and by taking and holding such Transfer Restricted Securities such
Person shall be conclusively deemed to have agreed to be bound by and to perform
all of the terms and provisions of this Agreement, including the restrictions on
resale set forth in this Agreement and, if applicable, the Purchase Agreement,
and such Person shall be entitled to receive the benefits hereof.

                                       25
<PAGE>

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

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

                  (i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK WITHOUT GIVING
EFFECT TO THE PRINCIPLES THEREOF RELATING TO CONFLICTS OF LAW EXCEPT SECTION
5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.

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

                  (k) Entire Agreement. This Agreement is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein with respect to the registration rights granted with respect to the
Transfer Restricted Securities. This Agreement supersedes all prior agreements
and understandings between the parties with respect to such subject matter.

                  (l) Agent for Service; Submission to Jurisdiction; Waiver of
Immunities. By the execution and delivery of this Agreement, the Issuer (i)
acknowledges that it has, by separate written instrument, irrevocably designated
and appointed CT Corporation System at 111 Eighth Avenue, 13th Floor, New York,
NY 10011 (and any successor entity) as its authorized agent upon which process
may be served in any suit or proceeding arising out of or relating to this
Agreement that may be instituted in any federal or state court in the State of
New York or brought under federal or state securities laws, and acknowledges
that CT Corporation System has accepted such designation, (ii) submits to the
nonexclusive jurisdiction of any such court in any such suit or proceeding, and
(iii) agrees that service of process upon CT Corporation System and written
notice of said service to the Issuer shall be deemed in every respect effective
service of process upon it in any such suit or proceeding. The Issuer further
agrees to take any and all action, including the execution and filing of any and
all such documents and instruments, as may be necessary to continue such
designation and appointment of CT Corporation System in full force and effect so
long as any of the Bonds shall be

                                       26
<PAGE>

outstanding. To the extent that the Issuer may acquire any immunity from
jurisdiction of any court or from any legal process (whether through service of
notice, attachment prior to judgment, attachment in aid of execution or
otherwise) with respect to itself or its property, it hereby irrevocably waives
such immunity in respect of this Agreement, to the fullest extent permitted by
law.

           [The remainder of this page was left blank intentionally.]

                                       27
<PAGE>

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

                                       CEDAR BRAKES II, L.L.C.

                                       By /s/ John L. Harrison
                                          -----------------------------------
                                       Name: John L. Harrison
                                       Title: Senior Vice President and Chief
                                              Financial Officer

                                       CREDIT SUISSE FIRST BOSTON CORPORATION

                                       By: /s/ Steven S. Greenwald
                                          -----------------------------------
                                           Name: Steven S. Greenwald
                                           Title: Managing Director

                                       28
<PAGE>

                                     ANNEX A

PLAN OF DISTRIBUTION

Each broker-dealer that receives Exchange Bonds for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such Exchange Bonds. This Prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of Exchange Bonds received in exchange for Initial Bonds
where such Initial Bonds were acquired as a result of market-making activities
or other trading activities. The Issuer has agreed that, for a period of 180
days after the Expiration Date, it will make this prospectus, as amended or
supplemented, available to any broker-dealer for use in connection with any such
resale. In addition, until , 2001, all dealers effecting transactions in the
Exchange Bonds may be required to deliver a prospectus.(1)

The Issuer will not receive any proceeds from any sale of Exchange Bonds by
broker-dealers. Exchange Bonds received by broker-dealers for their own account
pursuant to the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the Exchange Bonds or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer or the purchasers of any such Exchange Bonds. Any broker-dealer
that resells Exchange Bonds that were received by it for its own account
pursuant to the Exchange Offer and any broker or dealer that participates in a
distribution of such Exchange Bonds may be deemed to be an "underwriter" within
the meaning of the Securities Act and any profit on any such resale of Exchange
Bonds and any commission or concessions received by any such Persons may be
deemed to be underwriting compensation under the Securities Act. The Letter of
Transmittal states that, by acknowledging that it will deliver and by delivering
a prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.

For a period of 180 days after the Expiration Date the Issuer will promptly send
additional copies of this Prospectus and any amendment or supplement to this
Prospectus to any broker-dealer that requests such documents in the Letter of
Transmittal. The Issuer has agreed to pay all expenses incident to the Exchange
Offer (including the expenses of one counsel for the Holders of the Bonds) other
than commissions or concessions of any brokers or dealers and will indemnify the
Holders of the Bonds (including any broker-dealers) against certain liabilities,
including liabilities under the Securities Act.

--------------
(1) In addition, the legend required by Item 502(e) of Regulation S-K will
    appear on the back cover page of the Exchange Offer prospectus.

                                       1<PAGE>
                                                                  Exhibit  10.1

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

                  AMENDED AND RESTATED POWER PURCHASE AGREEMENT

                                     BETWEEN

                     PUBLIC SERVICE ELECTRIC AND GAS COMPANY

                                       AND

                             CEDAR BRAKES IV, L.L.C.

                                      dated
                                      as of

                                  May 23, 2001

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

<PAGE>

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                 Page
                                                                 ----
<S>                                                              <C>
ARTICLE XVI  ENTIRE AGREEMENT.....................................28
ARTICLE XVII  ASSIGNMENT/TRANSFER.................................28
ARTICLE XVIII  CURE BY FINANCIER..................................29
ARTICLE XIX  FINANCIER SECURITY AGREEMENTS........................30
ARTICLE XX  CHOICE OF LAW.........................................30
ARTICLE XXI  CAPTIONS.............................................31
ARTICLE XXII  COUNTERPARTS........................................31
ARTICLE XXIII  MISCELLANEOUS......................................31
ARTICLE XXIV  RESERVATIONS........................................32
ARTICLE XXV  SURVIVAL OF OBLIGATIONS..............................32
ARTICLE XXVI  NOTICES.............................................32
ARTICLE XXVII  RELEASE............................................34
</TABLE>

Exhibit 1  Annual Energy Deliveries
Exhibit 2  Contract Rates
Exhibit 3  Delivery Point Adjustment

<PAGE>

                  AMENDED AND RESTATED POWER PURCHASE AGREEMENT

         This Amended and Restated Power Purchase Agreement ("Amended
Agreement") is made and entered into this 23rd day of May, 2001 by and between
Public Service Electric and Gas Company, a New Jersey corporation ("PSE&G") and
Cedar Brakes IV, L.L.C., a Delaware limited liability company (the "Seller")
(each individually referred to as a "Party" and collectively as "Parties").

                                    RECITALS

         WHEREAS, PSE&G is a public utility as defined in N.J.S.A. 48:2-l3 and,
as such, is required by applicable statutes and regulations to furnish safe,
adequate and proper service to its customers and further, to have and maintain
its property, plant and equipment in such condition as to enable it to do so;

         WHEREAS, PSE&G is a member of the PJM Interconnection, L.L.C. ("PJM");

         WHEREAS, PJM operates a fully coordinated power pool pursuant to an
agreement (the "PJM Operating Agreement") executed by and among its members;

         WHEREAS, PSE&G and Camden Cogen L.P. ("Camden") are parties to a Power
Purchase and Interconnection Agreement dated April 15, 1988, as amended by the
First Amendment dated June 12, 1990 and the Second Amendment thereto dated
August 21, 1990 (together referred to as the "Camden Original Agreement"),
providing for the interconnection of the Camden Facility with PSE&G and the sale
by Camden and the purchase by PSE&G of the output of the cogeneration facility
located in Camden. New Jersey (the "Camden Facility");

         WHEREAS, PSE&G and Cogen Technologies NJ Venture ("Bayonne") are
parties to a Power Purchase and Operations Coordination Agreement dated June 5,
1989 (together referred to as the "Bayonne Original Agreement"), providing for
the interconnection of the Bayonne Facility with PSE&G and the sale by Bayonne
and the purchase by PSE&G of part of the output of the cogeneration facility
located in Bayonne, New Jersey (the "Bayonne Facility");

         WHEREAS, the Camden Original Agreement and the Bayonne Original
Agreement were entered into by PSE&G pursuant to its obligations under the
Public Utility Regulatory Policies Act of 1978 ("PURPA") and were approved by
the New Jersey Board of Public Utilities ("NJBPU") by orders dated June 29,
1989, October 2, 1990, and August 4, 1989;

                                      -1-

<PAGE>

         WHEREAS, New Jersey's Electric Discount and Energy Competition Act,
N.J. 208th Legislature, Assembly, No. 16 ("the New Jersey Competition Act") and
certain orders of the NJBPU encourage the mitigation of above-market costs of
long-term power purchase agreements with non-utility generators to effect rate
payer savings;

         WHEREAS, PSE&G, Camden and Bayonne desire to amend and restate the
Camden Original Agreement and the Bayonne Original Agreement to, among other
things, entitle PSE&G to a Restructuring Credit in respect of the amounts of
energy and capacity sold under the Camden Original Agreement and the Bayonne
Original Agreement, and to provide for Seller to supply energy and capacity from
sources other than the Camden Facility and Bayonne Facility; and

         WHEREAS, Camden and Bayonne intend to transfer and/or assign their
rights and obligations under the Camden Original Agreement and the Bayonne
Original Agreement to Seller as a condition to the effectiveness of this Amended
Agreement.

         NOW, THEREFORE, in consideration of the recitals and mutual covenants
contained herein, the Parties hereto agree as follows:

                                   ARTICLE I

                                  DEFINITIONS

         The following terms when used herein with capitalization shall have the
following meanings, unless a different meaning shall be expressly stated:

         "AAA" shall mean American Arbitration Association as defined and
described in Article XV.

         "Alternate Delivery Point" means any Delivery Point other than the
Camden Facility Interconnection Point or, at any time until and including
October 31, 2008, the Bayonne Facility Interconnection Point.

         "Amended Agreement" means this Amended and Restated Power Purchase
Agreement between Seller and PSE&G.

         "Annual Quantity" means an annual quantity of Energy to be delivered
hereunder in each calendar year as set forth in Exhibit 1. The Annual Quantity
for the calendar year ending on December 31, 2001 shall be prorated based on the
Effective Date.

         "Annual Shortfall Credit" means the credit calculated in accordance
with Article V(E) of the Amended Agreement.

                                      -2-
<PAGE>

         "Bayonne Delivery Point" means the existing point of physical
connection of the Bayonne Facility to the Public Service System as further
defined in the Interconnection Agreement for the Bayonne Facility.

         "Bayonne Facility" means the gas-fired combined cycle power plant
together with the Bayonne Substation Facility and all appurtenant structures and
equipment that, Bayonne owns/leases, operates and maintains, for the purpose of
generating electricity, steam and/or other forms of useful thermal energy
output.

         "Bayonne Substation Facility" has the meaning set forth in the Bayonne
Interconnection Agreement.

         "Blended Locational Marginal Price" for any hour equals (1) until and
including October 31, 2008, 78% of the real-time locational marginal price at
the Camden Delivery Point for the hour plus 22% of the real-time locational
marginal price at the Bayonne Delivery Point for the hour and (2) thereafter the
real-time locational marginal price at the Camden Delivery Point for the hour.

         "Camden Delivery Point" means the existing point of physical connection
of the Facility to the Public Service System as further defined in the
Interconnection Agreement for the Camden Facility.

         "Camden Facility" means the gas-fired combined cycle power plant
together with the Substation Facility and all appurtenant structures and
equipment that Camden owns/leases, operates and maintains, for the purpose of
generating electricity, steam and/or other forms of useful thermal energy
output.

         "Camden Substation Facility" has the meaning set forth in the Camden
Interconnection Agreement.

         "Capacity" has the meaning in Article II(C).

         "Contract Rate" means the applicable rate in dollars per MWh set forth
in Exhibit 2 to this Amended Agreement.

         "Curtailed Energy Deliveries" has the meaning in Article V(D).

         "Delivery Point" means any of: (i) the Camden Delivery Point; (ii)
until and including October 31, 2008, the Bayonne Delivery Point; or (iii) any
alternate point of delivery in the PJM System of which Seller notifies PSE&G
(any of which is referred to herein as the "Delivery Point").

                                      -3-
<PAGE>

         "Delivery Point Adjustment" means the adjustment to the Contract Rate
to be made pursuant to Article IV(B) of the Amended Agreement and calculated in
accordance with Exhibit 3.

         "Eastern Prevailing Time" means Eastern Standard Time or Eastern
Daylight Savings Time, as applicable, in New York, New York.

         "Effective Date" has the meaning in Article III(A).

         "Energy" means electric energy measured in kilowatt-hours (or
megawatt-hours), sixty hertz, balanced three phase alternating current at the
nominal voltage of the Delivery Point.

         "FERC" means the Federal Energy Regulatory Commission.

         "Financial Settlement Energy" has the meaning given in Article VI(B).

         "Financial Settlement Notice" has the meaning given in Article VI(B).

         "Financial Settlement Price" has the meaning given in Article VI(B).

         "Financier" or "Lender" means any individual(s) or entity(ies) and any
representative(s) or trustee(s) for any such individual(s) or entity(ies)): (i)
providing financing to El Paso Merchant Energy Holding Company or Seller or any
entity controlling, controlled by or under common control with such entity, in
respect of the transactions in this Amended Agreement, the Camden
Interconnection Agreement, the Bayonne Interconnection Agreement and the
corresponding PJM Interconnection Service Agreement(s), including without
limitation in the form of (a) term or interim debt or subordinated debt
financing; (b) the establishment and/or maintenance of working capital
requirements; and/or (c) any refinancing or take-out of any such loan(s); and/or
(ii) participating as an equity investor in such transactions; and/or (iii) any
lessor under a lease finance arrangement.

         "Hourly Shortfall" has the meaning given in Article V(E) of the Amended
Agreement.

         "Hourly Shortfall Credit" means the credit calculated in accordance
with Article V(E) of the Amended Agreement.

         "Interconnection" means the physical facilities interconnecting the
Camden Facility or the Bayonne Facility, as the case may be, with the Public
Service System as further described in the applicable Interconnection Agreement.

                                      -4-
<PAGE>

         "Interconnection Agreements" means the Interconnection Agreement
between PSE&G and Camden and the Interconnection Agreement between PSE&G and
Bayonne providing for the Interconnection of the Camden Facility or the Bayonne
Facility, as the case may be, with the Public Service System.

         "Loan Agreement" means any agreement with one or more Lenders pursuant
to which debt and/or equity financing is obtained by or on behalf of Seller.

         "Make-up Energy Deliveries" has the meaning in Article V(D).

         "Month" means the calendar Month commencing at 12:00.01 a.m. Eastern
Prevailing Time on the first day of the calendar Month and concluding at
midnight Eastern Prevailing Time on the final day of the same calendar Month.

         "NERC" means North American Electric Reliability Council or any
successor thereto.

         "Net Electrical Power Output" means Energy generated by the Camden
Facility or the Bayonne Facility, as the case may be, less energy consumed by
the auxiliary load of the Camden Facility or the Bayonne Facility, as the case
may be.

         "NJBPU" shall mean the New Jersey Board of Public Utilities.

         "NJBPU Order" has the meaning in Article III(B).

         "Non-Summer Hourly Minimum" means a quantity of Energy equal to (1) 50
MWh per hour until and including October 31, 2008, and (2) thereafter, 39 MWh
per hour.

         "Non-Summer On-Peak Minimum Quantity" means a quantity of Energy equal
to (1) 460,445 MWh until and including October 31, 2008, and (2) thereafter,
359,147 MWh.

         "OATT" means the Open Access Transmission Tariff filed by PJM with the
FERC on July 14, 1997, in Docket No. OA97-261-000 as amended effective April 1,
1998, as further amended modified or superseded from time to time, under which
transmission service is provided within the PJM Control Area.

         "Off-Peak Hour" means an hour occurring in the Off-Peak Period.

         "Off-Peak Period" means all other hours of a week exclusive of the
On-Peak Period.

                                      -5-
<PAGE>

         "On-Peak Hour" means an hour occurring in the On-Peak Period.

         "On-Peak Period" means the period commencing with hour beginning 0700
through hour ending 2300 (Eastern Prevailing Time) Monday through Friday,
excluding NERC holidays.

         "Party" has the meaning given in the introductory paragraph of this
Amended Agreement.

         "PJM Interconnection Service Agreement" means the PJM Interconnection
Service Agreement between PJM and Camden and between PJM and Bayonne regarding
interconnection under Part IV of the OATT.

         "PJM Operating Agreement" means the agreement governing the PJM
Interconnection, L.L.C. dated June 2, 1997, as amended December 31, 1997, as in
effect from time to time, together with all amendments and supplements thereto.

         "PJM System" means Transmission Facilities under which transmission
service is provided within the PJM Control Area, as each such term is defined in
the PJM Operating Agreement.

         "PJM Tariff" means the PJM Open Access Transmission Tariff.

         "Public Service System" means the transmission, subtransmission and
distribution facilities owned, operated and maintained by PSE&G, including the
Interconnection.

         "PURPA" shall have the meaning set forth in the fifth whereas clause
hereof.

         "RAA" means the PJM Reliability Assurance Agreement dated June 2, 1997,
as in effect from time to time, together with all amendments and supplements
thereto.

         "Scheduled Delivery Shortfall Credit" means the credit calculated in
accordance with Article V(E) of the Amended Agreement.

         "Seasonal Shortfall" has the meaning given in Article V(E) of the
Amended Agreement.

         "Seasonal Shortfall Credit" means the credit calculated in accordance
with Article V(E) of the Amended Agreement.

                                      -6-
<PAGE>

         "Summer Hourly Minimum" means a quantity of Energy equal to (1) 165 MWh
until and including October 31, 2008, and (2) thereafter, 130 MWh.

         "Summer On-Peak Minimum Quantity" means a quantity of Energy equal to
(1) until and including October 31, 2008, 185 MWh per hour multiplied by the
number of On-Peak Hours during the Summer Period and (2) thereafter 144 MWh per
hour multiplied by the number of On-Peak Hours during the Summer Period.

         "System Emergency" means the existence of a physical or operational
condition and/or the occurrence of an event on the Public Service System (or PJM
System) which in PSE&G's judgment is: (i) imminently likely to endanger life or
property; or (ii) impairs and/or imminently will impair: (a) PSE&G's ability to
discharge its statutory obligation(s) to provide safe, adequate and proper
service to its customers; and/or (b) the safety and/or reliability of the Public
Service System (or PJM System). System Emergency shall include a minimum
generation emergency declaration by PJM that meets the requirements specified in
the previous sentence if PSE&G treats Seller equally with all other generation
under contract with PSE&G (except for Small Power Producers as defined in PURPA)
on the Public Service System.

                                   ARTICLE II

                       GENERAL CONDITIONS OF DELIVERY AND
                   ACCEPTANCE OF ELECTRIC ENERGY AND CAPACITY

         Seller agrees to deliver and PSE&G agrees to accept, during the term of
this Amended Agreement, Energy and Capacity delivered by Seller, subject to and
in accordance with the terms of this Amended Agreement. Seller may provide
Energy and Capacity to PSE&G, at Seller's sole option, from any source of supply
including the Camden Facility, the Bayonne Facility or other sources. Bayonne
and Camden, respectively, shall have the right to sell all or a portion of the
Net Electrical Power Output of the Bayonne Facility and the Camden Facility
respectively, to any third party purchaser without prior notice thereof to
PSE&G, subject to Article II(E) below.

                                   SECTION A
                               STATUS OF FACILITY

         Seller's and PSE&G's obligations under this Amended Agreement are
expressly not conditioned on the maintenance of the "qualifying facility" ("QF")
status of either the Bayonne Facility or the Camden Facility under PURPA and
this Amended Agreement shall remain binding upon the Parties without regard to
whether the Bayonne Facility or the Camden Facility is or remains a QF. Seller
shall have no obligation to maintain such QF status. Seller, on behalf of itself
and any successor owner of the

                                      -7-
<PAGE>

Camden Facility or the Bayonne Facility, hereby waives and agrees not to
exercise any rights it may have under PURPA to require the purchase by PSE&G of
the Net Electrical Power Output of the Camden Facility or the Bayonne Facility.

                                   SECTION B
                                 SALE OF ENERGY

         Seller will sell and deliver to PSE&G Energy that is scheduled and
delivered by Seller in accordance with Article V, and PSE&G will purchase and
accept delivery of such Energy at the Delivery Point(s). The Annual Quantities
of Energy that Seller may schedule and deliver in each calendar year of the
Amended Agreement commencing with the Year 2001 are set forth in Exhibit 1. The
Annual Quantity applicable to the initial calendar year of the Term of this
Amended Agreement (if a partial calendar year) shall be adjusted by multiplying
the applicable Annual Quantity for such year times the number of days in such
partial calendar year divided by 365 days.

                                   SECTION C
                                SALE OF CAPACITY

         Seller shall arrange for capacity credits applicable to the PJM Control
Area (as defined in the PJM Open Access Tariff) to be made available to PSE&G
from Capacity Resources (as defined in the RAA) ("Capacity"), which may include
at Seller's option capacity provided by the Camden Facility, the Bayonne
Facility or from other sources of such capacity such that PSE&G shall be
credited by PJM with at least one hundred and eighty-nine (189) MW per day of
such Capacity credits through October 31, 2008 and at least one hundred
forty-nine (149) MW per day of such Capacity credits from November 1, 2008
through the end of the Term. Seller shall take all necessary steps utilizing
PJM's "eCapacity" mechanism, or as otherwise may be required by PJM, such that
PSE&G's account with PJM shall reflect such Capacity credits as of the effective
date of this Amended Agreement and at all times throughout the term hereof.
PSE&G agrees to cooperate with Seller in making any submittals required by PJM.

         The amount of Capacity credits to be provided to PSE&G above is based
on the methodology currently specified in the RAA. If such methodology is no
longer used by PJM, the minimum quantity of Capacity credits Seller is required
to provide hereunder (restated in terms of the new unit of measurement) shall be
calculated based upon the operation of the Facility during the twelve (12) Month
period from January 1, 1998, through December 31, 1998 or such shorter period
ending as of December 31, 1998, as may be specified in the new measurement
methodology. If the RAA and the PJM Operating Agreement no longer require PSE&G
to obtain such Capacity credits, Seller shall provide Capacity to PSE&G in an
amount equal to the amount specified in

                                      -8-
<PAGE>

the measurement methodology in effect immediately prior to the cancellation of
such requirement.

                                   SECTION D
                       EXCEPTIONS TO OBLIGATION TO ACCEPT
                               ENERGY AND CAPACITY

         Notwithstanding the above, and without derogating from the provisions
of Article XI of this Amended Agreement, PSE&G shall be excused from accepting
all or a portion of Seller's Energy and Capacity in the event of a System
Emergency, if such purchases would contribute to such System Emergency.

         Where practicable, PSE&G shall give Seller advance notice of any
interruption, curtailment or reduction effected pursuant to this Article, the
circumstances requiring or necessitating the interruption, curtailment or
reduction of PSE&G's acceptance of Energy and Capacity and, if able, the reasons
therefor, and the extent and duration thereof. In the event PSE&G is unable, for
any reason, to give Seller advance notice of such an interruption, curtailment
or reduction of such acceptance of the Energy and Capacity, PSE&G shall, as soon
thereafter as practicable, contact Seller to confirm such interruption,
curtailment or reduction, explaining the circumstances requiring or
necessitating the interruption, curtailment or reduction, and, if able, furnish
the reasons therefor and the extent and duration thereof. At Seller's request,
PSE&G shall provide written notice to Seller explaining the circumstances
requiring or necessitating any interruption, curtailment or reduction of service
effective pursuant to this Article. PSE&G will promptly notify Seller when the
reason for the interruption, curtailment or reduction no longer exists and shall
promptly resume the acceptance of the Energy and Capacity.

         In the event acceptance of the Energy and Capacity is interrupted,
curtailed or reduced by PSE&G for any reason specified in this Article II(D),
PSE&G agrees to use its best efforts (consistent with PSE&G's existing
obligations to restore service to its retail and wholesale customers) to correct
any condition and to restore acceptance of such power upon the cessation of any
System Emergency. Seller expressly agrees that PSE&G is not liable for damages
of any kind to Seller or any third party due to PSE&G's failure to accept the
Energy and Capacity for any of the reasons expressed above.

                                   SECTION E
                             DISTRIBUTION SURCHARGES

         Seller shall reimburse PSE&G for the amount of any Distribution
Surcharges, as defined below, not paid to PSE&G in respect of the Net Electrical
Power

                                      -9-
<PAGE>

Output of the Camden Facility or the Bayonne Facility, as the case may be,
because of an exemption from such Distribution Surcharges pursuant to Section 28
of the New Jersey Competition Act. For purposes of the foregoing provision, the
term, "Distribution Surcharges" shall mean the following charges individually or
in any combination: (i) the societal benefits charge or its equivalent, imposed
pursuant to Section 12 of the New Jersey Competition Act; (ii) the market
transition charge or its equivalent, imposed pursuant to Section 13 of the New
Jersey Competition Act; and (iii) the transition bond charge or its equivalent,
imposed pursuant to Section 18 of the New Jersey Competition Act. Upon request
by PSE&G, Seller shall provide PSE&G with data demonstrating the Net Electrical
Power Output of the Camden Facility and the Bayonne Facility for a given
calendar year and the amount of such Net Electrical Power Output sold to a
customer of Seller, Bayonne or Camden for which the exemption from Distribution
Surcharges under Section 28 of the New Jersey Competition Act, has been claimed.

                                   SECTION F
                               ANCILLARY SERVICES

         Seller shall have no obligation to provide ancillary services to PSE&G
under the Amended Agreement.

                                  ARTICLE III

                               TERM; EFFECTIVENESS

                                   SECTION A
                                      TERM

         This Amended Agreement shall become effective (the "Effective Date")
upon the later to occur of (i) the last date upon which all of the conditions
precedent set forth in Article III(B) below are satisfied or waived and (ii)
September 5, 2001. This Amended Agreement shall remain in effect through and
including March 5, 2013, except as otherwise provided herein.

                                   SECTION B
                              CONDITIONS PRECEDENT

         The following shall be conditions precedent to the effectiveness of
this Amended Agreement (i)(a) issuance by the NJBPU of an order ("NJBPU Order")
finding that this Amended Agreement is reasonable and prudent, and that PSE&G
will be able to fully and timely recover from its rate payers all costs and
charges to be paid by PSE&G hereunder for Capacity and Energy purchased pursuant
to this Amended Agreement, and such NJBPU Order is issued without conditions or
is otherwise deemed acceptable to the

                                      -10-
<PAGE>

Parties in their reasonable discretion and (b) the expiration of all relevant
notice and appeal periods and the filing of all other notices and obtaining of
all other approvals required under New Jersey law; (ii) amendment, modification
or replacement of the existing Gas Service Agreement between PSE&G and Camden
dated May 15, 1991, as amended by the First Amendment dated November 1, 1991 on
mutually acceptable terms and the receipt of any required regulatory approvals;
(iii) (a) issuance of a FERC order ("FERC Order"), if required, accepting for
filing pursuant to Section 205 of the Federal Power Act a rate schedule
providing for Seller to make sales of energy and capacity for resale in
interstate commerce as contemplated herein and granting waivers of regulation
under the Federal Power Act routinely granted by FERC to sellers of electricity
which market power, and such FERC Order is to be issued without conditions, or
subject to such conditions as are reasonably acceptable to Seller; and (b) if
required, the expiration or all relevant notice and appeal periods and the
filing of all other notices and obtaining of all other approvals required under
federal law; (iv) approval of the transactions contemplated by this Amended
Agreement by the Lenders, (v) approval of the Board of Directors of El Paso
Corporation and PSE&G, if required, (vi) receipt by PSE&G from Camden and by
Camden from PSE&G of a mutual waiver and release of any claims arising under the
Camden Original Agreement prior to the effective date of this Amended Agreement,
including but not limited to claims or liability for breach of contract or
contract defaults and a release of the mortgage held by PSE&G on the Camden
Facility, (vii) receipt by PSE&G from Bayonne and by Bayonne from PSE&G of a
mutual waiver and release of any claims arising under the Bayonne Original
Agreement prior to the effective date of this Amended Agreement, including but
not limited to claims or liability for breach of contract or contract defaults,
(viii) following a restructuring of the ownership of Camden and Seller which
causes the interest therein to be held by entities that are disregarded for
federal income tax purposes, the transfer and/or assignment of Camden's rights
and obligations under the Camden Original Agreement to Seller, (ix) following a
restructuring of the ownership of Bayonne and Seller which causes the interest
therein to be held by entities that are disregarded for federal income tax
purposes, the transfer and/or assignment of Bayonne's rights and obligations
under the Bayonne Original Agreement to Seller; and (x) closing of the
transactions contemplated by the Loan Agreements and availability of proceeds to
be obtained thereunder.

         Upon satisfaction or waiver of the last such condition precedent to be
satisfied, the Parties shall promptly affirm in writing that all conditions
precedent have been satisfied. In the event the conditions precedent are not
satisfied, or waived (in the case of (vi) above) by the Party responsible for
obtaining them, within 360 days of execution of this Amended Agreement, either
Party at its option may notify the other Party of its election to terminate this
Amended Agreement and upon receipt of such notice, this Amended Agreement shall
be terminated.

                                      -11-
<PAGE>

                                   SECTION C
                              RESTRUCTURING CREDIT

         In consideration of the amendment of the Original Camden Agreement and
the Original Bayonne Agreement by PSE&G, Seller shall within two Business Days
after the Effective Date pay to PSE&G the amount of $64 million by check or wire
transfer in next-day funds; provided however that the amount of the foregoing
payment shall be reduced by $28,266 per day for each day ($859,758 per month)
that the Effective Date occurs after September 5, 2001. Until such funds have
been delivered to PSE&G, Seller may not deliver Energy under this Amended
Agreement.

                                   ARTICLE IV

                      PURCHASE PRICE AND PAYMENT CONDITIONS

                                   SECTION A
                            ENERGY AND CAPACITY RATES

         The rates payable by PSE&G for Energy and Capacity delivered or deemed
delivered during the term of this Amended Agreement are set forth in Exhibit 2.
The payment for Energy and Capacity shall be calculated based on delivery of
Energy by Seller as scheduled by Seller in accordance with Article V, and shall
be billed in accordance with Article VI.

                                   SECTION B
                             TRANSMISSION OF ENERGY

         Seller shall be responsible for arranging transmission of all Energy
that is delivered to PSE&G and paying for all related transmission charges and
congestion costs to each Delivery Point. If during any hour during a Month,
either (1) Energy is delivered to an Alternate Delivery Point or (2) the ratio
of the quantity of Energy delivered to the Camden Delivery Point during the hour
to the quantity of Energy delivered to the Bayonne Delivery Point during the
same hour is not in the ratio of 78% to 22%, then a Delivery Point Adjustment
shall be used to adjust the amount due for Energy delivered during such hour.
The Delivery Point Adjustment shall be calculated in accordance with Exhibit 3.

                                   SECTION C
                                  BINDING RATE

         Each party, having entered into this Amended Agreement in good faith,
hereby waives all rights on its part now or hereafter to undertake any
proceeding for the

                                      -12-
<PAGE>

purpose of having the purchase rate, as calculated in this Article IV of this
Amended Agreement, set aside or adjusted as being unjust and unreasonable or as
impairing or disallowing the full and timely recovery of any payment made by
PSE&G under this Amended Agreement.

         PSE&G agrees to give notice to Seller of any challenge to the validity
of this Amended Agreement in any regulatory or judicial proceeding, so as to
permit Seller a reasonable opportunity to intervene in such proceeding, provided
that the failure of PSE&G to give notice shall not be deemed a breach of this
Amended Agreement so long as such failure was due to good faith error or
omission. PSE&G further agrees to refrain from objecting or in any way opposing
any application by Seller to intervene before any regulatory body or judicial
forum, or otherwise fully participate before such body or forum, in which the
validity or consequences of this Amended Agreement is subject to challenge.
Seller and PSE&G further agree to use their best efforts to defend this Amended
Agreement before such regulatory body or judicial forum.

                                   ARTICLE V

                         DELIVERY OF ENERGY AND CAPACITY

                                   SECTION A
                                   SCHEDULING

         Not later than three (3) business days prior to the commencement of
each calendar month, Seller shall provide PSE&G with a non-binding schedule of
proposed deliveries of Energy for each hour of the upcoming month (the "Monthly
Schedule").

         Notwithstanding the quantities set forth in a Monthly Schedule, on the
business day preceding the day of delivery of such Energy, Seller shall provide
PSE&G with a final daily schedule for deliveries of Energy no later than the
time that is one hour prior to the time that PJM requires submission of final
schedules. The volumes set forth in the final daily schedules may vary from each
other and from the volumes set forth in Monthly Schedules, provided that Seller
shall not schedule for delivery in any calendar year, any amount which exceeds
the annual quantities specified in Article II(B).

         In the event Seller fails to furnish a final daily schedule or a
Monthly Schedule on or before the time specified in the second paragraph of this
Article V(A), the scheduled delivery of Energy shall be deemed to be that
specified in the Monthly schedule last delivered by Seller.

         Any Monthly Schedule or final daily schedule shall be consistent with
the requirements of this Article V.

                                      -13-
<PAGE>

                                   SECTION B
                                RATE OF DELIVERY

         Seller may deliver Energy and Financial Settlement Energy at a rate up
to 200 MWh per hour until and including October 31, 2008, and 156 MWh per hour
thereafter, provided that in any hour in which Make-up Energy deliveries are
scheduled in accordance with Article V(D), the rate of delivery may be up to 250
MWh per hour until and including October 31, 2008 and 195 MWh per hour
thereafter.

         Seller shall schedule and deliver Energy at the same delivery rate
during all On-Peak Hours in any day and at the same delivery rate during all
Off-Peak Hours in any day, provided that (i) the delivery rate for On-Peak Hours
may vary from that for Off-Peak Hours in any day and (ii) the delivery rate for
On-Peak Hours in any day may vary from that for On-Peak Hours in any other day.

                                   SECTION C
                            MINIMUM ENERGY DELIVERIES

         During the months of June, July, August and September of each year (the
"Summer Period"), Seller shall schedule and deliver to PSE&G (1) at least the
Summer Hourly Minimum during each hour of the Summer Period and (2) during the
On-Peak Hours in the Summer Period an aggregate at least equal to the Summer
On-Peak Minimum Quantity.

         During the period of the year which is not included in the Summer
Period (the "Non-Summer Period"), Seller shall schedule and deliver to PSE&G (1)
at least the Non-Summer Hourly Delivery during each hour in the Non-Summer
Period and (2) during the On-Peak Hours of the Non-Summer Period an aggregate at
least equal to the Non-Summer On-Peak Minimum Quantity.

         During each calendar year, Seller shall schedule and deliver to PSE&G
an aggregate no greater than the Annual Quantity during all hours of the
calendar year.

         The foregoing delivery amounts shall be prorated for any partial
delivery period.

                                   SECTION D
                            MAKE-UP ENERGY DELIVERIES

         If Seller is unable to deliver Energy or PSE&G is unable to accept
delivery of Energy which has been scheduled by Seller in accordance with Article
V(A) above, due to an event of Force Majeure or due to the occurrence of an
event set forth in

                                      -14-
<PAGE>

Article II(D) ("Curtailed Energy Deliveries"), Seller shall have the right, but
not the obligation, to reschedule deliveries of make-up quantities of Energy
equivalent to such Curtailed Energy Deliveries during comparable periods during
the remainder of the Month in which the event occurred ("Make-up Energy
Deliveries"). If Seller as unable to deliver Energy or PSE&G is unable to accept
delivery of Energy which has been rescheduled by Seller in accordance with the
immediately preceding sentence, Seller shall have the right, but not the
obligation, to reschedule deliveries of make-up quantities of Energy equivalent
to such undelivered Energy during comparable periods during the remainder of the
Month in which the event occurred. If Seller is unable to reschedule such Energy
due to an event of Force Majeure or due to the occurrence of an event set forth
in Article II(D), Seller shall have the right (but not the obligation) to
reschedule the delivery of such make-up Energy quantities in respect of the
Curtailed Energy Deliveries during comparable periods during the immediately
following Month. To the extent that Seller fails to (i) deliver scheduled
quantities of Energy or (ii) in the case of Curtailed Energy Deliveries under
Article V(D), reschedule and deliver any such make-up quantities with respect to
Curtailed Energy Deliveries in the immediately following Month, PSE&G may, but
shall not be obligated to permit Seller to reschedule any such quantities which
Seller seeks to deliver in any subsequent Month.

         For the purposes of this Article V(D), rescheduled Energy deliveries
shall be deemed to be made during a comparable period if the rescheduled
deliveries are effected during the hours in which the curtailments occurred
(e.g., similar On-Peak Hours if the curtailment occurred during On-Peak Hours
and similar Off-Peak Hours if the curtailment occurred during Off-Peak Hours).

                                   SECTION E
                 SELLER'S FAILURE TO DELIVER ENERGY AND CAPACITY

         If Seller fails for reasons other than a Force Majeure event or in the
event of an occurrence described in Article II(D), to deliver all or part of the
scheduled Energy at the Delivery Point, PSE&G may but shall not be required to
permit Seller to reschedule delivery of such Energy. In the event that Seller
fails to deliver all or part of the Energy scheduled for delivery hereunder or
fails to schedule sufficient Energy to comply with Article V(C) hereunder, the
payment to Seller with respect to the corresponding billing period shall be
reduced by one or more of the following credits against the amount payable by
PSE&G for the next succeeding Month; provided that (1) if the amount of the
credit is greater than the amount payable by PSE&G for a single Month, the
excess portion of the credit shall be applied to reduce the amount otherwise
payable for Energy by PSE&G for subsequent Month(s), (2) the Scheduled Delivery
Shortfall Credit and the Hourly Shortfall Credit shall be calculated after the
end of each Month, (3) the Seasonal Shortfall Credit for the Summer Period shall
be calculated during October and (4) the Seasonal Shortfall Credit for the
Non-Summer Period and the Annual Shortfall Credit

                                      -15-
<PAGE>

shall be calculated during January of each calendar year for the prior calendar
year. These credits shall be calculated as follows:

         (i)    Scheduled Delivery Shortfall Credit. If Seller fails to deliver
                any quantities of Energy scheduled for delivery under Article
                V(A) hereof, the Scheduled Delivery Shortfall Credit shall be
                determined by multiplying the shortfall in scheduled Energy
                deliveries by the difference (if positive) between (a) the
                amounts paid by PSE&G to third parties to procure energy to
                replace the scheduled Energy which Seller failed to deliver,
                using commercially reasonable efforts under the circumstances,
                less (b) the applicable Contract Rate for such Energy.

         (ii)   Hourly Shortfall Credit. The Hourly Shortfall Credit shall
                equal, for each hour in which Seller fails to schedule at least
                the Summer Hourly Minimum or the Non-Summer Hourly Minimum, as
                the case may be, the shortfall in the scheduled Energy quantity
                (the "Hourly Shortfall") multiplied by the difference (if
                positive) between (a) the Blended Locational Marginal Price for
                the applicable hour less (b) the Contract Rate for such Energy.

         (iii)  Seasonal Shortfall Credit. If Seller fails during any Summer
                Period or Non-Summer Period to schedule at least the Summer
                On-Peak Minimum or the Non-Summer On-Peak Minimum, as the case
                may be, in accordance with Article V(C) hereof, the Seasonal
                Shortfall Credit shall equal the shortfall in scheduled Energy
                quantities (the "Seasonal Shortfall") multiplied by the
                difference (if positive) between (a) the average of the Blended
                Locational Marginal Prices for the On-Peak Hours during the
                Summer Period or Non-Summer Period, as the case may be, less (b)
                the Contract Rate for such Energy; provided, however, that in
                calculating the Seasonal Shortfall Credit, the Seasonal
                Shortfall for a period shall be reduced by the amount of all
                Hourly Shortfalls during the period.

         (iv)   Annual Shortfall Credit. If Seller fails during a calendar year
                to schedule at least the Annual Quantity during the calendar
                year, the Annual Shortfall Credit shall equal the amount, if
                any, of the shortfall in scheduled Energy quantities multiplied
                by the difference (if positive) between (a) the average of the
                Blended Locational Marginal Prices for all hours during the
                calendar year less (b) the Contract Rate for such Energy,
                provided, however, that

                                      -16-
<PAGE>

                in calculating the Annual Shortfall Credit, the amount of the
                shortfall in scheduled Energy quantities for the calendar year
                shall be reduced by the amount of (1) all Hourly Shortfalls
                during the year plus (2) all Seasonal Shortfalls during the
                year.

         (v)    Capacity Credit. If Seller fails for reasons other than a Force
                Majeure or in the event of an occurrence described in Article
                II(D), during any Month to provide all or part of the Capacity
                to PSE&G pursuant to Article II(C) hereof, PSE&G shall use
                reasonable commercial efforts to purchase replacement capacity
                in the amount of such shortfall, and Seller will be obligated to
                reimburse PSE&G for all such replacement costs. In the event
                that PSE&G, in spite of using reasonable commercial efforts, is
                unable to replace such capacity shortfall, then the payments due
                to Seller in respect of that Month shall be reduced by a credit
                against the amount payable by PSE&G for the next succeeding
                Month in an amount equal to the deficiency charge, if any, or
                other charges, as applicable, payable by PSE&G as a direct
                result of Seller's failure to provide such Capacity.

         The foregoing liquidated damages shall be the sole damages to which
PSE&G shall be entitled as the result of any failure by Seller to schedule or
deliver Energy or to provide Capacity under this Agreement, subject to Articles
X and XIV.

                                   SECTION F
                  PSE&G'S FAILURE TO ACCEPT DELIVERY OF ENERGY

         If PSE&G fails to accept deliveries of Energy scheduled by Seller in
accordance with this Amended Agreement, for reasons other than a Force Majeure
Event or due to the occurrence of an event excusing the acceptance of deliveries
under Article II(D) hereof, PSE&G shall pay to Seller an amount equal to the
difference, if positive, between (i) the amount payable by PSE&G to Seller under
this Amended Agreement for such scheduled Energy which PSE&G failed to accept
and (ii) the amount, if any, that Seller, using commercially reasonable efforts
under the circumstances realizes through re-marketing of such Energy to persons
other than PSE&G.

         The foregoing liquidated damages shall be the sole damages to which
Seller shall be entitled as the result of any failure by PSE&G to accept Energy
under this Agreement, subject to Articles X and XIV.

                                      -17-
<PAGE>

                                   ARTICLE VI

                               BILLING AND PAYMENT

                                   SECTION A
                                    STATEMENT

         PSE&G shall prepare and present to Seller, on or before the last day of
the subsequent Month, a statement and payment for Energy and Capacity delivered
to PSE&G during the Month in accordance with Article IV. Such statement shall
indicate (1) the total MWhs of Energy delivered during the Month for both the
On-Peak Period and the Off-Peak Period and the applicable Contract Rates, (2)
any Delivery Point Adjustment applicable in respect of the prior Month, (3) any
applicable credits, (4) the total amount of Financial Settlement Energy deemed
to be delivered during the month and (5) the amount due to or from Seller in
respect of Financial Settlement Energy.

         If the payment is not received by the due date specified above, PSE&G
shall pay to Seller an interest charge on unpaid amounts which shall accrue
daily from the due date until the date upon which payment is made at the then
current late payment charge for commercial customers prescribed in PSE&G's
Standard Terms and Conditions as may be amended from time to time.

         In the event Seller disputes any statement, Seller shall present the
dispute in writing and submit supporting documentation to PSE&G within a thirty
(30) day period from receipt of such statement. Upon receipt of notice of the
dispute and supporting documentation, PSE&G shall have thirty (30) days from
receipt of such notice to resolve any dispute with Seller. In the event the
dispute is not resolved within the thirty (30) day period, either party may
submit the matter to arbitration for resolution in accordance with Article XV.
The disputed amount of any statement disputed by Seller, in accordance with the
provisions of this Article, which is ultimately determined to be due and owing
by PSE&G to Seller, from the date originally due shall, until payment, accrue
interest at the then current late payment charge for commercial customers
prescribed in PSE&G's Standard Terms and Conditions as may be amended from time
to time.

                                   SECTION B
                              FINANCIAL SETTLEMENT

         A "Financial Settlement Notice" is a written notice given by a Party to
the other Party not later than one hour before PJM's deadline for next-day
deliveries and specifying the hour(s) during which Energy will not be physically
delivered under this Amended Agreement and an amount of Energy with respect to
each specified hour

                                      -18-
<PAGE>

("Financial Settlement Energy"), which may not, together with the Energy
delivered during such hour, exceed the maximum delivery rate specified in
Article V(B) for the hour permitted hereunder.

         If either Party gives a Financial Settlement Notice and the other Party
agrees, then (1) quantities identified as Financial Settlement Energy shall not
be scheduled or delivered as Energy hereunder during any hour specified in the
Financial Settlement Notice provided Seller may in such hour schedule and
deliver Energy in accordance with this Amended Agreement subject to the maximum
delivery rates specified in Article V(B) and (2) all Financial Settlement Energy
shall be deemed to have been scheduled, delivered and accepted for purposes of
(i)calculating the credits set forth in Article V(E) of this Amended Agreement
and (ii) the maximum delivery rates specified in Article V(B) with Financial
Settlement Energy offsetting and thereby reducing the amount of Energy that
Seller is entitled to deliver within such delivery rates. The Financial
Settlement Price for each MWh of Financial Settlement Energy relating to an hour
specified in the Financial Settlement Notice shall equal the difference between
(1) the Contract Rate for the hour minus (2) the Blended Locational Marginal
Price for the hour. If the Financial Settlement Price for Financial Settlement
Energy relating to an hour is a positive amount, PSE&G shall pay Seller the
Financial Settlement Price for each MWh of such Financial Settlement Energy. If
the Financial Settlement Price for Financial Settlement Energy relating to an
hour is a negative amount, Seller shall pay PSE&G an amount equal to the number
of MWh of such Financial Settlement Energy times the Financial Settlement Price.

                                  ARTICLE VII

                                METERING/RECORDS

         Metering of Energy and Capacity when delivered from the Camden Facility
or the Bayonne Facility shall be conducted in accordance with the applicable
Interconnection Agreement and when delivered from other sources shall be
conducted in accordance with the requirements of the PJM Operating Agreement,
including with respect to verification of deliveries by or on behalf of Seller
at the Delivery Points.

                                  ARTICLE VIII

                        USE OF THE PUBLIC SERVICE SYSTEM

         Except as otherwise provided in and pursuant to the terms and
conditions of any applicable PSE&G tariff on file with the NJBPU or the FERC or
the PJM Tariff, Seller shall not be permitted to use the Public Service System
nor shall PSE&G be obligated to provide any service to Seller, other than as
provided for in this Amended

                                      -19-
<PAGE>

Agreement and the Interconnection Agreements. Any rights to or interest in the
Public Service System that Seller has or may claim as a result of this Amended
Agreement shall cease or expire upon termination of this Amended Agreement.

                                   ARTICLE IX

                            DEDICATION OF FACILITIES

         No undertaking by PSE&G under any provision of this Amended Agreement
shall constitute the dedication to Seller or to the public of the Public Service
System.

                                   ARTICLE X

                                    LIABILITY

         Neither Party nor its officers, directors, partners, agents, servants,
employees, affiliates, parent, subsidiaries or respective successors or assigns
shall be liable to the other Party (except as provided for in Article V of this
Amended Agreement or as otherwise provided for in this Amended Agreement) for
claims for incidental, special, direct, indirect or consequential damages
whether such damages claim is based on a cause of action based in warranty,
negligence, strict liability, contract, operation of law or otherwise except
where such claim for damages arises out of, relates to or results from the gross
negligence of such Party or the willful disregard by a Party of its obligations
under this Amended Agreement; provided, however, each Party shall have the right
to seek to recover from the other Party direct damages upon the occurrence of an
Event of Default under this Amended Agreement as defined in and which has been
established pursuant to and in accordance with Article XIV of this Amended
Agreement.

                                   ARTICLE XI

                                  FORCE MAJEURE

         An event of "Force Majeure" as used herein means an event beyond the
reasonable control of the Party claiming Force Majeure which events may include
but are not limited to: acts of God; strikes, lockouts or other similar such
industrial disturbances; acts of the public enemy, wars, civil disturbances,
blockades, military actions, insurrections or riots; landslides, floods,
washouts, lightning, earthquakes, tornadoes, hurricanes, blizzards or other
storms or storm warnings; explosions, fires, sabotage or vandalism; mandates,
directives, orders or restraints of any governmental, regulatory or judicial
body or agency (other than mandates, directives, orders or restraints either
sought, approved or not contested by the party asserting Force Majeure or issued
in any

                                      -20-
<PAGE>

bankruptcy or insolvency proceeding for the relief the party asserting Force
Majeure); any catastrophic physical failures or disruptions of the PJM
transmission system; breakage, defects, malfunctioning, or accident to
machinery, equipment, materials or lines of pipe or wires; freezing of
machinery, equipment, materials or lines of pipe or wires; inability or delay in
the obtaining of materials or equipment; inability to obtain or utilize any
permit, approval, easement, license or right-of-way. The settlement of strikes,
lockouts or other similar such industrial disturbances shall be entirely within
the discretion of the Party directly affected. The requirement herein that any
event of Force Majeure shall be remedied with all reasonable dispatch shall not
require the settlement of strikes, lockouts or other similar such industrial
disturbances when such course is, in the opinion of the Party directly affected,
inadvisable.

         An event of Force Majeure shall not include (i) failures of the
equipment of the Party claiming Force Majeure which are due to (a) wear and tear
and (b) defects in manufacture, design or construction; (ii) any increase in the
cost of electricity supplies or costs associated with transmission system
operation, maintenance or congestion; (iii) unavailability of Capacity and/or
Energy from any source, regardless of price, for delivery to the Delivery Point
(except in the event of a System Emergency); (iv) interruption in service by a
transmission provider unless; (a) the Party contracting with such transmission
provider shall have made arrangements with such transmission provider for the
firm transmission, as defined under the transmission provider's tariff, of the
Energy to be delivered hereunder, and (b) such interruption is due to an
emergency or to an event of force majeure as defined under the transmission
provider's tariff; or (v) any change in economic conditions not caused by a
Force Majeure event.

         In the event PSE&G or Seller is rendered unable, wholly or in part, by
an event of Force Majeure, to perform any obligation it has under this Amended
Agreement, it is agreed that, on PSE&G or Seller giving notice and full
particulars of such event of Force Majeure to the other Party, as soon
thereafter as practicable, the obligations of PSE&G or Seller, so far as they
are affected by such event of Force Majeure, shall be suspended during the
continuance of any inability or incapacity so caused, but for no longer period;
provided however, neither Party shall be relieved from any obligation to make
any payment to the other required under this Amended Agreement. PSE&G or Seller
shall use best efforts to remedy the cause of the Force Majeure with all
reasonable dispatch.

         Neither Party shall be liable to the other for any claim(s), loss(es),
damage(s), liability(ies) or expense(s) sustained or incurred by PSE&G or
Seller, arising out of, relating to, or resulting from PSE&G's or Seller's
inability or incapacity to perform its obligations under this Amended Agreement
due to any event of Force Majeure, as herein defined.

                                      -21-
<PAGE>

                                  ARTICLE XII

                                 INDEMNIFICATION

         Each Party shall indemnify and hold harmless the other Party and each
and every of its officers, agents, servants and employees, its successors and
assigns of, from and against any and all claims, demands and suits, actions, and
liabilities, losses, damages, and/or judgments, which may arise therefrom, as
well as against any fees, costs, charges or expenses which PSE&G or Seller, its
officers, agents, servants and employees, its successors and assigns, incur in
the defense of any such claims, suits, actions or similar such demands made or
filed by any third-party, which in any manner arise out of, relate to, or result
from negligence, strict liability or breach of this Amended Agreement by the
indemnifying Party including but not limited to the design, construction,
engineering, installation, operation, maintenance, repair, replacement,
supervision, inspection, testing, protection, reinforcement, reconstruction,
decommissioning, removal, use, control or ownership of its facilities.

         In case a claim is asserted or action brought against either Party as
to which it believes it is entitled to indemnification under this Article XII,
the party seeking indemnification shall promptly notify the other in writing of
such claim or action. Prompt notice as contemplated in the preceding sentence
shall mean such notice as would be required to enable the indemnitor to assert
and prosecute appropriate defenses relative to such claim or such action in a
timely fashion. If the Party seeking indemnification fails to give the other
Party prompt notice of any claim or action as provided in this Paragraph, that
Party shall have no obligation to indemnify pursuant to this Article XII. Upon
receipt of such notice request for indemnification, that Party shall promptly
make a determination of whether it believes it is required to indemnify and
shall promptly notify the Party seeking indemnification in writing of that
determination. If the Party to whom such notice and request is directed
determines that it is required to indemnify the other Party pursuant to this
Article XII, it shall assume the defense of such claim or action, including the
employment of counsel and shall assume thereafter the payment of all costs and
expenses relative to the defenses of such claim or action. The non-indemnifying
Party shall cooperate in all reasonable respects with the indemnifying Party in
the defense of such claim or action. The non-indemnifying Party shall have the
right, at its own expense, to employ separate counsel in any such action and to
participate in the defense thereof. The indemnifying Party shall not be liable
for any settlement of any such claim or action effected without its consent.
Before settling any claim or action, the indemnifying Party shall demonstrate to
the other that it has sufficient financial means or has made adequate
arrangements to make all payments under any such settlement as and when due.

                                      -22-
<PAGE>

                                  ARTICLE XIII

                                   WARRANTIES

         Seller warrants and shall be obligated to supply to the Delivery Points
Energy and Capacity free and clear of any liens and/or adverse claims which
might attach to said Energy and Capacity prior to supply and receipt by PSE&G
except with respect to any lien possessed by a Financier. Seller agrees to
indemnify and hold harmless PSE&G against any and all claims, demands, suits,
actions, costs, and liabilities, damages, losses and/or judgments arising out
of, relating to or resulting from any such adverse claim or lien, as well as
against any fees, costs, charges or expenses which PSE&G might incur in the
defense of any such claim, suit, action or similar such demand made or filed by
such person, its successors or assigns, asserting such adverse claim. In
effecting the right of or obligation to indemnify pursuant to and in accordance
with the provisions of this Article XIII, the procedural provisions set forth in
Article XII of this Amended Agreement shall govern.

         Seller further warrants and represents that implementation of this
Amended Agreement by Seller shall not increase the breakage costs associated
with a negotiation of a future buy-down or buy-out of the Amended Agreement by
PSE&G, if any.

                                  ARTICLE XIV

                    EVENTS OF DEFAULT AND BREACH OF CONTRACT

                                   SECTION A
                                DEFAULT BY SELLER

         Seller shall be in default under this Amended Agreement upon the
happening or occurrence of any of the following events or conditions, each of
which shall be deemed to be an "Event of Default," and each of which shall be
considered a breach of contract for purposes of this Amended Agreement unless it
is cured in accordance with the provisions specified below:

         1.  Seller breaches or fails to observe or perform any of the material
         obligations, covenants, conditions, services or responsibilities under
         this Amended Agreement, unless, within thirty (30) days after written
         notice from PSE&G specifying the nature of such breach or failure,
         Seller either cures such breach or failure or, if such cure cannot be
         completed within thirty (30) days, provides PSE&G with a plan
         reasonably acceptable to

                                      -23-
<PAGE>

         PSE&G to cure such breach or failure and commences and diligently
         pursues such plan.

         2.  There is an assignment for the benefit of Seller's creditors, or
         Seller is adjudged bankrupt, or a petition is filed by or against
         Seller under the provisions of any state insolvency law or under the
         provisions of the federal bankruptcy laws, or the business or principal
         assets of Seller are placed in the hands of a receiver, assignee or
         trustee, or Seller is dissolved, or Seller's existence is terminated,
         or its business is discontinued; provided, however, that the events
         described in this Paragraph 2 shall not constitute an Event of Default
         or otherwise affect the validity of this Amended Agreement, so long as
         the terms, covenants and conditions of this Amended Agreement on the
         part of Seller are performed, and in such event, this Amended Agreement
         shall continue to remain in full force in accordance with the terms
         herein contained.

         3.  Seller takes any actions which prevent PSE&G from performing any of
         the material obligations, covenants, conditions, responsibilities or
         services under this Amended Agreement, unless, within thirty (30) days
         after written notice from PSE&G specifying the nature of such action or
         failure to act, Seller either cures such action or failure to act, or,
         such cure cannot be completed within thirty (30) days, provides PSE&G
         with a plan reasonably acceptable to PSE&G to cure such breach or
         failure and commences and diligently pursues such cure.

         4.  Seller fails to deliver Energy and Capacity to PSE&G for two
         hundred and forty (240) out of three hundred and sixty five (365) days
         for any reason other than Force Majeure or a curtailment in accordance
         with Article II(D) of this Amended Agreement and fails to pay the
         liquidated damages associated with such failure as set forth in Article
         V(E).

                                   SECTION B
                                DEFAULT BY PSE&G

         PSE&G shall be in default under this Amended Agreement upon the
happening or occurrence of any of the following events or conditions, each of
which shall be deemed to be an "Event of Default" and each of which shall be
considered a breach of contract for purposes of this Amended Agreement unless it
is cured in accordance with the provisions specified below.

         1.  PSE&G breaches or fails to observe or perform any of the material
         obligations, covenants, conditions, services or responsibilities under
         this

                                      -24-
<PAGE>

         Amended Agreement, unless, within thirty (30) days after written notice
         from Seller specifying the nature of such breach or failure, PSE&G
         either cures such breach or failure, or, if such cure cannot be
         completed within thirty (30) days, provides Seller with a plan
         reasonably acceptable to Seller to cure such breach or failure and
         commences and diligently pursues such cure.

         2.  PSE&G fails to accept deliveries of Energy and Capacity for any
         reason other than a Force Majeure Event or reason permitted under
         Article II(D), and such failure continues for a period of thirty (30)
         days following receipt of notice of such failure and fails to pay the
         liquidated damages associated with such failure as set forth in Article
         V(F).

         3.  There is an assignment for the benefit of PSE&G's creditors, or
         PSE&G is adjudged bankrupt, or a petition is filed by or against PSE&G
         under the provisions of any state insolvency law or under the
         provisions of the federal bankruptcy law, or the business or principal
         assets of PSE&G are placed in the hands of a receiver, assignee or
         trustee, or PSE&G is dissolved, or PSE&G's existence is terminated, or
         its business is discontinued; provided, however, that the events
         described in this Paragraph 3 shall not constitute an Event of Default
         or otherwise affect the validity of this Amended Agreement, so long as
         the payment for Energy and Capacity delivered by the Seller to PSE&G as
         provided under Article IV hereof continues to be paid and the other
         terms, covenants and conditions of this Amended Agreement on the part
         of PSE&G are performed, and in such event, this Amended Agreement shall
         continue to remain in full force in accordance with the terms herein
         contained.

         4.  PSE&G takes any actions which prevent Seller from performing any of
         the material obligations, covenants, conditions, responsibilities or
         services under this Amended Agreement, unless within thirty (30) days
         after written notice from Seller specifying the nature of such action
         or failure to act, PSE&G either cures such action or failure to act,
         or, if such cure cannot be completed within thirty (30) days, provides
         Seller with a plan reasonably acceptable to Seller to cure such breach
         or failure and commences and diligently pursues such cure.

         5.  PSE&G fails to pay, when due, the payment provided under Article
         IV, and such failure continues for a period of thirty (30) days
         following the receipt by PSE&G of notice of such failure; provided,
         however, PSE&G shall not be considered in default if (i) it has paid
         the undisputed portion of any payment due under this Amended Agreement

                                      -25-
<PAGE>

         and (ii) the Parties are in the process of resolving expeditiously any
         disputed portion in accordance with the terms set forth in Article VI
         of this Amended Agreement.

                                   SECTION C
                                    REMEDIES

         In the event a party claims that an Event of Default has occurred, such
party shall provide the other party with written notice thereof (hereinafter
referred to as Notice of Breach). The Notice of Breach shall state the basis for
such claim and any remedy sought. The Parties shall have thirty (30) days within
which to resolve the dispute via negotiation. If within such thirty (30) day
period after service of the Notice of Breach, the Parties are unable to resolve
their differences by negotiation, either Party shall have the right to submit
the dispute for resolution to either arbitration or to any regulatory body
having jurisdiction.

         The nature and extent of any damage incurred or sustained by the
non-breaching Party, as a result of any Event of Default shall be determined and
calculated as of the date the Event of Default commenced, taking into account
the non-breaching Party's obligation to act in a commercially reasonable manner
to mitigate damages.

         Except as otherwise provided in this Article XIV, neither Party shall
refuse to make, suspend or delay any payment(s) otherwise required to be made
under this Amended Agreement or refuse to carry out any of its obligations under
this Amended Agreement for or on account of or as a result of an alleged breach
of this Amended Agreement or Event of Default.

         Any waiver by a Party of any breach or Event of Default shall be deemed
to extend only to the particular breach or Event of Default waived and shall not
limit or otherwise affect any right(s) that such party may have with respect to
any other of future breach or Event of Default, whether of a similar or
difference nature.

                                   ARTICLE XV

                                   ARBITRATION

         Any controversy, dispute or claim between the Parties to this Amended
Agreement, which the Parties are unable to resolve by negotiation or over which
any regulatory body lacks jurisdiction or declines to initiate proceedings,
shall be settled by arbitration in accordance with the Commercial Arbitration
Rules of the American Arbitration Association ("AAA"), then in effect, and the
provisions of this Article. If either Party chooses arbitration, no suit at law
that seeks to resolve any controversy,

                                      -26-
<PAGE>

dispute or claim between the Parties shall be instituted by either Party hereto,
except where such suit is instituted to confirm an arbitration award received
pursuant to this Article. However, nothing contained herein shall deprive either
Party of any right to: (i) obtain injunctive or other equitable relief in any
court in the State of New Jersey, on an interim basis pending disposition of the
arbitration of any controversy, dispute or claim if such relief is available
under applicable principles of law and equity; and/or (ii) assert any
crossclaim, or third-party claim in any suit at law instituted by a third-party;
and/or (iii) file and prosecute any complaint at and with the regulatory agency
having jurisdiction or make and prosecute any claim or position in any filing
made with such regulatory agency by either party or some third-party.

         Any controversy, dispute or claim submitted to arbitration shall be
settled by arbitration in Newark, New Jersey in accordance with the laws of the
State of New Jersey. Any award entered pursuant to such arbitration shall be
binding on both Parties and judgment upon the award rendered or received may be
entered in the Superior Court of the State of New Jersey pursuant to N.J.S.A.
2A:24-1 et seq.

         Exclusive jurisdiction relative to the entry of judgment on any
arbitration award relative to any controversy or claim between the parties shall
be in any court of appropriate subject matter jurisdiction located in New
Jersey, and the Parties to this Amended Agreement expressly subject themselves
hereby to the personal jurisdiction of said court for entry of any such judgment
and for the resolution of any dispute, action, or suit arising in connection
with the entry of such judgment. The controversy or claim to be arbitrated shall
be referred to three (3) arbitrators, one to be selected by each party and the
third to be selected by the AAA. The selections to be made by the parties shall
be made from the list of the National Panel of Arbitrators maintained by the
AAA. The arbitrator to be selected by the AAA shall be qualified to pass on any
technical or engineering matters and shall be independent of and acceptable to
both PSE&G and Seller. All decisions and awards shall be made by a majority of
the arbitrators, except for decisions relating to discovery as set forth herein.

         In the event any arbitrator dies, or refuses to act, or becomes
incapable, incompetent or unfit to act before hearings have been completed
and/or before an award has been rendered, a successor arbitrator may be selected
by the party who originally made the selection. The selection of the successor
arbitrator shall be made consistent with the selection procedure set forth in
the preceding paragraph.

         The arbitrators selected pursuant to this Amended Agreement shall be
governed by and apply the laws of the State of New Jersey and federal law, as
applicable, in conducting any arbitration proceeding and/or in making any award.

                                      -27-
<PAGE>

         Notice of a demand for arbitration (hereinafter referred to as Demand
for Arbitration) of any controversy or dispute between the Parties shall be
filed in writing with the AAA by the Party seeking arbitration and a copy of
same shall be served contemporaneously with such filing on the other Party. The
notice shall state, with specificity, the nature of the dispute and the remedy
sought. After such notice has been filed, the Parties may make discovery of any
matter relevant to such dispute before the hearing, to the extent and in the
manner provided by the Rules Governing Civil Practice in the Superior Court
contained in the Rules Governing the Courts of the State of New Jersey. Any
question that may arise with respect to the obligations of the Parties relative
to discovery and/or relative to the protection of the discovery materials shall
be referred solely to the arbitrator selected by the AAA. His determination
shall be final and conclusive. Discovery shall be completed not later than
ninety (90) days after filing of the notice of arbitration unless such period
for discovery is extended by the arbitrator selected by the AAA, upon a showing
of good cause by either Party to the arbitration.

         The arbitrators may consider any material that is relevant to the
subject matter of any such controversy even if such material might also be
relevant to an issue or issues not subject to arbitration hereunder. A
stenographic record shall be made of any arbitration hearing.

         Any costs associated with any arbitration under this Article, including
but not limited to attorney fees and witness expenses, shall be paid by the
Party against whom an award is entered unless the arbitrators by their award
otherwise provide.

         Arbitration may not be utilized and the arbitrators selected in
accordance with this Article shall not possess the authority or power to alter,
amend or modify any of the terms or conditions or charges set forth in this
Amended Agreement, and further, the arbitrators may not enter any award which
alters, amends or modifies such terms, conditions or charges in any form or
manner.

                                  ARTICLE XVI

                                ENTIRE AGREEMENT

         The Amended Agreement constitutes the entire Agreement between the
Parties with respect to the matters contained herein and all prior agreements
with respect thereto including the Original Agreement are superseded hereby.
Each Party confirms that it is not relying on any oral representations or
warranties of the other Party except as specifically set forth herein. No
additions, amendments or modifications hereof or of any terms included herein
shall be binding unless duly executed by both Parties.

                                      -28-
<PAGE>

                                  ARTICLE XVII

                               ASSIGNMENT/TRANSFER

         Seller may at any time and from time to time during the term of this
Amended Agreement, assign its rights in this Amended Agreement to any
Financier(s). PSE&G shall, at Seller's request, execute a consent to assignment
provided that the terms and conditions of same are reasonably acceptable to
PSE&G and Seller. Upon written notice to PSE&G, Seller may transfer its rights
and obligations under this Amended Agreement to El Paso Merchant Energy Holding
Company or any entity (i) controlling, controlled by or under common control
with El Paso Merchant Energy Holding Company or Seller, or (ii) which has a
credit rating by Moody's and Standard & Poor's at least equal to Baa3, in the
case of Moody's or BBB- in the case of Standard and Poor's. Except as otherwise
provided herein, Seller may not assign its rights and/or transfer its rights and
obligations under this Amended Agreement without the prior written consent of
PSE&G, which consent shall not be unreasonably withheld or delayed. Nothing
contained herein shall prevent Seller from pledging or mortgaging all or any
part of its assets or interests in connection with any financing for or related
to the transactions contemplated herein.

         PSE&G may, on notice to and with the approval of Seller, assign its
rights in this Amended Agreement. Additionally, PSE&G may, on notice to Seller,
assign and transfer its rights and obligations under this Amended Agreement to
any entity controlling, controlled by or under common control with PSE&G (a
"PSE&G Affiliate") or to any other entity only if such PSE&G Affiliate or other
entity has a credit rating by both Moody's and Standard & Poor's at least
equivalent to that of PSE&G. Except as otherwise provided herein, PSE&G may not
assign its rights and/or transfer its obligations under this Amended Agreement
without the prior written consent of Seller. Seller shall not unreasonably delay
or withhold any approval of an assignment or assignment/transfer by PSE&G
provided that the assignee or assignee/transferee agrees to be bound by, subject
to and to comply with the terms and conditions of this Amended Agreement.

                                 ARTICLE XVIII

                                CURE BY FINANCIER

         During any term of this Amended Agreement, Seller shall provide PSE&G
with such information as to enable it to know the name(s) and address(es) of any
Financier on a current basis. For so long as Seller shall have outstanding and
unpaid any financing liabilities, PSE&G agrees to promptly furnish to all
Financiers, then known to PSE&G, a copy of any Notice of Breach pursuant to
Article XIV or Demand for

                                      -29-
<PAGE>

Arbitration pursuant to Article XV given to Seller. Additionally, no termination
of this Amended Agreement shall be effective unless any written notice of such
termination or breach, as the case may be, and the reasons therefor have been
give to and received by each Financier then known to PSE&G thirty (30) days
prior to the effective date of the termination. PSE&G shall not terminate this
Amended Agreement if, after notice thereof, and prior to any effective date of
termination Financier has:

         1.  cured the condition precipitating the Notice of Breach under
         Article XIV; or

         2.  if the condition precipitating such Notice of Breach is not capable
         of being cured prior to the date of termination, commenced in a
         diligent manner to cure the condition precipitating the Notice of
         Breach and for so long as the Financier diligently continues such
         efforts.

                                  ARTICLE XIX

                          FINANCIER SECURITY AGREEMENTS

         In the event Financier alleges that a breach or an event of default has
occurred under any operative agreement between Financier and Seller and
Financier thereafter elects to exercise any right(s) under any applicable
security, mortgage, assignment or other agreement then in effect between
Financier and Seller, it is agreed that, upon receipt of such notice from
Financier, PSE&G shall provide notice to Seller and thereafter PSE&G shall
accept the instructions of Financier in accordance with the terms of any
applicable security, mortgage or assignment agreement. In such event, Seller
shall have no claim against PSE&G for, and hereby agrees to release PSE&G from,
any liability for any cost, expense, loss, damage or liability Seller may incur
or sustains arising out of, relating to or resulting from any action(s) which
PSE&G determines it is obligated to take pursuant to any operative agreement
between Seller and Financier.

         Notwithstanding the foregoing, in the event PSE&G provides a notice to
Seller under this Article, and Seller notifies PSE&G that it disagrees with and
is actively contesting the Financier's allegation that an event of default has
occurred under any operative agreement between Financier and Seller, PSE&G may
in its reasonable discretion elect not to accept the instructions of such
Financier, provided that Seller shall (i) indemnify PSE&G in accordance with the
terms of Article XII for any costs or damages PSE&G may incur or sustain as a
result of PSE&G's failure to follow the instructions of such Financier, and (ii)
provide PSE&G with a non-cancelable surety bond, irrevocable bank letter of
credit or other security in form, substance and amount acceptable to PSE&G upon
which PSE&G can draw in the event it incurs or sustains any

                                      -30-
<PAGE>

expense, loss, damage or liabilities as a result of its failure to follow the
instructions of such Financier.

                                   ARTICLE XX

                                  CHOICE OF LAW

         This Amended Agreement shall be interpreted, construed, governed by,
performed and enforced in accordance with the laws of the State of New Jersey
and federal law, where applicable. All questions concerning the validity,
construction and enforceability of this Amended Agreement as well as questions
concerning the sufficiency or other aspects of performance under this Amended
Agreement shall be determined under the laws of the State of New Jersey without
recourse to the law governing conflict of laws.

                                  ARTICLE XXI

                                    CAPTIONS

         The subject headings of the Articles of this Amended Agreement are
inserted solely for the purpose of convenient reference and are not intended to,
nor shall same affect the meaning of any provision of this Amended Agreement.

                                  ARTICLE XXII

                                  COUNTERPARTS

         This Amended Agreement may be executed in counterparts. Each shall be
deemed an original but together shall constitute one and the same instrument.

                                 ARTICLE XXIII

                                  MISCELLANEOUS

         This Amended Agreement and the obligations of the Parties hereunder are
subject to all present and future valid laws and to all valid present and future
orders, rules and regulations of any court or regulatory authority having
jurisdiction.

         In case of conflict between any provisions hereof and any applicable
law, regulation or regulatory order, such applicable law, regulation or
regulatory order shall govern.

                                      -31-
<PAGE>

         All terms defined in this Amended Agreement shall have the same defined
meanings when used in any notice, correspondence, report or other document made
or delivered pursuant to or in connection with this Amended Agreement, unless
the context shall otherwise require.

         Each reference herein to Seller and PSE&G shall be deemed to include
their respective successors and assigns.

         All of the covenants, warranties, undertakings and agreements of Seller
and PSE&G shall bind the respective Parties, their successors and assigns.

                                  ARTICLE XXIV

                                  RESERVATIONS

         No Party shall be prejudiced or bound, except as otherwise specifically
provided herein, nor shall any Party be deemed to have approved, accepted,
agreed or consented to any concept, theory or principle underlying or supposed
to underlie any of the matters contained herein, including but not limited to
any concept, theory, principle or method used to calculate the rates provided
for herein.

         All Parties further understand and agree that the provisions of this
Amended Agreement relate only to the specific matter referred to herein and no
Party or person waives any claim or right which it may otherwise have with
respect to any matter not expressly provided for herein.

                                  ARTICLE XXV

                             SURVIVAL OF OBLIGATIONS

         Termination of this Amended Agreement for any reason shall not relieve
PSE&G or Seller of any obligation accruing or arising with respect to the period
prior to such termination and required by terms of this Amended Agreement to be
performed at date subsequent to the date of termination.

                                  ARTICLE XXVI

                                     NOTICES

         Any notice, request, demand, or statement which either PSE&G or Seller
may desire to give to the other shall be in writing and except as otherwise
provided for in this Amended Agreement shall be considered as duly delivered
when mailed by certified

                                      -32-
<PAGE>

mail or delivered against receipt by messenger or overnight courier addressed to
said Party as follows:

(a)      If to PUBLIC SERVICE ELECTRIC AND GAS COMPANY:

         Manager - Non Utility Generation
         Public Service Electric & Gas Company
         80 Park Plaza, 22B
         Newark, NJ  07101

         With electronic mail copies to:

         seymour.wodakow@pseg.com
         james.calore@pseg.com

(b)      If to Seller or to such other person or address as the
         addressee may have specified in a notice duly given as
         provided herein:

         Managing Director, El Paso Merchant Energy Holding Company
         1001 Louisiana Street
         Houston, TX  77002

         Vice President, El Paso Merchant Energy Holding Company
         70 Walnut Street
         Wellesley Hills, MA  02481-2175

         General Counsel, El Paso Merchant Energy Holding Company
         1001 Louisiana Street
         Houston, TX  77002

         With electronic mail copies to:
         tim.Sullivan@elpaso.com
         dave.nickerson@elpaso.com
         andrew.kidd@elpaso.com

         Except as otherwise provided in this Amended Agreement, routine
communications and Billing Statements shall be considered as duly delivered when
mailed by either certified or ordinary mail.

(a)      If to PUBLIC SERVICE ELECTRIC AND GAS COMPANY:

         Manager - Non Utility Generation
         Public Service Electric & Gas Company

                                      -33-
<PAGE>

         80 Park Plaza, 22B
         Newark, NJ 07101

         With electronic mail copies to:

         seymour.wodakow@pseg.com
         james.calore@pseg.com

(b)      If to Seller or to such other person or address as the
         addressee may have specified in a notice duly given as
         provided herein.

         Contract Administrator - Cedar Brakes IV, L.L.C.
         1001 Louisiana Street
         Houston, TX 77002

         With electronic mail copies to:

         tim.sullivan@elpaso.com
         dave.nickerson@elpaso.com
         andrew.kidd@elpaso.com

Monthly and Daily Schedules and Notices for Financial Settlement Energy

         Scheduling and Financial Settlement Energy information as set forth in
Article V(A) and Article VI(B) shall be provided by telephone between the
Parties with the Party providing the notice also sending a follow-up email to
the other Party before 5:00 p.m. EST on the same day. The Parties shall notify
each other in writing or email prior to the Effective Date of the appropriate
names and phone numbers to be used. The Parties agree that all telephone
conversations may be recorded and that emails will be sent to distributions
lists to be agreed to and changed as appropriate by the Parties.

                                 ARTICLE XXVII

                                   RELEASE

         Effective on the Effective Date, each of PSE&G and Seller hereby waives
and releases the other from any claims arising under the Original Agreement
prior to the Effective Date, including but not limited to claims or liability
for breach of contract or contract defaults. This release shall not impair nor
diminish the parties' duties and obligations under this Amended Agreement.

                                      -34-
<PAGE>

         IN WITNESS WHEREOF, this Amended Agreement has been executed and
delivered as of the date and year first above written.

                              CEDAR BRAKES IV, L.L.C.

                                 /s/ Timothy J. Sullivan Jr.
                              --------------------------------------------
                              By: Timothy J. Sullivan Jr.
                              Its: Attorney-in-Fact (Managing Director)
                                   (El Paso Merchant Energy)

                              PUBLIC SERVICE ELECTRIC AND GAS COMPANY

                                 /s/ Patrick J. Downes
                              -----------------------------------
                              By: Patrick J. Downes
                              Its: Vice President

                                      -35-
<PAGE>

EXHIBIT 1

                            Annual Energy Deliveries

<TABLE>
<CAPTION>
            Camden             Bayonne
Year       (MWh)(1)            (MWh(1)        Annual Quantity (MWh)
----       --------            -------        ---------------------
<S>        <C>                  <C>                 <C>
2001         378,707(2)         106,815(2)             485,522(2)
2002       1,171,424            330,402              1,501,825
2003       1,171,424            330,402              1,501,825
2004       1,171,424            330,402              1,501,825
2005       1,171,424            330,402              1,501,825
2006       1,171,424            330,402              1,501,825
2007       1,171,424            330,402              1,501,825
2008       1,171,424            275,184              1,447,524
2009       1,171,424                                 1,171,424
2010       1,171,424                                 1,171,424
2011       1,171,424                                 1,171,424
2012       1,171,424                                 1,171,424
2013         205,400                                   205,400
</TABLE>

(1)  Note:  Camden and Bayonne MWh values are shown to help illustrate the
     derivation of the total Annual Quantity.
(2)  Note:  The Annual Quantity will be reduced prorate for any delay in the
     Effective Date beyond September 5, 2001.

                                      1-1
<PAGE>

EXHIBIT 2

                             Contract Rates ($/MWh)

<TABLE>
<CAPTION>
            Camden             Bayonne              Contract
Year         Rate                Rate                 Rate
----       --------            -------              --------
<S>        <C>                  <C>                 <C>
2001        $   92.84            $  92.46            $   92.76
2002            81.03               80.36                80.88
2003            77.93               77.10                77.75
2004            80.21               79.31                80.01
2006            82.58               81.62                82.37
2006            85.05               84.01                84.82
2007            87.62               86.51                87.37
2008            90.29               89.11                90.07
2009            93.08                --                  93.08
2010            95.98                --                  95.98
2011            99.00                --                  99.00
2012           102.15                --                 102.15
2013           105.42                --                 105.42
</TABLE>

                                      2-1

<PAGE>

EXHIBIT 3

                  CALCULATION OF THE DELIVERY POINT ADJUSTMENT

         The Delivery Point Adjustment for any hour equals the difference, if
positive, between the Target Value ("TV") of the Energy delivered during the
hour and the Actual Value ("AV") of the Energy delivered during the hour. For
any hour in which the AV equals or exceeds the TV, the Delivery Point Adjustment
shall equal zero. The following is the formula for calculating the Delivery
Point Adjustment ("DPA").

         DPA = TV-AV

Where:

         TV = (.78 x TD x CLMP) + (.22 x TD x BLMP); provided that on and after
November 1, 2008, TV = TD x CLMP.

         AV = (CD x CLMP) + (BD x BLMP) + (AD x ALMP).

         TD = Total deliveries during the hour = CD+BD+AD.

         CD = total quantity of Energy delivered during the hour at the Camden
Delivery Point.

         BD = total quantity of Energy delivered during the hour at the Bayonne
Delivery Point.

                                      3-1
<PAGE>

         AD = total quantity of Energy delivered during the hour at each
Alternate Delivery Point. If Energy is delivered to more than one Alternate
Delivery Point during an hour, a separate "AD" will be determined for each
Alternate Delivery Point.

         CLMP = locational marginal price of energy during the hour at the
Camden Delivery Point.

         BLMP = locational marginal price of energy during the hour at the
Bayonne Delivery Point.

         ALMP = locational marginal price of energy during the hour at the
applicable Alternate Delivery Point. If Energy is delivered to more than one
Alternate Delivery Points during an hour, a separate "ALMP" will be determined
for each Alternate Delivery Point and a separate calculation of "AD x ALMP" will
be determined for each Alternate Delivery Point. These will then be summed in
the determination of the AV for the hour.

                                      3-2

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00034-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00034-of-00352.parquet"}]]